EXHIBIT 4.1.1
FORM OF AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT OF
PSE&G TRANSITION FUNDING LLC
TABLE OF CONTENTS
Page
----
ARTICLE I
Definitions....................................1
SECTION 1.01 Capitalized Terms...............................................1
SECTION 1.02 Other Definitional Provisions...................................7
ARTICLE II
Formation of the Limited Liability Company...................8
SECTION 2.01 Formation; Filings..............................................8
SECTION 2.02 Name and Office.................................................8
SECTION 2.03 Business Purpose................................................8
SECTION 2.04 Term............................................................9
SECTION 2.05 No State Law Partnership.......................................10
SECTION 2.06 Authority of Member............................................10
SECTION 2.07 Liability to Third Parties.....................................10
SECTION 2.08 No Personal Liability of any Member, Special Member, Manager,
Etc...........................................................10
SECTION 2.09 Separateness...................................................11
SECTION 2.10 Limited Liability and Bankruptcy Remoteness....................12
ARTICLE III
Management......................................12
SECTION 3.01 Management by Managers.........................................12
SECTION 3.02 Acts by Managers...............................................13
SECTION 3.03 Number and Qualifications......................................13
SECTION 3.04 Independent Managers...........................................13
SECTION 3.05 Appointment and Vacancy........................................14
SECTION 3.06 Term...........................................................14
SECTION 3.07 Removal........................................................15
SECTION 3.08 Resignation....................................................15
SECTION 3.09 Place of Meetings of Managers..................................15
SECTION 3.10 Meetings of Managers...........................................15
SECTION 3.11 Quorum; Majority Vote..........................................15
SECTION 3.12 Methods of Voting; Proxies.....................................16
SECTION 3.13 Actions Without a Meeting......................................16
SECTION 3.14 Telephone and Similar Meetings.................................16
SECTION 3.15 Managers.......................................................16
i
Page
----
ARTICLE IV
Officers.......................................16
SECTION 4.01 Designation; Term; Qualifications..............................16
SECTION 4.02 Removal and Resignation........................................17
SECTION 4.03 Vacancies......................................................17
SECTION 4.04 Compensation...................................................17
ARTICLE V
Member........................................17
SECTION 5.01 Powers.........................................................17
SECTION 5.02 Compensation of Member.........................................18
SECTION 5.03 Actions by the Member..........................................18
SECTION 5.04 Control by Member..............................................18
SECTION 5.05 Special Member.................................................18
ARTICLE VI
Common Interest...................................19
SECTION 6.01 General........................................................19
SECTION 6.02 Distributions..................................................19
SECTION 6.03 Rights on Liquidation, Dissolution or Winding Up...............20
SECTION 6.04 Redemption.....................................................20
SECTION 6.05 Voting Rights..................................................21
ARTICLE VII
Allocations; Distributions; Expenses;
Taxes; Books; Records; and Bank Accounts.....................21
SECTION 7.01 Allocations....................................................21
SECTION 7.02 Distributions..................................................21
SECTION 7.03 Limitation Upon Distributions..................................21
SECTION 7.04 Expenses.......................................................21
SECTION 7.05 Tax Elections..................................................22
SECTION 7.06 Annual Tax Information.........................................22
SECTION 7.07 Tax Matters Member.............................................23
SECTION 7.08 Maintenance of Books...........................................23
ii
Page
----
SECTION 7.09 Reports.........................................................23
SECTION 7.10 Bank and Investment Accounts....................................23
ARTICLE VIII
Indemnification....................................23
SECTION 8.01 Mandatory Indemnification of the Member, the Special Members,
and the Managers...............................................23
SECTION 8.02 Mandatory Advancement of Expenses...............................24
SECTION 8.03 Indemnification of Officers, Employees and Agents...............24
SECTION 8.04 Nonexclusivity of Rights........................................25
SECTION 8.05 Contract Rights.................................................25
SECTION 8.06 Insurance.......................................................25
SECTION 8.07 Savings Clause..................................................25
SECTION 8.08 Other Ventures..................................................26
SECTION 8.09 Other Arrangements Not Excluded.................................26
ARTICLE IX
Miscellaneous Provisions...............................26
SECTION 9.01 Offset..........................................................26
SECTION 9.02 Notices.........................................................27
SECTION 9.03 Effect of Waiver or Consent.....................................27
SECTION 9.04 Governing Law; Severability.....................................27
SECTION 9.05 No Bankruptcy Petition; No Dissolution..........................27
SECTION 9.06 Amendment.......................................................28
SECTION 9.07 Headings and Sections...........................................29
SECTION 9.08 Binding Agreement...............................................29
SCHEDULE A: SCHEDULE OF CAPITAL CONTRIBUTIONS OF MEMBER.....................A-1
SCHEDULE B: CERTIFICATE OF COMMON INTEREST..................................B-1
SCHEDULE C: MANAGERS........................................................C-1
SCHEDULE D: OFFICERS........................................................D-1
iii
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
PSE&G TRANSITION FUNDING LLC,
a Delaware Limited Liability Company
AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREE MENT, dated [January]
, 2001 (as it may be further amended, supplemented or otherwise modified and in
effect from time to time, the "Agreement"), of PSE&G TRANSITION FUND ING LLC, a
Delaware limited liability company (the "Company"), having its principal office
at 00 Xxxx Xxxxx, X-0X, Xxxxxx, Xxx Xxxxxx 00000.
WHEREAS, Public Service Electric & Gas Company ("PSE&G"), as sole Member,
(i) on July 21, 1999 filed a Certificate of Formation of the Company with the
Delaware Secretary of State, (ii) amended and restated such Certificate of
Formation and filed the same with the Secretary of State of the State of
Delaware on [January] , 2001, and (iii) executed a Limited Liability Company
Agreement, dated July 21, 1999 (the "Original LLC Agreement"); and
WHEREAS, this Agreement amends and restates the Original LLC Agreement in
all respects, and from and after the date hereof constitutes the governing
instrument of the Company;
NOW THEREFORE, the Member (as defined below) hereby amends and restates
the Original LLC Agreement as follows:
ARTICLE I
Definitions
SECTION 1.01 Capitalized Terms. For all purposes of this Agreement, the
following terms shall have the meanings set forth below:
"Act" shall mean the Delaware Limited Liability Company Act, as amended,
as in effect on the date hereof (currently Chapter 18 of Title 6, Sections
18-101 through 18-1109 of the Delaware Code) and as it may be amended hereafter,
from time to time.
"Administration Agreement" shall mean the Administration Agreement, dated
[January] , 2001, between the Company and PSE&G, as administrator, as the same
may be amended, supplemented or otherwise modified and in effect from time to
time.
"Affiliate" shall mean, with respect to any specified Person, any other
Person controlling or controlled by or under common control with such specified
Person. For the
purposes of this definition, "control" when used with respect to any specified
Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
"Agreement" shall mean this Amended and Restated Limited Liability Company
Agreement of the Company, as the same may be further amended, supplemented or
otherwise modified from time to time in accordance with the provisions hereof.
