AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT OF JCP&L TRANSITION FUNDING II LLC Dated as of ___________, 2006
Exhibit
4(c)
AMENDED
AND RESTATED
OF
JCP&L TRANSITION FUNDING II LLC
Dated
as
of ___________, 2006
TABLE
OF CONTENTS
Page
|
ARTICLE
I
|
DEFINITIONS
|
1
|
|
SECTION
1.01
|
Capitalized
Terms
|
1
|
|
SECTION
1.02
|
Other
Definitional Provisions
|
6
|
|
ARTICLE
II
|
CONTINUATION
OF THE LIMITED LIABILITY COMPANY
|
6
|
|
SECTION
2.01
|
Continuation;
Filings
|
6
|
|
SECTION
2.02
|
Name
and Office
|
7
|
|
SECTION
2.03
|
Business
Purpose
|
7
|
|
SECTION
2.04
|
Term
|
7
|
|
SECTION
2.05
|
No
State Law Partnership
|
7
|
|
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
|
11
|
|
ARTICLE
III
|
MANAGEMENT
|
12
|
|
SECTION
3.01
|
Management
by Managers
|
10
|
|
SECTION
3.02
|
Acts
by Managers
|
12
|
|
SECTION
3.03
|
Number
and Qualifications
|
12
|
|
SECTION
3.04
|
Independent
Managers
|
13
|
|
SECTION
3.05
|
Appointment
and Vacancy
|
13
|
|
SECTION
3.06
|
Term
|
13
|
|
SECTION
3.07
|
Removal
|
14
|
|
SECTION
3.08
|
Resignation
|
12
|
|
SECTION
3.09
|
Place
of Meetings of Managers
|
12
|
|
SECTION
3.10
|
Meetings
of Managers
|
12
|
|
SECTION
3.11
|
Quorum;
Majority Vote
|
12
|
|
SECTION
3.12
|
Methods
of Voting; Proxies
|
14
|
|
SECTION
3.13
|
Actions
Without a Meeting
|
13
|
|
SECTION
3.14
|
Telephone
and Similar Meetings
|
13
|
|
SECTION
3.15
|
Managers
|
13
|
i
|
ARTICLE
IV
|
OFFICERS
|
13
|
|
SECTION
4.01
|
Designation;
Term; Qualifications
|
13
|
|
SECTION
4.02
|
Removal
and Resignation
|
15
|
|
SECTION
4.03
|
Vacancies
|
14
|
|
SECTION
4.04
|
Compensation
|
14
|
|
ARTICLE
V
|
MEMBER
|
14
|
|
SECTION
5.01
|
Powers
|
14
|
|
SECTION
5.02
|
Compensation
of Member
|
14
|
|
SECTION
5.03
|
Actions
of Member
|
15
|
|
SECTION
5.04
|
Control
by Member
|
15
|
|
SECTION
5.05
|
Special
Members
|
15
|
|
ARTICLE
VI
|
COMMON
INTEREST
|
16
|
|
SECTION
6.01
|
General
|
16
|
|
SECTION
6.02
|
Distributions
|
16
|
|
SECTION
6.03
|
Rights
on Dissolution and Winding Up
|
16
|
|
SECTION
6.04
|
Redemption
|
17
|
|
SECTION
6.05
|
Voting
Rights
|
17
|
|
SECTION
6.06
|
Class
|
17
|
|
ARTICLE
VII
|
ALLOCATIONS;
DISTRIBUTIONS; EXPENSES; TAXES; BOOKS; REPORTS; AND BANK
ACCOUNTS
|
17
|
|
SECTION
7.01
|
Allocations
|
17
|
|
SECTION
7.02
|
Distributions
|
17
|
|
SECTION
7.03
|
Limitation
Upon Distributions
|
17
|
|
SECTION
7.04
|
Expenses
|
17
|
|
SECTION
7.05
|
Annual
Tax Information
|
18
|
|
SECTION
7.06
|
Tax
Matters
|
18
|
|
SECTION
7.07
|
Maintenance
of Books
|
18
|
|
SECTION
7.08
|
Reports
|
18
|
|
SECTION
7.09
|
Bank
and Investment Accounts
|
19
|
|
ARTICLE
VIII
|
INDEMNIFICATION
|
19
|
|
SECTION
8.01
|
Mandatory
Indemnification of the Member, the Special Members and the
Managers
|
19
|
|
SECTION
8.02
|
Mandatory
Advancement of Expenses
|
19
|
|
SECTION
8.03
|
Indemnification
of Officers, Employees and Agents
|
20
|
|
SECTION
8.04
|
Nonexclusivity
of Rights
|
20
|
ii
|
SECTION
8.05
|
Contract
Rights
|
20
|
|
SECTION
8.06
|
Insurance
|
21
|
|
SECTION
8.07
|
Savings
Clause
|
21
|
|
SECTION
8.08
|
Other
Ventures
|
21
|
|
SECTION
8.09
|
Survival
|
21
|
|
ARTICLE
IX
|
MISCELLANEOUS
PROVISIONS
|
21
|
|
SECTION
9.01
|
Offset
|
21
|
|
SECTION
9.02
|
Notices
|
21
|
|
SECTION
9.03
|
Effect
of Waiver or Consent
|
22
|
|
SECTION
9.04
|
Governing
Law; Severability
|
22
|
|
SECTION
9.05
|
No
Bankruptcy Petition; No Dissolution
|
22
|
|
SECTION
9.06
|
Amendment
|
23
|
|
SECTION
9.07
|
Headings
and Sections
|
23
|
|
SECTION
9.08
|
Binding
Agreement
|
23
|
|
SECTION
9.09
|
Dissolution
|
23
|
|
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
|
iii
AMENDED
AND RESTATED
OF
JCP&L
TRANSITION FUNDING II LLC,
a
Delaware limited liability company
AMENDED
AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT, dated as of __________, 2006
(as it may be further amended, supplemented or otherwise modified and in effect
from time to time, this “Agreement”), of JCP&L TRANSITION FUNDING II LLC, a
Delaware limited liability company (the “Company”), having its principal office
at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
WHEREAS,
the Company was formed as a Delaware limited liability company (i) by the filing
of the Certificate of Formation of the Company with the Secretary of State
of
the State of Delaware on March 29, 2004 and (ii) by the entering into of a
