EXHIBIT 3.1
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
CPL TRANSITION FUNDING LLC
Dated and Effective as of
February 7, 2002
Table of Contents
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ARTICLE I
GENERAL PROVISIONS
SECTION 1.01 Definitions.........................................................................................1
SECTION 1.02 Sole Member; Registered Office and Agent............................................................2
SECTION 1.03 Other Offices.......................................................................................3
SECTION 1.04 Name................................................................................................3
SECTION 1.05 Purpose; Nature of Business Permitted; Powers.......................................................3
SECTION 1.06 Limited Liability Company Agreement; Certificate of Formation.......................................5
SECTION 1.07 Separate Existence..................................................................................5
SECTION 1.08 Limitation on Certain Activities....................................................................8
SECTION 1.09 No State Law Partnership............................................................................9
ARTICLE II
CAPITAL
SECTION 2.01 Initial Capital.....................................................................................9
SECTION 2.02 Additional Capital Contributions....................................................................9
SECTION 2.03 Capital Account....................................................................................10
SECTION 2.04 Interest...........................................................................................10
ARTICLE III
ALLOCATIONS; BOOKS
SECTION 3.01 Allocations of Income and Loss.....................................................................10
SECTION 3.02 Company to be Disregarded for Tax Purposes.........................................................11
SECTION 3.03 Books of Account...................................................................................11
SECTION 3.04 Access to Accounting Records.......................................................................11
SECTION 3.05 Annual Tax Information.............................................................................11
SECTION 3.06 Internal Revenue Service Communications............................................................11
ARTICLE IV
MEMBER
SECTION 4.01 Powers.............................................................................................11
SECTION 4.02 Compensation of Member.............................................................................12
SECTION 4.03 Other Ventures.....................................................................................13
SECTION 4.04 Actions by the Member..............................................................................13
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Table of Contents
(continued)
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ARTICLE V
OFFICERS
SECTION 5.01 Designation; Term; Qualifications..................................................................13
SECTION 5.02 Removal and Resignation............................................................................14
SECTION 5.03 Vacancies..........................................................................................14
SECTION 5.04 Compensation.......................................................................................14
ARTICLE VI
MEMBERSHIP INTEREST
SECTION 6.01 General............................................................................................15
SECTION 6.02 Distributions......................................................................................15
SECTION 6.03 Rights on Liquidation, Dissolution or Winding Up...................................................15
SECTION 6.04 Redemption.........................................................................................15
SECTION 6.05 Voting Rights......................................................................................15
SECTION 6.06 Transfer of Membership Interests...................................................................15
SECTION 6.07 Admission of Transferee as Member..................................................................16
ARTICLE VII
MANAGERS
SECTION 7.01 Managers...........................................................................................16
SECTION 7.02 Powers of the Managers.............................................................................17
SECTION 7.03 Compensation.......................................................................................17
SECTION 7.04 Removal of Managers................................................................................17
SECTION 7.05 Resignation of Manager.............................................................................18
SECTION 7.06 Vacancies..........................................................................................18
SECTION 7.07 Meetings of the Managers...........................................................................18
SECTION 7.08 Electronic Communications..........................................................................18
SECTION 7.09 Committees of Managers.............................................................................18
SECTION 7.10 Limitations on Independent Managers................................................................19
ARTICLE VIII
EXPENSES
SECTION 8.01 Expenses...........................................................................................19
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Table of Contents
(continued)
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ARTICLE IX
PERPETUAL EXISTENCE; DISSOLUTION, LIQUIDATION AND WINDING-UP
SECTION 9.01 Existence..........................................................................................20
SECTION 9.02 Dissolution........................................................................................20
SECTION 9.03 Accounting.........................................................................................20
SECTION 9.04 Certificate of Cancellation........................................................................20
SECTION 9.05 Winding Up.........................................................................................21
SECTION 9.06 Order of Payment of Liabilities Upon Dissolution...................................................21
SECTION 9.07 Limitations on Payments Made in Dissolution........................................................21
SECTION 9.08 Limitation on Liability............................................................................21
ARTICLE X
INDEMNIFICATION
SECTION 10.01 Indemnity.........................................................................................21
SECTION 10.02 Indemnity for Actions By or In the Right of the Company...........................................22
SECTION 10.03 Indemnity If Successful...........................................................................22
SECTION 10.04 Expenses..........................................................................................22
SECTION 10.05 Advance Payment of Expenses.......................................................................23
SECTION 10.06 Other Arrangements Not Excluded...................................................................23
ARTICLE XI
MISCELLANEOUS PROVISIONS
SECTION 11.01 Amendments........................................................................................23
SECTION 11.02 PUCT Condition....................................................................................24
SECTION 11.03 Governing Law.....................................................................................25
SECTION 11.04 Headings..........................................................................................25
SECTION 11.05 Severability......................................................................................25
SECTION 11.06 Assigns...........................................................................................25
SECTION 11.07 Enforcement by Independent Managers...............................................................25
SECTION 11.08 Waiver of Partition; Nature of Interest...........................................................25
EXHIBITS AND SCHEDULES
Schedule A Schedule of Capital Contribution of Member
Schedule B Initial Managers
Schedule C Initial Officers
Exhibit A Management Agreement
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AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
CPL TRANSITION FUNDING LLC.
a
Delaware Limited Liability Company
This AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
(this "Agreement") of
CPL Transition Funding LLC, a
Delaware limited liability
company (the "Company"), is made and entered into as of February 7, 2002 by
Central Power and Light Company, a Texas corporation (including any additional
or successor members of the Company other than Special Members, the "Member").
WHEREAS, the Member has caused to be filed a Certificate of
Formation with the Secretary of State of the State of
Delaware to form the
Company under and pursuant to the LLC Act and has entered into a
Limited
Liability Company Agreement of the Company, dated as of October 28, 1999 (the
"Original LLC Agreement");
WHEREAS, in accordance with the LLC Act, the Member desires to
enter into this Agreement to amend and restate the terms of the Original LLC
Agreement and to set forth the rights, powers and interests of the Member with
respect to the Company and its Membership Interest therein and to provide for
the management of the business and operations of the Company.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained and other good and valuable consideration, the
receipt, adequacy and sufficiency of which are hereby acknowledged, the Member,
intending to be legally bound, hereby agrees to amend and restate in its
entirety the Original LLC Agreement as follows:
ARTICLE I
GENERAL PROVISIONS
SECTION 1.01 Definitions. (a) Unless otherwise defined herein,
capitalized terms used herein shall have the meanings assigned to them in that
certain Indenture (including Appendix A) dated as of February 7, 2002 between
the Company, as Note Issuer, and U.S. Bank National Association, as the
Indenture Trustee, as the same may be amended, supplemented or otherwise
modified from time to time.
(b) All terms defined in this Agreement shall have the defined
meanings when used in any certificate or other document made or delivered
pursuant hereto unless otherwise defined therein.
(c) The words "hereof," "herein," "hereunder" and words of
similar import, when used in this Agreement, shall refer to this Agreement as a
whole and not to any particular
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provision of this Agreement; Section, Schedule, Exhibit, Annex and Attachment
references contained in this Agreement are references to Sections, Schedules,
Exhibits, Annexes and Attachments in or to this Agreement unless otherwise
specified; and the term "including" shall mean "including without limitation."
(d) The definitions contained in this Agreement are applicable
to the singular as well as the plural forms of such terms.
(e) Non-capitalized terms used herein which are defined in the
Utilities Code shall, as the context requires, have the meanings assigned to
such terms in the Utilities Code, but without giving effect to amendments to the
Utilities Code.
SECTION 1.02 Sole Member; Registered Office and Agent. (a) The
initial sole member of the Company shall be Central Power and Light Company, a
Texas corporation, or any successor as sole member pursuant to Sections 1.02(c),
6.06 and 6.07. The registered office and registered agent of the Company in the
State of
Delaware shall be The Corporation Trust Company, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇. The Member may change said
registered office and agent from one location to another in the State of
Delaware. The Member shall provide notice of any such change to the Indenture
Trustee.
