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EXHIBIT 3.1
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AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
EAST COAST POWER L.L.C.
A DELAWARE LIMITED LIABILITY COMPANY
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AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
EAST COAST POWER L.L.C.
A DELAWARE LIMITED LIABILITY COMPANY
TABLE OF CONTENTS
ARTICLE 1
DEFINITIONS
1.01 Definitions.....................................................................................1
1.02 Construction....................................................................................8
ARTICLE 2
ORGANIZATION
2.01 Formation; Construction.........................................................................8
2.02 Name............................................................................................8
2.03 Registered Office; Registered Agent; Principal Office in the United States; Other
Offices.........................................................................................9
2.04 Purposes........................................................................................9
2.05 Foreign Qualification...........................................................................9
2.06 Term............................................................................................9
ARTICLE 3
MEMBERSHIP; DISPOSITIONS OF INTERESTS
3.01 Members........................................................................................10
3.02 Representations, Warranties and Covenants......................................................10
3.03 Dispositions of Membership Interests...........................................................12
3.04 Creation of Additional Membership Interest.....................................................15
3.05 Access to Information..........................................................................16
3.06 Confidential Information.......................................................................16
3.07 Liability to Third Parties.....................................................................16
3.08 Certificates...................................................................................16
3.09 Put and Call...................................................................................17
ARTICLE 4
CAPITAL CONTRIBUTIONS
4.01 Initial Capital Contributions..................................................................18
4.02 Subsequent Capital Contributions...............................................................19
4.03 Return of Contributions........................................................................19
4.04 Loans..........................................................................................19
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4.05 Capital Accounts...............................................................................19
ARTICLE 5
DISTRIBUTIONS
5.01 Distributions..................................................................................20
5.02 Distributions on Dissolution and Winding Up....................................................21
5.03 Allocations....................................................................................21
5.04 True-Up........................................................................................22
ARTICLE 6
MANAGEMENT
6.01 Management of Company Affairs..................................................................23
6.02 Standards of Performance and Conflicts of Interest.............................................25
6.03 Indemnification................................................................................27
6.04 Officers; Day-to-Day Management................................................................28
6.05 Monitoring Representative......................................................................28
ARTICLE 7
TAXES
7.01 Tax Returns....................................................................................29
7.02 Tax Elections..................................................................................29
7.03 Tax Matters Member.............................................................................29
ARTICLE 8
BOOKS, RECORDS, REPORTS, AND BANK ACCOUNTS
8.01 Maintenance of Books...........................................................................29
8.02 Bank Accounts..................................................................................29
ARTICLE 9
DISSOLUTION, WINDING-UP AND TERMINATION
9.01 Dissolution....................................................................................30
9.02 Winding-Up and Termination.....................................................................30
9.03 Certificate of Cancellation....................................................................31
ARTICLE 10
GENERAL PROVISIONS
10.01 Offset.........................................................................................31
10.02 Notices........................................................................................31
10.03 Entire Agreement; Superseding Effect...........................................................31
10.04 Effect of Waiver or Consent....................................................................31
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10.05 Amendment or Restatement.......................................................................32
10.06 Binding Effect.................................................................................32
10.07 Governing Law; Severability....................................................................32
10.08 Further Assurances.............................................................................32
10.09 Waiver of Certain Rights.......................................................................32
10.10 Characterization of Interests..................................................................32
10.11 Counterparts...................................................................................32
EXHIBIT:
A Members
B General Valuation Procedure
C Form of Certificate
SCHEDULE:
1 CalPERS Fiduciaries
2 Reporting Parties
3 Initial Approved Contracts
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AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
EAST COAST POWER L.L.C.
A Delaware Limited Liability Company
This AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT OF EAST
COAST POWER L.L.C. (this "Agreement"), dated as of February 4, 1999 (the
"Effective Date"), is adopted, executed and agreed to, for good and valuable
consideration, by JOINT ENERGY DEVELOPMENT INVESTMENTS II LIMITED PARTNERSHIP, a
Delaware limited partnership ("JEDI II"), ENRON CAPITAL & TRADE RESOURCES CORP.,
a Delaware corporation ("ECT"), and the California Public Employees' Retirement
System, a unit of the State and Consumer Services Agency of the State of
California ("Investor" or "CalPERS").
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. 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. JEDI II, ECT and Investor now desire to amend and restate the
Original Agreement in its entirety and, in connection therewith, to evidence the
admission of ECT and Investor as Members.
NOW, THEREFORE, for good and valuable consideration, JEDI II, ECT and
Investor hereby amend and restate the Original Agreement 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):
ACQUISITION DATE - the Closing Date as that term is defined in the
Transaction Agreement.
ACT - the Delaware Limited Liability Company Act.
ACTIVITIES - Section 6.02(b).
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AFFILIATE - with respect to any Person, any other Person
controlling, controlled by, or under common control with that first
Person. 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, by contract, or otherwise.
Notwithstanding the foregoing, (a) Investor shall not be considered to
be an Affiliate of Enron or of the Class A Member, and (b) the Company
shall not be considered an Affiliate of Enron, for purposes of this
Agreement.
AFFILIATE APPROVALS - Section 6.05.
AGREEMENT - introductory paragraph.
ASSIGNEE - 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 - 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
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 INTEREST - the partnership interest in Cogen Technologies
NJ Venture acquired by ECT pursuant to the Transaction Agreement.
BAYONNE SELLER NOTES - the meaning specified in the Senior Loan
Agreement.
BRIDGE MATURITY DATE - November 4, 1999.
BUSINESS DAY - any day other than a Saturday, a Sunday, or a
holiday on which national banking associations in the States of New
York or Texas are closed.
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CAPITAL ACCOUNT - the account to be maintained by the Company for
each Member in accordance with Section 4.05.
CAPITAL CONTRIBUTION - 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.
CERTIFICATES - Section 3.08.
CLAIM - any and all judgments, claims, causes of action, demands,
lawsuits, suits, proceedings, Governmental investigations or audits,
losses, assessments, fines, penalties, administrative orders,
obligations, costs, expenses, liabilities and damages (whether actual,
consequential or punitive), including interest, penalties, reasonable
attorneys' fees, disbursements and costs of investigations,
deficiencies, levies, duties and imposts.
CLASS A MEMBER - JEDI II and any other Person hereafter admitted
to the Company as a Class A Member as provided in this Agreement, but
such term does not include any Person who has ceased to be a Class A
Member of the Company.
CLASS A PREFERENCE AMOUNT - at any time, to the extent not
previously distributed to the Class A Member, distributions from the
Company equal to the sum of (i) $80,000,000, plus (ii) the amount
necessary to provide the Class A Member with an Internal Rate of Return
on such $80,000,000 (without duplication of distributions described in
clause (i) above (i.e. the return of such $80,000,000), calculated from
the Acquisition Date until distributions equal to the full Class A
Preference Amount have been made, of (a) 31%, if the full Class B
Preference Amounts have been distributed (including deemed
distributions) to the respective Class B Members on or before the
Bridge Maturity Date, or (b) 21.5%, if the full Class B Preference
Amounts have not been distributed (including deemed distributions) to
the respective Class B Members on or before the Bridge Maturity Date.
CLASS B MEMBER - Each of ECT, Investor and any other Person
hereafter admitted to the Company as a Class B Member as provided in
this Agreement, but such term does not include any Person who has
ceased to be a Class B Member of the Company.
CLASS B PREFERENCE AMOUNT - at any time, to the extent not
previously distributed to a Class B Member, distributions (including
deemed distributions pursuant to this Agreement) from the Company equal
to sum of (i) $25,000,000, plus (ii) interest on such $25,000,000, for
the Pre-Conversion Period, at the interest rate payable under the
Tranche A-2 Bridge Note, plus (iii) additional interest on such
$25,000,000, for the Pre-Conversion Period, equal to 150 basis points
per annum, plus (iv) if the full amounts described in clauses (i), (ii)
and (iii) above have not been distributed (or deemed distributed) to
such Class B Member on or before the Bridge Maturity Date, the amount
necessary to provide such Class B Member with an Internal Rate of
Return of 12% on such $25,000,000 (without duplication of distributions
described in clause (i) above (i.e., the return of such $25,000,000)),
calculated from the Acquisition Date until distributions equal to the
full Class B Preference Amount have been
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made; provided, however, that for purposes of calculating the Internal
Rate of Return on such $25,000,000, any distributions (or deemed
distributions) received pursuant to clause (ii) hereof shall be
ignored.
CODE - the Internal Revenue Code of 1986, as amended.
COMPANY - Recital 1.
DAY - 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 -Recital 1.
DISPOSE, DISPOSING or DISPOSITION - with respect to any asset
(including a Membership Interest or any portion thereof), a sale,
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 - Section 9.01.
ECM - Section 6.02.
ECT - introduction.
ECT LOAN - the loan in the original principal amount of
$25,000,000 from NationsBank, N.A., as Agent, and the Lenders from time
to time party thereto, to ECT made on the Acquisition Date.