Limited Liability Company Agreement, dated as of March 29, 2004 (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 meanings set
forth below:
“Administration
Agreement” shall mean the Administration Agreement, to be dated on or about
__________, 2006, between the Company and FirstEnergy Service Company, as
administrator (or any successor to FirstEnergy Service Company), as the same
may
be amended or supplemented from time to time.
“Affiliate”
shall mean, with respect to any specified Person, any other Person controlling
or controlled by or under common control with such specified Person. For the
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”
shall have the meaning set forth in the first paragraph of this
Agreement.
“Bankruptcy”
shall mean, with respect to any Person, if (A) such Person (i) makes an
assignment for the benefit of creditors, (ii) files a voluntary petition in
bankruptcy, (iii) is
1
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
or
(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 (B)(i) 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 (ii) within ninety 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 ninety 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(1) and
18-304 of the LLC Act.
“Basic
Documents” shall mean this Agreement, the Certificate of Formation, the Sale
Agreement, each ▇▇▇▇ of Sale, the Servicing Agreement, the Intercreditor
Agreement, the Administration Agreement, each Interest Rate Swap Agreement,
the
Indenture, the Underwriting Agreement and the Independent Manager Agreements,
each as may be amended or supplemented from time to time.
“▇▇▇▇
of
Sale” shall mean each ▇▇▇▇ of sale, issued by JCP&L to the Company, pursuant
to the Sale Agreement, evidencing the sale of Bondable Transition Property
by
JCP&L to the Company.
“Bondable
Transition Property” shall have the meaning assigned to such term in the
Competition Act and the Financing Order.
“BPU”
shall mean the New Jersey Board of Public Utilities or its
successor.
“Business
Day” shall mean any day other than a Saturday or Sunday or a day on which
banking institutions in New York, New York, are required or authorized by law
or
executive order to close.
“Certificate
of Formation” shall mean the Certificate of Formation of the Company as filed in
accordance with the LLC Act with the Secretary of State of the State of Delaware
on March 29, 2004, as the same may be amended, supplemented or otherwise
modified and in effect from time to time.
“Class”
shall mean, with respect to any Series, any one of the classes of Transition
Bonds of that Series, as specified in the Series Supplement for that
Series.
“Code”
shall mean the Internal Revenue Code of 1986, as amended from time to time,
and
all Treasury Regulations promulgated thereunder.
“Common
Interest” shall mean the limited liability company interest of the Member in the
Company as described in Article VI.
2
“Company”
shall have the meaning set forth in the first paragraph of this
Agreement.
“Competition
Act” shall mean the Electric Discount and Energy Competition Act, New Jersey
Statutes Annotated, Title 48, Chapter 3, Article 7, as amended.
“Covered
Persons” shall have the meaning set forth in Section 2.08(b).
“Financing
Order” shall mean the bondable stranded costs rate order issued by the BPU to
JCP&L on June 8, 2006, as amended or supplemented from time to time,
pursuant to the Competition Act.
“Fiscal
Year” shall mean, unless the Managers shall at any time determine otherwise
pursuant to the requirements of the Code, the fiscal year of the
Member.
“Fitch”
shall mean Fitch, Inc.
“GAAP”
shall mean the generally accepted accounting principles of the United States
promulgated or adopted by the Financial Accounting Standards Board and its
successors from time to time.
“Governmental
Authority” shall mean any federal, state, local or foreign court or governmental
department, commission, board, bureau, agency, authority, instrumentality or
regulatory body.
“Indenture”
shall mean the Indenture, to be dated on or about __________, 2006, between
the
Company and the Trustee, as the same may be amended or supplemented from time
to
time, and shall include each Series Supplement and the forms and terms of the
Transition Bonds established thereunder.