(b) Upon the occurrence of any event that causes the Member to
cease to be a member of the Company (other than (i) upon an assignment by the
Member of all of its limited liability company interest in the Company and the
admission of the transferee pursuant to Sections 6.06 and 6.07, or (ii) the
resignation of the Member and the admission of an additional member of the
Company pursuant to Sections 6.06 and 6.07), each Person acting as an
Independent Manager pursuant to the terms of this Agreement shall, without any
action of any Person and simultaneously with the Member ceasing to be a member
of the Company, automatically be admitted to the Company as a Special Member and
shall continue the Company without dissolution. No Special Member may resign
from the Company or transfer its rights as Special Member unless (i) a successor
Special Member has been admitted to the Company as Special Member by executing a
counterpart to this Agreement, and (ii) such successor has also accepted its
appointment as Independent Manager pursuant to this Agreement; provided,
however, the Special Members shall automatically cease to be members of the
Company upon the admission to the Company of a substitute Member. Upon the
occurrence of any event that causes there to be no Member of the Company, the
personal representative of such former Member shall be authorized to admit a
substitute Member of the Company pursuant to Sections 6.06 and 6.07, which
substitute Member shall be such personal representative or its nominee or
designee. Pending such admission of the personal representative or its nominee
or designee, as the case may be, as a substitute Member, such former Member (or
if such former Member no longer exists, its personal representative), shall
retain the limited liability company interest in the Company of such former
Member, including without limitation, all economic rights associated with such
interest (which economic rights shall continue to represent the sole economic
rights associated with any ownership interest in the Company). Upon the
admission to the Company of a substitute Member, such substitute Member shall
acquire, upon terms agreed to by the former Member (or its personal
representative) and the substitute Member, all right, title and interest in and
to such former Member's limited liability company interest in the Company. Each
Special Member shall be a member of the Company that has no interest in the
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profits, losses and capital of the Company and has no right to receive any
distributions of Company assets (and no Special Member shall be treated as a
member of the Company for federal income tax purposes). Pursuant to Section
18-301 of the LLC Act, a Special Member shall not be required to make any
capital contributions to the Company and shall not receive a limited liability
company interest in the Company. A Special Member, in its capacity as Special
Member, may not bind the Company. Except as required by any mandatory provision
of the LLC Act, each Special Member, in its capacity as Special Member, shall
have no right to vote on, approve or otherwise consent to any action by, or
matter relating to, the Company, including the merger, consolidation or
conversion of the Company. In order to implement the admission to the Company of
each Special Member, each Person acting as an Independent Manager pursuant to
this Agreement shall execute a counterpart to this Agreement. Prior to its
admission to the Company as Special Member, each Person acting as an Independent
Manager pursuant to this Agreement shall not be a member of the Company. A
"Special Member" means, upon such Person's admission to the Company as a member
of the Company pursuant to this Section 1.02(b), a Person acting as Independent
Manager, in such Person's capacity as a member of the Company. A Special Member
shall only have the rights and duties expressly set forth in this Agreement. For
purposes of this Agreement, a Special Member is not included within the defined
term "Member."
(c) In the event that the sole Member is converted to a Texas
limited liability company, then such limited liability company shall be the sole
Member of the Company without any further action by CPL or any amendment to this
Agreement.
(d) The Company may admit additional members with the
affirmative vote of a majority of the Managers, which vote must include the
affirmative vote of all of the Independent Managers. Notwithstanding the
preceding sentence, it shall be a condition to the admission of any additional
member that the sole Member shall have received an opinion of outside tax
counsel (as selected by the Member in form and substance reasonably satisfactory
to the Member and the Indenture Trustee) that the admission of such additional
member shall not cause the Company to be treated, for federal income tax
purposes, as having more than a "sole owner" and that the Company shall not be
treated, for federal income tax purposes, as an entity separate from such "sole
owner".
SECTION 1.03 Other Offices. The Company may have an office at
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, or at any other offices that
may at any time be established by the Member at any place or places within or
outside the State of
Delaware. The Member shall provide notice to the Indenture
Trustee of any change in the location of the Company's office.
SECTION 1.04 Name. The name of the Company shall be "
CPL
Transition Funding LLC." The name of the Company may be changed from time to
time by the Member with ten days' prior written notice to the Managers and the
Indenture Trustee, and the filing of an appropriate amendment to the Certificate
of Formation with the Secretary of State as required by the LLC Act.
SECTION 1.05 Purpose; Nature of Business Permitted; Powers.
The purposes for which the Company is formed are limited to:
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(a) acquire, own, hold, administer, service or enter into
agreements regarding the receipt and servicing of Transition Property
and the other Note Collateral, along with certain other related assets;
(b) manage, sell, assign, pledge, collect amounts due on or
otherwise deal with the Transition Property and the other Note
Collateral and related assets to be so acquired in accordance with the
terms of the Basic Documents;
(c) enter into, perform and comply with the Basic Documents
and enter into, perform and comply with such other agreements as may be
necessary or desirable in connection with the Basic Documents;
(d) file with the SEC one or more registration statements,
including any pre-effective or post-effective amendments thereto and
any registration statement filed pursuant to Rule 462(b) under the
Securities Act (including any prospectus supplement, prospectus and
exhibits contained therein) and file such applications, reports, surety
bonds, irrevocable consents, appointments of attorney for service of
process and other papers and documents necessary or desirable to
register the Notes under the securities or "Blue Sky" laws of various
jurisdictions;
(e) execute, deliver and issue Notes from time to time;
(f) pledge its interest in Transition Property and other Note
Collateral to the Indenture Trustee under the Indenture in order to
secure the Notes; and
(g) engage in any lawful act or activity and exercise any
powers permitted to limited liability companies formed under the laws
of the State of
Delaware that, in either case, are incidental to, or
necessary, suitable or convenient for the accomplishment of the
above-mentioned purposes.
The Company shall engage only in any activities related to the
foregoing purposes or required or authorized by the terms of the Basic Documents
or other agreements referenced above. The Company shall have all powers
reasonably incidental, necessary, suitable or convenient to effect the foregoing
purposes, including all powers granted under the LLC Act. The Company, the
Member, any Manager, including the Independent Managers (as defined herein), or
any officer of the Company, acting singly or collectively, on behalf of the
Company, may enter into and perform the Basic Documents and all registration
statements, documents, agreements, certificates or financing statements
contemplated thereby or related thereto, all without any further act, vote or
approval of any Member, Manager or other Person, notwithstanding any other
provision of this Agreement, the LLC Act, or other applicable law, rule or
regulation. The authorization set forth in the preceding sentence shall not be
deemed a restriction on the power and authority of the Member or any Manager,
including the Independent Managers, to enter into other agreements or documents
on behalf of the Company as authorized pursuant to this Agreement and the LLC
Act. The Company shall possess and may exercise all the powers and privileges
granted by the LLC Act or by any other law or by this Agreement, together with
any powers incidental thereto, insofar as such powers and privileges are
incidental,
4
necessary, suitable or convenient to the conduct, promotion or attainment of the
business purposes or activities of the Company.
SECTION 1.06
Limited Liability Company Agreement; Certificate
of Formation. This Agreement shall constitute a "
limited liability company
agreement" within the meaning of the LLC Act. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, as an
authorized person within the meaning of the LLC Act, has caused a certificate of
formation of the Company to be executed and filed in the office of the Secretary
of State of the State of
Delaware on October 28, 1999 (such execution and filing
being hereby ratified and approved in all respects).