"Bankruptcy" shall mean, with respect to any Person, if such Person (i)
makes an assignment for the benefit of creditors, (ii) files a voluntary
petition in bankruptcy, (iii) is adjudged a bankrupt or insolvent, or has
entered against it an order for relief, in any bankruptcy or insolvency
proceedings, (iv) files a petition or answer seeking for itself any
reorganization, arrangement, composition, readjustment, liquidation or similar
relief under any statute, law or regulation, (v) files an answer or other
pleading admitting or failing to contest the material allegations of a petition
filed against it in any proceeding of this nature, (vi) seeks, consents to or
acquiesces in the appointment of a trustee, receiver or liquidator of the Person
or of all or any substantial part of its properties, or (vii) if one hundred and
twenty (120) days after the com mencement of any proceeding against the Person
seeking reorganization, arrangement, composi tion, readjustment, liquidation or
similar relief under any statute, law or regulation, the proceeding has not been
dismissed, or if within ninety (90) days after the appointment without such
Person's consent or acquiescence of a trustee, receiver or liquidator of such
Person or of all or any substantial part of its properties, the appointment is
not vacated or stayed, or if within ninety (90) days after the expiration of any
such stay, the appointment is not vacated. The foregoing definition of
"Bankruptcy" is intended to replace and shall supersede and replace the
definition of "Bankruptcy" set forth in Sections 18-101(1) and 18-304 of the
Act.
"Basic Documents" shall mean this Agreement, the Certificate of Formation,
the Indenture, the Sale Agreement, any Xxxx of Sale, the Servicing Agreement,
the Administration Agreement, the Underwriting Agreement, the Hedge Agreement
and the Interest Rate Swap Agreement.
"Xxxx of Sale" shall mean the xxxx of sale, issued by PSE&G to the Company
as of [January] , 2001, pursuant to the Sale Agreement, together with any other
xxxx of sale delivered in accordance therewith.
"Bondable Transition Property" shall mean the irrevocable right of PSE&G
to charge, collect and receive, and be paid from collections of, the transition
bond charge in the amount necessary to provide for the full recovery of the
bondable stranded costs which have been determined to be recoverable in the
Financing Order, all rights of PSE&G under the Financing Order, including,
without limitation, all rights to obtain periodic adjustments of the transition
bond charge pursuant to the Competition Act, and all revenues, collections,
payments, money and proceeds arising under, or with respect to, all of the
foregoing.
2
"Bonds" shall have the meaning set forth in Section 2.03(a).
"BPU" shall mean the State of New Jersey Board of Public Utilities.
"Business Day" shall mean any day other than a Saturday, Sunday or other
day on which banks are authorized or required by law to be closed in New York
City, New York, Newark, New Jersey or, with respect to any payments on any Bonds
listed on the Luxembourg Stock Exchange, in Luxembourg.
"Certificate of Formation" shall mean the Certificate of Formation of the
Company as filed in accordance with the Act with the Secretary of State of the
State of Delaware on July 21, 1999, as amended and restated and filed with the
Secretary of State of the State of Delaware on [January] , 2001, as the same may
be further amended, supplemented or otherwise modified and in effect from time
to time.
"Code" shall mean the Internal Revenue Code of 1986, as amended (or any
successor law).
"Common Interest" shall mean the limited liability company interest of the
Member in the Company as described in Article VI. The Company shall have one
class of Common Interest.
"Company" shall mean PSE&G Transition Funding LLC, a Delaware limited
liability company.
"Competition Act" shall mean the New Jersey Electric Discount and Energy
Competition Act, 1999 N.J. Sess. Law Serv., Ch. 23 (West).
"Financing Order" shall mean the bondable stranded cost rate order, Docket
No. EF99060390, issued by the BPU on September 17, 1999 pursuant to the
Competition Act.
"Fiscal Year" shall mean, unless the Managers shall at any time determine
otherwise pursuant to the requirements of the Code, a calendar year.
"GAAP" shall mean the generally accepted accounting principles promulgated
or adopted by the Financial Accounting Standards Board and its successors from
time to time.
"Governmental Authority" shall mean any federal, state, local or foreign
court or governmental department, commission, board, bureau, agency, authority,
instrumentality or regulatory body.
"Hedge Agreement" shall mean (i) the ISDA Master Agreement, together with
the related Schedule and Confirmation, each dated as of January 5, 2001, between
the Company and
3
Public Service Electric and Gas Company as counterparty thereunder, as the same
may be amended, supplemented or otherwise modified and in effect from time to
time and (ii) any other Hedge Agreement, as defined in and permitted by the
Indenture and any Supplement thereto.
"Indenture" shall mean the Indenture, dated as of [January] , 2001,
between the Company and the Trustee, as the same may be amended, modified or
supplemented from time to time, including any Supplement thereto creating a new
Series of Bonds.
"Independent Manager" shall mean, with respect to the Company, a Manager
who is not, and within the previous five years was not (except solely by virtue
of such Person's serving as, or being an Affiliate of any other Person serving
as, an independent director or manager, as applicable, of PSE&G or any
bankruptcy-remote special purpose entity that is an Affiliate of PSE&G or the
Company), (i) a stockholder, member, partner, director, officer, employee,
Affiliate, customer, supplier, creditor or independent contractor of, or any
Person that has received any benefit in any form whatever from (other than in
such Manager's capacity as a ratepayer or customer of PSE&G in the ordinary
course of business), or any Person that has provided any service in any form
whatsoever to, or any major creditor (or any Affiliate of any major creditor)
of, the Company, PSE&G, or any of their Affiliates, or (ii) any Person owning
beneficially, directly or indirectly, any outstanding shares of common stock,
any limited liability company interests or any partnership interests, as
applicable, of the Company, PSE&G or any of their Affiliates, or of any major
creditor (or any Affiliate of any major creditor) of any of the foregoing, or a
stockholder, member, partner, director, officer, employee, Affiliate, customer,
supplier, creditor or independent contractor of, or any Person that has received
any benefit in any form whatever from (other than in such Person's capacity as a
ratepayer or customer of PSE&G in the ordinary course of business), or any
Person that has provided any service in any form whatever to, such beneficial
owner or any of such beneficial owner's Affiliates, or (iii) a member of the
immediate family of any person described above; provided that the indirect or
beneficial owner ship of stock through a mutual fund or similar diversified
investment vehicle with respect to which the owner does not have discretion or
control over the investments held by such diversified investment vehicle shall
not preclude such owner from being an Independent Manager. For purposes of this
definition, "major creditor" shall mean a natural person or business entity to
which the Company, PSE&G or any of their Affiliates has outstanding indebtedness
for borrowed money or credit on open account in a sum sufficiently large as
would reasonably be expected to influence the judgment of the proposed
Independent Manager adversely to the interests of the Company when the interests
of that Person are adverse to those of the Company.
"Interest Rate Swap Agreement" shall mean (i) the ISDA Master Agreement,
together with the related Schedule and Confirmation, each dated [January] , 2001
between the Company and [______________], as swap counterparty thereunder, as
the same may be amended, supplemented or otherwise modified and in effect from
time to time (ii) and any other Interest Rate Swap Agreement, as defined in and
permitted by the Indenture and any Supplement thereto.
