EXHIBIT 3.3
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AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
of
ATLANTIC CITY ELECTRIC TRANSITION FUNDING LLC
Dated as of ___________, 2002
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TABLE OF CONTENTS
Page
ARTICLE I Definitions 1
Section 1.01. Capitalized Terms 1
Section 1.02. Other Definitional Provisions 5
ARTICLE II Formation of the Limited Liability Company 6
Section 2.01. Formation; Filings 6
Section 2.02. Name and Office 7
Section 2.03. Business Purpose 7
Section 2.04. Term 8
Section 2.05. Tax Treatment; No State Law Partnership 8
Section 2.06. Authority of Member 8
Section 2.07. Liability to Third Parties 8
Section 2.08. No Personal Liability of any Member, Special Member, Manager, Etc. 9
Section 2.09. Separateness 9
Section 2.10. Limited Liability and Bankruptcy Remoteness 10
ARTICLE III Management 11
Section 3.01. Management by Managers 11
Section 3.02. Acts by Managers 11
Section 3.03. Number and Qualifications 11
Section 3.04. Independent Managers 11
Section 3.05. Appointment and Vacancy 12
Section 3.06. Term 12
Section 3.07. Removal 12
Section 3.08. Resignation 13
Section 3.09. Place of Meetings of Managers 13
Section 3.10. Meetings of Managers 13
Section 3.11. Quorum; Majority Vote 13
Section 3.12. Methods of Voting; Proxies 13
Section 3.13. Actions Without a Meeting 14
Section 3.14. Telephone and Similar Meetings 14
Section 3.15. Compensation of Managers 14
Section 3.16. Managers 14
ARTICLE IV Officers 14
Section 4.01. Designation; Term; Qualifications 14
Section 4.02. Removal and Resignation 15
Section 4.03. Vacancies 15
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Section 4.04. Compensation 15
ARTICLE V Member 15
Section 5.01. Powers 15
Section 5.02. Compensation of Member 15
Section 5.03. Actions by the Member 16
Section 5.04. Control by Member 16
Section 5.05. Special Member 16
ARTICLE VI Common Interest; Capital Contributions 17
Section 6.01. General 17
Section 6.02. Rights on Liquidation, Dissolution or Winding Up 17
Section 6.03. Redemption 18
Section 6.04. Voting Rights 18
Section 6.05. Capital Contributions 18
ARTICLE VII Allocations; Distributions; Expenses; Taxes; Books; Records; and Bank Accounts 18
Section 7.01. Allocations 18
Section 7.02. Distributions 18
Section 7.03. Limitation Upon Distributions 18
Section 7.04. Expenses 19
Section 7.05. Tax Elections 19
Section 7.06. Annual Tax Information 20
Section 7.07. Tax Matters Member 20
Section 7.08. Maintenance of Books 20
Section 7.09. Reports 20
Section 7.10. Bank and Investment Accounts 20
ARTICLE VIII Indemnification 20
Section 8.01. Mandatory Indemnification of the Member, the Special Members, and the Managers 20
Section 8.02. Mandatory Advancement of Expenses 21
Section 8.03. Indemnification of Officers, Employees and Agents 21
Section 8.04. Nonexclusivity of Rights 22
Section 8.05. Contract Rights 22
Section 8.06. Insurance 22
Section 8.07. Savings Clause 22
Section 8.08. Other Ventures 23
Section 8.09. Other Arrangements Not Excluded 23
ARTICLE IX Miscellaneous Provisions 23
Section 9.01. Offset 23
Section 9.02. Notices 23
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Section 9.03. Effect of Waiver or Consent 24
Section 9.04. Governing Law; Severability 24
Section 9.05. No Bankruptcy Petition; No Dissolution 24
Section 9.06. Amendment 25
Section 9.07. Headings and Sections 25
Section 9.08. Binding Agreement 25
SCHEDULE A: SCHEDULE OF CAPITAL CONTRIBUTIONS OF MEMBER A-1
SCHEDULE B: CERTIFICATE OF COMMON INTEREST B-1
SCHEDULE C: MANAGERS C-1
SCHEDULE D: OFFICERS D-1
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AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
ATLANTIC CITY ELECTRIC TRANSITION FUNDING LLC,
A DELAWARE LIMITED LIABILITY COMPANY
AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT,
dated [ ], 2002 (as it may be further amended, supplemented or otherwise
modified and in effect from time to time, this "Agreement"), of ATLANTIC CITY
ELECTRIC TRANSITION FUNDING LLC, a Delaware limited liability company (the
"Company"), having its principal office at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇.
WHEREAS, Atlantic City Electric Company ("ACE"), as sole
Member, (i) on March 28, 2001 caused to be filed a Certificate of Formation of
the Company with the Delaware Secretary of State and (ii) executed a Limited
Liability Company Agreement, dated as of April 11, 2001 (the "Original LLC
Agreement"); and
WHEREAS, this Agreement amends and restates the Original LLC
Agreement in all respects, and from and after the date hereof constitutes the
governing instrument of the Company;
NOW THEREFORE, the Member (as defined below) hereby amends and
restates the Original LLC Agreement as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Capitalized Terms.
For all purposes of this Agreement, the following terms shall
have the following meanings:
"ACE" means Atlantic City Electric Company, a New Jersey
corporation, and its permitted successors and assigns.
"Act" means the Delaware Limited Liability Company Act, as
amended, as in effect on the date hereof (currently Chapter 18 of Title 6,
Sections 18-101 through 18-1109 of the Delaware Code) and as it may be amended
hereafter, from time to time, and any successor law.
"Administration Agreement" means the Administration Agreement,
dated [ ], 2002, between the Company and Conectiv Resource Partners, Inc., as
administrator, as the same may be amended, supplemented or otherwise modified
and in effect from time to time.
"Affiliate" means, with respect to any specified Person, any
other Person
controlling or controlled by or under common control with such specified Person.
For purposes of this definition, "control" when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Agreement" means this Amended and Restated Limited Liability
Company Agreement of the Company, as the same may be further amended,
supplemented or otherwise modified and in effect from time to time.
"Bankruptcy" means, with respect to any Person, that such
Person (i) makes an assignment for the benefit of creditors, (ii) files a
voluntary petition in bankruptcy, (iii) is adjudged bankrupt or insolvent, or
has entered against it an order for relief, in any bankruptcy or insolvency
proceedings, (iv) files a petition or answer seeking for itself any
reorganization, arrangement, composition, readjustment, liquidation or similar
relief under any statute, law or regulation, (v) files an answer or other
pleading admitting or failing to contest the material allegations of a petition
filed against it in any proceeding of this nature, (vi) seeks, consents to or
acquiesces in the appointment of a trustee, receiver or liquidator of the Person
or of all or any substantial part of its properties, or (vii) if 120 days after
the commencement of any proceeding against the Person seeking reorganization,
arrangement, composition, readjustment, liquidation or similar relief under any
statute, law or regulation, the proceeding has not been dismissed, or if within
90 days after the appointment without such Person's consent or acquiescence of a
trustee, receiver or liquidator of such Person or of all or any substantial part
of its properties, the appointment is not vacated or stayed, or if within 90
days after the expiration of any such stay, the appointment is not vacated. The
foregoing definition of "Bankruptcy" is intended to replace and shall supersede
and shall be deemed to replace the definition of "Bankruptcy" set forth in
Sections 18-101(1) and 18-304 of the Act.
