Exhibit A
OPERATING AGREEMENT OF POWERTREE CARBON COMPANY, LLC
THIS OPERATING AGREEMENT OF POWERTREE CARBON COMPANY, LLC (this
"Agreement"), dated as of June 2, 2003, is made and entered into by the
undersigned organizing members to form, and be hereby admitted as members of, a
limited liability company to be named PowerTree Carbon Company, LLC, (the
"Company") under and pursuant to the provisions of the Delaware Limited
Liability Company Act, 6 Del. C. Section 18-101 et seq., as amended from time to
time (the "Act"). This Agreement shall be deemed effective as of immediately
prior to the filing of a certificate of formation (the "Certificate of
Formation") for the Company under the Act. This Agreement will be binding upon
additional members of the Company upon their admission as members of the Company
in the manner provided in this Agreement.
Whereas, the members intend that this Agreement memorialize the entire
limited liability company agreement (as defined in Section 18-101(7) of the Act)
of the Company as in effect at the time of formation of the Company;
NOW, THEREFORE, intending to be legally bound, the members hereby agree as
follows:
ARTICLE I - MEMBERSHIP
SECTION 1. Members. The members (each a "member") of the Company are the
following (together with any other persons or entities admitted in the future as
additional or substitute members of the Company in accordance with this
Agreement and the Act):
Ameren Corporation
American Electric Power Company, Inc.
Cinergy
Detroit Edison Company
Diversified Lands LLC
Duke Energy
Entergy Arkansas, Inc.
Exelon Generation Company LLC
First Energy Corp
Great Plains Energy Incorporated
Minnesota Power
Oglethorpe Power Corporation
Oklahoma Gas & Electric
Peabody Energy
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Conectiv Energy Holding Company
Arizona Public Service Company
Progress Energy, Inc.
PSEG
PNM Resources, Inc.
Reliant Energy
Tennessee Valley Authority
TXU Generation Company LLP
Virginia Electric & Power Company
We Energies
Wisconsin Public Service Corporation
Xcel Energy
SECTION 2. Interest of Members. Except as otherwise provided in Section 5
of this Article I, each member shall have a percentage interest ("Interest") in
the Company equal to a fraction the numerator of which is the net present value
discounted (using a discount rate of three (3) percent, or such other rate as
the Board subsequently establishes) to January 1, 2003 of the total contribution
commitment of such member set forth across from such member's name on Schedule A
hereto as may be amended from time to time pursuant to sections 3 and 7 through
9 of this Article I, and the denominator of which is the sum of the net present
values calculated for each of the members' total contribution commitments set
forth on Schedule A as may be amended from time to time pursuant to sections 3,
and 7 through 9 of this Article I. References hereinafter to "Schedule A" shall
mean Schedule A, as may be amended from time to time pursuant to sections 3, 5
and 7 through 9 of this Article I.
SECTION 3. Additional Members. Except as otherwise permitted in Section 5
of this Article I, new members may be added only upon the unanimous approval of
the then existing members, pursuant to the procedures adopted by the Board of
Managers. Upon the admission of a new member, this Operating Agreement (and
Schedule A hereto) shall be amended to include the new member as a party hereto.
The percentage Interest of any new member shall be calculated under the
methodology set forth in section 2 of this Article I, and the percentage
Interests of existing members shall be reduced pro rata to reflect the Interest
of the new member.
SECTION 4.1 Members' Capital Contributions. Each organizing member shall be
required to make the capital contributions of cash to the Company at the times
and in the amounts set forth across from such member's name as shown on Schedule
A hereto, as the same may be amended from time to time pursuant to section 7 of
this Article, by paying, or causing to be paid, said amount to the Company. Upon
receipt of such payment, such amount shall be credited to the member's Capital
Account (as such term is defined in Article VI) and shall be
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available to the Company to pay for the expenses associated with the Company's
business activities, pursuant to the Company's procedures for approving
expenditures. Members shall not be entitled to interest on the capital
contributions. A member's failure to make a scheduled capital contribution shall
result in a suspension of such member's voting rights until such time as the
member makes the required contribution. The Board may establish an interest
penalty for late payments, which interest penalty shall not exceed the lawful
rate. For purposes hereof, a member's payment shall not be considered late until
ten (10) business days after receipt of a notice from the Company of such
member's failure to make a scheduled payment.
SECTION 4.2 Capital Accounts. Each member shall have a Capital Account that
shall be credited with (i) the capital contributions (net of liabilities that
the Company is considered to assume or take subject to Code section 752)
contributed by such member to the Company; and (ii) allocations of Profits to it
pursuant to Article VI, Section 2. Each member's Capital Account shall be
debited with (a) the amount of cash and the Carrying Value (as defined in
Article VI hereof) of other property distributed to such member (net of
liabilities that such member is considered to assume or take under Section 752
of the Code) and (b) allocations of Losses to it pursuant to Article VI, Section
3. The provisions of this Agreement relating to the maintenance of Capital
Accounts and procedures under liquidation of the Company are intended to comply
generally with Regulations Section 1.704-1(b), and shall be interpreted and
applied in a manner consistent therewith and, to the extent the subject matter
thereof is otherwise not addressed by this Agreement, the provisions of such
Regulations are hereby incorporated by reference. The members hereby agree to be
bound by the provisions of this Article I, Section 4 (relating to Capital
Accounts) and Article VI (relating to Allocations) in reporting their shares of
Company income and loss for all tax purposes, except to the extent otherwise
required by applicable law. Notwithstanding any requirements of law, the members
agree, for purposes of maintaining their Capital Accounts, to be bound by the
allocations contained in Article VI, notwithstanding any allocations for income
tax purposes.
SECTION 4.3 Pre-formation Expenses. Each of the members shall be required
to pay its own expenses incurred in connection with formation of the Company
(collectively the "Pre-formation Expenses"). Such expenses shall represent a
deemed contribution to the capital of the Company. The Carrying Value of the
Pre-formation Expenses shall always be zero.
SECTION 5. Transfer or Sale of Interest. A member may not transfer, by
sale, gift, assignment or any other means, some or all of its Interest in the
Company to any party except with the two-thirds approval of the existing
members; except that a member may sell, transfer, or assign some or all of its
Interest without the prior approval of other members: (i) to an affiliate of the
member; and (ii) to another member. However, in the case of any such sale,
transfer, or assignment the transferring member shall not be released from its
obligations hereunder unless the transferee agrees in writing to assume all
obligations under this agreement with respect to the transferred interest in
form and substance acceptable to the Board. For purposes of this
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Agreement, "affiliate" means with respect to a person or entity, any other
person or entity controlled by, controlling or under common control with such
person or entity. For purposes hereof "control" means with respect to a person
or entity, possession of fifty (50) percent or more of the (i) outstanding
voting rights entitled to vote for election of the board of directors or other
governing body of such entity, or (ii) general partnership interests in such
entity, or (iii) joint venture or other interests with respect to such entity
entitled to direct the management and affairs of such entity, by contract or
otherwise. Schedule A hereto shall be amended to reflect a transfer of
Interest(s) permitted under this Agreement. A transferee hereunder shall succeed
to the Interest, voting and other rights of transferring member. In recognition
that each member has only one vote in the management of the Company, in the case
of transfer of less than the entire Interest of a member, the transferring
member and the transferee shall mutually agree and notify the Company as to
which of them shall exercise such vote and the Company shall not be liable for
relying on such notice.
SECTION 6. Proof of Membership. This Agreement shall be proof of membership
in the Company.
SECTION 7. Additional Capital Contributions. Except by a unanimous vote of
the members, no member shall be required to make any additional capital
contributions to the Company beyond those the member committed to make at the
time of such member's admission to the Company in accordance with Schedule A
hereto. Any additional capital contributions approved pursuant to this section
shall be reflected on Schedule A.
SECTION 8. Withdrawal. A member may withdraw from the Company for any
reason at any time by notifying the Secretary. Upon delivery of such notice the
member shall not be entitled to the return of any of its capital contributions
in the Company and shall have no further right, obligation or interest in, or
with respect to, the Company; except: (i) the withdrawing member shall remain
liable to the Company for any unpaid capital contributions that it agreed to pay
to the Company as set forth in Schedule A and shall remain liable to make such
contributions in accordance with the dates set forth in Schedule A; and (ii) the
withdrawing member shall remain liable for any other liabilities or obligations
that it undertook to the Company. Upon a member's withdrawal, such member's
Interest shall be allocated to the remaining members pro rata based on the
percentage Interest of each remaining member and the Board shall amend Schedule
A to reflect such allocation. A withdrawing member may retain Carbon Reductions
(as defined in Article V) associated with the withdrawing member's Interest that
accrue to the member prior to the member's withdrawal and that the Board
ratifies pursuant to Article V prior to or after the member's withdrawal. Carbon
Reductions associated with the withdrawing member's Interest which accrue after
the member's withdrawal and are ratified by the Board shall be allocated to the
remaining members pro rata based on each remaining member's percentage Interest.
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SECTION 9. Termination of Membership. The Company, by a two-thirds majority
vote of the Board, may revoke a member's Interest in the Company if: (i) within
thirty (30) days after receipt of notice thereof from the Company, a member
fails to make a capital contribution to the Company as provided on Schedule A
hereto; or (ii) a member becomes the subject of a voluntary or involuntary
petition for bankruptcy that is not withdrawn within one hundred twenty (120)
days of filing. Upon revocation of a member's Interest, the member shall not be
entitled to the return of any of its capital contributions in the Company and
shall have no further right, obligation or interest in the Company; except: (i)
such member shall remain liable to the Company for any unpaid capital
contributions as provided in and in accordance with the timetable set forth in
Schedule A hereto; and (ii) the member shall remain liable for any other
liabilities or obligations it undertook to the Company. A revoked member's
Interest shall be allocated to the remaining members pro rata based on each
remaining member's percentage Interest and the Board shall amend Schedule A to
reflect such allocation.
