EXHIBIT 3.2
================================================================================
AMENDED AND RESTATED
OPERATING AGREEMENT
OF
▇▇▇▇▇▇ ENERGY LLC
Dated as of August 3, 2001
================================================================================
TABLE OF CONTENTS
-----------------
ARTICLE I
DEFINED TERMS
1.1 Definitions................................................................... 1
ARTICLE II FORMATION AND PURPOSES
2.1 Formation and Name............................................................ 6
2.2 Registered Agent.............................................................. 7
2.3 Permitted Purpose............................................................. 7
2.4 No Other Purpose.............................................................. 7
2.5 No Member Benefit............................................................. 7
2.6 Limited Liability............................................................. 8
2.7 Term.......................................................................... 8
ARTICLE III
MEMBERS
3.1 General....................................................................... 8
3.2 Member List................................................................... 8
3.3 Consent or Approval of Members................................................ 8
3.4 Admission of Members.......................................................... 9
3.5 Resignation of Member......................................................... 9
ARTICLE IV
MANAGEMENT
4.1 Management by Management Committee............................................ 9
4.2 Powers of Management Committee................................................ 9
4.3 Composition of the Management Committee....................................... 11
4.4 Meetings of the Management Committee.......................................... 11
4.5 Votes of Members of the Management Committee.................................. 12
4.6 Function and Operation of Management Committee................................ 12
4.7 Delegation.................................................................... 12
4.8 General Manager............................................................... 12
4.9 Limitation on Authority of General Manager, Officers and Agents............... 12
4.10 Designation of Managers and General Manager.................................. 13
4.11 Tenure of Managers........................................................... 14
4.12 Tenure of General Manager.................................................... 14
4.13 Compensation................................................................. 14
4.14 Development Plans............................................................ 14
4.15 Operating Budget............................................................. 14
4.16 Plan Reporting and Compliance................................................ 14
i
ARTICLE V
RELATIONSHIPS AMONG MEMBERS AND MANAGERS
5.1 Liabilities of Members and Managers........................................... 15
5.2 Dealings with the Company..................................................... 15
5.3 Other Activities.............................................................. 15
ARTICLE VI
RELATED AGREEMENTS
6.1 Related Agreements............................................................. 16
6.2 Loaned Employees............................................................... 16
ARTICLE VII
ASSIGNMENTS
7.1 General Definitions........................................................... 17
7.2 Right to Make Permitted Assignments........................................... 18
7.3 Other Assignments............................................................. 18
7.4 Notice of Assignments; Effectiveness.......................................... 18
7.5 Status and Obligations of an Assignor......................................... 19
7.6 Rights of an Assignee......................................................... 19
ARTICLE VIII
CAPITAL
8.1 Capital Accounts.............................................................. 19
8.2 Capital Contributions......................................................... 20
8.3 Additional Contributions or Loans............................................. 20
8.4 Return of Capital............................................................. 23
ARTICLE IX
ALLOCATIONS
9.1 General Allocation of Profits and Losses...................................... 23
9.2 Special Tax Allocations....................................................... 23
9.3 Tax Allocations: Code Section 704(c).......................................... 24
9.4 Proration of Allocations...................................................... 25
9.5 Accrual of Items.............................................................. 25
9.6 Separate Items................................................................ 25
9.7 Installment Sales............................................................. 25
9.8 Tax Allocations............................................................... 25
9.9 Capital Account Deficits...................................................... 25
9.10 Special Allocation for Unit #9................................................ 26
ii
ARTICLE X
DISTRIBUTIONS
10.1 Distributions of Cash........................................................ 26
10.2 Distributions Following Dissolution.......................................... 27
10.3 Distributions of Property in Kind............................................ 27
ARTICLE XI
TAX MATTERS
11.1 Tax Classification........................................................... 27
11.2 Tax Matters.................................................................. 28
ARTICLE XII
DISSOLUTION
12.1 Events of Dissolution........................................................ 29
12.2 Winding Up and Termination................................................... 29
ARTICLE XIII
INDEMNIFICATION
13.1 Indemnification.............................................................. 30
ARTICLE XIV
ADMINISTRATIVE PROVISIONS
14.1 Offices...................................................................... 31
14.2 Books and Records............................................................ 31
14.3 Fiscal Year.................................................................. 31
14.4 Accountants/Reports.......................................................... 31
14.5 Notices...................................................................... 31
ARTICLE XV
BONA FIDE OFFERS TO SELL
15.1 Right of First Offer......................................................... 32
15.2 Sale to Third Parties; Admission............................................. 32
15.3 Admission of Offeror......................................................... 32
15.4 Purchase Right for Prohibited Transfer of Control............................ 33
ARTICLE XVI
DISPUTE RESOLUTION
16.1 Resolution of Member Disputes................................................ 34
16.2 Mandatory Buy-Sell Provisions................................................ 35
iii
16.3 Binding Election............................................................. 35
16.4 Closing and Default.......................................................... 35
16.5 Impact to Bona Fide Offers to Sell........................................... 36
ARTICLE XVII
OPTION ON OTHER PHASES
17.1 Option to Develop Additional Phases Prior to July 1, 2003.................... 36
17.2 Cooperation.................................................................. 37
17.3 Other Assurances............................................................. 39
17.4 Miscellaneous................................................................ 39
17.5 Option to Develop Additional Phases After July 1, 2003....................... 40
ARTICLE XVIII
MISCELLANEOUS
18.1 Amendment.................................................................... 42
18.2 Interpretation............................................................... 42
18.3 Invalidity................................................................... 42
18.4 No Third Party Beneficiaries................................................. 42
18.5 Confidentiality.............................................................. 42
18.6 Waiver of Partition.......................................................... 43
18.7 Press Releases............................................................... 43
18.8 Relationship of Parties...................................................... 43
18.9 Counterparts................................................................. 43
18.10 Further Assurances........................................................... 43
18.11 Complete Agreement........................................................... 44
18.12 Governing Law, Jurisdiction.................................................. 44
iv
AMENDED AND RESTATED
OPERATING AGREEMENT
OF
▇▇▇▇▇▇ ENERGY LLC
This Amended and Restated Operating Agreement (the "Agreement") of
▇▇▇▇▇▇ Energy LLC (the "Company") is made as of August 3, 2001, by and between
the undersigned Members (as defined below).
RECITALS
The Company was formed pursuant to a Certificate of Formation dated
May 13, 1998 in connection with an electric power generating business in Elwood,
Illinois. The Company recently acquired by merger the assets and obligations of
two related entities. As a result, the Company's business on the date hereof
consists of nine turbines and may include further development. In anticipation
of the potential benefits to be derived from the Company's business, the Members
have agreed, on the terms and conditions set forth below, to amend and restate
the Company's Operating Agreement dated as of July 23, 1998.
ARTICLE I
DEFINED TERMS
1.1 Definitions. As used in this Agreement, the following terms shall
have the meanings specified below:
"Acceptance Notice" has the meaning set forth in Section 15.4(b).
"Act" means the Delaware Limited Liability Company Act, as amended, and any
successor act.
"Adjusted Capital Account" has the meaning set forth in Section 9.9.
"Additional Phase Development Notice" has the meaning set forth in Section
17.5(a).
"Additional Phases" means such additional simple cycle and/or combined
cycle power generating facilities, and any related assets, as may be developed
from time to time for the purpose of enhancing or expanding the Facility.
"Affiliate" means, with respect to any Member, a Person that, directly, or
indirectly through one or more intermediaries, controls, is controlled by, or is
under common control with such Member, whether through the ownership of voting
securities, by contract or otherwise.
"Agreement" has the meaning set forth in the preamble.
"Applicable Appraised Value" has the meaning set forth in Section 15.4(f).
"Appraised Value" has the meaning set forth in Section 17.5(d).
"Appraiser" has the meaning set forth in Section 15.4(f).
"Approving Member" has the meaning set forth in Section 17.1(a).
"Assignee" has the meaning set forth in Section 7.1(a).
"Assignment" has the meaning set forth in Section 7.1(a).
"Assignor" has the meaning set forth in Section 7.1(a).
"Buy-Out Notice" has the meaning set forth in Section 17.5(c).
"Buy-Sell Notice" has the meaning set forth in Section 16.1(c).
"Capital Account" has the meaning set forth in Section 8.1.
"Capital Defaulting Member" has the meaning set forth in Section 8.3(d).
"Capital Non-Defaulting Member" has the meaning set forth in Section
8.3(d).
"Code" means the Internal Revenue Code of 1986, as amended, and any
successor code. Reference to any particular provision of the Code shall mean
that provision on the date hereof and any successor provision.
"Company Minimum Gain" has the meaning given to partnership minimum gain in
Section 1.704-2(b)(2) and (d) of the Treasury Regulations. A Member's share of
Company Minimum Gain shall be determined in accordance with Section 1.704-
2(g)(1) of the Treasury Regulations, substituting the term "member" for
"partner" therein.
"Confidential Information" has the meaning set forth in Section 18.5.
"Consolidated Net Worth" means, at any time with respect to any entity, the
total owners equity (including retained earnings) of such entity and its
subsidiaries on a consolidated basis, as determined in accordance with generally
accepted accounting principles.
"Current Phases" means, as of any date, the Current Project and any
additional facilities which, as of such date, have been constructed or have been
approved by the Management Committee.
2
"Current Project" means the 1409 MW simple cycle peaking power generating
facility located on the date of this Agreement in Elwood, Illinois, and all
related assets. As of the date of this Agreement, the Current Project includes,
without limitation, nine turbines.
"Default Rate" means a fixed annual interest rate equal to the lower of the
following: (a) the highest rate allowed by law; or (b) the sum of three percent
(3%) plus the then current "prime rate" as published in the Money Rates section
of the Wall Street Journal (or a comparable rate if such rate is no longer
published).
"Developing Member" has the meaning set forth in Section 17.5(c).
"Development Plan" has the meaning set forth in Section 4.14.
"Disclosing Member" has the meaning set forth in Section 18.5.
"Dominion" means Dominion ▇▇▇▇▇▇, Inc., a Delaware corporation and a direct
wholly-owned subsidiary of Dominion Energy. Such term also shall refer to any
successor entity.
"Dominion Energy" means Dominion Energy, Inc., a Virginia corporation,
which is a direct wholly-owned subsidiary of Dominion Resources. Such term also
shall refer to any successor entity.
"Dominion Resources" means Dominion Resources, Inc., a Virginia
corporation. Such term also shall refer to any successor entity.
"Dominion Manager" has the meaning set forth in Section 4.3.
"Eligible Member" has the meaning set forth in Section 15.1(b).
"▇▇▇▇▇▇ ▇▇" means ▇▇▇▇▇▇ Energy II, LLC, a Delaware limited liability
company that merged with and into the Company on the Merger II Date.
"Elwood III" means ▇▇▇▇▇▇ Energy III, LLC, a Delaware limited liability
company that merged with and into the Company on the Merger III Date.
"Event of Dissolution" has the meaning set forth in Section 12.1(a).
"Facility" means the Current Project, together with any Current Phases and
Additional Phases.
"First Appraiser" has the meaning set forth in Section 17.5(c).
"GE" means General Electric Company and any Affiliate.
"General Manager" has the meaning set forth in Section 4.8. References in
this Agreement to the General Manager shall not constitute a reference to a
Manager.
3
"Land Value Amount" has the meaning set forth in Section 17.2(a).
"Loss" means any damage, loss, liability or expense (including, without
limitation, reasonable expenses of investigation and litigation and reasonable
legal, accounting and other professional fees).
"Management Committee" has the meaning set forth in Section 4.1.
"Manager" has the meaning set forth in Section 4.3. References in this
Agreement to a Manager shall not constitute a reference to the General Manager.
"Member List" has the meaning set forth in Section 3.2.
"Member Nonrecourse Debt" has the meaning given to partner nonrecourse
liability as referred to in Sections 1.704-2(b)(4) and 1.704-2(i) of the
Treasury Regulations.
"Member Nonrecourse Debt Minimum Gain" has the meaning given to partner
nonrecourse debt minimum gain in Section 1.704-2(i)(2) and (3) of the Treasury
Regulations.
"Members" has the meaning set forth in Section 3.1.
"Merger II Date" means August 2, 2001.
"Merger III Date" means August 3, 2001.
"New Developer" has the meaning set forth in Section 17.1(b).
"Non-Approving Member" has the meaning set forth in Section 17.1(a).
"Nondeductible Expenditure" has the meaning set forth in Section 9.2(b).
"Non-Developing Member" has the meaning set forth in Section 17.5(c).
"Notice" has the meaning set forth in Section 15.1(a).
"Obtaining Member" has the meaning set forth in Section 18.5.