SECTION 1.07 Separate Existence. Except for financial
reporting purposes (to the extent required by generally accepted accounting
principles) and for federal income tax purposes and, to the extent consistent
with applicable state tax law, state income and franchise tax purposes, the
Member and the Managers shall take all steps necessary to continue the identity
of the Company as a separate legal entity and to make it apparent to third
Persons that the Company is an entity with assets and liabilities distinct from
those of the Member, Affiliates of the Member or any other Person, and that, the
Company is not a division of any of the Affiliates of the Company or any other
Person. In that regard, and without limiting the foregoing in any manner, the
Company shall:
(a) maintain office space separate and clearly delineated from
the office space of any Affiliate, owned by the Company or evidenced by
a written lease or sublease (even if located in an office owned or
leased by, or shared with, an Affiliate);
(b) maintain the assets of the Company in such a manner that
it is not costly or difficult to segregate, identify or ascertain its
individual assets from those of any other Person, including any
Affiliate;
(c) maintain a separate telephone number which will be
answered only in its own name;
(d) conduct all transactions with Affiliates on an
arm's-length basis;
(e) not guarantee, become obligated for or pay the debts of
any Affiliate or hold the credit of the Company out as being available
to satisfy the obligations of any Affiliate or other Person (nor
indemnify any Person for losses resulting therefrom), nor have any of
its obligations guaranteed by any Affiliate or hold the Company out as
responsible for the debts of any Affiliate or other Person or for the
decisions or actions with respect to the business and affairs of any
Affiliate, nor seek or obtain credit or incur any obligation to any
third Party based upon the creditworthiness or assets of any Affiliate
or any other Person (i.e. other than based on the assets of the
Company) nor allow any Affiliate to do such things based on the credit
of the Company;
(f) except as expressly otherwise permitted hereunder or under
any of the Basic Documents, not permit the commingling or pooling of
the Company's funds or other assets with the funds or other assets of
any Affiliate;
5
(g) maintain separate deposit and other bank accounts and
funds to which no Affiliate has any access, which accounts shall be
maintained in the name and, to the extent not inconsistent with
applicable federal tax law, tax identification number of the Company;
(h) maintain full books of accounts and records (financial or
other) and financial statements separate from those of its Affiliates
or any other Person, prepared and maintained in accordance with
generally accepted accounting principals (including, all resolutions,
records, agreements or instruments underlying or regarding the
transactions contemplated by the Basic Documents or otherwise) and
audited annually by an independent accounting firm which shall provide
such audit to the Indenture Trustee;
(i) compensate (either directly or through reimbursement of
the Company's allocable share of any shared expenses) all employees,
consultants and agents and Affiliates, to the extent applicable, for
services provided to the Company by such employees, consultants and
agents or Affiliates, in each case, from the Company's own funds and
maintain a sufficient number of employees in light of its contemplated
operations;
(j) pay from its own bank accounts for accounting and payroll
services, rent, lease and other expenses (or the Company's allocable
share of any such amounts provided by one or more other Affiliate) and
not have such operating expenses (or the Company's allocable share
thereof) paid by any Affiliates, provided, that the Member shall be
permitted to pay the initial organization expenses of the Company and
certain of the expenses related to the transactions contemplated by the
Basic Documents as provided therein;
(k) maintain adequate capitalization to conduct its business
and affairs considering the Company's size and the nature of its
business and intended purposes and, after giving effect to the
transactions contemplated by the Basic Documents, refrain from engaging
in a business for which its remaining property represents an
unreasonably small capital;
(l) conduct all of the Company's business (whether in writing
or orally) solely in the name of the Company through the Member and the
Company's Managers, employees, officers and agents and hold the Company
out as an entity separate from any Affiliate;
(m) not make or declare any distributions of cash or property
to the Member except in accordance with appropriate limited liability
company formalities and only consistent with sound business judgment to
the extent that it is permitted pursuant to the Basic Documents and not
violative of any applicable law;
(n) otherwise practice and adhere to all limited liability
company procedures and formalities to the extent required by this
Agreement or all other appropriate constituent documents;
6
(o) not appoint an Affiliate or any employee of an Affiliate
as an agent of the Company, except as otherwise permitted in the Basic
Documents (although such Persons can qualify as a Manager or as an
officer of the Company);
(p) not acquire obligations or securities of or make loans or
advances to or pledge its assets for the benefit of any Affiliate, the
Member or any Affiliate of the Member;
(q) not permit the Member or any Affiliate to acquire
obligations of or make loans or advances to the Company;
(r) except as expressly provided in the Basic Documents, not
permit the Member or any Affiliate to guarantee, pay or become liable
for the debts of the Company nor permit any such Person to hold out its
creditworthiness as being available to pay the liabilities and expenses
of the Company nor, except for the indemnities in this Agreement and
the Basic Documents, indemnify any Person for losses resulting
therefrom;
(s) maintain separate minutes of the actions of the Member and
the Managers, including the transactions contemplated by the Basic
Documents;
(t) cause (i) all written and oral communications, including
letters, invoices, purchase orders, and contracts, of the Company to be
made solely in the name of the Company, (ii) the Company to have its
own tax identification number (to the extent not inconsistent with
applicable federal tax law), stationery, checks and business forms,
separate from those of any Affiliate, (iii) all Affiliates not to use
the stationery or business forms of the Company, and cause the Company
not to use the stationery or business forms of any Affiliate, and (iv)
all Affiliates not to conduct business in the name of the Company, and
cause the Company not to conduct business in the name of any Affiliate;
(u) direct creditors of the Company to send invoices and other
statements of account of the Company directly to the Company and not to
any Affiliate and cause the Affiliates to direct their creditors not to
send invoices and other statements of accounts of such Affiliates to
the Company;
(v) cause the Member to maintain as official records all
resolutions, agreements, and other instruments underlying or regarding
the transactions contemplated by the Basic Documents;
(w) disclose, and cause the Member to disclose, in its
financial statements the effects of all transactions between the Member
and the Company in accordance with generally accepted accounting
principles, and in a manner which makes it clear that (i) the Company
is a separate legal entity, (ii) the assets of the Company (including
the Transition Property transferred to the Company pursuant to the Sale
Agreement) are not assets of any Affiliate and are not available to pay
creditors of any Affiliate and (iii) neither the Member nor any other
Affiliate is liable or responsible for the debts of the Company;
7
(x) treat and cause the Member to treat the transfer of
Transition Property from the Member to the Company as a sale under the
Utilities Code;
(y) except as described herein with respect to tax purposes
and financial reporting, describe and cause each Affiliate to describe
the Company, and hold the Company out as a separate legal entity and
not as a division or department of any Affiliate, and promptly correct
any known misunderstanding regarding the Company's identity separate
from any Affiliate or any Person;
(z) so long as any of the Notes are outstanding, treat the
Notes as debt for all purposes and specifically as debt of the Company,
other than for financial reporting or tax purposes or as required under
the Public Utility Holding Company Act of 1935, as amended;
(aa) solely for purposes of federal taxes and, to the extent
consistent with applicable state, local and other tax law, solely for
purposes of state, local and other taxes, so long as any of the Notes
are outstanding, treat the Notes as indebtedness of the Member secured
by the Note Collateral unless otherwise required by appropriate taxing
authorities;
(bb) maintain its valid existence in good standing under the
laws of the State of
Delaware and maintain its qualification to do
business under the laws of such other jurisdictions as its operations
require;
(cc) comply with all laws applicable to the transactions
contemplated by this Agreement and the Basic Documents; and
(dd) cause the Member to observe in all material respects all
limited liability company procedures and formalities, if any, required
by its constituent documents and the laws of its state of formation and
all other appropriate jurisdictions.
SECTION 1.08 Limitation on Certain Activities. Notwithstanding
any other provisions of this Agreement, the Company, and the Member or Managers
on behalf of the Company, shall not:
(a) engage in any business or activity other than as set forth
in Article I hereof;
(b) without the affirmative vote of its Member and the
affirmative vote of all of the Managers, including two Independent
Managers, file a voluntary petition for relief under the Bankruptcy
Code or similar law, consent to the institution of insolvency or
bankruptcy proceedings against the Company or otherwise institute
insolvency or bankruptcy proceedings with respect to the Company or
take any company action in furtherance of any such filing or
institution of a proceeding;
(c) without the affirmative vote of all Managers, including
two of the Independent Managers, and then only to the extent permitted
by the Basic Documents, convert, merge or consolidate with any other
Person or sell all or substantially all of its
8
assets or acquire all or substantially all of the assets or capital
stock or other ownership interest of any other Person;
(d) take any action, file any tax return, or make any election
inconsistent with the treatment of the Company, for purposes of federal
taxes and, to the extent consistent with applicable state tax law,
state income and franchise tax purposes, as a disregarded entity that
is not separate from the Member;
(e) incur any indebtedness or assume or guarantee any
indebtedness of any Person (other than the indebtedness incurred under
the Basic Documents); or
(f) to the fullest extent permitted by law, without the
affirmative vote of its Member and the affirmative vote of all
Managers, including two Independent Managers, execute any dissolution,
liquidation, or winding up of the Company.
To the fullest extent permitted by applicable law, including Section 18-1101(c)
of the LLC Act, the fiduciary duty of each Manager, including the two
Independent Managers, in respect of any decision on any matter referred to in
this Section 1.08 shall be owed solely to the Company (including its creditors)
and not to the Member or any other holders of equity interest in the Company as
may exist at such time.
SECTION 1.09 No State Law Partnership. No provisions of this
Agreement shall be deemed or construed to constitute a partnership (including a
limited partnership) or joint venture, or the Member a partner or joint venturer
of or with any Manager or the Company, for any purposes.
ARTICLE II
CAPITAL
SECTION 2.01 Initial Capital. The initial capital of the
Company shall be the sum of cash contributed to the Company by the Member (the
"Capital Contribution") in the amount set out opposite the name of the Member on
Schedule A hereto, as amended from time to time and incorporated herein by this
reference.