4
"Manager" shall mean any manager of the Company, including the Independent
Managers.
"Member" shall mean PSE&G, in its capacity as a member in the Company
under this Agreement, or any successor thereto as a member pursuant to Article
VI; provided, however, the term "Member" shall not include the Special Members.
"Person" shall mean any natural person, corporation, business trust, joint
venture, association, company, partnership, limited liability company, joint
stock company, corporation, trust, unincorporated organization or Governmental
Authority.
"Proceeding" shall have the meaning set forth in Section 8.01(a).
"PSE&G" shall mean Public Service Electric and Gas Company, a New Jersey
corporation.
"Sale Agreement" shall mean the Bondable Transition Property Sale
Agreement, dated as of [January , 2001, between PSE&G, as seller, and the
Company, as the same may be amended, supplemented or otherwise modified and in
effect from time to time.
"Securities Act" shall mean the Securities Act of 1933, as amended, and
the rules and regulations of the United States Securities and Exchange
Commission promulgated thereun der.
"Series" shall mean each series of Bonds issued and authenticated pursuant
to the Indenture and a related Supplement.
"Servicing Agreement" shall mean the Bondable Transition Property
Servicing Agreement, dated as of [January] , 2001, between the Company and
PSE&G, as servicer, as the same may be amended, supplemented or otherwise
modified and in effect from time to time.
"Special Member" shall mean, upon such person's admission to the Company
as a member of the Company pursuant to Section 5.05, a person acting as
Independent Manager, in such person's capacity as a member of the Company. A
"Special Member" shall have the rights and duties expressly set forth in this
Agreement.
"State" means any one of the 50 states of the United States of America or
the District of Columbia.
"Supplement" shall mean a supplement to the Indenture complying (to the
extent applicable) with the terms of Article 9 of the Indenture.
5
"Treasury Regulations" shall mean regulations, including proposed or
temporary regulations, promulgated under the Code. References herein to specific
provisions of proposed or temporary regulations shall include analogous
provisions of final Treasury Regulations or other successor Treasury
Regulations.
"Trustee" shall mean the party named as such in the Indenture until a
successor replaces it in accordance with the applicable provisions of the
Indenture and thereafter means the successor serving thereunder.
"Underwriting Agreement" shall mean the Underwriting Agreement, dated
[January] , 2001, between PSE&G, the Company and Xxxxxx Brothers, Inc., on
behalf of itself and as representative of the several underwriters listed
therein.
SECTION 1.02 Other Definitional Provisions.
(a) Unless otherwise defined herein, all capitalized terms herein shall
have the meanings ascribed thereto in the Indenture.
(b) All terms 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) As used in this Agreement and in any certificate or other documents
made or delivered pursuant hereto or thereto, accounting terms not defined in
this Agreement or in any such certificate or other document, and accounting
terms partly defined in this Agreement or in any such certificate or other
document to the extent not defined, shall have the respective meanings given to
them under GAAP. To the extent that the definitions of accounting terms in this
Agreement or in any such certificate or other document are inconsistent with the
meanings of such terms under GAAP, the definitions contained in this Agreement
or in any such certificate or other document shall control.
(d) 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 references contained in this
Agreement are references to Sections in this Agreement unless otherwise
specified; and the term "including" shall mean "including without limitation".
(e) The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms.
(f) Any agreement, instrument or statute defined or referred to herein or
in any instrument or certificate delivered in connection herewith means such
agreement, instrument or statute as from time to time amended, modified or
supplemented and includes (in the case of
6
agreements or instruments) references to all attachments thereto and instruments
incorporated therein; references to a Person are also to its permitted
successors and assigns.
ARTICLE II
Formation of the Limited Liability Company
SECTION 2.01 Formation; Filings. Pursuant to the Act and in accordance
with the further terms and provisions hereof, the Member and, when signed by the
Special Members, the Special Members, hereby continue the Company as a limited
liability company. The Certifi cate of Formation of the Company, has been
executed and filed with the Secretary of State of the State of Delaware by Xxxxx
X. Xxxxx, as an authorized person within the meaning of the Act. The Member
shall execute or cause to be executed from time to time all other instruments,
certificates, notices and documents, and shall do or cause to be done all such
filing, recording, publishing and other acts, in each case, as may be necessary
or appropriate from time to time to comply with all applicable requirements for
the formation and/or operation and, when appropriate, termination of a limited
liability company in the State of Delaware and all other jurisdictions where the
Company shall desire to conduct its business.
SECTION 2.02 Name and Office.
(a) The name of the Company shall be "PSE&G Transition Funding LLC." All
business of the Company shall be conducted in such name and all contracts,
property and other assets of the Company shall be held in that name and the
Member shall not have any ownership interests in such contracts, property or
other assets in its individual name.
(b) The address of the registered office of the Company in the State of
Delaware is the Corporation Trust Center, 0000 Xxxxxx Xxxxxx xx xxx xxxx xx
Xxxxxxxxxx, Xxxxxx of New Castle, 19801. The name of its registered agent at
that address is CT Corporation.
(c) The Company may also have offices at such other places both within and
without the State of Delaware as the Member may from time to time determine.
SECTION 2.03 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 ("Bonds") under the Indenture and, in connection
therewith, to execute and deliver Supplements, including Supplements
providing for the issuance of addi tional Series of Bonds, each as
permitted by and in accordance with the terms of the Indenture;
7
(b) to purchase and hold Bondable Transition Property and pledge the
same to the Trustee pursuant to the terms and conditions of the
Basic Documents;
(c) to negotiate, authorize, execute, deliver, assume the obligations
under, and per form, the Basic Documents and any other agreement or
instrument or document relating to the activities set forth in
clauses (a) and (b) above, including but not limited to agreements
with third-party credit enhancers and additional swap or hedge
agreement counterparties relating to any Series of Bonds; provided,
that each party to any agreement with 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 and the payment in full of
any Series of the Bonds and any other amounts owed under the
Indenture, including, without limitation, any amounts owed to
third-party credit enhancers, and any amounts owed under any Hedge
Agreement or Interest Rate Swap Agreement, acquiesce, petition or
otherwise invoke or cause the Company to invoke the process of any
court or government authority for the purpose of com mencing 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 connec tion with the foregoing
activities; and
(d) to engage in any activity and to exercise any powers permitted to
limited liability companies under the laws of the State of Delaware
that are related or incidental to the foregoing and necessary,
convenient or advisable to accomplish the foregoing.
SECTION 2.04 Term. The term of the Company shall continue until the
Company is dissolved and liquidated in accordance with the Act, subject to
Sections 6.03 and 9.05. The existence of the Company as a separate legal entity
shall continue until the cancellation of the Certificate of Formation in
accordance with the Act.
