<PAGE>
File No. 70-8887
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1 TO
FORM U-1 APPLICATION-DECLARATION
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)
___________________________________________________
William R. McKamey
General Manager
Public Service Company of Oklahoma
212 East 6th Street
Tulsa, Oklahoma 74119-1212
Wendy G. Hargus, 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)
Item 1. Description of Proposed Transaction
Public Service Company of Oklahoma ("PSO"), 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 amends its Application-Declaration in File No. 70-8887 in
the following respects.
Item 6. Exhibits and Financial Statements
Item 6 is hereby amended to file the following exhibits:
Exhibit 1 -Preliminary Opinion of Milbank, Tweed, Hadley
& McCloy, counsel to the Company.
Exhibit 5 -
Form of Member Agreement by and between Public Service
Company of Oklahoma, Monika Smith, Nuvest, L.L.C.,
Numanco, L.L.C. and NSS Numanco, Inc.
Exhibit 6 -
Form of Amended and Restated Articles of Organization of
Numanco, L.L.C.
Exhibit 7 -
Form of Amended and Restated Operating Agreement of
Numanco, L.L.C.
Exhibit 8 -
Form of Amended and Restated Articles of Organization of
Nuvest, L.L.C.
Exhibit 9 -
Form of Amended and Restated Operating Agreement of
Nuvest, L.L.C.
Exhibit 11 -
Manager's Agreement, dated February 21, 1996, between
Nuvest, L.L.C. and Richard H. Smith.
Exhibit 12 -
Manager's Agreement, dated April 25, 1996, between
Numanco, L.L.C. and Richard H. Smith.
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: July 29, 1996
PUBLIC SERVICE COMPANY
OF OKLAHOMA
By: /s/WILLIAM R. MCKAMEY
William R. McKamey
General Manager
INDEX OF EXHIBITS
EXHIBIT TRANSMISSION
NUMBER EXHIBITS METHOD
1 Preliminary Opinion of Milbank, Electronic
Tweed, Hadley & McCloy, counsel
to the Company.
5 Form of Member Agreement by and Electronic
between the Company, Monika Smith,
Nuvest, L.L.C., Numanco, L.L.C.
and NSS Numanco, Inc.
6 Form of Amended and Restated Electronic
Articles of Organization of
Numanco L.L.C.
7 Form of Amended and Restated Electronic
Operating Agreement of
Numanco L.L.C.
8 Form of Amended and Restated Electronic
Articles of Organization of
Nuvest L.L.C.
9 Form of Amended and Restated Electronic
Operating Agreement of
Nuvest L.L.C.
11 Manager's Agreement, dated Electronic
February 21, 1996, between Nuvest,
L.L.C. and Richard H. Smith.
12 Manager's Agreement, dated Electronic
April 25, 1996, between Numanco,
L.L.C. and Richard H. Smith.
<PAGE>
EXHIBIT 1
Milbank, Tweed, Hadley & McCloy
1 Chase Manhattan Plaza
New York, New York 10005
July 26, 1996
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Public Service Company of Oklahoma
Form U-1 Application-Declaration
File No. 70-8887
Dear Sirs:
We refer to the Form U-1 Application-Declaration in
File No. 70-8887 (the "Application") under the Public Utility
Holding Company Act of 1935, as amended (the "1935 Act"), filed
by 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. The
Application relates to the Company's request for authority under
the 1935 Act to make equity investments (the "Investments") in
Nuvest, L.L.C., an Oklahoma limited liability company, and
Numanco, L.L.C., an Oklahoma limited liability company, and to
enter into related transactions, all as more fully described in
the Application. We have acted as special counsel for the
Company in connection with the filing of the Application.
We have examined originals, or copies certified to our
satisfaction, of such corporate records of the Company,
certificates of public officials, certificates of officers and
representatives of the Company and other documents as we have
deemed it necessary to require as a basis for the opinions
hereinafter expressed. In such examination we have assumed the
genuineness of all signatures and the authenticity of all
documents submitted to us as originals and the conformity with
the originals of all documents submitted to us as copies. As to
various questions of fact material to such opinions we have, when
relevant facts were not independently established, relied upon
certificates by officers of the Company and other appropriate
persons and statements contained in the Application.
Based upon the foregoing, and having regard to legal
considerations which we deem relevant, we are of the opinion
that, in the event the proposed Investments are consummated in
accordance with the Application, as it may be amended, and
subject to the assumptions and conditions set forth below:
1. All state laws applicable to the proposed
Investments as described in the Application will have been
complied with.
2. The consummation of the proposed Investments as
described in the Application will not violate the legal rights of
the lawful holders of any securities issued by the Company or any
associate company of the Company.
The opinions expressed above in respect of the proposed
Investments as described in the Application are subject to the
following assumptions or conditions:
a. The Investments shall have been duly authorized
and approved to the extent required by state law
by the Board of Directors of the Company.
b. The Securities and Exchange Commission shall have
duly entered an appropriate order or orders
granting and permitting the Application to become
effective with respect to the Investments
described therein.
c. The Investments shall have been accomplished in
accordance with required approvals,
authorizations, consents, certificates and orders
of any state commission or regulatory authority
with respect thereto and all such required
approvals, authorizations, consents, certificates
and orders shall have been obtained and remain in
effect at the closing thereof.
d. No act or event other than as described herein
shall have occurred subsequent to the date hereof
which would change the opinions expressed above.
We hereby consent to the use of this opinion as an
exhibit to the Application.
Very truly yours,
MILBANK, TWEED, HADLEY & McCLOY
<PAGE>
EXHIBIT 5
MEMBER AGREEMENT
This Member Agreement (the "Agreement") entered into as of
the ____ day of ___________, 1996, by and among Public Service
Company of Oklahoma, an Oklahoma corporation ("PSO"); Monika
Smith, a natural person ("Monika"); Nuvest, L.L.C., an Oklahoma
limited liability company ("Nuvest"); Numanco, L.L.C., an
Oklahoma limited liability company ("Numanco LLC"); and NSS
Numanco, Inc., a Pennsylvania Corporation ("Numanco Inc.").
W I T N E S S E T H:
In consideration of the mutual promises set forth herein,
the parties agree as follows:
I. Recitals.
1.1. Pursuant to an agreement dated February 22, 1996 (the
"Initial Agreement"), PSO advanced an aggregate of $3,700,000
(the "PSO Advance" to Canton, L.L.C., an Oklahoma limited
liability company ("Canton"). Canton, in turn, loaned such
amount to Nuvest for the purpose of acquiring all of the capital
stock of Numanco Inc. Such acquisition was consummated on
______________, 1996.
1.2. Contemporaneously with the execution of the Initial
Agreement, PSO made application to the Securities and Exchange
Commission ("SEC") for permission under the Public Utility
Holding Company Act of 1935, as amended, to acquire an equity
interest in Nuvest. Such SEC approval has now been obtained.
1.3. Subsequent to Nuvest's acquisition of Numanco Inc.,
Nuvest and Numanco Inc. formed Numanco LLC, and Nuvest assumed
all of Canton's obligation to repay the PSO Advance. The parties
now desire to enter into this Agreement to memorialize the
parties' respective rights and obligations with respect to the
management of the businesses in which the Nuvest and its
subsidiaries, Numanco Inc. and Numanco LLC, are engaged, all as
described in the Business Plan.
II. Amendments to Charter Documents.
2.1. Contemporaneously with the execution and delivery of
this Agreement:
(a) PSO and Monika shall prepare, execute and file with
the Oklahoma Secretary of State an Amended and Restated Articles
of Organization of Nuvest in the form attached as Exhibit A, and
shall execute and deliver an Amended and Restated Operating
Agreement for Nuvest in the form attached as Exhibit B, and
(b) Nuvest and Numanco Inc. shall prepare, execute and
file with the Oklahoma Secretary of State an Amended and Restated
Articles of Organization for Numanco LLC in the form attached as
Exhibit C, and shall execute and deliver an Amended and Restated
Operating Agreement for Numanco LLC in the form of Exhibit D.
III. PSO's Investment in Nuvest.
3.1. Subject to the provisions of Section 4, $700,000 of
the PSO Advance is hereby converted to a contribution by PSO to
the capital of Nuvest, and the balance ($3 million) is hereby
returned to PSO. The parties acknowledge that no interest,
stand-by, option, or similar fee has been or will be paid to PSO
in connection with the PSO Advance, nor has PSO been under any
obligation to indemnify Canton or any of the parties to this
Agreement against any market risk or any other claim, loss,
damage or liability whatsoever.
3.2. Subject to the provisions of Section 4, PSO hereby
agrees to guarantee:
(a) For a period not to exceed three (3) years, the
performance of the Numanco Companies' obligations under that
certain promissory note in the amount of $3,000,000, by Nuvest to
________________ (the "Bank"), the proceeds of which are being
used by Nuvest to return to PSO the amount described in Section
3.1, and
(b) For a period not to exceed two (2) years, the
performance of the Numanco Companies' obligations under a
revolving line of credit up to $9,000,000, secured by short-term
receivables of the Numanco Companies.
IV. Conditions Precedent to PSO's Obligations.
Before PSO shall have any obligation to execute and deliver
this Agreement or perform its obligations under Section 3, each
of the following conditions shall be fulfilled to PSO's
satisfaction:
4.1. PSO shall have obtained the approval from the SEC for
its participation in the transactions contemplated by this
Agreement;
4.2. No breach shall have occurred of any of the covenants
of parties other than PSO under the Initial Agreement, or of
Richard Smith under his Management Agreement with Nuvest and
Numanco LLC;
4.3. Monika shall have acquired a membership interest in
Nuvest and Pat Buklin and Charles Bates shall have withdrawn as
members of Nuvest;
4.4. The amendments to the Articles of Organization and
Operating Agreement of Nuvest and Numanco LLC, as described in
Section 2 above, shall have been effected;
4.5. The loan from the Bank to Nuvest in the amount of
Three Million Dollars ($3,000,000) shall have been consummated,
and the proceeds of such loan shall have been paid to PSO as a
partial return of the PSO Advance; and
4.6. The representations and warranties contained in
Section 6 below shall be true and correct.
5. Definitions.
When used herein, the following terms shall have the
meanings ascribed to them:
5.1. "Affiliate" means, with respect to a Person, any
other Person that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common
control with, such Person.
5.2. "Business Plan" means the business plan of the Numanco
Companies described in Section 6.21.
5.3. "Capital Expenditures" means, for any period, amounts
added or required to be added to the property, plant and
equipment or other fixed assets account on the balance sheet of
any Numanco Company, prepared in accordance with GAAP, in respect
of (a) the acquisition, construction, improvement or replacement
of land, buildings, machinery, equipment, leaseholds and any
other real or personal property, (b) to the extent not included
in clause (a) above, materials, contract labor and direct labor
relating thereto (excluding amounts properly expensed as repairs
and maintenance in accordance with GAAP) and (c) software
development costs to the extent not expensed.
5.4. "Capitalized Lease" means any lease which is required
to be capitalized on the balance sheet of the lessee in
accordance with GAAP, including Statement Nos. 13 and 98 of the
Financial Accounting Standards Board.
5.5. "Capitalized Lease Obligations" means the amount of
the liability reflecting the aggregate discounted amount of
future payments under all Capitalized Leases calculated in
accordance with GAAP, including Statement Nos. 13 and 98 of the
Financial Accounting Standards Board.
5.6. "Cash Equivalents" means: (a) negotiable certificates
of deposit, time deposits (including sweep accounts), demand
deposits and bankers' acceptances having a maturity of nine
months or less and issued by any United States financial
institution having capital and surplus and undivided profits
aggregating at least $100,000,000 and rated at least Prime-1 by
Moody's Investors Service, Inc. or A-1 by Standard & Poor's
Ratings Group; (b) corporate obligations having a maturity of
nine months or less and rated at least Prime-1 by Moody's
Investors Service, Inc. or A-1 by Standard & Poor's Ratings
Group; (c) any direct obligation of the United States of America
or any agency or instrumentality thereof, or of any state or
municipality thereof, (i) which has a remaining maturity at the
time of purchase of not more than one year or which is subject to
a repurchase agreement with any financial institution referred to
in clause (a) above, exercisable within one year from the time of
purchase, and (ii) which, in the case of obligations of any state
or municipality, is rated at least Aa by Moody's Investors
Service, Inc. or AA by Standard & Poor's Ratings Group; and (d)
any mutual fund or other pooled investment vehicle rated at least
Aa by Moody's Investors Service, Inc. or AA by Standard & Poor's
Ratings Group which invests principally in obligations described
above.
5.7. "Code" means the federal Internal Revenue Code of
1986.
