2001-216ORDINANCE No 5{ool -ill b
AN ORDINANCE OF THE CITY OF DENTON, TEXAS PROVIDING FOR,
AUTHORIZING, AND APPROVING THE EXECUTION BY THE CITY MANAGER OF AN
ASSET PURCHASE AGREEMENT BY AND AMONG THE CITY OF DENTON, SPENCER
STATION GENERATING COMPANY, L.P., A DELAWARE LIMITED PARTNERSHIP,
AND PG&E GENERATING COMPANY, LLC, A DELAWARE LIMITED LIABILITY
COMP ANY; AUTHORIZING AND APPROVING THE EXECUTION BY THE CITY
MANAGER OF A TRANSITION POWER AGREEMENT BY AND BETWEEN THE CITY
OF DENTON AND PG&E ENERGY TRADING -POWER, L.P., A DELAWARE LIMITED
PARTNERSHIP; APPROVING AND AUTHORIZING THE EXECUTION BY THE CITY
MANAGER OF A TRANSITION POWER AGREEMENT GUARANTEE BY AND
BETWEEN THE CITY OF DENTON AND PG&E TRADING HOLDINGS, LLC; A
DELAWARE LIMITED LIABILITY COMP ANY; AUTHORIZING AND APPROVING THE
EXECUTION BY THE CITY MANAGER OF A BILL OF SALE BY AND BETWEEN THE
CITY OF DENTON AND SPENCER STATION GENERATING COMPANY, L.P.;
AUTHORIZING AND APPROVING THE EXECUTION BY THE CITY MANAGER OF AN
ASSIGNMENT AND ASSUMPTION AGREEMENT BY AND BETWEEN THE CITY OF
DENTON AND SPENCER STATION GENERATING COMPANY, L.P.; AUTHORIZING
AND APPROVING THE EXECUTION BY THE CITY MANAGER OF A CONTINUING
SITE/INTERCONNECTION AGREEMENT BY AND BETWEEN THE CITY OF DENTON
AND SPENCER STATION GENERATING COMPANY, L.P.; AUTHORIZING AND
APPROVING THE EXECUTION BY THE CITY MANAGER OF AN EASEMENT,
LICENSE AND ATTACHMENT AGREEMENT BY AND BETWEEN THE CITY OF
DENTON AND SPENCER STATION GENERATING COMPANY, L.P.; AUTHORIZING
AND APPROVING THE EXECUTION BY THE CITY MANAGER OF A GUARANTEE BY
AND BETWEEN THE CITY OF DENTON AND SPENCER STATION GENERATING
COMPANY, L.P.; AUTHORIZING AND APPROVING THE EXECUTION BY THE CITY
MANAGER OF A WATER RIGHTS AGREEMENT BY AND BETWEEN THE CITY OF
DENTON AND SPENCER STATION GENERATING COMPANY, L.P.; AUTHORIZING
AND APPROVING THE EXECUTION BY THE CITY MANAGER OF A RECLAIMED
WATER SERVICE AND WASTEWATER RETURN AGREEMENT BY AND BETWEEN
THE CITY OF DENTON AND SPENCER STATION GENERATING COMPANY, L.P.;
AUTHORIZING AND APPROVING THE EXECUTION BY THE CITY MANAGER OF A
POWER TRANSFER AGREEMENT BY AND BETWEEN THE CITY OF DENTON AND
PG&E ENERGY TRADING -POWER, L.P.; AUTHORIZING AND APPROVING THE
EXECUTION BY THE CITY MANAGER OF A SPECIAL WARRANTY DEED BY AND
BETWEEN THE CITY OF DENTON AND SPENCER STATION GENERATING
COMPANY, L.P.; AUTHORIZING AND APPROVING THE EXECUTION BY THE CITY
MANAGER OF BLANKET CONVEYANCES BY AND BETWEEN THE CITY OF DENTON
AND SPENCER STATION GENERATING COMPANY, L.P.; AUTHORIZING AND
APPROVING THE EXECUTION OF SUCH OTHER AGREEMENTS AND OTHER
DOCUMENTS, INCLUDING, WITHOUT LIMITATION, CERTIFICATES, CONTRACTS,
ASSIGNMENTS, LICENSES, LEASES, DIRECTIONS, INSTRUMENTS, AND
STATEMENTS BY THE CITY MANAGER, WHICH ARE INCIDENT OR RELATED
THERETO, AS SHALL BE REASONABLY DETERMINED BY THE CITY ATTORNEY OR
HIS DESIGNEE; CONFIRMING AND RATIFYING THAT THE CITY OF DENTON, ITS
MAYOR, ITS CITY COUNCIL, ITS CITY MANAGER, AND ITS CITY ATTORNEY SHALL
BE AUTHORIZED AND EMPOWERED TO PERFORM SUCH ACTS AND OBLIGATIONS
AS ARE REASONABLY REQUIRED TO CONSUMMATE THIS TRANSACTION;
RATIFYING ALL PRIOR ACTIONS TAKEN BY THE CITY COUNCIL IN FURTHERANCE
OF THE FOREGOING TRANSACTIONS; MAKING SUCH FINDINGS AS ARE REQUIRED
BY THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935, AS AMENDED, AND
THE FEDERAL ENERGY REGULATORY COMMISSION IMPLEMENTING
REGULATIONS; FINDING AND DETERMINING THAT SEVERAL OF SAID
AGREEMENTS PERTAIN TO A COMPETITIVE ELECTRIC MATTER AS SET FORTH
UNDER THE PROVISIONS OF SECTION 551.086 AND SECTION 552.131 OF THE TEXAS
GOVERNMENT CODE, AS AMENDED; FINDING AND DETERMINING THAT TEXAS
GOVERNMENT CODE SECTION 252.022(a)(15) AND SECTION 272.0010) APPLY;
ADOPTING SIGNIFICANT FINDINGS, CONCLUSIONS, AND RECITATIONS AS ARE
SET FORTH IN THE PREAMBLE OF THIS ORDINANCE; FINDING THAT THE SALE OF
THESE ELECTRIC GENERATION RESOURCES OWNED BY THE CITY IN
CONNECTION WITH ITS ELECTRIC UTILITY UNDER THE ASSET PURCHASE
AGREEMENT ARE NOT ESSENTIAL TO CONTINUED EFFECTIVE UTILITY SERVICE
WHEN CONSIDERING THE PURCHASE OF CAPACITY AND ENERGY, AND OTHER
ARRANGEMENTS MADE BY THE CITY UNDER THE TERMS OF THE TRANSITION
POWER AGREEMENT AND OTHER AGREEMENTS; AUTHORIZING THE
EXPENDITURE OF FUNDS THEREFOR; AND PROVIDING AN EFFECTIVE DATE.
WHEREAS, the City of Denton, Texas ("Denton") is a Home-Rule City governed by the
constitution and laws of the State of Texas; and
WHEREAS, in accordance with the provisions of Section 551.086 of the Texas
Government Code, after due public notice being given, the City Council, a "Public Power Utility
Governing Body" under Senate Bill 7, has discussed, deliberated, and considered the matter, the
subject of this ordinance, in a Closed Meeting of the City Council on the 12th day of June, 2001,
after determining by a preliminary majority vote of its members, that the consideration of the
items which are the subject of this ordinance are related to the competitive activity, including
commercial information, which if disclosed, would give advantage to its competitors or
prospective competitors; and
WHEREAS, thereafter, after due public notice being given, the City Council, proceeded
to discuss, deliberate, and consider the matter of the transactions which are the subject of this
ordinance, in its Open Meeting on the 12th day of June, 2001, and the City Council proceeded to
take final action, and voted in favor of the transactions described in said ordinance, as set forth
below; and
WHEREAS, the City Council has further determined that several of those documents to
be entered into by and between the City of Denton and Spencer Station Generating Company,
L.P., a Delaware Limited Partnership; PG&E Generating Company, LLC, a Delaware Limited
2
Liability Company; PG&E Trading Holdings, a Delaware Limited Liability Company; PG&E
Energy Trading -Power, L.P ., a Delaware Limited Partnership; and other affiliates of these
entities, namely the Asset Purchase Agreement, the Transition Power Agreement, the Guarantees
related to both of said agreements, as well as the Continuing Site/Interconnection Agreement
should be excepted from any public disclosure, as permitted by the provisions of Section 552.131
of the Texas Government Code, as documents that are reasonably related to a competitive
electric matter, the disclosure of which documents would provide an advantage to the
competitors or prospective competitors of Denton Municipal Electric; and
WHEREAS, the City Council has further determined that it is in the public interest that it
should exercise its right under the Texas Government Code to lawfully safeguard and keep
certain of these documents sealed, as they are competitive documents and contain competitive
electric information; and
WHEREAS, the City Council finds that the sale or other disposition of assets as provided
by this ordinance, does not constitute the entire assets of Denton Municipal Electric ("DME");
and
WHEREAS, the City Council finds that the sale or other disposition of electric generation
assets does not consist of any part essential to the continuation of effective utility service by
DME; and
WHEREAS, the City Council finds that those electric generation resources which are to
be sold as provided by this ordinance, are no longer needed by DME, and will be replaced by
other sources of power; and
WHEREAS, the City Council finds that the generation resources which are to be sold are
obsolete and inefficient; and
WHEREAS, the City Council finds that simultaneously with the conveyance of its
electric generation resources, that the City, by a Transition Power Agreement, and other
agreements, shall receive replacement power an~ energy that is advantageous, more reliable, and
cost-effective; and
WHEREAS, the City Council fmds that the transaction as provided by this ordinance,
will not impair the ability of the City to comply with the provisions of any of its utility revenue
bonds, as amended, which are issued and outstanding; and
WHEREAS, the City Council considering the overall effect of the transactions set forth
within this ordinance, is of the conclusion that no essential portion of the electric utility, DME, is
being conveyed; but that the assets conveyed are being simultaneously replaced by cost-
effective, power and energy, in the form of a Transition Power Agreement, with a term of five
(5) years, with no detriment to the DME electric service ratepayers; and
s
WHEREAS, the City Council finds that Section 252.022(a)(15) of the Texas Government
Code is applicable to this transaction and that competitive bidding law is not applicable to the
purchase by the City of electricity; and
WHEREAS, the City Council finds that Section 272.00l(j) of the Texas Government
Code is applicable to this transaction and that the provisions of Section 272.00l(a) do not apply
to this sale of real property; and
WHEREAS, the City Council finds that the sale or exchange of real property, as more
particularly set forth within this ordinance, is in the best interests ofDME ratepayers; and
WHEREAS, Denton desires to sell and assign to Spencer Station Generating Company,
L.P. certain fossil fuel and hydro-electric generating facilities and certain facilities and other
generating assets associated therewith and ancillary thereto, namely, the Spencer Station, the Ray
Roberts Station, and the Lewisville Station;
WHEREAS, the City of Denton and PG&E Energy Trading-Power, L.P., an affiliate of
the Spencer Station Generating Company, L.P., desire to enter into an agreement to provide
energy capacity and energy management for Denton; and
WHEREAS, the City of Denton desires to enter into such other agreements with Spencer
Station Generating Company, L.P. and PG&E Energy Trading -Power, L.P. (or their affiliates)
which are incident and related to the Asset Purchase Agreement and the Transition Power
Agreement, and to take such additional actions as the City Manager shall determine to be
necessary and advisable to effectuate the matters set forth herein; NOW THERFORE
THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS:
SECTION 1. That the City Council, hereby approves and authorizes the City
Manager and the City Secretary, to execute and attest respectively, the Asset Purchase
Agreement, by and among the City of Denton, Spencer Station Generating Company, L.P., and
PG&E Generating Company, LLC, under the terms and conditions being contained in
substantially the form which is attached hereto as Exhibit A and made a part hereof, with such
amendments, changes and additions as the City Manager may approve, and the execution and
delivery thereof on behalf of the City of Denton by or at the direction of the City Manager shall
constitute such approval.
SECTION 2. That the City Council, hereby approves and authorizes the City
Manager and City Secretary, to execute and attest respectively, the Transition Power Agreement,
by and between the City of Denton and PG&E Energy Trading -Power, L.P., under the terms
and conditions being contained in substantially the form which is attached hereto as Exhibit B
and made a part hereof, with such amendments, changes and additions as the City Manager may
approve, and the execution and delivery thereof on behalf of the City of Denton by or at the
direction of the City Manager shall constitute such approval.
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SECTION 3. That the City Council, hereby approves and authorizes the City
Manager and City Secretary, to execute and attest respectively, the Transition Power Agreement
Guarantee, by and between the City of Denton and PG&E Trading Holdings, LLC, under the
terms and conditions being contained in substantially the form which is attached hereto as
Exhibit C and made a part hereof, with such amendments, changes and additions as the City
Manager may approve, and the execution and delivery thereof on behalf of the City of Denton by
or at the direction of the City Manager shall constitute such approval.
SECTION 4. That the City Council, hereby approves and authorizes the City
Manager and City Secretary, to execute and attest respectively, the Bill of Sale, by and between
the City of Denton and Spencer Station Generating Company, L.P., under the terms and
conditions being contained in substantially the form which is attached hereto as Exhibit D and
made a part hereof, with such amendments, changes and additions as the City Manager may
approve, and the execution and delivery thereof on behalf of the City of Denton by or at the
direction of the City Manager shall constitute such approval.
SECTION 5. That the City Council, hereby approves and authorizes the City
Manager and City Secretary, to execute and attest respectively, the Assignment and Assumption
Agreement, by and between the City of Denton and Spencer Station Generating Company, L.P.,
under the terms and conditions being contained in substantially the form which is attached hereto
as Exhibit E and made a part hereof, with such amendments, changes and additions as the City
Manager may approve, and the execution and delivery thereof on behalf of the City of Denton by
or at the direction of the City Manager shall constitute such approval.
SECTION 6. That the City Council, hereby approves and authorizes the City
Manager and City Secretary, to execute and attest respectively, the Continuing
Site/Interconnection Agreement, by and between the City of Denton and Spencer Station
Generating Company, L.P ., under the terms and conditions being contained in substantially the
form which is attached hereto as Exhibit F and made a part hereof, with such amendments,
changes and additions as the City Manager may approve, and the execution and delivery thereof
on behalf of the City of Denton by or at the direction of the City Manager shall constitute such
approval.
SECTION 7. That the City Council, hereby approves and authorizes the City
Manager and City Secretary, to execute and attest respectively, the Easement, License and
Attachment Agreement, by and between the City of Denton and Spencer Station Generating
Company, L.P., under the terms and conditions being contained in substantially the form which
is attached hereto as Exhibit G and made a part hereof, with such amendments, changes and
additions as the City Manager may approve, and the execution and delivery thereof on behalf of
the City of Denton by or at the direction of the City Manager shall constitute such approval.
SECTION 8. That the City Council, hereby approves and authorizes the City
Manager and City Secretary, to execute and attest respectively, the Guarantee, by and between
the City of Denton and PG&E Generating Company, LLC, under the terms and conditions being
contained in substantially the form which is attached hereto as Exhibit H and made a part hereof,
5
with such amendments, changes and additions as the City Manager may approve, and the
execution and delivery thereof on behalf of the City of Denton by or at the direction of the City
Manager shall constitute such approval.
SECTION 9. That the City Council, hereby approves and authorizes the City
Manager and City Secretary, to execute and attest respectively, the Water Rights Agreement, by
and between the City of Denton and Spencer Station Generating Company, L.P., under the terms
and conditions being contained in substantially the form which is attached hereto as Exhibit I and
made a part hereof, with such amendments, changes and additions as the City Manager may
approve, and the execution and delivery thereof on behalf of the City of Denton by or at the
direction of the City Manager shall constitute such approval.
SECTION 10. That the City Council, hereby approves and authorizes the City
Manager and City Secretary, to execute and attest respectively, the Reclaimed Water Service and
Wastewater Return Agreement, by and between the City of Denton and Spencer Station
Generating Company, L.P., under the terms and conditions being contained in substantially the
form which is attached hereto as Exhibit J and made a part hereof, with such amendments,
changes and additions as the City Manager may approve, and the execution and delivery thereof
on behalf of the City of Denton by or at the direction of the City Manager shall constitute such
approval.
SECTION 11. That the City Council, hereby approves and authorizes the City
Manager and City Secretary, to execute and attest respectively, the Power Transfer Agreement,
by and between the City of Denton and PG&E Energy Trading -Power, L.P., under the terms
and conditions being contained in substantially the form which is attached hereto as Exhibit K
and made a part hereof, with such amendments, changes and additions as the City Manager may
approve, and the execution and delivery thereof on behalf of the City of Denton by or at the
direction of the City Manager shall constitute such approval.
SECTION 12. That the City Council, hereby approves and authorizes the City
Manager and City Secretary, to execute and attest respectively, the Special Warranty Deed, by
and between the City of Denton and Spencer Station Generating Company, L.P., under the terms
and conditions contained in substantially the form which is attached hereto as Exhibit L and
made a part hereof, with such amendments, changes and additions as the City Manager may
approve, and the execution and delivery thereof on behalf of the City of Denton by or at the
direction of the City Manager shall constitute such approval.
SECTION 13. That the City Council, hereby approves and authorizes the City
Manager and City Secretary, to execute and attest respectively, the Blanket Conveyances, by and
between the City of Denton and Spencer Station Generating Company, L.P., under the terms and
conditions being contained in substantially the form which is attached hereto as Exhibit M and
made a part hereof, with such amendments, changes and additions as the City Manager may
approve, and the execution and delivery thereof on behalf of the City of Denton by or at the
direction of the City Manager shall constitute such approval.
6
SECTION 14. That the City Council, hereby approves and authorizes the City
Manager and City Secretary to execute and attest respectively, all other documents which are
incident and related to those agreements referenced above and to take such additional actions as
the City Manager shall determine to be necessary and advisable to effectuate the matters set forth
above.
SECTION 15. That the City of Denton, the Mayor, the City Manager, the City
Attorney or their designees be, and each of them individually hereby is, authorized and
empowered to perform all such acts and obligations as required with respect to the agreements
and documents described herein.
SECTION 16. That the City Council, hereby makes the following findings:
Section 32 of the Public Utility Holding Company Act of 1935, as amended ("PUHCA"), and the
Federal Energy Regulatory Commission's implementing regulations require that the Denton City
Council, as the entity with exclusive jurisdiction over rates for electricity in the City of Denton,
make certain determinations prior to the transfer of ownership and/or operation of the Spencer
Generating Plant, the Ray Roberts Dam Project and the Lewisville Dam Project to Spencer
Station Generating Company, L.P. so that Spencer Station Generating Company, L.P. may obtain
Exempt Wholesale Generator status.1 The City of Denton hereby determines that allowing the
three electric generating facilities noted above to be Eligible Facilities will benefit consumers, is
in the public interest and does not violate State law.
SECTION 17. That the Mayor, the City Manager, the City Attorney or their
designees be, and each of them individually hereby is, authorized, empowered and directed to
negotiate, deliver and perform all such acts and things and to sign all such documents,
certificates, contracts, assignments, licenses, leases, agreements, directions, instruments and
statements, each together with such amendments, changes and additions thereto as the Mayor,
the City Manager, the City Attorney or their designees shall determine to be necessary or
advisable to effectuate the matter set forth herein, any such determination to be conclusively
evidenced by the taking or causing to be taken of such action or the execution and delivery of
any such document, certificate, agreement, license, lease, direction, instrument or statement by
the Mayor, the City Manager, the City Attorney or their designees.
SECTION 18. That all prior actions taken by the Mayor, the City Manager, the
City Attorney or their designees in furtherance of the foregoing matters be and hereby are
ratified, approved and authorized in all respects as of the dates and times such actions were
taken.
SECTION 19. That immediately following the execution and delivery of the
documents described as the Asset Purchase Agreement, the Transition Power Agreement, the
Guarantees incident to both such agreements, and the Continuing Site/Interconnection
Agreement, as provided for in this ordinance, the City Secretary is hereby directed to seal and
The terms "Exempt Wholesale Generator," "Eligible Facility" and "State" as used herein have the same
meanings established in PUHCA.
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maintain said documents in her custody and control, as documents excepted from public
disclosure under the provisions of Section 552.131 of the Texas Government Code (the "Public
Power Exception"); unless otherwise lawfully ordered to disclose said documents.
SECTION20
hereby authorized.
That the expenditure of funds as provided for in this ordinance is
SECTION 21. That this ordinance shall become effective immediately upon its
passage and approval.
PASSED AND APPROVED this the fit' day of ~ £, , 2001.
EULINE BROCK, MAYOR
ATTEST:
JENNIFER WALTERS, CITY SECRETARY
APPROVED AS TO LEGAL FORM:
HERBERT L. PROUTY, CITY ATTORNEY
S:\Our Documents\Ordinances\01\Electric Partial Divestiture and Acquisition Ordinance 5.doc
8
Exhibit D
Confidential
STATE OF TEXAS )
) SS:
COUNTY OF DENTON )
BILL OF SALE
THIS BILL OF SALE is made as of the ~day of June, 2001 by the City of Denton,
Texas, a municipal corporation of the State of Texas and a Home-Rule city (the "Seller"), for the
benefit of Spencer Station Generating Company, L.P., a Delaware limited partnership (the
"Buyer").
W IT NE S S E T H:
WHEREAS, pursuant to that certain Asset Purchase Agreement, dated as of June 21,
2001 (as amended, supplemented or otherwise modified from time to time, the "Asset Purchase
Agreement"), by and between the Seller, the Buyer, and PG&E Generating Company, LLC, a
Delaware limited liability company, the Seller has agreed to sell, assign, convey, transfer and
deliver all of its right, title and interest in and to the Purchased Assets, as defined in the Asset
Purchase Agreement, to the Buyer on the terms and conditions set forth in the Asset Purchase
Agreement and on such basis the Buyer has agreed to purchase and acquire such Purchased
Assets from the Seller; and
WHEREAS, pursuant to the Asset Purchase Agreement the Seller has entered into
this Bill of Sale as evidence of such conveyance to Buyer.
NOW, THEREFORE, in consideration of the foregoing premises and for other good
and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the
Seller hereby agrees as follows:
1. Defined Terms. Capitalized terms which are used but not defined in this Bill of
Sale shall have the meaning ascribed to such terms in the Asset Purchase Agreement.
2. Transfer of Assets. The Seller does hereby sell, assign, convey, transfer and
deliver to the Buyer all of the Seller's right, title and interest in and to all of the Purchased
Assets.
3. Excluded Assets Not Assigned. Notwithstanding anything expressed herein to the
contrary, the Excluded Assets are specifically excluded from the Purchased Assets and shall be
retained by the Seller following the Closing Date.
1050480 vB; M$K0038.DOC
4. Binding Effect; Assignment. This Bill of Sale and all of the provisions hereof
shall be binding upon Seller and its successors and permitted assigns and shall inure to the
benefit of the Buyer and its successors and permitted assigns.
5. GOVERNING LAW. THIS BILL OF SALE SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS
(WITHOUT GIVING EFFECT TO CONFLICT OF LAW PRINCIPLES).
6. Construction. This Bill of Sale is delivered pursuant to and is subject to the terms
of the Asset Purchase Agreement. In the event of any conflict or ambiguity between the terms of
the Asset Purchase Agreement and the terms of this Bill of Sale, the terms of the Asset Purchase
Agreement shall control.
IN WITNESS WHEREOF, this Bill of Sale has been duly executed and delivered by
the Seller hereto as of the date first above written.
Attest:
Jennifer Walters, City Secretary
By: ~~Liblfu.o
Approved as to Legal Form:
2
1050480 vB; M$K003B.DOC
STATE OF TEXAS )
) ss.
COUNTY OF DENTON )
ti This instrument was acknowledged before me on this ~ day of June, 2001, by Michael
A Conduff, City Manager of the City of Denton, Texas, a Texas home rule municipal
corporation, on behalf of said municipal corporation.
[SEAL]
/.,_,0,~:.:.~(l;i\ -ANN FORSYTHE
{ ~ \ Notary Public, State of Texas \ *.}~1.:J My Commission Expires
\.~-~EOF~~t~··' MAY 9, 2002 ............
My Commission Expires:
Public in an
State of Texas
Not J!~at~
Exhibit E
Confidential
STATE OF TEXAS )
) SS:
COUNTY OF DENTON )
ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT ("Assignment
Agreement") dated as of June ff, 2001 by and between the City of Denton, Texas, a municipal
corporation of the State of Texas and a Home Rule city, (the "Seller"), on the one hand, and
Spencer Station Generating Company, L.P., a Delaware limited partnership (the "Buyer"), on the
other hand. Seller and Buyer are referred to individually as a "Party", and collectively as the
"Parties".
WIT NE S S E T H:
WHEREAS, Seller, Buyer, and PG&E Generating Company, LLC, a Delaware
limited liability company are parties to that certain Asset Purchase Agreement, dated as of June
~' 2001 (the "Asset Purchase Agreement");
WHEREAS, pursuant to the Asset Purchase Agreement, the Buyer has agreed to
assume from Seller the Assumed Liabilities (as defined in the Asset Purchase Agreement) and
Seller has agreed to retain the Excluded Liabilities (as defined in the Asset Purchase Agreement);
and
WHEREAS, it is the intention of the Parties that by the execution and delivery of this
Assignment Agreement, Seller will assign to Buyer and Buyer will assume and agree to
discharge when due, without recourse to Seller, all Assumed Liabilities as more particularly
described and set forth in Section 2.3 of the Asset Purchase Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and for other good
and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Seller
and Buyer hereby agree as follows:
1. Capitalized terms which are used in this Assignment Agreement but are not
defined herein shall have the meaning ascribed to such terms in the Asset Purchase Agreement.
2. Seller hereby sells, assigns, conveys, transfers, delivers, and sets over to Buyer
free and clear of all Encumbrances, other than Permitted Encumbrances, all of the right, title and
interest that Seller possesses and has the right to transfer in, to, and under the Emission
Reduction Credits, the Assigned Agreements, the third-party warranties and guarantees, and all
other intangible personal property included in the Purchased Assets.
1050907 vC; M$W02C.DOC
3. Buyer hereby assumes and agrees to discharge when due, without recourse to
Seller, all liabilities and obligations of Seller constituting the Assumed Liabilities.
Notwithstanding anything to the contrary herein, Buyer shall not assume or perform any of the
Excluded Liabilities.
4. Neither the making nor the acceptance of this Assignment Agreement shall
enlarge, restrict or otherwise modify the terms of the Asset Purchase Agreement or constitute a
waiver or release by Seller or Buyer of any liabilities, duties or obligations imposed upon either
of them by the terms of the Asset Purchase Agreement, including, without limitation, the
representations and warranties and other provisions which the Asset Purchase Agreement
provides shall survive the date hereof.
5. In the event that any provision of this Assignment Agreement be construed to
conflict with a provision of the Asset Purchase Agreement, the provision in the Asset Purchase
Agreement shall be deemed controlling.
6. This Assignment Agreement shall bind and shall inure to the benefit of the
respective Parties and their respective assigns, transferees and successors.
7. THIS ASSIGNMENT AGREEMENT SHALL BE GOVERNED AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS
(WITHOUT GIVING EFFECT TO SUCH JURISDICTION'S APPLICABLE
PRINCIPLES OF CONFLICTS OF LAW).
8. This Assignment Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together will constitute one and the same
instrument.
2
1050907 vC; M$W02C.DOC
IN WITNESS WHEREOF, the undersigned have executed this Assignment
Agreement as of the date first above written.
Attest:
Jennifer Walters, City Sec etary
Approved as to Legal Form:
Attest:
By: -------------
1050907 vC; M$W02C.DOC
3
THE CITY OF DENTON, TEXAS
Spencer Station Generating
Company, L.P.
By ___________ _
Name:
Title:
IN WITNESS WHEREOF, the undersigned have executed this Assignment
Agreement as of the date first above written.
Attest:
Jennifer Walters, City Secretary
By: ------------
Approved as to Legal Form:
Herbert L. Prouty, City Attorney
By:
Attest:
By: ------------
1050907 vC; M$W02C.DOC
3
THE CITY OF DENTON, TEXAS
By __________ _
Michael Conduff
City Manager
Spencer Station Generating
Company, L.P.
By ~Ao/~i5fi
N~me: THOMASB\NG
Title: PRESIDENT
STATE OF TEXAS §
§
COUNTY OF DENTON §
This instrument was acknowledged before me on this 'lf/~day of June_, 2001 , by Michael A.
Conduff, City Manager of the City of Denton, Texas, a Texa home rule municipal corporation,
on behalf of said municipal corporation.
[SE AL]
My Commission Expires:
4
1050907 vC; M$W02C.DOC
MAR.~ L.Ai-lb
STATE OF~ §
M.oi,J,-~t-\Ef..'{ §
COUNTYOF~ §
acknowledged befor~ me on this -~ day of June ~ 2.001, by
the Yee&, <j.W:"t of Swnu.-r: S¼-~co ~~<\9i a
, on behalf of said _____ '-· ~~°'-~1 L lJ
[SEAL]
My Commissiun Expires:
5
1050907 vC; M$W02C.OOC
~~~
Notary Public in and for the
state of ____ _...,.ICHELE BRISTOL
NOTARY PUBLIC STATE OF MARYLAND
My Commission Expires October 15, 2002
Notary's Printed Name
RECLAIMED WATER SERVICE AND WASTEWATER
RETURN AGREEMENT
between
CITY OF DENTON
and
SPENCER STATION GENERATING COMPANY, L.P.
JUNE 7:1_, 2001
Exhibit J
TABLE OF CONTENTS
ARTICLE 1
DEFINED TERMS
1.1 Defined Terms
ARTICLE2
PURCHASE AND SUPPLY OF RECLAIMED WATER
2.1
2.2
2.3
2.4
2.5
Purchase and Supply of Reclaimed Water
[Reserved)
Volume and Flow Rates
Reclaimed Water Quality Standards
Nomination Procedure for Annual Quantity
ARTICLE3
3
3
3
3
3
3
TREATMENT AND DISPOSAL OF WASTEWATER RETURN FLOWS 4
3.1
3.2
3.3
3.4
Treatment and Disposal of Wastewater
Volume and Flow Rates
Wastewater Quality Limits
Consultation
ARTICLE4
[RESERVED]
ARTICLE 5
4
5
5
6
6
RECLAIMED WATER AND WASTEWATER RATES AND PAYMENT 6
5.1
5.2
5.3
5.4
5.5
Reclaimed Water Rate
Wastewater Rate
Wastewater Rate and Reclaimed Water Rate
Adjustments
Invoicing and Payment
Waiver of Right to Appeal Rates to Texas Natural Resource Conservation
Commission (''TNRCC")
ARTICLE6 -
COMMITMENT_ OF SUPPLIES AND RESOURCES
6.1 Sufficiency of Water Supply and Facilities
6.2 Maintenance and Repair Obligations
ARTICLE7
TERM AND TERMINATION
7.1 Term and Termination
6
6
6
6
7
7
7
7
7
8
ARTICLES
APPROVALS
8.1 Approvals
ARTICLE 9"
REPRE SENTATIONS AND WARRANTIES
9 .1 Representations and Warranties
ARTICLE 10
FORCE MAJEURE
10.1 Notification Obligations
10.2 Duty to Mitigate
10.3 Delay Caused by Force Majeure Event
ARTICLE 11
REMEDIES
8
8
8
8
8
8
8
9
9
11.1 Remedies for Breach by Denton 9
11.2 Remedies for Breach by User 9
11.3 Notice and Opportunity to Cure 9
11.4 Effect of Termination 9
11.5 Disclaimer of Implied Warranties/Limitations of Consequential Damages 9
ARTICLE 12
MISCELLANEOUS 10
12.1 Assignment 10
12.2 Severability 10
12.3 Notices 10
12.4 No Third Party Beneficiary 11
12.5 Further Assurances 11
12.6 Entire Agreement 11
12.7 Governing Law 11
12.8 Counterparts 11
12.9 Payment 11
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RECLAIMED WATER SERVICE AND WASTEWATER
RETURN AGREEMENT
THIS RECLAIMED WATER SERVICE AND WASTEWATER RETURN AGREEMENT (this
"Agreement"), dated this '1!fJJA_ day of June, 2001, is by and between the City of Denton, a home-rule
municipality of the State of Texas ("Denton"), and Spencer Station Generating Company, L.P., a
Delaware limited partnership (the "User").
RECITALS
(a) Denton and the User are parties to the Asset Purchase Agreement dated as of
June~ 2001 (the "Asset Purchase Agreement") pursuant to which Denton has agreed to sell to the User,
and the User has agreed to purchase (the "Acquisition"), Denton's right, title and interest in and to the
Spencer Station Generating Plant and certain related assets (the "Facility"), upon the terms and conditions
set forth therein.
(b) Prior to the Acquisition, reclaimed water and wastewater treatment services
required for Facility operations were provided by Denton.
(c) In connection with the transactions contemplated by the Asset Purchase
Agreement, Denton and the User desire to enter into this Agreement to provide for the continued
provision by Denton of reclaimed water and wastewater treatment services to the Facility upon the terms
and conditions set forth herein.
Article 1 Defined Terms
1.1 Defined Terms. As used in this Agreement, including the schedules and other
attachments hereto, each term with its initial letter capitalized and not otherwise defined shall have the
meaning assigned to such term as set forth below:
"Approvals" shall mean any and all permits, clearances, licenses, visas, authorizations, consents,
decrees, waivers, privileges, filings, exemptions or approvals of any Person or any federal, state, city,
county, local or regional authorities, departments, bodies, commissions, corporations, branches, agencies,
courts, tribunals, judicial authorities, legislative bodies, administrative bodies or regulatory bodies.
"Day" shall mean a twenty-four (24) hour period commencing at 12:00 midnight, Denton, Texas
time.
"Force Majeure Events" shall mean all events, occurrences, conditions or imminent threats
thereof which are beyond the reasonable control of the Party claiming such Force Majeure Event and
prevent the performance of such Party's obligations under this Agreement including, but not limited to,
acts of God or acts of providence, explosions, fires, ice, sabotage, epidemics, landslides, hurricanes,
floods, washouts, drought, lightning, earthquakes, storms, perils or"the sea, airplane crashes, acts of any
governmental authority ( except the City of Denton), acts of civil disorder, including acts of the public
enemy, acts of war ( declared or undeclared), blockades, insurrections, riots, mass protests or
demonstrations and police action in connection with or in reaction to any such acts of civil disorder, or
acts of industrial ·disorder including strikes, lockouts and picketing. A change in market conditions shall
not constitute a Force Majeure Event.
"Makeup Pumps" means the pumping facility located at the makeup water lake located adjacent
to the site of the Facility.
"Meters" shall mean the meters installed, owned and maintained by Denton for measurement of
the volume of Reclaimed Water to be supplied at the Supply Delivery Point or Wastewater to be delivered
at the Wastewater Delivery Point.
"~" shall mean a party to this Agreement and its successor and permitted assigns.
"Person" shall mean any natural person, corporation, company, partnership, limited liability
company, joint venture, trust, unincorporated organization, organization, association, sole proprietorship,
government (or any agency, instrumentality or political subdivision thereof, including autonomous and
quasi-autonomous entities) or other entity.
"Reclaimed Water" shall mean treated wastewater effluent exiting the WWTP and delivered to
the Supply Delivery Point to be used by the User for cooling water and other industrial and non-potable
purposes at the Generating Plant.
"Reclaimed Water Rate" shall mean the amount payable for the supply of Reclaimed Water as set
forth in Section 5.1. subject to the rate escalation formula set forth in Section 5.3(a).
"Regulatory Requirements" shall mean all applicable requirements and provisions of federal,
state, city, county and local constitutions, laws, statutes, rules, regulations and ordinances enacted or
issued from time to time, including all applicable sections of the Texas Water Code, TAC, and the rules
and regulations of the United States Environmental Protection Agency, Texas Natural Resource and
Conservation Commission, and all judicial and administrative orders, permits, judgments and decrees of
any governmental authority having jurisdiction concerning the matters contained herein issued from time
to time.
"supply Delivery Point" shall mean the point at which the cooling water storage pond pipeline
from the Facility connects to the Makeup Pumps suction.
"TAC" shall mean the Texas Administrative Code.
"Term" shall have the meaning set forth in Section 7 .1.
"User" shall mean Spencer Station Generating Company, L.P., a Delaware limited partnership.
"Wastewater" shall mean wastewater generated at the Facility, including cooling tower,
blowdown, and other wastewater that is delivered to the Wastewater Delivery Point for treatment at the
WWTP.
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"Wastewater Rate" shall mean the rate paid by the User to Denton for Wastewater treatment and
disposal services as set forth in Section 5.2, subject to the rate escalation formula set forth in Section
5.3(b).
"Wastewater--Delivery Point" shall mean the point at which the Water Line connects to the
Facility.
"Water Line" means the 18-inch industrial water line connecting from the WWTP to the Facility.
"WWTP" shall mean Denton's Pecan Creek Wastewater Treatment Plant.
Article 2 Purchase and Supply of Reclaimed Water
2.1 Purchase and Supply of Reclaimed Water. Denton shall make available for sale to the
User at the Supply Delivery Point up to-a maximum of 2.5 million gallons per day (2.5 MGD) of
Reclaimed Water, and the User agrees to purchase from Denton the quantity of Reclaimed Water needed
by the User for the operation of the Facility, subject to the terms and conditions set forth herein, including
the nomination procedures in Section 2.5.
(a) Denton shall supply and deliver the Reclaimed Water to the User at the Supply
Delivery Point through one or more Meters that will measure the volume supplied and delivered.
(b) The Reclaimed Water shall be owned, possessed, and controlled by the User at
the Supply Delivery Point, and title to such Reclaimed Water shall immediately and automatically vest in
the User at the Supply Delivery Point.
(c) Subject to the User's obligation to pay any shortfall payment which may become
due under Section 2.5, in no event will the User be obligated to purchase Reclaimed Water in any
minimum amounts.
2.2 [Reserved]
2.3 Volume and Flow Rates. Denton shall supply up to a maximum of 2.5 million gallons
per day (2.5 MGD) of Reclaimed Water from the WWTP to the Supply Delivery Point; provided,
however, that the Use_! may request that Denton consent (which consent shall not be unreasonably
withheld) to the supply of additional gallons of Reclaimed Water on the terms set forth herein in the event
that additional Reclaimed ·Water is necessary for the continued operation of the Facility. Denton shall
control the flow rates of Reclaimed Water to be delivered to the Supply Delivery Point.
2.4 Reclaimed Water Quality Standards. Reclaimed Water provided hereunder shall, when
discharged to the cooling water storage pond adjacent to the Facility, meet the quality criteria specified in
30 TAC Section 210.33 for a "Type II" Reclaimed Water for a system (other than a pond system) or as
specified in such other applicable Regulatory Requirements.
2.5 Nomination Procedure for Annual Quantity.
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(a) On March 1 of each year during the Term, commencing on March 1, 2002, the
User shall deliver to Denton a notice nominating the amount of Reclaimed Water the User expects to
purchase from Denton during the following October 1 to September 30 period, commencing with the
period from October_ 1, 2002 to September 30, 2003. On the Effective Date, the User shall deliver to
Denton a notice nominating the amount of Reclaimed Water the User expects to purchase from Denton
during the period from October 1, 2001 to September 30, 2002. Denton agrees to supply the amount
nominated in accordance with this Section 2.5.
(b) Denton's obligation to supply the amount nominated shall be conditioned on its
not being obligated to supply an amount greater than 2.5 million gallons on any given day, subject to
Section 2.3 above.
( c) If the User, at the end of each twelve-month period (beginning with period from
October 1, 2001 to September 30, 2002), or such shorter period if this Agreement is terminated during
any such twelve-month period, has purchased less than fifty thousand dollars ($50,000) ( or such pro rata
portion thereof if this Agreement is terminated during any such twelve-month period) (the "Minimum
Payment Amount") of Reclaimed Water from Denton for reasons other than Force Majeure Events, the
User shall pay Denton within five (5) Business Days of the end of any such period an amount equal to the
difference between the Minimum Payment Amount and the amount actually paid for Reclaimed Water by
the User during such period.
(d) Nothing in this Section 2.5 shall diminish Denton's obligation to maintain
sufficient water supplies pursuant to Section 6.1.
Article 3 Treatment and Disposal of Wastewater Return Flows
3.1 Treatment and Disposal of Wastewater. The User shall have the right to deliver for
treatment at the WWTP, the Facility's Wastewater return flows, subject to the terms and conditions set
forth herein.
(a) Delivery of the Wastewater will be made at the Wastewater Delivery Point. All
Wastewater delivered to the Wastewater Delivery Point will be measured by one or more Meters located
at the Wastewater Delivery Point.
(b) The Wastewater shall be owned, possessed, and controlled by the User until it is
delivered to the Wastewater Delivery Point, and title shall immediately and automatically vest in Denton
at the Wastewater Delivery Point.
( c) Denton shall cause the Wastewater delivered by the User to be treated at the
WWTP and disposed of in accordance with all Regulatory Requirements.
(d) As an industrial facility the User will be subject to applicable local, state and
federal wastewater discharge standards and all other applicable regulatory requirements.
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(e) In no event will the User be obligated to deliver Wastewater in any minimum
amounts.
3.2 Volume and Flow Rates. The volume of Wastewater delivered to the Wastewater
Delivery Point will riot exceed one million gallons per day (1 MGD); provided, however, that the User
may request that Denton consent (which consent shall not be unreasonably withheld) to the acceptance of
additional gallons of Wastewater on the terms set forth herein in the event that delivery of additional
Wastewater is necessary for the continued operation of the Facility. The User shall control the volume
and flow rate of Wastewater delivered to the Wastewater Delivery Point provided that the volume and
flow rate to the Wastewater Delivery Point shall not at any time exceed 1 MGD. Denton shall accept up
to 1 MGD of Wastewater. If the Reclaimed Water supplied by Denton does not meet the Reclaimed
Water quality standards described in Section 2.4, and cannot be used, the User will be entitled to deliver
to Denton Wastewater in excess of the 1 MGD rate at no cost to the User to take into account the
increased volume of Wastewater. Delivery of such excess Wastewater to Denton at no cost to the User
shall be the User's sole remedy arising from the failure of the Reclaimed Water to meet the quality
standards in Section 2.4 provided (i) Denton is not intentionally violating the Reclaimed Water quality
standards and (ii) Denton engages in diligent efforts to restore compliance with the Reclaimed Water
quality standards.
3.3 Wastewater Quality Limits. The Wastewater delivered to the Wastewater Delivery Poil)t
shall comply with the Wastewater quality standards (the "Wastewater Quality Limit") containe? in
Chapter 26 of Denton's Code of Ordinances, as amended (the "Code of Ordinances"), and shall fully
comply with the provisions of Section 26-186 of Chapter 26 of the Code of Ordinances. In the event that
the Wastewater violates the Wastewater Quality Limits, Denton shall promptly notify the User and
provide appropriate documentation thereof. The User shall have a period of fifteen (15) days to submit to
the User a plan for bringing the Wastewater into compliance with the Wastewater Quality Limits. The
plan shall comply with the requirements of Chapter 26 of the Code of Ordinances. In the event a plan is
not submitted to Denton within such fifteen (15) day period, or in the event the plan, if submitted, is not
reasonably acceptable to Denton or implemented in accordance with the schedule in such plan, Denton
may exercise any of the other rights of administrative enforcement set forth in Chapter 26 of the Code of
Ordinances. Notwithstanding the foregoing, Denton shall have the right to immediately suspend the
acceptance of Wastewater (after informal notice to the User) whenever such suspension is necessary in
order to stop an actual or threatened discharge which reasonably appears to present or cause an imminent
or substantial endangerment to the health or welfare of any person or to the operation of the WWTP in
accordance with Sectio_n 26-203 of Chapter 26 of the Code of Ordinances. If delivery of Wastewater is
suspended or terminated as a result of an emergency pursuant to the preceding sentence or as a result of
some other suspension or termination of service under Section 26-203 of Chapter 26 of the Code of
Ordinances, delivery of Wastewater shall resume after the quality of the Wastewater achieves compliance
with the Wastewater Quality Limits.
3.4 Consultation. The User agrees to consult with Denton before making any informal or
formal complaint with or requesting any administrative enforcement action by any state or federal agency
concerning the WWTP.
Article4 [Reserved]
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Article 5 Reclaimed Water and Wastewater Rates and Payment
5.1 Reclaimed Water Rate. The User will pay Denton a rate of $1.35 per 1,000 gallons (the
"Reclaimed Water Rate") of Reclaimed Water delivered to the Supply Delivery Point plus a $16.20 per
month facility chargi. The Reclaimed Water Rate shall be in effect for the first (60) months of supply,
and thereafter subject to escalation or de-escalation as provided in Section 5.3(a).
5.2 Wastewater Rate. The User will pay Denton a rate of $3.08 per 1,000 gallons (the
"Wastewater Rate") of Wastewater delivered to the Wastewater Delivery Point. The Wastewater Rate
shall be in effect for the first twelve (12) months of delivery of Wastewater, and thereafter subject to
escalation or de-escalation, as provided in Section 5.3(b).
5.3 Wastewater Rate and Reclaimed Water Rate Adjustments.
(a) Reclaimed water rates will be based on cost of service rate
methodologies. Periodically, every five to six years, an independent rate consultant will
be selected to complete a cash basis reclaimed water cost of service analysis. During the
interim periods between the consultant rate studies, reclaimed water costs will be
analyzed by Denton using the same methodology adopted at the time the last consultan!-
completed cost of service. The cost of service analysis will utilize the latest end of year
data ending September 30th, and adjusting for known and measurable changes. This may
result in annual adjustments in the reclaimed water rate, in order to recover the costs of
providing the service. Thereafter, changes in methodology will be allowed, if
recommended by the independent rate consultant. The costs included within the cost of
service shall include operation and maintenance expense, capital expense, return on
investment, franchise fee, administrative transfers, and other applicable costs as
determined.
(b) The wastewater rates shall be established utilizing the same
methodology as stated in the reclaimed water rate. Every five to six years an independent
rate consultant will be selected to perform a wastewater cost of service analysis. Denton
staff utilizing the same methodology established will complete interim studies by the
independent rate consultant. This may result in annual adjustments in wastewater rates, in
order ~o recover the costs of providing the service. Thereafter, change in methodology
will be allowed if recommended by the independent rate consultant. The costs included
within the cost of service shall include operation and maintenance expense, capital
·expense, return on investment, franchise fee, administrative transfers, and other
applicable costs as determined.
5 .4 Invoicing and Payment.
(a) In the event the User reasonably disputes any amounts specified
in an invoice, the User shall notify Denton of such disputed amounts. Denton shall
provide explanations and/or documentation which outlines the processes used in order for
the User to fully understand how the monthly volumes and billings were determined and
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calculated. The User shall pay the amounts due pursuant to each invoice in accordance
with the payment instructions contained therein within thirty days after receipt.
(b) If the User disputes the monthly billing and/or rates, the User
mus~·continue to make prompt monthly payments as required per this contract. If, after a
thorough. review, the User's position is determined to have merit and justification, the
area of concern or dispute shall be promptly adjusted and corrected. The determination or
settlement in areas of dispute will generally be judged against standard practices used in
the water and wastewater industry, while considering fairness to both parties.
(c) Unpaid invoiced amounts shall be subject to a late payment
charge equal to Citibank prime rate on commercial loans per month ("Interest Rate")
accruing on a pro-rata basis from the due date through the date payment is made,
provided however, that such late payment charge shall not exceed the maximum charge
which may be collected ·under the provisions of Texas Law. Any amount deemed
usurious pursuant to Texas law shall be immediately returned to the User.
5.5 Waiver of Right to Appeal Rates to Texas Natural Resource Conservation Commission
("TNRCC"). To the extent allowed by law, and provided the rates are established in a manner consistent
with this Article, the User waives its rights to appeal the rates set forth in this Article or any successor
rates to the TNRCC or any successor regulatory agency of the TNRCC. In the event the User appeals_ the
rates set forth in this Article to the TNRCC, and the TNRCC establishes a rate which is lower than the
rate established pursuant to this Article, then Denton shall have the right to terminate this Agreement by
providing at least ninety (90) days advance written notice to the User. Notwithstanding the foregoing, the
Agreement will not terminate if the User, before the end of such notice period, executes an agreement
with Denton which obligates the User to pay directly to Denton the difference between the rate
established under this Article and the rate established by the TNRCC. Denton agrees to negotiate in good
faith with the User in order to agree on the form and contents of such agreement.
Article 6 Commitment of Supplies and Resources
6.1 Sufficiency of Water Supply and Facilities. Denton agrees to include the maximum
amount of Reclaimed Water required under this Agreement in its planning and operations requirements
with respect to its water and wastewater utilities. Denton agrees that it will maintain rights to Reclaimed
Water as necessary to meet its supply obligation hereunder. Denton shall promptly notify the User of any
proposed or enacted legislation or regulations (either federal, regional, state, city, county or local level),
permit amendments, or agreement, which come to the attention of Denton and which could materially
adversely affect the ability of Denton to supply the Reclaimed Water. To the extent allowed by law and
subject to the provisions of Section 11.3, neither Denton nor the User will take any action or omit to take
any action that would or could impair, restrict or adversely affect its ability to perform its obligations
hereunder.
6.2 Maintenance and Repair Obligations.
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(a) Denton shall be obligated to maintain and operate its WWTP as necessary to have
sufficient capacity to perform its obligations hereunder.
(b) '.J]le User shall be obligated to maintain and operate the Facility as necessary for the
performance of its obligations hereunder.
Article 7 Term and Termination
7.1 Term and Termination. Unless sooner terminated or extended pursuant to the terms
hereof, this Agreement shall be effective on the date set forth in the first paragraph of this Agreement and
shall continue in effect for an initial period of five (5) years (the "Initial Term"). Upon expiration of the
Initial Term, this Agreement, unless sooner terminated pursuant to the Agreement, shall automatically
renew for up to an additional fifteen (15) one-year terms (each, a "Renewal Term"). Unless sooner
terminated pursuant to the Agreement, the User may terminate this Agreement upon the expiration of the
Initial Term or any Renewal Term by providing written notice to Denton at least one year prior to the
expiration of the Initial Term or such Renewal Term. The Initial Term and all subsequent Renewal Terms
of this Agreement are collectively referred to herein as the "Term".
Article 8 Approvals
8.1 Approvals. Each Party agrees to acquire and maintain in full force and effect
throughout the Term, at its expense, all Approvals necessary for it to fulfill its obligations hereunder-and
to comply with all Regulatory Requirements in the performance of their obligations.
Article 9 Representations and Warranties
9.1 Representations and Warranties. Each Party hereby represents and warrants to the other
as to itself that the following are true, legal, and correct as of the date hereof:
(a) Such Party is a home-rule municipality in the case of Denton and a limited
partnership in the case of the User; validly existing and in good standing under the laws of the State of
Texas in the case of Denton and the State of Delaware in the case of the User. Such Party has all requisite
power and authority to conduct its business, own its properties, execute, deliver this Agreement, and
perform its obligations hereunder in accordance with the terms hereof.
(b) -This Agreement has been duly executed and delivered on behalf of such Party
and constitutes the legal, valid and binding obligations of such Party, enforceable against it in accordance
with its terms,· except as the enforceability thereof may be limited by banlauptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of creditors' rights generally
and general equitable principles.
Article 10 Force Majeure
10. l Notification Obligations. In the event a Party claims a Force Majeure Event, such Party
shall promptly, but in no event more than seven (7) days after it knows or should have known of the
occurrence of the Force Majeure Event, give the other Party a brief written notice of the Force Majeure
Event. By not later than twenty (20) days after such notice, the claiming Party shall provide to the other
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Party a second, rriore detailed notice describing the details of the occurrence and the anticipated length of
delay due to the Force Majeure Event. The Party claiming the Force Majeure Event shall give notice to
the other Party of (i) the cessation of the relevant Force Majeure Event and (ii) the cessation of the effects
of such Force Majeure Event on the performance by it of its obligations under this Agreement as soon as
practicable after beco-ming aware of each of (i) and (ii) above.
10.2 Duty to Mitigate. The Parties shall use their reasonable efforts to mitigate the effects of
such Force Majeure Event and to cooperate to develop and implement a plan of remedial and rea~onable
alternative measures to remove the Force Majeure Event. In addition, a Party shall not be excused under
this Article from timely performance of its obligations to the extent that the claimed Force Majeure Event
was caused by any gross negligence or intentional acts or by any breach or default of this Agreement by
such Party.
10.3 Delay Caused by Force Maieure Event. To the extent provided in this Section 10.3 and
subject to Section 10.2, neither Party shall be responsible or liable for or deemed in breach of this
Agreement because of any failure or delay in complying with its obligations under or pursuant to this
Agreement to the extent that such failure has been caused, or contributed to, by one or more Force
Majeure Events or its effects or by any combination thereof.
Article 11 Remedies
. 11.1 Remedies for Breach by Denton. Except as otherwise provided herein, in the event
Denton fails or refuses to comply with the terms of this Agreement, the User may elect to bring suit to
recover any sum of money and/or may, subject to Section 11.3, take any other action available at law or in
equity, including specific performance and termination of the Agreement.
11.2 Remedies for Breach by User. In the event the User fails or refuses to comply with the
terms of this Agreement, Denton may elect to bring suit to recover any sum of money due hereunder
and/or may, subject to Section 11.3, take any other action available at law or in equity, including specific
performance and termination of the Agreement.
11.3 Notice and Opportunity to Cure. Prior to termination of the Agreement for breach or the
institution of legal proceedings for breach by either Party under this Article 11, the terminating Party, or
Party planning to institute legal proceedings, shall provide to the other Party at least sixty (60) days notice
and an opportunity to c_ure the breach within such period. The foregoing obligation to provide notice and
an opportunity to cure shall not apply, however, to a suit which seeks as a remedy injunctive relief or
specific performance (as opposed to monetary liability) and which involves a breach resulting in (or a
threatened breach which would result in) the interruption or cessation of delivery of Reclaimed Water to
the Supply Delivery Point or Wastewater to the Wastewater Delivery Point.
11.4 Effect of Termination. Except as specifically provided otherwise in this Agreement, all
rights and obligations of the Parties under this Agreement shall terminate upon termination of this
Agreement, except that such termination shall not affect any rights or liabilities accrued prior to such
termination.
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11.5 Disclaimer of Implied Warranties/Limitation of Consequential Damages. THE
WARRANTIES CONTAINED IN TIDS AGREEMENT ARE IN LIEU OF ALL OTHER
WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
THE GOODS AND SERVICES BEING PROVIDED UNDER TIDS AGREEMENT BY DENTON
ARE BEING OFFERED AND SOLD "AS IS" EXCEPT THAT DENTON WARRANTS THAT
THE RECLAIMED WATER SOLD TO THE USER HEREUNDER WILL BE IN
ACCORDANCE WITH THE STANDARDS APPLICABLE TO RECLAIMED WATER UNDER
ARTICLE 2 OF TIDS AGREEMENT, AND THE USER WARRANTS THAT THE
WASTEWATER DELIVERED TO DENTON WILL BE IN ACCORDANCE WITH
STANDARDS APPLICABLE TO WASTEWATER UNDER ARTICLE 3 OF TIDS
AGREEMENT. IN NO EVENT SHALL DAMAGES TO ANY PARTY IN THE NATURE OF
SPECIAL, INCIDENTAL, INDIRECT, OR CONSEQUENTIAL DAMAGES OR FOR THE LOSS
OF PROFIT OR REVENUE ARISING _(JNDER TIDS AGREEMENT EXCEED TWO (2) TIMES
THE IDGHEST ANNUAL BILLING ACTUALLY PAID BY THE USER TO DENTON UNDER
TIDS AGREEMENT.
Article 12 Miscellaneous
12.1 Assignment. Neither the User nor Denton may assign this Agreement to other entities
without obtaining the consent of the other Party which consent shall not be unreasonably withh_eld;
provided, however, Denton may assign its rights and obligations under this Agreement in connection with
the sale by Denton of the WWTP provided that the purchaser of the WWTP agrees in writing to perform
all of Denton's obligations hereunder; provided, further, that the User may assign all of its rights and
obligations under this Agreement (without the consent of Denton) to an affiliate or wholly-owned
subsidiary of the User upon the sale or transfer of the Facility to such affiliate or wholly-owned
subsidiary, but in no event shall such assignment relieve the User of any of its obligations or liabilities
under this Agreement.
12.2 Severability. The provisions of this Agreement are severable and if, for any reason, any
one or more of the provisions contained in this Agreement shall be held to be invalid, illegal, or
unenforceable in any respect, the invalidity, illegality or unenforceability shall not affect any other
provision of this Agreement and this Agreement shall remain in effect and be construed as if the invalid,
illegal or unenforceable provision had never been contained in the Agreement. In the event any provision
of this Agreement is declared invalid, illegal, or unenforceable, the parties shall, upon the request of a
party, promptly renegotiate in good faith a new provision to eliminate the invalidity and to restore this
Agreement as nearly as possible to its original intent and effect. In the event agreement cannot be reached
in such re-negotiation, this Agreement shall continue in force and effect as if it had been executed without
the invalid provision.
12.3 Notices. Notices given under this Agreement shall be in writing and are deemed to have
been duly delivered if hand delivered or sent by United States certified mail, return receipt requested,
postage prepaid, to:
(a) If to Denton:
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City of Denton
Attention: City Manager
215 E. McKinney St.
Denton, TX 75201
Telephone: ( 940) 3·49-8306
Fax: (940) 349-8596
(b) If to the User:
Spencer Station Generating Company, L.P.
c/o PG&E Generating Company
7500 Old Georgetown Road
Bethesda, Maryland 20814
Telephone: (301) 280-6800
Fax: (301) 280-6900
Attention: General Counsel
The names, titles;and addresses of either party in Section 12.3 may be changed by written notification to
the other.
12.4 No Third Party Beneficiary. (i) Nothing in this Agreement nor any action taken
hereunder shall be construed to create any duty, liability or standard of care to any Person that is not a
Party, (ii) no person that is not a Party shall have any rights or interest, direct or indirect, in this
Agreement or the services to be provided hereunder and this Agreement is intended solely for the benefit
of the Parties, and (iii) the Parties expressly disclaim any intent to create any rights in any third party as a
third-party beneficiary to this Agreement or the services to be provided hereunder.
12.5 Further Assurances. Each Party will promptly execute and deliver all further instruments
and documents, and take all further action, that may be necessary or desirable, or that the other Party may
reasonably request, in order to protect any right or interest granted by the provisions of this Agreement or
to enable the other Party to exercise and enforce its rights and remedies hereunder.
12.6 Entire Agreement. This Agreement constitutes the entire agreement between the parties
respecting the subject matter hereof and supersedes any prior understanding or written or oral agreements
concemmg same.
12.7 Governing. Law. This Agreement, and the rights and obligations of the parties under or
pursuant to this Agreement, shall be governed by the laws of the State of Texas.
12.8 Counterparts. This Agreement may be executed in multiple counterparts, each of which
shall be deemed an original, and all of which together shall constitute one and the same instrument.
12.9 Payment. Any amounts payable to Denton under this Agreement are due and payable in
Denton County, Texas.
11
1281548 vs; RG%K08!.DOC
IN WITNESS WHEREOF, the parties hereto have caused this Reclaimed Water Service and Wastewater
Return Agreement to be duly executed as of the day and year first above written.
Attest:
Approved as to Legal Form:
Herbert
By:
Attest: -------------
CITY OF DENTON, TEXAS
A Te
SPENCER STATION GENERATING
COMPANY, L.P.
By: ____________ _
Name:
Title:
IN WITNESS WHEREOF, the parties hereto have caused this Reclaimed Water Service and Wastewater
Return Agreement to be duly executed as of the day and year first above written.
Attest:
Jennifer Walters, City Secretary
By:-----------
Approved as to Legal Form:
Herbert L. Prouty, City Attorney
By:
Attest: ------------
CITY OF DENTON, TEXAS
A Texas Municipal Corporation
By: ____________ _
Michael A. Conduff
City Manager
SPENCER STATION GENERATING
COMPANY, L.P.
