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AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT
OF
ONCOR ELECTRIC DELIVERY TRANSITION BOND COMPANY LLC
DATED AND EFFECTIVE AS OF
JULY __, 2003
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TABLE OF CONTENTS
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PAGE
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ARTICLE I GENERAL PROVISIONS..................................................5
SECTION 1.01 Definitions...................................................5
SECTION 1.02 Sole Member; Registered Office and Agent......................5
SECTION 1.03 Other Offices.................................................7
SECTION 1.04 Name..........................................................7
SECTION 1.05 Purpose; Nature of Business Permitted; Powers.................7
SECTION 1.06 Limited Liability Company Agreement; Certificate
of Formation..................................................8
SECTION 1.07 Separate Existence............................................8
SECTION 1.08 Limitation on Certain Activities.............................11
SECTION 1.09 No State Law Partnership.....................................12
ARTICLE II CAPITAL...........................................................12
SECTION 2.01 Initial Capital..............................................12
SECTION 2.02 Additional Capital Contributions.............................12
SECTION 2.03 Capital Account..............................................13
SECTION 2.04 Interest.....................................................13
ARTICLE III ALLOCATIONS; BOOK................................................13
SECTION 3.01 Allocations of Income and Loss...............................13
SECTION 3.02 Company to be Disregarded for Tax Purposes...................14
SECTION 3.03 Books of Account.............................................14
SECTION 3.04 Access to Accounting Records.................................14
SECTION 3.05 Annual Tax Information.......................................14
SECTION 3.06 Internal Revenue Service Communications......................14
ARTICLE IV MEMBER............................................................14
SECTION 4.01 Powers.......................................................14
SECTION 4.02 Compensation of Member.......................................15
SECTION 4.03 Other Ventures...............................................15
SECTION 4.04 Actions by the Member........................................16
ARTICLE V OFFICERS...........................................................16
SECTION 5.01 Designation; Term; Qualifications............................16
SECTION 5.02 Removal and Resignation......................................16
SECTION 5.03 Vacancies....................................................16
SECTION 5.04 Compensation.................................................16
ARTICLE VI MEMBERSHIP INTEREST...............................................17
SECTION 6.01 General......................................................17
SECTION 6.02 Distributions................................................17
SECTION 6.03 Rights on Liquidation, Dissolution or Winding Up.............17
SECTION 6.04 Redemption...................................................17
SECTION 6.05 Voting Rights................................................17
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SECTION 6.06 Transfer of Membership Interests.............................17
SECTION 6.07 Admission of Transferee as Member............................18
ARTICLE VII MANAGERS.........................................................18
SECTION 7.01 Managers.....................................................18
SECTION 7.02 Powers of the Managers.......................................19
SECTION 7.03 Compensation.................................................19
SECTION 7.04 Removal of Managers..........................................19
SECTION 7.05 Resignation of Manager.......................................20
SECTION 7.06 Vacancies....................................................20
SECTION 7.07 Meetings of the Managers.....................................20
SECTION 7.08 Electronic Communications....................................20
SECTION 7.09 Committees of Managers.......................................20
SECTION 7.10 Limitations on Independent Managers..........................21
ARTICLE VIII EXPENSES........................................................21
SECTION 8.01 Expenses.....................................................21
ARTICLE IX PERPETUAL EXISTENCE; DISSOLUTION, LIQUIDATION AND WINDING-UP......22
SECTION 9.01 Existence....................................................22
SECTION 9.02 Dissolution..................................................22
SECTION 9.03 Accounting...................................................22
SECTION 9.04 Certificate of Cancellation..................................22
SECTION 9.05 Winding Up...................................................23
SECTION 9.06 Order of Payment of Liabilities Upon Dissolution.............23
SECTION 9.07 Limitations on Payments Made in Dissolution..................23
SECTION 9.08 Limitation on Liability......................................23
ARTICLE X INDEMNIFICATION....................................................23
SECTION 10.01 Indemnity...................................................23
SECTION 10.02 Indemnity for Actions By or In the Right of the Company.....24
SECTION 10.03 Indemnity If Successful.....................................24
SECTION 10.04 Expenses....................................................24
SECTION 10.05 Advance Payment of Expenses.................................25
SECTION 10.06 Other Arrangements Not Excluded.............................25
ARTICLE XI MISCELLANEOUS PROVISIONS..........................................25
SECTION 11.01 Amendments..................................................25
SECTION 11.02 PUCT Condition..............................................26
SECTION 11.03 Governing Law...............................................27
SECTION 11.04 Headings....................................................27
SECTION 11.05 Severability................................................27
SECTION 11.06 Assigns.....................................................27
SECTION 11.07 Enforcement by Independent Managers.........................27
SECTION 11.08 Waiver of Partition; Nature of Interest.....................27
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EXHIBITS AND SCHEDULES
Schedule A Schedule of Capital Contribution of Member
Schedule B Initial Managers
Exhibit A Management Agreement
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AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
ONCOR ELECTRIC DELIVERY TRANSITION BOND COMPANY LLC.
A DELAWARE LIMITED LIABILITY COMPANY
This AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT (this
"Agreement") of Oncor Electric Delivery Transition Bond Company LLC, a Delaware
limited liability company (the "Company"), is made and entered into as of July
___, 2003 by Oncor Electric Delivery Company (formerly known as TXU Electric
Delivery Company), a Texas corporation (including any additional or successor
members of the Company other than Special Members, the "Member").
WHEREAS, TXU US Holdings Company (formerly known as TXU Electric
Company) ("TXU US Holdings"), the former owner of the Company, has caused to be
filed a Certificate of Formation with the Secretary of State of the State of
Delaware to form the Company under and pursuant to the LLC Act and has entered
into a Limited Liability Company Agreement of the Company, dated as of November
30, 1999 (the "Original LLC Agreement");
WHEREAS, as mandated by the Utilities Code of the State of Texas, TXU
US Holdings was required to separate its business activities into separate units
consisting of a power generation company, a retail electric provider and
transmission and distribution utility by January 1, 2002;
WHEREAS, pursuant to the Master Separation Agreement, dated December
14, 2001, by and among TXU US Holdings, the Member and certain other parties
named therein, and the General Assignment and Assumption Agreement, dated as of
December 14, 2001, by and among TXU US Holdings, the Member and certain other
parties named therein, TXU US Holdings transferred all of its ownership
interests in the Company to the Member;
WHEREAS, in accordance with the LLC Act, the Member desires to enter
into this Agreement to amend and restate in its entirety the terms of the
Original LLC Agreement and to set forth the rights, powers and interests of the
Member with respect to the Company and its Membership Interest (as defined
herein) therein and to provide for the management of the business and operations
of the Company.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained and other good and valuable consideration, the receipt,
adequacy and sufficiency of which are hereby acknowledged, the Member, intending
to be legally bound, hereby agrees to amend and restate in its entirety the
Original LLC Agreement as follows:
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ARTICLE I
GENERAL PROVISIONS
SECTION 1.01 Definitions. (a) Unless otherwise defined herein, capitalized
terms used herein shall have the meanings assigned to them in that certain
Indenture (including Appendix A) dated as of __________, 2003 between the
Company, as Issuer, and The Bank of New York, as the Indenture Trustee, as the
same may be amended, supplemented or otherwise modified from time to time.
(b) All terms defined in this Agreement shall have the defined meanings
when used in any certificate or other document made or delivered pursuant hereto
unless otherwise defined therein.
(c) The words "hereof," "herein," "hereunder" and words of similar
import, when used in this Agreement, shall refer to this Agreement as a whole
and not to any particular provision of this Agreement; Section, Schedule,
Exhibit, Annex and Attachment references contained in this Agreement are
references to Sections, Schedules, Exhibits, Annexes and Attachments in or to
this Agreement unless otherwise specified; and the term "including" shall mean
"including without limitation."
(d) The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms.
(e) Non-capitalized terms used herein which are defined in the
Utilities Code shall, as the context requires, have the meanings assigned to
such terms in the Utilities Code, but without giving effect to amendments to the
Utilities Code.