“Independent
Manager” shall mean, 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 any bankruptcy-remote special purpose
entity that is an Affiliate of JCP&L or the Company), (i) a stockholder,
member, partner, director, officer, employee, Affiliate, customer, supplier,
creditor or independent contractor of, or any Person, except for CSC Entity
Services LLC, its agents and employees, and any successor entity thereof, that
has received any benefit in any form whatever from (other than in such Manager’s
capacity as a ratepayer or customer of JCP&L or any of its Affiliates 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, JCP&L, or any of their Affiliates, (ii) any
Person owning beneficially, directly or indirectly, any outstanding shares
of
common stock, any limited liability company interests or any partnership
interests, as applicable, of the Company, JCP&L or any of their Affiliates,
or of any major creditor (or any Affiliate of any major creditor) of any of
the
foregoing, or a stockholder, member, partner, director, officer, employee,
Affiliate, customer, supplier, creditor or independent contractor of, or any
Person that has received any benefit in any form whatever from (other than
in
such Person’s capacity as a ratepayer or customer of JCP&L or any of its
Affiliates in the ordinary course of business), or any Person that
3
has
provided any service in any form whatever to, such beneficial owner or any
of
such beneficial owner’s 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. For
purposes of this definition, “major creditor” shall mean a Person to which the
Company, JCP&L 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.
“Independent
Manager Agreement” shall mean any agreement by and between any Independent
Manager of the Company and the Company, including the Agreement, dated as of
__________, 2006 between the Company and [__________] and the Agreement, dated
as of __________, 2006, by and between the Company and
[__________].
“Intercreditor
Agreement” shall mean the Intercreditor Agreement as defined in and permitted by
the Indenture.
“Interest
Rate Swap Agreement” shall mean each Interest Rate Swap Agreement, as defined in
and permitted by the Indenture and any Series Supplement thereto.
“JCP&L”
shall mean Jersey Central Power & Light Company, a New Jersey corporation,
or its successor.
“LLC
Act”
shall mean 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.
“Manager”
shall mean any manager of the Company within the meaning of the LLC Act,
including the Independent Managers.
“Member”
shall mean JCP&L, in its capacity as sole member of the Company under this
Agreement, or any successor thereto as a member pursuant to Article VI;
provided, however,
the
term “Member” shall not include any Special Member.
“Moody’s”
shall mean ▇▇▇▇▇’▇ Investors Service, Inc.
“Original
LLC Agreement” shall have the meaning set forth in the second paragraph of this
Agreement.
“Person”
shall mean any individual, corporation, estate, partnership, joint venture,
association, joint stock company, trust (including any beneficiary thereof),
business trust, limited liability company, unincorporated organization or
Governmental Authority.
“Proceeding”
shall have the meaning set forth in Section 8.01.
4
“Rating
Agency” shall mean, as of any date, each rating agency rating the Transition
Bonds of any Class or Series at the request of the Company. If, at any time,
no
such organization or successor is in existence, “Rating Agency” shall mean a
nationally recognized statistical rating organization or other comparable Person
designated by the Company, notice of which designation shall be given to the
Trustee, the Member and JCP&L, as servicer under the Servicing
Agreement.
“Registration
Statement” shall mean the registration statement on Form S-3 filed by the
Company with the Securities and Exchange Commission on May 13, 2004, as such
Registration Statement may be amended and supplemented from time to
time.
“S&P”
means Standard & Poor’s Ratings Group, a division of The ▇▇▇▇▇▇-▇▇▇▇
Companies.
“Sale
Agreement” shall mean the Bondable Transition Property Sale Agreement, dated on
or about, __________, 2006, between JCP&L, as seller, and the Company, as
the same may be amended or supplemented from time to time.
“Series”
shall mean each series of Transition Bonds issued and authenticated pursuant
to
the Indenture as specified in the Series Supplement therefor.
“Series
Supplement” shall mean a supplemental indenture to the Indenture that authorizes
a particular Series of Transition Bonds, as the same may be amended or
supplemented from time to time.
“Servicing
Agreement” shall mean the Bondable Transition Property Servicing Agreement, to
be dated on or about __________, 2006, between the Company and JCP&L, as
servicer, as the same may be amended or supplemented from time to
time.
“Special
Member” shall have the meaning set forth in Section 5.04. A Special Member shall
have the rights and duties expressly set forth in this Agreement.
“State”
shall mean any one of the fifty states of the United States of America or the
District of Columbia.
“Transition
Bonds” shall have the meaning set forth in Section 2.03(a).
“Trustee”
shall mean 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” shall mean the Underwriting Agreement, dated __________, 2006,
between JCP&L, the Company and ▇▇▇▇▇▇▇, Sachs & Co., on behalf of itself
and as representative of the several underwriters listed therein.
5
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
in this Agreement shall have the defined meanings when used in any certificate
or other document made or delivered pursuant hereto unless otherwise defined
therein.