SECTION 10. Term. The Company shall have a term of ninety-nine (99) years.
SECTION 11. Public Utility Holding Company Act. So long as any member is
subject to regulation under the Public Utility Holding Company Act of 1935
("PUHCA") as a registered holding company or a subsidiary company thereof (each
a "PUHCA Regulated Member"), such PUHCA Regulated Member agrees that it,
together with each company that is an "associate company" (as defined in PUHCA)
thereof and that is also a member ("Associate Company"), shall not own, be
deemed to own, or acquire any voting rights in the Company (either as a member
or on the Board) which shall cause its voting rights together with its Associate
Companies to equal or exceed ten percent (10%) of the outstanding voting rights
in the Company. Any such voting right equal to or in excess of ten percent (10%)
that would be received, transferred or otherwise obtained by a member together
with its Associate Companies shall be automatically allocated in equal portions
to the other members for so long as and to the extent that the ownership of such
voting rights would cause the voting rights of the PUHCA Regulated Member
together with its Associate Companies to equal or exceed ten percent (10%) or
more of the total voting rights in the Company. The foregoing re-allocation of
voting rights shall not require the prior consent or approval of any Member. The
Board may determine an appropriate mechanism to implement the objectives of this
provision, including but not limited to the creation of fractional voting rights
or additional voting rights.
SECTION 12. Condition Precedent for PUHCA Registered Companies. As to each
of the following companies that will be a PUHCA Regulated Member once such
company becomes a member (each a "Registered Company"), the effectiveness each
Registered Company's admission as a member of the Company pursuant to this
Agreement is conditioned on the Registered Company receiving approval from the
Securities and Exchange Commission under PUHCA to perform, directly or
indirectly through any associate company (as such term is defined in PUHCA),
this Agreement. Upon such approval, such Registered Company or its
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designated affiliate shall be admitted to the Company as a full "member" under
this Agreement and shall thereupon pay all unpaid Schedule A capital
contributions due through the date of such admission. The Registered Companies
are:
Ameren Corporation
American Electric Power Company Inc.
Cinergy
Entergy Arkansas, Inc.
Exelon Generation Company LLC
First Energy Corp.
Great Plains Energy Incorporated
Conectiv Energy Holding Company
Progress Energy, Inc.
Virginia Electric & Power Company
Xcel Energy
SECTION 13. Additional Limitation on Voting Rights. No company that
notifies the Company of its intention to be subject to this provision, shall
own, be deemed to own, or acquire any voting rights either as a member or on the
Board in the Company (either as a member or on the Board) which shall cause its
voting rights together with any voting rights held by affiliates of such company
to equal or exceed five percent (5%) of the outstanding voting rights in the
Company. Any such voting right equal to or in excess of five percent (5%) that
would be received, transferred or otherwise obtained by such company together
with any affiliate thereof shall be automatically allocated in equal portions to
the other members for so long as and to the extent that the ownership of such
voting rights would cause the voting rights of such company together with its
affiliates to equal or exceed five percent (5%) or more of the total voting
rights in the Company. The foregoing re-allocation of voting rights shall not
require the prior consent or approval of any member. The Board may determine an
appropriate mechanism to implement the objectives of this provision, including
but not limited to the creation of fractional voting rights or additional voting
rights.
ARTICLE II - MANAGEMENT BY BOARD OF MANAGERS
SECTION 1. Board of Managers. The business and affairs of the Company shall
be managed by or under the direction of a Board of Managers (or "Board"). Each
member (or any permitted transferee of such member) owning an interest
representing at least an original capital contribution commitment of One Hundred
Thousand Dollars ($100,000) as provided in Schedule A hereto shall be entitled
to appoint one representative to the position of a Manager on the Board. Each
member (together with any affiliate) having a representative on the Board shall
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have one vote. Each Manager shall hold his or her seat on the Board for so long
as the respective member remains a member and complies with this Agreement and
the appointed Manager does not resign. A member may change its Manager on the
Board by providing notice thereof to the other members at their addresses as set
forth in Schedule B, attached to and made a part of this Agreement. The Board
shall have full authority and decision-making power to manage the business and
affairs of the Company without further authorization by the members except as
such authorization may be specifically required herein, and the actions of the
Board taken in accordance with this Agreement shall bind the Company. In
recognition that each member has no more than one vote in the management of the
Company, in the case of transfer of less than the entire Interest of a member
under Section 5 of Article I, the transferring member and the transferee shall
mutually agree and notify the Company as to which of them shall exercise the
corresponding voting right (if any) on the Board, and the Company shall not be
liable for relying on such notice.
SECTION 2. Meetings of the Board of Managers. The Board may hold meetings,
both regular and special, within or outside the State of Delaware. Regular
meetings of the Board may be held without notice at such time and at such place
as shall from time to time be determined by the resolution of the Board. Special
meetings of the Board may be called by the President on five (5) business days
notice to each Manager, either personally, by telephone, by mail, by telegram or
by any other means of communication; special meetings shall be called by the
President or Secretary in like manner and on like notice on the written request
of at least a quarter of the Managers.
SECTION 3. Quorum and Acts of the Board. At all Board meetings, a quorum
shall consist of those Managers present who represent at least a majority of the
total number of members that have appointed a Manager. Except as otherwise
provided in Section 7 of this Article or any other provision of this Agreement,
the act of a majority of the Managers present at any meeting at which there is a
quorum shall be the act of the Board. If a quorum shall not be present at a
Board meeting, the Managers present at the meeting may adjourn the meeting,
until a quorum can be present. Any action required or permitted to be taken at
any meeting of the Board may be taken without a meeting, if a majority of the
Board members consent in writing, and the writing or writings are filed with the
minutes of Board proceedings.
SECTION 4. Electronic Communications and Proxies. Members of the Board, or
any committee designated by the Board, may participate in a Board or committee
meeting by means of conference telephone or similar communications equipment by
means of which all persons participating in the meeting can hear each other, and
such participation in a meeting shall constitute presence in person at the
meeting. If all the participants are participating by conference telephone or
similar communications equipment, the meeting shall be deemed to be held at the
principal place of business of the Company. A member of the Board may vote on
any matter(s) brought before the Board by providing a written proxy to any
officer or member of the
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Company.
SECTION 5. Committees. The Board may designate by resolution one or more
committees, each committee to consist of one or more of the Managers. Any such
committee shall have and exercise only those powers and authority in the
management of the Company's business and affairs as are delegated to it in the
Board resolution and no such committee shall have the power or authority to take
any of the actions described in section 7 of this Article unless authorized in
writing beforehand by a two-thirds majority vote of the full Board. Such
committee or committees shall have such name or names as may be determined from
time to time by resolution adopted by the Board. Each committee shall keep
regular minutes of its meetings and report the same to the Board when required.
SECTION 6. Compensation of Managers. No Manager shall be entitled to
receive any financial compensation for serving as a Manager of the Board.
SECTION 7. Actions Requiring Two-Thirds Approval of the Full Board.
Notwithstanding any other provision of this Agreement to the contrary, none of
the Board, any Manager, or any officer shall take any of the following actions
on behalf of the Company unless authorized to do so by a two-thirds vote of the
full Board:
(i) The sale, exchange or other disposition of any of the assets of the
Company greater than $ 20,000 (twenty-thousand dollars) in value;
(ii) The commencement of a voluntary proceeding seeking reorganization or
other relief with respect to the Company under any bankruptcy or
other similar law or seeking the appointment of a trustee, receiver,
custodian or other similar official of the Company or any
substantial part of its property, or the making by the Company of a
general assignment for the benefit of creditors;
(iii) The declaration or making of any distributions to members;
(iv) The entering into or withdrawal from by the Company of any joint
venture, partnership, subcontracting, license, sub-license,
manufacturing, marketing, distribution or other similar arrangement
with any person;
(v) The entering into by the Company of any agreement, facility,
commitment, guaranty, instrument or other undertaking providing for,
or relating to, the incurrence of any indebtedness or financing by
the Company;
(vi) The formation or organization of any subsidiary of the Company or
other restructuring of the Company and the appointment of directors
of (or persons with
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comparable authority with respect to) any such subsidiary;
(vii) The Company's commitment to any material capital expenditure defined
as any expenditure exceeding $20,000 (twenty-thousand dollars);
(viii) The adoption of a business plan and annual operating budget for the
Company (or any updates to the plan or budget) pursuant to Article
XVI, Section 4 hereof;
(ix) The entering into, amendment or termination of employment contracts
with Officers of the Company or other contracts with Officers,
Managers, or members or their respective affiliates;
(x) The appointment or change of the independent auditors or deposit
banks of the Company; or
(xi) The acquisition or lease by the Company of any real property, or any
sale, donation, lease or sublease of, or similar arrangement
affecting, any real property owned or leased by the Company.
ARTICLE III - MEMBERS
SECTION 1. Regular Meetings. The members shall meet not less than annually
at such time and place as the President determines.
SECTION 2. Special Meeting. Special meetings of the members may be called
by or at the request of the President, the Board, or any three members. The
President shall fix the place for holding any such special meeting of the
members.
SECTION 3. Notice. Notice of any regular or special meeting shall be given
at least ten (10) days previously thereto by written notice delivered personally
or mailed to each member at the business address of the person designated by the
member as its contact. If mailed, such notice shall be deemed to be delivered
when deposited in the United States mail so addressed, with postage thereon
prepaid. A copy of the notice may also be sent by e-mail or facsimile to the
member. Any member may waive notice of any meeting. The attendance of a member
at a meeting shall constitute a waiver of notice of such meeting, except where a
member attends a meeting for the express purpose of objecting to the transaction
of any business because the meeting is not lawfully called or convened.
SECTION 4. Quorum. A majority of members present in person or who
participate by means of electronic communications or proxy shall constitute a
quorum for the transaction of
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business at any meeting of the members, but if less than such majority is
present at a meeting, a majority of the members present may adjourn the meeting
from time to time without further notice.