"Offer" has the meaning set forth in Section 15.1.
"Offer Amount" has the meaning set forth in Section 17.5(c).
"Offer Date" has the meaning set forth in Section 15.1(a).
"Offer Notice" has the meaning set forth in Section 15.4(a).
"Offered Company Interest" has the meaning set forth in Section 15.4.
4
"Offered Interest" has the meaning set forth in Section 15.1(a).
"Offeror" has the meaning set forth in Section 15.1(a).
"Operating Budget" has the meaning set forth in Section 4.15.
"Peoples" means ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, LLC, a Delaware limited liability company
and a direct wholly-owned subsidiary of PERC Power, LLC, a Delaware limited
liability company, which is a direct wholly-owned subsidiary of Peoples Energy
Resources.
"Peoples Energy" means Peoples Energy Corporation, an Illinois corporation.
Such term also shall refer to any successor entity.
"Peoples Energy Resources" means Peoples Energy Resources Corp., an
Illinois corporation and a direct wholly-owned subsidiary of Peoples Energy.
Such term also shall refer to any successor entity.
"Peoples Manager" has the meaning set forth in Section 4.3.
"Percentage Interest" has the meaning set forth in Section 3.2.
"Permitted Assignment" has the meaning set forth in Section 7.1(d).
"Permitted Transfer of Control" has the meaning set forth in Section
7.1(c).
"Person" means an individual, partnership (general or limited),
corporation, limited liability company, association or other form of business
organization (whether or not regarded as a legal entity under applicable law),
trust, estate or any other entity.
"Proceeding" means any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative, arbitrative or
investigative, and whether formal or informal.
"Prohibited Transfer of Control" has the meaning set forth in Section
7.1(a).
"Proposed Phase" has the meaning set forth in Section 17.1.
"Receipt Date" has the meaning set forth in Section 16.2(a).
"Receiving Member" has the meaning set forth in Section 16.2(a).
"Regulatory Allocations" has the meaning set forth in Section 9.2.
"Regulatory Requirements" means the requirement for issuance of an Exempt
Wholesale Generator Certificate from the Federal Energy Regulatory Commission
and any other
5
local, state or federal requirements for the Company to become a licensed
wholesale generator of electricity in any location to which it makes sales of
electricity.
"Related Agreements" has the meaning set forth in Section 6.1.
"Resolution Period" has the meaning set forth in Section 16.1(b).
"Response" has the meaning set forth in Section 16.2(a).
"Second Appraiser" has the meaning set forth in Section 17.5(c).
"Selling Entity" has the meaning set forth in Section 15.4.
"Selling Member" has the meaning set forth in Section 15.1.
"Sending Member" has the meaning set forth in Section 16.1(c).
"Tax Matters Member" has the meaning given to "tax matters partner" in
Section 6231(a)(7) of the Code.
"Tendered Interest" has the meaning set forth in Section 16.1(c).
"Third Appraiser" has the meaning set forth in Section 17.5(c).
"Treasury Regulations" means the regulations promulgated by the United
States Treasury Department under the Code and any successor regulations.
Reference to any particular provision of the Treasury Regulations shall mean
that provision on the date hereof and any successor provision.
"Unit #9" means that certain GE Model 7FA gas-fired combustion turbine
generator and other related equipment purchased for use at the Facility from
▇▇▇▇▇▇ III Holdings, LLC, a Delaware limited liability company.
"Unit #9 Remaining Allocation" means, with respect to any date, the portion
of the total Unit #9 Special Allocation that, as of such date, remains to be
allocated in accordance with this Agreement.
"Unit #9 Special Allocation" has the meaning set forth in Section 9.10.
ARTICLE II
FORMATION AND PURPOSES
2.1 Formation and Name. The Members acknowledge and agree that: (a) the
Company has been formed under, and is governed by, the Act; (b) ▇▇▇▇▇▇ ▇▇ merged
with and into the Company, effective on the Merger II Date; (c) ▇▇▇▇▇▇ III
merged with and into the
6
Company, effective on the Merger III Date; (d) the Company, as the result of
such mergers, is the successor to all rights, properties, assets, duties,
obligations, debts and liabilities of ▇▇▇▇▇▇ ▇▇ and ▇▇▇▇▇▇ III; (e) prior to
such mergers, the indirect subsidiaries of Dominion Resources and Peoples Energy
that were then the members of ▇▇▇▇▇▇ ▇▇ and ▇▇▇▇▇▇ III were merged with and into
Dominion and Peoples, respectively; and (f) prior to the mergers involving the
members of ▇▇▇▇▇▇ III, the members thereof agreed to alter the amounts of
certain capital contributions to be made to ▇▇▇▇▇▇ III in connection with Unit
#9, while preserving the original agreement that, for such purpose, the member
affiliated with Peoples shall contribute $4 million more than the member
affiliated with Dominion. All business of the Company shall be conducted in the
name "▇▇▇▇▇▇ Energy LLC" and such assumed names as may be approved by the
Management Committee.
2.2 Registered Agent. The Company shall maintain a registered office and
agent in accordance with the Act.
2.3 Permitted Purpose. The permitted purpose of the Company is:
(a) to own, acquire, construct, lease, develop, permit, operate,
finance and manage the Facility;
(b) to purchase and sell fuel, electricity and capacity for and from
the Facility, and to obtain such other property and services as are necessary or
appropriate in connection with the construction, ownership and operation of the
Facility, and to enter into contracts and commitments in connection with all of
the foregoing;
(c) to operate and manage the Facility as an ongoing power generation
business;
(d) to engage in any other activities which are permitted by law and
are agreed upon by the Management Committee; and
(e) to engage in any and all activities and to execute all documents
which are incidental, related, necessary or appropriate in connection with any
of the foregoing.
2.4 No Other Purpose. The Company shall have no purpose other than as set
forth in Section 2.3 above.
2.5 No Member Benefit. The credit and the assets of the Company shall be
used solely for the benefit of the Company and shall not be used to further the
personal gain of any
7
Member. No asset of the Company shall be transferred or encumbered for, or in
payment of, any individual obligation of a Member.
2.6 Limited Liability. No Member or Manager shall have any personal
obligation for any liabilities of the Company solely by reason of being a Member
or Manager, unless expressly required by the Act or any other applicable laws.
2.7 Term. The term of the Company shall continue until dissolved as set
forth in Section 12.1 hereof.
ARTICLE III
MEMBERS
3.1 General. The term "Members" means only Dominion, Peoples and any
Persons subsequently admitted as Members in accordance with the terms hereof. A
Member shall cease to be a Member upon the Assignment of such Person's entire
interest in the Company in accordance with the terms hereof.
3.2 Member List. The Company shall maintain at its principal office a
current list (the "Member List") showing the name, address, and percentage
interest in profits and losses with respect to each Member ("Percentage
Interest"). The Member List as of the date of this Agreement is attached as
Schedule A. The Member List and the Percentage Interest of each Member reflected
----------
thereon shall be amended promptly to reflect any changes permitted under this
Agreement, including, without limitation, any Assignments of an interest in the
Company in accordance with Article VII and any additional capital contributed to
the Company pursuant to Article VIII. Notwithstanding the foregoing, the Unit #9
Special Allocation shall not be considered for purposes of determining a
Member's Percentage Interest as set forth in this Section 3.2, and shall not
affect the Percentage Interests of the Members as set forth on Schedule A.
----------
Notwithstanding the immediately preceding sentence, the Unit #9 Special
Allocation shall be reflected in the Capital Account of Peoples pursuant to
Section 8.1.
3.3 Consent or Approval of Members. Except as otherwise provided herein,
the consents or approvals of Members shall be based on their Percentage
Interests at the time the consents or approvals are required. Each Member shall
be given prior written notice, which may be waived in writing, of at least five
(5) business days of any action requiring a consent or approval of Members.
Except as otherwise provided herein, the unanimous approval of the Members shall
be required for every action or consent taken or given by the Members. If the
Members reasonably expect to admit additional Persons to the membership of the
Company, then the Members shall consider amending this Agreement prior to such
admission to address issues
8
raised by multiple membership, including whether approval by the Members should
be based on a majority of the Percentage Interests.
3.4 Admission of Members. The Company shall not directly grant, offer or
issue any membership interest in the Company to any Person and shall not admit
such Person as a Member, whether in addition to the existing Members or in
replacement of a Member or Members, unless each of the following requirements is
satisfied: (a) the Members unanimously grant their prior written consent to the
admission of such Person as a Member; (b) such Person executes a counterpart
signature page to this Agreement, as it may have been amended, and makes all
required capital contributions to the Company; and (c) the Company receives an
opinion from its legal counsel, reasonably satisfactory to the Company in form
and substance, confirming that the proposed transaction (i) would not violate
any applicable laws, including but not limited to state or federal securities
laws, and (ii) would not result in termination of the Company for federal income
or other tax purposes. The preceding requirement of an opinion from legal
counsel may be waived or limited only by the unanimous written consent of the
Members. Each consent by a Member under this Section may be granted or withheld
in the sole and absolute discretion of such Member. The Members acknowledge and
agree that admission of a Member by transfer of a membership interest is
addressed in Section 7.4.
3.5 Resignation of Member. Each Member agrees not to resign or withdraw
from the Company except in connection with an Assignment of the Member's entire
interest in the Company, and only in a manner permitted by this Agreement.
ARTICLE IV
MANAGEMENT
4.1 Management by Management Committee. The management of the business of
the Company shall be vested in a management committee (the "Management
Committee"). The Management Committee shall be empowered to set policy for, and
to make all decisions in respect of, the business and operations of the Company
subject to the limitations set forth in this Agreement. The acts of the
Management Committee shall bind the Members and the Company when such acts are
within the scope of the authority of the Management Committee.
4.2 Powers of Management Committee. The Management Committee shall have
the full, exclusive and complete authority to manage, direct and control the
business and affairs of the Company, and shall be responsible for the
enforcement of the rights of the Company pursuant to this Agreement and the
Related Agreements. Without limiting the generality of the foregoing, the
Management Committee, upon the unanimous vote or consent of the Managers, shall
have the right and power, on behalf of the Company, to do any or all of the
following:
9
(a) negotiate with any Persons (including without limitation, management
personnel, lenders, and representatives of governmental agencies and regulatory
authorities) concerning potential contracts or other agreements, including,
without limitation, those contracts and agreements contemplated by any
Development Plan or Operating Budget, and to continue, complete or terminate
negotiations with respect thereto, and execute and deliver contracts and
agreements resulting therefrom;
(b) open, maintain and close bank accounts and draw checks or other orders
for the payment of money;
(c) invest Company funds on a temporary basis;
(d) make calls for capital contributions in excess of the capital
contributions called for in any Development Plan, or set or revise the timing or
amounts of such capital contributions, or agree to accept and repay loans in
lieu of capital contributions;
(e) receive, sell, lease or otherwise dispose of, and deal in any of the
assets and liabilities of the Company in the ordinary course of business;
(f) sell or dispose of substantially all or part of the assets of the
Company outside of the ordinary course of business;
(g) retain attorneys, accountants, consultants, custodians, contractors
and other agents, and pay them compensation on behalf of the Company;
(h) borrow money and commit the credit of the Company to the extent
necessary, convenient or incidental to the purposes of the Company and grant
liens on and security interests in the Company's property to secure any such
borrowings, on such terms and conditions as the Management Committee deems
appropriate; provided, however, that in connection therewith, the Management
Committee may not commit, nor delegate any authority to commit, the credit of
any Member without such Member's prior written consent;
(i) execute, in furtherance of any purpose of the Company, any deed,
lease, mortgage, ▇▇▇▇ of sale, contract or other instrument purporting to
encumber the real or personal property of the Company;
(j) determine the accounting methods and conventions to be used in
preparation of the Company's financial statements and tax returns and make any
and all elections under any applicable tax laws, subject to the terms of this
Agreement;
10
(k) maintain one or more offices on behalf of the Company;
(l) obtain all necessary permits and undertake or contract with other
Persons to undertake all necessary regulatory compliance activities, including
fulfillment of the Regulatory Requirements, provided, however, such permits and
regulatory applications shall, to the extent possible, be filed and maintained
in the name of the Company;
(m) review and approve Development Plans and Operating Budgets in
accordance with Sections 4.14 through 4.16; and
(n) engage in any other activity and perform and carry out contracts
of any kind which may be necessary or appropriate to conduct the Company's
business and accomplish its purposes, as may be lawfully carried on or performed
by a limited liability company under the laws of the State of Delaware and the
laws of the states and municipalities in which the Company conducts business.
