EXHIBIT 3.2
LIMITED LIABILITY COMPANY AGREEMENT
OF
CENTERPOINT ENERGY TRANSITION BOND COMPANY II, LLC
Effective as of December 3, 2004
TABLE OF CONTENTS
Page
----
ARTICLE I DEFINITIONS................................ 1
ARTICLE II FORMATION OF THE COMPANY................... 2
2.1 Formation............................................ 2
2.2 Name................................................. 2
2.3 Place of Business.................................... 2
2.4 Registered Office and Registered Agent............... 2
2.5 Term................................................. 2
2.6 Business Purpose..................................... 3
ARTICLE III INITIAL MEMBER............................. 4
ARTICLE IV CAPITAL OF THE COMPANY..................... 4
4.1 Common Shares and Initial Contributions.............. 4
4.2 Additional Contributions............................. 4
4.3 Interest............................................. 4
ARTICLE V RIGHTS AND OBLIGATIONS OF THE MEMBER....... 4
5.1 Limitation of Member's Responsibility, Liability..... 4
5.2 Return of Distributions.............................. 5
ARTICLE VI ACTS OF THE MEMBER......................... 5
6.1 Action by the Member With a Meeting.................. 5
6.2 Action by the Member Without a Meeting............... 5
6.3 Waiver of Notice..................................... 5
6.4 Special Prohibitions and Limitations................. 5
6.5 Amendments to be Adopted Solely by the Managers...... 5
6.6 Amendments........................................... 6
ARTICLE VII RIGHTS AND DUTIES OF MANAGERS.............. 6
7.1 Management........................................... 6
7.2 Number and Qualifications............................ 6
7.3 Powers of the Managers............................... 7
7.4 Initial Manager...................................... 7
7.5 Place of Meetings.................................... 7
7.6 Meetings of Managers................................. 7
7.7 Quorum............................................... 7
7.8 Attendance and Waiver of Notice...................... 7
7.9 Action by Managers Without a Meeting................. 7
7.10 Compensation of Managers............................. 7
7.11 Committees........................................... 8
7.12 Liability of Managers................................ 8
ARTICLE VIII INDEMNIFICATION............................ 8
8.1 Indemnification...................................... 8
8.2 Advancement or Reimbursement of Expenses............. 9
-i-
8.3 Nonexclusivity and Survival of Indemnification....... 9
8.4 Insurance............................................ 9
ARTICLE IX ALLOCATIONS AND DISTRIBUTIONS.............. 9
9.1 Allocations.......................................... 9
9.2 Distributions........................................ 9
ARTICLE X ACCOUNTING PERIOD, RECORDS AND REPORTS..... 10
10.1 Accounting Period.................................... 10
10.2 Records, Audits and Reports.......................... 10
10.3 Inspection........................................... 10
ARTICLE XI TAX MATTERS................................ 10
11.1 Tax Returns and Elections............................ 10
11.2 State, Local or Foreign Income Taxes................. 10
ARTICLE XII RESTRICTIONS ON TRANSFERABILITY............ 10
ARTICLE XIII DISSOLUTION AND TERMINATION................ 11
13.1 Dissolution.......................................... 11
13.2 Effect of Dissolution................................ 11
13.3 Winding Up, Liquidating and Distribution of Assets... 11
13.4 Certificate of Cancellation.......................... 12
13.5 Return of Contribution............................... 12
ARTICLE XIV MISCELLANEOUS PROVISIONS................... 12
14.1 Notices.............................................. 12
14.2 Books of Account and Records......................... 12
14.3 Application of Delaware Law.......................... 12
14.4 Waiver of Action for Partition....................... 12
14.5 Execution of Additional Instruments.................. 13
14.6 Headings............................................. 13
14.7 Waivers.............................................. 13
14.8 Rights and Remedies Cumulative....................... 13
14.9 Severability......................................... 13
14.10 Heirs, Successors and Assigns........................ 13
14.11 Creditors............................................ 13
14.12 Counterparts......................................... 13
-ii-
LIMITED LIABILITY COMPANY AGREEMENT
This Limited Liability Company Agreement (this "Agreement") is made
and executed to be effective as of December 3, 2004, by CenterPoint Energy
Houston Electric, LLC, a Texas limited liability company.