5.8. "Distribution" means, with respect to each Numanco
Company: (a) the declaration or payment of any dividend or
distribution, including dividends payable in shares of capital
stock of or other equity interests in the Numanco Company on or
in respect of any shares of any class of capital stock of or
other equity interests in the Numanco Company; (b) the purchase,
redemption or other retirement of any shares of capital stock of
or other equity interest in the Numanco Company or of options,
warrants or other rights for the purchase of such shares,
directly or indirectly; (c) any other distribution on or in
respect of any shares of capital stock of or equity or other
beneficial interest in the Numanco Company; (d) any payment of
principal or interest with respect to, or any purchase,
redemption or defeasance of, any Indebtedness of the Numanco
Company; and (e) any loan or advance by the Numanco Company to,
or any other Investment by the Numanco Company in, the holder of
any shares of any class of capital stock of or equity interest in
the Numanco Company, or any Affiliate of such holder; provided,
however, that the term "Distribution" shall not include (i) any
payment in the ordinary course of business in respect of (A)
reasonable compensation paid to employees, officers, directors
and managers, (B) advances to employees for travel expenses,
drawing accounts and similar expenditures, or (C) rent paid to,
or accounts payable for services rendered or goods sold by, any
person who is not an Affiliate of the Numanco Company or (ii) any
payment by the Numanco Company which constitutes repayment of an
Indebtedness permitted under Sections 6.13(e) and (f).
5.9. "Environmental laws" means all applicable federal,
state or local statutes, laws, ordinances, codes, rules,
regulations and guidelines (including consent decrees and
administrative orders) relating to public health and safety and
protection of the environment, including the Federal Occupational
Health and Safety Act.
5.10. "ERISA" means the federal Employee Retirement Income
Security Act of 1974.
5.11. "Financing Debt" means each of the items described in
clauses (a) through (f) of the definition of the term
"Indebtedness".
5.12. "GAAP" means generally accepted accounting principles
as from time to time in effect, including the statements and
interpretations of the United States Financial Accounting
Standards Board.
5.13. "Guarantee" means, with respect to each Numanco
Company: (a) any guarantee by the Numanco Company of the payment
or performance of, or any contingent obligation by the Numanco
Company, in respect of, any Indebtedness or other obligation of
any primary obligor; (b) any other arrangement whereby credit is
extended to a primary obligor on the basis of any promise or
undertaking of the Numanco Company, including any binding
"comfort letter" or "keep well agreement" written by the Numanco
Company, to a creditor or prospective creditor of such primary
obligor, to (i) pay the Indebtedness of such primary obligor,
(ii) purchase an obligation owed by such primary obligor, (iii)
pay for the purchase or lease of assets or services regardless of
the actual delivery thereof or (iv) maintain the capital, working
capital, solvency or general financial condition of such primary
obligor; (c) any liability of the Numanco Company, as a general
partner of a partnership in respect of Indebtedness or other
obligations of such partnership; (d) any liability of the Numanco
Company as a joint venturer of a joint venture in respect of
Indebtedness or other obligations of such joint venture; and (e)
reimbursement obligations, whether contingent or matured, of the
Numanco Company with respect to letters of credit, bankers
acceptances, surety bonds, other financial guarantees; whether or
not any of the foregoing (a) through (e) are reflected on the
balance sheet of the Numanco Company or in a footnote thereto.
5.14. "Hazardous Material" means any pollutant, toxic or
hazardous material or waste, including any "hazardous substance"
or "pollutant" or "contaminant" as defined in section 101(14) of
the Federal Comprehensive Environmental Response, Compensation
and Liability Act of 1980 or any other Environmental Law or
regulated as toxic or hazardous under the Federal Resource
Conservation and Recovery Act or any other Environmental Law.
5.15. "Indebtedness" means, with respect to each Numanco
Company, all obligations, contingent or otherwise, which in
accordance with GAAP are required to be classified upon the
balance sheet of the Numanco Company as liabilities, but in any
event including (without duplication): (a) borrowed money; (b)
indebtedness evidenced by notes, debentures or similar
instruments; (c) Capitalized Lease Obligations; (d) the deferred
purchase price of assets or securities, including related
noncompetition, consulting and stock repurchase obligations
(other than ordinary trade accounts payable within six months
after the incurrence thereof in the ordinary course of business);
(e) mandatory redemption or dividend rights on capital stock (or
other equity); (f) reimbursement obligations, whether contingent
or matured, with respect to letters of credit, bankers
acceptances, surety bonds, and other financial guarantees; (g)
unfunded pension liabilities; (h) obligations that are
immediately and directly due and payable out of the proceeds of
or production from property; (i) liabilities secured by any Lien
existing on property owned or acquired by the Numanco Company,
whether or not the liability secured thereby shall have been
assumed; and (j) all Guarantees in respect of Indebtedness of
others.
5.16. "Investment" means, with respect to each Numanco
Company: (a) any share of capital stock, partnership, membership,
or other equity interest, evidence of Indebtedness or other
security issued by any other Person; (b) any loan, advance or
extension of credit to, or contribution to the capital of, any
other Person; (c) any Guarantee of the Indebtedness of any other
Person; (d) any acquisition of all or any part of the business of
any other Person or the assets comprising such business or part
thereof; and (e) any other similar investment. The investments
described in the foregoing clauses (a) through (e) shall be
included in the term "Investment" whether they are made or
acquired by purchase, exchange, issuance of stock or other
securities, merger, reorganization or any other method; provided,
however, that the term "Investment" shall not include (i) current
trade and customer accounts receivable for property leased, goods
furnished or services rendered in the ordinary course of business
and payable in accordance with customary trade terms, (ii)
advances and prepayments to suppliers for property leased, goods
furnished and services rendered in the ordinary course of
business, (iii) advances to employees for travel expenses,
drawing accounts and similar expenditures, (iv) stock or other
securities acquired in connection with the satisfaction or
enforcement of Indebtedness or claims due to the Numanco Company
or as security for any such Indebtedness or claim or (v) demand
deposits in banks or similar financial institutions.
5.17. "Lien" means, with respect to each Numanco Company:
(a) any lien, encumbrance, mortgage, pledge, charge or security
interest of any kind upon any property or assets of the Numanco
Company, whether now owned or hereafter acquired, or upon the
income or profits therefrom; (b) the acquisition of, or the
agreement to acquire, any property or asset upon conditional sale
or subject to any other title retention agreement, device or
arrangement (including a Capitalized Lease); (c) the sale,
assignment, pledge or transfer for security of any accounts,
general intangibles or chattel paper of the Numanco Company, with
or without recourse; (d) the transfer of any tangible property or
assets for the purpose of subjecting such items to the payment of
previously outstanding Indebtedness in priority to payment of the
general creditors of the Numanco Company; and (e) the existence
for a period of more than 120 consecutive days of any
Indebtedness against the Numanco Company which if unpaid would by
law be given any priority over general creditors.
5.18. "Numanco Companies" means, collectively, Numanco
Inc., Nuvest, and Numanco LLC; individually, each such entity
shall be referred to as a "Numanco Company."
5.19. "Person" means any present or future natural person
or any corporation, association, partnership, joint venture,
limited liability, joint stock or other company, business trust,
trust, organization, business or government or any governmental
agency or political subdivision thereof.
5.20. "Plan" means, at any date, any pension benefit plan
subject to Title IV of ERISA maintained, or to which
contributions have been made or are required to be made, by any
Numanco Company within six years prior to such date.
6. Covenants, Representations and Warranties.
Except as may be otherwise mutually agreed upon in writing,
Monika, Nuvest, Numanco LLC, and Numanco Inc. hereby jointly and
severally covenant, represent and warrant to PSO the following:
6.1. Books and Records. Each Numanco Company shall 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.
6.2. Financial Information. Each Numanco Company shall
furnish the following reports to PSO:
(a) As soon as practicable after the end of each
fiscal year, and in any event within 120 days thereafter, a
balance sheet of the Numanco Company as of the end of such fiscal
year, and a statement of income and a statement of changes in
financial position of the Numanco Company for such year, prepared
in accordance with GAAP 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.
(b) As soon as practicable after the end of the first,
second and third quarterly accounting periods in each fiscal year
of the Numanco Company, and in any event within 45 days
thereafter, a balance sheet of the Numanco 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 Numanco
Company and its subsidiaries (if any) for such period and for the
current fiscal year to date, prepared in accordance with GAAP,
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
Manager.
(c) As soon as available after the end of each month,
and in any event within thirty (30) days thereafter, (i) a
balance sheet of the Numanco 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 GAAP setting forth in each case comparisons to
the Business Plan and the corresponding periods of the previous
fiscal year; (ii) a pro forma cash flow statement of anticipated
cash flow for the next succeeding 90 day period of the Numanco
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 the Manager and accompanied by a statement
explaining any material differences between budgeted and actual
results; and (iii) a memorandum from the Manager reporting on the
Numanco Company's operations, describing significant events or
circumstances affecting operations and containing such other
matters as are requested by PSO.
6.3. Additional Information. Each Numanco Company shall
furnish to PSO:
(a) As available, a certificate executed by the
Manager stating that neither the Numanco 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.
(b) Promptly following receipt thereof, any letters
furnished to the Numanco Company by its independent public
accountants which comment on the accounting practices of the
Numanco Company.
(c) Promptly (but in any event within five days) after
the discovery of any material adverse event or circumstance
affecting the Numanco Company including, but not limited to, the
filing of any material litigation against the Numanco Company or
any subsidiary and the discovery that the Numanco 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 Numanco Company, a notice specifying
the nature and period of existence thereof, and the actions the
Numanco Company has taken and/or proposes to take with respect
thereto. The Numanco 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.
(d) Promptly following the preparation thereof, copies
of the minutes of proceedings (or consents) of the Numanco
Company's Manager and Members together with all written materials
given to the Manager.
(e) With reasonable promptness, such other information
and data with respect to the Numanco Company and its subsidiaries
(if any) as any Member may from time to time reasonably request.
6.4. Audit and Inspection. From time to time at reasonable
intervals upon request of PSO, each Numanco Company shall furnish
to PSO such other information regarding the business, assets,
financial condition, income or prospects of the Numanco Company
PSO may reasonably request, including copies of all tax returns,
licenses, agreements, leases and instruments to which any of the
Numanco Company is party. PSO shall have the right during normal
business hours upon reasonable notice and at reasonable intervals
to examine the books and records of the Numanco Company, to make
copies and notes therefrom for the purpose of ascertaining
compliance with or obtaining enforcement of this Agreement.
6.5. Confidentiality of Information. With respect to each
Numanco Company (a) PSO agrees that any information obtained by
it pursuant to this Agreement or which is proprietary to the
Numanco Company or otherwise confidential will not be disclosed
without the prior written consent of the Numanco 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 Numanco 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 (b) similarly, the Numanco 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. Each Numanco Company shall
require each of its employees who is expected to become familiar
with the Numanco Company's trade secrets or other proprietary or
confidential information to execute a confidentiality agreement
containing appropriate terms to protect such information.
6.6. Property and Liability Insurance. Each Numanco
Company shall cause to be kept insured all of the Numanco
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 Numanco 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 Numanco 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 Numanco Company will promptly
notify PSO of any change in insurance coverage. The Numanco
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.
6.7. Licenses, Permits, Franchises, Etc. Each Numanco
Company shall qualify to conduct business in each jurisdiction in
which the nature of its business or activities requires it to so
qualify, shall remain in good standing in each such jurisdiction,
and shall acquire and keep in force all other licenses, permits,
franchises, and other rights necessary to the operation of its
business.
6.8 Preservation of Goodwill. Each Numanco Company shall
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 Numanco Company, the failure of
which would have a material adverse effect on the Numanco
Company.
6.9. Compliance with Laws. Each Numanco 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.
Without limiting the effect of the foregoing, each Numanco
Company shall (a) use and operate all of its facilities and
properties in material compliance with all Environmental Laws,
keep all necessary permits, approvals, certificates, licenses and
other authorizations relating to environmental matters in effect
and remain in material compliance therewith, and handle all
Hazardous Materials in material compliance with all applicable
Environmental Laws, and (b) shall immediately notify PSO, and
provide copies upon receipt, of all written claims, complaints,
notices or inquiries from any third party (including, but not
limited to, any governmental authorities) relating to the
condition of its facilities and properties or compliance with
Environmental Laws, and shall promptly cure and have dismissed
with prejudice to the satisfaction of PSO any actions and
proceedings relating to compliance with Environmental Laws.
6.10. ERISA. Each Numanco Company shall comply in all
material respects with the provisions of ERISA and the Code
applicable to each Plan. Each Numanco Company shall furnish to
PSO as soon as available the following items with respect to any
Plan (a) any request for a waiver of the funding standards or an
extension of the amortization period, (b) any reportable event
(as defined in section 4043 of ERISA), unless the notice
requirement with respect thereto has been waived by regulation,
(c) any notice received by the Company that the Pension Benefit
Credit Corporation has instituted or intends to institute
proceedings to terminate any Plan, or that any Multiemployer Plan
is insolvent or in reorganization, and (d) notice of the
possibility of the termination of any Plan by its administrator
pursuant to section 4041 of ERISA.
6.11. Compliance with Obligations. Each Numanco 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.
6.12. Taxes. Each Numanco Company shall 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 Numanco
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.
6.13. Indebtedness. No Numanco Company shall create,
incur, assume or otherwise become or remain liable with respect
to any Indebtedness except the following:
(a) Indebtedness under this Agreement.
(b) Current liabilities, other than Financing Debt,
incurred in the ordinary course of business.
(c) To the extent that payment thereof shall not at
the time be required by Section 6.12, Indebtedness in respect of
taxes, assessments, governmental charges and claims for labor,
materials and supplies.
(d) Indebtedness in respect of deferred taxes arising
in the ordinary course of business.