SECTION 2.05 No State Law Partnership. The Member and the Special Members
intend that the Company shall not be a partnership (including, without
limitation, a general partnership or a limited partnership) or joint venture,
and that neither the Member, any Special Member nor any Manager shall be a
partner or joint venturer of the Member, any Special Member or any Manager with
respect to the business of the Company for any purposes, and this Agreement
shall not be construed to suggest otherwise.
8
SECTION 2.06 Authority of Member. Subject to Section 3.04, the Member,
acting in such capacity, shall have the authority or power to act for or on
behalf of the Company, to do any act that would be binding on the Company, or to
incur any expenditures, debts, liabilities or obligations on behalf of the
Company.
SECTION 2.07 Liability to Third Parties. Except as otherwise expressly
provided by the Act, neither the Member, any Special Member nor any Manager
shall be liable for the debts, obligations or liabilities of the Company
(whether arising in contract, tort or otherwise), including, without limitation,
under a judgment, decree or order of a court, by reason of being the Member or
acting as a Special Member or Manager of the Company.
SECTION 2.08 No Personal Liability of any Member, Special Member, Manager,
Etc. (a) Neither the Member nor any Special Member shall be subject in such
capacity to any personal liability whatsoever to any Person in connection with
the assets or the acts, obligations or affairs of the Company, (b) the Member
and each Special Member shall have the same limitation of personal liability as
is extended to stockholders of a private corporation for profit incorporated
under the General Corporation Law of the State of Delaware, and (c) no Manager
or officer of the Company shall be subject in such capacity to any personal
liability whatsoever to any Person, other than the Company or its Member, in
connection with the assets or the affairs of the Company; and, subject to the
provisions of Article VIII, all such Persons shall look solely to the assets of
the Company for satisfaction of claims of any nature arising in connection with
the affairs of the Company; provided, that such protection from personal
liability shall apply to the fullest extent permitted by applicable law, as the
same exists or may hereafter be amended (but, in the case of any such amendment,
only to the extent that such amendment permits the Company to provide greater or
broader indemnification rights than such law permitted the Company to provide
prior to such amendment).
SECTION 2.09 Separateness.
(a) Except as provided in the Basic Documents, the funds and other assets
of the Company shall not be commingled with those of any other entity, and the
Company shall maintain its accounts separate from the Member and any other
Person.
(b) The Company shall not hold itself out as being liable for the debts of
any other entity, and shall conduct its own business in its own name.
(c) The Company shall not form, or cause to be formed, any subsidiaries.
(d) The Company shall act solely in its limited liability company name and
through its duly authorized Member, Special Members, Managers, officers or
agents in the conduct of its business, and shall conduct its business so as not
to mislead others as to the identity of the entity or assets with which they are
concerned.
9
(e) The Company shall maintain separate records, books of account and
financial statements, and shall not commingle its records and books of account
with the records and books of account of any other entity or the Member.
(f) The Managers shall hold appropriate meetings to authorize all of its
limited liability company actions, which meetings may be held by telephone
conference call. The Company shall observe all formalities required by this
Agreement.
(g) The Company shall at all times ensure that its capitalization is
adequate in light of its business and purpose.
(h) Neither the Member, any Special Member nor any Manager shall
guarantee, become liable on or hold itself out as being liable for the debts of
the Company. The Company shall not guarantee or become obligated for the debts
of the Member, any Special Member or any Manager, any Affiliate thereof or any
other Person, or otherwise hold out its credit as being available to satisfy the
obligations of the Member, any Special Member, any Manager or any other Person,
shall not pledge its assets for the benefit of any entity other than the
Trustee, shall not make loans or advances to any Person, and shall not acquire
obligations or securities of the Member, any Special Member, any Manager or any
Affiliate thereof.
(i) The Company shall pay its own liabilities out of its own funds,
including fees and expenses of the Administrator pursuant to the Administration
Agreement and the Servicer pursuant to the Servicing Agreement.
(j) The Company shall maintain an arm's-length relationship with its
Affili ates.
(k) The Company shall allocate fairly and reasonably any overhead for
office space shared with the Member, any Special Member or any Manager.
(l) The Company shall use its own separate stationery, invoices, checks
and other business forms.
(m) The Company shall correct any known misunderstanding regarding its
separate identity.
Failure of the Company, the Member, any Special Member or any Manager on
behalf of the Company to comply with any of the foregoing covenants or any of
the covenants contained in this Agreement shall not affect the status of the
Company as a separate legal entity or the limited liability of the Member, any
Special Member or any Manager.
10
SECTION 2.10 Limited Liability and Bankruptcy Remoteness. Without limiting
the generality of Section 2.09, the Company shall be operated in such a manner
as the Managers deem reasonable and necessary or appropriate to preserve (a) the
limited liability of PSE&G (or its successor) as the Member in the Company and
the limited liability of the Special Members, (b) the separateness of the
Company from the business of PSE&G (or its successor), as the Member of the
Company, or any other Affiliate thereof and (c) until the expiration of the
period of one year and one day specified in Section 9.05, the bankruptcy-remote
status of the Company.
ARTICLE III
Management
SECTION 3.01 Management by Managers. 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 the direction of, the Managers.
SECTION 3.02 Acts by Managers.
(a) 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 best
interests of the Company, and with such care as an ordinarily prudent person in
a like position would use under similar circumstances.
(b) 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 name of
the Company 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.
(c) The Managers shall have the right and authority to take all actions
which the Managers deem necessary, useful or appropriate for the day-to-day
management and conduct of the Company's business.
(d) The Managers may exercise all powers of the Company and do all such
lawful acts and things as are not by the Act, other applicable law or this
Agreement directed or required to be exercised or done by the Member. All
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. All instruments,
11
contracts, agreements and documents of whatsoever type executed on behalf of the
Company shall be executed in the name of the Company by one or more Managers.
SECTION 3.03 Number and Qualifications. The number of Managers of the
Company shall not be less than three nor more than five, as may be determined by
the Member from time to time, but no decrease in the number of Managers shall
have the effect of shortening the term of any incumbent Manager.
SECTION 3.04 Independent Managers.
(a) The Company shall have at all times at least two individuals who are
each Independent Managers. The Independent Managers may not delegate their
duties, authorities or responsibilities hereunder. If any Independent Manager
resigns, dies or becomes incapacitated, or such position is otherwise vacant, no
action requiring the unanimous affirmative vote of the Managers shall be taken
until a successor Independent Manager is appointed by the Member and qualifies
and approves such action.