WHEREAS, a certificate of formation of CenterPoint Energy Transition
Bond Company II, LLC (the "Company"), has been filed with the Secretary of State
of the State of Delaware; and
WHEREAS, it is desired that the orderly management of the affairs of
the Company be provided for;
ARTICLE I
DEFINITIONS
The following terms used in this Agreement shall have the following
meanings (unless otherwise expressly provided herein):
"Agreement" shall mean this Agreement as originally executed and as
it may be amended from time to time hereafter.
"Capital Contribution" shall mean any contribution to the capital of
the Company in cash or property by the Member whenever made.
"Certificate of Formation" shall mean the Certificate of Formation
of the Company filed with and endorsed by the Secretary of State of the State of
Delaware, as such certificate may be amended from time to time hereafter.
"Code" shall mean the Internal Revenue Code of 1986, as amended, or
corresponding provisions of subsequent superseding federal revenue laws.
"Common Interest" shall have the meaning given such term in Section
4.1.
"Common Share" shall mean an undivided portion of all of the rights,
duties, obligations and ownership interests in the Company.
"Delaware Act" shall mean the Delaware Limited Liability Company
Act, as the same may be amended from time to time hereafter.
"Entity" shall mean any foreign or domestic general partnership,
limited partnership, limited liability company, corporation, joint enterprise,
trust, business trust, employee benefit plan, cooperative or association.
"Fiscal Year" shall mean the Company's fiscal year, which shall be
determined by the Managers in accordance with Section 706(b) of the Code.
"Manager" shall mean any of the managers of the Company duly
appointed or elected to serve in such capacity under Delaware law and this
Agreement.
"Member" shall mean each Person who executes a counterpart of this
Agreement as a Member and each Person who may hereafter become a Member pursuant
to Article XII; but shall not include any Member that ceases to be a Member.
"Person" shall mean any individual or Entity, and any heir,
executor, administrator, legal representative, successor or assign of such
"Person" where the context so admits.
"PUCT" shall mean the Public Utility Commission of Texas or any
successor entity thereto.
"Texas Electric Choice Plan" shall mean the Act of May 21, 1999,
76th Leg. R.S. ch. 405, 1999 (codified at Texas Utilities Code Section 39.001 et
seq.).
"Transition Bonds" and "Transition Property" shall have the meanings
given such terms in Section 2.6.
ARTICLE II
FORMATION OF THE COMPANY
2.1 Formation. On December 3, 2004, the Certificate of Formation of
the Company was filed with the Secretary of State of the State of Delaware
pursuant to the Delaware Act.
2.2 Name. The name of the Company is CenterPoint Energy Transition
Bond Company II, LLC. If the Company shall conduct business in any jurisdiction
other than the State of Delaware, it shall register the Company or its trade
name with the appropriate authorities in such state in order to have the legal
existence of the Company recognized.
2.3 Place of Business. The Company may locate its places of business
and registered office at any place or places as the Managers may from time to
time deem advisable.
2.4 Registered Office and Registered Agent. The Company's registered
office shall be at the office of its registered agent at 0000 Xxxxxx Xxxxxx,
Xxxxxxxxxx, Xxxxxxxx 00000, and the name of its initial registered agent at such
address shall be The Corporation Trust Company.
2.5 Term. The Company and this Agreement shall continue until the
earliest of (a) such time as all of the Company's assets have been sold or
otherwise disposed of or (b) such time as the Company's existence has been
terminated as otherwise provided herein or in the Delaware Act.
