EXHIBIT 3.2
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FOURTH AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
ALLEGHENY ENERGY SUPPLY COMPANY, LLC
This Limited Liability Company Agreement (together with the schedules
attached hereto, this "AGREEMENT") of Allegheny Energy Supply Company, LLC (the
"COMPANY"), is entered into by ALLEGHENY ENERGY, INC., a Maryland corporation
("ALLEGHENY"), and ML IBK POSITIONS, INC., a Delaware corporation ("MLIBK" and,
together with Allegheny, the "MEMBERS"). Capitalized terms used and not
otherwise defined herein have the meanings set forth on SCHEDULE A hereto.
The Members, by execution of this Agreement, hereby amend and restate
in entirety the Third Amended and Restated Limited Liability Company Agreement,
effective as of November 12, 1999, of the Company, a limited liability company
organized pursuant to and in accordance with the Delaware Limited Liability
Company Act (6 DEL. C. Sections 18-101 ET SEQ.), as amended from time to time
(the "ACT").
Section 1. NAME.
The name of the limited liability company formed hereby is Allegheny
Energy Supply Company, LLC.
Section 2. PRINCIPAL BUSINESS OFFICE.
The principal business office of the Company shall be located at ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇.
Section 3. REGISTERED OFFICE AND AGENT.
The address of the registered office of the Company for service of
process in the State of Delaware is c/o The Corporation Trust Company,
Corporation Trust Center, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇
of ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇. The name of the registered agent of the Company
at the foregoing address is The Corporation Trust Company.
Section 4. MEMBERS.
a. The mailing addresses of the Members are set forth on SCHEDULE B
attached hereto.
b. The Members may act by written consent of more than 50% of the
total outstanding percentage interests in the Company held by the Members (a
"MAJORITY"). MLIBK shall have no authority to bind the Company.
c. The Members shall exercise all of their rights under this Agreement
and under the Act with respect to the Company in accordance with their
respective percentage interests (to the extent required by this Agreement or the
Act) in the Company set forth on SCHEDULE B attached hereto (as it may be
amended from time to time in accordance with Section 11 hereof), provided that
Allegheny shall, irrespective of its actual percentage interest in the Company,
at all times have and exercise at least 80% of all the voting rights with
respect to the Company.
Section 5. EXISTENCE.
The existence of the Company as a separate legal entity shall continue
until all of the Members determine in writing to dissolve the Company (provided
that this Section shall not be construed to restrict or limit in any manner the
Company's merger or consolidation with any other entity or its demise in
connection with such action).
Section 6. PURPOSES.
a. The Company is formed for the object and purpose of, and the nature
of the business to be conducted and promoted by the Company is, engaging,
directly or indirectly through any of its subsidiaries, in any lawful act or
activity for which limited liability companies may be formed under the Act,
including, but not limited to, generating electrical power, entering into
notional principal contracts with respect to electricity supply, acting as a
wholesale power marketer within the jurisdiction of the Federal Energy
Regulatory Commission (the "FERC") and trading energy commodities.
b. The Company hereby agrees that: (i) any Officer of the Company be,
and they hereby are, authorized for and on behalf of the Company to designate
that a bank account be established to act as depository for the funds of the
Company for and during such period as they may from time to time deem necessary
or desirable in the interests of the Company and to open or close out from time
to time such account so selected or reselected; (ii) any Officer of the Company
be, and they hereby are, authorized and directed, in the name and on behalf of
the Company, to take any and all action that they may deem necessary or
advisable in order to establish such bank account from time to time for the
efficient conduct of the Company's business; (iii) such bank account be used to
initiate funds transfers and that any Officer of the Company be, and they hereby
are, authorized to sign on such bank account any wire transfer documents
necessary, including those that will designate those Officers of the Company who
may be authorized to initiate wire transfers by phone from such bank account to
Allegheny's bank account at PNC Bank and from such bank account to the Company's
bank account; (iv) any Officer of the Company be, and they hereby are,
authorized and directed, in the name and on behalf of the Company, to take any
and all action that they may deem necessary or advisable in order to establish
such account from time to time for the efficient conduct of the Company's
business; and (v) any Officer of the Company be, and they hereby are, authorized
to designate those Officers of the Company who may be authorized from time to
time to sign checks on such bank account.
Section 7. POWERS.
Subject to SECTION 8, the Company, the Board of Directors and the
Officers of the Company on behalf of the Company (i) shall have and exercise all
powers necessary,
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convenient or incidental to accomplish its purposes as set forth in SECTION 6,
and (ii) shall have and exercise all of the powers and rights conferred upon
limited liability companies formed pursuant to the Act.
Section 8. MANAGEMENT.
a. BOARD OF DIRECTORS. The business and affairs of the Company shall
be managed by or under the direction of a Board of not less than six Directors
designated by the Members. Subject to the immediately preceding sentence, the
Members may determine at any time in their sole and absolute discretion the
number of Directors to constitute the Board, and the authorized number of
Directors may be increased or decreased by the Board at any time in its sole and
absolute discretion, provided that Allegheny shall at all times designate at
least 80% of the Directors. The initial number of Directors shall be eight. Upon
the terms and subject to the conditions set forth in Section 5.12 of the Asset
Contribution and Purchase Agreement, MLCS shall have the right to nominate one
Director to serve on the Board, who, as contemplated by Section 5.12 of the
Asset Contribution and Purchase Agreement, may be a non-voting Director. Each
Director elected, designated or appointed by the Members shall hold office until
a successor is elected and qualified or until such Director's earlier death,
resignation, expulsion or removal. A Director may or may not be a Member. The
initial Directors designated by the Members are listed on SCHEDULE C hereto.
▇. ▇▇▇▇▇▇. The Board of Directors shall have the power to do any and
all acts necessary, convenient or incidental to or for the furtherance of the
purposes described herein, including all powers, statutory or otherwise. Subject
to SECTION 6, the Board of Directors has the authority to bind the Company.
c. MEETING OF THE BOARD OF DIRECTORS. The Board of Directors of the
Company may hold meetings, both regular and special, within or outside the
Commonwealth of Pennsylvania. Regular meetings of the Board may be held without
notice at such time and at such place as shall from time to time be determined
by the Board, provided that the Board of Directors shall have previously
distributed to each Director an annual schedule of regular meetings. Special
meetings of the Board may be called by the Chief Executive Officer or President
on not less than one day's notice to each Director by telephone, facsimile,
mail, telegram or any other means of communication, and special meetings shall
be called by the Chief Executive Officer, President or Secretary in like manner
and with like notice upon the written request of any one or more of the
Directors.
d. QUORUM: ACTS OF THE BOARD. At all meetings of the Board, a majority
of the Directors shall constitute a quorum for the transaction of business.