PR
STATE OFTEXAS
COUNTY OF DENTON
§
§
§
Exhibit L
After Recording Return to:
Spencer Station Generating
Company, L.P.
c/o PG&E Generating Company
7500 Old Georgetown Road
Bethesda, Maryland 20814
SPECIAL WARRANTY DEED
KNOW ALL MEN BY THESE PRESENTS:
That the City of Denton, Texas, a Texas home rule municipal corporation ("Grantor"), for
and in consideration of the sum of $10.00 and other good and valuable consideration to it paid by
Spencer Station Generating Company, L.P. ("Grantee") has GRANTED, SOLD AND
CONVEYED, and by these presents does GRANT, SELL AND CONVEY unto Grantee the fee
simple interest of that certain land situated in Denton County, Texas, more particularly described
in Exhibit "A" attached hereto and incorporated herein by reference for all purposes, together
with all right, title and interest of Grantor in and to (i) any and all buildings, facilities and other
improvements situated thereon, (ii) all adjacent strips and gores of land, and (iii) all rights and
appurtenances in any wise belonging unto Grantee in connection with the foregoing (collectively,
the "Property").
TO HA VE AND TO HOLD the Property unto the said Grantee, its successors and assigns
forever, and Grantor does hereby bind itself, and its successors to WARRANT AND FOREVER
DEFEND all and singular the said Property unto the said Grantee, its successors and assigns,
against every person whomsoever lawfully claiming or to claim the same or any part thereof, by,
through or under Grantor, but not otherwise subject only to those encumbrances and matters
described in Exhibit "B" hereto and incorporated herein by reference for all purposes.
Grantor makes no representations or warranties whatsoever, express, implied or arising
by operation of law, with respect to the Property or the condition of the Property, other than the
special warranty of title in this Deed. The Property is being sold and conveyed to (and is accepted
by) Grantee in its present condition, AS IS, WITH ALL FAULTS, AND WITHOUT ANY
WRITTEN OR ORAL REPRESENTATIONS OR WARRANTIES WHATSOEVER,
EXPRESS, IMPLIED OR ARISING BY OPERATION OF LAW, other than the special warranty
of title in this Deed. Except for the special warranty of title in this Deed, this conveyance is
without any statutory, express or implied warranty, representation, statement or expression of
opinion of or with respect to (i) the condition of the Property or any aspect thereof including,
without limitation, any and all statutory, express or implied representations or warranties related
to suitability for habitation, merchantability or fitness for any particular use or purpose or any
activity Grantee may conduct or contemplate conducting thereon; (ii) the soil conditions,
drainage, topographical features or other conditions of or which affect the Property; (iii) any
1283184 v8; R$40081.DOC
conditions at or which affect the Property with respect to any particular use, purpose,
development potential or otherwise; (iv) any environmental, hydrological, geological, structural
or other condition or hazard or the absence thereof affecting in any manner any of the Property;
and (v) all other :~tatutory, express or implied representations and warranties by Grantor
whatsoever.
In consideration of the transactions contemplated by the Asset Purchase
Agreement dated as of June f€/_, 2001 among Granter, Grantee and PGE Generating Company,
LLC (the "Purchase Agreement"), Granter and Grantee hereby agree as follows:
1. (a) In the event that Grantee (i) determines to permanently cease all
commercial electric power generation-related activities on the Property or
(ii) ceases all commercial electric power generation-related activities on
the Property for a petj.od of ten substantially consecutive years (a
"Shutdown"), Grantee shall provide written notice of the same to Granter
(a "Shutdown Notice"), which Shutdown Notice may, at Grantee's sole
discretion, require Grantor to acquire the generating units and related
assets located at or preliminarily related to the generating stations known
as Lewisville Station and Ray Roberts Station at no additional cost if
Granter desires to purchase the Property. Granter shall have the right,
exercisable by written notice to Grantee (an "Exercise Notice") within
forty-five (45) days of Grantor's receipt of the Shutdown Notice, to
purchase ( or cause its designee or assignee to purchase) the Property at a
purchase price equal to the Fair Market Value thereof.
For purposes hereof, "Fair Market Value" shall mean the fair
market value of the Property based on the terms of sale described below,
determined by mutual agreement of Grantor and Grantee, provided that if
Granter and Grantee do not agree on the Fair Market Value of the Property
on or before the 30th day following delivery of the Exercise Notice, Fair
Market Value shall be determined by an independent appraiser mutually
satisfactory to Grantee and Granter. If Grantee and Granter are unable to
agree upon a mutually satisfactory independent appraiser, each of Grantee
and Granter shall appoint an independent appraiser to determine the Fair
Markef Value of the Property; if the valuations of each of such
independent appraisers does not differ by greater than fifteen percent
(15%), then Fair Market Value shall be determined by taking the
arithmetic average of the two valuations. If the valuations of each of such
independent appraiser differs by greater than fifteen percent (15%), then a
third independent appraiser shall be selected by mutual agreement of the
two independent appraisers and Fair Market Value shall be determined by
such third independent appraiser. Responsibility for payment of the fees
and expenses of the third independent appraiser shall be shared equally by
Grantor and Grantee. Conveyance of the Property pursuant to Grantor's
1283184 v8; R$4008!.DOC
2
exercise of its rights hereunder shall be on an "as is, where is" basis,
without representation or warranty other than Grantee's good and
marketable title to the Property, free and clear of any liens, mortgages,
pledges, security interests or other encumbrances that secure indebtedness
or contingent obligations (including capital leases) or relate to taxes or
assessments that are due or delinquent, pursuant to customary deeds of
conveyance, as of the date of conveyance against delivery of the purchase
price in immediately available funds.
Notwithstanding any provision hereof to the contrary, any sale,
transfer or other disposition of the Property with respect to which the
immediately following paragraph is applicable shall not constitute a
Shutdown.
(b) In the event that Grantee determines to sell, assign or
otherwise convey ( other than to an Affiliate of Grantee, which shall be
subject to the terms of this covenant) (i) more than 50% of the outstanding
equity interests of Grantee or any Affiliate of Grantee whose primary asset
is, directly or indirectly, the Property, or (ii) all or any material portion of
the Property, in each case to one or more third parties as a going concern
(a "Sale Transaction"), Grantee shall provide Granter with written notice
of such intention, specifying in as much detail as practicable the assets or
interest proposed to be transferred in such Sale Transaction (the "Sale
Notice"). Upon receipt of a Sale Notice, Granter shall have the right,
exercisable by written notice to Grantee within ten business days of receipt
of the Sale Notice to commence a forty-five day period (the "Exclusivity
Period") during which the Granter and Grantee shall negotiate in good
faith, and Grantee shall negotiate exclusively with Granter, to agree upon
the material terms and conditions with respect to the acquisition by
Granter of the Property ( or, in the case of a Sale Transaction involving the
disposition of a material portion of the Property, such portion to be
disposed of). The Exclusivity Period shall be subject to an extension for
an additional forty-five days at the request of either Grantee or Granter,
which request shall not be unreasonably withheld.
For purposes of this subparagraph (b ), "Affiliate" shall mean any person or
entity controlling, controlled by or under common control with Grantee.
( c) In the event that Grantee offers for sale or solicits equity
investments in Grantee or an entity formed by Grantee primarily for the
purpose of financing an expansion of the Property ( an "Expansion
Investment"), Grantee shall provide Granter with written notice of such
intention, specifying in as much detail as practicable the proposed terms or
financial parameters of such Expansion Investment (the "Expansion
1283184 vB; R$4008!.DOC
3
Irivestment Notice"). Upon receipt of an Expansion Investment Notice,
Grantor shall have the right, exercisable by written notice to Grantee
within ten business days of receipt of the Expansion Investment Notice
(the _."Expansion Notice") to commence a forty-five day period (the
"Expansion Exclusivity Period") during which the Grantee and Grantor
shall negotiate in good faith, and Grantee shall negotiate exclusively with
Grantor, to agree upon the material terms and conditions with respect to
the participation by Grantor in such · Expansion Investment. The
Expansion Exclusivity Period shall be subject to an extension for an
additional forty-five days at the request of either Party, which request shall
not be unreasonably withheld.
2. NOx Emission Reduction Credits. Grantee shall (and shall cause its successors
and assigns to agree to), to the extent permitted by applicable law, deliver to
Grantor a certificate or certificates for Emission Reduction Credits for nitrogen
oxides ("NOx ERCs"), in the amount of 11 tons per year, or such lesser amounts
as actually generated by Grantee through actual reductions in permitted NOx
emissions, for use by Grantor in the Dallas/Fort Worth nonattainment area in 2005
and subsequent years. Grantor shall receive the first 11 tons of NOx ERCs
regardless of when or how the NOx ERCs are generated, and regardless of whether
the NOx ERCs are generated as a result of reductions resulting from modificatigns
or activities of Grantor, Grantee or any of Grantee's successors or assigns, from
January 1, 2001 to January 1, 2009. The NOx ERCs must be based on all known
and foreseeable emission limitations that might impact the value of the credits,
certified by TNRCC, registered on the TNRCC credit registry, and transferred to
Grantee according to applicable emission banking and trading regulations and
time limitations. Notwithstanding the foregoing, Grantee shall have no obligation
(i) to modify or operate the Spencer Station Generating Plant in any way to
generate NOx ERCs for transfer to Grantor or (ii) to purchase NOx ERCs through
any banking or trading systems established in accordance with TNRCC
regulations for transfer to Grantor.
For purposes of this Section 2:
4 'Emission Reduction Credits" means credits, in units that are established
by the Governmental Authority with jurisdiction over the Spencer Station
Generating Plant, resulting from reductions in. the emissions of air pollutants from
an emitting source or facility (including, without limitation, and to the extent
allowable under applicable law, reductions resulting from shutdowns or control of
emissions beyond that required by applicable law) that are allocated to the
Spencer Station Generating Plant and: (a) have been identified by the Texas
Natural Resources Conservation Commission or any successor agency
(''TNRCC") as complying with applicable Texas law governing the establishment
of such credits (including, without limitation, that such emissions reductions are
1283184 v8; R$4008!.DOC
4
enforceable, permanent, quantifiable and surplus); or (b) have been certified by
any other applicable Governmental Authority as complying with the law and
regulations governing the establishment of such credits (including, without
limitation, certification that such emissions reductions are enforceable, permanent,
quantifiable and surplus). The term includes Emission Reduction Credits that
have been approved by the TNRCC and are awaiting approval of the United States
Environmental Protection Agency or any successor agency. The term also
includes certified air emissions reductions, as described above, regardless. as to
whether the Governmental Authority certifying such reductions designates such
certified air emissions reductions by a name other than "emission reduction
credits.
"Governmental Authority" means any foreign, federal, state, local or other
governmental, regulatory or administrative agency, court, comm1ss10n,
department, board, or other governmental subdivision, legislature, rulemaking
board, court, tribunal, arbitrating body or other governmental authority.
The obligations of Grantee pursuant to the foregoing Sections 1 and 2 shall run with the
land, and shall be binding upon any successor or assignee of Grantee as a transferee of the
Property.
1283184 v8; R$4008!.DOC
5
EXECUTED this~ day of June, 2001.
Attest:
Jennifer Walters, City Sj retary
By:~+IA-~
Approved as to Legal Form:
Mailing Address of Grantee:
Spencer Station Generating Company, L.P.
c/o PG&E Generating Company
7500 Old Georgetown Road
Bethesda, Maryland 20814
1283184 v8; R$4008!.DOC
6
THE CITY OF DENTON
IC
Title: City Manager
STATE OF TEXAS §
§
COUNTY OF DENTON §
This instrument was acknowledged before me on this ~7i,l day of June_, 2001, by Michael A.
Conduff, City Manager of the City of Denton, Texas, a Texas home rule municipal corporation,
on behalf of said municipal corporation.
•••••••;.f''IP(J_'•••-. /~o\ ........ ~i:\ ANN FORSYTHE
[S E A L] [. ~) • \ Notary Public, State ofTexas
\ \~); j My Commission Explroa \~,.◄·;·, ........ ~iY MAY 9 2002 .._,,,.£OF, ... •• J
My Commission Expires:
Notary Public in an or the Sta:;Tr;~
Notary's Printed 'i&
1283184 v8; R$4008!.DOC
EXHIBIT A
Spencer Station Real Property
The real property described in the attachment hereto, and all improvements thereon as
described in the survey of Landmark Surveyors, Inc., dated October 19, 1999, Job No.
991164 ( excluding any such improvements that are Excluded Assets).
FIELD NOTES
17.751 ACRES
9911645a
BEING all that certain lot, tract or parcel of land situated in the Mary Austin Survey
Abstract Number 4, in the City of Denton, Denton County, Texas, being a part of Lot 1,
Block 2 of Municipal Utility Addition, an addition to the City of Denton, Denton County,
Texas according to the plat thereof recorded in Cabinet G, Page 346, Plat Records,
Denton County, Texas, and being more particularly described as follows:
COMMENCING at an iron rod found for corner in the north line of Spencer Road, a
public roadway having a right-of-way of 60.0 feet, said point being the southwest corner
of that certain tract ofland conveyed by deed to N. Alex Bickley, Trustee recorded in
Volume 987, Page 548, Deed Records, Denton County, Texas;
THENCE N 88° 39' 46" W, 130.00 feet with said north line of said Spencer Road to an
iron rod set for PLACE OF BEGINNING;
THENCE N 88° 39' 46" W, 299.83 feet with said north line of said Spencer Road to an
iron rod set for corner;
THENCE along the arc of a curve to the right having a central angle of 12° 15' 19', a
radius of 520.00 feet, an arc length of292.74 feet, whose chord bears N --·2° 32' 06" W,
288.89 feet with said north line of said Spencer Road to an iron rod set for corner;
THENCE N 52° 50' 00" W, 281.92 feet with said north line of said Spen ..:er Road to an
iron rod set for co.mer;
THENCE N 52° 36'·00" W, 111.50 feet with said north line of said Spe'' -er Road to an
iron rod set for comer;
THENCE N 20° 02' 44" E, 92.00 feet to an iron rod set for corner;
THENCE N 02° 23' 36" W, 267.94 feet to an iron rod set for comer;
THENCE N 88° 09' 17" E, 48.91 feet to an iron rod set for corner;
THENCE N 01 ° 50' 44" W, 206.45 feet to an iron rod set for corner;
1309636v1: S2$S01!.DOC
1309636 v1: S2$S01!.DOC
THENCE N 38° 22' 23" E, 161.33 feet to an iron rod set for comer;
THENCE N 88° 03' 43" E, 749.08 feet to an iron rod set for comer;
THENCE S 44° 06' 44" E, 53.08 feet to an iron rod set for comer;
THENCE S 00° 53' 14" W, 562.85 feet to an iron rod set for comer;
THENCE S 87° 46' 24" W, 258.02 feet to a fence comer for comer;
THENCE S 02° 25' 18" E, 114.07 feet to an iron rod set for comer;
THENCE S 86° 24' 16" W, 68.28 feet to an iron rod set for comer;
THENCE S 02° 32' 00" E, 151.23 feet to a fence comer for comer;
THENCE N 87° 35' 34" E, 294.01 feet to a fence corner for comer;
THENCE S 09° 41' 28" W, 180.28 feet to the PLACE OF BEGINNING and containing
17.751 acres of land.
1309636 v1: S2SS01 '.DOC
1309636 v1, S2$S011 .DOC
EXHIBIT B
TO
SPECIAL WARRANTY DEED
Exceptions to Title
1. Easement for the installation, operation and maintenance of underground/overhead
electrical distribution systems granted to Texas Power & Light Company by Mrs. B.J.
Wills, by instrument dated September 25, 1924, filed December I, 1924, recorded in
Volume 197, Page 21, of the Deed Record of Denton County, Texas.
2. Easement for the installation, operation and maintenance of underground/overhead
electrical distribution systems granted to Texas Power & Light Company by Alex Dickie,
by instrument dated August 22, 1946, filed September 26, 1946, recorded in
Volume 327, Page 437, of the Deed Records of Denton County, Texas.
3. Right of way Easement for pipeline granted to Sinclair Refining company, by Alex
Dickie and Ollie R. Dickie, by instrument dated November 29, 1947, filed December 20,
1947, recorded in Volume 341, Page 269, as assigned to Sinclair Pipeline Company by
Assignment dated December 28, 1950, filed January 22, 1951 recorded in Volume 362,
Page 524, of the Deed Records of Denton County, Texas.
4. Easement for sewer line granted to City of Denton, by M.S. Acuff and Mintie A. Acuff,
by instrument dated May 28, 1923, filed June 16, 1923, recorded in Volume 185, Page
147, of the Deed Records of Denton County, Texas.
5. Easement for street purposes granted to City of Denton, by Alex Dickie, by instrument
dated March 3, 1955, filed March 9, 1955, recorded in Volume 407, page 575, of the
Deed Records of Denton County, Texas.
6. Any portion of subject property lying within the right-of-way of any road, public or
private.
7. Easement, License and Attachment Agreement between the City of Denton, Texas and
Spencer Station Generating Company, L.P. dated June 1!!1_, 2001, filed ____ ., 2001,
recorded in Volume --~ Page ___ , of the Deed Records of Denton County,
Texas.
8. Unrecorded Continuing Site/Interconnection Agreement between the City of Denton,
Texas and Spencer Station Generating Company, L.P. dated June 1f!l 2001.
9. Additional matters set forth on Schedule B to that certain Commitment for Title
Insurance No. 214325-X-0034 issued by Fidelity National Insurance Company dated
May 23, 2001, but only to the extent such matters are applicable to the Property described
on Exhibit A.
C:\WINDOWS\TEMP\5P8%01.DOC
THE STATE OF TEXAS
COUNTY OF DENTON
§
§
ASSIGNMENT OF CONTRACTS
TIDS ASSIGNMENT is made by and between the CITY OF DENTON, TEXAS
(hereinafter the "Assignor"); BRYAN, TEXAS UTILITIES (hereinafter the "Assignee");
the CITY OF GARLAND, TEXAS (hereinafter "Garland"); and GREENVILLE
ELECTRIC UTILITY SYSTEM (hereinafter "GEUS"). Garland and GEUS are
hereinafter also collectively referred to as the "Consenting Parties." This Assignment
refers to the following Agreements in pertinent part, to wit:
WHEREAS, on the 3rd day of September, 1991 , Assignor enacted Resolution No.
R91-057 wherein the Assignor was authorized, and did thereafter, dated as of October 11,
1991 , execute a "Contract For Sale and Purchase of Firm Power and Energy Between the
City of Bridgeport, Texas, as Purchaser, and each of the City of Bryan, Texas; the City of
Denton, Texas; the City of Garland, Texas; and the City of Greenville, Texas, Each
Acting on Its Own Behalf Severally and Not Jointly, as Seller" (hereinafter the
"Bridgeport Contract"); wherein wholesale electric service was sold by the Assignor,
Assignee, and the Consenting parties to the City of Bridgeport, Texas (hereinafter
"Bridgeport") as purchaser; and
WHEREAS, the Assignor, Assignee, the Consenting Parties and Bridgeport have
been performing the Bridgeport Contract since October 11 , 1991 , but Assignor now is
unable to continue its part of the performance of the Bridgeport Contract, and has
requested that Assignee assume and take over its position as a party to said contract; and
WHEREAS, in 1990, Assignor enacted a Resolution wherein the Assignor was
authorized, and did thereafter, execute a "Contract For Sale and Purchase of Firm Power
and Energy Between the City of Bowie, Texas, as Purchaser, and each of City of Bryan,
Texas; the City of Denton, Texas; the City of Garland, Texas; and the City of Greenville,
Texas, Each Acting on Its Own Behalf Severally and Not Jointly, as Seller" (hereinafter
the "Bowie Contract"); wherein wholesale electric service was sold by the Assignor,
Assignee, and the Consenting Parties to the City of Bowie, Texas (hereinafter "Bowie")
as purchaser; and
WHEREAS, the Assignor, Assignee, the Consenting Parties and Bowie have
been performing the Bowie Contract since its execution, but Assignor is unable to
continue its part of the performance of the Bowie Contract, and has requested that
Assignee assume and take over its position as a party to said contract; and
WHEREAS, on the i 11 day of January, 1992, Assignor, by Resolution No. R92-
005 passed and approved a resolution authorizing the Mayor to execute, and he did
1
execute thereafter, a "Contract By and Among Texas Municipal Power Agency and the
Cities of Bryan, Denton, Garland, and Greenville, Texas for the Administration of the
Contract for the Sale of Power and Energy by the Cities to Bridgeport, Texas"
(hereinafter the "TMP A/Bridgeport Contract") providing for the administration of the
Bridgeport Contract, and to provide for the distribution of revenues from such sales of
power and energy proportionate to the Cities' respective contributions to such sale; and
WHEREAS, on the 7th day of January, 1992, Assignor, by Resolution No. R92-
004 passed and approved a resolution authorizing the Mayor to execute, and he did on the
4th day of February, 1992 execute, a "Contract By and Among Texas Municipal Power
Agency and the Cities of Bryan, Denton, Garland, and Greenville, Texas for the
Administration of the Contract for the Sale of Power and Energy By the Cities to Bowie,
Texas (hereinafter the "TMP A/Bowie Contract); providing for the administration of the
Bowie Contract, and to provide for the distribution of revenues from such sales of power
and energy proportionate to the Cities' respective contributions to such sale; and
WHEREAS, Assignor has determined that its peak load has dramatically risen
over what it was at the time of the Bridgeport Contract, the Bowie Contract, the
TMP A/Bridgeport Contract, and the TMP A/Bowie Contract, due largely to growth, and it
has had to purchase electric capacity from Garland and GEUS for the past two (2) years
in order to cover Assignor's peak load and to maintain the reserves required by ERCOT;
and
WHEREAS, Assignor has requested that the Assignee assume, succeed and take
over its contract position, together with all of its rights, duties and responsibilities; and
Assignee shall expressly succeed to all rights of the Assignor to receive revenues
thereunder, respecting the Bridgeport Contract and the Bowie Contract. Assignee is
capable and willing to perform these contracts; and
WHEREAS, Assignor has further requested that Assignee succeed to all of its
rights, duties and responsibilities, respecting the TMP A/Bridgeport Contract and the
TMP A/Bowie Contract; and that Assignee also succeed to all rights of Assignor to
receive revenue thereunder; NOW THEREFORE
KNOW ALL MEN BY THESE PRESENTS:
1. For the sum of TEN DOLLARS OTHER GOOD AND VALUABLE
CONSIDERATION, Assignor does hereby assign all of its right, title and interest, unto
the Assignee, now known as Bryan, Texas Utilities, in and to the Bridgeport Contract and
the Bowie Contract, which Assignee shall succeed to all benefits and burdens thereof.
Assignor expressly waives any and all rights to receive revenue under the Bridgeport
Contract and the Bowie Contract; as well as under the TMP A/Bridgeport Contract and
the IMP A/Bowie Contract.
2
2. The Consenting Parties do hereby each, knowingly and voluntarily consent to the
assignment of the Bridgeport Contract and the Bowie Contract interests from Assignor to
Assignee; and further recognize that Assignee shall succeed to the rights of Assignor
under the TMP A/Bridgeport Contract and the TMP A/Bowie Contract.
3. f\" T}lis Assignment of Contracts shall be effective as of the .s'f day of
Jut u , 2001.
I
4. Except as modified by this Assignment of Contracts, all other terms and
conditions of the Bridgeport Contract, the Bowie Contract, the TMP A/Bridgeport
Contract, and the TMP A/Bowie Contract, as described above, shall remain unchanged
and shall remain in full force and effect.
5. This Assignment of Contracts may be executed in multiple counterparts, each of
which shall have the effect of an original.
'"'1d1'17 ,...-: u..D SIGNED AND EXECUTED this the _..L._,_ day of __ J (V_· -'"-'""'---' 2001.
ASSIGNOR
CITY OF DENTON, TEXAS
"Denton Municipal Electric"
By:
3
ASSIGNEE
CITY OF BRYAN, TEXAS
"Bryan, Texas Utilities"
By: flw~
Dan Wilkerson, Director
4
CONSENTING PARTY
CITY OF GREENVILLE, TEXAS
"Greenville Electric Utility System"
By:
Tom Darte, Director
S:\Our Documents\Contracts\01\Bridgeport and Bowie Assignment ofContracts-DME.doc
6
CONSENTING PARTY
5
CITY OF GARLAND, TEXAS
"Garland Electric Utilities"
CONSENT
This CONSENT (this "Consent"), dated as of June 1J;f , 2001, is given by the City of
Garland, Texas ("Garlancl"), and the Greenville Electric Utility System ("GEUS" and, together
with Garland, "Sellers").
WHEREAS, the City of Denton, Texas, a municipal corporation of the State of Texas
("Denton"), and Sellers are parties to a Letter Agreement, dated as of September 19, 2000 ( as
amended or supplemented through the date hereof, the "Agreement");
WHEREAS, the Agreement restricts Denton from reselling or assigning the rights to
any capacity purchased under the Agreement (the "Capacity") without the prior consent of
Sellers;
WHEREAS, Denton, Spencer Station Generating Company, L.P. ("Spencer"), and
PG&E Generating Company, LLC will enter into an Asset Purchase Agreement (the "Purchase
Agreement"), pursuant to which Denton will agree to, among other things, assign to Spencer in
accordance with the Purchase Agreement and Spencer has agreed to assume and fully perform,
all ofDenton's right, title, interest and obligations in, to and under the Agreement (the "First
Assignment"), effective as of the Closing Date (as defined in the Purchase Agreement), subject
to the execution and delivery by Sellers of this Consent;
WHEREAS, Denton and PG&E Epergy Trading-Power, L.P., a Delaware limited
partnership ("PGET"), intend to enter into a Transition Power Agreement which, among other
things, requires PGET to provide to Denton energy, capacity and ancillary services for the City's
requirements;
WHEREAS, Spencer intends to assign to PGET and PGET has agreed to assume and
fully perform, all of Spencer's right, title, interest and obligations in, to and under the Agreement
(the "Second Assignment" and together with the First Assignment are collectively referred to
herein as the "Assignments"), immediately following the First Assignment;
WHEREAS, Sellers desire to consent to the Assignments ( and to any subsequent
assignment or transfer by PGET of the Agreement to an affiliate of PGET).
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Sellers hereby agree as follows:
1. Sellers hereby (a) consent to the First Assignment by Denton to Spencer pursuant
to the Purchase Agreement, and the Second Assignment by Spencer to PGET effective as of the
Closing Date, upon delivery by Denton of notice that the Closing Date has occurred and (b) from
and after the Closing Date, release and discharge Denton of and from any and all liabilities,
obligations, claims, causes of action and demands whatsoever (whether existing now or
hereinafter arising) in connection with the Agreement; provided, however, that Denton shall
remain responsible for the payment of all amounts due for services (including Capacity)
provided to Denton prior to the Closing Date. Sellers also hereby consent to (i) any transfer,
pledge or assignment of the Agreement as security for any financing to financial institutions, (ii)
any transfer or assignment of the Agreement to an affiliate provided that such assignee has
DA!: \260738\07\5L6Q07!.DOC\ 785'J<1.11on
substantially equivalent financial capability to PGET, and (iii) any transfer or assignment of the
Agreement to any person or entity succeeding to all or substantially all of the assets of PGET;
provided, however, in each case, that any such assignee shall agree to be bound by the terms and
conditions of the AgreemenC For purposes of this Consent, the term "affiliate" means any
corporation, partnership;limited liability company or other entity controlling, controlled by or
under common control with Spencer or PGET.
2. Sellers hereby agree that from and after the Closing Date, they shall look solely to
PGET ( or its affiliate) for the prompt payment and performance of any covenants and provisions
of the Agreement to be paid or performed by PGET, and the Sellers shall accept performance
from PGET ( or its affiliate) of the Agreement.
3. This Consent may be executed in two or more counterparts, each of which shall
be deemed an original, but all of which together shall constitute one and the same instrument.
4. This Consent shall be irrevocable, and shall inure to the benefit of and shall be
binding upon Garland, GEUS and PGET and their respective successors, transferees and
permitted assigns.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
DA 1: \260738\ 07 \5L6Q071 .DOC\ 7859'1 .llll:lR 2
From-NATIONAL EN:RGY GROUP
IN~ W.ril-'J!SOV., ~-om.rs ha'v= ~ ~ ~t Z.!l of~
day-mMi,=a:-Sl'it~~
CH:.EBNVJJ.lJ? ~C trffl.JTY SYS?EM.
~--------Titk; ________ , _. _______ _
3
Jun-zs-01 02:J7pm
FROM · From-NATIONAL ENERGY GROUP
HJ 33717066 i-951 P I 0/14 F-m
\lUL./\,IU. ,u !J\ jQ • .:;1;.;;. IU.[_\/1!1,t. ,...,.,.._, ........ , 1
IN Wl!'N'ESS \V'r!ER.EOF, 01rl!Uld n OEUS M"t ~;,.:e::uterl this Co~nr. ~ of th~
day .wg year fiM lbtn·= wri~n.
By: ____________ =
Name; Title:·-----------.....
G~T'VILLE 'ELSCTR.IC UTILITY SYSTEM
:
3
Accepted and Agreed:
PG&E ENERGY TRADING-POWER, L.P.
By: PG&E Energy Trading Holdings
Corporation, its General Partner
SPENCER STATION GENERATING COMP ANY, L.P.
DAI :\260738\05\5L6Q05 ! .DOC\ 78599.0028 4
CONSENT AND AGREEMENT
CONSENT (this "Consent"), dated as of June 18, 2001, between TXU Lone Star
Pipeline ("Lone Star"), a Division of TXU Gas Company, City of Denton, and Spencer Station
Generating Company, L. P.
WHEREAS, the City of Denton, Texas, a municipal corporation of the State of Texas
("Assignor"), and Lone Star are parties to an Interruptible Natural Gas Transportation
Agreement, dated as ofDecember 14, 1999 (the "Agreement");
WHEREAS, Section 7.2 of the Agreement requires Lone Star's consent to an
assignment by Assignor, which consent may not be unreasonably withheld;
WHEREAS, Assignor, Spencer Station Generating Company, L.P. ("Assignee"), and
PG&E Generating Company, LLC ("PGE") will enter into an Asset Purchase Agreement (the
"Purchase Agreement"), pursuant to which Assignor will agree to, among other things, assign to
Assignee in accordance with the Purchase Agreement and Assignee will agree to assume and
fully perform, all of Assignor's right, title, interest and obligations in, to and under the
Agreement (the "Assignment") effective as of the Closing Date (as defined in the Purchase
Agreement), subject to the execution and delivery by Lone Star of this Consent; and
WHEREAS, Lone Star desires to consent to the Assignment.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Lone Star hereby agrees as follows:
1. Lone Star hereby (a) consents to the Assignment by Assignor to Assignee
pursuant to the Purchase Agreement, effective as of the Closing Date, and (b) from and after the
Closing Date, releases and discharges Assignor of and from any and all liabilities, obligations,
claims, causes of action and demands whatsoever (whether existing now or hereinafter arising) in
connection with the Agreement.
2. Lone Star hereby agrees that from and after the Closing Date, it shall look solely
to the Assignee for the prompt payment and performance of any covenants and provisions of the
Agreement to be paid or performed under the Agreement regardless of whatever such payment or
performance was required before or after the Closing Date, and that Lone Star shall accept
performance from the Assignee (or its affiliate) of the Agreement.
3. Assignee hereby agrees that from and after the Closing Date it will assume and
fully perform all covenants and provisions of the Agreement to be performed or paid by the
Shipper (as defined in the Agreement) under the Agreement.
4. This Consent shall be irrevocable, and shall inure to the benefit of and shall be
binding upon Lone Star, Assignor and Assignee and their respective successors, transferees and
permitted assigns.
IN WITNESS WHEREOF, Lone Star has executed this Consent as of the day and
year first above written.
TXU LONE ST AR PIPELINE,
a division of TXU Gas Company
By c/2d~~~
Name: Sandra J. (Joy11;.; -=.:;,
Title: Attorney-in-Fact
City of Denton
Title: CtT
Spencer Station Generating Company, L. P.
By:
Name:
Title:
2
IN WITNESS WHEREOF, Lone Star has executed this Consent as of the day and
year first above written.
TXU LONE STAR PIPELINE,
a division of TXU Gas Company
By: __________ _
Name:
Title:
City of Denton
By: __________ _
Name:
Title:
Spencer Station Generating Company, L.P.
By: ~~IL
Name: THOMAS altNG
Title: PRESIDENT
PIVT &~ ;;It/-325 -3'-(-4870 1397
-
RECORDING REQUESTED BY, THIS
INSTRUMENT WAS PREPARED BY AND
WHEN RECORDED AND/OR FILED
RETURN TO: 064870
Michael Copeland, Esq.
c/o Denton Municipal Electric
901 -A Texas Street
Denton, Texas 76201
1308898 v3; S1Y@03!.DOC
DEED OF TRUST, SECURITY AGREEMENT,
FINANCING STATEMENT AND FIXTURE FILING
FROM
SPENCER STATION GENERA TING COMP ANY L.P.
Grantor
TO
Michael Copeland, Esq.
Trustee
FOR THE USE AND BENEFIT OF
CITY OF DENTON, TEXAS,
Beneficiary
Dated as of JuneZt 2001
1398
"THIS INSTRUMENT CONTAINS AFTER-ACQUIRED PROPERTY PROVISIONS."
"THIS INSTRUMENT IS TO BE FILED FOR RECORD AS A FINANCING STATEMENT,
AMONG OTHER PLACES, IN THE REAL ESTATE RECORDS."
"THE GRANTOR HAS AN INTEREST OF RECORD IN THE REAL ESTATE
CONCERNED, WHICH IS DESCRIBED IN EXHIBIT A HERETO."
"SOME OF THE PERSONAL PROPERTY CONSTITUTING A PORTION OF THE
ENCUMBERED PROPERTY IS OR IS TO BE AFFIXED TO THE PROPERTIES
DESCRIBED IN EXHIBIT A HERETO, AND THIS INSTRUMENT IS TO BE FILED FOR
RECORD AS A FINANCING STATEMENT AND FIXTURES FILING, AMONG OTHER
PLACES, IN THE REAL ESTATE RECORDS."
1308898 v3; S1Y@03!.DOC
399
DEED OF TRUST, SECURITY AGREEMENT,
FINANCING STATEMENT AND FIXTURE FILING
THIS DEED OF TRUST, SECURITY AGREEMENT, FINANCING STATEMENT AND
FIXTURE FILING {"Deed of Trust"), dated as of June 7.1, 2001 is from Spencer Station
Generating Company L.P., a Qe,l. limited partnership ("Grantor"), to Michael Copeland, Esq.,
("Trustee"), for the use and benefit of CITY OF DENTON, TEXAS, a municipal corporation
and a home rule city existing under the laws of the State of Texas ("Beneficiary").
1. The City of Denton, Texas, as Seller (the "Seller"), Spencer Station Generating
Company, L.P., as buyer (the "Buyer"), and PG&E Generating Company, LLC have entered into
an Asset Purchase Agreement dated as of June z.q, 2001, (the "Asset Purchase Agreement"),
pursuant to which the Buyer has agreed to purchase certain fossil fuel and hydro-electric
generating facilities located in Texas and certain facilities and other assets associated therewith
from the Seller, and pursuant thereto, Grantor is acquiring the Encumbered Property.
2. In connection with the transactions contemplated by the Asset Purchase
Agreement, PG&E Energy Trading-Power, L.P., a Delaware limited partnership and an affiliate
of Buyer ("PGET"), and Beneficiary have entered into a Transition Power Agreement dated as of
June a_, 2001 (as the same may be from time to time amended or modified, the "Transition
Power Agreement"), pursuant to which PGET has agreed for a period of five years to provide
certain services and to perform certain obligations in favor of Beneficiary, the non-provision or
non-performance of which according to the terms of the Transition Power Agreement would
result in damages to Beneficiary (such full performance by PGET, as well as full performance
and payment by Guarantor of the TP A Guarantee and any damages incurred by Beneficiary as a
result of non-performance by PGET or Guarantor of their respective obligations under such
agreements, subject to any limitations to such damages expressly provided in such agreements,
are collectively referred to herein as the "Obligations").
3. The obligations of PGET are guaranteed by PG&E Energy Trading Holdings
Corporation (the "Guarantor") pursuant to a Guarantee dated as of June z:1 2001, by the
Guarantor for the benefit of the Beneficiary (the "TP A Guarantee")
4. As a condition precedent to Beneficiary's agreement to enter into the Asset
Purchase Agreement and Transition Power Agreement, the Grantor is required to grant to the
Trustee and the Beneficiary a deed of trust to secure the payment and performance of all of the
Obligations; provided that the Beneficiary has agreed that this Deed of Trust shall only be
enforced at such time as an Enforcement Event (as defined below) or an Event of Default (as
defined below) shall occur.
5. For all purposes of this Deed of Trust, unless the context otherwise requires:
A. "Credit Event of Default" shall mean the occurrence of both (i) the failure
of the Guarantor to maintain a rating of BBB-(as determined by Standard & Poor's Rating
Services) or maintain a rating of Baa3 (as determined by Moody's Investors Service, Inc.) (a
"Ratings Downgrade") and (ii) the failure of the Guarantor or the Grantor to deliver to
Beneficiary a letter of credit satisfying the conditions set forth in Section 11.5( d) of the
Transition Power Agreement within thirty calendar days following the occurrence of such
1308898 v3; S1Y@03!.DOC
4870 14 00
Ratings Downgrade, or other third party credit support for the Obligations, satisfactory in form
and substance to Beneficiary in its sole discretion.
B. "Encumbered Property" shall mean the properties, rights and interests
hereinafter described and defined as the Encumbered Property.
C. "Enforcement Event" shall mean the occurrence of either:
a. i) an Event of Default by PGET under the Transition Power Agreement which
remains uncured after any applicable period of notice and opportunity to
cure as provided therein has expired and ii) a Credit Event of Default,
or
b. i) an Event of Default by PGET under the Transition Power Agreement which
remains uncured after any applicable period of notice and opportunity to
cure as provided therein has expired and ii) the failure of the Guarantor to
timely perform its obligations under the TP A Guarantee with respect to
such Event of Default.
D. "Governmental Authority'' means any foreign, federal, state, local or other
governmental, regulatory or administrative agency, Court, commission, department, board, or
other governmental subdivision, legislature, rulemaking board, court, tribunal, arbitrary body or
other governmental authority.
E. "Lands" shall include the lands in Denton County, Texas which are
described in Exhibit A, but excluding any interest in such lands which is specifically excluded in
Exhibit A.
F. "Operating Equipment and Facilities" shall mean the machinery,
equipment, and facilities described in Exhibit A to the extent relating to operation of the Spencer
Station Generating Facility and Expansion Assets located on the Land (but specifically excluding
any Divisible Expansion Assets and any machinery, equipment, facilities, supplies or other
property which is owned by third parties and is located in, on or under any part of the Lands), to
the extent of the Grantor's interest therein.
G. "Permits" shall mean any permits, licenses, registrations, franchises and
other authorizations, consents and approvals (including Environmental Permits) that are required
by Governmental Authorities in connection with the ownership and/or operation of the Operating
Equipment and Facility.
H. "Permitted Encumbrances" means
( a) liens and encumbrances arising prior to the date of this Deed of Trust and constituting
Permitted Encumbrances within the meaning of such term as used in the Asset Purchase
Agreement ( other than any such lien or encumbrance created by Grantor or any of its affiliates);
(b) liens securing purchase money indebtedness incurred in connection with the acquisition
of tangible personal property, provided that the original principal balance thereof does not
2
1308898 v3; S1Y@03!.DOC
4870 I t+ 0 'I
exceed 100% of the purchase price of such property, and provided that such lien extends only to
the property acquired;
( c) liens of carriers, warehousemen, mechanics and materialmen imposed by operation of
law or arising in the ordinary course of business for amounts not yet due or being contested in
good faith by appropriate proceedings and for which adequate reserves are being maintained by
Grantor in accordance with GAAP;
( d) liens securing taxes, assessments and other governmental charges not yet due, or being
contested in good faith by appropriate proceedings and for which adequate reserves are being
maintained by Grantor in accordance with GAAP; and
(e) easements, rights-of-way, covenants and other restrictions and encumbrances which do
not, individually or in the aggregate, interfere materially with the operation of the Encumbered
Property or materially detract from the value thereof.
I. "Related Agreements" shall mean the agreement(s) listed in Exhibit A.
J. "Uniform Commercial Code" shall mean the Uniform Commercial Code
as in effect from time to time in the State of Texas, and the terms "Chattel Paper", "Contract
Rights", "Documents", "General Intangibles", "Goods", "Equipment", "Fixtures", "Inventory",
"Instruments", and "Proceeds" shall have the respective meanings assigned to such terms in the
Uniform Commercial Code.
The foregoing definitions shall be equally applicable to both the singular and plural forms
of the defined terms. Capitalized terms used and not otherwise defined herein shall have the
meanings assigned thereto in the Transition Power Agreement and the Asset Purchase
Agreement.
NOW, THEREFORE, the Grantor, for and in consideration of the premises and of the
debts and trusts hereinafter mentioned, and upon and subject to the terms and conditions
hereinafter set forth, has granted, bargained, sold, mortgaged, warranted, encumbered, assigned,
transferred and conveyed, and by these presents does grant, bargain, sell, mortgage, warrant,
encumber, assign, transfer and convey, unto the Trustee, IN TRUST, WITH POWER OF SALE,
for the use and benefit of the Beneficiary, all the Grantor's right, title and interest, whether now
owned or hereafter acquired, in and to all of the hereinafter described properties, rights and
interests; and insofar as such properties, rights and interests consist of Equipment, General
Intangibles, Chattel Paper, Contract Rights, Documents, Inventory, Instruments, Fixtures, Goods,
Proceeds of collateral subject to the applicable provisions of the Uniform Commercial Code (as
in effect in the appropriate jurisdiction with respect to each of said properties, rights and
interests), the Grantor hereby grants to the Beneficiary a first priority security interest therein to
the full extent of the Grantor's legal and beneficial interest therein now owned or hereafter
acquired, namely:
(a) the Lands and all interests therein,
(b) without limitation of the foregoing, all other right, title and interest of Grantor
of whatever kind or character (whether now owned or hereafter acquired by operation oflaw
or otherwise) in and to the lands which are described in Exhibit A,
3
1308898 v3; S1Y@03!.DOC
(c) the Operating Equipment and Facilities,
( d) the Related Agreements,
4 02
(e) the Permits (to the extent that transfer thereof does not violate any restrictions
on transfer imposed by law or by third parties),
(f) and, in any event, all General Intangibles, Contract Rights, Equipment, Fixtures
and Inventory to the extent the items enumerated in clauses (a) through (f) constitute any of
such items and Proceeds of all of the foregoing,
together with any and all corrections or amendments to, or renewals, extensions or ratifications
of, or replacements or substitutions for, any of the same (but excluding any Divisible Expansion
Assets), and (to the extent that transfer thereof does not violate any restrictions on transfer
imposed by law or by third parties) title instruments, records and information concerning
compliance with the Permits, reclamation plans and related data and reports, rights-of-way,
easements, servitudes, permits, licenses, tenements, hereditaments, appurtenances, condemnation
awards, rents, royalties, overriding royalties, revenues, income, returns, issues, profits, proceeds,
whether now or hereafter existing or arising, covering, or arising from or in connection with, any
of the aforesaid in this granting clause referenced, all the aforesaid properties, rights and
interests, together with any additions thereto which may be subjected to the lien and security
interest of this Deed of Trust by means of supplements hereto, being hereinafter called the
"Encumbered Property''.
Subject, however, with respect to the enforcement of this Deed of Trust by the Trustee
and/or the Beneficiary, to the occurrence of an Enforcement Event or an Event of Default
hereunder.
TO HA VE AND TO HOLD the Encumbered Property, together with the rights, privileges and
appurtenances thereto belonging, unto the Trustee and his substitutes or successors, forever, and
Grantor hereby binds itself and its heirs, executors, administrators, personal representatives,
successors and assigns to warrant and forever defend the Encumbered Property unto the Trustee,
his substitutes or successors and assigns, against the claim or claims of all persons claiming or to
claim the same or any part thereof and maintain and preserve the first priority lien and security
interest hereby created, so long as any of the Obligations are outstanding.
ARTICLE I
OBLIGATIONS SECURED
1.1 Obligations Secured. This Deed of Trust secures the prompt and complete
performance, payment and/or observance of the Obligations and the covenants and conditions to
be performed by Grantor in this Deed of Trust (including any amendment or modification
hereto).
4
1308898 v3; S1Y@03!.DOC
'4 870
ARTICLE II
PARTICULAR COVENANTS AND WARRANTIES
OF THE GRANTOR
2.1 The Grantor represents and warrants to the Trustee and the Beneficiary that
except for Permitted Encumbrances, the lien and security interest created hereby constitutes, as
security for the Obligations, (i) a legally valid and binding deed of trust lien on the Lands, and
(ii) a legally valid and binding security interest in all personal property included in the
Encumbered Property.
2.2 Further Assurances. The Grantor will execute and deliver such other and further
instruments and will do such other and further acts as in the reasonable opinion of the
Beneficiary may be necessary or desirable to carry out more effectually the purposes of this
Deed of Trust, including, without limiting the generality of the foregoing, (a) prompt correction
of any material defect which may hereafter be discovered in the title to the Lands or the
Encumbered Property or in the execution and acknowledgment of this Deed of Trust or any other
document executed in connection herewith, (b) prompt execution and delivery of all notices to
parties producing, purchasing or receiving proceeds of the Encumbered Property, any of which,
in the reasonable opinion of the Trustee or the Beneficiary, is needed to transfer effectively or
assist in the transferring to the Trustee of the assigned proceeds of the Encumbered Property, and
( c) supplements to this Deed of Trust as reasonably required from time to time by the
Beneficiary.
2.3 Operation of the Encumbered Property. So long as this Deed of Trust remains in
effect, and whether or not the Grantor is the operator of the Encumbered Property, the Grantor
shall, at the Grantor's own expense cause the Lands to be regularly operated and maintained
pursuant to Good Utility Practice, and shall cause the Encumbered Property to be kept free and
clear of liens, mortgages, security interests, deeds of trust and like encumbrances other than
Permitted Encumbrances.
2.4 Recording and Filing. The Grantor will promptly, and at the Grantor's expense,
record, register, deposit and file this and every other instrument in addition or supplemental
hereto in such offices and places and at such times and as often as may be necessary to create,
preserve, protect and renew the lien and security interest hereof as a first lien on and prior
perfected security interest in real or personal property, as the case may be, and the rights and
remedies of the Trustee and of the Beneficiary, and otherwise will do and observe all things or
matters necessary or expedient to be done or observed by reason of any law or regulation of any
State or of the United States of America or of any other competent authority, for the purpose of
effectively creating, maintaining and preserving the lien and security interest hereof on and in the
Encumbered Property.
2.5 Sale or Mortgage of the Encumbered Property. Grantor shall not sell or otherwise
dispose of all or any material portion of the Encumbered Property ( other than dispositions of
obsolete or damaged personal property in the ordinary course of business) unless, in connection
therewith, the transferee or lessee acknowledges, assumes and agrees to be bound by the terms
and conditions of this Deed of Trust in writing (satisfactory in form and substance to the
Beneficiary).
5
1308898 v3; S1Y@03!.DOC
'4870
ARTICLE Ill
SECURITY AGREEMENT AND FINANCING STATEMENT
3.1 Security Interest. This Deed of Trust shall be a security agreement between
Grantor, as the debtor, and Beneficiary, as the secured party, covering the Encumbered Property
constituting personal property or fixtures governed by the Texas Business and Commerce Code
(hereinafter called the "Code"), and for the purpose of further securing payment and performance
of the Obligations, Grantor grants to Beneficiary a security interest and lien in all rights, titles
and interests now owned or hereafter acquired by Grantor in the portion of the Encumbered
Property constituting personal property or fixtures governed by the Code other than Divisible
Expansion Assets (the "Collateral"). In addition to Beneficiary's other rights hereunder,
Beneficiary shall have all rights of a secured party under the Code. Grantor shall execute and
deliver to Beneficiary all financing statements and continuations thereof that may be required by
Beneficiary to establish and maintain the validity and priority of Beneficiary's security interest in
the Collateral.
3.2 Notice of Changes. Grantor shall give notice in writing to Beneficiary of any
proposed change in Grantor's name, principal place of business, identity, or structure and shall
execute and deliver to Beneficiary, prior to or concurrently with the occurrence of any such
change, all additional financing statements that Beneficiary may require to establish and
maintain the validity and priority of Beneficiary's security interest with respect to any of the
Encumbered Property described or referred to herein.
3 .3 Fixtures. This Deed of Trust shall be effective as a financing statement filed as a
fixture filing with respect to all items of the Collateral described herein that are or are to become
fixtures related to the Land other than Divisible Expansion Assets, and this Deed of Trust shall
be effective as such from the date of its filing for record in the real estate records of the county in
which the Collateral is situated. Information concerning the security interest created by this
instrument may be obtained from Beneficiary, as secured party, at the address of Beneficiary
stated above. Grantor does have an interest of record in the Land. Proceeds of the portion of the
Collateral constituting fixtures are also covered.
3.4 Reproductions. A carbon, photostatic or other reproduction of this Deed of Trust
shall be sufficient as a financing statement. The Beneficiary shall have the right at any time to
file a manually executed counterpart or a carbon, photostatic or other reproduction of this Deed
of Trust as a financing statement in either the central or local UCC records of any jurisdiction
wherein the Collateral is situated, but the failure of the Beneficiary to do so shall not impair (i)
the effectiveness of this Deed of Trust as a fixture filing as permitted by Section 9 .402( f) of the
Code as the same may be recodified from time to time or any successor provision, or (ii) the
validity and enforceability of this Deed of Trust in any respect whatsoever.
6
1308898 v3; S1Y@03!.DOC
ARTICLE IV
ENFORCEMENT OF THE SECURITY
4.1 Exercise of Specific Remedies. If an Event of Default or an Enforcement Event
shall occur, Beneficiary may exercise any one or more of the following remedies, without notice
(unless notice is required hereunder or by applicable statute):
4.2 Foreclosure. Beneficiary may require the Trustee to sell all or part of the
Encumbered Property, at public auction, to the highest bidder, for cash, at the county courthouse
of the county in Texas in which the Encumbered Property or any part thereof is situated, or if the
Encumbered Property is located in more than one county such sale may be made at the
courthouse in any county in which the Encumbered Property is situated. The sale shall take
place at such area of the courthouse as shall be properly designated from time to time by the
commissioners court ( or, if not so designated by the commissioners court, at such other area in
the courthouse as may be provided in the notice of sale hereinafter described) of the specified
county, between the hours of 10:00 o'clock a.m. and 4:00 o'clock p.m. (the commencement of
such sale to occur within three hours following the time designated in the hereinafter-described
notice of sale as the earliest time at which such sale shall occur, ifrequired by applicable law) on
the first Tuesday of any month, after giving notice of the time, place and terms of said sale
(including the earliest time at which such sale shall occur) and of the property to be sold in the
manner hereinafter described. Notice of a sale of all or part of the Encumbered Property by the
Trustee shall be given by posting written notice thereof at the courthouse door ( or other area in
the courthouse as may be designated for such public notices) of the county in which the sale is to
be made, and by filing a copy of the notice in the office of the county clerk of the county in
which the sale is to be made, at least twenty-one (21) days preceding the date of the sale, and if
the property to be sold is in more than one county a notice shall be posted at the courthouse door
(or other area in the courthouse as may be designated for such public notices) and filed with the
county clerk of each county in which the property to be sold is situated. In addition, Beneficiary
shall, at least twenty-one (21) days preceding the date of sale, serve written notice of the
proposed sale by certified mail on Grantor and each debtor obligated to pay the Obligations
secured hereby according to the records of Beneficiary. Service of such notice shall be
completed upon deposit of the notice, enclosed in a postpaid wrapper, properly addressed to such
debtor at the most recent address as shown by the records of Beneficiary, in a post office or
official depository under the care and custody of the United States Postal Service. The affidavit
of any person having knowledge of the facts to the effect that such service was completed shall
be prima facie evidence of the fact of service. Any notice that is required or permitted to be
given to Grantor may be addressed to Grantor at Grantor's address herein below. Trustee may
sell all or any portion of the Encumbered Property, together or in lots or parcels, and may
execute and deliver to the purchaser or purchasers of such property good and sufficient deeds of
conveyance of fee simple title with covenants of general warranty made on behalf of Grantor. In
no event shall Trustee be required to exhibit, present or display at any such sale any of the
personalty described herein to be sold at such sale. Payment of the purchase price to Trustee
shall satisfy the obligation of the purchaser at such sale therefor, and such purchaser shall not be
responsible for the application thereof. The sale or sales by Trustee of less than the whole of the
Encumbered Property shall not exhaust the power of sale herein granted, and Trustee is
specifically empowered to make successive sale or sales under such power until the whole of the
Encumbered Property shall be sold; and if the proceeds of such sale or sales of less than the
whole of the Encumbered Property shall be less than the aggregate of the Obligations and the
7
1308898 v3; S1Y@03!.DOC
expenses thereof, this Deed of Trust and the lien, security interest and assignment hereof shall
remain in full force and effect as to the unsold portion of the Encumbered Property just as though
no sale or sales had been made; provided, however, that Grantor shall never have any right to
require the sale or sales of less than the whole of the Encumbered Property, but Beneficiary shall
have the right, at its sole election, to request Trustee to sell less than the whole of the
Encumbered Property. If an Event of Default or an Enforcement Event shall occur, Beneficiary
shall have the option to proceed with foreclosure in satisfaction of such item either through
judicial proceedings or by directing Trustee to proceed as if under a full foreclosure, conducting
the sale as herein provided. Several sales may be made hereunder without exhausting the right
of sale. At any such sale (1) Grantor hereby agrees, in its behalf and in behalf of its heirs,
executors, administrators, successors, personal representatives and assigns, that any and all
recitals made in any deed of conveyance given by Trustee with respect to the identity of
Beneficiary, the occurrence or existence of any default, the nonpayment of the Obligations, the
request to sell, the notice of sale, the giving of notice to all debtors legally entitled thereto, the
time, place, terms, and manner of sale, and receipt, distribution and application of the money
realized therefrom, or the due and proper appointment of a substitute Trustee, and, without being
limited by the foregoing, with respect to any other act or thing having been duly done by
Beneficiary or by Trustee hereunder, shall be taken by all courts of law and equity as prima facie
evidence that the statements or recitals state facts and are without further question to be so
accepted, and (2) the purchaser may disaffirm any easement granted, or rental, lease or other
contract made in violation of any provision of this Deed of Trust, and may take immediate
possession of the Encumbered Property free from, and despite the terms of, such grant of
easement and rental or lease contract. Beneficiary may bid and become the purchaser of all or
any part of the Encumbered Property at any trustee's or foreclosure sale hereunder, and the
amount of Beneficiary's successful bid may be credited on the Obligations.
4.3 Uniform Commercial Code. Without limitation of Beneficiary's rights of
enforcement with respect to the Collateral or any part thereof in accordance with the procedures
for foreclosure of real estate, Beneficiary may exercise its rights of enforcement with respect to
the Collateral or any part thereof under the Code as amended ( or under the Uniform Commercial
Code in force in any other state to the extent the same is applicable law) and in conjunction with,
in addition to or in substitution for those rights and remedies: (1) Beneficiary may require
Grantor to assemble any Collateral located off the Land and make it available to Beneficiary on
the Land to allow Beneficiary to take possession or dispose of the Collateral; (2) in the event of a
foreclosure sale, whether made by Trustee under the terms hereof, or under judgment of a court,
the Collateral and the other Encumbered Property may, at the option of Beneficiary, be sold as a
whole; (3) it shall not be necessary that Beneficiary take possession of the Collateral or any part
thereof prior to the time that any sale pursuant to the provisions of this Section is conducted and
it shall not be necessary that the Collateral or any part thereof be present at the location of such
sale; ( 4) with respect to application of proceeds of disposition of the Collateral, the costs and
expenses incident to disposition shall include the reasonable expenses of retaking, holding,
preparing for sale or lease, selling, leasing and the like and the reasonable attorneys' fees and
legal expenses incurred by Beneficiary; (5) and any and all statements of fact or other recitals
made in any bill of sale or assignment or other instrument evidencing any foreclosure sale
hereunder as to nonpayment of the Obligations or as to the occurrence of any Event of Default,
or as to notice or time, place and terms of sale and of the properties to be sold having been duly
given, or as to any other act or thing having been duly done by Beneficiary, shall be taken as
prima facie evidence of the truth of the facts so stated and recited; and (6) Beneficiary may
appoint or delegate any one or more persons as agent to perform any act or acts necessary or
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incident to any sale held by Beneficiary, including the sending of notices and the conduct of the
sale, but in the name and on behalf of Beneficiary.
4.4 Tenancy at Will. fu the event of a trustee's sale hereunder and if at the time of
such sale Grantor or any other party occupies the portion of the Encumbered Property so sold or
any part thereof, such occupant shall immediately become the tenant of the purchaser at such
sale, which tenancy shall be a tenancy from day to day, terminable at the will of either tenant or
landlord, at a reasonable rental per day based upon the value of the portion of the Encumbered
Property so occupied, such rental to be due and payable daily to the purchaser. An action of
forcible detainer shall lie if the tenant holds over after a demand in writing for possession of such
Encumbered Property.
4.5 Substitute Trustee. If, for any reason, Beneficiary prefers to appoint a substitute
Trustee hereunder, Beneficiary may, from time to time, by written instrument, appoint one or
more substitute Trustees, who shall succeed to all the estate, rights, powers, and duties of the
original Trustee named herein. Such appointment may be executed by anyone acting in a
representative capacity, and such appointment shall be conclusively presumed to have been
executed with appropriate authority.
4.6 Exculpation of Trustee. Except for gross negligence or willful misconduct,
Trustee shall not be liable for any act or omission or error of judgment. Trustee may rely on any
document believed by him in good faith to be genuine. All money received by Trustee shall,
until used or applied as herein provided, be held in trust, but need not be segregated ( except to
the extent required by law), and Trustee shall not be liable for interest thereon.
4.7 Remedies Cumulative, Concurrent and Nonexclusive. Beneficiary shall have all
rights, remedies and recourses granted in the Transition Power Agreement and this Deed of
Trust, and same (a) shall be cumulative and concurrent, (b) may be pursued separately,
successively or concurrently against Grantor or others obligated under the Obligations, or any
part thereof or against any one or more of them, or against the Encumbered Property, at the sole
discretion of Beneficiary, ( c) may be exercised as often as occasion therefor shall arise, it being
agreed by Grantor that the exercise of or failure to exercise any of same shall in no event be
construed as a waiver or release thereof or of any other right, remedy or recourse, and ( d) are
intended to be, and shall be, nonexclusive.
4.8 Rights and Remedies of Sureties. Grantor waives any right or remedy which
Grantor may have or be able to assert pursuant to Chapter 34 of the Business and Commerce
Code of the State of Texas pertaining to the rights and remedies of sureties.
4.9 Judicial Proceedings. Upon the occurrence of an Enforcement Event, the
Beneficiary, in lieu of or in addition to exercising any power of sale hereinabove given, may
proceed by a suit or suits in equity or at law, whether for a foreclosure of this Deed of Trust and
the liens and security interests hereunder, or for the judicial or other sale of the Encumbered
Property, or for the specific performance of any covenant or agreement herein contained or in aid
of the execution of any power herein granted, or for the appointment of a receiver pending any
foreclosure hereunder or the sale of the Encumbered Property.
4.10 Appointment of Receiver. Upon the occurrence of an Event of Default or an
Enforcement Event, in addition to all other remedies herein provided for, the Beneficiary shall,
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as a matter of right, be entitled to the appointment of a receiver or receivers for all or any part of
the Encumbered Property, whether such receivership be incident to a proposed sale of such
property or otherwise, and without regard to the value of the Encumbered Property or the
solvency of Grantor or any entity or entities liable for the payment of the Indebtedness secured
hereby, and Grantor does hereby consent to the appointment of such receiver or receivers, waives
any and all defenses to such appointment and agrees not to oppose any application therefor by
the Beneficiary and where allowed by law such receiver or receivers may be appointed by any
court of competent jurisdiction upon ex parte application, without notice, notice being hereby
waived. Nothing herein is to be construed to deprive Beneficiary of any other right, remedy or
privilege it may now have under the law to have a receiver appointed.
4.11 Possession of the Encumbered Property. It shall not be necessary for the Trustee
or the Beneficiary to have physically present or constructively in its possession at any sale held
by the Trustee, the Beneficiary or by any court, receiver or public officer any or all of the
Encumbered Property; and, subject to any right to redemption provided by applicable law, the
Grantor shall deliver to the purchasers at such sale on the date of sale the Encumbered Property
purchased by such purchasers at such sale, and if it should be impossible or impracticable for any
of such purchasers to take actual delivery of the Encumbered Property, then subject to such
rights of redemption, the title and right of possession to the Encumbered Property shall pass to
such purchaser at such sale as completely as if the same had been actually present and delivered.
