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EXHIBIT 3.1
FOURTH AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
EAST COAST POWER L.L.C.,
A DELAWARE LIMITED LIABILITY COMPANY
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TABLE OF CONTENTS
PAGE
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ARTICLE 1: DEFINITIONS 3
1.01 Definitions.....................................................................................3
1.02 Construction...................................................................................15
ARTICLE 2: ORGANIZATION 15
2.01 Formation; Construction........................................................................15
2.02 Name...........................................................................................15
2.03 Registered Office; Registered Agent; Principal Office and Other Offices........................15
2.04 Purposes.......................................................................................16
2.05 Foreign Qualification..........................................................................16
2.06 Term...........................................................................................16
ARTICLE 3: MEMBERSHIP; DISPOSITIONS OF INTERESTS 16
3.01 Members........................................................................................16
3.02 Representations, Warranties and Covenants......................................................18
3.03 Dispositions of Membership Interests...........................................................20
3.04 Creation of Additional Membership Interests....................................................22
3.05 Access to Information..........................................................................23
3.06 Confidential Information.......................................................................23
3.07 Liability to Third Parties.....................................................................24
3.08 Certificates...................................................................................24
ARTICLE 4: CAPITAL CONTRIBUTIONS 25
4.01 Subsequent Capital Contributions...............................................................25
4.02 Return of Contributions........................................................................25
4.03 Loans..........................................................................................25
4.04 Capital Accounts...............................................................................25
ARTICLE 5: ALLOCATIONS AND DISTRIBUTIONS 26
5.01 Distributions. Distributions to the Members shall be made as follows:.........................26
5.02 Failure to Make Distributions..................................................................26
5.03 Distributions on Dissolution and Winding Up....................................................27
5.04 Allocations....................................................................................27
5.05 Additional Allocations.........................................................................28
5.06 Allocations for Tax Purposes...................................................................30
ARTICLE 6: MANAGEMENT 31
6.01 Management of Company Affairs..................................................................31
6.02 Standards of Performance and Conflicts of Interest.............................................34
6.03 Indemnification................................................................................35
ARTICLE 7: TAXES 36
7.01 Tax Returns....................................................................................36
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7.02 Tax Elections..................................................................................37
7.03 Tax Matters Member.............................................................................37
7.04 Fiscal Year....................................................................................37
ARTICLE 8: BOOKS, RECORDS, REPORTS, AND BANK ACCOUNTS 37
8.01 Maintenance of Books...........................................................................37
8.02 Bank Accounts..................................................................................37
8.03 Reports and Information........................................................................37
8.04 Conduct of Business............................................................................38
ARTICLE 9: DISSOLUTION, WINDING-UP AND TERMINATION 39
9.01 Dissolution....................................................................................39
9.02 Winding-Up and Termination.....................................................................40
9.03 Certificate of Cancellation....................................................................40
ARTICLE 10: GENERAL PROVISIONS 40
10.01 Notices........................................................................................40
10.02 Entire Agreement; Superseding Effect...........................................................41
10.03 Effect of Waiver or Consent....................................................................41
10.04 Amendment or Restatement.......................................................................41
10.05 Binding Effect.................................................................................42
10.06 Governing Law; Severability....................................................................42
10.07 Further Assurances.............................................................................42
10.08 Waiver of Certain Rights.......................................................................43
10.09 Characterization of Interests..................................................................44
10.10 Counterparts...................................................................................44
EXHIBITS:
A Members
B Form of Certificate
C Restructuring Distribution
D Capital Account Balances
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FOURTH AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
EAST COAST POWER L.L.C.,
A
DELAWARE LIMITED LIABILITY COMPANY
This FOURTH AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT OF EAST
COAST POWER L.L.C. (this "Agreement"), dated as of March 23, 2001, is adopted,
executed and agreed to, for good and valuable consideration, by MESQUITE
INVESTORS, L.L.C., a
Delaware limited liability company ("MESQUITE"), BONNEVILLE
PACIFIC CORPORATION, a
Delaware corporation ("MESQUITE AFFILIATE"), and EAST
COAST POWER HOLDING COMPANY L.L.C., a
Delaware limited liability company ("ECP
HOLDING").
RECITALS
1. East Coast Power L.L.C. (the "COMPANY") was formed as a
Delaware limited
liability company on December 18, 1998 (the "FORMATION DATE"), by the filing of
a Certificate of Formation (the "
DELAWARE CERTIFICATE") with the
Delaware
Secretary of State. Joint Energy Development Investments II Limited Partnership,
a
Delaware limited partnership ("JEDI II"), was admitted to the Company as the
initial Member, effective as of the Formation Date, pursuant to that certain
Limited Liability Company Agreement of the Company, dated as of the Formation
Date (the "ORIGINAL AGREEMENT").
2. Effective as of February 4, 1999 (the "FIRST RESTATEMENT DATE"), Enron North
America Corp. (formerly known as Enron Capital & Trade Resources Corp.), a
Delaware corporation ("ENA"), and California Public Employees' Retirement
System, a unit of the State and Consumer Services Agency of the State of
California ("CALPERS"), were admitted to the Company as Members, and the
Original Agreement was amended and restated, pursuant to that certain Amended
and Restated
Limited Liability Company Agreement of the Company, dated as of the
First Restatement Date (as amended, the "FIRST RESTATED AGREEMENT"). Pursuant to
the First Restated Agreement, JEDI II became the sole Class A Member having a
90% Sharing Ratio; and each of ENA and CalPERS became a Class B Member having a
5% Sharing Ratio each.
3. ENA assigned all of its Membership Interest in the Company to its
wholly-owned subsidiary, ECT Merchant Investments Corp., a Delaware corporation
("ECT MERCHANT"), and ECT Merchant assigned all of its Membership Interest in
the Company to JEDI II.
4. JEDI II assigned all of its Membership Interest in the Company to its
wholly-owned subsidiary, ECP Holding.
5. Pursuant to that certain Purchase Agreement dated as of August 2, 1999
between ECP Holding and Mesquite (the "1999 PURCHASE AGREEMENT"), ECP Holding
sold to Mesquite a 49% Membership Interest in the Company.
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6. Effective as of August 2, 1999 (the "SECOND RESTATEMENT DATE"), Mesquite was
admitted to the Company as a Member, and the First Restated Agreement was
amended and restated, pursuant to that certain Second Amended and Restated
Limited Liability Company Agreement of the Company, dated as of the Second
Restatement Date. Pursuant to the Second Restated Agreement, each of ECP Holding
and Mesquite became a Class A Member having a Sharing Ratio of 45.9% and 44.1%,
respectively; each of ECP Holding and Mesquite became a Class B Member having a
Sharing Ratio of 0.1% and 4.9%, respectively; and CalPERS continued as a Class B
Member having a Sharing Ratio of 5%. ECP Holding, Mesquite, and CalPERS executed
that certain Amendment No. 1 to Second Amended and Restated
Limited Liability
Company Agreement dated as of June 30, 2000 (as amended, the "SECOND RESTATED
AGREEMENT"). On November 16, 2000, JEDI II acquired all of CalPERS' Class B
Membership Interest in the Company and contributed that Class B Membership
Interest to ECP Holding, thereby increasing ECP Holding's Class B Sharing Ratio
to 5.1%.
7. On December 18, 2000, Mesquite, ECP Holding, El Paso, Enron, ENA, and JEDI
II entered into that certain Transaction Agreement, as amended (the "TRANSACTION
AGREEMENT"), pursuant to which, Mesquite, and ECP Holding agreed to admit
Mesquite Affiliate as a Member and Mesquite and Mesquite Affiliate each agreed
to make certain Capital Contributions to the Company. On February 22, 2001,
Mesquite, Mesquite Affiliate, and ECP Holding executed Amendment No. 2 to Second
Amended and Restated
Limited Liability Company Agreement ("AMENDMENT NO. 2")
whereby (A) Mesquite made its Capital Contribution to the Company and increased
the Sharing Ratio of its Class A Membership Interest in the Company to 45.53%,
(B) Mesquite Affiliate made its Capital Contribution to the Company and was
admitted and became a Class A Member with a .9% Sharing Ratio in the Company,
and (C) ECP Holding's Sharing Ratio for its Class A Membership Interest was
reduced to 43.57%.
8. Also pursuant to the Transaction Agreement, Mesquite acquired, on even date
herewith, all of ECP Holding's remaining Class A Membership Interest with a
43.57% Sharing Ratio in the Company and a portion of ECP Holding's Class B
Membership Interest in the Company which has a 4.1% Sharing Ratio in the
Company. Following such transfer, (a) Mesquite owned a Class A Membership
Interest in the Company with an 89.1% Sharing Ratio in the Company, and a Class
B Membership Interest in the Company with a 9% Sharing Ratio in the Company, (b)
Mesquite Affiliate owned a Class A Membership Interest in the Company with a .9%
Sharing Ratio in the Company, and ECP Holding owned a Class B Membership
Interest in the Company with a 1% Sharing Ratio in the Company.
9. Effective as of February 23, 2001(the "THIRD RESTATEMENT DATE"), Mesquite
converted all of its Class A and Class B Membership Interests, and Mesquite
Affiliate converted all of its Class A Membership Interests into new common
Membership Interests (the "COMMON INTERESTS"), and ECP Holding converted all of
its Class B Membership Interests into a new preferred Membership Interest (the
"PREFERRED INTEREST").
10. Effective March 12, 2001, the Company completed acquisition of all third
party interests in Cogen Technologies NJ Venture. As such, the Management
Committee assumed full, complete and exclusive authority to act on behalf of the
Company in its capacity as the managing
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member of JEDI Bayonne GP, L.L.C. ("BAYONNE GP") without resulting in a default
under the governing documents of Bayonne GP or its Affiliates.
11. In connection with the execution of this Agreement, the parties desire to
eliminate the Preferred Managers and the Preferred Management Committee and make
other amendments related thereto.
NOW, THEREFORE, for good and valuable consideration, the Members hereby amend
and restate the Third Restated Agreement, as amended, as follows:
ARTICLE 1: DEFINITIONS
1.01 DEFINITIONS. As used in this Agreement, the following terms have
the respective meanings set forth below or set forth in the Sections referred to
below (and grammatical variations of such terms have correlative meanings).
Other terms defined in this Agreement have the meanings so given them.
"1935 ACT" has the meaning set forth in Section 3.02(m).
"1999 PURCHASE AGREEMENT" has the meaning set forth in Recital 5.
"ACT" means the Delaware Limited Liability Company Act.
"ACTIVITIES" has the meaning set forth in Section 6.02(b).
"ADJUSTED CAPITAL ACCOUNT" means a Capital Account determined and maintained for
each Member throughout the term of this Agreement, the balance of which as of
the end of the relevant taxable year shall be equal to such Member's Capital
Account balance, modified as follows:
(a) increased by the amount, if any, of such Member's share of the
Minimum Gain of the Company as determined under Treasury Regulation
Section 1.704-2(g)(1);
(b) increased by the amount, if any, of such Member's share of the
Minimum Gain attributable to Member Nonrecourse Debt of the Company
pursuant to Treasury Regulation Section 1.704-2(i)(5);
(c) increased by the amount, if any, of such Member's share of the
Member's Modified 752 Share of Recourse Debt;
(d) increased by the amount, if any, that such Member is treated as
being obligated to contribute subsequently to the capital of the
Company as determined under Treasury Regulation Section
1.704-1(b)(2)(ii)(c);
(e) decreased by the amount, if any, of cash that is reasonably
expected to be distributed to such Member, but only to the extent that
the amount thereof exceeds any offsetting increase in such Member's
Capital Account that is reasonably expected to
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occur during (or prior to) the tax year during which such distributions
are reasonably expected to be made as determined under Treasury
Regulation Section 1.704-1(b)(2)(ii)(d)(6); and
(f) decreased by the amount, if any, of loss and deduction that is
reasonably expected to be allocated to such Member pursuant to Code
Section 704(e)(2) or 706(d), Treasury Regulation Section
1.751-1(b)(2)(ii) or Treasury Regulation Section 1.704-1(b)(2)(iv)(k).
The foregoing definition of Adjusted Capital Account is intended to comply with
the provisions of Treasury Regulation Section 1.704-1(b)(2)(ii)(d) and shall be
interpreted consistently therewith.
"AFFILIATE" means (a) with respect to any Person, any other Person controlling,
controlled by, or under common control with that first Person, and (b) in any
event with respect to (i) Mesquite, each of El Paso and its Affiliates, but only
so long as El Paso and its Affiliates control Mesquite or own (directly or
indirectly) 10% or more of the voting securities or similar interests of
Mesquite, and (ii) ECP Holding, each of Enron and its Affiliates, but only so
long as Enron and its Affiliates control ECP Holding or own (directly or
indirectly) 10% or more of the voting securities or similar interests of ECP
Holding. The term "control" and correlative terms includes the possession,
directly or indirectly and whether acting alone or in conjunction with others,
of the authority to direct or cause the direction of the management or policies
of a Person, whether through the ownership of voting securities or similar
interests, by contract, or otherwise. Notwithstanding the foregoing, the Company
shall not be considered an Affiliate of any Member, for purposes of this
Agreement.
"AGREEMENT" has the meaning set forth in the introductory paragraph.
"AMENDMENT NO. 2" has the meaning set forth in Recital 7.
"ASSIGNEE" means any Person that acquires a Membership Interest or any portion
thereof through a Disposition; provided, however, that an Assignee shall have no
right to be admitted to the Company as a Member except in accordance with
Section 3.03(b).
"BANKRUPTCY" or "BANKRUPT" means with respect to any Person, that (a) such
Person (i) makes a general assignment for the benefit of creditors; (ii) files a
voluntary bankruptcy petition; (iii) becomes the subject of an order for relief
or is declared insolvent in any federal or state bankruptcy or insolvency
proceedings; (iv) files a petition or answer seeking for such Person a
reorganization, arrangement, composition, readjustment, liquidation,
dissolution, or similar relief under any Law; (v) files an answer or other
pleading admitting or failing to contest the material allegations of a petition
filed against such Person in a proceeding of the type described in subclauses
(i) through (iv) of this clause (a); or (vi) seeks, consents to, or acquiesces
in the appointment of a trustee, receiver, or liquidator of such Person or of
all or any substantial part of such Person's assets; or (b) against such Person,
a proceeding seeking reorganization, arrangement, composition, readjustment,
liquidation, dissolution, or similar relief under any Law has been commenced and
120 Days have expired without dismissal thereof or with respect to which,
without such Person's consent or acquiescence, a trustee, receiver, or
liquidator of such
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Person or of all or any substantial part of such Person's assets has been
appointed and 90 Days have expired without the appointment's having been vacated
or stayed, or 90 Days have expired after the date of expiration of a stay, if
the appointment has not previously been vacated.