Except as otherwise provided in any other provision of this Agreement, the act
of a majority of the Directors present at any meeting at which there is a quorum
shall be the act of the Board. If a quorum shall not be present at any meeting
of the Board, the Directors present at such meeting may adjourn the meeting from
time to time, without notice other than announcement at the meeting, until a
quorum shall be present. Any action required or permitted to be taken at any
meeting of the Board or of any committee thereof may be taken without a meeting
if all members of the Board or committee, as the case may be, consent thereto in
writing, and the writing or writings are filed with the minutes of proceedings
of the Board or committee, as the case may be.
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e. ELECTRONIC COMMUNICATIONS. Members of the Board, or any committee
designated by the Board, may participate in meetings of the Board, 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.
f. COMMITTEES OF DIRECTORS.
i. The Board may, by resolution passed by a majority of the
whole Board, designate one or more committees, each committee
to consist of one or more of the Directors of the Company.
The Board may designate one or more Directors 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 unanimously appoint another
member of the Board 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 Board, shall have and may exercise all the powers and
authority of the Board 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 Board. Each committee shall
keep regular minutes of its meetings and report the same to
the Board when required.
g. COMPENSATION OF DIRECTORS; EXPENSES. The Board shall have the
authority to fix the compensation of Directors. The Directors may be paid their
expenses, if any, of attendance at meetings of the Board, which may be a fixed
sum for attendance at each meeting of the Board or a stated salary as Director.
No such payment shall preclude any Director from serving the Company in any
other capacity and receiving compensation therefor. Members of special or
standing committees may be allowed like compensation for attending committee
meetings.
h. REMOVAL OF DIRECTORS. Unless otherwise restricted by law, any
Directors nominated by Allegheny may be removed or expelled with or without
cause, at any time by Allegheny. Any vacancy caused by any such removal or
expulsion may be filled by Allegheny. Unless otherwise restricted by law, any
Directors nominated by MLCS may be removed or (x) expelled, with or without
cause, at any time by MLCS and (y) with cause, at any time by Allegheny. Any
vacancy caused by any such removal or expulsion may be filled by MLCS.
i. DIRECTORS AS AGENTS. To the extent of their powers set forth in
this Agreement and subject to SECTION 8, the Directors (except for the Director
nominated by MLCS) are agents of the Company for the purpose of the Company's
business, and the actions of the Directors (except for the Director nominated by
MLCS) taken in accordance with such powers set forth in this
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Agreement shall bind the Company. Except as provided in this Agreement or in a
resolution of the Directors, a Director may not bind the Company.
Section 9. OFFICERS.
a. OFFICERS. The initial and additional or successor Officers of the
Company shall be chosen by the Board and shall consist of at least a Chief
Executive Officer, a President, a Secretary and a Treasurer. The Board of
Directors may also choose one or more Vice Presidents, Assistant Secretaries and
Assistant Treasurers. Any number of offices may be held by the same person. The
Board shall choose a Chief Executive Officer, a President, a Secretary and a
Treasurer. The Board may appoint such other Officers and agents as it shall deem
necessary or advisable who shall hold their offices for such terms and shall
exercise such powers and perform such duties as shall be determined from time to
time by the Board. The salaries of all Officers and agents of the Company shall
be fixed by or in the manner prescribed by the Board. The Officers of the
Company shall hold office until their successors are chosen and qualified. Any
Officer may be removed at any time, with or without cause, by the affirmative
vote of a majority of the Board. Any vacancy occurring in any office of the
Company shall be filled by the Board. Upon the effectiveness of this Agreement,
the Officers of the Company designated by the Members are listed on SCHEDULE D
hereto and any persons formerly appointed as Officers of the Company shall
automatically cease to be Officers of the Company.
b. CHIEF EXECUTIVE OFFICER. The Chief Executive Officer of the Company
shall preside at all meetings of the Board, shall be responsible for the general
and active management of the business of the Company, shall see that all orders
and resolutions of the Board are carried into effect and shall have and perform
such other duties as from time to time may be assigned to him by the Board.
c. PRESIDENT. The President shall be the chief operating officer of
the Company, shall preside, in the absence of the Chief Executive Officer, at
all meetings of the Board, shall have general and active management of the
business of the Company and shall see that all orders and resolutions of the
Board are carried into effect. The President or any other Officer authorized by
the President or the Board shall execute all bonds, mortgages and other
contracts, except: (i) where required or permitted by law or this Agreement to
be otherwise signed and executed, including SECTION 7, (ii) where signing and
execution thereof shall be expressly delegated by the Board to some other
Officer or agent of the Company, and (iii) as otherwise permitted in SECTION 10.
d. 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 Directors, 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 Board may from time to time prescribe.
e. 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 Board and record all the
proceedings of the meetings of the Company and of the
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Board 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 meetings of the Members, if any, and special meetings
of the Board, and shall perform such other duties as may be prescribed by the
Board 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 Board (or if there be no such determination, then in
order of their election) 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 Board may from time to time prescribe.
f. 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 Board.
The Treasurer shall disburse the funds of the Company as may be ordered by the
Board, taking proper vouchers for such disbursements, and shall render to the
President and to the Board, at its regular meetings or when the Board so
requires, 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 Board (or if
there be no such determination, then in the order of their election) 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 Board may from time
to time prescribe.
g. OFFICERS AS AGENTS. The Officers, to the extent of their powers set
forth in this Agreement or otherwise vested in them by action of the Board not
inconsistent with this Agreement, are agents of the Company for the purpose of
the Company's business and, subject to SECTION 8, the actions of the Officers
taken in accordance with such powers shall bind the Company.
h. DUTIES OF BOARD AND OFFICERS. Except to the extent otherwise
provided herein, each Director and Officer 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 10. LIMITED LIABILITY.
Except as otherwise expressly provided by the Act, the debts,
obligations and liabilities of the Company, whether arising in contract, tort or
otherwise, shall be the debts, obligations and liabilities solely of the
Company, and neither the Members nor any Director shall be obligated personally
for any such debt, obligation or liability of the Company solely by reason of
being a Member or Director of the Company.