"Basic Documents" means this Agreement, the Certificate of
Formation, the Indenture, the Sale Agreement, any ▇▇▇▇ of Sale, the Servicing
Agreement and the Administration Agreement, each as the same may be further
amended, supplemented or otherwise modified and in effect from time to time.
"▇▇▇▇ of Sale" means the ▇▇▇▇ of sale, issued by ACE to the
Company as of [ ], 2002, pursuant to the Sale Agreement, together with any other
▇▇▇▇ of sale delivered in accordance therewith.
"Bondable Transition Property" means the irrevocable right of
ACE to charge, collect and receive, and be paid from collections of, the
transition bond charge in the amount necessary to provide for the full recovery
of the bondable stranded costs that have been determined to be recoverable in
the BPU Financing Orders, all rights of ACE under the BPU Financing Orders,
including without limitation all rights to obtain periodic adjustments of the
transition bond charge pursuant to the Competition Act, and all revenues,
collections, payments, money and proceeds arising under, or with respect to, all
of the foregoing.
"Bonds" has the meaning set forth in Section 2.03(a).
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"BPU" means the State of New Jersey Board of Public Utilities,
and any successor.
"BPU Financing Orders" means the bondable stranded costs rate
order issued by the BPU in favor of ACE on [ ], 2002 pursuant to the Competition
Act, any subsequent bondable stranded costs rate orders issued by the BPU in
favor of ACE pursuant to the Competition Act, and any order supplemental to any
of the foregoing.
"Business Day" means any day other than a Saturday, Sunday or
other day on which banks are authorized or required by law to be closed in New
York City, New York or, with respect to any payments on any Bonds listed on the
Luxembourg Stock Exchange, in Luxembourg.
"Certificate of Formation" means the Certificate of Formation
of the Company, which was filed in accordance with the Act with the Secretary of
State of the State of Delaware on March 28, 2001, as the same may be amended or
supplemented from time to time.
"Code" means the Internal Revenue Code of 1986, as amended, or
any successor law.
"Common Interest" means the limited liability company interest
of the Member in the Company as described in Article VI. The Company shall have
one class of Common Interest.
"Company" means Atlantic City Electric Transition Funding LLC,
a Delaware limited liability company.
"Competition Act" means the New Jersey Electric Discount and
Energy Competition Act, New Jersey Statutes Annotated, title 48, chapter 3,
article 7, as in effect from time to time.
"Fiscal Year" means, unless the Managers shall at any time
determine otherwise pursuant to the requirements of the Code, a calendar year.
"GAAP" means the generally accepted accounting principles
promulgated or adopted by the Financial Accounting Standards Board and its
successors from time to time.
"Governmental Authority" means any federal, state, local or
foreign court or governmental department, commission, board, bureau, agency,
authority, instrumentality or regulatory body.
"Hedge Agreement" means [(i) the ISDA Master Agreement,
together with the related Schedule and Confirmation, each dated as of [ ], 2002,
between the Company and Atlantic City Electric Company as counterparty
thereunder, as the same may be amended, supplemented or otherwise modified and
in effect from time to time and (ii)] any [other] Hedge Agreement, as defined in
and permitted by the Indenture or any Supplement.
"Indenture" means the Indenture, dated as of [ ], 2002,
between the
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Company and the Trustee, as the same may be amended, modified or supplemented
from time to time.
"Independent Manager" means, with respect to the Company, a
Manager who is not, and within the previous five years was not (except solely by
virtue of such Person's serving as, or being an Affiliate of any other Person
serving as, an independent director or manager, as applicable, of ACE or any
bankruptcy-remote special purpose entity that is an Affiliate of ACE or the
Company), (i) a stockholder, member, partner, director, officer, employee,
Affiliate, customer, supplier, material creditor or independent contractor of,
or any Person that has received any benefit in any form whatever from (other
than in such Manager's capacity as a ratepayer or customer of ACE in the
ordinary course of business), or any Person that has provided any service in any
form whatsoever to, or any major creditor (or any Affiliate of any major
creditor) of, the Company, ACE, or any of their Affiliates, or (ii) any Person
owning legally or beneficially, directly or indirectly, any outstanding shares
of common stock, any limited liability company interests or any partnership
interests, as applicable, of the Company, ACE or any of their Affiliates, or
(iii) a member of the immediate family of any person described above; provided
that the indirect or beneficial ownership of stock through a mutual fund or
similar diversified investment vehicle with respect to which the owner does not
have discretion or control over the investments held by such diversified
investment vehicle shall not preclude such owner from being an Independent
Manager, or (iv) any Person who controls the Company, ACE, or their Affiliates.
For purposes of this definition, "major creditor" means a natural person or
business entity to which the Company, ACE or any of their Affiliates has
outstanding indebtedness for borrowed money or credit on open account in a sum
sufficiently large as would reasonably be expected to influence the judgment of
the proposed Independent Manager adversely to the interests of the Company when
the interests of that Person are adverse to those of the Company.
"Interest Rate Swap Agreement" means [(i) the ISDA Master
Agreement, together with the related Schedule and Confirmation, each dated [ ] ,
2002 between the Company and [_______], as swap counterparty thereunder, as the
same may be amended, supplemented or otherwise modified and in effect from time
to time and (ii)] any [other] Interest Rate Swap Agreement, as defined in and
permitted by the Indenture or any Supplement.
"Manager" means any manager of the Company, including any
Independent Manager.
"Member" means ACE, in its capacity as a member in the Company
under this Agreement, or any successor thereto as a member pursuant to Article
VI; provided, however, the term "Member" shall not include the Special Members.
"Person" means any natural person, corporation, business
trust, joint venture, association, company, partnership, limited liability
company, joint stock company, corporation, trust, unincorporated organization or
Governmental Authority.
"Proceeding" shall have the meaning set forth in Section
8.01(a).
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"Sale Agreement" means the Bondable Transition Property Sale
Agreement, dated as of [_________ , 2002, between ACE, as seller, and the
Company, as the same may be amended, supplemented or otherwise modified and in
effect from time to time.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations of the United States Securities and Exchange
Commission promulgated thereunder, and any successor law or regulations.
"Series" means each series of Bonds issued and authenticated
pursuant to the Indenture and a related Supplement.
"Servicing Agreement" means the Bondable Transition Property
Servicing Agreement, dated as of [ ] , 2002, between the Company and ACE, as
servicer, as the same may be amended, supplemented or otherwise modified and in
effect from time to time.
"Special Member" means, upon such person's admission to the
Company as a member of the Company pursuant to Section 5.05, a person acting as
Independent Manager, in such person's capacity as a member of the Company. A
"Special Member" shall have the rights and duties expressly set forth in this
Agreement.