SECTION 1.02 Sole Member; Registered Office and Agent. (a) The sole member
of the Company shall be Oncor Electric Delivery Company, a Texas corporation, or
any successor as sole member pursuant to Sections 1.02(c), 6.06 and 6.07. The
registered office and registered agent of the Company in the State of Delaware
shall be Corporation Service Company, 0000 Xxxxxx Xxxx, Xxxxxxxxxx, Xxxxxxxx
00000. The Member may change said registered office and agent from one location
to another in the State of Delaware. The Member shall provide notice of any such
change to the Indenture Trustee.
(b) Upon the occurrence of any event that causes the Member to cease to
be a member of the Company (other than (i) upon an assignment by the Member of
all of its limited liability company interest in the Company and the admission
of the transferee pursuant to Sections 6.06 and 6.07, or (ii) the resignation of
the Member and the admission of an additional member of the Company pursuant to
Sections 6.06 and 6.07), each Person acting as an Independent Manager (as
defined in Section 4.01 hereof) pursuant to the terms of this Agreement shall,
without any action of any Person and simultaneously with the Member ceasing to
be a member of the Company, automatically be admitted to the Company as a
Special Member (as defined below) and shall continue the Company without
dissolution. No Special Member may resign from the Company or transfer its
rights as Special Member unless (i) a successor Special Member has been admitted
to the Company as Special Member by executing a counterpart to this Agreement,
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and (ii) such successor has also accepted its appointment as Independent Manager
pursuant to this Agreement; provided, however, the Special Members shall
automatically cease to be members of the Company upon the admission to the
Company of a substitute Member. Upon the occurrence of any event that causes
there to be no Member of the Company, the personal representative of such former
Member shall be authorized to admit a substitute Member of the Company pursuant
to Sections 6.06 and 6.07 which substitute Member shall be such personal
representative or its nominee or designee. Pending such admission of the
personal representative or its nominee or designee, as the case may be, as a
substitute Member, such former Member (or if such former Member no longer
exists, its personal representative) shall retain the limited liability company
interest in the Company of such former Member, including without limitation, all
economic rights associated with such interest (which economic rights shall
continue to represent the sole economic rights associated with any ownership
interest in the Company). Upon the admission to the Company of a substitute
Member, such substitute Member shall acquire, upon terms agreed to by the former
Member (or its personal representative) and the substitute Member, all right,
title and interest in and to such former Member's limited liability company
interest in the Company. Each Special Member shall be a member of the Company
that has no interest in the profits, losses and capital of the Company and has
no right to receive any distributions of Company assets (and no Special Member
shall be treated as a member of the Company for federal income tax purposes).
Pursuant to Section 18-301 of the LLC Act, a Special Member shall not be
required to make any capital contributions to the Company and shall not receive
a limited liability company interest in the Company. A Special Member, in its
capacity as Special Member, may not bind the Company. Except as required by any
mandatory provision of the LLC Act, each Special Member, in its capacity as
Special Member, shall have no right to vote on, approve or otherwise consent to
any action by, or matter relating to, the Company, including the merger,
consolidation or conversion of the Company. In order to implement the admission
to the Company of each Special Member, each Person acting as an Independent
Manager pursuant to this Agreement shall execute a counterpart to this
Agreement. Prior to its admission to the Company as Special Member, each Person
acting as an Independent Manager pursuant to this Agreement shall not be a
member of the Company. A "Special Member" means, upon such Person's admission to
the Company as a member of the Company pursuant to this Section 1.02(b), a
Person acting as Independent Manager, in such Person's capacity as a member of
the Company. A Special Member shall only have the rights and duties expressly
set forth in this Agreement. For purposes of this Agreement, a Special Member is
not included within the defined term "Member."
(c) In the event that the sole Member is converted to a Texas limited
liability company, then such limited liability company shall be the sole Member
of the Company without any further action by Oncor or any amendment to this
Agreement.
(d) The Company may admit additional members with the affirmative vote
of a majority of the Managers, which vote must include the affirmative vote of
all of the Independent Managers. Notwithstanding the preceding sentence, it
shall be a condition to the admission of any additional member that the sole
Member shall have received an opinion of outside tax counsel (as selected by the
Member in form and substance reasonably satisfactory to the Member and the
indenture trustee) that the admission of such additional member shall not cause
the Company to be treated, for federal income tax purposes, as having more than
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a "sole owner" and that the Company shall not be treated, for federal income tax
purposes, as an entity separate from such "sole owner".
SECTION 1.03 Other Offices. The Company may have an office at 0000 Xxxxx
Xxxxxx, Xxxxx 0-000, Xxxxxx, Xxxxx, or at any other offices that may at any time
be established by the Member at any place or places within or outside the State
of Delaware. The Member shall provide notice to the Indenture Trustee of any
change in the location of the Company's office.
SECTION 1.04 Name. The name of the Company shall be "Oncor Electric
Delivery Transition Bond Company LLC." The name of the Company may be changed
from time to time by the Member with ten days' prior written notice to the
Managers and the Indenture Trustee, and the filing of an appropriate amendment
to the Certificate of Formation with the Secretary of State as required by the
LLC Act.
SECTION 1.05 Purpose; Nature of Business Permitted; Powers. The purposes
for which the Company is formed are limited to:
(a) acquire, own, hold, administer, service or enter into agreements
regarding the receipt and servicing of Transition Property and the other
Collateral, along with certain other related assets;
(b) manage, sell, assign, pledge, collect amounts due on or otherwise
deal with the Transition Property and the other Collateral and related assets to
be so acquired in accordance with the terms of the Basic Documents;
(c) enter into, perform and comply with the Basic Documents and enter
into, perform and comply with such other agreements as may be necessary or
desirable in connection with the Basic Documents;
(d) file with the SEC one or more registration statements, including
any pre-effective or post-effective amendments thereto and any registration
statement filed pursuant to Rule 462(b) under the Securities Act (including any
prospectus supplement, prospectus and exhibits contained therein) and file such
applications, reports, surety bonds, irrevocable consents, appointments of
attorney for service of process and other papers and documents necessary or
desirable to register the Bonds under the securities or "Blue Sky" laws of
various jurisdictions;
(e) execute, deliver and issue one or more series or classes of Bonds
from time to time (however, the aggregate principal amount of Bonds issued
before January 1, 2004 shall not exceed $500 million);
(f) pledge its interest in Transition Property and other Collateral to
the Indenture Trustee under the Indenture in order to secure the Bonds; and
(g) engage in any lawful act or activity and exercise any powers
permitted to limited liability companies formed under the laws of the State of
Delaware that, in either case, are incidental to, or necessary, suitable or
convenient for the accomplishment of the above-mentioned purposes.
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The Company shall engage only in any activities related to the
foregoing purposes or required or authorized by the terms of the Basic Documents
or other agreements referenced above. The Company shall have all powers
reasonably incidental, necessary, suitable or convenient to effect the foregoing
purposes, including all powers granted under the LLC Act. The Company, the
Member, any Manager, including the Independent Managers (as defined herein), or
any officer of the Company, acting singly or collectively, on behalf of the
Company, may enter into and perform the Basic Documents and all registration
statements, documents, agreements, certificates or financing statements
contemplated thereby or related thereto, all without any further act, vote or
approval of any Member, Manager or other Person, notwithstanding any other
provision of this Agreement, the LLC Act, or other applicable law, rule or
regulation. The authorization set forth in the preceding sentence shall not be
deemed a restriction on the power and authority of the Member or any Manager,
including the Independent Managers, to enter into other agreements or documents
on behalf of the Company as authorized pursuant to this Agreement and the LLC
Act. The Company shall possess and may exercise all the powers and privileges
granted by the LLC Act or by any other law or by this Agreement, together with
any powers incidental thereto, insofar as such powers and privileges are
incidental, necessary, suitable or convenient to the conduct, promotion or
attainment of the business purposes or activities of the Company.
SECTION 1.06 Limited Liability Company Agreement; Certificate of Formation.
This Agreement shall constitute a "limited liability company agreement" within
the meaning of the LLC Act. A Certificate of Formation for the Company was filed
with the Secretary of State of Delaware on December 1, 1999, a Certificate of
Amendment of such certificate was filed with the Secretary of State if the State
of Delaware on [May 6, 2003] and [an Amended and Restated Certificate of
Formation was filed with the Secretary of State of the State of Delaware on
[June __, 2003] (such filings being hereby ratified and approved in all
respects).