Section 11. MEMBERSHIP INTEREST.
On the date hereof, Allegheny's percentage interest in the Company
shall be 98.033% and MLIBK's percentage interest in the Company shall be 1.967%.
In the event additional members are admitted to the Company or additional
capital contributions
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are made pursuant to Section 13 hereof, each Member's percentage interest in the
Company shall be expressed as a percentage equal to the product of (x) 100 and
(y) a fraction, the numerator of which is the sum of (a) the product of the
Member's percentage interest in the Company immediately prior to such admission
or additional contribution and the fair market value of the Company at such time
and (b) the amount of any additional contribution made at that time by such
Member either pursuant to Section 13 or, in the case of a new Member, upon its
admission, and the denominator of which is the sum of the fair market value of
the Company at the time immediately prior to such admission or additional
contribution and the amount of all contributions made at the time of such
admission or additional contribution.
Section 12. CAPITAL CONTRIBUTIONS.
SCHEDULE B attached hereto sets forth, among other things, the initial
and subsequent capital contributions of property Allegheny has made to the
Company and the agreed value of such property.
Section 13. ADDITIONAL CAPITAL CONTRIBUTIONS.
For so long as MLIBK owns any of its percentage interests in the
Company, Allegheny may make capital contributions to the Company only at fair
market value, PROVIDED, HOWEVER, that Allegheny may contribute to the Company
the assets specified as "Exempted Assets" on Schedule B hereto at book value;
and PROVIDED, FURTHER, that the contribution to the Company of any or all of
such Exempted Assets shall not be taken into account as additional capital
contributions for purposes of Section 11 hereof.
The Members are not required to make any additional capital
contributions to the Company. However, Allegheny may make additional capital
contributions to the Company at any time. To the extent that a Member makes an
additional capital contribution (other than the Exempted Assets) to the Company,
the Members shall revise SCHEDULE B of this Agreement . The provisions of this
Agreement, including this SECTION 13, are intended to benefit the Members and,
to the fullest extent permitted by law, shall not be construed as conferring any
benefit upon any creditor of the Company (and no such creditor of the Company
shall be a third-party beneficiary of this Agreement) and the Members shall not
have any duty or obligation to any creditor of the Company to make any
contribution to the Company or to issue any call for capital pursuant to this
Agreement.
Section 14. DISTRIBUTIONS.
Distributions shall be made to each Member in accordance with its
respective percentage interest in the Company at the times and in the aggregate
amounts as determined by the Board. Notwithstanding any provision to the
contrary contained in this Agreement, the Company shall not be required to make
a distribution to the Members on account of its interest in the Company if such
distribution would violate the Act or any other applicable law or any agreement
of the Company.
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Section 15. TAX ALLOCATION AGREEMENT.
a. Parent shall provide to the Company a list of the entities that
will be included in the consolidated United States federal income tax return to
be filed by Parent for the current taxable period. Parent shall notify the
Company of any changes to such list for the current taxable period and for any
subsequent taxable period in which the Company is an "includible corporation"
(within the meaning of Section 1504 of the Code) with respect to Parent. To the
extent that the Company's Tax items are consolidated with the Tax items of any
other entities on any Tax Return for any taxable period, the Company shall
prepare pro forma Separate Company Tax Returns with respect to such taxable
period, shall provide copies of such Returns to Parent and each Member prior to
the date that is 30 days prior to the date of filing of the consolidated returns
that will include the items reported on the Separate Company Tax Returns, and
shall pay to the Parent an amount equal to the Taxes that would be payable by
the Company and its subsidiaries if the Company and its subsidiaries filed
Separate Company Tax Returns for such taxable period. The amount payable for any
taxable period shall take into account any estimated tax or withholding tax
previously paid by the Company or its subsidiaries with respect to such taxable
period and the carryforward (determined on a Separate Company Tax Return basis)
of any deductions, credits or other Tax items of the Company or its subsidiaries
from preceding taxable periods. Such payments shall be made to the Parent on or
prior to the date such payments (including estimated tax payments) would have
been due to the Internal Revenue Service (or such other relevant Tax authority)
if the Company and its subsidiaries were required to file Separate Company Tax
Returns with such Tax authority. In the event that Parent or any Member
disagrees with the amount of Taxes shown on any pro forma Separate Company Tax
Return provided to it by the Company, such party shall notify the Company of
such dispute within 10 days of its receipt of such return. In the event of such
a dispute, Parent, the Company and the Members agree to consult and to attempt
in good faith to resolve such dispute. If any such dispute is not resolved at
least 10 days prior to the due date for filing the consolidated return, the
party initiating such dispute shall be entitled to have such Separate Company
Tax Return and the computation of Taxes shown thereon reviewed by the Company's
outside accounting firm (currently PricewaterhouseCoopers LLP), and the
determination of such outside accounting firm with respect to such Separate
Company Tax Return and the Taxes shown thereon shall be binding upon all
parties. The fees of such outside accounting firm for the conduct of such review
shall be borne by the Parent and by the Member(s) that gave notice of dispute
(or, in the case of notice by the Parent and not by any other Member, by the
Parent and the Company) in the same proportion as the proportion of the dollar
amounts as to which each party did not prevail in such dispute.