-2-
2.6 Business Purpose. The nature of the business or purpose to be
conducted or promoted by the Company is to engage exclusively in the following
business and financial activities:
(a) to authorize, issue, sell and deliver one or more series
or classes of transition bonds (as defined in the Texas Electric Choice Plan)
("Transition Bonds") and, in connection therewith, to enter into any agreement
or document providing for the authorization, issuance, sale and delivery of the
Transition Bonds;
(b) to purchase, acquire, own, hold, administer, service, and
enter into agreements for the servicing of, finance, manage, sell, assign,
pledge, collect amounts due on and otherwise deal with rights and interests
under any financing order issued by the PUCT to the Member in connection with
the issuance of Transition Bonds ("Transition Property"), other assets to be
acquired in connection therewith and any proceeds or rights associated
therewith;
(c) to negotiate, authorize, execute, deliver, assume the
obligations under, and perform its duties under, any agreement, instrument or
document relating to the activities set forth in clauses (a) and (b) above;
provided, that each party to any such agreement under which material obligations
are imposed upon the Company shall covenant that it shall not, prior to the date
which is one year and one day after the termination of the indenture providing
for the Transition Bonds and the payment in full of each series of Transition
Bonds and any other amounts owed under such indenture, acquiesce, petition or
otherwise invoke or cause the Company to invoke the process of any court or
Governmental Authority for the purpose of commencing or sustaining a case
against the Company under any federal or state bankruptcy, insolvency or similar
law or appointing a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of the Company or any substantial part of
the property of the Company; or ordering the winding up or liquidation of the
affairs of the Company; and provided, further, that the Company shall be
permitted to incur additional indebtedness or other liabilities payable to
service providers and trade creditors in the ordinary course of business in
connection with the foregoing activities;
(d) to invest proceeds from Transition Property and its other
assets and any capital and income of the Company in accordance with the
applicable agreements or instruments entered into in connection with the
issuance of Transition Bonds or as otherwise determined by the Managers and not
inconsistent with this Section or such applicable agreements or instruments;
(e) to do such other things and carry on any other activities
which the Managers determine to be necessary, convenient or incidental to any of
the foregoing purposes, and have and exercise all of the powers and rights
conferred upon limited liability companies formed pursuant to the Delaware Act
that are related or incidental to any of the foregoing; and
(f) to enter into and perform all agreements or instruments
entered into in connection with the issuance of Transition Bonds and all
documents, certificates or financing statements contemplated thereby or related
thereto, all without any further act, vote or approval of the Member, any
Manager or other Person notwithstanding any other provision of this Agreement,
the Delaware Act or applicable law, rule or regulation. The foregoing
-3-
authorization shall not be deemed a restriction on the powers of the Member or
any Manager to enter into other agreements on behalf of the Company.
ARTICLE III
INITIAL MEMBER
The name and place of business of the initial Member are as follows:
CenterPoint Energy Houston Electric, LLC
0000 Xxxxxxxxx
Xxxxxxx, Xxxxx 00000
ARTICLE IV
CAPITAL OF THE COMPANY
4.1 Common Shares and Initial Contributions.
(a) A class of equity interests denominated the "Common
Shares" is hereby designated as the sole class of equity interests of the
Company. Each issued and outstanding Common Share shall at any time represent
that undivided portion of all of the rights, duties, obligations and ownership
interests in the Company in proportion to the total number of Common Shares
outstanding at such time.
(b) The Company will issue to the initial Member 1,000 Common
Shares (together, the "Common Interest") upon payment of $1,000 to the Company
from the Initial Member, which shall be deemed to be the initial Capital
Contribution of the initial Member. Upon receipt of such initial Capital
Contribution and execution of this Agreement by the Member, such Common Shares
shall be validly issued and outstanding, fully paid and nonassessable.
4.2 Additional Contributions. The Member shall not be required to
make additional Capital Contributions unless, and except on such terms as, the
Managers and the Member unanimously agree.
4.3 Interest. No interest shall be paid by the Company on Capital
Contributions.
ARTICLE V
RIGHTS AND OBLIGATIONS OF THE MEMBER
5.1 Limitation of Member's Responsibility, Liability. The Member
shall not perform any act on behalf of the Company, incur any expense,
obligation or indebtedness of any nature on behalf of the Company, or in any
manner participate in the management of the Company or receive or be credited
with any amounts, except as specifically contemplated hereunder. The Member
shall not be personally liable for any amount in excess of its Capital
-4-
Contribution, and shall not be liable for any of the debts or losses of the
Company, except to the extent that a liability of the Company is founded upon or
results from an unauthorized act or activity of the Member. In addition, the
Member's liability shall be limited as set forth in the Delaware Act and other
applicable law hereafter in effect.