4.12. Certain Aspects of a Sale. The Beneficiary shall have the right to become the
purchaser at any sale held by the Trustee or by any court, receiver or public officer, and the
Beneficiary shall have the right to credit upon the amount of the bid made therefor the amount
payable out of the net proceeds of such sale to it in respect of the Obligations and amounts
otherwise payable to Beneficiary with respect to costs of collection, enforcement and
preservation of the Encumbered Property.
4.13. Receipt to Purchaser. Upon any sale, whether made under the power of sale
herein granted and conferred or by virtue of judicial proceedings, the receipt of the Trustee, or of
the officer making sale under judicial proceedings, shall be sufficient discharge to the purchaser
or purchasers at any sale for his or their purchase money, and such purchaser or purchasers, or
his or their assigns or personal representatives, shall not, after paying such purchase money and
receiving such receipt of the Trustee or of such officer therefor, be obliged to see to the
application of such purchase money, or be in anywise answerable for any loss, misapplication or
nonapplication thereof.
4.14 Effect of Sale. Subject to any rights of redemption granted by applicable law, any
sale or sales of the Encumbered Property, whether under the power of sale herein granted and
conferred or by virtue of judicial proceedings, shall operate (a) to divest all right, title, interest,
claim and demand whatsoever either at law or in equity, of the Grantor of, in and to the premises
and the property sold, and shall be a perpetual bar, both at law and in equity, against the Grantor,
and the Grantor's successors or assigns, and against any and all persons claiming or who shall
thereafter claim all or any of the property sold from, through or under the Grantor or the
Grantor's successors or assigns and (b) to terminate ( and Gran tor shall cause all such agreements
to so provide) any agreement between Grantor and its affiliates ( or for the direct or indirect
benefit of such affiliates) relating to the Encumbered Property or any production thereof.
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4.15 Application of Proceeds. The proceeds of any sale by Trustee of the Encumbered
Property, or any part thereof, under the power of sale herein shall be applied in accordance with
applicable law, and the proceeds of any sale granted and conferred or by virtue of judicial
proceedings, shall be applied in accordance with any final, non-appealable order issued in such
proceedings, provided that in all instances, it is the intention of the parties that all proceeds of
any disposition of the Encumbered Property following the occurrence of an Event of Default or
an Enforcement Event shall be applied first to the cost of such sale, second to any costs of the
Trustee in connection therewith, and third to the reasonable amounts necessary to cure any Event
of Default hereunder, fourth to the Obligations and fifth to Grantor or to whomever else is
legally entitled to same.
4.16 The Grantor's Waiver of Appraisement, Marshalling, and Other Rights. The
Grantor agrees, to the full extent that the Grantor may lawfully so agree, that the Grantor will not
at any time insist upon or plead or in any manner whatever claim the benefit of any
appraisement, valuation, stay, extension or redemption law now or hereafter in force, in order to
prevent or hinder the enforcement or foreclosure of this Deed of Trust or the absolute sale of the
Encumbered Property or the possession thereof by any purchaser at any sale made pursuant to
any provision hereof, or pursuant to the decree of any court of competent jurisdiction; but the
Grantor, for the Grantor and all who may claim through or under the Grantor, so far as the
Grantor or those claiming through or under the Grantor now or hereafter lawfully may, hereby
waives the benefit of all such laws. The Grantor, for the Grantor and all who may claim through
or under the Grantor, waives, to the extent that the Grantor may lawfully do so, any and all right
to the exemption of homesteads, and to have the Encumbered Property marshalled upon any
foreclosure of the lien hereof, or sold in inverse order of alienation, and agrees that the Trustee or
any court having jurisdiction to foreclose such lien may sell the Encumbered Property as an
entirety or in separate parts. The Grantor, for the Grantor and all who may claim through or
under the Grantor, further waives, to the full extent that the Grantor may lawfully do so, any
requirement for posting a receiver's bond or replevin bond or other similar type of bond if the
Trustee commences an action for appointment of a receiver or an action for replevin to recover
possession of any of the Encumbered Property. If any law in this paragraph referred to and now
in force, of which the Grantor or the Grantor's successor or successors might take advantage
despite the provisions hereof, shall hereafter be repealed or cease to be in force, such law shall
not thereafter be deemed to constitute any part of the contract herein contained or to preclude the
operation or application of the provisions of this paragraph.
4.17 Operation of the Encumbered Property by the Beneficiary. So long as the
Beneficiary ( or the Trustee on behalf of the Beneficiary) is diligently pursuing a foreclosure
hereunder, upon the occurrence of an Enforcement Event or an Event of Default hereunder and
in addition to all other rights herein conferred on the Beneficiary, the Beneficiary ( or any person,
firm or corporation designated by the Beneficiary) shall have the right and power, but shall not
be obligated, to enter upon and take possession of any of the Encumbered Property, and to
exclude the Grantor, and the Grantor's agents or servants, wholly therefrom, and to hold, use,
administer, manage and operate the same to the extent that the Grantor shall be at the time
entitled and in its place and stead. The Beneficiary, or any person, firm or corporation
designated by the Beneficiary, may operate the same without any liability to the Grantor in
connection with such operations, except to use ordinary care in the operation of such properties,
and the Beneficiary or any person, firm or corporation designated by the Beneficiary shall have
the right to collect, receive and receipt for all revenues from such operations, to make repairs,
purchase machinery and equipment, conduct operations, open new mines and to exercise every
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power, right and privilege of the Grantor with respect to the Encumbered Property. The
Beneficiary, by exercising its rights hereunder, shall not be deemed a mortgagee-in-possession.
ARTICLEV.
CONDEMNATION AND INSURANCE
5.1 Condemnation. With respect to any proceeds or awards which may become due
by reason of any condemnation or other taking by any governmental authority other than the
Beneficiary for use of the whole or any part of the Encumbered Property, such proceeds shall be
held in a segregated escrow account with a commercial bank reasonably satisfactory to the
Beneficiary, and Grantor shall take such action as may be necessary or appropriate to provide to
the Trustee for the benefit of the Beneficiary a perfected first priority security interest in such
proceeds, provided that if Grantor delivers to the Beneficiary a letter of credit in an available
amount equal to the amount of such insurance proceeds and otherwise satisfying the
requirements set forth in Section 11.5( d) of the Transition Power Agreement, such proceeds shall
be delivered to Grantor, and released from the lien of this Deed of Trust promptly following
delivery of such letter of credit.
5 .2 Application of Insurance Proceeds. In the event of any insured damage to or
destruction of the Encumbered Property, the proceeds of such insurance shall constitute Proceeds
hereunder and shall be subject to the lien of this Deed of Trust, and if no Event of Default or
Enforcement Event has occurred, such proceeds shall be made available to Grantor. Any such
proceeds not applied to the cost of rebuilding, repairing or replacing the damaged portion of the
Encumbered Property shall be held in a segregated escrow account with a commercial bank
reasonably satisfactory to the Beneficiary, and Grantor shall take such action as may be
necessary or appropriate to provide to the Trustee for the benefit of the Beneficiary a perfected
first priority security interest in such insurance proceeds, or if Grantor delivers to the Beneficiary
a letter of credit in the available amount equal to the amount of such insurance proceeds and
otherwise satisfying the requirements set forth in Section 11.5( d) of the Transition Power
Agreement, such proceeds shall be delivered to Grantor and the Encumbered Property shall be
released from the lien of this Deed of Trust promptly following delivery of such letter of credit.
In the event that proceeds of insurance, if any, shall be made available to Grantor for the
restoring, repairing, replacing or rebuilding of the Encumbered Property, Grantor shall promptly
take such action as shall be necessary or appropriate to subject such replacement property to the
lien of this Deed of Trust and provide to Trustee for the benefit of Beneficiary a first priority
security interest therein.
In the event Grantor is entitled to receive insurance proceeds hereunder in excess of $1,000,000
for application to restoration, repair, replacement and rebuilding, such funds shall at
Beneficiary's election be disbursed in accordance with disbursement arrangements reasonably
satisfactory to Beneficiary.
In the event of the exercise of remedies by the Trustee pursuant to Section 5 .1 hereof, all right,
title and interest of Grantor in any claims arising prior to or during such proceedings pursuant to
policies of insurance then in effect with respect to the Encumbered Property shall vest in
Beneficiary, and the Trustee and the Beneficiary are hereby authorized to assign any and all such
claims and the proceeds thereof to the purchaser at the sale, or take such other steps as the
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4870 I 4 J 1
Beneficiary may deem advisable to provide to the purchaser such rights with respect to such
claims and the proceeds thereof.
ARTICLE VI.
MISCELLANEOUS PROVISIONS
6.1 Right to Perform the Grantor's Obligations. Each and every covenant herein
contained shall be performed and kept by the Grantor solely at the Grantor's expense. If the
Grantor shall fail to perform or keep any of the covenants of whatsoever kind or nature contained
in this Deed of Trust, the Beneficiary or the Trustee shall provide notice to the Grantor of such
failure, and Grantor shall have a period of thirty days from the delivery of such notice ( or such
longer period as shall be necessary to cure such failure, so long as Grantor is diligently and in
good faith pursuing such cure, provided that in the event such failure could reasonably be
expected to result in a material adverse change in the value of the Encumbered Property,
Grantor's total cure period hereunder shall not exceed ninety days from the date of notice of
breach). In the event Grantor fails to cure such breach or failure within such period (an "Event
of Default"), the Beneficiary or any receiver appointed hereunder, may, but shall not be
obligated to, perform or keep, or cause to be performed or kept, the same in the Grantor's behalf,
and the Grantor hereby agrees to reimburse the Beneficiary or such receiver ( as the case may be)
on demand for all reasonable and documented fees, costs and expenses, including the reasonable
fees, costs and expenses of counsel or other advisors of Beneficiary or such receiver (including
environmental and management consultants and appraisers, but excluding any allocation of the
salaries or other similar overhead of Beneficiary, such receiver or any Lender), incurred in
connection therewith. The undertaking of such performance by the Beneficiary or such receiver
( as the case may be) as aforesaid shall not obligate the Beneficiary or such receiver ( as the case
may be) to continue such performance or to engage in such performance or performance of any
other act in the future, shall not relieve the Grantor from the observance or performance of any
covenant or agreement contained in this Deed of Trust or constitute a waiver of default
hereunder, and shall not affect the right of the Beneficiary to resort to any other of its rights or
remedies hereunder or under applicable law.
6.2 Delivery of Letter of Credit. At any time Grantor or Guarantor may deliver or
cause to be delivered to the Beneficiary a $25 million letter of credit satisfying the conditions set
forth in Section 11.5(d) (but not the provisions thereofrelating to reduction of the fact amount of
such letter of credit) of the Transition Power Agreement in substitution of the lien of this Deed of
Trust, in which case all of the Encumbered Property shall revert to the Grantor and the entire
estate, right, title and interest of the Trustee and the Beneficiary therein shall thereupon cease;
and the Trustee and Beneficiary in such case shall, upon the request of the Grantor and at the
Grantor's sole cost and expense, promptly deliver to the Grantor proper instruments
acknowledging satisfaction and release of this Deed of Trust.
6.3 The Encumbered Property to Revert. If the Obligations shall be fully performed
and the covenants herein contained shall be well and truly performed, then all of the Encumbered
Property shall revert to the Grantor and the entire estate, right, title and interest of the Trustee
and the Beneficiary shall thereupon cease; and the Trustee and the Beneficiary in such case shall,
upon the request of the Grantor and at the Grantor's cost and expense, promptly deliver to the
Grantor proper instruments acknowledging satisfaction and release of this Deed of Trust.
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6.4 Construction of Instrument as an Assignment. This Deed of Trust shall be
deemed to be and may be enforced from time to time as an assignment, chattel mortgage,
contract, deed of trust, financing statement, real estate mortgage, or security agreement, and from
time to time as any one or more thereof.
6.5 Divisible Expansions. Nothing herein is intended to limit in any way Grantor's
right or ability to undertake an expansion or otherwise build additional facilities on the Land
prior to the exercise of remedies by the Trustee pursuant to Article IV hereof, so long as any
such expansion or additional facility does not cause Grantor to violate Grantor's obligations
under Section 2.3 or Section 2.5 ("Expansion Assets"). An Expansion Asset, to the extent it does
not modify or replace Operating Equipment and Facilities (a "Divisible Expansion Asset"), shall
not be subject to the lien of this Deed of Trust provided that the removal, operation or demolition
of such expansion would not adversely affect the operation and maintenance of, or require the
incurrence of any incremental material expense by any person to continue the operation of, the
Operating Equipment and Facilities as a stand-alone power generating facility consistent with
Good Utility Practice. Any Expansion Asset other than a Divisible Expansion Asset shall be
subject to the lien of this Deed of Trust. At any time following the exercise of remedies by the
Trustee pursuant to Article N hereof or at such other time as Grantor may reasonably request
(including, without limitation at the time of financing the installation or acquisition of Divisible
Expansion Assets), Beneficiary shall negotiate diligently and in good faith such instruments as
Grantor may reasonably request to enable Grantor to undertake and own, operate and maintain
the Divisible Expansion Assets free and clear of the lien created by this Deed of Trust. Grantor
shall be solely responsible for any surveying, engineering and similar costs associated with such
request (including such costs relating to the Operating Equipment and Facilities). Such
agreements may include, without limitation, a deed of real property, easements for use of shared
facilities, an electrical interconnection agreement and other necessary or desirable agreements,
provided that the Beneficiary shall have no obligation to enter into any agreement which would
impair its ability to generate and export electricity from the Operating Equipment and Facilities,
in each case consistent with Good Utility Practice or cause it to incur any material expense or
financial obligation unless Beneficiary receives fair compensation therefor.
6.6. Unenforceable or Inapplicable Provisions. If any provision hereof, or of the
Transition Power Agreement is invalid or unenforceable in any jurisdiction, the other provisions
hereof and the Transition Power Agreement shall remain in full force and effect in such
jurisdiction, and the remaining provisions hereof shall be liberally construed in favor of the
Trustee and the Beneficiary in order to effectuate the provisions hereof, and the invalidity of any
provision hereof in any jurisdiction shall not affect the validity or enforceability of any such
provision in any other jurisdiction.
6.7 Rights Cumulative. Each and every right, power and remedy herein given to the
Trustee or the Beneficiary shall be cumulative and not exclusive; and each and every right,
power and remedy whether specifically herein given or otherwise existing may be exercised
from time to time and so often and in such order as may be deemed expedient by the Trustee or
the Beneficiary, as the case may be. and the exercise, or the beginning of the exercise, of any
such right, power or remedy shall not be deemed a waiver of the right to exercise, at the same
time or thereafter, any other right, power or remedy. No delay or omission by the Trustee or by
the Beneficiary in the exercise of any right, power or remedy shall impair any such right, power
or remedy or operate as a waiver thereof or of any other right, power or remedy then or thereafter
existing.
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6.8 No Partnership. Nothing contained in this Deed of Trust is intended to create, or
shall be construed as creating, to any extent and in any manner whatsoever, any partnership, joint
venture, or association among the Grantor, the Trustee and the Beneficiary, or in any way as to
make the Beneficiary or the Trustee coprincipals with the Grantor with reference to the
Encumbered Property, and any inferences to the contrary are hereby expressly negated.
6.9 Partial Releases. No release from the lien or security interest of this Deed of
Trust of any part of the Encumbered Property by the Beneficiary or the Trustee shall in anywise
alter, vary or diminish the force, effect, lien or security interest of this Deed of Trust against the
balance or remainder of the Encumbered Property.
6.10 Waiver by the Trustee and/or the Beneficiary. Any and all covenants in this Deed
of Trust may from time to time by instrument in writing signed by the Beneficiary be waived to
such extent and in such manner as the Beneficiary may desire, but no such waiver shall ever
affect or impair either the Trustee's or the Beneficiary's rights or liens or security interests
hereunder, except to the extent specifically stated in such written instrument.
6.11 Successors and Assigns. This Deed of Trust is binding upon the Grantor, the
Grantor's successors and assigns, and shall inure to the benefit of the Trustee and the
Beneficiary, their respective successors and assigns, and the provisions hereof shall likewise be
covenants running with the land.
6.12 Article and Section Headings. The article and section headings in this Deed of
Trust are inserted for convenience of reference and shall not be considered a part of this Deed of
Trust or used in its interpretation.
6.13 Execution in Counterparts. This Deed of Trust may be executed in any number of
counterparts, each of which shall for all purposes be deemed to be an original and all of which
are identical, except that, to facilitate recordation or filing, in any particular counterpart portions
of Exhibit A hereto which describe properties situated in counties other than the county in which
such counterpart is to be recorded or filed may have been omitted.
6.14 Recording References in Exhibit A. All recording references in Exhibit A hereto
are to the official real property records of the county in which the affected land is located.
6.15 Special Filing as Financing Statement. This Deed of Trust shall likewise be a
Security Agreement and a Financing Statement. This Deed of Trust shall be filed for record,
among other places, in the real estate records of each county in which any portion of the real
property covered by the Lands described in Exhibit A hereto is situated, and, when filed in such
counties, shall be effective as a financing statement covering fixtures included within the
Encumbered Properties. At the option of the Beneficiary, a carbon, photographic or other
reproduction of this Deed of Trust or of any financing statement covering the Encumbered
Property or any portion thereof shall be sufficient as a financing statement and may be filed as
such. Grantor shall execute and deliver on demand such other and further security agreements,
financing statements, and other instruments as Beneficiary may request in order to perfect and
maintain the security interests created hereby, and shall pay all recording and/or filing fees
associated therewith. In addition, Grantor agrees that Beneficiary is authorized, on behalf of
Grantor, to execute on Grantor's behalf and file any financing statement evidencing the security
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4870 1414
interests created hereby, and any such :financing statement executed by Beneficiary shall be
deemed sufficient for purposes of Section 9-402(2)(e) of the Uniform Commercial Code as in
effect in the State of Texas.
6.16 Notices. Any notice, request, demand or other instrument which may be required
or permitted to be given or served hereunder shall be sufficiently given when given in the
manner provided by the Asset Purchase Agreement at the address set forth therein or, if no
address for a recipient is set forth in the Asset Purchase Agreement, then at the address set forth
herein.
6.17 Request for Notice. The Grantor hereby requests a copy of any notice of default
and that any notice of sale hereunder be mailed to it at the address set forth on the signature
page(s) of this Deed of Trust. Beneficiary also agrees to provide to Grantor, simultaneously with
the delivery thereof to PGET pursuant to the Transition Power Agreement, notices of any Event
of Default with respect to PGET thereunder.
6.18 Non-Contravention. Notwithstanding the representation and warranty by, and the
reasonable good faith belief of, the Grantor that the execution, delivery, recordation and
performance by the Grantor of this Deed of Trust does not require the consent or approval of, or
notice to, any person, the Grantor does not intend that this Deed of Trust should be effective to
grant a lien against or security interest in any of the Encumbered Property if the granting of such
lien or security interest violates or breaches any enforceable term of the particular instrument or
agreement constituting or governing such item as of the date hereof.
6.19 CHOICE OF LAW. THIS DEED OF TRUST SHALL BE CONSTRUED,
INTERPRETED AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS.
6.20 CHOICE OF VENUE. THE PARTIES HERETO AGREE THAT VENUE IN
ANY AND ALL ACTIONS AND PROCEEDINGS RELATED TO THE SUBJECT MATTER
OF THIS AGREEMENT (OTHER THAN A FORECLOSURE ACTION WHICH MAY BE
COMMENCED BY BENEFICIARY OR TRUSTEE ON BEHALF OF BENEFICIARY IN
DENTON COUNTY) SHALL BE IN THE STATE AND FEDERAL COURTS IN AND FOR
DALLAS COUNTY, TEXAS, WHICH COURTS SHALL HA VE EXCLUSIVE
JURISDICTION FOR SUCH PURPOSE, AND THE PARTIES HERETO IRREVOCABLY
SUBMIT TO THE EXCLUSIVE JURISDICTION OF SUCH COURTS AND IRREVOCABLY
WAIVE THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF
ANY SUCH ACTION OR PROCEEDING. SERVICE OF PROCESS MAY BE MADE IN
ANY MANNER RECOGNIZED BY SUCH COURTS.
6.21 Contingent Obligations; Priority. This Deed of Trust also secures contingent
Obligations under the Transition Power Agreement, whether direct or indirect, existing, future,
or otherwise, which Obligations shall have the same priority as if such Obligations were due on
the date of the execution hereof whether or not any debt is outstanding on the date hereof or at
any future time.
6.22 Substitution of Trustee. Beneficiary, acting alone, may, from time to time, by
instrument in writing, substitute a successor to any Trustee named herein or acting hereunder.
Such instrument, executed, acknowledged and recorded in the manner required by law, shall be
conclusive proof of proper substitution of such successor Trustee or Trustees, who shall (without
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1415
conveyance from the preceding Trustee) succeed to all of the title, estate, rights, powers and
duties of such preceding Trustee. Such instrument shall contain the name of the original
Grantor, Trustee and Beneficiary hereunder, the book and page where this Deed of Trust is
recorded and the name and address of the new Trustee.
6.23 Limited Recourse. The recourse of Beneficiary and Trustee against Grantor with
respect to the Obligations and this Deed of Trust shall be limited to Grantor's interest in the
Encumbered Property, and neither Grantor nor any of its directors, shareholders, partners,
officers, members, employees, agents or representatives shall be personally liable therefor. The
foregoing shall not waive any claim or right against in any such parties in the case of fraud,
misappropriation of funds or willful misconduct.
6.24 Maximum Obligations. The maximum amount of liability of Grantor hereunder
shall not exceed Twenty-Five Million Dollars ($25,000,000).
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IN WITNESS WHEREOF, the Gran.tor has executed or caused to be executed this Deed
of Trust, Security Agreement, Financing Statement and Fixture Filing as of the day, month and
year first above written.
Attest:
By: --------
Attest:
Jennifer Walters, City Secretary
By: ______ _
Approved as to Legal Form:
Herbert L. Prouty, City Attorney
By: ______ _
1308898 v3; S1Y@03!.DOC
GRANTOR
SPENCER STATION GENERATING
COMPANY, L.P.
By~&~
N_ame: THOMAS fJ.KG
Title: PRESIDENT
ACCEPTED:
THE CITY OF DENTON, TEXAS
By __________ _
Name: Michael A. Conduff
Title: City Manager
18
4870
IN WITNESS WHEREOF, the Grantor has executed or caused to be executed this Deed
of Trust, Security Agreement, Financing Statement and Fixture Filing as of the day, month and
year first above written.
Attest:
By: --------
Attest:
Jennifer Walters, City Secretary
By:~~~frljJ
Approved as to Legal Form:
Herb
I
By: -t.-:..~~..!--l.6,!j3p,.~-
1308898 v3; S1Y@03!.DOC
GRANTOR
SPENCER STATION GENERATING
COMPANY, L.P.
By ___________ _
Name:
Title:
ACCEPTED:
18
4870 14 IB
STATE OF M~'-\ l-~t-Jb )
) SS:
COUNTY OF \-,\o 1-JT <\o~ ~ )
--lThis instrument was acknowled&ed before me on this 2:Z.~ day of June, 2001, by
\ DO'C'<\~ ~, \ ;?ce.2,, 6-ent of Spencer Station Generating Company, L.P ., on
behalf of Scl;id limite partnership.
STATE OF TEXAS )
) ss.
COUNTY OF DENTON )
R~~~
Notary Public in and for the
State of~ N~'{L~0 'b
MICHELE BRISTOL
This instrument was acknowledged before me on this __ day of June, 2001, by Michael A.
Conduff, City Manager of the City of Denton, Texas, a Texas home rule municipal corporation,
on behalf of said municipal corporation.
[SEAL]
My Commission Expires:
1308898 v3; S1Y@03!.DOC
Notary Public in and for the
State of Texas
Notary's Printed Name
19
STATE OF
COUNTY OF
)
) SS:
)
4810 \419
This instrument was acknowledged before me on this __ day of June, 2001, by
_________ ., ______ of Spencer Station Generating Company, L.P., on
behalf of said limited partnership.
[SEAL]
My Commission Expires:
STATE OF TEXAS )
) ss.
COUNTY OF DENTON )
Notary Public in and for the
State of Texas
Notary's Printed Name
This instrument was acknowledged before me on this J,7:t-4 day of June, 2001, by Michael A.
Conduff, City Manager of the City of Denton, Texas, a Texas home rule municipal corporation,
on behalf of said municipal corporation.
My Commission Expires:
1308898 v3; S1 Y@03!.DOC
Public in and
Stat7?fT exa]'---dL
ff,1 fl f t(5 )vL,
Notary's Printed ~me
19
'4 8 7 0 4 20
EXHIBIT A
1. Spencer Station Real Property Description. Spencer Station Real Property described below
and all improvements made therein except for Divisible Expansion Assets, if any, as described
below and all improvements made therein as described in the survey of Landmark Surveyors,
Inc., dated October 19, 1999, Job. No. 991164 (excluding any such improvements that are
Excluded Assets)
FIELD NOTES
17.751 ACRES
BEING all that certain lot, tract or parcel of land situated in the Mary Austin Survey Abstract
Number 4, in the City of Denton, Denton County, Texas, being a part of Lot 1, Block 2 of
Municipal Utility Addition, an addition to the City of Denton, Denton County, Texas according
to the plat thereof recorded in Cabinet G, Page 346, Plat Records, Denton County, Texas, and
being more particularly described as follows:
COMMENCING at an iron rod found for comer in the north line of Spencer Road, a public
roadway having a right-of-way of 60.0 feet, said point being the southwest comer of that certain
tract of land conveyed by deed to N. Alex Bickley, Trustee recorded in Volume 987, Page 548,
Deed Records, Denton County, Texas;
THENCE N 88° 39' 46" W, 130.00 feet with said north line of said Spencer Road to an iron rod
set for PLACE OF BEGINNING;
THENCE N 88° 39' 46" W, 299.83 feet with said north line of said Spencer Road to an iron rod
set for comer;
THENCE along the arc of a curve to the right having a central angle of 32° 15' 19', a radius of
520.00 feet, an arc length of 292.74 feet, whose chord bears N 72° 32' 06" W, 288.89 feet with
said north line of said Spencer Road to an iron rod set for comer;
THENCE N 52° 50' 00" W, 281.92 feet with said north line of said Spencer Road to an iron rod
set for comer;
THENCE N 52° 36' 00" W, 111.50 feet with said north line of said Spencer Road to an iron rod
set for comer;
THENCE N 20° 02' 44" E, 92.00 feet to an iron rod set for comer;
THENCE N 02° 23' 36" W, 267.94 feet to an iron rod set for comer;
THENCE N 88° 09' 17" E, 48.91 feet to an iron rod set for comer;
THENCE N 01 ° 50' 44" W, 206.45 feet to an iron rod set for comer;
THENCE N 38° 22' 23" E, 161.33 feet to an iron rod set for comer;
1308898 v3; S1Y@03!.DOC
1421
THENCE N 88° 03' 43" E, 749.08 feet to an iron rod set for corner;
THENCE S 44° 06' 44" E, 53.08 feet to an iron rod set for corner;
THENCE S 00° 53' 14" W, 562.85 feet to an iron rod set for corner;
THENCE S 87° 46' 24" W, 258.02 feet to a fence corner for corner;
THENCE S 02° 25' 18" E, 114.07 feet to an iron rod set for corner;
THENCE S 86° 24' 16" W, 68.28 feet to an iron rod set for corner;
THENCE S 02° 32' 00" E, 151.23 feet to a fence corner for corner;
THENCE N 87° 35' 34" E, 294.01 feet to a fence corner for corner;
THENCE S 09° 41' 28" W, 180.28 feet to the PLACE OF BEGINNING and containing 17.751
acres of land.
2. Spencer Station Operating Equipment and Facilities
Spencer Unit #5:
One General Electric single casing, single flow, four extraction steam turbine, serial #178861,
rated at 65,481 kW. One General Electric generator, serial #8384471, rated at 76,470 kV A, 0.85
Power Factor, 30psig Hydrogen, 14,400 volts, Wye Connected, ATB-2 Poles, 60 Cycles, with a
Direct Driven, 195 kW, 250 volt, 780 amp Air Cooled exciter. One Combustion Engineering
front wall, horizontal burner, natural gas fired, 640,000 lb/hr, 1250 psig, 950°F controlled
superheat steam generator, contract # 21470. The unit also includes all associated auxiliary
machinery directly associated with operation of the unit including that noted below.
Cooling Tower# 5
Marley cross-flow, Treated Fir model 6515-4-05, serial# 6515-12-54-70, 5 cell, 5 Marley type
HP4-8 fans
Spencer Unit #4
One General Electric single casing, single flow, four extraction steam turbine, serial #164191,
rated at 65,481 kW. One General Electric generator, serial #8354669, rated at 66,667 kVA, 0.90
Power Factor, 30psig Hydrogen, 14,400 volts, Wye Connected, ATB-2 Poles, 60 Cycles, with a
Direct Driven, 200 kW, 250 volt, Air Cooled exciter. One Combustion Engineering front wall,
horizontal burner, natural gas fired, 530,000 lb/hr, 1263 psig, 950°F controlled superheat steam
generator, contract# 11364. The unit also includes all associated auxiliary machinery directly
associated with operation of the unit including that noted below.
Cooling Tower# 4
2
~810 1422
Marley cross-flow, Redwood, serial# 6516-0-3, 4 cell, 4 Marley type HP-4 fans
Spencer Unit #3
One General Electric, single casing, single flow, four extraction steam turbine, serial #137431,
rated at 22,000 kW. One General Electric generator, serial #8287298, generator field # 842146,
rated at 32000 kV A, 0.85 Power Factor, 30psig Hydrogen, 13,800 volts, Wye Connected, ATB-2
Poles, 60 Cycles, with a Direct Driven, 200 kW, 250 volt, Air Cooled exciter. One Combustion
Engineering, tangential, horizontal, tilting burner, natural gas fired, 280,000 lb/hr, 850 psig,
900°F controlled superheat steam generator, serial# 19527. The unit also includes all associated
auxiliary machinery directly associated with operation of the unit including that noted below.
Cooling Tower# 3
Marley cross-flow, Redwood, 4 cell, 4 60hp Allis-Chalmers fans
31 1-5143-44698-1-1
32 l-5143-44698-1-2
33 1-5143-44698-1-3
34 1-5143-44698-1-4
Spencer Unit #2
One General Electric, single casing, single flow, four extraction steam turbine, serial #112511,
rated at 12650 kW. One General Electric generator, serial #6978289, rated at 13529 kV A, 0.85
Power Factor, 13,800 volts, Wye Connected, ATB-2 Poles, 60 Cycles, with a Direct Driven, 50
kW, 250 volt, Self ventilated, Air Cooled, Shunt wound exciter. One Combustion Engineering,
tangential horizontal, tilting burner, natural gas fired, 280,000 lb/hr, 600 psig, 825°F controlled
superheat steam generator, serial # 17895. The unit also includes all associated auxiliary
machinery directly associated with operation of the unit including that noted below.
Cooling Tower# 1 & 2
Marley No. 4-32A5 cross-flow, Induced Draft, Redwood, 4 cell, 4 Allis-Chalmers 75hp fans
Spencer Unit #1
One General Electric, single casing, single flow, four extraction steam turbine, serial #112512,
rated at 12650 kW. One General Electric generator, serial #6978290, rated at 13529 kV A, 0.85
Power Factor, 13,800 volts, Wye Connected, ATB-2 Poles, 60 Cycles, with a Direct Driven, 50
kW, 250 volt, Self ventilated, Air Cooled, Shunt wound exciter. One Combustion Engineering,
tangential horizontal, tilting burner, natural gas fired, 280,000 lb/hr, 600 psig, 825°F controlled
superheat steam generator, serial # 17895. The unit also includes all associated auxiliary
machinery directly associated with operation of the unit including that noted below.
CEM Equipment
Installed by: KVB/Analect in accordance with Appendix D of"40 CFR 75"
Dilution Extraction Probe
3
Manufacture: EPM
Model 797 .302
Serial#
NOx Analyzer
Manufacture: TECO
Model 42D -Range 500ppm
Serial # 42d-48035-279
CO2 Analyzer
Manufacture: TECO
Model 41H -Range 1000/2000ppm
Serial# 4lh-46262-276
Data Handling System (PLC)
Manufacture: GE Fanuc
Model 90-30
Serial#
Data Acquisition System (PC w/ SCO UNIX OS)
Manufacture: Dell Computers
Li870
Model 200Mhz MMX w/ 2GB HD and 128 MB RAM
Serial# 10017005
Software(PC)
Manufacture:
Model
Serial#
CEMS Unit 5
Process Analysts, Inc.
Compliance 3 .1
96309.01
Installed by: KVB/Analect in accordance with Appendix D of"40 CFR 75"
Dilution Extraction Probe
Manufacture: EPM
Model 797 .302
Serial#
NOx Analyzer
Manufacture: TECO
Model 42D -Range 500ppm
(1) Serial# 42d-48007-279
CO2 Analyzer
Manufacture: TECO
Model 41H-Range 1000/2000ppm
Serial# 41h-47064-227
Data Handling System(PLC)
Manufacture: GE Fanuc
Model 90-30
Serial#
Data Acquisition System (PC w/ SCO UNIX OS)
Manufacture: Dell Computers
Model 200Mhz MMX w/ 2GB HD and 128 MB RAM
Serial# 10017005
Software(PC)
Manufacture: Process Analysts, Inc.
4
Model
Serial#
Compliance 3.1
96309.01
Other Spencer Equipment
1 33.6 MVA General Electric 69/13.2 KV power transformer
1 29 MV A Federal Pacific 69 KV/13.2 KV power transformer
1 Allis Chalmers 69 KV OCB, DME ID S310
1 Allis Chalmers 16 KV OCB, DME ID S320
1 General Electric 13.2 kV grounding transformer
1 Federal Pacific 13.2 KV grounding transformer
4 Auxiliary oil cooler
1 Auxiliary oil filter for L TC
1 78.4 MV A, 69/14.4KV, Unit 5 generator transformer
1 5 MV A, 14.4/4.36KV Unit 5 main auxiliary transformer
2 0.75 MVA, 4.36/
1 65.5 MV A, 69/14.4KV, Unit 4 generator transformer
1 5 MVA, 14.4/4.36KV Unit 4 main auxiliary transformer
2 0.75MVA,4.36/
1 39.2 MVA, 69/14.4KV Unit 3 generator transformer
1 Unit 3 auxiliary transformer
1 Breaker G210
1 Breaker G220
1 Breaker G231
1 Breaker G330
1 Breaker G340
1 Breaker G350
All related generation cubicles including all breakers, relays, metering apparatus, control
switches, control wiring, transducers, terminal blocks and other equipment contained within the
cubicles.
ASSET DESC
8243 PHOTOMETER
8255 MICROSCOPE, MONO
8280 TYPEWRITER
8310 PLATFORM SCALE 800LB
8323 DRY CHEMICAL FIRE EX
8326 DRY CHEMICAL FIRE EX
8344 PORTABLE TOOL CART
8363 FLOOR POLISHER
8364 SHELVING 25LF
8377 TORCH
8474 VIBRATION ANALYZER
8626 VIBRATION MONITOR
8668 OSCILLOSCOPE PORT
8674 BLOCK CALIBRATOR
8797 HYDRAULIC JACK 1 00T
10624 AIR CONDITIONER
5
4810 1425
10680 PORT ABLE SUMP PUMP
98467 COMPUTER FLOOR 400SF
98519 CHAIR SIDE ARM
98621 CHAIN HOIST 1/2T
98680 FLOOR MATS
98952 FIRE HOSE BOX
98960 AXIALVAN FAN
10686 VIBRATION RAMMER
10712 TONE REMOTE
8216 TV MONITORING CONTRO
98551 TV CAMERAS
10755 AIR CONDITIONER
8208 AIR PACK
8229 OPERATOR CHAIR
8230 OPERATOR CHAIR
8231 OPERATOR CHAIR
8232 OPERA TOR CHAIR
8276 MEMO CASE
8319 WELDER
8325 HYDRAULIC LIFT
8328 PORTABLE FAN
8330 PORTABLE PUMP
8345 PORTABLE TOOL CART
8350 PORT MIG WELDER
8353 PORT ABLE TOOL CHEST
8421 BOOKCASE 3X6 WOOD
8422 BOOKCASE 3X6 WOOD
8425 AIR CONDITIONER 12,0
8427 AIR CONDITIONER
8478 PRINTER
8707 MEGGER
10756 DESK 2PD METAL
98494 CHAIR SIDE
98664 FIRE EXT
98940 FIRE EXT
98981 ALARM CABINET
8782 PARTITIONS 5X5
8209 COPIER
8301 HYDRAULIC MANLIFT
8390 PRINTER
8783 COVERED CABINET 6FT
8785 DESK 6FT
93001 AIR CONDITIONER
8233 OPERATOR CONSOLE 3X1
98358 BATTERY ROOM METAL
8227 FAX MACHINE
8253 MULTIMETER
8321 PORTABLE WASHER
8346 PORTABLE TOOL CART
6
~810
8347 PORTABLE TOOL CART
8348 PORTABLE TOOL CART
8370 PALLET JACK 4500LBS
8376 PORTABLE TOOL CART
8457 PORTABLE FILTER PUMP
8637 HYDRO PROGRAMMER
8792 HYDRO PROGRAMMER
8808 HYDRAULIC TORQUE WRE
8841 PLOTTER
10702 PORTABLE CALIBRATOR
10730 CONSTANT VOLT TRAN SF
10731 BATTERY AND RACK
10732 CHARGER
8475 FOOD CENTER
8625 VIDEO CAMERA VHS
8638 MONITOR
8396 FILE, LATERAL 5DR
10688 PORTABLE GENERATOR
10689 PORTABLE GENERATOR
98489 OVER FILE 3X4 METAL
98562 SPECTRO PHOTOMETER
98968 HOIST RAIL 25LF
15202 PRINTER HP560C DESKJ
15210 MECHANICS CHEST 12 D
15211 MECHANICS CHEST 5 DR
15212 MECHANICS CHEST 5 DR
15214 MECHANICS CHEST 10 D
15215 MECHANICS CHEST 10 D
15213 MECHANICS CHEST 12 D
15216 TOOL CABINET 7 DRAWE
15217 TOOL CABINET 7 DRAWE
15223 MODULAR WORKSTATION
15230 MILLER SYCROWAVE & A
16163 STORAGE ROOM ADDITIO
16167 MICRO OHM METER 1 DAM
16179 MILLER SPECTROM PLAS
16173 FIELD LINK:VER7.2&RE
16166 CHLORINATOR WNACCUM
16180 MUL Tl FUNCTION CENTER
16174 DRUM DOLLY
16175 DRUM DOLLY
16176 DRUM DOLLY
16165 COMB. GATE VALVE RES
16178 ANALYZER, ECOM-AC
17330 MOTOR DRIVER INVERTO
17344 HUDSON FAN
17347 CORRELATION WHEEL 41
17348 CORRELATION WHEEL 41
17362 BUTTERFLY W/GEAR OPE
7
-
~8 10 1421
17381 DR/2010 SPETROPHMETE
17403 POWER PLANT AIR DRYE
18274 15GALLON STAINLESS S
18275 3 TON 20' LIFT HAND
18276 3TON 20' LIFT HAND C
18277 6TON 20' LIFT HAND C
18278 5TON 20' LIFT HAND C
18285 CUSTOM WORKSTATION
18265 3" IPT TRASH PUMP GO
18266 LAGUNA MILL W/COLLEC
18267 PORTABLE GAS DETECTO
18268 GAS MONITOR WITH SEN
18269 10 TN AIR HANDLER 48
18270 POTENTIOMETER VOL TAG
18286 CUSTOM CABINETS,DESK
18271 RATCHETING HYDRAULIC
18279 ICE-O-MATIC ICE CUBE
18280 SITMATIC BIG/TALL HI
18281 SITMATIC BIG/TALL HI
18282 SITMATIC BIG/TALL HI
18283 SITMATIC BIG/TALL HI
18284 SITMATIC BIG/TALL HI
18262 CENTRIFUGAL PUMP 120
3. Related Agreements
1. Letter Agreement regarding DGG capacity among the City of Garland, Seller, and
Greenville Electric Utility System, dated as of December 31, 2000.
8
Q870 . '
~ {)
J\J\
_ffe. ~ i.~ ,.,d,J.U' j ,-
couNiY CLERK TEXAS DENTON couNTY,
Filed for Record in: DENTON COUNTY TX CYNTHIA MITCHELL, COUNTY CLERK
On Jul 02. 2001 At 11 :36am
Receipt#: 33122
Recording: 63.00
Doc/Mgat : 6.00 Doc/Num : 2001-R0064870 Doc/Type: DTR Deputy -Felicia
...
ARTICLE IV
ENFORCEMENT OF THE SECURITY
4.1 Exercise of Specific Remedies. If an Event of Default or an Enforcement Event
shall occur, Beneficiary may exercise any one or more of the following remedies, without notice
(unless notice is required hereunder or by applicable statute):
4.2 Foreclosure. Beneficiary may require the Trustee to sell all or part of the
Encumbered Property, at public auction, to the highest bidder, for cash, at the county courthouse
of the county in Texas in which the Encumbered Property or any part thereof is situated, or if the
Encumbered Property is located in more than one county such sale may be made at the
courthouse in any county in which the Encumbered Property is situated. The sale shall take
place at such area of the courthouse as shall be properly designated from time to time by the
commissioners court ( or, if not so designated by the commissioners court, at such other area in
the courthouse as may be provided in the notice of sale hereinafter described) of the specified
county, between the hours of 10:00 o'clock a.m. and 4:00 o'clock p.m. (the commencement of
such sale to occur within three hours following the time designated in the hereinafter-described
notice of sale as the earliest time at which such sale shall occur, ifrequired by applicable law) on
the first Tuesday of any month, after giving notice of the time, place and terms of said sale
(including the earliest time at which such sale shall occur) and of the property to be sold in the
manner hereinafter described. Notice of a sale of all or part of the Encumbered Property by the
Trustee shall be given by posting written notice thereof at the courthouse door (or other area-in
the courthouse as may be designated for such public notices) of the county in which the sale is to
be made, and by filing a copy of the notice in the office of the county clerk of the county in
which the sale is to be made, at least twenty-one (21) days preceding the date of the sale, and if
the property to be sold is in more than one county a notice shall be posted at the courthouse door
(or other area in the courthouse as may be designated for such public notices) and filed with the
county clerk of each county in which the property to be sold is situated. In addition, Beneficiary
shall, at least twenty-one (21) days preceding the date of sale, serve written notice of the
proposed sale by certified mail on Granter and each debtor obligated to pay the Obligations
secured hereby according to the records of Beneficiary. Service of such notice shall be
completed upon deposit of the notice, enclosed in a postpaid wrapper, properly addressed to such
debtor at the most recent address as shown by the records of Beneficiary, in a post office or
official depository under the care and custody of the United States Postal Service. The affidavit
of any person having knowledge of the facts to the effect that such service was completed shall
be prima facie evidence of the fact of service. Any notice that is required or permitted to be
given to Grantor may-be addressed to Grantor at Grantor's address herein below. Trustee may
sell all or any portion of the Encumbered Property, together or in lots or parcels, and may
execute and deliver to the purchaser or purchasers of such property good and sufficient deeds of
conveyance of fee simple title with covenants of general warranty made on behalf of Grantor. In
no event shall Trustee be required to exhibit, present or display at any such sale any of the
personalty described herein to be sold at such sale. Payment of the purchase price to Trustee
shall satisfy the obligation of the purchaser at such sale therefor, and such purchaser shall not be
responsible for the application thereof. The sale or sales by Trustee of less than the whole of the
Encumbered Property shall not exhaust the power of sale · herein granted, and Trustee is
specifically empowered to make successive sale or sales under such power until the whole of the
Encumbered Property shall be sold; and if the proceeds of such sale or sales of less than the
whole of the Encumbered Property shall be less than the aggregate of the Obligations and the
7
1308898 v3; S1Y@03!.DOC
expenses thereof, this Deed of Trust and the lien, security interest and assignment hereof shall
remain in full force and effect as to the unsold portion of the Encumbered Property just as though
no sale or sales had been made; provided, however, that Granter shall never have any right to
require the sale or sales of less than the whole of the Encumbered Property, but Beneficiary shall
have the right, at its sole election, to request Trustee to sell less than the whole of the
Encumbered Property. If an Event of Default or an Enforcement Event shall occur, Beneficiary
shall have the option to proceed with foreclosure in satisfaction of such item either through
judicial proceedings or by directing Trustee to proceed as if under a full foreclosure, conducting
the sale as herein provided. Several sales may be made hereunder without exhausting the right
of sale. At any such sale (1) Granter hereby agrees, in its behalf and in behalf of its heirs,
executors, administrators, successors, personal representatives and assigns, that any and all
recitals made in any deed of conveyance given by Trustee with respect to the identity of
Beneficiary, the occurrence or existence of any default, the nonpayment of the Obligations, the
request to sell, the notice of sale, the giving of notice to all debtors legally entitled thereto, the
time, place, terms, and manner of sale, and receipt, distribution and application of the money
realized therefrom, or the due and proper appointment of a substitute Trustee, and, without being
limited by the foregoing, with respect to any other act or thing having been duly done by
Beneficiary or by Trustee hereunder, shall be taken by all courts of law and equity as prima facie
evidence that the statements or recitals state facts and are without further question to be so
accepted, and (2) the purchaser may disaffirm any easement granted, or rental, lease or other
contract made in violation of any provision of this Deed of Trust, and may take immediate
possession of the Encumbered Property free from, and despite the terms of, such grant of
easement and rental or lease contract. Beneficiary may bid and become the purchaser of all-or
any part of the Encumbered Property at any trustee's or foreclosure sale hereunder, and the
amount of Beneficiary's successful bid may be credited on the Obligations.
4.3 Uniform Commercial Code. Without limitation of Beneficiary's rights of
enforcement with respect to the Collateral or any part thereof in accordance with the procedures
for foreclosure of real estate, Beneficiary may exercise its rights of enforcement with respect to
the Collateral or any part thereof under the Code as amended ( or under the Uniform Commercial
Code in force in any other state to the extent the same is applicable law) and in conjunction with,
in addition to or in substitution for those rights and remedies: (1) Beneficiary may require
Grantor to assemble any Collateral located off the Land and make it available to Beneficiary on
the Land to allow Beneficiary to take possession or dispose of the Collateral; (2) in the event of a
foreclosure sale, whether made by Trustee under the terms hereof, or under judgment of a court,
the Collateral and the other Encumbered Property may, at the option of Beneficiary, be sold as a
whole; (3) it shall not be necessary that Beneficiary take possession of the Collateral or any part
thereof prior to the tiriie that any sale pursuant to the provisions of this Section is conducted and
it shall not be necessary that the Collateral or any part thereof be present at the location of such
sale; (4) with respect to application of proceeds of disposition of the Collateral, the costs and
expenses incident to disposition shall include the reasonable expenses of retaking, holding,
preparing for sale or lease, selling, leasing and the like and the reasonable attorneys' fees and
legal expenses incurred by Beneficiary; (5) and any and all statements of fact or other recitals
made in any bill of sale or assignment or other instrument evidencing any foreclosure sale
hereunder as to nonpayment of the Obligations or as to the occurrence of any Event of Default,
or as to notice or time, place and terms of sale and of the properties to be sold having been duly
given, or as to any other act or thing having been duly done by Beneficiary, shall be taken as
prima facie evidence of the truth of the facts so stated and recited; and (6) Beneficiary may
appoint or delegate any one or more persons as agent to perform any act or acts necessary or
8
1308898 v3; S1Y@03!.DOC
incident to any safe lield by Beneficiary, including the sending of notices and the conduct of the
sale, but in the name and on behalf of Beneficiary.
4.4 Tenancy at Will. In the event of a trustee's sale hereunder and if at the time of
such sale Grantor or..any other party occupies the portion of the Encumbered Property so sold or
any part thereof, such occupant shall immediately become the tenant of the purchaser at such
sale, which tenancy shall be a tenancy from day to day, terminable at the will of either tenant or
landlord, at a reasonable rental per day based upon the value of the portion of the Encumbered
Property so occupied, such rental to be due and payable daily to the purchaser. An action of
forcible detainer shall lie if the tenant holds over after a demand in writing for possession of such
Encumbered Property.
4.5 Substitute Trustee. If, for any reason, Beneficiary prefers to appoint a substitute
Trustee hereunder, Beneficiary may, from time to time, by written instrument, appoint one or
more substitute Trustees, who shall succeed to all the estate, rights, powers, and duties of the
original Trustee named herein. Such appointment may be executed by anyone acting in a
representative capacity, and such appointment shall be conclusively presumed to have been
executed with appropriate authority.
4.6 Exculpation of Trustee. Except for gross negligence or willful misconduct,
Trustee shall not be liable for any act or omission or error of judgment. Trustee may rely on any
document believed by him in good faith to be genuine. All money received by Trustee shalli
until used or applied as herein provided, be held in trust, but need not be segregated ( except to
the extent required by law), and Trustee shall not be liable for interest thereon.
4.7 Remedies Cumulative, Concurrent and Nonexclusive. Beneficiary shall have all
rights, remedies and recourses granted in the Transition Power Agreement and this Deed of
Trust, and same ( a) shall be cumulative and concurrent, (b) may be pursued separately,
successively or concurrently against Grantor or others obligated under the Obligations, or any
part thereof or against any one or more of them, or against the Encumbered Property, at the sole
discretion of Beneficiary, ( c) may be exercised as often as occasion therefor shall arise, it being
agreed by Grantor that the exercise of or failure to exercise any of same shall in no event be
construed as a waiver or release thereof or of any other right, remedy or recourse, and ( d) are
intended to be, and shall be, nonexclusive.
4.8 Rights and Remedies of Sureties. Grantor waives any right or remedy which
Grantor may have or be able to assert pursuant to Chapter 34 of the Business and Commerce
Code of the State of Texas pertaining to the rights and remedies of sureties.
4.9 Judicial Proceedings. Upon the occurrence of an Enforcement Event, the
Beneficiary, in lieu of or in addition to exercising any power of sale hereinabove given, may
proceed by a suit or suits in equity or at law, whether for a foreclosure of this Deed of Trust and
the liens and security interests hereunder, or for the judicial or other sale of the Encumbered
Property, or for the specific performance of any covenant or agreement herein contained or in aid
of the execution of any power herein granted, or for the appointment of a receiver pending any
foreclosure hereunder or the sale of the Encumbered Property.
4.10 Appointment of Receiver. Upon the occurrence of an Event of Default or an
Enforcement Event, in addition to all other remedies herein provided for, the Beneficiary shall,
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as a matter of right, be entitled to the appointment of a receiver or receivers for all or any part of
the Encumbered Property, whether such receivership be incident to a proposed sale of such
property or otherwise, and without regard to the value of the Encumbered Property or the
solvency of Grantor or any entity or entities liable for the payment of the Indebtedness secured
hereby, and Grantor-does hereby consent to the appointment of such receiver or receivers, waives
any and all defenses to such appointment and agrees not to oppose any application therefor by
the Beneficiary and where allowed by law such receiver or receivers may be appointed by any
court of competent jurisdiction upon ex parte application, without notice, notice being hereby
waived. Nothing herein is to be construed to deprive Beneficiary of any other right, remedy or
privilege it may now have under the law to have a receiver appointed.
4.11 Possession of the Encumbered Property. It shall not be necessary for the Trustee
or the Beneficiary to have physically present or constructively in its possession at any sale held
by the Trustee, the Beneficiary or by any court, receiver or public officer any or all of the
Encumbered Property; and, subject to any right to redemption provided by applicable law, the
Grantor shall deliver to the purchasers at such sale on the date of sale the Encumbered Property
purchased by such purchasers at such sale, and if it should be impossible or impracticable for any
of such purchasers to take actual delivery of the Encumbered Property, then subject to such
rights of redemption, the title and right of possession to the Encumbered Property shall pass to
such purchaser at such sale as completely as if the same had been actually present and delivered.
4.12. Certain Aspects of a Sale. The Beneficiary shall have the right to become the
purchaser at any sale held by the Trustee or by any court, receiver or public officer, and the
Beneficiary shall have the right to credit upon the amount of the bid made therefor the amount
payable out of the net proceeds of such sale to it in respect of the Obligations and amounts
otherwise payable to Beneficiary with respect to costs of collection, enforcement and
preservation of the Encumbered Property.
4.13. Receipt to Purchaser. Upon any sale, whether made under the power of sale
herein granted and conferred or by virtue of judicial proceedings, the receipt of the Trustee, or of
the officer making sale under judicial proceedings, shall be sufficient discharge to the purchaser
or purchasers at any sale for his or their purchase money, and such purchaser or purchasers, or
his or their assigns or personal representatives, shall not, after paying such purchase money and
receiving such receipt of the Trustee or of such officer therefor, be obliged to see to the
application of such purchase money, or be in anywise answerable for any loss, misapplication or
nonapplication thereof.
4.14 Effect of Sale. Subject to any rights ofredemption granted by applicable law, any
sale or sales of the Encumbered Property, whether under the power of sale herein granted and
conferred or by virtue of judicial proceedings, shall operate (a) to divest all right, title, interest,
claim and demand whatsoever either at law or in equity, of the Grantor of, in and to the premises
and the property sold, and shall be a perpetual bar, both at law and in equity, against the Grantor,
and the Grantor's successors or assigns, and against any and all persons claiming or who shall
thereafter claim all or any of the property sold from, through or under the Grantor or the
Grantor's successors or assigns and (b) to terminate (and Grantor shall cause all such agreements
to so provide) any agreement between Grantor and its affiliates (or for the direct or indirect
benefit of such affiliates) relating to the Encumbered Property or any production thereof.
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4.15 Application of Proceeds. The proceeds of any sale by Trustee of the Encumbered
Property, or any part thereof, under the power of sale herein shall be applied in accordance with _
applicable law, and the proceeds of any sale granted and conferred or by virtue of judicial
proceedings, shall be applied in accordance with any final, non-appealable order issued in such
proceedings, provided that in all instances, it is the intention of the parties that all proceeds of
any disposition of the Encumbered Property following the occurrence of an Event of Default or
an Enforcement Event shall be applied first to the cost of such sale, second to any costs of the
Trustee in connection therewith, and third to the reasonable amounts necessary to cure any Event
of Default hereunder, fourth to the Obligations and fifth to Grantor or to whomever else is
legally entitled to same.
4.16 The Grantor's Waiver of Appraisement, Marshalling. and Other Rights. The
Grantor agrees, to the full extent that the Grantor may lawfully so agree, that the Grantor will not
at any time insist upon or plead or in any manner whatever claim the benefit of any
appraisement, valuation, stay, extension or redemption law now or hereafter in force, in order to
prevent or hinder the enforcement or foceclosure of this Deed of Trust or the absolute sale of the
Encumbered Property or the possession thereof by any purchaser at any sale made pursuant to
any provision hereof, or pursuant to the decree of any court of competent jurisdiction; but the
Grantor, for the Grantor and all who may claim through or under the Grantor, so far as the
Grantor or those claiming through or under the Grantor now or hereafter lawfully may, hereby
waives the benefit of all such laws. The Grantor, for the Grantor and all who may claim through
or under the Grantor, waives, to the extent that the Grantor may lawfully do so, any and all right
to the exemption of homesteads, and to have the Encumbered Property marshalled upon any
foreclosure of the lien hereof, or sold in inverse order of alienation, and agrees that the Trustee or
any court having jurisdiction to foreclose such lien may sell the Encumbered Property as an
entirety or in separate parts. The Grantor, for the Grantor and all who may claim through or
under the Grantor, further waives, to the full extent that the Grantor may lawfully do so, any
requirement for posting a receiver's bond or replevin bond or other similar type of bond if the
Trustee commences an action for appointment of a receiver or an action for replevin to recover
possession of any of the Encumbered Property. If any law in this paragraph referred to and now
in force, of which the Grantor or the Grantor's successor or successors might take advantage
despite the provisions hereof, shall hereafter be repealed or cease to be in force, such law shall
not thereafter be deemed to constitute any part of the contract herein contained or to preclude the
operation or application of the provisions of this paragraph.
4.17 Operation of the Encumbered Property by the Beneficiary. So long as the
Beneficiary ( or the Trustee on behalf of the Beneficiary) is diligently pursuing a foreclosure
hereunder, upon the occurrence of an Enforcement Event or an Event of Default hereunder and
in addition to all other rights herein conferred on the Beneficiary, the Beneficiary ( or any person,
firm or corporation designated by the Beneficiary) shall have the right and power, but shall not
be obligated, to enter upon and take possession of any of the Encumbered Property, and to
exclude the Grantor, and the Grantor's agents or servants, wholly therefrom, and to hold, use,
administer, manage and operate the same to the extent that the Grantor shall be at the time
entitled and in its place and stead. The Beneficiary, or any person, firm or corporation
designated by the Beneficiary, may operate the same without any liability to the Grantor in
connection with such operations, except to use ordinary care in the operation of such properties,
and the Beneficiary or any person, firm or corporation designated by the Beneficiary shall have
the right to collect, receive and receipt for all revenues from such operations, to make repairs,
purchase machinery and equipment, conduct operations, open new mines and to exercise every
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power, right and privilege of the Grantor with respect to the Encumbered Property. The
Beneficiary, by exercising its rights hereunder, shall not be deemed a mortgagee-in-possession.
ARTICLE V.
CONDEMNATION AND INSURANCE
5.1 Condemnation. With respect to any proceeds or awards which may become due
by reason of any condemnation or other taking by any governmental authority other than the
Beneficiary for use of the whole or any part of the Encumbered Property, such proceeds shall be
held in a segregated escrow account with a commercial bank reasonably satisfactory to the
Beneficiary, and Grantor shall take such action as may be necessary or appropriate to provide to
the Trustee for the benefit of the Beneficiary a perfected first priority security interest in such
proceeds, provided that if Grantor delivers to the Beneficiary a letter of credit in an available
amount equal to the amount of such insurance proceeds and otherwise satisfying the
requirements set forth in Section 11 .5( d) of the Transition Power Agreement, such proceeds shall
be delivered to Grantor, and released from the lien of this Deed of Trust promptly following
delivery of such letter of credit.
5 .2 Application of Insurance Proceeds. In the event of any insured damage to or
destruction of the Encumbered Property, the proceeds of such insurance shall constitute Proceeds
hereunder and shall be subject to the lien of this Deed of Trust, and if no Event of Default ot
Enforcement Event has occurred, such proceeds shall be made available to Granter. Any such
proceeds not applied to the cost of rebuilding, repairing or replacing the damaged portion of the
Encumbered Property shall be held in a segregated escrow account with a commercial bank
reasonably satisfactory to the Beneficiary, and Granter shall take such action as may be
necessary or appropriate to provide to the Trustee for the benefit of the Beneficiary a perfected
first priority security interest in such insurance proceeds, or if Granter delivers to the Beneficiary
a letter of credit in the available amount equal to the amount of such insurance proceeds and
otherwise satisfying the requirements set forth in Section 1 l.5(d) of the Transition Power
Agreement, such proceeds shall be delivered to Grantor and the Encumbered Property shall be
released from the lien of this Deed of Trust promptly following delivery of such letter of credit.
In the event that proceeds of insurance, if any, shall be made available to Granter for the
restoring, repairing, replacing or rebuilding of the Encumbered Property, Grantor shall promptly
take such action as shall be necessary or appropriate to subject such replacement property to the
lien of this Deed of Trust and provide to Trustee for the benefit of Beneficiary a first priority
security interest therein.
In the event Grantor is entitled to receive insurance proceeds hereunder in excess of $1,000,000
for application to restoration, repair, replacement and rebuilding, such funds shall at
Beneficiary's election be disbursed in accordance with disbursement arrangements reasonably
satisfactory to Beneficiary.
In the event of the exercise of remedies by the Trustee pursuant to Section 5.1 hereof, all right,
title and interest of Grantor in any claims arising prior to or during such proceedings pursuant to
policies of insurance then in effect with respect to the Encumbered Property shall vest in
Beneficiary, and the Trustee and the Beneficiary are hereby authorized to assign any and all such
claims and the proceeds thereof to the purchaser at the sale, or take such other steps as the
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Beneficiary may· deem advisable to provide to the purchaser such rights with respect to such
claims and the proceeds thereof.