SECTION 2.02 Additional Capital Contributions. The assets of
the Company are expected to generate a return sufficient to satisfy all
obligations of the Company under this Agreement and the Basic Documents and any
other obligations of the Company. It is expected that no capital contributions
to the Company will be necessary after the purchase of the initial Transition
Property, except for capital contributions in connection with the issuance of
additional Series of Notes. On or prior to the date of issuance of each Series
of Notes, the Member shall make an additional contribution to the Company in an
amount equal to at least 0.50% of the initial principal amount of such Series
(less, to the extent permitted by any Subsequent Financing Order and subject to
the discretion of the Member, any amount of the proceeds of such Series retained
by the Company in substitution for such additional contribution) or such greater
amount as agreed to by the Member in connection with the issuance by the Company
of any Series of Notes which amount the Company shall deposit into the Capital
Subaccount established by the Company as provided under Section 8.02 of the
Indenture. No capital contribution by the
9
Member to the Company will be made for the purpose of mitigating losses on
Transition Property that has previously been transferred to the Company, and all
capital contributions shall be made in accordance with all applicable limited
liability company procedures and requirements, including proper record keeping
by the Member and the Company. Each capital contribution will be acknowledged by
a written receipt signed by any one of the Managers. The Managers acknowledge
and agree that, notwithstanding anything in this Agreement to the contrary, such
additional contribution will be managed by an investment manager selected by the
Member who shall invest such amounts only in Eligible Investments, and all
income earned thereon shall be allocated or paid by the Indenture Trustee in
accordance with the provisions of the Indenture.
SECTION 2.03 Capital Account. A Capital Account shall be
established and maintained for the Member on the Company's books (the "Capital
Account").
SECTION 2.04 Interest. No interest shall be paid or credited
to the Member on its Capital Account or upon any undistributed profits left on
deposit with the Company. Except as provided herein or by law, the Member shall
have no right to demand or receive the return of its Capital Contribution.
ARTICLE III
ALLOCATIONS; BOOKS
SECTION 3.01 Allocations of Income and Loss.
(a) Book Allocations. The net income and net loss of the
Company shall be allocated entirely to the Member.
(b) Tax Allocations. Because the Company is not making (and
will not make) an election to be treated as an association taxable as a
corporation under Section 301.7701-3(a) of the Treasury Regulations, and because
the Company is a business entity that has a single owner and is not a
corporation, it is expected to be disregarded as an entity separate from its
owner for federal income tax purposes under Section 301.7701-3(b)(1) of the
Treasury Regulations. Accordingly, all items of income, gain, loss, deduction
and credit of the Company for all taxable periods will be treated for federal
income tax purposes, and for state and local income and other tax purposes to
the extent permitted by applicable law, as realized or incurred directly by the
Member. To the extent not so permitted, all items of income, gain, loss,
deduction and credit of the Company shall be allocated entirely to the Member as
permitted by applicable tax law, and the Member shall pay (or indemnify the
Company, the Indenture Trustee and each of their officers, managers, employees
or agents for, and defend and hold harmless each such person from and against
its payment of) any taxes levied or assessed upon all or any part of the
Company's property or assets based on existing law as of the date hereof,
including any sales, gross receipts, general corporation, personal property,
privilege, franchise or license taxes (but excluding any taxes imposed as a
result of a failure of such person to properly withhold or remit taxes imposed
with respect to payments on any Note). The Indenture Trustee (for itself and on
behalf of Noteholders) shall be third party beneficiaries of the Member's
obligations set forth in this Section 3.01, it being understood that Noteholders
shall be entitled to enforce their rights
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against the Member under this Section 3.01 solely through a cause of action
brought for their benefit by the Indenture Trustee.
SECTION 3.02 Company to be Disregarded for Tax Purposes. The
Company shall comply with the applicable provisions of the Code and the
applicable Treasury Regulations thereunder in the manner necessary to effect the
intention of the parties that the Company be treated, for federal income tax
purposes, as a disregarded entity that is not separate from the Member pursuant
to Treasury Regulations Section 301.7701-1 et seq. and that the Company be
accorded such treatment until its dissolution pursuant to Article IX hereof and
shall take all actions, and shall refrain from taking any action, required by
the Code or Treasury Regulations thereunder in order to maintain such status of
the Company. In addition, for federal income tax purposes, the Company may not
claim any credit on, or make any deduction from the principal or premium, if
any, or interest payable in respect of, the Notes (other than amounts properly
withheld from such payments under the Code or other tax laws) or assert any
claim against any present or former Noteholder by reason of the payment of the
taxes levied or assessed upon any part of the Note Collateral.
SECTION 3.03 Books of Account. At all times during the
continuance of the Company, the Company shall maintain or cause to be maintained
full, true, complete and correct books of account in accordance with generally
accepted accounting principles, using the fiscal year and taxable year of the
Member. In addition, the Company shall keep all records required to be kept
pursuant to the LLC Act.
SECTION 3.04 Access to Accounting Records. All books and
records of the Company shall be maintained at any office of the Company or at
the Company's principal place of business, and the Member, and its duly
authorized representative, shall have access to them at such office of the
Company and the right to inspect and copy them at reasonable times.
SECTION 3.05 Annual Tax Information. The Managers shall cause
the Company to deliver to the Member all information necessary for the
preparation of the Member's federal income tax return.
SECTION 3.06 Internal Revenue Service Communications. The
Member shall communicate and negotiate with the Internal Revenue Service on any
federal tax matter on behalf of the Member and the Company.
ARTICLE IV
MEMBER
SECTION 4.01 Powers. Subject to the provisions of this
Agreement and the LLC Act, all powers shall be exercised by or under the
authority of, and the business and affairs of the Company shall be controlled
by, the Member pursuant to Section 4.04. The Member may delegate any or all such
powers to the Managers. Without prejudice to such general powers, but subject to
the same limitations, it is hereby expressly declared that the Member shall have
the following powers:
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First - To select and remove the Managers and all officers,
agents and employees of the Company, prescribe such powers and duties for them
as may be consistent with the LLC Act and other applicable law and this
Agreement, fix their compensation, and require from them security for faithful
service; provided, that, except as provided in Section 7.06, at all times the
Company shall have at least two Independent Managers. Prior to issuance of any
Notes, the Member shall appoint two Independent Managers. An "Independent
Manager" is a Manager that is a natural person and is not and has not been for
at least five years from the date of his or her or its appointment (i) a direct
or indirect legal or beneficial owner of the Company or the Member or any of
their respective Affiliates, (ii) a relative, supplier, employee, officer,
director (other than as an independent director), manager (other than as an
independent manager), contractor or material creditor of the Company or the
Member or any of their respective Affiliates or (iii) a Person who controls
(whether directly, indirectly or otherwise) the Member or its Affiliates or any
creditor, employee, officer, director, manager or material supplier or
contractor of the Member or its Affiliates. All right, power and authority of
the Independent Managers shall be limited to the extent necessary to exercise
those rights and perform those duties specifically set forth in this Agreement.
Except as provided in this Agreement, including Section 1.08, in exercising
their rights and performing their duties under this Agreement, any Independent
Manager shall have a fiduciary duty of loyalty and care similar to that of a
director of a business corporation organized under the General Corporation Law
of the State of
Delaware. No Independent Manager shall at any time serve as
trustee in bankruptcy for any Affiliate of the Company. The Company shall pay,
directly or indirectly, the Independent Managers annual fees totaling not more
than $5,000 per year. Such fees shall be determined without regard to the income
of the Company, shall not be deemed to constitute distributions to the recipient
of any profit, loss or capital of the Company and shall be considered a fixed
Operating Expense of the Company subject to the limitations on such expenses set
forth in the Financing Order. Each Manager, including each Independent Manager,
is hereby deemed to be a "manager" within the meaning 18-101(10) of the LLC Act.
Second - Subject to Article VII hereof, to conduct, manage and
control the affairs and business of the Company, and to make such rules and
regulations therefor consistent with the LLC Act and other applicable law and
this Agreement.
Third - To change the registered agent and office of the
Company in Delaware from one location to another; to fix and locate from time to
time one or more other offices of the Company; and to designate any place within
or without the State of Delaware for the conduct of the business of the Company.
SECTION 4.02 Compensation of Member. To the extent permitted
by applicable law, the Company shall have authority to reimburse the Member for
out-of-pocket expenses incurred by the Member in connection with its service to
the Company. It is understood that the compensation paid to the Member under the
provisions of this Section 4.02 shall be determined without regard to the income
of the Company, shall not be deemed to constitute distributions to the recipient
of any profit, loss or capital of the Company and shall be considered as a fixed
Operating Expense of the Company subject to the limitations on such expenses set
forth in the Financing Order.
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SECTION 4.03 Other Ventures. It is expressly agreed that the
Member, the Managers and any Affiliates, officers, directors, managers,
stockholders, partners or employees of the Member, may engage in other business
ventures of any nature and description, whether or not in competition with the
Company, independently or with others, and the Company shall not have any rights
in and to any independent venture or activity or the income or profits derived
therefrom.
SECTION 4.04 Actions by the Member. All actions of the Member
may be taken by written resolution of the Member which shall be signed on behalf
of the Member by an authorized officer of the Member and filed with the records
of the Company.