SECTION 5. Electronic Communications. Members may participate in any
meeting by means of conference telephone or similar communications equipment
where all persons participating in the meeting can hear each other, and such
participation in a meeting shall constitute presence in person at the meeting.
If all the participants are participating by conference telephone or similar
communications equipment, the meeting shall be deemed to be held at the
Company's principal place of business.
SECTION 6. Manner of Acting. Except as otherwise provided in this
Agreement, the act of the majority of the members present in person or by proxy
at a meeting at which a quorum is present shall be the act of the Company. Each
member shall have one vote.
SECTION 7. Action Without a Meeting. Any action that may be taken by the
members at a meeting may be taken without a meeting if a consent in writing,
setting forth the action so to be taken, shall be signed before or after such
action by all of the members.
SECTION 8. Presumption of Assent. A member who is present at a meeting of
the members at which action on any Company matter is taken shall be presumed to
have assented to the action taken unless such member's dissent shall be entered
in the minutes of the meeting or unless such member shall file its written
dissent to such action with the person acting as the secretary of the meeting
before the meeting's adjournment or shall forward such dissent by certified
mail, return receipt requested, to the Company's Secretary as soon as
practicable after the meeting is adjourned. A member may submit its dissent
electronically via facsimile or e-mail so long as the Company acknowledges in
writing its receipt thereof. The right to dissent shall not apply to a member
who voted in favor of such action.
SECTION 9. Voting by Proxy. A member may vote on any matter(s) brought
before the members by providing a written proxy to any Company officer or
member.
SECTION 10. Actions of Members. Members, as members, have no authority to
act on behalf of or otherwise bind, the Company.
SECTION 11. Representations and Warranties. Each member hereby represents
and warrants to the Company and to the other members as follows:
A. It is duly organized and existing in good standing under the laws of
its state of organization and is duly qualified to do business in such
state.
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B. It possesses all requisite power and authority to enter into and
perform this Agreement and to carry out the transactions contemplated
herein.
ARTICLE IV - OFFICERS
SECTION 1. Number. The officers of the Company shall be a President, a
Chairman of the Board of Managers, a Secretary, and a Treasurer, each of whom
shall be elected by a two-thirds vote of the members.
SECTION 2. Term of Office. Each officer shall hold office until his or her
successor shall have been duly elected, until his or her death, or until he or
she shall resign or shall have been removed in the manner hereinafter provided.
SECTION 3. Removal. Any officer may be removed by a two-thirds vote of the
members.
SECTION 4. Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification or otherwise, shall be filled by the
members at a special meeting called for that purpose.
SECTION 5. President. The President shall be the principal executive
officer of the Company and, subject to the control of the Board, shall in
general supervise and control all of the business and affairs of the Company and
be responsible for the day-to-day operations of the Company. He or she shall,
when present, preside at all meetings of members. He or she may sign, pursuant
to authority delegated by the Board, contracts or other instruments, except in
cases where the signing and execution thereof shall be expressly delegated by
this Agreement to some other officer or agent of the Company, or shall be
required by law to be otherwise signed or executed; and in general shall perform
all duties incident to the office of President and such other duties as may be
prescribed by the Board.
SECTION 6. Chairman. The Chairman shall preside at all Board meetings. Only
a Manager may be the Chairman.
SECTION 7. Secretary. The Secretary shall: (a) keep the minutes of the
proceedings of the members in one or more books provided for that purpose; (b)
see that all notices are duly given in accordance with the provisions of this
Agreement or as required by law; (c) be custodian of the Company's records and
of the Company's seal and see that the Company's seal is affixed to all
documents the execution of which on the Company's behalf under its seal is duly
authorized; and (d) in general perform all of the duties incident to the office
of Secretary and such other duties as from time to time may be assigned to him
or her by the President or by the
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Board.
SECTION 8. Treasurer. The Treasurer shall: (a) have charge and custody of
and be responsible for all funds and securities of the Company; (b) receive and
give receipts for moneys due and payable to the Company from any source
whatsoever, and deposit all such moneys in the Company's name in such banks,
trust companies or other depositaries as shall be selected in accordance with
the provisions of this Agreement; and (c) in general perform all of the duties
incident to the office of Treasurer and such other duties as from time to time
may be assigned to him or her by the President or by the Board. If required by
the members, the Treasurer shall give a bond for the faithful discharge of his
or her duties in such sum and with such surety or sureties as the Board shall
determine.
ARTICLE V - BUSINESS PURPOSE;
CARBON REDUCTIONS AND WILDLIFE HABITAT ENHANCEMENT
The Company will have all legal powers and privileges, together with any
powers incidental thereto, to conduct, promote and attain the businesses,
purposes and activities of the Company. The Company's principal purpose shall be
to invest in and develop forestation and reforestation projects designed to
sequester carbon from the atmosphere, where such projects are not inconsistent
with the development and enhancement of wildlife habitat, and to secure the
legal rights associated with such sequestration (hereinafter the "Projects").
Members shall be entitled to claim a pro rata share of all carbon that is
determined to be sequestered by the Company's efforts to which legal rights have
been obtained ("Carbon Reductions") based on the members percentage Interest in
the Company. The Board shall take such actions as are reasonable and necessary
to: (i) ratify the amount of Carbon Reductions achieved through the Projects;
(ii) allow each member (or its designee(s) or transferee(s)) to utilize (or not
utilize) its share of Carbon Reductions in connection with the member's (or
designee(s) or transferee(s)) participation in any greenhouse gas reporting or
regulatory programs; (iii) transfer (or not transfer) the legal rights
associated with Carbon Reductions from the Company to each member (or its
designee(s) or transferees) at the member's direction; or (iv) take such other
action to use (or not to use) on behalf of or to permit use (or non-use) by one
or more members (or its or their designee(s) or transferee(s)) as the Board may
specifically authorize from time to time. In no event does the Company or any
member guarantee, warranty, or covenant to any member or any other party: (i)
that the Company's efforts will result in Carbon Reductions; (ii) that any
Carbon Reductions resulting from the Company's efforts or otherwise will have
any value regardless of whether such Carbon Reductions are held by the Company
or transferred to a member or other person; (iii) that any Carbon Reductions
resulting from the Company's efforts will be credited, certified, or otherwise
recognized under any governmental greenhouse gas voluntary reporting or
regulatory program. In addition to the principal purpose described herein, the
Company may carry on any other lawful business purpose or activity permitted by
the Agreement. So long as
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any member is subject to regulation under PUHCA as a registered holding company,
or a subsidiary company thereof, the Company shall not engage in any business
activity inconsistent with any exemption, advice, rule, or order of the
Securities and Exchange Commission relied upon by such member permitting its
ownership of its Interest in the Company.
ARTICLE VI - ALLOCATIONS AND DISTRIBUTIONS TO MEMBERS
SECTION 1. Defined Terms. For purposes of this Agreement, the following
shall be defined terms:
A. "Capital Account" means the separate capital account established and
maintained on behalf of each member. Such Capital Accounts shall be
maintained in accordance with the Code, including Section 704(b) of
the Code, Regulations, capital accounting rules of Regulations Section
1.704-1(b)(2)(iv), and other applicable authority. In the event of a
permitted sale or exchange of an Interest, the Capital Account of the
transferor shall become the Capital Account of the transferee to the
extent it relates to the transferred Interest.
B. "Code" means the Internal Revenue Code of 1986 , as amended, and any
successor statute.
C. "Deficit Capital Account" means with respect to any member, the
deficit balance, if any, in such member's Capital Account as of the
end of the taxable year, after giving effect to the following
adjustments:
(i). Credit to such Capital Account (1) any amount which such member
is obligated to restore, under Section 1.704-1(b)(2)(ii)(c) of the
Regulations, including, but not limited to, the unpaid principal
balance of any promissory note (of which the member is the maker)
contributed to the Company by the member, (2) the amount of such
member's share of Company minimum gain (as determined in accordance
with Section 1.704-2(g)(1) and (g)(3) of the Regulations), and (3) the
amount of such member's share of member nonrecourse debt minimum gain
(as determined under Section 1.704-2(i)(5) of the Regulations); and
(ii). Debit to such Capital Account the items described in Sections
1.704-1(b)(2)(ii)(d)(4), (5) and (6) of the Regulations.
(iii). This definition is intended to comply with the provisions of
Treasury Regulations Section 1.704-1(b)(2)(ii)(d) and shall be
interpreted consistently with those provisions.
14
D. "Capital Contribution" means, for purposes of this Article VI, with
respect to any member, the aggregate amount of money and the initial
Carrying Value of any property (other than money) contributed to the
Company pursuant to this Article VI.
E. "Carrying Value" means (i) with respect to any Company asset
contributed to the Company by any person, the gross fair market value
of such asset, adjusted as provided in the last sentence of this
paragraph, and (ii) with respect to any other Company asset, the
adjusted basis of such asset for federal income tax purposes as of the
time of determination; provided, however, that the Carrying Value of
all Company assets shall, at the election of the Tax Matters Member
with approval of the Board, be adjusted to equal their gross fair
market value, as determined by the Tax Matters Member with approval of
the Board, upon the occurrence of an event specified in Treasury
Regulations Section 1.704-1(b)(2)(iv)(f)(5). The Carrying Value of
Company property shall be increased (or decreased) to reflect any
adjustments to the adjusted basis of such assets pursuant to Code
Section 734(b) or Code Section 743(b), but only to the extent that
such adjustments are taken into account in determining Capital
Accounts pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(m)
and Subparagraph (vi) of the definition of "Profits" and "Losses".