5.2 Return of Distributions. In accordance with Section 18-607 of
the Delaware Act, the Member will be obligated to return any distribution from
the Company only as provided by applicable law.
ARTICLE VI
ACTS OF THE MEMBER
6.1 Action by the Member With a Meeting. The Member may act by
voting the Common Interest at a meeting, which may be called by the Member or
any Manager, and which may be held at any place designated by the Member. If a
Manager calls such a meeting, written notice shall be given to the Member not
less than 10 and not more than 60 days before the date of the meeting. At all
meetings of the Member, the Member may vote in person or by proxy executed in
writing by the Member or by a duly authorized attorney in fact. Such proxy shall
be filed with the Managers of the Company before or at the time of the meeting.
No proxy shall be valid after 11 months from the date of its execution, unless
otherwise provided in the proxy.
6.2 Action by the Member Without a Meeting. Action required or
permitted to be taken at a meeting of the Member may be taken without a meeting
if the action is evidenced by one or more written consents describing the action
taken, signed by the Member and delivered to the Managers of the Company for
inclusion in the minutes or for filing with the Company records.
6.3 Waiver of Notice. When any notice is required to be given to the
Member, a waiver thereof in writing signed by the Person entitled to such
notice, whether before, at or after the time stated therein, shall be equivalent
to the giving of such notice.
6.4 Special Prohibitions and Limitations. Without the prior approval
of the Member, the Company shall not (i) sell, exchange or otherwise dispose of
all or substantially all of the assets of the Company outside the ordinary
course of business of the Company (provided, however, that this provision shall
not be interpreted to preclude or limit the mortgage, pledge, hypothecation or
grant of a security interest in all or substantially all of the assets of the
Company and shall not apply to any forced sale of any or all of the assets of
the Company pursuant to the foreclosure of (or in lieu of foreclosure), or other
realization upon, any such encumbrance), (ii) merge, consolidate or combine with
any other Person, or (iii) issue additional Common Shares.
6.5 Amendments to be Adopted Solely by the Managers. The Managers,
without the consent at the time of the Member, may amend any provision of this
Agreement and execute, swear to, acknowledge, deliver, file and record whatever
documents may be required in connection therewith, to reflect:
-5-
(a) a change in the name of the Company or the location of the
principal place of business of the Company;
(b) a change that is necessary or advisable in the opinion of
the Managers to qualify the Company as a company in which members have limited
liability under the laws of any state or other jurisdiction or to ensure that
the Company will not be treated as an association taxable as a corporation for
federal income tax purposes;
(c) a change that (i) in the sole discretion of the Managers
does not adversely affect the Member in any material respect, (ii) is necessary
or desirable to satisfy any requirements, conditions or guidelines contained in
any opinion, directive, order, ruling or regulation of any federal or state
agency or contained in any federal or state statute or (iii) is required or
contemplated by this Agreement;
(d) a change in any provision of this Agreement that requires
any action to be taken by or on behalf of the Company or the Member pursuant to
the requirements of Delaware law if the provisions of Delaware law are amended,
modified or revoked so that the taking of such action is no longer required;
provided that this Section 6.5(d) shall be applicable only if such changes are
not materially adverse to the Member; or
(e) any other amendments similar to the foregoing.
The Member hereby appoints each Manager as its attorney in fact to
execute any amendment permitted by this Section 6.5.
6.6 Amendments. A proposed amendment to this Agreement (other than
one permitted by Section 6.5) shall be effective upon its adoption by the
Member.
ARTICLE VII
RIGHTS AND DUTIES OF MANAGERS
7.1 Management. The powers of the Company shall be exercised by or
under the authority of, and the business and affairs of the Company shall be
managed under, its Managers. In addition to the powers and authorities expressly
conferred by this Agreement upon the Managers, the Managers may exercise all
such powers of the Company and do all such lawful acts and things as are not
directed or required to be exercised or done by the Member by the Delaware Act,
the Certificate of Formation of the Company or this Agreement. In accordance
with and pursuant to the provisions of Section 18-407 of the Delaware Act, the
Managers may delegate to one or more other persons their rights and powers to
manage and control the business and affairs of the Company, provided that any
such delegation may not authorize any action that would violate or reasonably be
expected to violate the limited business purpose of the Company specified in
Section 2.6.