(c) 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 shall refer to this Agreement as a whole and not to any particular
provision of this Agreement; Article and Section references contained in this
Agreement are references to Articles and Sections in this Agreement unless
otherwise specified; and the term “including” shall mean “including without
limitation.”
(e) The
definitions contained in this Agreement are applicable to the singular as well
as the plural forms of such terms.
(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; references to a Person
are also to its permitted successors and assigns.
ARTICLE
II
CONTINUATION
OF THE LIMITED LIABILITY COMPANY
SECTION
2.01 Continuation;
Filings.
Pursuant to the LLC Act and in accordance with the further terms and provisions
hereof, the Member hereby continues the Company as a limited liability company.
The Certificate of Formation has been duly executed and filed with the Secretary
of State of the State of Delaware by ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ as an authorized person
within the meaning of the LLC Act. Upon such filing, his powers as an
“authorized person” ceased. The Managers, as authorized persons, 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 applicable requirements for
the
formation, 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.
6
SECTION
2.02 Name
and Office.
(a) The
name
of the Company shall be “JCP&L Transition Funding II 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 interest 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/o
The Corporation Trust Company, Corporation Trust Center, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇. The name of the Company’s registered agent at that
address is The Corporation Trust Company.
(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.
(a) 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:
(i) to
authorize, issue, sell and deliver one or more Series or Classes of transition
bonds (“Transition Bonds”) under the Indenture and, in connection therewith, to
execute and deliver Series Supplements, including Series Supplements providing
for the issuance of additional Series of Transition Bonds, each as permitted
by
and in accordance with the terms of the Indenture;
(ii) to
purchase and hold Bondable Transition Property and pledge the same and other
Collateral to the Trustee pursuant to the terms and conditions of the Basic
Documents;
(iii) to
negotiate, authorize, execute, deliver, assume the obligations under, and
perform, any agreement or instrument or document relating to the activities
set
forth in subclauses (i) and (ii) above, including but not limited to agreements
with third-party credit enhancers and additional swap or hedge agreement
counterparties relating to any Series of Transition Bonds; provided,
that
each
party to any such agreement with the Company shall covenant that it shall not,
prior to the date which is one year and one day after the termination of the
Indenture and the payment in full of any Series of the Transition Bonds and
any
other amounts owed under the Indenture, including, without limitation, any
amounts owed to third-party credit enhancers, acquiesce, petition or otherwise
invoke or cause the Company to invoke the process of any court or Governmental
Authority for the purpose of commencing or sustaining a case against the Company
under any federal or State bankruptcy, insolvency or similar law or appointing
a
receiver, liquidator, assignee, trustee, custodian, sequestrator or other
similar official of the Company or any substantial part of the property of
the
Company, or ordering the winding up or liquidation of the affairs of the
Company; and
provided, further,
that
the Company shall be permitted to incur additional indebtedness or other
liabilities payable to service providers in the ordinary course of business
in
connection with the foregoing activities; and
7
(iv) 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.
(b) Notwithstanding
anything in this Agreement to the contrary, the Company, the Member, and each
officer and Manager of the Company on behalf of the Company, has authority
and
is hereby authorized to enter into and perform the Basic Documents and all
documents, agreements, certificates or financing statements contemplated thereby
or related thereto, and to execute and file with the Commission, and cause
to go
effective, one or more registration statements, including the Registration
Statement, all without any further act, vote or approval of any other
Person.
SECTION
2.04 Term.
The
term of the Company shall continue until the Company is dissolved and wound-up
in accordance with the LLC Act and this Agreement. The existence of the Company
as a separate legal entity shall continue until the cancellation of the
Certificate of Formation in accordance with the LLC Act.
SECTION
2.05 No
State Law Partnership.
The
Member and the Special Members intend that the Company shall not be a
partnership (including, without limitation, a general partnership or a limited
partnership) or joint venture, and that neither the Member, any Special Member
nor any Manager shall be a partner or joint venturer of the Member, any Special
Member or any Manager with respect to the business of the Company for any
purposes, and this Agreement shall not 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
and power to act for and on behalf of the Company, to do any act that would
be
binding on the Company, and to incur any expenditures, debts, liabilities and
obligations on behalf of the Company.
SECTION
2.07 Liability
to Third Parties.
Except
as otherwise expressly provided by the LLC Act, neither the Member nor 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, any debts, obligations or liabilities of the
Company arising under a judgment, decree or order of a court, solely by reason
of such Person being the Member, or a Special Member or Manager of the
Company.
SECTION
2.08 No
Personal Liability of Any Member, Special Member, Manager,
Etc.
(a) Except
as
otherwise expressly provided by the LLC 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 Member nor any Special Member nor any Manager shall be obligated
personally for any such debt, obligation or liability of the Company solely
by
reason of such Person being a Member, Special Member or Manager.