F. "Depreciation" means for each Fiscal Year, an amount equal to the
depreciation, amortization, or other cost recovery deduction allowable
with respect to an asset for such Fiscal Year, except that if the
Carrying Value of an asset differs from its adjusted basis for federal
income tax purposes at the beginning of such Fiscal Year, Depreciation
shall be an amount which bears the same ratio to such beginning
Carrying Value as the federal income tax depreciation, amortization,
or other cost recovery deduction for such Fiscal Year bears to such
beginning adjusted tax basis; provided, however, that if the adjusted
basis for federal income tax purposes of an asset at the beginning of
such Fiscal Year is zero, Depreciation shall be determined with
reference to such beginning Carrying Value using any reasonable method
selected by the Tax Matters Member with the approval of the Board.
G. "Member Nonrecourse Debt" has the meaning set forth in Treasury
Regulations Section 1.704-2(b)(4).
H. "Member Nonrecourse Deductions" has the meaning set forth in Treasury
Regulations Sections 1.704-2(i)(1) and 1.704-2(i)(2).
15
I. "Minimum Gain" means the amount determined pursuant to the provisions
of Treasury Regulations Section 1.704-2(d).
J. "Minimum Gain Attributable to Member Nonrecourse Debt" means the
amount determined pursuant to the provisions of Treasury Regulations
Section 1.704-2(i)(3).
K. "Nonrecourse Deductions" has the meaning set forth in Treasury
Regulations Section 1.704-2(b)(1).
L. "Nonrecourse Liability" means those liabilities defined as such in
Treasury Regulations Section 1.704-2(b)(3).
M. "Membership Interest" means, with respect to a member, the member's
Interest (as defined in Article I, Section 2 of this Agreement), the
member's rights to distributions (liquidating or otherwise), the
member's tax allocations (if any), and the member's information and
rights to vote, consent, or approve.
N. "Profit" or "Loss" means, for any Fiscal Year, an amount equal to the
Company's taxable income or loss for such Fiscal Year, determined in
accordance with the Code Section 703(a) (for this purpose, all items
of income, gain, loss, or deduction required to be stated separately
pursuant to Code Section 703(a)(1) shall be included in taxable income
or loss), with the following adjustments:
(i) Any income of the Company that is exempt from federal income tax
and not otherwise taken into account in computing Profits or
Losses pursuant to this definition of "Profits" and "Losses"
shall be added to such taxable income or loss;
(ii) In the event the Carrying Value of any Company property is
adjusted pursuant to the definition of Carrying Value, the
amount of such adjustment shall be taken into account as gain or
loss from the disposition of such asset for purposes of
computing Profits or Losses;
(iii) Any expenditures of the Company described in Code Section
705(a)(2)(B) or treated as Code Section 705(a)(2)(B)
expenditures pursuant to Treasury Regulations Section
1.704-1(b)(2)(iv)(i), and not otherwise taken into account in
computing Profits or Losses pursuant to this definition of
"Profits" and "Losses" shall be subtracted from such taxable
income or Loss;
16
(iv) Gain or loss resulting from any disposition of Company property
with respect to which gain or loss is recognized for federal
income tax purposes shall be computed by reference to the
Carrying Value of the Company property disposed of,
notwithstanding that the adjusted tax basis of such Company
property differs from its Carry Value;
(v) In lieu of depreciation, amortization and other cost recovery
deductions taken into account in computing such taxable income
or loss, there shall be taken into account Depreciation for such
Allocation Year, computed in accordance with the definition of
"Depreciation";
(vi) To the extent an adjustment to the adjusted tax basis of any
Company property pursuant to Code Section 734(b) is required,
pursuant to Treasury Regulations Section
1.704-1(b)(2)(iv)(m)(4), to be taken into account in determining
Capital Accounts as a result of a distribution other than in
liquidation of a member's Membership Interest, the amount of
such adjustment shall be treated as an item of gain (if the
adjustment increases the basis of the asset) or loss (if the
adjustment decreases such basis) from the disposition of such
asset and shall be taken into account for purposes of computing
Profits or Losses.
O. "Tax Matters Member" has the meaning assigned to such term in Article
XIII.
P. "Regulations" means the regulations, temporary and final, of the
Treasury Department promulgated under the Code.
SECTION 2. Net Profits. Net profits for any taxable year of the Company
shall be allocated to the members in proportion to their respective Interests.
SECTION 3. Net Losses. Net losses for any taxable year shall be allocated
to the members in proportion to their respective Interests.
SECTION 4. Distributions. Except upon dissolution and liquidation as set
forth in Article XI, at such times as the Board shall determine, but no less
than annually, the distributable cash of the Company, if any, shall be
distributed to the members in proportion to their respective Interests.
17
SECTION 5.
A. The net Profit and net Loss of the Company, including each item of
income, gain, loss and deduction, and credit shall be allocated with
respect to each Fiscal Year (or portion thereof) among the Members in
accordance with their respective Interest.
B. Allocations for tax purposes shall be made in the same manner as the
allocations set forth under Section 5(a); however the following
adjustments shall be made and applied, to the extent necessary, in a
manner consistent with Treasury Regulation Section 1.704-1(b):
(1) The allocations of income, gain, loss and deduction pursuant
to Section 5(a) shall be adjusted to comply with the qualified
income offset requirements of Treasury Regulation Section
1.704-1(b) and the nonrecourse deduction or minimum gain
charge-back requirements of Treasury Regulation Section 1.704-2.
(2) The net Losses allocated pursuant to Section 5(a) shall not
exceed the maximum amount of net Losses that can be so allocated
without causing any Member to have a Deficit Capital Account at
the end of any fiscal period. If some but not all Members would
have Deficit Capital Accounts as a consequence of an allocation
of net Losses pursuant to this Section 5(b)(ii), then the
limitation set forth in this Section 5(b)(ii) shall be applied on
a Member-by-Member basis so as to allocate the maximum
permissible net Losses to each Member under Regulations Section
1.704-1(b)(2)(ii)(d). With respect to each allocation period
thereafter, 100 percent of net Profit shall be allocated to the
Members up to the aggregate of, and in proportion to, any net
Losses previously allocated to each Member in accordance with
this Section 5(b)(ii) in the reverse order in which such net
Losses were allocated.
(3) Any special allocations pursuant to the preceding clause (i)
required in order to comply with the Treasury Regulations shall
be taken into account, to the extent permitted by the Treasury
Regulations, in computing subsequent allocations pursuant to this
Section 5(b) so that the net amount of any items so allocated and
all other items allocated to each Member shall, to the extent
possible, be equal to the amount that would have been allocated
to each Member had there been no such special allocation.
18
C. If there is a change in any Member's share of the distributions or
other items of the Company during any Fiscal Year as a result of the
Transfer (as defined herein) of an Interest (subject, in each case, to
Article XI hereof), allocations among the Members shall be made in
accordance with their respective Interests in the Company from time to
time during such Fiscal Year in accordance with Code Section 706,
using the closing-of-the-books method; however depreciation shall be
deemed to accrue ratably on a daily basis over the entire year during
which the corresponding asset is owned by the Company.
D. If the Internal Revenue Service successfully asserts an adjustment to
the taxable income of a Member attributable to a transaction between
the Member and the Company and, as a result of such adjustment, the
Company is entitled to a deduction or reduction in income for Federal
income tax purposes in excess of any gain recognized by the Company,
such excess deduction shall be allocated to such Member or such
reduced income shall be reflected in a reduction in income allocated
to such Member. If the Internal Revenue Service successfully asserts
an adjustment to the taxable income of the Company attributable to a
transaction between the Member and the Company and, as a result of
such adjustment, any Member is entitled to a deduction or reduction in
income for Federal income tax purposes in excess of any gain
recognized by such Member, the additional Company taxable income shall
be allocated to such Member.
Notwithstanding anything to the contrary in this Section 5, the Tax Matters
Member shall not take any of the actions described in this Section 5 without the
prior approval of the Board, as required by Article XIII.
SECTION 6. Special Allocations. The special allocations described in
Sections 7 through 12 of this Article shall be made in the same order as they
appear in this Article VI.
SECTION 7. Minimum Gain Chargeback. Notwithstanding any other portion of
this Article VI and except as provided in Section 1.704-2(f) of the Regulations,
if there is a net decrease in the Company's minimum gain as determined under
Sections 1.704-2(b)(2) and 1.704-2(d) of the Regulations during a taxable year
of the Company, then the capital accounts of each member shall be allocated
items of income (including gross income) and gain for such year (and, if
necessary, for subsequent years) in an amount equal to the total net decrease in
the Company's minimum gain multiplied by the members' percentage share of the
Company's minimum gain at the end of the preceding taxable year determined in
accordance with Section 1.704-2(g) of the Regulations. This Article VI, Section
7 is intended to comply with the minimum gain chargeback requirement of Section
1.704-2(f) of the Regulations and shall be interpreted consistently therewith.
The items to be so allocated shall be determined in accordance with Sections
1.704-2(f)(6) and 1.704-2(j)(2) of the Regulations. In any taxable year that the
19
Company has a net decrease in the Company's minimum gain, if the minimum gain
chargeback requirement would cause a distortion in the economic arrangement
among the members and it is not expected that the Company will have sufficient
other income to correct that distortion, the Board may in its discretion (and
shall, if requested to do so by a member) seek to have the Internal Revenue
Service waive the minimum gain chargeback requirement in accordance with
Regulation Section 1.704-2(f)(4).
SECTION 8. Chargeback of Minimum Gain Attributable to Member Nonrecourse
Debt. Except as otherwise provided in Treasury Regulations Section
1.704-2(i)(4), notwithstanding any other provision of this Agreement, if there
is a net decrease in Minimum Gain Attributable to Member Nonrecourse Debt during
any Company Allocation Year, each member who has a share of the Minimum Gain
Attributable to Member Nonrecourse Debt, determined in accordance with Treasury
Regulations Section 1.704-2(i)(5), shall be specially allocated items of Company
income and gain for such Allocation Year (and, if necessary, subsequent
Allocation Years) in an amount equal to such member's share of the net decrease
in Minimum Gain Attributable to Member Nonrecourse Debt, determined in
accordance with Treasury Regulations Section 1.704-2(i)(4). Allocations pursuant
to the previous sentence shall be made in proportion to the respective amounts
required to be allocated to each member. The items to be so allocated shall be
determined in accordance with Treasury Regulations Sections 1.704-2(i)(4) and
1.704-2(j)(2). This Section is intended to comply with the minimum gain
chargeback requirement in Treasury Regulations Section 1.704-2(i)(4) and shall
be interpreted consistently therewith.