7.2 Number and Qualifications. The number of Managers of the Company
shall initially be one; but the number of Managers may be changed by the Member.
Managers need not be residents of the State of Delaware or Members of the
Company. The Managers, in
-6-
their discretion, may elect a chairman of the Managers who shall preside at any
meetings of the Managers.
7.3 Powers of the Managers. Without limiting the generality of
Section 7.1, the Managers shall have power and authority, acting in concert in
accordance with this Agreement, to cause the Company to do and perform all acts
as may be necessary or appropriate to the conduct of the Company's business.
7.4 Initial Manager. The initial Manager shall be Xxxx Xxxxxxxx. The
Member shall have the right to take action pursuant Section 6.1 or Section 6.2
to designate one or more Managers and to remove, replace or fill any vacancy
occurring for any reason of any Manager.
7.5 Place of Meetings. All meetings of the Managers of the Company
or committees thereof may be held either within or without the State of
Delaware. Any Manager may participate in a meeting by means of conference
telephone or similar equipment, and participation by such means shall constitute
presence in person at the meeting.
7.6 Meetings of Managers. Meetings of the Managers may be called by
any Manager on two days' notice to each Manager, either personally or by mail,
telephone or telegram.
7.7 Quorum. At all meetings of the Managers, the presence of a
majority of the Managers shall be necessary and sufficient to constitute a
quorum for the transaction of business unless a greater number is required by
law. The act of a majority of the Managers present at a meeting at which a
quorum is present shall be the act of the Managers, except as otherwise provided
by law, Certificate of Formation or this Agreement. If a quorum shall not be
present at any meeting of the Managers, the Managers present at the meeting may
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum shall be present.
7.8 Attendance and Waiver of Notice. Attendance of a Manager at any
meeting shall constitute a waiver of notice of such meeting, except where a
Manager attends a meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened. Neither the business to be transacted at, nor the purpose
of, any regular or special meeting of the Managers need be specified in the
notice or waiver of notice of such meeting.
7.9 Action by Managers Without a Meeting. Action required or
permitted to be taken at a meeting of Managers may be taken without a meeting if
the action is evidenced by one or more written consents describing the action
taken, signed by a majority of the Managers and included in the Company minutes
or records. Action taken under this Section is effective when a majority of the
Managers have signed the consent, unless the consent specifies a different
effective date. The record date for determining Managers entitled to take action
without a meeting shall be the date the first Manager signs a written consent.
7.10 Compensation of Managers. Managers, as such, shall not receive
any stated salary for their services, but shall receive such compensation for
their services as may be
-7-
from time to time approved by the Member, provided that nothing contained in
this Agreement shall preclude any Manager from serving the Company in any other
capacity and receiving compensation for service. In addition, a fixed sum and
expenses of attendance, if any, may be allowed for attendance at each meeting of
the managers.
7.11 Committees. The Managers may, by resolution, designate from
among the Managers one or more committees, each of which shall be comprised of
one or more Managers, and may designate one or more of the Managers as alternate
members of any committee, who may, subject to any limitations imposed by the
Managers, replace absent or disqualified Managers at any meeting of that
committee. Such committee shall have and may exercise all of the authority of
the Managers, subject to the limitations set forth in this Agreement and under
the Delaware Act.
7.12 Liability of Managers. A Manager shall not be liable under any
judgment, decree or order of a court, or in any other manner, for any debt,
obligation or liability of the Company by reason of his acting as a Manager of
the Company. A Manager of the Company shall not be personally liable to the
Company or the Member for monetary damages for breach of fiduciary duty as a
Manager, except for liability for any acts or omissions that involve intentional
misconduct, fraud or a knowing violation of law or for a distribution in
violation of Delaware law as a result of the willful or grossly negligent act or
omission of the Manager. If the laws of the State of Delaware are amended after
the date of this Agreement to authorize action further eliminating or limiting
the personal liability of Managers, then the liability of a Manager of the
Company, in addition to the limitation on personal liability provided herein,
shall be limited to the fullest extent permitted by the amended laws of the
State of Delaware. Any repeal or modification of this Section 7.12 by the Member
of the Company shall be prospective only, and shall not adversely affect any
limitation on the personal liability of a Manager of the Company existing at the
time of such repeal or modification or thereafter arising as a result of acts or
omissions prior to the time of such repeal or modification.