4.3 Composition of the Management Committee. The Management Committee
shall consist of two individuals (each, a "Manager"). Managers may be given such
titles as are unanimously approved by the Members. Dominion shall be entitled to
appoint one Manager to represent Dominion on the Management Committee (a
"Dominion Manager"). Peoples shall be entitled to appoint one Manager to
represent Peoples on the Management Committee (a "Peoples Manager"). In
addition, each Member shall be entitled to appoint one or more alternates for
each Manager it appoints. Each alternate shall have all of the powers of the
regular Manager in the regular Manager's absence, declination or inability to
serve from time to time. Notwithstanding the foregoing, each Dominion Manager
and alternative Dominion Manager shall be an employee of Dominion or an
Affiliate thereof when appointed by Dominion and at all times thereafter while
serving in such position, and each Peoples Manager and alternate Peoples Manager
shall be an employee of Peoples or an Affiliate thereof when appointed by
Peoples and at all times thereafter while serving in such position.
4.4 Meetings of the Management Committee. The Management Committee shall
meet at least quarterly. Such meetings may be held by telephone conference.
Special meetings of the Management Committee may be called from time to time by
either Manager. Except as otherwise provided herein, or as waived in writing by
the Managers, each Manager shall be given prior written notice of at least five
(5) days of any meeting of the Management Committee. Such notice shall contain
the time and place of such meeting, along with an agenda of items to be
discussed and/or voted on at such meeting. A quorum shall consist of both
Managers. In lieu of a meeting, action may be taken by the unanimous written
consent of the Managers. Each written consent shall indicate the date of
execution by each Manager and shall be effective on the date designated in the
consent, or if no effective date is designated, on the latest date of execution.
11
4.5 Votes of Members of the Management Committee. On any matters coming
before the Management Committee, the number of votes that may be cast by each
Manager shall equal the Percentage Interest of the Member represented by such
Manager. Except as otherwise provided herein, the unanimous approval of the
Managers shall be required for the Management Committee to act or to refrain
from acting.
4.6 Function and Operation of Management Committee. The Management
Committee is authorized to adopt such rules as the Managers consider necessary
to govern its operations, provided such rules are not inconsistent with this
Agreement and do not restrict or impede the rights of any Manager or Member as
set forth herein.
4.7 Delegation.
(a) Except as otherwise provided herein, the Management Committee is
authorized to designate a Manager or other duly authorized officers or agents
(i) to make, execute and deliver in the name of and on behalf of the Company,
such certificates and documents as are necessary or appropriate for the conduct
of the Company's business or to effectuate the purposes of this Agreement, and
(ii) to sign on behalf of, and to bind, the Company.
(b) The Management Committee is authorized to designate such officers
and other agents, and may grant such Persons such rights and powers, as the
Management Committee may deem appropriate; provided, however, that such
-------- -------
designations and grants are not inconsistent with or in contravention of the
provisions of this Agreement, including, without limitation, Section 4.9.
Without limiting the generality of the foregoing, the Management Committee
periodically may delegate certain project-related duties to one or more project
managers, who shall oversee such specific duties as are designated in writing by
the Management Committee.
4.8 General Manager. The Management Committee shall appoint a general
manager of the Company (the "General Manager") who shall (a) be an individual
who is not a Manager, (b) be responsible for all daily operations of the Company
if not otherwise inconsistent with this Agreement, (c) attend meetings (except
for executive sessions) of the Management Committee, and (d) undertake such
other duties and serve on such other terms and conditions as authorized by
resolution of, or otherwise in writing by, the Management Committee.
4.9 Limitation on Authority of General Manager, Officers and Agents.
Notwithstanding any provision of this Agreement to the contrary, the Managers
acting individually, the General Manager, officers and other agents of the
Company shall not undertake or consent to any of the following acts on behalf of
the Company without obtaining the prior written consent of the Management
Committee specifically authorizing such act:
12
(a) sell or otherwise dispose of, or contract to sell or otherwise
dispose of, assets of the Company outside the ordinary course of business;
(b) enter into any agreement or undertake any commitment which would
generate revenues for the Company, or cause the Company to incur obligations or
contingent liabilities or make capital expenditures, in excess of $100,000
individually or $250,000 in the aggregate in any fiscal year;
(c) make any assignment for the benefit of creditors of the Company,
or otherwise cause the Company to seek protection under any bankruptcy or
insolvency law;
(d) execute any material amendment to or make any material
modification of any of the Related Agreements;
(e) enter into any contract with any Member, Manager or any Affiliate
of any Member or Manager, or any officer, director, employee or family member of
a Member, Manager or Affiliate thereof;
(f) approve any additional capital contribution required of the
Members;
(g) initiate or settle any claim in excess of $25,000 on behalf of
the Company;
(h) borrow money in the name of the Company or pledge or grant a
security interest in any of the Company's assets;
(i) enter into any agreement of merger, consolidation or liquidation
of or with the Company;
(j) hire any employees; and
(k) enter into any agreements, grant any consents or undertake any
commitments, with respect to any of the foregoing.
4.10 Designation of Managers and General Manager. The Managers, their
alternates, and the General Manager as of date of this Agreement are as set
forth on Schedule B, which shall be amended promptly to reflect any changes
----------
permitted under this Agreement.
13
4.11 Tenure of Managers. Any Member may at any time or from time to time,
remove a Manager or alternate Manager appointed by such Member, with or without
cause.
4.12 Tenure of General Manager. The Management Committee shall remove a
General Manager, with or without cause, promptly upon the written request of any
Member or Members holding fifty percent (50%) or more of the Percentage
Interests.
4.13 Compensation. The Managers shall receive no compensation for serving
on the Management Committee or services rendered in such capacity. All other
officers and agents of the Company (including, without limitation, the General
Manager) shall receive such compensation, if any, as may be approved by the
Management Committee.
4.14 Development Plans. The Management Committee shall cause the
preparation of an annual construction, development, and permitting plan and
budget for the long-term development objectives of the Company, if any (the
"Development Plan"). Each Development Plan, if any, shall reflect each phase of
long-term development and shall include, for each fiscal year, the following
items: (a) projected development activity to be undertaken, including
construction, development, and permitting, (b) projected completion dates for
such activity, and (c) projected capitalization required, including the amount,
source, and timing thereof.
4.15 Operating Budget. For each fiscal year, the Management Committee
shall cause the preparation of an annual operating budget and related operating
plan (the "Operating Budget"). The Operating Budget shall include separate
fiscal year projections for one-year and three-year periods showing the
following: (a) projected capital expenditures of the Company, (b) projected
working capital and reserves to be maintained or funded, (c) projected revenues,
(d) projected operating expenses broken down in reasonable detail satisfactory
to the Managers and the Members, (e) projected compensation changes including
bonuses, (f) projected general and administrative expenses of the Company, and
(g) projected capitalization and indebtedness of the Company and the debt
service payable thereon.
4.16 Plan Reporting and Compliance.
(a) At least ninety (90) days before the end of each fiscal year,
the Management Committee shall cause preparation of, and shall review and
attempt to approve, the Operating Budget and any Development Plan for the next
fiscal year. At its fourth quarter meeting, the Management Committee shall
approve such plans as it considers appropriate, including any amendments
requested by the Managers. The Management Committee is authorized to revise any
Development Plan or the Operating Budget from time to time as it deems
appropriate. In the event the Management Committee is unable to approve or
disapprove an Operating Budget, all line items of the new Operating Budget which
the Management
14
Committee has approved shall go into effect and all line items on which the
Management Committee has been unable to reach a decision shall be deemed
increased by three percent (3%) from the level specified in the last Operating
Budget approved by the Management Committee, with the exception of Capital
Contributions, which shall not automatically increase.
(b) The General Manager shall report to the Management Committee at
least monthly, and such report shall compare the actual results of the Company
to the projections set forth in any Development Plan or the Operating Budget as
last approved by the Management Committee. A copy of such monthly report shall
be delivered to the Management Committee and each Member within fifteen (15)
days after the end of the month in question. At each meeting of the Management
Committee that occurs in any month in which development of any Additional Phase
is ongoing, the Management Committee shall review the Development Plan for the
next month and shall consider for approval those expenditures and other actions
that the General Manager anticipates for such month.
ARTICLE V
RELATIONSHIPS AMONG MEMBERS AND MANAGERS
5.1 Liabilities of Members and Managers. Except for the contractual
obligations of the Members, the Managers and the General Manager under this
Agreement, the Related Agreements, or otherwise, no Member, Manager or General
Manager shall have any liability to, or any obligation for the debts of, the
Company arising out of a transaction, occurrence or course of conduct unless
such Member, Manager or General Manager engaged in willful misconduct, gross
negligence or a knowing violation of criminal law. The obligations of the
Members, the Managers and the General Manager under this Agreement and the
Related Agreements are not intended to confer, and shall not confer, any rights
or remedies upon any Person who is not a party hereto or thereto.
5.2 Dealings with the Company. The Management Committee is authorized to
engage the services of, or to cause the Company to transact business with, any
of the following: (a) any Member or Manager, (b) any Affiliate of a Member or
Manager (iii) any Person having a financial interest in a Member or (iv) any
Person in which a Member or Manager has a financial interest. In all cases, the
provisions of any contracts between the Company and any of the foregoing shall
not be less favorable to the Company than generally would be obtainable in an
arms length transaction from unrelated and unaffiliated Persons, unless the
provisions that are less favorable to the Company are fully disclosed in advance
to the Management Committee.
5.3 Other Activities. A Member or its Affiliate shall be entitled to
engage in, or to possess an interest, in any types and categories of business
ventures, independently or with others, and whether similar or dissimilar to the
business of the Company, even if competitive with the business of the Company,
and the pursuit of such other business ventures shall not be
15
deemed wrongful or improper. Notwithstanding the foregoing, no Member or
Affiliate shall use Confidential Information in connection with such other
business ventures. The Company and the other Members shall have no rights by
virtue of this Agreement in or to such other business ventures or the income or
profits derived therefrom. No Member or Affiliate thereof shall be obligated (a)
to provide notice to the Company or other Members of other business ventures, or
(b) to present the Company or other Members with the opportunity to invest or
participate in such other business ventures, even if such other business
ventures are similar to or competitive with the business of the Company.
ARTICLE VI
RELATED AGREEMENTS
6.1 Related Agreements. In connection with the Facility and the Company's
business, the Company shall be entitled to enter into each of the following
agreements (collectively, the "Related Agreements") as directed by the
Management Committee.
(a) An Amended and Restated Operation and Maintenance Agreement,
pursuant to which an Affiliate of Dominion or an entity jointly owned by
Dominion and Peoples, or Affiliates thereof as the Management Committee
determines, shall operate and maintain the Facility;
(b) An Engineering, Procurement and Construction Agreement relating
to the construction of the Facility;
(c) Any agreement necessary to lease, purchase or accept the transfer
of the site for the Facility;
(d) Equity contribution agreements pursuant to which Peoples Energy
and Dominion Energy commit to contribute required equity to the Members; and
(e) Such other agreements as the Management Committee may approve.
6.2 Loaned Employees. Officers and employees performing services for the
Company may be loaned to the Company by the Members or their Affiliates (in
which case they shall remain officers and employees of the loaning Member or
Affiliate). In the case of loaned officers or employees, the Company shall
reimburse the loaning Member (or its Affiliate) for the services of loaned
officers and employees pursuant to the terms and conditions set forth in
separate agreements to be entered into between the loaning Member and the
Company.
16
ARTICLE VII
ASSIGNMENTS
7.1 General Definitions.
(a) Except as set forth below, the term "Assignment" means a sale,
gift, exchange, pledge, encumbrance or other transfer (including, without
limitation, transfers upon dissolution, reorganization or merger), whether
voluntary or involuntary, of:
(i) any interest in the Company; or
(ii) any interest in a Member (or any interest in a Person
owning, directly or indirectly, through one or more intermediaries, an
interest in a Member) such that fifty percent (50%) or more of the
total voting interest in the Member, or fifty percent (50%) or more of
the capital or profits of such Member, shall thereby have been
transferred directly or indirectly to Persons not owning such voting
or economic interest as of the date of this Agreement (a "Prohibited
Transfer of Control"). To the extent that a Member, or an owner
thereof, is a disregarded entity for tax purposes, the preceding
clause shall apply with equal force and effect to the first Person in
the chain of ownership that is not disregarded.
Without limiting the scope of the foregoing, a pledge or encumbrance
of any interest in a Member (regardless of whether such pledge or encumbrance is
of less than fifty percent (50%) of the total voting interest in such Member)
shall constitute an "Assignment" for purposes of this Agreement. The term
"Assignor" means any Person who makes an Assignment. The term "Assignee" means
the Person or Persons, other than a Member, to which an Assignment is made. An
intended Assignee of an interest in the Company may become a Member only in the
manner provided in this Agreement.