ARTICLE VI.
MISCELLANEOUS PROVISIONS
6.1 Right to Perform the Grantor's Obligations. Each and every covenant herein
contained shall be performed and kept by the Grantor solely at the Grantor's expense. If the
Grantor shall fail to perform or keep any of the covenants of whatsoever kind or nature contained
in this Deed of Trust, the Beneficiary or the Trustee shall provide notice to the Grantor of such
failure, and Grantor shall have a period of thirty days from the delivery of such notice ( or such
longer period as shall be necessary to cure such failure, so long as Grantor is diligently and in
good faith pursuing such cure, provided that in the event such failure could reasonably be
expected to result in a material adverse change in the value of the Encumbered Property,
Grantor's total cure period hereunder shall not exceed ninety days from the date of notice of
breach). In the event Grantor fails to cure such breach or failure within such period (an "Event
of Default"), the Beneficiary or any receiver appointed hereunder, may, but shall not be
obligated to, perform or keep, or cause to be performed or kept, the same in the Grantor's behalf,
and the Grantor hereby agrees to reimburse the Beneficiary or such receiver ( as the case may be)
on demand for all reasonable and documented fees, costs and expenses, including the reasonable
fees, costs and expenses of counsel or other advisors of Beneficiary or such receiver (including
environmental and management consultants and appraisers, but excluding any allocation of the
salaries or other similar overhead of Beneficiary, such receiver or any Lender), incurred in
connection therewith. The undertaking of such performance by the Beneficiary or such receiver
(as the case may be) as aforesaid shall not obligate the Beneficiary or such receiver (as the case
may be) to continue such performance or to engage in such performance or performance of any
other act in the future, shall not relieve the Grantor from the observance or performance of any
covenant or agreement contained in this Deed of Trust or constitute a waiver of default
hereunder, and shall not affect the right of the Beneficiary to resort to any other of its rights or
remedies hereunder or under applicable law.
6.2 Delivery of Letter of Credit. At any time Grantor or Guarantor may deliver or
cause to be delivered to the Beneficiary a $25 million letter of credit satisfying the conditions set
forth in Section 11.5( d) (but not the provisions thereof relating to reduction of the fact amount of
such letter of credit) of the Transition Power Agreement in substitution of the lien of this Deed of
Trust, in which case all of the Encumbered Property shall revert to the Grantor and the entire
estate, right, title and-interest of the Trustee and the Beneficiary therein shall thereupon cease;
and the Trustee and Beneficiary in such case shall, upon the request of the Grantor and at the
Grantor's sole cost and expense, promptly deliver to the Grantor proper instruments
acknowledging satisfaction and release of this Deed of Trust.
6.3 The Encumbered Property to Revert. If the Obligations shall be fully performed
and the covenants herein contained shall be well and truly performed, then all of the Encumbered
Property shall revert to the Grantor and the entire estate, right, title and interest of the Trustee
and the Beneficiary shall thereupon cease; and the Trustee and the Beneficiary in such case shall,
upon the request of the Grantor and at the Grantor's cost and expense, promptly deliver to the
Grantor proper instruments acknowledging satisfaction and release of this Deed of Trust.
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6.4 Construction of Instrument as an Assignment. This Deed of Trust shall be
deemed to be and may be enfor_ced from time to time as an assignment, chattel mortgage,
contract, deed of trust, financing statement, real estate mortgage, or security agreement, and from
time to time as any one or more thereof.
6.5 Divisible Expansions. Nothing herein is intended to limit in any way Grantor's
right or ability to undertake an expansion or otherwise build additional facilities on the Land
prior to the exercise of remedies by the Trustee pursuant to Article IV hereof, so long as any
such expansion or additional facility does not cause Grantor to violate Grantor's obligations
under Section 2.3 or Section 2.5 ("Expansion Assets"). An Expansion Asset, to the extent it does
not modify or replace Operating Equipment and Facilities (a "Divisible Expansion Asset"), shall
not be subject to the lien of this Deed of Trust provided that the removal, operation or demolition
of such expansion would not adversely affect the operation and maintenance of, or require the
incurrence of any incremental material expense by any person to continue the operation of, the
Operating Equipment and Facilities as a stand-alone power generating facility consistent with
Good Utility Practice. Any Expansion· Asset other than a Divisible Expansion Asset shall be
subject to the lien of this Deed of Trust. At any time following the exercise of remedies by the
Trustee pursuant to Article IV hereof or at such other time as Grantor may reasonably request
(including, without limitation at the time of financing the installation or acquisition of Divisible
Expansion Assets), Beneficiary shall negotiate diligently and in good faith such instruments as
Grantor may reasonably request to enable Grantor to undertake and own, operate and maintain
the Divisible Expansion Assets free and clear of the lien created by this Deed of Trust. Grantor
shall be solely responsible for any surveying, engineering and similar costs associated with such
request (including such costs relating to the Operating Equipment and Facilities). Such
agreements may include, without limitation, a deed of real property, easements for use of shared
facilities, an electrical interconnection agreement and other necessary or desirable agreements,
provided that the Beneficiary shall have no obligation to enter into any agreement which would
impair its ability to generate and export electricity from the Operating Equipment and Facilities,
in each case consistent with Good Utility Practice or cause it to incur any material expense or
financial obligation unless Beneficiary receives fair compensation therefor.
6.6. Unenforceable or Inapplicable Provisions. If any provision hereof, or of the
Transition Power Agreement is invalid or unenforceable in any jurisdiction, the other provisions
hereof and the Transition Power Agreement shall remain in full force and effect in such
jurisdiction, and the remaining provisions hereof shall be liberally construed in favor of the
Trustee and the Beneficiary in order to effectuate the provisions hereof, and the invalidity of any
provision hereof in any jurisdiction shall not affect the validity or enforceability of any such
provision in any other jurisdiction.
6.7 Rights Cumulative. Each and every right, power and remedy herein given to the
Trustee or the Beneficiary shall be cumulative and not exclusive; and each and every right,
power and remedy whether specifically herein given or otherwise existing may be exercised
from time to time and so often and in such order as may be deemed expedient by the Trustee or
the Beneficiary, as the case may be. and the exercise, or the beginning of the exercise, of any
such right, power or remedy shall not be deemed a waiver of the right to exercise, at the same
time or thereafter, any other right, power or remedy. No delay or omission by the Trustee or by
the Beneficiary in the exercise of any right, power or remedy shall impair any such right, power
or remedy or operate as a waiver thereof or of any other right, power or remedy then or thereafter
existing.
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6.8 No Partnership. Nothing contained in this Deed of Trust is intended to create, or
shall be construed as creating, to any extent and in any manner whatsoever, any partnership, joint
venture, or association among the Grantor, the Trustee and the Beneficiary, or in any way as to
make the Beneficiary or the Trustee coprincipals with the Grantor with reference to the
Encumbered Property, and any inferences to the contrary are hereby expressly negated.
6.9 Partial Releases. No release from the lien or security interest of this Deed of
Trust of any part of the Encumbered Property by the Beneficiary or the Trustee shall in anywise
alter, vary or diminish the force, effect, lien or security interest of this Deed of Trust against the
balance or remainder of the Encumbered Property.
6.10 Waiver by the Trustee and/or the Beneficiary. Any and all covenants in this Deed
of Trust may from time to time by instrument in writing signed by the Beneficiary be waived to
such extent and in such manner as the Beneficiary may desire, but no such waiver shall ever
affect or impair either the Trustee's or the Beneficiary's rights or liens or security interests
hereunder, except to the extent specifically stated in such written instrument.
6.11 Successors and Assigns. This Deed of Trust is binding upon the Grantor, the
Grantor's successors and assigns, and shall inure to the benefit of the Trustee and the
Beneficiary, their respective successors and assigns, and the provisions hereof shall likewise be
covenants running with the land.
. 6.12 Article and Section Headings. The article and section headings in this Deed of
Trust are inserted for convenience of reference and shall not be considered a part of this Deed of
Trust or used in its interpretation.
6.13 Execution in Counterparts. This Deed of Trust may be executed in any number of
counterparts, each of which shall for all purposes be deemed to be an original and all of which
are identical, except that, to facilitate recordation or filing, in any particular counterpart portions
of Exhibit A hereto which describe properties situated in counties other than the county in which
such counterpart is to be recorded or filed may have been omitted.
6.14 Recording References in Exhibit A. All recording references in Exhibit A hereto
are to the official real property records of the county in which the affected land is located.
6.15 Special Filing as Financing Statement. This Deed of Trust shall likewise be a
Security Agreement and a Financing Statement. This Deed of Trust shall be filed for record,
among other places, in the real estate records of each county in which any portion of the real
property covered by the Lands described in Exhibit A hereto is situated, and, when filed in such
counties, shall be effective as a financing statement covering fixtures included within the
Encumbered Properties. At the option of the Beneficiary, a carbon, photographic or other
reproduction of this Deed of Trust or of any financing statement covering the Encumbered
Property or any portion thereof shall be sufficient as a financing statement and may be filed as
such. Grantor shall execute and deliver on demand such other and further security agreements,
financing statements, and other instruments as Beneficiary may request in order to perfect and
maintain the security interests created hereby, and shall pay all recording and/or filing fees
associated therewith. In addition, Grantor agrees that Beneficiary is authorized, on behalf of
Grantor, to execute on Grantor's behalf and file any financing statement evidencing the security
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interests created· hereby, and any such financing statement executed by Beneficiary shall be
deemed sufficient for purposes of Section 9-402(2)( e) of the Uniform Commercial Code as in .
effect in the State of Texas.
6.16 Notices. Any notice, request, demand or other instrument which may be required
or permitted to be · given or served hereunder shall be sufficiently given when given in the
manner provided by the Asset Purchase Agreement at the address set forth therein or, if no
address for a recipient is set forth in the Asset Purchase Agreement, then at the address set forth
herein.
6.17 Request for Notice. The Grantor hereby requests a copy of any notice of default
and that any notice of sale hereunder be mailed to it at the address set forth on the signature
page(s) of this Deed of Trust. Beneficiary also agrees to provide to Grantor, simultaneously with
the delivery thereof to PGET pursuant to the Transition Power Agreement, notices of any Event
of Default with respect to PGET thereunder.
6.18 Non-Contravention. Notwithstanding the representation and warranty by, and the
reasonable good faith belief of, the Grantor that the execution, delivery, recordation and
performance by the Grantor of this Deed of Trust does not require the consent or approval of, or
notice to, any person, the Grantor does not intend that this Deed of Trust should be effective to
grant a lien against or security interest in any of the Encumbered Property if the granting of such
lien or security interest violates or breaches any enforceable term of the particular instrument ot
agreement constituting or governing such item as of the date hereof.
6.19 CHOICE OF LAW. THIS DEED OF TRUST SHALL BE CONSTRUED,
INTERPRETED AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS.
6.20 CHOICE OF VENUE. THE PARTIES HERETO AGREE THAT VENUE IN
ANY AND ALL ACTIONS AND PROCEEDINGS RELATED TO THE SUBJECT MATTER
OF THIS AGREEMENT (OTHER THAN A FORECLOSURE ACTION WHICH MAY BE
COMMENCED BY BENEFICIARY OR TRUSTEE ON BEHALF OF BENEFICIARY IN
DENTON COUNTY) SHALL BE IN THE STATE AND FEDERAL COURTS IN AND FOR
DALLAS COUNTY, TEXAS, WHICH COURTS SHALL HA VE EXCLUSIVE
JURISDICTION FOR SUCH PURPOSE, AND THE PARTIES HERETO IRREVOCABLY
SUBMIT TO THE EXCLUSIVE JURISDICTION OF SUCH COURTS AND IRREVOCABLY
WAIVE THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF
ANY SUCH ACTION OR PROCEEDING. SERVICE OF PROCESS MAY BE MADE IN
ANY MANNER RECOGNIZED BY SUCH COURTS.
6.21 Contingent Obligations: Priority. This Deed of Trust also secures contingent
Obligations under the Transition Power Agreement, whether direct or indirect, existing, future,
or otherwise, which Obligations shall have the same priority as if such Obligations were due on
the date of the execution hereof whether or not any debt is outstanding on the date hereof or at
any future time.
6.22 Substitution of Trustee. Beneficiary, acting alone, may, from time to time, by
instrument in writing, substitute a successor to any Trustee named herein or acting hereunder.
Such instrument, executed, acknowledged and recorded in the manner required by law, shall be
conclusive proof of proper substitution of such successor Trustee or Trustees, who shall (without
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RECORDING REQUESTED BY, THIS
INSTRUMENT WAS PREPARED BY AND
WHEN RECORDED AND/OR FILED
RETURN TO:
Michael Copeland, Esq;
c/o Denton Municipal Electric
901-A Texas Street
Denton, Texas 76201
1308898 v3: S1Y@03!.DOC
DEED OF TRUST, SECURITY AGREEMENT,
FINANCING STATEMENT AND FIXTURE FILING
FROM
SPENCER STATION GENERATING COMP ANY L.P.
Grantor
TO
Michael Copeland, Esq.
Trustee
FOR THE USE AND BENEFIT OF
CITY OF DENTON, TEXAS,
Beneficiary
Dated as of June-Z--i, 2001
"THIS INSTRUMENT CONTAINS AFTER-ACQUIRED PROPERTY PROVISIONS."
"THIS INSTRUMENT IS TO BE FILED FOR RECORD AS A FINANCING STATEMENT,
AMONG OTHER PLACES, IN THE REAL ESTATE RECORDS."
"THE GRANTOR HAS AN INTEREST OF RECORD IN THE REAL ESTATE
CONCERNED, WHICH IS DESCRIBED IN EXHIBIT A HERETO."
"SOME OF THE PERSONAL PROPERTY CONSTITUTING A PORTION OF THE
ENCUMBERED PROPERTY IS OR IS TO BE AFFIXED TO THE PROPERTIES
DESCRIBED IN EXHIBIT A HERETO, AND THIS INSTRUMENT IS TO BE FILED FOR
RECORD AS A FINANCING STATEMENT AND FIXTURES FILING, AMONG OTHER
PLACES, IN THE REAL ESTATE RECORDS."
1308898 v3; S1Y@03!.DOC
~. DEED OF TRUST, SECURITY AGREEMENT,
FINANCING STATEMENT AND FIXTURE FILING
THIS DEED OF TRUST, SECURITY AGREEMENT, FINANCING STATEMENT AND
FIXTURE FILING {"Deed of Trust"), dated as of June 1g_, 2001 is from Spencer Station
Generating Company L.P., a "Dal , limited partnership ("Grantor"), to Michael Copeland, Esq.,
("Trustee"), for the use and benefit of CITY OF DENTON, TEXAS, a municipal corporation
and a home rule city existing under the laws of the State of Texas ("Beneficiary").
1. The City of Denton, Texas, as Seller (the "Seller"), Spencer Station Generating
Company, L.P., as buyer (the "Buyer"), and PG&E Generating Company, LLC have entered into
an Asset Purchase Agreement dated as of June 1£L, 2001, (the "Asset Purchase Agreement"),
pursuant to which the Buyer has agreed to purchase certain fossil fuel and hydro-electric
generating facilities located in Texas and certain facilities and other assets associated therewith
from the Seller, and pursuant thereto, Grantor is acquiring the Encumbered Property.
2. In connection with the transactions contemplated by the Asset Purchase
Agreement, PG&E Energy Trading-Power, L.P., a Delaware limited partnership and an affiliate
ofBtry~r ("PGET"), and Beneficiary have entered into a Transition Power Agreement dated as of.
June ~' 2001 (as the same may be from time to time amended or modified, the "Transition
Power Agreement"), pursuant to which PGET has agreed for a period of five years to provide
certain services and to perform certain obligations in favor of Beneficiary, the non-provision ot
non-performance of which according to the terms of the Transition Power Agreement would
result in damages to Beneficiary (such full performance by PGET, as well as full performance
and payment by Guarantor of the TP A Guarantee and any damages incurred by Beneficiary as a
result of non-performance by PGET or Guarantor of their respective obligations under such
agreements, subject to any limitations to such damages expressly provided in such agreements,
are collectively referred to herein as the "Obligations").
3. The obligations of PGET are guaranteed by PG&E Energy Trading Holdings
Corporation (the "Guarantor") pursuant to a Guarantee dated as of June -zfl, 2001, by the
Guarantor for the benefit of the Beneficiary (the "TPA Guarantee")
4. As a condition precedent to Beneficiary's agreement to enter into the Asset
Purchase Agreement and Transition Power Agreement, the Grantor is required to grant to the
Trustee and the Beneficiary a deed of trust to secure the payment and performance of all of the
Obligations; provided that the Beneficiary has agreed that this Deed of Trust shall only be
enforced at such time-as an Enforcement Event (as defined below) or an Event of Default (as
defined below) shall occur.
5. For all purposes of this Deed of Trust, unless the context otherwise requires:
A. "Credit Event of Default" shall mean the occurrence of both (i) the failure
of the Guarantor to maintain a rating of BBB-(as determined by Standard & Poor's Rating
Services) or maintain a rating of Baa3 (as determined by Moody's Investors Service, Inc.) (a
"Ratings Downgrade") and (ii) the failure of the Guarantor or the Grantor to deliver to
Beneficiary a letter of credit satisfying the conditions set forth in Section 11.5( d) of the
Transition Power Agreement within thirty calendar days following the occurrence of such
1308898 v3; S1Y@03!.DOC
Ratings Downgrade, or other third party credit support for the Obligations, satisfactory in form
and substance to Beneficiary in its sole discretion.
B. "Encumbered Property'' shall mean the properties, rights and interests
hereinafter described and defined as the Encumbered Property.
C. "Enforcement Event" shall mean the occurrence of either:
a. i) an Event of Default by PGET under the Transition Power Agreement which
remains uncured after any applicable period of notice and opportunity to
cure as provided therein has expired and ii) a Credit Event of Default,
or
b. i) an Event of Default by PGET under the Transition Power Agreement which
remains uncured after any applicable period of notice and opportunity to
cure as provided therein has expired and ii) the failure of the Guarantor to
timely perform its obligations under the TP A Guarantee with respect to
such Event of Default.
D. "Governmental Authority'' means any foreign, federal, state, local or other
governmental, regulatory or administrative agency, Court, commission, department, board, or
other governmental subdivision, legislature, rulemaking board, court, tribunal, arbitrary body or
other governmental authority.
E. "Lands" shall include the lands in Denton County, Texas which are
described in Exhibit A, but excluding any interest in such lands which is specifically excluded in
Exhibit A.
F. "Operating Equipment and Facilities" shall mean the machinery,
equipment, and facilities described in Exhibit A to the extent relating to operation of the Spencer
Station Generating Facility and Expansion Assets located on the Land (but specifically excluding
any Divisible Expansion Assets and any machinery, equipment, facilities, supplies or other
property which is owned by third parties and is located in, on or under any part of the Lands), to
the extent of the Grantor's interest therein.
G. "Permits" shall mean any permits, licenses, registrations, franchises and
other authorizations, consents and approvals (including Environmental Permits) that are required
by Governmental Authorities in connection with the ownership and/or operation of the Operating
Equipment and Facility.
H. "Permitted Encumbrances" means
(a) liens and encumbrances arising prior to the date of this Deed of Trust and constituting
Permitted Encumbrances within the meaning of such term as used in the Asset Purchase
Agreement (other than any such lien or encumbrance created by Grantor or any of its affiliates);
(b) liens securing purchase money indebtedness incurred in connection with the acquisition
of tangible personal property, provided that the original principal balance thereof does not
2
1308898 v3; S1Y@03!.DOC
exceed 100% of the purchase price of such property, and provided that such lien extends only to
the property acquired;
( c) liens of carriers, warehousemen, mechanics and materialmen imposed by operation of
law or arising in the ordinary course of business for amounts not yet due or being contested in
good faith by appropriate proceedings and for which adequate reserves are being maintained by
Grantor in accordance with GAAP;
( d) liens securing taxes, assessments and other governmental charges not yet due, or being
contested in good faith by appropriate proceedings and for which adequate reserves are being
maintained by Grantor in accordance with GAAP; and
(e) easements, rights-of-way, covenants and other restrictions and encumbrances which do
not, individually or in the aggregate, interfere materially with the operation of the Encumbered
Property or materially detract from the value thereof.
I. "Related Agreements" shall mean the agreement(s) listed in Exhibit A.
J. "Uniform Commercial Code" shall mean the Uniform Commercial Code
as in effect from time to time in the State of Texas, and the terms "Chattel Paper", "Contract
Rights", "Documents", "General Intangibles", "Goods", "Equipment", "Fixtures", "Inventory'',
"Instruments", and "Proceeds" shall have the respective meanings assigned to such terms in the
Uniform Commercial Code.
The foregoing definitions shall be equally applicable to both the singular and plural forms
of the defined terms. Capitalized terms used and not otherwise defined herein shall have the
meanings assigned thereto in the Transition Power Agreement and the Asset Purchase
Agreement.
NOW, THEREFORE, the Grantor, for and in consideration of the premises and of the
debts and trusts hereinafter mentioned, and upon and subject to the terms and conditions
hereinafter set forth, has granted, bargained, sold, mortgaged, warranted, encumbered, assigned,
transferred and conveyed, and by these presents does grant, bargain, sell, mortgage, warrant,
encumber, assign, transfer and convey, unto the Trustee, IN TRUST, WITH POWER OF SALE,
for the use and benefit of the Beneficiary, all the Grantor's right, title and interest, whether now
owned or hereafter acquired, in and to all of the hereinafter described properties, rights and
interests; and insofar as such properties, rights and interests consist of Equipment, General
Intangibles, Chattel P.rper, Contract Rights, Documents, Inventory, Instruments, Fixtures, Goods,
Proceeds of collateral subject to the applicable provisions of the Uniform Commercial Code (as
in effect in the appropriate jurisdiction with respect to each of said properties, rights and
interests), the Grantor hereby grants to the Beneficiary a first priority security interest therein to
the full extent of the Grantor's legal and beneficial interest therein now owned or hereafter
acquired, namely:
(a) the Lands and all interests therein,
(b) without limitation of the foregoing, all other right, title and interest of Grantor
of whatever kind or character (whether now owned or hereafter acquired by operation of law
or otherwise) in and to the lands which are described in Exhibit A,
3
1308898 v3; S1Y@03!.DOC
( c) the Operating Equipment and Facilities,
( d) the Related Agreements,
( e) the Permits (to the extent that transfer thereof does not violate any restrictions
on transfer imposed by law or by third parties),
(f) and, in any event, all General Intangibles, Contract Rights, Equipment, Fixtures
and Inventory to the extent the items enumerated in clauses (a) through (f) constitute any of
such items and Proceeds of all of the foregoing,
together with any and all corrections or amendments to, or renewals, extensions or ratifications
of, or replacements or substitutions for, any of the same (but excluding any Divisible Expansion
Assets), and (to the extent that transfer thereof does not violate any restrictions on transfer
imposed by law or by third parties) -title instruments, records and information concerning
compliance with the Permits, reclamation plans and related data and reports, rights-of-way,
easements, servitudes, permits, licenses, tenements, hereditaments, appurtenances, condemnation
awards, rents, royalties, overriding royalties, revenues, income, returns, issues, profits, proceeds,
whether now or hereafter existing or arising, covering, or arising from or in connection with, any
of the aforesaid in this granting clause referenced, all the aforesaid properties, rights and
interests, together with any additions thereto which may be subjected to the lien and security
interest of this Deed of Trust by means of supplements hereto, being hereinafter called the
"Encumbered Property".
Subject, however, with respect to the enforcement of this Deed of Trust by the Trustee
and/or the Beneficiary, to the occurrence of an Enforcement Event or an Event of Default
hereunder.
TO HA VE AND TO HOLD the Encumbered Property, together with the rights, privileges and
appurtenances thereto belonging, unto the Trustee and his substitutes or successors, forever, and
Grantor hereby binds itself and its heirs, executors, administrators, personal representatives,
successors and assigns to warrant and forever defend the Encumbered Property unto the Trustee,
his substitutes or successors and assigns, against the claim or claims of all persons claiming or to
claim the same or any part thereof and maintain and preserve the first priority lien and security
interest hereby created, so long as any of the Obligations are outstanding.
ARTICLE I
OBLIGATIONS SECURED
1.1 Obligations Secured. This Deed of Trust secures the prompt and complete
performance, payment and/or observance of the Obligations and the covenants and conditions to
be performed by Grantor in this Deed of Trust (including any amendment or modification
hereto).
4
1308898 v3; S1Y@03!.OOC
ARTICLE II
PARTICULAR COVENANTS AND WARRANTIES
OF THE GRANTOR
2.1 The Grantor represents and warrants to the Trustee and the Beneficiary that
except for Permitted Encumbrances, the lien and security interest created hereby constitutes, as
security for the Obligations, (i) a legally valid and binding deed of trust lien on the Lands, and
(ii) a legally valid and binding security interest in all personal property included in the
Encumbered Property.
2.2 Further Assurances. The Grantor will execute and deliver such other and further
instruments and will do such other and further acts as in the reasonable opinion of the
Beneficiary may be necessary or desirable to carry out more effectually the purposes of this
Deed of Trust, including, without limiting the generality of the foregoing, ( a) prompt correction
of any material defect which may hereafter be discovered in the title to the Lands or the
Encumbered Property or in the execution and acknowledgment of this Deed of Trust or any other
document executed in connection herewith, (b) prompt execution and delivery of all notices to
parties producing, purchasing or receiving proceeds of the Encumbered Property, any of which,
in the reasonable opinion of the Trustee or the Beneficiary, is needed to transfer effectively or
assist in the transferring to the Trustee of the assigned proceeds of the Encumbered Property, and
( c) supplements to this Deed of Trust as reasonably required from time to time by the
Beneficiary.
2.3 Operation of the Encumbered Property. So long as this Deed of Trust remains in
effect, and whether or not the Grantor is the operator of the Encumbered Property, the Grantor
shall, at the Grantor's own expense cause the Lands to be regularly operated and maintained
pursuant to Good Utility Practice, and shall cause the Encumbered Property to be kept free and
clear of liens, mortgages, security interests, deeds of trust and like encumbrances other than
Permitted Encumbrances.
2.4 Recording and Filing. The Grantor will promptly, and at the Grantor's expense,
record, register, deposit and file this and every other instrument in addition or supplemental
hereto in such offices and places and at such times and as often as may be necessary to create,
preserve, protect and renew the lien and security interest hereof as a first lien on and prior
perfected security interest in real or personal property, as the case may be, and the rights and
remedies of the Trustee and of the Beneficiary, and otherwise will do and observe all things or
matters necessary or expedient to be done or observed by reason of any law or regulation of any
State or of the United States of America or of any other competent authority, for the purpose of
effectively creating, maintaining and preserving the lien and security interest hereof on and in the
Encumbered Property.
2.5 Sale or Mortgage of the Encumbered Property. Grantor shall not sell or otherwise
dispose of all or any material portion of the Encumbered Property ( other than dispositions of
obsolete or damaged personal property in the ordinary course of business) unless, in connection
therewith, the transferee or lessee acknowledges, assumes and agrees to be bound by the terms
and conditions of this Deed of Trust in writing (satisfactory in form and substance to the
Beneficiary).
5
1308898 v3; S1Y@03!.DOC
ARTICLE III
SECURITY AGREEMENT AND FINANCING STATEMENT
3.1 Security Interest. This Deed of Trust shall be a security agreement between
Grantor, as the debtor, and Beneficiary, as the secured party, covering the Encumbered Property
constituting personal property or fixtures governed by the Texas Business and Commerce Code
(hereinafter called the "Code"), and for the purpose of further securing payment and performance
of the Obligations, Grantor grants to Beneficiary a security interest and lien in all rights, titles
and interests now owned or hereafter acquired by Grantor in the portion of the Encumbered
Property constituting personal property or fixtures governed by the Code other than Divisible
Expansion Assets (the "Collateral"). In addition to Beneficiary's other rights hereunder,
Beneficiary shall have all rights of a secured party under the Code. Grantor shall execute and
deliver to Beneficiary all financing statements and continuations thereof that may be required by
Beneficiary to establish and maintain the validity and priority of Beneficiary's security interest in
the Collateral.
3.2 Notice of Changes. Grantor shall give notice in writing to Beneficiary of any
proposed change in Grantor's name, principal place of business, identity, or structure and shall
execute and deliver to Beneficiary, prior to or concurrently with the occurrence of any such
change, all additional financing statements that Beneficiary may require to establish and
maintain the validity and priority of Beneficiary's security interest with respect to any of the
Encumbered Property described or referred to herein.
3.3 Fixtures. This Deed of Trust shall be effective as a financing statement filed as a
fixture filing with respect to all items of the Collateral described herein that are or are to become
fixtures related to the Land other than Divisible Expansion Assets, and this Deed of Trust shall
be effective as such from the date of its filing for record in the real estate records of the county in
which the Collateral is situated. Information concerning the security interest created by this
instrument may be obtained from Beneficiary, as secured party, at the address of Beneficiary
stated above. Granter does have an interest of record in the Land. Proceeds of the portion of the
Collateral constituting fixtures are also covered.
3.4 Reproductions. A carbon, photostatic or other reproduction of this Deed of Trust
shall be sufficient as a financing statement. The Beneficiary shall have the right at any time to
file a manually executed counterpart or a carbon, photostatic or other reproduction of this Deed
of Trust as a financing statement in either the central or local UCC records of any jurisdiction
wherein the Collaterai is situated, but the failure of the Beneficiary to do so shall not impair (i)
the effectiveness of this Deed of Trust as a fixture filing as permitted by Section 9.402(f) of the
Code as the same may be recodified from time to time or any successor provision, or (ii) the
validity and enforceability of this Deed of Trust in any respect whatsoever.
6
1308898 v3; S1Y@03!.DOC
conveyance froni the preceding Trustee) succeed to all of the title, estate, rights, powers and
duties of such preceding Trustee. Such instrument shall contain the name of the original
Grantor, Trustee and Beneficiary hereunder, the book and page where this Deed of Trust is
recorded and the name and address of the new Trustee.
6.23 Limited Recourse. The recourse of Beneficiary and Trustee against Grantor with
respect to the Obligations and this Deed of Trust shall be limited to Grantor's interest in the
Encumbered Property, and neither Grantor nor any of its directors, shareholders, partners,
officers, members, employees, agents or representatives shall be personally liable therefor. The
foregoing shall not waive any claim or right against in any such parties in the case of fraud,
misappropriation of funds or willful misconduct.
6.24 Maximum Obligations. The maximum amount of liability of Grantor hereunder
shall not exceed Twenty-Five Million Dollars ($25,000,000).
17
1308898 v3; S1Y@03!.DOC
IN WITNESS WHEREOF, the Grantor has executed or caused to be executed this Deed
of Trust, Security Agreement, Financing Statement and Fixture Filing as of the day, month and
year first above written.
Attest:
By: --------
Attest:
Jennifer Walters, City Secretary
By: --------
Approved as to Legal Form:
Herbert L. Prouty, City Attorney
By: ______ _
1308898 v3; S1Y@03!.DOC
GRANTOR
SPENCER STATION GENERATING
COMPANY, L.P.
By ~he $~~
N_ame: THOMAS ~ G
Title: PRESIDENT
ACCEPTED:
THE CITY OF DENTON, TEXAS
By __________ _
Name: Michael A. Conduff
Title: City Manager
18
IN WITNESS WHEREOF, the Grantor has executed or caused to be executed this Deed
of Trust, Security Agreement, Financing Statement and Fixture Filing as of the day, month and
year first above written.
Attest:
By: ---------
Attest:
Approved as to Legal Form:
1308898 v3; S1Y@03!.DOC
GRANTOR
SPENCER STATION GENERATING
COMPANY, L.P.
By ___________ _
Name:
Title:
ACCEPTED:
s
18
STATE OF µA«.,'f LA-1'-.)b )
) SS:
COUNTY OF ~Cl f\J\G.,o w..a'( )
This instrument was acknowledged before me on this "Zk\ day of June, 2001, by
Turo@~ lfl\'lf\@. , "J?c::~ffi~ of Spencer Station Generating Company, L.P., on
behalf of said limited pfu.tnership.
[SEAL]
lvfy Commission Expires:
STATE OF TEXAS )
) ss.
COUNTY OF DENTON )
fuJu~~~
Notary Public in and for the
State of~ \J--<-:\.-e.'-{ L ~~
MICHELE BRISTOL
NOTARY PUBLIC STATE OF MARYlAND
~opl,3ionJ11~ifes Oeleeer la, 2002 Not s nnte Name
This instrument was acknowledged before me on this __ day of June, 2001, by Michael A.
Conduff, City Manager of the City of Denton, Texas, a Texas home rule municipal corporation,
on behalf of said municipal corporation.
[SEAL]
My Commission Expires:
1308898 v3; S1Y@03!.DOC
Notary Public in and for the
State of Texas
Notary's Printed Name
19
STATE OF
COUNTY OF
)
) SS:
)
This instrument was acknowledged before me on this __ day of June, 2001, by
__________ , ______ of Spencer Station Generating Company, L.P., on
behalf of said limited partnership.
[SE AL]
My Commission Expires:
STATE OF TEXAS )
) ss.
COUNTY OF DENTON )
Notary Public in and for the
State of Texas
Notary's Printed Name
This instrument was acknowledged before me on this .iJ!: day of June, 2001, by Michael A.
Conduff, City Manager of the City of Denton, Texas, a Texas home rule municipal corporation,
on behalf of said municipal corporation.
[SEAL]
Not y Public m and or the
My Commission Expires:
State &i~as & Ji.e,
Notary's Printe~
19
1308898 v3; S1Y@03!.DOC
EXHIBIT A
1. Spencer Station Real Property Description. Spencer Station Real Property described below
and all improvements made therein except for Divisible Expansion Assets, if any, as described
below and all improvements made therein as described in the survey of Landmark Surveyors,
Inc., dated October 19; 1999, Job. No. 991164 (excluding any such improvements that are
Excluded Assets)
FIELD NOTES
17.751 ACRES
BEING all that certain lot, tract or parcel of land situated in the Mary Austin Survey Abstract
Number 4, in the City of Denton, Denton County, Texas, being a part of Lot 1, Block 2 of
Municipal Utility Addition, an addition to the City of Denton, Denton County, Texas according
to the plat thereof recorded in Cabinet G, Page 346, Plat Records, Denton County, Texas, and
being more particularly described as follows:
COMMENCING at an iron rod found for comer in the north line of Spencer Road, a public
roadway having a right-of-way of 60.0 feet, said point being the southwest comer of that certain
tract of land conveyed by deed to N. Alex Bickley, Trustee recorded in Volume 987, Page 548,
Deed Records, Denton County, Texas;
THENCE N 88° 39' 46" W, 130.00 feet with said north line of said Spencer Road to an iron rod
set for PLACE OF BEGINNING;
THENCE N 88° 39' 46" W, 299.83 feet with said north line of said Spencer Road to an iron rod
set for corner;
THENCE along the arc of a curve to the right having a central angle of 32° 15' 19', a radius of
520.00 feet, an arc length of 292.74 feet, whose chord bears N 72° 32' 06" W, 288.89 feet with
said north line of said Spencer Road to an iron rod set for corner;
THENCE N 52° 50' 00" W, 281.92 feet with said north line of said Spencer Road to an iron rod
set for corner;
THENCE N 52° 36' 00" W, 111.50 feet with said north line of said Spencer Road to an iron rod
set for corner;
THENCE N 20° 02' 44" E, 92.00 feet to an iron rod set for comer;
THENCE N 02° 23' 36" W, 267.94 feet to an iron rod set for comer;
THENCE N 88° 09' 17" E, 48.91 feet to an iron rod set for comer;
THENCE N 01 ° 50' 44" W, 206.45 feet to an iron rod set for corner;
THENCE N 38° 22' 23" E, 161.33 feet to an iron rod set for comer;
1308898 v3; S1Y@03!.DOC
THENCE N 880" 03' 43" E, 749.08 feet to an iron rod set for comer;
THENCE S 44° 06' 44" E, 53.08 feet to an iron rod set for comer;
THENCE S 00° 53'-14" W, 562.85 feet to an iron rod set for comer;
THENCE S 87° 46' 24'; W, 258.02 feet to a fence comer for comer;
THENCE S 02° 25' 18" E, 114.07 feet to an iron rod set for comer;
THENCE S 86° 24' 16" W, 68.28 feet to an iron rod set for comer;
THENCE S 02° 32' 00" E, 151.23 feet to a fence comer for comer;
THENCE N 87° 35' 34" E, 294.01 feet to a fence comer for comer;
THENCE S 09° 41' 28" W, 180.28 feet to the PLACE OF BEGINNING and containing 17.751
acres ofland.
2. Spencer Station Operating Equipment and Facilities
Spencer Unit #5:
One General Electric single casing, single flow, four extraction steam turbine, serial #178861 ,
rated at 65,481 kW. One General Electric generator, serial #8384471, rated at 76,470 kVA, 0.85
Power Factor, 30psig Hydrogen, 14,400 volts, Wye Connected, ATB-2 Poles, 60 Cycles, with a
Direct Driven, 195 kW, 250 volt, 780 amp Air Cooled exciter. One Combustion Engineering
front wall, horizontal burner, natural gas fired, 640,000 lb/hr, 1250 psig, 950°F controlled
superheat steam generator, contract # 214 70. The unit also includes all associated auxiliary
machinery directly associated with operation of the unit including that noted below.
Cooling Tower# 5
Marley cross-flow, Treated Fir model 6515-4-05, serial# 6515-12-54-70, 5 cell, 5 Marley type
HP4-8 fans
Spencer Unit #4
One General Electric single casing, single flow, four extraction steam turbine, serial #164191,
rated at 65,481 kW. One General Electric generator, serial #8354669, rated at 66,667 kV A, 0.90
Power Factor, 30psig Hydrogen, 14,400 volts, Wye Connected, ATB-2 Poles, 60 Cycles, with a
Direct Driven, 200 kW, 250 volt, Air Cooled exciter. One Combustion Engineering front wall,
horizontal burner, natural gas fired, 530,000 lb/hr, 1263 psig, 950°F controlled superheat steam
generator, contract# 11364. The unit also includes all associated auxiliary machinery directly
associated with operation of the unit including that noted below.
Cooling Tower# 4
2
Marley cross-flow, Redwood, serial# 6516-0-3, 4 cell, 4 Marley type HP-4 fans
Spencer Unit #3
One General Electric, single casing, single flow, four extraction steam turbine, serial # 13 7 431,
rated at 22,000 kW. One General Electric generator, serial #8287298, generator field# 842146,
rated at 32000 kV A, 0.85 Power Factor, 30psig Hydrogen, 13,800 volts, Wye Connected, ATB-2
Poles, 60 Cycles, with a Direct Driven, 200 kW, 250 volt, Air Cooled exciter. One Combustion
Engineering, tangential, horizontal, tilting burner, natural gas fired, 280,000 lb/hr, 850 psig,
900°F controlled superheat steam generator, serial# 19527. The unit also includes all associated
auxiliary machinery directly associated with operation of the unit including that noted below.
Cooling Tower# 3
Marley cross-flow, Redwood, 4 cell, 4 60hp Allis-Chalmers fans
31 1-5143-44698-1-1
32 1-5143-44698-1-2
33 1-5143-44698-1-3
34 1-5143-44698-1-4
Spencer Unit #2
One General Electric, single casing, single flow, four extraction steam turbine, serial #112511,
rated at 12650 kW. One General Electric generator, serial #6978289, rated at 13529 kV A, 0.85
Power Factor, 13,800 volts, Wye Connected, ATB-2 Poles, 60 Cycles, with a Direct Driven, 50
kW, 250 volt, Self ventilated, Air Cooled, Shunt wound exciter. One Combustion Engineering,
tangential horizontal, tilting burner, natural gas fired, 280,000 lb/hr, 600 psig, 825°F controlled
superheat steam generator, serial # 17895. The unit also includes all associated auxiliary
machinery directly associated with operation of the unit including that noted below.
Cooling Tower# 1 & 2
Marley No. 4-32A5 cross-flow, Induced Draft, Redwood, 4 cell, 4 Allis-Chalmers 75hp fans
Spencer Unit #1
One General Electric,-single casing, single flow, four extraction steam turbine, serial # 112512,
rated at 12650 kW. One General Electric generator, serial #6978290, rated at 13529 kVA, 0.85
Power Factor, 13,800 volts, Wye Connected, ATB-2 Poles, 60 Cycles, with a Direct Driven, 50
kW, 250 volt, Self ventilated, Air Cooled, Shunt wound exciter. One Combustion Engineering,
tangential horizontal, tilting burner, natural gas fired, 280,000 lb/hr, 600 psig, 825°F controlled
superheat steam generator, serial # 17895. The unit also includes all associated auxiliary
machinery directly associated with operation of the unit including that noted below.
CEM Equipment
Installed by: KVB/Analect in accordance with Appendix D of"40 CFR 75"
Dilution Extraction Probe
3
Manufacture: Ei>M
Model 797 .302
Serial#
NOx Analyzer _
Manufacture: TECO
Model 42D .:. Range 500ppm
Serial # 42d-480'.35-279
CO2 Analyzer
Manufacture: TECO
Model 4 lH -Range 1000/2000ppm
Serial# 41h-46262-276
Data Handling System (PLC)
Manufacture: GE Fanuc
Model 90-30
Serial#
Data Acquisition System (PC w/ SCO UNIX OS)
Manufacture: Dell Computers
Model 200Mhz MMX w/ 2GB HD and 128 MB RAM
Serial# 10017005
Software(PC)
Manufacture:
Model
Serial#
CEMS Unit 5
Process Analysts, Inc.
Compliance 3.1
96309.01
Installed by: KVB/Analect in accordance with Appendix D of"40 CFR 75"
Dilution Extraction Probe
Manufacture: EPM
Model 797.302
Serial#
NOx Analyzer
Manufacture: TECO
Model 42D -Range 500ppm
(1) Serial# 42d-48007-279
CO2 Analyzer
Manufacture: TECO
Model 41H -Range 1000/2000ppm
Serial# 41h-47064-227
Data Handling System(PLC)
Manufacture: GE Fanuc
Model 90-30
Serial#
Data Acquisition System (PC w/ SCO UNIX OS)
Manufacture: Dell Computers
Model 200Mhz MMX w/ 2GB HD and 128 MB RAM
Serial# 10017005
Software(PC)
Manufacture: Process Analysts, Inc.
4
Model
Serial#
Compliance 3.1
96309.01
Other Spencer Equipment
1 33.6 MV A General Electric 69/13.2 KV power transformer
1 29 MV A Federal Pacific 69 KV/13.2 KV power transformer
1 Allis Chalmers 69 KV OCB, DME ID S310
1 Allis Chalmers 16 KV OCB, DME ID S320
1 General Electric 13.2 kV grounding transformer
1 Federal Pacific 13 .2 KV grounding transformer
4 Auxiliary oil cooler
1 Auxiliary oil filter for L TC
1 78.4 MV A, 69/14.4KV, Unit 5 generator transformer
1 5 MV A, 14.4/4.36KV Unit 5 main auxiliary transformer
2 0.75 MV A, 4.36/
1 65.5 MV A, 69/14.4KV, Unit 4 generator transformer
1 5 MV A, 14.4/4.36KV Unit 4 main auxiliary transformer
2 0.75 MVA, 4.36/
1 39.2 MV A, 69/14.4KV Unit 3 generator transformer
1 Unit 3 auxiliary transformer
1 Breaker G210
1 Breaker G220
1 Breaker G231
1 Breaker G330
1 Breaker G340
1 Breaker G350
All related generation cubicles including all breakers, relays, metering apparatus, control
switches, control wiring, transducers, terminal blocks and other equipment contained within the
cubicles.
ASSET DESC
8243 PHOTOMETER
8255 MICROSCOPE, MONO
8280 TYPEWRITER
8310 PLATFORM SCALE 800LB
8323 DRY CHEMICAL FIRE EX
8326 DRY CHEMICAL FIRE EX
8344 PORTABLE TOOL CART
8363 FLOOR POLISHER
8364 SHELVING 25LF
8377 TORCH
8474 VIBRATION ANALYZER
8626 VIBRATION MONITOR
8668 OSCILLOSCOPE PORT
8674 BLOCK CALIBRATOR
8797 HYDRAULIC JACK 1 00T
10624 AIR CONDITIONER
5
10680 PORTABLE SUMP PUMP
98467 COMPUTER FLOOR 400SF
98519 CHAIR SIDE ARM
98621 CHAIN HOIST 1/2T
98680 FLOOR MATS
98952 FIRE HOSE BOX
98960 AXIALVAN FAN
10686 VIBRATION RAMMER
10712 TONE REMOTE
8216 TV MONITORING CONTRO
98551 TV CAMERAS
10755 AIR CONDITIONER
8208 AIR PACK
8229 OPERATOR CHAIR
8230 OPERATOR CHAIR
8231 OPERATOR CHAIR
8232 OPERATOR CHAIR
8276 MEMO CASE
8319 WELDER
8325 HYDRAULIC LIFT
8328 PORTABLE FAN
8330 PORTABLE PUMP
8345 PORTABLE TOOL CART
8350 PORT MIG WELDER
8353 PORTABLE TOOL CHEST
8421 BOOKCASE 3X6 WOOD
8422 BOOKCASE 3X6 WOOD
8425 AIR CONDITIONER 12,0
8427 AIR CONDITIONER
8478 PRINTER
8707 MEGGER
10756 DESK 2PD METAL
98494 CHAIR SIDE
98664 FIRE EXT
98940 FIRE EXT
98981 ALARM CABINET
8782 PARTITIONS 5X5
8209 COPIER
8301 HYDRAULIC MANLIFT
8390 PRINTER
8783 COVERED CABINET 6FT
8785 -DESK6FT
93001 AIR CONDITIONER
8233 OPERATOR CONSOLE 3X1
98358 BATTERY ROOM METAL
8227 FAX MACHINE
8253 MULTIMETER
8321 PORTABLE WASHER
8346 PORTABLE TOOL CART
6
8347 PORT ABLE TOOL CART
8348 PORT ABLE TOOL CART
8370 PALLET JACK 4500LBS
8376 PORTABLE TOOL CART
8457 PORTABLE l=ILTER PUMP
8637 HYDRO PROGRAMMER
8792 HYDRO PROGRAMMER
8808 HYDRAULIC TORQUE WRE
8841 PLOTTER
10702 PORTABLE CALIBRATOR
10730 CONSTANT VOLT TRANSF
10731 BATTERY AND RACK
10732 CHARGER
8475 FOOD CENTER
8625 VIDEO CAMERA VHS
8638 MONITOR
8396 FILE, LATERAL 5DR
10688 PORTABLE GENERATOR
10689 PORTABLE GENERATOR
98489 OVER FILE 3X4 METAL
98562 SPECTRO PHOTOMETER
98968 HOIST RAIL 25LF
15202 PRINTER HP560C DESKJ
15210 MECHANICS CHEST 12 D
15211 MECHANICS CHEST 5 DR
15212 MECHANICS CHEST 5 DR
15214 MECHANICS CHEST 10 D
15215 MECHANICS CHEST 10 D
15213 MECHANICS CHEST 12 D
15216 TOOL CABINET 7 DRAWE
15217 TOOL CABINET 7 DRAWE
15223 MODULAR WORKSTATION
15230 MILLER SYCROWAVE & A
16163 STORAGE ROOM ADDITIO
16167 MICRO OHM METER 10AM
16179 MILLER SPECTROM PLAS
16173 FIELD LINK:VER7.2&RE
16166 CHLORINATORWNACCUM
16180 MUL Tl FUNCTION CENTER
16174 DRUM DOLLY
16175 DRUM D.OLLY
16176 DRUM DOLLY
16165 COMB. GATE VALVE RES
16178 ANALYZER, ECOM-AC
17330 MOTOR DRIVER INVERTO
17344 HUDSON FAN
17347 CORRELATION WHEEL 41
17348 CORRELATION WHEEL 41
17362 BUTTERFLY W/GEAR OPE
7
17381 DR/2010 SPETROPHMETE
17403 POWER PLANT AIR DRYE
18274 15GALLON STAINLESS S
18275 3 TON 20' LIFT HAND
18276 3TON 20' LIFT" HAND C
18277 6TON 20' LIFT HAND C
18278 5TON 20' LIFT HAND C
18285 CUSTOM WORKSTATION
18265 3" IPT TRASH PUMP GO
18266 LAGUNA MILL W/COLLEC
18267 PORTABLE GAS DETECTO
18268 GAS MONITOR WITH SEN
18269 10 TN AIR HANDLER 48
18270 POTENTIOMETER VOL TAG
18286 CUSTOM CABINETS,DESK
18271 RATCHETING HYDRAULIC
18279 ICE-0-MATIC ICE CUBE
18280 SITMATIC BIG/TALL HI
18281 SITMATIC BIG/TALL HI
18282 SITMATIC BIG/TALL HI
18283 SITMATIC BIG/TALL HI
18284 SITMATIC BIG/TALL HI
18262 CENTRIFUGAL PUMP 120
3. Related Agreements
1. Letter Agreement regarding DGG capacity among the City of Garland, Seller, and
Greenville Electric Utility System, dated as of December 31, 2000.
8
FIDELITY NATIONAL TITLE INSURANCE COMPANY
AFF'IDAVIT AS TO DEBTS AND LIENS
THE STATE OF TEXAS §
§
COUNTY OF DENTON §
BEFORE ME, the undersigned authority, on this day personally
appeared the undersigned (hereinafter called Affiant, whether one
or more) and each says, as follows:
/1/1 0 ,_ ' ,.J.-+a!.J., J , ;·~,1(:..,.
1. Affiant is I IIIUHf.L 'J' U)f'£uP.1.p, I) ~~c.v-t '') 111., of the City of
Denton, a Texas home rule municipal 'corporation~' the owner of the
property (the "Owner") described on Exhibit "A" attached hereto and
made a part hereof (the "Property").
2. Owner is desirous of selling the Property and has requested
FIDELITY NATIONAL TITLB INSURANCE COMPANY to issue a title policy
guaranteeing the title of same to their Purchaser.
3. In connection with the issuance of such policy, Affiant states
to the best of his knowledge:
a. That the Owner owes no past due Federal or
State taxes and that there are no delinquent
Federal assessments presently existing against
the Property, and that to Affiant's knowledge,
no Federal or State liens have been filed
against the Property.
b. That there are no delinquent State, County,
City, School District, Water District or other
governmental agency taxes due or owing against
the Property and that to Affiant's knowledge
no tax suit has been filed by any State,
County, Municipal, Water District or other
governmental agency for taxes levied against
the Property.
c. That all labor and material used in the
construction of improvements or repairs, if
any, on the Property have been paid for and
there are now no unpaid labor or material
claime against the improvements or repairs, if
any, or the Property upon which same are
situated, and Affiant hereby declares that all
sums of money due for the erection of
improvements or repairs, if any, have been
fully paid and satisfied and there are no
Attidavie as to D@ts and Liens Page+
Mechanic's or Materialman's liens against the
Property, except;
None.
d. That to Affiant' s knowledge no mowing lien,
paving assessment or lien, nor any other
privileged lien has been filed against the
Property, and Affiant owes no paving charges,
except;
None.
e. That to Affiant's knowledge there are no
judgment liens filed against Owner as to the
Property.
f. There are no proceedings in bankruptcy or
receivership instituted by or against Owner,
nor has Owner made an assignment for th_e
I ~t of creditors; nor has owner been namect ~ in an~suits currently pending in any Federal . rAfl) or Stat.e Court which relate to tfie property or the transaction ~ g. That Aff iant knows of no adverse claim to the related there
Property and that so far as Affiant knows
there are no encroachments or boundary
conflicts.
h. That there a:re no outstanding building
improvement loans, recorded or unrecorded,
e~cept as follows;
None.
i. That Owner has not heretofore sold, contracted
to sell or conveyed any part of the Property
other than in connection with this sale.
j. That there are no unpaid debts for electric or
plumbing fixtures, water heaters, floor
furnaces, air conditioners, radio or
television antennae, carpeting, rugs, lawn
sprinkling systems, venetian blinds, window
shades, draperies, electric appliances,
fences, street paving, or any personal
property or fixtures that are located on the
Property, and that no such items have been
purchased on time payment contracts, and there
are no security interests on such property
secured by financing statements, security
agreement or otherwise except the following:
None.
Affidavit as co Debts and Liens Page 2
k. That there are no loans of any kind on the
Property except;
None.
1. That there are no dues or assessments owing to
any property owner's association.
m. That Owner has not entered into any oral or
written lease agreements, given permission to
use, occupy, or enter or otherwise granted or
suffered any possessory rights of any nature
whatsoever which are presently existing as of
this date, except:
None.
n. That neither owner nor Owner's authorized agent has
signed a commission agreement with any real estate broker
concerning the Property, except:
None.
4. Affiant recognizes that but for the making of the hereinabove
statements of fact relative to the Property FIDBLJ:TY NATIONAL TITLE
INSURANCE COMPANY would not issue a title guaranty policy on the
Property and that such statements have been made as a material
inducement for the issuance of such policy.
Executed on the z_q i-h day of June, 2001.
THE STATE OF TEXAS
COUNTY OF DALLAS
This instrument
me, on this o2!;
§
§
§
Affidavit as co Debts and Li~.ns
' MELODIE LAMBETH
Notary Public
STATE OF TEXAS
My Comm. Expires 01-17-2005
Page 3
STATE OF TEXAS )
) SS:
COUNTY OF DENTON )
NON-FOREIGN AFFIDAVIT
Section 1445 of the Internal Revenue Code of 1986, as am.ended (the "Code") provides that a
transferee of a U.S. real property interest must withhold tax if the transferor is a foreign person. To
inform the transferee that withholding of tax is not required upon the disposition of a U.S. real property
interest by THE CITY OF DENTON, TEXAS, a municipal corporation of the State of Texas and a
home rule city (the "Transferor"), the undersigned hereby certifies the following:
1. The Transferor is not a foreign corporation, foreign partnership, foreign trust or foreign
estate ( as those terms are defined in the Code and treasury regulations promulgated pursuant
thereto);
2. The Transferor's U.S. taxpayer identification number is _(not applicable) ___ .; and
3. The Transferor's office address is c/o Denton Municipal Electric, 901-A Texas Street,
Denton, Texas 76201.
The Transferor understands that this certification m.ay be disclosed to the Internal Revenue
Service by the transferee and that any false statement contained herein could be punished by fine,
imprisonment, or both.
I 0018. l/SP3/RRS/JKF /06250 I
1309057 v2; S22P02!.DOC
Under penalty of perjury I declare that I have examined this certification and to the best of my
knowledge and belief it is true, correct and complete, and I further declare that I have the authority to
sign this document on behalf of the Transferor.
THE CITY OF DENTON, TEXAS
Attest:
Approved as to Legal Form:
STATE OF TEXAS §
§
COUNTY OF DENTON §
This instrument was acknowledged before me on this ~day of June_, 2001, by Michael A.
Conduff, City Manager of the City of Denton, Texas, a Tex ome rule municipal corporation, on
behalf of said municipal corporation.
[SE AL]
My Commission Expires:
oot!j Ot
I 00l 8. l/SP3/RRS/JKF/06200 I
1309057 v2; $22P02!.DOC
Nata
.,.
OFFICER'S CERTIFICATE
I, Thomas B. King, hereby certify that I am the duly elected, qualified and
serving President of Spencer Station Generating Company, L.P., a Delaware limited
partnership (the "Company"). Capitalized terms used herein and not otherwise defmed
herein shall have the meaning given to such terms in the Asset Purchase Agreement (the
"Agreement") dated as of June~, 2001, among the Company, the City of Denton,
Texas, a municipal corporation of the State of Texas and a home rule city, and PG&E
Generating Company, LLC, a Delaware limited liability company. This Certificate is
being delivered pursuant to Section 8.2(f) of the Agreement.
In the above capacity, I hereby certify on behalf of the Company, without
personal liability, the following matters:
(a) To my knowledge, the Company has in all material respects performed
and complied with the covenants and agreements contained in the Agreement which are
required to be performed and complied with by it on or prior to the Closing Date
including, without limitation, execution and delivery of the Ancillary Agreements.
(b) To my knowledge, the representations and warranties of the Company set
forth in the Agreement are true and correct in all material respects as of the date hereof as
though made at and as of the date hereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
DAl:\262356\0l\5MF _01 !.DOC\78599.0028
IN WITNESS WHEREOF, I have duly executed this Certificate this 1!f/!!_ day of
June, 2001.
DAI :\262356\0 I \5MF _ 0 I !.DOC\78599.0028
SPENCER STATION GENERATING
COMPANY, L.P.
By: ~® l~/2:; ,-
Name: Thomas B. King J
Title: President
2
THE STATE OF TEXAS §
COUNTY OF DENTON §
THE CITY OF DENTON, TEXAS
OFFICIAL'S CERTIFICATE
The undersigned, Michael A. Conduff, in his capacity as City Manager of the City of
Denton, Texas, a municipal corporation of the State of Texas and home-rule city (the "Seller"),
hereby certifies on behalf of the Seller, pursuant to Section 8.l(e) of that certain Asset Purchase
Agreement, dated as of June 251 , 2001 (the "Asset Purchase Agreement"), by and among the
Seller, Spencer Station Generating Company, L.P., a Delaware limited partnership, and PG&E
Generating Company, LLC, a Delaware limited liability company, that, to the best of the
undersigned's Knowledge: (i) the Seller has in all material respects performed and complied
with each of its covenants and agreements contained in the Asset Purchase Agreement which are
required to be performed and complied with by the Seller on or prior to the Closing Date,
including without limitation execution and delivery of all Ancillary Agreements; and (ii) the
representations and warranties of the Seller set forth in the Asset Purchase Agreement are true
and correct in all material respects as of the Closing Date as though made at and as of the
Closing Date.
Capitalized terms used but not otherwise defined herein shall have the respective
meanings set forth in the Asset Purchase Agreement.
IN WITNESS WHEREOF, the undersigned has executed this Official's Certificate on
the ~day of June, 2001.
Ht: CE nt ED JU l O. 6 200,
WEIL, GOTS HAL & MANGES LLP
100 CRESCENT COURT
SUITE 1300
DALLAS, TEXAS 75201-6950
(214) 746-7700
HOUSTON
MENLO PARK
(SILICON VALLEY)
MIAMI
FAX: (214) 746-7777
NEW YORK
WASHINGTON , D .C .
WRITER'S DIRECT LINE
(214) 746-7866
dawn.stout@weil.com
Ms. Sharon Van Skiver
Strasburger and Price LLP
901 Main Street, Suite 4300
Dallas, Texas 75202-3794
Dear Sharon:
July 3, 2001
Please find enclosed for filing on behalf of The City of Denton, Texas, a
revised UCC Financing Statement relating to the sale of Spencer Station to Spencer
Station Generating Company, L.P. Please note that the UCC should be filed with the
Delaware Secretary of State, per the new UCC rules. Please do not hesitate to call me at
the above referenced phone number if you have any questions. Thank you again for your
help with the transaction.
·~'<....,-.. l.
--..Y._ ery truly yhours,
~~-'; oY
Dawn A. Stout
Enclosures
cc: Mike Copeland (City of Denton) /
Peter E. Meier (PG&E National Energy Group)
Emmanuel Faust (Dickstein Shapiro Morin & Oshinsky LLP)
Leslie S. Smith
DAl :\166661 \01 \5PR901 !.DOC\78599.0028
BRUSSELS
BUDAPEST
LONDON
PRAGUE
WARSAW
UCC FINANCING STATEMENT
FOLLOW lNSTRUCTIONS (front and back) CAREFULLY
A NAME & PHONE OF CONTACT AT FILER [optional}
B. SEND ACKNOWLEDGMENT TO: (Name an_d Address)
lcsc The United States Corporation Company
Suite 400, 2711 Centerville Road
Wilmington, DE 19808
L
7
_J
THE ABOVE SPACE IS FOR FILING OFFICE USE ONLY
1. DEBTOR'S EXACT FULL LEGAL NAME• insert only llllll debtor name (1a or 1b). do not abbreviate or combine names
1a. ORGANIZATION'S NAME
SPENCER STATION GENERA TING COMP ANY, L.P.