(e) Up to $2 million of Indebtedness owed by Nuvest,
Numanco Inc., and/or Numanco LLC to Bank of Oklahoma, N.A., or
any substantially equivalent financial institution, provided the
proceeds of such Indebtedness are used solely to increase Numanco
Inc.'s working capital.
(f) Indebtedness owed by Numanco Inc. to Nuvest or by
Numanco LLC to Nuvest.
6.14. Guarantees; Letter of Credit. No Numanco Company
shall become or remain liable with respect to any Guarantee,
including reimbursement obligations, whether contingent or
matured, under letters of credit or other financial guarantees by
third parties, except under this Agreement, and except under a
bond or guarantee issued by one Numanco Company to secure the
performance by another Numanco Company of any agreement to
furnish temporary employment services to an unrelated entity.
6.15. Lease Obligations. No Numanco Company shall be or
become obligated as lessee under any lease, except as provided in
the Business Plan.
6.16. Liens. No Numanco Company shall create, incur or
enter into, or suffer to be created or incurred or to exist, any
Lien, except under this Agreement, and except Liens granted to
secure the Indebtedness described under Sections 6.13(e) and (f).
6.17. Investments and Acquisitions. No Numanco Company
shall have outstanding, acquire, commit itself to acquire or hold
any Investment (including any Investment consisting of the
acquisition of any business) except for (i) Investments in Cash
Equivalents; (ii) Nuvest's Investment in Numanco Inc. and Numanco
LLC; and (iii) Numanco Inc.'s Investment in Numanco LLC.
6.18. Distributions. No Numanco Company shall make any
Distributions other than (a) Distributions required for the
purpose of paying (i) permitted Indebtedness, or (ii) income tax
liability incurred under federal or state law by a member of a
Numanco Company as a result of taxable income allocated to such
member under the Numanco Company's Operating Agreement, and (b)
Distributions otherwise contemplated by this Agreement.
6.19. Reimbursement of Expenses. Members shall not be
entitled to any compensation for attendance at meetings of the
Members, except that upon a Member's request the Numanco Company
shall reimburse him for all reasonable travel, food and lodging
expenses incurred or paid by him in connection with attendance at
such meetings.
6.20. Maintenance of Properties. Each Numanco 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.
6.21. Business Plan. Nuvest shall prepare on the Numanco
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:
(a) For each succeeding calendar year, Nuvest 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 Members of Nuvest. A
copy of the Numanco Companies' Business Plan existing as of the
date hereof is attached hereto as Exhibit E.
(b) Nuvest 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.
6.22. Patents, Trademarks and Copyrights. Intellectual
property of the Numanco Company shall be governed by the
following provisions:
(a) No Numanco Company will do any act or omit to do
any act whereby any Numanco Company patent or any patent licensed
by the Numanco Company may become abandoned or rendered invalid.
Each Numanco Company shall take all such actions as may be
necessary to maintain the validity of all such patents.
(b) No Numanco Company will do any act or omit to do
any act whereby any Numanco Company trademark or any trademark
licensed by the Numanco Company may become abandoned or rendered
invalid. Each Numanco Company shall take all such actions as may
be necessary to maintain the validity of all such trademarks.
(c) Each Numanco Company has placed and will continue
to place appropriate notice of copyright on all copies embodying
Numanco Company copyrighted works which are publicly distributed
and the Numanco Company will not do any act or omit to do any act
whereby any Numanco Company copyright may become invalidated or
dedicated to the public domain.
(d) Each Numanco 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 Numanco Company patents, trademarks and
copyrights, including, without limitation, filing of renewals,
extensions, affidavits of use and incontestability, and
opposition, interference and cancellation proceedings.
(e) With respect to each Numanco Company, in the event
that any Numanco Company patent, trademark, or copyright is
infringed, misappropriated or diluted by a third party, the
Numanco Company shall, unless the Numanco Company shall determine
in its reasonable business judgment that such trademark, patent
or copyright is of negligible economic value to the business of
the Numanco 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
Numanco Company shall deem appropriate in its reasonable business
judgment under the circumstances.
6.23. Merger, Consolidation, Sale of Assets, Organic
Changes. No Numanco Company shall issue or agree to issue any
additional stock or membership interests or cause any division or
splitting of any such stock or 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 Numanco Company's total consolidated
assets in any 12-month period (other than sales or other
dispositions of inventory in the normal course of business or as
provided in the Business Plan), or liquidate, dissolve
recapitalize or reorganize in any form of transaction. No
Numanco Company shall adopt any amendment, modification or waiver
of any provision of its Operating Agreement or Articles of
Organization, except as provided in this Agreement.
6.24. Insider Transactions. No Numanco Company shall
engage in any transaction with its Manager or any of its Members
except (a) as provided in this Agreement, or the Numanco
Company's management agreement with the Manager, or any related
Agreement, and (b) reimbursements of reasonable expenses incurred
in the ordinary course of business.
6.25. Type of Business. Each Numanco Company shall engage
only in (a) the business of providing temporary manpower services
to the electric utility industry, and (b) its historical base of
business.
6.26. Conflicting Agreements or Actions. No Numanco
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 Numanco 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.
6.27. Capital Expenditures. No Numanco Company will make
Capital Expenditure in excess 25% of the amount set forth in the
Business Plan during any one fiscal year.
7. Events of Default.
Each of the following events shall be an "Event of Default"
(collectively, the "Events of Default"):
7.1. The Numanco Companies shall fail to meet at least 75%
of the EBITDA financial goals set forth in the Business Plan.
7.2. The Numanco Companies shall exceed 110% of the
budgeted administrative and general expense for any quarter, as
set forth in the Business Plan.
7.3. Any Numanco Company shall default in the payment when
due of any principal or interest on any Indebtedness or shall
default under or fail to perform or observe any material term,
covenant or other agreement contained in, any material agreement,
document or instrument to which it is a party or to which it or
its assets is bound, and such default or failure to perform shall
continue and remain unwaived by the obligee for more than fifteen
(15) days or any applicable period of grace therein specified,
whichever is longer, except where the Numanco Company is in good
faith and through appropriate proceedings contesting such default
or failure to perform.
7.4. Any covenant, representation or warranty made herein
or in connection with the transactions contemplated in this
Agreement shall be breached or shall prove to have been false or
incorrect on the date as of which made resulting in a material
adverse effect on the Numanco Company and such false or incorrect
representation or warranty shall not have been remedied within
fifteen (15) days after written notice thereof shall have given
to the Numanco Company.
7.5. Any Numanco 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 Numanco Company under any bankruptcy laws or
the Numanco 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 Numanco Company in any such proceeding, or shall seek or
consent to the acquiesce in the appointment of any trustee,
receiver or liquidator of the Numanco Company of all or any
substantial part of the properties of the Numanco Company, or the
Numanco Company or its Manager or majority of its Members shall
take any action looking to the dissolution or liquidation of the
Numanco Company and such has not been remedied.
7.6. With respect to any Numanco Company, there shall occur
any event that, under the laws of the State of Oklahoma, would
result in the dissolution of the Numanco Company.
8. Remedies on Default.
8.1. Indemnity. The Numanco Companies shall be jointly and
severally liable to PSO for any amounts PSO may be required to
pay pursuant to its guaranty of any Indebtedness, and all
attorneys fees and additional other costs PSO may incur in
connection therewith. The payment of all of amounts covered by
this indemnity shall be secured by a security interest in the
same collateral held by the creditor to whom such Indebtedness
was owed.
8.2. Enforcement. 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 for
the collection of amounts it is due, for the specific performance
of any agreement contained herein or in the Operating Agreement
of any Numanco Company 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.
8.3. Reallocation of Voting Rights. Notwithstanding the
parties' respective interests in the profits and capital of
Nuvest, Voting Rights (as such term is defined in the Nuvest
Operating Agreement) with respect to all matters coming before a
vote of the Members of Nuvest shall be apportioned as follows:
(i) Prior to the occurrence of an Event of Default, the
Voting Rights of the Members of Nuvest shall be apportioned 4.9%
for PSO, and 95.1% for Monika.
(ii) Upon occurrence of an Event of Default, the Voting
Rights shall be reapportioned 51% for PSO and 49% for Monika;
provided, however, PSO shall limit its control over Nuvest, and,
in turn, Nuvest's control over Numanco Inc. and Numanco LLC, to
one or more of the following: (A) electing a new Manager for
either or both of Nuvest and Numanco LLC, (B) electing new
officers for Numanco Inc., (C) overseeing the development of a
restructured operating plan for the Numanco Companies, and/or (D)
liquidating and dissolving the Numanco Companies.
9. Notices.
9.1. 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:Monika Smith
7633 East 63rd Place
Fourth Floor
Tulsa, OK 74133
or such other addresses as such party shall have specified by
notice in writing to the other party.
10. General.
10.1. Entire Agreement. 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.
10.2. Governing Law. 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.
10.3. Jurisdiction and Venue. 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.
Such jurisdiction and venue are merely permissive; jurisdiction
and venue shall also continue to lie in any court where
jurisdiction and venue would otherwise be proper. The parties
further agree that the mailing by certified or registered mail,
return receipt requested, of any process required by either such
court shall, when received, constitute valid and lawful service
of process against them, without the necessity for service by any
other means otherwise provided by statute or rule of court.
10.4. Binding Effect; Assignment. 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 his 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 to its parent corporation, Central and
South West Corporation, or any direct or indirect subsidiary of
such parent.
10.5. Injunctive Relief. Each of the parties hereto hereby
acknowledges that in the event of a breach by any of them of any
material provision of this Agreement, the aggrieved party may be
without an adequate remedy at law. Each of the parties therefore
agrees that in the event of a breach of any material provision of
this Agreement the aggrieved party may elect to institute and
prosecute proceedings in any court of competent jurisdiction to
enforce specific performance or to enjoin the continuing breach
of such provision, as well as to obtain damages for breach of
this Agreement. By seeking or obtaining any such relief, the
aggrieved party will not be precluded from seeking or obtaining
any other relief to which it may be entitled.
10.6. Waiver. Except as otherwise provided in this
Agreement, any failure of any of the parties to comply with any
obligation, covenant, agreement of condition herein may be waived
by the parties entitled to the benefits thereof only by a written
instrument signed by the party granting such waiver, but such
waiver or failure to insist upon strict compliance with such
obligation, covenant, agreement or condition shall not operate as
a waiver of, or estoppel with respect to, any subsequent or other
failure.
10.7. 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.
10.8. 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.
10.9. 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.
10.10. Severability 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.
10.11. Captions. The headings contained in this Agreement
are for reference purposes only and shall not affect the meaning
or interpretation of this Agreement.
10.12. Expenses. 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.
10.13. Confidentiality. 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 10.4 above, and to any
governmental agency having jurisdiction over PSO or any such
entity.
10.14. Attorneys Fees. 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:
Monika Smith
Numanco, L.L.C.
By:
Title:
Nuvest, L.L.C.
By:
Title:
NSS Numanco, Inc.
By:
Title:
Exhibits:
A Amended and Restated Articles of Organization for Nuvest
B Amended and Restated Operating Agreement for Nuvest
C Amended and Restated Articles of Organization for Numanco
LLC
D Amended and Restated Operating Agreement for Numanco LLC
E Business Plan for the Numanco Companies
<PAGE>
EXHIBIT 6
NUMANCO, 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 Numanco, 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 "Numanco, L.L.C."
2. The name under which this Company was originally
organized was "Numanco, 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
NUMANCO, L.L.C.
FIRST. The name of the limited liability company is
Numanco, 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 7633 East
63rd Place, Fourth Floor, Tulsa, Oklahoma 74133.
FIFTH. The name and address of the registered agent of the
Company in the State of Oklahoma is Pat Buklin, 7633 East 63rd
Place, Fourth Floor, Tulsa, Oklahoma 74133.
SIXTH. The business of the Company shall be managed by a or
Manager 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 the 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), the
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, the 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 $100,000; (b) sell any asset of the Company
(or assets, in related transactions) having a fair market value
in excess of $500,000; (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
$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.
NUVEST, L.L.C.
By:___________________________
Title:________________________
NSS NUMANCO, INC.
By:___________________________
Title:________________________
<PAGE>
EXHIBIT 7
NUMANCO, 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 Nuvest, L.L.C., an Oklahoma limited liability
company ("Nuvest"), and NSS Numanco, Inc., a Pennsylvania
corporation ("Numanco Inc."), collectively referred to herein as
the "Members" of Numanco 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 "Numanco
L.L.C.".
1.03 Principal Office. The principal office of the Company
in the State of Oklahoma shall be located at 7633 East 63rd
Place, Fourth Floor, Tulsa, Oklahoma 74133. The name and address
of the resident agent of the Company is Pat Buklin, 7633 East
63rd Place, Fourth Floor, Tulsa, Oklahoma 74133. The Company may
also maintain offices at such other place or places as the
Manager deems 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, 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. Section 2000 et seq. (Supp. 1993), as it may be
amended from time to time, and any successor to such act.
"Adjusted Capital Account Deficit" means, with respect to
any Member, the deficit balance, if any, in such Member's Capital
Account as of the end of the relevant taxable year, after giving
effect to the following adjustments: (i) Credit to such Capital
Account any amounts which such Member is obligated to restore or
is deemed to be obligated to restore pursuant to the penultimate
sentence of Reg. Section 1.704-2(g)(1) and (i)(5); and (ii) Debit
to such Capital Account the items described in Reg.
