Exhibit T3A-2
OPERATING AGREEMENT
OF
ELECTRIC GENERATION LLC,
a California Limited Liability Company
DATED AS OF
October 29, 2001
ARTICLE I - Business........................................................1
Section 1.1 Formation of the Company.....................................1
Section 1.2 Name and Place of Business...................................1
Section 1.3 Foreign Qualifications.......................................1
ARTICLE II - Rights of the Member............................................2
Section 2.1 Liability of Member..........................................2
Section 2.2 Admission of Additional Members..............................2
Section 2.3 Transactions with the Company................................2
Section 2.4 Member Meetings..............................................2
Section 2.5 Certificates of Interests....................................2
ARTICLE III - Capital Contributions...........................................2
Section 3.1 Capital Contributions........................................2
Section 3.2 No Interest..................................................2
ARTICLE IV - Allocations of Profits, Losses and Distributions................3
Section 4.1 Allocations..................................................3
Section 4.2 Distributions................................................3
ARTICLE V - Management of the Company.......................................3
Section 5.1 Management...................................................4
Section 5.2 Certain Powers...............................................4
Section 5.3 Delegation of Authority; Transactions with Manager
Providers or Affiliates......................................5
Section 5.4 Compensation; Reimbursement of Expenses......................5
Section 5.5 Officers.....................................................5
ARTICLE VI - Indemnification.................................................7
Section 6.1 Indemnification..............................................7
ARTICLE VII - Accounting and Fiscal Matters..................................10
Section 7.1 Maintenance of Records......................................10
Section 7.2 Fiscal Year.................................................10
Section 7.3 Company Tax Returns.........................................10
Section 7.4 Reports.....................................................10
Section 7.5 Bank Accounts...............................................10
ARTICLE VIII - Dispositions of the Member's Interest..........................10
Section 8.1 No Restriction..............................................10
i
ARTICLE IX - Amendment of Agreement.........................................10
Section 9.1 Amendment...................................................10
ARTICLE X - Dissolution....................................................11
Section 10.1 Dissolution.................................................11
Section 10.2 Liquidation.................................................11
Section 10.3 Restoration of Deficit Capital Account Balances.............11
ARTICLE XI - Miscellaneous Provisions.......................................12
Section 11.1 Notices.....................................................12
Section 11.2 Nature of Interest of Members...............................12
Section 11.3 Applicable Law..............................................12
Section 11.4 Successors in Interest......................................12
Section 11.5 Severability................................................12
Section 11.6 Third Parties...............................................12
Section 11.7 Headings....................................................12
Section 11.8 Rights and Remedies Cumulative..............................13
EXHIBIT A - SCHEDULE OF CAPITAL CONTRIBUTION AND ADDRESS OF MEMBER........A-1
ii
OPERATING AGREEMENT
OF
ELECTRIC GENERATION LLC
THIS OPERATING AGREEMENT (this "Agreement") is executed as of October
29, 2001 by NEWCO ENERGY CORPORATION, a California corporation (the "Member",
which term shall include any additional Members admitted pursuant to Section 2.2
below), as the sole member of Electric Generation LLC, a California limited
liability company to be formed pursuant to this Agreement (the "Company"), with
reference to the following facts:
A. On October 29, 2001, Articles of Organization for the Company were
filed with the California Secretary of State (the "Articles").
B. The Member desires to adopt and approve an operating agreement for
the Company.
NOW, THEREFORE, the Member sets forth the operating agreement of the
Company under the laws of the State of California.
ARTICLE I
Business
--------
Section 1.1 Formation of the Company. The Company has been formed as a
------------------------
California limited liability company pursuant to the provisions of the
Xxxxxxx-Xxxxxx Limited Liability Company Act, codified in the California
Corporations Code, Section 17000 et seq., as the same may be amended from time
-- ---
to time (the "Act"), and the laws of the State of California. The rights and
obligations of the Member shall be determined pursuant to the Act and this
Agreement. To the extent that the rights or obligations of the Member are
different by reason of any provision of this Agreement than they would be in the
absence of such provision, this Agreement, to the extent permitted by the Act,
shall control.