b. Within 90 days following the end of any taxable period, the Company
shall determine the amount of any Tax refund, including a refund from the
carryback or carryforward of any deduction, credit, or other Tax item, to which
the Company would have been entitled if they had filed Separate Company Tax
Returns (including all claims for refunds to which it would have been entitled),
the Company shall thereupon notify the Parent and each Member of such
determination, and the Parent (or the respective Member that was the Parent for
the taxable period with respect to which such Tax refund is owing) shall pay
such amount to the Company within 45 days of the filing of the consolidated Tax
Return for such taxable period to which such Tax refund relates (such payment to
include any interest to which the Company would have been entitled if the
Company had filed Separate Company Tax Returns and the respective Tax authority
had paid such refund to the Company on the date such payment is actually made by
the
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Parent). In the event that any Member believes that the Company would be
entitled to a Tax Refund from the Parent pursuant to this SECTION 15 B. with
respect to any taxable period that the Company has not claimed, such Member
shall notify Parent, the Company and the other Members to that effect, setting
forth the amount in dispute and the basis therefor, and Parent, the Company and
the Members agree to consult and to attempt in good faith to resolve such
dispute. If any such dispute is not resolved within 30 days from the date of the
notice of dispute, such dispute shall be resolved by the Company's outside
accounting firm (currently PricewaterhouseCoopers LLP), and the determination of
such accounting firm shall be binding upon all parties. The fees of such outside
accounting firm shall be borne by the Parent and the Member(s) that gave notice
of dispute in the same proportion as the proportion of the dollar amounts as to
which each did not prevail in such dispute. The Company shall reimburse the
Parent if and to the extent that items giving rise to such refund are
subsequently disallowed by the respective Tax authority (such reimbursement to
include any interest which the Company or its subsidiaries would have been
required to pay if the Company and its subsidiaries had filed Separate Company
Tax Returns, received the refund and made repayment to the respective Tax
authority on the date such repayment is actually made to the Parent, and to
include penalties to the extent that Parent was actually liable therefor). Such
repayment shall be made within thirty (30) days following such notice of
disallowance except that, if the Parent has not paid any amounts attributable to
such disallowance and such disallowance is being contested before the
appropriate governmental authorities in good faith, the Company shall not be
required to make payment until such time as such disallowance is finally
determined in such proceeding.
c. (i) If adjustments are made by any Tax authority to any
consolidated return in which the Company is included after the date on which
such returns are filed with such Tax authority, and such adjustments would have
required a larger or smaller payment by the Company to the Parent, or by the
Parent to the Company, if made on the original return in accordance with the
provisions of paragraph a. or b. of this SECTION 15, then the Company shall pay
to the Parent or the Parent shall pay to the Company, as the case may be, an
appropriate supplemental amount to reflect such larger or smaller payment.
Payments by the Company and by the Parent under this paragraph shall include
interest, computed at the "overpayment rate" provided in Section 6621 of the
Code, compounded semiannually, to the extent that the Company would have been
required to pay or would have been entitled to receive interest, as the case may
be, if the Company had filed Separate Company Tax Returns and made or received
such payment to or from the respective Tax authority on the date such payment is
actually made. Such supplemental payments shall be made not later than the time
any payments are made to, or refunds (or credits) are received from, the
respective Tax authority. Parent shall notify the Members of the amount and
basis of any payment to be made to or by the Company hereunder. If any Member
disputes such payment, or the amount thereof, such Member shall give Parent, the
Company and the other Members written notice to that effect, setting forth the
amount disputed and the basis therefor, and Parent, the Company and the Members
agree to consult and to attempt in good faith to resolve such dispute. If any
such dispute is not resolved within 60 days from the date of the notice of
dispute, such dispute shall be resolved by the Company's outside accounting firm
(currently PricewaterhouseCoopers LLP) and the determination of such accounting
firm shall be binding upon all parties. The fees of such outside accounting firm
shall be borne by the Parent and the Member(s) that gave notice of dispute in
the same proportion as the proportion of the dollar amounts as to which each did
not prevail in such dispute.
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(ii) The Parent shall notify each Member within 10 days of receiving
notice from any Tax authority of any audit or proposed adjustment, or any demand
or claim, that could affect the liability of the Company for Taxes (or the
entitlement of the Company to a Tax refund payment hereunder), and shall
promptly notify the Members of the commencement of any other administrative or
judicial proceeding related to Taxes or Tax Returns of the Company. Parent shall
have the right to control any such proceeding; PROVIDED, HOWEVER, that Parent
shall diligently keep each Member appraised of all developments in such regard,
and shall promptly respond to all requests for information with respect to such
audit from any Member. Each Member shall have the right to participate in such
audit or other proceeding (solely as it relates to the Company) at its own
expense. Parent shall not enter into a compromise or settlement of any dispute
with a Tax authority except with the consent of the Members (which consent shall
not be unreasonably withheld). Parent agrees that in negotiating any compromise
or settlement of any dispute with any Tax authority it will act in good faith
and use reasonable efforts to ensure that the Company is not treated on a basis
less favorable than other members of the consolidated group of which Parent is
member. Parent, the Company and the Members agree to attempt in good faith to
resolve any disagreement with respect to a proposed settlement. If any such
disagreement is not resolved within 30 days, and if a Member does not consent to
a settlement or compromise of such dispute proposed by the Parent, then the
Parent and such Member shall select an independent outside accounting firm to
evaluate such dispute and the determination of such accounting firm shall be
binding on all parties. Such Member shall bear the cost of such independent
accounting firm (subject to reimbursement by Parent to the extent provided in
the next sentence) and shall reimburse the Company to the extent that (i) the
amount of Taxes determined by such accounting firm to be payable by the Company
with respect to dispute exceeds (ii) the total amount of Taxes that would have
been payable by the Company with respect to such dispute if such settlement or
compromise proposed by the Parent had been accepted at the time originally
proposed by Parent. The Parent shall thereupon reimburse such Member for the
cost of such independent accounting firm to the extent that the amount described
in clause (ii) in the foregoing sentence exceeds the amount described in clause
(i) thereof.
d. If any payment required to be made by the Parent to the Company, or
by the Company to the Parent, under this SECTION 15, is not made on or prior to
the date such payment is due, then (i) if such payment includes an interest
component, such interest component shall be computed to the date payment is
actually made notwithstanding the due date for such payment; and (ii) in the
case of payments other than Taxes, if such payment does not otherwise include an
interest component, interest shall accrue on the unpaid amounts from the date
such payment is due to the date such payment is actually made at "overpayment
rate" under Section 6621(a) of the Code, compounded semiannually.
e. The Parent shall indemnify and hold harmless the Company from and
against all Taxes of the Parent (and other corporations included in the
consolidated or combined return of the Parent and its subsidiaries), other than
Taxes of the Company, for any and all periods, and from and against any and all
Indemnifiable Tax Damages arising out of or in any manner directly attributable
to such Taxes.