ARTICLE VIII
INDEMNIFICATION
8.1 Indemnification. Each Person who at any time shall be, or shall
have been, a Member or Manager of the Company, or any Person who, while a
Member, Manager or agent of the Company, is or was serving at the request of the
Company as a director, member, manager, officer, partner, venturer, proprietor,
trustee, employee, agent or similar functionary of an Entity, shall be entitled
to indemnification as and to the fullest extent permitted by the provisions of
Delaware law or any successor statutory provisions, as from time to time
amended. The foregoing right of indemnification shall not be deemed exclusive of
any other rights to which one to be indemnified may be entitled as a matter of
law or under this Agreement, any other agreement, by vote of the Member or
disinterested Managers or otherwise, both as to any action in an official
capacity and as to action in another capacity while holding such office. Any
repeal of this Section 8.1 shall be prospective only, and shall not adversely
affect any right of indemnification existing at the time of such repeal or
modification or thereafter arising as a result of acts or omissions prior to the
time of such repeal or modification. Any Person entitled to indemnification in
accordance with this Section 8.1 shall hereinafter be referred to as an
-8-
"Indemnitee." If any provision or provisions of this Agreement relating to
indemnification shall be held to be invalid, illegal or unenforceable for any
reason whatsoever, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby; and, to the
fullest extent possible, the provisions of this Agreement shall be construed so
as to give effect to the intent manifested by the provision held invalid,
illegal or unenforceable, including, without limitation, by allowing
indemnification by vote of the Member or Managers or the disinterested minority
thereof.
8.2 Advancement or Reimbursement of Expenses. The Company may pay in
advance or reimburse expenses actually or reasonably incurred or anticipated by
an Indemnitee in connection with an appearance as a witness or other
participation in a proceeding whether or not such Indemnitee is a named
defendant or a respondent in the proceeding.
8.3 Nonexclusivity and Survival of Indemnification. The
indemnification and advancement of expenses provided by, or granted pursuant to,
the other subsections of this Article VIII shall not be deemed exclusive of any
other rights to which one seeking indemnification and advancement of expenses
may be entitled under this Agreement, any other agreement, by vote of the
disinterested Member or Managers or otherwise, both as to action in an official
capacity and as to action in any other capacity while holding such office, it
being the policy of the Company that, if the Managers and the Member unanimously
approve, indemnification specified in this Article VIII shall be made to the
fullest extent permitted by law. The provisions of this Article VIII shall not
be deemed to preclude the indemnification of any Person who is not specified in
this Article VIII but whom the Company has the power or obligation to indemnify
under the provisions of the Delaware Act or otherwise.
8.4 Insurance. The Company may purchase and maintain insurance on
behalf of any Person who is or was a Member, Manager or agent of the Company, or
is or was serving at the request of the Company as a member, manager, director,
officer, employee or agent of an Entity against any liability asserted against
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 or the
obligation to indemnify such Person against such liability under the provisions
of this Article VIII.
ARTICLE IX
ALLOCATIONS AND DISTRIBUTIONS
9.1 Allocations. Except as may otherwise be unanimously agreed by
the Managers with the consent of the Member, all items of income, gain, loss,
deduction, and credit of the Company shall be allocated to the Member in respect
of its Common Interest.
9.2 Distributions. The Member shall be entitled to receive, out of
the assets of the Company legally available therefor, when, as and if declared
by unanimous vote of the Managers, distributions payable in cash in such
amounts, if any, as the Managers shall declare. Notwithstanding any provision to
the contrary contained in this Agreement, the Company shall not be required to
make a distribution to the Member on account of its interest in the Company if
such distribution would violate Sections 18-607 or 18-804 of the Delaware Act or
any other
-9-
applicable law or any agreement or instrument entered into by the Company in
connection with the issuance of Transition Bonds.
ARTICLE X
ACCOUNTING PERIOD, RECORDS AND REPORTS
10.1 Accounting Period. The Company's accounting period shall be the
Fiscal Year.