Section 1.704-1(b)(2)(ii)(d)(4),(5) and (6) (generally including
certain Capital Account adjustments for depletion allowances,
certain future allocations of loss and deduction which are
reasonably expected as of year end, and future distributions, in
excess of offsetting Capital Account increases, which are
reasonably expected as of year end). The foregoing definition of
Adjusted Capital Account Deficit is intended to comply with the
provisions of Reg. Section 1.704- 1(b)(2)(ii)(d) and shall be
interpreted consistently therewith.
"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.
"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 a promissory
note or other binding obligation to contribute cash or property
to the Company by all Members, or any one Member, as the case may
be.
"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 as determined by
the unanimous consent of the Members.
"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 Minimum Gain" means that amount determined by first
computing Company Nonrecourse Liability, any gain the Company
would realize if it disposed of the Company Property subject to
such liability for no consideration other than full satisfaction
of the liability, and by then aggregating the separately computed
gains. For purposes of determining the amount of such gain, the
additional rules set forth in Reg. Section 1.704-2(d) shall be
followed.
"Company Property" means all property owned, leased or
acquired by the Company from time to time, whether real or
personal, tangible or intangible.
"Dissociated Member" shall have the meaning ascribed to it
in Section 13.01.
"Event of Default" shall have the meaning ascribed to it in
the Member Agreement.
"Event of Dissociation" has the meaning specified in Section
13.01.
"Manager" means the Person designated pursuant to Article
VI.
"Majority Vote of the Members" means the vote of the Members
owning a majority of the Voting Rights.
"Member Loan Nonrecourse Deductions" shall have the meaning
set forth in Reg. Section 1.704-2(i)(2). The amount of Member
Loan Nonrecourse Deductions with respect to a Member Nonrecourse
Debt for a Company taxable year equals the net increase, if any,
in the amount of Member Minimum Gain attributable to such Member
Nonrecourse Debt during that taxable year, reduced (but not below
zero) by proceeds of the liability distributed during the year to
the Member bearing the economic risk of loss for the liability
that are both attributable to the liability and allocable to an
increase in the Member Nonrecourse Debt Minimum Gain.
"Member Minimum Gain" means an amount, with respect to each
Member Nonrecourse Debt, equal to the Company Minimum Gain that
would result if such Member Nonrecourse Debt were treated as a
Nonrecourse Liability, determined in accordance with Reg.
Section 1.704-2(i).
"Member Nonrecourse Debt" shall have the meaning set forth
in Reg. Section 1.704-2(b)(4), being generally any nonrecourse
debt of the Company for which any Member (or related person
within the meaning of Reg. Section 1.752-4(b)) bears the
economic risk of loss.
"Members" means the Record Holders of all interests in the
profits and capital of the Company. The term does not include a
transferee of an interest unless the transferee has been admitted
as a Substitute Member.
"Member-Managers" shall mean Members who are "member-
managers," as such term is used in IRS Rev. Proc. 95-10, I.R.B.
1995-3, December 28, 1994.
"Nonrecourse Deductions" shall have the meaning set forth in
Reg. Section 1.704-2(b)(1). The amount of Nonrecourse
Deductions for a Company taxable year equals the net increase in
the amount of Company Minimum Gain during that taxable year
determined under Reg. Section 1.704-2(d), reduced (but not below
zero) by the aggregate distributions made during the taxable year
of proceeds of a Nonrecourse Liability that are allocable to an
increase in Company Minimum Gain determined pursuant to Reg.
Section 1.704-2(h).
"Nonrecourse Liability" shall have the meaning set forth in
Reg. Paragrapph 1.704-2(b)(3).
"Person" means a natural person, partnership, domestic or
foreign limited partnership, domestic or foreign limited
liability company, trust, estate, association or corporation.
"Record Holder" means the Person in whose name an interest
in the profits and capital of the Company is registered on the
books and records of the Company as of the close of business on a
particular Business Day.
"Regulations" or "Reg." means the Treasury Regulations
promulgated under the Code, as amended from time to time.
"Substitute Member" means a transferee of an interest in the
profits and capital of the Company who is admitted as a Member to
the Company pursuant to Section 12.01 in place of and with all
the rights of a Member.
"Tax Item" means the Company's taxable income or loss for
each taxable year, determined in accordance with Section 703(a)
of the Code, all items of income, gain, loss, deduction or credit
required to be stated separately pursuant to Section 703(a)(1) of
the Code, and the following:
(a) Any income of the Company that is exempt from
federal income tax and not otherwise taken into account in
computing taxable income;
(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 Reg.
Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into
account in computing taxable 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.
"Tax Matters Partner" means the Member designated pursuant
to Section 9.02.
"Term" means the period of time the Company shall continue
in existence as provided in Section 1.04.
"Unit" means an interest in the profits and capital of the
Company, to the extent provided in Articles IV and V.
"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, oil and gas leases and other
properties, either alone or in conjunction with other parties;
(b) dispose of, rent, lease, transfer, encumber or
otherwise utilize Company Property used in connection with
Company operations;
(c) employ such personnel and obtain such legal,
accounting, and other professional services and advice as may be
necessary 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 options, leases, contracts,
agreements, documents, or instruments of any kind which are
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, member, shareholder 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 banks and other lending
institutions for Company purposes and pledge Company Property for
the repayment of such loans, it being understood that no bank or
other lending institution to which the Company makes application
for a loan will be required to inquire as to the purposes for
which such loan is sought, and as between the Company and such
bank or lending institution it will be conclusively presumed that
the proceeds of such loans are to be and will be used for
purposes authorized under the terms of this Agreement;
(k) sell, relinquish, release, abandon, or otherwise
dispose of Company Property, 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 is authorized to issue
an aggregate of One Thousand (1,000) Units. Upon the execution
and delivery of this Agreement, the Company shall issue Units to
the Members in the following proportions:
Number Percentage of
Member of UnitsOutstanding Units
Nuvest900 90%
Numanco Inc. 100 10%
1,000 100.0%
4.02 Capital Contributions. Capital Contributions shall be
in the form of cash or property, or an obligation to contribute
cash or property.
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 the amount of the initial Capital Contribution
attributable to the Member, which amount shall be (i) increased
by subsequent Capital Contributions by such Member, (ii)
increased or decreased, as the case may be, by Tax Items
allocated to such Member pursuant to Article V, and (iii)
decreased by distributions to such Member pursuant to Section
5.01. Distributions shall be debited to Capital Accounts in the
year containing the record date for such distribution.
(b) In the event any in-kind contributions are made,
the Capital Account of the Member shall be increased by the fair
market value of the property contributed by such Member.
(c) The foregoing definition of Capital Account and
certain other provisions of this Agreement are intended to comply
with Reg. 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) A transferee of an interest in the profits and
capital of the Company transferred in accordance with Article XI
will succeed to the Capital Account relating to the Member
transferring such interest. 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 the interest) pursuant to Section
13.02 and re-contributed 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 Reg. 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 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. No Member shall without the written
consent of all remaining Members of the Company have 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.
4.07 Borrowings. Subject to Section 6.03, the Manager may
arrange for the Company to borrow funds and to pledge Company
Property as security therefor.
ARTICLE V
Distributions and Allocations
5.01 Distribution of Cash Available for Distribution. Cash
Available for Distribution shall be determined by the Manager.
Any distribution of property shall be treated as a distribution
of cash in the amount of the fair market value of such property.
Distributions shall be allocated between the Members in
accordance with their respective Unit ownership.
5.02 Allocation of Tax Items. All Tax Items shall be
allocated between the Members in accordance with their respective
Unit ownership.
5.03 Regulatory Allocations. The following special alloca-
tions shall be made for each Company taxable year in the
following order:
(a) Minimum Gain Chargeback. If there is a net
decrease in Company Minimum Gain (other than Minimum Gain
attributable to Member Nonrecourse Debt or net decreases in
Minimum Gain attributable to transactions subject to the
exceptions contained in Reg. Section 1.704-2(f)(2)-(5)) during
any Company taxable year, each Member shall be specially
allocated items of Company income and gain for such year equal to
such Member's share of the net decrease in Company Minimum Gain
during that year. Each Member's share of the net decrease in
Company Minimum Gain shall be determined in accordance with Reg.
Section 1.704-2(g)(2). This Section 5.03(a) is intended to
comply with the minimum gain chargeback requirement in Reg.
Section 1.704-2(f) and shall be interpreted consistently
therewith.
(b) Member Nonrecourse Debt Minimum Gain Chargeback.
If there is a net decrease in Member Minimum Gain attributable to
a Member Nonrecourse Debt during any Company taxable year, each
Member with a share of such Member Minimum Gain attributable to a
Member Nonrecourse Debt determined in accordance with Reg.
Section 1.704-2(i)(5), shall be specially allocated items of
Company income and gain for such year (and, if necessary,
subsequent years) equal to such Member's share of the net
decrease in Member Minimum Gain during such year. Each Member's
share of the net decrease in Member Minimum Gain attributable to
a Member Nonrecourse Debt shall be determined in a manner
consistent with Reg. Section 1.704-2(g)(2). This subsection is
intended to comply with the minimum gain chargeback requirement
in Reg. Section 1.704-2(i)(4) pertaining to Member Nonrecourse
Debt and shall be interpreted consistently therewith.
(c) Gross Income Allocation. In the event any Member
has a Capital Account deficit at the end of any Company taxable
year which is in excess of the sum of (i) the amount such Member
is obligated to restore, and (ii) the amount such Member is
deemed to be obligated to restore pursuant to the penultimate
sentence of Reg. Section 1.704-2(g)(1), each such Member shall be
specially allocated items of Company income and gain in the
amount of such excess as quickly as possible, provided that an
allocation pursuant to this Section 5.03(c) shall be made only if
and to the extent that any such Member would have a deficit
Capital Account in excess of such sum after all other allocations
provided for in this Article V have been tentatively made as if
this Section 5.03(c) hereof and Section 5.03(d) were not in the
Agreement.
(d) Qualified Income Offset. In the event any Member
unexpectedly receives any adjustments, allocations or
distributions described in Reg. Section 1.704-1(b)(2)(ii)(d)(4),
(5) or (6), items of Company income and gain shall be specially
allocated to each such Member in an amount and manner sufficient
to eliminate, to the extent required by the Treasury Regulations,
the Adjusted Capital Account Deficit of such Member as quickly as
possible, provided that an allocation pursuant to this Section
5.03(d) shall be made only if and to the extent that any such
Member would have an Adjusted Capital Account Deficit after all
other allocations provided for in this Article V have been
tentatively made as if this Section 5.03(d) were not in the
Agreement.
(e) Nonrecourse Deductions. Nonrecourse Deductions
for any taxable year or other periods shall be allocated among
the Members in proportion to their respective Capital
Contributions.
(f) Member Loan Nonrecourse Deductions. Any Member
Loan Nonrecourse Deductions for any fiscal year or other period
shall be allocated to the Members who bear the risk of loss with
respect to the loan to which such Member Loan Nonrecourse
Deductions are attributable in accordance with Reg.
Section 1.704-2(i).
(g) Section 754 Adjustments. To the extent an adjust-
ment to the adjusted tax basis of any Company Property pursuant
to Section 734(b) or Section 743(b) of the Code is required,
pursuant to Reg. Section 1.704-1(b)(2)(iv)(m), to be taken into
account in determining Capital Accounts, the amount of such
adjustment to the Capital Accounts shall be treated as an item of
gain (if the adjustment increases the basis of the asset) or loss
(if the adjustment decreases such basis) and such gain or loss
shall be specially allocated to the Member(s) in a manner
consistent with the manner in which their Capital Accounts are
required to be adjusted pursuant to such section of the
Regulations.
5.04 Curative Allocations. The allocations set forth in
Section 5.03, hereof (the "Regulatory Allocations") are intended
to comply with certain requirements of the Regulations. It is
the intent of the Members that, to the extent possible, all
Regulatory Allocations shall be offset either with other
Regulatory Allocations or with special allocations of other Tax
Items pursuant to this Article V. Therefore, notwithstanding any
other provision of this Article V (other than the Regulatory
Allocations), the Manager shall make such offsetting special
allocations of Tax Items in whatever manner he determines
appropriate so that, after such offsetting allocations are made,
each Member's Capital Account balance is, to the extent possible,
equal to the Capital Account balance such Member would have had
if the Regulatory Allocations were not part of the Agreement and
all Tax Items were allocated pursuant to Section 5.03. In
exercising his discretion under this Section 5.04, the Manager
shall take into account future Regulatory Allocations under
Sections 5.03(a) and (b) that, although not yet made, are likely
to offset other Regulatory Allocations previously made under
Sections 5.03(e) and (f).
5.05. Special Allocation of Gain or Loss on Contributed
Property. Under Regulations prescribed by the Secretary of the
Treasury pursuant to Section 704(c) of the Code, Tax Items 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 Manager shall have
the power to make such elections, adopt such conventions, and
allocate Tax Items as he deems appropriate to comply with Section
704(c) of the Code and any Regulations promulgated thereunder and
to preserve, to the extent possible, uniformity of the Members'
interests in the profits and capital of the Company. Any Tax
Items allocated under this Section 5.05 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.
