EXHIBIT 7
MEMBER AGREEMENT
This Member Agreement (the "Agreement") entered into as of the
____ day of ___________, 1995, by and among Public Service Company of
Oklahoma, an Oklahoma corporation ("PSO"); Xxxxxxx X. Xxxxx, a natural person
("Xxxxx"); Xxxxxx Xxxxx, a natural person ("Monika"); Xxxxxx X. Xxxxxxxxxx, a
natural person ("Xxxxxxxxxx"); RIKA Management Company, L.L.C., an Oklahoma
limited liability company ("Management"); Universal Power Products Company,
L.L.C., an Oklahoma limited liability company doing business as "Relay
Concepts" ("Marketing"); Automated Substation Development Company, L.L.C., an
Oklahoma limited liability company ("Development"); and RC Training, L.L.C.,
an Oklahoma limited liability company ("Training").
W I T N E S S E T H:
In consideration of the mutual promises set forth herein, the
parties agree as follows:
1. Recitals.
(a) PSO and Management are parties to a PSO Specific Software
Application and Development Agreement dated as of , 1995 (the
"R&D Agreement"), pursuant to which PSO has paid an aggregate of $ to
Management for the purposes of funding the development of certain software for
use in substation automation (the "Software").
(b) Contemporaneously with the execution of the R&D Agreement,
PSO made application to the Securities and Exchange Commission ("SEC") for
permission under the Public Utility Holding Company Act of 1935 to make both
an equity and debt investment in Management, to make an equity investment in
Marketing, and to acquire certain equity interests in Development and
Training, all as hereinafter described. Such SEC approval has now been
obtained.
(c) The parties now desire to enter into this Agreement (i) to
effect the conversion by PSO of the $_____________ it has paid to Management
to fund the development of the Software, into a loan to Management under the
terms hereinafter described; (ii) to set forth the terms of PSO's commitment
to loan additional funds to Management to complete the development of the
Software; (iii) to set forth the rights of PSO and its affiliates with respect
to the Software; (iv) to pay an additional Four Hundred Fifty Thousand Dollars
($450,000) to Marketing for the purposes hereafter described; and (v) to
memorialize the parties' respective rights and obligations with respect to the
management of the businesses in which Management, Marketing, Development, and
Training (collectively, the "Companies," and individually a "Company") intend
to engage, all as described in the Companies' Business Plan (hereafter
defined).
(d) Capitalized terms used but not otherwise defined herein
shall have the meanings ascribed to them in the Operating Agreement (as
hereafter described) of the Company to which the term pertains.
2. Amendments to Charter Documents.
Contemporaneously with the execution and delivery of this
Agreement, Xxxxx, Xxxxxx, and Xxxxxxxxxx shall effect the following amendments
to the Articles of Organization and Operating Agreement of their respective
Companies:
(a) Management. Xxxxx and Monika hereby agree to vote their
respective interests in Management to cause the execution and delivery of (i)
the Amended and Restated Articles of Organization of Management in the form
set forth as Exhibit A, and the filing of such document with the Oklahoma
Secretary of State; and (ii) the Amended and Restated Operating Agreement of
Management in the form set forth as Exhibit B.
(b) Marketing; Development; Training. Xxxxx, Xxxxxxxxxx and
Management hereby agree to vote their respective interests in Marketing,
Development and Training to cause the execution and delivery of (i) the
Amended and Restated Articles of Organization of each of Marketing,
Development, and Training, in the forms set forth as Exhibits C, E and G,
respectively, and the filing of each such document with the Oklahoma Secretary
of State; and (ii) the Amended and Restated Operating Agreement of each of
Marketing, Development, and Training in the forms set forth as Exhibits D, F
and H, respectively.
3. PSO's Investment in Development and Loan to Management.
(a) Subject to the provisions of Section 6, Seven Hundred
Fifty Thousand ($750,000) of the $ previously paid by PSO to
Management pursuant to the R & D Agreement (which Management has in turn,
loaned to Development to fund development of the Software) is hereby converted
to a contribution by PSO to the capital of Development, and the balance is
hereby deemed to constitute a loan by PSO to Management in the form of a first
advance against Management's promissory note to PSO in the form set forth as
Exhibit I (the "PSO Note").