(b) To
the
fullest extent permitted by law, neither the Member nor any Special Member
nor
any officer, Manager, employee or agent of the Company, nor any employee,
agent
8
or
Affiliate of the Member, a Manager or a Special Member (collectively, the
“Covered Persons”) shall be liable to the Company or the Member, any Special
Member or any Manager 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 loss, damage or claim incurred by
reason of such Covered Person’s gross negligence or willful misconduct, and
except that a Manager shall be liable for (i) liabilities arising from the
failure by such Manager to perform obligations expressly undertaken by it in
this Agreement and (ii) taxes, fees or other charges, based on or measured
by
any fees, commissions or compensation received by such Manager in connection
with the transactions described in this Agreement and the Basic
Documents.
SECTION
2.09 Separateness.
Except
for financial reporting purposes (to the extent required by GAAP) and for
federal income tax purposes and, to the extent consistent with applicable state
tax law, state income and corporation business tax purposes, the Member and
the
Managers shall take all steps necessary to continue the identity of the Company
as a separate legal entity and to make it apparent to third Persons that the
Company is an entity with assets and liabilities distinct from those of the
Member, Affiliates of the Member or any other Person, and that the Company
is
not a division of any of the Affiliates of the Company or any other Person.
In
that regard, and without limiting the foregoing in any manner:
(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 Person, and the Company shall maintain
its accounts separate from the Member and any other Person.
(b) The
Company shall not hold itself out as being liable for the debts of any other
Person, and shall conduct its own business in its own name.
(c) The
Company shall not form, or cause to be formed, any subsidiaries.
(d) The
Company shall act solely in its limited liability company name and through
its
duly authorized Member, Special Members, Managers, officers or agents in the
conduct of its business, and shall conduct its business so as not to mislead
others as to the identity of the entity or assets with which they are concerned
and (except as provided in the Basic Documents) shall at all times maintain
its
assets in a manner that facilitates their identification and segregation from
those of the Member or any of its Affiliates or any other Person.
(e) The
Company shall practice and adhere to organizational formalities, such as
maintaining 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 of its Affiliates or any other
Person.
(f) The
Managers shall act by written consent or hold appropriate meetings to authorize
all of the Company’s limited liability company actions, which meetings may be
held by telephone conference call or by electronic transmission. The Company
shall observe all formalities required by this Agreement.
9
(g) The
Company shall at all times remain solvent and ensure that its capitalization
is
adequate in light of its business and purpose.
(h) Neither
the Member nor any Special Member nor any Manager shall guarantee, become liable
on or hold itself out as being liable for the debts of the Company. The Company
shall not guarantee or become obligated for the debts of the Member, any Special
Member, any Manager, any Affiliate of the foregoing or any other Person, or
otherwise hold out its credit as being available to satisfy the obligations
of
the Member, any Special Member, any Manager or any other Person, shall not
pledge its assets for the benefit of any Person other than the Trustee for
the
benefit of the Holders of the Transition Bonds, shall not make loans or advances
to any Person, and shall not acquire obligations or securities of the Member,
any Special Member, any Manager or any Affiliate of the foregoing.
(i)
The
Company shall pay its own liabilities out of its own funds, including fees
and
expenses earned by FirstEnergy Service Company, as administrator, pursuant
to
the Administration Agreement and JCP&L, as servicer, pursuant to the
Servicing Agreement.
(j)
The
Company shall maintain an arm’s-length relationship with its
Affiliates.
(k) The
Company shall allocate fairly and reasonably, on market-based terms, any
overhead for office space shared with the Member, any Special Member or any
Manager.
(l)
The
Company shall use its own separate stationery, invoices, checks and other
business forms distinct from those of the Member or any of its Affiliates or
any
other Person.
(m) The
Company shall hold itself out as a separate entity and correct any known
misunderstanding regarding its separate identity.
(n) The
Company shall not engage in any activity other than those activities expressly
permitted under this Agreement and the Basic Documents to which it is a party,
nor will the Company enter into any agreement other than those necessary to
fulfill the purposes of the Company as described in Section 2.03 hereof and
such
other agreements that are permitted by the Basic Documents and are necessary
or
desirable for the Company to exercise its rights and perform its obligations
under such Basic Documents and this Agreement.
(o) To
the
fullest extent permitted by law, the Company shall make all decisions with
respect to its business and daily operations independently and in the Company’s
best interest without obligation or reference to how such decision might affect
any other Person, including the Member or any of its Affiliates; provided,
that
the officer making any particular decision may also be an employee, officer
or
director of the Member, any other member, or any of their respective
Affiliates.
(p) The
Company shall maintain office space separate from the office space of the
Member, any other member and any of their respective Affiliates (but which
may
be located at the same address).
10
(q) The
Company shall allocate, on an arm’s-length basis, all shared corporate operating
services, leases and expenses and otherwise maintain an arm’s-length
relationship with the Member, any other members and any of their respective
Affiliates.