"State" means any one of the 50 states of the United States of
America or the District of Columbia.
"Supplement" means a supplement to the Indenture complying (to
the extent applicable) with the terms of Article 9 of the Indenture.
"Treasury Regulations" means regulations, including proposed
or temporary regulations, promulgated under the Code. References herein to
specific provisions of proposed or temporary regulations shall include analogous
provisions of final Treasury Regulations or other successor Treasury
Regulations.
"Trustee" means the party named as such in the Indenture until
a successor replaces it in accordance with the applicable provisions of the
Indenture and thereafter means the successor serving thereunder.
"Underwriting Agreement" means the Underwriting Agreement,
dated [ ] , 2002, between ACE, the Company and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, on behalf of
itself and as representative of the several underwriters named therein.
Section 1.02. Other Definitional Provisions.
(a) Unless otherwise defined herein, all capitalized terms
herein shall have the meanings ascribed thereto in the Indenture.
(b) All terms defined in this Agreement shall have the
meanings herein assigned
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to them when used in any certificate or other document made or delivered
pursuant hereto except where otherwise expressly provided therein.
(c) As used in this Agreement and in any certificate or other
documents made or delivered pursuant hereto or thereto, accounting terms not
defined in this Agreement or in any such certificate or other document, and
accounting terms partly defined in this Agreement or in any such certificate or
other document to the extent not defined, shall have the respective meanings
given to them under GAAP. To the extent that the definitions of accounting terms
in this Agreement or in any such certificate or other document are inconsistent
with the meanings of such terms under GAAP, the definitions contained in this
Agreement or in any such certificate or other document shall control.
(d) The words "hereof" "herein", "hereunder", and words of
similar import when used in this Agreement refer to this Agreement as a whole
and not to any particular provision of this Agreement;
References in this Agreement to articles, sections and
schedules are to the articles, sections and schedules of or to this Agreement
unless otherwise specified;
The term "including" means "including without limitation" and
"or" is used in the inclusive sense.
(e) The definitions contained in this Agreement are applicable
to the singular as well as the plural forms of the defined terms, and personal
pronouns refer to all persons regardless of gender; and
(f) Any agreement, instrument or statute defined or referred
to herein or in any instrument or certificate delivered in connection herewith
means such agreement, instrument or statute as from time to time amended,
modified or supplemented and includes (in the case of agreements or instruments)
references to all attachments thereto and instruments incorporated therein.
ARTICLE II
FORMATION OF THE LIMITED LIABILITY COMPANY
Section 2.01. Formation; Filings.
Pursuant to the Act and in accordance with the further terms
and provisions hereof, the Member and, when signed by the Special Members, the
Special Members, hereby continue the Company as a limited liability company. The
Certificate of Formation of the Company has been executed and filed with the
Secretary of State of the State of Delaware by ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, as an
"authorized person" within the meaning of the Act. The Member shall execute or
cause to be executed from time to time all other instruments, certificates,
notices and documents, and shall do or cause to be done all such filing,
recording, publishing and other acts, in each case, as may be necessary or
appropriate from time to time to comply with all
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applicable requirements for the formation and/or operation and, when
appropriate, termination of a limited liability company in the State of Delaware
and all other jurisdictions where the Company shall desire to conduct its
business.
Section 2.02. Name and Office.
(a) The name of the Company shall be "Atlantic City Electric
Transition Funding LLC." All business of the Company shall be conducted in such
name and all contracts, property and other assets of the Company shall be held
in that name and the Member shall not have any ownership interests in such
contracts, property or other assets in its individual name.
(b) The address of the registered office of the Company in the
State of Delaware is ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
(c) The Company may also have offices at such other places
both within and without the State of Delaware as the Member may from time to
time determine.
Section 2.03. Business Purpose.
The nature of the business or purpose to be conducted or
promoted by the Company is to engage exclusively in the following business and
financial activities:
(a) to authorize, issue, sell and deliver one or more Series
or classes of transition bonds pursuant to the Competition Act ("Bonds") under
the Indenture and, in connection therewith, to execute and deliver Supplements,
including Supplements providing for the issuance of additional Series of Bonds,
each as permitted by and in accordance with the terms of the Indenture;
(b) to purchase and own Bondable Transition Property and
pledge the same and other collateral to the Trustee pursuant to the terms and
conditions of the Basic Documents;
(c) to negotiate, authorize, execute, deliver, assume the
obligations under, and perform, the Basic Documents and any other agreement or
instrument or document relating to the activities set forth in clauses (a) and
(b) above, including but not limited to agreements with third-party credit
enhancers and additional swap or hedge agreement counterparties relating to any
Series or Class of Bonds; provided that each party to any agreement with the
Company shall covenant that such party shall not, prior to the date that is one
year and one day after the termination of the Indenture and the payment in full
of any Series of the Bonds and any other amounts owed under the Indenture,
including without limitation any amounts owed to third-party credit enhancers,
and any amounts owed under any Hedge Agreement or Interest Rate Swap Agreement,
acquiesce, petition or otherwise invoke or cause the Company to invoke the
process of any court or government 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
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liquidation of the affairs of the Company; and provided, further, that the
Company shall be permitted to incur additional indebtedness or other liabilities
payable to service providers and trade creditors in the ordinary course of
business in connection with the foregoing activities; and
(d) to engage in any activity and to exercise any powers
permitted to limited liability companies under the laws of the State of Delaware
that are related or incidental to the foregoing and necessary, convenient or
advisable to accomplish the foregoing.
Section 2.04. Term.
The term of the Company shall continue until the Company
is dissolved and liquidated in accordance with the Act, subject to Sections 6.03
and 9.05. The existence of the Company as a separate legal entity shall continue
until the cancellation of the Certificate of Formation in accordance with the
Act.
Section 2.05. Tax Treatment; No State Law Partnership.
(a) The Member, the Special Members and the Managers intend
that the Company be disregarded as an entity separate from its sole Member under
Treasury Regulations Section 301.7701-3(b)(1) for federal, state and local
income tax purposes. All provisions of this Agreement shall be interpreted and
construed so as to effectuate such treatment. Neither the Member, any Special
Member or any Manager shall make an election for the Company to be treated as an
association taxable as a corporation under Treasury Regulations Section
301.7701-3(a).
(b) The Member, the Special Members and the Managers intend
that the Company shall not be a partnership (including without limitation a
general partnership or a limited partnership) or joint venture, and no
partnership or joint venture shall exist among the Member, any Special Member
and any Managers or any subgroup thereof with respect to the business of the
Company for any purposes. No provisions of this Agreement shall be construed to
suggest otherwise.
Section 2.06. Authority of Member.
Subject to Section 3.04, the Member, acting in such
capacity, shall have the authority or power to act for or on behalf of the
Company, to do any act that would be binding on the Company, or to incur any
expenditures, debts, liabilities or obligations on behalf of the Company.
Section 2.07. Liability to Third Parties.