(b) Subject to the provisions of Section 6, PSO hereby commits
to loan to Management an aggregate of Two Million Three Hundred Thousand
($2,300,000) under the terms of the PSO Note, of which amount $____________
shall be deemed to have been advanced to Management pursuant to Section 3(a),
and the balance of $__________ shall be advanced under the PSO Note pursuant
to the following schedule [to be revised at signing to delete prior payments]:
Amount Date of Advance
$ 500,000 07/17/95
300,000 07/31/95
200,000 08/31/95
500,000 09/30/95
500,000 12/29/95
1,050,000 03/31/96
(c) In consideration of PSO's loan commitment to Management,
and for other good and valuable consideration, the receipt of which is hereby
acknowledged by Management, Management shall issue to PSO Units of membership
interest in Management, which Units, upon issuance, shall comprise fifty
percent 50% of the outstanding Units. As a result of such issuance, the
outstanding units of membership interest in Management shall be held by the
following Persons in the amounts indicated:
Member %Unit Ownership
PSO 50%
Xxxxx 25%
Monika 25%
100%
(d) As further consideration of PSO's loan Commitment to
Management, each of Management, Marketing and Development agrees to take all
action as may be necessary to allow PSO and each of its affiliated operating
companies the right to purchase a non-exclusive license to use the Software
under the same terms and conditions as the license Marketing will offer to
non-affiliated utilities except that the license granted to PSO and its
affiliates shall be (i) a perpetual, unrestricted license to use and modify
the Software, and (ii) at a fee no greater than the fee Marketing shall pay
Development for the right to market the Software to non-affiliated utilities.
(e) PSO acknowledges that Management is indebted to Xxxxx in
the amount of $ , pursuant to a promissory note dated
(the "Xxxxx Note"), which note is payable over a 5-year straight-line
amortization at the rate of 8% per annum simple, and may be accelerated upon
the occurrence of an Event of Default (as hereafter defined). Xxxxx
acknowledges that upon his receipt of the payments described in Section 4(a)
below, the Xxxxx Note will be current. The parties agree that although Xxxxx
has waived his right to accelerate the Xxxxx Note in this instance, his
decision will not constitute a waiver of the right to do so upon the
occurrence of an Even of Default in the future; provided, PSO and Xxxxx agree
that upon the occurrence of an Event of Default, no payment shall be made
under either the PSO Note or the Xxxxx Note unless payments are made under
both notes in proportion to their respective amounts of principal and accrued
interest then outstanding under the PSO Note and the Xxxxx Note, respectively.
For example, if at the time an Event of Default occurs, the amounts of
principal and accrued interest then outstanding under the PSO Note and the
Xxxxx Note are $2 million and $500,000, respectively, PSO would be entitled to
receive 80% of each payment made by Management under either the PSO Note or
the Xxxxx note, and Xxxxx would be entitled to receive the remaining 20%.
4. PSO's Investment in Marketing.
(a) Subject to the provisions of Section 6, upon the execution
and delivery of this Agreement, PSO shall make a capital contribution to
Marketing in the amount of Four Hundred Fifty Thousand Dollars ($450,000), of
which amount Three Hundred Fifty-Five Thousand Two Hundred Fifty Dollars
($355,250) shall be used by Marketing (i) to pay all such amounts Xxxxx is
owed by all the Companies as of May 31, 1995; and (ii) to redeem a portion of
the membership interests owned by Xxxxx and Xxxxxxxxxx in Marketing.
(b) As a result of such contribution by PSO and redemption by
Marketing, the outstanding Units of membership interest in Marketing shall be
held by the following persons in the amounts indicated:
Member % Unit Ownership
PSO 48%
Xxxxx 19%
Xxxxxxxxxx 28%
Management 5%
100%
5. Allocation of Membership Interests in Development and Training.
In consideration of the valuable contributions PSO, Xxxxx,
Xxxxxxxxxx and Management will make toward implementation of the Business
Plan, such parties agree to allocate the Units of membership interest in
Development and Training in accordance with the following:
(a) Development. The outstanding Units of membership interest
in Development shall be held by the following Persons in the amounts
indicated:
% Unit Ownership
Before Payment of After Payment of
Member PSO Note in Full PSO Note in Full
PSO 71% 48%
Xxxxx 10% 19%
Xxxxxxxxxx 14% 28%
Management 5% 5%
100% 100%
(b) Training. The outstanding Units of membership interest in
Training shall be held by the following Persons in the amounts indicated:
Member % Unit Ownership
PSO 48%
Xxxxx 19%
Xxxxxxxxxx 28%
Management 5%
100%
6. Conditions Precedent to PSO's Obligations.
(a) Before PSO shall have any obligation to execute and
deliver this Agreement or make the conversion set forth in Section 3(a), each
of the following conditions shall be fulfilled to PSO's satisfaction:
(i) PSO shall have obtained the approval from the SEC for
its participation in the transactions contemplated by this Agreement;
(ii) The amendments to the Articles of Organization and
Operating Agreement of each Company, as described in Section 2 above, shall
have been effected;
(iii) Management shall have executed and delivered the PSO
Note to PSO; and
(iv) The representations and warranties contained in
Section 7 below shall be true and correct.
(b) Before PSO shall have any obligation to make any future
advance under the PSO Note, each of the following conditions shall be
fulfilled to PSO's satisfaction:
(i) All conditions set forth in Section 6(a) shall have
been fulfilled;
(ii) The representations and warranties contained in
Section 7 below shall be true and correct in all material respects on and as
of the time of such advance with the same effect as though such
representations and warranties had been repeated on and as of such time,
except to the extent that such representations and warranties expressly relate
to an earlier date; and
(iii) No Event of Default (as hereafter defined) shall
have occurred.
7. Representations and Warranties.
Xxxxx, Xxxxxx, Xxxxxxxxxx, and the Companies hereby jointly and
severally represent and warrant to PSO the following:
(a) Books and Records. Each Company will make and keep books,
records and accounts, which, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of its assets, and devise and
maintain a system of internal accounting controls sufficient to provide
reasonable assurances that (i) transactions are executed in accordance with
management's general or specific authorization, (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with
generally accepted accounting principles or any other criteria applicable to
such statements and to maintain accountability for assets, (iii) access to
assets is permitted only in accordance with management's general or specific
authorization, and (iv) the recorded accountability for assets is compared
with the existing assets at reasonable intervals and appropriate action is
taken with respect to any differences.
(b) Financial Information. Each Company will make available
the following reports to its Members:
(i) As soon as practicable after the end of each fiscal
year, and in any event within 120 days thereafter, a balance sheet of the
Company as of the end of such fiscal year, and a statement of income and a
statement of changes in financial position of the Company for such year,
prepared in accordance with generally accepted accounting principles and
setting forth in each case in comparative form the figures of the previous
fiscal year, all in reasonable detail including all supporting schedules and
comments.
(ii) As soon as practicable after the end of the first,
second and third quarterly accounting periods in each fiscal year of the
Company, and in any event within 45 days thereafter, a balance sheet of the
Company as of the end of each such quarterly period, and a statement of income
and a statements of changes and financial condition of the Company and its
subsidiaries (if any) for such period and for the current fiscal year to date,
prepared in accordance with generally accepted accounting principles, setting
forth in each case comparisons to the Business Plan (as hereinafter defined)
and the corresponding period to the previous fiscal year, all in reasonable
detail and signed, subject to changes resulting from year-end audit
adjustments, by the principal financial officer of the Company.
(iii) As soon as available after the end of each month,
and in any event within thirty (30) days thereafter,
(A) a balance sheet of the Company as of the end of such
month, and a statement of income and changes in financial position for the
month and for the current fiscal year to date, both prepared in accordance
with generally accepted accounting principles setting forth in each case
comparisons to the Business Plan and the corresponding periods of the previous
fiscal year;
(B) a pro forma cash flow statement of anticipated cash flow
for the next succeeding 90 day period of the Company prepared on a
consolidated basis setting forth, in each case, comparisons to the Business
Plan and the corresponding periods of the previous fiscal year, all in
reasonable detail and signed, subject to changes resulting from year-end audit
adjustments, by Xxxxx and accompanied by a statement explaining any material
differences between budgeted and actual results; and
(C) a memorandum from Xxxxx and Xxxxxxxxxx reporting on the
Company's operations, describing significant events or circumstances affecting
operations and containing such other matters as are requested by PSO.