ARTICLE V
OFFICERS
SECTION 5.01 Designation; Term; Qualifications. (a) The
Managers may, from time to time, designate one or more Persons to be officers of
the Company. Any officer so designated shall have such title and authority and
perform such duties as the Managers may, from time to time, delegate to them.
Each officer shall hold office for the term for which such officer is designated
and until its successor shall be duly designated and shall qualify or until its
death, resignation or removal as provided in this Agreement. Any Person may hold
any number of offices. No officer need be a Manager, the Member, a Delaware
resident, or a United States citizen. The Member hereby appoints the Persons
identified on Schedule C to be the initial officers of the Company.
(b) President. The President shall be the chief executive
officer of the Company, shall preside at all meetings of the Managers, shall be
responsible for the general and active management of the business of the Company
and shall see that all orders and resolutions of the Managers are carried into
effect. The President or any other officer authorized by the President or the
Managers may execute all contracts, except: (i) where required or permitted by
law or this Agreement to be otherwise signed and executed, including Section
1.08; and (ii) where signing and execution thereof shall be expressly delegated
by the Managers to some other officer or agent of the Company.
(c) Vice President. In the absence of the President or in the
event of the President's inability to act, the Vice President, if any (or in the
event there be more than one Vice President, the Vice Presidents in the order
designated by the Managers, or in the absence of any designation, then in the
order of their election), shall perform the duties of the President, and when so
acting, shall have all the powers of and be subject to all the restrictions upon
the President. The Vice Presidents, if any, shall perform such other duties and
have such other powers as the Managers may from time to time prescribe.
(d) Secretary and Assistant Secretary. The Secretary shall be
responsible for filing legal documents and maintaining records for the Company.
The Secretary shall attend all meetings of the Managers and record all the
proceedings of the meetings of the Company and of the Managers in a book to be
kept for that purpose and shall perform like duties for the standing committees
when required. The Secretary shall give, or shall cause to be given, notice of
all
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meetings of the Member, if any, and special meetings of the Managers, and shall
perform such other duties as may be prescribed by the Managers or the President,
under whose supervision the Secretary shall serve. The Assistant Secretary, or
if there be more than one, the Assistant Secretaries in the order determined by
the Managers (or if there be no such determination, then in order of their
designation), shall, in the absence of the Secretary or in the event of the
Secretary's inability to act, perform the duties and exercise the powers of the
Secretary and shall perform such other duties and have such other powers as the
Managers may from time to time prescribe.
(e) Treasurer and Assistant Treasurer. The Treasurer shall
have the custody of the Company funds and securities and shall keep full and
accurate accounts of receipts and disbursements in books belonging to the
Company and shall deposit all moneys and other valuable effects in the name and
to the credit of the Company in such depositories as may be designated by the
Manager. The Treasurer shall disburse the funds of the Company as may be ordered
by the Manager, taking proper vouchers for such disbursements, and shall render
to the President and to the Managers, at its regular meetings or when the
Managers so require, an account of all of the Treasurer's transactions and of
the financial condition of the Company. The Assistant Treasurer, or if there
shall be more than one, the Assistant Treasurers in the order determined by the
Managers (or if there be no such determination, then in the order of their
designation), shall, in the absence of the Treasurer or in the event of the
Treasurer's inability to act, perform the duties and exercise the powers of the
Treasurer and shall perform such other duties and have such other powers as the
Managers may from time to time prescribe.
(f) Officers as Agents. The officers of the Company, to the
extent their powers as set forth in this Agreement or otherwise vested in them
by action of the Managers are not inconsistent with this Agreement, are agents
of the Company for the purpose of the Company's business and, subject to Section
1.08, the actions of the officers taken in accordance with such powers shall
bind the Company.
(g) Duties of Managers and Officers. Except to the extent
otherwise provided herein, each Manager and officer of the Company shall have a
fiduciary duty of loyalty and care similar to that of directors and officers of
business corporations organized under the General Corporation Law of the State
of Delaware.
SECTION 5.02 Removal and Resignation. Any officer of the
Company may be removed as such, with or without cause, by the Managers at any
time. Any officer of the Company may resign as such at any time upon written
notice to the Company. Such resignation shall be made in writing and shall take
effect at the time specified therein or, if no time is specified therein, at the
time of its receipt by the Managers.
SECTION 5.03 Vacancies. Any vacancy occurring in any office of
the Company may be filled by the Managers.
SECTION 5.04 Compensation. The compensation, if any, of the
officers of the Company shall be fixed from time to time by the Managers. Such
compensation shall be determined without regard to the income of the Company,
shall not be deemed to constitute distributions to the recipient of any profit,
loss or capital of the Company and shall be considered
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a fixed Operating Expense of the Company subject to the limitations on such
expenses set forth in the Financing Order.
ARTICLE VI
MEMBERSHIP INTEREST
SECTION 6.01 General. "Membership Interest" means the limited
liability company interest of the Member in the Company. The Membership Interest
constitutes personal property and, subject to Section 6.06, shall be freely
transferable and assignable in whole but not in part upon registration of such
transfer and assignment on the books of the Company in accordance with the
procedures established for such purpose by the Managers of the Company.
SECTION 6.02 Distributions. The Member shall be entitled to
receive, out of the assets of the Company legally available therefor,
distributions payable in cash in such amounts, if any, as the Managers shall
declare. Notwithstanding any provision to the contrary contained in this
Agreement, the Company shall not be required to make a distribution to the
Member on account of its interest in the Company if such distribution would
violate Section 18-607 of the LLC Act or any other applicable law or any Basic
Document.
SECTION 6.03 Rights on Liquidation, Dissolution or Winding Up.
(a) In the event of any liquidation, dissolution or winding up of the Company,
the Member shall be entitled to all remaining assets of the Company available
for distribution to the Member after satisfaction (whether by payment or
reasonable provision for payment) of all liabilities, debts and obligations of
the Company.
(b) Neither the sale of all or substantially all of the
property or business of the Company, nor the merger or consolidation of the
Company into or with another Person or other entity, shall be deemed to be a
dissolution, liquidation or winding up, voluntary or involuntary, for the
purpose of this Section 6.03.
SECTION 6.04 Redemption. The Membership Interest shall not be
redeemable.
SECTION 6.05 Voting Rights. Subject to the terms of this
Agreement, the Member shall have the sole right to vote on all matters as to
which members of a limited liability company shall be entitled to vote pursuant
to the LLC Act and other applicable law.
SECTION 6.06 Transfer of Membership Interests. (a) The Member
may transfer its Membership Interest, in whole but not in part, but the
transferee shall not be admitted as a Member except in accordance with Section
6.07. Until the transferee is admitted as a Member, the Member shall continue to
be the sole member of the Company (subject to Section 1.02) and to be entitled
to exercise any rights or powers of a Member of the Company with respect to the
Membership Interest transferred.
(b) To the fullest extent permitted by law, any purported
transfer of any Membership Interest in violation of the provisions of this
Agreement shall be wholly void and shall not effectuate the transfer
contemplated thereby. Notwithstanding anything contained herein to the contrary
and to the fullest extent permitted by law, the Member may not transfer
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any Membership Interest in violation of any provision of this Agreement or in
violation of any applicable federal or state securities laws.
SECTION 6.07 Admission of Transferee as Member. (a) A
transferee of a Membership Interest desiring to be admitted as a Member must
execute a counterpart of, or an agreement adopting, this Agreement and, except
as permitted by paragraph (b) below, shall not be admitted without unanimous
affirmative vote of the Managers, which vote must include the affirmative vote
of two Independent Managers. Upon admission of the transferee as a Member, the
transferee shall have the rights, powers and duties and shall be subject to the
restrictions and liabilities of the Member under this Agreement and the LLC Act.
The transferee shall also be liable, to the extent of the Membership Interest
transferred, for the unfulfilled obligations, if any, of the transferor Member
to make capital contributions to the Company, but shall not be obligated for
liabilities unknown to the transferee at the time such transferee was admitted
as a Member and that could not be ascertained from this Agreement. Except as set
forth in paragraph (b) below, whether or not the transferee of a Membership
Interest becomes a Member, the Member transferring the Membership Interest is
not released from any liability to the Company under this Agreement or the LLC
Act.
(b) The approval of the Managers, including the Independent
Managers, shall not be required for the transfer of the Membership Interest from
the Member to any successor pursuant to Section 5.02 of the Sale Agreement or
the admission of such Person as a Member. Once the transferee of a Membership
Interest pursuant to this paragraph (b) becomes a Member, the prior Member shall
be released from any liability to the Company under this Agreement and the LLC
Act.