10.2 Records, Audits and Reports. At the expense of the Company, the
Managers shall maintain records and accounts of all operations and expenditures
of the Company.
10.3 Inspection. The books and records of the Company shall be
maintained at the principal place of business of the Company and shall be open
to inspection by the Member at all reasonable times during any business day.
ARTICLE XI
TAX MATTERS
11.1 Tax Returns and Elections. The Managers or their designees
shall cause the preparation and timely filing of all tax returns required to be
filed by the Company pursuant to the Code and all other tax returns that the
Managers or their designees deem necessary and are required to be filed by the
Company. Copies of such returns, or pertinent information therefrom, shall be
furnished to the Member as promptly as practicable after filing.
11.2 State, Local or Foreign Income Taxes. In the event state or
foreign income taxes are applicable, any references to federal income taxes or
to "income taxes" contained herein shall refer to federal, state, local and
foreign income taxes. References to the Code or Treasury Regulations shall be
deemed to refer to corresponding provisions that may become applicable under
state, local or foreign income tax statutes and regulations.
ARTICLE XII
RESTRICTIONS ON TRANSFERABILITY
The Common Interest constitutes personal property and shall be
freely transferable and assignable in whole but not in part upon registration of
such transfer and assignment on the books of the Company in accordance with the
procedures established for such purpose by the Managers. Upon registration of
the transfer and assignment of the Common Interest on the books of the Company,
and without any further action of any Person, the transferee/assignee shall be
and become the sole Member of the Company and shall have the rights and powers,
and be subject to the restrictions and liabilities, of the Member under this
Agreement and the Delaware Act, and the transferor/assignor shall cease to be
the Member, each as of the date of such registration. Notwithstanding the
foregoing, the Common Interest may not
-10-
be transferred unless any conditions thereto specified in agreements or
instruments entered into by the Company in connection with the issuance of
Transition Bonds are satisfied.
ARTICLE XIII
DISSOLUTION AND TERMINATION
13.1 Dissolution. The Company shall dissolve upon the occurrence of
any of the following events:
(i) when the period fixed for the duration of the Company
shall expire;
(ii) if the Member so elects by vote or in writing; or
(iii) as otherwise provided under Delaware law.
13.2 Effect of Dissolution. Upon the occurrence of any of the events
specified in this Article effecting the dissolution of the Company, the Company
shall cease to carry on its business, except insofar as may be necessary for the
winding up of its business, but its separate existence shall continue until a
certificate of cancellation has been issued by the Secretary of State of the
State of Delaware or until a decree dissolving the Company has been entered by a
court of competent jurisdiction.
13.3 Winding Up, Liquidating and Distribution of Assets.
(a) Upon dissolution, an accounting shall be made of the
accounts of the Company and of the Company's assets, liabilities and operations,
from the date of the last previous accounting until the date of dissolution. The
Managers shall immediately proceed to wind up the affairs of the Company.
(b) If the Company is dissolved and its affairs are to be wound up, the Managers
shall (1) sell or otherwise liquidate all of the Company's assets as promptly as
practicable (except to the extent the Managers may determine to distribute any
assets in kind to the Member), (2) allocate any income or loss resulting from
such sales to the Member in accordance with this Agreement, (3) discharge all
liabilities to creditors in the order of priority as provided by law, (4)
discharge all liabilities of the Member (other than liabilities to the Member or
for Capital Contributions to the extent unpaid in breach of an obligation to do
so), including all costs relating to the dissolution, winding up and liquidation
and distribution of assets, (5) establish such reserves as the Managers may
determine to be reasonably necessary to provide for contingent liabilities of
the Company, (6) discharge any liabilities of the Company to the Member other
than on account of their interests in Company capital or profits and (7)
distribute the remaining assets to the Member, either in cash or in kind, as
determined by the Managers.
(c) Notwithstanding anything to the contrary in this
Agreement, upon a liquidation of the Company no Member shall have any obligation
to make any contribution to the capital of the Company other than any Capital
Contributions such Member agreed to make in accordance with this Agreement.
-11-
(d) Upon completion of the winding up, liquidation and
distribution of the assets, the Company shall be deemed terminated.