SECTION 1.07 Separate Existence. Except for financial reporting purposes
(to the extent required by generally accepted accounting principles) and for
federal income tax purposes and, to the extent consistent with applicable state
tax law, state income and franchise tax purposes, the Member and the Managers
shall take all steps necessary to continue the identity of the Company as a
separate legal entity and to make it apparent to third Persons that the Company
is an entity with assets and liabilities distinct from those of the Member,
Affiliates of the Member or any other Person, and that, the Company is not a
division of any of the Affiliates of the Company or any other Person. In that
regard, and without limiting the foregoing in any manner, the Company shall:
(a) maintain office space separate and clearly delineated from the
office space of any Affiliate, owned by the Company or evidenced by a written
lease or sublease (even if located in an office owned or leased by, or shared
with, an Affiliate);
(b) maintain the assets of the Company in such a manner that it is not
costly or difficult to segregate, identify or ascertain its individual assets
from those of any other Person, including any Affiliate;
(c) maintain a separate telephone number which will be answered only in
its own name;
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(d) conduct all transactions with Affiliates on an arm's-length basis;
(e) except as expressly otherwise permitted hereunder or under any of
the Basic Documents, not guarantee, become obligated for or pay the debts of any
Affiliate or hold the credit of the Company out as being available to satisfy
the obligations of any Affiliate or other Person (nor indemnify any Person for
losses resulting therefrom), nor have any of its obligations guaranteed by any
Affiliate or hold the Company out as responsible for the debts of any Affiliate
or other Person or for the decisions or actions with respect to the business and
affairs of any Affiliate, nor seek or obtain credit or incur any obligation to
any third Party based upon the creditworthiness or assets of any Affiliate or
any other Person (i.e. other than based on the assets of the Company) nor allow
any Affiliate to do such things based on the credit of the Company;
(f) except as expressly otherwise permitted hereunder or under any of
the Basic Documents, not permit the commingling or pooling of the Company's
funds or other assets with the funds or other assets of any Affiliate;
(g) except as expressly otherwise permitted hereunder or under any of
the Basic Documents, maintain separate deposit and other bank accounts and funds
to which no Affiliate has any access, which accounts shall be maintained in the
name and, to the extent not inconsistent with applicable federal tax law, tax
identification number of the Company;
(h) maintain full books of accounts and records (financial or other)
and financial statements separate from those of its Affiliates or any other
Person, prepared and maintained in accordance with generally accepted accounting
principles (including, all resolutions, records, agreements or instruments
underlying or regarding the transactions contemplated by the Basic Documents or
otherwise) and audited annually by an independent accounting firm which shall
provide such audit to the Indenture Trustee;
(i) compensate (either directly or through reimbursement of the
Company's allocable share of any shared expenses) all employees, consultants and
agents and Affiliates, to the extent applicable, for services provided to the
Company by such employees, consultants and agents or Affiliates, in each case,
from the Company's own funds and maintain a sufficient number of employees in
light of its contemplated operations;
(j) pay from its own bank accounts for accounting and payroll services,
rent, lease and other expenses (or the Company's allocable share of any such
amounts provided by one or more other Affiliate) and not have such operating
expenses (or the Company's allocable share thereof) paid by any Affiliates,
provided, that the Member shall be permitted to pay the initial organization
expenses of the Company and certain of the expenses related to the transactions
contemplated by the Basic Documents as provided therein;
(k) maintain adequate capitalization to conduct its business and
affairs considering the Company's size and the nature of its business and
intended purposes and, after giving effect to the transactions contemplated by
the Basic Documents, refrain from engaging in a business for which its remaining
property represents an unreasonably small capital;
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(l) conduct all of the Company's business (whether in writing or
orally) solely in the name of the Company through the Member and the Company's
Managers, employees, officers and agents and hold the Company out as an entity
separate from any Affiliate;
(m) not make or declare any distributions of cash or property to the
Member except in accordance with appropriate limited liability company
formalities and only consistent with sound business judgment to the extent that
it is permitted pursuant to the Basic Documents and not violative of any
applicable law;
(n) otherwise practice and adhere to all limited liability company
procedures and formalities to the extent required by this Agreement or all other
appropriate constituent documents;
(o) not appoint an Affiliate or any employee of an Affiliate as an
agent of the Company, except as otherwise permitted in the Basic Documents
(although such Persons can qualify as a Manager or as an officer of the
Company);
(p) not acquire obligations or securities of or make loans or advances
to or pledge its assets for the benefit of any Affiliate, the Member or any
Affiliate of the Member;
(q) not permit the Member or any Affiliate to acquire obligations of or
make loans or advances to the Company;
(r) except as expressly provided in the Basic Documents, not permit the
Member or any Affiliate to guarantee, pay or become liable for the debts of the
Company nor permit any such Person to hold out its creditworthiness as being
available to pay the liabilities and expenses of the Company nor, except for the
indemnities in this Agreement and the Basic Documents, indemnify any Person for
losses resulting therefrom;
(s) maintain separate minutes of the actions of the Member and the
Managers, including the transactions contemplated by the Basic Documents;
(t) cause (i) all written and oral communications, including letters,
invoices, purchase orders, and contracts, of the Company to be made solely in
the name of the Company, (ii) the Company to have its own tax identification
number (to the extent not inconsistent with applicable federal tax law),
stationery, checks and business forms, separate from those of any Affiliate,
(iii) all Affiliates not to use the stationery or business forms of the Company,
and cause the Company not to use the stationery or business forms of any
Affiliate, and (iv) all Affiliates not to conduct business in the name of the
Company, and cause the Company not to conduct business in the name of any
Affiliate;
(u) direct creditors of the Company to send invoices and other
statements of account of the Company directly to the Company and not to any
Affiliate and cause the Affiliates to direct their creditors not to send
invoices and other statements of accounts of such Affiliates to the Company;
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(v) cause the Member to maintain as official records all resolutions,
agreements, and other instruments underlying or regarding the transactions
contemplated by the Basic Documents;
(w) disclose, and cause the Member to disclose, in its financial
statements the effects of all transactions between the Member and the Company in
accordance with generally accepted accounting principles, and in a manner which
makes it clear that (i) the Company is a separate legal entity, (ii) the assets
of the Company (including the Transition Property transferred to the Company
pursuant to the Sale Agreement) are not assets of any Affiliate and are not
available to pay creditors of any Affiliate and (iii) neither the Member nor any
other Affiliate is liable or responsible for the debts of the Company;
(x) treat and cause the Member to treat the transfer of Transition
Property from the Member to the Company as a sale under the Utilities Code;
(y) except as described herein with respect to tax purposes and
financial reporting, describe and cause each Affiliate to describe the Company,
and hold the Company out as a separate legal entity and not as a division or
department of any Affiliate, and promptly correct any known misunderstanding
regarding the Company's identity separate from any Affiliate or any Person;
(z) so long as any of the Bonds are outstanding, treat the Bonds as
debt for all purposes and specifically as debt of the Company, other than for
financial reporting or tax purposes or as required under the Public Utility
Holding Company Act of 1935, as amended;
(aa) solely for purposes of federal taxes and, to the extent consistent
with applicable state, local and other tax law, solely for purposes of state,
local and other taxes, so long as any of the Bonds are outstanding, treat the
Bonds as indebtedness of the Member secured by the Collateral unless otherwise
required by appropriate taxing authorities;
(bb) maintain its valid existence in good standing under the laws of
the State of Delaware and maintain its qualification to do business under the
laws of such other jurisdictions as its operations require;
(cc) comply with all laws applicable to the transactions contemplated
by this Agreement and the Basic Documents; and
(dd) cause the Member to observe in all material respects all limited
liability company procedures and formalities, if any, required by its
constituent documents and the laws of its state of formation and all other
appropriate jurisdictions.