EFFECTIVE DATE - introductory paragraph.
ENCUMBER, ENCUMBERING, or ENCUMBRANCE - the creation of a security
interest, lien, pledge, mortgage or other encumbrance, whether such
encumbrance be voluntary, involuntary or by operation of Law.
ENRON - Enron Corp., an Oregon corporation.
EQUITY SUBSCRIPTION AGREEMENT - the meaning specified in the
Senior Loan Agreement.
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ERISA - Section 3.02(e).
FORMATION DATE - Recital 1.
GOVERNMENTAL AUTHORITY (or GOVERNMENTAL) - 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 - including, without limitation.
INTERNAL RATE OF RETURN - the discount rate at which the present
value of a series of future cash flows of an investment equals the cost
of the investment, as calculated using the "XIRR" function on Microsoft
Excel Version 4.0 or higher or any other acceptable spreadsheet program
agreed to in writing by the Members.
INVESTMENT COMPANY ACT - Investment Company Act of 1940, as
amended.
INVESTOR - introduction.
INVESTOR GUARANTY - the Guaranty, dated as of February 4, 1999,
from Investor in favor of NationsBank, N.A., as Agent and the other
Secured Parties referred to therein.
JEDI II - introduction.
LAW - 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.
LOAN DOCUMENTS - the collective reference to the Senior Loan
Documents and the Subordinated Note Documents.
LOAN PARTIES - the meaning specified in the Senior Loan Agreement.
MEMBER - either a Class A Member or a Class B Member, 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.
MEMBERSHIP INTEREST - 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
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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.
MONITORING REPRESENTATIVE - the Monitoring Representative
designated as provided in Section 6.05.
NET INCOME -for any period, the excess, if any, of the Company's
items of income and gain (other than income and gain allocated pursuant
to Section 5.03(c)) for such period over the Company's items of loss
and deduction for such period, including items described in Section
705(a)(1)(B) and 705(a)(2)(B) of the Code.
NET LOSS - for any period, the excess, if any, of the Company's
items or loss and deduction for such period over the Company's items of
income and gain (other than income and gain allocated pursuant to
Section 5.03(c)) for such period, including items described in Sections
705(a)(1)(B) and 705(a)(2)(B) of the Code.
NET OFFERING PROCEEDS - an amount equal to the proceeds from the
sale of the Refinancing Securities minus the sum of the Offering Costs
and the Offering Proceeds Repayment Amount.
OFFERING - the offering, sale and delivery of the Refinancing
Securities.
OFFERING COSTS - with respect to the Offering, commercially
reasonable brokerage commissions, underwriting fees and discounts (or
initial purchaser fees or discounts in the context of an offering in
which resales are to be made pursuant to Rule 144A promulgated pursuant
to the Securities Act), legal fees, finder's fees and other similar
fees and commissions to the extent, but only to the extent, that such
fees and commissions are actually paid to a Person that is not an
Affiliate of the Company or Enron and are properly attributable to the
Offering; provided that for the purposes of the definition of Net
Offering Proceeds, the term "Offering Costs" shall not include such
fees and commissions that are paid from sources other than the proceeds
of the Offering.
OFFERING DATE - the date the Refinancing Securities are delivered
against payment therefor.
OFFERING PROCEEDS REPAYMENT AMOUNT - the meaning specified in the
Subordinated Loan Agreement.
ORIGINAL AGREEMENT - Recital 1.
PERSON - any individual, corporation, company, voluntary
association, partnership, joint venture, trust, unincorporated
organization or government or any agency, instrumentality or political
subdivision thereof, or any other form of entity.
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POST-CONVERSION PERIOD - the period commencing on the Bridge
Maturity Date to, but excluding, the date distributions equal to the
full Class B Preference Amount have been made to each Class B Member.
PRE-CONVERSION PERIOD - the period commencing on the Acquisition
Date to, but excluding, the earlier of (i) the Bridge Maturity Date and
(ii) the date distributions equal to the full Class B Preference Amount
have been made to each Class B Member.
PURPA - the Public Utility Regulatory Policies Act of 1978, as
amended, the Federal Energy Regulatory Commission's regulations
thereunder, and regulatory and judicial interpretations thereof.
RECORD HOLDER - the Person in whose name a Membership Interest is
registered in the books and records of the Company as contemplated in
Section 3.08.
REFINANCING SECURITIES - the meaning specified in the Subordinated
Loan Agreement.
SECURITIES ACT - the Securities Act of 1933, as amended.
SENIOR LENDERS - the meaning specified in the Subordinated Loan
Agreement.
SENIOR LOAN AGREEMENT - the Credit Agreement dated as of February
4, 1999, among the Company, NationsBank N.A., as Agent, and the Lenders
from time to time party thereto, as such Credit Agreement 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 Credit
Agreement.
SENIOR LOAN DOCUMENTS - the meaning specified in the Subordinated
Loan Agreement.
SENIOR NOTES - the promissory notes of the Borrower outstanding
from time to time under the Senior Loan Agreement.
SHARING RATIOS - shall mean 90% for the Class A Member and 10% for
the Class B Members (5% for the Investor and 5% for ECT).
SUBORDINATED LOAN AGREEMENT - the Credit and Subordination
Agreement dated as of February 4, 1999, between Enron and the Company,
as such Credit and Subordination Agreement 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 Credit and
Subordination Agreement.
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SUBORDINATED NOTE DOCUMENTS - the meaning specified in the
Subordinated Loan Agreement.
SUBORDINATED OBLIGATIONS - the meaning specified in the Senior
Loan Agreement.
TERM - Section 2.06.
TRANCHE A-2 BRIDGE ADVANCE - the meaning specified in the Senior
Loan Agreement.
TRANCHE A-2 BRIDGE NOTE - the meaning specified in the Senior Loan
Agreement.
TRANSACTION AGREEMENT - the Transaction Agreement among Enron
Corp., Enron Capital & Trade Resources Corp. and RCM Holdings, Inc.,
Cogen Technologies Camden, Inc., Camden Cogen Technologies Capital
Company, L.P., Cogen Technologies Limited Partners Joint Venture, the
Partners of Cogen Technologies Limited Partners Joint Venture and the
shareholders of ▇▇▇▇▇▇ Energy Services Corporation, dated October 25,
1998, as amended by amendments dated November 6, 1998, November 13,
1998, and February 1, 1999.
UTILITY AFFILIATE - Section 5.04.
1935 ACT - Section 3.02(f).
Other terms defined herein have the meanings so given them.
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 and Sections refer
to Articles and Sections of this Agreement; (c) references to an Exhibit refer
to the Exhibit attached to this Agreement, which is 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. JEDI II, ECT and Investor 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 Class A Member may select.
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2.03 REGISTERED OFFICE; REGISTERED AGENT; PRINCIPAL OFFICE IN THE
UNITED STATES; 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 Company 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 Company 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 Company may designate, which need not be in the State of Delaware,
and the Company shall maintain records there or such other place as the Company
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 Company may designate. The Company shall notify
each Member of any change in the registered office, the registered agent, or the
street address of the principal office of the Company.
2.04 PURPOSES. The purposes of the Company are to engage in the
acquisition, development, lease, ownership and sale (directly or indirectly
through one or more subsidiary entities), 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 Bayonne Plant (as defined
in the Transaction Agreement), the Linden Plant (as defined in the Transaction
Agreement), the Camden Plant (as defined in the Transaction Agreement) and the
other assets acquired by the Company and its subsidiaries pursuant to the
Transaction Agreement, the purchasing, ownership, use, transmission, marketing
and sale of any input, output or right associated therewith, and 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 qualify 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 Company
shall comply, to the extent procedures are available and those matters are
reasonably within the control of the Company, with all requirements necessary to
qualify the Company as a foreign limited liability company in that jurisdiction.
At the request of the Company, 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 10.03.
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ARTICLE 3
MEMBERSHIP; DISPOSITIONS OF INTERESTS
3.01 MEMBERS. (a) JEDI II was admitted to the Company as the initial
Member, effective as of the Formation Date, pursuant to the Original Agreement.
(b) Effective as of the Effective Date, there are hereby created two
classes of Members in the Company, Class A Members and Class B Members, and each
shall have the respective rights accorded it under this Agreement. JEDI II's
Membership Interest is hereby converted into that of the initial Class A Member,
and ECT and Investor are hereby admitted as the initial Class B Members. Each of
ECT and Investor initially shall own 50% of the interests of the Class B
Members.