(iv) In addition to the above, as soon as available at the end of each
month, Management shall provide PSO with combining financial statements
reflecting all the above for all Companies.
(c) Additional Information. Each Company will furnish to its Members:
(i) As available, a certificate executed by Xxxxx and Xxxxxxxxxx stating
that neither the Company nor any of its subsidiaries is in default under its
Articles of Organization or Operating Agreement, this Agreement, any
promissory note, or any other material agreement to which it is a party or to
which it or any of its properties is subject.
(ii) Promptly following receipt thereof, any letters furnished to the
Company by its independent public accountants which comment on the accounting
practices of the Company.
(iii) Promptly (but in any event within five days) after the discovery
of any material adverse event or circumstance affecting the Company including,
but not limited to, the filing of any material litigation against the Company
or any subsidiary and the discovery that the Company is not, or with the
passage of time will not be, in compliance with any provision of this
Agreement, any promissory note, or any other material agreement of the
Company, a notice specifying the nature and period of existence thereof, and
the actions the Company has taken and/or proposes to take with respect
thereto. The Company shall furnish its Members with monthly reports updating
and describing any developments relating to matters described under this
subparagraph and will promptly notify its Members of any material developments
or changes relating thereto.
(iv) Promptly following the preparation thereof, copies of the minutes
of proceedings (or consents) of the Company's Managers and Members together
with all written materials given to the Managers in connection with any
meeting of the Managers.
(v) With reasonable promptness, such other information and data with
respect to the Company and its subsidiaries (if any) as any Member may from
time to time reasonably request.
(d) Inspection. With respect to each Company, PSO shall have the right, at
its expense, to visit and inspect any of the properties of the Company and to
discuss its affairs, finances and accounts with its Managers and employees,
all at such reasonable times and as often as may be reasonably requested.
(e) Confidentiality of Information. With respect to each Company (i) PSO
agrees that any information obtained by it pursuant to this Agreement or which
is proprietary to the Company or otherwise confidential will not be disclosed
without the prior written consent of the Company except as may be required to
be disclosed in order to comply with any applicable law, rule, regulation,
order or request of any governmental agency or authority; provided, that
without the prior written consent of the Company, PSO may disclose such
information to its parent corporation, Central and South West Corporation, any
direct or indirect subsidiary of such parent, or any governmental agency
having jurisdiction over any such entity; and (ii) similarly, the Company
agrees that any information obtained by it pursuant to this Agreement or which
is proprietary to PSO or otherwise confidential will not be disclosed without
the prior written consent of PSO except as may be required to be disclosed in
order to comply with any applicable law, rule, regulation, order or request of
any governmental agency or authority.
(f) Property and Liability Insurance. Each Company will cause to be kept
insured all of the Company's assets which are of insurable character, and
which are customarily insured by companies engaged in the same or similar
businesses by financially sound and reputable insurers against loss or damage
by fire, explosion or other hazards customarily insured against by such
comparable companies with extended coverage in amounts sufficient to prevent
the Company from becoming a co-insurer, except for normal deductibles, but
not, in any event, less than eighty percent (80%) of the insurable value of
the property. Each Company will maintain, with financially sound and
reputable insurers, such insurance against hazards and risks and liabilities
to persons and property as are customarily insured against by companies
engaged in the same or similar businesses. The amount of liability insurance
shall be at least $1,000,000 for property damage and $1,000,000 for personal
injury regardless of the number of persons injured. Each Company will
promptly notify PSO of any change in insurance coverage. The Company shall
promptly cause all policies of insurance obtained by it in accordance with its
obligations hereunder to provide that they may not be cancelled unless the
insurance carrier gives PSO (or, if the insurer requires, a designated
representative of PSO) at least 30 days prior written notice thereof.
(g) Life Insurance. Management will, within 30 days of the date hereof,
obtain and will thereafter maintain key man level term life insurance policies
on the life of Xxxxxx Xxxxxxxxxx in the face amount of at least $500,000
naming Management as beneficiary. Management will pay or cause to be paid all
premiums on such life insurance as the same from time to time become payable.