"BAYONNE PLANT" means the 176-megawatt gas-fired, combined cycle cogeneration
facility, and any related facilities or expansions, located in Bayonne, New
Jersey.
"BUSINESS DAY" means any day other than a Saturday, a Sunday, or other day on
which commercial banks in New York, New York or Houston, Texas are authorized or
required by law to close.
"CALPERS" has the meaning set forth in Recital 2.
"CAMDEN COGEN" means Camden ▇▇▇▇▇ ▇.▇., a Delaware limited partnership
"CAMDEN PLANT" means the 146-megawatt gas-fired, combined cycle cogeneration
facility, and any related facilities or expansions, located in Camden, New
Jersey.
"CAPITAL ACCOUNT" means the account to be maintained by the Company for each
Member in accordance with Section 4.04.
"CAPITAL CONTRIBUTION" means, with respect to any Member, the amount of money
and the net agreed value of any assets (other than money) contributed to the
Company by the Member. Any reference in this Agreement to the Capital
Contribution of a Member shall include a Capital Contribution of its
predecessors in interest.
"CARRYING VALUE" means, with respect to any asset, the asset's adjusted basis
for federal income tax purposes, except as follows:
(a) the Carrying Value of any asset contributed or deemed contributed
by a Member to the Company shall be the gross fair market value of such
asset at the time of contribution as determined by a majority of the
Common Members;
(b) the Carrying Value of any asset distributed or deemed distributed
by the Company to any Member shall be adjusted immediately prior to
such distribution to equal its gross fair market value at such time as
determined by a majority of the Common Members;
(c) the Carrying Values of all Company assets may be adjusted to equal
their respective gross fair market values, as determined by the
agreement or approval to a majority of the Common Members as of:
(i) the date of the acquisition of an additional interest in
the Company by any new or existing Member in exchange for a
contribution to the capital of the Company; or
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(ii) upon the liquidation of the Company, or the distribution
by the Company to a retiring or continuing Member of money or
other Company property in reduction of such Member's interest
in the Company pursuant to the terms of this Agreement;
(d) any adjustments to the adjusted basis of any asset of the Company
pursuant to Sections 734 or 743 of the Code shall be taken into account
in determining such asset's Carrying Value in a manner consistent with
Treasury Regulation Section 1.704-1(b)(2)(iv)(m); and
(e) if the Carrying Value of an asset has been determined pursuant to
clauses (a) through (d) above, such Carrying Value shall thereafter be
adjusted in the same manner as would the asset's adjusted tax basis for
federal income tax purposes, except that depreciation and amortization
deductions shall be computed based on the asset's Carrying Value as so
determined, and not on the asset's adjusted tax basis.
"CERTIFICATES" has the meaning set forth in Section 3.08(a).
"CLASS A MANAGER" means a Class A Manager of the Management Committee elected as
provided in 6.01.
"CLASS B MANAGER" means a Class B Manager of the Management Committee elected as
provided in 6.01.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMON INTEREST" has the meaning set forth in Recital 9.
"COMMON MEMBER" means Mesquite, Mesquite Affiliate and any other Person
hereafter admitted to the Company as a Common Member as provided in this
Agreement, but such term does not include any Person who has ceased to be a
Common Member of the Company.
"COMPANY" has the meaning set forth in Recital 1.
"COMPANY BASE AMOUNT" means an amount equal to (a) $1,694,193,625 plus (b)
without duplication, the amount of all cash and the fair market value of all
assets contributed by the Common Members to the Company after September 30,
2000, minus (c) without duplication, the amounts of all cash and the fair market
value of all assets distributed from the Company to the Common Members after
September 30, 2000, plus (d) 40% of the Net Income or Net Loss (expressed as a
negative number) of the Company for the period from October 1, 2000 through
December 31, 2000 and for each calendar year or part thereof thereafter until
the occurrence of a Project Sale.
"CONED" means Consolidated Edison Company of New York, Inc., its successors and
assigns, and any of their respective subsidiaries or Affiliates.
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"DAY" means a calendar day; provided, however, that, if any period of Days
referred to in this Agreement shall end on a Day that is not a Business Day,
then the expiration of such period shall be automatically extended until the end
of the first succeeding Business Day.
"DELAWARE CERTIFICATE" has the meaning set forth in Recital 1.
"DISPOSE, DISPOSING OR DISPOSITION" means, with respect to any asset (including
a Membership Interest or any portion thereof), a sale, lease, assignment,
transfer, conveyance, gift, exchange or other disposition of such asset, whether
such disposition be voluntary, involuntary or by operation of Law, including the
following: (a) in the case of an asset owned by a natural person, a transfer of
such asset upon the death of its owner, whether by will, intestate succession or
otherwise; (b) in the case of an asset owned by an entity, (i) a merger or
consolidation of such entity (other than where such entity is the survivor
thereof), (ii) a conversion of such entity into another type of entity, or (iii)
a distribution of such asset, including in connection with the dissolution,
liquidation, winding-up or termination of such entity; and (c) a disposition in
connection with, or in lieu of, a foreclosure of an Encumbrance; but such terms
shall not include the creation of an Encumbrance.
"DISSOLUTION EVENT" has the meaning set forth in Section 9.01.
"DISTRIBUTION DEFAULT" has the meaning set forth in Section 5.02.
"ECP HOLDING" has the meaning set forth in the introductory paragraph.
"ECT MERCHANT" has the meaning set forth in Recital 3.
"EFFECTIVE DATE" means the date and time that the Second Closing contemplated
under the Transaction Agreement is completed.
"EL PASO" means El Paso Energy Corporation, a Delaware corporation.
"EL PASO MEMBER" means any Member that is (a) El Paso or a wholly-owned
Affiliate of El Paso, or (b) Mesquite (for so long as it remains a Member and an
Affiliate of El Paso), or (c) Mesquite Affiliate (for so long as it remains a
Member and an Affiliate of Mesquite and Mesquite an Affiliate of El Paso).
"ENA" has the meaning set forth in Recital 2.
"ENCUMBER, ENCUMBERING, OR ENCUMBRANCE" means the creation of a security
interest, lien, pledge, mortgage or other encumbrance, whether such encumbrance
be voluntary, involuntary or by operation of Law.
"ENRON" means Enron Corp., an Oregon corporation.
"ENRON MEMBER" means any Member that is Enron, JEDI II (for so long as it
remains an Affiliate of Enron) or a wholly-owned Affiliate of Enron or of JEDI
II (for so long as JEDI II
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remains an Affiliate of Enron), including ECP Holding (for so long as it remains
(i) a Member and (ii) a wholly owned Affiliate (a) of Enron or (b) of JEDI II,
so long as JEDI II remains an Affiliate of Enron).
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended.
"FINANCIAL CLOSING" means (a) with respect to a Power Contract Restructuring,
the earlier of (i) payment in full of the amounts due with respect to a Power
Contract Restructuring, or (ii) 45 days after all conditions precedent to the
full effectiveness of a Power Contract Restructuring have been satisfied or
waived and (b) with respect to a Project Sale, the earlier of (i) payment in
full of the amounts due with respect to a Project Sale, or (ii) 45 days after
all conditions precedent to the full effectiveness of a Project Sale have been
satisfied or waived.
"FIRST RESTATED AGREEMENT" has the meaning set forth in Recital 2.
"FIRST RESTATEMENT DATE" has the meaning set forth in Recital 2.
"FISCAL YEAR" has the meaning set forth in Section 7.04.
"FORMATION DATE" has the meaning set forth in Recital 1.
"GOVERNMENTAL AUTHORITY (OR GOVERNMENTAL)" means a federal, state, local or
foreign governmental authority; a state, province, commonwealth, territory or
district thereof; a county or parish; a city, town, township, village or other
municipality; a district, ▇▇▇▇ or other subdivision of any of the foregoing; any
executive, legislative or other governing body of any of the foregoing; any
agency, authority, board, department, system, service, office, commission,
committee, council or other administrative body of any of the foregoing; any
court or other judicial body; and any officer, official or other representative
of any of the foregoing.
"INCLUDING" and "INCLUDES" means including, without limitation.
"INDEBTEDNESS" means without duplication, (a) all obligations of such Person for
borrowed money of any kind, (b) all obligations of such Person evidenced by
bonds, debentures, notes or similar instruments, (c) all obligations of such
Person under conditional sale or other title retention agreements relating to
property or assets purchased by such Person, (d) all obligations of such Person
issued or assumed as the deferred purchase price of property or services, (e)
all Indebtedness of others secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any encumbrance on property owned or acquired by such Person, whether or not the
obligations secured thereby have been assumed, (f) all guarantees by such Person
of Indebtedness of others, (g) all obligations of such Person to pay rent or
other amounts under any lease or other right to use property, (h) all
obligations of such Person in respect of interest rate hedge agreements, other
interest rate swaps, collars or caps and other interest rate protection
arrangements, foreign currency exchange agreements, commodity exchange,
commodity future, commodity forward or commodity option agreement (including
with respect to natural gas and electric power, but only if such agreement is
for a term of longer
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than three months), or other interest or exchange rate or commodity hedging
arrangements, and (i) all obligations of such Person as an account party in
respect of letters of credit.
"INDEMNIFIED PERSON" has the meaning set forth in Section 6.03(a).
"INDENTURE" means the Indenture dated as of April 20, 1999, between the Company
and The Bank of New York, as Trustee, as the same may be amended, supplemented
or otherwise modified from time to time.
"INVESTMENT COMPANY ACT" means Investment Company Act of 1940, as amended.
"JEDI II" has the meaning set forth in Recital 1.
"LAW" means any applicable constitutional provision, statute, act, code
(including the Code), law, regulation, rule, ordinance, order, decree, ruling,
proclamation, resolution, judgment, decision, declaration, or interpretative or
advisory opinion or letter of a Governmental Authority having valid
jurisdiction.
"LINDEN BASE AMOUNT" means an amount equal to (a) $1,146,593,742 plus (b)
without duplication, the amount of all cash and the fair market value of all
assets contributed by the Company or any Linden Subsidiary to any Linden
Subsidiary after September 30, 2000, minus (c) without duplication, the amounts
of all cash and the fair market value of all assets distributed from any Linden
Subsidiary to the Company or any Linden Subsidiary after September 30, 2000,
plus (d) 40% of the Net Income or Net Loss (expressed as a negative number) of
the Company for the period from October 1, 2000 through December 31, 2000 and
for each calendar year or part thereof thereafter until the occurrence of a
Project Sale without regard to any items of income, gain, loss, deduction or
credit attributable to any activities of the Subsidiaries of the Company other
than the Linden Subsidiaries.
"LINDEN PLANT" means the 715-megawatt gas-fired, combined cycle cogeneration
facility, and any related facilities or expansions, located in Linden, New
Jersey.
"LINDEN SUBSIDIARY" means any Subsidiary of the Company that owns, either
directly or indirectly, an ownership interest in the Linden Plant.
"LOAN DOCUMENTS" means (a) the Indenture and (b) the Notes and Security
Documents (as such terms are defined in such Indenture); in each case as such
documents may be amended, modified or supplemented from time to time, including
amendments, modifications, supplements and restatements thereof giving effect to
increases, renewals, extensions, refundings, deferrals, restructurings,
replacements or refinancings with the same or different lenders of, or additions
to, the arrangements provided in such Indenture.
"MANAGEMENT COMMITTEE" has the meaning set forth in 6.01.
"MANAGERS" shall mean those persons who are acting as Managers of the Company as
selected by the Common Members in the manner set out in Section 6.01 below.
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"MEMBER" means Mesquite, Mesquite Affiliate, ECP Holding, or any Person
hereafter admitted to the Company as a Member as provided in this Agreement, but
such term does not include any Person who has ceased to be a Member of the
Company.
"MEMBER NONRECOURSE DEBT" means the same meaning as the term "partner
nonrecourse debt" in Treasury Regulation Section 1.704-2(b)(4).
"MEMBER NONRECOURSE DEDUCTIONS" means the same meaning as the term "partner
nonrecourse deductions" in Treasury Regulation Sections 1.704-2(i)(1) and
1.704-2(i)(2).
"MEMBERSHIP INTEREST" means, with respect to any Member, (a) that Member's
status as a Member; (b) that Member's right to receive distributions from the
Company; and (c) all other rights, benefits and privileges enjoyed by that
Member (under the Act, this Agreement, or otherwise) in its capacity as a
Member, including that Member's rights to vote, consent and approve and
otherwise to participate in the management of the Company.
"MESQUITE" has the meaning set forth in the introductory paragraph.
"MESQUITE AFFILIATE" has the meaning set forth in the introductory paragraph.
"MINIMUM GAIN" means, with respect to each Nonrecourse Liability of the Company,
the amount of gain the Company would realize if the property subject to such
Nonrecourse Liability were disposed of for no consideration other than full
satisfaction of the Nonrecourse Liability, determined in accordance with the
rules set forth in Treasury Regulation Sections 1.704-2(b)(2) and 1.704-2(d).
"MODIFIED 752 SHARE OF RECOURSE DEBT" means of any Member, as of any date, the
aggregate amount of economic risk of loss that such Member and all related
persons to such Member are treated as bearing with respect to such liability
pursuant to Treasury Regulation Section 1.752-2 with respect to any Company
liability (or portion thereof) that is neither a Nonrecourse Liability nor a
Company liability that is treated as a "member nonrecourse debt" under Treasury
Regulation Section 1.704-2(b)(4) (determined, as of the date in question, by
assuming, for purposes of Treasury Regulation Section 1.752-2, that the Company
constructively liquidates on such date (within the meaning of Treasury
Regulation Section 1.752-2) except that all Company properties shall be deemed
thereunder to be transferred in fully taxable exchanges for an aggregate amount
of cash consideration equal to their respective Carrying Values and such
consideration shall be deemed thereunder to be used, in the appropriate order of
priority, in full or partial satisfaction of all Company liabilities).