3.02 REPRESENTATIONS, WARRANTIES AND COVENANTS. Each Member hereby
represents, warrants and covenants to the Company and each other Member that the
following statements are true and correct as of the Effective Date (and, in the
case of Section 3.02(e), shall remain true and correct for so long as it is a
Member):
(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 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 it 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) in the case of Investor, (i) ownership of a Membership
Interest by it may be treated as ownership by one person for purposes
of Section 3(c)(1)(A) of the Investment
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Company Act of 1940, and (ii) it is a governmental plan, as such term
is defined in Section 3(32) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA");
(f) in the case of a Class B Member or a Person to which a Class B
Member Membership Interest is Disposed:
(i) it 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;
(ii) it understands that it may not sell or transfer its
Membership Interest, except in accordance with Section 3.03;
(iii) it 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;
(iv) it has carefully reviewed this Agreement and any other
relevant information furnished to it in writing by the Class A
Member and its Affiliates, and it understands the risks of, and
other considerations relating to, an investment in its Membership
Interest;
(v) it 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, the Class A Member, its Affiliates, and the Company's
business activities, and the Class A Member 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;
(vi) it 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;
(vii) it 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
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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;
(viii) it understands that the Class A Member 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;
(ix) in the case of Class B Members other than the ECT, at the
time of its investment in the Company and at all times while it
remains a Member it (A) does not and will not own or operate any
facility used for the generation, transmission or distribution for
sale of electric energy or any facility used for the retail
distribution of natural or manufactured gas, 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"), (B) is not and
will not be an "electric utility company" or a "gas utility
company" within the meaning of the 1935 Act, (C) is not and will
not be (1) a "holding company," (2) a "subsidiary company," an
"affiliate" or "associate company" of a "holding company" or (3)
an "affiliate" of a "subsidiary company" of a "holding company,"
each within the meaning of the 1935 Act, and (D) is not and will
not be subject to regulation as a public utility, public utility
holding company (except to the extent certain acquisitions may be
subject to the regulatory approval of the Securities and Exchange
Commission pursuant to Section 9(a)(2) of the ▇▇▇▇ ▇▇▇) or public
service company (or similar designation) by any Governmental
Authority;
(x) in the case of Class B Members other than Investor, if
such Class B Member has or may have or does at any time have, more
than 10% of the aggregate Sharing Ratio of the Company, that, at
the time of its investment in the Company and at all times during
the existence of the Company, no facts do or will exist with
respect to such Class B Member that will deprive the Company of an
exemption from the Investment Company Act of 1940 by reason of
Section 3(c)(1) thereof; and
(xi) at the time of its investment in the Company and at all
times while it remains a Member, such Class B 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 Class B 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.
3.03 DISPOSITIONS OF MEMBERSHIP INTERESTS. (a) GENERAL RESTRICTION. A
Member may not Dispose of all or any portion of its Membership Interest except
by complying with all of the following requirements: (i) such Member must obtain
the consent of the other Members; provided, however, that no such consent shall
be required for a Disposition of a Membership Interest by (A)
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the Class A Member or ECT to Enron or any of its wholly-owned Affiliates or (B)
the Class A Member or ECT if, in connection therewith, the Membership Interest
of Investor (and, at the election of ECT, the Membership Interest of ECT) is
redeemed by the Company or acquired by the Class A Member, Enron, an Affiliate
of the Class A Member or Enron, or a third party designated by the Class A
Member in accordance with Exhibit B; (ii) such Member must comply with the
requirements of Section 3.03(c), Section 3.08 and, if the Assignee is to be
admitted as a Member, Section 3.03(b) and (iii) 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 Class A 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. (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 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 non-Disposing 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 Members and must be reasonably
satisfactory, in form and substance, to the non-Disposing Members:
(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
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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.
(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 non-Disposing Members (which in the case of Investor, may be
its internal counsel), 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 a Disposition by the Class A Member to one of its Affiliates.
(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 opinion referred to in Section 3.03(c)(i)(C), 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.
(d) If Investor is required by law or regulation enacted or adopted or
court decision rendered following the Effective Date to divest itself of all or
any part of its Membership Interest and delivers to the Company an opinion of
legal counsel reasonably acceptable to the Class A Member (which may be
Investor's internal counsel) to that effect, then subject to the provisions of
this Section 3.03(d), Investor may assign all or that part of its Membership
Interest to the Class A Member or its designee or to a third party (which may
include another Member) reasonably acceptable to the Class A Member at a price
to be mutually determined between Investor and the Class A Member or such
designee or third party, as applicable. If within 120 days following the
occurrence of an event specified in this Section 3.03(d), Investor is unable to
make such assignment on terms reasonably acceptable to it, the Company will
redeem or (at the election of the Class A Member) Enron, an Affiliate of Enron
or a third party designated by Enron will purchase, the Membership Interest of
Investor (and, at the election of the Class A Member, the Membership Interest of
ECT) in accordance with Exhibit B.
(e) (i) If any of the representations set forth in Section 3.02(f)
(ix), (x) or (xi) becomes false with respect to any Class B Member, such Class B
Member, as soon as practicable after the occurrence of any event that makes such
representation untrue (a "Trigger Event"), shall assign all of its Membership
Interest, effective for all purposes as of the close of Company business on the
day prior to the occurrence of the Trigger Event (the "Repurchase Date"), to any
Person (which may
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include another Class B Member) reasonably acceptable to the Class A Member. If
the Disposition of the Membership Interest of such Class B Member has not been
effected on or before the expiration of 60 days following the Trigger Event, the
Class A Member shall have the option, exercisable by notice to such Class B
Member on or before the 90th day following the Trigger Event, to purchase (or to
cause one of its Affiliates or a third party designated by it to purchase) the
Membership Interest of such Class B Member, effective as of the Repurchase Date,
at the higher of (A) the price determined in accordance with Exhibit B and (B)
the cash price offered for such Membership Interest by a third party unrelated
to any Member pursuant to a bona fide written offer therefor executed by that
third party, which offer does not contain any financing condition (other than
customary conditions in a firm commitment letter from a responsible financial
institution), and a copy of which offer must have been delivered to the Class A
Member on or before the 75th day following the occurrence of such Trigger Event.
On the third Business Day following the determination of the price in accordance
with Exhibit B, the Class A Member or its designated Affiliate or third party
shall pay to the owner of such Membership Interest the price therefor determined
in accordance with this Section 3.02(e)(i) and the consideration described in
Section 3.02(e)(ii), whereupon that Membership Interest shall become the
property of the Class A Member or its designated Affiliate or third party, and
such other Class B Member shall cease to be a Member, all effective as of the
Repurchase Date.
(ii) The purchase price for any Membership Interest acquired by the
Class A Member or its designated Affiliate or third party upon the exercise of
the option granted in Section 3.03(e)(i) shall be payable in cash.
(iii) Notwithstanding any purchase of its Membership Interest pursuant
to Section 3.03(e)(i), any Class B Member or former Class B Member whose
representations given in Section 3.02(f) (ix), (x) or (xi) became false shall be
liable to the Company and the Class A Member for any damages caused to the
Company, the Class A Member or any Affiliate of either thereof arising out of or
related to any such representation being false at any period.
3.04 CREATION OF ADDITIONAL MEMBERSHIP INTERESTS. 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 unanimous
consent of the existing Members, on such terms and conditions as the existing
Members may unanimously 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. The Class A
Member may reflect the creation of any new class or group in an amendment to
this Agreement indicating the different rights, powers, and duties, and such an
amendment need be executed only by the Class A Member (if the consent described
in the first sentence of this Section 3.04 has already been obtained). Any such
admission is effective only after the new Member has executed and delivered to
the 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. Each Member shall be entitled to receive
any information that it may reasonably request concerning the Company; provided,
however, 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). Each
Member shall also have the right, upon reasonable notice, and at all times
during usual business hours to inspect the assets of the Company and to audit,
examine and make copies of the books of account and other records of the
Company. Such right may be exercised through any agent or employee of such
Member designated in writing by it or by an independent public accountant,
attorney or other consultant so designated. 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.
3.06 CONFIDENTIAL INFORMATION. (a) The Members acknowledge that, from
time to time, they may receive information from or regarding the Company, the
Class A Member, Enron or Enron's Affiliates (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 Class A Member if the Company is the Subject
Person) consents otherwise, each Member 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 other than another Member, except for disclosures (i) required
by Law or applicable stock exchange regulations (but the Member must notify the
Subject Person (the Class A Member if the Company is the Subject Person)
promptly of any request for that information, before disclosing it if
practicable), (ii) to advisers or representatives of the Member or Persons to
which that Member'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
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 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.
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 C. The Company
shall issue to each Member a Certificate
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certifying the 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. No charge shall be imposed for such transfer;
provided, however, that, as a condition to the issuance of any new Certificate
under this Section 3.08, 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 evidencing the same class and
Sharing Ratio of Membership Interest as the Certificate that was lost, destroyed
or stolen.
3.09 PUT AND CALL. (a) Investor may at its option require the Class A
Member to purchase (which purchase may, at the option of the Class A Member, be
made through a redemption by the Company or a purchase by the Class A Member, an
Affiliate of the Class A Member or a third party designated by the Class A
Member) all (but not part) of Investor's Membership Interest effective on a date
(that date or any date similarly designated under Section 3.09(c) called the
"Option Exercise Date") that is (i) the fifth anniversary of the Effective Date
or (ii) the first day of any calendar year thereafter, as provided in this
Section 3.09. To exercise this option, Investor must give the Class A Member
notice of the exercise (an "Option Exercise Notice") on or before the 180th day
prior to the Option Exercise Date.