5.06. Change or Transfer of Interests in Profits and
Capital. Upon the transfer of an interest in the profits and
capital of the Company in accordance with Article XI, Tax Items
attributable to the transferred interest shall, for federal
income tax purposes, be allocated between the transferor and the
transferee of such interest based on the number of months that
each such Person was the owner of the interest, in a manner
determined by the Manager to be consistent with the requirements
of Section 706 of the Code and Regulations or rulings promulgated
thereunder.
5.07. Deemed Income or Gain. If, and to the extent that,
any Member is deemed to recognize income or gain 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 allocated such income or gain.
5.08. Recapture Items. Any portion of any income or gain
attributable to the sale or other disposition of any depreciable
Company Property required to be recaptured as ordinary income
shall, to the maximum extent possible in accordance with
Section 704 of the Code and the Regulations thereunder, be
allocated among the Members for tax purposes in the same ratio as
the deductions giving rise to such recapture were allocated. Any
recapture of tax credit shall be allocated among the Members in
accordance with Reg. Section 1.704-1(b)(4)(ii).
ARTICLE VI
Management and Operation of Business
6.01. Manager. Management of the Company shall be vested
in a Manager. Unless and until there has occurred an Event of
Default, the Manager shall be R. Smith. Upon the occurrence of
an Event of Default, the holder of a majority of the Voting
Rights shall be entitled to designate a new Manager at any annual
or special meeting called for that purpose.
6.02. Authority of Manager. 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 Manager. Notwithstanding any other
provision hereof, unless and until there shall have occurred an
Event of Default, the Manager shall not 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, the 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 $100,000;
(b) Sell any assets of the Company (or assets, in
related transactions) having a fair market value over $500,000;
(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 Manager and
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 Manager 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 Manager. 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 upon a Majority Vote of the Members. Each Unit
shall entitle the holder thereof to one (1) vote.
7.03 Indemnification.
(a) To the maximum extent permitted by law, the
Company shall indemnify and hold harmless the Manager, 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 the Manager.
ARTICLE IX
Tax Matters
9.01 Taxable year. The taxable year of the Company shall
be the calendar year, unless otherwise determined by the Manager.
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 Interests in the
Profits and Capital of the Company
10.01. Transfer.
(a) The term "transfer," when used in this Article X
with respect to an interest in the profits and capital of the
Company, shall be deemed to refer to a transaction by which the
Member assigns all or a portion of its interest to another
Person, or by which the holder of an interest assigns the
interest 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 interest 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 interest not made in accordance with this Article X shall be
null and void. Should a Member attempt to transfer its interest
in contravention of this Article XI, then (i) such an alleged
assignee shall have no right to require any information or
account of the Company's transactions or to inspect the Company's
books and records, tax return information, or any other
information, documents, or other data associated with the
Company; and (ii) the Company and the other Members (A) shall be
entitled to treat such assigning Member as the absolute owner
thereof in all respects, and (B) shall incur no liability for
distributions or for allocations of income, gain, loss, deduction
or credit, or for transmittal of reports and notices required to
be given to such Member.
(c) A transferee of an interest in the profits and
capital transferred in accordance with this Article XI shall not
become a Substitute Member unless and until admitted as a Substi-
tute Member pursuant to Article XII. Any such transferee who
does not become a Substitute Member shall have no right to vote
or otherwise participate in the Company's affairs as a Member
thereof, but instead shall be a Record Holder only for the
purpose of receiving 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 Interests by a Member.
(a) No interests in the profits and capital may be
transferred by a Member unless the following conditions are first
satisfied:
(i) The assigning Member and his transferee has
(A) delivered to the Company a duly executed and acknowledged
counterpart of the instrument of assignment and such instrument
evidences the written acceptance by the transferee 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; and (B) executed and delivered to the Company such
other instruments as the Manager may reasonably deem necessary or
desirable to effect the assignment; and
(ii) The Company has received an opinion from counsel
for the assigning Member, in form and substance satisfactory to
the Manager, that such transfer; (A) would not materially
adversely affect the classification of the Company as a
partnership for federal and (as applicable) state income tax
purposes; and (B) would not 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.
(b) Without the consent of the Manager, no transfer of
an interest in the profits and capital of the Company may be made
if such transfer, when added to the total of all other transfers
within the preceding 12 months, would result in the Company being
considered to have terminated within the meaning of Section
708(b)(1)(B) of the Code.
(c) In no event shall any interest be transferred to a
minor (except in trust pursuant to the Uniform Transfers to
Minors Act) or any incompetent (except in trust).
ARTICLE XI
Admission of Substitute and Additional Members
11.01. Admission of Substitute Members.
(a) Upon a transfer of an interest in the profits and
capital of the Company by a Member in accordance with Article X
(but not otherwise), the transferor shall have the power to give
the transferee the right to apply to become a Substitute Member
with respect to the interest acquired, subject to the conditions
of and in the manner permitted under this Agreement. No
transferee of an interest shall become a Substitute Member with
respect to the transferred interest (whether or not such
transferee is then a Member or Substitute Member with respect to
other previously acquired interests) unless and until all of the
following conditions are satisfied:
(i) The instrument of assignment sets forth the intentions
of the assignor that the transferee succeed to the assignor's
interest as a Substitute Member in his place;
(ii) The assignor and transferee shall have fulfilled all
other requirements of this Agreement;
(iii) The transferee 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, in
the event Public Service Company of Oklahoma ("PSO") shall become
a member of the Company, 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 a transferee as a Substitute
Member with respect to a transferred interest 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 interest in the profits and capital shall
cease to be a Member of the Company upon a transfer of such
interest 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 transferee of such former Member is admitted
to he Company as a Substitute Member).
ARTICLE XII
Dissolution and Liquidation
12.01 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
the Articles of Organization expires; (ii) if, upon the
occurrence of an Event of Dissociation, the remaining Members
fail to continue the Company pursuant to Section 12.02; or (iii)
all Members vote to dissolve the Company.
12.02 Events of Dissociation. Upon the death, incapacity,
resignation, expulsion, bankruptcy or dissolution of a Member,
the involuntary withdrawal of PSO as a result of requirements
imposed by regulatory authorities having jurisdiction over such
Member, or the occurrence of any other event which terminates the
continued membership of a Member in the Company (any such Member
shall be referred to herein as a "Dissociated Member" and any of
such events shall be referred to herein as an "Event of
Dissociation"), 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 fifth 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 Dissociation, 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 Dissociated Member's interest in the profits and capital of
the Company upon such terms and conditions as the remaining
Members and the Dissociated Member or the legal representative of
the Dissociated Member, may agree. In the event the remaining
Members and the Dissociated Member (or such legal representative)
do not agree upon terms and conditions for a purchase of such
interest of the Dissociated Member,the remaining Members shall
have an option (to be exercised within sixty (60) days after the
occurrence of the Event of Dissociation, by giving notice to the
Dissociated Member (or such legal representative) to purchase the
interest for a cash purchase price determined by the value of the
Capital Account of the Dissociated Member, as of the end of the
calendar month preceding the occurrence of the Event of
Dissociation, 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 12.03.
(b) The Company shall continue until the expiration of
the term for which it was formed or until the occurrence of
another Event of Dissociation, in which event any remaining
Members shall again elect whether to continue the Company
pursuant to this Section 12.02.
12.03 Method of Winding Up. Upon dissolution of the
Company pursuant to Section 12.01, the Company shall immediately
commence to liquidate and wind up its affairs. Member-Managers,
if any, shall make Capital Contributions to the Company in an
aggregate amount equal to the lesser of (i) the aggregate deficit
balance, if any, in their Capital Accounts, or (ii) the excess of
one and 1/100 percent (1.01%) of the total capital contributions
of the Members who are not Member-Managers over the aggregate
Capital Contributions previously made by the Member-Managers.
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. Unless the
Manager shall determine otherwise, all distributions will be made
in cash, and none of the Company Property will be distributed in
kind to the Members. 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) To each Member the amount of his Capital Account
balance, and if the remaining proceeds are insufficient to allow
each Member to receive the full amount in his Capital Account, to
the Members pro rata according to their respective Capital
Account balances; and
(c) The balance, if any, to the Members in proportion
to their respective Unit ownership.
12.04 Filing Articles of Dissolution. Upon the completion
of the distribution of Company Property as provided in Section
12.03, 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
Section 13.01 or this Section 13.02.
13.03 Meetings. Meetings may be called by any Member, by
providing at least five (5) business days prior notice of the
time, place and purpose of the meeting to all Members. The
holder of a majority of the Voting Rights, represented in person
or by proxy, shall constitute a quorum at a meeting of Members.
14.04 Action Without a Meeting. Any action that may be
taken by any vote of all or any part of the Members may be taken
without a meeting if a consent to such action is signed by
Members holding not less than the minimum number of Voting Rights
that would be necessary to authorize or take such action at a
meeting at which all Members entitled to vote thereon were
present and voted. Prompt notice of the taking of any action
without a meeting shall be given to those Members who have not
consented in writing.
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 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:
NUVEST, L.L.C.
By:___________________________
Title:________________________
NSS NUMANCO, INC.
By:___________________________
Title:________________________
<PAGE>
EXHIBIT 8
NUVEST, 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 Nuvest, 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 "Nuvest, L.L.C."
2. The name under which this Company was originally
organized was "Nuvest, 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
NUVEST, L.L.C.
FIRST. The name of the limited liability company is Nuvest,
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 7633 East
63rd Place, Fourth Floor, Tulsa, Oklahoma 74133.
FIFTH. The name and address of the registered agent of the
Company in the State of Oklahoma is Pat Buklin, 7633 East 63rd
Place, Fourth Floor, Tulsa, Oklahoma 74133.
SIXTH. The business of the Company shall be managed by a or
Manager 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 the 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), the
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, the 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 $100,000; (b) sell any asset of the Company
(or assets, in related transactions) having a fair market value
in excess of $500,000; (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.
Public Service Company of Oklahoma
By:
Title:
Monika Smith
<PAGE>
EXHIBIT 9
NUVEST, 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"), and Monika Smith, a natural person
("Monika"), collectively referred to herein as the "Members" of
Nuvest 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 "Nuvest
L.L.C.".
1.03 Principal Office. The principal office of the Company
in the State of Oklahoma shall be located at 7633 East 63rd
Place, Fourth Floor, Tulsa, Oklahoma 74133. The name and address
of the resident agent of the Company is Pat Buklin, 7633 East
63rd Place, Fourth Floor, Tulsa, Oklahoma 74133. The Company may
also maintain offices at such other place or places as the
Manager deems 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, 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. Section 2000 et seq. (Supp. 1993), as it may be
amended from time to time, and any successor to such act.
"Adjusted Capital Account Deficit" means, with respect to
any Member, the deficit balance, if any, in such Member's Capital
Account as of the end of the relevant taxable year, after giving
effect to the following adjustments: (i) Credit to such Capital
Account any amounts which such Member is obligated to restore or
is deemed to be obligated to restore pursuant to the penultimate
sentence of Reg. Section 1.704-2(g)(1) and (i)(5); and (ii) Debit
to such Capital Account the items described in Reg.
Section 1.704-1(b)(2)(ii)(d)(4),(5) and (6) (generally including
certain Capital Account adjustments for depletion allowances,
certain future allocations of loss and deduction which are
reasonably expected as of year end, and future distributions, in
excess of offsetting Capital Account increases, which are
reasonably expected as of year end). The foregoing definition of
Adjusted Capital Account Deficit is intended to comply with the
provisions of Reg. Section 1.704- 1(b)(2)(ii)(d) and shall be
interpreted consistently therewith.
"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.
"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 a promissory
note or other binding obligation to contribute cash or property
to the Company by all Members, or any one Member, as the case may
be.
"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 as determined by
the unanimous consent of the Members.
"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 Minimum Gain" means that amount determined by first
computing Company Nonrecourse Liability, any gain the Company
would realize if it disposed of the Company Property subject to
such liability for no consideration other than full satisfaction
of the liability, and by then aggregating the separately computed
gains. For purposes of determining the amount of such gain, the
additional rules set forth in Reg. Section 1.704-2(d) shall be
followed.
"Company Property" means all property owned, leased or
acquired by the Company from time to time, whether real or
personal, tangible or intangible.
"Dissociated Member" shall have the meaning ascribed to it
in Section 13.01.
"Event of Default" shall have the meaning ascribed to it in
the Member Agreement.
"Event of Dissociation" has the meaning specified in Section
13.01.
"Manager" means the Person designated pursuant to Article
VI.
"Majority Vote of the Members" means the vote of the Members
owning a majority of the Voting Rights.
"Member Agreement" means that certain agreement between PSO
and Monika, of even date herewith.
"Member Loan Nonrecourse Deductions" shall have the meaning
set forth in Reg. Section 1.704-2(i)(2). The amount of Member
Loan Nonrecourse Deductions with respect to a Member Nonrecourse
Debt for a Company taxable year equals the net increase, if any,
in the amount of Member Minimum Gain attributable to such Member
Nonrecourse Debt during that taxable year, reduced (but not below
zero) by proceeds of the liability distributed during the year to
the Member bearing the economic risk of loss for the liability
that are both attributable to the liability and allocable to an
increase in the Member Nonrecourse Debt Minimum Gain.