(b) Notwithstanding the foregoing, none of the following shall
constitute an "Assignment" for purposes of this Agreement: (i) a pledge or
encumbrance of all or any portion of the stock of Dominion Resources, Dominion
Energy, Peoples Energy or Peoples Energy Resources; (ii) a sale or other
transfer of all or any portion of the stock of Dominion Resources or Peoples
Energy; or (iii) a "Permitted Transfer of Control" (as defined below).
(c) The term "Permitted Transfer of Control" means:
17
(i) a sale or other transfer of the capital stock of Dominion
Energy to (A) the public in connection with a registered public
offering of such capital stock pursuant to which such capital stock is
listed on a recognized national exchange or on NASDAQ; (B) the then
shareholders of Dominion Resources pursuant to a distribution or other
direct or indirect transfer of the capital stock of Dominion Energy;
or (C) a Person having Consolidated Net Worth, determined immediately
prior to such transfer in accordance with generally accepted
accounting principles, of not less than forty percent (40%) of the
Consolidated Net Worth of the assets of Dominion Resources determined
as of the same date; and
(ii) a sale or other transfer of the capital stock of Peoples
Energy Resources to (A) the public in connection with a registered
public offering of such capital stock pursuant to which such capital
stock is listed on a recognized national exchange or on NASDAQ; (B)
the then shareholders of Peoples Energy pursuant to a distribution or
other direct or indirect transfer of the capital stock of Peoples
Energy Resources; or (C) a Person having Consolidated Net Worth,
determined immediately prior to such transfer in accordance with
generally accepted accounting principles, of not less than forty
percent (40%) of the Consolidated Net Worth of Peoples Energy
determined as of the same date.
(d) The term "Permitted Assignment" means (i) an Assignment of an
interest in the Company to a Member or its Affiliate at least fifty-one percent
(51%) of which is wholly-owned, directly or indirectly, by Dominion Resources or
Dominion Energy with respect to Dominion, or by Peoples Energy or Peoples Energy
Resources with respect to Peoples; provided, however, that such assignment does
-------- -------
not result in a Prohibited Transfer of Control or a violation of any agreement
or obligation under this Agreement or otherwise relating to the ownership or
operation of the Company or the Facility, (ii) a Permitted Transfer of Control;
or (iii) a transfer to an Offeror pursuant to Section 15.4(d).
7.2 Right to Make Permitted Assignments. A Member shall be entitled
to make a Permitted Assignment at any time provided that any of its obligations
relating to the Company or the financing thereof shall remain in full force and
effect and that all other Members have received prior written notice of any such
Assignment.
7.3 Other Assignments. Except for Permitted Assignments or as
otherwise provided herein, no Assignment may be made by a Member without the
prior written consent of each other Member. Such consent may be granted or
withheld by a Member in its sole and absolute discretion.
7.4 Notice of Assignments; Effectiveness. The Company shall not be
required to recognize any Assignment of an interest in the Company until (a) the
Assignee executes a counterpart signature page to this Agreement, as it may have
been amended, and tenders full
18
payment of applicable purchase price for such interest in such manner as may be
approved by the Members in their reasonable discretion; and (b) the Company
receives an opinion from its legal counsel, reasonably satisfactory to the
Company in form and substance, confirming that the proposed transaction (i)
would not violate any applicable laws, including but not limited to state or
federal securities laws, and (ii) would not result in a termination of the
Company for federal income or other tax purposes. The preceding requirement of
an opinion from legal counsel may be waived or limited only by the unanimous
written consent of the Members, which may be granted or withheld in the sole and
absolute discretion thereof. A purported Assignment in violation of this
Agreement shall be void and unenforceable against the Company.
7.5 Status and Obligations of an Assignor. A Member that makes an
Assignment of an interest in the Company shall thereafter be considered a Member
only to the extent of its remaining interest in the Company. Notwithstanding the
foregoing, if the Assignment results in a Prohibited Transfer of Control, the
Member as to which the Assignment occurs shall (a) lose all of its rights as a
Member, including, without limitation, the right to vote; and (b) retain all of
its obligations as a Member until each other Member grants its consent to relief
from such obligations. Such consent may be granted or withheld by a Member in
its sole and absolute discretion.
7.6 Rights of an Assignee. An Assignment of an interest in the Company
entitles the Assignee, to the extent assigned, to the Capital Account and
Percentage Interest of the Assignor. An Assignment does not entitle the Assignee
to participate in the management and affairs of the Company or to become a
Member with respect to the interest assigned until full compliance with Section
7.4.
ARTICLE VIII
CAPITAL
8.1 Capital Accounts. The Company shall maintain a capital account for
each Member as set forth in this Article VIII (a "Capital Account").
(a) The value of each Capital Account shall equal (i) the sum of the
cash contributions to the account, the fair market value of contributions of
property other than cash to the account on the date of contribution (net of
liabilities secured by such property that the Company is considered to assume or
take subject to under Code Section 752), and the share of the net profits of the
Company allocated to the account, less (ii) cash and the fair market value of
----
property distributions made to the owner of the account on the date of
distribution (net of liabilities secured by such distributed property that such
person is considered to assume or take subject to under Code Section 752), the
share of the net losses of the Company allocated to the account (together with
the amounts allocated or to be allocated pursuant to Section 9.10 hereof), and
the share of expenditures of the Company described in Code Section 705(a)(2)(b)
allocated
19
to the account. Capital Accounts shall be maintained in accordance with the
applicable provisions of the Code, shall not bear interest and, except as
otherwise provided in Section 8.1(c) hereof, shall be adjusted thereafter in
accordance with the requirements of Treasury Regulation Sections 1.704-1, 1.704-
2, 1.704-3, and 1.704-4, including, without limitation, the revaluation
provisions of Treasury Regulation Sections 1.704-1(b)(2)(iv)(e)-(g).
(b) This Article VIII and the other provisions of this Agreement
relating to the maintenance of Capital Accounts are intended to comply with the
requirements of Section 1.704-1(b) of the Treasury Regulations and shall be
interpreted and applied in a manner consistent therewith. If the Management
Committee determines that it is prudent to modify the manner in which the
Capital Accounts are computed to comply with such Treasury Regulations, the
Management Committee may make such modifications; provided, however, that the
-------- -------
Management Committee determines in good faith that such modifications are not
likely to have a material effect on the amounts distributable to any Member upon
dissolution of the Company.
(c) The Members acknowledge and agree that the Capital Account of a
Member as of the date of this Agreement shall equal (i) the aggregate amount of
such Member's "capital account" in the Company and in ▇▇▇▇▇▇ ▇▇ as of the Merger
II Date (as such amounts were determined under the operating agreements then in
effect with respect to each such entity); increased by (ii) such
------------
Member's "capital account" in ▇▇▇▇▇▇ III as of the Merger III Date (as such
amount was determined under the operating agreement then in effect with respect
to such entity), all without adjustment for any increase or decrease in the
valuation of property (including intangible assets such as goodwill) of the
Company, ▇▇▇▇▇▇ ▇▇ or ▇▇▇▇▇▇ III that may have occurred prior to or on the
Merger II Date or the Merger III Date, respectively, and all in accordance with
Treasury Regulation Section 1.704-1(b)(2)(iv)(f).
8.2 Capital Contributions. The Members shall not be required to make any
additional capital contributions, except as required by Section 8.3 hereof.
8.3 Additional Contributions or Loans. Additional capital may be required
of each Member only in accordance with this Section 8.3.
(a) Each Member hereby agrees to contribute its Percentage Interest
of all additional payments due from the Company: (i) to GE under any contract or
purchase order for turbine generator sets, to be contributed prior to the date
such payments are due or as directed by the Management Committee in connection
therewith, (ii) to GE (or such other entity with which the Company may contract)
pursuant to any engineering, procurement and construction contract which may be
entered into by the Company with respect to the Facility, to be contributed
prior to the date such payments are due or as directed by the Management
Committee in connection therewith, and (iii) for such other amounts as may be
included in any approved Development Plan. To the extent the foregoing payments
are made directly from a Member to GE (or another entity with which the Company
may contract), such payments shall be deemed to have been
20
made to the Company pursuant to this Section 8.3, and shall constitute capital
contributions for the purposes hereof. The Management Committee is authorized to
obtain debt financing for all or part of any Current Phases or Additional
Phases.
(b) Each Member also hereby agrees to contribute such additional
capital under Section 8.3(a) as may be determined by the Management Committee.
Such contributions shall be proportionate to each Member's Percentage Interest.
(c) In lieu of a capital contribution, with the consent of the
Management Committee, a Member may provide capital to the Company in the form of
a loan on commercially reasonable terms and conditions. Capital provided in the
form of a loan shall not be deemed a capital contribution hereunder.
(d) In the event that a Member (the "Capital Defaulting Member")
fails to make a required additional capital contribution when due (including
without limitation a capital contribution required by any Development Plan or
any loan in lieu of a capital contribution as determined by the Management
Committee), the Management Committee or the non-defaulting Member (the "Capital
Non-Defaulting Member") shall give written notice of default to the Capital
Defaulting Member. If the Capital Defaulting Member does not pay all amounts due
within ten (10) days after such notice is given, the Capital Non-Defaulting
Member shall be entitled to take, or to cause the Company to take, any of the
following actions (or any combination of such actions, to the extent not
inconsistent or mutually exclusive):
(i) The Company may apply any distributions otherwise payable to
the Capital Defaulting Member under this Agreement, the Related Agreements
or otherwise, toward the payment of the defaulted capital contribution,
plus interest thereon at the Default Rate from the date when originally
due.
(ii) The Capital Non-Defaulting Member may loan to the Company
the amount of the defaulted capital contribution, in which event interest
shall accrue at the Default Rate from the date of such loan. Repayment of
the loan to the Capital Non-Defaulting Member shall have priority over any
other distributions to be made under this Agreement or any Related
Agreements, and the amount of interest paid by the Company for any such
loan shall be deducted from the share of profits to be paid to the Capital
Defaulting Member. Upon the making of any such loan to the Company, the
Company shall be deemed to have made a simultaneous loan in the same amount
and at the same interest rate to the Capital Defaulting Member, and such
simultaneous loan shall be due and payable upon demand of the Management
Committee acting in accordance with Section 8.3(d)(v).
21
(iii) The Capital Non-Defaulting Member may contribute to the
Company the amount of any defaulted capital contribution, in which case the
respective Percentage Interests of the Capital Defaulting Member and the
Capital Non-Defaulting Member shall be adjusted proportionately, provided
such reduction and increase do not violate any law or a regulatory
requirement.
(iv) Upon notice (a "Purchase Notice") to the Capital
Defaulting Member, which notice may be given at any time before the Capital
Defaulting Member pays such defaulted capital contribution, or if the
Capital Non-Defaulting Member has loaned the defaulted capital contribution
to the Company in accordance with this Section 8.3(d), before such loan has
been repaid by the Capital Defaulting Member, the Capital Non-Defaulting
Member may purchase the entire interest of the Capital Defaulting Member in
the Company. The purchase price shall equal seventy-five percent (75%) of
the Capital Account balance of the Capital Defaulting Member as of the date
of the Purchase Notice and shall be paid in cash. Closing on any such
purchase shall take place on the date specified by the Capital Non-
Defaulting Member, but shall not occur sooner than fifteen (15) days nor
later than thirty (30) days after the date of the Purchase Notice.
(v) Provided that the Capital Non-Defaulting Member has not
exercised the remedies set forth in Sections 8.3(d)(iii) or (iv) above, or,
if it has exercised the remedy set forth in Section 8.3(d)(i) above,
provided that such distributions have not fully paid the defaulted capital
contribution and interest thereon, the Company may ▇▇▇ to collect the
defaulted capital contribution, together with interest thereon at the
Default Rate from the date when originally due, plus all collection costs
(including reasonable legal fees and expenses).
(e) Except as expressly provided herein, the foregoing remedies shall be
cumulative and shall not be exclusive. No course of dealing between the Capital
Non-Defaulting Member and the Capital Defaulting Member and no delay in
exercising any right, power or remedy conferred in this Section, whether now or
hereafter existing at law or in equity, shall operate as a waiver or otherwise
prejudice any such right, power, or remedy. In addition to the remedies set
forth above, until such time as (i) the Capital Defaulting Member has paid in
full any loan made by the other Member to the Company pursuant to Section
8.3(d)(ii), (ii) the amount of such defaulted capital contribution and interest
due thereon has been paid in full by the application of distributions pursuant
to Section 8.3(d)(i), or (iii) the Capital Non-Defaulting Member completes the
exercise of its rights under Sections 8.3(d)(iii), (iv) or (v), the Capital
Defaulting Member, and the Manager appointed by the Capital Defaulting Member to
the Management Committee, shall have no right to vote on any matters as to which
such Member or Manager would otherwise be entitled to vote, and any actions
requiring the consent, approval or direction of the Members or the Management
Committee may be taken by the Capital Non-Defaulting Member without the consent,
approval or vote of the Capital Defaulting Member or the Manager appointed by
it.