(b) Notwithstanding any other provision of this Agreement and any
provision of law that otherwise so empowers the Company, the Member, any Special
Member, any Manager or any other Person, the Company shall not, and neither the
Member nor any Special Member, Manager nor any other Person on behalf of the
Company shall, without the prior unanimous consent of the Managers, including
each of the Independent Managers, do any of the following: (i) engage in any
business or activity other than those set forth in Article II; (ii) except as
provided in the Basic Documents, incur any indebtedness, other than the Bonds,
obligations under agreements with third party credit enhancers and swap or hedge
agreement counterparties relating to any Series of Bonds and ordinary course
expenses as set forth in Article II, or assume or guarantee any indebtedness of
any other entity; (iii) make a general assignment for the benefit of creditors;
(iv) file a petition commencing a voluntary bankruptcy case; (v) file a petition
or answer seeking reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under any statute, law or regulation;
(vi) file an answer or other pleading admitting or failing to contest the
material allegations of a petition filed against it in any proceeding seeking
reorganiza tion, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any statute, law or regulation, or the entry
of any order appointing a trustee, liquidator or receiver of it or of its assets
or any substantial portion thereof; (vii) seek, consent to or acquiesce in the
appointment of a trustee, receiver or liquidator of it or of all or any
substantial part of its assets; (viii) consolidate or merge with or into any
other entity or convey or transfer substantially all of its properties and
assets substantially as an entirety to any entity, or (ix) amend this Agreement
or take action in furtherance of any such action. With regard to any action
contemplated by the preceding sentence, or with regard to any action taken or
determination made at any time when the Company is insolvent, each Manager will,
to the fullest extent permitted by law, owe its primary fiduciary duty to the
Company (including the creditors of the Company).
12
SECTION 3.05 Appointment and Vacancy. The Member will appoint each
Manager, including any Manager to be appointed by reason of an increase in the
number of Managers.
SECTION 3.06 Term. Each Manager shall hold office until his or her
successor shall be selected by the Member and qualified, or until his or her
earlier death, resignation or removal as provided in this Agreement.
SECTION 3.07 Removal. Subject to Section 3.04(a) and Section 3.15 of this
Agreement, the Member may remove, with or without cause, any Manager.
SECTION 3.08 Resignation. Any Manager may resign at any time. 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
remaining Managers; provided that the resignation of an Independent Manager
shall not be effective until a replacement Independent Manager has been
appointed. The acceptance of a resignation shall not be necessary to make it
effective, unless so expressly provided in the resignation.
SECTION 3.09 Place of Meetings of Managers. Any meetings of the Managers
may be held either within or without the State of Delaware at such place or
places as shall be determined from time to time by resolution of the Managers.
SECTION 3.10 Meetings of Managers. Meetings of the Managers may be held
when called by any Managers or Manager. The Manager or Managers calling any
meeting shall cause notice to be given of such meeting, including therein the
time, date and place of such meeting, to each Manager at least two Business Days
before such meeting. The business to be transacted at, or the purpose of, any
meeting of the Managers shall be specified in the notice or waiver of notice of
any such meeting. If fewer than all of the Managers are present in person, by
telephone or by proxy, business transacted at any such meeting shall be confined
to the business or purposes specifically stated in the notice or waiver of
notice of such meeting.
SECTION 3.11 Quorum; Majority Vote. At all meetings of the Managers, the
presence in person, by telephone or by proxy 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 this Agreement or by law. The
act of a majority of the Managers present in person, by telephone or by proxy at
a meeting at which a quorum is present in person, by telephone or by proxy shall
be the act of the Managers, except as otherwise provided by law or this
Agreement. If a quorum shall not be present in person, by telephone or by proxy
at any meeting of the Managers, the Managers present in person, by telephone or
by proxy 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
in person, by telephone or by proxy.
13
SECTION 3.12 Methods of Voting; Proxies. A Manager may vote either in
person, by telephone or by proxy executed in writing by the Manager; provided
that the Person designated to act as proxy for an Independent Manager must be an
Independent Manager.
SECTION 3.13 Actions Without a Meeting. Any action required or permitted
to be taken at a meeting of the Managers may be taken without a meeting, without
prior notice, and without a vote, if a consent in writing, setting forth the
action so taken, is signed by the Managers having not fewer than the minimum
number of votes that would be necessary to take the action at a meeting at which
all Managers entitled to vote on the action were present and voted. Copies of
any such consents shall be filed with the minutes and permanent records of the
Company.
SECTION 3.14 Telephone and Similar Meetings. The Managers, or members of
any committee thereof, may participate in and hold meetings by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other. Such participation in
any such meeting shall constitute presence in person at such meeting, except
where a Person participates in such meeting for the express purpose of objecting
to the transaction of any business on the ground that such meeting is not
lawfully called or convened.
SECTION 3.15 Managers. The Member and each Manager shall take all actions
necessary from time to time to ensure that at all times the number of Managers
shall be not less than three nor more than five; provided, however, that
pursuant to Section 3.04, the Company shall at all times have at least two
Independent Managers. The Managers upon the execution of this Agreement shall be
Xxxxxx X. Xxxxx, Xxxxxx X. Xxxxxxx, R. Xxxxx Xxxxxxx, [______] (who will serve
as an Independent Manager) and [______] (who will serve as an Independent
Manager).
ARTICLE IV
Officers
SECTION 4.01 Designation; Term; Qualifications. 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
his or her successor shall be duly designated and shall qualify or until his or
her 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. The persons identified on Schedule D are
hereby designated the initial officers of the Company.
14
SECTION 4.02 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 4.03 Vacancies. Any vacancy occurring in any office of the Company
may be filled by the Managers.
SECTION 4.04 Compensation. The compensation, if any, of the officers of
the Company shall be fixed from time to time by the Managers.
ARTICLE V
Member
SECTION 5.01 Powers. Subject to the provisions of this Agreement and the
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 pursuant
to Section 5.03. Pursuant to Section 3.01, the Member has delegated 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, subject to Section 3.04 in all cases:
First: To select and remove the Managers and prescribe such powers
and duties for them as may be consistent with the Act and other applicable
law and this Agreement.
Second: To conduct, manage and control the affairs and business of
the Company, and to make such rules and regulations therefor consistent
with the Act and other applica ble law and this Agreement.
Third: To change the registered 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 5.02 Compensation of Member. The Company shall have authority to
pay to the Member reasonable compensation for the Member's services to the
Company. It is understood that the compensation paid to the Member under the
provisions of this Section 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 an
operating expense of the Company.
15
SECTION 5.03 Actions by the Member. All 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 minutes and
permanent records of the Company.
SECTION 5.04 Control by Member. To the extent the Member takes any action
with respect to the Company (including by means of its appointment of any
individual Manager or its control or employment of any individual Manager in any
other capacity), the Member, or any such Manager, as applicable, will act in
good faith in accordance with the terms of this Agree ment, and make decisions
with respect to the business and daily operations of the Company independent of,
and not dictated by, in the case of any such Manager, the Member, or in either
case any Affiliate of the foregoing, and, to the fullest extent permitted by
law, any such Manager shall bear a fiduciary duty to the Company (including its
creditors) under the circumstances set forth in Section 3.04.
SECTION 5.05 Special Member. Upon the occurrence of any event that causes
the Member to cease to be a member of the Company, each person acting as an
Independent Manager pursuant to Section 3.04 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 (a "Special
Member") and shall continue the Company without dissolution. No Special Member
may resign from the Company or transfer its rights as Special Member unless (a)
a successor Special Member has been admitted to the Company as Special Member by
executing a counterpart to this Agreement, and (b) such successor has also
accepted its appoint ment as Independent Manager, provided, however, the Special
Members shall automatically cease to be members of the Company upon the
admission to the Company of a substitute Member. 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.