SECTION 1.08 Limitation on Certain Activities. Notwithstanding any other
provisions of this Agreement, the Company, and the Member or Managers on behalf
of the Company, shall not:
(a) engage in any business or activity other than as set forth in
Article I hereof;
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(b) without the affirmative vote of its Member and the affirmative vote
of all of the Managers, including two Independent Managers, file a voluntary
petition for relief under the Bankruptcy Code or similar law, consent to the
institution of insolvency or bankruptcy proceedings against the Company or
otherwise institute insolvency or bankruptcy proceedings with respect to the
Company or take any company action in furtherance of any such filing or
institution of a proceeding;
(c) without the affirmative vote of all Managers, including two of the
Independent Managers, and then only to the extent permitted by the Basic
Documents, convert, merge or consolidate with any other Person or sell all or
substantially all of its assets or acquire all or substantially all of the
assets or capital stock or other ownership interest of any other Person;
(d) take any action, file any tax return, or make any election
inconsistent with the treatment of the Company, for purposes of federal taxes
income tax purposes and, to the extent consistent with applicable state tax law,
state income and franchise tax purposes, as a disregarded entity that is not
separate from the Member;
(e) incur any indebtedness or assume or guarantee any indebtedness of
any Person (other than the indebtedness incurred under the Basic Documents); or
(f) to the fullest extent permitted by law, without the affirmative
vote of its Member and the affirmative vote of all Managers, including two
Independent Managers, execute any dissolution, liquidation, or winding up of the
Company.
To the fullest extent permitted by applicable law, including Section
18-1101(c) of the LLC Act, the fiduciary duty of each Manager, including the two
Independent Managers, in respect of any decision on any matter referred to in
this Section 1.08 shall be owed solely to the Company (including its
creditors)and not to the Member or any other holders of equity interest in the
Company as may exist at such time.
SECTION 1.09 No State Law Partnership. No provisions of this Agreement
shall be deemed or construed to constitute a partnership (including a limited
partnership) or joint venture, or the Member a partner or joint venturer of or
with any Manager or the Company, for any purposes.
ARTICLE II
CAPITAL
SECTION 2.01 Initial Capital. The initial capital of the Company shall be
the sum of cash contributed to the Company by the Member (the "Capital
Contribution") in the amount set out opposite the name of the Member on Schedule
A hereto, as amended from time to time and incorporated herein by this
reference.
SECTION 2.02 Additional Capital Contributions. The assets of the Company
are expected to generate a return sufficient to satisfy all obligations of the
Company under this Agreement and the Basic Documents and any other obligations
of the Company. It is expected that no capital contributions to the Company will
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be necessary after the purchase of the initial Transition Property, except for
capital contributions in connection with the issuance of additional Series of
Bonds. On or prior to the date of issuance of each Series of Bonds, the Member
shall make an additional contribution to the Company in an amount equal to at
least 0.50% of the initial principal amount of such Series or such greater
amount as agreed to by the Member in connection with the issuance by the Company
of any Series of Bonds which amount the Company shall deposit into the Capital
Subaccount for such Series established by the Indenture Trustee as provided
under Section 8.02 of the Indenture. No capital contribution by the Member to
the Company will be made for the purpose of mitigating losses on Transition
Property that has previously been transferred to the Company, and all capital
contributions shall be made in accordance with all applicable limited liability
company procedures and requirements, including proper record keeping by the
Member and the Company. Each capital contribution will be acknowledged by a
written receipt signed by any one of the Managers. The Managers acknowledge and
agree that, notwithstanding anything in this Agreement to the contrary, such
additional contribution will be managed by an investment manager selected by the
[Indenture Trustee] who shall invest such amounts only in Eligible Investments,
and all income earned thereon shall be allocated or paid by the Indenture
Trustee in accordance with the provisions of the Indenture.
SECTION 2.03 Capital Account. A Capital Account shall be established and
maintained for the Member on the Company's books (the "Capital Account").
SECTION 2.04 Interest. No interest shall be paid or credited to the Member
on its Capital Account or upon any undistributed profits left on deposit with
the Company. Except as provided herein or by law, the Member shall have no right
to demand or receive the return of its Capital Contribution.
ARTICLE III
ALLOCATIONS; BOOK
SECTION 3.01 Allocations of Income and Loss.
(a) Book Allocations. The net income and net loss of the Company shall
be allocated entirely to the Member.
(b) Tax Allocations. Because the Company is not making (and will not
make) an election to be treated as an association taxable as a corporation under
Section 301.7701-3(a) of the Treasury Regulations, and because the Company is a
business entity that has a single owner and is not a corporation, it is expected
to be disregarded as an entity separate from its owner for federal income tax
purposes under Section 301.7701-3(b)(1) of the Treasury Regulations.
Accordingly, all items of income, gain, loss, deduction and credit of the
Company for all taxable periods will be treated for federal income tax purposes,
and for state and local income and other tax purposes to the extent permitted by
applicable law, as realized or incurred directly by the Member. To the extent
not so permitted, all items of income, gain, loss, deduction and credit of the
Company shall be allocated entirely to the Member as permitted by applicable tax
law, and the Member shall pay any state income or franchise taxes levied or
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assessed upon all or any part of the Company's property or assets based on
existing law as of the date hereof.
SECTION 3.02 Company to be Disregarded for Tax Purposes. The Company shall
comply with the applicable provisions of the Code and the applicable Treasury
Regulations thereunder in the manner necessary to effect the intention of the
parties that the Company be treated, for federal income tax purposes, as a
disregarded entity that is not separate from the Member pursuant to Treasury
Regulations Section 301.7701-3 et seq. and that the Company be accorded such
treatment until its dissolution pursuant to Article IX hereof and shall take all
actions, and shall refrain from taking any action, required by the Code or
Treasury Regulations thereunder in order to maintain such status of the Company.
In addition, for federal income tax purposes, the Company may not claim any
credit on, or make any deduction from the principal or premium, if any, or
interest payable in respect of, the Bonds (other than amounts properly withheld
from such payments under the Code or other tax laws) or assert any claim against
any present or former Bondholder by reason of the payment of the taxes levied or
assessed upon any part of the Collateral.
SECTION 3.03 Books of Account. At all times during the continuance of the
Company, the Company shall maintain or cause to be maintained null, true,
complete and correct books of account in accordance with generally accepted
accounting principles, using the fiscal year and taxable year of the Member. In
addition, the Company shall keep all records required to be kept pursuant to the
LLC Act.
SECTION 3.04 Access to Accounting Records. All books and records of the
Company shall be maintained at any office of the Company or at the Company's
principal place of business, and the Member, and its duly authorized
representative, shall have access to them at such office of the Company and the
right to inspect and copy them at reasonable times.
SECTION 3.05 Annual Tax Information. The Managers shall cause the Company
to deliver to the Member all information necessary for the preparation of the
Member's federal income tax return and applicable state tax returns.
SECTION 3.06 Internal Revenue Service Communications. The Member shall
communicate and negotiate with the Internal Revenue Service on any federal tax
matter on behalf of the Member and the Company.
ARTICLE IV
MEMBER
SECTION 4.01 Powers. Subject to the provisions of this Agreement and the
LLC Act, all powers shall be exercised by or under the authority of, and the
business and affairs of the Company shall be controlled by, the Member. The
Member may delegate any or all such powers to the Managers. Without prejudice to
such general powers, but subject to the same limitations, it is hereby expressly
declared that the Member shall have the following powers:
First - To select and remove the Managers and all officers, agents and
employees of the Company, prescribe such powers and duties for them as may be
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consistent with the LLC Act and other applicable law and this Agreement, fix
their compensation, and require from them security for faithful service;
provided, that, except as provided in Section 7.06, at all times the Company
shall have at least two Independent Managers. Prior to issuance of any Bonds,
the Member shall appoint two Independent Managers. An "Independent Manager" is a
Manager that is a natural person and is not and has not been for at least five
years from the date of his or her or its appointment (i) a direct or indirect
legal or beneficial owner of the Company or the Member or any of their
respective Affiliates, (ii) a relative, supplier, employee, officer, director
(other than as an independent director), manager (other than as an independent
manager), contractor or material creditor of the Company or the Member or any of
their respective Affiliates, [except that an Independent Manager may be an
employee of a Person that provides corporate or related services to the Company
or its Affiliates] or (iii) a Person who controls (whether directly, indirectly
or otherwise) the Member or its Affiliates or any creditor, employee, officer,
director, manager or material supplier or contractor of the Member or its
Affiliates. All right, power and authority of the Independent Managers shall be
limited to the extent necessary to exercise those rights and perform those
duties specifically set forth in this Agreement. Except as provided in this
Agreement, including Section 1.08, in exercising their rights and performing
their duties under this Agreement, any Independent Manager shall have a
fiduciary duty of loyalty and care similar to that of a director of a business
corporation organized under the General Corporation Law of the State of
Delaware. No Independent Manager shall at any time serve as trustee in
bankruptcy for any Affiliate of the Company. The Company shall pay the
Independent Managers annual fees totaling not more than [$4,000] per year. Such
fees shall be determined without regard to the income of the Company, shall not
be deemed to constitute distributions to the recipient of any profit, loss or
capital of the Company and shall be considered a fixed Operating Expense of the
Company subject to the limitations on such expenses set forth in the Financing
Order. Each Manager, including each Independent Manager, is hereby deemed to be
a "manager" within the meaning 18-101(10) of the LLC Act.