Except as otherwise expressly provided by the Act, neither
the Member, any Special Member nor any Manager shall be liable for the debts,
obligations or liabilities of the Company (whether arising in contract, tort or
otherwise), including without limitation under a judgment, decree or order of a
court, by reason of being the Member or acting as a Special
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Member or Manager of the Company.
Section 2.08. No Personal Liability of any Member, Special
Member, Manager, Etc.
(a) Neither the Member nor any Special Member shall be subject
in such capacity to any personal liability whatsoever to any Person in
connection with the assets or the acts, obligations or affairs of the Company,
(b) the Member and each Special Member shall have the same limitation of
personal liability as is extended to stockholders of a private corporation for
profit incorporated under the General Corporation Law of the State of Delaware,
and (c) no Manager or officer of the Company shall be subject in such capacity
to any personal liability whatsoever to any Person, other than the Company or
its Member, in connection with the assets or the affairs of the Company; and,
subject to the provisions of Article VIII, all such Persons shall look solely to
the assets of the Company for satisfaction of claims of any nature arising in
connection with the affairs of the Company; provided that such protection from
personal liability shall apply to the fullest extent permitted by applicable
law, as the same exists or may hereafter be amended (but, in the case of any
such amendment, only to the extent that such amendment permits the Company to
provide greater or broader indemnification rights than such law permitted the
Company to provide prior to such amendment).
Section 2.09. Separateness.
(a) Except as provided in the Basic Documents, the funds and
other assets of the Company shall not be commingled with those of any other
entity and the Company shall maintain with commercial banking institutions its
own bank accounts separate from those of the Member and any other Person.
(b) The Company shall act solely through its duly authorized
Member, Special Members, Managers, officers and agents in the conduct of its
business, shall take all reasonable steps to continue its identity as a
separate legal entity, shall conduct its business in its own name and so as not
to mislead others as to the identity of the entity or assets with which they are
concerned, and shall correct any known misunderstanding regarding its separate
identity. Neither the Member nor any of its Affiliates shall be appointed to act
as agent of the Company except as contemplated by the Basic Documents, in which
case the capacity of such agent shall be clearly identified.
(c) The Company shall maintain separate records, books of
account and financial statements, and shall not commingle its records and books
of account with the records and books of account of the Member or any other
entity.
(d) The Managers shall hold appropriate meetings to authorize
all of its limited liability company actions (which meetings may be held by
telephone conference call), and shall observe all other formalities required by
the Basic Documents and applicable law with respect to action taken on behalf of
the Company. Without limiting the foregoing, the Company shall observe all of
the formalities required by this Agreement.
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(e) The Company shall at all times ensure that its
capitalization is adequate in light of its business and purpose and shall make
it apparent to third parties that it is an entity with assets and liabilities
distinct from those of the Member and its Affiliates, any Special Member, any
Manager or any other Person.
(f) Neither the Member, any Special Member or any Manager
shall guarantee, become liable on, or hold itself out as being liable for the
debts of the Company or make loans or advances to the Company, except in each
case as contemplated by the Basic Documents, it being understood that in any
event the Member may lend or provide funds to the Company in connection with the
organization of the Company and may elect to make capital contributions to the
Company in connection with issuances of Bonds.
(g) The Company shall not guarantee, become liable on, or hold
itself out as being liable for the debts of any other Person, shall not pledge
its assets for the benefit of any entity, and shall not make loans or advances
to, or acquire obligations or securities of, the Member, any Special Member or
any Manager, except as contemplated by the Basic Documents.
(h) The Company shall pay its operating expenses and
liabilities out of its own funds as provided in the Indenture, including fees
and expenses of the Administrator pursuant to the Administration Agreement and
the Servicer pursuant to the Servicing Agreement.
(i) The Company shall ensure that, to the extent that it
jointly contracts with the Member or any Affiliate thereof to do business with
vendors or service providers or shares employees or office space or other
overhead items with any such Persons, the costs so incurred shall be allocated
fairly among such Persons, and each such Person shall bear its fair share of
such costs.
(j) The Company shall not form, acquire or hold any
subsidiaries.
(k) The Company shall maintain an arm's length relationship
with its Affiliates.
(l) The Company shall use its own separate stationery,
invoices, checks and other business forms.
(m) The Company shall pay the salaries of its own employees,
if any, except as otherwise provided in the Basic Documents, and shall file its
own tax and information returns if and to the extent it is required to do so
under applicable federal, state or local tax laws.
(n) The Company shall comply with all restrictions on its
business and operations as set forth in Sections 2.03 and 3.04.
Failure of the Company, the Member, any Special Member or any
Manager on behalf of the Company to comply with any of the foregoing covenants
or any of the covenants contained in this Agreement shall not affect the status
of the Company as a separate legal entity or the limited liability of the
Member, any Special Member or any Manager.
Section 2.10. Limited Liability and Bankruptcy Remoteness.
Without limiting the generality of Section 2.09, the Company
shall be operated
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in such a manner as the Managers deem reasonable and necessary or appropriate to
preserve (a) the limited liability of ACE (or its successor) as the Member in
the Company and the limited liability of the Special Members, (b) the
separateness of the Company from the business of ACE (or its successor), as the
Member of the Company, or any other Affiliate thereof and (c) until the
expiration of the period of one year and one day specified in Section 9.05, the
bankruptcy-remote status of the Company.
ARTICLE III
MANAGEMENT
Section 3.01. Management by Managers.
The powers of the Company shall be exercised by or under the
authority of, and the business and affairs of the Company shall be managed under
the direction of, the Managers.
Section 3.02. Acts by Managers.
(a) 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.
(b) 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
name of the Company 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.
(c) The Managers shall have the right and authority to take
all actions that the Managers deem necessary, useful or appropriate for the
day-to-day management and conduct of the Company's business.
(d) The Managers may exercise all powers of the Company and do
all such lawful acts and things as are not by the Act, other applicable law or
this Agreement directed or required to be exercised or done by the Member. All
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. All instruments, contracts,
agreements and documents of whatsoever type executed on behalf of the Company
shall be executed in the name of the Company by one or more Managers.
Section 3.03. Number and Qualifications.
15
The number of Managers of the Company shall not be less than
three nor more than five, as may be determined by the Member from time to time,
but no decrease in the number of Managers shall have the effect of shortening
the term of any incumbent Manager.
Section 3.04. Independent Managers.
(a) The Company shall have at all times at least two
individuals who are each Independent Managers. The Independent Managers may not
delegate their duties, authorities or responsibilities hereunder. If any
Independent Manager resigns, dies or becomes incapacitated, or such position is
otherwise vacant, no action requiring the unanimous affirmative vote of the
Managers shall be taken until a successor Independent Manager is appointed by
the Member and qualifies and approves such action.