OR 1b. lNOIVIDUAL'S LAST NAME FIRST NAME MIDDLE NAME SUFFIX
1c. MAILING ADDRESS CllY STATE I POSTAL CODE COUNTRY
901 Spencer Road Denton TX 76205
1d. TAX 10 #: SSNOR EIN I ADD'L INFO RE j 1 e. lYPE OF ORGANIZATION 1f. JURISDICTION OF ORGANIZATION 1g. ORGANIZATIONAL ID#, if any
ORGANIZATION
nNONE DEBTOR I I I
2. ADDITIONAL DEBTOR'S EXACT FULL LEGAL NAME -insert only .Qil!l debtor name (2a or Zb} -do not abbreviate or combine names
2a. ORGANIZATION'S NAME
.9~ 2b:·INDIVIDUAL'S-LAST NAME· . ~·.• . ,-.. a • ···•· FIRST NAME .-MIDDLE NAME SUFFIX
2c. MAILING ADDRESS CITY STATE rOST AL CODE -COUNTRY
2d. TAX ID#: SSNDREIN I ADD'L INFO RE I 2e. TYPE OF ORGANIZATION 2f. JURISDICTION OF ORGANIZATION 2g. ORGANIZATIONAL ID #, if any
ORGANIZATION-
nNONE DEBTOR I J I
3. SECURED PARTY'S NAME (or NAME of TOTAL ASSIGNEE of ASSIGNOR SIP) -insert only= secured party name (3a or 3b)
3a. ORGANIZATION'S NAME
CITY OF DENTON, TX
OR 3b. INDIVIDUAL'S LAST NAME FIRST NAME MIDDLE NAME SUFFIX
3c. MAILING ADDRESS CITY STATE !POSTAL CODE COUNTRY
901-A Texas Street Denton TX 76201
4. This FINANCING STATEMENT covers the following collateral:
See Exhibit "a" attached hereto and incorporated herein for all purposes by this reference.
CSC ID: 135980 DE-Secretary of State
LESSEE/LESSOR
Debtor2
8. OPTIONAL FILER REFERENCE DATA
FILING OFFICE COPY-NATIONAL UCC FINANCING STATEMENT (FORM UCC1) (REV. 07/29/98)
1. Spencer Station Operating Equipment and Facilities
Spencer Unit #5:
One General Electric single casing, single flow, four extraction steam turbine, serial
#178861, rated at 65,481 kW. One General Electric generator, serial #8384471, rated at
76,470 kV A, 0.85 Power Factor, 30psig Hydrogen, 14,400 volts, Wye Connected, ATB-2
Poles, 60 Cycles, with a Direct Driven, 195 kW, 25 0 volt, 780 amp Air Cooled exciter.
One Combustion Engineering front wall, horizontal burner, natural gas fired, 640,000 .
lb/hr, 1250 psig, 950°F controlled superheat steam generator, contract# 21470. The unit
also includes all associated auxiliary machinery directly associated with operation of the
unit including that noted below.
Cooling Tower# 5
Marley cross-flow, Treated Fir model 6515-4-05, serial# 6515-12-54-70, 5 cell, 5 Marley
type HP4-8 fans
Spencer Unit #4
One General Electric single casing, single :flow, four extraction steam turbine, serial
#164191, rated at 65,481 kW. One General Electric generator, serial #8354669, rated at
66,667 kV A, 0.90 Power Factor, 30psig Hydrogen, 14,400 volts, Wye Connected, ATB-2
Poles, 60 Cycles, with a Direct Driven, 200 kW, 250 volt, Air Cooled exciter. One
Combustion Engineering front wall, horizontal burner, natural gas fired, 530,000 lb/hr,
1263 psig, 950°F controlled superheat steam generator, contract# 11364. The unit also
includes all associated auxiliary machinery directly associated with operation of the unit
including that noted below.
Cooling Tower# 4
Marley cross-flow, Redwood, serial# 6516-0-3, 4 cell, 4 Marley type HP-4 fans
Spencer Unit #3
One General Electric, single casing, single flow, four extraction steam turbine, serial
#137431, rated at 22,000 kW. One General Electric generator, serial #8287298,
generator field# 842146, rated at 32000 kV A, 0.85 Power Factor, 30psig Hydrogen,
13,800 volts, Wye Connected, ATB-2 Poles, 60 Cycles, with a Direct Driven, 200 kW,
250 volt, Air Cooled exciter. One Combustion Engineering, tangential, horizontal, tilting
burner, natural gas fired, 280,000 lb/hr, 850 psig, 900°F controlled superheat steam
generator, serial# 19527. The unit also includes all associated auxiliary machinery
directly associated with operation of the unit including that noted below.
DA I :'.266291\01 \SPGZOI !.DOC\78599.0028
Cooling Tower# 3
Marley cross-flow, Redwood, 4 cell, 4 60hp Allis-Chalmers fans
31 1-5143-44698-1-1
32 1-5143-44698-1-2
33 1-5143-44698-1-3
34 l-5143-44698-1-4
Spencer Unit #2
One General Electric, single casing, single flow, four extraction steam turbine, serial
#112511, rated at 12650 kW. One General Electric generator, serial #6978289, rated at
13529 kV A, 0.85 Power Factor, 13,800 volts, Wye Connected, ATB-2 Poles, 60 Cycles,
with a Direct Driven, 50 kW, 250 volt, Self ventilated, Air Cooled, Shunt wound exciter.
One Combustion Engineering, tangential horizontal, tilting burner, natural gas fired,
280,000 lb/hr, 600 psig, 825°F controlled superheat steam generator, serial# 17895. The
unit also includes all associated auxiliary machinery directly associated with operation of
the unit including that noted below.
Cooling Tower# 1 & 2
Marley No. 4-32A5 cross-flow, Induced Draft, Redwood, 4 cell, 4 Allis-Chalmers 75hp
fans
Spencer Unit #1
One General Electric, single casing, single flow, four extraction steam turbine, serial
#112512, rated at 12650 kW. One General Electric generator, serial #6978290, rated at
13529 kV A, 0.85 Power Factor, 13,800 volts, Wye Connected, ATB-2 Poles, 60 Cycles,
with a Direct Driven, 50 kW, 250 volt, Self ventilated, Air Cooled, Shunt wound exciter.
One Combustion Engineering, tangential horizontal, tilting burner, natural gas fired,
280,000 lb/hr, 600 psig, 825°F controlled superheat steam generator, serial# 17895. The
unit also includes all associated auxiliary machinery directly associated with operation of
the unit including that noted below.
CEM Equipment
Installed by: KVB/Analect in accordance with Appendix D of"40 CFR 75"
Dilution Extraction Probe
Manufacture: EPM
Model 797.302
Serial#
NOx Analyzer
DA I ''.266291\0l\5PGZ01 !DOa78599.0028 2
Manufacture: TECO
Model 42D -Range 500ppm
Serial# 42d-48035-279
CO2 Analyzer
Manufacture: TECO
Model 4 lH -Range 1000/2000ppm
Serial# 41h-46262-276
Data Handling System (PLC)
Manufacture: GE Fanuc
Model 90-30
Serial#
Data Acquisition System (PC w/ SCO UNIX OS)
Manufacture: Dell Computers
Model 200Mhz MMX w/ 2GB HD and 128 MB RAM
Serial # 10017005
Software(PC)
Manufacture:
Model
Serial#
CEMS Unit 5
Process Analysts, Inc.
Compliance 3 .1
96309.01
Installed by: KVB/Analect in accordance with Appendix D of<'40 CFR 75"
Dilution Extraction Probe
Manufacture: EPM
Model 797.302
Serial#
NOx Analyzer
Manufacture: TECO
Model 42D -Range 500ppm
(1) Serial# 42d-48007-279
CO2 Analyzer
Manufacture: TECO
Model 4 lH -Range 1000/2000ppm
Serial# 41h-47064-227
Data Handling System(PLC)
Manufacture: GE Fanuc
Model 90-30
Serial#
Data Acquisition System (PC w/ SCO UNIX OS)
Manufacture: Dell Computers
Model 200Mhz MMX w/ 2GB HD and 128 MB RAM
Serial# 10017005
Software(PC)
DAI :\266291 \0l\5PGZ0I !.DO078599.0028 3
Manufacture: Process Analysts, Inc.
Model Compliance 3 .1
Serial# 96309.01
Other Spencer Equipment
1 33.6 MV A General Electric 69/13.2 KV power transformer
1 29 MV A Federal Pacific 69 KV /13 .2 KV power transformer
1 Allis Chalmers 69 KV OCB, DME ID S310
1 Allis Chalmers 16 KV OCB, DME ID S320
1 General Electric 13.2 kV grounding transformer
1 Federal Pacific 13 .2 KV grounding transformer
4 Auxiliary oil cooler
1 Auxiliary oil filter for L TC
1 78.4 MV A, 69/l 4.4KV, Unit 5 generator transformer
1 5 MV A, l 4.4/4.36KV Unit 5 main auxiliary transformer
2 0.75 MVA, 4.36/
1 65.5 MVA, 69/14.4KV, Unit 4 generator transformer
1 5 MV A, l 4.4/4.36KV Unit 4 main auxiliary transformer
2 0.75 MV A, 4.36/
1 39.2 MV A, 69/14.4KV Unit 3 generator transformer
1 Unit 3 auxiliary transformer
1 Breaker G210
1 Breaker G220
1 Breaker G23 l
1 Breaker G330
1 Breaker G340
1 Breaker G350
All related generation cubicles including all breakers, relays, metering apparatus, control
switches, control wiring, transducers, terminal blocks and other equipment contained
within the cubicles.
ASSET DESC
8243 PHOTOMETER
8255 MICROSCOPE, MONO
8280 TYPEWRITER
8310 PLATFORM SCALE 800LB
8323 DRY CHEMICAL FIRE EX
8326 DRY CHEMICAL FIRE EX
8344 PORTABLE TOOL CART
8363 FLOOR POLISHER
8364 SHELVING 25LF
8377 TORCH
8474 VIBRATION ANALYZER
8626 VIBRATION MONITOR
8668 OSCILLOSCOPE PORT
8674 BLOCK CALIBRATOR
8797 HYDRAULIC JACK 1 OOT
10624 AIR CONDITIONER
DA I :,266291\0 I\SPGZ0l !.DOQ78599 .0028 4
10680 PORTABLE SUMP PUMP
98467 COMPUTER FLOOR 400SF
98519 CHAIR SIDE ARM
98621 CHAIN HOIST 1/2T
98680 FLOOR MA TS
98952 FIRE HOSE BOX
98960 AXIALVAN FAN
10686 VIBRATION RAMMER
10712 TONE REMOTE
8216 TV MONITORING CONTRO
98551 TV CAMERAS
10755 AIR CONDITIONER
8208 AIR PACK
8229 OPERATOR CHAIR
8230 OPERATOR CHAIR
8231 OPERATOR CHAIR
8232 OPERATOR CHAIR
8276 MEMO CASE
8319 WELDER
8325 HYDRAULIC LIFT
8328 PORTABLE FAN
8330 PORTABLE PUMP
8345 PORTABLE TOOL CART
8350 PORT MIG WELDER
8353 PORTABLE TOOL CHEST
8421 BOOKCASE 3X6 WOOD
8422 BOOKCASE 3X6 WOOD
8425 AIR CONDITIONER 12,0
8427 AIR CONDITIONER
8478 PRINTER
8707 MEGGER
10756 DESK2PD METAL
98494 CHAIR SIDE
98664 FIRE EXT
98940 FIRE EXT
98981 ALARM CABINET
8782 PARTITIONS 5X5
8209 COPIER
8301 HYDRAULIC MANLIFT
8390 PRINTER
8783 COVERED CABINET 6FT
8785 DESK 6FT
93001 AIR CONDITIONER
8233 OPERATOR CONSOLE 3X1
98358 BATTERY ROOM METAL
8227 FAX MACHINE
8253 MULTIMETER
8321 PORTABLE WASHER
8346 PORTABLE TOOL CART
8347 PORTABLE TOOL CART
8348 PORTABLE TOOL CART
8370 PALLET JACK 4500LBS
8376 PORTABLE TOOL CART
8457 PORTABLE FILTER PUMP
8637 HYDRO PROGRAMMER
8792 HYDRO PROGRAMMER
8808 HYDRAULIC TORQUE WRE
8841 PLOTTER
10702 PORTABLE CALIBRATOR
10730 CONSTANT VOLT TRANSF
10731 BATTERY AND RACK
10732 CHARGER
8475 FOOD CENTER
8625 VIDEO CAMERA VHS
8638 MONITOR
8396 FILE, LATERAL SOR
DA I :,266291'.0l\5PGZ0I 1.DOC\78599.0028 5
10688
10689
98489
98562
98968
15202
15210
15211
15212
15214
15215
15213
15216
15217
15223
15230
16163
16167
16179
16173
16166
16180
16174
16175
16176
16165
16178
17330
17344
17347
17348
17362
17381
17403
18274
18275
18276
18277
18278
18285
18265
18266
18267
18268
18269
18270
18286
18271
18279
18280
18281
18282
18283
18284
18262
2.
PORTABLE GENERATOR
PORTABLE GENERATOR
OVER FILE 3X4 METAL
SPECTRO PHOTOMETER
HOIST RAIL 25LF
PRINTER HP560C DESKJ
MECHANICS CHEST 12 D
MECHANICS CHEST 5 DR
MECHANICS CHEST 5 DR
MECHANICS CHEST 10 D
MECHANICS CHEST 10 D
MECHANICS CHEST 12 D
TOOL CABINET 7 DRAWE
TOOL CABINET 7 DRAWE
MODULAR WORKSTATION
MILLER SYCROWAVE &A_
STORAGE ROOM ADDITIO
MICRO OHM METER 1 0AM
MILLER SPECTROM PLAS
FIELD LINK:VER7.2&RE
CHLORINATOR WNACCUM
MULTIFUNCTION CENTER
DRUM DOLLY
DRUM DOLLY
DRUM DOLLY
COMB. GATE VALVE RES
ANAL YlER, ECOM-AC
MOTOR DRIVER INVERTO
HUDSON FAN
CORRELATION WHEEL 41
CORRELATION WHEEL 41
BUTTERFLY W/GEAR OPE
DR/2010 SPETROPHMETE
POWER PLANT AIR DRYE
15GALLON STAINLESS S
3 TON 20' LIFT HAND
3TON 20' LIFT HAND C
6TON 20' LIFT HAND C
5TON 20' LIFT HAND C
CUSTOM WORKSTATION
3" IPT TRASH PUMP GO
LAGUNA MILL W/COLLEC
PORTABLE GAS DETECTO
GAS MONITOR WITH SEN
10 TN AIR HANDLER 48
POTENTIOMETER VOL TAG
CUSTOM CABINETS.DESK
RATCHETING HYDRAULIC
ICE-O-MATIC ICE CUBE
SITMATIC BIG/TALL HI
SITMATIC BIG/TALL HI
SITMATIC BIG/TALL HI
SITMATIC BIG/TALL HI
SITMATIC BIG/TALL HI
CENTRIFUGAL PUMP 120
Related Agreements
I. Letter Agreement regarding DGG capacity among the City of Garland, Seller,
and Greenville Electric Utility System, dated as ofDecember 31, 2000.
DAJ:1266291\0 l\5PGZOJ !.DOa78599.0028 6
THE STATE OF TEXAS §
COUNTY OF DENTON §
THE CITY OF DENTON, TEXAS
CITY SECRET ARY' S CERTIFICATE
The undersigned hereby certifies that she is the duly elected, qualified and acting City
Secretary of the City of Denton, Texas, a municipal corporation of the State of Texas and a home
rule city (the "Seller"), and hereby further certifies on behalf of the Seller to Spencer Station
Generating Company, L.P., a Delaware limited partnership ("Spencer"), and PG&E Generating
Company, LLC, a Delaware limited liability company ("PGE"), in connection with the
transactions contemplated by that certain Asset Purchase Agreement, dated as of June "!:£f-,
2001, by and among the Seller, Spencer, and PGE as follows:
(a) attached hereto as Exhibit A is a true, complete and correct copy of the City
Charter of the Seller, as in effect on the date hereof;
(b) attached hereto as Exhibit B is a true, complete and correct copy of the
Ordinance No. of the Seller, as in effect on the date hereof; -----
( c) set forth below are the names and titles of certain of the duly elected,
qualified and acting officials of the Seller; each person holds the office(s) set forth opposite his
or her name; and the signature appearing opposite the respective name of such official is the
genuine signature of such official:
Michael A. Conduff City Manager
Jennifer Walters City Secretary
( d) each person who, as an official of the Seller, signea any of the agreements,
instruments or documents in connection with any of the matters which are the subject of the
ordinance attached hereto was, at the respective times of such signing and the delivery thereof,
duly elected, qualified and acting as such official.
-1-1,~ WITNESS WHEREOF, the undersigned has executed this City Secretary's Certificate
this <J..._·fM._ day of June, 2001.
~~ City Secretary
The undersigned hereby certifies that he is the duly elected, qualified and acting City
Manager of the Seller and hereby certifies that Jennifer Walters is the duly elected, qualified and
acting City Secretary of the Seller and that the above signature is her genuine signature.
IN WITNESS WHEREOF, the undersigned has executed this City Secretary's Certificate
the ~ day of June, 2001.
2
Art. I.
Art. II.
Art. Ill.
Art. IV.
Art. V.
Art. VI.
Art. VII.
Art. VIII.
Art. IX.
Art. X.
Art. XI.
Art. XII.
Art. XIII.
Art. XIV.
PAR.Tl
CHARTER*
Incorporation, Form of Government and Powers, §§ 1.01 .. :.::.:1.07
The Council, §§ 2.01-2.13
Nominations and Elections, §§ 3.01-3.05
Initiative Referendum and Recall, §§ 4.01-4.17
The City Manager, §§ 5.01-5.07
City Attorney and Municipal Court, §§ 6.01-6.04
Revenue and Taxation,§§ 7.01-7.07
Budget, §§ 8.01-8.09
Borrowing for Permanent Improvements,§§ 9.01-9.08
Planning and Zoning, §§ 10.01-10.12
Parks and Recreation, §§ 11.01, 11.02
Public Utilities, §§ 12.01-12.08
Franchises, §§ 13.01-13.06
General Provisions, §§ 14.01-14.16
ARTICLE I. INCORPORATION, FORM OF GOVERNMENT AND POWERS
Sec. 1.01. Incorporation.
-
The inhabitants of the City of Denton, in Denton County, Texas, within the corporate limits
as now established or as hereafter established in the manner prescribed by this charter, shall
be and continue to be municipal corporation and the inhabitants thereof shall be a body politic
and corporate in perpetuity under the name of the "City of Denton, 11 possessing all power,
property and interests which it possessed immediately prior to the time this charter takes
effect or may hereafter acquire, and having the duties, obligations and liabilities now
incumbent upon or hereafter incurred by the city as a municipal corporation.
Sec. 1.02. Boundaries.
The boundaries and limits of the City of Denton until changed in the manner herein
provided, shall be the same as have heretofore been established and as exist on the date of the
adoption of this charter, which boundaries are more fully set out and described by metes and
bounds in a book entitled "Official Corporate Limits of the City of Denton, Texas," which is now,
and shall hereafter be, on file in the office of the city secretary of the City of Denton.
*Editor's note-Published herein is the city's Home Rule Charter which was adopted by
the voters at an election held on February 24, 1959. The original arrangement and section
numbers have been retained. Subsequent amendments to the Charter are denoted by a history
note at the end of the affected section and/or by a note explaining the effect of the amendment.
Obviously misspelled words have been corrected without notation. Words added for clarity are
enclosed in brackets.
Supp. No. 10, Rev. 1
§ 1.03 DENTON CODE
Sec. 1.03. Extension of city limits.
The city council, by a vote of not less than four-fifths (4/5) of its membership, shall have the
power by ordinance to provide for the alteration and extension of said boundary limits, and the
annexation of territory lying adjacent to the City, with or without the consent of the
inhabitants of the territory ~exed. Upon the introduction of any such ordinance to the City
Council, such ordinance shall be published one time in the official newspaper of the City of
Denton. Amendments may later be incorporated into the proposed ordinance by a vote of not
less than four-fifths (4/5) of the membership of the City Council and publication one time in the
official newspaper of the City of Denton. The proposed ordinance, or any amendment thereof
shall not thereafter be finally acted upon until at least thirty (30) days after the publication
thereof; and upon the final passage of any such ordinance, or any-amendment thereto, the
boundary limits of the City shall thereafter be as fixed thereby. When any additional territory
has been so annexed, same shall be a part of the City of Denton, and the property situated
therein shall be subject to and shall bear its pro rata part of the taxes levied by the city, and
the inhabitants thereof shall be entitled to and shall possess all the rights and privileges of the
citizens of the City of Denton, and shall be under obligations as such citizens.
Sec. 1.04. Form of government.
The municipal government provided by this charter shall be known as the "council-manager
government." Pursuant to its provisions and subject only to the limitations imposed by the
state Constitution and by this charter, all powers of the City shall be vested in an elective
council, hereinafter referred to as "the council," which shall enact local legislation, adopt
budgets, determine policies and appoint the city manager, who shall execute the laws and
administer the government of the city. All powers of the city shall be exercised in the manner
prescribed by this charter, or if the manner be not prescribed, then in such manner as may be
prescribed by ordinance.
Sec. 1.05. Powers of the city.
The City of Denton shall have and may exercise all the powers granted to cities by the
Constitution or laws of Texas including specifically those powers made available to cities of
more than five thousand (5,000) inhabitants by what is known as the Home Rule Amendment
to the Constitution of Texas (Article XI, Section 5 and the Home Rule Enabling Act (Vernon's
Texas Codes Annotated, Texas Local Government Code Section 5.004, Chapter 9, Chapter 26,
and Subchapter E of Chapter 51), as these laws now read or may hereafter be amended. The
city may acquire property within or without its corporate limits for any municipal purpose;
may cooperate with the government of Texas or any agency thereof, or with the federal
government or any agency thereof, or with the government of any county, city, or political
subdivision to accomplish any lawful purpose for the advancement of the health, morals,
safety, convenience, or welfare of the city or its inhabitants; may sell, lease, mortgage, hold,
manage, and control such property as its interest may require; provided the city shall not sell,
convey, lease, mortgage, or otherwise alienate the entire assets of any public utility system or
Supp. No. 10, Rev. 2
CHARTER § 1.06
any portion thereof essential to continued effective utility service without the prior approval by
a majority of the qualified voters of the city who vote at an election held for this purpose; and
may exercise the power of eminent domain when necessary or desirable to carry out any of the
powers conferred upon it by thi~ Charter or the Constitution or laws of Texas. The enµmeration . . .. ··-
ofparticular powers in this Cparter shall not be held or deemed to be exclusive, but in addition
to the powers enumerated herein, implied thereby or appropriate to the exercise thereof, the
city shall have and may exercise all other powers which under the Constitution and general
laws of this state it would be competent for this Charter to specifically enumerate.
(Ord. No. 99-057, Amend. No. 2, 2-16-99, ratified 5-1-99)
Sec. 1.06. Liabilities, exemptions and lim itations.
(a) No property belonging to the city shall be subject to any execution of any kind or nature.
(b) No fund belonging to the city shall be subject to garnishment, attachment or seques-
tration, and the city shall never be required to answer in any garnishment proceedings.
(c) No assignment of wages or other compensation earned, or to be earned, by any employee
of the city shall be valid and the city shall never be required to recognize any such assignment
or to answer in any proceeding thereon.
(d) The City of Denton shall never be liable for death or personal injury of a person or for
property damages of any kind unless within ninety (90) days after the occurrence causing the
damage, death, injury, or destruction a notice in writing by or on behalf of the person injured
or claiming damages, if living, or the person's representative, if dead, or the owners of the
property injured or destroyed is delivered to the city manager stating specifically and
accurately in complete detail when, where, and how the exact death, injury, destruction, or
damages occurred, the full extent of the injury, the basis of the claim, and the amount of
damages claimed or asserted. This notice shall also include the residence of the claimant by
street number on the date the claim is presented, the residence of the claimant for six (6)
months immediately preceding the occurrence of the death, injury, or destruction, and the
names and addresses of all witnesses that are known at the time upon who it is relied to
establish the claim for damages; provided, however, nothing in this subsection shall be
construed to affect or repeal the provision in subsection (e) of this section relating to the
liability of the city for damages on account of injuries received on the public streets, highways,
alleys, grounds, public works, and public places of the city.
(e) The City of Denton shall never be liable for personal mJury or property damages
resulting from any defect in any public street, highway, alley, grounds or public work of the city
unless the specific defect causing the injury or damage shall have been known to the city
manager from personal inspection or written notice thereof for a period of at least twenty-four
(24) hours prior to the occurrence of the injury or damage and proper diligence shall not have
been used to rectify the defect after such inspection or notice. Such notice shall be required
whether the defect arose from any act or omission of the city itself through its agent or
employee, or otherwise.
Supp. No. 10 3
§ 1.06 DENTON CODE
(f) No provision of this section shall ever be so construed as to expand the ordinary liability
of the city.
(Ord. No. 99-057, Amend. No. 3, 2-16-99, ratified 5-1-99)
Sec. 1.07. Gender neutrai.
Whenever used in this Charter, a word importing the masculine gender only shall extend
and be applied to include females, and, where applicable, to firms, partnerships, and
corporations, as well as males.
(Ord. No. 99-057, Amend. No. 4, 2_-16-99, ratified 5-1-99)
ARTICLE II. THE COUNCIL
Sec. 2.01. Number, selection and term.
(a) The city council shall have seven (7) members, six (6) councilpersons and a mayor. The
manner of their election is prescribed herein. Each councilperson shall be elected to and occupy
a place on the council, such places being numbered one (1), two (2), three (3), four (4), five (5)
and six (6). The mayor's position on the council shall be place seven (7).
(b) Four (4) members of the council whose positions shall be places one (1), two (2), three (3)
and four (4), shall be residents of and elected by the qualified voters of single-member
geographical districts of the city, known as districts one (1), two (2), three (3) and four (4), as
such districts may from time to time be determined by the city council in accordance with
Section 2.0l(d), and created and described by ordinance. Two (2) members of the council and
the mayor shall be elected by the qualified voters of the entire city, commonly known as at
large. One (1) at large member, place five (5), shall be a resident of district one (1) or two (2),
and one (1) at large member, place six (6), shall be a resident of district three (3) or four (4).
(c) All members of the council and the mayor shall be elected for two-year terms and shall
not be eligible for election to more than three (3) consecutive two-year terms, such terms to
commence with the first two-year term to which such member or mayor is elected after the
adoption of this section.
(d) The council shall from time to time create and describe by ordinance election districts
known as districts one (1), two (2), three (3) and four ( 4). Such districts shall be created so that
each will contain, as nearly as possible, a population equivalent to the others, according to the
latest available census data.
(Ord. No. 76-12, Amend. No. 1, 4-5-76; Ord. No. 79-86, § 2, 12-11-79, ratified 1-19-80)
Sec. 2.02. Qualifications.
(a) Each member of the council, in addition to having the other qualifications prescribed by
law:
(1) Shall be registered to vote in the city;
Supp. No. 10 4
CHARTER § 2.05
(2) Shall have resided for at least one year next preceding his or her election within the
corporate limits of Denton and, if running within a single member geographic district
as set forth in Section 2.01, in the district in which elected;
(3) Shall not hold any other public office of emolument;
(4) Shall have and maintain the eligibility requirements for municipal officers set forth in
Section 141.001 of the Texas Election Code, Vernon's Texas Civil Statutes Annot::Jt.ed
hereinafter referred to as "Election Code" as it may now read or hereafter be amer,.uuJ.
(b) If a m~mber of the council shall, after being elected, cease to possess any of t1-.3~te
qualifications or eligibility requirements, or shall hold another office of emolument, or ent.,~· a
plea of guilty to a felony, or be convicted of a felony he or she shalf 1mmediately forfeit hi~ or
her office.
(Ord. No. 79-86, § 2, 12-11-79, ratified 1-19-80; Ord. No. 99-057,Amend. No. 5, 2-16-99, ratified
5-1-99)
Sec. 2.03. Presiding officer: Mayor and mayor pro tem.
The mayor shall preside at the meetings of the council and shall be recognized as head of the
city government for all ceremonial purposes and by the governor for purposes of martial law,
but shall not interfere with the managerial duties and responsibilities of the city manager. The
mayor shall have all the same powers and privileges as any other councilmember, including
entitlement to vote upon all matters considered by the council, but shall have no veto power.
The council shall, as soon as possible after the annual election, elect from its membership a
mayor pro tern. The mayor pro tern shall act as mayor during the absence or disability of the
mayor and if a vacancy occurs shall become mayor for the completion of the unexpired term.
(Ord. No. 79-86, § 2, 12-11-79, ratified 1-19-80)
Sec. 2.04. Vacancies in council.
Where a vacancy in any place on the council shall occur, the vacant place shall be filled by
a special election, and, where necessary, by a runoff election, in the same manner as provided
in this Charter for the regular election of the councilperson. Such special election shall be held
on the first authorized uniform election date following the creation of the vacancy occurring on
or after the thirtieth day after the date the election is ordered. The runoff election, where
necessary, shall be held in accordance with the requirements of the Election Code and all other
applicable laws; provided, however, that where a vacancy shall occur within one hundred and
twenty (120) days of a regular election, no special election to fill the vacancy shall be called,
unless more than one vacancy occurs.
(Ord. No. 76-12, Amend. No. 2, 4-5-76; Ord. No. 99-057, Amend. No. 6, 2-16-99, ratified 5-1-99)
Sec. 2.05. Meetings of the council.
(a) On the second (2nd) Tuesday in April, or as soon thereafter as practicable, the council
shall meet at the city hall and the newly-elected members shall qualify and assume the duties
of office. Thereafter, the council shall meet regularly at such times as may be prescribed by its
Supp. No. 10 5
§ 2.05 DENTON CODE
rules but not less frequently than once each calendar month. All meetings of the council shall
be held at the city hall unless the council shall by ordinance or resolution designate another
place.
(b) Special meetings shall be called by the city secretary upon reque!St ofthe mayor, city
manager, or a majority of the members of the council.
(c) The city manager sball attend all meetings of the council and may take part in the
discussion of all matter~ coming before the council but shall have no vote.
(Ord. No. 79-86, § 2, 12-11-79, ratified 1-19-80)
Sec. 2.06. Quorum, voting.
(a) A majority of the members of the council shall constitute a quorum for the transaction
of business, and the affirmative vote of a majority of the council shall be necessary to repeal
any ordinance or take any official action in the name of the city, except as otherwise provided
in this Charter or by the general laws of the State of Texas.
(b) The ayes and noes shall be taken upon the passage of all ordinances or resolutions and
the vote of each member shall be recorded in the minutes.
(Ord. No. 76-12, Amend. No. 3, 4-5-76; Ord. No. 79-86, § 2, 12-11-79, ratified 1-19-80)
Sec. 2.07. Rules of procedure, minutes.
The council shall determine its own rules of procedure and order of business. Minutes of all
meetings of the council shall be taken and preserved as a permanent record open to the public
for inspection.
Sec. 2.08. Powers of the council.
Except as otherwise provided by this charter all powers of the city and the determination of
all matters of policy shall be vested in the council. Without limitation of the powers granted or
delegated to the city by the Constitution, statutes, or this Charter, the council shall have power
to:
(a) Appoint and remove the city manager.
(b) Appoint and remove the city attorney and the municipal court judge.
(c) Approve members of all boards, commissions and committees serving the city.
(d) Adopt the budget of the city.
(e) Fix the salary of the city manager and, in cooperation with the city manager, all other
salaries.
(D Authorize by ordinance the issuance of bonds, assignments of revenue or warrants.
(g) Approve plats.
(h) Adopt and modify the official map of the city.
Supp. No. 10 6
CHARTER § 2.09
(i) Adopt and modify the zoning plan which may regulate and fix the height and number
of stories of buildings and other structures, the size of yards and courts, the density of
population and the location and use of buildings for trade, industry, business, residence
or other purposes. _
(j) Provide for the establishment and designation of fire limits and prescribe the kind and
character of buildings, structures, or improvements which may be erected therein, and
provide for the condemnation of dangerous or dilapidated buildings or structures
which increase the fire hazard and the manner of their removal or destruction.
(k) Adopt and modify the building code.
(l) Adopt, modify and carry out plans proposed by the planning commission for the
clearance of slum districts and rehabilitation of blighted areas, and for the replanni.1g,
improvement and redevelopment of any area or district which may have been
destroyed in whole or in part by disaster.
(m) Regulate, license and fix the charges or fares made by any person, firm or corporation
owning, operating or controlling any vehicle of any character used for the carrying of
passengers for hire or the transportation of freight for hire on the public streets or
alleys of the city.
(n) Provide by ordinance for the exercise of the police powers of the city.
(o) Establish and maintain a free public library and to cooperate for such purposes with
any person, firm, association or political subdivision in the manner prescribed by
ordinance.
(p) Provide by ordinance for the exercise by this city of any and all powers of local
self-government not made self-enacting by this charter or by statute.
(q) Inquire into the conduct of any office, department or agency of the city and make
investigations of municipal affairs.
(r) Provide for an independent audit.
(s) Perform the districting and redistricting function.
(Ord. No. 76-12, Amend. No. 4, 4-5-76; Ord. No. 79-86, § 2, 12-11-79, ratified 1-19-80)
Sec. 2.09. Ordinances.
(a) In addition to such acts of the council as are required by statutes or by this charter to
be by ordinance, every act of the council establishing a fine or other penalty or providing for the
expenditure of funds or for the contracting of indebtedness, shall be by ordinance. The enacting
clause of all ordinances shall be: "The Council of the City of Denton hereby ordains:"
(b) Every ordinance shall be introduced in written or printed form and passed in compliance
with section 2.06 of this Article, authenticated by the signatures of the mayor (or mayor pro
tern) and the city secretary and systematically recorded in an ordinance book in a manner
approved by the council. It shall be necessary to record only the caption or title of each
ordinance in the minutes of the council.
Supp. No. 10 7
§ 2.09 DENTON CODE
(c) A full text of every penal ordinance, or in lieu thereof a descriptive caption or title stating
in summary the purpose of the ordinance and the penalty for violation thereof, shall be
published at least twice in the official newspaper of the City of Denton within ten (10) days
after the passage of such ordinance; provided that any penal ordinance shall become effective
not less than fourteen (14) days from the date of its passage. All other ordinarices, except those
specifically required by this charter to be published, are not required to be published in either
the official newspaper of the city or in any other publication, and such ordinances shall become
effective upon passage or on the date specified therein.
(d) The council shall have power to cause the ordinances of the city to be corrected,
amended, revised, codified and pnnted in code form as often as the council deems necessary
and advisable, and such printed code, when adopted by the council, shall be in full force ai.d
effect without the necessity of publishing the same or any part thereof in the official newspaper
except that the ordinance adopting the same shall be published one time in the official
newspaper of the city. Such printed code shall be admitted in evidence in all courts and places
without further proof.
Sec. 2.10. Council not to interfere in appointments or removals.
Neither the council nor any of its members shall direct or request the appointment of any
person to, or his removal from, office by the city manager or by any of his subordinates. Except
for the purpose of inquiry, the council and its members shall deal with the administrative
service solely through the city manager and neither the council nor any member thereof shall
give orders to any subordinates of the city manager, either publicly or privately.
Sec. 2.11. Employee bonds.
The council shall require bonds of all municipal officers and employees who receive or pay
out any monies of the city. The amount of such bonds shall be determined by the council and
the cost thereof shall be borne by the city.
Sec. 2.12. City secretary.
The city secretary shall be appointed by the city manager subject to the approval of the
council. He shall serve as clerk of the council, give notice of its meetings, keep the journal of
its proceedings, authenticate by his signature and record in full in a book kept for the purpose
all ordinances and resolutions, and perform such other duties as this charter may provide or
as the city manager may assign him.
Sec. 2.13. Independent annual audit.
(a) Prior to the end of each fiscal year, the council shall designate a certified public
accountant who, as of the end of the fiscal year, shall make an independent audit of accounts
and other evidences of financial transactions of the city government and shall submit his
report to the council and to the city manager. Such accountant shall have no personal interest,
direct or indirect, in the fiscal affairs of the city government or of any of its officers. He shall
Supp. No. 10 8
CHARTER § 3.01
not maintain any accounts or records of the city business, but within specifications approved
by the council, shall post-audit the books and documents kept by the department of finance and
any separate or subordinate accounts kept by any other office, department or agency of the city
government.
(b) A copy of such audit shall be kept in the office of the city secretary subject to inspection
by any citizen during regular office hours.
ARTICLE III. NOMINATIONS AND ELECTIONS
Sec. 3.01. Municipal elections.
(a) The regular election for the choice of members of the city council as provided in Article
II shall be held each year on the first Saturday in May or on any other uniform election day for
municipal elections established by the Election Code. The council may by resolution or
ordinance order special elections which shall be held as nearly as practicable according to the
provisions for a regular election. The hours and places for holding all city elections shall be
determined by the city council. All elections shall be conducted in accordance with the Election
Code and all other applicable laws as they now read or may hereafter be amended.
(b) On the first Saturday in April immediately following adoption of Section 2.01, and the
drawing of election district boundaries by the council, the voters shall elect:
(1) The mayor, place seven (7), for a term of two (2) years.
(2) Two (2) councilmembers, places five (5) and six (6), for terms of two (2) years each.
(3) One (1) councilmember for an interim term of one (1) year. This position shall be
denominated for such interim term as place four (4) and such councilmember shall be
elected from the city at large and may be a resident of any district.
At the next following regular annual municipal election after the one referred to above in this
section, the district and at large system provided in Section 2.01 shall take full effect.
(c) Councilmembers holding office at the time the charter amendments to Section 2.01 are
adopted (places one (1), two (2) and three (3)) shall serve the remainder of their unexpired
terms as at large members of the council.
(d) If any councilmember whose term would not otherwise expire at the time of the canvass
of the results of the election specified in Section 3.0l(b) shall enter said election, such
councilmember's term shall be deemed to have been vacated at the time of the canvass of said
election results, whether the candidacy of said councilmember is successful or not.
(e) Neither the mayor nor any member of the council shall become a candidate for election
to any position on the council, other than for reelection to the same seat, unless such candidate
shall first submit to the city secretary his written resignation from the council to be effective
at the time of the canvass of the results of the next regularly scheduled election. If such
Supp. No. 10 9
§ 3.01 DENTON CODE
candidate's unexpired term would otherwise extend beyond the date of such canvass, the city
secretary shall notify the council and an election shall be held on the date of the next regularly
scheduled election to fill the unexpired term of said resigning councilmember.
(Ord. No. 79-86, § 2, 12-11-79, ratified 1-19-80; Ord. No. 99-057,Amend. No. 7, 2-16-99, ratified . -. -
5-1-99)
Sec. 3.02. Nominations.
(a) Any qualified person may have his or her name placed on the ballot as a candidate for
councilmember by filing with the city secretary not more than ninety (90) days nor less th~
thirty (30) days prior to the date of election an application in substa11tially the following form:
I, _________ , do hereby declare that I am a candidate for the Council of the
City of Denton and request that my name be printed upon the official Ballot for that
office in the next city election. I am aware of the nepotism law, chapter 573 of the
Government Code. I am qualified to serve on the council with respect to the qualifica-
tions set forth in the Charter. I reside at _________ , Denton, Texas.
Signed
The foregoing petition was filed with the City Secretary on the ____ day of
------~ 19 __ .
City Secretary
(b) As an alternative method, any qualified person may be nominated for councilmember by
a written petition signed by the greater twenty five (25) qualified voters of the city or one-half
of one percent of the total votes received by all candidates for mayor in the most recent mayoral
general election, provided the candidate signs the petition certifying his or her acceptance. One
such petition shall be circulated and signed for each nominee or candidate. With each signature
shall be stated the place of residence of the signer, giving the street and number or other
description sufficient to identify it. Nominating petitions shall be filed with the city secretary
not more than ninety (90) days nor less than thirty (30) days before the election day, and shall
be in substantially the following form:
We, the undersigned electors of the City of Denton, hereby nominate
_________ whose residence address is _________ as a can-
didate for councilmember of the City of Denton, to be voted for at the election to be held
on the ____ day of _______ , 19 __ ; and we individually certify that we
are qualified to vote for a candidate for the council.
Name Address Date of Signing
(Spaces for the greater twenty five (25) or one-half of one percent of the total votes
received for candidates for Mayor signatures and required data)
Supp. No. 10
CHARTER § 3.04
Acceptance of Nomination
I am qualified to serve on the council of the City of Denton with respect to the
qualifications set forth in this Charter. I hereby accept the nomination for councilmember
and agree to serve if elected:
Signature of Candidate
Statement of Circulator
The undersigned is the circulator of the foregoing petition containing signatures. Each
signature was appended thereto in my presence and is the genuine signature of the
person whose name it purports to be.
Signature of Circulator
Address of Circulator
The foregoing petition was filed with the City Secretary on the ____ day of
__________ , 19 __ .
City Secretary
(Ord. No. 99-057, Amend. No. 8, 2-16-99, ratified 5-1-99)
Sec. 3.03. Official ballot.
The city secretary shall make up the official ballot from the names presented to him. The
order in which the names of the candidates for each place shall appear on the ballot shall be
determined by lot in a drawing held under the supervision of the city secretary, at which
drawing each candidate or his designated representative shall have a right to be present. All
official ballots shall be printed at least twenty (20) days prior to the date of any general or
special election, and absentee voting shall be governed by the general laws of the State of
Texas.
Sec. 3.04. Canvass: Election returns, results.
(a) Immediately after counting the votes, the presiding judge shall deliver the official
returns of the election to the city secretary. Not earlier than the third day or later than the
sixth day after the election or as otherwise required by the Election Code and all other
applicable laws, the city council shall canvass the returns and declare the results. The returns
of every municipal election shall be recorded in the minutes of the council.
(b) The candidates receiving the majority of the votes cast for each place shall be declared
elected. If no candidate receives a majority, or if there is a tie for any one place, the council shall
order a runoff election which shall be held not earlier than the twentieth or later than the
Supp. No. 10 11
§ 3.04 DENTON CODE
thirtieth day after the date the final canvass of the regular election is completed or as
otherwise required by the Election Code and all other applicable laws. Only the names of the
candidates who tie for the highest number of votes cast for that place, or the two (2) candidates
who receive the highest number of votes with neither having a majority of votes cast for that
place, shall be printed on th~ ballot for each election. In the event of a tie vote at the runoff
election, the candidates who tie shall cast lots in the presence of the City Secretary to
determine which one shall be declared elected, and said lots shall be cast within five (5) days
of the runoff election in accordance with Section 2.028 of the Election Code and all other
applicable laws.
(c) Immediately after the election results have been declared -the mayor shall deliver
certificates of election to the successful candidates. Each councilman shall take the oath of
office as soon thereafter as practicable at which time his term of office shall begin.
(Ord. No. 76-12, Amend. No. 1, 4-5-76; Ord. No. 79-86, § 2, 12-11-79, ratified 1-19-80; Ord. No.
99-057, Amend. No. 9, 2-16-99, ratified 5-1-99)
Sec. 3.05. Regulation of elections.
Except as otherwise provided by this charter, all city elections shall be governed by the
applicable provisions of the Election Code of the State of Texas, as now or hereafter amended.
The council shall have the power to make .such additional regulations as may be necessary.
State law reference-Elections, V.T.C.A., Election Code § 1.005 et seq.
ARTICLE IY. INITIATIVE, REFERENDUM AND RECALL
Sec. 4.01. Power of initiative.
The electors shall have power to propose any ordinance, except an ordinance appropriating
money or authorizing the levy of taxes, and to adopt or reject the proposed ordinance at the
polls, such power being known as the initiative. Any initiative ordinance may be submitted to
the council by a petition signed by qualified voters of the city equal in number to at least
twenty-five percent of the number of votes cast at the last regular municipal election.
Sec. 4.02. Power of referendum.
The electors shall have power to approve or reject at the polls any ordinance passed by the
council or submitted by the council to a vote of the electors, except an ordinance appropriating
money, issuing bonds or authorizing the levying of taxes, such power being known as the
referendum. Within twenty (20) days after the enactment by the council of any ordinance
which is subject to a referendum, a petition signed by qualified voters of the city equal in
number to at least twenty-five percent (25%) of the number of votes cast at the last preceding
regular municipal election may be filed with the city secretary requesting that any such
ordinance be either repealed or submitted to a vote of the electors.
Supp. No. 10 12
CHARTER § 4.05
Sec. 4.03. Form of p etition, committee of petitioners.
Initiative petition papers shall contain the full text of the proposed ordinance. Referendum
petition papers shall contain the full text of the ordinance which they propose to repeal. The
signatures to initiative or referendum petitions need not all be appended to one paper, but to
each separate petition there shall be attached a statement of the circulator thereof as provided
by this section. Each signer shall sign his name in ink or indelible pencil and shall give after
his name h · 0; place of residence by street and number, or other description sufficient to identify
the place. There shall appear on each petition the names and addresses of the same five (5)
electors, who, as a committee of the petitioners, shall be regarded as responsible for the
circulation and filing of the petition. Attached to each separate petiti9n paper there shall bP an
affidavit of the circulator thereof that he, and he only, personally circulated the foregoing
paper, that it bears a stated number of signatures, that all the signatures were appended
thereto in his presence and that he believes them to be the genuine signatures of the persons
whose names they purport to be.
Sec. 4.04. Filing, examination and certification of petitions.
All papers comprising an initiative or referendum petition shall be assembled and filed with
the city secretary as one instrument. Within twenty (20) days after a petition is filed, the city
secretary shall determine whether each paper of the petition bears the required affidavit of the
circulator and whether the petition is signed by a sufficient number of qualified voters. After
completing his examination of the petition, the city secretary shall certify the result thereof to
the council at its next regular meeting. If he shall certify that the petition is insufficient he
shall set forth in his certificate the particulars in which it is defective and shall at once notify
the committee of the petitioners of his findings.
Sec. 4.05. Amendment of petitions.
An initiative or referendum petition may be amended at any time within ten (10) days after
the notification of insufficiency has been sent by the city secretary, by filing a supple-
Supp. No. 10 12.1
CHARTER § 4.09
mentary petition upon additional papers signed and filed as provided in the case of an original
petition. The city secretary shall within five (5) days after such an amendment is filed, ex-
amine the amended petition and, if the petition is still insufficient, he shall file his certificate
to that effect in his office and notify the committee of the petitioners of his findings and no
further action shall be had· on ·such insufficient petition. The findings of the "insufficiency of a
petition shall not prejudice the filing of a new petition for the same purpose.
Sec. 4.06. Effect of certification of referendum petition.
When a referendum petition, or amended petition as defined in section 4.05 of this article,
has been certified as sufficient by the city secretary, the ordinance specified in the petition
shall not go into effect, or further action thereunder shall be suspended if it shall have gone
into effect, until and unless approved by the electors as hereiI?-after proviqed.
Sec. 4.07. Consideration by council.
Whenever the council receives a certified initiative 'or referendum petition from the city
secretary, it shall proceed at once to consider such petition. A prop(Sed initiative ordinance
shall be read and provision shall be made for a public hearing upon the proposed ordinance.
The council shall take final action on the ordinance within sixty (60) days after the date on
which such ordinance was certified to the council by the city secretary. A referred ordinance
shall be reconsidered by the council and its final vote upon such reconsideration shall be upon
the question, "Shall the ordinance specified in the referendum petition be repealed?"
Sec. 4.08. Submission of electors.
If the council shall fail to pass an ordinance proposed by initiative petition, or shall pass
it in a form different from that set forth in the petition therefor, or if the council shall fail to
repeal a referred ordinance, the proposed or referred ordinance shall be submitted to the
electors not less than thirty (30) days nor more than sixty (60) days from the date the council
takes its final vote thereon. If no regular election is to be held within such period the council
shall provide for a special election.
Sec. 4.09. Form of ballot for initiated and referred ordinances.
Ordinances submitted to a vote of the electors in accordance with the initiative and
referendum provisions of this charter shall be submitted by ballot title, which shall be pre-
pared in all cases by the city attorney. The ballot title may be different from the legal title of
any such initiated or referred ordinance and shall be a clear, concise statement, without
argument or prejudice, descriptive of the substance of such ordinance. If a paper ballot is used
it shall have below the ballot title the following propositions, one above the other, in the order
indicated: "FOR THE ORDINANCE" and "AGAINST THE ORDINANCE." Any number of
ordinances may be voted on at the same election and may be submitted on the same ballot, but
any paper ballot used for voting thereon shall be for that purpose only. If voting machines are
used, the ballot title shall have below it the same two (2) propositions, one above the other or
13
§ 4.09 DENTON CODE
one preceding the other in the order indicated, and the elector shall be given an opportunity
to vote for or against the ordinance.
Sec. 4.10. Results of election, publication.
(a) If a majority of the electors voting on a proposed initiative ordinance shall vote in favor
thereof, it shall thereupon be an ordinance of the city. A referred ordinance which is not
approved by a majority of the electors voting thereon shall thereupon be deemed repealed.
(b) Initiative ordinances adopted and referendum ordinances approved by the elect0rs
shall be published, and may be amended or repealed by the council in the same manne! 2.s
other ordinances.
Sec. 4.11. Recall of councilmen.
Any member of the city council may be removed from office by a recall election.
Sec. 4.12. R ecall petition, committee of petitioners.
Recall petition papers shall contain the name of the councilman (or names of the coun-
cilmen) whose removal is sought, and a clear and concise statement of the grounds for his (or
their) removal. There shall appear at the head of each petition the names and addresses of five
electors, who, as a committee of the petitioners shall be regarded as responsible for the cir-
culation and filing of the petition. Each signer of any petition paper shall sign his name in ink
or indelible pencil and give after his name his place ofresidence by street and number, or other
description sufficient to identify the place, and the date his signature was affixed. No signa-
ture to such petition shall remain effective or be counted which was placed thereon more than
forty-five (45) days prior to the filing of such petition with the city secretary. The signatures
to a recall petition need not all be appended to one paper, but to each separate petition there
shall be attached an affidavit of the circulator thereof that he, and he only, personally circu-
lated the foregoing paper, that it bears a stated number of signatures, that all signatures were
appended thereto in his presence and that he believes them to be the genuine signatures of the
persons whose names they purport to be.
Sec. 4.13. Filing and certification of petitions, recall election.
(a) All papers comprising a recall petition shall be assembled and filed with the city
secretary as one instrument. Within seven (7) days after a petition is filed, the city secretary
shall determine whether each paper bears the names of five (5) electors who constitute a
committee of the petitioners, and the required affidavit of the circulator thereof, and whether
the petition is signed by qualified voters of the constituency of the councilmember whose
removal is sought equal in number to at least twenty-five (25) percent of the number of the
votes cast for th~t councilmember and all of his opponents in the last preceding general
municipal election in which he was a candidate. As used herein "constituency" shall mean the
qualified voters eligible to vote for the councilmember whose removal is sought, either by
geographical district or at large, as the case may be.
14
CHARTER § 4.16
(b) If the city secretary finds the petition insufficient he shall return it to the committee
of the petitioners, without prejudice, however, to the filing of a new petition based upon new
and different grounds, but not upon the same grounds. If the city secretary finds the petition
sufficient and in compliance with the provisions of this Article of the Charter he shall submit
the petition and his certificate of its sufficiency to the council at its next regular meeting and
immediately notify the councilman whose removal is sought of such action.
(c) If the councilman whose removal is sought does not resign within seven (7) days after
such notice the city council shall thereupon order and fix a date for holding a recall election
not less than thirty (30) nor more than sixty (60) days after the petition has been presented to
the council. If no general election is to be held within this time the council shall provide for a
special election.
(Ord. No. 79-86, § 2, 12-11-79, ratified 1-19-80)
Sec. 4.14. Recall election ballots.
Ballots used at recall elections shall conform to the following requirements:
(a) With respect to each person whose removal is sought the question shall be submitted:
"SHALL (name of person) BE REMOVED FROM THE CITY COUNCIL BY
RECALL?"
(b) Immediately below each such question shall be printed the two following propositions,
one above the other, in the order indicated:
"YES"
"NO"
Sec. 4.15. Results of recall election.
If a majority of the votes cast at a recall election shall be against the recall of the
councilman named on the ballot, he shall continue in office. If a majority of the votes cast at
a recall election be for the recall of the councilman named on t]w ballot, he shall be deemed
removed from office and the vacancy shall be filled in the manner prescribed in Article II,
section 2.04 of this charter.
Sec. 4.16. Limitations on recalls.
No petition shall be filed against a councilmember within six (6) months after he takes
office nor against a councilmember who has been subjected to a recall election and not removed
thereby until at least six (6) months after such election. Should a regular election occur during
the time when a recall petition is current and should the person(s) being recalled be reelected,
the recall petition shall be null and void.
(Ord. No. 79-86, § 2, 12-11-79, ratified 1-19-80)
15
§ 4.17 DENTON CODE
Sec. 4.17. District judge may order election.
Should the city council fail or refuse to order any recall election when all of the require-
ments for such election have been complied with by the petitioning electors in conformity with
this Article of the charter; then it shall be the duty of the District Judge of Denton County,
upon proper application therefor, to order such election and effectuate the provisions of this
Article of the charter.
ARTICLE V. THE CITY MANAGER
Sec. 5.01. The city manager: qualifications.
The city manager shall be chosen by the council solely on the basis of his executivt-&nd
administrative qualifications with special reference to his actual experience in or his knowl-
edge of accepted practice in respect to the duties of his office, as hereinafter set forth, provided
that any person who is appointed city manager must have had at least two (2) years of
experience as a city manager or assistant city manager, or the equivalent thereof. At the time
of his appointment he need not be a resident of the city or state but during his tenure of office
he shall reside within the city.
(Ord. No. 79-86, § 2, 12-11-79, ratified 1-19-80)
Sec. 5.02. The city manager: term and salary.
(a) The council shall appoint the city manager for an indefinite term and may remove him
by a majority vote of its members. At least thirty (30) days before such removal shall become
effective, the council shall by a majority vote of its members adopt a preliminary resolution
stating the reasons for his removal. The city manager may reply in writing and may request
a hearing at a public meeting of the council, which shall be held not earlier than twenty (20)
days nor later than thirty (30) days after the filing of such request. Pending such hearing the
council may suspend the city manager from duty but may not suspend or reduce his salary.
After such public hearing, if one be requested, and after full consideration, the council by
majority vote of its members may adopt a final resolution of removal.
(bl The city manager's salary shall be fixed by the council.
Sec. 5.03. The city manager: powers and duties.
The city manager shall be the chief executive officer and the head of the administrative
branch of the city government. He shall be responsible to the council for the proper adminis-
tration of all affairs of the city placed under his control by this Charter or by ordinance or
resolution of the council, and to that end he shall:
(a) Appoint and, when necessary for the good of the service, remove any officer or em-
ployee of the city, except as otherwise provided by this Charter and except as he may
authorize the head of a department to appoint and remove subordinates in such
department. In case of the removal of an officer or the head of a department after six
16
CHARTER § 6.01
months' service, if the person removed so demands, a written statement giving the
reason for his removal shall be made by the city manager, and the person removed
shall, ifhe so demands, be given a public hearing by the council before the order of his
removal is made final. The statement of the c~ty manager and any written reply thereto
shall be filed as a public record in the office of the city secretary.
(b) Prepare the annual budget and submit it to the council and be responsible for its
administration after adoption.
(c) Prepare and submit to the council at the end of the fiscal year a complete report oi t he
finances and administrative activities of the city for the preceding year.
(d) Attend all meetings of the council, with the right to take part in the discussion, but
having no vote.
(e) Keep the council advised of the financial condition and future needs of the city and
make such recommendations as may seem to him desirable.
(f) Appoint, subject to the approval of the council, the city secretary.
(g) Perform such other duties as may be prescribed by this Charter or required of him by
the council not inconsistent with this Charter.
Sec. 5.04. Absence of city manager.
To perform his duties during his temporary absence or disability, the [city] manager shall
designate by letter filed with the city secretary a qualified administrative officer of the city. The
administrative officer thus designated shall perform the duties of the [city] manager until he
shall return or his disability shall cease or until the council by resolution designates another
officer of the city to perform such duties.
Sec. 5.05. Administrative departments.
The city manager is hereby authorized to organize the employees of the city into various
departments and divisions with the concurrence of the city council.
(Ord. No. 79-86, § 2, 12-11-79, ratified 1-19-80)
Secs. 5.06, 5.07. Reserved.
Editor's note-Ord. No. 79-86, § 2, adopted Dec. 11, 1979; and ratified Jan. 19, 1980,
deleted former sections 5.06 and 5.07 which pertained to directors of departments and
departmental divisions and were derived unamended from the Charter adopted Feb. 24, 1959.
ARTICLE VI. CITY ATIORNEY AND MUNICIPAL COURT
Sec. 6.01. City attorney: appointment.
The city attorney, who shall be head of the legal department, shall be a qualified
attorney-at-law licensed to practice in the State of Texas. He shall be appointed by the council.
He shall receive such compensation as may be fixed by the council.
Supp. No. 10 17
§ 6.02 DENTON CODE
Sec. 6.02. City attorney: powers and duties.
(a) The city attorney shall represent the city in all litigation and controversies and shall
prosecute all cases brought before the municipal court. He shall draft, approve or file his
written opinion on the legality of every proposed ordinance before it. is acted upon by the
council, and shall pass upon all documents, contracts and other legal instruments in which the
city may have an interest.
(b) He shall be the legal advisor of the city manager, city council, and of all boards,
commissions, agencies, officers and employees with respect to any legal question involving
their official powers or duties. He shall perform such other duties as may be required by
statute, by this Charter or by ordinance.
(c) The council may authorize the appointment of such assistant city attorneys as may be
needed to perform the duties of this department or the appointment of a temporary city
attorney to act for the city attorney in the case of his temporary absence or disability.
(Ord. No. 79-86, § 2, 12-11-79, ratified 1-19-80)
Sec. 6.03. Municipal court.
(a) There is hereby established a court which shall be known as the "Municipal Court No.
1 of the City of Denton." Municipal Court No. 1 shall have the jurisdiction and be conducted as
a municipal court of record in accordance with Vernon's Texas Codes Annotated Texas
Government Code subchapter FF, chapter 30, §§ 30.1211 through 30.01233 inclusive and
applicable state law as these laws may now read or hereafter be amended. All costs and fines
imposed by the municipal court shall be paid into the city treasury for the use and benefit of
the city. The city council may, by ordinance, create additional municipal courts or municipal
courts of record if so authorized under the provisions of applicable law.
(b) The municipal judge shall preside over the municipal court. The municipal judge shall
be a qualified attorney-at-law licensed to practice in the State of Texas in good standing and
shall have such other qualifications as required by subchapter FF of chapter 30 of the Texas
Government Code and other applicable laws as these laws may now read or hereafter be
amended. He or she shall be appointed by, and shall serve at the pleasure of the council. The
municipal judge shall receive such compensation as may be fixed by the council. The municipal
judge shall have all the powers and duties assigned to a municipal judge by the Charter, other
city ordinances, subchapter FF of chapter 30 of the Texas Government Code, or other
applicable state laws.
(c) There shall be one regularly scheduled session of the court each week and as many other
sessions as, in the discretion of the municipal judge, may be necessary for the timely
transaction of the business of the court.
(d) The council may appoint such assistant municipal judges or additional municipal judges
as may be necessary to perform the duties of the municipal court or a temporary municipal
judge to act for the municipal judge in the case of his or her temporary absence or disability,
and such assistant, additional, or temporary municipal judge shall receive such compensation
Supp. No. 10 18
CHARTER § 7.04
as may be set by the council. All such assistant, additional, or temporary municipal judges,
when appointed, shall have all of the other powers and duties assigned to the municipal judge
herein.
(Ord. No. 79-86, § 2, 12-11-79, ratified 1-19-80; Ord. No. 99-057, Amend. No. 10, 2-16-99, --.. . -. ..
ratified 5-1-99)
Sec. 6.04. Reserved.
Editor's note-Ord. No. 79-86, § 2, adopted Dec. 11, 1979, and ratified ,Tan. 19, ~980,
deleted former section 6.04 which pertained to the clerk of the court and was derived
unamended from the Charter adopted Feb. 24, 1959.
ARTICLE VII. REVENUE AND TAXATION*
Sec. 7.01. Property subject to tax.