22
8.4 Return of Capital. No Member shall be entitled to require the return
of all or any part of such Member's capital contributions or Capital Account
balance prior to dissolution of the Company.
ARTICLE IX
ALLOCATIONS
9.1 General Allocation of Profits and Losses. Except as otherwise provided
in this Agreement, the profits and losses of the Company shall be allocated to
or deducted from, the Capital Accounts of the Members, annually or more
frequently, in accordance with their Percentage Interests.
9.2 Special Tax Allocations. The allocations under this Agreement shall
comply with the requirements of Sections 703 and 704(b) of the Code and the
Treasury Regulations promulgated thereunder, including Treasury Regulation
Sections 1.704-1 and 1.704-2 (the "Regulatory Allocations"), pursuant to which
the special tax allocations of this Section 9.2 shall be made prior to the
allocations of Section 9.1, and in the following order:
(a) If a net decrease occurs in Company Minimum Gain during any
Company taxable year, except as provided in Section 1.704-2(f) of the Treasury
Regulations, each Member shall be allocated items of income and gain for such
taxable year (and, if necessary, for subsequent taxable years) to the extent, in
the manner, and at the time required under Section 1.704-2(g) of the Treasury
Regulations. This Section 9.2(a) is intended to comply with the minimum gain
charge back requirements under Section 1.704-2(f) of the Treasury Regulations
and shall be interpreted consistently with such intent.
(b) Any item of the Company's loss, deduction, or nondeductible
expenditure under Section 705(a)(2)(B) of the Code ("Nondeductible Expenditure")
that is attributable to a Member Nonrecourse Debt pursuant to Section 1.704-
2(i)(2) of the Treasury Regulations shall be allocated to the Member or Members
who bear the economic risk of loss for such debt in the time and manner
described in Section 1.704-(2)(i) of the Treasury Regulations. If a net decrease
occurs in Member Nonrecourse Debt Minimum Gain pursuant to Section 1.704-2(i)(4)
of the Treasury Regulations, then any Member with a share in such minimum gain
shall be allocated items of Company income and gain for such taxable year (and,
if necessary, for subsequent taxable years) to the extent required under Section
1.704-2(i) of the Treasury Regulations. The provisions of this Section 9.2(b)
are intended to comply with requirements in Section 1.704-2(i) of the Treasury
Regulations and shall be interpreted consistently with such intent.
23
(c) If the Company makes an election under Section 754 of the Code,
to the extent an adjustment to the adjusted tax basis of any Company asset
pursuant to Code Sections 734(b) or 743(b) is required pursuant to Section
1.704-1(b)(2)(iv)(m) of the Treasury Regulations to be taken into account in
determining Capital Accounts, the amount of such adjustment to the Capital
Accounts shall be treated as an item of gain (if the adjustment increases basis)
or loss (if the adjustment decreases basis). Such gain or loss shall be
specially allocated to the Members in a manner consistent with the manner in
which Capital Accounts are required to be adjusted pursuant to such section of
the Treasury Regulations.
(d) In the event any Member unexpectedly receives any adjustments,
allocations, or distributions described in Section 1.704-1(b)(2)(ii)(d)(4), (5),
or (6) of the Treasury Regulations, items of the Company's income and gain shall
be specially allocated to each such Member in an amount and manner sufficient to
eliminate, to the extent required by the Treasury Regulations, the deficit in
such Member's Adjusted Capital Account (as defined hereafter) as quickly as
possible, provided that an allocation pursuant to this Section 9.2(d) shall be
made if and only to the extent that the Member would have a deficit in his
Adjusted Capital Account after all other allocations provided for in this
Section 9.2 have been tentatively made as if this Section 9.2(d) were not in the
Agreement. This Section 9.2(d) is intended to comply with the qualified income
offset provisions of Section 1.704-1(b)(2)(ii)(d) and shall be interpreted
consistently with that intent.
(e) As noted above, the allocations set forth in this Agreement are
intended to comply with certain requirements of the Treasury Regulations,
including Sections 1.704-1 and 1.704-2. These Regulatory Allocations may not be
consistent with the manner in which the Members intend to divide the Company's
distributions. Accordingly, the Management Committee is authorized to cause the
Company to allocate future profits, losses, and other items among the Members so
as to prevent the Regulatory Allocations from distorting the manner in which
Company distributions shall be divided between the Members pursuant to this
Agreement to the extent permitted under the Treasury Regulations.
9.3 Tax Allocations: Code Section 704(c).
(a) Income, gain, loss, and deduction with respect to any property
contributed to the capital of the Company shall, solely for tax purposes, be
allocated between the Members so as to take account of any variation between the
adjusted basis of such property to the Company for federal income tax purposes
and its net fair market value in accordance with Section 1.704-1(b)(2)(iv) of
the Treasury Regulations.
(b) If the value of any Company asset is adjusted pursuant to Section
8.1, subsequent allocations of income, gain, loss, and deduction with respect to
such asset shall take account of any variation between the adjusted tax basis of
such asset for federal income tax purposes and its adjusted value in the same
manner as under Section 704(c) of the Code and the
24
Treasury Regulations under Sections 704(c) and 704(b) of the Code. The
Management Committee shall make any elections or other decisions relating to
such allocations in any manner that reasonably reflects the purpose and
intention of this Agreement.
(c) Allocations pursuant to this Section 9.3 are solely for purposes
of federal, state, and local taxes and shall not affect, or in any way be taken
into account in computing, any Member's Capital Account or its share of profits,
losses, or distributions pursuant to any provision of this Agreement.
9.4 Proration of Allocations. If additional Members are admitted to the
Company on different dates during any fiscal year or other period, the profits
or losses allocated to the Members for such fiscal year or other period shall be
allocated during such fiscal year in accordance with Section 706 of the Code
using a proration method unless the Management Committee determines another
permitted convention would give materially more equitable results.
9.5 Accrual of Items. For purposes of determining the profits, losses, or
any other items allocable to any period, profits, losses and any other items
shall be determined on a daily, monthly, or other basis, as the Management
Committee shall determine using any permissible method under Section 706 of the
Code and Treasury Regulations.
9.6 Separate Items. Except as otherwise provided in this Agreement, all
items of Company income, gain, loss, deduction, and any other allocations not
otherwise provided for shall be divided between the Members in the same
proportions as they share profits or losses, as the case may be, for the fiscal
year or other period.
9.7 Installment Sales. If the Company sells any asset for an installment
obligation (other than a de minimis obligation) and the Management Committee
-- -------
determines to retain and collect the obligation in the Company, the Company
shall account for obligations as if it distributed out the present value of the
obligation as determined by the Management Committee. Any interest on such
obligation shall be allocated to the Members in accordance with their share
received in the deemed distribution.
9.8 Tax Allocations. Except as otherwise set forth in this Agreement or
required by the Code or the Treasury Regulations, tax items shall be allocated
in the same manner as book items.
9.9 Capital Account Deficits. No net losses shall not be allocated to a
Member to the extent that such allocation would cause a deficit in such Member's
Adjusted Capital Account. For purposes of this Agreement, the term "Adjusted
Capital Account" means the
25
Capital Account of a Member, established and maintained as required by Article
VIII of this Agreement, (i) increased for the amount a Member is obligated to
restore to the Company or is deemed obligated to restore pursuant to Section
1.704-1(b)(2)(ii)(c) of the Treasury Regulations, (ii) increased pursuant to the
penultimate sentences in Sections 1.704-2(g)(1) and 1.704-2(i)(5) of the
Treasury Regulations, and (iii) reduced for the adjustments required under
Sections 1.704-1(b)(2)(ii)(d)(4), (5), and (6) of the Treasury Regulations
relating to reasonably expected adjustments, allocations, and distributions.
9.10 Special Allocation for Unit #9. Notwithstanding anything contained
herein to the contrary, with respect to Unit #9, Peoples shall receive a special
allocation of depreciation expense and deduction, for both book and tax
purposes, in the total amount of $4,000,000, as reduced for book and tax
depreciation taken prior to the Merger III Date pursuant to the Amended and
Restated Operating Agreement of ▇▇▇▇▇▇ III, as further amended and then in
effect (the "Unit #9 Special Allocation"). The amount of the Unit #9 Special
Allocation shall be calculated based on a recovery of $4,000,000 over the
depreciable life of Unit #9 in accordance with the book and tax methods of
depreciation that apply to Unit #9, including for this purpose the depreciation
claimed for book and tax purposes with respect to Unit #9 by ▇▇▇▇▇▇ III prior to
the Merger III Date. Immediately prior to any sale or other disposition of Unit
#9 by the Company, or any assignment by Peoples of its interest in the Company
(other than an assignment described in Section 7.1(d)(i) or (ii) above), items
of expense or deduction shall be specially allocated to Peoples in the amount of
the Unit #9 Remaining Allocation, which shall occur without any requirement of
notice or other action by the Members or the Company. To the extent possible,
the Unit #9 Remaining Allocation shall reflect, for both book and tax purposes,
an allocation of depreciation expense and deduction attributable to Unit #9. If
the Unit #9 Remaining Allocation exceeds the remaining depreciation expense and
deduction attributable to Unit #9 at the time of such sale or disposition, the
excess portion of the Unit #9 Remaining Allocation shall reflect other items of
ordinary expense and deduction of the Company. The Members shall take all steps
necessary to ensure that all such special allocations of depreciation expense
are deemed to have "substantial economic effect" for purposes of Section 704 of
the Code, including the maintenance of Capital Accounts in accordance with all
special allocations. Notwithstanding the foregoing special allocations, all
other capital costs associated with the installation, replacement, modification
or otherwise, with respect to Unit #9, shall be depreciated in accordance with
each Member's Percentage Interest.
ARTICLE X
DISTRIBUTIONS
10.1 Distributions of Cash. Cash which the Management Committee determines
is not necessary for the operations or reserves of the Company may be
distributed to the Members quarterly or more frequently in accordance with their
Percentage Interests. The Management Committee shall base its determination of
cash to be distributed upon the Company's net cash available from operations
during such quarter and previous quarters not yet distributed, less cash
reasonably deemed necessary by the Management Committee to meet the Company's
26
requirements for debt service, capital expenditures and operating costs for the
succeeding three months (or longer if deemed necessary based on reasonable cash
flow projections), plus a reasonable reserve for future contingencies. The
Members' current intention is that cash distributions shall be made by the
Company within thirty (30) days after the end of each fiscal quarter, from net
cash available for such purpose, after deduction of the amounts noted in the
previous sentence.
10.2 Distributions Following Dissolution. Following the dissolution of the
Company and the winding up of its affairs, the assets shall be distributed:
(a) First, to satisfy debts and obligations of the Company,
including those owed to Members or their Affiliates;
(b) Second, to fund any reserves deemed appropriate by the
Management Committee; and
(c) Third, between the Members in proportion to the amounts in their
Capital Accounts, after reduction for the Unit #9 Remaining Allocation
attributable to such Member, if any. The profits and losses incurred in the
winding up of the affairs of the Company (including profits and losses incurred
in connection with the disposition of Company assets in liquidation) shall be
credited or charged to the Members' Capital Accounts in accordance with Articles
VIII and IX hereof.
10.3 Distributions of Property in Kind. The Management Committee may
determine with the unanimous consent of the Members whether and to whom
properties should be distributed in kind rather than liquidated. Any property
distributed in kind shall be treated as though the property were sold for its
fair market value at the time of distribution and the cash proceeds were
distributed. The difference between the fair market value of property
distributed in kind and its previous recorded value shall be treated as profits
or losses on sale of the property and shall be credited or charged to the
Members' Capital Accounts in accordance with their interests in such profits or
losses pursuant to Article IX.
ARTICLE XI
TAX MATTERS
11.1 Tax Classification. The Members intend that the Company shall
continue to be classified as a partnership for United States federal income tax
purposes and this Agreement shall be interpreted accordingly.
27
11.2 Tax Matters. The following provisions specify certain tax matters
applicable to the Company.
(a) The tax year of the Company shall be a fiscal year beginning on
October 1 and ending on September 30, unless the Code requires otherwise or
unless the Company elects, to the extent permitted under the Code, to have a
different tax year.