SECTION 9. Qualified Income Offset. In the event any member unexpectedly
receives any adjustments, allocations, or distributions described in Sections
1.704-1 (b)(2)(ii)(d)(4), (5), or (6) of the Regulations, which create or
increase a Deficit Capital Account of such member, then items of Company income
and gain (consisting of a pro rata portion of each item of Company income,
including gross income, and gain for such year and, if necessary, for subsequent
years) shall be specially allocated and credited to the Capital Account of such
member in an amount and manner sufficient to eliminate, to the extent required
by the Regulations, the Deficit Capital Account so created as quickly as
possible. It is the intent that this Article VI, Section 9 be interpreted to
comply with the alternate test for economic effect set forth in Section 1.704-1
(b)(2)(ii)(d) of the Regulations.
SECTION 10. Gross Income Allocation. In the event any member would have a
Deficit Capital Account at the end of any Company taxable year which is in
excess of the sum of any amount that such member is obligated or deemed
obligated to restore to the Company (1) pursuant to this Agreement, (2) under
Regulations Section 1.704-2(g)(1) regarding Company minimum gain, and (3) under
Regulations Section 1.704-2(i)(5) regarding member nonrecourse minimum gain,
then the Capital Account of such member shall be specially allocated and
credited with items of Company income (including gross income) and gain in the
amount of such
20
excess as quickly as possible.
SECTION 11. Allocation of Nonrecourse Deductions. Beginning in
the first taxable year in which there are allocations of "nonrecourse
deductions" (as described in Section 1.704-2(b) of the Regulations) attributable
to nonrecourse liabilities of the Company, and thereafter throughout the full
term of the Company, nonrecourse deductions shall be allocated to the members in
accordance with, and as a part of, the allocations of Company net losses for
such period subject to the preceding Section 3 of this Article.
SECTION 12. Allocation of Member Nonrecourse Debt Deductions. Items of
Company loss, deduction and expenditures described in Section 705(a)(2)(B) of
the Regulations which are attributable to any nonrecourse debt of the Company
and are characterized as member nonrecourse debt deductions as determined under
Section 1. 704-2(i)(2) of the Regulations shall be charged to the members'
Capital Accounts in accordance with said Section 1.704-2(i) of the Regulations.
SECTION 13. Intention of Allocations. Any credit or charge to the Capital
Accounts of the members pursuant to Sections 6 through 12 of this Article shall
be taken into account in computing subsequent allocations of net profits and net
losses pursuant to Sections 2 and 3 of this Article, so that the net amount of
any items charged or credited to Capital Accounts shall to the extent possible,
be equal to the net amount that would have been allocated to the Capital Account
of each member if the special allocations required by Sections 6 through 12 of
this Article hereof had not occurred.
A. In accordance with Section 704(c)(1)(A) of the Code and Section
1.704-1(b)(2)(iv)(d)(3) of the Regulations, if a member contributes
property with a fair market value that differs from its adjusted basis
at the time of contribution, income, gain, loss and deductions with
respect to the property shall, solely for federal income tax purposes,
be allocated among the members so as to take account of any variation
between the adjusted basis of such property to the Company and its
fair market value at the time of contribution. Allocations pursuant to
this Section 13A shall be made utilizing the remedial allocation
method described in Treasury Regulation Section 1.704-3(d).
B. Pursuant to Section 704(c)(1)(B) of the Code, if any contributed
property is distributed by the Company other than to the contributing
member within seven years of being contributed, then, except as
provided in Section 704(c)(2) of the Code, the contributing member
shall be treated as recognizing gain or loss from the sale of such
property in an amount equal to the gain or loss that would have been
allocated to such member under Section 704(c)(1)(A) of the Code if the
property had been sold at its fair market value at the time of the
distribution.
21
C. In the case of any distribution of property (other than cash) by the
Company to a member, such member shall be treated as recognizing gain
in an amount equal to the lesser of:
(1) the excess (if any) of (A) the fair market value of the
property received in the distribution over (B) the adjusted basis
of such member's interest in the Company immediately before the
distribution, reduced (but not below zero) by the amount of money
received in the distribution, or
(2) the Net Precontribution Gain (as defined in Section 737(b)
of the Code) of the member. The Net Precontribution Gain means
the net gain (if any) which would have been recognized by the
distributee member under Section 704(c)(1)(B) of the Code if all
property which (A) had been contributed to the Company within
seven years of the distribution, and (B) is held by the Company
immediately before the distribution, had been distributed by the
Company to another member.
If any portion of the property distributed consists of property
which had been contributed by the distributee member to the
Company, then such property shall not be taken into account under
this Article and shall not be taken into account in determining
the amount of the Net Precontribution Gain. If the property
distributed consists of an interest in a general partnership,
limited partnership, limited liability company, corporation,
joint venture, trust, business trust, cooperative, association or
other such entity, then the preceding sentence shall not apply to
the extent that the value of such interest is attributable to the
property contributed to such entity after such interest had been
contributed to the Company.
SECTION 14. Allocation of Income and Loss and Distributions in Respect of
Interest Transferred. Distributions of Company assets may be made only to
holders of Interests shown on the Company's books and records. Neither the
Company, the Board, nor any member (who is not a recipient of such distribution)
shall incur any liability for making distributions in accordance with the
provisions of the foregoing, whether or not the Company, the Board, or the
member has knowledge or notice of any transfer or purported transfer of
ownership of a Company Interest which has not been effected in accordance with
this Agreement. Notwithstanding any provision above to the contrary, the
Company's gain or loss realized in connection with the sale or other disposition
of any of the Company's assets shall be allocated solely to the holders of
Company Interests as of the date the sale or other disposition occurs.
SECTION 15. Revaluation of Capital Accounts. In connection with a
contribution of
22
cash or other property (other than a de minimis amount) by a member or existing
member as consideration for the member's interest in the Company, or in
connection with the dissolution of the Company or a distribution of money or
other property (other than a de minimis amount) by the Company, to a withdrawing
member, as consideration for a membership interest, the Capital Accounts of the
members shall be adjusted to reflect a revaluation of Company property
(including intangible assets) in accordance with Regulation Section
1.704-1(b)(2)(iv)(f). If under Section 1.704-1(b)(2)(iv)(f) of the Regulations,
Company property that has been revalued is properly reflected in the Capital
Accounts and on the books of the Company at a book value that differs from the
adjusted tax basis of such property, then depreciation, depletion, amortization
and gain or loss with respect to such property shall be shared among the members
in a manner that takes account of the variation between the adjusted tax basis
of such property and its book value, in the same manner as variations between
the adjusted tax basis and fair market value of property contributed to the
Company are taken into account in determining the members' share of tax items
under Section 704(c) of the Code.
SECTION 16. Recapture. All recapture of income tax deductions resulting
from sale or other disposition of Company property shall be allocated to the
member or members to whom the deduction that gave rise to such recapture was
allocated hereunder to the extent that such member is allocated any gain from
the sale or other disposition of such property.
SECTION 17. Other Allocations.
A. For purposes of determining the net profits and net losses or other
items allocable to any period, net profits, net losses and any other
items shall be determined on a daily, monthly, or other basis, as
determined by the Board using any permissible method under Code
Section 706 and the Regulations thereunder.
B. The members are aware of the income tax consequences of the
allocations made hereunder and hereby agree to be bound by the
provisions of this Agreement in reporting their shares of Company
income and loss for income tax purposes.
C. To the extent permitted by Section 1.704-2(h)(3) of the Regulations,
the Board shall endeavor to treat distributions as having been made
from the proceeds of a nonrecourse liability or a member nonrecourse
debt only to the extent that such distributions would cause or
increase the Deficit Capital Account for any member.
ARTICLE VII - CONTRACTS, LOANS, CHECKS AND DEPOSITS
SECTION 1. Contracts. Subject to the conditions set forth in Article II,
Section 7, the Board may authorize any officer or officers, agent or agents, to
enter into any contract or execute
23
and deliver any instrument in the name of and on behalf of the Company, and such
authority may be general or confined to specific instances.
SECTION 2. Loans. No loans shall be contracted on behalf of the Company and
no evidences of indebtedness shall be issued in its name unless authorized by
the Board subject to the conditions set forth in Article II, Section 7. Such
authority may be general or confined to specific instances.
SECTION 3. Checks, Drafts, etc. All checks, drafts or other orders for the
payment of money, notes or other evidences of indebtedness issued in the name of
the Company shall be signed by such officer or officers, agent or agents of the
Company and in such manner as shall from time to time be determined by Board.
SECTION 4. Deposits. All funds of the Company not otherwise employed shall
be deposited from time to time to the credit of the Company in such banks, trust
companies or other depositaries as the Board may select.
ARTICLE VIII - LIMITED LIABILITY AND
EXCULPATION OF MANAGERS AND OFFICERS
SECTION 1. Limited Liability. The debts, obligations and liabilities of the
Company, whether arising in contract, tort or otherwise, will be solely the
debts, obligations and liabilities of the Company, and no member, Manager,
employee or agent of the Company will be obligated personally for any such debt,
obligation or liability of the Company solely by reason of being a member or
acting in the capacity as a Manager, employee or agent of the Company, except as
provided under Article IX.