Pursuant to Section 18-301 of the 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 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, without limitation, the merger,
consolidation or conversion of the Company. In order to implement the admission
to the Company of each Special Member pursuant to this Section 5.05, each person
acting as an Independent Manager pursuant to Section 3.04 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 Section 3.04
shall not be a member of the Company.
16
ARTICLE VI
Common Interest
SECTION 6.01 General. 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 of
the Company. Upon registration of the transfer and assignment of the Common
Interest on the books of the Company, 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 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 be transferred unless each Rating Agency (as defined in
the Indenture) then rating the Bonds of any Class or Series shall have confirmed
in writing to the Trustee and the Company that such transfer will not result in
a reduction or withdrawal of the then current rating by any such Rating Agency
of any outstanding Class or Series of Bonds. The Common Interest of the Member
in the Company shall be evidenced by a certificate in the form set forth in
Schedule B hereto.
SECTION 6.02 Distributions. The Member shall be entitled to receive, out
of the assets of the Company legally available therefor, when, as and if
declared by the Managers, distributions payable in cash in such amounts, if any,
as the Managers shall declare. Notwith standing 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 Section 18-607 of the 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 liquidation, dissolution or winding up of the
Company, the Member shall be entitled to all remaining assets of the Company
available for distribution to the Member after payment of all liabilities, debts
and obligations of the Company to creditors, as set forth in Section 18-804 of
the Act.
(b) Neither the sale of all or substantially all of the property or
business of the Company, nor the merger or consolidation of the Company into or
with another Company 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.
(c) The commencement of a bankruptcy, insolvency, receivership or other
similar proceeding by or against the Company, any Special Member or the Member
shall not result in the dissolution of the Company or in the cessation of the
interest of the Member in the Company. The withdrawal or resignation of the
Member or any Special Member or the dissolu-
17
tion of the Member or any Special Member shall not, by itself, constitute a
dissolution of the Company.
(d) Subject to Section 5.05, 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 ninety (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.
(e) Notwithstanding any other provision of this Agreement, the bankruptcy
of the Member or any Special Member shall not cause the Member or Special
Member, respectively, 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.
SECTION 6.04 Redemption. The Common Interest shall not be redeemable.
SECTION 6.05 Voting Rights. 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 Act and other applicable law.
ARTICLE VII
Allocations; Distributions; Expenses;
Taxes; Books; Records; and Bank Accounts
SECTION 7.01 Allocations. Except as may be required by section 704(c) of
the Code and Treasury Regulation ss. 1.704-1(b)(2)(iv)(f)(4), all items of
income, gain, loss, deduction, and credit of the Company for each Fiscal Year
shall be allocated to the Member. Any credit available for federal income tax
purposes shall be allocated to the Member in the same manner.
SECTION 7.02 Distributions. All distributions shall be made to the Member
from surplus funds. Except as provided in Section 7.03, all distributions shall
be made in such amounts and at such times as determined by the Managers.
SECTION 7.03 Limitation Upon Distributions. No distribution shall be
declared and paid unless, after the distribution is made, the fair value of the
Company assets is in excess of all liabilities of the Company and no default has
occurred and is continuing under the Indenture or any Series of Bonds then
outstanding.
18
SECTION 7.04 Expenses. Except as otherwise provided in this Agreement, and
subject to the provisions of 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 payment of the principal of and interest
on the Bonds issued by the Company;
(c) all expenses related to the business of the Company and all routine
admin istrative expenses of the Company, including any amounts
payable under the Administration Agreement and the Servicing
Agreement, the mainte xxxxx of books and records of the Company, and
the preparation and dispatch to the Member of checks, financial
reports, tax returns and notices required pursuant to this
Agreement;
(d) all expenses incurred in connection with any litigation or
arbitration involv ing the Company (including the cost of any
investigation and preparation) and the amount of any judgment or
settlement paid in connection therewith;
(e) all expenses for indemnity or contribution payable by the Company to
any person;
(f) all expenses incurred in connection with the collection of amounts
due to the Company from any person;
(g) all expenses incurred in connection with the preparation of
amendments to this Agreement;
(h) all expenses incurred in connection with the liquidation,
dissolution and winding up of the Company; and
(i) all expenses otherwise allocated in good faith to the Company by the
Managers.
SECTION 7.05 Tax Elections. The Managers shall make the following
elections on behalf of the Company:
(a) To elect the calendar year as the Company's Fiscal Year;
(b) To elect the accrual method of accounting;
19
(c) To elect to treat all organization and start-up costs of the Company
as deferred expenses amortizable over sixty (60) months under Section 195 of the
Code; and
(d) To elect with respect to such other federal, state and local tax
matters as the Managers shall agree upon from time to time.
SECTION 7.06 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 or state income tax return.
SECTION 7.07 Tax Matters Member. The Member shall communicate and
negotiate with the Internal Revenue Service on any tax matter on behalf of the
Member and the Company.
SECTION 7.08 Maintenance of Books. The Company shall keep books and
records of accounts and shall keep minutes of the proceedings of the Member, the
Managers and each committee of the Managers. The Fiscal Year shall be the
accounting year of the Company.
SECTION 7.09 Reports. Within sixty (60) days following the end of each
Fiscal Year during the term of the Company, the Managers shall cause to be
furnished to the Member a balance sheet, an income statement and a statement of
changes in Member's capital account for, or as of the end of, that Fiscal Year.
Such financial statements shall be prepared in accordance with the accounting
method selected by the Managers consistently applied (except as therein noted),
and shall be accompanied by an audit report from a nationally recognized
accounting firm. The Managers also may cause to be prepared or delivered such
other reports as they may deem appropriate. The Company shall bear the costs of
all such financial statements and reports.
SECTION 7.10 Bank and Investment Accounts. The Managers shall establish
and maintain one or more separate bank and investment accounts and arrangements
for Company funds in the Company name with such financial institutions and firms
as the Managers determine.
ARTICLE VIII
Indemnification
SECTION 8.01 Mandatory Indemnification of the Member, the Special Members,
and the Managers. Any Person who was or is a party or is threatened to be made a
party to, or is involved in, any threatened, pending or completed action, suit
or proceeding, whether civil, criminal, administrative, arbitrative or
investigative (hereafter a "Proceeding"), or any appeal in such a Proceeding or
any inquiry or investigation that could lead to such a Proceed ing, by reason of
the fact that such Person is or was the Member, a Special Member or a Manager,
or by reason of the fact that the Member, such Special Member or such Manager is
or was serving
20
at the request of the Company as a member, director, manager, officer, partner,
venturer, proprietor, trustee, employee, agent or similar functionary of another
foreign or domestic corporation, limited liability company, partnership, joint
venture, partnership, trust, sole propri etorship, employee benefit plan or
other enterprise, shall be indemnified by the Company to the fullest extent
permitted by applicable law, as the same exists or may hereafter be amended
(but, in the case of any such amendment, only to the extent that such amendment
permits the Company to provide greater or broader indemnification rights than
such law permitted the Company to provide prior to such amendment) against
judgments, penalties (including, without limitation, excise and similar taxes
and punitive damages), fines, settlements and reasonable expenses (including,
without limitation, attorneys' fees) actually incurred by such Person in
connection with such Proceeding. It is expressly acknowledged that the
indemnification provided in this Article VIII could involve indemnification for
negligence or under theories of strict liability. Notwithstanding anything
herein to the contrary, for so long as any Bonds are outstanding, no payment
from funds of the Company (as distinct from funds from other sources, such as
insurance) of any indemnity under this Article VIII shall be payable except out
of funds available for payment of Company expenses as provided in the Indenture.