ARTICLE VII
MANAGERS
SECTION 7.01 Managers. (a) Subject to Section 1.08, the
business and affairs of the Company shall be managed by or under the direction
of two or more Managers designated by the Member. Subject to the terms of this
Agreement, the Member may determine at any time in its sole and absolute
discretion the number of Managers. Subject in all cases to the terms of this
Agreement, the authorized number of Managers may be increased or decreased by
the Member at any time in its sole and absolute discretion, upon notice to all
Managers; provided, that, except as provided in Section 7.06, at all times the
Company shall have at least two Independent Managers. The initial number of
Managers shall be five, two of which shall be Independent Managers. Each Manager
designated by the Member shall hold office until a successor is elected and
qualified or until such Manager's earlier death, resignation, expulsion or
removal. Each Manager shall execute and deliver the Management Agreement in the
form attached hereto as Exhibit A. Managers need not be a Member. The initial
Managers designated by the Member are listed on Schedule B hereto.
(b) Each Manager shall be designated by the Member and shall
hold office for the term for which designated and until a successor has been
designated.
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(c) The Managers shall be obliged to devote only as much of
their time to the Company's business as shall be reasonably required in light of
the Company's business and objectives. A Manager shall perform his or her duties
as a Manager in good faith, in a manner he or she reasonably believes to be in
the best interests of the Company, and with such care as an ordinarily prudent
Person in a like position would use under similar circumstances.
(d) Except as otherwise provided in this Agreement, the
Managers shall act by the affirmative vote of a majority of the Managers. Each
Manager shall have the authority to sign duly authorized agreements and other
instruments on behalf of the Company without the joinder of any other Manager.
(e) Subject to the terms of this Agreement, any action may be
taken by the Managers without a meeting and without prior notice if authorized
by the written consent of a majority of the Managers (or such greater number as
is required by this Agreement), which written consent shall be filed with the
records of the Company.
(f) Every Manager is an agent of the Company for the purpose
of its business, and the act of every Manager, including the execution in the
Company name of any instrument for carrying on the business of the Company,
binds the Company, unless such act is in contravention of this Agreement or
unless the Manager so acting otherwise lacks the authority to act for the
Company and the Person with whom he or she is dealing has knowledge of the fact
that he or she has no such authority.
SECTION 7.02 Powers of the Managers. Subject to the terms of
this Agreement, the Managers shall have the right and authority to take all
actions which the Managers deem incidental, necessary, suitable or convenient
for the day-to-day management and conduct of the Company's business.
Subject to the terms of this Agreement, the Managers may
exercise all powers of the Company and do all such lawful acts and things as are
not prohibited by the LLC Act, other applicable law or this Agreement directed
or required to be exercised or done by the Member. All duly authorized
instruments, contracts, agreements and documents providing for the acquisition
or disposition of property of the Company shall be valid and binding on the
Company if executed by one or more of the Managers.
SECTION 7.03 Compensation. To the extent permitted by
applicable law, the Company may reimburse any Manager, directly or indirectly,
for out-of-pocket expenses incurred by such Manager in connection with its
services rendered to the Company. Such compensation shall be determined by the
Managers without regard to the income of the Company, shall not be deemed to
constitute distributions to the recipient of any profit, loss or capital of the
Company and shall be considered a fixed Operating Expense of the Company subject
to the limitations on such expenses set forth in the Financing Order.
SECTION 7.04 Removal of Managers. (a) Subject to Section 4.01,
the Member may remove any Manager with or without cause at any time.
(b) Subject to Sections 4.01 and 7.05, any removal of a
Manager shall become effective on such date as may be specified by the Member
and in a notice delivered to any
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remaining Managers or the Manager designated to replace the removed Manager
(except that it shall not be effective on a date earlier than the date such
notice is delivered to the remaining or newly-elected Manager). Should a Manager
be removed who is also the Member, the Member shall continue to participate in
the Company as the Member and receive its share of the Company's income, gains,
losses, deductions and credits pursuant to this Agreement.
SECTION 7.05 Resignation of Manager. A Manager other than an
Independent Manager may resign as a Manager at any time by 30 days' prior notice
to the Member. An Independent Manager may not resign, withdraw or resign as a
Manager of the Company without the consent of the Member. No resignation or
removal of an Independent Manager, and no appointment of a successor Independent
Manager, shall be effective until such successor (i) shall have accepted his or
her appointment as an Independent Manager by a written instrument, which may be
a counterpart signature page to the Management Agreement, and (ii) shall have
executed a counterpart to this Agreement.
SECTION 7.06 Vacancies. Subject to Section 4.01, any vacancies
among the Managers may be filled by the Member. In the event of a vacancy in the
position of Independent Manager, the Member shall, as soon as practicable,
appoint a successor Independent Manager.
SECTION 7.07 Meetings of the Managers. The Managers may hold
meetings, both regular and special, within or outside the State of Delaware.
Regular meetings of the Managers may be held without notice at such time and at
such place as shall from time to time be determined by the Managers. Special
meetings of the Managers may be called by the President on not less than one
day's notice to each Manager by telephone, facsimile, mail, telegram or any
other means of communication, and special meetings shall be called by the
President or Secretary in like manner and with like notice upon the written
request of any one or more of the Managers.
SECTION 7.08 Electronic Communications. Managers, or any
committee designated by the Managers, may participate in meetings of the
Managers, or any committee, by means of telephone conference or similar
communications equipment that allows all Persons participating in the meeting to
hear each other, and such participation in a meeting shall constitute presence
in Person at the meeting. If all the participants are participating by telephone
conference or similar communications equipment, the meeting shall be deemed to
be held at the principal place of business of the Company.
SECTION 7.09 Committees of Managers.
(i) The Managers may, by resolution passed by a majority
of the Managers, designate one or more committees,
each committee to consist of one or more of the
Managers. The Managers may designate one or more
Managers as alternate members of any committee, who
may replace any absent or disqualified member at any
meeting of the committee.
(ii) In the absence or disqualification of a member of a
committee, the member or members thereof present at
any meeting and not disqualified from voting, whether
or not such members constitute a quorum, may
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unanimously appoint another Manager to act at the
meeting in the place of any such absent or
disqualified member.
(iii) Any such committee, to the extent provided in the
resolution of the Managers, shall have and may
exercise all the powers and authority of the Managers
in the management of the business and affairs of the
Company. Such committee or committees shall have such
name or names as may be determined from time to time
by resolution adopted by the Managers. Each committee
shall keep regular minutes of its meetings and report
the same to the Managers when required.
SECTION 7.10 Limitations on Independent Managers. All right,
power and authority of the Independent Managers shall be limited to the extent
necessary to exercise those rights and perform those duties specifically set
forth in this Agreement.
ARTICLE VIII
EXPENSES
SECTION 8.01 Expenses. Except as otherwise provided in this
Agreement or the Basic Documents, the Company shall be responsible for all
expenses and the allocation thereof including without limitation:
(a) all expenses incurred by the Member or its Affiliates in
organizing the Company;
(b) all expenses related to the business of the Company and
all routine administrative expenses of the Company, including the maintenance of
books and records of the Company, the preparation and dispatch to the Member of
checks, financial reports, tax returns and notices required pursuant to this
Agreement;
(c) all expenses incurred in connection with any litigation or
arbitration involving the Company (including the cost of any investigation and
preparation) and the amount of any judgment or settlement paid in connection
therewith;
(d) all expenses for indemnity or contribution payable by the
Company to any Person;
(e) all expenses incurred in connection with the collection of
amounts due to the Company from any Person;
(f) all expenses incurred in connection with the preparation
of amendments to this Agreement;
(g) all expenses incurred in connection with the liquidation,
dissolution and winding up of the Company; and
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(h) all expenses otherwise allocated in good faith to the
Company by the Managers.
ARTICLE IX
PERPETUAL EXISTENCE; DISSOLUTION, LIQUIDATION AND WINDING-UP
SECTION 9.01 Existence. (a) The Company shall have a perpetual
existence. So long as any of the Company's Notes shall remain Outstanding, the
Member shall not be entitled to consent to the dissolution of the Company.
(b) Notwithstanding any provision of this Agreement, the
bankruptcy (as defined in the LLC Act) of the Member will not cause the Member
to cease to be a member of the Company, and upon the occurrence of such an
event, the business of the Company shall continue without dissolution. Upon the
occurrence of any event that causes the last remaining Member of the Company to
cease to be a member of the Company, to the fullest extent permitted by law, the
personal representative of such member is hereby authorized to, and shall,
within 90 days after the occurrence of the event that terminated the continued
membership of such member in the Company, agree in writing (i) to continue the
Company and (ii) to the admission of the personal representative or its nominee
or designee, as the case may be, as a substitute member of the Company,
effective as of the occurrence of the event that terminated the continued
membership of the last remaining member of the Company in the Company.