(r) The
Company, without the consent of the Independent Managers, shall not file or
otherwise initiate or support the filing of a motion in any Bankruptcy or other
insolvency proceeding involving the Member, any other member or any of their
respective Affiliates to substantively consolidate the Member or any Affiliate
of the Member with the Company.
(s) The
Company shall not acquire obligations or securities of the Member, any other
member or any of their respective Affiliates.
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 in such
a
manner as the Managers deem reasonable and necessary or appropriate to
preserve:
(a) the
limited liability of JCP&L (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 JCP&L (or its successor),
as the Member of the Company, or any other Affiliate thereof and
(c) until
the
expiration of the one year and one day period of time as specified in Section
9.05(a), the bankruptcy-remote status of the Company.
ARTICLE
III
MANAGEMENT
SECTION
3.01 Management
by Managers.
Except
as otherwise expressly set forth in this Agreement, 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
11
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 which 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 required or directed by the LLC Act, other applicable law
or
this Agreement to be exercised or done by the Member. Except as provided in
Section 2.03(b), 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. Except as
provided in Section 2.03(b), 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.
The
number of Managers of the Company shall be as determined by the Member from
time
to time but shall not be less than five, and no decrease in the number of
Managers shall have the effect of shortening the term of any incumbent Manager.
The Member hereby determines the initial number of Managers to be
five.
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 such successor
Independent Manager 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
nor
any 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 Transition Bonds, obligations
under agreements with third party credit enhancers and swap or hedge agreement
counterparties relating to any Series of Transition Bonds and ordinary course
expenses inurred in accordance with 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 the
Company in any proceeding seeking
12
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 the Company or of the Company’s
assets or any substantial portion thereof; (vii) seek, consent to or acquiesce
in the appointment of a trustee, receiver or liquidator of the Company or of
all
or any substantial part of the Company’s assets; (viii) consolidate, convert or
merge with or into any other entity or convey or transfer substantially all
of
the Company’s properties and assets substantially as an entirety to any entity;
or (ix) amend this Agreement or take any 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 Independent Manager will, 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 will appoint each Manager, including any Manager to be appointed by
reason of an increase in the number of Managers. The initial Managers hereby
appointed by the Member are listed on Schedule C attached hereto.
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, 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 Manager or Managers.
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
13
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, 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, electronic transmission 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 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 not be less than five;
provided,
however,
that
pursuant to Section 3.04, the Company shall at all times have at least two
Independent Managers.
ARTICLE
IV
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. To the extent the
Managers do not enumerate the powers and duties of an officer of the Company,
such officers shall have the powers and duties of an officer with a comparable
title of a corporation organized under the General Corporation Law of the State
of
14
Delaware.
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 an officer of the Company shall 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 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 5.01 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
5.02 Actions
of Member.
All
actions of the Member may be taken by written resolution of the Member which
shall be signed on behalf of the Member by an authorized officer of the Member
and filed with the minutes and permanent records of the Company.
SECTION
5.03 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, will 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, each Independent Manager shall
bear
a fiduciary duty to the Company (including its creditors) under the
circumstances set forth in Section 3.04.
SECTION
5.04 Special
Members.
Upon
the occurrence of any event that causes the Member to cease to be a member
of
the Company other than by a transfer by the Member of its limited liability
company interest in the Company pursuant to Section 6.01 and the admission
of a
substitute Member pursuant to Section 6.01, 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 a Special
15
Member
unless (a) a successor Special Member has been admitted to the Company as a
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 appointed by the personal
representative of the last Member that ceased to be a member of the Company.
Each 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 LLC Act,
a
Special Member shall not be required to make any capital contributions to the
Company and shall not receive a limited liability company interest in the
Company. A Special Member, in its capacity as Special Member, may not bind
the
Company. Except as required by any mandatory provision of the LLC Act, each
Special Member, in its capacity as Special Member, shall have no right to vote
on, approve or otherwise consent to any action by, or matter relating to, the
Company, including, 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 5.04, 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
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. Immediately upon
registration of the transfer and assignment of the Common Interest on the books
of the Company and execution by the transferee/assignee of an instrument
evidencing its agreement to be bound by this Agreement and without the need
for
any other action by any Person, 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
LLC 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 S&P shall have confirmed in writing
to the Trustee and the Company that such transfer will not result in a reduction
or withdrawal of the then current rating by any such Rating Agency of any
outstanding Series or Class of Transition Bonds and ten days prior written
notice of such transfer shall be provided to ▇▇▇▇▇’▇ and ▇▇▇▇▇. The Common
Interest of the Member in the Company shall be evidenced by a certificate in
substantially the form set forth in Schedule B hereto. Such certificate shall
be
executed on behalf of the Company by any Manager or any duly appointed officer
of the Company.
SECTION
6.02 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.
Notwithstanding any provision to the contrary contained in this Agreement,
the
Company shall
16
not
be
required to make a distribution to the Member on account of its interest in
the
Company if such distribution would violate the LLC Act or any other applicable
law or any Basic Document.
SECTION
6.03 Rights
on Dissolution and Winding Up.