The city council is authorized to levy and collect taxes, to seize and sell property for
delinquent taxes, to create tax liens, and to exercise all other powers and authority pursuant
to the Tax Code, Vernon's Texas Codes Annotated and all other applicable laws as they now
read or may hereafter be amended.
(Ord. No. 79-86, § 2, 12-11-79, ratified 1-19-80; Ord. No. 99-057, Amend. No. 11, 2-16-99,
ratified 5-1-99)
Sec. 7 .02. Reserved.
Editor's note-Ord. No. 99-057, Amend. No. 1, adopted February 16, 1999, ratified May 1,
1999, repealed§ 7.02, which pertained to payment, delinquencies, and penalties, and derived
from Ord. No. 79-86, § 2, adopted Dec. 11, 1979, ratified Jan. 19, 1980.
Sec. 7.03. Reserved.
Editor's note-Ord. No. 99-057, Amend. No. 11, adopted February 16, 1999, ratified May
1, 1999, repealed§ 7.02, which pertained to seizure and sale of property for delinquent taxes,
and derived from Ord. No. 79-86, § 2, adopted Dec. 11, 1979, ratified Jan. 19, 1980.
Sec. 7.04. Reserved.
Editor's note-Ord. No. 99-057, Amend. No. 11, adopted February 16, 1999, ratified May
1, 1999, repealed§ 7.02, which pertained to tax liens, and derived from Ord. No. 79-86, § 2,
adopted Dec. 11, 1979, ratified Jan. 19, 1980.
*Editor's note-Ord. No. 79-86, § 2, adopted Dec. 11, 1979, and ratified Jan. 19, 1980,
deleted former sections 7.01-7.15 and 7.17-7.23 which pertained to the director of finance;
procedures relative to accounting, payment of claims, purchasing, disbursement of funds,
payment of claims and audits; the treasurer; the tax assessor-collector; the board of equaliza-
tion and procedures relative to taxation and were derived from the Charter adopted Feb. 24,
1959, as amended by Ord. No. 76-12, Amend. No. 5, adopted April 5, 1976. Section 2 of Ord. No.
79-86 also renumbered former sections 7.16 and 7.24-7.29 as sections 7.01-7.07.
Supp. No. 10 19
§ 7.05 DENTON CODE
Sec. 7.05. Ratification.
All taxes heretofore assessed by the City of Denton are ratified and all ordinances relating
to taxes now in force shall continue until amendment or repeal by the council.
(Ord. No. 79-86, § 2, 12-11-79, ratified 1-19-80)
Sec. 7.06. General powers.
In addition to the powers herein conferred with reference to the assessment and collec•·;on
of taxes, the City of Denton shall _have and may exercise all powers and authority r,ow
conferred or that may hereafter be conferred upon cities having a population of more thf"n five
thousand (5,000) inhabitants by the general laws of the State of Texas.
(Ord. No. 79-86, § 2, 12-11-79, ratified 1-19-80)
Sec. 7.07. Borrowing in anticipation of property taxes.
In any budget year, in anticipation of the collection of the property tax for such year, whether
levied or to be levied in such year, the council may by resolution authorize the borrowing of
money by the issuance of negotiable notes of the city, each of which shall be designated "Tax
Anticipation Note for the Year 19 __ " (stating the budget year). Such notes shall not be
renewable but shall mature and be paid not later than the end of the fiscal year in which the
original notes have been issued.
(Ord. No. 79-86, § 2, 12-11-79, ratified 1-19-80)
ARTICLE VIII. BUDGET
Sec. 8.01. Fiscal year.
The fiscal year of the city government which began on June 1, 1958, shall end on May 31,
1959. The next succeeding fiscal year shall begin on June 1, 1959, and end on September 30,
1959, and shall constitute an interim fiscal period. After September 30, 1959, the fiscal year of
the city shall begin on the first day of October and end on the last day of September of each
calendar year. The fiscal year established by this charter shall also constitute the budget and
accounting year.
Sec. 8.02. Interim budget.
The city manager shall submit to the council an interim budget which shall be prepared, as
nearly as practicable in accordance with the requirements for the budget document herein
prescribed, for the interim fiscal period hereinabove established. Following the approval of
such interim budget, the council shall enact such appropriation or other ordinances as may be
necessary for the effectuation of the interim budget.
Supp. No.10 20
CHARTER § 8.06
Sec. 8.03. Preparation and submission of budget.
At least sixty (60) days before the end of each fiscal year, the city manager shall submit to
the council a proposed budget for the ensuing fiscal year. The budget shall provide a complete
financial plan for the fiscai .. Y~ar, and the budget -shall be prepared on -the -basi~ of policy
priorities defined by the council for the city manager at least one hundred twenty (120) days
before the end of the fiscal year.
(Ord. No. 76-12_. Arnend. No. 6, 4-5-76)
Sec. 8.04. Public hearing on budget.
The council shall hold a public hearing on the proposed budget .. Any taxpayer 01 the
municipality may attend and may participate in the hearing, which shall be set for a date after
the fifteenth day after the date the proposed budget is filed with the city secretary but before
the date the city council makes its tax levy. The council shall provide for public notice of the
date, time, and location of the hearing. In addition to this notice, the city council shall publish
notice before the public hearing related to the budget in at least one newspaper of general
circulation in Denton County. This notice shall be published not earlier than the thirtieth or
later than the tenth day before the date of the public hearing. The city council shall provide
such other notice as may be required by state and all other applicable law. The city council may
make such changes in the budget that it considers warranted by the law or by the best interests
of the municipal taxpayers and may increase or decrease the items of the budget provided the
total proposed expenditures shall not exceed the total anticipated revenue.
(Ord. No. 99-057, Amend. No . 12, 2-16-99, ratified 5-1-99)
Sec. 8.05. Adoption of budget.
The budget shall be finally adopted by the favorable votes of at least a majority of all
members of the council after the conclusion of the public hearing. Should the council take no
final action at the conclusion of the public hearing and before the end of the fiscal year, the
budget as submitted by the city manager shall be deemed to have been finally adopted by the
council.
(Ord. No. 99-057, Amend. No. 13, 2-16-99, ratified 5-1-99)
Sec. 8.06. Budget establishes appropriations and tax levy.
Upon final adoption, the budget shall be in effect for the budget year. Final adoption of the
budget by the council shall constitute the official appropriation of the several amounts stated
therein as proposed expenditures for the budget year. A copy of the budget as finally adopted
shall be filed with the city secretary, the county clerk of Denton County and the state
comptroller of public accounts in Austin. All appropriations that have not been expended or
lawfully encumbered shall lapse at the end of the budget year.
(Ord. No. 79-86, § 2, 12-11-79, ratified 1-19-80)
Supp. No. 10 21
§ 8.07 DENTON CODE
Sec. 8.07. Transfer of appropriations.
At any time during the fiscal year, the city manager may transfer any part of the
unencumbered appropriation balance or the entire balance thereof between programs or
general classifications of expenditures within an office, department, agency, or organizational
unit. At any time during the fiscal year, at the request of the city manager the council may by
resolution transfer any part of the unencumbered appropriation balance or the entire balance
thereof from one office, department, agency, or organizational unit to another.
(Ord. No. 99-057, Amend. No. 14, 2-16-99, ratified 5-1-99)
Sec. 8.08. Amending the budget.
In case of grave public necessity, emergency expenditures to meet unusual and unforeseen
conditions, which could not by diligent thought and attention have been included in the
original budget, may be authorized by the affirmative vote of at least five (5) of the members
of the council as an amendment to the original budget. In every case where such amendment
is made, a copy of the ordinance adopting the amendment shall be filed with the city secretary,
published in the next issue of the official newspaper of the city, and attached to the budget
originally adopted.
(Ord. No. 79-86, § 2, 12-11-79, ratified 1-19-80)
Sec. 8.09. Bu dget a public record.
The budget, budget message and all supporting schedules shall be a public record in the
office of the city secretary open to public inspection. The city manager shall cause sufficient
copies of the budget and budget message to be prepared for distribution to interested persons.
ARTICLE IX. BORROWING FOR PERMANENT IMPROVEMENTS
Sec. 9.01. Power to issue bonds.
(a) The City of Denton shall have the right and power to issue general obligation bonds to
finance any capital project which it may lawfully construct or acquire or for any other
legitimate public purpose. The general obligation bonded debt of the city shall only be
increased by the consent of the majority of the qualified voters of the city voting at an election
held for that purpose. A bond election shall be ordered and notice given by ordinance,
consistent with the requirements for holding elections set forth in Article III of this Charter
and in accordance with the applicable laws of the State of Texas as they now read or may
hereafter be amended.
(b) The city shall have the power to issue revenue bonds against the anticipated revenues
of any municipally-owned utility or other self-liquidating municipal function to pay the debt
incurred on account of such utility or function. In no event shall revenue bonds be considered
an indebtedness of the city nor be repaid from bonds secured by taxation.
Supp. No. 10 22
CHARTER § 9.03
(c) No bonds or warrants shall be issued to fund any overdraft or indebtedness incurred for
current expenses of the city government.
(Ord. No. 79-86, § 2, 12-11-79, ratified 1-19-80; Ord. No. 99-057, Amend. No. 15, 2-16-99,
ratified 5-1-99)
Sec. 9.02. Bond ordinance and election.
(a; After approval by a majority of the qualified property taxpaying voters voting at a
general obligation bond election called for the purpose of authorizing the issuance of general
obligation bonded debt, the city shall authorize the issuance of such ~onds by a bond ordinance
passed by an affirmative vote of a majority of all members of the council. The city council may
approve the issuance of revenue bonds without an election by authorizing the issuance of such
bonds by bond ordinance passed by an affirmative vote of the majority of all members of the
council.
(b) Before any bond ordinance is passed by the council an attorney or attorneys specializing
in municipal bonds shall be retained by the city to advise with the council in all matters
pertaining to the proposed bond ordinance, and no action shall be taken until a written
instrument has been prepared by the bond attorneys certifying the legality of the proposal. The
bond attorneys shall assist the city attorney and the council in preparing all ordinances and
other legal instruments required in the execution and sale of any bonds issued.
(c) The election ordinance on a bond proposal shall provide for proper notice, the calling of
the election and the propositions to be submitted. It shall distinctly specify:
(1) The purpose for which the bonds are to be issued, and where possible, the probable
period of usefulness of the improvements for which the bond funds are to be expended.
(2) The amount thereof.
(3) The rate of interest, if known.
(4) The levy of taxes sufficient to pay interest and sinking fund.
(5) That the bonds to be issued shall mature serially within a given number of years.
(6) A determination of the net debt of the city after issuance of the bonds thereby
authorized, together with a declaration that the bonds thereby authorized will be
within all debt and other limitations prescribed by the Constitution and laws of the
State of Texas.
(Ord. No. 99-057, Amend. No. 16, 2-16-99, ratified 5-1-99)
Sec. 9.03. Execution of bonds.
All bonds shall be signed by the mayor, countersigned by the city secretary, and imprinted
with the seal of the city, and shall be payable at such time as may be fixed, not more than forty
(40) years from their date.
Supp. No. 10 23
§ 9.04 DENTON CODE
Sec. 9.04. Sale of bonds.
All bonds issued under this charter shall be sold at public sale upon sealed bids in the
following manner: After all of the bond requirements of the charter have been fully met the
council shall immediately cause to be published a -proper notice in a national pllblication
canying municipal bond notices and devoted primarily to financial news which regularly
includes municipal bond sale notices, stating the pertinent facts relating to the proposed sale,
the time, the date and the place (which shall be in the City of Denton) that all sealed bids will
be publicly opened and tabulated before the council. The date advertised for the opening of
sealed bids shall be thirty (30) days from the date of publication; concurrently therewith 2.
similar notice shall be published at least once in the designated officiJ:11 newspaper of the C1t::,,
of Denton. When the sealed bids are opened the bond attorneys retained by the city in
compliance with section 9.02(b) of this Article shall tabulate the bids and give the council a
written recommendation as to the low and best bid. No bonds issued under this charter shall
be sold for less than par value and accrued interest, and the council shall have the right to
refuse any and all bids and readvertise the sale at a later date or dates. An official bid form
shall be made available by the council to all prospective bidders on request, and no sealed bid
will be accepted unless it is made on the official bid form. The official bid form shall carry the
total amount of bonds published to be sold; the purpose of the bond sale; the type of bonds;
years of maturity; principal amounts as determined by the council; coupon rate by years; and
a provision requiring the bidder to attach a bid bond executed by an approved surety company
or a certified or cashier's check, payable unconditionally to the City of Denton in the amount
as determined by the council, as a guarantee of performance if the bid is accepted by the
council; and other pertinent information ordinarily appearing on official bid forms. Should the
council so desire, a prospectus shall be prepared by the City of Denton or by someone employed
by the City of Denton, giving more complete detail on the proposed bond sale.
Sec. 9.05. Sinking fund for general obligation bonds.
It shall be the duty of the council each year to levy a tax sufficient to pay the interest and
provide the necessary sinking fund required by law on all general obligation bonds outstand-
ing, and if a deficiency appears at any time in such fund the council shall, for the next
succeeding year, levy an additional tax sufficient to discharge such deficiency.
Sec. 9.06. Bond register.
The director of finance shall prepare, maintain and cause to be filed in the office of the city
secretary a complete bond register, showing all bonds, the date and amount thereof, the rate
of interest, a schedule of maturity dates, and a record of all bonds and all other transactions
of the council having reference to the refunding of any indebtedness of the city. When bonds or
their coupons are paid, their payment or cancellation shall be noted in the register.
Sec. 9.07. Misapplication of bond funds.
Any officer or employee of the city who shall wilfully or knowingly, direct or use any funds
arising from the issuance of any bond or sinking fund for any other purpose than that for which
Supp. No. 10 24
CHARTER § 10.02
the fund is created or is herein otherwise authorized, shall be subject to prosecution as
provided by the laws of the state on the diversion and conversion of funds belonging to any of
the municipalities of the state.
Sec. 9.08. Assessments for improvements.
All of the terms, powers and applicable provisions of Chapter 9, Title 28, of the Revised Cj ril
Statutes of the State of Texas, as now or hereafter amended, relating to assessments for st·c::~t
improvements are hereby adopt_ed as a part of this charter and hereby constitut e an
alternative authority and method which the City of Denton may use in improving s~J"t::Pts,
alleys, and public places and levying assessments therefor; provided, the city shall hm·t th e
power in all cases to make such improvements with its own forces if, in the opinion u1 the
council, the work can be done more expeditiously or economically.
ARTICLE X. PLANNING AND ZONING
Sec. 10.01. Reserved.
Editorts note-Ord. No. 79-86, § 2, adopted Dec. 11, 1979, and ratified Jan. 19, 1980,
deleted former section 10.01 which pertained to the director of planning and was derived
unamended from the Charter adopted Feb. 24, 1959.
Sec. 10.02. Planning and zoning commission.
(a) There shall be a planning and zoning commission which shall consist of seven (7) real
property taxpayers, who, during their respective terms of office and for at least one year prior
to beginning thereof, shall be residents of the City of Denton. They shall be appointed by the
council for a term of two (2) years, provided four (4) members shall be appointed each
odd-numbered year and three (3) members each even-numbered year. The city manager, mayor
and director of community development shall serve as ex officio members of the commission,
but shall have no vote.
(b) None of the appointed members shall hold any other public office or position in the city
while serving on the planning and zoning commission. The planning and zoning commission
shall elect its chairman from among its members. Seven (7) members shall serve without pay
and shall adopt such rules and regulations as they deem best governing their actions,
proceedings, deliberations, and the times and places of meetings.
(c) If a vacancy occurs in the city planning and zoning commission the council shall appoint
a commissioner to fill such vacancy for the unexpired term.
(Ord. No. 76-12, Amend. No. 7, 4-5-76)
Supp. No. 10 25
§ 10.03 DENTON CODE
Sec. 10.03. Planning and zoning commission: Powers and duties.
(a) The planning and zoning commission shall:
(1) Make, amend, extend and add to the master plan for the physical dev~~opment of the
city.
(2) Formulate and adopt regulations governing the platting or subdividing ofland within
the city. (The applicable provisions of Chapter 1, Title 28 of the Revised Civil Statt iE:
of the State of Texas, 1925, as now or hereafter amended, are hereby adopted and m :., .• e
a part of this charter, and shall be controlling on the planning and zoning commissicn.)
(3) Draft for the council an official map of the city and recommend· approval or disapproval
of proposed changes in said map; keep such map up-to-date so as to reflect any char,£?.'es
in the boundary or the zoning plan of the city.
(4) Make and recommend plans for the clearance and rebuilding of any slum districts or
blighted areas within the city.
(5) Recommend approval or disapproval of proposed changes in the zoning plan and
ordinance of this city and have all the power, duty and authority of a zoning
commission as provided in Vernon's Texas Civil Statutes, 1948, Article lOllf, as now or
hereafter amended, [V.T.C.A., Local Government Code § 211.007] all of which are
hereby adopted as a part of this charter.
(6) Submit annually to the city manager, not less than sixty (60) days prior to the
beginning of the budget year, a list of recommended general obligation capital
improvements which in the opinion of the commission ought to be constructed during
the forthcoming five (5) year period. (Such list shall be arranged in order of preference,
with recommendations as to which projects should be constructed in which year, and
the city manager shall forthwith furnish a copy of such recommendations to each
member of the council.)
(7) Promote public interest in and understanding of the master plan and of planning,
zoning, clearance of blighted areas and development of the city.
(8) Meet not less than once each month and keep a public record ofits resolutions, findings
and determinations.
(9) Hold such public hearings as it may deem desirable in the public interest and advise
the council upon such matters as the council may request its advice.
(b) For the accomplishment of the foregoing purposes the planning and zoning commission
is hereby empowered to:
(1) Require information which shall be furnished within a reasonable time from the other
departments of the city government in relation to its work.
(2) Within its budget appropriation, recommend the employment of city planners and
other consultants for such services as it may require.
Supp. No.10 26
CHARTER § 10.06
(3) Request additional assistance for special survey work of the city manager, who may at
his discretion assign to the planning and zoning commission employees of any
administrative department or direct such department to make special studies re-
quested by the commis~ion.
(4) In the performance of its functions, enter upon any land and make examinations and
surveys and place and maintain necessary monuments and marks thereon.
(5) Make and recommend plans for the replanning, improvement and redevelopment of
neighborhoods or of any area or district which may be destroyed in whole or in part or
seriously damaged by fire, earthquake, flood or disaster.
(Ord. No. 99-057, Amend. No. 17, 2-16-99, ratified 5-1-99)
Sec. 10.04. The master plan.
The master plan for the physical development of the city, with the accompanying maps,
plats, charts, descriptive and explanatory matter, shall show the commission's recommenda-
tions for the development of city territory, and may include, among other things:
(a) The general location, character and extent of streets, bridges, parks, waterways and
other public ways, grounds and spaces.
(b) The general location of public buildings and other public property.
(c) The general location and extent of public utilities, whether publicly or privately owned.
(d) The removal, relocation, widening, extension, narrowing, vacation, abandonment or
change of use of such existing or future public ways, grounds, spaces, buildings,
property or utilities.
(e) The general extent and location of public housing projects and slum-clearance projects.
Sec. 10.05. Legal effect of master plan.
No street, park, or other public way, ground or space, no public building or structure and no
public utility whether publicly or privately owned, shall be constructed or authorized in the
city until and unless the location and extent thereof shall have been submitted to and approved
by the planning and zoning commission; provided that, in case of disapproval, the commission
shall within thirty (30) days communicate its reasons to the council, which shall have the
power to overrule such disapproval, and, upon such overruling, the council or the appropriate
office, department, or agency shall have the power to proceed.
(Ord. No. 99-057, Amend. No. 18, 2-16-99, ratified 5-1-99)
Sec. 10.06. Zoning.
(a) For the purpose of promoting health, safety, morals or the general welfare of the
community, the council may by ordinance regulate and restrict the height, number of stories
and size of buildings and other structures, the percentage oflot that may be occupied, the size
of yards, courts and other open spaces, the density of population and the location and use of
Supp. No. 10 27
§ 10.06 DENTON CODE
buildings, structures and land for trade, industry, residence or other purposes. Such ordinance
shall provide that the board of adjustment may, in appropriate cases and subject to appropriate
principles, standards, rules, conditions and safeguards set forth in the ordinance, authorize
variances from and make special exceptions to the zoning regulations in harmony with their
general purpose and intent. -· --
(b) For any or all of said purposes the council may divide the city into districts of such
number, shape a11d arua as may be deemed best suited to carry out the purposes of this sectior ·
and within such d1stri.,ts it may regulate and restrict the erection, constn.1ction, reconstrP"·-
tion, alteration, repair or use of buildings, structures or land. All such regulation~ shall !)E:
uniform for each district, but the regulations in one district may differ from those in other
districts.
(c) Such regulations shall be made in accordance with a comprehensive plan and be
designed to lessen congestion in the streets; to secure safety from fire, panic and other dangers;
to promote health or the general welfare; to provide adequate light and air; to prevent the
overcrowding of land; to avoid undue concentration of population; to facilitate the adequate
provision of transportation, water, sewerage, schools, parks, public convenience and other
public requirements. Such regulations shall be made with reasonable consideration of the
character of the district and its peculiar suitability for particular uses, and with a view of
conserving the value of buildings and encouraging the most appropriate use ofland throughout
the city.
Sec. 10.07. Board of adjustment.
The city council shall by ordinance establish a board of adjustment which shall consist of at
least seven (7) members who shall have the qualifications, powers, and duties and serve for the
terms provided by the city council in an ordinance creating the board. All current members of
the board of adjustment and the board shall continue to serve under the current provisions of
the City Charter until such ordinance creating the board is enacted and effective.
(Ord. No. 99-057, Amend. No. 19, 2-16-99, ratified 5-1-99)
Sec. 10.08. P latting or subdivision control.
The planning and zoning commission shall adopt regulations governing the platting or
subdividing within the city or within the area under the extraterritorial jurisdiction of the city,
and the owner of every such subdivision shall comply with all of the provisions of Article 97 4a
and 6626, Vernon's Texas Civil Statutes, 1948, [v.T.C.A., Local Government Code § 212.002 et
seq. and V.T.C.A., Property Code § 12.001 et seq.] as now or hereafter amended. Such
regulation may provide for the harmonious development of the city within the subdivided land
with other existing or planned streets and ways or for conformance with the master plan or
official map, for adequate open spaces, spaces for traffic, utilities, recreation, light and air and
for the avoidance of congestion of population. Such regulations may include requirements as to
Supp. No. 10 28
CHARTER § 10.12
the extent to which and the manner in which streets and other ways shall be graded and
improved and water, sewer and other utility mains, piping, connections or other facilities shall
be installed as a condition precedent to the approval of a subdivision.
(Ord. No. 79-86, § 2, 12-11-79,_ratified· l-19-80)
Sec. 10.09. Reserved.
Editor's note-Ord. No. 79-86, § 2, adopted Dec. 11, 1979, and ratified Jan. 19, '~O,
deleted former section 10.09 which pertained to the tentative approval of plats and .:ar
derived unamended from the Charter adopted Feb. 24, 1959.
Sec. 10.10. Building permits, use and occupancy certificates.
(a) The city shall have the power to prohibit the erection, construction or use of any building
or structure of any kind within the city without a permit having first been issued, by the city,
for the construction or erection of such building or structure, and without a use and occupancy
certificate having been issued for the use actually made of such premises and structure and
may authorize a fee to be charged for such permit. In pursuance of this authority the council
may authorize the inspection of all buildings and structures during the progress of their
construction or thereafter and may require all building regulations existing in the city or
which shall hereafter be passed [sic].
(b) For the purpose of preserving property values, protecting the public health, preventing
the blighting of areas within the city, promoting safety and the public welfare the council may
fix a minimum standard for the construction and use of housing accommodations and other
structures within this city and prohibit the construction, erection and use of substandard
housing and other substandard structures.
Sec. 10.11. Official map.
The council may by ordinance establish an official map of the city, on which shall be shown
and indicated all public streets existing and established by law at the time of the establish-
ment of the official map.
Sec. 10.12. Slum clearance and rehabilitation of blighted areas.
The council may adopt, modify and carry out plans proposed by the planning and zoning
commission for the clearance of slum districts and blighted areas within the city and, for the
accomplishment of this purpose, may acquire by purchase or condemnation all privately owned
lands, buildings and other real property interests within the district; may establish, locate,
relocate, build and improve the streets and other public open spaces provided for in the plan;
may maintain, operate, lease or sell said buildings or any of them; may sell the land or any part
thereof designated for buildings and private open spaces upon such terms and conditions and
subject to such restrictions as to building uses and open spaces as will substantially carry out
and effect the plan.
Supp. No. 10, Rev. 29
§ 11.01 DENTON CODE
ARTICLE XI. PARKS AND RECREATION
Sec. 11.01. Reserved.
Editor's n ote-Ord. No. 79-86, § 2, adopted Dec. 11, 1979, and ratified Jan. 19, 1980,
deleted former section 11.01 -which pertained to the director of parks and recre!.ttion-and was
derived unamended from the'Charter adopted Feb. 24, 1959.
Sec. 11.02. Park and recreation board.
The city council shall by ordinance establish a board which shall advise the colu1cil on parl,.s
and recreation and which shall consist of at least seven (7) residents of the city who shall have
the qualifications, duties, and powers and serve for the terms provided by the city council ;n
the ordinance creating the board. All current members of the parks and recreation board ru:.d
the board shall continue to serve under the current provisions of the City Charter until the
ordinance creating the board is enacted and effective.
(Ord. No. 99-057, Amend. No. 20, 2-16-99, ratified 5-1-99)
ARTICLE XII. PUBLIC UTILITIES ·
Sec. 12.01. General powers respecting utilities.
(a) The City of Denton may license, regulate, fix the rates, control and supervise public
utilities of all kinds.
(b) In addition to such public utilities as it may now own, the City of Denton may own,
acquire, construct, maintain, and operate any other public utility that may be approved by a
majority of the qualified voters of the City voting therefor at an election held for such purpose;
and shall have power for the purpose of operating and maintaining any such utility, and for
distributing such service throughout the city or any portion thereof, but in such condemnation
proceedings no allowance shall be made for the value of any franchise and only the actual
physical assets shall be purchased by the City.
Sec. 12.02. Rates.
The city shall have the power, subject to limitations imposed by state law and this Charter,
to fix and, from time to time, revise such rates and charges as it may deem advisable for
supplying such utility services as the city may provide. The utilities shall provide no free
services; the rates and charges for services to city departments and other public agencies shall
be the same as the regular rates and charges fixed for similar services to consumers generally.
The rates and charges for services to consumers outside the corporate limits of the city may be
greater but shall not be less than the rates and charges for similar service to consumers within
the corporate limits of the city.
Supp. No. 10, Rev_ 30
CHARTER § 12.05
Sec. 12.03. Excess revenues of utility systems.
(a) Any money remaining in the "System Fund" after all necessary expenses of operation
and maintenance of the utility systems, including salaries, labor and materials, have been
paid, upon proper approval·, arid after all payments have been made into the several funds
required and provided to be made by the ordinance or ordinances authorizing the issuance of
any revenue bonds of the city, now outstanding or hereafter authorized and issued which may
be payable from and secured by a pledge of the net earnings of the light, water or sewer
systems, shall be deemed "Excess Revenues" for the purposes of this section. "System Fund" as
used herein shall mean the fund (or funds as may be required by outstanding bond issues) into
which are deposited the gross incomes derived from the operation of the above named utility
systems.
(b) Excess Revenues shall be utilized at the times and for the purposes as follows:
(1) After all of the requirements of the various funds have been met, there shall be
computed a return on the net investment in the utility system. The "Net Investment"
figure used in these computations shall be taken from the independent audit of the
utility systems for the last fiscal period. The city shall be entitled to receive annually
on the net investment from excess revenues, if any, not more than six (6) percent of the
net investment.
(2) Any remaining excess revenues shall be used for the redemption and retirement of
utility revenue bonds, as they become available at not more than fair market value. If
utility revenue bonds are not available, these funds shall immediately be invested in
short-term United States Government securities or at the option of the city, placed on
time deposit in the city depository to draw interest. As utility revenue bonds become
available, sufficient United States Government securities shall be sold or time deposits
withdrawn to purchase the longest maturities available on the market.
Sec. 12.04. Disposal of utility properties.
No sale, conveyance, lease, or other alienation of the entire assets of any utility system or
any part thereof essential to continued effective utility service, shall ever be made unless such
sale, lease, or disposal is approved by a majority vote of all the qualified voters voting in an
election held for that purpose in the City of Denton.
(Ord. No. 99-057, Amend. No. 22, 2-16-99, ratified 5-1-99)
Sec. 12.05. Cooperation of other city departments.
The [public utilities] board shall have the right to request the services of any officer or
department of the city government; provided, however, that the utility system shall pay out of
its revenues a proportionate part of the expenses of the department used in an amount agreed
upon by the city manager and the board. If they fail to agree, the final decision on any such
expenses shall be made by the city council.
Supp. No. 10 31
• . I
§ 12.06 DENTON CODE
Sec. 12.06. Reserved .
Editor's note-Ord. No. 79-86, § 2, adopted Dec. 11, 1979, and ratified Jan. 19, 1980,
deleted former section 12.06 which pertained to the director of utilities and was derived
unamended from the Charter adopted Feb. 24, 1959.
Sec. 12.07. The public utilities board.
(a) There is hereby created a public utilities board to be composed of seven (7) members, or
as many members as there are councilmembers, whichever is greater, appointed by the council
for four-year terms and until_ their respective successors have been appointed and qualified.
Members of the board may be removed by the council only for cause and only after charges
have been filed and published and the member has been given a reasonable opportunity to
defend himself in an open public hearing before the council. Vacancies shall be filled for any
unexpired term in the same manner as provided for regular appointments.
(b) The city manager and director of utilities shall be ex officio members of the board. They
shall attend all meetings of the board and shall have the right to discuss any matter that is
under consideration by the board but shall have no vote.
(c) Members of the public utilities board shall have the same qualifications as are required
by membership on the city council.
(d) At its organizational meeting, and annually thereafter as soon as the newly appointed
member (or members) has qualified; the board shall select from its own membership a
chairman, vice-chairman, and secretary. Any three (3) of the regularly appointed members
shall constitute a quorum. The board shall determine its own rules and order of business. The
board shall meet at least once each month; all meetings shall be conducted in accordance with
the Texas Open Meetings Act, Chapter 551 of the Texas Government Code, as it may now read
or hereafter be amended and all other applicable laws and a permanent record of proceedings
maintained.
(Ord. No. 76-12,Amend. No. 8, 4-5-76; Ord. No. 99-057,Amend. No. 23, 2-16-99, ratified 5-1-99)
Sec. 12.08. Powers and duties of the public utilities board.
(a) The board shall serve the department of utilities as a consulting, advisory and
supervisory body.
(b) The annual budget for the department of utilities shall be prepared by the director and
submitted to the board in the form required by the city manager. The board shall review the
budget, make such changes therein as they deem appropriate, then return it to the director
who shall deliver it to the city manager for incorporation without any changes, in the proposed
general budget of the city and transmission to the council.
(c) The public utilities board is hereby authorized to expend such funds for information and
advertising as shall be budgeted for this purpose.
Supp. No. 10 32
Jun-18-01 12:40pm From-US GEN 13THFLOOR + T-511 P.02/10 F-315
AMENDED AND REST.A.TED
LIMITED LIABl.LlTY COMPANY AGREEMENT
OF
PG&E GENERATING COMPANY, LLC
This A.mended and Restated Limited Liability Company Agreement (mis
"J\gi::eement") of PG&E Generating Company, LLC {lhe "Companv") is entered into by PG&E
Shareholdings, Inc., as the member (the "Member"). ·
Toe Member hereby agrees as follows:
1. ~-Thenarne of the limited liability company is PG&E Generating
Company, LLC (th~ "Company").
2. fonpation. The Company was fanned on December 19, 1997_ On June 1,
1999, the Company filed a. Certificate of Amendment to Certificate ofFonnation changing the
name of the Company from U.S. Generating Company, LLC to PG&E Generating Company.
LLC. The Member, acting through. any ofits duly authorized nfficers. the Board of Control (as
..--defined in Section 12 hereof) or an Officer (as defined in Section 13 hereof), shall execute,
cieliver and file any other certificates (and any amendments and.Jor restatements thereof)
necessary for tbe Company to quaijfy to do business in any and all jurisdictions in which the
Company may wish to conduct business.
3. Pm:pose am} Pow,.gs. The Company is formed for the object and pmpos:e
of all legal purposes for which a limited liability company may conduct business and the
Company shall have those powers which are provided to a limited liability company lm.der the
Act which are related or incidental to such purpose and necessary, convenient or advisable to
accomplish such purpose.
4. Principal Business Office. The principal business office of the Company
shall be located at such locm:ion as may hereafter be detennined by the Member.
5. Registered Office. The address of the registered office of the Company in
the State of Delaware is clo Corporation Service Company, 1013 Centre Road~ Wilmington. DE
19805, in the County of New Castle.
6. Eegjstered Agent. The name and address of the registered agent of the
Company fo:r service of process on the Company in the State of Delaware is Corporation Service
Company, 1013 Centre Road, Wilmington, DE 19805, in the Counzy of New Castle.
Jun-18-01 12:40pm From-US GEN 13THFLOOR + T-511 P.03/10 F-315
follows:
7. Member. The name and the mailing address of the Member are as
PG&E Shareholdings, Inc.
(formerly PG&E Generating
Company)
Address
Suite 2400
One Market, Spear Tower
San Francisco. CA 94105
8. J..jmjted Liability. Except as otherwise provided by the Act, the debts,
obligations and liabilities of the Company, whether arising in contract, tort or otherwise, shall be
solely the debts, obligations and liabilities of the Company, and the Member shall not be
obligaled personally for any such debt, obligation or liability of the Company solely by i-eason of
being a member of the Company.
9. C!!gjtaJ CsmtriJ:mRans. The Member is deemed ~ned ss the Member of
the Company upon its execution and delivery of this A~eemenr. The Member ha$ contributed
$1000.00 in cash to the Company.
10. Addi{ional.Comributions. The Member is not reqlJired to make any
additional capital contribution to the Company. However, the Member may make additional
( capital contributjons to the Company in its discretion.
11. Distributions. Distributions shall be made to the Member at the tilna; ana
in the aggregate ~aunts determined by the Member. Notwithsumding the preceding sentence or
any other provision to the contrary contained in this Agreement, the Company shall not 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 other applicable law.
12. Management.
a) Overall management and control of the Company shall be ves1ed in a board (rhe
··Board of Control"). The Board of Control shall have the power to do any ancl all
acts necessary, convenimt or incidental to or for the furtherance of the purposes
descn"bed herein, including all powen;, statutory or otherwise, possessed by members
of a limited liability company under the laws of the State of Delaware to me exi:em
such powers are consistent with the terms of th.is Agreement and are appropriate or
useful in carrying out the purposes of the Company as ser forth in this Agreement.
The Board of Contra l has the authority to bind the Company. The Board of Control
may delegate the foregoing power and authority to any of its authorized officers.
b) The Board of Control shall initially consist of four ( 4) individuals, each appoinred by
the Member. Each member of the Board of Control shall have such powers and rights
as are set forth in this Agreement and as the Member determines from time to time
and shall serve until he or she resigns, dies or becomes incapacitareo or is removed by
Jun-18-01 12:40pm From-US GEN 13THFLOOR + T-51 1 P.04/10 F-315
the Member. The President of the Company shall serve as the chair of the Board of
Control. The Board of Control shall have the sole power to determine appropriate
levels of capital of the Company, whether the Company should seek capital in the
fonn of debi, equity or a combination thereof and the kinds of securities, if any, of the
Company to be issued from time io time. The Board of Control shall meet ar an
agreed rime and location proposed by the chair (which may be by telephone
conference so long as each member has the opportunity to panicipate fully) to direct
and supervise the Company's affairs, and may adopt such other rules oflhe conduct
of its business as it shall determine to be necessary, proper or desirable. Decisions of
the Board of Control shall be reflected in writing in the form acceptable to lhe Board
of ConU"ol.
c) Any action required or permined to be taken at any meeting of the Board ofConirol
may be 1aken without a meeting if all members of the Board of Control consent
thereto in writing, and. the writings are filed with me minutes of proceedings oftbe
Board of Control.
d) Unless otherwise specified herein, all decisions of the Board of Control shall require
the majority vote of a quorum of the members of the Board of Control. A quorum
shall consist of a majority of the members of the Bo!U'd of Control.
e) Notwithstanding the foregoing provisions, the following actions shall require the
unanimous approval of each member of the :aoard of Comrol:
(i) the sale. transfer or other disposition of all or substantially all of the
Company's assets (except in connection with a liquidation of the Company);
(ii) ~ri.e merger or consolidation of the Company with or imo any other
entity unless the Company shall be the surviving entity thereof;
(iii) the admission of a new or substinne Member other than as provided in
Section 15 hereof; and
(iv) such other matters as the Board of Control may from time to time
detennine to require unanimous approval.
f) The members of tbe Board of Control of the Comp.my are as follows:
P. Chrisman Iribe
Peter A. Darbee
Bruce R Worthington
Thomas G. Boren
. __ ,,;
Jun-18-01 12:41pm From-US GEN 13THFLOOR + T-511 P.05/10 F-315
13. Officers. The Board of Control may, from time to time as it deems
advisable, appoint officers of the Company (the "Officers'') and assign in writing titles
(including, without limitation. President, Vice President, Secretary, and Treasurer) to any such
person. Unless the Board of Control decides otherwise, if the title is one commonly useci for
officers of a business corporation fanned under the Delaware Gt!neral Corporation Law. the
assignment of such title shall constitute the delegation to such person of the authorities and duties
that are non.nally associated wiTh that office. Any delegation pursu.~n to this Section 13 may be
amended or revoked ar any time by the Board of Control. The initial Officers of me Company
shall be the persons listed below opposite the offices to which they are hereby appoimed until
each resigns or is removed:
P. Chrisman lribe
Kent L Fickett
Catherine S. Leggett
JalllesV.Mahoney
M. Richard Smith
John R. Cooper
Joe C. Turnage
Davicl N. Bassett
Leslie H. Everen
Sanford L. Hamn.an
Linda Y. H. Cheng
Eric A. Montizam.bert
Peter E. Meier
John C. Barpoulis
Office
President & Chief Operating Officer
Sen.tor Vice President
Senior Vice President & Chief Human
Resources Officer
Senior Vice President
Senior Vice President
Senior Vice President & Chief Financial
Officer
Senior Vice Presi<lent
Vice Presiden~ Controller & Treasurer
Secretary
Vice Presidenr. General Counsel and Assistant
SecretQ.rY
Assis~t Secretary
Assistant Secretary
Assistant Secretary
Assistant Treasurer
14. Indemnification of Officers.
a) Tng.emnificatj.o:o of Boru,:d of Comrol Members and Cerrain Officers. Each person
who was or is a party or is threatened to be made a party to, or who is involved in
any tb.rearened, pending or completed action, suit or proceeding, formal or
informal. whether brought in the name of me Company or otherwise. and whether
of a civil, criminal, administrative or investigative namre (hereinafter a
.. proceeding"), by reason of The fact mat he or she. or a person of whom he or she
is the legal representative. is or was a Board of Conuol member or officer (Officer
Compensation Band Levels I through V) of the Company, or is or was a Board of
Control member or officer (Officer Compensation Band Levels I through Y) of the
Company serving at the request of the Company as a board of control member,
director, officer, employee or agent of anomer partnership or of a corporation, joim:
-
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venrure, U-USl or other emerprise, including service with respect to employee benefit
plans, whether the basis of such proceeding is an alleged action or inaction in aa
official capacicy or in any orher capacicy while serving as a board of concrol
member, director, or officer, shall, subject to the tenns of any agreement berween
the Company and such person, be indemnified. and held harmless by the Company
to rhe fullest extent permissible unc!er California law, against all costs, charges,
e.>q,enses, liabiliries and losses (including, without limitation. anorneys' fees,
judgmems, ful,es, ERISA excise taxes, or penallies and .amounLS paid or robe paid
in settlement) reasonably incurred or suffered by such person in connection
therewith, and such indemnification shall continue as co a person who has ceased to
be a Board of Com:rol member or officer and shall inure to the benefir of his or her
heirs, executors and administrators; provided. however. that (a) the Company shall
indemnify any such person seeking indemnification in connection with a proceeding
(or part rbereot) initiated by such person only if such proceeding (or part thereof)
was authorizt:d by the Board of Connol of me Company, or (b) the Company shall
indemnify any such person seeking indemnification in coooeclion wiUl a proceeding
(hereinafter a "third pacy proceed.ing"') (or pan ihereof) other than a proceeding by
or in rhe name of the Company to procure a juClgment in irs favor (hereinafter a
.. derivative proceeding") only if any settlement of such a proceeding is approved in
writing by me Company, and (c) no such person shall be indemnified:
i) E:xcept to the exrenr that the aggregate of losses ro be indemnified
exceeds the amount of such losses for which the Board of Control
member or officer is paid pursuant IO any Boarcl of Control members? or
officers• liability insurance policy maintained by the Company;
ii) On account of any suit on which judgmenr is rendered against sucb.
person for an accounting of profits made from me purchase or sale by
such person of securities of any Affiliate of the Company pursuant to the
provisions of Section 16(b) of the Securities Exchange Act of 1934 and
amendmer.us uierero;
ili) If a court of competent jurisdiction f'mally detennines that any
indemnification hereunder is unlawful;
iv) For acts or omission involving iruemional misconduct or knowing and
culpable violation of !aw;
v) For acrs or omissions that the Board of Control member o:r officer
believes r.o be contrary to the best imeres-i:s of the Company or us
partners, or chm: involve the absence of good faith on the pan of the
Boaro of Control member or officer;
vi) For any transac-i:ion from which me Boarc! of Control .member or officer
derivecl an improper personal benefit;
(.
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vii) For acts or omissions mat show a reek.less disregard for the Board of
Comrol member's or officer's duty to me Company or irs Parmers in
circumstances in which lhe Board of Control member or officer was
aware, or should have been aware, in rhe ordinary course of performing
his or ber duties. of a risk of serious injury to the Company or iis
partners~ or
viii) For acts or omissions chat constimre an unexcused panern of inanemion
that amount to an abdication of rhe Board of Control member's-or
officer's du.ties t0 the Company or irs Farmers;
ix) However, the exclusions ser forth in clauses (iv) through (viii) above
shall apply oJJly to inclemnification for acts. omissions or transactions
mvolving breach of duty to the Company and-its Partners. A majoricy of
disinrerested. Boara. of Control members representing a quorum of the
Board of Comrol of the Company shall make the de1ermination as to
whether any of the exclusions sei form in clauses (iv) through (viii)
above applies in a panicular case_
b) Jpdemnification as a Contract Right. The indemnification rights set forth in lb.is
paragraph with respect to Board of Control members and officers (Officer
Compensation Band Levels I through V) of the Company shall be a contract right
and shall inclue!e the right ro be paid by the Company expenses acmally anc!
reasonably incurred. in defencling any proceeding in aclvance of its final disposition;
provided that such advances be conditioned upon delivery to me Company of an
und.ertaking, by or on behalf of such Board of Control member or officer, ro repay
all amounts to the Company if it shall be ultimm:ely determined th1:1.t such person is
nor entitled to be indemnified.
c) Inde_mmficm]on of Certain Officers, Employees mJ4 Ar:epJS. A person who was or
is a pany or is threatened to be made a parcy lO or is involved in any p:roceecJ.ing by
reason of lbe fact that he or she is or was an officer (Officer Compensation Ban<!
Level VI). employee or agent of the Company (other than a Board of Comrol
member or officer as set fonh in Section 6.6(a)) or is or was serving at the requesr
of the Company as a board of control member. director. officer. employee or agent
of anotller enterprise, including service wim respect ro employee benefit plans.
whether the basis of such proceeding is an alleged action or inaction while serving
as a board of control member, director. officer. employee or agem:, may, subject to
the terms of any agreement berween the Company and such person, be indem.nifie<l
and held. hannless by rhe Company ro the fullest extent permissible Ullder California
law, against all costs, charges, expenses, liabilities ancl losses (incluaing. without
limitation, attorneys' fees.judgments, fines, ElUSA excise tax.es, or penalties and
amounts paid or to be paid in senlemem), reasonably and acrually incurred or
suffered by such person in connection men:wirh (hereinafter "indemnifiable
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losses"). Tbe immediately preceding sentence is not intended to be and shall not be
considered to confer a comract righc on any officer, employee or agent (orher than
Board of Control members and officers as ser forth in Section 6.6(b)) of lhe
Company.
d) Advance of Exp~pses. The Company may advance '[O an officer (Officer
Compensation Band Level VI). employee or agent referenced in Section 6.6(c}
expenses reasonably and actually incurred or suffered in defending any proceeding.
or may agree to provide prospective inoemnification of any such person against
indemnifiable losses in any lhird parry proceeding prior to the final disposition of
such proceeding; provided, however, that (a) rhe Company may make such advances
in any proceeding or agree to provic!e such indemnification m any such officer,
employee or agent in any third parry proceeaiug prior to the final disposition of
such proceeding only if an investiga1:ion is conducted with respect ro me
circumstances of the conduce ar issue aoci it is determined by the General Counsel of
this Coi:npauy. t>ase4 o:n tbe results of such investigation, that such person is entitlecl
to inclemnification because he or she is or was involved in such proceeding. or is
tllreaten.ed to be involved in such proceeding, as a direct consequence of {i) the
discharge of such person Ts duties as an officer, employee or agent of me Company,
or (ii) such person's obedience to the directions of che Company. even though
unlawful. unless such person, at the time of obeying such directions, believed. Ihem
10 be unlawflll, (b) notwithsranding any <letermination by the General Counsel that
any such officer, employee or agent is entitle'1 to any advance or indemnification
pursuant to clause (a) abovei the Company shall have tbe right ro discontinue any
advance to such person and to rerm:ina:re any oral or wrinen agreement to provide
prospective iru:lemnification ro such person in the event that it. is subsequently
determined by the General Counsel or the Board of Control that such person is nor
entitled. to be indemnified under California law. and (c) any advance to any such
officer. employee or agem shall be conditioned upon delivery to the Company of an
undenaking, by or on behalf of such person, to repay all am.oums to the Company if
it shall ultimately be determined that such person is not emitied tO be indemnifiecl.
e) Right of .Bom:fi of Control Members and Cerrain Officers w Brirl2 Suir. If a
claim by a Board of Corurol member or officer (Officer Compensation Band Levels
I through V) under this paragraph is nor paid ill full by lhe Company within ninecy
(90) clays after a written claim has been received by the Company, the claimant may
ar any time thereafter bring suit against the Company rn recover the unpaid amount
of the claim and. if successful in whole or in pan, the claimant shall also be enticied
to be paid Ihe expense of prosecuting the claim. Neither the failure of the Company
(including irs Board of Conuol or independent legal counsel) ro have mad.e a
c:letermination prior to the commenceme.n1 of such action that indemnification of tbl!
claimant is permissible in the circumsrances because he or she has mer the
applicable standard of conduct, if any, nor any acrual determination by rhe
Company before the commencement of such action mar the claimant had nor mer
any applicable standard of conducr, s~ll be a defense m thr: action or create a
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Jun-18-01 12:42pm From-US GEN 13THFLOOR + T-511 P.09/10 F-315
presumption for the purpose of an action thar the claimant has not met the appll~Je
s1andard of conduct.
f) Non-}?2,clusiviry of RiW,t.~. The right ro indemnification provided by this Section
6.6 shall not be exclusive of any other right which any person may have or hereafter
acquire under any statute, bylaw. agreement, or omerwise.
g) Exprnses as a Wi10~ss. To the extenr that any Board of Control member, offi~er,
employee or agent of the Company is by reason of suc:h position, or position wim
another entiry at rhe request of the Company, a witness in any action, suit or
proceeding, he or she shall be indemnified against all costs and expenses actually
and reasonably incurred by him or her on his or her behalf in connecrion therewith.
h) Indemnity Agreemenrs. The Company :may enter into agreements with any board
of conrrol member, officer, employee or agent of the Company providing for
iru!emni:f:i.cation to the fullest extent permiss.ible undeT California law.
15. Assi1IDW,ents. The Membennay assign in whole or in pan its membership
interest in the limited liability company to any affiliated entity so long as such assignment does
not cause a dissolution of the Company, and. ihb.e Member assigns its interest to more than one
entity or assigns its membership interest in part, after such assignment all references herein to
Member shall thereafter refer to all Members jointly and no Member shall thereafter assign its
membership interest in whole or in pan without the prior written consent of all other Members.
If a Member transfers all of its interest in the Company pursuant to this Section, the transferee
shall be aclmined to the Company as a Member ijpon its execution of an instrument signifying its
agreement to be bound by th.e tenns and conditions of this Agreement. Such admission shall be
deemed effective immediately prior to the transfer, and, immediately following such admission.
the transferor Member shall cease to be a member of the Company.
16. Resig;narion. The Member may resign from the Company as provided in
this Section 16 or if there are then multiple Members, a Member, may resign from the Company
with the \1/Tltten consent of all Members, and upon satisfaction of the provisions of this Section
16 and provided that such resi~tion will not result in a dissolution oftbe Company. lfthe
Member or a Member is permitted to :resign pursuant to this Section such resignation shall not be
effective until (i) a new Member or Members shall be admitted to the Company in tht! pl~ce and
stead of the resigning Member and such new Member or Members shall each have executed an
instrument signifying its agreement to be bound by the terms and conditions of this Agreement.
Such admission shall be deemed effective immediately prior to tbe resignation, awl, immediately
following such admission, the resigning Member shall cease robe a member of the Company.
17. RissoJytion.
a) The existence of the Company shall be perpenial; provided that it shall dissolve upon
the occurrence of an event described in the following paragraph.
b) The Company shall dissolve, and its affairs shall be wound up upon the first to occur
(
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of the following: (i) the wriuen consent of the Member, (ii) the retirement, resignation
or dissolution of the Member or the occurrence of any other event which terminates
the continu.e4 membership of the Member in the Company unless the business of the
Company is continued in a manner pennitted by the Act, or (iii) the entry of a decree
of judicial dissolution under Section 18-802 of the Act.
c) The bankruptcy w other event described in Section 18-304(a) of the Act with respect
to the Member or a Member will not cause such 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.
d) In the event of disso!ution,, the Company shall conduct only such activities as are
necessary to wind up its affairs (including the sale of the assets of the Company in an
orderly manner), and the assets of!he Company shall be applied in the manner. and in
the order or priority, set fonh in Section 18-804 of the Act.
18. S=11arabjli!Y of Provisjons. Each provision of this Agreement shall be
considered separable and if for any reason any provision or provisions herein are determined to
be invalid, unenforceable or illegal under any existing or future law, such invalidity,
unenforceability or illegality shall not impair the operation of or affect those portions oftbis
Agreement which are valid) enforceable and legal.
19. Entire Af!:feement. This Agreement constitutes the entire agreement of the
Member with re::i--pect to the subject mauer hereof.
20. Qovmung J.,aw. This Agreement shall be governed by, 811d construed
under, the laws of the State of Delaware (without regard to conflict oflaws principles)~ all rights
and remedies being governed by said laws.
21. Amendments. This Agreement may noi be modified, altered,
supplemented or amended except pursuant to a wrinen agreement executed ancl. delivered by the
Member.
IN WITNESS WHEREOF, the undersigned. intending to be legally bound hereby,
has duly executed this Agreement as of this 13w aay of December, 1999.
PG&E SHAREHOLDINGS, INC.
By: d-N.e---
Name: Peter A Darbee
Title: Presicent, Chief Executive Officer? and
Treasurer
PG&E Energy Trading Holdings Corporation
PG&E Energy Trading-Power, L.P.
Assistant Secretary's Certificate
June121.._, 2001
Reference is hereby made to that certain Asset Purchase Agreement (the
"Agreement") dated June1J!L 2001, by and among the City of Denton, Texas, a
municipal corporation of the State of Texas and a home rule city ("Denton"), Spencer
Station Generating Company, L.P., a Delaware limited partnership, and PG&E
Generating Company, LLC, a Delaware limited liability company. Pursuant to Sections
3.6(d) and (e) of the Agreement, the undersigned hereby certifies that she is the Assistant
Secretary of PG&E Energy Trading Holdings Corporation (the "Company"), which is the
sole general partner of PG&E Energy Trading-Power, L.P. ("PGET'), and as such
officer, hereby certifies, in her capacity as such and not individually, as follows:
1. Attached hereto as Exhibit A is a true, correct and complete copy
of resolutions that have been duly adopted by the Board of Directors of the Company
authorizing (i) the execution and delivery by the Company, as the sole general partner of
PGET, of the Transition Power Agreement dated as of the date hereof between Denton
and PGET (the "Transition Power Agreement") and the Power Transfer Agreement dated
as of the date hereof between Denton and PGET (the "Power Transfer Agreement"), and _
the consummation of the transactions contemplated thereby, and (ii) the execution and
delivery by the Company of the Guarantee dated as of the date hereof between the
Company and Denton, and the consummation of the transactions contemplated thereby.
None of such resolutions have been amended, modified or repealed in any respect, and all
of such resolutions are in full force and effect on the date hereof.
2. The persons listed on Exhibit B have been duly elected or
appointed, have been duly qualified, have been authorized to execute and deliver the
Transition Power Agreement and Power Transfer Agreement (on behalf of PGET, as its
sole general partner) and the Guarantee and all of the other agreements and instruments
contemplated thereby, and on the date hereof, are officers of the Company, holding the
respective offices set forth opposite their names, and the signatures set forth opposite
their names are their genuine signatures.
3. -Attached hereto as Exhibit C is a true, correct and complete copy
of the Certificate of Incorporation of the Company, as in effect on the date hereof.
4. Attached hereto as Exhibit D is a true, correct and complete copy
of the Bylaws of the Company, as in effect on the date hereof.
5. Attached hereto as Exhibit Eis a true, correct and complete copy
of the Second Amended and Restated Agreement of Limited Partnership of PGET.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
DAI :1265169\02\S _LT02!.DOC\78599.0028
· IN WITNESS WHEREOF, the undersigned has hereunto set her name on
behalf of the Company and not individually.
PG&E ENERGY TRADING
HOLDINGS CORPORATION
B;::)i ~(Bmwd 8 Name: N~ .Manrung
Title: Assistant Secretary
The undersigned hereby certifies that he is the duly elected, qualified and acting President
and Chief Executive Officer of the Company and hereby certifies that Nancy A. Manning
is the duly elected, qualified and acting Assistant Secretary of the Company and that the
above signature is his genuine signature.
DAI :\265169\0115 _LT0I !.DOC\78599.0028 2
EXHIBIT A
See Attached.
DAI :1265169\0115 _LT0I !.DOC\78599.0028 3
Schedule A
AGREEMENTS TO BE EXECUTED BY PG&E ENERGY TRADING HOLDINGS
CORPORATION ON BEHALF OF PG&E ENERGY TRADING -POWER, L.P.
1. Transition P~wer Agreement dated as of Junelft, 2001 between The City of Denton, Texas
and PG&E Energy Trading-Power, L.P.
2. Power Transfer Agreement dated as of June 7$._, 2001 between The City of Denton, Texas
and PG&E Energy Trading-Power, L.P.
3. Consent, dated as of JuneZfL, 2001 given by the City of Garland, Texas and the Greenville
Electric Utility System, and acknowledged by Spencer Station Generating Company, L.P.
and PG&E Energy Trading -Power, L.P.
4. Assignment, dated as of June1it_,-2001 between Spencer Station Generating Company, L.P.
and PG&E Energy Trading -Power, L.P.
3
PG&E ENERGY TRADING HOLDINGS CORPORATION
BOARD OF DIRECTORS
ACTION BY WRITTEN CONSENT
June 1.i., 2001
The Board of Directors of PG&E Energy Trading Holdings Corporation, a California
corporation, acting by written consent pursuant to the Bylaws of this Corporation and the California
Corporations Code, hereby adopts the following resolutions:
WHEREAS, PG&E Energy Trading Holdings Corporation (the "Company'') is the sole
general partner of PG&E Energy Trading -Power, L.P. ("ET -Power"); and
WHEREAS, there has been made available to the Board of Directors of the Company (i)
certain agreements being entered into by ET -Power listed on Schedule A hereto (collectively, the
"ET -Power Agreements") and (ii) a Guarantee Agreement dated as of June ~ 2001 between the
Company and The City of Denton, Texas ("COD'') (the "Guarantee''), pursuant to which the
Company will guarantee to COD the performance of all obligations of ET -Power under the
Transition Power Agreement dated as of June ·Uf_, 2001 between ET -Power and COD, subject to
the terms and conditions set forth in the Guarantee; and
. WHEREAS, the Board of Directors has examined the drafts and the principal terms and
provisions of the ET -Power Agreements and the Guarantee; and
WHEREAS, on the basis of review of the ET -Power Agreements and the Guarantee, and
the principal terms and provisions of the transactions provided for therein, the Board of Directors
deems it advisable and in the best interest of the Company that the transactions referred to in the ET
-Power Agreements and the Guarantee be consummated substantially in accordance with the terms
and provisions thereof, and that the President, any Vice President, Treasurer, Assistant Treasurer,
Secretary, Assistant Secretary or any other officer of the Company (the "Authorized Signatories'')
be severally authorized to take all actions to execute and deliver all certificates, instruments,
agreements, and other documents necessary to effect and carry out any and all acts and transactions
contemplated by the ET -Power Agreements and the Guarantee.
NOW, THEREFORE, BE IT RESOLVED, that the Company execute, as General Partner of
ET -Power, the ET -Power Agreements and make the Guarantee and perform the agreements
contemplated to be performed by it thereunder and that the Authorized Signatories are severally
authorized to execute and deliver, in the name and on behalf of the Company and/or ET-Power as
the case may be, the ET -Power Agreements and the Guarantee to be substantially in the form
thereof approved by this Board of Directors, with such changes therein as shall be approved by the
Authorized Signatory executing and delivering the same, such approval to be evidenced
conclusively by such execution and delivery; and
RESOLVED, that the form of and each of the terms and provisions contained in the ET-
Power Agreements and the Guarantee are hereby authorized and approved in each and every
respect; and each and every transaction effected or to be effected pursuant to and substantially in
accordance with the terms of the ET -Power Agreements and the Guarantee, including, but not
J:\LEGAL\CORPORA 1\ET Companies\ET Holdings Corp\ Written Consents\r'denton-060 I .doc
limited to, those specific transactions which are described, authorized and approved in each of these
resolutions, are hereby authorized and approved in each and every respect; and
RESOLVED, that the Authorized Signatories be and hereby are severally authorized to do
and perform or cause to be done and performed, in the name of and on behalf of the Company, all
other acts, to pay or cause to be paid on behalf of the Company, all related costs and expenses and
to execute and deliver or cause to be executed and delivered all other notices, requests, demands,
directions, consents, approvals, orders, applications, agreements, certificates, undertakings,
supplements, amendments and further assurances or other communications of any kind under the
corporate seal of the Company or otherwise as he, she or they may deem necessary, advisable or
appropriate to effect the intent of the foregoing resolutions or to comply with the requirements of
the instruments approved and authorized by the foregoing resolutions; and
RESOLVED, that any and all acts of the Authorized Signatories of the Company, which acts
would have been authorized by the foregoing resolutions except that such acts were taken prior to
the adoption of such resolutions, are hereby ratified, confirmed, approved and adopted as the acts of
the Company. -
Stephen A. Herman
.......___
2
EXHIBIT B
Name · Office Signature
Lyndell E. Maddo:JE . President & CEO
Thomas B. King
John R. Cooper
Executive Vice President ~/~
Senior Vice President & Treasurer ~
Sarah M. Barpoulis Senoii: Vice President tm~
Nancy A. Manning Assistant Secretary
DAl:1265169\0l\5_LTOl!.DOC\78599.0028 4
C-F-:m
Jun~26·01 03:13pm From-US GEN 13THFLOOR T-556 P.04
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SECRETARY OF STATE
I, BJU JONES, Secretary of State of the State of California,
hereby certify:
That the attached transcript of f page(s) has
been compared with the record on file in this office, of
which it purports to be a copy, and that it is full, true
and correct.