(b) The Management Committee shall designate a Tax Matters Member as
required by the Code. Unless otherwise changed by the unanimous agreement of the
Management Committee, the Tax Matters Member shall be Dominion. The Tax Matters
Member shall make an appropriate election under Code Section 754 and shall have
the authority to make, refrain from making, or revoke any other tax elections
under the Code or comparable provisions under state or local law.
(c) The General Manager shall prepare, or cause to be prepared, a
federal and any required state and local income tax returns for the Company for
each tax year of the Company Within ninety (90) days after the end of each year
of the Company, the General Manager shall send to each person who was a Member
at any time during such year such tax information, including, without
limitation, a federal tax Schedule K-1, as shall be reasonably necessary for the
preparation by such person of its federal income tax return.
(d) In the event of an audit of a Company income tax return, the
General Manager shall, at the expense of the Company, participate in, retain
accountants in accordance with Section 14.4 and other professionals to
participate in, the audit, and may contest, with the consent of the Management
Committee, assertions by the auditing agent that may be adverse to the Members
and the Company.
(e) The Members acknowledge and agree that, with respect to the
mergers described in Section 2.1 above and in accordance with Section
708(b)(2)(A) of the Code and Section 1.708-1(c)(1) of the Treasury Regulations,
▇▇▇▇▇▇ ▇▇ and ▇▇▇▇▇▇ III were terminated for U.S. federal income tax purposes on
the Merger II Date and the Merger III Date, respectively.
28
ARTICLE XII
DISSOLUTION
12.1 Events of Dissolution.
(a) The Company shall be dissolved, and its assets distributed
according to Section 10.2, within one hundred twenty (120) days after the first
to occur of the following events (each, an "Event of Dissolution"):
(i) the unanimous consent of the Members;
(ii) the sale or other disposition of substantially all of the
non-cash assets of the Company outside of the ordinary course of
business;
(iii) the liquidation or dissolution of a Member, unless the
remaining Member, within ninety (90) days of such event, elects to
continue the Company and a new Member is admitted, in which event the
business of the Company shall be continued in accordance with this
Agreement;
(iv) any event in which a Member (1) institutes, or consents
to the institution of, proceedings to be adjudicated bankrupt or
insolvent; (2) has instituted against it, without its consent,
proceedings to be adjudicated bankrupt or insolvent and such
proceedings are not dismissed within sixty (60) calendar days, (3)
consents to the appointment of any receiver, liquidator, trustee or
similar official with respect to itself or any substantial part of its
property, (4) makes an assignment for the benefit of its creditors, or
(5) admits in writing its general inability to pay its debts as they
become due; or
(v) any event requiring dissolution under the Act or this
Agreement.
(b) In the event of dissolution, this Agreement shall terminate and
the Members shall have no further obligations hereunder, other than to cooperate
with each other in winding up the business of the Company.
12.2 Winding Up and Termination. The Members shall cause the Managers to
wind up the business of the Company promptly following its dissolution. Upon
completion of such winding up, the Company and its legal existence shall be
terminated by the filing of a Certificate of Cancellation with the Delaware
Secretary of State.
29
ARTICLE XIII
INDEMNIFICATION
13.1 Indemnification.
(a) The Company shall indemnify any Member, Manager, officer or
other agent who was or is a party to any Proceeding, including a Proceeding
brought on behalf of the Members of the Company, because such Person is or was a
Member, Manager, officer or other agent of the Company, or is or was serving at
the request of the Company as a manager, trustee, partner or officer of another
Person, against any Loss incurred by such Person in connection with such
Proceeding unless such Person has engaged in gross negligence, willful
misconduct or a knowing violation of the criminal law, or unless such Proceeding
is to enforce contractual obligations of a Member, Manager or officer under this
Agreement or otherwise, including the Related Agreements. No amendment of this
Article shall have any effect on the rights provided herein with respect to any
act or omission occurring prior to such amendment.
(b) The Company shall promptly make advances or reimbursements for
any Loss incurred by any Person claiming indemnification under this Article,
unless it has been determined that such Person is not entitled to
indemnification because of a failure to meet the standards set forth in this
Article. Such advances or reimbursements shall be conditioned upon receipt from
the Person claiming indemnification of a written undertaking to repay the amount
of such advances or reimbursements if it is ultimately determined that such
Person is not entitled to indemnification.
(c) The determination that indemnification under this Article is
permissible, and of the reasonableness of expenses and legal fees which
constitute or are part of any Loss, shall be determined (1) in good faith by the
Management Committee if the claimant is a Member or officer, and is not a
Manager; and (2) by legal counsel agreed upon by the Company and the Person
claiming indemnification if the claimant is a Manager. The determination may be
made before or after a claim for indemnification is made.
(d) If any Person entitled to indemnification pursuant to this
Article is indemnified for the claim in question by a third party, including an
insurer, such Person shall notify the Company thereof. To the extent such Person
actually receives indemnification payments from such third party, such Person
shall not be entitled to seek or receive any indemnification payments from the
Company to the extent covered by such third party, and the Company shall require
such Person to reimburse the Company for any amounts which it has previously
received and which have been or are being reimbursed by such third party.
30
ARTICLE XIV
ADMINISTRATIVE PROVISIONS
14.1 Offices. The Management Committee shall be authorized to change the
registered office and registered agent of the Company, subject to any
requirements of the Act..
14.2 Books and Records. The General Manager shall keep full and accurate
books of account, records and financial statements with respect to the Company
at its principal office. Upon reasonable notice, each Member, or a Member's
designated representative, shall have access to such books and records during
ordinary business hours and shall have the opportunity to inspect and make
copies of them at the Member's expense.
14.3 Fiscal Year. The fiscal year of the Company shall begin on October 1
and shall end on September 30.
14.4 Accountants/Reports. The Management Committee may appoint a major
internationally recognized accounting firm to serve the Company. Within ninety
(90) days after the end of each fiscal year, each Member shall be furnished with
(a) audited financial statements which shall contain a balance sheet as of the
end of the fiscal year, together with statements of income, a statement of cash
flows and a reconciliation of capital accounts for the fiscal year then ended,
(b) a comparison of actual financial results to projections set forth in the
Operating Budget, and (c) a comparison of actual project costs incurred, a
revised projection of future project costs yet to be incurred, and scheduled
completion dates, to projections set forth in the Operating Budget. Each Member
shall be furnished each month with (a) monthly unaudited financial statements
promptly after such financial statements are completed, including a balance
sheet, income statement, statement of cash flows, a reconciliation of capital
accounts, (b) a comparison of actual financial results to projections set forth
in the Operating Budget, and (c) a comparison of actual project costs incurred,
a revised projection of future project costs yet to be incurred, and scheduled
completion dates, to projections set forth in the Operating Budget.
14.5 Notices. All notices and other communications with respect to this
Agreement shall be in writing and shall be delivered, as applicable, to the
Company at its principal executive office or to a Member at the address shown in
the records of the Company. Each notice or other communication that satisfies
the requirements set forth above shall be deemed to have been properly given or
delivered: (a) on the fifth business day after being mailed by United States
certified mail, return receipt requested, postage prepaid; (b) on the day when
delivered by hand; (c) on the first business day after being deposited with a
national overnight courier; or (d) on the day when transmitted by facsimile with
confirmation of receipt or successful transmission. A party to this Agreement
may elect to receive notices or communications at a different address by
notifying each other party in accordance with the preceding requirements.
31
ARTICLE XV
BONA FIDE OFFERS TO SELL
15.1 Right of First Offer. Except as provided in Section 15.2, if any
Member (the "Selling Member") receives a valid bona fide offer (the "Offer") to
purchase all or any portion of the Selling Member's interest in the Company in
an Assignment other than a Permitted Assignment, and if the Selling Member
desires to sell such interest, the Selling Member may transfer such interest
only after first offering such interest to the other Member of the Company, as
provide herein.
(a) The Selling Member shall deliver to the Company and the other
Member a written copy of the following information (collectively, the "Notice"):
(i) a copy of the Offer; (ii) the name and address of the prospective transferee
(the "Offeror"); (iii) the interest in the Company subject to the proposed
transfer (the "Offered Interest"); (iv) the proposed price for such interest;
(v) the terms of the proposed transfer; and (vi) the date the Offer was made
(the "Offer Date").
(b) For a period of sixty (60) days following receipt of the Notice,
the other Member of the Company (the "Eligible Member") shall have the right to
elect to purchase all, but not less than all, of the Offered Interest on the
same terms as set forth in the Offer.
(c) The purchase price and terms for the Offered Interest shall be
the same as set forth in the Notice. A failure by the Eligible Member to respond
to the Notice shall be deemed an acknowledgment that the Eligible Member does
not elect to purchase the Offered Interest.
15.2 Sale to Third Parties; Admission. If the Eligible Member fails to
purchase all of the Offered Interest, the Selling Member may sell the Offered
Interest to the Offeror at the purchase price and terms set forth in the Notice.
If the Selling Member fails to transfer the Offered Interest within one hundred
twenty (120) days after the Offer Date, the entire Offered Interest shall again
become subject to the terms and conditions of this Agreement as if the Offer had
not been made.
15.3 Admission of Offeror. Notwithstanding any provision of this Article
XV to the contrary, the purchase of the Offered Interest by the Offeror or the
Eligible Member shall be subject to the provisions of Section 7.4, and the
status of the Offeror as Assignee or Member, and the status of the Selling
Member as Assignor, shall be determined in accordance with the provisions of
Article VII.
32
15.4 Purchase Right for Prohibited Transfer of Control. If Dominion
Resources, Inc. or Peoples Energy (the "Selling Entity"), as the case may be,
receives an Offer to purchase fifty percent (50%) or more of the Selling
Entity's interest in Dominion Energy or Peoples Energy Resources Corp.,
respectively, whether in one transaction or a series of related transactions, in
an Assignment which would qualify as a Prohibited Transfer of Control, and if
the Selling Entity desires to transfer such interest, the Selling Entity may
transfer such interest only after first offering to the other Member of the
Company the right to purchase the ownership interest in the Company owned by the
Selling Entity or its Affiliate (the "Offered Company Interest") as provided
herein.
(a) The Selling Entity shall deliver to the Company and the other
Member a written notice (the "Offer Notice") indicating (i) the name and address
of the Offeror, (ii) the interest in Dominion Energy or Peoples Energy Resources
Corp., as the case may be, included in the proposed Prohibited Transfer of
Control and (iii) whether the purchase price for the Offered Company Interest
shall be based on the book value of the Company's assets (as more particularly
described in Section 15.4(c)(i)) or the Applicable Appraised Value (as defined
below);
(b) For a period of twenty (20) days following receipt of the Offer
Notice, the Eligible Member shall have the right to elect, by written notice
(the "Acceptance Notice") to the Selling Entity, to purchase the Offered Company
Interest at the price and on the terms set forth below.
(c) The purchase price for such Offered Company Interest shall be
(i) in the case in which the Offer Notice specifies the book value of the
Company's assets as the method for establishing the purchase price for the
Offered Company Interest, 1.75 times the product of (A) the book value of the
Company's assets as carried on the books of the Company (net of book
depreciation or amortization and, for any sale or other transfer of an interest
in the Company by Peoples pursuant to this Article XV, after reduction for the
Unit #9 Remaining Allocation, if any), as of the latest audited financial
statement of the Company, multiplied by (B) the Percentage Interest in the
Company represented by the Offered Company Interest or (ii) in the case in which
the Offer Notice specifies the Applicable Appraised Value (as defined below) as
the method for establishing the purchase price for the Offered Company Interest,
the Applicable Appraised Value.
(d) If the Eligible Member fails to give the Acceptance Notice to
the Selling Entity within twenty (20) days after receipt of the Offer Notice,
then the Eligible Member shall be deemed to have elected not to purchase the
Offered Company Interest, in which case the Selling Entity shall be free to sell
its interest in Dominion Energy or Peoples Energy Resources Corp., as the case
may be, to the Offeror on such terms as it deems appropriate free and clear of
any right of the Eligible Member to purchase the Offered Company Interest
pursuant to this Section 15.4.
33
(e) If the Eligible Member gives the Acceptance Notice within such
twenty (20) day period, then the Eligible Member shall purchase the Offered
Company Interest on the terms set forth herein, and the closing of such purchase
shall be consummated on a date specified by the Eligible Member, which date
shall not be later than sixty (60) days after the date of the Acceptance Notice,
except as set forth below. If despite diligent efforts, the Eligible Member is
unable to consummate such closing as a result of the inability to obtain third
party consents or approvals, then such closing date shall be extended for such
additional reasonable period as shall be necessary, but in no event more than
sixty (60) additional days. The Selling Entity shall cooperate with the Eligible
Member in obtaining any such necessary third party consents or approvals.