Section 1.2 Name and Place of Business. The name of the Company is
--------------------------
"Electric Generation LLC". The name and address of the Company's initial
registered agent located in California is as set forth in the Articles. The
registered office and registered agent in California may be changed by the
Member from time to time pursuant to the Act. The Company's principal place of
business is at 00 Xxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxxxxxxx, XX 00000 or such
other place or places as the Member may from time to time determine.
Section 1.3 Foreign Qualifications. The Company shall apply for
----------------------
authority to transact business in those jurisdictions where the Company is
required to do so. The Company shall file such other certificates and
instruments as may be necessary or desirable in connection with the Company's
formation, existence and operation.
ARTICLE II
Rights of the Member
--------------------
Section 2.1 Liability of Member. Except as otherwise provided in the
-------------------
Act, the debts, obligations and liabilities of the Company (whether arising in
contract, tort or otherwise) shall be solely the debts, obligations and
liabilities of the Company, and the Member (including any person who formerly
held such status) shall not be liable nor shall it be obligated personally for
any such debt, obligation or liability of the Company solely by reason of such
status. No individual trustee, officer, director, shareholder, member, manager,
partner, employee or agent of any entity Member, in his or her individual
capacity as such, shall have any personal liability for the performance of any
obligation of the Member under this Agreement.
Section 2.2 Admission of Additional Members. No additional persons may
-------------------------------
be admitted as a Member or substitute Member of the Company without the consent
of the Member or, if there is more than one Member, the consent of the holders
of a majority of the Interests (as defined in Section 3.1). The admission of a
new Member or substitute Member shall not require the consent of the Board of
Control (as defined in Section 5.1).
Section 2.3 Transactions with the Company. The Member may lend money
-----------------------------
to, enter into agreements with, and transact other business with, the Company.
Subject to applicable law, the Member has the same rights and obligations with
respect thereto as a person who is not a Member.
Section 2.4 Member Meetings. No annual or regular meetings of the
---------------
Member (in its capacity as such) are required to be held.
Section 2.5 Certificates of Interests. The Member may authorize the
-------------------------
issuance of certificates in such form and with such signatures as the Member may
determine to evidence the Interest (as defined in Section 3.1) of the Member in
the Company.
ARTICLE III
Capital Contributions
---------------------
Section 3.1 Capital Contributions. The Member shall make a
---------------------
contribution to the capital of the Company in the amount shown opposite the
Member's name on Exhibit A attached hereto in exchange for the entire membership
---------
interest of the Company (the "Interest"). If an additional person is admitted as
a Member, Exhibit A shall be amended to reflect the capital contribution of the
---------
new Member and the term "Interest" shall refer to each Member's proportionate
Interest of the Company. The Member shall not be required to make any additional
contributions to the capital of the Company. However, the Member may make
additional capital contributions to the Company in its discretion.
Section 3.2 No Interest. The Company shall not pay any interest on any
-----------
capital contribution made by the Member pursuant to Section 3.1.
2
ARTICLE IV
Allocations of Profits, Losses and Distributions
------------------------------------------------
Section 4.1 Allocations. All income, gain, loss, deductions, credits
-----------
and other tax items of the Company shall be allocated to the Member.
Section 4.2 Distributions. The Company shall make periodic
-------------
distributions to the Member, from whatever source derived, in amounts and in the
form (i.e., cash or property) that the Member shall at any time determine in its
sole and absolute discretion.
ARTICLE V
Management of the Company
-------------------------
Section 5.1 Management.
----------
(a) Subject to the rights and powers retained by the Member under this
Agreement, overall management and control of the Company shall be vested in a
board (the "Board of Control"). The Board of Control shall have the power to do
any and all acts necessary, convenient or incidental to or for the furtherance
of the purposes described herein, including all powers, statutory or otherwise,
possessed by members of a limited liability company under the laws of the State
of California to the extent such powers are consistent with the terms of this
Agreement and are appropriate or useful in carrying out the purposes of the
Company as set forth in this Agreement. The Board of Control has the authority
to bind the Company.