IN WITNESS WHEREOF, I execute this
certificate and affix the Great Seal of
the State of California this day of
JA~ - 8 2001
Secretary of State
Jun-ze-01 03:13pm From-US GEN 13THFLOOR T-556 P05 F-373
ENDOAaa, -Ffl.Et llllllalfafll mt~111 ~
Ii h~Cld CAtartlii.
PG&E ENERGY TRADING -POWER HOLDINGS CORPORATION JA S N -200!
CERTD1CATE OF AMENDMENI' OF
ARTICLES OF INCORPORATION
Lyndell E. Maddox and Nancy A. Manning hereby certify that;
m,, ff'lPak:iDJarSma
I. They ar~ the President aJld Chief&~tive Officer~ and Assistant Seeteta.ty. r=sp~y.
of PG&E Energy Trading -Power Holdmgs Corporation, a Califomia coipOr¢on (the "'Coq,orat:ion'j.
2. The Article FIRST of the Articles ofincmporatian of the Cmparatian is hereby arnc::n:dcd
to be and read as set forth below:
'ERSI
The name of this corporatioll is PG&E Energy Trading Holdings Cozporation.,.
3. The amendment of the Articles of Incotp0ration herein certified has been duly apprav~
• by ?be Coiporati.on,s Board of Directors.
4. The foregoing amendment of the Articles of Incmporation has been duly approved by the
required vote of shareholders in accardance with Secuon 902 of tbe Ccnporarion Cnde. The Cmporatiaa:
has one class of shares and the total munber of outstanding shares of the Corporation is 1,000. Tbc
number of shar~ voting in favor of the amendment equaled or exceeded lhe vote rcqu:ir=d. The
perccmagc vote required was mere than 50% of the shaffl; omstanding.
We further declare under penalty of perjury Wld.er the laws of the State of Califm:ma mat die
matters set forth in this cc:rtificate are trUc aud coaect of our own knowledge.
Signed on this 27~ day ofDecembcr, ZOOO.
Jun-26·01 03:13pm From-US GEN 13THFLOOR + T-556 P.06/39 F-373
• f{.G55 \ 313 ..
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SECRETARY OF STATE
.~:, · I, BIU JONES, Secretary of State of the State of California,
hereby certify:
That the attached transcript of _L page(s) has
been compared with the record on file in this office, of
which it purports to be a copy, and that it is ful4 true
and correct.
S....Sllllll Farm CE,107 1Ytv 9-1l8J
IN WITNESS WHEREOF, I execute this
certificate and affix the Great Seal of
the State of California this day of
-OfiiP llil 1'.5524
Jun-26-01 03:14pm From-US GEN 13THFLOOR + T-556 P.07/39 F-373
A0551373
CERTIF1CATE OF AMENDMENT
OF
ARTICLES OF INCORPORATION
r , •
OF ::.~: 3 ~ '7.~.-.~
PG&E ENERGY TRADING-POWER HOLDINGS CORPORATION . . .. -
-·-... -·. ...... • • .: ••• .-• -* -: -
The undersigned certify that:
l. They are the Pn:sidcnt and Chief Executive Officer and Assistam Seaenuy.,
respectively, of PG&E Energy Trading -Power Holdings ColJ)Otation, a California corporation..
2.
deleted.
Anicle SIX'Il:I of the Articles of Incorporation of this CO?pOr:ation is hereby
3. The foregoing aniendmenr to tbc Articles of Incorporation has '&eea. duiy
approved by the Board of Direcwrs.
4. The foregoing ame:odment lO 1he Articles of Incorpmarion has becu duly
approved by the reqwred vote of shaTeholders in accordance with Section 90~ California
Corporatio'JlS Code. The t0tal number of oumanding sharea of the corporation is 1,000. The
number of shares voting in favor of the ameudm.ell? equaled or exceeded the vote~ Toe
perc~ vote required was niore wm SO%.
5. The aforesaid amendment shall bccc:ine effective upan lhe ~ cf ibis.
Certificate of Amendment.
We further declare under peruucy of perjury under the laws of the State of Califam:ia mat
-the matters set fanh in this certificate are true mid con-ect of our ovvn koowledge.
DATE: Allgust; ~ 2000
B;)//JJ,(('J)J).l&u,n~
NancyA.~
Assistam SecretarY
J:\l.EOA.l.\CORJ'OR.A T\E'l' Comp,Ulie&\l::r Po~ Holdings~.oaoC>Jlo::
/
Jun-26-01 03: 15pm T-556
-.
From-US GEN 1 STHFLOOR ,. ... ,___ +
A508247
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SECRETARY OF STATE
i BilL JONES, Secretary of State of the State of Califo~
hereby certify.
That the attached transcript has been compared with
the record on file in this office, of which it purports to
be a copy, and that it is full, true and correct.
' A ,,"l:f,. ;!t~i,.{~,:..";~: ,_ -,:
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IN WITNESS WHEREOF, I execute
this certificate and affix the Great
Seal of the State of California this
Secretary or State
97 llS0M
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Jun-26-01 03:15pm From-US GEN 13THFLOOR +
CERTIFICATI: OF AMENDMENT
OF
ARTICU:S OF INCORPORATION
OF
T-556 P.12/39 F-313
EWDORSEIJ -F!l~D I:! Ille oflict ol iP.i: :,m~;;;r,; of State ut :he Slal! :ir c.iiinic
f1A"f. :> 7 "'l3Ba
PG&£ ENERGY TRADING-POWER. HOU>!NGS COR.PORATION
Tbe undersigned certify that:
1. They ate me Senior Vice President. Onef Financial Officer and Trcasu:rc:r, and Assistant
Secretary, respectively, of .PG&E Enagy Trading-Power Holdillgs Cotpcnation. a Ca.tifomia. corpoNtion.
2.. Anicle SlXIH of the Anicles oflncoiporation of mis corporation is amended m tull lQ read
as follows:
"Sixth:
This cotpmation shall have tluee (3) dircaors."
3. The foregoing amendments to the .t\niclcs of Incorporation l:lave ~ dtuy' appiavecl byme
Bow-d of Direcl:ors.
4 -The foregQing zur=ndmenis to the Aiticles oflllcotporation ha~ been duly approved by me:
~quired vote of shareholders m accon:lance with Section ~02. California CorpoBtimis Code. The tolal
number of o~ding shares of the corporation 'is 1,000. The number of shares voting in fuvor of ibe
amendment equaled or exceeded lhe vote reqi.nred. The ~ge vote reqqired was more tliail 50%.
s. That the aforesaid ame:Mments shall bec01Ue effective upon the filing of this Cc:nifii:aic of
Amaidmc:nt.
We funher declare under penalty of perjury under me mws of the Siaie of California that the ~ $Ct fonh
in this ccnifi~te are aue and comet of om own knowledge.
.1998
By: ~~ -...,;;~~. ~St ... ep_beD..,._~G...,..ilben__..-=-------------
Assismnt Sec:mary
c
Jun-26-01 03:15prn From-US GEN 13THFLOOR + T-556 P.13/39 F-373
..,. A508247
k~flf '
SECRETARY OF STATE
L BIT.l ./ONES, Secretary of State of the State of CaJifo~
hereby certify:
That the attached transcript has been compared with
the record on file in this office, of which it purports to
be a copy, and that it is full, true and correct.
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IN WITNESS WHER£0F, I execute
this certificate and affix the Great
Seal of the State of California tllis
MAY O 8 :9S8
Secretary of State
17 35:185
.,
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Jun-26-01 03: 16pm F rem-US GEN 13THFLOOR + T-556 P .14/39 F-373
CERTIFICATE OF AMENDMENT
OF
ARTICLES OF INCORPORATION
OF
EJfDOR~tO -fH.E'ft
llt 1lle Dh1i;c. OI Iii, ;~cr~,y ,'i 31i!f1:
u! Ille 513te ~ ~
HAY.D1~:r·
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PG&E ENERGY TRADING-POWER HOLDINGS CORPORATION
The undersigned certify that:
1. They arc~ Senior Vice Presldent. Chief Financial Officer and Treasurer. and Assimur
Secretary, respectively, of PG&E Energy Trading-Power Holdings Ccuporatioll, a Ca.lifcmia ~o~
2 · Article SIXTH of the Articles of Incorporation of this coiporation is amended in full ta n:ad
as follows:
Tius corporali011 shAU ha~ wee (3) diTecrors. n
3 • The foregoing amendments to the Anicles of Jneo?porario11 have been duly a,ppi<)vc:d.by ?be
Board of Directors.
4. The foregoing am.cndmcrlts to the .Articles of Incorporation ha"e been duly apprcn,cd by ?ht:
r=quired vote of shareboldcxs in ~cordance With S~on 902. CaJ.ifonua Corporations Code. ~ total
number of outstanding shares of the corponstion is 1,000. The nwn~ of shat'es voting in favor of aic
amendment equaled or exceeded the vore reql.lired. The pc:n:enmge voie reqwred was more 1bail SOo/a.
s. That the aforesaid amendmc:n~ shall betome effec~ upon the filing of this Cen:ifiauc of
Amendment.
We further Qeclare under penalty of perjury under me laws of me State of Califomia that lb= malll:S set fortA
in this certificate are true imd correct of our own knowledge.
DATED: ""f) __J 1998
By:_~~~~-=---.;._-..,.___._
~en:
ASsistant Secrcuuy
By:_-+T .... J=--=~~-----Pau1w. Y
Senior Vice ·dent, ChieiFmancial
Offu:c:r and Treasurer
Jun-26-01 03:16pm From-US GEN 13THFLOOR
~=::::;;:;,..;;;;;;;;;;;;;;;;;;;;
T-556 P.15/39 F-373
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SECRETARY OF STATE
i BILL JONES, Secretary of State of the State of California,
hereby certify:
That the attached transcript has been compared with
the record on file in this office, of which it purports to
be a copy, and that it is full, true and correct.
IN WITNESS WHEREOF, I execute
this certificate and affix the Great
Seal of the State of California this
..
Sec:retazy ofState
Jun-26-01 03:16Pl!I From-US GEN 13THFLOOR
KITE POWER CORPORATION
CERTIFICATE OF AMENDMENT
OF
ARTICLES OF INCORPORATION
Tony F. Di Stefano and Richard C. Jones certify that:
T-556 P.16/39 F-373
c •' u O i<:; E u • F ! LEO
1il the r;ff;=a !if rh; St!C'Etary i;f s~te
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FEB 61998
BILL JONES, Secrefiry of State
l. They arc the Chief Executive Officer and the SecretarY, respectively, ofKii:e Power
Corporation. a California corporarioD. -
2. Anicle l of the A.Iticles of Incorporation of this corporation is amc:ndeti to~ as
follows:
•~ :wne of this c:orpora'ticm is PG&E EnergyTrading -Power Holdings
Corporation."
3. The foregoing amendment of the Alticles of Incorporation bas been duly approved by
the board of dm:ctors.
4. The foregoing acicndrnent of the Articles of Inco.rporation has been duly approwd by
tbcrcquin:d vote ofsbat'choldcrs in accordance with Section 902 of the Corpomtians
Code. The total number of outstanding~ of the Corporation is 1000. The
number of slwre$ voting in favor oftbe iu:nendment equaled or c:xcccded th: vote
required. The percemage vote required was more than 50%.
We further declare under ~tY of perjury UDder the laws oftbe Stare of Califomia. that
the matters set forth in this cen:ificare are aue and correct of our own knowledge.
DATE: December 1, 1997
. (
Jun-26-01 03:17pm From-US GEN 13THFLOOR T-556 P.17/39 F-373 r ,.
statp
c81itornia
OFFICE OF THE SECRETARY OF STATE
CORPORA TJON DIVISION
I, MARCH FONG EU, Secretary of State of the
State of California, hereby certify:
That the annexed transcript has been compared with
the corporate record on file in this office, of which it
purports to be a copy) and that same is full, true and
correct.
;
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IN WITNESS WHEREOF~ I execute
this certificate and affix the Great
Seal of the State of Califomia this
OCT 18 1991
S9 .. -
Jun-26-01 03:17pm From-US GEN 13THFLOOR +
ARTlCLES OF lNCORPOMT~ON
Of'
KITE POWER CORPORATION
FIRS't
T-556 P.18/39 F-373
F.:NOORSED
Fil.ED
i:<:. 1M office of II,~ ~m111Y cif St~
ttl Ille S...,. o1 ~
OCT 18 f99t
MAACti FONG ru. Sfflet.vy at Sra.;e
'rhe naae of this 00rporation is Kite Power corporatio.i.
StcoND
'l'he purpose of the corporation is to engage in A?TY
l~wful act or activity for whioh a eoq,or~tion iiiay be orgcnized
under the General Corporation Law of C~U.fornia other than the
banktng busine5s, the~~ comp~ny business or 1:he practice of
a profession permitted to be inco-:-porated by the california
Corporations Code.
TRIBP
'l'he name ancl basine&fi add.re&& in this state of the
COq)oration's initi2'l agent for service of procelis is Stuart w .. Booth, 444 ~rlcet St~eet, l.9tb Floor, san Francisco, Ca.liforn.i.A
94111 ..
fOQ'RTH
~is corporation ia authorized to issue only one elass
of shares, which shall be designated "comaon" abare&. 'I'he total
_ authorized numl'ler ot shares wb.ieb may be issued is 101 ooo shar'as.
No di5tinction shall exist between the shares of the corp0t:ation.
FJPTH
'rbe sh.Area of stock may l)e offertld for sale far lloney
or in exchange for property, from time to tiae upon such terma
and conditions as tbe. l:>oard. of direct:0:ns :may prescribe ..
§iXTff
Tnis coiporaticn $~ail have two directors. The names
and addresses of the persons appointed as the initial d~ec~s are:
Ma:.on Willrich
444 K~rket ~eet, 19th Floor
San !'ra.nc;:,i.aco, CA 94111
Stuart w. Booth
444 Market Street, 19th Floer
San F'ranci&eo, CA 94111
Jun-26-01 03: 17pm F rem-US GEN 13THFLOOR + T-556 P. 19/39 F-373
~ r
SeygNTB
The 11ability or the directo~s ot the corporation
for monetary damages shall be elimin•ted to the fulleat extent
permissible under California law.
DGffi'H
The corpc>ration is authorized to provide
indemnification of agents (as defined in section-317 of the
california corporations Code) through bylawa, resolutions,
agreements with agcmts, vote of libcu'eholders or disintereRtecl
directors, or othm"wise, in excess at tbe indemnification
01:herwise peniitted by Secticn 317 of the CAlitornia corporations
Code, sUl::>ject only to tlle applicable limits set forth in
Section 204 or ~a California Corporations Code.
IN WITNESS WHEREOF, the undersigned., who ~a the above-named initi~l directors ct this corporation, have executed thwi•
Articles of Incorporation on Octobe~ 11, 1991.
stuart w. Booth
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Jun~26-01 03:18pm From-US GEN 13THFLOOR + T-556 P.20/39 F-373 .,,. .... . ,
we, and each ot us, decla~e:
l.. We a:r-e the persons lrlbose names a.re subsc::-iced
below.
2. We collectively are all of the initial directo~s
named in the foregoing Article$ of lnc:orporation.
3. The f0reg0ing Articles of Incorporation Are our
a~t and deed, jointly and severally.
Executed on October 11, 1991.
Stuart W. 8ootll
. . •
Jun-26-01 03:18pm Fr011-US GEN 13THFLOOR + T-556 P.22/39 F-373 ..
BYLAWS
OF
PG&E ENERGY TRADING -POWER HOLDINGS CORPORATION
As Amended aud Restated August 15, 2000
ARTICLE I
OFFICES
SECTION 1. Principal Office. The principal executive office fortlu: transaction of the
business of the Coqxmmon is located at 7500 Old Georgetown Ro~ Suite 1300,,.
Betbes<hi, Maryla:ad 20814.
SECTION 2. Other O!!ictl. The Chain:nan of the Boo.rd, the President. o:i-ihc Bo=d of
Directors may at any ~ or subordinate business offices at any place or places
where the Corporation is qlJalified to do business.
ARTICLED
MEETINGS OF SHAREHOLJ>ERS
SECTION t. Place OfMeetinJ2!, All meetings of the shareholders miall be held at the
principal office of the Corpotatio~ or ai such other place as ma.y be designated by tbe Board. of
Directors.
SEC'I10N 2 Amnull Me= The annual meeting of shaieholders shall be held on
such date-~ at such time ana at sue e within or without the Suue of Califomia as shall be
clesignar.ed from time to time by the Board of Directors. At each annual meeting directors shall
bee~ and any proper business within the _power of the sbareholdets may be muisacted.
SECTION 3. Special Meetings. Special meetings of the shareholders shall be called by
the Secretary or an Assistant Secretary ilt my time on order of the Board of Directors. ~
Chairman oftbe Board or the Piesidem. Special meetings of the shareholders shall also be called
by the Secretary orilll Assisumt SecretaJy upon the written request of holders of shares entitled
to cast not less than ten _percent of ~ votes at lhe meeting. Such requests shall state the
putposes of the meetings imd shall be delivered to the Chairman of the Bo~ the President, or
1he Secretary. If a special niceting is C4lled by any person other than the Board of Directors. the
me:eti.ng so ieqw:sted shall be held on the date requested. but not less than thirty-five nor more:
than sixty days after tbe date of receipt of the original written request therefor.
SECTION 4. Notii:e or Shanholdera' Meetin~. Written notice of the annual meeting
shall be given not less than ten or more than sixty aiys prior r.o the date of the meeting to each
shareholder entitled to vote thereat. The notice shall Siate the place. day and hour of sucll.
meeting. and those maners which the Boar<J, at the time of mailing, intends to present for action
l:\U:GAL\CORl'ORA 1\ET Conil)ll'l~\ET Powi:r l'loldinp\8Yliws\byw.¥S-OllOO.aoc
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Jun-26-01 03:18pm From-US GEN 13THFLOOR + T-556 P.23/39 F-373
by the shareholders. If a special meetillg of shareholders is called by aiiyonc other than the
Boatd of Directors, writteii notice of such special meeting, sw.ting the place. day alld hour of
such meeting and the business proposed to be n-ansacted tbcn:ai, shiul be given within twenty
days after receipt of the written request.
SECTION 5. MBDDer Of Givmg Notice. Notice of any shareholders' meeting shall be
given either pmonaily or by mail or telegraphic or other written COlillnunication, charges
prepaid, addressed to me shareholder at the address of that shareholder appearing on the books of
the Corporation or given by the shareboldeJ" to the Corporation for tbe pUEpOses of ttceiving
notice.
SECTION 6. Attendance At Meenngs. At aiiy meeting of the sbarehol®JS~ each
holder of record of stOCk entitled to vote thereat may an end in person or may designate &11 a.gem
or reasonable number of agents, not to exc=d three, to anend the meeting and cast votes for bis
shares. The authority of agents mum-(i) be evidenced by written proxy signed by lhe shareholder
designating the agents aimiorized to attend the meeting and {ii) be delivered to the Scc:rewy of"
the CoipOration prior ro the comm.eiiccmCDl of the meetiDg..
SECTTON 7. Aerio11 ~omcnt. Subject to Section 603 (b) of me Califomia 0eneiaI
Corpomion Law, any acclon ch may b~ taken at any annual or special meeting of the
shareholders may be ta.km witbout a mcetin; and without prior aotice, if a conseut iII 'M'iting..
setting form the action so Ulken, shall be signed by lht sbaieboldas having not less thar:i the
minimum number of voU!S 'dlat woul'1 be necessary lO authorize or tac~ actioll ~ a meeting
at which all slw"es of the CoqMmlticn entitled to vote tllCICOll were present and voted.. SQCb.
action by written consent shall bave the same force and effect as the vote of such slweholdcrs.
Such written coDSCnts shall be filed with 1hc min~ of tbc ~ Qf lbe sbardlolders.
ARTICLEm
DIRECTORS
SECTION 1. N11mber. The Board of Directors shall COJlSist of such numb=-of
directOrs, .not less than tw0 (2J nor more than tbtee (3), with the: exact nrmber of dir=ors to be
fixed in this Bylaw, and ~ exact number of directors shall be two (2) qtil changed, wit:hm ti=
limits specified above. by a resolution or by amendment to this Bylaw~ duly adopted by the
Board of Directors.
SEcrJON-2. Powen. Subject to the provisions of the Califomia GeueraI Cmpcnat:ion
Law and any limitations m tile Anicles of Inco:,poration and these-Bylaws zela:ting to ~
required to be approved by tbe slweholders or by dle owsnmdmg shares, the bus~ and affairs
of this CoTporation sball be managed and all corporate powers slw1 be exercised by aruuda-tbc
direction of the Board of Directors_
SECTION 3. T"une! And Place Of Directon' Mee~ Jmmc:diazeJy following each
annual meeting of sbafefioldm. the Bow of Directors shall a regular meeting at tht place
that the annual meeting of shareholders was held or ai: any other place that shall have been
designated by the Boord of Ditector.,, for w p1Up0se of orgaoization, any desired election of
officm, and the ttanSaction of olher business. Notice of this meeting shall JlDt be t~
' ..,_
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Jun-26-01 03:18pm From-US GEN 13THFLOOR + T-556 P.24/39 F-373
Other regular meetings of 1he Board of Directors shall be held without call at such time as sbail
from time to time be fixed by resolution by the Boll?d of Directors. Such other regular meetings
may be held without notice. Regular meetings of the Board of Directo?S may be held at any
place within or outside the State of California as bas been designated from lime to time by the
Board for such pwposcs1 or to which dl members of the Board have given wrine:Jl consent, either
before or after the meeting. and filed with the Secretary of the Corporation. In the absence of
such designinion or c~Jn, regular meetings shall be held at the principal cxccunve office of
the Cotporation.
SECTION 4. SJ?eeid Meetings. The Chairman of the BomL the Presid=t.. me
Secmary. any Vice Presideiii or any iwo (2} directors may call a special meeting of the Board of
Directots at any time. Notice of lhe time and place of special mcctmgs shall be given to each
Director by the Secretary. Such notice shall be delivered :personally or by telephone, facsimile,.
telegraph, elcctromc;; mail or other elecll'onic means to each Director at least forty-eight (48)
hours in advance of such meeting, or sent by ~ postage prepaid, at least four ( 4) days in
advance of SQC}1 meeting.
SECllON 5. auonm. A majoricy of Ule amborized DUIDbe:r of dfrcct0rs sf1aU
constitute a qlJOrum or ?ht transac1iou of ln1siuess. except lbat a majority of the directors
present, wbether or not a quorwn is present, may acljoum the meeting to anotbc:r time and ~
.A.Dy meeting. regular or ~ inay be held by confemicc telephone or similar ro1tununicatiou
equipment, as long as all directors participating in the meeting can hear one anolhet. A mee{ing
~ which a quorum is initi.ally present may continue to uansact business notWithcraading the
withdrawal of directon, if any action 1aken is itpproVed by at lea.st a majority of me ~ui:R:d
quorum for that meeting.
SECfION 6. Aclion ~mrut. AJJ.y action required or permitted to be tahn by the
Board of Director.; may bi wiifiaut a meeting. if all JDrmbm of me B061'd shall
individually or collecnvdy consent in writing to tllat action. Such action by 'Written c<msCnt shall
have the same force 8Ild effect as the lD'\ffl1iro01is vote of lbe Board cf Imec:io.rs. Sll.Ch wria=n.
consent or consents shall be tiled with the II'linlltes of 1he proceedings of the Board.
ARTICLE IV
OFFICERS
SECTION 1. Officers. The officers of this Cotporation shall be a Chairman of lhc
Board of Directors or a President or both, a Trcasurc::r. and a Secretary. The Co.iponmon may
have, at the discrctiou of the Board of Directors, the Chairman of the Board of Directors, or the:
President, ~ Chief Executive O:ffu:cr, a Controller, additional Senior Vice Presi~
Vice Presidents. Assistant Sec:rctaries, A.ssistant Treasurers. and such other officers as may be
necessary for 'the conduct ofits business.
SECTION 2. Elemoa Of Officm. The officers of the Corpomion shall be dected by
the Boar4 of Directors, and each sball senre at tbe pleasure of the Board.
SECTION 3. Chairuum Of The Board. The Chainnan of the Board of Directors. if
that office be filled, sfiiill preside at all meetlngs of the sbareholdefs and of the B<wd of
J:\LEGAt,\CORPORA T\ET Ccmpunics\ET P~r Hotdinll,$\B)'laWi\l,ylaws-0800..clix
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Jun-26-01 03:19pm From-US GEN 13THFLOOR + T-556 P.25/39 F-373
Directors. Subject to such powers, if any, as may be given by the Bylaws or the Board of·
Directors to the President, if there is such an officer, the Chairman of the Board sball be the
Chief Executive Officer of the Corporation and shall, subject to the control of the Boani of
Directo~. have general supervision., direction and control of the business and lbe offices of the
Corporation. The Chainnan of the Board shall have aUihority to sign on behalf of the
Corporation agreements and insliumcnts of every character, and in lhe absence or disability of
the President, shall exercise the duties and responsibilities of the: President in the event that no
Vice President bas been designated by the Board of Directors to perform such duties. The
Cbairman of the Board shall have the authority to delegate to any officer of the Corporation tbc
authority to sign on behalf of the Corporation agreemems and instruments of every ci:wacter.
SECTION 4. President. The President shall have such duues and n:spomfbiiilies as
may be prescribed by the Board of Directors or the Bylaws. If there is no Cllainnan of the
B~ the President shall also exercise the duties and re~nsibilities of that offic:e. The
President shall have authority to sign -on behalf of the Corporation agreemems and~ of
every character.
SECTION 5. Senior Vice Pretideots. In lhe absence or disability afthr Prcsidc:ul, lhr:'
President's duties and respoD.S11iilities may be carried out by a Senior Vice Presidem. designated
by the Bomd of Directors. When so actm~ such Senior Vice President shall have all !he powers
of and be subjea to all the remictions on the Presidcut Each Senior Vice Presid.cm sball have
such other duties and respollSllnliti~ ll!J may be prescn"bed by the Board of Directors, the
Chainnan of the Board, 1he President, or these Bylaws. Each Senior Vice President shall have
authority to sigJ:1 on behalf of the Corporation &grecmentS and insauments of every cbaraC'rer.
The Board of Directors or t1w ChaiIII1an of the Board may c0Ilfc:r a special mle upon any
Senior Vice President
SECTION 6. Viu Presidents. In lbc absence or disability of the ~ tbe-
Pr:sidenrs duties and responsibilities may be earned out by a Vice President desisuated l,y the
Board of Directors. When so acting. such Vic~ Pt=dent shall have all the powers of and be
subject to all the restrictions on the President. Each Vice President shall have sw:h other dutie$
and responsibililies as may be :presctlbed by me BOIU'd of Directois> the Cb airman of the Board,
the President, or these Bylaws. Each Vice President designaled by the CMim1an sbaII llave
authority to sign on behalf of the Corporation agreements and insu:umcnts of every characte:r.
The Board of Directors or the Cbainnan of the Board may confer a special title upon any
Vice President.
SECTION-,. Secmaffit The SeQ'ewy shall attend all meetings of the Board of
Direcun-s aud all meetings of shareholders. 21nd shall keep or cause to be kept, at tbc priDcipal
executive office or such other place as the Board of Dilectors my dire-c:~ a booJc. of minmes of
all meetings and actions of Directors,, committees of Directors> and shareholders.. The Secretary
shall be responsible for majQtaitJfog a proper share tegister and stock transfer books for all stwes
issued by the Corporation. The Sec;i-elal'Y sball give, or cause to be given~ all notices ?equii'ed
either by Jaw or these Bylaws. The S~ shall ha.ve such other duties as may be pICSal'bed.
'by the Board of Directors, the Chainrui.n of the Board, or these Bylaws.
SECTION 8. AssisiAnC Secretaries. The Assistant Secretaries shall perform sach
dllties as may be assigned" from time to time by the Board of Dire~?'S~ the Chai:rmm:i of the
Jun-26-01 03:19pm From-US GEN 13THFLOOR + T-556 P.26/39 F-373
Boar~ lhe President, any Senior Vice Presi• or lbe Secretary. In the absence or disability of
the Secretary. the Secretarys duties shall be perfooned by an Assistant Secretaxy.
SECTION !J. Treasurer. The Treasurer shall have custody of all mollies and fimds of
the Corporation. and shall cause to be kept full and accurate records of receipts and
disbursements of the Corpmation. The Treasurer shall deposit all monies and. olher valuables of'
the Corporalion in the MIQe and to the credit of the Corporation in such depositories as may be
designaled by the Board of Directors. The Treasurer shall disburse such funds of the
Corporation as have been duly approved for disbursement. Unless the Boani of Direc:tors
provides otherwise by resolution, the Treasurer shall be the chief' fimmcial officei" of the
Co:rporation for situ.QOns in which an officer with that title may be needed. The Tn:asurcr snail
perform such other duties as may from tune to time be prescn"bed by the Board of D~ the
f'biriTDlan of the Board. the Presidenl. any Senior Vice President, onhe Bylaws.
SECTION 10. AssisWJ.t Treasuren. The Assistant Treasurers shall perfomL
S1JCh duties as may be assigned from time to time by the Board of Dir~ the Chairman of the:
Board. the PresideIIt. any Senior Vice President, or the Treasurer. In the absence or disability of
the Treasurer~ the duties of the Treasurer shall be performed by an Assistant Treasurer.
SECTION 11. Ceutroll~r. The Co:qtroller shall be responsible fur maintaining tbt:
accounling records and stalnl'lmts, aiid shall properly accoUDI for all monies and obligatiom due
the Corpora.lion and all propeni~ assets. a:qd UZlbilities of the COJ:pOration. The Comrollcr shall
render to the Cbairma1l of the Board ot lhe President such periodic repons covering 1he results of
operations of the COJPOnu:iOD as may be required by either of them or by law. The Controller
shall have such other duties as may from lime to time be prescn"bcd by the Board of Dim:iors.
the Chairman. of me Board. the President, any Senior Vice President, or these Bylaws..
ARllCLEV
GENERAL CO.RPORATE MATTERS
SECTION 1. Record Date. The Bolll'd of Oirectors may fix a time in the futort llS a
record date for the ~on of the shan:holdel'S emitled to notice of aDd to vote aJ ;my
meeting of shareholders,. or entitled to receive auy dividend or distribution. or allotment or rights.
or to e,ccrc:ise rights in respect to any cbange. conversion. or exclwage of shares. The record dale
so fixed shall be u.ot more than sixtY nor less uum ien days prior to 'the dale of such meeung. nor
more than sixl}' ~ys prior to any otber action for lhe purposes for which it is so fixed. When a
record date is so fixed. only sbareholdets of record on that dale are emitled to notice of and to
vote al the meeting or entitled JO receive any dividend or distribution or allotmc:nt of rights or to
exercise rigbts, as the case may be, notwitbstaJlding any transfer of any share on the books of the
Corporation a:tte:r the :reoord date so ~ except as otherwise provided in the Califomia. GcoeraI
Corpcuation Law.
SECTION 2. Transfer Of Stock. Upon surrender to the Sec.ietary or mmsfer ~ of
the Coiporation, a certificate for share duly endorsed or accompanied. by proper evidence of
succession. assigmnen~ or authority to tnmSfer. aild Fayment" of traDSfer r.ax.es, the Corporation
shall issue a new cenificinc to the person entided thereto, cancel lhe old cenifa:a.te, and ~rd
the transaction upon its books. Subject to the foregoin~ The Board of Directors shall have power
J:\l.EGAI..\COJtPOllAT\ET Cempllllil:$\ET Power Holdin$1,-\Jh,laMlb)')aY,s-O&OO.doc
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and authority to make such rules and regulations as it may deem necessary or appmpriate
concc:miug the issue, mwsfer and registration of certificates for shares of ~ of 1hc:
Coiporation, ~ to appoint and remove transfer agents and registrarn.
SECTION 3, Lost Cenifi1:ates. Any person claiming a certificate of stoek to be lost.
stolen. mislaid or deStroycd shall make an affi&vit or affirmation of the fact aod verify the same
in such manner as the Board of D~ niay require. and shall, if the Board of Directo~ so re,.
quires, give the CoipOratioo., its transfer agen?S, registtaIS and/or other agents a bond of
indemnity in form approved by co~ and in amount and with such sureties as may be
satisfactory to the Secmary of the Corporaf:ion. before a new certificate may be issued of the
same lCJlOt and for the s~ ammmt of shares as the one alleged to have been lost, stolcu..
misp.laced or destroyed.
SECTION 4-. Annual Re£n1alo Shlll'eholdcn· For so long as this Co:rporation has
fewer lhan 100 sbarebolaers, me report to sh.iiiaiiilders refem:d to in Sectiou 1501 oflbc
Califonua GCilC1'al Co?poration Law is expressly dispens~ with, but notlring herein shall be
inte?pret.ed as prolrlbiting the Board of Directors from issuing annual or other periodic reports ta
tbe shareholders of the Cotpomion as 'Qu:y coJ:l.$i4ef pioper.
SECTION 5. Co~te Contradl A.lid Innrumenu. The Boa:rd of Ditectors~ except
as otherwise provided in Bylaws, may authoriie any officer or officers, agem or ~ 10
enter iJJto any contract or execure any instrumc::m in the name of and on behalf of -the
CotpOmiou., and this amhotity may be general or confined to specific instances; • lllJless so
avtbcri7.ed or rarified by the Board of DircctOJs or within the agency power of an officer~ and
except as J>lOVidcd in these Bylaws, no officer, agent, or employee shall bilve any power or
aUlhority to bind the Corporation by any contract or engagement or 10 pledge its cICdi1 or to
render it liable for any porposc or for any amount.
SECTION 6. Coutrucdou And Definitions. Unless the come.,a requires otherwise,.
the gcnc:ral provision.s, iiiles of consuucdon, arid ac:tinitiom in Sections 100 through 195 oftbc
Califomia Cruporatiom Code (the 5'Code'') shall govern the construction of these Byfaws.
Without limiting lhe generality of this provision, the singular m.unber include$ the plural, the
phual nwnbet inc:lu4es the singular, and the term '"pmon" includes both a corpomtiOil and a
natmal:pefSOtl.
SECTION7. Shares Of Other Cotporations: Hh' Voted• Shares of olher
coiponuions stalldlug m the name of this Corporation shall be voted by Olle of the followillg
persmis, listed in order of prm.rence: (1) the Chairman of lhe Board, or person dcsigiuued by
the ChairmQn of the Board; (2) the President, or person desigzw.cd by the Prcsickm; (3) ~Y
Scmior Vice President, or person desigxwed by any Senior Vice President; (4) the Secmary. or
person designated by me Secretary; (5) any person designated by the Board of Directors. The
authority to vote shares granted by this sectioii includes the authority to exeaue a proxy iD. tbe
name of this Co?pOrarion forpUl'Jloses of voting the shares.
SECTION 8. Stock Certificate.a. Every holder of shares of the Corporation shall be
entitled to have a certi1foate signed by (i) the Cbairman of the Board, the President, or any Vice
President of the Corporatio~ and {ii) the Chief fip.aocial Officer, the Treasurer,, lhe Secn:tary,
any Assisuw Treasurer, or any Assistant Secretary of the Corporntion, cenifying the number of
Jun-26-01 03:20pm From-US GEN 13THFLOOR + T-556 P.28/39 F-373
shares and the class or series of shares owned by the shareholder. Any or all of the signamres on
the ceriificate may be facsirnile. If any officer, transfer agent or registrar who bas signed ar
whose facsimile sig:DatUre has been placed upon a certificate has ceased to be such officer7
transfer agent or reg:ist:rar before such certificate is issued, it may be issued by the Caq:,oration
with the same cffCCJ as if such person were an officer. tnmsfcr agCI1t or registiar at tbe date of
issue.
ARTICLE VI
AMENDMENTS
SECTION ly Amendment ~ Shareholders. Except as olhetwise provided by law>
these Bylaws. or any 0£ them. may amended or repealed by new Bylaws adopted by the
affirmative vote of a majority of the omstanding shares entided to vote aJ any regular or special
meeting of the shareholders.
SECTION 2. Amendment ~eton. To the extent provided by law. these Bylaws.,
or any of them. may be amended or ied or new Bylaws adopted by resolutio11 ado.Pl=! by~
majority of the members of the Board of Directors; provided, however, that the Boatd of
directors may adopt a Bylaw or amendment of~ Bylaw changing the authorized number of
direct0rs only for the pmpose of fixing the exact m:unber of direaors within 'dle limits spec:itie<i
in these Bylaws.
ARTICLEVll
lNOEMNlFICATION
SECTION 1. Jn,temnifialion of Directors od Offiffrs· Each person wbo was oris a
party or is threaiened to be made a pan:y 10, or who is involved in any threat~ pending or
completed action. suit or procMding. fOnDal o:r infOJmal, whether biought in lhe name of b
Corporation or otherwise, and whether of a civil, criminal, administrative or inv~ga:rive narure
(hereinAftcr a ~a"), by :reason of the fact that he or she, or a person of whom = Of' she
is the legal represemative, is or W11S a direcio? or officer of the Cotp0ration, or is or was a
director or officer of tbe Corporation serving 8l tbe request of the Cmporalion (as determined by
the General Cmmscl of this Corporation) as a direc1or, offic:=-, employee or agem of aiw\llcr
c.o1poration or of a partnership, joint vent:un=, trust or other entetprise. including service with
respect to employee benefit plans, whether the basis of such proceeding is an allesed action or
inaction in an official capaciiy or in any other cap~cy wbile serving as ~ ditect.or or offic::er,.
shall, subject to tlie tenns of any agreemenr between '!be Coq>0ration and such person. be
indemnified and hc:ld harmless by lhe Co:i:pmation to uie fullest extent permissible under
California law and the Co?pOnUion's Articles of Incorporati~ againsl all costs,, charges,
expenses, liabilities and losses (including. without limitation, attorneys' fees, jwigmems, fineSi,
ERlSA excise taxes,. or penalties and amounts paid or to be paid in settlement) reasonably
incurred or suffered by such person in connection lherewitb, and such indeumifictttion sbalI
continue as ro a person Who bas ceased U> be a director o:r officer and shall inure to tbe benefit of
his or ber b~ ~tors and adrniuimators; provided, however. that (a) the CotpO?ation shall
indemnify any such person seeking indemnukation in connection willl a proceeding (or part
thereof) initiated by such person only if such proceeding ( or part thereof) was authorized by the:
Board of Directors of the Co.rporat.ion, or (b) the Corporation shall indemnify any such _person
J:\U~\COIU'OMT\ET Compan~ POY,Cr Hal4i11gs\JblP'$1t>yi-,.oaOO.do1:
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seeking indemnification in connection with a pror::eeding (hereinafter a '"third pany proceedingj
(or part mereot) other than a proceeding by or in the name of the Corporation to procure a.
judgment in i,s favor (hcrcinaitcr a .. derivative proceeding") only if any settlement of such a.
proceeding is approved in writing by the Corporation, and (c) no such persoii shall be
indemnified: .
i) Except to the extent that the aggregate of losses to be indrmnific:d ~ the
amotmt of such losses for wbic.h the director or officer is paid pursuant to any ditectois' or
officers' liability insurance policy maintained by the Coiporation;
ii) On account of any suit on which judgment is rendered against snch person for
an accounting of profits made from the p~ or sale by such person of secmi~ of the
Corporation pursuant to the provisions of Section 16{b) of the Securities Exchange Act of 1934
and amendments thereto;
iii) If a coun of competent jurisdiction finally determines that any wdemm:ficatioa.
hereunder is UDlawful; ·
iv) For acts or cmiission involvmg intentioual misconduct or k:nowuig 211d.
culpable violation of law;
v) For acts or omissions that the director or officer believes to be eom:raryto.Jhe,
best intetestS oftbe CO?pOra.tion or its sharebolder:i-or that involve the absc:ncc of good. fai1b on
the pan of the director or officer;
vi) For any uansaclion from which the director or officer derived an impmper-
persanal benefit;
vii) For acts or omissions that . show a reckless disreganl for the ~i's or
officer7 s duty to the Coq,oration or its ~lder iu circumstances in which tbi: duecror or
officer was a~ or should have been aware, in lhe oidinary eourse of pedomiing his or bc:r
duties, of a. risk o! serious injury to the Corporation or its shareholder;
vili) For acts or Olllissions that constitute an imex:cused pattern of i.aauClti<m thift
amoUDt to au abdication oftbe directar's or officer's chnies to the Corporation or its sbareboldet;
ix) For costs,,~ expenses. liabilities and losses arising under Section 310 or
316 of the CalifOillizl Corporations Code (me "Code~'); or
x) As to circumstances in which indemnity is expressly prolu"'bited by Section 317
of the Code; provided, howr:ver, wu: me c::xclusiom set fonh in c~ (iv) through. (x) above
shall apply only to indemnification for acts, omissions or transactions involvui: bn:ach of duty to
the Corporation and its shareholder. A majority cf disinterested. directors representing q. quonmi
of the Board of Directc:rs of the Corpomion shall miUCe the detemlination 11-!i to Wheihet any of
the exclusions set fonh in clauses (iv) through (x) above applies in a particular case.
SECTION 2. IndemnifiQtion as a Contract Rijt Tbe indemnification rights set
forth in this Ani.cle VII wiih respect to directors and o ce:rs of the Cor:pormicn shalt be a
J:11.EGAl.\COR.PORAl\ET Cornp811ies\ET Power Hi:!lilings\B)'laws\bylaws-OS00.4oc
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contraCl right and shall include the right to be paid by the CorpcmU:ion ~es actUally and
reasonably incuired in defending any pra<:eeding in advance ofits final disposition; provided that
such advances. be conditioned upon delivery to the Corporation of an unde:i1:akin& by or on
behalf of such director or officer. to repay all amoums to the Cotparation if it shall be ultimately
determined that such person is not eiititled to be indemnified.
SECJ'lON 3. Indemnification of EmeloyffS and Agents• A person 'Who was or is a.
party or is tmtttened to be made a party to or is involved in any proceeding by reason of the fact
that be or she is or was an employee or agent of the Cmporation or is or was serving ar the
request of the Corporauon ~ an employee or agent of another enterprise, including service with
respect to employee benefit plans, whether the basis of such proceeding is an alleged action or
inaction while serving as an employee or agcm,, may, subject. to the terms of any agreement
between the Co:rporation and such person, be indcmmfied and held bmnless by the Cotparation
to the fullest extem pemiliisible under Califomia law and the Corporation,s Articles of
Incorpanuioo, against all costs, charges, expenses, liabilities and losses (includin& without
limitation. anorneys• fees, j~ts, tmes. ERJSA. excise tax:es, or penalties and amowrts paid
or to be paid in settlement), reasonably and ac:rually mcurred or suffered by such pe:son in
coonection therewith (hcrema:fter .. inqemnifiablc losses"). The immediately preceding .sentence
is not intended to be and shall not be considered to confer a contract right on any empfoyce or
agem ( other than directors and officers as set forth in lhe preceding Section 2) of the
Corporation. ·
SECI'ION 4. Advance of fats· The COJpOtation may advance to an employee or
agent referenced in tlie preceding ecuon 3 expemes reasonably and acnuuly incuned or
suffered in defeading any proceeding, or may agree to provide prospective indc:mt1ifir:ation of
any such perSOn against indemn:ifisblc losses ill any third pany proceeding prier to the final
disposilion of such proceediJlg; provided, however. that (a) lhe Cor:ponti.on may make such
advances in any proceedblg ar agree to provide such indemmficimon to any such employee or
agent in any third party proceeding prior to the final disposition of such pt0ceedmg only if an
investigation is conducted with respect to the circumstances of the conduct at issue aad it is
dewmined by the Gena-al Counsel of this Co?pomion. based on the results of such
investigation. that such pezsoii is entilled to i.ndemnifir.qtion because be Cl' sbe is or was iuvolvc:d
in such proceeding. or is thrca.tcced to be involved in sucb proceeding, as a direct comequeiu:e of
(i) the discharge of such person's duties as an employee or agent of the Coiporation, or (il) such
person's obedience to the directions of the CoipOrati.on, even though unlawful. unless such
person, at the time of obeying Sl.lCh directioDS, believed them l0 be unlawful, (b) notwithstanding
any dcte:rmination by the General Counsel that any such employee or agent is cmitled to any
advance or m<kmnifi".ation pmsuant to clause (a) above, lhe Cotporarlon shall have the tight to
discontinue any advance to such pcrsou and to terminate any oral or wrinen. agreement to
provide prospective indemnification to such person in the event that it is subsequently
determined by the General Counsel or the Boma. of Directors that such person is not entitled to
be indCilllliiied under California law. and (c) any advance to any such employee or agent shall be-
conditioned upoD delivery Ul the Corporation of an undmaking. by or on behalf of such person,
to repay all amounts lO the Coipans.tion if it shall ultimately be detemrined tbm such person is not
entitled to be ind.emnified.
SECTION S. Ri~l of Dircnors and Officcn to Brmg Suit· lf a claim by a director or
officer under this Articlell 1s not paid m full by the Cotparauon within ninety (90} days after ~
J:\LEGAl.\COJU>OJt>.NT Compaeies\ET Power Hc>lding:i\Bylaws\by~OOA<lc
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Jun-26-01 03:ZZpm From-US GEN 13THFLOOR + T-556 P.31/39 F-373
•
written claim bas been received by the Corporation. the daitnant may at any time thereafter bring
suit against the Corporation to recover the unpaid amotmt of the claim and. if successful in whole
or in p~ the claimant shall also be emided lO be paid the expense of prosecuting the claim..
Neither the fai.lµre of the Cotparation (including its Board. independent legal counsel or its
shareholder) to have made a determination prior to the commencement of such action that
indemnification of w clajmant is permissible in the circumsumces because he or she has met the
applicable standard of conduci, if any. nor any actual determination by the Cmporation before
the conunencemellt of such action that the claimant had not met any applicable SJMidatd of
cond~ s!wl be a defCllSC to the action ar qeate a presumption for the pmposc of an action that
the claimant has not met the applicable standard of conduct.
SECfION 6. Non-ExchuiviR of Ri~rs· The right to indemnification prottided by this
Article VU shall not be exclusive o any o right which any person may have or hereafter
acquire under any statute, agr~ vote of shareholder or disinterested directors or otherwise.
SECTION 7. £slcmes as a Witneslii· To the extent that any ~ectot, officer,. employee
or agent of the Corporation is by reason of such position, or position with another c:mitY Q.t the
requesi of the Coiporation, a wimess in any action, suit or proceeding, he or she shall be
indemnified against all costs and expenses actually and reasonably incur:red by him or her on ms
or her bebalf in connection therewith.
SECI1ON 8.. Indemnity Ac!!!!nents• The Cmpora.tion may cuter mto agreemcms .
with any du'ector, otliccr. employee or agent of the Co:rpora:tion providing fur iJtdernnifir~n to
the tullest att:nt permissible under Califomia law and the Corpotation7S Alticles of
Incorporation.
SECilON 9. Separahilit Each and every paragraph, sent=ce, term and provision of
this Articlc VII is separate and tinct, so that if any paragraph, sentence7 u:nn or provision
hereof shall be held to be invalid or unenforceable for any reason. such mvalidity Of'
unenforceability shall not affect the validity or enforceability of any other p~ sent.en~
term or provision hereof. To the exteJ1l required, any pamgraph, semence, tenn or provision of
this Article Vll may be modified by a court of competem jurisdiction to preserve its validity and
to provide the claimanr -with, subject to the limit.ations set forth in this Article vn and any
agreement between the Corporation and claimam, the broadest indemnification pemuued lUlder'
applicable law. -
J;\Ll;GAL\COtu'ORA 1'-ET Campanicf\ET Power Hol(finp18y1-S\!lylaw5-D800.dac
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SECONll AMENDED AND RESTATED AGREEMENT OF
LlMITED P AR.TNERSHIP
OF
PG&E ENERGY TRADING-POWER, L.P.
as of October l, 1999
Jun-26-01 02:56pm From-US GEN 13THFLOOR + T-553 P.21/53 F-370
TABLE OF CONTENTS
Page
ARTICLE l
GENERAL TERMS
1.1 Name ............................................................................................................ 2
1.2 Principal Place of Business .......................................................................... 2
1.3 Tenn · ........................................................................................................... 2
1.4 Puzpose ......................................................................................................... 2
l .S Filings .......................................................................................................... 3
1.6 Definitions ........................................................ ._ .......................................... 3
ARTICLE2
CA.PlTALIZATION
2.1 Capital Accounts .......................................................................................... 8
2.2 Capital Contribuiions, Loans and Withdrawals of Capital ........................ 10
2.3 No Interest on Capital Account Balances .................................................. 10
ARTICLE3
PROFITS A.ND LOSSES
3.1 lntl'oduction ................................................................................................ 11
3 .2 Profit and Loss Allocations ........................................................................ 11
3.3 Tax Allocatians .......................................................................................... 13
ARTICLE4
DISTRIBUTIONS
4.1 Cash Flow Distributions ............................................................................ 14
4.2 · Liql.Qdaiing Dismbutions ........................................................................... 15
4.3 Other Distributions ... _ ................................................................................ 15
v ·\IT(l\003 \Agmts\2ndAmnd& !ki.tdAglLP. 67 5.092899
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ARTICLES
ACCOUNTING A.'f\ID RECORDS
5.1 Fiscal Year ................................................................................................. 15
5 .2 Method of Accounting ............................................................................... 1 S
5.3 Books and Records and Inspection ............................................................ 15
5.4 Financial Statem.ents .................................................................................. 15
5.5 Taxation ..................................................................................................... 16
ARTICLE6
MANAGEMENT
6.1 Managetnent ............................................................................................... 17
6.2 Restrictions on Authority ........................................................................... l 7
6.3 Documents ................................................................................................. 18
6.4 Limited Pan:ner Approval Procedure ......................................................... 18
6.5 Other Activities of the Partnei:s .................................................................. 18
6.6 Liability and Indemnification of the General Parl:D.ers .............................. 18
6. 7 Panne:rship Fuods ....................................................................................... 19
ARTICLE7
GENERAL PARTNERS
7. l Transfer of General Panner Interest .......................................................... I 9
7.2 Cea.sing to be a General Panner ................................................................. 20
7.3 .A..dmission of a New General Partnc:r ........................................................ 21
7 .4 Code Limitation ......................................................................................... 21
ARTICLES
UIWTED PARTNERS
8.1 No Management o:r Control ................................................... ·················-·21
8.2 Liability ofLimited Partners ...................................................................... 22
8.3 Changes in Liinited Partners ...................................................................... 22
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ARTICLE9
DISSOLUTION AND TERMINATION
9 .1 No Terinination .......................................................................................... 24
9.2 Events ofDissoluti.on ..............................................................................•.. 24
9.3 Procedures Upon Oissolmion .................................................................... 25
9.4 Terarlnation of Partnership ........................................................................ 26
ARTICLE 10
MISCELLANEOUS PROVISIONS
10.1 Disclaimer of Agency .............................................................................• 26
10.2 Deetnecl Utility Status .............................................................................. 26
10.3 Amendment .............................................................................................. 26
10.4 Notices ..................................................................................................... 26
l 0.5 Consequential Dainages ........................................................................... 27
10.6 Counte?parts .............................•............................................................... 27
l 0. 7 Goveming Law ........................................................................................ 27
10.8 Bin.ding Effect .......................................................................................... 27
l 0.9 Partial Jnvdidity ....................................................................................... 27
l 0.10 Captions ................................................................................................. 27
10.11 Eniire Agreernent ....•............•................................................................• 27
I 0.12 No Rights in Third Puties ....................................................•................ 27
10.13 No Right to Partition .............................................................................. 28
10.14 No Title to Partnership Property ............................................................ 28
l 0.15 Additional Documents .................................•......................................... 28
10.16 Partners Not N8llled ........................................................... ·················-·28
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SECOND AMENDED AND RESTATED AGREEMENT
OF LIMITED P ARTNERSIDP
OF
PG&E ENERGY TRADING-POWER, L.P.
TJ:IIS SECOND AMENI>ED AND RESTATED AGREEMENT OF LIMITED
PARTNERSHIP Of PG&E ENERGY TRAl>ING -POWER, L.P. (formerly known as
··uSGen Power Services, L.P.") is etlte:red into as of October l, 1999, by and between
PG&E Energy Trading -:Power Holdings Corporation (formerly known as .. Kite Power
ColPOmtion"), a. California corporation ('•ET -Power Holdings"), and PG&E ET Investments
Corporation ( .. ET Investments"), a Delaware corporation. with reference to the following:
RECITALS
WHEREAS, pursuant to a Limited Partucrship Agreement, dated as of May 12, 1992
(the "Original Partnership AgreemCllt"), Kite Power C01porati0n (nt:iw "ET -Power Holdingsj
and Cottonwood Power Corporation ("'Co non wood,,) formed Indiana Generating Company. L.P. -
(now known as ··PG&E Energy Trading -Power, L.P ... )(the "Partnership") as a limited
partnership under the Delaware Revised Uniform Lu:nited Partnership Act (the "Act");
WHEREAS, pursuant to the First Amendment to the Original Partnership Agreement,
dated as of March 22, 1995, the name of the Partnership was changed from ""Indiana Genera.ting
Company, L.P." to "USGcn Power Services. L.P.;" and
WHEREAS, pursuant to the First Amended and Restated Agreement of Limited
Pannership, dated as of February 1, 1996, be~ccn Kite Power Cotporation (now ··ET-Power
Holdings,.) and Cottonwood, such parties amended and restated the Original Partnership
Agreement. as amended, to adjust their respective percentage interests in the Partnership and for
certain other purposes as set forth therein; and
WHEREAS, putS1WU to the First Ameilcbnent to the First Amended and Restated
Agreement of Limited Pannership of the Partnership. dated as of September 5, 1997. between
Kite Power Coxporation (now "ET -Power Holdings") and Cottonwood, such parties amended.
such agreement in certain respects, including the addition of a procedure by which Kite Power
Corporation (now .. ET -Power Holdings'') could tranSfer its limited partnership interest in the
Partnership; and
WHEREAS, pursuam to the Second Amendment to the First Amended and ~
Agreement of Limited. Partnership of the Partnership. dated~ of December 31. 1997, between
ET -Power Holdings and Cononwood, the parties amended such agreement in certain respects.
including the addition of a provision permitting Cottonwood's interest in the partnership to be
redeemed; and ·
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WHEREAS, pursuant to the Assignment and Assumption Agreement, dated as of
December 31, 1997, between ET-Power Holdings and ET Investments, ET-Power Holdings
assigned its limited partnership interest in the Partnership to ET Investments; and
WHJi:REAS, pursuant to that certain Redemption Agreement, dated as of September 5,
1997, among ET -Power Holdings. CottoJiwood, and certain affiliates, Cottonwood's interest in
the Partoership was redeemed effective December 31. 1997, with the effect that ET -Power
Holdings became the sole general partner and ET -Investments became the sole limited partner
of the Partnership; and. ·
WHEREAS, pursuant to the Third Amendment to the First Amended and Restated
Agreement of Limited Partnership of the Partnership. dated as of Pecember 31, 1997, between
ET -Power Holdings and ET Investments, the name of the Partnership was changed from ··usGen Power Services, L.P.,. to .. PG&E Energy Trading-Power. L.P .;" and
WHEREAS. ET -Power Holdings and ET Investments desire to amen~ ~ restate the
First Amenaed and Restated Agreement of Limited Partnership of the Pannership, as heretofore
amended, 'f'.O re.fleet, atn0ng other things. the fact that lhe Pannerahip has only one general panncr
and no longer has a Board of Control;
NOW't THEREFORE, in consideration of the mumal covenants and conditions
contained ~ the patties hereby amend and reswe the First Amended and Restated
Agreeinent of Limited Partnership , as amended. in its entirety and agree as follows:
L.P.
ARTICLE!·
GENERAL TERMS
1,1 Name. The name oftbe Partnership shall be PG&E Energy Tradiug-Power,
l.2 Principal Place of Business. The Partnership's priucipal office and place of
business shall be 7500 Old Georgeiown Roa.cl. Bethesda, Maryl~d 20814. The principal office
and place of business may be changed from time to time, and other offices and places of business
may be established from time to time, by the Partners.
1.3 Term. The teim of the Pannersbip commenced on July l. 1992, the date the
original Certificate of Limited Pannership of the Partnership was tiled with the Delaware
Secrerary of State pursuant to the Original :Partnm.hip Agreement. and shall continue in
existence until December 31, 2042. Ullless earlier dissolved by operation oflaw or in a.ccordaDCc
with the provisions of Article 9.
IA Purpose. The purpose of the Partnership (the "Pwpose") is to engage in electric
power marketing activities, including the purchase, sale~ trading and marketing of electric
capacity and energy ancl related products and services for its own account and for the accounts of
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its custom.etS, and io do all lhings necessary or desirable in connection therewi~ including the
ownership of interests in coiporations or other entities in furtberance thereof.
l.S Filings. The General Partner shall cause to be executed, filed and published all
such certificates, notices, statements or other instruments, and amendments thereto under the
laws of the State of Delaware and other applicable jurisdictions as it may deem necessary or
advisable for the Purpose or the operation of the Partnership.
1.6 Defilljtions. Capiralizec! temis used in this Agreement witbout other definition
shall, unless expressly stated otherwise, have the meanings specified in this Section 1.6. The
singular s.ball include the plural and the masculine shall include the feminine and neuter, and vice
versa. "Includes" or "including" shall mean "including without limitation."
"Act" means the Delaware .Revised Uniform Limited Partnership Act (6 Del C. §§17-
101, ~-}. as amended from time to time.
"Adjusted Capital Account Deficit" means, with respect to any Partner7 tbe deficit
balance. if all.Y, in such Partner's Capital Account as of the end of the relevant fiscal year. after
giving etrect to the following adjustments:
(i) such Capital AecounJ shall be cleemed to be-increased by any amounts wbic)l
such Partner is obligated to resto~ to me Partnership (pursuant to this Agreement or
otherwise) or is deemed to be obligated to restore pursuant to the second to last sentences
of Treasmy Regwation sections l.704-2(g)(l) and l.704-2{i)(S} (relating to allocations
attributable to nonrccourse debt); and
(ii) such Capital Account shall be deemed to be decreased by the items descnl>cd
in Treasury Regulation sections 1.704-l(b)(2){ii)(d)(4). (5) and (6) to the extent
reasonably anticipated..
The foregoing definition of A.c!justed. Capital Account Deficit is intended to comply with
the provisions of Treaswy Regulation section l.704-l(b){2){ii){d) and shall be intcxpretcd and
applied consistently therewiih.
"Afliliate" ineao.s, when used with reference to a specified Person. (i) any Person that
directly or :indirectly controls or is corurolled by or is Ullder COilllllon con1rol with the specified
Person. and {ii) any Person that is a responsible employee of, an officer of, a general partner in or
a trustee ot or serves in a similar capacity with respect to. the specified Pexson or any Person
described in clause (i) or of which the specified Person or any Person described in clause (i) is a
responsible cinployce, officer, general partner or trustee. or with respect to which the specified
Person or any Person described in clause (i) serves in a similar capacicy.
"Agreement" means this Second Amended and Restated Agreement of Limited
Partnership, as originally executed and as ameuded. modified or supplemented from time to time.
''.Anicle" means an Article oftbis Agreement..
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( "Assignment" or "Assign" means, in the context of a transfer of a Limited Partner
(
Interest. a mere· assignment (other than as security) of an economic interest held by the
transferring Limited Partner, as opposed to a transfer with the intent to substitute the transferee
as a Limited Parmer.