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(b) Promptly after receipt of an Option Exercise Notice from Investor,
the Class A Member shall notify ECT in writing of the receipt of the Option
Exercise Notice and shall afford ECT the option, exercisable for a period of
fifteen Business Days following receipt of such notice from the Class A Member,
to (i) require the Class A Member to purchase (which purchase may, at the option
of the Class A Member, be made through a redemption by the Company or a purchase
by the Class A Member, an Affiliate of the Class A Member or a third party
designated by the Class A Member) all (but not part) of ECT's Membership
Interest effective on the Option Exercise Date, or (ii) remain as a Class B
Member of the Company. A failure to respond to the notice given by the Class A
Member within the fifteen Business Day period described above shall constitute
an election by ECT to remain a Class B Member of the Company.
(c) The Class A Member may at its option cause the Company to redeem
from Investor, or require Investor to sell to the Class A Member (or an
Affiliate of the Class A Member or a third party designated by the Class A
Member), all (but not part) of such Investor's Membership Interest effective on
an Option Exercise Date that is (i) the fifth anniversary of the Effective Date
or (ii) the first day of any calendar year thereafter, as provided in this
Section 3.09. To exercise this option, the Class A Member must give Investor
notice of the exercise on or before the 180th day prior to the Option Exercise
Date.
(d) The price for any redemption or purchase and sale of a Membership
Interest under this Section 3.09 shall be the amount determined in accordance
with Exhibit B. The purchase price shall be payable in cash. On the Option
Exercise Date (or if that day is not a Business Day, on the next succeeding
Business Day), the Company, the Class A Member (or its designated Affiliate or
third party) shall pay the redemption or purchase price to the applicable Class
B Member, and if such interest is purchased, the Class A Member (or its
designated Affiliate or third party) automatically shall become the owner of
that Membership Interest and such Class B Member shall cease to be a Member in
the Company, effective as of the Option Exercise Date.
ARTICLE 4
CAPITAL CONTRIBUTIONS
4.01 INITIAL CAPITAL CONTRIBUTIONS. Each Member shall make the
following initial Capital Contributions:
(a) On the Effective Date, Investor shall make a Capital Contribution
by execution of the Investor Guaranty. Investor agrees that, as between Investor
and the Company, Investor shall be responsible for the payment to the Senior
Lenders of the principal of and interest on the Tranche A-2 Bridge Advances as
provided in the Investor Guaranty. The Members agree that the value of the
Capital Contribution made by Investor is $25,000,000.
(b) Within one Day after the Effective Date, ECT, at its option, shall
make a contribution to the Company of (i) $994,800.01 plus the Bayonne Interest,
and the Company shall assume ECT's obligations under the Bayonne Seller Notes,
pursuant to assignment documentation acceptable to ECT and to the other Members,
or (ii) $25,000,000. The Members agree that the value of the Capital
Contribution to be made by ECT is $25,000,000.
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4.02 SUBSEQUENT CAPITAL CONTRIBUTIONS. (a) On the earliest to occur of
(i) the Offering Date, (ii) the Bridge Maturity Date and (iii) the date such
contribution is required under the Equity Subscription Agreement, JEDI II shall
make an additional Capital Contribution in the amount of $80,000,000; provided,
however, that if the Net Offering Proceeds exceed the sum of (x) the Class B
Preference Amount for both Class B Members and (y) the full amount of the
Subordinated Obligations, then the additional Capital Contribution required
under this Section 4.02(a) shall be reduced by the amount of such excess.
(b) Except as provided in Section 4.02(a), no Member shall have any
obligation to make any additional Capital Contributions.
(c) No Class B Member may make any additional Capital Contributions
without the consent of the Class A Member. A Class A Member may make additional
Capital Contributions (i) without the consent of any other Member and (ii)
without offering to any other Member the opportunity to make such Capital
Contributions.
4.03 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.
4.04 LOANS. No Member may make any loans to the Company without the
consent of the Class A Member; provided, however, that subject to Section
6.01(b), the Company may obtain loans from the Class A Member, its Affiliates or
any other Persons (a) without the consent of any other Member, (b) without
offering to any other Member or any Affiliate of another Member the opportunity
to make such loans, and (c) without accounting to, or sharing the results or
profits of such contracts or arrangements with, the Company, its subsidiaries,
any other Member or any Affiliate of another Member. Notwithstanding the
foregoing, any such loan must satisfy the following requirements: (a) it must
not subject any Member to personal liability for its repayment (unless the
Member expressly agrees to guarantee the loan); and (b) if the loan is made by
the Class A Member or its Affiliates, its terms (including the interest rate)
must be no less favorable to the Company than the Company could have obtained
from Persons who are not Affiliated with the Members. A loan described in this
Section 4.04 shall bear interest at a rate determined by the Class A Member from
the date of the advance until the date of payment and is not a Capital
Contribution.
4.05 CAPITAL ACCOUNTS. A Capital Account shall be established and
maintained for each Member. 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 (including the Investor Guaranty) 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), and (c) allocations to that Member of Company income and gain (or
items thereof), including income and gain exempt from tax and income and gain
described in Treasury Regulation Section 1.704-1(b)(2)(iv)(g), but excluding
income and gain described in Treasury Regulation Section 1.704-1(b)(4)(i), and
shall be decreased by (d) the amount of money distributed to that Member (or in
the case of the Investor, amounts paid to the Senior Lenders on behalf of the
Investor)
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by the Company, (e) 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), (f) allocations to that Member of expenditures of the
Company described (or treated as described) in Section 705(a)(2)(B) of the Code,
and (g) allocations of Company loss and deduction (or items thereof), including
loss and deduction described in Treasury Regulation Section
1.704-1(b)(2)(iv)(g), but excluding items described in (f) above and loss or
deduction described in Treasury Regulation Section 1.704-1(b)(4)(i) or
1.704-1(b)(4)(iii). The Members' Capital Accounts shall also be maintained and
adjusted as permitted by the provisions of Treasury Regulation Section
1.704-1(b)(2)(iv)(f) and as required by the other provisions of Treasury
Regulation Sections 1.704-1(b)(2)(iv) and 1.704-1(b)(4), including adjustments
to reflect the allocations to the Members of depreciation, depletion,
amortization, and gain or loss as computed for book purposes rather than the
allocation of the corresponding items as computed for tax purposes, as required
by Treasury Regulation Section 1.704-1(b)(2)(iv)(g). Thus, the Members' Capital
Accounts shall be increased or decreased to reflect a revaluation of the
Company's property on its books based on the fair market value of the Company's
property on the date of adjustment immediately prior to (A) the contribution of
money or other property to the Company by a new or existing Member as
consideration for a Membership Interest or an increased Sharing Ratio, (B) the
distribution of money or other property by the Company to a Member as
consideration for a Membership Interest, or (C) the liquidation of the Company.
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 Assignee in accordance with the provisions of Treasury
Regulation Section 1.704-1(b)(2)(iv)(l).
ARTICLE 5
DISTRIBUTIONS
5.01 DISTRIBUTIONS. Distributions to the Members shall be made as
follows:
(a) From the Effective Date until the earlier to occur of (i) the
Offering Date and (ii) the Bridge Maturity Date, the Company shall (A) make a
distribution to Investor from time to time by paying to the Senior Lenders, on
Investor's behalf, any accrued and unpaid interest on the Tranche A-2 Bridge
Note then due and payable (each an "Interest Payment"), thereby reducing
Investor's obligations under the Investor Guaranty by a like amount, and (B)
make a distribution of any cash it is permitted to distribute under the Loan
Documents (1) to the Class B Members (other than the Investor) in an amount
equal to the amount described in (A), and (2) to the Class B Members, pro rata,
up to the accrued but unpaid portion of the amount specified in clauses (ii) and
(iii) of the definition of "Class B Preference Amount" less, amounts described
in clauses (A) and (B)(1) of this Section 5.01(a).
(b) On (or within one Day after) the Offering Date, the Company shall
distribute to each of the Class B Members 25% of the Net Offering Proceeds until
each Class B Member has received the Class B Preference Amount; provided,
however, that Investor directs the Company to pay up to the full amount of any
such distribution, on Investor's behalf, (i) to the Senior Lenders to the extent
necessary to pay any principal of and interest on the Tranche A-2 Bridge Note
then outstanding and
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(ii) to the Company to the extent necessary to reimburse it for any principal of
and interest on the Tranche A-2 Bridge Note otherwise paid by the Company on
Investor's behalf.