(b) The Board of Control shall initially consist of the two (2)
individuals identified in Section 5.1(e) below. Each member of the Board of
Control shall have such powers and rights as are set forth in this Agreement and
as the Member determines from time to time and shall serve until he or she
resigns, dies or becomes incapacitated or is removed by the Member. The
President of the Company shall serve as the chair of the Board of Control. The
Board of Control shall have the power to determine appropriate levels of capital
of the Company, whether the Company should seek capital in the form of debt,
equity or a combination thereof and the kinds of securities, if any, of the
Company to be issued from time to time. The Board of Control shall meet at an
agreed time and location proposed by the chair (which may be by telephone
conference so long as each member has the opportunity to participate fully) and
may adopt such other rules relating to the conduct of its business as it shall
determine to be necessary, proper or desirable. Minutes of all meetings of the
Board of Control shall be in writing and filed in the Company's minute book.
(c) Any action required or permitted to be taken at any meeting of the
Board of Control may be taken without a meeting if all members of the Board of
Control consent thereto in writing, and the writings are filed with the minutes
of proceedings of the Board of Control.
(d) All decisions of the Board of Control shall require the unanimous
vote of the members of the Board of Control.
3
(e) The initial members of the Board of Control of the Company are as
follows:
Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxxxxxxx
Section 5.2 Certain Powers. Without limiting the generality of and in
--------------
accordance with Section 5.1 hereof, the Board of Control, on behalf of the
Company, shall have the power and authority to:
(a) acquire property from any person as the Board of Control may
determine;
(b) borrow money from any person on such terms as the Board of Control
deems appropriate, and in connection therewith, to hypothecate, encumber and
grant security interests in the assets of the Company to secure repayment of the
borrowed sums (no debt shall be contracted or liability incurred by or on behalf
of the Company except by the Board of Control or by agents or employees of the
Company expressly authorized by the Board of Control to contract such debt or
incur such liability);
(c) purchase liability, directors and officers and fidelity and crime
and other insurance to protect the Company's property and business;
(d) dispose of the Company's real and personal properties, including,
without limitation, selling, transferring, leasing or otherwise disposing of all
or substantially all of the assets of the Company as part of a single
transaction or plan;
(e) invest any Company funds (by way of example but not limitation) in
time deposits, short-term governmental obligations, commercial paper or other
investments;
(f) execute, acknowledge (as appropriate) and deliver on behalf of the
Company all instruments and documents, including, without limitation, checks,
drafts, notes and other negotiable instruments, mortgages or deeds of trust,
security agreements, financing statements, documents providing for the
acquisition, mortgage or disposition of the Company's property, assignments,
bills of sale, leases, contracts, partnership agreements, operating agreements
of other limited liability companies, and any other instruments or documents
necessary, desirable or conducive in the opinion of the Board of Control to the
business of the Company;
(g) employ accountants, legal counsel, managing agents, investment
bankers, appraisers or other persons to perform services for the Company and to
compensate them from Company funds;
(h) enter into any and all other agreements on behalf of the Company,
with any other person for any purpose, in such forms as the Board of Control may
approve; and
4
(i) do and perform all other acts as the Board of Control deems
necessary or appropriate to the conduct of the Company's business.
Section 5.3 Delegation of Authority; Transactions with Manager
--------------------------------------------------
Providers or Affiliates. The Board of Control may contract with other persons
-----------------------
and entities (each, a "Manager Provider"), including, without limitation,
affiliates of the Member, to perform any of the Board of Control's duties for or
on behalf of the Company; provided, however, that such delegation shall not
relieve the Board of Control of responsibility for such duties.
Section 5.4 Compensation; Reimbursement of Expenses. Members of the
---------------------------------------
Board of Control may receive reasonable compensation for acting as members of
the Board of Control and shall be entitled to reimbursement from the Company of
all actual, out-of-pocket expenses incurred and paid by the member of the Board
of Control on behalf of the Company.
Section 5.5 Officers.