SECTION 2. Exculpation. Any Company Manager or officer exercising
authorities or responsibilities for or on behalf of the Company shall not be
personally liable to the Company for damages or for any breach of duty in that
capacity, provided that nothing in this Article shall eliminate or limit the
liability of any Manager or officer if a judgment or other final adjudication
adverse to him or her establishes that his or her acts or omissions were in bad
faith or involved willful misconduct or a knowing violation of law, or that he
or she personally gained in fact a financial profit or other advantage to which
he or she was not legally entitled.
ARTICLE IX - INDEMNIFICATION OF MANAGERS AND OFFICERS
To the fullest extent permitted by law, the Company shall indemnify and
hold harmless any Manager or officer of the Company (collectively, the
"Indemnitees") from and against any
24
and all claims and demands whatsoever; provided that no indemnification will be
made to or on behalf of any Indemnitee if a judgment or other final adjudication
adverse to such Indemnitee establishes; (a) that his or her acts were committed
in bad faith or were the result of active and deliberate dishonesty and were
material to the cause of action so adjudicated, or (b) that he or she personally
gained in fact a financial profit or other advantage to which he or she was not
legally entitled. The provisions of this Article shall continue to afford
protection to each Indemnitee regardless of whether he or she remains a Manager,
officer, employee or agent of the Company. Indemnification shall be limited to
the capital of the Company, except to the extent that such indemnification is
covered by the proceeds of any insurance purchased by Company. No member shall
be responsible for this indemnification obligation.
ARTICLE X - FISCAL YEAR
The fiscal year ("Fiscal Year") of the Company shall begin on the first day
of January and end on the 31st of December in each year.
ARTICLE XI - DISSOLUTION, CANCELLATION AND TERMINATION
SECTION 1. Dissolution and Cancellation. The Company may be dissolved only
upon the earlier of the following: (a) expiration of the Company's term or (b) a
decision in writing by at least two-thirds of the members to dissolve the
Company; or (c) as otherwise provided in the Act. After the Company has
completed winding up its affairs and upon the filing with the State of Delaware
of a Certificate of Cancellation the Company shall cease to carry on its
business.
SECTION 2. Winding Up, Liquidation and Distribution of Assets.
A. Accounting. Upon the occurrence of an event of dissolution, an
accounting shall be made by the Company's independent accountants of
the Company's accounts and of the Company's assets, liabilities and
operations, from the date of the last previous accounting until the
date of dissolution. The Board shall immediately proceed to wind up
the Company's affairs.
B. Winding Up. If the Company is dissolved and its affairs are to be
wound up, the Company shall continue solely for the purpose of winding
up its affairs in an orderly manner, liquidating its assets, and
satisfying the claims of its creditors and members and no member shall
take any action that is inconsistent with or not necessary or
appropriate for winding up the Company's business and affairs. To the
extent not inconsistent with the foregoing, all covenants and
obligations in this
25
Agreement shall continue in full force and effect until such time as
the Company's property and assets have been distributed pursuant to
this Agreement and the Certificate of Cancellation has been filed with
the State of Delaware. The Board shall be responsible for overseeing
the winding up and dissolution of the Company, shall take full account
of the Company's liabilities and property, shall cause the property to
be liquidated as promptly as is consistent with obtaining the fair
value thereof (except to the extent the Board decides to distribute
any assets to the members in kind), shall allocate any net profit and
net loss resulting from such sales to the members as set forth in
Article VI and shall cause the proceeds therefrom, to the extent
thereof, to be applied and distributed in the following order:
(1) First, to the payment and discharge of all the Company's debts
and liabilities to creditors, including any loans advanced by the
members and all costs related to the dissolution, winding up, and
liquidation and distribution of assets;
(2) Second, to the establishment of such reserves as may reasonably
be determined by the Board to be necessary to provide for the
Company's contingent liabilities; and
(3) The balance, if any, to the members, in proportion to the
members' respective positive balances in their Capital Accounts,
after giving effect to all contributions, distributions and
allocations and adjustments for the Company's taxable year during
which the liquidation occurs. Notwithstanding anything to the
contrary contained herein, no member shall have an obligation to
restore a negative balance in its Capital Account (or a Deficit
Capital Account) upon winding up and dissolution of the Company.
C. Valuation of Distributable Assets. Assets may be distributed to
members either in cash or in kind, as determined by the Board, with
any assets distributed in kind being valued for this purpose at the
fair market value at the date of dissolution as determined by the
Board. In the event of the Company's dissolution, the Board may
request an independent appraisal of the fair market value of the
Company's assets. If such assets are distributed in kind, such assets
shall be deemed to have been sold as of the date of dissolution for
their fair market value, and the Capital Accounts shall be adjusted
pursuant to this Agreement to reflect such deemed sale.
D. Termination; Compliance with Laws. Upon completion of the winding up,
26
liquidation and distribution of the assets and the filing of the
Certificate of Cancellation with the State of Delaware, the Company
shall be deemed terminated. The Board shall comply with any applicable
requirements of applicable law pertaining to the winding up of the
Company's affairs and the final distribution of its assets.
SECTION 3. Certificate of Cancellation. When all debts, liabilities and
obligations have been paid and discharged or adequate provisions have been made
therefor and all the remaining property and assets have been distributed to the
members, a Certificate of Cancellation shall be executed in duplicate and
verified by the person signing the Certificate, which Certificate shall set
forth the information required by applicable law. Upon filing the Certificate of
Cancellation with the State of Delaware, the Company shall cease to exist,
except for the purpose of suits, other proceedings and appropriate actions
pursuant to applicable law. The Board shall have authority to distribute any
Company property discovered after filing of the Certificate of Cancellation with
the State of Delaware, convey real estate and take such other action as may be
necessary on behalf of and in the name of the Company.
SECTION 4. Return of Contribution Nonrecourse to Other Members. Except as
provided by law, upon dissolution, each member shall look solely to the assets
of the Company for the return of the member's capital contribution. If the
Company property remaining after the payment or discharge of the Company's debts
and liabilities is insufficient to return the cash contribution of one or more
members, such member or members shall have no recourse against any other member
or the Board.
ARTICLE XII - WAIVER OF NOTICE
Unless otherwise provided by law, whenever any notice is required to be
given to any Company member or officer under the provisions of this Agreement or
pursuant to the Company's Certificate of Formation, a waiver thereof in writing,
signed by the person or persons entitled to such notice, whether before or after
the time stated therein, shall be deemed equivalent to the giving of such
notice.
ARTICLE XIII - TAX MATTERS
The members of the Company and the Company intend that the Company be
treated as a partnership for all income tax purposes and will file all necessary
and appropriate forms in furtherance of that position. The Board shall cause the
preparation and timely filing of all tax returns required to be filed pursuant
to the Code and all other tax returns deemed necessary in each jurisdiction in
which the Company does business. Copies of such returns (including K-1
27
Forms or their equivalent), or pertinent information therefrom, shall be
furnished to the members by March 15 each year after the end of the Company's
Fiscal Year. All elections permitted to be made by the Company under the federal
or state laws shall be made by the Board in the Board's sole discretion. The
Board shall report the members' shares of net profits, net losses, income,
expense, deduction and credit for federal income tax purposes in accordance with
the terms of this Agreement.
A. Tax Matters Member. As soon as reasonably practicable after formation
of the Company, the Board shall designate a member by two-thirds vote
(and subject to that member's approval) as Tax Matters Member (as
defined in Code Section 6231(a)(7)) on behalf of the Company. The Tax
Matters Member shall take such action as may be necessary to cause
each other member to become a "notice Member" within the meaning of
Section 6223 of the Code. The Tax Matters Member shall inform each
other member of all significant matters that may come to its attention
in its capacity as Tax Matters Member by giving notice thereof on or
before the fifth (5/th/) business day after becoming aware thereof
and, within that time, shall forward to each other member copies of
all significant written communications it may receive in that
capacity. The Tax Matters Member may take any action contemplated by
Sections 6222 through 6232 of the Code (inclusive); provided, however,
that the Tax Matters Members shall not, without prior approval of the
Board, (i) extend the statute of limitations on any income tax return
of the Company; (ii) settle any income tax controversy; (iii) file a
petition in the United States Tax Court; or (iv) file a claim for
refund. Any reasonable cost incurred by the Tax Matters Member in
connection with performing his or her duties as Tax Matters Member,
including retaining accountants and attorneys, shall be as reimbursed
expenses of the Company. The Tax Matters Member shall not take any
action on behalf of the Company without prior approval of the Board.
The Tax Matters Member shall provide all information received in his
or her capacity to the Board.
B. Tax Status. The tax status of the Company shall not be changed without
unanimous consent of the members.
C. Tax Return Elections. The Company shall make the following elections
on the appropriate tax returns:
(i) to adopt the calendar year as the Company's Fiscal Year;
(ii) to adopt the accrual method of accounting and to keep the
Company's books and records accordingly;
(iii) if a distribution of Company property as described in
Section 734 of
28
the Code occurs or if a transfer of a Company Interest as
described in Section 743 of the Code occurs, on request by notice
from any member, if the Board so approves, to elect pursuant to
Section 754 of the Code, to adjust the basis of Company
properties;
(iv) the Company shall make the election under Code Section 709
to amortize organizational expenses over 60 months. The
Pre-formation Expenses shall be amortized in accordance with Code
Section 709 and the amortization expense shall be allocated to
the members in the ratio of the total Pre-formation Expenses
incurred by each; and
(v) any other election the Tax Matters Member may deem
appropriate and in the best interests of the members.
D. Code Section 754 Adjustments.
To the extent an adjustment to the adjusted tax basis of any Company
property pursuant to Code Section 734(b) or Code Section 743(b) is
required pursuant to Regulations Section 1.704-1(b)(2)(iv)(m)(2) or
1.704-1(b)(2)(iv)(m)(4) to be taken into account in determining
Capital Accounts as the result of a distribution to a member in
complete liquidation of its Interest, the amount of such adjustment to
Capital Accounts shall be treated as an item of gain (if the
adjustment increases the basis of the asset) or loss (if the
adjustment decreases such basis) and such gain or loss shall be
allocated to the members in accordance with their interests in the
Company in the event Regulations Section 1.704-1(b)(2)(iv)(m)(2)
applies, or to the member to whom such distribution was made in the
event Regulations Section 1.704-1(b)(2)(iv)(m)(4) applies.