"NET INCOME AND NET LOSS" means respectively, for any period, the taxable income
and taxable loss of the Company for the period as determined for federal income
tax purposes, provided that for purpose of determining Net Income and Net Loss
and each item thereof (and not for income tax purposes) (a) there shall be taken
into account any tax exempt income of the Company; (b) any expenditures of the
Company which are described in Section 705(a)(2)(B) of the Code or which are
deemed to be described in Section 705(a)(2)(B) of the Code pursuant to Treasury
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Regulations under Section 704(b) of the Code shall be treated as deductible
expenses; (c) if any Company asset has a Carrying Value which differs from its
adjusted tax basis as determined for federal income tax purposes, income, gain,
loss and deduction with respect to such asset shall be computed based upon the
asset's Carrying Value rather than its adjusted tax basis; (d) items of gross
income or deduction allocated pursuant to Section 5.05(b) - (g) shall be
excluded from the computation of Net Income and Net Loss; (e) there shall be
taken into account any separately stated items under Section 702(a) of the Code;
and (f) if the Carrying Value of any Company asset is adjusted pursuant to the
definition thereof, the amount of such adjustment shall be taken in to account
in the taxable year of adjustment as gain or loss from the disposition of such
asset for purposes of computing Net Income and Net Losses.
"NJ VENTURE" means Cogen Technologies NJ Venture, a New Jersey general
partnership.
"NONRECOURSE DEDUCTIONS" means the excess, if any, of the net increase, if any,
in the amount of Minimum Gain during a Fiscal Year over the aggregate amount of
distributions during that Fiscal Year of proceeds of a Nonrecourse Liability, as
defined in Treasury Regulation Sections 1.704-2(b)(i) and 1.704-2(c).
"NONRECOURSE LIABILITY" means a nonrecourse liability of the Company, as defined
in Treasury Regulation Section 1.752-1(a)(2).
"NOTES" means the meaning specified in the Indenture.
"ORIGINAL AGREEMENT" has the meaning set forth in Recital 1.
"OTHER CONSIDERATION" means the fair market value of any non-cash consideration
or deferred payments as reasonably determined in good faith by the Common
Members using commonly accepted valuation techniques.
"PPA BENEFITS" means the rights, benefits and obligations of the Company (or any
successor direct or indirect owner of the Linden Subsidiary or the Linden Plant)
under the Power Purchase Agreement, without giving effect to the amendments
thereto contained in the Third Amendment to Power Purchase Agreement dated as of
August 1, 1999 by and between Consolidated Edison Company of New York, Inc. and
Cogen Technologies Linden Venture, L.P.
"PERSON" means any individual, corporation, company, voluntary association,
partnership, joint venture, limited liability company, trust, estate,
unincorporated organization or government or any agency, instrumentality or
political subdivision thereof, or any other form of entity.
"POWER CONTRACT RESTRUCTURING" means, with respect to the PPA Benefits:
(a) any termination prior to the then-scheduled expiration date of the
PPA Benefits resulting from a breach thereof by any Person (other than
the power purchaser) that results in more than an insubstantial
economic benefit to the Company (or any successor direct or indirect
owner of the Linden Subsidiary or the Linden Plant);
(b) the sale, transfer, or assignment to ConEd of the PPA Benefits, any
Linden Subsidiary, or the Linden Plant;
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(c) any agreement to (i) terminate or reduce the payments to be made by
the power purchaser, (ii) change the amount of capacity or energy to be
sold to the power purchaser, (iii) change the source of the capacity or
energy to be delivered to the power purchaser, or (iv) change or
substitute the power purchaser to El Paso or any of its Affiliates or
any other Person if such change results in more than an insubstantial
economic benefit to the Company (or any successor direct or indirect
owner of the Linden Subsidiary or the Linden Plant) or El Paso;
(d) any agreement that has substantially the same effect as the events
or agreements described in subsections (a) through (c) above, except
for (i) any of the foregoing described in subsection (c) that is
expressly permitted pursuant to the terms and conditions of the Power
Purchase Agreement, or (ii) any of the foregoing that that occurs after
a loss of the Linden Facility of its status as a "Qualifying Facility"
under PURPA in circumstances that result in more than an insubstantial
economic benefit to the Company (or any successor direct or indirect
owner of the Linden Subsidiary or the Linden Plant), or (iii) any
temporary or interim amendment or supplement to the Power Purchase
Agreement that is entered into at the request of the power purchaser
(including as a result of a default under the Power Purchase Agreement)
in response to temporary conditions respecting the power purchaser's
system or its consumers (a "TEMPORARY AGREEMENT"), so long as the
aggregate net pre-tax economic benefit to the Company (or any successor
direct or indirect owner of the Linden Subsidiary or the Linden Plant)
of such all such Temporary Agreements, determined in good faith by the
Common Members and the Preferred Member based on pro forma operating
budgets of the Company (or any such successor) giving effect to each
such Temporary Agreement during the period from January 1, 2001 through
the term of the PPA Benefits in comparison to pro forma operating
budgets without giving effect to any of such temporary or interim
agreements during the period from January 1, 2001 through the term of
the PPA Benefits, is less than $25,000,000 in the aggregate.
The parties agree that this definition of "Power Contract
Restructuring" is intended to continue to apply notwithstanding any
merger, consolidation, dissolution or liquidation of the Company, or
any sale or other transfer of the PPA Benefits, any Linden Subsidiary
or all or any part of the Linden Plant.
"POWER PURCHASE AGREEMENT" means the Power Purchase Agreement dated as of April
14, 1989, by and between Consolidated Edison Company of New York, Inc. and Cogen
Technologies, Inc., as assigned by Cogen Technologies, Inc. to Linden, Ltd. with
the consent of Consolidated Edison Company of New York, Inc. on August 3, 1989
and as further assigned by Linden, Ltd. to Linden Venture with the consent of
Consolidated Edison Company of New York, Inc. on December 22, 1989, as amended
by First Amendment to Power Purchase Agreement dated as of September 17, 1990,
by and between Consolidated Edison Company of New York, Inc. and Cogen
Technologies Linden Venture, L.P., as amended by Second Amendment to Power
Purchase Agreement dated as of December 22, 1993, by and between Consolidated
Edison Company of New York, Inc. and Cogen Technologies Linden Venture, L.P., as
amended by the Third Amendment to Power Purchase Agreement dated as of August 1,
1999 by and
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between Consolidated Edison Company of New York, Inc. and Cogen Technologies
Linden Venture, L.P.
"PROJECT SALE" means any sale or other transfer, or series of related sales or
transfers, to any Person, other than (a) El Paso or any Affiliate of El Paso
other than any such Affiliate with respect to which all or substantially all of
the economic benefit interest is held by a Person other than El Paso and its
consolidated subsidiaries, or (b) or Enron, of
(i) (A) the Linden Plant, or (B) all or substantially all of
the assets or equity interests of (1) Cogen Technologies
Linden Venture, L.P., or (2) the Linden Subsidiaries, taken as
a whole; in each case in exchange for a Purchase Price that in
the aggregate exceeds the Linden Base Amount; or
(ii) all or substantially all of the assets or equity
interests of the Company, in exchange for a Purchase Price
that in the aggregate exceeds the Company Base Amount.
"PURCHASE PRICE" means
(a) with respect to a sale or transfer contemplated in clause (ii) of
the definition of Project Sale, the sum of the following:
(i) the aggregate amount of cash or Other Consideration
actually received by the Company or the Common Members, as applicable,
in connection with such sale or transfer, plus
(ii) the aggregate principal amount of Indebtedness (to the
extent such Indebtedness is described in clause (a) or (b) of the
definition thereof) of the Company or the Common Members, as
applicable, assumed by the buyer or owed by the Company or any
Subsidiary thereof, at the consummation of such sale or transfer, minus
(iii) any amounts payable by the Common Members or any of
their Affiliates or the Company or any Subsidiary thereof in connection
with such sale or transfer, including, without limitation, legal,
accounting, or investment banker fees; make-whole premiums; interest
rate or interest rate swap breakage costs; liquidated damage provisions
under contracts to which the Company or any Subsidiary of the Company
is bound or affected; travel costs of employees; and data room costs
and other out-of-pocket selling costs associated with the transaction;
(b) with respect to a sale or transfer contemplated in clause (i) of
the definition of Project Sale, the sum of the following:
(i) the aggregate amount of cash or Other Consideration
actually received by (i) Cogen Technologies Linden Venture, L.P., (ii)
any of the other Linden Subsidiaries, or (iii) the Company, as
applicable, in connection with such sale or transfer, plus
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(ii) the aggregate principal amount of Indebtedness (to the
extent such Indebtedness is described in clause (a) or (b) of
the definition thereof) of any of the Linden Subsidiaries
assumed by the buyer or owed by any of the Linden Subsidiaries
at the consummation of such sale or transfer, minus
(iii) any amounts payable by the Common Members or any of
their Affiliates, the Company or any Subsidiary of the Company
in connection with such sale or transfer, including, without
limitation, legal, accounting, or investment banker fees;
make-whole premiums; interest rate or interest rate swap
breakage costs; liquidated damage provisions under contracts
to which the Company or any Subsidiary of the Company is bound
or affected; travel costs of employees; and data room costs
and other out-of pocket selling costs associated with the
transaction.
"PURPA" means the Public Utility Regulatory Policies Act of 1978, as amended,
the Federal Energy Regulatory Commission's regulations thereunder, and
regulatory and judicial interpretations thereof.
"PREFERRED INTEREST" has the meaning set forth in Recital 9.
"PREFERRED MEMBER" means ECP Holding and any other Person hereafter admitted to
the Company as a Preferred Member as provided in this Agreement, but such term
does not include any Person who has ceased to be a Preferred Member of the
Company.
"RECORD HOLDER" means the Person in whose name a Membership Interest is
registered in the books and records of the Company as contemplated in Section
3.08.
"RESTRUCTURING DISTRIBUTION" has the meaning set forth in Section 5.01(a).
"SALE DISTRIBUTION" means the amounts distributable to the Preferred Member
pursuant to Section 5.01(b) or 5.01(c), as applicable, together with any
additional amounts due under Section 5.02.
"SECOND RESTATED AGREEMENT" has the meaning set forth in Recital 6.
"SECOND RESTATEMENT DATE" has the meaning set forth in Recital 6.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SHARING RATIO" means 99% for the Common Members (98.01% for Mesquite and .99%
for Mesquite Affiliate) and 1% for the Preferred Member.
"SUBJECT PERSON" has the meaning set forth in Section 3.06(a).
"SUBSIDIARY" means an Affiliate that a Person controls, including, in the case
of the Company, Camden ▇▇▇▇▇, ▇▇▇▇▇▇ Venture, and NJ Venture.
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"TAX MATTERS MEMBER" has the meaning set forth in Section 7.03.
"TEMPORARY AGREEMENT" has the meaning set forth in the definition of Power
Contract Restructuring.
"TERM" has the meaning set forth in Section 2.06.
"TRANSACTION AGREEMENT" has the meaning set forth in Recital 7.
"UTILITY AFFILIATE" means a Member as to which one or more of the
representations in Section 3.02(m) is, or becomes, untrue.
1.02 CONSTRUCTION. Unless the context requires otherwise: (a) the
gender (or lack of gender) of all words used in this Agreement includes the
masculine, feminine, and neuter; (b) references to Articles, Sections and
subsections refer to Articles, Sections and subsections of this Agreement; (c)
references to an Exhibit or Schedule refer to the Exhibits or Schedules attached
to this Agreement, which are made a part hereof for all purposes; (d) references
to Laws refer to such Laws as they may be amended from time to time, and
references to particular provisions of a Law include any corresponding
provisions of any succeeding Law; and (e) references to money or the sign "$"
refer to legal currency of the United States of America.
ARTICLE 2: ORGANIZATION
2.01 FORMATION; CONSTRUCTION. The Company was formed as a Delaware
limited liability company by the filing of the Delaware Certificate as of the
Formation Date. ECP Holding, Mesquite Affiliate, and Mesquite hereby continue
the Company pursuant to the terms and conditions of this Agreement.
2.02 NAME. The name of the Company shall continue to be "East Coast
Power L.L.C.," and all Company business must be conducted in that name or such
other names that comply with Law, as the Common Members may select.
2.03 REGISTERED OFFICE; REGISTERED AGENT; PRINCIPAL OFFICE AND OTHER
OFFICES. The registered office of the Company required by the Act to be
maintained in the State of Delaware shall be the office of the registered agent
named in the Delaware Certificate or such other office (which need not be a
place of business of the Company) as the Common Members may designate in the
manner provided by Law. The registered agent of the Company in the State of
Delaware shall be the registered agent named in the Delaware Certificate or such
other Person or Persons as the Common Members may designate in the manner
provided by Law. The principal office of the Company in the United States shall
be at such place as the Common Members may designate, which need not be in the
State of Delaware, and the Company shall maintain records there or such other
place as the Common Members shall designate and shall keep the street address of
such principal office at the registered office of the Company in the State of
Delaware. The Company may have such other offices as the Common Members may
designate. The Company shall notify each Common Member of any change in the
registered office, the registered agent, or the street address of the principal
office of the Company.
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2.04 PURPOSES. The purposes of the Company are to engage directly or
indirectly through its Subsidiaries in (a) the acquisition, development, lease,
ownership and sale, and the operation, maintenance, financing, modification, and
expansion, of electric power, steam, water and other utility production and
related steam consumption assets and any real or personal property associated
therewith, including the Camden Plant, the Linden Plant and the Bayonne Plant;
(b) the purchasing, ownership, use, transmission, marketing and sale of any
input, output or right associated therewith; and (c) all actions incidental,
necessary or appropriate to the foregoing that may be engaged in by a limited
liability company formed under the Act.
2.05 FOREIGN QUALIFICATION. The Company shall maintain its
qualification as a foreign limited liability company in New Jersey. Prior to the
Company's conducting business in any jurisdiction other than Delaware or New
Jersey, the Common Members shall cause the Company to comply, to the extent
procedures are available and those matters are reasonably within the control of
the Common Members, with all requirements necessary to qualify the Company as a
foreign limited liability company in that jurisdiction. At the request of the
Common Members, each Member shall execute, acknowledge, swear to, and deliver
all certificates and other instruments conforming with this Agreement that are
necessary or appropriate to qualify, continue, and terminate the Company as a
foreign limited liability company in all such jurisdictions in which the Company
may conduct business.
2.06 TERM. The period of existence of the Company (the "TERM")
commenced on the Formation Date and shall end at such time as a certificate of
cancellation is filed with the Secretary of State of Delaware in accordance with
Section 9.03.
ARTICLE 3: MEMBERSHIP; DISPOSITIONS OF INTERESTS
3.01 MEMBERS
(a) There shall be two classes of Members in the Company, the Common
Members and the Preferred Members, each of which has the respective
rights accorded it under this Agreement.