--------
(a) The Board of Control shall be entitled to appoint such officers,
with such titles, authority and reasonable compensation as the Board of Control
shall from time to time determine. Any officers so appointed shall hold office
at the pleasure of the Board of Control and shall be entitled to exercise such
powers as shall be delegated to them by the Board of Control. The initial
officers of the Company shall be the persons listed below opposite the offices
to which they are hereby appointed until each resigns, dies or becomes
incapacitated or is removed:
Name Office
---- ------
Xxxxx X. Xxxxxxxxxxx President and Treasurer
Xxxx Xxxxxx Chief Nuclear Officer
Xxxxx Xxxxx Secretary
(b) Chairman of the Board. The Chairman of the Board of Control, if
---------------------
that office be filled, shall preside at all meetings of the Board of Control.
Subject to such powers, if any, as may be given by this Agreement or the Board
of Control to the President, if there is such an officer, the Chairman of the
Board shall, subject to the control of the Board of Control, have general
supervision, direction and control of the business and the offices of the
Company. The Chairman of the Board shall have authority to sign on behalf of the
Company agreements and instruments of every or any character, and in the absence
or disability of the President, shall exercise the duties and responsibilities
of the President in the event that no Vice President has been designated by the
Board of Control to perform such duties. The Chairman of the Board shall have
the authority to delegate to any officer of the Company the authority to sign on
behalf of the Company agreements and instruments of every or any character.
(c) President and Chief Executive Officer. The President shall be the
-------------------------------------
chief executive officer of the Company and shall have, subject to the
supervision, direction and control of the Board of Control, the general powers
and duties of supervision, direction and management
5
of the affairs and business of the Company usually vested in the chief executive
officer of the Company, including, without limitation, all powers necessary to
direct and control the organizational and reporting relationships within the
Company. If at any time the office of the Chairman of the Board shall not be
filled, or in the event of the temporary absence or disability of the Chairman
of the Board, the President shall have the powers and duties of the Chairman of
the Board and be subject to all the restrictions of the Chairman of the Board.
The President shall have authority to sign on behalf of the Company agreements
and instruments of every or any character. The President shall have the
authority to delegate to any officer of the Company the authority to sign on
behalf of the Company agreements and instrument of every or any character.
(d) Senior Vice President. In the absence or disability of the
---------------------
President, the President's duties and responsibilities may be carried out by a
Senior Vice President designated by the Board of Control. When so acting, such
Senior Vice President shall have all the powers of and be subject to all the
restrictions on the President. Each Senior Vice President shall have such other
duties and responsibilities as may be prescribed by the Board of Control, the
Chairman of the Board, the President, or this Agreement. Each Senior Vice
President shall have authority to sign on behalf of the Company agreements and
instruments of every or any character. The Board of Control or the Chairman of
the Board may confer a special title upon any Senior Vice President.
(e) Chief Nuclear Officer. The Chief Nuclear Officer shall be the
---------------------
corporate executive with overall responsibility for nuclear safety and
compliance at the Diablo Canyon Nuclear Power Plant and shall have such other
duties and responsibilities as may be prescribed by the Board of Control, the
Chairman of the Board, the President, or this Agreement. The Chief Nuclear
Officer shall have the authority to sign on behalf of the Company agreements and
instruments of every or any character.
(f) Vice President. In the absence or disability of the President, the
--------------
President's duties and responsibilities may be carried out by a Vice President
designated by the Board of Control. When so acting, such Vice President shall
have all the powers of and be subject to all the restrictions on the President.
Each Vice President shall have such other duties and responsibilities as may be
prescribed by the Board of Control, the Chairman of the Board, the President, or
this Agreement. Each Vice President designated by the Chairman or the President
shall have the authority to sign on behalf of the Company agreements and
instruments of every or any character. The Board of Control or the Chairman of
the Board may confer a special title upon any Vice President.
(g) Secretary. The Secretary shall attend all meetings of the Board of
---------
Control and shall keep or cause to be kept, at the principal executive office or
such other place as the Board of Control may direct, a book of minutes of all
meetings and actions of Directors and committees of Directors. The Secretary
shall be responsible for maintaining a proper register or books of the
membership interest for all membership interests issued by the Company. The
Secretary shall give, or cause to be given, all notices required either by law
or this Agreement. The Secretary shall have such other duties as may be
prescribed by the Board of Control, the Chairman of the Board, the President or
this Agreement.