(b) Notwithstanding any other provision of this Agreement and
any provision of law that otherwise so empowers the Company, the Member, any
Special Member, any Manager or any other Person, the Company shall not, and
neither the Member nor any Special Member, Manager nor any other Person on
behalf of the Company shall, without the prior unanimous consent of the
Managers, including each of the Independent Managers, do any of the following:
(i) engage in any business or activity other than those set forth in Article II;
(ii) except as provided in the Basic Documents, incur any indebtedness, other
than the Bonds, obligations under agreements with third party credit enhancers
and swap or hedge agreement counterparties relating to any Series of Bonds and
ordinary course expenses as set forth in Article II, or assume or guarantee any
indebtedness of any other entity; (iii) make a general assignment for the
benefit of creditors; (iv) file a petition commencing a voluntary bankruptcy
case; (v) file a petition or answer seeking reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief under any
statute, law or regulation; (vi) file an answer or other pleading admitting or
failing to contest the material allegations of a petition filed against it in
any proceeding seeking reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under any statute, law or regulation,
or the entry of any order appointing a trustee, liquidator or receiver of it or
of its assets or any substantial portion thereof; (vii) seek, consent to or
acquiesce in the appointment of a trustee, receiver or liquidator of it or of
all or any substantial part of its assets; (viii) consolidate or merge with or
into any other entity or convey or transfer substantially all of its properties
and assets substantially as an entirety to any entity; or (ix) amend this
Agreement or take action in furtherance of any such action. With regard to any
action contemplated by the preceding sentence, or with regard to any action
taken or determination made at any time when the Company is insolvent, each
Manager shall, to the fullest extent permitted by law, owe its primary fiduciary
duty to the Company (including the creditors of the Company).
Section 3.05. Appointment and Vacancy.
The Member shall appoint each manager, including any Manager
to be appointed by reason of an increase in the number of Managers.
16
Section 3.06. Term.
Each Manager shall hold office until his or her successor
shall be selected by the Member and qualified, or until his or her earlier
death, resignation or removal as provided in this Agreement.
Section 3.07. Removal.
Subject to Section 3.04 (a) and Section 3.15 of this
Agreement, the Member may remove, with or without cause, any Manager.
Section 3.08. Resignation.
Any Manager may resign at any time. 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 remaining Managers;
provided that the resignation of an Independent Manager shall not be effective
until a replacement Independent Manager has been appointed. The acceptance of a
resignation shall not be necessary to make it effective, unless so expressly
provided in the resignation.
Section 3.09. Place of Meetings of Managers.
Any meetings of the Managers may be held either within or
without the State of Delaware at such place or places as shall be determined
from time to time by resolution of the Managers.
Section 3.10. Meetings of Managers.
Meetings of the Managers may be held when called by any
Managers or Manager. The Manager or Managers calling any meeting shall cause
notice to be given of such meeting, including therein the time, date and place
of such meeting, to each Manager at least two Business Days before such meeting.
The business to be transacted at, or the purpose of, any meeting of the Managers
shall be specified in the notice or waiver of notice of any such meeting. If
fewer than all of the Managers are present in person, by telephone or by proxy,
business transacted at any such meeting shall be confined to the business or
purposes specifically stated in the notice or waiver of notice of such meeting.
Section 3.11. Quorum; Majority Vote.
At all meetings of the Managers, the presence in person, by
telephone or by proxy of a majority of the Managers shall be necessary and
sufficient to constitute a quorum for the transaction of business unless a
greater number is required by this Agreement or by law. The act of a majority of
the Managers present in person, by telephone or by proxy at a meeting at which a
quorum is present in person, by telephone or by proxy shall be the act of the
Managers, except as otherwise provided by law or this Agreement. If a quorum
shall not be present in person, by telephone or by proxy at any meeting of the
Managers, the Managers present in person, by telephone or by proxy at the
meeting may adjourn the meeting from time to time,
17
without notice other than announcement at the meeting, until a quorum shall be
present in person, by telephone or by proxy.
Section 3.12. Methods of Voting; Proxies.
A Manager may vote either in person, by telephone or by proxy
executed in writing by the Manager; provided that the Person designated to act
as proxy for an Independent Manager must be an Independent Manager.
Section 3.13. Actions Without a Meeting.
Any action required or permitted to be taken at a meeting of
the managers may be taken without a meeting, without prior notice, and without a
vote, if a consent in writing, setting forth the action so taken, is signed by
the Managers having not fewer than the minimum number of votes that would be
necessary to take the action at a meeting at which all Managers entitled to vote
on the action were present and voted. Copies of any such consents shall be filed
with the minutes and permanent records of the Company.
Section 3.14. Telephone and Similar Meetings.
The Managers, or members of any committee thereof, may
participate in and hold meetings by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other. Such participation in any such meeting shall
constitute presence in person at such meeting, except where a Person
participates in such meeting for the express purpose of objecting to the
transaction of any business on the ground that such meeting is not lawfully
called or convened.
Section 3.15. Compensation of Managers.
The Managers other than the Independent Managers shall not be
compensated by the Company for their services on behalf of the Company. The
Independent Managers shall be paid monthly fees from the revenues of the Company
and shall be reimbursed for their reasonable expenses. These expenses include
without limitation the reasonable compensation, expenses and disbursements of
such agents, representatives, experts and counsel as the Independent Managers
may employ in the exercise and performance of their rights and duties under this
Agreement and the Other Basic Documents.
Section 3.16. Managers.
The Member and each Manager shall take all actions necessary
from time to time to ensure that at all times the number of Managers shall be
not less than three nor more than five; provided, however, that pursuant to
Section 3.04, the Company shall at all times have at least two Independent
Managers. The Managers upon the execution of this Agreement shall be ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇, [_______] (who shall serve as an
Independent Manager) and [_______] (who shall serve as an Independent Manager).
ARTICLE IV
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OFFICERS
Section 4.01. Designation; Term; Qualifications.
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 his or her successor shall be duly
designated and shall qualify or until his or her 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 persons identified on Schedule D are hereby designated the initial
officers of the Company.
Section 4.02. 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 4.03. Vacancies.
Any vacancy occurring in any office of the Company may be
filled by the Managers.
Section 4.04. Compensation.
The compensation, if any, of the officers of the Company shall
be fixed from time to time by the Managers.
ARTICLE V
MEMBER
Section 5.01. Powers.
Subject to the provisions of this Agreement and the 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
5.03. Pursuant to Section 3.01, the Member has delegated 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, subject to Section 3.04 in all cases:
First: To select and remove the Managers and prescribe such
powers and duties for them as may be consistent with the Act and other
applicable law and this Agreement.
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Second: To conduct, manage and control the affairs and
business of the Company, and to make such rules and regulations therefor
consistent with the Act and other applicable law and this Agreement.
Third: To change the registered 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 5.02. Compensation of Member.
The Company shall have authority to pay to the Member
reasonable compensation for the Member's services to the Company. It is
understood that the compensation paid to the Member under the provisions of this
Section 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 an operating expense of the
Company.
Section 5.03. Actions by the Member.
All actions of the Member may be taken by written resolution
of the Member signed on behalf of the Member by an authorized officer of the
Member and filed with the minutes and permanent records of the Company.
Section 5.04. Control by Member.