(b) Effective as of the Effective Date:
(i) ECP Holding is hereby exchanging its existing Membership
Interest, which consists of only Class B Membership Interests,
for a Membership Interest in the Company as a Preferred
Interest with a 1% Sharing Ratio and is being admitted as the
sole Preferred Member and its Membership Interest in the
Company is being re-denominated as such under the terms of
this Agreement; and
(ii) Mesquite is hereby exchanging its existing Membership
Interest, which consists of both Class A and Class B
Membership Interest for a Membership Interest in the Company
as a Common Interest with a 98.01% Sharing Ratio, and is being
admitted as such and its Membership Interest in the Company is
being re-denominated as such under the terms of this
Agreement; and
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(iii) Mesquite Affiliate is hereby exchanging its existing
Membership Interest, which consists of a Class A Membership
Interest for a Membership Interest in the Company as a Common
Interest, with a .99% Sharing Ratio and is being admitted as
such and its Membership Interest in the Company is being
re-denominated as such under the terms of this Agreement.
(c) All other terms and conditions of this Agreement notwithstanding,
the Preferred Member's rights to Restructuring Distributions, Sale
Distributions and all rights or benefits relating thereto shall
terminate, be eliminated from this Agreement, and the Company shall
have no further obligations thereto upon the earliest of the following:
(i) a Power Contract Restructuring has occurred, and either
(A) the Company has paid the Preferred Member the full
Restructuring Distribution as set forth in Section 5.01(a), or
(B) Mesquite or El Paso has satisfied the Company's obligation
to pay the Preferred Member such Restructuring Distribution;
(ii) the Preferred Member has otherwise been paid the full
Restructuring Distribution prior to a Power Contract
Restructuring pursuant to Section 5.01(a);
(iii) the Power Purchase Agreement has terminated or expired
other than pursuant to a Power Contract Restructuring; or
(iv) a Project Sale has occurred and either (A) the Company
has paid the Preferred Member the full Sale Distribution as
set forth in Section 5.01(b), or (B) Mesquite or El Paso has
satisfied the Company's obligation to pay the Preferred Member
such Sale Distribution (it being understood that a payment of
an amount equal to one half of the Restructuring Distribution
pursuant to Section 5.01(c) will not, unless and until the
remainder of the Restructuring Distribution has been paid,
result in the termination and elimination of the Preferred
Member's right to the Restructuring Distribution, Sale
Distribution and all rights or benefits relating thereto).
The Preferred Member agrees that the termination and
elimination of its rights to the Restructuring Distributions,
Sale Distributions and all rights or benefits relating
thereto, as set out above, shall occur simultaneously with the
satisfaction of any such conditions without any further act by
the Company, the Managers, the Preferred Member or any Common
Member.
(d) All other terms and conditions of this Agreement notwithstanding,
at such time as any one of the events set out in Section 3.02 (c ) (i)
through (iv) above has occurred, the Company shall have the right to
redeem the Preferred Interest at any time thereafter it may elect by
paying to the Preferred Member that sum which is equal to its then
positive balance in its Capital Account (which in no event may exceed
the sum of $250,000.00) at which time the Preferred Member shall have
no further rights or obligations under this Agreement. In the event
such a redemption shall occur when the Preferred Interest has a
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negative capital account balance, the Preferred Member shall have no
obligation to contribute capital to the Company to make up any such
negative balance in such account.
3.02 REPRESENTATIONS, WARRANTIES AND COVENANTS. Each Member hereby
represents, warrants and covenants to the Company and each other that the
following statements are true and correct as of the Effective Date:
(a) that Member is duly incorporated, organized or formed (as
applicable), validly existing and (if applicable) in good standing
under the Law of the jurisdiction of its incorporation, organization or
formation; if required by applicable Law, that Member is duly qualified
and (if applicable) in good standing in the jurisdiction of its
principal place of business, if different from its jurisdiction of
incorporation, organization or formation; and that Member has full
power and authority to execute and deliver this Agreement and to
perform its obligations hereunder, and all necessary actions by the
board of directors, shareholders, managers, members, partners,
trustees, beneficiaries, or other applicable Persons necessary for the
due authorization, execution, delivery, and performance of this
Agreement by that Member have been duly taken;
(b) that Member has duly executed and delivered this Agreement, and
this Agreement constitutes the legal, valid and binding obligation of
that Member enforceable against it in accordance with its terms (except
as may be limited by bankruptcy, insolvency or similar Laws of general
application and by the effect of general principles of equity,
regardless of whether considered at law or in equity);
(c) that Member's authorization, execution, delivery and performance of
this Agreement do not (i) conflict with, or result in a breach, default
or violation of, (A) the organizational documents of such Member, (B)
any contract or agreement to which that Member is a party, or (C) any
Law to which that Member is subject; or (ii) require any consent,
approval or authorization from, filing or registration with, or notice
to, any Governmental Authority, unless such requirement has already
been satisfied;
(d) that Member is not required to register as an "investment company"
within the meaning of the Investment Company Act;
(e) that Member is acquiring its Membership Interest for its own
account and not with a view to the resale or distribution of all or any
part thereof in violation of applicable securities Laws; it understands
that the Membership Interest being acquired by it has not been
registered under the Securities Act or applicable state securities Laws
and, therefore, it will be necessary for it to continue to hold the
Membership Interest being acquired by it and continue to bear the
economic risk of the investment therein unless and until the offering
and sale of such Membership Interest by it are registered or qualified
under the Securities Act and applicable state securities Laws or an
exemption from registration or qualification is available;
(f) that Member understands that it may not sell or transfer its
Membership Interest, except in accordance with Section 3.03;
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(g) that Member acknowledges that it has no right to require the
Company to register or qualify the offering and sale of its Membership
Interest under the Securities Act or any applicable state securities
Laws;
(h) that Member has carefully reviewed this Agreement and any other
relevant information furnished to it in writing regarding the Company,
and it understands the risks of, and other considerations relating to,
an investment in its Membership Interest;
(i) that Member has been furnished all materials, if any, that it
requested relating to the Company and the purchase of Membership
Interests, and it has been afforded the opportunity to obtain any
additional information and to ask all questions it deemed necessary
regarding information about Membership Interests, the Company, its
Affiliates, and the Company's business activities, and the Company has
given it such answers concerning those matters as it deems sufficient
to make an informed investment decision with respect to its investment
in the Company;
(j) that Member has such knowledge and experience (based on actual
participation) in financial and business matters that it is capable of
evaluating the merits and risks of an investment in Membership
Interests and of making an informed investment decision;
(k) that Member understands that any information furnished to it
concerning the federal income tax consequences arising from an
investment in the Company is necessarily general in nature, and the
specific tax consequences to it of an investment in the Company will
depend on its individual circumstances, and it affirms that it has been
advised to seek appropriate legal counsel with respect to such tax
consequences;
(l) that Member understands that the other Members and the Company are
relying on its representations and warranties in selling the Membership
Interests or recognizing their transfer without registration under the
securities Laws;
(m) in the case of Members other than Enron Members, at the time of its
investment in the Company and at all times while it remains a Member,
that Member (i) is not and will not be an "electric utility company," a
"holding company," or a "subsidiary company" of a "holding company,"
each within the meaning of the Public Utility Holding Company Act of
1935, as amended and the rules and regulations of the Securities and
Exchange Commission thereunder (the "1935 ACT"); and (ii) shall not be
or become an "electric utility" or "electric utility holding company"
under PURPA, or a wholly or partially owned subsidiary of either
thereof, except to the extent that the failure to satisfy the
representations in clause (i) or (ii) above would not cause any power
plant in which the Company owns a direct or indirect interest to lose
its status as a "qualifying facility" under PURPA or the Common Member
determines in its reasonable discretion that such loss of "qualifying
facility" status under PURPA would not materially adversely affect such
facility, the Company or its Members;
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(n) at the time of its investment in the Company and at all times while
it remains a Member, such Member does not and will not constitute an
employee benefit plan (as defined in Section 3(3) of ERISA), or a plan
(as defined in Section 4975(e) of the Code), or a trustee of any such
plan acting on behalf of such plan, or an entity whose underlying
assets include plan assets by reason of a plan's investment in the
entity other than a governmental plan (as defined in Section 3(32) of
ERISA or Section 414(d) of the Code); and if it constitutes a
governmental plan, such Member does not treat itself as subject to the
Department of Labor Regulations Section 2510.3-101 or interpret
applicable state law as incorporating similar rules; and
(o) each Enron Member, at the time of its investment in the Company and
at all times while it remains both a Member and a Utility Affiliate,
will not own, directly or indirectly, more than 50% of the interests in
the Company or its Subsidiaries, except to the extent that such
ownership in excess of 50% would not cause any power plant in which the
Company owns a direct or indirect interest to lose its status as a
"qualifying facility" under PURPA or the Common Member determines in
its reasonable discretion that such loss of "qualifying facility"
status under PURPA would not materially adversely affect such facility,
the Company or its Members.
3.03 DISPOSITIONS OF MEMBERSHIP INTERESTS.
(a) GENERAL RESTRICTION. A Member may Dispose of all or any
portion of its Membership Interest only upon the approval of the Common
Members or otherwise complying with all of the following requirements:
(i) such Disposition must comply with the requirements of
Section 3.03(c) and Section 3.08 and, if the Assignee is to be
admitted as a Member, Section 3.03(b);
(ii) such Disposition must not cause any power plant in which
the Company owns a direct or indirect interest to lose its
status as a "qualifying facility" under PURPA, unless the
non-Disposing Member determines in its reasonable discretion
that such loss of "qualifying facility" status under PURPA
would not materially adversely affect such facility, the
Company or its Members;
(iii) such Disposition must not cause any termination or
acceleration under the Loan Documents or result in a "Change
of Control" occurring under, and as defined in, the Indenture
or result in the holders of the Notes having the right to
require the Company to purchase the Notes in accordance with
the terms of the Indenture; and
(iv) the Preferred Member shall not Dispose of its Membership
Interest to ConEd.
References in this Section 3.03 to Dispositions of a "Membership
Interest" shall also refer to Dispositions of a portion of a Membership
Interest. Any attempted Disposition
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of a Membership Interest, other than in strict accordance with this
Section 3.03, shall be, and is hereby declared, null and void ab
initio. The Members agree that a breach of the provisions of this
Section 3.03 may cause irreparable injury to the Company and to the
other Members for which monetary damages (or other remedy at law) are
inadequate in view of (A) the complexities and uncertainties in
measuring the actual damages that would be sustained by reason of the
failure of a Member to comply with such provision, and (B) the
uniqueness of the Company's business and the relationship among the
Members. Accordingly, the Members agree that the provisions of this
Section 3.03 may be enforced by specific performance.
(b) ADMISSION OF ASSIGNEE AS A MEMBER. An Assignee has the
right to be admitted to the Company as a Member, with the Membership
Interest so transferred to such Assignee, only if (i) the Disposing
Member making the Disposition has granted the Assignee either (A) the
Disposing Member's entire Membership Interest or (B) the express right
to be so admitted; and (ii) such Disposition is effected in strict
compliance with this Section 3.03.
(c) REQUIREMENTS APPLICABLE TO ALL DISPOSITIONS AND ADMISSIONS.
In addition to the requirements set forth in Sections 3.03(a), 3.03(b)
and 3.08, any Disposition of a Membership Interest, and any admission
of an Assignee as a Member shall also be subject to the following
requirements, and such Disposition (and admission, if applicable) shall
not be effective unless such requirements are complied with; provided,
however, that the Common Members, in their sole and absolute
discretion, may waive any of the following requirements:
(i) Disposition Documents. The following documents must be
delivered to the non-Disposing Member and must be reasonably
satisfactory, in form and substance, to the non-Disposing
Member:
(A) Disposition Instrument. A copy of the
instrument pursuant to which the Disposition is
effected.
(B) Ratification of this Agreement. An
instrument, executed by the Disposing Member and its
Assignee, containing the following information and
agreements, to the extent they are not contained in
the instrument described in Section 3.03(c)(i)(A):
(I) the notice address of the Assignee; (II) the
portion of the Membership Interest to be held after
the Disposition by the Disposing Member and its
Assignee (which together must total the Membership
Interest of the Disposing Member before the
Disposition); (III) the Assignee's ratification of
this Agreement and agreement to be bound by it, and
its affirmation that the representations and
warranties in Section 3.02 are true and correct with
respect to it; and (IV) representations and
warranties by the Disposing Member and its Assignee
that the Disposition and admission are being made in
accordance with all applicable Laws.
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(C) Securities Law Opinion. Unless the
Membership Interest subject to the Disposition is
registered under the Securities Act and any
applicable state securities Law, a favorable opinion
of the Company's legal counsel, or of other legal
counsel acceptable to the Common Member, to the
effect that the Disposition and admission are being
made pursuant to a valid exemption from registration
under those Laws and in accordance with those Laws;
provided, however, that this Section 3.03(c)(i)(C)
shall not apply to Dispositions by the Preferred
Member to Enron or any of Enron's Affiliates as set
forth in Section 3.03(a) or to the Dispositions
described in the Recitals hereof.
(ii) Payment of Expenses. The Disposing Member and
its Assignee shall pay, or reimburse the Company for, all
reasonable costs and expenses incurred by the Company in
connection with the Disposition and admission, including the
reasonable legal fees incurred in connection with the legal
opinions referred to in Sections 3.03(c)(i)(C) and (D), on or
before the tenth Day after the receipt by that Person of the
Company's invoice for the amount due.
(iii) No Release. No Disposition of a Membership
Interest shall effect a release of the Disposing Member from
any liabilities to the Company or the other Members arising
from events occurring prior to the Disposition.
3.04 CREATION OF ADDITIONAL MEMBERSHIP INTERESTS. Subject to
requirements set forth in Section 10.04, additional Membership Interests may be
created and issued to existing Members or to other Persons, and such other
Persons may be admitted to the Company as Members, with the consent of the
Common Members, on such terms and conditions as the Common Members may determine
at the time of admission. The terms of admission or issuance may provide for the
creation of different classes or groups of Members having different rights,
powers, and duties. Any such admission is effective only after the new Member
has executed and delivered to the Common Members an instrument containing the
notice address of the new Member, the new Member's ratification of this
Agreement and agreement to be bound by it, and its affirmation that the
representations and warranties in Section 3.02 are true and correct with respect
to it. The provisions of this Section 3.04 shall not apply to Dispositions of
Membership Interests or admissions of Assignees in connection therewith, such
matters being governed by Section 3.03.