SECTION 9.02 Dissolution. The Company shall be dissolved and
its affairs shall be wound up upon the occurrence of the earliest of the
following events:
(a) subject to Section 1.07, the election to dissolve the
Company made in writing by the Member and each Manager, including the
Independent Managers, as permitted by the Basic Documents;
(b) the occurrence of any event that causes the last remaining
member of the Company to cease to be a member of the Company unless the
business of the Company is continued without dissolution in a manner
permitted by the LLC Act or this Agreement; or
(c) the entry of a decree of judicial dissolution of the
Company pursuant to Section 18-802 of the LLC Act.
SECTION 9.03 Accounting. In the event of the dissolution,
liquidation and winding-up of the Company, a proper accounting shall be made of
the Capital Account of the Member and of the net income or net loss of the
Company from the date of the last previous accounting to the date of
dissolution.
SECTION 9.04 Certificate of Cancellation. As soon as possible
following the occurrence of any of the events specified in Section 9.02 and the
completion of the winding up of the Company, the Person winding up the business
and affairs of the Company, as an authorized Person, shall cause to be executed
a Certificate of Cancellation of the Certificate of Formation
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and file the Certificate of Cancellation of the Certificate of Formation as
required by the LLC Act.
SECTION 9.05 Winding Up. Upon the occurrence of any event
specified in Section 9.02, the Company shall continue solely for the purpose of
winding up its affairs in an orderly manner, liquidating its assets, and
satisfying the claims of its creditors. The Member, or if there is no Member,
the Managers, shall be responsible for overseeing the winding up and liquidation
of the Company, shall take full account of the liabilities of the Company and
its assets, shall either cause its assets to be sold or distributed, and if sold
as promptly as is consistent with obtaining the fair market value thereof, shall
cause the proceeds therefrom, to the extent sufficient therefor, to be applied
and distributed as provided in Section 9.06.
SECTION 9.06 Order of Payment of Liabilities Upon Dissolution.
After determining that all debts and liabilities of the Company, including all
contingent, conditional or unmatured liabilities of the Company, in the process
of winding-up, including, without limitation, debts and liabilities to the
Member in the event it is a creditor of the Company to the extent otherwise
permitted by law, have been paid or adequately provided for, the remaining
assets shall be distributed in cash or in kind to the Member.
SECTION 9.07 Limitations on Payments Made in Dissolution.
Except as otherwise specifically provided in this Agreement, the Member shall
only be entitled to look solely to the assets of Company for the return of its
positive Capital Account balance and shall have no recourse for its Capital
Contribution and/or share of net income (upon dissolution or otherwise) against
any Manager.
SECTION 9.08 Limitation on Liability. Except as otherwise
provided by the LLC Act and except as otherwise characterized for tax and
financial reporting purposes, the debts, obligations and liabilities of the
Company, whether arising in contract, tort or otherwise, shall be solely the
debts, obligations and liabilities of the Company, and no Member or Manager
shall be obligated personally for any such debt, obligation or liability of the
Company solely by reason of being a Member or a Manager.
ARTICLE X
INDEMNIFICATION
SECTION 10.01 Indemnity. Subject to the provisions of Section
10.04 hereof, to the fullest extent permitted by law, the Company shall
indemnify any Person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative, except an action by or in the
right of the Company, by reason of the fact that such Person is or was a
Manager, Member, officer, controlling Person, employee, legal representative or
agent of the Company, or is or was serving at the request of the Company as a
member, manager, director, officer, partner, shareholder, controlling Person,
employee, legal representative or agent of another limited liability company,
partnership, corporation, joint venture, trust or other enterprise, against
expenses, including attorneys' fees, judgments, fines and amounts paid in
settlement actually and reasonably incurred by such Person in connection with
the action, suit or proceeding if such
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Person acted in good faith and in a manner which such Person reasonably believed
to be in or not opposed to the best interests of the Company, and, with respect
to a criminal action or proceeding, had no reasonable cause to believe such
Person's conduct was unlawful; provided that such Person shall not be entitled
to indemnification if such judgment, penalty, fine or other expense was directly
caused by such Person's fraud, gross negligence or willful misconduct.
SECTION 10.02 Indemnity for Actions By or In the Right of the
Company. Subject to the provisions of Section 10.04 hereof, to the fullest
extent permitted by law, the Company shall indemnify any Person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the rights of the Company to procure a
judgment in its favor by reason of the fact that such Person is or was a Member,
Manager, officer, controlling Person, employee, legal representative or agent of
the Company, or is or was serving at the request of the Company as a member,
manager, director, officer, partner, shareholder, controlling Person, employee,
legal representative or agent of another limited liability company, corporation,
partnership, joint venture, trust or other enterprise, against expenses,
including amounts paid in settlement and attorneys' fees actually and reasonably
incurred by such Person in connection with the defense or settlement of the
actions or suit if such Person acted in good faith and in a manner which such
Person reasonably believed to be in or not opposed to the best interests of the
Company; provided that such Person shall not be entitled to indemnification if
such judgment, penalty, fine or other expense was directly caused by such
Person's fraud, gross negligence or willful misconduct. Indemnification may not
be made for any claim, issue or matter as to which such Person has been adjudged
by a court of competent jurisdiction, after exhaustion of all appeals therefrom,
to be liable to the Company or for amounts paid in settlement to the Company,
unless and only to the extent that the court in which the action or suit was
brought or other court of competent jurisdiction determines upon application
that in view of all the circumstances of the case, the Person is fairly and
reasonably entitled to indemnity for such expenses as the court deems proper.
SECTION 10.03 Indemnity If Successful. The Company shall
indemnify any Person who is or was a Manager, Member, officer, controlling
Person, employee, legal representative or agent of the Company, or is or was
serving at the request of the Company as a member, manager, director, officer,
partner, shareholder, controlling Person, employee, legal representative or
agent of another limited liability company, corporation, partnership, joint
venture, trust or other enterprise against expenses, including attorneys' fees,
actually and reasonably incurred by him or her in connection with the defense of
any action, suit or proceeding referred to in Sections 10.01 and 10.02 or in
defense of any claim, issue or matter therein, to the extent that such Person
has been successful on the merits.
SECTION 10.04 Expenses. Any indemnification under Sections
10.01 and 10.02, as well as the advance payment of expenses permitted under
Section 10.05 unless ordered by a court or advanced pursuant to Section 10.05
below, must be made by the Company only as authorized in the specific case upon
a determination that indemnification of the Manager, Member, officer,
controlling Person, employee, legal representative or agent is proper in the
circumstances. The determination must be made:
(a) By the Member if the Member was not a party to the act,
suit or proceeding; or
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(b) If the Member was a party to the act, suit or proceeding
by independent legal counsel in a written opinion.
SECTION 10.05 Advance Payment of Expenses. The expenses of
each Person who is or was a Manager, Member, officer, controlling Person,
employee, legal representative or agent, or is or was serving at the request of
the Company as a member, manager, director, officer, partner, shareholder,
controlling Person, employee, legal representative or agent of another limited
liability company, corporation, partnership, joint venture, trust or other
enterprise, incurred in defending a civil or criminal action, suit or proceeding
may be paid by the Company as they are incurred and in advance of the final
disposition of the action, suit or proceeding, upon receipt of an undertaking by
or on behalf of such Person to repay the amount if it is ultimately determined
by a court of competent jurisdiction that such Person is not entitled to be
indemnified by the Company. The provisions of this Section 10.05 shall not
affect any rights to advancement of expenses to which personnel other than the
Member or the Managers (other than the Independent Managers) may be entitled
under any contract or otherwise by law.
SECTION 10.06 Other Arrangements Not Excluded. The
indemnification and advancement of expenses authorized in or ordered by a court
pursuant to this Article X:
(a) Does not exclude any other rights to which a Person
seeking indemnification or advancement of expenses may be entitled under any
agreement, decision of the Member or otherwise, for either an action of any
Person who is or was a Manager, Member, officer, controlling Person, employee,
legal representative or agent, or is or was serving at the request of the
Company as a member, manager, director, officer, partner, shareholder,
controlling Person, employee, legal representative or agent of another limited
liability company, corporation, partnership, joint venture, trust or other
enterprise, in the official capacity of such Person or an action in another
capacity while holding such position, except that indemnification and
advancement, unless ordered by a court pursuant to Section 10.05 above, may not
be made to or on behalf of such Person if a final adjudication established that
its acts or omissions involved intentional misconduct, fraud or a knowing
violation of the law and were material to the cause of action; and
(b) Continues for a Person who has ceased to be a Member,
Manager, officer, employee, legal representative or agent and inures to the
benefit of the successors, heirs, executors and administrators of such a Person.