(c) From and after the Bridge Maturity Date (and after the Offering
Date if the Offering Date has occurred and each of the Class B Members has not
received distributions equal to the Class B Preference Amount), the Company
shall distribute, at such times as may be determined by the Class A Member but
no less often than once each calendar quarter, any cash it is permitted to
distribute under the Loan Documents (other than reasonable reserves and other
amounts the Class A Member determines are necessary or appropriate for the
expected business needs of the Company) to the Class B Members, pro rata, until
each Class B Member has received the Class B Preference Amount.
(d) After each of the Class B Members has received distributions equal
to the Class B Preference Amount, the Company shall distribute, at such times as
may be determined by the Class A Member, any cash it is permitted to distribute
under the Loan Documents (other than reasonable reserves and other amounts the
Class A Member determines are necessary or appropriate for the expected business
needs of the Company) to the Class A Member until the Class A Member has
received distributions equal the Class A Preference Amount.
(e) After the Class A Member has received distributions equal to the
Class A Preference Amount, the Company shall distribute, at such times as may be
determined by the Class A Member, any cash it is permitted to distribute under
the Loan Documents (other than reasonable reserves and other amounts the Class A
Member determines are necessary or appropriate for the expected business needs
of the Company) to the Members in accordance with the Sharing Ratios.
5.02 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 10.02 shall be distributed as follows:
(a) The proceeds shall be distributed first to the Class B Members
until each Class B Member has received the Class B Preference Amount.
(b) After the Class B Members have received distributions equal to the
Class B Preference Amount, proceeds shall be distributed to the Class A Members
until the Class A Members have received distributions equal the Class A
Preference Amount.
(c) After the Class A Members have received distributions equal to the
Class A Preference Amount, proceeds shall be distributed in accordance with the
Sharing Ratios.
5.03 ALLOCATIONS. (a) Except as may be required by Code Section 704(c)
and Treasury Regulation Section 1.704-1(b)(2)(iv)(d)(3), Net Income shall be
allocated as follows:
(i) First, to the Class A Member until the cumulative amount of
Net Income allocated pursuant to this Section 5.03(a)(i) for the current taxable
period and all prior taxable periods equals the cumulative amount of Net Loss,
if any, allocated pursuant to Section 5.03(b)(iv) for all prior taxable periods.
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(ii) Next, to the Class B Members until the cumulative amount of
Net Income allocated pursuant to this Section 5.03(a)(ii) for the current
taxable period and all prior taxable periods equals, the sum of the amounts
described in clauses (ii), (iii) and (iv) of the definition of Class B
Preference Amount, plus the cumulative amount of Net Loss, if any, allocated
pursuant to Section 5.03(b)(iii) for all prior taxable periods;
(iii) Next, to the Class A Member until the cumulative amount of
Net Income allocated pursuant to this Section 5.03(a)(iii) for the current
taxable period and all prior taxable periods equals the amount described in
clause (ii) of the definition of Class A Preference Amount, plus the cumulative
amount of Net Loss, if any, allocated pursuant to Section 5.03(b)(ii) for all
prior taxable periods ; and
(iv) Thereafter, to the Members in accordance with the Sharing
Ratios.
(b) Except as may be required by Code Section 704(c) and Treasury
Regulation Section 1.704-1(b)(2)(iv)(d)(3), Net Loss shall be allocated as
follows:
(i) First, to the Members in accordance with the Sharing Ratios
until the cumulative amount of Net Loss allocated pursuant to this Section
5.03(b)(i) for the current taxable period and all prior taxable periods equals
the cumulative amount of Net Income, if any, allocated pursuant to Section
5.03(a)(iv) for all prior taxable periods;
(ii) Next, to the Class A Member until the cumulative amount of
Net Loss allocated pursuant to this Section 5.03(b)(ii) for the current taxable
period and all prior taxable periods equals the cumulative amount of Net Income,
if any, allocated pursuant to Section 5.03(a)(iii) for all prior taxable
periods;
(iii) Next, to the Class B Members until the cumulative amount of
Net Loss allocated pursuant to this Section 5.03(b)(iii) for the current taxable
period and all prior taxable periods equals, the cumulative amount of Net
Income, if any, allocated pursuant to Section 5.03(a)(ii) for all prior taxable
periods; and
(iv) Thereafter, to the Class A Member.
5.04 TRUE-UP. In order to ensure that, in the aggregate, no "electric
utility company" or affiliate of an "electric utility company," each as defined
in the Federal Power Act (each, a "Utility Affiliate"), receives in excess of a
fifty percent (50%) derivative share of the "stream of benefits" (as such term
is used by the Federal Energy Regulatory Commission in applying the "QF
Ownership Criteria") from the Company, to the extent that any provision of this
Agreement results or has resulted in an allocation or payment to the Utility
Affiliate or to the extent that any payment under any other agreement is
determined or has been determined to be included in the "stream of benefits"
attributable to the Utility Affiliate such that the portion of the "stream of
benefits" attributable to the Utility Affiliate would exceed fifty percent (50%)
of the aggregate "stream of benefits" of the Company, then unless the Class A
Member determines in its reasonable discretion that failure to satisfy the QF
Ownership Criteria would not materially adversely affect the Company or its
Members, the Utility Affiliate shall pay over to the other Members that are not
Utility Affiliates (in
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proportion to their respective Sharing Ratios) such amounts as is necessary so
that the portion so attributable to the Utility Affiliate shall not exceed fifty
percent (50%).
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
6.04 (which the Class A Member shall oversee) and for situations in which the
approval of other Members is expressly required by this Agreement or by
non-waivable provisions of applicable Law, the Class A Member shall have full,
complete, and exclusive authority to manage and control the business and affairs
of the Company.
(b) Notwithstanding the provisions of Sections 6.01(a), 6.04 and
6.02(c), (i) until a Class B Member has received distributions (including deemed
distributions) equal to the Class B Preference Amount, the Company may do any of
the following only with the consent of such Class B Member:
(A) enter into, amend or waive any material rights of
the Company under any material agreement between the Company
and the Class A Member, Enron or any Affiliate of Enron;
(B) indemnify the Class A Member, Enron or any
Affiliate of Enron or advance funds to the Class A Member,
Enron or any Affiliate of Enron in accordance with Section
6.03; or
(C) settle any claim of the Company against the Class
A Member, Enron or any Affiliate of Enron other than a claim
of less than $250,000 in the aggregate or settle any claim by
the Class A Member, Enron or any Affiliate of Enron against
the Company other than claims aggregating less than $250,000
per annum; and
(ii) the Company may do any of the following only with the
consent of the Class B Members:
(A) engage in any business other than as described in
Section 2.04;
(B) amend the Senior Loan Documents or the Subordinated
Note Documents if, as a result thereof, the obligations or
liabilities of any of the Class B Members (whether as guarantors,
pledgors of security or otherwise) thereunder would be increased;
or
(C) merge or consolidate with or into another limited
liability company or other business entity, or enter into an
agreement to do so;
provided, however, that if Investor fails to provide its consent to any action
contemplated by Section 6.01(b)(ii)(C), at the election of the Class A Member,
the Company may redeem, or the Class A
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Member, Enron, an Affiliate of the Class A Member or Enron, or a third party
designated by the Class A Member may purchase, the Membership Interest of
Investor (and, at the election of the Class A Member, the Membership Interest of
ECT) in accordance with Exhibit B.
(c) The Class A Member shall have the right to request that the Class B
Members grant any consent or approval or make any designation regarding the
matters referred to in this Section 6.01, and any Class B Member may, but shall
have no obligation to, grant its consent, approval or designation. In any
request to another Member for its consent, approval or determination, the Class
A Member may specify a response period that is reasonable and that ends no
earlier than the 10th Business Day following the date on which the Member whose
consent, approval or determination is sought receives the request as described
in this Section 6.01(c). Each Class B Member agrees that in the event the Class
A Member requests its consent, approval or determination regarding a matter,
such Class B Member will respond within the response period specified in the
notice. In the event the Class A Member follows such procedures and a Class B
Member fails to respond within the response period specified in the notice given
in accordance with this Section 6.01(c), the request of the Class A Member will
be deemed to have been denied by such Class B Member. In the event the Class B
Members grant a consent or approval or make a designation pursuant to this
Section 6.01(c), the Class A Member shall take action in a manner consistent, or
refrain from taking action pursuant to this Agreement in a manner inconsistent,
with such consent, approval or designation.
(d) If requested by any Class B Member, the Company shall assert a
claim it may have against Enron or any Affiliate of Enron.
(e) No Member (other than the Class A Member) has the authority or
power to act for or on behalf of the Company, to do any act that would be
binding on the Company or to incur any expenditures on behalf of the Company.
(f) Any Person dealing with the Company, other than a Member, may rely
on the authority of the Class A Member or the officers of the Company in taking
any action in the name of the Company without inquiry into the provisions of
this Agreement or compliance with them, regard less of whether that action
actually is taken in accordance with the provisions of this Agreement.
(g)(i) For purposes of this provision, the following definitions
apply:
1. "CalPERS fiduciary" means the individuals listed in Schedule
1. Investor reserves the right to amend this list, upon notice
to the Contractor, and without amending this agreement.