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3.05 ACCESS TO INFORMATION. The Common Members shall be entitled to
receive that information relating to the Company which it determines to be
useful or necessary in connection with its ownership and operation of the
Company. The Preferred Member shall be entitled to receive the information
expressly set out herein and only such other information as may be necessary to
protect its rights under this Agreement; provided that this Section 3.05 shall
not obligate the Company or any Member to create any information that does not
already exist at the time of such request (other than to convert existing
information from one medium to another, such as providing a printout of
information that is stored in a computer database). The Member making the
request shall bear all costs and expenses incurred in any inspection,
examination or audit made on such Member's behalf. Confidential information
obtained pursuant to this Section 3.05 shall be subject to the provisions of
Section 3.06. The Preferred Member hereby confirms that the standard set out
above is a fair and reasonable standard for access to the records of the Company
based upon its interests set out herein.
3.06 CONFIDENTIAL INFORMATION.
(a) The Members and Managers acknowledge that, from time to time, they
may receive information from or regarding the Company or the other
Members (each, a "SUBJECT PERSON") in the nature of trade secrets or
that otherwise is confidential, the release of which may be damaging to
the Subject Person or to Persons with which it does business. Unless
the Subject Person (the Common Members if the Company is the Subject
Person) consents otherwise, the Members and Managers shall hold in
strict confidence and not use (except for matters involving the
Company) any information it receives regarding the Subject Person that
is identified as being confidential (and if that information is
provided in writing, that is so marked) and may not disclose it to any
Person, except for disclosures (i) required by Law or applicable stock
exchange regulations (but the Member or Manager must notify the Subject
Person (the Common Members if the Company is the Subject Person)
promptly of any request for that information, before disclosing it if
practicable), (ii) if the Subject Person is a Member, to advisers or
representatives of the Subject Person, or Persons to which the Subject
Person's Membership Interest may be Disposed as permitted by this
Agreement, but only if the recipients have agreed to be bound by the
provisions of this Section 3.06, or (iii) of information that is
publicly available or that such Member also has received from a source
independent of the Subject Person that the Member reasonably believes
obtained that information and disclosed it to that Member without
breach of any obligation of confidentiality. The Members and Managers
acknowledge that breach of the provisions of this Section 3.06 may
cause irreparable injury to the Subject Person for which monetary
damages are inadequate, difficult to compute, or both. Accordingly, the
Members and Managers agree that the provisions of this Section 3.06 may
be enforced by specific performance, including specifically through
injunctive relief. The provisions of this Section 3.06 may be
specifically enforced by any applicable Subject Person.
(b) The provisions of this Section 3.06 shall terminate on the earlier
of (i) the second anniversary of the end of the Term and (ii) with
respect to any Member that ceases to be a Member, the second
anniversary of the date such Member ceases to be a Member.
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3.07 LIABILITY TO THIRD PARTIES. No Member shall be liable for the
debts, obligations or any other liabilities of the Company of whatever nature,
whether now existing or arising in the future.
3.08 CERTIFICATES.
(a) Certificates ("CERTIFICATES") evidencing the Membership Interests
shall be in the form attached as Exhibit B The Company shall issue to
each Member a Certificate certifying their Membership Interest (and the
class and Sharing Ratio of such Membership Interest) held by such
Member. Certificates shall be consecutively numbered and shall be
entered in the books and records of the Company as they are issued and
shall exhibit the holder's name.
(b) The Company shall keep or cause to be kept on behalf of the Company
a register that will provide for the registration and transfer of
Membership Interests. The Company shall not recognize transfers of
Membership Interests unless the same are effected in compliance with
Section 3.03 and in the manner described in this Section 3.08. Upon
surrender for registration of transfer of any Certificate, and subject
to the provisions of Section 3.08(c), the Company shall issue, in the
name of the holder or the designated Assignee or Assignees, as required
pursuant to the Record Holder's instructions, one or more new
Certificates evidencing the same class and the same aggregate Sharing
Ratio of Membership Interest as was evidenced by the Certificate so
surrendered.
(c) The Company shall not recognize any transfer of a Membership
Interest until the Certificate evidencing such Membership Interest is
surrendered to the Company for registration of transfer and the
requirements of Section 3.03 have been satisfied. The Company may
require the payment of a sum sufficient to cover any tax or other
Governmental charge that may be imposed with respect thereto.
(d) If the Assignee has the right, pursuant to Section 3.03(b), to be
admitted to the Company as a Member, such Assignee shall become a
Member when such transfer and admission is reflected in the books and
records of the Company.
(e) Each distribution in respect of a Membership Interest shall be paid
by the Company only to the Record Holder thereof as of the date of such
distribution, unless otherwise directed by the Record Holder. Such
payment shall constitute full payment and satisfaction of the Company's
liability in respect of such payment, regardless of any claim of any
Person who may have an interest in such payment by reason of assignment
or otherwise.
(f) If any mutilated Certificate is surrendered to the Company, then
the Company shall issue a new Certificate evidencing the same class and
Sharing Ratio of Membership Interest as the Certificate so surrendered.
Upon delivery by the Record Holder of an affidavit, in form and
substance satisfactory to the Company, that a previously issued
Certificate has been lost, destroyed or stolen, the Company shall issue
a new Certificate
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evidencing the same class and Sharing Ratio of Membership Interest as
the Certificate that was lost, destroyed or stolen.
ARTICLE 4: CAPITAL CONTRIBUTIONS
4.01 SUBSEQUENT CAPITAL CONTRIBUTIONS.
(a) Except as expressly provided herein, no Member shall have any
obligation to make any additional Capital Contributions.
(b) The Preferred Member may not make any additional Capital
Contributions. No Member may make a Capital Contribution without the
consent of the Common Members.
4.02 RETURN OF CONTRIBUTIONS. Except as expressly provided herein, a
Member is not entitled to the return of any part of its Capital Contributions. A
Member is not entitled to be paid interest in respect of its Capital
Contributions. An unrepaid Capital Contribution is not a liability of the
Company or of any Member. A Member is not required to contribute or to lend any
cash or assets to the Company to enable the Company to return any Member's
Capital Contributions.
4.03 LOANS. The Preferred Member may not make any loans to the Company
without the consent of the Common Members.
4.04 CAPITAL ACCOUNTS. A Capital Account shall be established and
maintained for each Member in accordance with Treasury Regulation Section
1.704-1(b)(2)(iv). Each Member's Capital Account shall be increased by (a) the
amount of money contributed by that Member to the Company, (b) the fair market
value of property contributed by that Member to the Company (net of liabilities
secured by such contributed property that the Company is considered to assume or
take subject to under Section 752 of the Code), (c) the Net Income allocated to
such Member pursuant to Section 5.04, and (d) the gross income allocated to such
Member pursuant to Section 5.05, and shall be decreased by (e) the amount of
money distributed to that Member by the Company, (f) the fair market value of
property distributed to that Member by the Company (net of liabilities secured
by such distributed property that such Member is considered to assume or take
subject to under Section 752 of the Code), (g) the Net Loss allocated to such
Member pursuant to Section 5.03, and (h) any "partner non-recourse deductions"
(as defined in Treasury Regulation Section 1.704-2(i)) and any "non-recourse
deductions" (as defined in Treasury Regulation Section 1.704-2(b)) allocated to
such Member pursuant to Section 5.05 of this Agreement. The Capital Account of
each Member shall be adjusted to reflect any adjustment to the Carrying Value of
the Company's assets attributable to the application of Sections 734 or 743 of
the Code to the extent required pursuant to Treasury Regulation Section
1.704-1(b)(2)(iv)(m). Except as otherwise provided in this Agreement, whenever
it is necessary to determine the Capital Account of any Member, the Capital
Account of such Member shall be determined after giving effect to the allocation
of Net Income, Net Loss and other items realized prior or concurrently to such
time (including any Net Income and Net Losses attributable to adjustments to
Carrying Values with respect to any concurrent distribution), and all
contributions and distributions made prior or concurrently to the time as of
which such determination is to be made. Upon the Disposition of all or a portion
of a Membership Interest, the Capital Account of the Disposing Member that is
attributable to such Membership Interest shall carry over to the
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Assignee in accordance with the provisions of Treasury Regulation Section
1.704-1(b)(2)(iv)(l). The Members Capital Accounts in the Company as of the end
of the Effective Date are as set forth on Exhibit "D."
ARTICLE 5: ALLOCATIONS AND DISTRIBUTIONS
5.01 DISTRIBUTIONS. Distributions to the Members shall be made as
follows:
(a) On or before five (5) Business Days after the Financial
Closing of a Power Contract Restructuring, the Company shall distribute
to the Preferred Member the amount in cash set forth in Exhibit C less
any amounts previously paid pursuant to Sections 5.01(b) or (c) below
(together with any additional amounts due under Section 5.02, the
"RESTRUCTURING DISTRIBUTION"). Upon the occurrence of any Power
Contract Restructuring, the Company shall give prompt written notice of
such Power Contract Restructuring to the Preferred Member. Nothing
herein shall prevent the Company from pre-paying the Restructuring
Distribution before such distribution becomes due and payable according
to its terms.
(b) On or before five (5) Business Days after the Financial
Closing of a Project Sale with respect to which definitive agreements
are entered into on or before December 31, 2001, the Company shall
distribute to the Preferred Member an amount in cash equal to the
Restructuring Distribution that would then be payable if the Financial
Closing of a Power Contract Restructuring had occurred on the date of
such payment. Upon the occurrence of any Project Sale, the Company
shall give prompt written notice of such Project Sale to the Preferred
Member.
(c) On or before five (5) Business Days after the Financial
Closing of a Project Sale with respect to which definitive agreements
are entered into after December 31, 2001 but on or before December 31,
2002, the Company shall distribute to the Preferred Member an amount in
cash equal to one-half of the Restructuring Distribution that would
then be payable if Financial Closing of a Power Contract Restructuring
had occurred on the date of such payment. Upon the occurrence of any
Project Sale, the Company shall give prompt written notice of such
Project Sale to the Preferred Member.
(d) All other distributions to be made hereunder shall be made
only to the Common Members in accordance with their relative Sharing
Ratios.
5.02 FAILURE TO MAKE DISTRIBUTIONS If all or any of a Restructuring
Distribution or Sale Distribution has become due and payable and is not timely
paid, (a "Distribution Default"), then immediately upon such Distribution
Default and continuing until the Distribution Default has been cured in full by
a distribution from the Company or a payment of such sums on behalf of the
Company by Mesquite or El Paso, the amount of the Restructuring Distribution or
Sale Distribution, as applicable, owed by the Company to the Preferred Member,
beginning from the date such distribution was payable until the date actually
distributed or paid, shall bear interest at a rate equal to the lesser of (i)
eighteen percent (18%) per annum, and (ii) the maximum interest rate permitted
by applicable Law.
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5.03 DISTRIBUTIONS ON DISSOLUTION AND WINDING UP Upon the dissolution
and winding up of the Company, all available proceeds distributable to the
Members as determined under Section 9.02 shall be distributed as follows:
(a) If any Restructuring Distribution or Sale Distribution has
become payable pursuant to Section 5.01, the proceeds shall be
distributed first to the Preferred Member until the Preferred Member
has received the full applicable Restructuring Distribution or Sale
Distribution.
(b) All remaining proceeds shall be distributed to the Common
Members and Preferred Member in proportion to the balance in their
respective Capital Accounts, provided however, in no event shall the
distribution to the Preferred Member be greater than $250,000.00.
5.04 ALLOCATIONS.
(a) Net Income for any Fiscal Year shall be allocated as follows:
(i) First, to the Common Members pro rata in accordance with
their Sharing Ratios until the cumulative amount of Net Income
allocated pursuant to this Section 5.04(a)(i) during the
current and all prior Fiscal Years equals the cumulative
amount of Net Loss previously allocated to the Common Members
pursuant to Section 5.04(b)(ii);
(ii) Then, 100% to the Common Members and the Preferred Member
pro rata in accordance with their Sharing Ratios until the
cumulative amount of Net Income allocated pursuant to this
Section 5.04(a)(ii) during the current and all prior Fiscal
Years equals cumulative amount of Net Loss allocated to the
Common Members and Preferred Member pursuant to Section
5.04(b)(i) during all prior Fiscal Years; but in no event
shall the allocations set out herein ever cause the Capital
Account of the Preferred Member to exceed $250,000.00;
(iii) Then, to the Common Members and Preferred Member pro
rata in accordance with their Sharing Ratios until the Capital
Account of the Preferred Member is equal to $250,000.00;
(iv) Thereafter, 100% to the Common Members pro rata in
accordance with their Sharing Ratios;
(v) The above notwithstanding, in the event a Restructuring
Distribution or Sale Distribution is required to be made
pursuant to Sections 5.01, or 5.03, 100% of the Net Income of
the Company shall be first allocated to the Preferred Member
until the cumulative amount of Net Income allocated pursuant
to this Section 5.04(a)(v) during that Fiscal Year equals the
amount of such
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Restructuring Distribution or Sale Distribution actually paid,
plus any sums to be distributed pursuant to Section 5.02,
above.
(b) Net Loss for any Fiscal Year shall be allocated as follows:
(i) First, to the Common Members and Preferred Member pro
rata in accordance with their Sharing Ratios until such time
as the Capital Account of the Preferred Member is negative
$250,000.00; and
(ii) Thereafter the Net Loss for any Fiscal Year shall be
allocated 100% to the Common Members pro rata in accordance
with their relative Sharing Ratios.
5.05 ADDITIONAL ALLOCATIONS.
(a) STOP NET LOSS. Notwithstanding any other provision hereof
to the contrary, no Net Loss (or item of loss or deduction) of the
Company shall be allocated to a Member if such allocation would result
in a deficit balance in such Member's Adjusted Capital Account. Such
Net Loss (or item of loss or deduction) shall be allocated among the
Members whose Adjusted Capital Account balances are positive in
proportion to such positive balances to the extent necessary to reduce
the balances of such other Member's positive Adjusted Capital Accounts
balances to zero, it being the intention of the Members that no
Member's positive Adjusted Capital Account balance shall fall below
zero while any other Member's positive Adjusted Capital Account balance
has a positive balance.
(b) MINIMUM GAIN CHARGEBACK. Notwithstanding any other
provision hereof to the contrary, if there is a net decrease in Minimum
Gain for a taxable year (or if there was a net decrease in Minimum Gain
for a prior fiscal year and the Company did not have sufficient amounts
of income and gain during prior years to allocate among the Members
under this Section 5.04(b), then items of income and gain shall be
allocated to each Member in an amount equal to such Members' share of
the net decrease in such Minimum Gain (in the manner and amounts as
determined pursuant to Treasury Regulation Sections 1.704-2(f)(6),
1.704-2(g)(2) and 1.704-2(j)(2)(i)). It is the intent of the Members
that any allocation pursuant to this Section 5.04(b) shall constitute a
"minimum gain chargeback" under Treasury Regulation Section 1.704-2(f)
and shall be interpreted consistently therewith.