(a) In
the
event of any dissolution and winding up of the Company, the Member shall be
entitled to all remaining assets of the Company available for distribution
to
the Member after satisfaction (whether by payment or reasonable provision for
payment) of all liabilities, debts and obligations of the Company to creditors,
as set forth in Section 18-804 of the LLC Act.
(b) Neither
the sale of all or substantially all of the property or business of the Company,
nor the merger, conversion or consolidation of the Company into or with another
company or other entity, shall be deemed to be a dissolution, liquidation or
winding up, voluntary or involuntary, for the purpose of this Section
6.03.
(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, by itself, result in the dissolution of the Company or in the cessation
of
the interest of the Member in the Company. The 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) 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 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
6.04 Redemption.
The
Common Interest shall not be redeemable.
SECTION
6.05 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 LLC Act
and
other applicable law.
SECTION
6.06 Class.
The
Company shall have one class of Common Interest.
17
ARTICLE
VII
ALLOCATIONS;
DISTRIBUTIONS; EXPENSES;
TAXES;
BOOKS; REPORTS; AND BANK ACCOUNTS
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 Expenses.
Except
as otherwise provided in this Agreement, and subject to the provisions of the
Basic Documents, the Company shall be responsible for all of its own 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
Transition 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;
(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
7.03 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.
18
SECTION
7.04 Tax
Matters.
(a) The
Member shall communicate and negotiate with the Internal Revenue Service on
any
tax matter on behalf of the Member and the Company.
(b) The
Member acknowledges that at all times that two or more persons or entities
hold
equity interests in the Company for federal income tax purposes (i) it is the
intention of the Company to be treated as a “partnership” for federal and all
relevant state tax purposes, and (ii) the Company will be treated as a
“partnership” for federal and all relevant state tax purposes and shall make all
available elections to be so treated. Until such time, however, it is the
intention of the Member that the Company be disregarded for federal and all
relevant state tax purposes and that the activities of the Company be deemed
to
be activities of the Member for such purposes. All provisions of the Company’s
certificate of formation and this Agreement are to be construed so as to
preserve that tax status under those circumstances.
(c) In
accordance with the provisions of Treasury Regulations section 301.7701-3,
the
Company will not elect to be treated as a corporation for Federal income tax
purposes, and therefore will be treated as either a disregarded entity or a
division of the Member. Any other election under any provision of any tax law
shall be made only by the Managers or by a person authorized to do so by the
Managers.
SECTION
7.05 Maintenance
of Books.
The
Company shall keep books and records of accounts and shall keep minutes of
the
proceedings of the Member and the Managers. The Fiscal Year shall be the
accounting year of the Company.
SECTION
7.06 Reports.
Within
sixty 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 the 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 Company shall bear the costs of all such financial statements
and reports.
SECTION
7.07 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 suit in equity, action at
law
or other judicial or administrative proceeding (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
19
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, reasonable attorneys’ fees) actually incurred by such Person in
connection with such Proceeding; provided,
that such
judgments, penalties, settlements, fines or other expenses are not directly
caused by the gross negligence or willful misconduct of such Person except
that
such Person shall be liable for (i) liabilities arising from the failure by
such
Person to perform obligations expressly undertaken by it in this Agreement
and
(ii) taxes, fees or other charges, based on or measured by any fees, commissions
or compensation received by such Person in connection with the transactions
described in this Agreement and the Basic Documents. It is expressly
acknowledged that the indemnification provided in this Article VIII could
involve indemnification for negligence or under theories of strict liability.
Notwithstanding anything herein to the contrary, including the provisions of
Section 8.02, for so long as any Transition Bonds are outstanding, no payment
from funds of the Company (as distinct from funds from other sources, such
as
insurance) of any indemnity of the Member, any Special Member or any Manager
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 this Agreement and a written undertaking
by
or on 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, corporation, partnership, joint venture, sole proprietorship,
trust, employee benefit plan or other
20
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.
Subject
to Section 8.01, 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 which
initially entitled such Person to indemnity and advancement and payment of
expenses;
(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;
(d) shall
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, disinterested Managers 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 such Person’s acts or omissions involved gross
negligence or willful misconduct; and
(e) shall
continue 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 heirs,
executors, administrators, successors and assigns of such a 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
as
an officer, employee or agent of the Member, or 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, 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.
21
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 Survival.
The
foregoing provisions of this Article VIII shall survive any termination of
the
Company or this Agreement.