To the extent the Member takes any action with respect to the
Company (including by means of its appointment of any individual Manager or its
control or employment of any individual Manager in any other capacity), the
Member, or any such Manager, as applicable, shall act in good faith in
accordance with the terms of this Agreement, and make decisions with respect to
the business and daily operations of the Company independent of, and not
dictated by, in the case of any such Manager, the Member, or in either case any
Affiliate of the foregoing, and, to the fullest extent permitted by law, any
such Manager shall bear a fiduciary duty to the Company (including its
creditors) under the circumstances set forth in Section 3.04.
Section 5.05. Special Member.
Upon the occurrence of any event that causes the Member to
cease to be a member of the Company, each person acting as an Independent
Manager pursuant to Section 3.04 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 (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 (a)
a successor Special Member has been admitted to the Company as Special Member by
executing a counterpart to this Agreement, and (b) such successor has also
accepted its appointment as Independent Manager, provided, however, the Special
Members shall automatically cease to be members of the Company upon the
admission to the Company of a substitute Member. Each
20
Special Member shall be a member of the Company that has no interest in the
profits, losses and capital of the Company and has no right to receive any
distributions of Company assets. Pursuant to Section 18-301 of the 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 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 without limitation the merger, consolidation or conversion of
the Company. In order to implement the admission to the Company of each Special
Member pursuant to this Section 5.05, each person acting as an Independent
Manager pursuant to Section 3.04 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 Section 3.04 shall not be a member of the
Company.
ARTICLE VI
COMMON INTEREST; CAPITAL CONTRIBUTIONS
Section 6.01. General.
The Common Interest constitutes personal property and 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. Upon
registration of the transfer and assignment of the Common Interest on the books
of the Company, the transferee/assignee shall be and become the sole Member of
the Company and shall have the rights and powers, and be subject to the
restrictions and liabilities, of the Member under this Agreement and the Act,
and the transferor/assignor shall cease to be the Member, each as of the date of
such registration. Notwithstanding the foregoing, the Common Interest may not be
transferred unless each Rating Agency (as defined in the Indenture) then rating
the Bonds of any Class or Series shall have confirmed in writing to the Trustee
and the Company that such transfer shall not result in a reduction or withdrawal
of the then current rating by any such Rating Agency of any outstanding Class or
Series of Bonds. The Common Interest of the Member in the Company shall be
evidenced by a certificate in the form set forth in Schedule B.
Section 6.02. 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 payment of all
liabilities, debts and obligations of the Company to creditors, as set forth in
Section 18-804 of the Act.
(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 Company or
21
other entity, shall be deemed to be a dissolution, liquidation or winding up,
voluntary or involuntary, for the purpose of this Section 6.03.
(c) The commencement of a bankruptcy, insolvency, receivership
or other similar proceeding by or against the Company, any Special Member or the
Member shall not result in the dissolution of the Company or in the cessation of
the interest of the Member in the Company. The withdrawal or resignation of the
Member or any Special Member or the dissolution of the Member or any Special
Member shall not, by itself, constitute a dissolution of the Company.
(d) Subject to Section 5.05, 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 ninety (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.
(e) Notwithstanding any other provision of this Agreement, the
bankruptcy of the Member or any Special Member shall not cause the Member or
Special Member, respectively, 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.
Section 6.03. Redemption.
The Common Interest shall not be redeemable.
Section 6.04. Voting Rights.
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 Act and other applicable law.
Section 6.05. Capital Contributions.
The Member may make capital contributions in cash in such
amounts as the Member may agree to from time to time. To the extent that the
Member makes an additional capital contribution to the Company, the Member shall
revise Schedule A to reflect the amount contributed by the Member. The Member
shall not be required to make any additional capital contributions to the
Company.
ARTICLE VII
ALLOCATIONS; DISTRIBUTIONS; EXPENSES;
TAXES; BOOKS; RECORDS; AND BANK ACCOUNTS
22
Section 7.01. Allocations.
All items of income, gain, loss, deduction, and credit of the
Company for each Fiscal Year shall be allocated to the Member. Any credit
available for federal income tax purposes shall be allocated to the Member in
the same manner.
Section 7.02. Distributions.
The Member shall be entitled to receive, out of the assets of
the Company legally available therefor, when, as and if declared by the
Managers, distributions payable in cash in such amounts, if any, as the Managers
shall declare.
Section 7.03. Limitation Upon Distributions
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 Act or any other applicable law or any Basic
Document.
Section 7.04. Expenses.
Except as otherwise provided in this Agreement, and subject to
the provisions of 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 payment of the principal of
and interest on the Bonds issued by the Company;
(c) all expenses related to the business of the Company and
all routine administrative expenses of the Company, including any amounts
payable under the Administration Agreement and the Servicing Agreement, the
maintenance of books and records of the Company, and the preparation and
dispatch to the Member of checks, financial reports, tax returns and notices
required pursuant to this Agreement;
(d) 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;
(e) all expenses for indemnity or contribution payable by the
Company to any person;
(f) all expenses incurred in connection with the collection of
amounts due to the Company from any person;
23
(g) all expenses incurred in connection with the preparation
of amendments to this Agreement;
(h) all expenses incurred in connection with the liquidation,
dissolution and winding up of the Company; and
(i) all expenses otherwise allocated in good faith to the
Company by the Managers.
Section 7.05. Tax Elections.
The Managers shall make the following elections on behalf of
the Company:
(a) To elect the calendar year as the Company's Fiscal Year;
(b) To elect the accrual method of accounting;
(c) To elect to treat all organization and start-up costs of
the Company as deferred expenses amortizable over sixty (60) months under
Section 195 of the Code; and
(d) To elect with respect to such other federal, state and
local tax matters as the Managers shall agree upon from time to time.
Section 7.06. 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 or state
income tax return.
Section 7.07. Tax Matters Member.
The Member shall communicate and negotiate with the Internal
Revenue Service on any tax matter on behalf of the Member and the Company.
Section 7.08. Maintenance of Books.
The Company shall keep books and records of accounts in
accordance with GAAP and shall keep minutes of the proceedings of the Member,
the Managers and each committee of the Managers. The Fiscal Year shall be the
accounting year of the Company.
Section 7.09. Reports.
Within sixty (60) days following the end of each Fiscal Year
during the term of the Company, the Managers shall cause to be furnished to the
Member a balance sheet, an income statement and a statement of changes in
Member's capital account for, or as of the end of, that Fiscal Year. Such
financial statements shall be prepared in accordance with the accounting method
selected by the Managers consistently applied (except as therein noted), and
shall be accompanied by an audit report from a nationally recognized accounting
firm. The Managers also may cause to be prepared or delivered such other reports
as they may deem appropriate. The
24
Company shall bear the costs of all such financial statements and reports.
Section 7.10. Bank and Investment Accounts.
The Managers shall establish and maintain one or more separate
bank and investment accounts and arrangements for Company funds in the Company
name with such financial institutions and firms as the Managers determine.
ARTICLE VIII
INDEMNIFICATION
Section 8.01. Mandatory Indemnification of the Member, the
Special Members, and the Managers.