Management will request the insurers on such policy of life insurance to
provide that it may not be cancelled unless the insurance carrier gives PSO
(or, if the insurer requires, a designated representative of PSO) at least 30
days prior written notice thereof.
(h) Use of Proceeds. Each Company's use of all proceeds loaned to it shall
be in accordance with the Business Plan.
(i) Managers' Election. Each Company will use its best efforts to assure
compliance with its Operating Agreement. Each Company will cause its
Operating Agreement to be amended from time to time to reflect the current
number of Managers. Any representative of a Member who serves as a Manager of
the Company shall be paid such Managers' fees which are paid by each Company
to its other Managers. Apart from any such fees, any representatives of PSO
who serve as a Manager shall not be entitled to any compensation for
attendance at meetings of the Managers or the executive committee thereof, if
any, except that upon a representative's request the Company shall reimburse
him for all reasonable travel, food and lodging expenses incurred or paid by
him in connection with attendance at such meetings.
(j) Preservation of Corporate Existence and Business. Each Company will
preserve intact the present business organization, rights and privileges and
present goodwill and, to the best of its ability relationships existing with
other parties and will at all times cause to be done all things necessary to
maintain, preserve, and renew its existence and will observe and conform with
all valid requirements of all governmental authorities relating to the conduct
of the business of the Company, the failure of which would have a material
adverse effect on the Company. Each Company will maintain and keep in force
all material licenses, permits and agreements necessary to the conduct of its
businesses.
(k) Maintenance of Properties. Each Company will maintain and keep its
properties, real and personal, in good repair, working order, and condition,
and from time to time make all necessary or desirable repairs, renewals, and
replacements, so that its business may be properly and advantageously
conducted at all times.
(l) Taxes and Other Obligations. Each Company will pay and discharge all
taxes, assessments, interest and installments on mortgages and governmental
charges against it or against any of its properties, upon the respective dates
when due, except to the extent that (i) such taxes, assessments, interest,
installments and governmental charges are contested in good faith and by
appropriate proceedings in such manner as not to cause any materially adverse
effect on its financial condition or loss of any right of redemption from any
sale, and (ii) the Company shall have set aside on its books reserves
(segregated to the extent required by generally accepted accounting
principles) adequate with respect to such liabilities.
(m) Compliance with Obligations, Laws, Etc. Each Company shall comply with
all of the obligations which it has incurred or to which it becomes subject
pursuant to any contract or agreement, whether oral or written, express or
implied, the breach of which might have a material adverse effect upon its
business or financial condition, unless and to the extent that the same are
being contested in good faith and by appropriate proceedings and adequate
reserves have been set aside on its books with respect thereto. Each Company
shall comply with all applicable laws, rules and regulations of all
governmental authorities, the violation of which might have a material adverse
effect upon its business or financial condition.
(n) Agreements with Employees and Consultants. Each Company will cause all
employees and consultants of the Company who may become materially involved in
research, development or technological matters to execute an employment or
confidentiality agreement containing the same confidentiality provisions as
the agreement attached as Exhibit J.
(o) Business Plan. Management shall prepare on the Companies' behalf an
operating plan, including a cash flow budget, a profit and loss statement and
balance sheet (collectively the "Business Plan") in accordance with the
following:
(i) For each succeeding calendar year, Management shall
furnish a copy of the Business Plan to PSO at least 30 days prior to the
beginning of such twelve month period. The Business Plan shall become
effective if approved by the Managers of the Management. A copy of the
Companies' Business Plan existing as of the date hereof is attached hereto as
Exhibit K. A revised Business Plan will be prepared by Management in October,
1995.
(ii) Management may amend any Business Plan adopted pursuant
to this Agreement by following the procedures set forth herein. Such amended
Business Plan shall be deemed the "Business Plan" for all purposes of this
Agreement for the remainder of the twelve month period of the Business Plan so
amended.