ARTICLE
IX
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 or
electronic 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
Jersey Central Power & Light Company, ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇, Attention: Treasurer 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:
JCP&L Transition Funding II LLC, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, with a copy to JCP&L Transition Funding II LLC, c/o
FirstEnergy Service Company, ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, 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
22
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. If there is a direct conflict between the provisions
of
this Agreement and any mandatory and non-modifiable provision of the LLC Act,
then the applicable provision of the LLC 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) Each
Member, each Special Member and each Manager hereby covenants and agrees (or
shall be deemed to have hereby covenanted and agreed) that it shall not, prior
to the date which is one year and one day after the termination of the Indenture
and the payment in full of all Series of the Transition Bonds and any other
amounts owed under the Indenture, including, without limitation, any amounts
owed to third-party credit enhancers, consent to, or make application for,
or
institute or maintain any action for, 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 of all or any
substantial part of the property of the Company, or to the fullest extent
permitted by law 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, each 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 Transition Bonds and any other amounts
owed
under the Indenture, including, without limitation, any amounts owed to
third-party credit enhancers, the Member, such Special Member and such Manager
will 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
LLC 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 agrees that it will 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.
23
(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, upon prior
approval of the Trustee and with prior notice to the Rating Agencies and
notification from each of ▇▇▇▇▇’▇, Fitch and S&P, or their respective
successors, to the Company, that such amendment will not result in a reduction
or withdrawal of the then current rating by such Rating Agency of any
outstanding Series or Class of Transition Bonds (except that with regard to
▇▇▇▇▇’▇ and Fitch, it will be sufficient to provide ten days’ prior written
notice of the amendment).
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 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.
SECTION
9.09 Dissolution.
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
terminates the continued membership of the last remaining member of the Company
in the Company unless the Company is continued without dissolution in a manner
permitted by this Agreement or by the LLC Act; or (ii) the entry of a decree
of
judicial dissolution under Section 18-802 of the LLC Act.
24
IN
WITNESS WHEREOF, this Agreement is hereby executed by the undersigned as of
__________, 2006.
|
MEMBER:
|
||
|
JERSEY
CENTRAL POWER & LIGHT COMPANY
|
||
|
By:
|
||
|
Name:
|
||
|
Title:
|
||
|
Agreed
and Consented to by the Independent Managers:
|
||
|
Name:
|
||
|
Name:
|
||
25
SCHEDULE
A
SCHEDULE
OF CAPITAL CONTRIBUTIONS OF MEMBER
COMMON
INTEREST
|
MEMBER’S
NAME
|
CAPITAL
CONTRIBUTION
|
COMMON
INTEREST PERCENTAGE |
CAPITAL
ACCOUNT |
|
Jersey
Central Power & Light Company
|
$[__________]*
|
100%
|
$[__________]
|
_________
*
0.50%
of original principal amount of the Transition Bonds.
A-1
SCHEDULE
B
CERTIFICATE
OF COMMON INTEREST
of
JCP&L
TRANSITION FUNDING II LLC
A
limited liability company
formed
under the Laws of the State of Delaware
This
Certificate is issued and shall be held subject to the provisions of the Amended
and Restated Limited Liability Company Agreement of JCP&L TRANSITION FUNDING
II LLC, a limited liability company formed under the laws of the State of
Delaware (the “Company”), dated as of __________, 2006, as amended from time to
time (the “Agreement”).
The
undersigned certifies that JERSEY CENTRAL POWER & LIGHT COMPANY is the
registered holder of the entire Common Interest (as defined in the Agreement)
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, the Company has caused this Certificate to be signed by one
of
its duly authorized officers this __ day of _____, 2006.
|
JCP&L
TRANSITION FUNDING II LLC
|
|
|
Name:
|
|
|
Title:
|
JCP&L
TRANSITION FUNDING II 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:
__________, 2006
|
JERSEY CENTRAL POWER & LIGHT COMPANY | |
| By: |
|
|
|
Name:
|
||
|
Title:
|
||
B-1
SCHEDULE C
MANAGERS
Names
|
1.
|
▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇
|
|
2.
|
▇▇▇▇▇▇▇
▇. ▇▇▇▇▇
|
|
3.
|
▇▇▇▇▇▇▇
▇. ▇▇▇▇▇
|
|
4.
|
[__________]
(Independent Manager)
|
|
5.
|
[__________]
(Independent Manager)
|
C-1
SCHEDULE
D
OFFICERS
|
Names
|
Office
|
|
|
▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇
|
President
|
|
|
▇▇▇▇▇▇▇
▇. ▇▇▇▇▇
|
Senior
Vice President and Chief Financial Officer
|
|
|
▇▇▇▇▇
▇. ▇▇▇▇▇▇▇
|
Senior
Vice President and General Counsel
|
|
|
▇▇▇▇▇▇
▇. ▇▇▇▇▇▇
|
Vice
President and Controller
|
|
|
▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇
|
Corporate
Secretary
|
|
|
▇▇▇▇▇
▇. ▇▇▇▇▇▇▇
|
Treasurer
|
|
|
▇▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇
|
Assistant
Controller
|
|
|
▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇
|
Assistant
Controller
|
|
|
▇▇▇▇▇
▇▇▇▇▇▇
|
Assistant
Treasurer
|
|
|
▇▇▇▇
▇. ▇▇▇▇▇▇
|
Assistant
Controller
|
|
|
▇▇▇▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇
|
Assistant
Corporate Secretary
|
|
|
▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇
|
Assistant
Corporate Secretary
|
D-1