ARTICLE XIV - PUBLICITY
No member shall issue publicity of any kind relating to this Agreement or
the Projects without the Board's prior written approval, which approval shall
not be unreasonably withheld. Each member shall inform the Board of any response
made to any inquiry from the news media concerning the Agreement or the
Projects. In addition, no member shall publish or release any technical paper,
article, publication, or announcement in connection with this Agreement or the
Projects, during or after the term of this Agreement, without the Board's prior
written approval, which approval shall not be unreasonably withheld. The Board
shall promptly establish a generally-applicable publicity policy.
ARTICLE XV - DISPUTE RESOLUTION
SECTION 1. Negotiation. In the event of any dispute between a member and
the
29
Company regarding this Agreement, the member and the Company (hereinafter the
Parties) first shall attempt to resolve the dispute through good faith
negotiation.
SECTION 2. Arbitration. In the event of a dispute that is not resolvable
through such negotiation, the Parties shall promptly submit the dispute to
binding arbitration in accordance with the Rules of the American Arbitration
Association.
A. Commencement. Any Party may commence an arbitration by serving a
written request for arbitration on the other Party by at least one
method reasonably calculated to provide the other Party with actual
notice of the request. The request shall include all matters required
for a request for arbitration under the Rules of the American
Arbitration Association. The Party upon whom the request for
arbitration is served shall submit to arbitration as requested. Any
Party which shall refuse to submit to arbitration shall be liable to
the requesting Party for any award and judgment resulting from such
arbitration, together with all expenses, including reasonable
attorneys' fees and court costs, incurred by the requesting Party to
enforce or collect the arbitration award, and all expenses, including
reasonable attorneys' fees and court costs, incurred by the requesting
Party to defend any effort by the refusing Party to submit the dispute
to any forum, including any court, not designated by this Agreement.
B. Procedures. The arbitration shall be conducted in Washington, D.C., in
the English language. The proceeding shall be conducted in such a
manner as to be completed within one (1) year of the appointment of
the arbitrator. For purposes of this Article, "arbitrator" shall also
mean "arbitrators" if the Parties appoint multiple arbitrators. The
arbitrator may render partial or prehearing awards and orders. The
Parties shall exchange all documents in their respective possession
relating to the subject matter of the dispute. Each Party to the
dispute may conduct a total of two depositions of employees, officers
or agents of the other Party, at a time and place convenient to the
person to be deposed. The arbitrator may enter sanctions for, or
attach weight to, a Party's failure to disclose.
C. Technical Matters. If for any particular arbitration proceeding the
substantial portion of the matters to be arbitrated involve technical,
engineering or scientific expertise, the Parties shall endeavor to
select an arbitrator with previous relevant expertise.
D. Expenses and Costs. Each Party shall bear its own expenses and costs
of arbitration.
E. Judgment. Judgment upon the award may be entered in any court of
competent
30
jurisdiction. Any Party seeking to enforce or collect an award shall
be entitled to payment by the Party against whom such enforcement is
sought of all expenses, including reasonable attorneys' fees and court
costs incurred in seeking to enforce or collect the arbitration award.
F. No Limitation on Rights or Remedies. No part of this Article shall be
construed to limit any rights or remedies of a Party to bring any
action in any court of competent jurisdiction for injunctive or other
provisional relief necessary or appropriate to compel the other Party
to comply with the obligations of this Article. In addition, no part
of this Article shall be construed to limit any rights or remedies of
a Party, at its sole discretion, to bring instead of or in addition to
any arbitration under this Article, any action in any court of
competent jurisdiction for injunctive or other provisional relief
necessary or appropriate to protect its trademarks, trade names,
service marks, patents, trade secrets, confidential information or
other intellectual property.
ARTICLE XVI - REPORTS AND RECORDS
SECTION 1. Books and Records; Inspection Rights. Books, records and
accounts will be maintained by the Company showing its assets, liabilities,
operations, transactions and financial condition in accordance with generally
accepted accounting principles ("GAAP"). The Company's books, budgets, analyses
(including allocation and distribution methodologies and calculations, records
(including invoices, canceled checks and other documents needed to justify costs
and expenditures) and reports, a copy of the Certificate of Formation and any
amendments thereto or restatements thereof, executed copies of any powers of
attorney pursuant to which any document has been executed, a copy of this
Agreement and any amendments thereto, and all notices related to the appointment
and removal of Managers will be maintained at the business office of the Company
(or at such other place as the Board may specify) and each member (and the
designated representatives of any member) will, at all reasonable times, during
regular business hours, and upon reasonable notice, have the right to inspect
and copy the same.
SECTION 2. Financial Reports. Within twenty (20) days following the close
of each quarter and ninety (90) days after the close of each Fiscal Year of the
Company, the Board will cause to be prepared (at the Company's expense) and
furnished to each person who was a member during the fiscal period then ended,
an income statement, balance sheet, statement of cash flows and such other
information as may be reasonably requested by a member. The Board will cause to
be prepared annual audited financial statements (at the Company's expense) by a
nationally or regionally recognized accounting firm and furnish such financial
statements to each member during the fiscal period then ended within ninety (90)
days from the end of the Fiscal Year.
31
SECTION 3. Audit Request by Members. Any member(s) may request the Board to
form a committee to conduct an audit of any of the activities of the Company,
including, an audit of the Company's financial statements, the Company's risk
management practices, and contracts executed by the Company. The Board shall
promptly consider such request, and shall promptly inform the requesting
member(s) of the Board's decision and the reasons for its decision with respect
to such request.
SECTION 4. Annual Business Plan and Operating Budget. The Board shall adopt
by two-thirds vote a business plan and annual operating budget for the Company
(or an updates to the plan or budget) which plan and budget shall be presented
to the Board for approval prior to the start of each Fiscal Year and which the
Board shall seek to adopt prior to the start of each Fiscal Year.
ARTICLE XVII - MISCELLANEOUS PROVISIONS
SECTION 1. Amendment. Any amendment to this Agreement must be in writing,
executed by all of the members.
SECTION 2. Pre-Organization Costs. The Board shall pay all costs associated
with formation of the Company as soon as reasonably practicable upon formation.
SECTION 3. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the successors and assigns of the members and their
respective heirs, executors, administrators, successors and assigns, subject to
the restrictions on assignment in this Agreement.
SECTION 4. Severability. In the event that any provision of this Agreement
is declared by a court of competent jurisdiction to be void or unenforceable,
the remainder of this Agreement shall not be affected thereby and shall remain
in full force and effect to the extent feasible in the absence of the void and
unenforceable provision. The members furthermore agree to execute and deliver
such amendatory provisions to this Agreement to accomplish as nearly as possible
the goals and purposes of the provision so held to be void or unenforceable.
SECTION 5. Law Applied. This Agreement shall be governed under the laws of
the State of Delaware, without giving effect to the State of Delaware's
conflicts of law principles.
SECTION 6. Entire Agreement. There are no other agreements or
understandings, either oral or in writing, pertaining to the subject matter of
this Agreement. This Agreement supersedes all previous agreements among the
members relating to the subject matters of this
32
Agreement.
SECTION 7. No Third-Party Beneficiaries. No third-party beneficiaries are
intended by this Agreement.
SECTION 8. Loans. If a member loans money to the Company, such loans shall
be on terms and subject to conditions, that are, in the judgment of the Board,
fair and reasonable to the Company.
SECTION 9. Intellectual Property. Unless otherwise decided by the Company,
intellectual property created by the Company or acquired thereby shall be owned
by the Company, not by members or any third parties. Notwithstanding the
foregoing, the Company hereby grants each of the members, for as long as such
member is a member of the Company, at no additional cost, a nonexclusive,
nonassignable, nontransferable license to use any such intellectual property
owned by the Company.
SECTION 10. Confidentiality. Unless otherwise decided by the Company,
confidential Company information given to members that is marked with the legend
"CONFIDENTIAL" or any other legend indicating the confidentiality of such
information shall be held confidential by such members. Confidential Company
information shall not be deemed to include any: (i) information in the public
domain through no fault or breach of this Agreement or other confidentiality
obligations by any member; (ii) information previously and lawfully known by a
member prior to disclosure by Company; (iii) information rightfully learned from
a third party not under restriction of disclosure; (iv) information
independently developed by a member without access to, or use of, Company's
confidential information; (v) information approved in writing by the Company for
disclosure by the member(s), provided such approval is given prior to any
disclosure; (vi) information required to be disclosed by any judicial,
administrative, or similar body before whom a member(s) seeks to enforce its
rights under this Agreement (subject to any restrictions agreed to by such
member and the Company, or any restrictions sought by the Company and imposed by
the authority before whom the matter is pending); or (vii) is required to be
disclosed by law or by the order of any judicial, administrative, or similar
body with enforcement powers; provided, however, that the member shall make
reasonable efforts to notify the Company of this requirement as soon as
practicable, and shall cooperate reasonably with the Company, at the Company's
expense, in challenging the disclosure, including, if requested, the obtaining
of a protective or similar order with respect thereto. If disclosure is required
under (vii) above, the member will provide only that portion of Company's
confidential information which it is advised by the member is legally required
to be disclosed and will exercise all reasonable efforts to obtain a reliable
assurance that the Company's confidential information will be treated as
strictly confidential by any recipient of it.
SECTION 11. Insurance. The Company shall acquire general liability
insurance and
33
directors and officers insurance as soon as reasonably practicable after
formation of the Company, and acquire such other insurance as may be appropriate
to the operations of the Company.