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f. After such time as the Company (or any of its Tax items) shall
cease to be included in a consolidated return with the Parent, the Parent shall
reimburse the Company for the use of any Tax attributes of the Company in any
Tax Return of the Parent (or any of its Affiliates) to the extent that there was
not a corresponding benefit to the Company in determining amounts payable by the
Company to the Parent in respect of Taxes (or the amount of any refund to the
Company by the Parent in respect of Taxes) hereunder. Such reimbursement shall
be made at the time and in the amount, that such Tax attribute would have
reduced the Taxes payable by the Company had the Company filed Separate Company
Tax Returns and not been included in a consolidated Tax Return with the Parent.
g. In the case of income Taxes and income Tax Returns other than those
(if any) for which the Company is included in a consolidated return with the
Parent, the Company shall provide to the Parent (if any) and each Member copies
of all such Tax Returns of the Company at least 30 days prior to the due date
for filing such returns (including extensions). A Member shall notify the
Company of any dispute with respect to any such Tax Return within 10 days of its
receipt of such return. In the event of such a dispute, the Company and the
Members agree to consult and to attempt in good faith to resolve such dispute.
If any such dispute is not resolved at least 10 days prior to the due date for
filing the consolidated return, such dispute shall be resolved by the Company's
outside accounting firm (currently PricewaterhouseCoopers LLP), and the
determination of such accounting firm shall be binding upon all parties. The
fees of such outside accounting firm shall be borne by the Company and the
Member(s) that gave notice of dispute in the same proportion as the proportion
of the dollar amounts as to which each did not prevail in such dispute. To the
extent that the Company (or any of its subsidiaries) is included in a
consolidated or combined return with the Parent, the Company shall provide to
the Parent and each Member, within 30 days after the original due date for the
filing of such returns (without regard to any extension granted in respect
thereof) (or, if earlier, prior to the date that is 30 days prior to the date of
filing of the consolidated returns that will include the Company), a copy of all
information required to be included in such consolidated or combined return as
relates to the Company or any of its subsidiaries (to the extent that such
information was not contained in the pro forma Separate Company Tax Returns
prepared and delivered pursuant to SECTION 15 a. hereof).
h. The Company shall promptly notify the Members in writing of the
commencement of any Tax audit or administrative or judicial proceeding or any
demand or claim related to Taxes or Tax Returns of the Company. Thereafter the
Company shall diligently keep each Member appraised of all developments in such
regard, and shall promptly respond to all requests for information with respect
to such audit from any Member. Each Member, if it receives written notice
thereof (other than pursuant to the preceding sentence), shall promptly notify
the Company and the other Members in writing of its receipt of notice of the
commencement of any Tax audit or administrative or judicial proceeding or any
demand or claim which relates to any taxable year or portion thereof of the
Company. Except in the case of consolidated returns governed by SECTION 15 c.,
the Company shall have the right to control any such proceeding; PROVIDED,
HOWEVER, that each Member shall have the right to participate in such audit or
other proceeding at its own expense. The Company shall not enter into a
compromise or settlement of any dispute with a Tax authority except with the
written consent of the Members (which consent shall not be unreasonably
withheld); PROVIDED, HOWEVER, that, if a Member does not consent to a settlement
or compromise proposed by the Company, then such Member shall have the right to
assume control of the proceeding, and such Member shall reimburse the
11
Company to the extent that the amount of Taxes finally determined to be payable
by the Company with respect to such proceeding, plus reasonable professional
fees and other third-party costs incurred by or on behalf of the Company with
respect to such issue subsequent to the date such settlement or compromise was
proposed by the Company, exceeds the total amount of Taxes that would have been
payable by the Company if such settlement or compromise proposed by the Company
had been accepted (and the remainder shall be borne by the Company).
i. The Company, the Parent and the Members will provide each other
with such cooperation and information on a timely basis as either the Company or
the Parent or any Member reasonably may request in filing any Tax Return,
amended Tax Return or claim for refund, determining a liability for Taxes or a
right to a refund of Taxes or participating in or conducting any audit or other
proceeding in respect of Taxes. Such cooperation and information shall include
providing copies of relevant Tax Returns of the Company or portions thereof,
together with accompanying schedules and related work papers and documents
relating to rulings or other determinations by Tax authorities, but in no event
shall the Parent or any Member be required by any provision of this Agreement to
disclose to any other party any information relating to its operations other
than those of the Company or the Company's subsidiaries. The Company and each
Member shall make its employees available on a mutually convenient basis to
provide explanations of any documents or information provided by it hereunder.
The Company shall make available to each of the Members, on a mutually
convenient basis, such personnel as would be reasonably necessary or helpful to
each of the Members in connection with the conduct of any audit or
administrative or judicial proceeding with respect to which any Member has any
potential liability. The Company shall retain all returns. schedules and work
papers and all records or other documents relating to tax matters of the Company
until the later of (i) the expiration of the statute of limitations of the
taxable periods to which such returns and other documents relate (including
extensions to the extent such party has notice of such extensions for the
respective tax periods), or (ii) 6 years following the due date (without
extension) for such returns. Notwithstanding the foregoing, the Company shall
not dispose of any records or any other documents relating to Tax matters unless
it has previously notified each Member and each Member has declined to take
custody of such records or other documents. Any information obtained under this
SECTION 15 j. shall be kept confidential, except as may be otherwise necessary
in connection with the filing of returns or claims for refund or in conducting
an audit or other proceeding.
j. In the event that any Member (including a Parent) or the Company
shall expend any amounts that could, under the provisions hereof, constitute
Indemnifiable Tax Damages, such Member or the Company shall consult with the
other Members and the Company in advance of any such initial expenditure, and on
an ongoing basis, with respect to the amount and nature of the expenses being so
incurred, and each shall use reasonable efforts in good faith to minimize the
amount of Indemnifiable Tax Damages.
k. Reference in this SECTION 15 to the Company shall include reference
to its subsidiaries. Reference to returns filed on a consolidated basis shall
include reference to returns filed on a combined, unitary or other similar
basis.
12
Section 16. ARM'S-LENGTH TRANSACTIONS.
Other than with respect to agreements relating to provider of last
resort or similar obligations, all agreements, arrangements, transactions or
otherwise between Allegheny (or any of its Affiliates other than the Company)
and the Company after the date hereof shall be entered into on the terms and
conditions that two unaffiliated parties would have agreed as fair and
reasonable (unless a different standard is required by the SEC under PUHCA (and
the rules and regulations thereunder) or the FERC under the Federal Power Act
(and the rules and regulations thereunder), or any state utility regulatory body
in which case such SEC, FERC or state standard shall apply).
Section 17. BOOKS AND RECORDS.