2. "Contractor" includes the Company, as well as its directors,
officers and the persons specified on Schedule 2 (as well as
the successors to such persons, collectively the "Reporting
Parties").
3. "Gift" means anything for which no corresponding consideration
has been given, with a value over $10.
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4. "Political contribution" means a "contribution" as defined by
the Political Reform Act (Cal. Gov. Code sec. 81000 et seq.,
sec. 82015), or any contribution made in connection with a
CalPERS Board member election provided for in Cal. Gov. Code
sec. 20090(g).
(ii) By January 31 of each year that CalPERS is a Member, the
Contractor (on behalf of itself and its directors, officers and the Reporting
Parties) shall disclose in writing to the CalPERS Chief Executive Officer
whether the Contractor provided, or was requested to provide, during the
previous calendar year, any gifts or political or other contributions to a
CalPERS fiduciary, or to a candidate for California State Treasurer or
Controller. For each solicitation, the disclosure shall include the following
information: the date of the solicitation; the name of the individual who made
the solicitation; the amount solicited; the manner of solicitation; and the
purpose of the solicitation. For gifts and contributions provided, the
disclosure shall include: the nature of the item provided (gift or type of
contribution); a brief description of the item provided; the approximate value;
the date provided; and the recipient.
(iii) The Company represents and warrants to Investor that the officers
and directors of the Company and the Reporting Parties constitute all of the
persons authorized to act for the Company with regard to its relationship with
CalPERS. The Company agrees to amend or supplement Schedule 2 from time to time
so long as CalPERS is a Member so that the officers and directors of the Company
and the Reporting Parties continue to constitute all the persons authorized to
act for the Company with regard to its relationship with CalPERS.
6.02 STANDARDS OF PERFORMANCE AND CONFLICTS OF INTEREST. (a) Except as
provided otherwise in this Agreement, the Class A Member (and Enron Capital
Management II Limited Partnership, its general partner ("ECM")) shall manage the
business and affairs of the Company and oversee the day-to-day management of the
Company by the officers of the Company as provided in Section 6.01 in good faith
and in accordance with prudent industry standards toward the best interests of
the Company. Each of the Class A Member and ECM is liable for errors or
omissions in performing its duties with respect to the Company only in the case
of breach or reckless disregard of fiduciary duties, gross negligence, willful
misconduct, fraud or material breach of this Agreement, but not otherwise, IT
BEING SPECIFICALLY AGREED THAT NEITHER OF THE CLASS A MEMBER NOR ECM IS LIABLE
FOR ITS OWN SIMPLE, PARTIAL, OR CONCURRENT NEGLIGENCE. In no event shall the
Class A Member or ECM be liable for any action or course of conduct approved or
consented to by the Class B Members or any action or course of conduct based on
a determination by the Class B Members, INCLUDING SPECIFICALLY MATTERS FOR WHICH
THE CLASS A MEMBER OR ECM WOULD BE LIABLE IN THE ABSENCE OF THIS SECTION 6.02,
SUCH AS ITS OWN SIMPLE, PARTIAL OR CONCURRENT NEGLIGENCE, absent a material
misstatement or omission or fraud in obtaining the approval; provided, that
notwithstanding the existence of a material misstatement or omission, in no
event shall the Class A Member or ECM be liable for any such action or course of
conduct if the Class A Member or ECM, as applicable, at the time of the Class B
Members' consent, approval or determination, did not know of, and in the
exercise of a standard of care not constituting bad faith, gross negligence,
willful misconduct or fraud could not have known of, the material misstatement
or omission. Each of the Class A Member and ECM shall devote such time and
effort to the duties described in Section 6.01 as is necessary to promote fully
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the interests of the Company. In no event shall the provisions of this Section
6.02 relieve the Class A Member or ECM from liability pursuant to the provisions
of any contract or transaction that may be entered into hereafter between the
Company and the Class A Member.
(b) A Member and its 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. Without limiting the generality of the foregoing,
the Members recognize and agree that Enron and its Affiliates currently engage,
and may engage in the future, in various Activities that are the same or similar
to the Activities proposed to be engaged in by the Company and its subsidiaries.
(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, provided, that unless the Class A Member determines in its reasonable
discretion that the loss of "qualifying facility" status under PURPA by the
power plants in which the Company owns a direct or indirect interest would not
materially adversely affect such facility, the Company or its Members, (i) the
terms of any such transactions with the Class A Member or one of its Affiliates
(including, for the purposes of this Section 6.02(c), Enron and any Affiliate
thereof) are comparable to, or at least as favorable to the Company or the
applicable subsidiary or other Person as, the terms of transactions at arms'
length between unaffiliated parties and (ii) if the transaction is with Enron or
any Affiliate thereof, the terms of the transaction have been approved by either
(A) Investor or (B) any Person that is (1) an equity interest holder in the
subsidiary or other Person that is a party to such transaction and (2) not an
"electric utility", "electric utility holding company", or a wholly or partially
owned subsidiary of either, within the meaning of PURPA. Any transaction between
the Company and a Member or its Affiliates that has been approved by the Class B
Members after full disclosure shall be deemed to have satisfied the standard set
forth in the previous sentence. Each Member hereby approves the entering into by
the Company of each of the agreements with Affiliates of Enron listed on
Schedule 3. A Member or Affiliate that transacts business with the Company owes
no duty to the Company or the other Members to exercise or to refrain from
exercising in any particular manner its rights or powers as a participant in
that transaction, including those arising under any contract with the Company,
and (subject to the proviso in the first sentence of this Section 6.02(c)) such
Member or such Affiliate of a Member may realize profits from that transaction.
(d) The Class B Members acknowledge that the Class A Member, Enron and
their respective Affiliates do not guarantee the performance of the Company or
the Class A Member or ECM. In the absence of gross negligence, willful
misconduct or fraud by the Class A Member or ECM in performing the duties
described in Section 6.01, neither Enron nor any other Affiliate of Enron (other
than the Class A Member and ECM) shall have any liability for the acts,
omissions or
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courses of conduct of the Company or the Class A Member or ECM. As a result of
the foregoing, Enron and its Affiliates (other than the Class A Member and ECM)
shall have NO LIABILITY FOR THE SIMPLE, PARTIAL OR CONCURRENT NEGLIGENCE OF THE
CLASS A MEMBER, ECM, ENRON OR ANY OF THEIR AFFILIATES in connection with the
acts, omissions or courses of conduct of the Company or the Class A Member or
ECM. Nothing herein shall prohibit a Class B Member or the Company from
asserting valid claims other than as provided in this Section 6.02. In no event
shall the provisions of this Section 6.02(d) relieve the Class A Member, ECM,
Enron or any of their respective Affiliates from liability pursuant to the
provisions of any contract or transaction that may be entered into hereafter
between the Company and Enron or any of its Affiliates.
(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 and the Class A Member, ECM
and their respective officers, directors, employees, agents and controlling
Persons, and each Class B Member and its 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 of the Company or
as a controlling Person of such Member, in performing the obligations of an
officer, the Class A Member or ECM with respect to the Company, or in exercising
rights of a Class B Member, 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
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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 Sections 6.03
for any legal or other expenses subsequently incurred by the Indemnified Person
in connection with the defense thereof other than reasonable costs of
investigation; provided, that all of the Indemnified Persons shall have the
right to employ one counsel to represent them if, in the opinion of counsel to
the Indemnified Persons (which, in the case of Investor, may be its internal
counsel), 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.
6.04 OFFICERS; DAY-TO-DAY MANAGEMENT. (a) Officers of the Company may
be appointed, and may be removed and replaced, by the Class A Member, and such
officers shall have such titles, authority, duties and salary or other
compensation, if any, as the Class A Member shall determine. Each officer shall
hold office until his successor shall be duly designated or until his death or
earlier resignation or removal. Any officer may resign as such at any time.
(b) Subject to the policies and guidelines adopted by the Class A
Member and the other restrictions set forth in this Agreement, the Company's
officers shall have the full authority to and shall manage, control and oversee
the day-to-day business and affairs of the Company and shall perform all other
acts as are customary or incident to the management of such business and
affairs, which will include the general and administrative affairs of the
Company and the operation and maintenance of the Company's assets in accordance
with annual budgets approved by the Class A Member and the other provisions of
this Agreement.