(c) MEMBER NONRECOURSE DEDUCTIONS. All Member Nonrecourse
Deductions attributable to Member Nonrecourse Debt shall be allocated
among the Members bearing the economic risk of loss for such debt as
determined under Treasury Regulation Section 1.704-2(b)(4); provided,
however, that if more than one Member bears the economic risk of loss
for such debt, the Member Nonrecourse Deductions attributable to such
debt shall be allocated to and among the Members in the same proportion
that they bear the economic risk of loss for such debt. This Section
5.05(c) is
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intended to comply with the provision of Treasury Regulation Section
1.704-2(i) and shall be interpreted consistently therewith.
(d) MEMBER NONRECOURSE MINIMUM GAIN CHARGEBACK. Notwithstanding
any other provision hereof to the contrary (except for Section 5.05(b)
regarding minimum gain chargeback), if there is a net decrease in
Member Nonrecourse Minimum Gain for a taxable year (or if there was a
net decrease in Member Nonrecourse Minimum Gain for a prior fiscal year
and the Company did not have sufficient amounts of income and gain
during prior years to allocate among the Members under this Section
5.05(d)), then items of income and gain shall be allocated to each
Member in an amount equal to such Member's share of the net decrease in
such Member Nonrecourse Minimum Gain (in the manner and amounts as
determined pursuant to Treasury Regulation Section 1.704-2(i)(4) and
1.704-2(j)(2)(ii)). It is the intent of the Members that any allocation
pursuant to this Section 5.05(d) shall constitute a "minimum gain
chargeback" under Treasury Regulation Section 1.704-2(i)(4) and shall
be interpreted consistently therewith.
(e) QUALIFIED INCOME OFFSET. A Member who unexpectedly receives
any adjustment, allocation or distribution described in Treasury
Regulation Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6) will be
specially allocated items of income or gain (after the allocations
required by Section 5.05(b) regarding minimum gain chargeback and
Section 5.05(d) regarding minimum gain chargeback for Member
Nonrecourse Debt but before any other allocation required by this
Article 5) in an amount and in the manner sufficient to eliminate any
deficit balance in his Adjusted Capital Account as quickly as possible.
This Section 5.05(e) is intended to satisfy the provisions of Treasury
Regulation Section 1.704-1(b)(2)(ii)(d) and shall be interpreted
consistently therewith. In the event the Preferred Member should
receive a distribution under the terms of this Agreement and the
Distribution should cause its Capital Account to be reduced below zero,
the Preferred Member shall receive an allocation of gross income
sufficient to satisfy any such negative balance in its Capital Account
prior to any withdrawal of the Preferred Member from the Company.
(f) CURATIVE ALLOCATION. If any items of income and gain
(including gross income) or loss and deduction are allocated to a
Member pursuant to Sections 5.05(a) through (e) then, subject to
Sections 5.05(a) through (e), items of income and gain (including gross
income) and items of loss and deduction for subsequent periods shall be
allocated to the Members in a manner designed to result in each
Member's Adjusted Capital Account having a balance equal to the balance
it would have had such allocation of income and gain (including gross
income) and item of loss and deduction not occurred pursuant to
Sections 5.05(a) through (e).
(g) CODE SECTION 754 ADJUSTMENT. To the extent an adjustment to
the adjusted tax basis of any Company asset pursuant to Code Section
734(b) or Code Section 743(b) is required to be taken into account in
determining Capital Accounts pursuant to Treasury Regulation Section
1.704-1(b)(2)(iv)(m), the amount of the adjustment to the Capital
Accounts shall be treated as an item of gain (if the adjustment
increases the basis of the asset) or loss (if the adjustment decreases
basis), and the gain or
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loss shall be specially allocated to the Members in a manner consistent
with the manner in which their Capital Accounts are required to be
adjusted pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(m).
(h) VARYING INTERESTS. All Net Income and Net Loss (and any item
of income, gain, loss, deduction or credit specially allocated under
this Agreement) shall be allocated to the Persons shown on the records
of the Company to have been Members as of the last calendar day of the
period for which the allocation is to be made. Notwithstanding the
foregoing, if during any taxable year there is a change in any Member's
interest in the Company, the Members agree that their allocable shares
of the Net Income and Net Losses (or items thereof) for the taxable
year shall be determined on any method determined by the Common Member
to be permissible by Code Section 706 and the related Treasury
Regulations to take account of the Member's varying interest.
5.06 ALLOCATIONS FOR TAX PURPOSES. For tax purposes, (a) all items of
income, gain, loss and deduction shall be allocated to the Members in the same
manner as the correlative items of "book" income, gain, loss and deduction are
allocated pursuant to Sections 5.04 and 5.05, and (b) each tax credit shall be
allocated to Members in the same manner as the receipt or expenditure giving
rise to such credit is allocated pursuant to Sections 5.04 and 5.05; provided,
however, that in accordance with Section 704(c) of the Code, the Treasury
Regulations promulgated thereunder and Treasury Regulation Section
1.704-1(b)(4)(i), items of income, gain, loss, deduction, expense and credit
with respect to any property whose Carrying Value differs from its adjusted
basis for tax purposes shall, solely for tax purposes, be allocated between the
Members so as to take account of both the amount and character of such
variation.
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ARTICLE 6: MANAGEMENT
6.01 MANAGEMENT OF COMPANY AFFAIRS.
(a) Except for the day-to-day management duties delegated to the
officers of the Company pursuant to Section 6.01(h) (which the
Management Committee shall oversee) or by non waivable provisions of
applicable Law, all management powers over the business and affairs of
the Company and full, complete, and exclusive authority to manage and
control all aspects of the business and affairs of the Company shall be
vested in a Management Committee (the "Management Committee"), who
shall collectively constitute "managers" of the Company within the
meaning of the Act. No Member, by virtue of having the status of a
Member, shall have any management power over the business and affairs
of the Company or actual or apparent authority to enter into contracts
on behalf of, or to otherwise bind, the Company. In this regard the
Preferred Member expressly shall have no voting rights and no power or
authority to manage, or govern the business or affairs of the Company
and all of such rights are hereby waived to the fullest extent allowed
by applicable law. Except as specifically provided in this Agreement,
(i) the authority and functions of the Management Committee shall be
identical to the authority and functions of the board of directors of a
corporation organized under the Delaware General Corporation Law, and
(ii) the authority and functions of the Management Committee shall be
managed and controlled by the Management Committee.
(b) There shall be two classes of Managers: Class A (the "Class A
Managers") and Class B (the "Class B Managers" and together with the
Class A Managers, the "Managers"). The Management Committee shall
consist of five (5) Managers. There shall be three (3) Class A Managers
and two (2) Class B Managers. The initial Class A Managers shall be
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇'▇▇▇▇▇▇, and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇. The initial Class
B Managers shall be ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇. Class A
Managers shall be elected by the Common Members at an annual meeting of
Members to hold office, subject to Section 6.01(c), until the next
annual meeting of the Common Members or until their respective
successors are elected and qualified. Vacancies and newly created Class
A Manager positions resulting from any increase in the authorized
number of Class A Managers may be filled by a majority of the Class A
Managers then in office, although less than a quorum, or by the sole
remaining Class A Manager, and the Class A Managers so chosen shall
hold office, subject to Section 6.01(c), until the next annual meeting
of Members or until their respective successors are elected and
qualified. Each Class B Manager shall be elected by the Common Members
to hold office, subject to Section 6.01(c), until his or her successor
is elected and qualified. There shall be acting Class B Managers at all
times and upon the resignation, termination, incapacity or death of a
Class B Manager, the Common Members shall promptly hold a special
meeting to elect a successor. No Class B Manager (A) shall be an
Affiliate of the Company or any of the Company's Affiliates; (B) shall
be an Affiliate, employee, agent, director, partner, member or officer
of any Member; (C) shall be and shall have been within the five years
immediately prior to such Person's appointment as a Class B
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Manager either (1) a partner or member of or employed as a Manager
(other than a Class B Manager), officer or employee by the Company or
any of its Affiliates; (2) a significant advisor or consultant to the
Company or any of its Affiliates; (3) affiliated with a significant
customer, supplier or other Person who derives more than 10 of its
purchases or revenues from its activities with the Company or any of
its Affiliates; (4) engaged under significant personal service
contract(s) with the Company or any of its Affiliates; (5) affiliated
with a tax-exempt entity that receives significant contributions from
the Company or any of its Affiliates; (6) at the time of such
individual's appointment as Class B Manager or at any time thereafter
while serving as Class B Manager, shall be a legal or beneficial owner
of any direct or indirect equity interest in the Company, any Member or
any Affiliates of the Company; or (D) a spouse, parent, sibling or
child of any individual described by clauses (A) through (C) above. The
Class B Manager shall have reasonable knowledge and experience in any
of the following areas: power plant facility operations, investment
banking, law or accounting.
(c) Any Manager may resign at any time by giving written notice of such
resignation to the Management Committee or the President or the
Secretary of the Company. Any such resignation shall take effect at the
time specified therein or, if no time is specified, upon receipt
thereof by the Management Committee; and, unless specified therein, the
acceptance of such resignation shall not be necessary to make it
effective. When one or more Class A Managers shall resign from the
Management Committee, effective at a future date, a majority of the
Class A Managers then in office, including those who have so resigned,
shall have power to fill such vacancy or vacancies, the vote thereof to
take effect when such resignation or resignations shall become
effective and each Class A Manager so chosen shall hold office as
provided in this Agreement in the filling of other vacancies. If any
Class B Manager resigns from the Management Committee, the Common
Members shall promptly hold a special meeting to elect a successor.
(d) A majority of the whole Management Committee shall constitute a
quorum for the transaction of business other than with respect to the
matters set forth in Section 6.01(f). The Class B Managers and two or
more of the Class A Managers shall constitute a quorum for the
transaction of business with respect to the matters set forth in
Section 6.01(f). In the absence of a quorum and except with respect to
the matters set forth in Section 6.01(f), a majority of those present
(or if only one be present, then that one) may adjourn the meeting,
without notice other than announcement at the meeting, until such time
as a quorum is present. Except as otherwise required by this Agreement
(including, without limitation, 6.01(f)), the vote of the majority of
the Class A Managers present at a meeting at which a quorum is present
shall be the act of the Management Committee. Except as otherwise
required by this Agreement (including, without limitation, 6.01(f)),
any action required or permitted to be taken at any meeting of the
Management Committee may be taken without a meeting if all Class A
Managers consent thereto in writing, and the writing or writings are
filed with the minutes of proceedings of the Management Committee.
(e) Except as provided in Section 6.01(f), the Class B Managers, in his
or her capacity as Class B Managers, shall not exercise any power over
and shall not be
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responsible for the following: (A) the management, conduct or control
of the business, operations or affairs of the Company; (B) the
management or operation of any Company property; or (C) any actions for
or on behalf of the Company that would bind the Company or incur any
expenditures on behalf of or with respect to the Company.
(f) The Company shall not, without unanimous vote of the Class A
Managers present and the Class B Managers:
(i) institute or cause to be instituted any proceeding seeking
to adjudicate the Company bankrupt or insolvent, or seek a
liquidation, winding up, reorganization, dissolution,
arrangement, adjustment, protection, relief or composition of
the Company or its debts under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors, or seek or
consent to the entry of an order for relief or the appointment
of a receiver, trustee, liquidator, assignee, sequestrator,
custodian or other similar official for it or for any
substantial part of its property, consent to the filing of any
bankruptcy or other similar proceeding or admit in writing the
Company's inability to pay its debts generally as they become
due, or seek an assignment of property for the benefit of
creditors, or take any action that might reasonably cause the
Company to become insolvent, or take any action in furtherance
of any of the foregoing;
(ii) dissolve, liquidate, consolidate or merge the Company
into any other corporation, business trust or association,
real estate investment trust, limited liability company,
partnership, common law trust, unincorporated business or
entity;
(iii) amend, or consent to the waiver of compliance by the
Company with, Sections 5.01, 6.01(b), 6.01(c) and 8.01 of this
Agreement; or
(iv) engage in any business or activity other than as set
forth in Section 2.04.
(g) A special meeting of Common Members may be called by the Management
Committee or the President or holders of not less than one-tenth (1/10)
of the Membership Interests entitled to vote at the meeting. If any
Class B Manager resigns from the Management Committee, the Common
Members shall promptly hold a special meeting to elect a successor. Any
such meeting shall be held on such date and at such time and place as
shall be determined by the body or individual calling such meeting and
as shall be stated in the notice of such meeting.
(h) The following officers shall be elected as the Class A Managers
deem necessary or appropriate: a President, one or more Executive Vice
Presidents, one or more Senior Vice President, one or more Vice
President, a Secretary, a Treasurer and a Controller, one or more
Assistant Vice Presidents, Assistant Secretaries, Assistant Treasurers
and Assistant Controllers, and such other officers (the "Officers")
with such title and powers and/or duties as the Class A Managers shall
from time to time determine. The Class A Managers shall have the
authority to establish the authority and responsibility of the
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Officers, designate Officers for particular areas of responsibility and
may cause the Officers to simultaneously serve as officers of
subsidiaries or divisions. The officers shall be elected to hold office
until the first meeting of the Management Committee following the next
annual meeting of the Common Members or until their respective
successors are elected and qualified. Any officer so elected may resign
at any time upon written notice to the Class A Managers. Such
resignation shall take effect at the time specified therein, and unless
otherwise specified therein, no acceptance of such resignation shall be
necessary to make it effective. Any officer may be removed, with or
without cause, by the Class A Managers. Any such removal shall be
without prejudice to the contractual rights of such officer, if any,
with the Company, but the election or appointment of any officer shall
not of itself create contractual rights. Any number of offices may be
held by the same person. Any vacancy occurring in any office by death,
resignation, removal or otherwise may be filled for the unexpired
portion of the term by the Class A Managers.
6.02 STANDARDS OF PERFORMANCE AND CONFLICTS OF INTEREST.
(a) The Managers and Common Members are liable to the Preferred Members
for errors or omissions in performing their duties with respect to the
Company only in the case of reckless disregard of duties, gross
negligence, willful misconduct, fraud or a material breach of this
Agreement, which reduce the Preferred Member's rights or increase its
obligations hereunder, but not otherwise. IT BEING SPECIFICALLY AGREED
THAT THE MANAGERS AND COMMON MEMBERS ARE NOT LIABLE TO THE PREFERRED
MEMBERS FOR THEIR OWN SIMPLE, PARTIAL, OR CONCURRENT NEGLIGENCE.