Any Person who was or is a party or is threatened to be made a
party to, or is involved in, any threatened, pending or completed action, suit
or proceeding, whether civil, criminal, administrative, arbitrative or
investigative (hereafter a "Proceeding"), or any appeal in such a Proceeding or
any inquiry or investigation that could lead to such a Proceeding, by reason of
the fact that such Person is or was the Member, a Special Member or a Manager,
or by reason of the fact that the Member, such Special Member or such Manager is
or was serving at the request of the Company as a member, director, manager,
officer, partner, venturer, proprietor, trustee, employee, agent or similar
functionary of another foreign or domestic corporation, limited liability
company, partnership, joint venture, trust, sole proprietorship, employee
benefit plan or other enterprise, shall be indemnified by the Company to the
fullest extent permitted by applicable law, as the same exists or may hereafter
be amended (but, in the case of any such amendment, only to the extent that such
amendment permits the Company to provide greater or broader indemnification
rights than such law permitted the Company to provide prior to such amendment)
against judgments, penalties (including without limitation excise and similar
taxes and punitive damages), fines, settlements and reasonable expenses
(including without limitation attorneys' fees) actually incurred by such Person
in connection with such Proceeding. It is expressly acknowledged that the
indemnification provided in this Article VIII could involve indemnification for
negligence or under theories of strict liability subject to the exclusions set
forth in Section 8.09(a). Notwithstanding anything herein to the contrary, for
so long as any Bonds are outstanding, no payment from funds of the Company (as
distinct from funds from other sources, such as insurance) of any indemnity
under this Article VIII shall be payable except out of funds available for
payment of Company expenses as provided in the Indenture.
Section 8.02. Mandatory Advancement of Expenses.
Expenses incurred by a Person of the type entitled to be
indemnified under Section 8.01 in defending any Proceeding shall be paid or
reimbursed by the Company in advance of the final disposition of the Proceeding,
without any determination as to such Person's ultimate entitlement to
indemnification under Section 8.01, upon receipt of a written affirmation by
such Person of such Person's good faith belief that such Person has met the
standard of conduct necessary for indemnification under applicable law and a
written undertaking by or on
25
behalf of such Person to repay all amounts so advanced if it shall ultimately be
determined that such Person is not entitled to be indemnified by the Company as
authorized in Section 8.01 or otherwise. The written undertaking shall be an
unlimited general obligation of the Person but need not be secured and shall be
accepted without reference to financial ability to make repayment.
Section 8.03. Indemnification of Officers, Employees and
Agents.
The Company shall indemnify and pay and advance expenses to an
officer, employee or agent of the Company to the same extent and subject to the
same conditions under which it may indemnify and pay and advance expenses to the
Member, any Special Member or any Manager under this Article VIII; and the
Company shall indemnify and pay and advance expenses to any Person who is or was
an officer, employee or agent of the Company and who is or was serving at the
request of the Company as a member, manager, director, officer, partner,
venturer, proprietor, trustee, employee, agent or similar functionary of another
foreign or domestic limited liability company, partnership, corporation,
partnership, joint venture, sole proprietorship, trust, employee benefit plan or
other enterprise against any liability asserted against such Person and incurred
by such Person in such a capacity or arising out of such Person's status as such
to the same extent and subject to the same conditions that the Company may
indemnify and pay and advance expenses to the Member, any Special Member or any
Manager under this Article VIII.
Section 8.04. Nonexclusivity of Rights.
The indemnification and advancement and payment of expenses
provided by this Article VIII (a) shall not be deemed exclusive of any other
rights to which the Member, a Special Member, a Manager or other Person seeking
indemnification may be entitled under any statute, agreement, decision of the
Member or disinterested Managers, or otherwise both as to action in such
Person's official capacity and as to action in another capacity while holding
such office, (b) shall continue as to any Person who has ceased to serve in the
capacity that initially entitled such Person to indemnity and advancement and
payment of expenses, and (c) shall inure to the benefit of the heirs, executors,
administrators, successors and assigns of the Member, such Special Member, such
Manager or such other Person.
Section 8.05. Contract Rights.
The rights granted pursuant to this Article VIII shall be
deemed to be contract rights, and no amendment, modification or repeal of this
Article VIII shall have the effect of limiting or denying any such rights with
respect to actions taken or Proceedings arising prior to any such amendment,
modification or repeal.
Section 8.06. Insurance.
The Company may purchase and maintain insurance or other
arrangement or both, at its expense, on behalf of itself or any Person who is or
was serving as the Member, a Special Member or a Manager, officer, employee or
agent of the Company, or is or was serving
26
at the request of the Company as a member, manager, director, officer, partner,
venturer, proprietor, trustee, employee, agent or similar functionary of another
foreign or domestic limited liability company, partnership, corporation,
partnership, joint venture, sole proprietorship, trust, employee benefit plan or
other enterprise, against any liability, expense or loss, whether or not the
Company would have the power to indemnify such Person against such liability
under the provisions of this Article VIII.
Section 8.07. Savings Clause.
If this Article VIII or any portion of this Agreement shall be
invalidated on any ground by any court of competent jurisdiction, then the
Company shall nevertheless indemnify and hold harmless the Member, each Special
Member, each Manager or any other Person indemnified pursuant to this Article
VIII as to costs, charges and expenses (including without limitation attorneys'
fees), judgments, fines and amounts paid in settlement with respect to any
action, suit or proceeding, whether civil, criminal, administrative or
investigative, to the fullest extent permitted by any applicable portion of this
Article VIII that shall not have been invalidated and to the fullest extent
permitted by applicable law.
Section 8.08. Other Ventures.
It is expressly agreed that the Member, any Special Member,
any Manager and any Affiliates, officers, directors, managers, stockholders,
partners or employees of the Member, any Special Member or any Manager, may
engage in other business ventures of every 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 8.09. Other Arrangements Not Excluded.
The indemnification and advancement of expenses authorized in
or ordered by a court pursuant to this Article VIII:
(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 the
Member, any Special Member or any Manager, officer, employee or agent in the
official capacity of such Person or an action in another capacity while holding
such position, except that indemnification, unless ordered by a court, may not
be made to or on behalf of the Member, any Special Member or any Manager if a
final adjudication established that its acts or omissions involved intentional
misconduct, fraud or a knowing violation of the law and was material to the
cause of action; and
(b) Continues for a person who has ceased to be the Member, a
Special Member or a Manager, officer, employee or agent and inures to the
benefit of the successors, heirs, executors and administrators of such a person.
ARTICLE IX
27
MISCELLANEOUS PROVISIONS
Section 9.01. Offset.
Whenever the Company is to pay any sum to the Member, any
amounts the Member owes the Company may be deducted from such sum before
payment.
Section 9.02. Notices.
Except as expressly set forth to the contrary in this
Agreement, all notices, requests, or consents provided for or permitted to be
given under this Agreement shall be in writing and shall be given either by
depositing such writing in the United States mail, addressed to the recipient,
postage paid, and registered or certified with return receipt requested or by
delivering such writing to the recipient in person, by reputable overnight
courier, or by facsimile transmission; and a notice, request or consent given
under this Agreement shall be effective on receipt by the Person to whom sent.