6.05 MONITORING REPRESENTATIVE. (a) To facilitate granting consents and
approvals by Investor pursuant to Sections 6.01(b)(i)(A) and 6.02(c) (the
"Affiliate Approvals"), Investor may designate, by notice to the Class A Member,
a Person to serve as the Monitoring Representative. The duties of the Monitoring
Representative shall be as separately agreed between Investor and the Monitoring
Representative so designated. Prior to the appointment of the Monitoring
Representative or the designation of a successor Monitoring Representative,
Investor shall notify and shall consult with the Class A Member regarding the
identity of any such Monitoring Representative. The Class A Member shall have no
obligation to recognize or otherwise deal with any Monitoring Representative the
appointment of which or whom the Class A Member reasonably believes would
adversely affect the Company, and so notifies Investor in writing. After the
Class A Member objects as provided in the foregoing sentence to the appointment
of a Monitoring Representative, the Class A Member may deal solely with Investor
as to all matters related to Investor's status as a Class B Member until the
appointment of a substitute Monitoring Representative as to which or whom the
Class A Member does not so object. A Monitoring Representative shall serve in
that capacity until Investor notifies the Class A Member that such Person no
longer serves in that capacity and either designates a replacement or indicates
that no replacement will then be named.
(b) The Monitoring Representative shall have the power to exercise
those specific rights, responsibilities or decision making powers relating to
Affiliate Approvals granted to Investor as a Class B Member under this Agreement
as are designated by Investor to the Class A Member in
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writing from time to time. While a Monitoring Representative has been appointed
and is acting, all references herein to a Class B Member shall, as it pertains
to Investor, be deemed to be references to the Monitoring Representative in
respect of each area as is designated by Investor by notice thereof to the Class
A Member as herein provided. Any consent or approval relating to an Affiliate
Approval given or made by the Monitoring Representative under this Agreement and
consistent with the notice given by Investor as provided in this Section 6.05(b)
shall bind Investor as a Class B Member without further act or inquiry, absent
fraud or a material misstatement or omission in obtaining the consent and
approval. If a Monitoring Representative is designated, the Company shall
deliver notices with respect to Affiliate Approvals to the Monitoring
Representative at the same time and in the same manner as notice is required to
be given to Investor.
ARTICLE 7
TAXES
7.01 TAX RETURNS. The Company shall prepare and timely file all
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.
7.02 TAX ELECTIONS. The Company shall make and maintain the following
elections for tax purposes:
(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;
and
(c) any other election the Class A Member may deem appropriate.
7.03 TAX MATTERS MEMBER. The Class A Member 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.
ARTICLE 8
BOOKS, RECORDS, REPORTS, AND BANK ACCOUNTS
8.01 MAINTENANCE OF BOOKS. The Company shall keep or cause to be kept
at the principal office of the Company or at such other location the Company
deems appropriate complete and accurate books and records of the Company,
supporting documentation of the transactions with respect to the conduct of the
Company's business and minutes of the proceedings of its Members, and any other
books and records that are 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
Company. All withdrawals from any
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such depository shall be made only as authorized by the Company and shall be
made only by check, wire transfer, debit memorandum or other written
instruction.
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 Members; or
(b) entry of a decree of judicial dissolution of the Company under
Section 18-802 of the Act.
9.02 WINDING-UP AND TERMINATION. (a) On the occurrence of a Dissolution
Event, the Class A Member 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 Class A Member shall continue to operate the Company's assets
with the same power and authority it had prior to the Dissolution Event. The
steps to be accomplished by the Class A Member are as follows:
(i) as promptly as possible after dissolution and again after
final winding up, the Class A Member 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 Class A Member 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
4.04) 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 Class A
Member may reasonably determine); and
(iii) all remaining assets of the Company shall be distributed to
the Members as follows:
(A) the Class A Member may sell any or all the Company's
assets, including to Members; and
(B) the Company's assets (including cash) shall be
distributed among the Members in accordance with Section 5.02;
provided, however, that no assets other than cash may be
distributed to Investor without its consent.
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(b) The distribution of cash or other assets to a Member in accordance
with the provisions of this Section 9.02 constitutes a complete return to the
Member of its Capital Contributions and 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 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 OFFSET. Whenever the Company is to pay any sum to any Member, any
Capital Contributions that Member owes the Company may be deducted from that sum
before payment.
10.02 NOTICES. Except as expressly set forth to the contrary in this
Agreement, all notices, requests or consents provided for or permitted to be
given under this Agreement must be 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 other Members. Any notice,
request or consent to the Company must be given to all of the Members. 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.
10.03 ENTIRE AGREEMENT; SUPERSEDING EFFECT. This Agreement constitutes
the entire agreement of the Members relating to the Company and the transactions
contemplated hereby and supersedes all provisions and concepts contained in all
prior contracts or agreements (including the Original Agreement) between the
Members with respect to the Company and the transactions contemplated hereby,
whether oral or written.
10.04 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
31
36
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.
10.05 AMENDMENT OR RESTATEMENT. This Agreement or the Delaware
Certificate may be amended or restated only by a written instrument executed
(or, in the case of the Delaware Certificate, approved) by all of the Members.
10.06 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.
10.07 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.
10.08 FURTHER ASSURANCES. In connection with this Agreement and the
transactions contemplated hereby, each Member shall execute and deliver any
additional documents and instruments and perform any additional acts that may be
necessary or appropriate to effectuate and perform the provisions of this
Agreement and those transactions.
10.09 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.
10.10 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.
10.11 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.
32
37
IN WITNESS WHEREOF, the Members have executed this Agreement as of the
date first set forth above.
CLASS A MEMBER: JOINT ENERGY DEVELOPMENT INVESTMENTS II LIMITED
PARTNERSHIP
By: Enron Capital Management II Limited
Partnership,
its general partner
By: Enron Capital II Corp.,
its general partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Vice President
CLASS B MEMBERS: ENRON CAPITAL & TRADE RESOURCES CORP.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
---------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Vice President
CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------------
Title: Principal Investment Officer
------------------------------------------
33
38
EXHIBIT A
Members
--------------------------------------------------------------------------------
NAME AND ADDRESS
CLASS A MEMBER:
Joint Energy Development Investments II Limited Partnership
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
With Copies To:
Enron Capital & Trade Resources Corp Legal
Department
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
Enron Capital & Trade Resources Corp.
Compliance Department
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇ or (▇▇▇) ▇▇▇-▇▇▇▇
--------------------------------------------------------------------------------
39
--------------------------------------------------------------------------------
Name and Address
CLASS B MEMBERS:
Enron Capital & Trade Resources Corp.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: W. ▇▇▇▇▇ ▇▇▇▇▇
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
With Copies To:
Enron Capital & Trade Resources Corp Legal
Department
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
Enron Capital & Trade Resources Corp.
Compliance Department
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇ or (▇▇▇) ▇▇▇-▇▇▇▇
California Public Employees' Retirement System
Lincoln Plaza
▇▇▇ "▇" ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Senior Investment Officer
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
With copies to:
▇▇▇▇▇, Day, ▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. Brand, Esq.
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
--------------------------------------------------------------------------------
2
40
EXHIBIT B
GENERAL VALUATION PROCEDURE
1. When any provision of the Agreement to which this Exhibit B is attached
requires the value of a Membership Interest to be determined in accordance with
this Exhibit B, the purchaser and the seller first shall negotiate in good faith
in an effort to agree on the price of the Membership Interest to be purchased
and sold. Regardless of the succeeding provisions of this Exhibit B, if the
purchaser and the seller at any time agree on the price of the Membership
Interest, that shall be the price. As used in this Exhibit B, the term "seller"
means the Class B Members or other holders of the applicable Membership
Interest.
2. At any time on or after the 15th day following the notice that a Member
desires to commence good faith negotiations under paragraph 1 above, provided
the purchaser and the seller have not yet agreed on the price, the Person
desiring to purchase or sell (the "first party") may elect to have the price
determined by appraisal under this Exhibit B by notifying the other party, which
notice must state that the first party is electing to have the price determined
by appraisal under this Exhibit B and designating an appraiser. On or before the
15th day following the notice electing to have an appraisal, the other party may
agree to the appraiser nominated by the first party or designate a second
appraiser by notice to the first party. The appraisers so designated shall
attempt to agree on a third appraiser, but if they fail so to agree on or before
the 15th day following the notice designating the second appraiser, either
appraiser may request the American Arbitration Association, New York, New York
to designate the third appraiser, and any appraiser so designated shall act as
the third appraiser. If the party receiving the initial notice of election to
have the price determined by appraisal does not notify the first party of a
second appraiser, then all determinations will be made by the single appraiser
designated by the first party. For any designation of an appraiser to be valid,
the appraiser designated (a) must be recognized investment banking firm or an
appraiser with experience in the operation and valuation of U.S. electric
generation assets, (b) unless the purchaser and the seller consent in writing
otherwise, may not be or be employed by any Member or Affiliate of a Member or
any Person transacting a significant portion of its business with any Member or
Affiliate of a Member, and (b) must agree in writing to abide by the
confidentiality restrictions set forth in Section 3.06 as if that appraiser were
a Member.
3. If any appraiser, once designated, ceases to serve (whether due to
resignation, death, incapacity, or other cause), the Persons designating that
appraiser shall appoint a substitute; provided, however, that if that appraiser
had been functioning as a single appraiser, that designation shall be treated as
an initial designation under the first sentence of paragraph 2 and entitles the
other party to designate a second appraiser and further appraisal to be
conducted by three appraisers in accordance with paragraph 2.