(b) A Member, Manager or their Affiliates may engage in, and possess
interests in, other businesses, activities, ventures, enterprises and
investments of any and every type and description (collectively,
"ACTIVITIES"), independently or with others, including Activities in
competition with the Company and its subsidiaries, with no duty or
obligation (express, implied, fiduciary or otherwise) (i) to refrain
from engaging in such Activities, (ii) to offer the right to
participate in such Activities to the Company, its subsidiaries, any
other Member or any Affiliate of another Member, or (iii) to account
to, or to share the results or profits of such Activities with, the
Company, its subsidiaries, any other Member or any Affiliate of another
Member; and any doctrines of non-competition, "company opportunity" or
similar doctrines are hereby expressly disclaimed.
(c) The Company may, and may permit any direct or indirect Subsidiary
of the Company or other Person in which the Company owns, directly or
indirectly, an equity interest to, transact business with (including
entering into or modifying any contractual arrangements with) any
Member or Affiliate of a Member.
(d) No Member shall take any action that is intended to avoid the
Company's obligations to pay the Restructuring Distribution or Sale
Distribution pursuant to the terms of this Agreement.
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(e) THIS SECTION 6.02 CONSTITUTES A MODIFICATION AND DISCLAIMER OF
DUTIES AND OBLIGATIONS (EXPRESS, IMPLIED, FIDUCIARY OR OTHERWISE) WITH
RESPECT TO THE MATTERS DESCRIBED IN THIS SECTION 6.02, PURSUANT TO
SECTION 18-1101 OF THE ACT. THE MEMBERS AGREE THAT THE PROVISIONS OF
THIS SECTION 6.02 ARE "EXPRESS" AND "CONSPICUOUS" FOR ALL PURPOSES OF
APPLICABLE LAW.
6.03 INDEMNIFICATION.
(a) To the fullest extent permitted by Law, the Company shall indemnify
the officers of the Company, the Managers and each of the Members and
their respective officers, directors, employees, agents and controlling
Persons (each, an "INDEMNIFIED PERSON"), on request by the Indemnified
Person, and hold each of them harmless from and against all losses,
costs, liabilities, damages and expenses (including reasonable costs of
suit and attorney's fees) any of them may incur as an officer, a Member
or Manager of the Company or as a controlling Person of such Member or
Manager, in performing the obligations of an officer, Manager or the
Common Member with respect to the Company, as the case may be,
INCLUDING ANY MATTER ARISING OUT OF OR RESULTING FROM THE INDEMNIFIED
PERSON'S OWN SIMPLE, PARTIAL, OR CONCURRENT NEGLIGENCE, except for any
such loss, cost, liability, damage or expense primarily attributable to
the Indemnified Person's breach or reckless disregard of fiduciary
duties, gross negligence, willful misconduct, fraud or material breach
of this Agreement. If an Indemnified Person becomes involved in any
action, proceeding or investigation with respect to which indemnity may
be available under this Section 6.03, the Company may reimburse the
Indemnified Person for its reasonable legal and other expenses
(including the cost of investigation and preparation) as they are
incurred, provided that the Indemnified Person shall promptly repay to
the Company the amount of any such expense paid if it is ultimately
determined that the Indemnified Person was not entitled to
indemnification hereunder. Any amounts payable in respect of
indemnification hereunder shall be recoverable only from the assets of
the Company.
(b) Promptly after receipt by an Indemnified Person of notice of any
claim or the commencement of any action with respect to which indemnity
may be available under this Section 6.03, the Indemnified Person shall,
if a claim in respect thereof is to be made against the Company under
this Section 6.03, notify the Company in writing of the claim or the
commencement of the action; provided that the failure to notify the
Company shall not relieve it from any liability which it may have to an
Indemnified Person other than under this Section 6.03 except to the
extent that the Company is prejudiced thereby. If any such claim or
action shall be brought against an Indemnified Person, and it shall
notify the Company thereof, the Company shall be entitled to
participate therein, and, to the extent that it wishes, to assume the
defense thereof with counsel reasonably satisfactory to the Indemnified
Person. After notice from the Company to the Indemnified Person of its
election to assume the defense of such claim or action, the Company
shall not be liable to the Indemnified Person under this Section 6.03
for any legal or other expenses subsequently incurred by the
Indemnified Person in connection with the defense thereof; provided
that all of the Indemnified Persons shall have the right
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to employ one counsel to represent them if, in the opinion of counsel
to the Indemnified Persons, there are available to them defenses not
available to the Company and in that event the fees and expenses of
such separate counsel shall be paid by the Company. In no event shall
the Company be required to indemnify an Indemnified Person with respect
to amounts paid in settlement of a claim unless such claim was settled
with the consent of the Company.
ARTICLE 7: TAXES
7.01 TAX RETURNS. The Common Members shall cause to be prepared and
timely filed all necessary federal, state and local tax returns required to be
filed by the Company. The Company shall bear the costs of the preparation and
filing of its returns.
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7.02 TAX ELECTIONS. The Common Members shall make all elections for tax
purposes including but not limited to the following:
(a) to adopt the calendar year as the Company's taxable year;
(b) to adopt the accrual method of accounting and to keep a set of the
Company's books and records on such method for income tax purposes;
(c) to make the election provided for in Section 754 of the Code, if
requested by any Member; and
(d) any other election the Common Members may deem appropriate.
7.03 TAX MATTERS MEMBER. Mesquite shall be the "tax matters partner" of
the Company pursuant to Code Section 6231(a)(7) (the "TAX MATTERS MEMBER"). Any
cost or expense incurred by the Tax Matters Member in connection with its
duties, including the preparation for or pursuance of administrative or judicial
proceedings, shall be paid by the Company. The Tax Matters Member shall take all
actions with respect to taxes (including, but not limited to, (a) making,
changing or revoking a material tax election, (b) taking a significant position
in any tax return, (c) settling or otherwise resolving any audit or other
proceeding relating to taxes and (d) extending the statute of limitations with
respect to taxes) in its sole discretion.
7.04 FISCAL YEAR. The fiscal year of the Company for financial,
accounting, federal, state and local income tax purposes shall initially be the
fiscal year commencing on January 1 and ending on December 31 or such other
fiscal year that is the same as the taxable year that is required law for
federal income tax purposes (the "FISCAL YEAR").
ARTICLE 8: BOOKS, RECORDS, REPORTS, AND BANK ACCOUNTS
8.01 MAINTENANCE OF BOOKS. The Managers shall keep or cause to be kept
at the principal office of the Company or at such other location the Managers
deem appropriate such books and records of the Company, and supporting
documentation of the transactions with respect to the conduct of the Company's
business required to be maintained by applicable Law.
8.02 BANK ACCOUNTS. Funds of the Company shall be deposited in such
banks or other depositories as shall be designated from time to time by the
Managers.
8.03 REPORTS AND INFORMATION. The Managers shall (a) notify the
Preferred Member of any proposed Project Sale or Power Contract Restructuring
and the anticipated date of the Financial Closing of any such transaction, (b)
provide the Preferred Member a copy of any modification or amendment to the
Power Purchase Agreement which affects PPA Benefits, (c) upon the execution of
any Temporary Agreement, notify the Preferred Member of such Temporary Agreement
and include in such notice (i) a copy of the Temporary Agreement, (ii) a summary
of the economic effect of such Temporary Agreement upon the Company's budget,
and (iii) any supporting documentation, and (d) provide any other information
reasonable requested by the Preferred Member for the purpose of assessing its
rights to the Sale Distribution or the
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Restructuring Distributions. In addition, in the event of any merger,
consolidation, dissolution or liquidation of the Company, or any sale or other
transfer of the PPA Benefits, any Linden Subsidiary or all or any part of the
Linden Plant, (X) the Managers shall notify the Preferred Member of such
transaction, (Y) the Managers and Common Members shall ensure as a part of such
transaction that the buyer or other successor owner of the Company, the PPA
Benefits, any Linden Subsidiary or the Linden Plant in such transaction shall
continue to provide to the Company such information as shall be necessary to
permit the Managers to continue to provide to the Preferred Member all
information provided for above with respect to any Power Contract Restructuring
or any Temporary Agreement, and (Z) the Managers shall continue to provide such
information to the Preferred Member in accordance with this Section 8.03.
8.04 CONDUCT OF BUSINESS.
(a) The Company shall conduct its business in accordance with all
requisite limited liability company procedures and formalities,
including without limitation, maintaining proper limited liability
company records and books of account.
(b) Notwithstanding any provision hereof, the following shall govern in
order to preserve and ensure the Company's separate and distinct
identity, and the Company shall conduct its affairs in accordance with
the following provisions:
(i) The Company shall hold itself out to the public as a legal
entity separate and distinct from any other Person, including
any Member or any Affiliate of the Company or any Member, and
shall conduct Company business solely in its name in order not
(A) to mislead others as to the identity with which such other
party is transacting business, or (B) to suggest that the
Company is responsible for the debts of any third party
(including any Member or any Affiliate of the Company or any
Member);
(ii) The Company shall maintain records, books of account and
bank accounts separate from those of any Member, any Affiliate
of the Company or any Member, or any other Person;
(iii) The Company shall allocate fairly and reasonably any
overhead expenses that are shared with any Affiliate of the
Company;
(iv) The Company shall not commingle assets with those of any
Member, any Affiliate of the Company or any Member, or any
other Person, and shall hold its assets in its own name;
(v) The Company shall conduct its own business in its own
name;
(vi) The Company shall maintain financial statements showing
its own assets as being separate from those of any Member, any
Affiliate of the Company or any Member, or any other Person;
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(vii) The Company shall pay its liabilities out of its own
funds, including salaries of any employees of the Company
(including, without limitation, holding its obligations or
securities of such entities, unless permitted by the terms of
the Indenture), and not out of the funds of any Member, or any
Affiliate of the Company or any Member, or any other Person;
(viii) The Company shall not enter into any transaction with
any Member or any Affiliate of the Company or any Member,
except upon terms and conditions that are intrinsically fair
and substantially similar to those that would be available on
an arm's-length basis with third parties other than any Member
or Affiliate of the Company or any Member;
(ix) The Company shall hold regular Management Committee and
Member meetings, as appropriate;
(x) The Company shall preserve its existence as an entity duly
organized, validly existing and in good standing under the
laws of the jurisdiction of its organization or formation, and
qualification to do business in the states where its business
is conducted;
(xi) The Company shall use separate stationery, invoices and
checks bearing its own name;
(xii) The Company shall take commercially reasonable steps to
correct any known misunderstandings regarding the separate
identity of the Company;
(xiii) The Company shall maintain adequate capital for the
normal obligations reasonably foreseeable in a business of its
size and character and in light of its contemplated business
operations; and
(xiv) The Company shall not share any common logo with or
identify itself as a department or division of any Member, or
Affiliate of the Company or any Member, or any other Person.
ARTICLE 9: DISSOLUTION, WINDING-UP AND TERMINATION
9.01 DISSOLUTION. The Company shall dissolve and its affairs shall be
wound up on the first to occur of the following events (each a "DISSOLUTION
EVENT"):
(a) the unanimous consent of the Common Members to dissolve the
Company; or
(b) entry of a decree of judicial dissolution of the Company under
Section 18-802 of the Act. In this regard, the Preferred Member agrees
that it will not take any action to effect a judicial dissolution of
the Company under Section 18-802 of the Act or under any other
applicable laws.
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9.02 WINDING-UP AND TERMINATION.
(a) On the occurrence of a Dissolution Event, the Common Members shall
proceed diligently to wind up the affairs of the Company and make final
distributions as provided herein and in the Act. The costs of winding
up shall be borne as a Company expense. Until final distribution, the
Common Members shall continue to operate the Company's assets with the
same power and authority they had prior to the Dissolution Event. The
steps to be accomplished by the Common Members are as follows:
(i) as promptly as possible after dissolution and again after
final winding up, the Common Members shall cause a proper
accounting to be made by a recognized firm of certified public
accountants of the Company's assets, liabilities, and
operations through the last calendar day of the month in which
the dissolution occurs or the final winding up is completed,
as applicable;
(ii) the Common Members shall discharge from the Company's
funds all of the debts, liabilities and obligations of the
Company (including all expenses incurred in winding up and any
loans described in Section 4.03) or otherwise make adequate
provision for payment and discharge thereof (including the
establishment of a cash escrow fund for contingent liabilities
in such amount and for such term as the Common Members may
reasonably determine);
(iii) the Common Members may sell any or all the Company's
assets, including to any one or more of the Members; and
(iv) the Company's assets (including cash) shall be
distributed in accordance with Section 5.03, above.
(b) The distribution of cash or other assets to a Member in accordance
with the provisions of this Section 9.02 constitutes a complete
distribution to the Member of its Membership Interest and all the
Company's assets and constitutes a compromise to which all Members have
consented pursuant to Section 18-502(b) of the Act. To the extent that
a Member returns funds to the Company, it has no claim against any
other Member for those funds.
9.03 CERTIFICATE OF CANCELLATION. On completion of the distribution of
Company assets as provided herein, the upon request of the Common Members (or
such other Person or Persons as the Act may require or permit) shall file a
certificate of cancellation with the Secretary of State of Delaware, cancel any
other filings made pursuant to Section 2.05, and take such other actions as may
be necessary to terminate the existence of the Company. Upon the filing of such
certificate of cancellation, the existence of the Company shall terminate (and
the Term shall end), except as may be otherwise provided by the Act or other
applicable Law.
ARTICLE 10: GENERAL PROVISIONS
10.01 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 must be
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in writing and must be delivered to the recipient in person, by courier or mail
or by facsimile or other electronic transmission. A notice, request or consent
given under this Agreement is effective on receipt by the Member to receive it;
provided, however, that a facsimile or other electronic transmission that is
transmitted after the normal business hours of the recipient shall be deemed
effective on the next Business Day. All notices, requests and consents to be
sent to a Member must be sent to or made at the addresses given for that Member
on Exhibit A or such other address as that Member may specify by notice to the
Common Member. Any notice, request or consent to the Company must be given to
the Common Member. Whenever any notice is required to be given by Law, the
Delaware Certificate 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.
10.02 ENTIRE AGREEMENT; SUPERSEDING EFFECT. This Agreement constitutes
the entire agreement of the Members relating to the operations of the Company
and the transactions contemplated hereby and supersedes all provisions and
concepts contained in all prior contracts or agreements (including the Original
Agreement, the First Restated Agreement, and the Second Restated Agreement)
between the Members with respect to the Company and the transactions
contemplated hereby, whether oral or written.