The Board shall keep or cause to be kept complete and accurate books of
account and records with respect to the Company's business. The books of the
Company shall at all times be maintained by the Board. The Members and their
duly authorized representatives shall have the right to receive copies of
records relating to any adjustments of the percentage interests in the Company.
The Company's books of account shall be kept using the method of accounting
determined by the written consent of a Majority. The Company's independent
auditor, if any, shall be an independent public accounting firm selected by a
Majority.
Section 18. REPORTS.
a. Within 60 days after the end of each fiscal quarter, the Board
shall cause to be prepared an unaudited report setting forth as of the end of
such fiscal quarter:
i. unless such quarter is the last fiscal quarter, a balance sheet
of the Company; and
ii. unless such quarter is the last fiscal quarter, an income
statement of the Company for such fiscal quarter.
b. The Board shall use diligent efforts to cause to be prepared and
mailed to the Members, as of the date audited financial statements have to be
prepared in accordance with the Securities and Exchange Act of 1934, as amended,
an audited report setting forth as of the end of such fiscal year:
i. a balance sheet of the Company; and
ii. an income statement of the Company for such fiscal year.
c. The Board shall, after the end of each fiscal year, use reasonable
efforts to cause the Company's independent accountants, if any, to prepare and
transmit to the Members as promptly as possible any such tax information as may
be reasonably necessary to enable the Members to prepare their federal, state
and local income tax returns relating to such fiscal year.
13
Section 19. OTHER BUSINESS.
The Members and any Affiliate of the Members may engage in or possess
an interest in other business ventures (unconnected with the Company) of every
kind and description, independently or with others; PROVIDED, that the foregoing
shall not release MLIBK or any of its Affiliates from, or otherwise affect in
any respect, the obligations of MLIBK and its Affiliates set forth in Section
5.08 of the Asset Contribution and Purchase Agreement. The Company shall not
have any rights in or to such independent ventures or the income or profits
therefrom by virtue of this Agreement.
Section 20. EXCULPATION AND INDEMNIFICATION.
a. Neither the Members nor any Officer, Director, employee or agent of
the Company nor any employee, representative, agent or Affiliate of the Members
(collectively, the "COVERED PERSONS") shall be liable to the Company or any
other Person who has an interest in or claim against the Company for any loss,
damage or claim incurred by reason of any act or omission performed or omitted
by such Covered Person in good faith on behalf of the Company and in a manner
reasonably believed to be within the scope of the authority conferred on such
Covered Person by this Agreement, except that a Covered Person shall be liable
for any such loss, damage or claim incurred by reason of such Covered Person's
gross negligence or willful misconduct.
b. To the fullest extent permitted by applicable law, a Covered Person
shall be entitled to indemnification from the Company for any loss, damage or
claim incurred by such Covered Person by reason of any act or omission performed
or omitted by such Covered Person in good faith on behalf of the Company and in
a manner reasonably believed to be within the scope of the authority conferred
on such Covered Person by this Agreement, except that no Covered Person shall be
entitled to be indemnified in respect of any loss, damage or claim incurred by
such Covered Person by reason of such Covered Person's gross negligence or
willful misconduct with respect to such acts or omissions; PROVIDED, HOWEVER,
that any indemnity under this SECTION 20 by the Company shall be provided out of
and to the extent of Company assets only, and the Members shall not have
personal liability on account thereof; and PROVIDED FURTHER that, so long as any
Obligation is outstanding, no indemnity payment from funds of the Company (as
distinct from funds from other sources, such as insurance) of any indemnity
under this SECTION 20 shall be payable from amounts allocable to any other
Person and, so long as any Obligation is outstanding, all such indemnity
payments under this SECTION 20 shall be subordinated to any amounts payable to
any other Person.
c. To the fullest extent permitted by applicable law, expenses
(including legal fees) incurred by a Covered Person defending any claim, demand,
action, suit or proceeding shall, from time to time, be advanced by the Company
prior to the final disposition of such claim, demand, action, suit or proceeding
upon receipt by the Company of an undertaking by or on behalf of the Covered
Person to repay such amount if it shall be determined that the Covered Person is
not entitled to be indemnified as authorized in this SECTION 20; PROVIDED,
HOWEVER, that any such advance shall be subordinated to any amounts payable to
any other Person.
d. A Covered Person shall be fully protected in relying in good faith
upon the records of the Company and upon such information, opinions, reports or
statements presented to
14
the Company by any Person as to matters the Covered Person reasonably believes
are within such other Person's professional or expert competence and who has
been selected with reasonable care by or on behalf of the Company, including
information, opinions, reports or statements as to the value and amount of the
assets, liabilities, or any other facts pertinent to the existence and amount of
assets from which distributions to the Members might properly be paid.
e. To the extent that, at law or in equity, a Covered Person has
duties (including fiduciary duties) and liabilities relating thereto to the
Company or to any other Covered Person, a Covered Person acting under this
Agreement shall not be liable to the Company or to any other Covered Person for
its good faith reliance on the provisions of this Agreement or any approval or
authorization granted by the Company or any other Covered Person. The provisions
of this Agreement, to the extent that they restrict the duties and liabilities
of a Covered Person otherwise existing at law or in equity, are agreed by the
Members to replace such other duties and liabilities of such Covered Person.
f. The foregoing provisions of this SECTION 20 shall survive any
termination of this Agreement.
Section 21. TRANSFER AND ASSIGNMENTS.
Allegheny may transfer, convey, assign or otherwise dispose of, in
whole or in part, its percentage interest in the Company to any person. No other
Member of the Company may transfer, convey, assign or otherwise dispose of, in
whole or in part, its percentage interests in the Company; PROVIDED, that MLIBK
may transfer, convey, assign or otherwise dispose of its percentage interests in
the Company as permitted by Section 5.18 of the Asset Contribution and Purchase
Agreement. If any Member transfers all of its percentage interest in the Company
pursuant to and in accordance with this SECTION 21, the transferee shall be
admitted to the Company as a member of the Company upon its execution of an
instrument signifying its agreement to be bound by the terms and conditions of
this Agreement, which instrument may be a counterpart signature page to this
Agreement. Such admission shall be deemed effective immediately prior to the
transfer and, immediately following such admission, the transferor Member shall
cease to be a member of the Company. Notwithstanding anything in this Agreement
to the contrary, any successor to a Member by merger or consolidation shall,
without further act, take the place of such Member hereunder, and such merger or
consolidation shall not constitute an assignment for purposes of this Agreement
and the Company shall continue without dissolution.