"Member Minimum Gain" means an amount, with respect to each
Member Nonrecourse Debt, equal to the Company Minimum Gain that
would result if such Member Nonrecourse Debt were treated as a
Nonrecourse Liability, determined in accordance with Reg.
Section 1.704-2(i).
"Member Nonrecourse Debt" shall have the meaning set forth
in Reg. Section 1.704-2(b)(4), being generally any nonrecourse
debt of the Company for which any Member (or related person
within the meaning of Reg. Section 1.752-4(b)) bears the economic
risk of loss.
"Members" means the Record Holders of all interests in the
profits and capital of the Company. The term does not include a
transferee of an interest unless the transferee has been admitted
as a Substitute Member.
"Member-Managers" shall mean Members who are "member-
managers," as such term is used in IRS Rev. Proc. 95-10, I.R.B.
1995-3, December 28, 1994.
"Nonrecourse Deductions" shall have the meaning set forth in
Reg. Section 1.704-2(b)(1). The amount of Nonrecourse Deductions
for a Company taxable year equals the net increase in the amount
of Company Minimum Gain during that taxable year determined under
Reg. Section 1.704-2(d), reduced (but not below zero) by the
aggregate distributions made during the taxable year of proceeds
of a Nonrecourse Liability that are allocable to an increase in
Company Minimum Gain determined pursuant to Reg. Section 1.704-
2(h).
"Nonrecourse Liability" shall have the meaning set forth in
Reg. Section 1.704-2(b)(3).
"Person" means a natural person, partnership, domestic or
foreign limited partnership, domestic or foreign limited
liability company, trust, estate, association or corporation.
"PSO" means Public Service Company of Oklahoma, a Member.
"Record Holder" means the Person in whose name an interest
in the profits and capital of the Company is registered on the
books and records of the Company as of the close of business on a
particular Business Day.
"Regulations" or "Reg." means the Treasury Regulations
promulgated under the Code, as amended from time to time.
"Substitute Member" means a transferee of an interest in the
profits and capital of the Company who is admitted as a Member to
the Company pursuant to Section 12.01 in place of and with all
the rights of a Member.
"Tax Item" means the Company's taxable income or loss for
each taxable year, determined in accordance with Section 703(a)
of the Code, all items of income, gain, loss, deduction or credit
required to be stated separately pursuant to Section 703(a)(1) of
the Code, and the following:
(a) Any income of the Company that is exempt from
federal income tax and not otherwise taken into account in
computing taxable income;
(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 Reg.
Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into
account in computing taxable 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.
"Tax Matters Partner" means the Member designated pursuant
to Section 9.02.
"Term" means the period of time the Company shall continue
in existence as provided in Section 1.04.
"Unit" means an interest in the profits and capital of the
Company, to the extent provided in Articles IV and V.
"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, oil and gas leases and other
properties, either alone or in conjunction with other parties;
(b) dispose of, rent, lease, transfer, encumber or
otherwise utilize Company Property used in connection with
Company operations;
(c) employ such personnel and obtain such legal,
accounting, and other professional services and advice as may be
necessary 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 options, leases, contracts,
agreements, documents, or instruments of any kind which are
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, member, shareholder 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 banks and other lending
institutions for Company purposes and pledge Company Property for
the repayment of such loans, it being understood that no bank or
other lending institution to which the Company makes application
for a loan will be required to inquire as to the purposes for
which such loan is sought, and as between the Company and such
bank or lending institution it will be conclusively presumed that
the proceeds of such loans are to be and will be used for
purposes authorized under the terms of this Agreement;
(k) sell, relinquish, release, abandon, or otherwise
dispose of Company Property, 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 is authorized to issue
an aggregate of One Thousand (1,000) Units. Upon the execution
and delivery of this Agreement, the Company shall issue Units to
the Members in the following proportions:
Number Percentage of
Member of UnitsOutstanding Units
PSO 700 70%
Monika 300 30%
1,000 100.0%
4.02 Capital Contributions. Capital Contributions shall be
in the form of cash or property, or an obligation to contribute
cash or property.
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 the amount of the initial Capital Contribution
attributable to the Member, which amount shall be (i) increased
by subsequent Capital Contributions by such Member, (ii)
increased or decreased, as the case may be, by Tax Items
allocated to such Member pursuant to Article V, and (iii)
decreased by distributions to such Member pursuant to Section
5.01. Distributions shall be debited to Capital Accounts in the
year containing the record date for such distribution.
(b) In the event any in-kind contributions are made,
the Capital Account of the Member shall be increased by the fair
market value of the property contributed by such Member.
(c) The foregoing definition of Capital Account and
certain other provisions of this Agreement are intended to comply
with Reg. 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) A transferee of an interest in the profits and
capital of the Company transferred in accordance with Article XI
will succeed to the Capital Account relating to the Member
transferring such interest. 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 the interest) pursuant to Section
13.02 and re-contributed 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 Reg. 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 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. No Member shall without the written
consent of all remaining Members of the Company have 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.
4.07 Borrowings. Subject to Section 6.03, the Manager may
arrange for the Company to borrow funds and to pledge Company
Property as security therefor.
ARTICLE V
Distributions and Allocations
5.01 Distribution of Cash Available for Distribution. Cash
Available for Distribution shall be determined by the Manager.
Any distribution of property shall be treated as a distribution
of cash in the amount of the fair market value of such property.
Distributions shall be allocated between the Members in
accordance with their respective Unit ownership.
5.02 Allocation of Tax Items. All Tax Items shall be
allocated between the Members in accordance with their respective
Unit ownership.
5.03 Regulatory Allocations. The following special alloca-
tions shall be made for each Company taxable year in the
following order:
(a) Minimum Gain Chargeback. If there is a net
decrease in Company Minimum Gain (other than Minimum Gain
attributable to Member Nonrecourse Debt or net decreases in
Minimum Gain attributable to transactions subject to the
exceptions contained in Reg. Section 1.704-2(f)(2)-(5)) during
any Company taxable year, each Member shall be specially
allocated items of Company income and gain for such year equal to
such Member's share of the net decrease in Company Minimum Gain
during that year. Each Member's share of the net decrease in
Company Minimum Gain shall be determined in accordance with Reg.
Section 1.704-2(g)(2). This Section 5.03(a) is intended to
comply with the minimum gain chargeback requirement in Reg.
Section 1.704-2(f) and shall be interpreted consistently
therewith.
(b) Member Nonrecourse Debt Minimum Gain Chargeback.
If there is a net decrease in Member Minimum Gain attributable to
a Member Nonrecourse Debt during any Company taxable year, each
Member with a share of such Member Minimum Gain attributable to a
Member Nonrecourse Debt determined in accordance with Reg.
Section 1.704-2(i)(5), shall be specially allocated items of
Company income and gain for such year (and, if necessary,
subsequent years) equal to such Member's share of the net
decrease in Member Minimum Gain during such year. Each Member's
share of the net decrease in Member Minimum Gain attributable to
a Member Nonrecourse Debt shall be determined in a manner
consistent with Reg. Section 1.704-2(g)(2). This subsection is
intended to comply with the minimum gain chargeback requirement
in Reg. Section 1.704-2(i)(4) pertaining to Member Nonrecourse
Debt and shall be interpreted consistently therewith.
(c) Gross Income Allocation. In the event any Member
has a Capital Account deficit at the end of any Company taxable
year which is in excess of the sum of (i) the amount such Member
is obligated to restore, and (ii) the amount such Member is
deemed to be obligated to restore pursuant to the penultimate
sentence of Reg. Section 1.704-2(g)(1), each such Member shall be
specially allocated items of Company income and gain in the
amount of such excess as quickly as possible, provided that an
allocation pursuant to this Section 5.03(c) shall be made only if
and to the extent that any such Member would have a deficit
Capital Account in excess of such sum after all other allocations
provided for in this Article V have been tentatively made as if
this Section 5.03(c) hereof and Section 5.03(d) were not in the
Agreement.
(d) Qualified Income Offset. In the event any Member
unexpectedly receives any adjustments, allocations or
distributions described in Reg. Section 1.704-1(b)(2)(ii)(d)(4),
(5) or (6), items of Company income and gain shall be specially
allocated to each such Member in an amount and manner sufficient
to eliminate, to the extent required by the Treasury Regulations,
the Adjusted Capital Account Deficit of such Member as quickly as
possible, provided that an allocation pursuant to this Section
5.03(d) shall be made only if and to the extent that any such
Member would have an Adjusted Capital Account Deficit after all
other allocations provided for in this Article V have been
tentatively made as if this Section 5.03(d) were not in the
Agreement.
(e) Nonrecourse Deductions. Nonrecourse Deductions
for any taxable year or other periods shall be allocated among
the Members in proportion to their respective Capital
Contributions.
(f) Member Loan Nonrecourse Deductions. Any Member
Loan Nonrecourse Deductions for any fiscal year or other period
shall be allocated to the Members who bear the risk of loss with
respect to the loan to which such Member Loan Nonrecourse
Deductions are attributable in accordance with Reg.
Section 1.704-2(i).
(g) Section 754 Adjustments. To the extent an adjust-
ment to the adjusted tax basis of any Company Property pursuant
to Section 734(b) or Section 743(b) of the Code is required,
pursuant to Reg. Section 1.704-1(b)(2)(iv)(m), to be taken into
account in determining Capital Accounts, the amount of such
adjustment to the Capital Accounts shall be treated as an item of
gain (if the adjustment increases the basis of the asset) or loss
(if the adjustment decreases such basis) and such gain or loss
shall be specially allocated to the Member(s) in a manner
consistent with the manner in which their Capital Accounts are
required to be adjusted pursuant to such section of the
Regulations.
5.04 Curative Allocations. The allocations set forth in
Section 5.03, hereof (the "Regulatory Allocations") are intended
to comply with certain requirements of the Regulations. It is
the intent of the Members that, to the extent possible, all
Regulatory Allocations shall be offset either with other
Regulatory Allocations or with special allocations of other Tax
Items pursuant to this Article V. Therefore, notwithstanding any
other provision of this Article V (other than the Regulatory
Allocations), the Manager shall make such offsetting special
allocations of Tax Items in whatever manner he determines
appropriate so that, after such offsetting allocations are made,
each Member's Capital Account balance is, to the extent possible,
equal to the Capital Account balance such Member would have had
if the Regulatory Allocations were not part of the Agreement and
all Tax Items were allocated pursuant to Section 5.03. In
exercising his discretion under this Section 5.04, the Manager
shall take into account future Regulatory Allocations under
Sections 5.03(a) and (b) that, although not yet made, are likely
to offset other Regulatory Allocations previously made under
Sections 5.03(e) and (f).
5.05. Special Allocation of Gain or Loss on Contributed
Property. Under Regulations prescribed by the Secretary of the
Treasury pursuant to Section 704(c) of the Code, Tax Items 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 Manager shall have
the power to make such elections, adopt such conventions, and
allocate Tax Items as he deems appropriate to comply with Section
704(c) of the Code and any Regulations promulgated thereunder and
to preserve, to the extent possible, uniformity of the Members'
interests in the profits and capital of the Company. Any Tax
Items allocated under this Section 5.05 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.
5.06. Change or Transfer of Interests in Profits and
Capital. Upon the transfer of an interest in the profits and
capital of the Company in accordance with Article XI, Tax Items
attributable to the transferred interest shall, for federal
income tax purposes, be allocated between the transferor and the
transferee of such interest based on the number of months that
each such Person was the owner of the interest, in a manner
determined by the Manager to be consistent with the requirements
of Section 706 of the Code and Regulations or rulings promulgated
thereunder.
5.07. Deemed Income or Gain. If, and to the extent that,
any Member is deemed to recognize income or gain 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 allocated such income or gain.
5.08. Recapture Items. Any portion of any income or gain
attributable to the sale or other disposition of any depreciable
Company Property required to be recaptured as ordinary income
shall, to the maximum extent possible in accordance with
Section 704 of the Code and the Regulations thereunder, be
allocated among the Members for tax purposes in the same ratio as
the deductions giving rise to such recapture were allocated. Any
recapture of tax credit shall be allocated among the Members in
accordance with Reg. Section 1.704-1(b)(4)(ii).
ARTICLE VI
Management and Operation of Business
6.01. Manager. Management of the Company shall be vested
in a Manager. Unless and until there has occurred an Event of
Default, the Manager shall be R. Smith. Upon the occurrence of
an Event of Default, the holder of a majority of the Voting
Rights shall be entitled to designate a new Manager at any annual
or special meeting called for that purpose.
6.02. Authority of Manager. 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 Manager. Notwithstanding any other
provision hereof, unless and until there shall have occurred an
Event of Default, the Manager shall not 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, the 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 $100,000;
(b) Sell any assets of the Company (or assets, in
related transactions) having a fair market value over $500,000;
(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 Manager and
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 Manager 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 Manager. 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 upon a Majority Vote of the Members. Each Unit
shall entitle the holder thereof to one (1) vote; provided, as
long as PSO is a Member, Voting Rights shall be allocated as
follows:
(a) Unless and until there shall have occurred an
Event of Default, PSO shall hold 4.9% of all Voting Rights and
Monika shall hold 95.1% of all Voting Rights.