SECTION 8.02 Mandatory Advancement of Expenses. Expenses incurred by a
Person of the type entitled to be indemnified under Section 8.01 in defending
any Proceeding shall be paid or reimbursed by the Company in advance of the
final disposition of the Proceeding, without any determination as to such
Person's ultimate entitlement to indemnification under Section 8.01, upon
receipt of a written affirmation by such Person of such Person's good faith
belief that such Person has met the standard of conduct necessary for
indemnification under applicable law and a written undertaking by or on behalf
of such Person to repay all amounts so advanced if it shall ultimately be
determined that such Person is not entitled to be indemnified by the Company as
authorized in Section 8.01 or otherwise. The written undertaking shall be an
unlimited general obligation of the Person but need not be secured and shall be
accepted without reference to financial ability to make repayment.
SECTION 8.03 Indemnification of Officers, Employees and Agents. The
Company shall indemnify and pay and advance expenses to an officer, employee or
agent of the Company to the same extent and subject to the same conditions under
which it may indemnify and pay and advance expenses to the Member, any Special
Member or any Manager under this Article VIII; and the Company shall indemnify
and pay and advance expenses to any Person who is or was an officer, employee or
agent of the Company and who is or was serving at the request of the Company as
a member, manager, director, officer, partner, venturer, proprietor, trustee,
employee, agent or similar functionary of another foreign or domestic limited
liability company, partnership, corporation, partnership, joint venture, sole
proprietorship, trust, employee benefit plan or other enterprise against any
liability asserted against such Person and incurred by such Person in such a
capacity or arising out of such Person's status as such to the same extent and
subject to the same conditions that the Company may indemnify and pay and
advance expenses to the Member, any Special Member or any Manager under this
Article VIII.
21
SECTION 8.04 Nonexclusivity of Rights. The indemnification and advance
ment and payment of expenses provided by this Article VIII (a) shall not be
deemed exclusive of any other rights to which the Member, a Special Member, a
Manager or other Person seeking indemnification may be entitled under any
statute, agreement, decision of the Member or disinterested Managers, or
otherwise both as to action in such Person's official capacity and as to action
in another capacity while holding such office, (b) shall continue as to any
Person who has ceased to serve in the capacity which initially entitled such
Person to indemnity and advancement and payment of expenses, and (c) shall inure
to the benefit of the heirs, executors, administrators, successors and assigns
of the Member, such Special Member, such Manager or such other Person.
SECTION 8.05 Contract Rights. The rights granted pursuant to this Article
VIII shall be deemed to be contract rights, and no amendment, modification or
repeal of this Article VIII shall have the effect of limiting or denying any
such rights with respect to actions taken or Proceedings arising prior to any
such amendment, modification or repeal.
SECTION 8.06 Insurance. The Company may purchase and maintain insurance or
other arrangement or both, at its expense, on behalf of itself or any Person who
is or was serving as the Member, a Special Member or a Manager, officer,
employee or agent of the Company, or is or was serving at the request of the
Company as a member, manager, director, officer, partner, venturer, proprietor,
trustee, employee, agent or similar functionary of another foreign or domestic
limited liability company, partnership, corporation, partnership, joint venture,
sole proprietorship, trust, employee benefit plan or other enterprise, against
any liability, expense or loss, whether or not the Company would have the power
to indemnify such Person against such liability under the provisions of this
Article VIII.
SECTION 8.07 Savings Clause. If this Article VIII or any portion of this
Agreement shall be invalidated on any ground by any court of competent
jurisdiction, then the Company shall nevertheless indemnify and hold harmless
the Member, each Special Member, each Manager or any other Person indemnified
pursuant to this Article VIII as to costs, charges and expenses (including,
without limitation, attorneys' fees), judgments, fines and amounts paid in
settlement with respect to any action, suit or proceeding, whether civil,
criminal, administrative or investigative, to the fullest extent permitted by
any applicable portion of this Article VIII that shall not have been invalidated
and to the fullest extent permitted by applicable law.
SECTION 8.08 Other Ventures. It is expressly agreed that the Member, any
Special Member, any Manager and any Affiliates, officers, directors, managers,
stockholders, partners or employees of the Member, any Special Member or any
Manager, may engage in other business ventures of every 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.
22
SECTION 8.09 Other Arrangements Not Excluded. The indemnification and
advancement of expenses authorized in or ordered by a court pursuant to this
Article VIII:
(a) Does not exclude any other rights to which a Person seeking
indemnifica tion or advancement of expenses may be entitled under
any agreement, decision of the Member or otherwise, for either an
action of the Member, any Special Member or any Manager, officer,
employee or agent in the official capacity of such Person or an
action in another capacity while holding such position, except that
indemnification, unless ordered by a court, may not be made to or on
behalf of the Member, any Special Mem ber or any Manager if a final
adjudication established that its acts or omis sions involved
intentional misconduct, fraud or a knowing violation of the law and
was material to the cause of action; and
(b) Continues for a person who has ceased to be the Member, a Special
Mem ber or a Manager, officer, employee or agent and inures to the
benefit of the successors, heirs, executors and administrators of
such a person.
ARTICLE IX
Miscellaneous Provisions
SECTION 9.01 Offset. Whenever the Company is to pay any sum to the Member,
any amounts the Member owes the Company may be deducted from such sum before
payment.
SECTION 9.02 Notices. Except as expressly set forth to the contrary in
this Agreement, all notices, requests, or consents provided for or permitted to
be given under this Agreement shall be in writing and shall be given either by
depositing such writing in the United States mail, addressed to the recipient,
postage paid, and registered or certified with return receipt requested or by
delivering such writing to the recipient in person, by reputable overnight
courier, or by facsimile transmission; and a notice, request or consent given
under this Agreement shall be effective on receipt by the Person to whom sent.
All notices, requests, and consents to be sent to the Member shall be sent to or
made to 00 Xxxx Xxxxx, Xxxxxx, Xxx Xxxxxx 00000, Attention: Treasurer or such
other address as the Member may specify by notice to the Company and the
Managers. Any notice, request, or consent to the Company or the Managers must be
given to the Managers at the following address: 00 Xxxx Xxxxx, X-0X, Xxxxxx, Xxx
Xxxxxx 00000, Attention: Managers. Whenever any notice is required to be given
by law or this Agreement, a written waiver thereof, signed by the Person
entitled to notice, whether before or after the time stated therein, shall be
deemed equivalent to the giving of such notice.