Section 22. ADMISSION OF ADDITIONAL MEMBERS.
One or more additional members of the Company may be admitted to the
Company with the written consent of a Majority.
Section 23. DISSOLUTION.
a. Subject to SECTION 8, the Company shall be dissolved, and its
affairs shall be wound up, upon the first to occur of the following: (i) the
termination of the legal existence of the last remaining member of the Company
or the occurrence of any other event which
15
terminates the continued membership of the last remaining member of the Company
in the Company unless the business of the Company is continued in a manner
permitted by this Agreement or the Act or (ii) the entry of a decree of judicial
dissolution under the Act. 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 (x) to continue the Company and (y) 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.
b. Notwithstanding any other provision of this Agreement, the
Bankruptcy of a Member shall not cause such 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.
c. In the event of dissolution, the Company shall conduct only such
activities as are necessary to wind up its affairs (including the sale of the
assets of the Company in an orderly manner), and the assets of the Company shall
be applied in the manner, and in the order of priority, set forth in Section
18-804 of the Act.
d. The Company shall terminate when (i) all of the assets of the
Company, after payment of or due provision for all debts, liabilities and
obligations of the Company, shall have been distributed to the Members in the
manner provided for in this Agreement and (ii) the Certificate of Formation
shall have been canceled in the manner required by the Act.
Section 24. WAIVER OF PARTITION; NATURE OF INTEREST.
Except as otherwise expressly provided in this Agreement, to the
fullest extent permitted by law, each Member 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 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 Members shall not
have any interest in any specific assets of the Company, and the Members shall
not have the status of creditors with respect to any distribution pursuant to
SECTION 14 hereof. The percentage interests of the Members in the Company are
personal property.
Section 25. BENEFITS OF AGREEMENT; NO THIRD-PARTY RIGHTS.
None of the provisions of this Agreement shall be for the benefit of or
enforceable by any creditor of the Company or by any creditor of any of the
Members. Nothing in this Agreement shall be deemed to create any right in any
Person (other than Covered Persons) not a party hereto, and this Agreement shall
not be construed in any respect to be a contract in whole or in part for the
benefit of any third Person.
16
Section 26. SEVERABILITY OF PROVISIONS.
Each provision of this Agreement shall be considered severable and if
for any reason any provision or provisions herein are determined to be invalid,
unenforceable or illegal under any existing or future law, such invalidity,
unenforceability or illegality shall not impair the operation of or affect those
portions of this Agreement which are valid, enforceable and legal.
Section 27. ENTIRE AGREEMENT.
This Agreement constitutes the entire agreement of the parties with
respect to the subject matter hereof.
Section 28. GOVERNING LAW.
This Agreement shall be governed by and construed under the laws of the
State of Delaware (without regard to conflict of laws principles), all rights
and remedies being governed by said laws.
Section 29. AMENDMENTS.
Subject to SECTION 8, this Agreement may be modified, altered,
supplemented or amended pursuant to a written agreement executed and delivered
by a Majority; PROVIDED, that no modification, alteration, supplement or
amendment shall affect in any material respect the rights of MLIBK (or its
successors or assigns) as a Member (and it being understood that any merger or
consolidation of the Company with any other entity shall not be deemed a
modification, alteration, supplement or amendment) including the rights of MLIBK
to: (i) maintain its percentage interest pursuant to the formula set forth in
Section 11 herein; (ii) transfer its percentage interest in the Company to a
wholly owned subsidiary of ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., Inc. in accordance with Section
21 herein; and (iii) exercise its right to sell its percentage interest in
accordance with Section 5.19 of the Asset Contribution and Purchase Agreement;
nor shall any modification, alteration, supplement or amendment affect in any
material respect the rights of MLCS (or its successors or assigns) to (x)
nominate one Director to serve on the Board; (y) remove or expel, with or
without cause, at any time, such nominated director.
Section 30. COUNTERPARTS.
This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original of this Agreement and all of which together
shall constitute one and the same instrument.
Section 31. NOTICES.
Any notices required to be delivered hereunder shall be in writing and
personally delivered, mailed or sent by telecopy, electronic mail or other
similar form of rapid transmission, and shall be deemed to have been duly given
upon receipt (a) in the case of the Company, to the Company at its address in
SECTION 2, (b) in the case of the Members, to the Members at their addresses as
listed on SCHEDULE B attached hereto and (c) in the
17
case of either of the foregoing, at such other address as may be designated by
written notice to the other parties.
Section 32. EFFECTIVENESS.
This Agreement shall be effective as of June 29, 2001.
18
IN WITNESS WHEREOF, the undersigned, intending to be legally bound
hereby, have duly executed this Fourth Amended and Restated Limited Liability
Company Agreement as of the 29th day of June, 2001.
MEMBERS:
ALLEGHENY ENERGY, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Senior Vice President
ML IBK POSITIONS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
19
SCHEDULE A
DEFINITIONS
(a) DEFINITIONS
When used in this Agreement, the following terms not otherwise defined
herein have the following meanings:
"ACT" has the meaning set forth in the preamble to this Agreement.
"AFFILIATE" means, with respect to any Person, any other Person
directly or indirectly Controlling or Controlled by or under direct or indirect
common Control with such Person.
"AGREEMENT" means this Fourth Amended and Restated Limited Liability
Company Agreement of the Company, together with the schedules attached hereto,
as amended, restated or supplemented or otherwise modified from time to time.
"ALLEGHENY" has the meaning set forth in the preamble to this
Agreement.
"ASSET CONTRIBUTION AND PURCHASE AGREEMENT" means the Asset
Contribution and Purchase Agreement, dated January 8, 2001, as amended by the
First Amendment to the Asset Contribution and Purchase Agreement, dated March 2,
2001, between ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., Inc. and MLCS, as sellers, and Allegheny, the
Company and Allegheny Energy Global Markets, LLC, as purchasers.
"BANKRUPTCY" means, with respect to any Person, if such Person (i)
makes an assignment for the benefit of creditors, (ii) files a voluntary
petition in bankruptcy, (iii) is adjudged a 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, if 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 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 replace the definition of `Bankruptcy" set forth in
Sections 18-101(10 and 18-304 of the Act.
"BOARD" or "BOARD OF DIRECTORS" means the Board of Directors of the
Company.