6
(h) Assistant Secretary. The Assistant Secretaries, if any, shall
-------------------
perform such duties as may be assigned from time to time by the Board of
Control, the Chairman of the Board, the President or the Secretary. In the
absence or disability of the Secretary, the Secretary's duties shall be
performed by an Assistant Secretary.
(i) Treasurer. The Treasurer shall have custody of all moneys and
---------
funds of the Company, and shall keep or cause to be kept full and accurate
records of receipts and disbursements of the Company. The Treasurer shall
deposit all moneys and other valuables of the Company in the name and to the
credit of the Company in such depositories as may be designated by the Board of
Control. The Treasurer shall disburse such funds of the Company as have been
duly approved for disbursement.
Unless the Board of Control provides otherwise by resolution, the
Treasurer shall be the chief financial officer of the Company for situations in
which an officer with that title may be needed. The Treasurer shall perform such
other duties as may from time to time be prescribed by the Board of Control, the
Chairman of the Board, the President or this Agreement.
(j) Assistant Treasurer. The Assistant Treasurers, if any, shall
-------------------
perform such duties as may be assigned from time to time by the Board of
Control, the Chairman of the Board, the President or the Treasurer. In the
absence or disability of the Treasurer, the duties of the Treasurer shall be
performed by an Assistant Treasurer
(k) Controller. The Controller, if any, shall be responsible for
----------
maintaining the accounting records and statements, and shall properly account
for all moneys and obligations due the Company and all properties, assets and
liabilities of the Company. The Controller shall render to the Chairman of the
Board or the President such periodic reports covering the results of operations
of the Company as may be required by either of them or by law. The Controller
shall have such other duties as may from time to time be prescribed by the Board
of Control, the Chairman of the Board, the President or this Agreement.
ARTICLE VI
Indemnification
---------------
Section 6.1 Indemnification. (a) The Company shall indemnify, to the
---------------
full extent that it shall have power under applicable law to do so and in a
manner permitted by such law, any person made or threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (hereinafter, a "Proceeding"),
by reason of the fact that such person is or was a member of the Board of
Control or an officer of the Company, or is or was serving at the request of the
Company as a director, officer or member of the board of control of another
corporation, limited liability company, partnership, joint venture, trust or
other enterprise. The Company may indemnify, to the full extent that it shall
have power under applicable law to do so and in a manner permitted by such law,
any person made or threatened to be made party to any Proceeding, by reason of
the fact that such person is or was an employee or agent of the Company, or is
or was serving at the request of the Company as an employee or agent of another
corporation, limited liability company, partnership, joint venture, trust or
other enterprise.
7
(b) Advancement of Expenses. With respect to any person made or
-----------------------
threatened to be made a party to any Proceeding by reason of the fact that such
person is or was a member of the Board of Control or officer of the Company, or
is or was serving at the request of the Company as a director, officer or member
of the board of control of another corporation, limited liability company,
partnership, joint venture, trust or other enterprise, the Company shall pay the
expenses (including attorneys' fees) incurred by such person in defending any
such Proceeding in advance of its final disposition (hereinafter, an
"advancement of expenses"); provided, however, that the payment of expenses
-------- -------
(including attorneys' fees) incurred by such person in advance of the final
disposition of such Proceeding shall be made only upon receipt of an undertaking
(hereinafter, an "undertaking") by such person to repay all amounts advanced if
it shall ultimately be determined by final judicial decision from which there is
no further right to appeal (hereinafter, a "final adjudication") that such
person is not entitled to be indemnified for such expenses under this Section
6.1 or otherwise; and further provided that with respect to a Proceeding
------- --------
initiated against the Company by a member of the Board of Control or officer of
the Company (including a person serving at the request of the Company as a
director, officer, or member of the board of control of another corporation,
limited liability company, partnership, joint venture, trust or other
enterprise), such director or officer shall be entitled under this Section 6.1
to the payment of expenses (including attorneys' fees) incurred by such person
in defending any counterclaim, cross-claim, affirmative defense or like claim of
the Company in connection with such Proceeding in advance of the final
disposition of such proceeding only if such proceeding was authorized by the
Board of Control. With respect to any person made or threatened to be made a
party to any Proceeding, by reason of the fact that such person is or was an
employee or agent of the Company, or is or was serving at the request of the
Company as an employee or agent of another corporation, limited liability
company, partnership, joint venture, trust or other enterprise, the Company may,
in its discretion and upon such terms and conditions, if any, as the Member
deems appropriate, pay the expenses (including attorneys' fees) incurred by such
person in defending any such Proceeding in advance of its final disposition.