Second - Subject to Article VII hereof, to conduct, manage and control
the affairs and business of the Company, and to make such rules and regulations
therefor consistent with the LLC Act and other applicable law and this
Agreement.
Third - To change the registered agent and office of the Company in
Delaware from one location to another; to fix and locate from time to time one
or more other offices of the Company; and to designate any place within or
without the State of Delaware for the conduct of the business of the Company.
SECTION 4.02 Compensation of Member. To the extent permitted by applicable
law, the Company shall have authority to reimburse the Member for out-of-pocket
expenses incurred by the Member in connection with its service to the Company.
It is understood that the compensation paid to the Member under the provisions
of this Section 4.02 shall be determined without regard to the income of the
Company, shall not be deemed to constitute distributions to the recipient of any
profit, loss or capital of the Company and shall be considered as a fixed
Operating Expense of the Company subject to the limitations on such expenses set
forth in the Financing Order.
SECTION 4.03 Other Ventures. It is expressly agreed that the Member, the
Managers and any Affiliates, officers, directors, managers, stockholders,
partners or employees of the Member, may engage in other business ventures of
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any nature and description, whether or not in competition with the Company,
independently or with others, and the Company shall not have any rights in and
to any independent venture or activity or the income or profits derived
therefrom.
SECTION 4.04 Actions by the Member. Any actions of the Member may be taken
by written resolution of the Member which shall be signed on behalf of the
Member by an authorized officer of the Member and filed with the records of the
Company.
ARTICLE V
OFFICERS
SECTION 5.01 Designation; Term; Qualifications. (a) The Managers may, from
time to time, designate one or more Persons to be officers of the Company. Any
officer so designated shall have such title and authority and perform such
duties as the Managers may, from time to time, delegate to them. Each officer
shall hold office for the term for which such officer is designated and until
its successor shall be duly designated and shall qualify or until its death,
resignation or removal as provided in this Agreement. Any Person may hold any
number of offices. No officer need be a Manager, the Member, a Delaware
resident, or a United States citizen.
(b) Officers as Agents. The officers of the Company, to the extent
their powers as set forth in this Agreement or otherwise vested in them by
action of the Managers are not inconsistent with this Agreement, are agents of
the Company for the purpose of the Company's business and, subject to Section
1.08, the actions of the officers taken in accordance with such powers shall
bind the Company.
(c) Duties of Managers and Officers. Except to the extent otherwise
provided herein, each Manager and officer of the Company shall have a fiduciary
duty of loyalty and care similar to that of directors and officers of business
corporations organized under the General Corporation Law of the State of
Delaware.
SECTION 5.02 Removal and Resignation. Any officer of the Company may be
removed as such, with or without cause, by the Managers at any time. Any officer
of the Company may resign as such at any time upon written notice to the
Company. Such resignation shall be made in writing and shall take effect at the
time specified therein or, if no time is specified therein, at the time of its
receipt by the Managers.
SECTION 5.03 Vacancies. Any vacancy occurring in any office of the Company
may be filled by the Managers.
SECTION 5.04 Compensation. The compensation, if any, of the officers of the
Company shall be fixed from time to time by the Managers. Such compensation
shall be determined without regard to the income of the Company, shall not be
deemed to constitute distributions to the recipient of any profit, loss or
capital of the Company and shall be considered a fixed Operating Expense of the
Company subject to the limitations on such expenses set forth in the Financing
Order.
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ARTICLE VI
MEMBERSHIP INTEREST
SECTION 6.01 General. "Membership Interest" means the limited liability
company interest of the Member in the Company. The Membership Interest
constitutes personal property and, subject to Section 6.06, 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 of the Company.
SECTION 6.02 Distributions. The Member shall be entitled to receive, out of
the assets of the Company legally available therefor, 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 LLC
Act or any other applicable law or any Basic Document.
SECTION 6.03 Rights on Liquidation, Dissolution or Winding Up. (a) In the
event of any dissolution and winding up of the Company, the Member shall be
entitled to all remaining assets of the Company available for distribution to
the Member after satisfaction (whether by payment or reasonable provision for
payment) of all liabilities, debts and obligations of the Company
(b) Neither the sale of all or substantially all of the property or
business of the Company, nor the merger, conversion or consolidation of the
Company into or with another Person or other entity, shall be deemed to be a
dissolution, liquidation or winding up, voluntary or involuntary, for the
purpose of this Section 6.03.
SECTION 6.04 Redemption. The Membership Interest shall not be redeemable.
SECTION 6.05 Voting Rights. Subject to the terms of this Agreement, the
Member shall have the sole right to vote on all matters as to which members of a
limited liability company shall be entitled to vote pursuant to the LLC Act and
other applicable law.
SECTION 6.06 Transfer of Membership Interests. (a) The Member may transfer
its Membership Interest, in whole but not in part, but the transferee shall not
be admitted as a Member except in accordance with Section 6.07. Until the
transferee is admitted as a Member, the Member shall continue to be the sole
member of the Company (subject to Section 1.02) and to be entitled to exercise
any rights or powers of a Member of the Company with respect to the Membership
Interest transferred.
(b) To the fullest extent permitted by law, any purported transfer of
any Membership Interest in violation of the provisions of this Agreement shall
be wholly void and shall not effectuate the transfer contemplated thereby.
Notwithstanding anything contained herein to the contrary and to the fullest
extent permitted by law, the Member may not transfer any Membership Interest in
violation of any provision of this Agreement or in violation of any applicable
federal or state securities laws.
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SECTION 6.07 Admission of Transferee as Member. (a) A transferee of a
Membership Interest desiring to be admitted as a Member must execute a
counterpart of, or an agreement adopting, this Agreement and, except as
permitted by paragraph (b) below, shall not be admitted without unanimous
affirmative vote of the Managers, which vote must include the affirmative vote
of two Independent Managers. Upon admission of the transferee as a Member, the
transferee shall have the rights, powers and duties and shall be subject to the
restrictions and liabilities of the Member under this Agreement and the LLC Act.
The transferee shall also be liable, to the extent of the Membership Interest
transferred, for the unfulfilled obligations, if any, of the transferor Member
to make capital contributions to the Company, but shall not be obligated for
liabilities unknown to the transferee at the time such transferee was admitted
as a Member and that could not be ascertained from this Agreement. Except as set
forth in paragraph (b) below, whether or not the transferee of a Membership
Interest becomes a Member, the Member transferring the Membership Interest is
not released from any liability to the Company under this Agreement or the LLC
Act.
(b) The approval of the Managers, including the Independent Managers,
shall not be required for the transfer of the Membership Interest from the
Member to any successor pursuant to Section 5.02 of the Sale Agreement or the
admission of such Person as a Member. Once the transferee of a Membership
Interest pursuant to this paragraph (b) becomes a Member, the prior Member shall
be released from any liability to the Company under this Agreement and the LLC
Act.
ARTICLE VII
MANAGERS
SECTION 7.01 Managers. (a) Subject to Section 1.08, the business and
affairs of the Company shall be managed by or under the direction of two or more
managers of the Company (each, a "Manager" and collectively, the "Managers")
designated by the Member. Subject to the terms of this Agreement, the Member may
determine at any time in its sole and absolute discretion the number of
Managers. Subject in all cases to the terms of this Agreement, the authorized
number of Managers may be increased or decreased by the Member at anytime in its
sole and absolute discretion, upon notice to all Managers; provided, that,
except as provided in Section 7.06, at all times the Company shall have at least
two Independent Managers. The initial number of Managers shall be five, two of
which shall be Independent Managers. Each Manager designated by the Member shall
hold office until a successor is elected and qualified or until such Manager's
earlier death, resignation, expulsion or removal. Each Manager shall execute and
deliver the Management Agreement in substantially the form attached hereto as
Exhibit A (the "Management Agreement"). Managers need not be a Member. The
initial Managers designated by the Member are listed on Schedule B hereto.