10.03 EFFECT OF WAIVER OR CONSENT. Except as otherwise provided in this
Agreement, a waiver or consent, express or implied, to or of any breach or
default by any Member in the performance by that Member of its obligations with
respect to the Company is not a consent or waiver to or of any other breach or
default in the performance by that Member of the same or any other obligations
of that Member with respect to the Company. Except as otherwise provided in this
Agreement, failure on the part of a Member to complain of any act of any Member
or to declare any Member in default with respect to the Company, irrespective of
how long that failure continues, does not constitute a waiver by that Member of
its rights with respect to that default until the applicable
statute-of-limitations period has run.
10.04 AMENDMENT OR RESTATEMENT. This Agreement, or the Delaware
Certificate, may be amended or restated by a written instrument approved by the
Common Members, provided, however, that this Agreement may not be amended or
restated without the prior written consent of the Preferred Member if such
amendment or restatement (a) imposes upon the Preferred Member any financial
obligations greater than the obligations imposed upon the Preferred Member,
respectively, under this Agreement, (b) imposes upon the Preferred Member any
administrative or other non financial obligations of a material nature which are
greater than the obligations imposed upon the Preferred Member under this
Agreement, or (c) adversely affects the rights of the Preferred Member to
receive the Sale Distribution, Restructuring Distribution or information
relating thereto. Subject to the above, the Common Members shall expressly have
the right to amend or restate this Agreement to establish new Membership
Interests in accordance with Section 3.04, including an amendment or restatement
that provides voting rights or distribution rights with respect to such
Membership Interests, provided that the Common Members obtain the prior written
consent of the Preferred Member if any such amendment or restatement adversely
affects or is inconsistent with the Preferred Member's rights under Sections
3.05, 5.01, 5.02, 5.03, 6.02, 8.03, or this 10.04 (including any definitions
related thereto). The Common Members shall notify the Preferred Member of any
amendment or
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restatement of this Agreement and shall promptly provide the Preferred Member a
copy of such amendment or restatement.
10.05 BINDING EFFECT. Subject to the restrictions on Dispositions set
forth in this Agreement, this Agreement is binding on and shall inure to the
benefit of the Members and their respective successors and permitted assigns.
10.06 GOVERNING LAW; SEVERABILITY. THIS AGREEMENT IS GOVERNED BY AND
SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF DELAWARE,
EXCLUDING ANY CONFLICT-OF-LAWS RULE OR PRINCIPLE THAT MIGHT REFER THE GOVERNANCE
OR THE CONSTRUCTION OF THIS AGREEMENT TO THE LAW OF ANOTHER JURISDICTION. In the
event of a direct conflict between the provisions of this Agreement and any
mandatory, non-waivable provision of the Act, such provision of the Act shall
control. If any provision of the Act provides that it may be varied or
superseded in a
limited liability company agreement (or otherwise by agreement
of the members or managers of a limited liability company), such provision shall
be deemed superseded and waived in its entirety if this Agreement contains a
provision addressing the same issue or subject matter. If any provision of this
Agreement or the application thereof to any Member or circumstance is held
invalid or unenforceable to any extent, (a) the remainder of this Agreement and
the application of that provision to other Members or circumstances is not
affected thereby, and (b) the Members shall negotiate in good faith to replace
that provision with a new provision that is valid and enforceable and that puts
the Members in substantially the same economic, business and legal position as
they would have been in if the original provision had been valid and
enforceable.
10.07 FURTHER ASSURANCES.
(a) In connection with this Agreement, each Member shall execute and
deliver any additional documents and instruments and perform any additional acts
that the Common Members determine may be necessary or appropriate to effectuate
and perform the provisions of this Agreement, including executing (i) all
certificates and other instruments the Common Members deem necessary or useful
to qualify, or continue the qualification of, the Company as a limited liability
company in all jurisdictions in which the Company may, or may intend to, conduct
business or own property, (ii) any financing statements, continuation
statements, or other documents necessary to grant to or perfect for secured
creditors of the Company, a security interest, mortgage, pledge or lien on all
or any of the Company's assets, and (iii) any and all documents the Common
Members may request from time to time in connection with the operations of the
Company, including documentation in the form of consents which may be required
of them under the terms of the Act for any actions that the Common Members
desire to take in connection with the management, or operations of the Company
(including the merger or consolidation of the Company) provided that, any such
action does not (A) impose upon the Preferred Member any financial obligations
greater than the obligations imposed upon the Preferred Member under this
Agreement, (B) impose upon the Preferred Member any administrative obligations
or other non financial obligations of a material nature which are greater than
the obligations imposed upon the Preferred Member under this Agreement, (C)
cause the Preferred Member to carry out an unlawful act, or (D) adversely
affects the rights of the Preferred Member to receive the Restructuring
Distribution or Sale
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Distribution or otherwise adversely affects the Preferred Member's rights as
stated under Sections 3.05, 5.01, 5.02, 5.03, 6.02, 8.03, or 10.04 (including
any definitions related thereto). Any document which the Common Members request
to be executed or actions the Common Members request be taken under the terms of
this Section shall be carried out or executed and returned to the Company, as
the case may be, no later than ten (10) days following the request made
therefore. The above notwithstanding, the Preferred Member shall not have the
obligation to take any such act or execute and deliver any such documentation to
the extent it may reasonably object to do so as set out under the terms of this
Agreement, provided however, at such time as any such objection has been cured
the Preferred Member shall the obligation shall take any such act or execute and
deliver any such documentation within ten (10) days thereafter.
(b) In the event a request is made of a Preferred Member to execute
such documents or take such actions and (subject to the right to object as set
out above) the documents are not executed by the Member or the action is not
taken within ten (10) days of the request Preferred Member hereby irrevocably
constitutes, appoints and empowers the Company and each of the Common Members,
(and any of their successor) with full power of substitution, as the true and
lawful agent and attorney-In-fact of such Preferred Member, as the case may be,
with full power and authority in such Member's name, place and stead and for
such Member's use or benefit to take such actions or make, execute, consent to,
swear to, acknowledge, make oath as to, deliver, record in the appropriate
public offices or otherwise deal with such documents as it may deem appropriate
to meet the obligations of the Preferred Member, as set out in subparagraph (a)
above.
(c) The execution and delivery by any of said attorneys-in-fact of any
such agreements, amendments, consents, certificates or other Instruments shall
be conclusive evidence that such execution and delivery was authorized hereby.
The appointment by each Common Member and the Company as attorneys-in-fact shall
be deemed to be a power of attorney coupled with an interest in recognition of
the fact that the Company and each of the Members under this Agreement will be
relying upon the power of such Persons to act pursuant to this power of
attorney for the orderly administration of the affairs of the Company. The
foregoing power of attorney is hereby declared to be irrevocable, and it shall
survive, and shall not be affected by, the subsequent death, incompetency,
dissolution, disability, incapacity, bankruptcy or termination of any Member and
it shall extend to the Preferred Member's heirs, successors and assigns;
provided, however, that such power of attorney shall terminate effective upon
the substitution of record of another Member for all of such Member's Membership
Interests. Each Member hereby agrees to be bound by the acts of any Person who
rightfully acts as attorney-in-fact pursuant to this power of attorney. In
accordance with this Agreement. Each Member hereby waives any and all defenses
that may be available to contest, negate or disaffirm the action of any Person
taken as attorney-in-fact under this power of attorney in accordance with this
Agreement. Each Member shall execute and deliver to the Common Members, within
ten (10) days after receipt of the Common Member's or Company's request
therefor, all such further designations, powers of attorney and other
instruments as they deem necessary to effectuate this Agreement.
10.08 WAIVER OF CERTAIN RIGHTS. Each Member irrevocably waives any
right it may have to maintain any action for dissolution of the Company or for
partition of the assets of the Company.
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10.09 CHARACTERIZATION OF INTERESTS. Interests in the Company are
"securities" governed by Article 8 of the Uniform Commercial Code in effect from
time to time in all jurisdictions where such Article 8 or equivalent provision
is adopted.
10.10 COUNTERPARTS. This Agreement may be executed in any number of
counterparts with the same effect as if all signing parties had signed the same
document. All counterparts shall be construed together and constitute the same
instrument.
[SIGNATURES BEGIN ON NEXT PAGE]
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IN WITNESS WHEREOF, the Members have executed this Agreement as of the date
first set forth above.
COMMON MEMBER: MESQUITE INVESTORS, L.L.C.
By: El Paso Chaparral Management, L.P.
Its Manager
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Senior Vice President
and Chief Financial Officer
COMMON MEMBER: BONNEVILLE PACIFIC CORPORATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Senior Vice President
and Chief Financial Officer
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EXHIBIT A
MEMBERS/NOTICES
NAME AND ADDRESS
COMMON MEMBERS:
MESQUITE INVESTORS, L.L.C.
c/o El Paso Merchant Energy Holding Company
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Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
With copies to:
El Paso Corporation
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Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
BONNEVILLE PACIFIC CORPORATION
c/o El Paso Merchant Energy Holding Company
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Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
With copies to:
El Paso Corporation
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Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
PREFERRED MEMBER:
EAST COAST POWER HOLDING COMPANY, L.L.C.
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Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
With copies to:
Enron North America Corp.
Legal Department
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Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
Enron North America Corp.
Compliance Department
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Fax No. (▇▇▇) ▇▇▇-▇▇▇▇ or (▇▇▇) ▇▇▇-▇▇▇▇
Exhibit A
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EXHIBIT B
CERTIFICATE EVIDENCING MEMBERSHIP INTEREST IN A LIMITED LIABILITY COMPANY
-------------------------- -------------------------
NUMBER MEMBERSHIP INTEREST
-------------------------- -------------------------
[COMMON INTEREST]
___ EAST COAST POWER L.L.C. [PREFERRED INTEREST]
-------------------------- -------------------------
THIS CERTIFICATE IS A LIMITED LIABILITY COMPANY UNDER THE
TRANSFERABLE LAWS OF THE STATE OF DELAWARE
IN NEW YORK, NEW YORK
THIS CERTIFIES THAT _____________________________ is the owner of a [Common
Interest] [Preferred Interest] (the "MEMBERSHIP INTEREST") in East Coast Power
L.L.C. (hereinafter referred to as the "COMPANY") transferable on the books of
the Company by the holder hereof in person or by duly authorized attorney upon
surrender of this certificate properly endorsed. The designations, preferences
and relative participating, optional or other special rights, powers and duties
of the Membership Interest are set forth in, and this Certificate, and the
Membership Interest represented hereby, is issued and shall in all respects be
subject to all of the provisions of, the Fourth Amended and Restated
Limited
Liability Company Agreement of the Company, as amended, supplemented or restated
from time to time (the "COMPANY AGREEMENT"). Copies of the Company Agreement are
on file at, and will be furnished without charge on delivery of written request
to the Company at, the principal office of the Company located at
___________________________________. Capitalized terms used but not defined
herein shall have the meaning given them in the Company Agreement.
The holder hereof, by accepting this Certificate, is deemed to have (i)
requested admission as, and agreed to become, a Member and to have agreed to
comply with and be bound by and to have executed the Company Agreement, (ii)
represented and warranted that the holder has all right, power and authority
and, if an individual, the capacity necessary to enter into the Company
Agreement, (iii) given the powers of attorney provided for in the Company
Agreement and (iv) made the waivers and given the consents and approvals
contained in the Company Agreement.
THE OFFERING, SALE AND DELIVERY OF THE MEMBERSHIP INTEREST REPRESENTED BY THIS
CERTIFICATE WERE NOT REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS AND THUS NEITHER SUCH MEMBERSHIP INTEREST NOR
ANY INTEREST THEREIN MAY BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED, HYPOTHECATED
OR OTHERWISE DISPOSED OF UNLESS SUCH TRANSACTION IS REGISTERED UNDER SUCH LAWS
OR IN THE OPINION OF COUNSEL TO THE COMPANY THE DISPOSITION IS BEING MADE
PURSUANT TO A VALID EXEMPTION FROM REGISTRATION UNDER SUCH LAWS. THE MEMBERSHIP
INTEREST REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO THE TRANSFER RESTRICTIONS
SET FORTH IN SECTION 3.03 OF THE COMPANY AGREEMENT AND MAY NOT BE TRANSFERRED,
SOLD, ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS SUCH TRANSFER, SALE OR
HYPOTHECATION COMPLIES WITH THE TERMS OF SUCH AGREEMENT.
Exhibit B, Page 1
51
Witness the signature of the duly authorized representative of the Company.
EAST COAST POWER L.L.C.
By:
------------------------
Name:
------------------------
Title:
------------------------
Dated: , 2000
---------------
Exhibit B, Page 2
52
EAST COAST POWER L.L.C.
The Company will furnish without charge to each Member who so requests a
statement of the designations, preferences and relative participating, optional
or other special rights, powers and duties relating to the Membership Interest.
Any such request should be made to the Secretary of the Company at its principal
place of business.
For Value Received, ______________________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
-----------------------------------------
-----------------------------------------
--------------------------------------------------------------------------------
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS,
INCLUDING POSTAL ZIP CODE, OF ASSIGNEE)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
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of the Membership Interest represented by the within Certificate, and do hereby
irrevocably constitute and appoint __________________________ Attorney to
transfer said Membership Interest on the books of the within-named Company with
full power of substitution in the premises.
Dated
---------------------
----------------------------------------------
NOTICE: THE SIGNATURE(S) TO THIS ASSIGNMENT
MUST CORRESPOND WITH THE NAME(S) AS
WRITTEN UPON THE FACE OF THE
CERTIFICATE IN EVERY PARTICULAR,
WITHOUT ALTERATION OR ENLARGEMENT OR
ANY CHANGE WHATSOEVER.
SIGNATURE(S) GUARANTEED:
----------------------------------------------
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN
ELIGIBLE GUARANTOR INSTITUTION (BANKS,
STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND
CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED
SIGNATURE GUARANTEE MEDALLION PROGRAM),
PURSUANT TO S.E.C. RULE 17Ad-15.
Exhibit B, Page 3
53
EXHIBIT C
RESTRUCTURING DISTRIBUTION
YEAR OF RESTRUCTURING
DISTRIBUTION PAYMENT RESTRUCTURING DISTRIBUTION AMOUNT
During 2001 $ 26,103,000
2002 $ 29,235,360
2003 $ 32,743,603
Any year after 2003 $ 36,672,836
Exhibit C
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EXHIBIT D
CAPITAL ACCOUNTS OF MEMBERS AS OF THE END OF THE EFFECTIVE DATE
MEMBERS INTEREST CAPITAL ACCOUNT
------- -------- ---------------
ECP Holding Preferred Interest $ 0
Mesquite Common Interest $440,962,851.35
Mesquite Affiliate Common Interest $ 4,454,170.22