(c) Claims. With respect to any person made or threatened to be made a
------
party to any Proceeding, by reason of the fact that such person is or was a
member of the Board of Control or an officer of the Company, or is or was
serving at the request of the Company as a director, officer or member of the
board of control of another corporation, limited liability company, partnership,
joint venture, trust or other enterprise, the rights to indemnification and to
the advancement of expenses conferred in subsections (a) and (b) of this Section
6.1 shall be contract rights. If a claim under subsections (a) or (b) of this
Section 6.1 with respect to such rights is not paid in full by the Company
within sixty (60) days after a written demand has been received by the Company,
except in the case of a claim for an advancement of expenses by a member of the
Board of Control or an officer of the Company, in which case the applicable
period shall be twenty (20) days, the person seeking to enforce a right to
indemnification or an advancement of expenses hereunder may at any time
thereafter bring suit against the Company to recover the unpaid amount of the
claim. If successful in whole or in part in any such suit, or in a suit brought
by the Company to recover an advancement of expenses pursuant to the terms of an
undertaking, the person seeking to enforce a right to indemnification or an
advancement of expenses hereunder or the person from whom the Company seeks to
recover an advancement of expenses shall also be entitled to be paid the
expenses (including attorneys' fees) of prosecuting or defending such suit. In
any suit brought by a person seeking to enforce a right to
8
indemnification hereunder (but not in a suit brought by a person seeking to
enforce a right to an advancement of expenses hereunder) it shall be a defense
that the person seeking to enforce a right to indemnification has not met any
applicable standard for indemnification under applicable law. In any suit
brought by the Company to recover an advancement of expenses pursuant to the
terms of an undertaking, the Company shall be entitled to recover such expenses
upon a final adjudication that the person from whom the Company seeks to recover
an advancement of expenses has not met any applicable standard for
indemnification under applicable law. With respect to any suit brought by a
person seeking to enforce a right to indemnification hereunder (including any
suit seeking to enforce a right to the advancement of expenses hereunder) or any
suit brought by the Company to recover an advancement of expenses pursuant to
the terms of an undertaking, neither the failure of the Company (including
independent legal counsel or the Member) to have made a determination prior to
commencement of such suit that indemnification of such person is proper in the
circumstances because such person has met the applicable standards of conduct
under applicable law, nor an actual determination by the Company (including
independent legal counsel or the Member) that such person has not met such
applicable standards of conduct, shall create a presumption that such person has
not met the applicable standards of conduct or, in a case brought by such person
seeking to enforce a right to indemnification, be a defense to such suit. In any
suit brought by a person seeking to enforce a right to indemnification or to an
advancement of expenses hereunder, or by the Company to recover an advancement
of expenses pursuant to the terms of an undertaking, the burden of proving that
the person seeking to enforce a right to indemnification or to an advancement of
expenses or the person from whom the Company seeks to recover an advancement of
expenses is not entitled to be indemnified, or to such advancement of expenses,
under this Section 6.1 or otherwise shall be on the Company.
(d) Non-exclusive Rights. The indemnification and advancement of
--------------------
expenses provided in this Section 6.1 shall not be deemed exclusive of any other
rights to which any person indemnified may be entitled under any agreement,
consent of the Member or otherwise, both as to action in such person's official
capacity and as to action in another capacity while holding such office, and
shall continue as to a person who has ceased to be such member of the Board of
Control or officer, employee or agent of the Company (or who has ceased to serve
as a director, officer, member of the board of control, employee or agent of
another corporation, limited liability company, partnership, joint venture,
trust or other enterprise to the extent such person was serving in such capacity
at the request of the Company) and shall inure to the benefit of the heirs,
executors and administrators and personal representatives of such person.