(b) Each Manager shall be designated by the Member and shall hold
office for the term for which designated and until a successor has been
designated.
(c) The Managers shall be obliged to devote only as much of their time
to the Company's business as shall be reasonably required in light of the
Company's business and objectives. A Manager shall perform his or her duties as
a Manager in good faith, in a manner he or she reasonably believes to be in the
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best interests of the Company, and with such care as an ordinarily prudent
Person in a like position would use under similar circumstances.
(d) Except as otherwise provided in this Agreement, the Managers shall
act by the affirmative vote of a majority of the Managers. Each Manager shall
have the authority to sign duly authorized agreements and other instruments on
behalf of the Company without the joinder of any other Manager.
(e) Subject to the terms of this Agreement, any action may be taken by
the Managers without a meeting and without prior notice if authorized by the
written consent of a majority of the Managers (or such greater number as is
required by this Agreement), which written consent shall be filed with the
records of the Company.
(f) Every Manager is an agent of the Company for the purpose of its
business, and the act of every Manager, including the execution in the Company
name of any instrument for carrying on the business of the Company, binds the
Company, unless such act is in contravention of this Agreement or unless the
Manager so acting otherwise lacks the authority to act for the Company and the
Person with whom he or she is dealing has knowledge of the fact that he or she
has no such authority.
SECTION 7.02 Powers of the Managers. Subject to the terms of this
Agreement, the Managers shall have the right and authority to take all actions
which the Managers deem incidental, necessary, suitable or convenient for the
day-to-day management and conduct of the Company's business.
Subject to the terms of this Agreement, the Managers may exercise all
powers of the Company and do all such lawful acts and things as are not
prohibited by the LLC Act, other applicable law or this Agreement directed or
required to be exercised or done by the Member. All duly authorized instruments,
contracts, agreements and documents providing for the acquisition or disposition
of property of the Company shall be valid and binding on the Company if executed
by one or more of the Managers.
SECTION 7.03 Compensation. To the extent permitted by applicable law, the
Company may reimburse any Manager for out-of-pocket expenses incurred by such
Manager in connection with its services rendered to the Company. Such
compensation shall be determined by the Managers without regard to the income of
the Company, shall not be deemed to constitute distributions to the recipient of
any profit, loss or capital of the Company and shall be considered a fixed
Operating Expense of the Company subject to the limitations on such expenses set
forth in the Financing Order.
SECTION 7.04 Removal of Managers. (a) Subject to Section 4.01,the Member
may remove any Manager with or without cause at any time.
(b) Subject to Sections 4.01 and 7.05, any removal of a Manager shall
become effective on such date as may be specified by the Member and in a notice
delivered to any remaining Managers or the Manager designated to replace the
removed Manager (except that it shall not be effective on a date earlier than
the date such notice is delivered to the remaining or newly-elected Manager).
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Should a Manager be removed who is also the Member, the Member shall continue to
participate in the Company as the Member and receive its share of the Company's
income, gains, losses, deductions and credits pursuant to this Agreement.
SECTION 7.05 Resignation of Manager. A Manager other than an Independent
Manager may resign as a Manager at any time by 30 days' prior notice to the
Member. An Independent Manager may not resign, withdraw or resign as a Manager
of the Company without the consent of the Member. No resignation or removal of
an Independent Manager, and no appointment of a successor Independent Manager,
shall be effective until such successor (i) shall have accepted his or her
appointment as an Independent Manager by a written instrument, which may be a
counterpart signature page to the Management Agreement, and (ii) shall have
executed a counterpart to this Agreement.
SECTION 7.06 Vacancies. Subject to Section 4.01, any vacancies among the
Managers may be filled by the Member. In the event of a vacancy in the position
of Independent Manager, the Member shall, as soon as practicable, appoint a
successor Independent Manager.
SECTION 7.07 Meetings of the Managers. The Managers may hold meetings, both
regular and special, within or outside the State of Delaware. Regular meetings
of the Managers may be held without notice at such time and at such place as
shall from time to time be determined by the Managers. Special meetings of the
Managers may be called by any Manager on not less than one day's notice to each
Manager by telephone, facsimile, mail, telegram or any other means of
communication.
SECTION 7.08 Electronic Communications. Managers, or any committee
designated by the Managers, may participate in meetings of the Managers, or any
committee, by means of telephone conference or similar communications equipment
that allows all Persons participating in the meeting to hear each other, and
such participation in a meeting shall constitute presence in Person at the
meeting. If all the participants are participating by telephone conference or
similar communications equipment, the meeting shall be deemed to be held at the
principal place of business of the Company.
SECTION 7.09 Committees of Managers.
(i) The Managers may, by resolution passed by a majority of
the Managers, designate one or more committees, each committee to
consist of one or more of the Managers. The Managers may designate one
or more Managers as alternate members of any committee, who may replace
any absent or disqualified member at any meeting of the committee.
(ii) In the absence or disqualification of a member of a
committee, the member or members thereof present at any meeting and not
disqualified from voting, whether or not such members constitute a
quorum, may unanimously appoint another Manager to act at the meeting
in the place of any such absent or disqualified member.
(iii) Subject to Section 1.08, any such committee, to the
extent provided in the resolution of the Managers, shall have and may
exercise all the powers and authority of the Managers in the management
of the business and affairs of the Company. Such committee or
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committees shall have such name or names as may be determined from
time to time by resolution adopted by the Managers. Each committee
shall keep regular minutes of its meetings and report the same to the
Managers when required.
SECTION 7.10 Limitations on Independent Managers. All right, power and
authority of the Independent Managers shall be limited to the extent necessary
to exercise those rights and perform those duties specifically set forth in this
Agreement.
ARTICLE VIII
EXPENSES
SECTION 8.01 Expenses. Except as otherwise provided in this Agreement or
the Basic Documents, the Company shall be responsible for all expenses and the
allocation thereof including without limitation:
(a) all expenses incurred by the Member or its Affiliates in organizing
the Company;
(b) all expenses related to the business of the Company and all routine
administrative expenses of the Company, including the maintenance of books and
records of the Company, the preparation and dispatch to the Member of checks,
financial reports, tax returns and notices required pursuant to this Agreement;
(c) all expenses incurred in connection with any litigation or
arbitration involving the Company (including the cost of any investigation and
preparation) and the amount of any judgment or settlement paid in connection
therewith;
(d) all expenses for indemnity or contribution payable by the Company
to any Person;
(e) all expenses incurred in connection with the collection of amounts
due to the Company from any Person;
(f) all expenses incurred in connection with the preparation of
amendments to this Agreement;
(g) all expenses incurred in connection with the liquidation,
dissolution and winding up of the Company; and
(h) all expenses otherwise allocated in good faith to the Company by
the Managers.
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ARTICLE IX
PERPETUAL EXISTENCE; DISSOLUTION, LIQUIDATION AND WINDING-UP
SECTION 9.01 Existence. (a) The Company shall have a perpetual existence.
So long as any of the Company's Bonds shall remain Outstanding, the Member shall
not be entitled to consent to the dissolution of the Company.
(b) Notwithstanding any provision of this Agreement, the bankruptcy (as
defined in the LLC Act) of the Member or Special Member will not cause the
Member or such Special Member to cease to be a member of the Company, and upon
the occurrence of such an event, the business of the Company shall continue
without dissolution. Upon the occurrence of any event that causes the last
remaining member of the Company to cease to be a member of the Company, to the
fullest extent permitted by law, the personal representative of such member is
hereby authorized to, and shall, within 90 days after the occurrence of the
event that terminated the continued membership of such member in the Company,
agree in writing (i) to continue the Company and (ii) to the admission of the
personal representative or its nominee or designee, as the case may be, as a
substitute member of the Company, effective as of the occurrence of the event
that terminated the continued membership of the last remaining member of the
Company in the Company.