23
SECTION 9.03 Effect of Waiver or Consent. A waiver or consent, express or
implied, to or of any breach or default by any Person in the performance by such
Person of its obligations with respect to the Company shall not be a consent or
waiver to or of any other breach or default in the performance by such Person of
the same or any other obligations of such Person with respect to the Company.
SECTION 9.04 Governing Law; Severability. THIS AGREEMENT SHALL BE GOVERNED
BY AND SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF DELAWARE,
EXCLUDING ANY CONFLICT-OF-LAWS RULE OR PRINCIPLE THAT MIGHT REFER THE GOVERNANCE
OR THE CON STRUCTION OF THIS AGREEMENT TO THE LAW OF ANOTHER JURISDICTION. In
the event of a direct conflict between the provisions of this Agreement and any
mandatory pro vision of the Act, then the applicable provision of the Act shall
control. If any provision of this Agreement or the application thereof to any
Person or circumstance is held invalid or unenforce able to any extent, the
remainder of this Agreement and the application of that provision to other
Persons or circumstances shall not be affected thereby and such provision shall
be enforced to the fullest extent permitted by law.
SECTION 9.05 No Bankruptcy Petition; No Dissolution. (a) The Member, each
Special Member and each Manager hereby covenants and agrees (or shall be deemed
to have hereby covenanted and agreed) that, prior to the date which is one year
and one day after the termination of the Indenture and the payment in full of
any Series of the Bonds, any other amounts owed under the Indenture, including,
without limitation, any amounts owed to third-party credit enhancers, and any
amounts owed under any Hedge Agreement or Interest Rate Swap Agreement,
acquiesce, petition or otherwise invoke or cause the Company to invoke the
process of any court or government 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 Issuer or any
substantial part of the property of the Company, or ordering the winding up or
liquidation of the affairs of the Company; provided, however, that nothing in
this Section 9.05 shall constitute a waiver of any right to indemnification,
reimbursement or other payment from the Company pursuant to this Agreement.
(b) To the fullest extent permitted by law, the Member, each Special
Member and each Manager hereby covenants and agrees (or shall be deemed to have
hereby covenanted and agreed) that, until the termination of the Indenture and
the payment in full of any Series of the Bonds, any other amounts owed under the
Indenture, including without limitation, any amounts owed to third-party credit
enhancers, and any amounts owed under any Hedge Agreement or Interest Rate Swap
Agreement, the Member, such Special Member and such Manager will not consent to,
or make application for, or institute or maintain any action for, the
dissolution of the Company under Section 18-801 or 18-802 of the Act or
otherwise.
(c) In the event that the Member, any Special Member or any Manager takes
action in violation of this Section 9.05, the Company agrees that it will file
an answer with the court or otherwise properly contest the taking of such action
and raise the defense that the
24
Member, the Special Member or the Manager, as the case may be, has agreed in
writing not to take such action and should be estopped and precluded therefrom
and such other defenses, if any, as its counsel advises that it may assert.
(d) The provisions of this Section 9.05 shall survive the termination of
this Agreement and the resignation, withdrawal or removal of the Member, any
Special Member or any Manager. Nothing herein contained shall preclude
participation by the Member, any Special Member or a Manager in assertion or
defense of its claims in any such proceeding involving the Company.
SECTION 9.06 Amendment. This Agreement may not be amended, except in
writing by the Member and the Company, upon prior approval of the Trustee and
with prior notice to the Rating Agencies (as defined in the Indenture).
SECTION 9.07 Headings and Sections. 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.
SECTION 9.08 Binding Agreement. 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 Mangers, in accordance with its terms. In addition, the
Independent Managers shall be intended beneficiaries of this Agreement.
25
IN WITNESS WHEREOF, this Agreement is hereby executed by the undersigned
as of [January] , 2001.
MEMBER:
PUBLIC SERVICE ELECTRIC AND GAS
COMPANY
By:
-----------------------------------------------
Name: Xxxxx X. Xxxxx
Title: General Corporate Counsel
COMPANY:
PSE&G TRANSITION FUNDING LLC
By:
-----------------------------------------------
Name:
Title: Manager
26
Agreed and Consented to by
the Special Members and
Independent Mangers:
---------------------------
[_________________]
---------------------------
[_________________]
SCHEDULE A
SCHEDULE OF CAPITAL CONTRIBUTIONS OF MEMBER
COMMON INTEREST
CAPITAL COMMON INTEREST CAPITAL
MEMBER'S NAME CONTRIBUTION PERCENTAGE ACCOUNT
------------- ------------ --------------- -------
Public Service Electric $______* 100% $_____*
and Gas Company
---------------
* 0.05% of original principal amount of the Bonds.
A-1
SCHEDULE B
CERTIFICATE OF COMMON INTEREST
of
PSE&G TRANSITION FUNDING LLC
A Limited Liability Company
Organized under the Laws of the State of Delaware
This Certificate is issued and shall be held subject to the provisions of
the Certificate of Formation of PSE&G TRANSITION FUNDING LLC, a Limited
Liability Company organized under the laws of the State of Delaware (the
"Company"), filed on July 21, 1999 with the Secretary of State of the State of
Delaware, and the Limited Liability Company Agreement dated July 21, 1999 of the
Company, as each may be amended from time to time.
This Certificate of Common Interest certifies that Public Service Electric
and Gas Com pany is the registered holder of the entire Common Interest of the
Company, which Common Interest shall be transferable only on the books of the
Company by the holder hereof in person or by a duly authorized attorney upon
surrender of this Certificate with a proper endorsement.
IN WITNESS WHEREOF, this Company has caused this Certificate to be signed
by one of its duly authorized Managers this __ day of _____, 2001.
-------------------------
Title: Manager
B-1
PSE&G TRANSITION FUNDING LLC
For Value Received the undersigned hereby sells, assigns and transfers unto
--------------------------------------------------------------------------------
the entire Common Interest of the Company represented by the within
Certificate and does hereby irrevocably constitute and appoint
--------------------------------------------------------------------------------
Attorney, to transfer said Common Interest on the books of the Company
with full power of substitution in the premises.
Dated:
------------
-----------------------------------
B-2
SCHEDULE C
MANAGERS
Names
1) Xxxxxx X. Xxxxx
2) Xxxxxx X. Xxxxxxx
3) R. Xxxxx Xxxxxxx
4) [___] (Independent Manager)
5) [___] (Independent Manager)
C-1
SCHEDULE D
OFFICERS
Names Office
----- ------
Xxxxxx X. Xxxxx President, Chief Financial Officer and
Principal Accounting Officer
Xxxxx X. Xxxxx Vice-President and General Counsel
Xxxxxx X. Xxxxxxx Vice-President and Treasurer
Xxxxxx X. Xxxxxxx, Xx. Assistant Secretary
Xxxxxx X. Xxxxx Assistant Treasurer
Xxxxxxxx Xxxxxxx Assistant Treasurer
Xxxx X. Xxxxxxxx Assistant Treasurer
Xxxxxxx X. Xxxxx Assistant Secretary
Xxxxx X. Xxxxx Assistant Secretary
D-1