SECTION 12. Environmental Assessments. Before the Company takes title to
any real property or any interest therein, the Board shall consider if there are
any actual or potential environmental or other liabilities with respect to such
real property, perform or engage a third party to perform a chain of title
search, and consider the need for an environmental assessment regarding such
real property.
SECTION 13. Related Party Transactions. The Board may, on behalf and at the
expense of the Company, engage themselves, any Manager or member, or any firm in
which a member or Manager has an interest, to render services to the Company on
such terms as the Board determines to be reasonable and appropriate. Any such
interest will be disclosed by the member which holds such interest (or the
Manager who holds such interest) to the other members or Managers prior to the
authorization of such transaction by the Company. Compensation payable to a
member or its affiliates will be treated as a Code Section 707(a) or 707(c)
payment, as the case may be, and will be treated as an operating expense of the
Company and will not be treated as cash available for distribution. The Board
may elect to reimburse any member or manager, and their respective affiliates,
for any and all reasonable out-of-pocket costs and expenses incurred by them in
connection with the activities and operations of the Company. The Company will
not hire or pay any compensation to any family member of any individual
affiliate of a member without the consent of all of the members. If and to the
extent members render services to the Company pursuant to this Article XVII,
Section 8, the terms and conditions applicable to such services, and the
compensation therefor, will be set forth in a written contract between the
Company and the service provider, which contract will be subject to approval of
the Board in accordance with the procedures herein set forth, including the
provisions of this Article XVII, Section 13.
SECTION 14. Filings. The members hereby appoint Delaware Corporate Services
Inc., a Delaware corporation ("DCS") as the initial registered agent of the
Company in Delaware and hereby designate DCS's offices in Delaware as the
Company's initial registered office within the State of Delaware. At any time
after the formation of the Company, the members may change the registered agent
and office of the Company in Delaware. DCS is hereby further appointed to be an
"authorized person" within the meaning of the Act, and is hereby authorized and
instructed to execute and file the Company's original Certificate of Formation
of the Company with the State of Delaware pursuant to Section 18-201(a) of the
Act. Following the filing of the Certificate of Formation, the Secretary shall
be an "authorized person" within the meaning of the Act, and shall prepare any
documents required to be filed and recorded under the Act, and the Secretary
shall promptly cause each such document required to be filed and recorded in
accordance with the Act and, to the extent required by local law, to be filed
and recorded or notice thereof to be published in the appropriate place in each
jurisdiction in which the Company may hereafter establish a
34
place of business. The Secretary shall also promptly cause to be filed, recorded
and published such statements of fictitious business name and any other notices,
certificates, statements or other instruments required by any provision of any
applicable law of the United States or any state or other jurisdiction which
governs the conduct of its business from time to time.
SECTION 15. Further Assurances. Each member agrees to perform all further
acts and execute, acknowledge and deliver any documents that may be reasonably
necessary to carry out the provisions of this Agreement.
IN WITNESS OF WHICH THE UNDERSIGNED HAVE DULY EXECUTED THIS AGREEMENT:
35
Ameren Corporation:
By:
-----------------------------
Its:
----------------------------
Date:
---------------------------
36
American Electric Power Company, Inc.:
By:
-----------------------------
Its:
----------------------------
Date:
---------------------------
37
Cinergy:
By:
-----------------------------
Its:
----------------------------
Date:
---------------------------
38
Detroit Edison Company:
By:
-----------------------------
Its:
----------------------------
Date:
---------------------------
39
Diversified Lands LLC:
By:
-----------------------------
Its:
----------------------------
Date:
---------------------------
40
Duke Energy:
By:
-----------------------------
Its:
----------------------------
Date:
---------------------------
41
Entergy Arkansas, Inc.:
By:
-----------------------------
Its:
----------------------------
Date:
---------------------------
42
Exelon Generation Company LLC:
By:
-----------------------------
Its:
----------------------------
Date:
---------------------------
43
First Energy Corp:
By:
-----------------------------
Its:
----------------------------
Date:
---------------------------
44
Great Plains Energy Incorporated:
By:
-----------------------------
Its:
----------------------------
Date:
---------------------------
45
Minnesota Power:
By:
-----------------------------
Its:
----------------------------
Date:
---------------------------
46
Oglethorpe Power Corporation:
By:
-----------------------------
Its:
----------------------------
Date:
---------------------------
47
Oklahoma Gas & Electric:
By:
-----------------------------
Its:
----------------------------
Date:
---------------------------
48
Peabody Energy:
By:
-----------------------------
Its:
----------------------------
Date:
---------------------------
49
Conectiv Energy Holding Company:
By:
-----------------------------
Its:
----------------------------
Date:
---------------------------
50
Arizona Public Service Company:
By:
-----------------------------
Its:
----------------------------
Date:
---------------------------
51
Progress Energy, Inc.:
By:
-----------------------------
Its:
----------------------------
Date:
---------------------------
52
PSEG:
By:
-----------------------------
Its:
----------------------------
Date:
---------------------------
53
PNM Resources, Inc.:
By:
-----------------------------
Its:
----------------------------
Date:
---------------------------
54
Reliant Energy:
By:
-----------------------------
Its:
----------------------------
Date:
---------------------------
55
Tennessee Valley Authority:
By:
-----------------------------
Its:
----------------------------
Date:
---------------------------
56
TXU Generation Company LLP:
By:
-----------------------------
Its:
----------------------------
Date:
---------------------------
57
Virginia Electric & Power Company:
By:
-----------------------------
Its:
----------------------------
Date:
---------------------------
58
We Energies:
By:
-----------------------------
Its:
----------------------------
Date:
---------------------------
59
Wisconsin Public Service Corporation:
By:
-----------------------------
Its:
----------------------------
Date:
---------------------------
60
Xcel Energy:
By:
-----------------------------
Its:
----------------------------
Date:
---------------------------
Exhibit A
#59667 v1
SCHEDULE A - MEMBERS, CAPITAL COMMITMENTS AND PERCENTAGE INTERESTS
Exhibit A
------------------------------------------------------------------------------------------------------------------------------
Payment Year and Amount/1/ Total Net Present Member
---------------------------------------------------------------------------------- Amount to Value of All Percentage
Member Company 2003 2004 2005 2006 2007 Be Paid Payments/2/ Interest/3/
---------------------------------------------------------------------------------------------------------------------------
1 Ameren Corporation 20 20 20 20 20 100
---------------------------------------------------------------------------------------------------------------------------
2 American Electric Power
Company, Inc. 200 100 0 0 0 300
---------------------------------------------------------------------------------------------------------------------------
3 Cinergy 20 20 20 20 20 100
---------------------------------------------------------------------------------------------------------------------------
4 Detroit Edison Company 300 200 200 200 100 1000
---------------------------------------------------------------------------------------------------------------------------
5 Diversified Lands LLC 20 20 20 20 20 100
---------------------------------------------------------------------------------------------------------------------------
6 Duke Energy Corporation 20 20 20 20 20 100
---------------------------------------------------------------------------------------------------------------------------
7 Entergy Arkansas, Inc. 66.666 0 16.666 0 16.668 100
---------------------------------------------------------------------------------------------------------------------------
8 Exelon Generation
Company LLC 20 20 20 20 20 100
---------------------------------------------------------------------------------------------------------------------------
9 First Energy Corp 20 20 20 20 20 100
---------------------------------------------------------------------------------------------------------------------------
10 Great Plains Energy
Incorporated 10 10 10 10 10 50
---------------------------------------------------------------------------------------------------------------------------
11 Minnesota Power 20 20 20 20 20 100
---------------------------------------------------------------------------------------------------------------------------
12 Oglethorpe Power
Corporation 20 20 20 20 20 100
---------------------------------------------------------------------------------------------------------------------------
14 Oklahoma Gas & Electric 10 10 10 10 10 50
---------------------------------------------------------------------------------------------------------------------------
13 Peabody Energy 20 20 20 20 20 100
---------------------------------------------------------------------------------------------------------------------------
15 Conectiv Energy Holding
Company 10 10 10 10 10 50
---------------------------------------------------------------------------------------------------------------------------
16 Arizona Public Service
company 20 20 20 20 20 100
---------------------------------------------------------------------------------------------------------------------------
17 Progress Energy, Inc. 20 20 20 20 20 100
---------------------------------------------------------------------------------------------------------------------------
18 PSEG 10 10 10 10 10 50
---------------------------------------------------------------------------------------------------------------------------
19 PNM Resources, Inc. 20 20 20 20 20 100
---------------------------------------------------------------------------------------------------------------------------
20 Reliant Energy 10 10 10 10 10 50
---------------------------------------------------------------------------------------------------------------------------
21 Tennessee Valley
Authority 100 0 0 0 0 100
---------------------------------------------------------------------------------------------------------------------------
22 TXU Generation Company LLP 15 15 15 15 15 75
---------------------------------------------------------------------------------------------------------------------------
23 Virginia Electric &
Power Company 20 20 20 20 20 100
---------------------------------------------------------------------------------------------------------------------------
24 We Energies 20 20 20 20 20 100
---------------------------------------------------------------------------------------------------------------------------
25 Wisconsin Public Service
Corporation 10 10 10 10 10 50
---------------------------------------------------------------------------------------------------------------------------
26 Xcel Energy 20 20 20 20 20 100
------------------------------------------------------------------------------------------------------------------------------
Note 1: All amounts except Member's Percentage Interest Are in Thousands of
Dollars. For Fiscal Year 2003, each Member's capital contribution shall
be due 45 days after its receipt of an invoice from the Company.
Note 2: This column is to be completed by the Board in accordance with the
terms of the Company's Operating Agreement
Note 3: This column is to be completed by the Board in accordance with the
terms of the Company's Operating Agreement
#59667 v1
SCHEDULE B
NAMES AND ADDRESSES OF POWERTREE CARBON COMPANY, LLC MEMBERS
Note: This Schedule is to be complete by the Board of the Company after Company
Formation upon receipt of applicable information from each member.