(p) Patents, Trademarks and Copyrights. Intellectual property of the
Company shall be governed by the following provisions:
(i) Patent Maintenance. No Company will do any act or omit to
do any act whereby any Company patent or any patent licensed by the Company
may become abandoned or rendered invalid. Each Company shall take all such
actions as may be necessary to maintain the validity of all such patents.
(ii) Trademark Maintenance. No Company will do any act or
omit to do any act whereby any Company trademark or any trademark licensed by
the Company may become abandoned or rendered invalid. Each Company shall take
all such actions as may be necessary to maintain the validity of all such
trademarks. Each Company will continue to use its trademarks, together with
appropriate notice of trademark, on each and every trademark class of goods
applicable to its current and future lines of goods and to maintain its
trademarks in full force and effect and free from any claim of abandonment for
non-use. Each Company has used and will continue to use for the duration of
this Agreement standards of quality in the manufacture of products sold under
its trademarks that are at least equal to those standards in effect as of the
date of this Agreement.
(iii) Copyright Maintenance. Each Company has placed and will
continue to place appropriate notice of copyright on all copies embodying
Company copyrighted works which are publicly distributed and the Company will
not do any act or omit to do any act whereby any Company copyright may become
invalidated or dedicated to the public domain.
(iv) Application and Registration Maintenance. Each Company
will take all steps necessary in the opinion of counsel in any proceeding
before the United States Patent and Trademark Office, United States Register
of Copyrights or similar office or agency of the United States or any office
of the Secretary of State (or equivalent) of any state thereof, to maintain
and prosecute each application and registration of Company patents, trademarks
and copyrights, including, without limitation, filing of renewals, extensions,
affidavits of use and incontestability, and opposition, interference and
cancellation proceedings.
(v) Infringement. With respect to each Company, in the event
that any Company patent, trademark, or copyright is infringed, misappropriated
or diluted by a third party, the Company shall, unless the Company shall
determine in its reasonable business judgment that such trademark, patent or
copyright is of negligible economic value to the business of the Company,
promptly xxx for infringement, misappropriation and/or dilution and to obtain
injunctive relief and recover damages therefor, and shall take such other
actions to protect such patent, trademark, or copyright, all as the Company
shall deem appropriate in its reasonable business judgment under the
circumstances.
(q) Investments. No Company will invest (as a shareholder, partner, lender
or otherwise) in any other corporation, partnership, joint venture or any
other entity.
(r) Merger, Consolidation, Sale of Assets, Etc. No Company shall issue or
agree to issue any additional ownership interests or cause any division or
splitting of any such ownership interests, reclassification, exchange or
substitution thereof or approve or agree to any reorganization, merger,
consolidation or combination with any corporation or other entity or sell or
lease (as lessor) more than 5 percent of the Company's total consolidated
assets in any 12-month period (other than mortgages, deeds of trust, pledges
or other hypothecations of real or personal property approved by the Managers,
and other than sales or other dispositions of inventory in the normal course
of business), or liquidate, dissolve recapitalize or reorganize in any form of
transaction. Without the prior written consent of PSO, no Company will
acquire any corporation or other entity nor purchase nor lease (as lessee) all
or a substantial portion of the assets, property, business stock or other
securities or interests of another corporation or entity.
(s) Insider Transactions. The Company shall not engage in any transaction
with any of the Company's Managers or Members except (i) as provided in this
Agreement or any related Agreement, (ii) reimbursements of reasonable expenses
incurred in the ordinary course of business, and (iii) as provided in
employment arrangements which are terminable by the Company at will without
penalty upon not more than 30 days notice.
(t) Organic Changes. No Company shall adopt any amendment, modification or
waiver of any provision of its Operating Agreement or Articles of
Organization, make any change in its capital structure by reclassification,
subdivision, reorganization or otherwise, or merge or consolidate with any
other corporation, partnership trust or entity.
(u) Priority of the PSO Notes. Management shall not issue, or enter into
any agreement providing for the issuance (contingent or otherwise) of any
interest in Management that is equal or senior to the PSO Note and the Xxxxx
Note in terms of priority with respect to the distribution of assets upon
liquidation.
(v) Conflicting Agreements or Actions. No Company shall enter into any
agreement or make any amendment to any agreement or take any other action
which would restrict or adversely affect the Company's performance of its
obligations to PSO under its Articles of Organization, as amended, its
Operating Agreement, this Agreement or any agreement referred to herein.