(b) Upon the occurrence of an Event of Default, Voting
Rights shall be reapportioned so that PSO shall hold 51% of all
Voting Rights and Monika shall hold 49% of all Voting Rights.
7.03 Indemnification.
(a) To the maximum extent permitted by law, the
Company shall indemnify and hold harmless the Manager, 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 the Manager.
ARTICLE IX
Tax Matters
9.01 Taxable year. The taxable year of the Company shall
be the calendar year, unless otherwise determined by the Manager.
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 Interests in the
Profits and Capital of the Company
10.01. Transfer.
(a) The term "transfer," when used in this Article X
with respect to an interest in the profits and capital of the
Company, shall be deemed to refer to a transaction by which the
Member assigns all or a portion of its interest to another
Person, or by which the holder of an interest assigns the
interest 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 interest 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 interest not made in accordance with this Article X shall be
null and void. Should a Member attempt to transfer its interest
in contravention of this Article XI, then (i) such an alleged
assignee shall have no right to require any information or
account of the Company's transactions or to inspect the Company's
books and records, tax return information, or any other
information, documents, or other data associated with the
Company; and (ii) the Company and the other Members (A) shall be
entitled to treat such assigning Member as the absolute owner
thereof in all respects, and (B) shall incur no liability for
distributions or for allocations of income, gain, loss, deduction
or credit, or for transmittal of reports and notices required to
be given to such Member.
(c) A transferee of an interest in the profits and
capital transferred in accordance with this Article XI shall not
become a Substitute Member unless and until admitted as a Substi-
tute Member pursuant to Article XII. Any such transferee who
does not become a Substitute Member shall have no right to vote
or otherwise participate in the Company's affairs as a Member
thereof, but instead shall be a Record Holder only for the
purpose of receiving 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 Interests by a Member.
(a) No interests in the profits and capital may be
transferred by a Member unless the following conditions are first
satisfied:
(i)The assigning Member and his transferee has
(A) delivered to the Company a duly executed and acknowledged
counterpart of the instrument of assignment and such instrument
evidences the written acceptance by the transferee 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; and (B) executed and delivered to the Company such
other instruments as the Manager may reasonably deem necessary or
desirable to effect the assignment; and
(ii)The Company has received an opinion from counsel
for the assigning Member, in form and substance satisfactory to
the Manager, that such transfer; (A) would not materially
adversely affect the classification of the Company as a
partnership for federal and (as applicable) state income tax
purposes; and (B) would not 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.
(b) Without the consent of the Manager, no transfer of
an interest in the profits and capital of the Company may be made
if such transfer, when added to the total of all other transfers
within the preceding 12 months, would result in the Company being
considered to have terminated within the meaning of Section
708(b)(1)(B) of the Code.
(c) In no event shall any interest be transferred to a
minor (except in trust pursuant to the Uniform Transfers to
Minors Act) or any incompetent (except in trust).
ARTICLE XI
Admission of Substitute and Additional Members
11.01. Admission of Substitute Members.
(a) Upon a transfer of an interest in the profits and
capital of the Company by a Member in accordance with Article X
(but not otherwise), the transferor shall have the power to give
the transferee the right to apply to become a Substitute Member
with respect to the interest acquired, subject to the conditions
of and in the manner permitted under this Agreement. No
transferee of an interest shall become a Substitute Member with
respect to the transferred interest (whether or not such
transferee is then a Member or Substitute Member with respect to
other previously acquired interests) unless and until all of the
following conditions are satisfied:
(i) The instrument of assignment sets forth the
intentions of the assignor that the transferee succeed to the
assignor's interest as a Substitute Member in his place;
(ii) The assignor and transferee shall have fulfilled
all other requirements of this Agreement;
(iii) The transferee 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 a transferee as a Substitute
Member with respect to a transferred interest 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 interest in the profits and capital shall
cease to be a Member of the Company upon a transfer of such
interest 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 transferee of such former Member is admitted
to he Company as a Substitute Member).
ARTICLE XII
Dissolution and Liquidation
12.01 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
the Articles of Organization expires; (ii) if, upon the
occurrence of an Event of Dissociation, the remaining Members
fail to continue the Company pursuant to Section 12.02; or (iii)
all Members vote to dissolve the Company.
12.02 Events of Dissociation. Upon the death, incapacity,
resignation, expulsion, bankruptcy or dissolution of a Member,
the involuntary withdrawal of PSO as a result of requirements
imposed by regulatory authorities having jurisdiction over such
Member, or the occurrence of any other event which terminates the
continued membership of a Member in the Company (any such Member
shall be referred to herein as a "Dissociated Member" and any of
such events shall be referred to herein as an "Event of
Dissociation"), 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 fifth 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 Dissociation, 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 Dissociated Member's interest in the profits and capital of
the Company upon such terms and conditions as the remaining
Members and the Dissociated Member or the legal representative of
the Dissociated Member, may agree. In the event the remaining
Members and the Dissociated Member (or such legal representative)
do not agree upon terms and conditions for a purchase of such
interest of the Dissociated Member,the remaining Members shall
have an option (to be exercised within sixty (60) days after the
occurrence of the Event of Dissociation, by giving notice to the
Dissociated Member (or such legal representative) to purchase the
interest for a cash purchase price determined by the value of the
Capital Account of the Dissociated Member, as of the end of the
calendar month preceding the occurrence of the Event of
Dissociation, 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 12.03.
(b) The Company shall continue until the expiration of
the term for which it was formed or until the occurrence of
another Event of Dissociation, in which event any remaining
Members shall again elect whether to continue the Company
pursuant to this Section 12.02.
12.03 Method of Winding Up. Upon dissolution of the
Company pursuant to Section 12.01, the Company shall immediately
commence to liquidate and wind up its affairs. Member-Managers,
if any, shall make Capital Contributions to the Company in an
aggregate amount equal to the lesser of (i) the aggregate deficit
balance, if any, in their Capital Accounts, or (ii) the excess of
one and 1/100 percent (1.01%) of the total capital contributions
of the Members who are not Member-Managers over the aggregate
Capital Contributions previously made by the Member-Managers.
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. Unless the
Manager shall determine otherwise, all distributions will be made
in cash, and none of the Company Property will be distributed in
kind to the Members. 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) To each Member the amount of his Capital Account
balance, and if the remaining proceeds are insufficient to allow
each Member to receive the full amount in his Capital Account, to
the Members pro rata according to their respective Capital
Account balances; and
(c) The balance, if any, to the Members in proportion
to their respective Unit ownership.
12.04 Filing Articles of Dissolution. Upon the completion
of the distribution of Company Property as provided in Section
12.03, 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
Section 13.01 or this Section 13.02.
13.03 Meetings. Meetings may be called by any Member, by
providing at least five (5) business days prior notice of the
time, place and purpose of the meeting to all Members. The
holder of a majority of the Voting Rights, represented in person
or by proxy, shall constitute a quorum at a meeting of Members.
14.04 Action Without a Meeting. Any action that may be
taken by any vote of all or any part of the Members may be taken
without a meeting if a consent to such action is signed by
Members holding not less than the minimum number of Voting Rights
that would be necessary to authorize or take such action at a
meeting at which all Members entitled to vote thereon were
present and voted. Prompt notice of the taking of any action
without a meeting shall be given to those Members who have not
consented in writing.
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 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:
______________________________
MONIKA SMITH
PUBLIC SERVICE COMPANY
OF OKLAHOMA
By:___________________________
Title:________________________
<PAGE>
EXHIBIT 11
5480-000
MANAGER'S AGREEMENT
This Manager's Agreement is made and entered into this 21st
day of February, 1996, by and between Nuvest, L.L.C., an Oklahoma
limited liability company (the "Company"), and Richard H. Smith
(the "Manager").
RECITALS.
The Company is engaged in the temporary personnel business;
and
Manager has knowledge and experience which would be most
beneficial to the Company's business; and
The Company and Manager are willing to enter into a
consulting relationship on the terms and conditions herein set
forth.
NOW, THEREFORE, in consideration of the mutual promises,
covenants, and agreements hereinafter set forth, the parties
hereto agree as follows:
Section 1. DESIGNATION AS MANAGER.
The Company hereby designates the Manager as manager of the
Company, and the Manager hereby agrees to serve as consultant and
manager of the Company upon the terms and conditions, and for the
compensation hereinafter set forth.
Section 2. TERM.
The term of this Agreement shall be for the term of two (2)
years.
Section 3. DUTIES AND RESPONSIBILITIES OF MANAGER.
Manager is engaged to advise and consult the Company, and
shall be responsible for causing the following activities to be
accomplished:
3.1 Operating Agreement. Manager shall carry out the
duties and responsibilities of Manager as defined in that certain
Operating Agreement of the Members of the Company dated the ___
day of February, 1996.
3.2 Staffing; Consultants. Manager shall consult with
regard to the hiring, engagement, and employment of the employees
and the augmentation staff of the Company and other professional
consultants to be used by the Company from time to time.
3.3 Supervision of Customer Contracts. Manager shall
coordinate and oversee the performance of the staff augmentation
contracts with the Company's customers. In this regard, the
Manager shall report on the status of these contracts regularly
and the quality of the services being rendered by the Company.
3.4 Records; Reports. Manager shall cause the Company to
make and keep books, records, and accounts, which, in reasonable
detail, accurately and fairly reflect the transactions and
operations, and devise and maintain a system of internal
accounting control sufficient to provide reasonable assurances
that: (i) transactions are executed in accordance with the
Company's general or specific authorization; and (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.
3.5 Financial Information. The Manager shall cause the
following reports to be made available to the Company's Members:
A. 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.
B. 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 statement 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.
C. As soon as available after the end of each month,
and in any event within thirty (30) days thereafter:
(1) 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;
(2) 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;
(3) a report on the Company's operations,
describing significant events or circumstances affecting
operations and containing such other matters as are requested by
the Members or the lenders of the Company; and
3.6 Business Plan. Manager has prepared on the Company's
behalf, an operating plan, including a cash flow budget, a profit
and loss statement, and balance sheet (collectively, the
"Business Plan") which has been approved by the Company and
NUMANCO, L.L.C., an Oklahoma Limited Liability Company, and
Public Service Company of Oklahoma, an Oklahoma corporation
(collectively the "Lenders"). The Manager shall prepare proposed
revisions to the Business Plan in accordance with the following:
(1) For each succeeding calendar year, the
Manager shall furnish a copy of the proposed revisions to the
Business Plan to the Members and the Lenders at least thirty (30)
days prior to the beginning of such twelve month period. The
Business Plan shall become effective if approved by the Members
and Lenders. A copy of the Company's Business Plan existing as
of the date hereof is attached hereto as Exhibit "A." A revised
Business Plan will be prepared by Management in October, 1996.
(2) The Company may amend the Business Plan only
with the consent of the Lenders. 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.
3.7 Financial Reports For Affiliates. In addition to the
above, as soon as available at the end of each month, Manager
shall cause to be provided to the Members and lenders to the
Company, financial statements of all affiliates, corporations,
venturers, partnerships, limited liability companies, or other
enterprises in which the Company may have an interest.
3.8 Property and Liability Insurance. The Manager shall
cause the Company to insure all of its assets. The 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. The
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. The Company will promptly
notify its lenders 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
the lenders (or, if the insurer requires, a designated
representative of lenders) at least thirty (30) days prior
written notice thereof.
3.9 Use of Proceeds. The Manager shall determine that all
proceeds loaned to the Company shall be used in accordance with
the Business Plan.
3.10 Preservation of Corporate Existence and Business. The
Manager shall cause the Company to 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.
3.11 Maintenance of Properties. The 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.
3.12 Taxes and Other Obligations. The Manager shall cause
the Company to pay and discharge all taxes, assessments, interest
and installments on debts 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.
3.13 Monitor Budget. The Manager shall financially monitor
the condition of the Company to make sure the Company does not
make expenditures in excess of 110% of the budgeted amount set
forth in the Business Plan during any one fiscal year.
3.14 Other Duties. Manager shall perform such other duties
and activities as the Members and Manager may agree in the
future.
Section 4. MANAGER'S FEES; REIMBURSEMENT OF EXPENSES.
4.1 Fees and Compensation. Company agrees to pay to the
Manager an hourly fee of $300.00, such fee to be paid within ten
(10) days of the submission of Manager's statement. Such fee
shall not exceed $20,833.00 per month.
4.2 Reimbursement of Expenses. Company agrees to reimburse
the ordinary and necessary expenses incurred by Manager in the
performance of Managers' duties and responsibilities hereunder.
An itemization of such reimbursed expenses shall be provided to
each of the Members, along with the other monthly financial
reports as prepared by the Manager.
Section 5. EVENTS OF DEFAULT; REMEDIES.
5.1 Events of Default. Each of the following events shall,
if not cured or otherwise corrected within 30 days following
written notice from the Company or a Member, be an "Event of
Default":
A. The Company fails to meet at least 60% of the
EBITDA financial goals for the first year of the Business Plan
attached hereto or fails to meet at least 80% of the financial
EBITDA goals of the Business Plan to be prepared for the second
fiscal year.
B. The Company exceeds 105% of the aggregate budgeted
expense for any quarter, as set forth in the Business Plan.
C. The 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. The Manager or the 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.
E. With respect to the Company there occurs an event
that, under the laws of the State of Oklahoma, would result in
the dissolution of the Company.