All notices, requests, and consents to be sent to the Member shall be sent to or
made to ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇.▇. ▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention:
General Counsel or such other address as the Member may specify by notice to the
Company and the Managers. Any notice, request, or consent to the Company or the
Managers must be given to the Managers at the following address: ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Managers. Whenever any notice is
required to be given by law or this Agreement, a written waiver thereof, signed
by the Person entitled to notice, whether before or after the time stated
therein, shall be deemed equivalent to the giving of such notice.
Section 9.03. Effect of Waiver or Consent.
A waiver or consent, express or implied, to or of any breach
or default by any Person in the performance by such Person of its obligations
with respect to the Company shall not be a consent or waiver to or of any other
breach or default in the performance by such Person of the same or any other
obligations of such Person with respect to the Company.
Section 9.04. Governing Law; Severability.
THIS AGREEMENT SHALL BE GOVERNED BY AND SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAW OF THE STATE OF DELAWARE, EXCLUDING ANY CONFLICT OF LAWS
RULE OR PRINCIPLE THAT MIGHT REFER THE GOVERNANCE OR THE CONSTRUCTION OF THIS
AGREEMENT TO THE LAW OF ANOTHER JURISDICTION. In the event of a direct conflict
between the provisions of this Agreement and any mandatory provision of the Act,
then the applicable provision of the Act shall control. If any provision of this
Agreement or the application thereof to any Person or circumstance is held
invalid or unenforceable to any extent, the remainder of this Agreement and the
application of that provision to other Persons or circumstances shall not be
affected thereby and such provision shall be enforced to the fullest extent
permitted by law.
Section 9.05. No Bankruptcy Petition; No Dissolution.
(a) The Member, each Special Member and each Manager
hereby covenants
28
and agrees (or shall be deemed to have hereby covenanted and agreed) that such
Member, Special Member or Manager shall not, prior to the date that is one year
and one day after the termination of the Indenture and the payment in full of
all of the outstanding Bonds, all other amounts owed under the Indenture
(including without limitation all amounts owed to third-party credit enhancers)
and all amounts owed by the Company under all Hedge Agreements and Interest Rate
Swap Agreements, acquiesce, petition or otherwise invoke or cause the Company to
invoke the process of any court or government 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
Issuer or any substantial part of the property of the Company, or ordering the
winding up or liquidation of the affairs of the Company; provided, however, that
nothing in this Section 9.05 shall constitute a waiver of any right to
indemnification, reimbursement or other payment from the Company pursuant to
this Agreement.
(b) To the fullest extent permitted by law, the Member, each
Special Member and each Manager hereby covenants and agrees (or shall be deemed
to have hereby covenanted and agreed) that, until the termination of the
Indenture and the payment in full of all Series of the Bonds, any other amounts
owed under the Indenture, including without limitation, any amounts owed to
third-party credit enhancers, and any amounts owed under any Hedge Agreement or
Interest Rate Swap Agreement, the Member, such Special Member and such Manager
shall not consent to, or make application for, or institute or maintain any
action for, the dissolution of the Company under Section 18-801 or 18-802 of the
Act or otherwise.
(c) In the event that the Member, any Special Member or any
Manager takes action in violation of this Section 9.05, the Company shall file
an answer with the court or otherwise properly contest the taking of such action
and raise the defense that the Member, the Special Member or the Manager, as the
case may be, has agreed in writing not to take such action and should be
estopped and precluded therefrom and such other defenses, if any, as its counsel
advises that it may assert.
(d) The provisions of this Section 9.05 shall survive the
termination of this Agreement and the resignation, withdrawal or removal of the
Member, any Special Member or any Manager. Nothing herein contained shall
preclude participation by the Member, any Special Member or a Manager in
assertion or defense of its claims in any such proceeding involving the Company.
Section 9.06. Amendment.
This Agreement may not be amended, except in writing by the
member and the Company, upon prior approval of the Trustee and with prior notice
to the Rating Agencies (as defined in the Indenture).
Section 9.07. Headings and Sections.
The headings in this Agreement are inserted for convenience
only and are in no way intended to describe, interpret, define, or limit the
scope, extent or intent of this Agreement
29
or any provision hereof.
Section 9.08. Binding Agreement.
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. In addition, the Independent
Managers shall be intended beneficiaries of this Agreement.
IN WITNESS WHEREOF, this Agreement is hereby executed by the
undersigned as of [ ] , 2002.
MEMBER:
ATLANTIC CITY ELECTRIC COMPANY
By: ____________________________________
Name:
Title:
COMPANY:
ATLANTIC CITY ELECTRIC TRANSITION
FUNDING LLC
By: ____________________________________
Name:
Title: Manager
30
Agreed and Consented to by the Special Members
and Independent Managers:
------------------------------------
[-------------------]
------------------------------------
[-------------------]
31
SCHEDULE A
SCHEDULE OF CAPITAL CONTRIBUTIONS OF MEMBER
COMMON INTEREST
CAPITAL COMMON INTEREST
MEMBER'S NAME CONTRIBUTION PERCENTAGE CAPITAL ACCOUNT
Atlantic City Electric Company $______* 100% $______*
------------------
* 0.5% of original principal amount of the Bonds.
SCHEDULE B
CERTIFICATE OF COMMON INTEREST
OF
ATLANTIC CITY ELECTRIC TRANSITION FUNDING LLC
A LIMITED LIABILITY COMPANY
ORGANIZED UNDER THE LAWS OF THE STATE OF DELAWARE
This Certificate is issued and shall be held subject to the
provisions of (i) the Certificate of Formation of ATLANTIC CITY ELECTRIC
TRANSITION FUNDING LLC, a limited liability company organized under the laws of
the State of Delaware (the "Company"), filed on March 28, 2001 with the
Secretary of State of the State of Delaware, as amended or supplemented from
time to time and (ii) the Limited Liability Company Agreement dated as of April
11, 2001 of the Company, as amended and restated on ________, 2002, as amended
or supplemented from time to time.
This Certificate of Common Interest certifies that Atlantic
City Electric Company is the registered holder of the entire Common Interest of
the Company, which Common Interest shall be transferable only on the books of
the Company by the holder hereof in person or by a duly authorized attorney upon
surrender of this Certificate with a proper endorsement.
IN WITNESS WHEREOF, this Company has caused this Certificate
to be signed by one of its duly authorized Managers this ____ day of _______,
2002.
------------------------------------
Title: Manager
ATLANTIC CITY ELECTRIC TRANSITION FUNDING LLC
For Value Received the undersigned hereby sells, assigns and
transfers unto _____________________________________ the entire Common Interest
of the Company represented by the within Certificate and does hereby irrevocably
constitute and appoint ______________________________ Attorney, to transfer said
Common Interest on the books of the Company with full power of substitution in
the premises.
Dated: ________________
____________________________________
B-34
SCHEDULE C
MANAGERS
Names
1. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
2. ▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇
3. ▇▇▇▇▇ ▇. ▇▇▇▇▇
4. [____] (Independent Manager)
5. [____] (Independent Manager)
SCHEDULE D
OFFICERS
NAMES OFFICE