(e) Insurance. The Company may purchase and maintain insurance on
---------
behalf of any person who is or was a member of the Board of Control or an
officer, employee or agent of the Company, or is or was serving at the request
of the Company as a director, officer, member of the board of control, employee
or agent of another corporation, limited liability company, partnership, joint
venture, trust or other enterprise against any liability asserted against such
person and incurred by such person in any such capacity, or arising out of such
person's status as such, whether or not the Company would have the power to
indemnify such person against such liability under the provisions of this
Section 6.1 or otherwise.
9
ARTICLE VII
Accounting and Fiscal Matters
------------------------------
Section 7.1 Maintenance of Records. The Company shall keep, or shall
----------------------
cause to be kept, full, accurate, complete and proper books and records of all
of the operations of the Company including, without limitation, all the records
required to be maintained pursuant to the Act.
Section 7.2 Fiscal Year. The Company hereby adopts the calendar year
-----------
for financial and income tax purposes.
Section 7.3 Company Tax Returns. The Company shall cause the
-------------------
preparation and filing of all tax or information returns required to be filed by
or on behalf of the Company and the payment of all taxes due from the Company.
The Company shall make such tax elections as the Member shall deem to be in the
best interests of the Member. For federal income tax purposes, the Company will
be an "eligible entity" with a single member, and the Company will not elect to
be treated as an association taxable as a corporation under Treasury Regulations
Sections 301.7701-2(a), -3(a). As such, the Company expects to be disregarded as
a separate entity for federal income tax purposes under Treasury Regulations
Section 301.7701-3(b).
Section 7.4 Reports. The Company shall cause to be filed, in\
-------
accordance with the Act, all reports and documents required to be filed with any
governmental agency. The Company shall cause to be prepared at least annually
information concerning the Company's operations necessary for the completion of
the Member's federal and state income tax returns.
Section 7.5 Bank Accounts. The Company may from time to time open bank
-------------
accounts in the name of the Company and may designate the persons having
authority to withdraw or apply funds from such accounts.
ARTICLE VIII
Dispositions of the Member's Interest
-------------------------------------
Section 8.1 No Restriction. The Member may sell, assign, give,
--------------
hypothecate, pledge, transfer or otherwise dispose of any or all of its Interest
in the Company, in whole or in part, voluntarily, involuntarily, by operation of
law or otherwise, to any other person or entity.
ARTICLE IX
Amendment of Agreement
----------------------
Section 9.1 Amendment. Any amendment or supplement to this Agreement
---------
shall only be effective if in a writing executed by the Member or, if more than
one Member, the holders of a majority of the Interests. Amendments and
supplements to this Agreement shall not require the approval of the Board of
Control in order to be effective.
10
ARTICLE X
Dissolution
-----------
Section 10.1 Dissolution. The Company shall be dissolved and its
-----------
business wound up upon the earliest to occur of the following events:
(a) A determination by the Member that the Company should be
dissolved; or
(b) The entry of a decree of judicial dissolution under Section 17351
of the Act.
Section 10.2 Liquidation.
-----------
(a) If the Company shall be dissolved by reason of the occurrence of
any of the circumstances described in Section 10.1, no further business shall be
conducted by the Company except for the taking of such action as shall be
necessary for the winding up of its affairs and the distribution of its assets
to the Member pursuant to the provisions of this Article X. Upon such
dissolution, the Board of Control or, if none, the Member shall act as the
liquidator or, if it is unable or unwilling to do so, the Member or its
representative shall select a liquidator. Such liquidator shall have full
authority to wind up the affairs of the Company and to make final distribution
as provided herein. Upon such dissolution of the Company, the liquidator shall
take the following steps:
(i) determine which Company properties and assets should be
distributed in kind, and dispose of all other Company properties and assets
at the best cash price obtainable therefor;
(ii) pay all Company debts and liabilities, in the order of
priority as provided by law, or otherwise make adequate provision therefor;
(iii) distribute the remaining assets to the Member in cash or in
kind, as the liquidator may decide; and
(iv) execute a Certificate of Dissolution in such form as shall
be prescribed by the California Secretary of State and file such
Certificate of Dissolution as required by the Act upon the completion of
the winding up of the Company.