5.2 Curative Action. Upon written notice from the Company
or a Member of the Company alleging that an event has occurred
which may lead to an Event of Default, Manager shall have 30 days
from the receipt thereof to cure such event or otherwise take
such action as may be necessary to correct such action. If the
Manager successfully cures or corrects such event, then there
shall be no Event of Default. If the Manager does not believe
that such an event has occurred which, without a cure or
correction would lead to an Event of Default, Manager may so
advise the Company and/or the Member in writing. If Manager and
the Company or Member cannot agree with regard to whether or not
an Event of Default has occurred, then such issue shall be
submitted to arbitration pursuant to the provisions of Section
6.5 of this Agreement.
5.3 Remedies. In the event there is an Event of Default
(which is not cured or rectified pursuant to Section 5.2 above),
then this Agreement shall be terminated at the end of the month
following the expiration of the curative period or the written
findings of the arbitrator if such an Event of Default has, in
fact, occurred.
Section 6. MISCELLANEOUS.
6.1 Governing Law. 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.
6.2 Binding Effect. 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.
6.3 Headings. The headings contained in this Agreement are
for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.
6.4 Attorney's Fees. 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.
6.5 Binding Arbitration. Any controversy or claim arising
out of or relating to this Agreement or the breach, termination,
or validity thereof, shall be settled exclusively by arbitration
by three qualified arbitrators, one chosen by each of the
disputing parties and a third shall be chosen by the two
arbitrators. The arbitration shall be governed by the Uniform
Arbitration Act, 15 O.S. 801 et. seq., and judgment upon the
award rendered by the arbitrators may be entered by any court
having jurisdiction thereof. The arbitrators shall not be
empowered to award damages in excess of actual damages, including
punitive damages. In the event of a breach of this Agreement,
the arbitrators shall award to the prevailing party a reasonable
attorney's fee and the reasonable costs incurred by the
prevailing party in enforcing this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
Nuvest, L.L.C.,
An Oklahoma limited liability company
By: ____________________________
Charles G. Bates, Member
____________________________
Pat R. Bucklin, Member
"Company"
____________________________
Richard H. Smith
"Manager"
EXHIBIT "A"
Business Plan
<PAGE>
EXHIBIT 12
5518-000
MANAGER'S AGREEMENT
This Manager's Agreement is made and entered into this 25th
day of April, 1996, by and between Numanco, L.L.C., an Oklahoma
limited liability company (the "Company"), and Richard H. Smith
(the "Manager").
RECITALS.
The Company is engaged in the temporary personnel business;
and
Manager has knowledge and experience which would be most
beneficial to the Company's business; and
The Company and Manager are willing to enter into a
consulting relationship and management agreement on the terms and
conditions herein set forth.
NOW, THEREFORE, in consideration of the mutual promises,
covenants, and agreements hereinafter set forth, the parties
hereto agree as follows:
Section 1. DESIGNATION AS MANAGER.
The Company hereby designates the Manager as manager of the
Company, and the Manager hereby agrees to serve as consultant and
manager of the Company upon the terms and conditions, and for the
compensation hereinafter set forth.
Section 2. TERM.
The term of this Agreement shall be for the term of two (2)
years.
Section 3. DUTIES AND RESPONSIBILITIES OF MANAGER.
Manager is engaged to advise and consult the Company, and
shall be responsible for causing the following activities to be
accomplished:
3.1 Intent. Manager shall carry out the duties and
responsibilities of Manager as defined in that certain Operating
Agreement of the Members of the Company dated the 25th day of
April, 1996. Manager shall devote such time to Company and its
business affairs as shall be reasonably required for its welfare
and success. However, nothing herein contained shall be
construed to require the Manager to devote his full time to the
business of this Company. Nothing herein contained shall be
construed to prohibit the Manager from engaging in other business
ventures exclusively for his own account so long as other
business ventures are dissimilar in nature to the business
venture of this Company.
3.2 Staffing; Consultants. Manager shall consult with
regard to the hiring, engagement, and employment of the employees
and the augmentation staff of the Company and other professional
consultants to be used by the Company from time to time.
3.3 Supervision of Customer Contracts. Manager shall
coordinate and oversee the performance of the staff augmentation
contracts with the Company's customers. In this regard, the
Manager shall report on the status of these contracts regularly
and the quality of the services being rendered by the Company.
3.4 Records; Reports. Manager shall cause the Company to
make and keep books, records, and accounts, which, in reasonable
detail, accurately and fairly reflect the transactions and
operations, and devise and maintain a system of internal
accounting control sufficient to provide reasonable assurances
that: (i) transactions are executed in accordance with the
Company's general or specific authorization; and (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.
3.5 Financial Information. The Manager shall cause the
following reports to be made available to the Company's Members:
A. 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.
B. 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 statement 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.
C. As soon as available after the end of each month,
and in any event within thirty (30) days thereafter:
(1) 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;
(2) 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;
(3) a report on the Company's operations,
describing significant events or circumstances affecting
operations and containing such other matters as are requested by
the Members or the lenders of the Company; and
3.6 Business Plan. Manager has prepared on the Company's
behalf, an operating plan, including a cash flow budget, a profit
and loss statement, and balance sheet (collectively, the
"Business Plan") which has been approved by the Company and
Public Service Company of Oklahoma, an Oklahoma corporation
("PSO"). The Manager shall prepare proposed revisions to the
Business Plan in accordance with the following:
(1) For each succeeding calendar year, the
Manager shall furnish a copy of the proposed revisions to the
Business Plan to the Members and PSO at least thirty (30) days
prior to the beginning of such twelve month period. The Business
Plan shall become effective if approved by the Members and PSO.
A copy of the Company's Business Plan existing as of the date
hereof is attached hereto as Exhibit "A." A revised Business
Plan will be prepared by Management in October, 1996.
(2) The Company may amend the Business Plan only
with the consent of PSO, unless PSO fails to get Securities and
Exchange Commission ("SEC") approval on or before August 31,
1996, as provided in that certain Preliminary Agreement dated
February 22, 1996, in which event PSO approval shall not be
required. 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.
3.7 Financial Reports For Affiliates. In addition to the
above, as soon as available at the end of each month, Manager
shall cause to be provided to the Members and lenders to the
Company, financial statements of all affiliates, corporations,
venturers, partnerships, limited liability companies, or other
enterprises in which the Company may have an interest.
3.8 Property and Liability Insurance. The Manager shall
cause the Company to insure all of its assets. The 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. The
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. The Company will promptly
notify its lenders 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
the lenders (or, if the insurer requires, a designated
representative of lenders) at least thirty (30) days prior
written notice thereof.
3.9 Use of Proceeds. The Manager shall determine that all
proceeds loaned to the Company shall be used in accordance with
the Business Plan.
3.10 Preservation of Corporate Existence and Business. The
Manager shall cause the Company to 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.
3.11 Maintenance of Properties. The 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.
3.12 Taxes and Other Obligations. The Manager shall cause
the Company to pay and discharge all taxes, assessments, interest
and installments on debts 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.
3.13 Monitor Budget. The Manager shall financially monitor
the condition of the Company to make sure the Company does not
make expenditures in excess of 110% of the budgeted amount set
forth in the Business Plan during any one fiscal year.
3.14 Manager's Powers. Unless otherwise limited by the
Articles of Organization of the Company or Section 3.15 hereof,
the Manager shall have the power and authority in connection with
the operation of the business of this Company to do the
following:
(A) To sell, exchange, trade, transfer or otherwise
dispose of any or all of the Company's assets;
(B) To lease office space, equipment and other
property; and to negotiate a renewal or extended terms in such
leases that may extend the termination date thereof beyond the
date of termination of Company;
(C) To hire, employ, retain or otherwise secure
employees, temporary personnel, accountants, attorneys and other
independent contractors or personnel necessary to carry out the
purposes of this Company upon such terms as the Manager may
determine; to charge the compensation of such employees,
temporary personnel, accountants, attorneys, and other agents and
any other expenses against the assets or income of the Company;
(D) To enter into a contract or contracts for the
furtherance of the Company's business upon such terms and
conditions as may be determined by the Manager;
(E) To borrow money for Company's purposes from such
lenders and upon such terms as the Manager may determine and to
pledge, mortgage, grant security interests or otherwise encumber
all or any part of the properties of this Company as security for
any such loans;
(F) To obtain replacements of any loans with or
without liens and/or security interests on the properties of this
Company and to prepay in whole or in part, refinance, recast,
increase, modify, consolidate, or extend any mortgages or
security documents affecting the Company's assets, or any portion
thereof; and
(G) To open bank accounts for the Company and to
designate, from time to time, signatories authorized to draw
funds on such accounts.
3.15 Restrictions on Authority of Manager. Without the
written consent of all of the Members, the Manager shall not have
the authority to: (a) borrow money in excess of One Hundred
Thousand Dollars ($100,000.00); (b) sell any asset of the Company
(or assets, in related transactions) having a fair market value
in excess of Five Hundred Thousand Dollars ($500,000.00); (c)
enter into any contract involving an anticipated total commitment
or expenditure of over One Hundred Thousand Dollars
($100,000.00); (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 One Hundred Thousand Dollars
($100,000.00); (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 for the Company.
3.16 Other Duties. Manager shall perform such other duties
and activities as the Members and Manager may agree in the
future.
Section 4. MANAGER'S FEES; REIMBURSEMENT OF EXPENSES.
4.1 Fees and Compensation. Company agrees to pay to the
Manager an hourly fee of $300.00, such fee to be paid within ten
(10) days of the submission of Manager's statement. Such fee,
when combined with the fees of the Manager from all Numanco
affiliates, shall not exceed $20,833.00 per month.
4.2 Reimbursement of Expenses. Company agrees to reimburse
the ordinary and necessary expenses incurred by Manager in the
performance of Managers' duties and responsibilities hereunder.
An itemization of such reimbursed expenses shall be provided to
each of the Members, along with the other monthly financial
reports as prepared by the Manager.
Section 5. EVENTS OF DEFAULT; REMEDIES.
5.1 Events of Default. Each of the following events shall,
if not cured or otherwise corrected within 30 days following
written notice from the Company or a Member, be an "Event of
Default":
A. The Company fails to meet at least 60% of the
EBITDA financial goals for the first year of the Business Plan
attached hereto or fails to meet at least 80% of the financial
EBITDA goals of the Business Plan to be prepared for the second
fiscal year.
B. The Company exceeds 105% of the aggregate budgeted
expense for any quarter, as set forth in the Business Plan.
C. The 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. The Manager or the 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.
E. With respect to the Company there occurs an event
that, under the laws of the State of Oklahoma, would result in
the dissolution of the Company.
5.2 Curative Action. Upon written notice from the Company
or a Member of the Company alleging that an event has occurred
which may lead to an Event of Default, Manager shall have 30 days
from the receipt thereof to cure such event or otherwise take
such action as may be necessary to correct such action. If the
Manager successfully cures or corrects such event, then there
shall be no Event of Default. If the Manager does not believe
that such an event has occurred which, without a cure or
correction would lead to an Event of Default, Manager may so
advise the Company and/or the Member in writing. If Manager and
the Company or Member cannot agree with regard to whether or not
an Event of Default has occurred, then such issue shall be
submitted to arbitration pursuant to the provisions of Section
6.5 of this Agreement.
5.3 Remedies. In the event there is an Event of Default
(which is not cured or rectified pursuant to Section 5.2 above),
then this Agreement shall be terminated at the end of the month
following the expiration of the curative period or the written
findings of the arbitrator if such an Event of Default has, in
fact, occurred.
Section 6. MISCELLANEOUS.
6.1 Governing Law. 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.
6.2 Binding Effect. 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.
6.3 Headings. The headings contained in this Agreement are
for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.
6.4 Attorney's Fees. 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.
6.5 Binding Arbitration. Any controversy or claim arising
out of or relating to this Agreement or the breach, termination,
or validity thereof, shall be settled exclusively by arbitration
by three qualified arbitrators, one chosen by each of the
disputing parties and a third shall be chosen by the two
arbitrators. The arbitration shall be governed by the Uniform
Arbitration Act, 15 O.S. 801 et. seq., and judgment upon the
award rendered by the arbitrators may be entered by any court
having jurisdiction thereof. The arbitrators shall not be
empowered to award damages in excess of actual damages, including
punitive damages. In the event of a breach of this Agreement,
the arbitrators shall award to the prevailing party a reasonable
attorney's fee and the reasonable costs incurred by the
prevailing party in enforcing this Agreement.
6.6 Preliminary Agreement. Notwithstanding any provision
in this Agreement to the contrary, Manager agrees to take (or
refrain from taking, as appropriate) all such action as may be
necessary to cause the Company to comply with all of the
covenants of the Numanco Companies set forth in that certain
Preliminary Agreement dated as of February 22, 1996, by and among
the Company, Public Service Company of Oklahoma, and others.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
"COMPANY"
NUMANCO, L.L.C.,
An Oklahoma limited liability company
BY: NSS NUMANCO, INC.,
A Pennsylvania corporation
By: _____________________________
Monika Smith, Vice President
BY: NUVEST, L.L.C.,
an Oklahoma limited liability
company
By: ______________________________
Richard H. Smith, Manager
"MANAGER"
_____________________________________
Richard H. Smith