(w) Capital Expenditures. No Company will make capital expenditure or
research and development expenditure nor acquire capital assets not for resale
in excess of 110% of the amount set forth in the Business Plan during any one
fiscal year.
(x) Assignment. No Company will directly or indirectly, assign or transfer,
or attempt to do so, any of its rights, powers, duties or obligations under
this Agreement or any agreement or document relating thereto.
8. Events of Default.
Each of the following events shall be an "Event of Default"
(collectively, the "Events of Default"):
(a) The Companies shall fail to meet at least 60% of the
EBITDA financial goals of the Business Plan attached hereto as Exhibit K, or
shall fail to meet at least 80% of the financial EBITDA goals of the Business
Plan Management is to prepare by October 1995 (the "October Business Plan").
(b) The Companies shall exceed 105% of the budgeted expense
for any quarter, as set forth in the October Business Plan.
(c) Any Company shall default in the payment when due of any
principal or interest on any note or shall default under or fail to perform or
observe any material term, covenant or agreement contained in, any material
agreement, document or instrument to which it is a party or to which it or its
assets is bound, including any obligation for borrowed money or for the
purchase price of property, and such default or failure to perform shall
continue and remain unwaived by the obligee for more than 60 days or any
applicable period of grace therein specified, whichever is longer, except
where the Company is in good faith and through appropriate proceedings
contesting such default or failure to perform.
(d) Any representation or warranty made herein or in
connection with the transactions contemplated in this Agreement shall prove to
have been false or incorrect on the date as of which made resulting in a
material adverse effect on the Company and such false or incorrect
representation or warranty shall not have been remedied within 10 days after
written notice thereof shall have given to the Company.
(e) Any Company shall make an assignment for the benefit of
creditors, or shall admit in writing its inability to pay its debts as they
become due, or an order for relief is entered against the Company under any
bankruptcy laws or the Company shall file any petition or answer seeking for
itself any reorganization, arrangement, composition, readjustment, dissolution
or similar relief under any present or future statute, law or regulation, or
shall file an answer admitting the material allegations of a petition filed
against the Company in any such proceeding, or shall seek or consent to the
acquiesce in the appointment of any trustee, receiver or liquidator of the
Company of all or any substantial part of the properties of the Company, or
the Company or its Managers or majority of its Members shall take any action
looking to the dissolution or liquidation of the Company and such has not been
remedied.
(f) With respect to any Company, there occurs any event that,
under the laws of the State of Oklahoma, would result in the dissolution of
the Company.
9. Remedies on Default.
(a) Contracts. Upon the occurrence of any Event of Default,
PSO may proceed to protect and enforce its rights by a suit in equity, action
at law or other appropriate proceeding including but not limited to the
enforcement of any rights under any of the other documents executed and
delivered in connection herewith whether for the collection of amounts due on
the PSO Note (by acceleration or otherwise), for the specific performance of
any agreement contained herein or in the Operating Agreement or in the PSO
Note or in any other documents executed and delivered in connection herewith
or for an inunction against a violation of any of the terms or provisions
hereof or thereof or in aid of the exercise of any power granted hereby or
thereby or by law. In case of a default in the payment of any principal of or
interest on the PSO Note, Management will pay to the holder thereof such
further amount as shall be sufficient to cover the reasonable cost and expense
of collection, including (without limitation) reasonable attorneys' fees.
(b) Reallocation of Voting Rights. Notwithstanding the
parties' respective percentages of Unit ownership in the Companies, Voting
Rights (as such term is defined in the Operating Agreement of each Company)
with respect to all matters coming before a vote of the Members of each
Company shall be apportioned as follows:
(i) Management. Prior to the occurrence of an Event of
Default, the Voting Rights of the Members of Management shall be apportioned
4% for PSO, 48% for Xxxxx, and 48% for Monika. Upon occurrence of an Event of
Default, the Voting Rights shall be reapportioned between PSO on the one hand,
and Xxxxx and Xxxxxx on the other hand, in proportion to the respective
amounts of principal and accrued interest then outstanding under the PSO Note
and the Xxxxx Note. For example, if at the time an Event of Default occurs,
the amounts of principal and accrued interest outstanding under the PSO Note
and Xxxxx Note are $2 Million and $500,000, respectively, PSO would be
entitled to 80% of the Voting Rights, Xxxxx 10%, and Monika 10%.