SECTION 9.02 Dissolution. The Company shall be dissolved and its affairs
shall be wound up upon the occurrence of the earliest of the following events:
(a) subject to Section 1.08, the election to dissolve the Company made
in writing by the Member and each Manager, including the Independent Managers,
as permitted by the Basic Documents;
(b) the occurrence of any event that causes the last remaining member
of the Company to cease to be a member of the Company unless the business of the
Company is continued without dissolution in a manner permitted by the LLC Act or
this Agreement; or
(c) the entry of a decree of judicial dissolution of the Company
pursuant to Section 18-802 of the LLC Act.
SECTION 9.03 Accounting. In the event of the dissolution, liquidation and
winding-up of the Company, a proper accounting shall be made of the Capital
Account of the Member and of the net income or net loss of the Company from the
date of the last previous accounting to the date of dissolution.
SECTION 9.04 Certificate of Cancellation. As soon as possible following the
occurrence of any of the events specified in Section 9.02 and the completion of
the winding up of the Company, the Person winding up the business and affairs of
the Company, as an authorized Person, shall cause to be executed a Certificate
of Cancellation of the Certificate of Formation and file the Certificate of
Cancellation of the Certificate of Formation as required by the LLC Act.
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SECTION 9.05 Winding Up. Upon the occurrence of any event specified in
Section 9.02, 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. The Member, or if there is no Member, the Managers,
shall be responsible for overseeing the winding up and liquidation of the
Company, shall take full account of the liabilities of the Company and its
assets, shall either cause its assets to be sold or distributed, and if sold as
promptly as is consistent with obtaining the fair market value thereof, shall
cause the proceeds therefrom, to the extent sufficient therefor, to be applied
and distributed as provided in Section 9.06.
SECTION 9.06 Order of Payment of Liabilities Upon Dissolution. After
determining that all debts and liabilities of the Company, including all
contingent, conditional or unmatured liabilities of the Company, in the process
of winding-up, including, without limitation, debts and liabilities to the
Member in the event it is a creditor of the Company to the extent otherwise
permitted by law, have been paid or adequately provided for, the remaining
assets shall be distributed in cash or in kind to the Member.
SECTION 9.07 Limitations on Payments Made in Dissolution. Except as
otherwise specifically provided in this Agreement, the Member shall only be
entitled to look solely to the assets of Company for the return of its positive
Capital Account balance and shall have no recourse for its Capital Contribution
and/or share of net income (upon dissolution or otherwise) against any Manager.
SECTION 9.08 Limitation on Liability. Except as otherwise provided by the
LLC Act and except as otherwise characterized for tax and financial reporting
purposes, 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 no Member or Manager shall be obligated
personally for any such debt, obligation or liability of the Company solely by
reason of being a Member or a Manager.
ARTICLE X
INDEMNIFICATION
SECTION 10.01 Indemnity. Subject to the provisions of Section 10.04 hereof,
to the fullest extent permitted by law, the Company shall indemnify any Person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, except an action by or in the right of the
Company, by reason of the fact that such Person is or was a Manager, Member,
officer, controlling Person, employee, legal representative or agent of the
Company, or is or was serving at the request of the Company as a member,
manager, director, officer, partner, shareholder, controlling Person, employee,
legal representative or agent of another limited liability company, partnership,
corporation, joint venture, trust or other enterprise, against expenses,
including attorneys' fees, judgments, fines and amounts paid in settlement
actually and reasonably incurred by such Person in connection with the action,
suit or proceeding if such Person acted in good faith and in a manner which such
Person reasonably believed to be in or not opposed to the best interests of the
Company, and, with respect to a criminal action or proceeding, had no reasonable
cause to believe such Person's conduct was unlawful; provided that such Person
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shall not be entitled to indemnification if such judgment, penalty, fine or
other expense was directly caused by such Person's fraud, negligence or willful
misconduct.
SECTION 10.02 Indemnity for Actions By or In the Right of the Company.
Subject to the provisions of Section 10.04 hereof, to the fullest extent
permitted by law, the Company shall indemnify any Person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action or suit by or in the rights of the Company to procure a judgment in its
favor by reason of the fact that such Person is or was a Member, Manager,
officer, controlling Person, employee, legal representative or agent of the
Company, or is or was serving at the request of the Company as a member,
manager, director, officer, partner, shareholder, controlling Person, employee,
legal representative or agent of another limited liability company, corporation,
partnership, joint venture, trust or other enterprise, against expenses,
including amounts paid in settlement and attorneys' fees actually and reasonably
incurred by such Person in connection with the defense or settlement of the
actions or suit if such Person acted in good faith and in a manner which such
Person reasonably believed to be in or not opposed to the best interests of the
Company; provided that such Person shall not be entitled to indemnification if
such judgment, penalty, fine or other expense was directly caused by such
Person's fraud, negligence or willful misconduct. Indemnification may not be
made for any claim, issue or matter as to which such Person has been adjudged by
a court of competent jurisdiction, after exhaustion of all appeals therefrom, to
be liable to the Company or for amounts paid in settlement to the Company,
unless and only to the extent that the court in which the action or suit was
brought or other court of competent jurisdiction determines upon application
that in view of all the circumstances of the case, the Person is fairly and
reasonably entitled to indemnity for such expenses as the court deems proper.
SECTION 10.03 Indemnity If Successful. The Company shall indemnify any
Person who is or was a Manager, Member, officer, controlling Person, employee,
legal representative or agent of the Company, or is or was serving at the
request of the Company as a member, manager, director, officer, partner,
shareholder, controlling Person, employee, legal representative or agent of
another limited liability company, corporation, partnership, joint venture,
trust or other enterprise against expenses, including attorneys' fees, actually
and reasonably incurred by him or her in connection with the defense of any
action, suit or proceeding referred to in Sections 10.01 and 10.02 or in defense
of any claim, issue or matter therein, to the extent that such Person has been
successful on the merits.
SECTION 10.04 Expenses. Any indemnification under Sections 10.01and 10.02,
as well as the advance payment of expenses permitted under Section10.05 unless
ordered by a court or advanced pursuant to Section 10.05 below, must be made by
the Company only as authorized in the specific case upon a determination that
indemnification of the Manager, Member, officer, controlling Person, employee,
legal representative or agent is proper in the circumstances. The determination
must be made:
(a) By the Member if the Member was not a party to the act, suit or
proceeding; or
(b) If the Member was a party to the act, suit or proceeding by
independent legal counsel in a written opinion.
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SECTION 10.05 Advance Payment of Expenses. The expenses of each Person who
is or was a Manager, Member, officer, controlling Person, employee, legal
representative or agent, or is or was serving at the request of the Company as a
member, manager, director, officer, partner, shareholder, controlling Person,
employee, legal representative or agent of another limited liability company,
corporation, partnership, joint venture, trust or other enterprise, incurred in
defending a civil or criminal action, suit or proceeding may be paid by the
Company as they are incurred and in advance of the final disposition of the
action, suit or proceeding, upon receipt of an undertaking by or on behalf of
such Person to repay the amount if it is ultimately determined by a court of
competent jurisdiction that such Person is not entitled to be indemnified by the
Company. The provisions of this Section 10.05 shall not affect any rights to
advancement of expenses to which personnel other than the Member or the Managers
(other than the Independent Managers) may be entitled under any contract or
otherwise by law.
SECTION 10.06 Other Arrangements Not Excluded. The indemnification and
advancement of expenses authorized in or ordered by a court pursuant to this
Article X:
(a) Does not exclude any other rights to which a Person seeking
indemnification or advancement of expenses may be entitled under any agreement,
decision of the Member or otherwise, for either an action of any Person who is
or was a Manager, Member, officer, controlling Person, employee, legal
representative or agent, or is or was serving at the request of the Company as a
member, manager, director, officer, partner, shareholder, controlling Person,
employee, legal representative or agent of another limited liability company,
corporation, partnership, joint venture, trust or other enterprise, in the
official capacity of such Person or an action in another capacity while holding
such position, except that indemnification and advancement, unless ordered by a
court pursuant to Section 10.05 above, may not be made to or on behalf of such
Person if a final adjudication established that its acts or omissions involved
intentional misconduct, fraud or a knowing violation of the law and were
material to the cause of action; and
(b) Continues for a Person who has ceased to be a Member, Manager,
officer, employee, legal representative or agent and inures to the benefit of
the successors, heirs, executors and administrators of such a Person.