(b) Thereafter, the liquidator shall comply with all requirements of
the Act, or other applicable law, pertaining to the winding up of a limited
liability company, at which time the Company shall stand terminated.
Section 10.3 Restoration of Deficit Capital Account Balances. The
-----------------------------------------------
Member shall not be required to restore to the Company or to any other party (on
liquidation or otherwise) any deficit balance in its capital account.
11
ARTICLE XI
Miscellaneous Provisions
------------------------
Section 11.1 Notices. Notices, requests, reports, payments or other
-------
communications required to be given or made to the Member hereunder shall be in
writing and shall be deemed to be given or made when properly addressed and
posted by registered or certified mail, postage prepaid, to the Member at the
Member's last known address. The address of the Member set forth on Exhibit A
---------
shall be considered the last known address of the Member unless and until the
Company is otherwise notified by the Member.
Section 11.2 Nature of Interest of Members. The Member's Interest in
-----------------------------
the Company is personal property.
Section 11.3 Applicable Law. Notwithstanding the place where this
--------------
Agreement may be executed by any of the parties hereto, this Agreement, the
rights and obligations of the parties hereto, and any claims and disputes
relating thereto, shall be subject to and governed by the Act and the other laws
of the State of California as applied to agreements among California residents
to be entered into and performed entirely within the State of California, and
such laws shall govern the limited liability company aspects of this Agreement.
Section 11.4 Successors in Interest. Each and all of the covenants,
----------------------
agreements, terms and provisions of this Agreement shall be binding upon and
inure to the benefit of the Member and its heirs, executors, administrators,
personal representatives, successors and assigns.
Section 11.5 Severability. Any provision of this Agreement which is
------------
invalid, illegal or unenforceable in any respect in any jurisdiction shall, as
to such jurisdiction, be ineffective to the extent of such invalidity,
illegality or unenforceability without in any way affecting the validity,
legality or enforceability of the remaining provisions hereof, and any such
invalidity, illegality or unenforceability in any jurisdiction shall not
invalidate or in any way affect the validity, legality or enforceability of such
provisions in any other jurisdiction.
Section 11.6 Third Parties. Except as provided in Article VI, the
-------------
provisions of this Agreement are for the exclusive benefit of the Member and the
Company and no other person, including creditors of the Member or the Company,
shall have any right or claim against any party by reason of those provisions or
be entitled to enforce any of those provisions against any party. Without
limiting the foregoing, nothing contained in this Agreement shall benefit any
creditor of the Company or of the Member. No creditor of the Company or of the
Member may require a contribution to the capital of the Company or an advance to
the Company to be solicited, or a distribution to be made, by the Company, nor
may any creditor of the Company or the Member enforce the obligation of the
Member to make a contribution to the capital of the Company or an advance to the
Company.
Section 11.7 Headings. The headings in this Agreement are inserted for
--------
convenience and identification only and are in no way intended to describe,
interpret, define or limit the scope, extent or intent of this Agreement or any
provision hereof.
12
Section 11.8 Rights and Remedies Cumulative. The rights and remedies
------------------------------
provided by this Agreement are given in addition to any other rights and
remedies the Member may have by law, statute, ordinance or otherwise. All such
rights and remedies are intended to be cumulative and the use of any one right
or remedy by the Member shall not preclude or waive the Member's right to use
any or all other rights or remedies.
[Signature Page Follows]
13
IN WITNESS WHEREOF, the Member has executed and delivered this
Agreement as of the day and year first above written.
NEWCO ENERGY CORPORATION,
a California corporation
By /s/ Xxxxx X. Xxxxxxxxxxx
--------------------------------
Xxxxx X. Xxxxxxxxxxx
President
14
EXHIBIT A
SCHEDULE OF CAPITAL CONTRIBUTION AND ADDRESS OF MEMBER
------------------------------------------------------
Amount of Capital Percentage
Name and Address Contribution Interest
--------------------------- ----------------- ----------
Newco Energy Corporation $100.00 100%
00 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
A-1