ARTICLE XI
MISCELLANEOUS PROVISIONS
SECTION 11.01 Amendments. (a) The power to alter, amend or
repeal this Agreement shall be only on the consent of the Member, provided, that
(i) the Company shall not alter, amend or repeal any provision of Sections 1.05,
1.07, 1.08, 3.01(b), 3.02, 6.06, 6.07, 7.05, 9.01, 9.02, 11.01 and 11.06 of this
Agreement or the definition of an Independent Manager contained herein or the
requirement that at all times the Company have at least two Independent Managers
without, in each case, the affirmative vote of a majority of the Managers, which
vote must include the affirmative vote of all of the Independent Managers and
(ii) the Company shall
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only amend Sections 4.01 (with respect to the fees of the Independent Managers
described in clause First), 4.02, 5.04, and 7.03 of this Agreement upon the
satisfaction of the condition set forth below in Section 11.02.
(b) The Company's power to alter or amend the Certificate of
Formation shall be vested in the Member. Upon obtaining the approval of any
amendment, supplement or restatement as to the Certificate of Formation, the
Member on behalf of the Company shall cause a Certificate of Amendment or
Amended and Restated Certificate of Formation to be prepared, executed and filed
in accordance with the LLC Act.
SECTION 11.02 PUCT Condition. Notwithstanding anything to the
contrary in Section 11.01, no amendment of Sections 4.01 (with respect to the
fees of the Independent Managers described in clause First), 4.02, 5.04, and
7.03 of this Agreement shall be effective except upon satisfaction of the
conditions precedent in this Section 11.02.
(a) At least fifteen days prior to the effectiveness of any
such amendment and after obtaining the other necessary approvals set forth in
Section 11.01 above (except that the consent of the Indenture Trustee may be
subject to the consent of Holders if such consent is required or sought by the
Indenture Trustee in connection with such amendment), the Member shall have
delivered to the PUCT's executive director and general counsel written
notification of any proposed amendment, which notification shall contain:
(i) a reference to Docket No. 21528;
(ii) an Officer's Certificate stating that the proposed
amendment has been approved by all parties to this
Agreement; and
(iii) a statement identifying the person to whom the PUCT
or its staff is to address any response to the
proposed amendment or to request additional time;
(iv) If the PUCT or its staff shall have, within fifteen
days (subject to extension as provided in Section
11.02(c) below) of receiving a notification complying
with Section 11.02(a) above, delivered to the office
of the person specified in Section 11.02(a)(iii)
above a written statement that the PUCT might object
to the proposed amendment, then such proposed
amendment shall not be effective unless and until the
PUCT subsequently delivers a written statement in
writing that it does not object to such proposed
amendment.
(v) If the PUCT or its staff shall have, within fifteen
days of receiving a notification complying with
Section 11.02(a) above, delivered to the office of
the person specified in Section 11.02(a)(iii) above a
written statement requesting an additional amount of
time not to exceed thirty days in which to consider
such proposed amendment, then such proposed amendment
shall not be effective if, within such extended
period, the PUCT shall have delivered to the office
of the person specified in Section 11.02(a)(iii)
above a written statement as described in Section
11.02(b) above, unless
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and until the PUCT subsequently delivers a written
statement in writing that it does not object to such
proposed amendment.
(vi) If the PUCT or its staff shall have not delivered
written notice that the PUCT might object to such
proposed amendment within the time periods described
in Section 11.02(b) or Section 11.02(c) above,
whichever is applicable, then the PUCT shall be
conclusively deemed not to have any objection to the
proposed amendment and such amendment may
subsequently become effective upon satisfaction of
the other conditions specified in Section 11.01.
(vii) Following the delivery of a notice to the PUCT by the
Member under Section 11.02(a) above, the Member shall
have the right at any time to withdraw from the PUCT
further consideration of any notification of a
proposed amendment.
SECTION 11.03 Governing Law. THIS AGREEMENT SHALL BE CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 11.04 Headings. The headings of the various Articles
and Sections herein are for convenience of reference only and shall not define
or limit any of the terms or provisions hereof.
SECTION 11.05 Severability. Any provision of this Agreement
that is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remainder of such provision (if any)
or the remaining provisions hereof (unless such construction shall be
unreasonable), and any such prohibition or unenforceability in any jurisdiction
shall not invalidate or render unenforceable such provision in any other
jurisdiction.
SECTION 11.06 Assigns. Each and all of the covenants, terms,
provisions and agreements contained in this Agreement shall be binding upon and
inure to the benefit of the Member, and its permitted successors and assigns.
SECTION 11.07 Enforcement by Independent Managers.
Notwithstanding any other provision of this Agreement, the Member agrees that
this Agreement constitutes a legal, valid and binding agreement of the Member,
and is enforceable against the Member by the Independent Managers in accordance
with its terms. The Independent Managers are intended beneficiaries of this
Agreement.
SECTION 11.08 Waiver of Partition; Nature of Interest. Except
as otherwise expressly provided in this Agreement, to the fullest extent
permitted by law, each of the Member and the Special Members hereby irrevocably
waives any right or power that such Person might have to cause the Company or
any of its assets to be partitioned, to cause the appointment of a receiver for
all or any portion of the assets of the Company, to compel any sale of all or
any
25
portion of the assets of the Company pursuant to any applicable law or to file a
complaint or to institute any proceeding at law or in equity to cause the
dissolution, liquidation, winding up or termination of the Company. The Member
shall not have any interest in any specific assets of the Company, and the
Member shall not have the status of a creditor with respect to any distribution
pursuant to this Agreement.
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IN WITNESS WHEREOF, this Agreement is hereby executed by the
undersigned as the sole Member of the Company and is effective as of February 7,
2002.
CENTRAL POWER AND LIGHT COMPANY
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
Name: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Assistant Treasurer
ACKNOWLEDGED AND AGREED:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
as Independent Manager
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------
▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
as Independent Manager
/s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------
Signature Page to Amended and Restated
Limited Liability Company Agreement
SCHEDULE A
Schedule of Capital Contributions of Member
Membership Interest
MEMBERSHIP
MEMBER'S CAPITAL INTEREST CAPITAL
NAME CONTRIBUTION PERCENTAGE ACCOUNT
-------- ------------ ---------- -------
Central Power and Light Company $ 10.00 100% $ 10.00
Central Power and Light Company $3,986,675 100% $3,986,685
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SCHEDULE B
Initial Managers
Names
1) ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
2) ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
3) ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
4) ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
5) ▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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SCHEDULE C
Initial Officers
Names Office
30
EXHIBIT A
Management Agreement
,
---------------------- -- ----
[
----------------------------
-----------------------------
]
-----------------------------
Re: Management Agreement --
CPL Transition Funding LLC
Ladies and Gentlemen:
For good and valuable consideration, each of the undersigned Persons,
who have been designated as managers of
CPL Transition Funding LLC, a Delaware
limited liability company (the "Company"), in accordance with the Amended and
Restated
Limited Liability Company Agreement of the Company, dated as of
______________________ __, ____, as it may be amended or restated from time to
time (the "LLC Agreement"), hereby agree as follows:
1. Each of the undersigned accepts such Person's rights and authority
as a Manager under the LLC Agreement and agrees to perform and discharge such
Person's duties and obligations as a Manager under the LLC Agreement, and
further agrees that such rights, authorities, duties and obligations under the
LLC Agreement shall continue until such Person's successor as a Manager is
designated or until such Person's resignation or removal as a Manager in
accordance with the LLC Agreement. Each of the undersigned agrees and
acknowledges that it has been designated as a "manager" of the Company within
the meaning of the Delaware Limited Liability Company Act.
2. Until a year and one day has passed since the date that the last
obligation under the Basic Documents was paid, to the fullest extent permitted
by law, each of the undersigned agrees, solely in its capacity as a creditor of
the Company on account of any indemnification or other payment owing to the
undersigned by the Company, not to acquiesce, petition or otherwise invoke or
cause the Company to invoke the process of any court or governmental authority
for the purpose of commencing or sustaining a case against the Company under any
federal or state bankruptcy, insolvency or similar law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar official
of the Company or any substantial part of the property of the Company, or
ordering the winding up or liquidation of the affairs of the Company.
3. THIS MANAGEMENT AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE,
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AND ALL RIGHTS AND REMEDIES SHALL BE GOVERNED BY SUCH LAWS WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAWS.
Capitalized terms used and not otherwise defined herein have the
meanings set forth in the LLC Agreement.
This Management Agreement may be executed in any number of
counterparts, each of which shall be deemed an original of this Management
Agreement and all of which together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the undersigned have executed this Management
Agreement as of the day and year first above written.
[SIGNATURE BLOCKS]
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