(f) If the Selling Entity has elected the Applicable Appraised Value
as the method of establishing the purchase price of the Offered Company
Interest, then the Selling Entity shall propose an appraiser to establish the
Applicable Appraised Value (as defined below) for the Offered Company Interest.
The Eligible Member shall have ten (10) days from the date of receipt of the
name of the Selling Entity's proposed appraiser to either agree to such
appraiser or nominate another appraiser. If the Eligible Member nominates a
second appraiser, the apprasiers nominated by each party shall select a third
appraiser. The appraiser nominated by the Selling Entity, if the Eligible Member
does not object, or the appraiser nominated by the two appraisers, if one has
been selected, shall be the "Appraiser" hereunder. The cost of the Appraiser
shall be paid equally by the Selling Entity and the Eligible Member. The
Appraiser shall determine, within thirty (30) days after appointment, the fair
market value of the Company as of such date. The "Applicable Appraised Value"
purchase price for the Offered Company Interest shall be the fair market value
of the Company as determined by the Appraiser multiplied by the Percentage
Interest represented by the Offered Company Interest.
ARTICLE XVI
DISPUTE RESOLUTION
16.1 Resolution of Member Disputes.
(a) In the event the Members disagree with respect to a matter that
is material to the operation, financial success, capital requirements or
liability of the Company, and if such disagreement is not otherwise resolved
within a period of thirty (30) days, then either Member may declare a "material
deadlock" in writing to the other Member.
(b) Upon declaration of a material deadlock as provided above, each
Member shall cause one or more of the senior executive officers of Dominion
Energy to negotiate in good faith with designated senior executive officers of
Peoples Energy and such other Members and their Affiliates as may be reasonably
requested in an effort to resolve the dispute within the next sixty (60) days
(the "Resolution Period").
34
(c) If the Members are unable to resolve the dispute within the
Resolution Period, either Member may initiate the buy-sell procedures described
in Section 16.2 by delivering a written notice (the "Buy-Sell Notice") to the
other Member. The Buy-Sell Notice shall specify a cash price for the entire
interest in the Company (the "Tendered Interest") of the Member delivering such
notice (the "Sending Member"), together with a proposed closing date for the
sale of the Tendered Interest, which shall be no sooner than sixty (60) days and
no later than one hundred twenty (120) days after such Buy-Sell Notice. In
addition, the Sending Member shall include with the Buy-Sell Notice such
documentation as may be necessary to reasonably establish the financial ability
of the Sending Member to acquire the interests of the other Members if obligated
to do so pursuant to Section 16.2.
(d) If the Buy-Sell Notice is not delivered within sixty (60) days
following the end of the Resolution Period, and if the material deadlock remains
at the end of such sixty (60) day period, representatives of the Members, upon
written notice from either of the Members, shall again meet in accordance with
Section 16.1(b). If the dispute is not resolved within thirty (30) days
following the date on which representatives of the Members meet again, the
Company shall be dissolved in accordance with Article XII hereof.
16.2 Mandatory Buy-Sell Provisions.
(a) If the Buy-Sell Notice is delivered in accordance with Section
16.1(c), within sixty (60) days after receipt (the "Receipt Date"), the
receiving Member (the "Receiving Member") shall give a written notice (the
"Response") to the Sending Member stating whether or not the Receiving Member or
its designee elects to purchase the Tendered Interest on the terms and
conditions set forth in the Buy-Sell Notice.
(b) If the Receiving Member does not elect to purchase all of the
Tendered Interest, the Receiving Member shall be required to sell all of its
interest in the Company to the Sending Member or its designee on the terms and
conditions set forth in the Buy-Sell Notice.
16.3 Binding Election. The election made in the Response shall be binding
on all Members. If there is no Response given within the time specified above,
the Receiving Member shall be deemed to have agreed to sell all of its interests
in the Company to the Sending Member as provided in Section 16.2(b).
16.4 Closing and Default. The purchase and sale of a Member's interests
pursuant to Section 16.2 and Section 16.3 shall be closed at the principal
office of the Company on the date specified in the Notice, but in no event less
than thirty (30) days or more than one hundred eighty (180) days after the
Receiving Member's receipt of the Notice. If no closing date is specified in the
Notice, then the closing shall occur one hundred eighty (180) days after the
Receiving
35
Member's receipt of the Notice. The applicable purchase price shall be paid in
full in cash at closing. The seller of such Member's interests shall convey such
interests at the closing free and clear of all liens, security interests and
encumbrances, and in the event of a purchase, the purchasing Member shall hold
the selling Member harmless from liability for payment of any existing
obligations of the Member in the nature of guarantees of Company indebtedness.
16.5 Impact to Bona Fide Offers to Sell. Notwithstanding anything to the
contrary, the buy-sell provisions described in this Article XVI shall cease to
apply during any period in which a Member (or its designee) is exercising the
purchase rights set forth in Article XV.
ARTICLE XVII
OPTION ON OTHER PHASES
17.1 Option to Develop Additional Phases Prior to July 1, 2003. In the
event that in connection with the consideration by the Management Committee of
approval of any Development Plan or amendment thereto, either the Dominion
Manager or Peoples Manager shall make prior to July 1, 2003 a proposal to
develop and construct all or part of the Additional Phases. Such proposal shall
describe in reasonable detail the proposed additional facilities and the
estimated cost and timetable for development thereof (the "Proposed Phase"). If
the Proposed Phase is not approved by the Management Committee, then the
following shall apply:
(a) If the Member whose nominated Manager approved the Proposed
Phase (the "Approving Member") still intends to proceed with the Proposed Phase,
such Approving Member shall give written notice to the Member whose nominated
Manager did not approve the Proposed Phase (the "Non-Approving Member") that the
Approving Member intends to proceed with the Proposed Phase (the "Notice of
Intent to Proceed"); provided, however, that such option shall not apply (and
the provisions of Article XVI shall apply) with respect to any disputes
regarding the Proposed Phase if both the Dominion Manager and the Peoples
Manager approved the concept and general timing of developing and building the
Proposed Phase but disagreed on any other aspect of such Proposed Phase which
would normally be considered a "material deadlock" under Section 16.1.
(b) If, within thirty (30) days after delivery of the Notice of
Intent to Proceed, the Manager nominated by the Non-Approving Member does not
give written notice that it has changed its vote to approve the Proposed Phase,
then the Approving Member shall be entitled (but not obligated), proceeding by
itself, through an Affiliate and/or through a Person owned by it or an Affiliate
in conjunction with any other Person (collectively, the "New Developer"), to
proceed with construction of the Proposed Phase. In such event, the Company
shall no longer be entitled to develop, construct or operate such Proposed Phase
unless the New Developer fails to commence construction of the proposed Phase
within twelve (12) months after the Notice of Intent to Proceed.
36
(c) If construction is not commenced within such twelve (12) month
period, the New Developer shall have no right to proceed with the Proposed Phase
unless it again seeks the approval of the Management Committee and, after
following the procedures set forth in clauses (a) and (b) above, the Non-
Approving Member again fails to approve the Proposed Phase.
17.2 Cooperation. If the New Developer complies with the conditions set
forth in Section 17.1 above and proceeds with the Proposed Phase, then, subject
to Section 17.4 hereof, the following shall apply:
(a) The Company shall deed or lease (at the New Developer's option)
to the New Developer, if owned, or sublease to the New Developer, if leased by
the Company, such portions of the unimproved real estate which are part of the
Facility (other than the generator locations on the Current Phases) as the New
Developer reasonably considers to be required to develop, construct and operate
the Proposed Phase, and which are approved by the Non-Approving Member, which
approval shall not be unreasonably withheld. The terms of such transfer or lease
shall be negotiated in good faith, provided that (i) the amount paid for any
such transfer by deed shall equal the amount (the "Land Value Amount") paid by
the Company to acquire the real estate (determined on a per square foot basis),
plus a pro rata portion of any land development costs incurred by the Company in
connection with the Current Phases and which benefit the real estate to be
purchased for the Proposed Phase, (ii) the annual rent payable by New Developer
under any such lease shall equal the Land Value Amount, as amortized evenly over
the shorter of fifteen (15) years or the original lease term with a financing
rate imputed at the per annum interest rate at which the Company would be able
to obtain a mortgage loan for undeveloped land, and such lease may contain a
nominal value purchase option exercisable at the end of the term thereof; and
(iii) any sublease shall be on comparable terms as such property has been leased
to the Company and the subrent payable thereunder shall equal the greater of the
rent payable under the leasehold which is being sublet to New Developer or the
annual rent determined in accordance with clause (ii) above. In the case of a
lease or sublease, such lease or sublease lease shall contain terms typical of
fully net ground leases in which the rent payable by the lessee is fully net to
the lessee and all other obligations with respect to the leased property are
borne by the lessee. In connection with the foregoing, the Company shall
cooperate with the New Developer in obtaining a survey and, if necessary for
transferability and separate property taxation of the property for the Proposed
Phase, replatting such property. In addition, subject to the approval of the
Company, which approval shall not be unreasonably withheld, the Company shall
take such other necessary, appropriate and reasonable steps with respect to
county, municipal and other governmental authorities as are requested by New
Developer in connection with any such subdivision or replatting of the property
for the Proposed Phase, with any costs incurred by the Company in connection
with the foregoing being borne by the New Developer.
(b) The Company shall not unreasonably withhold its approval of any
request by the New Developer to enter into easements or other agreements which
permit the New Developer, on the terms set forth therein, to use the switchyard,
the gas, electric and steam lines
37
and the transmission facilities which are part of the Facility or are available
to the Company by agreement or easement. The cost of ongoing maintenance and
operation of the foregoing (including amortization over useful lives of the
original construction costs, plus carrying costs) shall be shared by the New
Developer and the Company based on relative use or another equitable basis to be
negotiated by the parties in good faith.
(c) The Company and the New Developer shall negotiate in good faith
any other agreements for joint use of roads, sidewalks, transmission facilities,
waste water and waste treatment facilities and other utility facilities on
Company property, or which are available to the Company by agreement or
easement, as are deemed reasonably necessary by the New Developer and the
Company for the operation of the Proposed Phase. All costs of maintenance or
operation associated with the joint use of the foregoing (including amortization
over useful lives of any construction costs, plus carrying costs) shall be
shared by the New Developer and Company based on relative use or another
equitable basis to be negotiated by the parties in good faith.
(d) The Company and the New Developer shall negotiate in good faith
and enter into any cross access or other easements, licenses, party wall
agreements, and other mutual use agreements as shall be deemed reasonably
necessary by the New Developer and the Company, and any lender of either, to
efficiently operate the Current Phases and to build and operate the Proposed
Phase in a manner that does not impair or interfere with the operation of the
Current Phases.
(e) The Company shall not unreasonably withhold its approval of any
request by New Developer to amend existing air, water and other environmental
permits for the Current Phases which permit emission levels in excess of the
anticipated levels for the Current Phases, to the extent necessary for
construction and operation of the Proposed Phase.
(f) The Company and the New Developer shall enter into
confidentiality agreements as reasonably necessary to protect confidentiality of
plans, drawings or other data relating to the Current Phases, the Proposed
Phase, the Company, the New Developer or Affiliates thereof, consistent with the
provisions of Section 18.5 hereof.
(g) At the option of the New Developer, the Additional Phases may be
managed, power marketing services may be supplied to it, and/or fuel may be
supplied to it, by the same or different suppliers of such services as supply
them to the Company as, to the extent, and on such terms as are agreed to by
such suppliers.
38
17.3 Other Assurances.
(a) The Non-Approving Member shall cause its designated Manager to
agree to all necessary approvals and authorizations of the Management Committee
to effectuate the provisions of this Article XVII.
(b) The Company and the New Developer shall negotiate in good faith
any other documents and otherwise cooperate with each other and each other's
lenders, as shall be reasonably necessary to ▇▇▇▇▇▇ efficient development,
construction, financing, and operation of the Current Phases and the Proposed
Phase.