4. Each appraiser shall determine the fair market value of the Company
assets, net of any liabilities with respect thereto and the fair market value of
the Membership Interest based thereon, taking into account (if applicable) the
right of the holder of such Membership Interest to participate in future Company
distributions and based on the following assumptions:
41
(a) no further Capital Contributions (other than for working
capital) will be made;
(b) the Class A Member will not be obligated to make advances
under Section 4.04 or to pay liabilities of the Company;
(c) the Company will remain a going concern; and
(d) such assumptions and predictions about discount rates,
interests rates, costs, prices and other matters as the
purchaser and the seller may establish in writing or as the
appraiser may deem appropriate.
5. The Company and the Class A Member shall allow each appraiser such access
to information about the Company as the appraiser deems necessary.
6. Each appraiser shall complete his calculation of the amount referred to in
paragraph 4 or 5 above, as applicable, as soon as reasonably possible and shall
use all reasonable efforts to do so on or before the 30th day following the
designation of the last appraiser (or if there is one appraiser, the expiration
of the period during which a second appraiser could have been designated). Each
appraiser shall report his calculation of such amount to the purchaser, the
seller, and each other appraiser on a single date agreed to by the appraisers,
but in any event on or before the 45th day following the designation of the last
appraiser (or, if there is one appraiser, the expiration of the period during
which a second appraiser could have been designated).
7. If there is only one appraiser, the price for the Membership Interest
shall be the amount determined by that appraiser in accordance with paragraph 4
or 5, as the case may be. If there are three appraisers, the price for the
Membership Interest shall be the median appraisal. If an appraisal is expressed
as a range, the mid-point of the range shall be deemed the appraisal. The
determination of the appraisers shall be final and binding on the purchaser, the
seller, all Members, and the Company and shall be considered to have been
determined as of the time the report(s) are given under paragraph 6 above.
8. The Company shall pay all costs and expenses of the appraisers.
2
42
EXHIBIT C
CERTIFICATE EVIDENCING MEMBERSHIP INTEREST
IN A LIMITED LIABILITY COMPANY
------ -------------------
NUMBER MEMBERSHIP INTEREST
CLASS A
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ POWER L.L.C. 90% SHARING RATIO
------ -------------------
THIS CERTIFICATE IS A LIMITED LIABILITY COMPANY UNDER THE
TRANSFERABLE LAWS OF THE STATE OF DELAWARE
IN NEW YORK, NEW YORK
THIS CERTIFIES THAT Joint Energy Development Investments II Limited Partnership
is the owner of a Class A Membership Interest representing a 90% Sharing Ratio
(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 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
43
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.
Witness the signature of the duly authorized representative of the Company.
By: Joint Energy Development Investments II Limited
Partnership, its Class A Member
By: Enron Capital Management II Limited Partnership,
General Partner
By: Enron Capital II Corp., General Partner
By:
-------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Vice President
Dated: February __, 1999
2
44
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)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
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.
3
45
CERTIFICATE EVIDENCING MEMBERSHIP INTEREST
IN A LIMITED LIABILITY COMPANY
------ -------------------
NUMBER MEMBERSHIP INTEREST
CLASS B
002 EAST COAST POWER L.L.C. 5% SHARING RATIO
------ -------------------
THIS CERTIFICATE IS A LIMITED LIABILITY COMPANY UNDER THE
TRANSFERABLE LAWS OF THE STATE OF DELAWARE
IN NEW YORK, NEW YORK
THIS CERTIFIES THAT Enron Capital & Trade Resources Corp. is the owner of a
Class B Membership Interest representing a 5% Sharing Ratio (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 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
46
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.
Witness the signature of the duly authorized representative of the Company.
By: Joint Energy Development Investments II Limited
Partnership, its Class A Member
By: Enron Capital Management II Limited Partnership,
General Partner
By: Enron Capital II Corp., General Partner
By:
-------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Vice President
Dated: February __, 1999
2
47
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)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
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.
3
48
CERTIFICATE EVIDENCING MEMBERSHIP INTEREST
IN A LIMITED LIABILITY COMPANY
------ -------------------
NUMBER MEMBERSHIP INTEREST
CLASS B
003 EAST COAST POWER L.L.C. 5% SHARING RATIO
------ -------------------
THIS CERTIFICATE IS A LIMITED LIABILITY COMPANY UNDER THE
TRANSFERABLE LAWS OF THE STATE OF DELAWARE
IN NEW YORK, NEW YORK
THIS CERTIFIES THAT the California Public Employees' Retirement System is the
owner of a Class B Membership Interest representing a 5% Sharing Ratio (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 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
49
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.
Witness the signatures of the duly authorized representative of the Company.
By: Joint Energy Development Investments II Limited
Partnership, its Class A Member
By: Enron Capital Management II Limited Partnership,
General Partner
By: Enron Capital II Corp., General Partner
By:
-------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Vice President
Dated: February __, 1999
2
50
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)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
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.
3
51
Schedule 1
CalPERS Alternative Investment Management Program
List of Fiduciaries
(1/7/99)
The CalPERS Board of Administration (Board) requires firms that do, or seek to
do, business for gain with CalPERS to disclose whether they have made political
contributions to, or were solicited for contributions from, "CalPERS
fiduciaries." As of the date of this list, the following people are covered by
this policy, as it relates to investment transaction decisions:
Current Board Members
---------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇
Current Board Alternates
------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Executive Staff
---------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chief Executive Officer
▇▇▇▇▇ ▇. ▇▇▇▇▇, Deputy Executive Officer
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Assistant Executive Officer
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Assistant Executive Officer
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, General Counsel
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Assistant Executive Officer
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Chief, Public Affairs
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Chief Investment Officer
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Chief Actuary
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Assistant Executive Officer
▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇, Assistant Executive Officer
52
Senior Management
-----------------
▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇ Lung
▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇
2
53
Schedule 2
Reporting Parties
Enron Corp.
-----------
▇▇▇▇▇▇▇ ▇. ▇▇▇ Chairman and Chief Executive Officer
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ President and Chief Operating Officer
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Senior Vice President and Chief Accounting & Information Officer
▇▇▇▇▇▇ ▇. Fastow Senior Vice President and Chief Financial Officer
▇▇▇▇▇▇▇ ▇. ▇▇▇▇ Chairman and Chief Executive Officer - ECT North America
▇▇▇▇▇ ▇. Hananon President and Chief Operating Officer - ECT North America
▇▇▇▇ ▇▇▇▇▇▇▇▇ Vice Chairman - ECT North America
▇▇▇▇▇▇▇ ▇. ▇▇▇▇ Vice Chairman - Enron
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Chairman and Chief Executive Officer - ECT Europe and Enron Europe Ltd.
▇▇▇▇▇▇▇ ▇. Buy Senior Vice President and Chief Risk Officer
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Senior Vice President, Finance and Treasurer
Enron Covered Entities
----------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇ Chairman and Chief Executive Officer - ECT North America
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ President and Chief Operating Officer - ECT North America
▇▇▇▇ ▇▇▇▇▇▇▇▇ Vice Chairman - ECT North America
▇▇▇▇ ▇▇▇▇▇▇▇▇ President - Merchant Finance
▇▇▇▇▇ ▇. Delainey Managing Director - ECT
W. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Managing Director - ECT
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ Vice President - ECT
▇▇▇▇▇ ▇▇▇▇▇▇▇ Vice President - ECT
▇▇▇▇ ▇▇▇▇▇▇▇▇ Vice President - ECT
▇▇▇▇ ▇. ▇▇▇▇▇▇ Vice President - ECT
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ Vice President - ECT
▇▇▇▇ ▇▇▇▇▇▇▇▇ Vice President - ECT
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Vice President - ECT
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ Vice President - ECT
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Vice President - ECT
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Vice President - ECT
▇▇▇▇▇ ▇▇▇▇ Vice President - ECT
▇▇▇▇▇▇ ▇▇▇▇▇ Vice President - ECT
▇▇▇▇▇ ▇▇▇▇▇▇▇ Vice President - ECT
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Vice President - ECT
Jempy ▇▇▇▇▇▇ Vice President - ECT
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Vice President - ECT
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Vice President - ECT
W. ▇▇▇▇▇ ▇▇▇▇▇ Vice President - ECT
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Vice President
54
East Coast Power Officers
-------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ Co-President
▇▇▇▇ ▇. Ain Co-President
▇▇▇▇▇ ▇▇▇▇▇▇ Vice President - ECT
2
55
Schedule 3
Initial Approved Contracts
1. $250,000,000 Credit and Subordination Agreement dated as of February 4,
1999 between the Company and Enron.
2. Stock Purchase Agreement dated as of February 4, 1999 between the
Company and Enron.
3. Subordinated Promissory Note dated February 4, 1999 in the original
principal amount of $250,000,000 from the Company in favor of Enron.
4. Sublease dated as of February 4, 1999 between the Company and Enron.