(ii) Marketing; Development; Training.
Voting Rights
Before After
Member Event of Default Event of Default
PSO 4% 0%
Xxxxx 45 1/2% 0%
Xxxxxxxxxx 45 1/2% 0%
Management 5% 100%
100% 100%
(c) No Waiver. No course of dealing and no delay on the part
of PSO in exercising any right shall operate as a waiver thereof or otherwise
prejudice PSO's rights. No remedy conferred hereby or by any of the other
documents executed and delivered in connection herewith shall be exclusive of
any other remedy referred to herein or therein or now or hereafter available
at law, in equity, by statute or otherwise.
10. Notices.
All notices required or given under this Agreement shall be in
writing and shall be deemed given (i) when received, if personally delivered;
(ii) the day after it is sent, if sent by a recognized expedited delivery
service with next-day delivery requested; or (iii) five days after it is sent,
if mailed, postage prepaid, via certified mail, return receipt requested. In
each case, notice shall be sent to:
If to PSO: Public Service Company of Oklahoma
000 Xxxx 0xx Xxxxxx
Xxxxx, XX 00000-0000
Attn: Xxxxxx X. Xxxxxxxx
If to any other party: Xxxxxxx X. Xxxxx
00000 Xxxxx Xxxxxx
Xxxxx, XX 00000
or such other addresses as such party shall have specified by notice in
writing to the other party.
11. General.
(a) This Agreement constitutes the whole and entire agreement
between the parties pertaining to the subject matter hereof, and supersedes
all prior agreements or understandings. This Agreement may not be modified
except by an instrument in writing signed by all parties.
(b) The validity, construction and enforcement of, and the
remedies under, this Agreement shall be governed in accordance with the laws
of Oklahoma, except any choice of law provision of Oklahoma law shall not
apply if the law of a state or jurisdiction other than Oklahoma would apply
thereby.
(c) The parties to this Agreement agree that jurisdiction and
venue of any action brought to enforce, or to construe or determine the
validity of, any term or provision contained in this agreement shall properly
lie in the District Court of Tulsa County, Oklahoma, or the United States
District Court for the Northern District of Oklahoma.
(d) This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective personal representatives,
successors and permitted assigns. No party may assign its, his or her
obligations hereunder without the prior written consent of all other parties;
provided, however, without the prior consent of any other party, PSO may
assign this Agreement (including the PSO Note) to its parent corporation,
Central and South West Corporation, or any direct or indirect subsidiary of
such parent.
(e) The headings contained in this Agreement are for reference
purposes only and shall not affect the meaning or interpretation of this
Agreement.
(f) Each party to this Agreement shall bear its, his or her
own expenses incurred in connection with negotiation, preparation and
execution of this Agreement and the transactions contemplated herein.
(g) The terms of this Agreement shall remain confidential
between the parties, except that without the consent of any other party, PSO
may disclose such terms and furnish a copy of this Agreement to its parent
corporation and affiliates described in Section 11(e) above, and to any
governmental agency having jurisdiction over PSO or any such entity.
(h) If any action is brought to enforce, or to construe or
determine the validity of, any term or provision of this agreement, the
prevailing party shall be entitled to reasonable attorney's fees and costs of
the action.
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first above written.
Public Service Company of Oklahoma
By:
Title:
Xxxxxxx X. Xxxxx
Xxxxxx Xxxxx
Xxxxxx X. Xxxxxxxxxx
RIKA Management Company, L.L.C.
By:
Xxxxxxx X. Xxxxx, Manager
Universal Power Products
Company,L.L.C. d/b/a
Relay Concepts
By:
Xxxxxxx X. Xxxxx, Manager
Automated Substation
DevelopmentCompany, L.L.C.
By:
Xxxxxxx X. Xxxxx, Manager
RC Training, L.L.C.
By:
Xxxxxxx X. Xxxxx, Manager