17.4 Miscellaneous.
(a) Notwithstanding any provision to the contrary contained in this
Article XVII, whenever the terms of this Article XVII require that the Company's
approval, agreement, cooperation or consent is required to or with any action or
proposed action by New Developer and state that such approval, agreement,
cooperation, or consent must be "reasonable", undertaken in "good faith" or not
"unreasonably withheld" (or any grammatical variation thereof), the Company
shall be deemed to have acted in accordance with such standards if, in
withholding or conditioning any such approval, agreement, cooperation or
consent, the Non-Approving Member reasonably believes that the proposed action
(i) could reasonably be expected to materially and adversely affect the use,
operation, safety or cost of operation of the Current Phases or the prospects
for development of Additional Phases other than the Proposed Phase, (ii) could
reasonably be expect to result in a violation of any agreement, law or permit
applicable to or binding upon the Current Phases or the Company, or (iii)
requires the consent of any lender providing financing to the Company or any
other unrelated third party and such consent is withheld. In no event shall the
Company be obligated to transfer any property, enter in any lease, grant any
request, amend or obtain any permits, enter into any agreements or take, or
permit to be taken, any other action with respect to the Proposed Phase if the
Company would have been reasonable in withholding its approval of any such
action in accordance with the standard set forth in the previous sentence. In no
event shall the Company withhold its approval, agreement, cooperation or consent
of any proposed action with respect to the Proposed Phase on the criteria that
the Proposed Phase would be competitive with or adversely affect the
competitiveness of the Current Phases or Additional Phases other than the
Proposed Phase based on the price or cost of the power produced by the Proposed
Phase, and the withholding of approval, agreement, cooperation or consent on the
basis of such criteria shall be deemed unreasonable.
(b) All actions by the Company under Sections 17.1, 17.2 and 17.3
may be taken by the Non-Approving Member acting alone and the Approving Member,
or its Manager or other representatives shall have no right to vote on or
participate in any actions by the Management Committee or the Company in
connection with any such actions by the Company.
39
(c) Notwithstanding anything in the Agreement to the contrary, the
New Developer shall be fully responsible for, and shall, as directed by the
Company or the Non-Approving Member, either pay directly or reimburse the
Company or the Non-Approving Member for, all costs and expenses incurred by the
Company or the Non-Approving Member in connection with, or arising from, (i) the
Proposed Phase; (ii) any actions taken or requested to be taken by the Company
or the Non-Approving Member under this Section 17; (iii) the lease, sale,
sublease, subdivision, surveying or replatting of any real property; (iv) any
easements, joint use agreements, or other agreements entered into between the
Company and the New Developer or any other Person in connection with the
Proposed Phase; (v) the amendment of any permits, the obtaining of new permits,
any studies or filings in connection with any such amendments or new permits,
any changes in operations, production, ash disposal, pollution control equipment
or procedures, fuel usage or otherwise with respect to the Current Phases or the
Company arising from or in connection with any such permit amendments or new
permits; (vi) obtaining the consent of the Company's lenders and any consultant
reports, lender charges, or amendments to loan documents required in connection
therewith; and (vii) all legal, engineering and other consultant and transaction
costs incurred by the Company or the Non-Approving Member in connection with any
of the foregoing.
17.5 Option to Develop Additional Phases After July 1, 2003. In the event
that in connection with the consideration by the Management Committee of
approval of any Development Plan or amendment thereto, either the Dominion
Manager or Peoples Manager proposes after July 1, 2003 to develop and construct
one or more Proposed Phases (other than the Current Phases), and such
development and construction is not then approved by the Management Committee,
then the following shall apply:
(a) Notice. The Member that desires to develop such Proposed Phase
must send a notice to the other Member, and such notice shall (i) identify, in
reasonable detail, the proposal for the development of the Additional Phase, and
(ii) set forth the estimated costs and timing of such development (the
"Additional Phase Development Notice").
(b) Election to Participate. The other Member shall have thirty (30)
days from the date of receipt of the Additional Phase Development Notice to
elect to participate in the Proposed Phase described in the Additional Phase
Development Notice. If the other Member elects to participate in the Additional
Phase, such election shall be deemed equivalent of an approval by the Management
Committee, on the terms set forth in the Additional Phase Development Notice,
pursuant to Section 4.5 hereof. The other Member's election to participate in
such Additional Phase shall be sent jointly to the Member sending the Additional
Phase Development Notice and to the Company. Failure to send a response to the
Additional Phase Development Notice within such period shall be deemed an
election not to participate. In all cases, the Additional Phase Development
Notice shall provide for development, ownership and operation of the Proposed
Phase in the same percentages, and with the same approval, management and other
rights and responsibilities on the part of the Members, as are provided for in
this Agreement with respect to the Current Phases.
40
(c) Appraisal Procedure. If the other Member does not elect to
participate in the development of the Proposed Phase, then the Member who elects
to participate in the Proposed Phase (the "Developing Member") shall have the
option to elect to effect such development and purchase the Interests of the
other Member (the "Non-Developing Member"). If the Developing Member elects to
develop such Proposed Phase, the Developing Member shall send a notice (the
"Buy-Out Notice") to the Non-Developing Member, which Buy-Out Notice shall (i)
notify the Non-Developing Member that the Developing Member has elected to
proceed with the Proposed Phase, (ii) propose an appraiser to establish the Buy-
Out Price (as defined below) for the Non-Developing Member's Interest in the
Company (the "First Appraiser"), and (iii) indicate the amount at which the
Developing Member would agree to purchase the Non-Developing Member's Interest
in the Company (the "Offer Amount"). The Non-Developing Member shall have thirty
(30) days from the date of receipt of the Buy-Out Notice to (A) agree to sell
its Interest to the Developing Member at the Offer Amount, or (B) elect for an
appraisal. If the Non-Developing Member elects for an appraisal, its response
shall either agree to the First Appraiser, or shall nominate another appraiser
(the "Second Appraiser"). If the Non-Developing Member nominates a Second
Appraiser, the First Appraiser and the Second Appraiser shall select a third
appraiser (the "Third Appraiser"). The First Appraiser, if the Non-Developing
Member does not object to the First Appraiser, or the Third Appraiser, if one
has been selected, shall be the Appraiser hereunder. The cost of the Appraiser
shall be paid equally by the Developing Member and the Non-Developing Member,
provided that if the Developing Member does not elect to purchase the Interests
of the Non-Developing Member, the Developing Member shall pay the entire cost of
the Appraiser.
(d) Purchase of Interest. The Appraiser shall, within sixty (60)
days from the date of its appointment, determine the fair market value of the
Company as of such date. The Buy-Out Price of the Non-Developing Member's
Interest shall be the greater of (i) the Offer Amount, and (ii) the fair market
value of the Company as determined by the Appraiser, times the Percentage
Interest of the Non-Developing Member's Interest being acquired (the "Appraised
Value"), provided that if the Appraised Value is more than 125% of the Offer
Value, the Developing Member shall have option to purchase the Non-Developing
Member's Interest or to terminate its plans to proceed with the Additional
Phase. Unless the Developing Member terminates its plans to proceed with the
Additional Phases, the Developing Member shall purchase the Interest of the Non-
Developing Member for the Buy-Out Price. Such purchase shall be consummated
within thirty (30) days of the determination of the Buy-Out Price, at the
principal offices of the Company.
(e) Eligible Appraisers. All appraisers nominated hereunder
shall be investment banking firms or accounting firms with expertise in
evaluating and appraising electric generating facilities. No appraiser shall
have been retained by any Member, or any Affiliate of any member, within the
last 12 months.
41
(f) Limitations. No Member may initiate the procedures set
forth in this Section 17.5 if such Member has previously initiated such
procedures within the previous six months.
ARTICLE XVIII
MISCELLANEOUS
18.1 Amendment. This Agreement may be amended only in a writing
evidenced by the consent of all of the Members.
18.2 Interpretation. Unless the context otherwise requires, terms
used and not defined in this Agreement shall have the definitions set forth in
the Act.
18.3 Invalidity. If any provision of this Agreement is determined to
be invalid or unenforceable, such determination shall not affect in any respect
whatsoever the validity or enforceability of the remainder of this Agreement.
18.4 No Third Party Beneficiaries. No provision of this Agreement
shall operate to the benefit of, or be enforceable by, any third party,
including, without limitation, any creditor of the Company or any creditor of a
Member.
18.5 Confidentiality. The terms of this Agreement shall be kept
confidential by each of the Members and its respective representatives. Each of
the Members and the Company shall hold any "Confidential Information" (as
defined below) obtained by it (the "Obtaining Member") from any other party (the
"Disclosing Member") in strict confidence, unless such information (a) is or
becomes generally available to the public other than as a result of a disclosure
by the Obtaining Member, its officers, employees or agents or by others to whom
the Obtaining Member or its officers, employees or agents have disclosed such
information, (b) was in the possession of the Obtaining Member on a
nonconfidential basis prior to its disclosure by or at the request of the
Disclosing Member, or (c) becomes available to the Obtaining Member on a
nonconfidential basis from a source other than the Disclosing Member, provided,
however, that such source is not known by the Obtaining Member to be bound by a
confidentiality agreement with the Disclosing Member or otherwise prohibited
from disclosing such information to the Obtaining Member by a contractual, legal
or fiduciary obligation. "Confidential Information" shall mean information about
a Member that is not generally available to the public, information about a
Member that such Member has designated as "confidential", the terms of this
Agreement, or unique and specific information about the Company or the Facility.
Notwithstanding the foregoing, nothing in this Section shall preclude the
Obtaining Member from disclosing such information to auditors, attorneys,
potential Assignees, financial advisors and other consultants and advisors
subject to the confidentiality requirements set forth herein, in
42
connection with the transactions contemplated hereunder and, in the case of
potential Assignees, they sign a confidentiality agreement by which they agree
expressly to be bound by the terms of this Section and notice is given by the
Disclosing Member to the Obtaining Member prior to the disclosure of
Confidential Information to such potential Assignee.
18.6 Waiver of Partition. Unless otherwise expressly authorized in
this Agreement, no Member, either directly or indirectly, shall take any action
to require partition or appraisement of the Company or any of its assets or
property or to cause the sale of any property of the Company, and
notwithstanding any provisions of applicable law to the contrary, each Member
(and its legal representative, successor or assign) hereby irrevocably waives
any and all right to maintain any action for partition or to compel any sale
with respect to its interest in, or with respect to any assets or properties of
the Company except as expressly provided in this Agreement.
18.7 Press Releases. Except as required by applicable law
(including, without limitation, federal and state securities laws), each press
release or public statement about the Company, the business of the Company, or
the transactions or operations contemplated hereby shall require the prior
mutual consent of Dominion and Peoples, and such consent shall not be
unreasonably withheld.
18.8 Relationship of Parties. It is understood and agreed that the
relationship of the parties is limited to that specifically contained herein and
the Related Agreements, and the parties shall have no fiduciary or other
obligation to each other or the Company, except for those set forth in this
Agreement and the Related Agreements. Further, neither Dominion nor Peoples nor
any of their respective Affiliates, employees or agents shall be construed as
the agent, employee or representative of the other, and neither party has the
authority to bind the other or to incur any obligation on its behalf, except as
provided herein or in the Related Agreements. Without limiting the foregoing,
the Company shall not be construed as a partnership (including a limited
partnership) or joint venture other than for federal and state income tax
purposes.
18.9 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original and all of which, when taken together,
shall constitute one and the same instrument and shall be binding on the
Members. The signature of any party to any counterpart shall be deemed a
signature to, and may be appended to, any other counterpart.
18.10 Further Assurances. The parties hereto agree that they shall
cooperate with each other and shall execute and deliver, or cause to be
delivered, all such other instruments, and shall take such other actions, as any
party hereto may reasonably request from time to time in order to effectuate the
provisions and purposes hereof.
43
18.11 Complete Agreement. This Agreement constitutes the complete and
exclusive agreement among the Members with respect to the management and
governance of the Company. It supersedes all prior written and oral agreements
and no representation, statement, condition or warranty not contained in this
Agreement shall be binding on the Members or have any force or effect
whatsoever.
18.12 Governing Law, Jurisdiction. This Agreement shall be governed
by the laws of the State of Delaware, without giving effect to its choice of
laws rules. Furthermore, each Member agrees to subject itself to the
jurisdiction of the courts of the State of Delaware and has designated an agent
for service of process.
IN WITNESS WHEREOF, the Members have executed this Agreement.
Dominion: Dominion ▇▇▇▇▇▇, Inc.
--------
a Delaware corporation
By: /s/ ▇▇▇▇▇ ▇. ▇'▇▇▇▇▇▇
------------------------------
▇▇▇▇▇ ▇. ▇'▇▇▇▇▇▇, President
Peoples: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, LLC
-------
a Delaware limited liability company
By: Peoples Energy Resources Corp.
Its: Manager
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
44
Schedule A
----------
MEMBER LIST
OF
▇▇▇▇▇▇ ENERGY LLC
As of August 3, 2001
Name and Business Percentage
Address of Member Interest
----------------- --------
1. Dominion ▇▇▇▇▇▇, Inc. 50%
c/o Dominion Energy, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
2. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ LLC 50%
c/o Peoples Energy Resources Corp.
▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
45
Schedule B
----------
MANAGERS AND ALTERNATES
OF
▇▇▇▇▇▇ ENERGY LLC
As of August 3, 2001
Member Manager Alternate
------ ------- ---------
Dominion ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Peoples ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
General Manager: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
46