A-1
"CERTIFICATE OF FORMATION" means the Certificate of Formation of the
Company filed with the Secretary of State of the State of Delaware on November
12, 1999, as amended or amended and restated from time to time.
"CODE" means the Internal Revenue Code.
"COMPANY" means Allegheny Energy Supply Company, LLC, a Delaware
limited liability company.
"CONTROL" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person, whether
through the ownership of voting securities or general partnership or managing
member interests, by contract or otherwise. "Controlling" and "Controlled" shall
have correlative meanings. Without limiting the generality of the foregoing, a
Person shall be deemed to Control any other Person in which it owns, directly or
indirectly, a majority of the ownership interests.
"COVERED PERSONS" has the meaning set forth in SECTION 20 a.
"DIRECTORS" means the Persons elected to the Board of Directors from
time to time by the Members in their capacity as managers of the Company. Each
Director (other than any Director nominated by MLCS) is hereby designated as a
"manager" of the Company within the meaning of Section 18-101(10) of the Act.
"FERC" has the meaning set forth in SECTION 6 hereof.
"INDEMNIFIABLE TAX DAMAGES" means any and all claims, liabilities,
losses, damages, costs and expenses arising out of the claim covered by the
respective indemnity, but only to the extent that any of the foregoing are
payable to third parties (including, without limitation, court costs and
reasonable fees of independent professionals incurred in the investigation,
defense or settlement of the claim covered by the respective indemnity).
"MAJORITY" has the meaning set forth in SECTION 4.
"MEMBERS" means Allegheny and MLIBK and includes any Person admitted as
an additional member of the Company or a substitute member of the Company
pursuant to the provisions of this Agreement, each in its capacity as a member
of the Company.
"MLCS" shall mean ▇▇▇▇▇▇▇ ▇▇▇▇▇ Capital Services, Inc., a Delaware
corporation.
"MLIBK" has the meaning set forth in the preamble to this Agreement.
"OBLIGATIONS" shall mean the indebtedness, liabilities and obligations
of the Company under or in connection with this Agreement or any related
document in effect as of any date of determination.
"OFFICER" means an officer of the Company described in SECTION 9
hereof.
A-2
"PARENT" means the entity that files a Tax Return which includes the
Tax items of the Company and its subsidiaries on a consolidated basis. If the
Parent is not a Member, then reference to the Parent includes reference to any
Member that is included in the consolidated return with the Parent.
"PERSON" means any individual, corporation, partnership, joint venture,
limited liability company, limited liability partnership, association, joint
stock company, trust, unincorporated organization, or other organization,
whether or not a legal entity, and any governmental authority.
"PUHCA" means the Public Utility Holding Company Act of 1935, as
amended.
"SEPARATE COMPANY TAX RETURNS" means Tax Returns for the Company as
such Tax Returns would be prepared and filed if they were prepared and filed
without consolidation with any other entities (other than the Company and its
subsidiaries), but in each case with consolidation of the Company and its
subsidiaries to the maximum extent permitted for the respective Tax Return. Each
Separate Company Tax Return shall not report any item in a manner that is
inconsistent with the manner in which any corresponding item has been previously
reported on any Tax Return of the Company or on any other Separate Company Tax
Return unless such inconsistent treatment is (i) required due to a change in law
or circumstances, or (ii) permitted by law, the Company elects to make such
change in treatment, and such change would not be prejudicial to the Parent.
"SEC" means the United States Securities and Exchange Commission.
"TAX" or "TAXES" means all federal, state, local and foreign income,
gross receipts, sales, use, employment, franchise, profits, excise, property or
other taxes, estimated taxes, fees, stamp taxes and duties, assessments or
charges of any kind whatsoever (whether payable directly or by withholding),
together with any interest and any penalties, additions to tax or additional
amounts imposed by any taxing authority with respect thereto.
"TAX RETURN" or "TAX RETURNS" means all returns or reports required to
be filed under any statute, rule or regulation relating to Taxes, including
attachments, schedules or amendments thereof.
(b) RULES OF CONSTRUCTION
Definitions in this Agreement apply equally to both the singular and
plural forms of the defined terms. The words "include" and "including" shall be
deemed to be followed by the phrase "without limitation." The terms "herein,"
"hereof" and "hereunder" and other words of similar import refer to this
Agreement as a whole and not to any particular Section, paragraph or
subdivision. The Section titles appear as a matter of convenience only and shall
not affect the interpretation of this Agreement. All Section, paragraph, clause,
Exhibit or Schedule references not attributed to a particular document shall be
references to such parts of this Agreement.
A-3
SCHEDULE B
MEMBERS
---------------------------------------------------------------------------------------------
NAME MAILING ADDRESS PERCENTAGE INTEREST IN THE COMPANY
---------------------------------------------------------------------------------------------
Allegheny Energy, Inc. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ 98.033%
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
---------------------------------------------------------------------------------------------
ML IBK Positions, Inc. 4 World Financial Center 1.967%
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------------------------------------------------------------------
CAPITAL CONTRIBUTIONS
Agreed Value of Initial Capital $100,000
Contribution:
Agreed Value of Subsequent Capital Allegheny Energy, Inc.: $5,731,000,000
Contribution: ML IBK Positions: $115,000,000
EXEMPTED ASSETS
1. All of the generating assets of Monangahela Power Company.
2. The Assets to be contributed to the Company pursuant to that certain
Purchase and Sale Agreement, dated as of November 11, 2000, by and between Enron
North America Corp., a Delaware corporation, and the Company.
3. The hydro-electric generating assets located in the State of Virginia
of The Potomac Edison Company.
B-1
SCHEDULE C
--------------------------------------------------------------------------------
Directors Nominated by Allegheny Advisory Director Nominated by MLCS
(non-voting)
--------------------------------------------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇, Chairman ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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SCHEDULE D
OFFICERS TITLE
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▇▇▇▇ ▇. ▇▇▇▇ Chairman of the Board &
Chief Executive Officer
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ President and Chief Operating Officer
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Vice President
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ Vice President
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Vice President
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ Vice President
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Secretary
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇. Assistant Secretary
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Assistant Secretary
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Assistant Secretary
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ Assistant Secretary
▇▇▇▇▇▇ ▇. ▇▇▇▇ Controller
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Treasurer
▇▇▇▇▇ ▇▇▇▇▇▇ Assistant Treasurer
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Assistant Treasurer
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