ARTICLE XI
MISCELLANEOUS PROVISIONS
SECTION 11.01 Amendments. (a) The power to alter, amend or repeal this
Agreement shall be only on the consent of the Member, provided, that (i) the
Company shall not alter, amend or repeal any provision of Sections 1.05,1.07,
1.08, 3.02, 6.06, 6.07, 7.05, 9.01(b), 9.02, 11.01 and 11.06 of this Agreement
or the definition of an Independent Manager contained herein without the
affirmative vote of a majority of the Managers, which vote must include the
affirmative vote of all of the Independent Managers and (ii) the Company shall
only amend Sections 4.01 (with respect to the fees of the Independent Managers
described in clause First), 4.02, 5.04, and 7.03 of this Agreement upon the
satisfaction of the condition set forth below in Section 11.02.
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(b) The Company's power to alter or amend the Certificate of Formation
shall be vested in the Member. Upon obtaining the approval of any amendment,
supplement or restatement as to the Certificate of Formation, the Member on
behalf of the Company and as an authorized person shall cause a Certificate of
Amendment or Amended and Restated Certificate of Formation to be prepared,
executed and filed in accordance with the LLC Act.
SECTION 11.02 PUCT Condition. Notwithstanding anything to the contrary in
Section 11.01, no amendment or modification of Sections 4.01 (with respect to
the fees of the Independent Managers described in clause First), 4.02, 5.04, and
7.03 of this Agreement shall be effective except upon satisfaction of the
conditions precedent in this Section 11.02:
(a) At least fifteen days prior to the effectiveness of any such
amendment and after obtaining the other necessary approvals set forth in Section
11.01 above (except that the consent of the Indenture Trustee may be subject to
the consent of Holders if such consent is required or sought by the Indenture
Trustee in connection with such amendment or modification), the Member shall
have delivered to the PUCT's executive director and general counsel written
notification of any proposed amendment, which notification shall contain:
(i) a reference to Docket No. 25230;
(ii) an Officer's Certificate stating that the proposed
amendment or modification has been approved by all parties to this
Agreement; and
(iii) a statement identifying the Person to whom the PUCT or
its staff is to address any response to the proposed amendment or to
request additional time;
(iv) If the PUCT or its staff shall have, within fifteen days
(subject to extension as provided in Section 11.02(v) below) of
receiving a notification complying with Section 11.02(a) above,
delivered to the office of the person specified in Section
11.02(a)(iii) above a written statement that the PUCT might object to
the proposed amendment, then such proposed amendment shall not be
effective unless and until the PUCT subsequently delivers a written
statement in writing that it does not object to such proposed amendment
or modification.
(v) If the PUCT or its staff shall have, within fifteen days
of receiving a notification complying with Section 11.02(a) above,
delivered to the office of the person specified in Section
11.02(a)(iii) above a written statement requesting an additional amount
of time not to exceed thirty days in which to consider such proposed
amendment, then such proposed amendment shall not be effective if,
within such extended period, the PUCT shall have delivered to the
office of the person specified in Section 11.02(a)(iii) above a written
statement as described in Section 11.02(iv) above, unless and until the
PUCT subsequently delivers a written statement in writing that it does
not object to such proposed amendment or modification.
(vi) If the PUCT or its staff shall have not delivered written
notice that the PUCT might object to such proposed amendment within the
time periods described in Section 11.02(iv) or Section 11.02(v) above,
whichever is applicable, then the PUCT shall be conclusively deemed not
26
to have any objection to the proposed amendment and such amendment may
subsequently become effective upon satisfaction of the other conditions
specified in Section 11.01.
(vii) Following the delivery of a notice to the PUCT by the
Member under Section 11.02(a) above, the Member shall have the right at
any time to withdraw from the PUCT further consideration of any
notification of a proposed amendment.
SECTION 11.03 Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 11.04 Headings. The headings of the various Articles and Sections
herein are for convenience of reference only and shall not define or limit any
of the terms or provisions hereof.
SECTION 11.05 Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remainder of such provision (if any)or the remaining provisions
hereof (unless such construction shall be unreasonable), and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
SECTION 11.06 Assigns. Each and all of the covenants, terms, provisions and
agreements contained in this Agreement shall be binding upon and inure to the
benefit of the Member, and its permitted successors and assigns.
SECTION 11.07 Enforcement by Independent Managers. Notwithstanding any
other provision of this Agreement, the Member agrees that this Agreement
constitutes a legal, valid and binding agreement of the Member, and is
enforceable against the Member by the Independent Managers, in accordance with
its terms. The Independent Managers are intended beneficiaries of this
Agreement.
SECTION 11.08 Waiver of Partition; Nature of Interest. Except as otherwise
expressly provided in this Agreement, to the fullest extent permitted by law,
each of the Member and the Special Members hereby irrevocably waives any right
or power that such Person might have to cause the Company or any of its assets
to be partitioned, to cause the appointment of a receiver for all or any portion
of the assets of the Company, to compel any sale of all or any portion of the
assets of the Company pursuant to any applicable law or to file a complaint or
to institute any proceeding at law or in equity to cause the dissolution,
liquidation, winding up or termination of the Company. The Member shall not have
any interest in any specific assets of the Company, and the Member shall not
have the status of a creditor with respect to any distribution pursuant to this
Agreement.
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IN WITNESS WHEREOF, this Agreement is hereby executed by the
undersigned as the sole Member of the Company and is effective as of _______,
2003.
ONCOR ELECTRIC DELIVERY COMPANY
By:
--------------------------------
Name:
Title:
ACKNOWLEDGED AND AGREED:
---------------------------------
as Independent Manager
---------------------------------
as Independent Manager
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SCHEDULE A
SCHEDULE OF CAPITAL CONTRIBUTIONS OF MEMBER
-----------------------------------------------------------------------------
MEMBERSHIP INTEREST
----------------------- ------------------- ----------------- ---------------
MEMBERS NAME CAPITAL INTEREST CAPITAL
CONTRIBUTION PERCENTAGE ACCOUNT
----------------------- ------------------- ----------------- ---------------
Oncor Electric
Delivery Company $1,000 100% $1,000
----------------------- ------------------- ----------------- ---------------
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SCHEDULE B
INITIAL MANAGERS
Names
1) Xxxx Xxxxxx
2) Xxxx X. Xxxxxxx
3) Xxxxx Xxxxx
4)
5)
30
EXHIBIT A
MANAGEMENT AGREEMENT
Re: Management Agreement -- Oncor Electric Delivery Transition Bond
Company LLC
Ladies and Gentlemen:
For good and valuable consideration, each of the undersigned Persons,
who have been designated as managers of Oncor Electric Delivery Transition Bond
Company LLC, a Delaware limited liability company (the "Company"), in accordance
with the Amended and Restated Limited Liability Company Agreement of the
Company, dated as of _______________ __, ____, as it may be amended or restated
from time to time (the "LLC Agreement"), hereby agree as follows:
(1) Each of the undersigned accepts such Person's rights and authority
as a Manager under the LLC Agreement and agrees to perform and discharge such
Person's duties and obligations as a Manager under the LLC Agreement, and
further agrees that such rights, authorities, duties and obligations under the
LLC Agreement shall continue until such Person's successor as a Manager is
designated or until such Person's resignation or removal as a Manager in
accordance with the LLC Agreement. Each of the undersigned agrees and
acknowledges that it has been designated as a "manager" of the Company within
the meaning of the Delaware Limited Liability Company Act.
(2) Until a year and one day has passed since the date that the last
obligation under the Basic Documents was paid, to the fullest extent permitted
by law, each of the undersigned agrees, solely in its capacity as a creditor of
the Company on account of any indemnification or other payment owing to the
undersigned by the Company, not to 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.
(3) THIS MANAGEMENT AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, AND ALL RIGHTS AND REMEDIES
SHALL BE GOVERNED BY SUCH LAWS WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF
LAWS.
Capitalized terms used and not otherwise defined herein have the
meanings set forth in the LLC Agreement.
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This Management Agreement may be executed in any number of
counterparts, each of which shall be deemed an original of this Management
Agreement and all of which together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the undersigned have executed this Management
Agreement as of the day and year first above written.
[SIGNATURE BLOCKS]
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