(e) The Managers shall comply with any applicable requirements
of applicable law pertaining to the winding up of the affairs of the Company and
the final distribution of its assets.
13.4 Certificate of Cancellation. When all debts, liabilities and
obligations have been paid and discharged or adequate provisions have been made
therefor and all of the remaining property and assets have been distributed to
the Member, a Certificate of Cancellation shall be executed in duplicate, and
verified by the person signing the Certificate of Cancellation and filed with
the Secretary of State of the State of Delaware, which Certificate shall set
forth the information required by the Delaware Act.
13.5 Return of Contribution. Except as provided by law, upon
dissolution, the Member shall look solely to the assets of the Company for the
return of its Capital Contribution.
ARTICLE XIV
MISCELLANEOUS PROVISIONS
14.1 Notices. Any notice, demand or communication required or
permitted to be given by any provision of this Agreement shall be deemed to have
been sufficiently given or served for all purposes if delivered personally to
the party or to an executive officer of the party to whom the same is directed
or if sent by registered or certified mail, postage and charges prepaid,
addressed to the Member's and/or Company's address, as appropriate, which is set
forth in this Agreement.
If mailed, any such notice shall be deemed to be delivered two calendar days
after being deposited in the United States mail with postage thereon prepaid,
addressed and sent as aforesaid.
14.2 Books of Account and Records. Proper and complete records and
books of account in which shall be entered fully and accurately all transactions
and other matters relating to the Company's business in such detail and
completeness as is customary and usual for businesses of the type engaged in by
the Company shall be kept or shall be caused to be kept by the Company. Such
books and records shall be maintained as provided in Section 10.3. The books and
records shall at all times be maintained at the principal executive office of
the Company and shall be open to the reasonable inspection and examination of
the Member or its duly authorized representatives during reasonable business
hours.
14.3 Application of Delaware Law. This Agreement, and the
application of interpretation hereof, shall be governed exclusively by its terms
and by the laws of the State of Delaware, and specifically the Delaware Act.
14.4 Waiver of Action for Partition. The Member irrevocably waives,
during the term of the Company, any right that the Member may have to maintain
any action for partition with respect to the property of the Company.
-12-
14.5 Execution of Additional Instruments. The Member hereby agrees
to execute such other and further statements of interest and holdings,
designations, powers of attorney and other instruments necessary to comply with
any laws, rules or regulations.
14.6 Headings. The headings in this Agreement are inserted for
convenience 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.
14.7 Waivers. No waiver of any right under this Agreement shall be
effective unless evidenced in writing and executed by the Person entitled to the
benefits thereof. The failure of any party to seek redress for violation of or
to insist upon the strict performance of any covenant or condition of this
Agreement shall not prevent another act or omission, which would have originally
constituted a violation, from having the effect of an original violation.
14.8 Rights and Remedies Cumulative. The rights and remedies
provided by this Agreement are cumulative and the use of any one right or remedy
by any party shall not preclude or waive the right to use any or all other
rights or remedies. Said rights and remedies are given in addition to any other
rights the parties may have by law, statute, ordinance or otherwise.
14.9 Severability. If any provision of this Agreement or the
application thereof to any person or circumstance shall be invalid, illegal or
unenforceable to any extent, the remainder of this Agreement and the application
thereof shall not be affected and shall be enforceable to the fullest extent
permitted by law.
14.10 Heirs, Successors and Assigns. Each and all of the covenants,
terms, provisions and agreements herein contained shall be binding upon and
inure to the benefit of the parties hereto and, to the extent permitted by this
Agreement, their respective heirs, legal representatives, successors and
assigns.
14.11 Creditors. None of the provisions of this Agreement shall be
for the benefit of or enforceable by any creditors of the Company.
14.12 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original but all of which shall constitute one
and the same instrument.
-13-
EXECUTED to be effective as of the date first above written.
CENTERPOINT ENERGY HOUSTON
ELECTRIC, LLC
By: /s/ Xxxxx X. Xxxxx
--------------------------------------
Name: Xxxxx X. Xxxxx
Title: Vice President, Deputy General
Counsel and Assistant Secretary
-14-