"Bankruptcv" means a situation in which:
{i) a Parmer shall file a vo!UI1tary petition in bankruptcy or shall be a4judged a
bankrupt or msolvent, or shall file any petition or answer or conse11t seeking any
reorgani2ation. arrangement, composition, reru:ljustment, liquidatio~ dissolution or
similar relief for itself under any present or future applicable federal, state or other statute
or la.w relating to bankruptcy, insolvency, or other relief for debtol'S, or shall file an
answer or other pleading admittmg or failing to contest the material allegations of a
petition tiled against it in any proceeding of this nature, or shall seek or consent to or
acquiesce in the appointment of any trustee, receiver~ conservator or liquidator of said
Partner or of all or any substantial pan of its properties or its interest in the Partnership
(the tetm "acquiesce," as used m this de.finition, includes the failure to file a. petition or
motion to vacate or discharge any order> judgment or decree within ten (10) days after
entry of such order,jud.gm.eot or decree);
(ii) a court of competent jurisdiction shall enter an order, judgment or decree
approving a pei:ition filed against any Partner seeldng a reorgunization. aITanieIXlen~
composition, readjustment. liquidation, dissolution or similar relief wder the presen? or
any future federal bankruptcy ac~ or any other present or future applicable federal, state
or other starute or law relating to baoktuptcy, insolvency, or other relief for deb~ and
such Partner shall acquiesce in the entry of such order,judgment or decree or such order,
judgment or decree shall remain unvacated and unstayed for an aggregate of sixty {60)
days (whether or not consecutive) from the date of entrY lhereot:. or any~ receiver,
coo.setVator or liquidator of such Parmer or of all or aQ.y substantial part of its propc::rtY or
its interest in the Partnership shall be appointed witho\Jt the consent or acquiescence of
such Parmer and such appointment shall remain unvacated and unstayed for an aggregate
of sixty (60) days (whethc:r or not consecutive);
(iii) a Paz1ncr shall admit in writing its inabiliiy to pay its debts as they mature;
(iv) -a PartDer shall give notice to any Person of insolvency or pCilding
insolvency. or suspension or pending suspension of operations; or
(v) a Parmer sllall make an assignment for the benefit of creditors or take any
other similar action for lhe protection or benefit of creditoIS.
"Capital Account'' means an account maintained {in accorclance with, and intended to
comply with, Treasury Regulation section 1. 704-1 (b)) for each Partner pursuant to Section 2.1
hereof.
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"C¥£Ying_ Value" means, with respect to any asset of the Partnership, the asset1s adjusted
basis as oftbe relevant date for federal income tax purposes, except as follows:
{i) the initial Carrying Value of any asset connibured by a Parmer to the
Partnership shall be the gross fair market value of such asset, which shall be equal to the
amount credited to such Partner's Capital Account for such contnl>ution (with adjustment,
as appropriate, for debt associated therewith) as set forth in Article 2 or otherwise herein
or in any amendment or supplement hereto providing for the contribution of such asset;
(ii) the Carrying Values of all Partnership assets (including i.ntangJble assets such
as goodwill) shall be adjusted to equal their respective gross fair market values as of the
following times:
(A) the a.cquisitioo of an additional interest in the Partnership by any tiew
or existing Partner in exchange for more than a de minimis capital contribution
unless tbe Genenl Partner reasonably determines such adjustment is not
necessary or appropriate to reflect the relative economic inu:rests in the Partners;
and
(B) the distn"bution by the Pattn=rsbip to a Panner of more than a -
de minim.is amount of rnoney or Partnership property as consideration for an
interest in the: Partnership unless the General Partner reasonably dctcrmmes such
adjustment is not necessary or appropriate to retlect the relative economic
interest& in the Partners;
(iii) if the Carrying Value of an asset has been determined or adjusted pursuam to
subsection (i} or (ilj above, such Canying Value shall there4fter be adjusted by the ,
Depteciation taken into account with respect to such asset for puipose$ of computing
Profits and Losses and other items allocated pumwit to Section 3.1.
The foregoing definition of Carrying Value is in.tended to comply with the provisions of
Treasuzy Regulation section l.704-l(b){2){iv) and shall be interpreted and applied comistcntly
therewith.
"Cash Flow" means> for any periocL the amo\Ult, compmcd on a cash basis, of
(i) the s11m of(A) gross receipts., all investment income of the :Partnership, and all
cash received from other sources., inclucling any refinancing, sale or other even~ and (B)
any amounts released from reserves, reduced by:
(ii) the sum of (A) disbursements of the Partnership for opexating expeoses,
principal paymenTS Oll debt, interest and other expenses, including any debt repayments
required or elected to be made in connection with any refinancing, sale or other event,
(B) any increase in reserves require'1 pursuant to the financing agreements or any other
contractual obligations of the Pannersbip, and. (C) a reasonable allowance for reserves,
solely for working capital and :reasonably anticipated ex.traonlimuy expenses and capital
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requirements consistent with the Purpose; provided t:har any cash received. expenses
incurred and disburs~ents made with respect to liquidation of the Pannership shall not
be taken into account in computing Cash Flow.
"Code" means the Internal Revenue Coae of 1986. as amended from time to time.
"Deemed Utility Status" means that status of a Person which is or may be deemed by any
governmental autboritY having jurisdiction to be {i) an "electric utility company," an "electric
utility holding company,'' a "holding company,'' a. "subsidiary company" ofa "holding company"
or an "affiliate" of a "holding company" as such terms are used in the Public Utility Holdmg
Company Act of 1935, as amended, and the regulations promulgated thereunder~ (ii) a. "public
utility" as such term is used. iD. the Federal Power Act, as amended, and the regulations
promulgated thereunder, {iii) any similar entity subject to regulation under the Public Utility
Holding Company Act of 1935, as amended, or the Federal Power Act, as amended, or any other
comparable Federal, state or local law or regulation,. or (iv} a Person controlled by any of the
foregoing.
"Depreciatlon'r means for each fiscal year or part thereof.. an amount equal ta the
depreciation, amortization, or other cost recovery deduction allowable for federal illcome tax
purposes with respect to an asset for such year or other period, except that if the Can;ing Value,
of an asset differs from its adjusted basis for federal income tax pwposes at the beginning of
such year, Depreciation shall be an amount which bears the same ratio to such Carrying Value as
the federal mcome tax depreciation, amortization or other cost recovery deduction for Sl.lch yeu
bears to such adjusted tax basis.
"Entire Interest" means, in the context of a Partner's "Entire Interest," tbe aggregate of
such Partnet's Interest, if any, as General Pa.rtner and such Parti1er's Interest, if any, as a Luoiled
Partticr.
''EguitY Contribution Agreement" means any and. all agreement(s) among the :Partners or
between one or more of the Partners and any other Person to contnbute capital to the Partnership.
MET Investm=nts" means PG&E ET Investments Corporation .
.. ET -Power Holdings" means PG&E Energy Tratiing-Power Holdings Corporation.•~
''Financing Agreements" means any credit or similar agreements at any time in force and
effect providing for debt and/or equity fiJ1ancing commitments to the Partnership.
11GAAP" means generally accepted accounting principles and practices in effc(:t in the
United States from time to time.
"General Partner" means ET -Power Holdmgs, its successors or any substitnte therefor
approved or pennitted hereunder.
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"Interest" means, in the context of "a Partner's Interest," the entire legal and equitable
ownership interest of a Partner in the Partnership at any particular time. When used in the
context of the General Partner, "Interest'' means the J>annership Interest held by the Partner in its
capacity as General Parmer. When used in the context of a Limited Partner, "Interest'' means the
Parinership Interest held by the Partner in its capacity as a Limited Partner.
"Limited Partner" means any Person who has been admitted to the Pann~ as a
limited panner in accordance with the temis of this A~eement. at the time of reference thereto.
in such person's capacity as a limited. partneT far so long as such Person has not ceased to be a.
Limited Parmer hereunder.
''Majority in Interest'' means Limited Partners whose combiued Sharing Percentages
represent over 50% of the sum of the then existing Sharing Percentages of all Limited Partners.
''Original PannershiE Agreement" has tbe meaning set forth in the Recitals to this
Agreement.
''Parmer" mea:os any one oflhe General or Limited Panners, and reference to "Partners"
shall be to all of the partners of the Partnership.
''Partnership" meaus the partnership formed pursuant to the Original Pannersh;ip
Agreement, as amended by the First Amc:ndment thereto and by this Agreement.
"Person" means any individual, partnership. corporation, association. business, trust.
government or political subdivision the:reot: governmental agency or other entity.
"Profits" and ''1-()sses" means, for eacll fiscal year of the Partnership or part thereat;. the
Pannetship's taXable income or loss for such year determined in accordance with Code section
703(a) (for this puzpose, all items of incom~ gain. loss or deduction required to be stated
separately pursuant to Code section 703(a.) (1) shall be included in taxable iucomc or loss) with
the following adjustment.s:
(i) any income of the Partnership that is exempt from federal income tax shall be
added to such taxable income or loss;
(ii) any expenditures of the Partnership described in Code section 705(a)(2)(B) or
treated as such pursuant to Treasury Regulation section 1.704-l(b)(2-)(iv){i) shall reduce
such iaxable income or increase su.ch loss;
(iii) Depreciation for such fiscal year shall be taken into account in lieu of the
depreciation, amonization and other cost recovery deductions taken into actoW1t in
computing such taxable income or loss;
(iv) gain or loss resulting from any disposition of Partnership property with
respect to which gain or loss is recognized for federal income tax purposes shall be:
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computed with reference to the Carrying Value of the property disposed o(, rather than
the acljusicd tax basis of such property;
(v) if any property is distributed in kind to any Partner, the difference between its
fair market value and its Carrying Value at the time of distribution shall be treated as
Profit or Loss, as the case may be, recognized by the Partnership; and
(vi) such taXable income or loss shall not be deemed to include items of income,
gain. loss. deduction and Code section 705(a)(2)(BJ expenditures which are allocated
pursuant ta Sections 3.2(b){l)(A)~ 3.2(b)(l){B), 3.2(b)(l)(C), 3.2(b)(l)(D), 3.2(b)(l)(E}
OT 3.2(b)(4).
"PuipQse" has the meaning given in Section 1.4.
''Reference ~te" means a. per annum interest rate equal to two percent (2%) above the
prime rate as published from time to time in The W iul Street Joumal, but in no event in ex.cess of
the maximum ~tc pcnnitted by applicable law.
''Regulatory Allocations" has the meaning set forth in Section 3.2(l)(E) of this
Agreemem.
"Section" means a sectiQn of this Agreement, unless the context requires otherwise.
"Sharing Percentage" means, for any Parm.er. the ~plicable percentage for such Partner
set forth in Exbloit 1.
"Tax Matters Partner" has the meaning given in Section 5.S(d).
11Transfer" m~ in the context of a Transfer of ao lnteteST, a sale, assignment, transfer,
hypothecation, pledge or other disposition (whether as secl.lrity or otherwise) of all or pan of
such Interest. ·
2.1 Capital Accounts.
AR.TICLE2
CAPITALIZATION
(a) Establishment. A separate Capital Account shall be maintained for each
Partner. Any Partner which is both General Pano.er and a Limited Partner shall have a.
single Capital Account
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(b} Caeital Account Balances. The Capital Account of each Panner shall be:
(c)
(1) increased bl'.':
(A) the aggregate amount of such Partner's cash oonnibutions
to the Partnership;
(B) the .fair market value (as of the time of contribution) of
property contributed by such Partner to the Partnership, net of liabilities
seCll,fecf. by such property that the Partnership is considered to asSUllle or
take subject to under Code section 752;
(C) Profits and. items of income and gain allocated to such
partner pursuant to Section 3.2; and
(D) any positive adjustment to such Partners Capital Accoq:nt
by reason of an adjustment to the Carrying Value of Partnership assets
pursuant to Section 2.l(c)(l); and
(2) decreased by:
(A) cash distributions to such Partner from the Partnership;
(B) the fair market value (as of the time of dim:n"bution) of
propeny 4isnibuted in kind to such Partner, net of liabilities secured by
such property that such Parmer is deemed to assume or take subject to
under Code section 752;
(C) Losses and items of loss or deduction ~ocated to such
Partner pwsua:nt to Section 3.2; and
(P) any negative aLljustment to such Partner's Capital Account
by reason of au adjustment to the Caaying Value of Partnership assets
pursuant to Section 2.l(c)(l).
Special Rules.
(l} Adjustment for Chapge in Canyjng Value. If the Carrying
Values of Pitl'Ulership assets are adjusted, as provided in the definition of Carrying
ValuC» tbe Capital Accounts of all Partners shall be adjusted simultanco-usly to
reflect the aggregate net adjustment a$ if the Partnership recogni2:ed gain or loss
equal to the amount of such aggregate net aqjusnnent and such gain or loss were
allocated. to the Partners in the manner required by Section 3.2.
(2) Intent to Comply with Treasury R.c.g\llations. The foregoing
provisions and tbe other provisions of this Agreement relating m the maintenance
Jun-26-01 03:00pm Frc~-US GEN 13THFLOOR + T-553 P.33/53 F-370
of Capital Accounrs are intended to comply with Treasury Regulation section
L704-l{b). and shall be interpreted and applied in a manner consistellt with such
Regulation. To the extent such provisions are inconsistent with such Regulation
or are incomplete with ri:spect thi:reto, thi: Capital Accounts of the Partners shall
be maintained in accordance with such Regulation.
2.2 Capital Coiitributions, Loans and Withdrawals of Capital.
(a) Contriburian.s.. As of the da~ of this Agreement, the Capital Account of
each Partner is as set forth in Exhibit l hereto. Each Partner shall make contributions to
the capital of the Pannership in the amounts and at the times provided in any Equity
Contribution Agreement to which such Partner is a party, and such contn"butions shall be
treated as a c~ital contribution made by such Pann~. Except as provided in the Equity
Contribution Agreements, no Partner shall be required to conmoute to the capital of the
Partnership any money, property, facilities or services.
(b) Loans.
(1) General Rule. No Parmer shall be required to lend or advance
any money to or for the benefa of the Partnership.
(2) Permitted Operatipg Loans. If (a) the Partnership's funds are
insufficient to meet its operating costs, expenses, obligations or liabilities. and (b)
the Pannersbip has been unsuccessM in obtaining necessary financing from third
parties on temis which are satisfactocy to the General Partner. any Para:u:r m~y
(but shall not be reqllired to). with the approval of the General Parmer, lend all or
a portion of the amount of needed operating .funds to the Pmtnership. In the event
more than one Parmer desires to loan or advance funds to the Partnership pursuant
to this Sectiou 2.2(bX2). each such Parmer shall be entitled to provide to the
.Partnership such proportion of tbe pecessary funds as such Pannet's Sharing
Percentage bears to the Sharing Percentages of all Partn::ts who desire to
participate. Any such loans shall (i) be unsecur~ (ii) bear u:itcrest at a me equal
to tbe Reference Rate, (ill) provide for repayments to be applied first to accrued
interest and then to principal,. and {iv) provide for repayment at the earliest
possible time solely o~t of funds available for distribution pursuant to the terms of
this Agreement and prior to any distnlnitions to the Partners.
(c) Withdrawals. Except as expressly set forth herein, no Partner shall be
entitled to withdraw any panion of its capital contribution or capital accoUDt balance.
2.3 No foterest on Capital Account Balances. No Partner shall be entitled to
:receive any interest on the balance in its capital account.
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ARTICLE3
PROFITS AND LOSSES
T-553 P.34/53 F-370
3.1 Introduction. This Article 3 generally sets forth the rules for allocations to the
.Partners. Section 3.2 sets fonh the allocations of Profits, Losses and similar items, determined in
accordance with the method of accou.nling set forth in Section 5.2. which is based 011 federal
income tax principles as acljusted by the partnership allocation rules set fonh in Tre~
Regulation section 1.704--l(b) and 1.704-2. rather than in accordance with either GA.AP or the
method used in filing the Pannership's federal income tax retum. Section 3.3 sets forth the
manner in which items of income, gain, loss, deduction, credits ancl basis therefor will be
allocated to the Partners for :income taX purposes to the extent such items may be allocated
differently from the allocations referred to in the preceding sentence.
3.2 Profit and Loss Allocations. Section 3.2(a) sets forth the general rule for
allocations of profits and losses to the PartnerS. Section 3.2(b) sets fonb various special rules
which modify or clarify the general iules of Section 3.2(a).
{a) General .8.qle. Profits and Losses of the Partnership &ball be allocated r.o
the Partners in accordance with their respective Sharing Percentages.
(b) Special Rules. Notwithstanding the general allocation rule set forth in
Section 32{a), the rules set fonb. in this Section 3.2(b) and in Section 3.3{c) shall apply
under the circumstances described therein.
(1) Deficit Capiial Accouin and Noarecourse Debt Rules. The
special rules in this Section 3.2(b)(l) apply, in the order stated, to take into
account the possibility of Partners having deficit Capital Account balances for
which they are not economically respoosible and the effect of the Partnership
incurring uebt which is nonrecourse to the Parmers.
(A) Partnership Minimum Gain Ch!lJ;eback. If there is a
net decrease in "partnership minimum gain" during my Partoetship fiscal
year, determined .in accordance with Treasuzy Regulation section l.704-
2(g), each Panner shall be allocated items of income and gain for such
year (and. if necessary. for su\>seq~t years) in proportion to, md to the
extent of, each Partner's share of the net decrease in partnership minimum
gain. To the extent that tllis Section 3.2(b)(lXAJ is inconsistent with
Treasuzy Regulation section l.704-2(t) or incomplete with respect to such
Regulation, the minimum gain cha:rgebaclc provided for herein shall be
applic'1 and inteipreted in accordance with such Regulation.
(B) Partner Nonrecon.rse Debt Minimom Gain Chargeback.
If there is a net decrease in partner "nqnrecourse debt minimum gain"
during any Partnership fiscal year. · within the meaning of Treasury
Regulation section l.704-2{i), each Parmer who has a share of the partner
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nonrecourse debt minimum gain, detennined in accordance with Treasmy
Regulation section 1. 704-2(i), shall be allocated items of income and gain
for such year {and, if necessary, subsequent years) in proportion to, mid to
the ex.tent of, each Partner's share of the net decrease in partner
nanrecourse debt minimum gain. To the extent that this Section
3.2(b)(l)(B) is inconsistent with Treasury Regulation section 1.704-2(i) or
incomplete with respect to sucb Regulation, the partner minimum gain
ctulrgeback provided for herein shall be applied and interpreted in
accordance with such Regulation.
(C) Limitation on Loss .Allocations. The Losses allocated to
any Partner pursuant to Section 3.2(a.) with respect to any fiscal yew shall
not exceed the maximum amount of Losses that can be so allocated
without causing-such Partner to have an Adjusted Capital Account Deficit
at the encl of such year. All Losses in excess of tbe limitation set fonh in
this Section 3.2(b)(l)(C) shall be allocated as follows and in the following
order of priority:
(i) fim. to those Panners who will not be subject to
this limitatio~ in the ratio that their respective Sharing Percentages ·
bear to each other; and
{ii} second, any remaining amount to the Partners in the
manner required. by the Code and Treasury Regulations.
(D) Deficit Account Chargeback and Qualified Income
Offset. In the event that any Partner has an AdjPsted Capital .Accouni
Deficit at the end of any fiscal year. including an Adjusted Capital
Account Deficit for such :Partner caused or increased by 2ll adj~~
allocation or aistribu.tion described. in Treasury Regulation sections l.704-
l(b)(2)(ii)(d)(4), (5) or (6) that could not reasonably have been
anticipated, such Partller shall be allocaied items of income and gain
{ consisting of a pro rata portion of each item of Pannership inc~
including gross income ancJ gajn) in an amount and manner sufficient to
eliminate such Ad.jusred Capital Account Deficit as quickly as poSSlole.
(E) Curative Allocations. The allocations provided for in
Section 3.2(bXl)(A}, (B), (C) and (D} above and Section 3.2(b)(4) below
{the nRegulatory Allocations") may not~ consistent with the mamu:r in
which the Partners intend to divide the Pannersbip Profits, Losses and
similar items. Accordingly. Profits, Losses and other items will be
reallocated among the Partners in a manner consistent with Treasury
Regulation section 1.704-l(b) so as to prevent the Rt!gulatory Allocations
from di.stoning the manner in which Partnership Profits, Losses and other
items are intended to be allocated among the Pannen: pl.USuant to Section
3.2(a).
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(F) Change in Regulations. lf me Treasuzy Regulations
incorporating the Regulatory Allocations are hereafter changed or if new
Treasury Regulations are hereafter adopted, and such change or new
· re~lations, in the opinion of independent recognized tax. counsel for the
Partnership, make it necessary to revise the Regulatory Allocations or
provide further special allocation rules in order to avoid a significant risk
that a material portion of any allocation set forth in this Article 3 womd
not be respected for federal income taX purposes, this Agreement shall be
amended (with the consent of all Partners, which consent shall not be
unreasonably withheld) in such a manner as, in the opinion of such
counsel, is necessary or ocsirable, taking into account the interesrs of the
Partners as a whole and all other relevant fact.ors, ta avoid or :reduce
.significantly such risk to the extent possible without materially changing
the amounts distributable to any Partner pursuant to this Agreement.
(2) Chang~ ill Partners' Intercm. If there is a change in my
Partner's share of the Parmership's Profits. Losses or other items during any fiscal
year, allocations among me Partnet'S ~ be made in accordance with lheir
interests in lhe Partnership from rime to time during such-fiscal year in ·
accordance with Code section 706, using the closing-of-the-books me~ except
that depreciation. amortization and similar items shall be decmec! to acctUC ratably
on a daily basis over the entire fiscal year during which the corresponding asset is
owned by the Pannership for the entire year, and over the portion of a fiscal year
after such asset is placed in service by the Part:ne?:&tlp if such asset is placed in
service during the .fiscal year.
(3) Nonr~course Debt Sbarin_g. For purposes of this Agremient, the
Partners shall be deemed to be allocated nonrecourse deductions, within the
meaoine of Tieasury Regqlation section l.704-2(c), in proportion to lbeir Sharing
Percentages. Solely for purposes of detc:nnining a Partner's proportionate share of
the "excess nonrecourse liabilities" of the Parmership within the meaning of
Treasury Regu.lation section l.752-3(a)(3). the PartneTS' interests in Pannership
profits arc their Sharing Percentages.
(4) Parmer Nour~oarse Deductions. Ally partner nonrccourse
cteductions, within the meaning of Treasmy Regulation section l.704-2(i)(2), for
any fiscal year or other periotl shall be aUocatecl to the Partner who bears the
economic risk of loss with respect to the partner nonrecoursc debt to which such
partner non:recourse deductions arc attributable in accordance with Treasury
Regulation section 1. 704-2(i)( l).
3.3 Tu Allocations.
(a) Generally. Except as set forth in Section 3.3(b), allocations for tax
purposes of items of incomi:, gain, loss, deduction, and credits shall be made in the same
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manner as allocations for book purposes as set fonh in Section 3 .2. Allocations pursuant
to this Section 3.3 are solely for purposes of federal. state and local income tax.es and
shall not atfect, or in any way be taken into account in computing, my Partner's Capital
Account or share of Profits, Losses or other items or distributions pursuant to any
provision of this Agreement.
(b) Special Rules.
(1) Elimination of Book/fax Disparities. If any Partnership property
has a Carrying Value different than its adjusted tax basis to the Partnership for
federal income tax pmposes (whether by reason of the contribution of such
property to the Partnership, the revaluation of such propeny hereunder, or
otherwise), allocations of taxable income, gain, loss and deduction unda this
Section 3.3 with respect to such asset shall take account of any variation betWeen
the adjusted tax basis of such asset for federal income tax pUiposes .md its
Carrying Value in the same manner as under Code section 704(c) or the principles
set forth in Treasury Regulation section 1. 704-1 (b )(2)(iv)(g), as the case may be.
{2} Allocatio11 ofltems Among Partners. Eacll item of income.~
loss. deduction and credit and all other items governed by Code section 702(a) .
shall be allocated among the Partners in proportion to the allocation of Pro.fits,
Losses and other items to such Parmers hereunder, provioed that any gain
recognized frOIJ1 any disposition of a Partnetship asset which is treated as ordinary
income because it is attributable to the recapnu-e of any depreciation or
amonization shall be allocated among the .Partners in the same ratio as the prior
allocatioos of Profits, Losses or other items which included such depreciation or
amortization, but not in excess of the gain otherwise allocable to each such
Partner.
(c) Cooformiry of Reporti.a,g. The Partners are aware of the iDcome tax
consequences of the allocations made by this Section 3.3 and hereby agree to be bound
by the provisions of this Section 3.3 in reponing their shares of Partnership income, g~
loss, deducti~ credits and other items for income tax putp0ses1 except in the case of
manifest error.
ARTICLE4
DISTRIBUTIONS
4.1 Cash Flow Otstribsnions. Subject to the Financing Agreements, the Partnership
shall distribute Cash Flaw to the Partners as and when detemtined by the General Partner? but
not less often tluul annually to each of the Panners, in accordance with their respective Sharing
Percentages.
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4.2 Liquidating Distributions. Distributions to the Partners of cash or property
arising from a li_quidatian of the Partnership shall be made in accordance with the Capital
Account balances of the .Partners. as provide4 in Section 9.3(4)(2).
4.3 Other Distributions. Except as provided in Section 4.1 or otherwise in this
Agreement. no Panner shall be entitled to receive any distribution from the Parmersbip without
the consent of the Gen~ Partner,
ARTICLES
ACCOUNTING AND RECORDS
5.1 Fiscal Year. The fiscal year oftbe Partnership shall be the calendar year.
5.2 Method of Accounting. Unless otherwise provided herein, the Partnership's
books of account shall b~ mamtaine4 in accorc!.mce with GAAP; provided., however, ~ for
purposes of making allocations and distributions hereunder (in.eluding. without limitation.
distributions in liquidation of the Pannership m accordance with Capital Account balances as
required by Section 9.3{d){2)}. Capital Accounts !Ind Profits, Lossea and other items descn"bed in
Section 3.2 shall be 4ctemtined in accordance with federal income tax accounting principles·
utilizing the accrual method of accounting, with tb.e aqjusiments required by Trcasuzy Regulation
section 1.704-l{b) to properly maintain Capital Accounts. Each Panncr acknowledges that the
capital account balances of the Partners for the purposes described in the preceding sentence are
not computed in accordance with GAAP and accordingly that any GA.AP finan<:ial statements for
rhe Partnership do not reflect their true Capilal ACCOllllt balaoces for pU?poses of detemiining
allocations and making liquidating disnibutions to the Partners hcrc:under.
5.3 Books and Records and Inspection.
(a) Boolci of Account and Records. Proper and complete records and books
of account of the Partnership's business, including all such 1W1Sactions and other matters
as are usually entered into records and books of account maintainCI! by Persons engaged
in businesses of like character or as are required by law, shall be kept by the Pannersbip
at the Partnership's principal office and place of business.
(b) Inspection. All books and records of the Pa:rmership shall be open to
inspection and copying upon at least five (5) business days' prior written notice by any of
the Partners or their representatives at any reasonable time during business hours and at
such Partner's expense. Any Limited PartnCf who receives any proprietary infonnation of
the Partnership pursuant to this Section S.3(b) or otherwise shall hold such proprietary
infonnation in confidence unless disclosure is required by law.
5.4 Financial Statements. Within one hundred twenty (120) days after the end of
each year, the Genc:ral Partner sball cause to be furnished to each Partner financial statements
with respect to each fiscal year of the PartneI"Sbip, consisting of (i) a balance sheet showing 'the
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Partnership's financial position as of the end of such fiscal year, (ii) supporting profir and loss
statements, and (iii) a s~tement of cash flows for such year.
S.S Ta.xatjon.
(aJ Status of the Partncrsbip. The Partners acknowledge that this
Agreement creates a partnership for federal and state income taX purposes, and. hereby
agree not to elect to be excluded from the application of Subchapter K of Chapter l of
Subtitle A of the Code or any similar state stamte.
(b) Tax Elections and R.eponi~.
(1) Generally. The Partnership shall make the following elections and
take the following positions under United States income tax laws and regulations
and any similar state statutes:
(A) Adopt the calendar year ras the annual accounting period;
(B) Adopt the accrual method of accounting; and
(C) Insofar as pemussi'ble, report the Partnership's taX attnoutes
and. results using principles consistent with those assumed in connection
with entering into this A.grecme:nt.
(2) Code Section 754 Election. The General Partner shall, upon the
written request of any Parmer, cause the Partnership to file an election under Code
Section 754 an'1 tb.e Treasury Regulations thereunder to adjust the basis of the
Partnemtlp assets under Code Section 734(b) or 743(b) and a corresponding
election under the applicable sections of state and local law.
(c) Partnership Tu Retarns. The i:ieces&aiy federal income tax retums,
infonnation returns and other tax reuu:ns for lbc Panncrship shall be prepared in a manner
directed by the General Partner. Each Partner shall provide such information, if any, as
may be needed by the Partnership for purposes of preparing such tax and infonnation
renuns, provided that such information is rewly available from regularly maintained
accounting records. The Partnership sbiul deliver to each Partner a copy of the
Partnctship's federal am} state in.come tax and information returns for each fiscal year.
together with any additional tax.related infonnation in the possession of the Parmership
that such Partner may reasonably and timely request in order properly to prepare its own
income ta:X returns.
(d) Tm-: Audits. ET-Power Holdings shall be the "tax matters partner," as
that term is defined in Code section 623l(aX7) (the ''Tax Maneis Partner'') with all of the
rights, duties and powers providecf for in Code sections 6221 tb.rougb 6233, inclusive.
The Tax Matters Partner shall direct the c:jefense of any claims made by the Internal
Revenue Service to the extent mat such claims relate to the adjusun.ent of Partnership
... \lrQ\OO)\Ar,~\211dA.mnd&Rc~tdAglLP .b 75.0921!99 16
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items at the Partnership level and, in connection therewith., shall cause the Partnership to
retain and Jo pay the fees and expenses of counsel and other advisors chosen by the Tax
Mancrs Parmer. The Tax Matte-ts Partner shall promptly deliver to each Parmer a copy
of all notices and communications with respect to income or similar taxes receive<! from
the Internal Revem1e Service or other taxing authority relating to the Partnership which
might materially adversely affect such Partner, and shall keep such Partner advised of all
significant developments in such matters coming to the attention. of the Tax Matters
Partner. All expemes of the Tax Matters Partner and its agents (including reasonable
internal time charges and reasonable disbursements) and other fees and expenses in
connection with such defense shall be borne by the Partnership; provided. however. that
amounts paid by the Partnership to the Tax Maners Partner or any agent thereof under
this Section 5.5(d) shall not duplicate any amount paid by the Partnership under any
management services agreement or similar agreement. Except in the case of willful
misconduct or gross negligence. neither the Tax Matters Partner nor the Partnership shall
be liable for any additional tax, interest or penalties payable by a Partner or any costs of
separate counsel chosen by such Partner to represent the Partner with reSpect to any
aspect of such challenge.
ARTICLE6
MANAGEMENT
6.1 Management. Toe overall management and control of the Partnership shall be
exercised by the General .Partner. The General Partner shall have responsibility and control with
respect to both the policy and direction of the Partnership and the day-to-day affairs thereof, and
may authorize Persons to execute documents on behalf of the Pallllership. Subject at all times to
the Purpose of the Parmership, the General Partner shall have the right. power and authority to
do on behalf of the Partnership all things which arc necessary or desirable to caIIY out its duties
and reBpOnsibilities hereunder, including caosing the Pattnership to engage in any kind of
activity and enter into and perform agreements of any kind necess.uy to, desinble for, c,r
incidental to, the accomplishment of the Purpose of the Parmersbip (and to execute and deliver
all instruments, certificates and other documents in connection therewith). so long as such
activities and agreements may be: lawfully carried on or perl"onned by a limited partnership under
the laws of the State of Delaware. Except as expressly provided in this Agreement, the Limited
Partners shall have no right to vote on or consent to any action of the Partnership or the Genctal
Partner.
6.2 Restrictioll5 on Authority. Notwithstanding any other provision in this
Agreement to the contrary. the following acts require the prior wlinen approval oftbe designated.
panics:
{aJ Cnntin11~tion of Parmersbip after General Partner Cessation. The
con1inuation of the business of the Partnership in accordance with Section 92(c) requires
the approval of Farmers as set forth. therein.
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(b) Ame1Jclments. Section 10.3 requires the approval of the General Partner
and a Majortzy in Interest of the Limited Partners with respect to an amendment of this
Agreement, except as set forth therein.
6.3 Documents. The General Partner shall have the authority to execute contracts,
agreements, insmunents, notes and other clocuments, including, without limitation. documents
acquiring or conveying interests in real or personal property, 1he creation of a mortgage of or a
security interest in property of the Partnership or the entry of a confession of judgment.
6.4 Limited PartneT Approval Procedure. All meetings of Limited Partners and
procedures for voting by Limited Partners shall be as set forth in the Act.
6.5 Other Activities of the Farmers. Except as otherwise provided in this
Agreement. the Panners and their A.fnliates may at any time and from ti.me to tune engage in and
possess interests in other business ventures of any and every type and description. independently
or with others. whether such vc:ntures arc: competitive with the Partnership or otherwise. Neither
the Partnership nor any olher Partner shall by vimle of this Agreement have any right, title or
interest in or to such independent ventures or to the income or profits derived therefrom.
6.6 Liability and lademqificatiou of the General Parmers.
{a} Neither the General Parmer, any shareholder or Affiliate of tbe Gene:ral
Partner, nor any officer, director or employee of any of the foregoing (each. an
"Exculpated Party"), shall be liable, responsible or accountable in damages Qt otherwise
to the Partnership or any Partner for any a.ct or omission perfonned or omined. (i) in good
faith on behalf of the P~rship, (ii) in a manner reasoiiably believed by it to be
consistent with this Agreement, and (iii) in a manner not constituting willful misconduc:r,
fraud, breach of its fiduciary duty of loyalty or gross negligence. The P~ shall
indemnify. defend and hold harmless each Exculpated Pa.ny for any such acts or
omissions, and fer any acts or omissions not meeting such requirements to the extent that
a court determines that in view of all the circumstances of the case, such Exculpated
Party is fairly aru:l reasonably c:ntitled to indelllllification for those expenses which the
coun deems proper.
(b} The Partneribip shall indemnify, defend and hold harmless each
Exculpated Pany for any payments such Exculpated Pany is required to make, and does
make, in ~isfaction of any obligation or liability of the Pannership, unless such
Partnership obligation or liabilicy arises by reason of the willtul misconduct or gross
negligence of the Exculpated Pa.tty.
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6. 7 Pat01ersbip Funds. Subject to the Financing Agreements, the funds of the
Parmership shall be deposited in such bank account or accounts, or invested in such interest-
bearing or non-interest-bearing investments, as shall be designated by the General Partner in its
sole c!iscretion. All withdrawals from any such bank accounts shall be made by the General
.Panner or the duly authorized agelll or agents of the General Parmer. Partnership funds shall not
be commingle<! with those of any other Person.
ARTICLE7
GENERAL PARTNER
7.1 Transfer of General Parmer Interest.
{a) Cenerallv. No .General Partner may at any time Transfer all or any part of
its Interest in the Partners.hip, except, subject to the conditions and restrictions set fanh in
Section 7.l(b), as follows:
(1) upon the withdrawal of such General Partner, to a successor
general parlner;
(2) in whole or in part, to (A) a corporation at least 80% of the stock of
which is owned by such General Parmer, (B) a corporation which owns at least
80% of the stock of such Gcnetal. Partner, (C) a corporation at least 80% of the
stock of which is owned directly or ~tly by Persons which collectively hold,
ditectly or indirectly, at least 80% of the stock of such General Partner, or (D) a
coiporation into which such General Partiler shall merge o:r with which it shall
consolidate or to which it shall sell all or subsauuially all ofits assets, if after such
merger. consolidation or sale. at least 80% of the: stock of such continuing
corporation is owned directly or indkectly by Persons which held (immediateLy
prior to such transaction), directly or indirectly, at least 80% of the stock of such
Genezal Partner.
(3) in whale or in pan to a limited partnership in which such General
Parmer or a corporation having a relationship to such General Partner descn"bed in
Section 7.l(a)(2) above is the sole general partner, provided tb.at the creation of
such limited partnership interests shall be accomplished in compliance with all
state and federal securities laws iu1d regulations;
(4) in the form of a pledge of such Interest, if any, which is required
by any Financing Agreement. and "1!Y Transfer of such Interest occurring
pursuant to the tenns of such pledge; or
(5) with the ptjor written consent of a Majority in Interest of the
Limited Partners.
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(b) Conditions and Restrictions on Transfer. Any Transfer described in
Section 7-l{a)(otherthan Section 7.l(a)(5)) shall only be permitted if:
( 1) the Transfer is accomplished in a non-public offering in
compliance with. and exempt 1rom registration and qualification requirements ot
all federal and state securities laws and reglllations;
{2) the effect of the Transfer will not be to terminate the Partnership
pursuant to Code section 708(b} or any similar successor provision of the Code, or
otherwise adversely to affect the Pannership or any other Parmer under the Code7
in each case unless indemnified against by the transferor or an Affiliate thereof in
a manner reasonably satisfii.ctory to each affected Partner;
{3) the T~er does not cause any Parmer or any Affiliate of a
Parmer to have Deemed Utility StatuS;
(4) the Transfer cloes not :result in a aefautt under, breach of any
obligation contained in, or cause the failure of a condition contained in any
material agreement to which the Parmersbip is a party;
(5) the transferor and/or transferee bears all reasonable costs of the
Partnership and the other Parm.ers in co:nnection with the Transfer~ including costs
incurred m amending this Agreement and any agreement of the Partnership as
provided in Section 7. l(c); and
(6) in the case of a Tnosfer of an interest where the transferee is to be
admined as a substitute general partner, the transferee executes an appropriate
agreement agreeing to be bound by the teilllS and conditions of this Agrccmcnt..
(c) Corresponding Changes to Agreemeais. rt; pursuant to the provisions
of this Section 7 .1. a General Parmer Ttausfers, in whole or in. part, any of its General
Partner Interest in the Partnership in a pcnnined. manner, then the Partn~ aDd the
transferee shall, at the request of any Partner, am.end this Agreement to reflect such event
and coope:rafe to amend. any other agreement of the Pannership if necessaI)'.
(d) Prohibited Tra1isfers aJ!_d Pledges. Any purported Transfer, of all or any
portion oftbe General Parmer Interest which is not in accordance with this Section 7.1 or
Section 7.4 shall be null and void.
7.2 Ceasing to be a General Partner.
(a) Events of CessathHl• A General Partner shall automatically and without
funher act be removed as, and shall cease to be, a general partner of the Panru:rship upon
the earliest to occur of the following events:
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(1) the TTansfer of all of the General Partner's Interest as a general
partner in me Partnership in accordance with Section 7.1, and tbe substitution of
the transferee as a general partner;
(2) the Ba.oknlptcy of a General Parmer;·
(3) the filing of a cenificare of dissolution of a General Partner or its
equivalent. or the revocation of its chaner and the expiration of 90 days after
notice 10 such General Partner of revocation without reinstatement of its chaner7
if such General Partner is a corporation;
(4) the dissolution and commencement of winding up of the General
Partner, if the General Partner is a partnemiip; or
(5) as provided in Section 17-402 of the Act; provided. however, that a
General Parmer shall not cease to be a seneral partner" by reason of an event
. described in Section l 7-402(a)(4) of the Act unless such event is a Bankruptcy of
such General .Parmer.
(b) Effects of Cessation. If a General Partner ceases to be a general partner:
in the Partnership under Section 7.2(a) by l'eason of its Bankruptcy (Section 7.2(a)(2)) or
ctissolution (Section 7.2(a)(3) or ( 4)). then as of the date of such event {regardless · of
wbetbe:r the Partnership dissolves as a result of such cessation in accordance with and
pursuant to Section 9.2 hereat). the General Parmer shall cease to be a General Partner in
the Partnership and shall instead become a Limited Partner (or solely a Limited Partncr, if
already a Limited l'artncr) in the Partn.emhip with all of the rights and subject to all of the
limitations of a Limited Parmer hereunder, provided tMt (i) it shall have no other voting
or consent rights hereunder and (li) it shall retain its capital account and financial rights
with respect to allocatioas and distributions in the Dl8Imel' pro"Yided in chis Agreement.
7.3 Admission of a New General Parmer. Except as provided in Section 7.17 a new
general partner may be admitted to me Partnership only with lhe conseru of each other General
Partner; provided, however, that if such admission is in connection with a General Partner
ceasing to be a General Partner, the consent of such General Partner shall not be required.
7.4 Code Limitanon. No Transfer involving a General Partner interest may be ma~
and no G~eral Partner may withdraw from the Parmersbip o, otherwise cease to be a General
Panner. if the effect of any such Transfer. withdrawal or cessation would be that the Partnership
would-be treated ~ other than a partnership for federal income tax purposes.
ARTICLE 8
LIMITED PARTNERS
8.1 No Management or Conn-oL Except as otherwise provided herein, the Limited
( Partners, in their capacity as limited partru:rs in the Partnership, shall take no pan in the
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management. control, conduct or operation of the Partnership and shall have no right or authority
to act for or bind_ the Partn~p.
8.2 Liability of Limited Partners. Except as required by applicable law, the liability
of each Limited Parmer (in its capacity as a limited partner in the Partnership) for the losses.
debts and obligations of the Partnership shall be limited to such Parmer's capital contributions to
the Partnership pursuant to this Agreement.
8.3 Changes in Limited Partners.
{a) Admission of New Limited Partners. Except as provided in Section
7.2(b) or 8.3(b). a. new Limited Partner may be admitted to the Parmerahip only with the
approval of the General Panner. Admission of a new Limited Partner shall not c::ause
dissolution of the Partnership: Following or coincident with any such admission, the
Partners shall amend this Agreement, and cooperate to amend any other agreement
relating to the Project as appropriate, to re.fleet ~ch event and the tenns of such
admission.
(b) Transfers of Limited Panner l.uterests. Section 8.3(b)(l) below
governs Assignments of Limited Parm.er Interests (whereby the assignee acquires only an ·
economic interest in the Pannership), whereas Section 8.3(b)(2) below gov~ the
substitution of an assignee as a new Limited Partner in the Partnership.
(1) Anignmeuts by Limited Parmers. A Limited Partner may
Assign all or a portion of its Limited !Janner Interest only (x) ta (i) a coq,oration
at least 80% of the stock of which is owned by the Limited Panner7 (ii) a
corporation which oWllS at least 80% of the stock of such Lilllited Partner, (iii) a
corporation at least 80% of the stock of which is owned by Persons wbich
collectively hold. directly or indirectly. at least 80% of the stock of soch Limited
Partner, or (iv) a corporation into which such Li.miled Partner shall merge or with
which it shall consolidate or to which it shall sell all or substantially all of its
assets, if after~ merger, consoli®uon or sale, at least 80% of the 5tock of sw:h
COIJtiDuing corporation is owned directly or indirectly by Persons which
collecuvely held (immediately prior to such transaction). directly or indirectly. at
least 800/11 of the stock of such Limited Partner, or (y} with the prior w.ritten
consent of the General Partner {which consent will not be unreasonably withheld)
and in either case so long as:
(A) such Assignment is accomplished in a non-public offering
in compliance with and exempt from registration and qualification
requiremi:nts of all federal and state securities laws and regulations;
(B) the effect of the Assignment will not be to terminate the
Partnership pursuant to Code section 708(b) or any . similar successor
provision of the Code, or othenvise adveisely to affect the Pannetsllip or
any other Partner under the Code, in each case unless indemnified against
., llrcl\003\J\gmisllndAmnd&RrsldAgtlP .675.092899 22
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by the assignor or assignee or an Affiliate thereof in a manner reasonably
acceptable to each affected Partner;
(C) the Assignment will not cause any other Partner or any
Affiliate of another Partner to have Deemed Utility Status;
(D) the Assigom.ent does not result in a default under, breach of
any obligation comained in., or cause the failure of a condition contained
in any material agreement to which the Partnership is a party; and
(E) the assignor and/or assigitee bears all reasonable costs of
the Partnership and the other Partners in connection with the ASsignment.
including costs incurred iu am.ending this Agreement and any other
agreement relating to the Project as provided in Section 8.3(b)(3).
Upon satisfaction of such conditions, the assignee shall become entitled to receive the assigning
Limited Partner's share of Profits, Losses and other items pursuant to Article 3 amt such Pa:ctnel"s
share of distributions pursuant lO Article 4. An assignee shall not be a Limited Partner, and shall
not be entitled to vote or to the other rights of a. Limited Pano.er, other th.in the right lO receive
allocations of profits anc:1 losses and distn"butions, and the assignini Limited Partner shall not be .
relieved of any of its obligations herewder. in each case unless the assignee is admitted to tbe
Pannersbip as a substituted Limited Partner as provided in Section 8.3(b)(2).
(2) Substituted Limited Farmers. A permitted assignee of a Limited
Partner Interest pursuant to Section 8.3(b}(l) may become a. substitwed Limited
Partner only if:
(A) ea.ch of the canditiOJ1S set forth in Section 8.3(b}(l) is
satisfied (as if such conditions applied to the substitution);
(B) the ~signee executes an appropriate agreement agreeing to
be bound by the terms and conditions of this Agreement aucl any other
agreement relating to lhe Project which agrc:ement shall contain
representations and warranties of the assignee required by the Oellcral
Partners, 3Ild the assignee and assignor execute any other instruments
relating to the Transfer required by General Partners including
documentation evidencing the parties' authority to enter mto s\.l.C.b
arrangement; and
(C) the Transfer bas been approved by the General Partner
(which approval may be withheld in its sole discretion).
(3) Correswnding Changes to Agreements. If. pUISuant to the
provisions of this Section 8.3(b), any Partner Transfers in whole or in pan. any of
its Limited Partner Interest in the Partnership in a permitted maoner, then the
P.utoers and the transferee shall, at the request of any Partner, cooperate to amen4
v:\lrd\003\h1lffl~\2iidAITll14&~1dAg1lP.67S.09289!> 23
(
Jun-26-01 03:05pm From-US GEN 13THFLOOR T-553 P.47/53 F-370
this Agreement and. if necessary, any other agreement relating to the Project, to
reflect such event.
(4) Prohibited Traasren. .Any pmponed Transfer of all or any
ponion of a Limited Partner Interest in the Pannership which is not per.mined
hereby shall be null and void.
ARTICLE!>
DISSOLUTION AND TERMINATION
9.1 No Termination. Except as expressly provided in this Agreement, no Partner
shall have the right, and each Partner hereby agrees not. to dissolve. terminate or liquidate the
Partnership. No Partners shall have lhe right.. md each Partner hereby agrees not, to petition a
coun for the dissolution. tennination or liquidation of the Partnership except as such rights are
provided in this Agreemeni or are ~vaila.ble 'IU14er applicable law notwithstanding any agreement
herein to the contrary.
9.2 Events of Dissolution. The Partnership shall be dissolved upon the first to occur
of the following:
(a) expiration of~ term oftne Partnership set fonh in Section 1.3;
(b) upon the approval of the Pattn.."'I'S to dissolve the Partnership, but only on
the effective date of dissolution specified by the General Parmer at the time of such
approval;
(c) the General Parmer ceases to be a general partner of the Pannership under
Section 7.2, unless all of the Limited Partners within 90 days after such cessation agree to
continue the Partnership and to the appoinnnent, effective as of the date of such
cessation, of a new Gcru:ral Panncr;
(d) the sale, exchange, condemnatioll or involunwy transfer of all or
substantially all ofme assets of the Pannerahip, provided that this Section 9.2(d) shall not
apply if part of the consideration rcccivcd by the Pannersbip in connection with any such
event jncludes deferred payment oblig!Uions and the General Partner reasonably
detennines that it is in the best interest of the Partners to keep the Partnership in existence
for rb.e sole putpose of collecting amounts payable Ullde:r such obligations and
distributing such amounts in accatdance with the terms of this Agreemeru, upon the
satisfaction of which obligations the Partnership shall dissolve; or
( e) entry of a decree of judicial dissolution under Section 17-802 of the Act.
". \lrd\OOl\Agmis\2ndAmnd&Re.1dAgtLf' .075.092&99 24
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9..3 ProcedUTes Upon Dissolution.
(a). GeperaL In the event the Partnership dissolves, it shall commence
winding up pursuant to the applicable provisions of the Act imd the procedures set forth
in this Section 9.3. Notwithstanding the dissolution of the Partnership, prior co the
te:nnination of the Partnership, the business of the Partnership and the affairs of the
Partners, as such, shall continue to be governed by this Agreement.
(b) Control of Winding Up. The winding up of the .Partnership shall be
conducted under the direction of (i) the General Partner, or (ii) if there is no remaining
General Panner. a Person selected by a Majority in Interest of Limited Partners {such
agent or such Person, as the case may be, hereinafter refen-ed to as the "Liquidator");
provided, however. that any Partner who cause4 the dissolution of the Partnership in
contravention of this Agreement shall not participate in the control of the winding up of
the Partnership and provided further, that if the dissolution is caused by entry of a decree
of judicial dissolution pursuant to Section 9.2(e). the winding up shall be carried out in
accordance with such decree.
(c) Maqner of Winding Up. The l?'artncrsbip shall engage in no fintbcr
business following dissolution other than that necessary for the ordc:rly winding up of the .
business and distribution of assets. The maintenance of offices shall not be deemed a
continuation of business for purposes of this Section 9.3(c}. Upon dissolution of rhe
Partnership, the Liquidator shall determine the time, manner and tCIIDS of any sale or
sales of Partnership property pursuant to such winding up. cOilSistent with its fiduciary
responsibility and having due regard to the activity and condition of the relevant matket
and gene:ral .financial and economic conditions.
( d) Application of Assets. In the case of a dissolution of the Partnership. the
Partnership's assets shall be applied as follows;
(1) Creditors. Fust, to payment of the liabilities of the Pannersbip
owing to third pa.mes (iru:llUling Affiliates of the Partners) and to Partners. After
payment of any such known liabilitiea, the Liquidator shall set up such reserves as
are reasonably necessary for any contillgent or unforeseen liabilities or obligations
of the Partnership. Such reserves may be paid. over by the Liquidator to an
esc:row holder or tmstee, to be held m escrow or trust for the pwpose of paying
any such contingent or wuorcseen liabilities or obligations, and, at the expiration
of such period as lhe Liqui~r may deem a4visable, such reserves shall be
distn'buted to the Partners or their assigns in the manner set forth in Section
9.3(d)(2) below.
(2) Partners. Second, 10 the .Partners in accordance with the balances
in their Capital A.ccoUilts, as applleable after adjusting such accounts for all
allocations of PTofits or Losses and otber items pursuant to Article 3. All
distnoutions pursuant to this Section 9.3{d)(2) shall be made no later than the eod
• .,lr<P~lOJ\Ag1m.f\2naAmna&:lk,l<IAgtLP 675.09Z899 25
( .
Jun-26-01 03:05pm From-US GEN l3THFLOOR + T-553 P.49/53 F-370
of the Pannership taxable year dwing which the liquidation of the Partnership
occurs (or. iflate:r. within 90 days aft.er the date of such liquidation).
9.4 Terminatiou of Parwership. Upon the completion of the liquidation of the
Partnership and. the distribution of all Partnership assets, the Partnership's affairs shall terminate
and the General Parmer sball cause to be executed and filed a Certificate of Cancellation of the
Partnership's Ceni:ficate of Limited Partnership pursuam to Section 17-203 of the Act, as well as
any anc! all other documents required to effectuate the termination of the Partnership.
ARTICLElO
MISCELLANEOUS PROVISIONS
10.l Disclaimer of Agen£Y .. This Agreement does not cre~ne any partnership beyond
the scope set forth herein. and except as otherwise expressly provided herein, this Ai?'Cement
shall not constitute any Partner the legal representative or agent of the other. nor shall any
Partner have the right or authority to assume. create or incur any liAbili.ty o:r obliga.i:ion, express
or implie4, against, in the name of or on behalf of any other Panner or the Partnership.
10.2 Deemed Utility Status. Each of the Partners hereby covenants and agrees that
neither such Partner nor any Affiliate of such Parmer wiU take any action. omit to take any action
or suffer imy action to be tuen with respect to itself or any of its Affiliates which would cause
any other Parmer or Affiliate of a. Parmer not otherwise having Deemed. Utility Sunus t:o have
Dt-emed Utility Status.
l 0.3 Amendment. Except: for an amendment in connection with the withdrawal of a
Partner from the Partnership. 1he transfer of an Iruerest in accordance with the teans of the
Agreement, or the admission of a new Pan:ner in accordance with tbe tenns of this Agreement
(including any financial, managcm=it or other issues in connection therewith). or as provided in
Section 3.2(b)(l){F) (relating to tax allocation 11mendmenlS) or otherwise hc:rein. any amendment
to this Agreement must be in writing and approved by the General Partner a:nd a Majority in
Interest of the Limited Pannm.
10.4 Notices. Any written notice or communication to any of the Partners required Qr
pemutted undef this Agreement s.ball be deemed to have been duly given and received (i) on the
date of setVice. if served personally or sent by telex. or facsimile mmsmission to the pany to
whom notice is to be given, or (ii) on the fourth day a.fter mailing, if mailed by first class.
registered or certified mail, postage prepaid, anci. addressed to the party to whom notice is to be
given at the acldress stated opp0site its name below or at the most: :recent address specified by
written notice given to the other Partners, or (iii) on the next day if sent by a nationally
recognized courier for next day service and so adQressed and if there is evidence of acceptance
by receipt. Notices to the Panne:rship shall be similarly given, and addressed to it at its principal
place of busiru:$$.
v :\lnNl0.3\A.grrc°lir.4Jl.mn4&RaldAg1LP o 75.09:?599 26
(_
Jun-26-01 03:06pm From-US GEN 13THFLOOR
(a) if to ET -Power.
(b) ifto ET Investments:
+
7500 Old Georgetown Road
Bethesda. Maryland 20814
Ann: President
One Oak Park. Suite 700
1020 N.E. Loop 410
San Antonio, Tex.as 78209
Ann: President
T-553 P.50/53 F-370
10.5 Consequential Damages. Neither the Partnership nor any Panner shall be liable
to any other Partner or the Partnership for special, indirect or consequential damages resulting or
arising out oftbis Agreement,, including loss of profit, provided, however, that this Section 10.5
shall not apply to limit the indemnifi~on by the Partnership of an Exculpated. Party otherwise
providec! in Section 6. 7.
10.6 Counterparts. Toe Partners may execute this Agreement in two or man:
counterparts, which shall, in the aggregate, be signed by all the Partners; each counterpart shall
be deemed an original instrument as agamst any Partner who has signed. it.
10.7 Governing Law. The laws of the State of Delaware shall govern the -
comtruction. inteipietation and effect of this Agreement.
10.8 Bindiog Effect. This Agreement shall be binding on all successors and assigns of
the Partners and inure to the benefit of the respective pc:rmitted successors and assigns of the
Partners. except to the extent of .!Ul.Y express contrary provision in this Agreement.
10.9 Partial Invalidity. If any term. provision, coverum~ or condition of this
Agreement is held by a court of competent jurisdiction to be invalid, void~ or unenforceable, the
rc:st of this Agreement shall remain in full force and. effect and shall in no way be affected.
impaired, or invalidated.
10.10 Captions. Titles or captions of Sections or Articles contained in this Agreement
arc inserted only as a matter of convenience and for reference, and in no way defiuc. limit~
extend or descnbe the scope of this Agreement or the intent of any provision hereof.
10.11 Entire Agreemcq.t. This instrument contains the entire agreelllent of the Partners
relating to the rights grantecl and obligations assumed. in this instl'Uillent. Any oral
representations o:r moclifications concerning this i.nmument shall be of no force or effect unless
containe4 in a subsequent written modification signod by the: pai,:y to be cht1Iged.
10.12 No Rights in Third Parties. The provisions of this Agreement ar-e for the benefit
of the Parmership and the Farmers, and are noJ intended to be for the benefit of any Person to
whom any debts, liabilities or obligations are owed. or who otherwise has any cl1Um against the
PartnC'I'Ship or any Pa.ttner, and no creditor or other Person shall obt.un any rights under such
v:\lr'1\003\Ai;mt,.\2na.l\mnl1&[{cs'4A,.g[LJ'.b75 092899 27
Jun-26-01 03:0Spm Frcm-US GEN 13THFLOOR + -T-553 P.51/53 F-370
provisions or solely by reason of such provisions shall be able to make my claims in respect of
any debts. liabilities or obligations against the Partnership or any of the Partners.
10.13 No RJght to Partition. No Partner shall have the right to bring an action for
partition against the Parmership. Each of ,he Partners hereby irrevocably waives any and all
rights which it may have to maintain an action to partition Partnership property or to compel any
sale or transfer thereof.
10,14 No Title to Partnership Property. All property owned by the Partnership7
whether rcal,'J)ersonal or mixl¾l, ana whether tangible or intangible, shall be aeemed to be owned
by the Pannmhip as an entity, and no Partner, individually, shall have any own~hip interest in
such propeny.
10.15 Additional Documents. Ea.ch pany hereto agrees to execute. with
acknowledgment or affidavit. if required or deemed. appropriate. any and all documcrus and
writings which :may be necessary or expedient in connection with the creatioD of the Partnership
and the acluevement of its Puq,o:sc, specifically inclmiing (i} such certificates and other
documents as the General Partner deems necessaiy or appropriate to fonn. qualify or conti.twc
1h.e PanDership as a limited partnership (or a partneTSbip in which the Limited Pannm have
limited liability) in a.11 jurisdictions in which the Partnership conducts or plans to conduct
husiness and (ii) all such agreements, certiticaies, tax sr.arements, tax rctQms and other·
documents as may be required of the Partnership or its Partners by the laws of the United States ·
of America., the State of Delaware7 or any other state in which the Partnership conducts or plans
to conduct business, or any political subdivision or agency thereat:
10.16 Partners Not Namfli. Unless ll8Jlled in 'this Agreement, or unless admitted to the
P&:tnership as a General Parmer or Limited Partner, as provided in this Agreement, no Person
shall be considered a Partner. The Pannership need d~ only with Persons so named or admiu.ed
as Pamu:rs; provided, however~ that any distribution by the Parmcrship to the Person shown on
the Pannersbip :records as a Partner or his legal :representative or the assigoee of the right to
receive Pannership distrib\Uions as herein provided. shall relieve the Partnership of all liability to
any other Person who may be interested in such distribution by reason of any other assignment
by the Partner or by reason of bis death. Bankruptcy. incompcu:ncy, or for any other reason.
v ·1Jrd\003\Ai:rms\2ndAmn4&fu:i;l(IA&tl.J' .6 7 S.1)92899 28
l
Jun-26-01 03:07pm From-US GEN 13THFLOOR + T-553 P.52/53 F-370
IN WITNESS WHE~OF7 this Agreement has been executed as oftbe date first above
wrinen.
GENER.Al.. PARTNER:
PG&E ENERGY TRADING-PO'WER
HOLDINGS CORPORATION
LIMlTED PARTNER:
~ \IT<1\003V.gm~\2ndAmno&.~tdAJ:tl.P,675.092899 29
Jun-26-01 03:07pm From-US GEN 13THFLOOR + T-553 P.53/53 F-370
£XHIB1T l
CAPITAL ACCOUNTS AND SHARING PERCENTAGES
GENERAL PARTNERS
ET-Power Holdings
LIMITED PARTNER
ET Investments
CAPITAL
ACCOUNT
AS OFS/31
$47,104,296.92
$92,112,!14.65
v:\lrd\OOl\Apn1$\2ndAmnd&R.e:stdAgtLP 675 .092899 1
S£1A.RJNG
PERCENTAGES
2%
98%
CHARTER § 13.01
(d) All actions recommending expansion of the system and the making of additions and
betterments thereto or extensions thereof, the incurring of indebtedness, the issuance ofbonds,
and the fixing ofrates and charges for utility services shall be submitted to the board for review
and approval; provided, that i:r:i case of disapprov~, the board shall within_ thirty_ (30) days
communicate the reasons for its disapproval to the council, which shaii · ha~e the power to
overrule such disapproval, and, upon such overruling, the council or the appropriate depart-
ment shall have power to proceed; and provided further that all rates and charges for utility
£:ervices shall be reviewed by the board and revised or reenacted by the council at intervais not
exceeding five (5) years and beginning with the year 1960.
(e) The board shall submit annually to the planning and zoning. commissior;. (for incm.110-
ration in its report), not less than one hundred twenty (120) days prior to the beginning o~·thb
budget year, a list of recommended capital improvements, which in the opinion of the board
ought to be constructed during the forthcoming five (5) year period. Such list shall be arranged
in order of preference, with recommendations as to which projects should be constructed in
which year.
(f) It shall be the duty of the board to act in an advisory capacity to the council, with
authority to hold public hearings and to study and recommend policies relating to the
operation, promotion, enlargement, future planning and such other matters involving city-
owned utilities as may be referred to it by the council. At intervals not exceeding ten (10) years
the council shall at the expense of the utilities involved, cause a general management survey
to be made of all utilities under the jurisdiction of the board by a competent management
consulting or industrial engineering firm, the report and recommendations of which shall be
made public; provided, that the first such survey shall be made within three (3) years of the
effective date of this Charter.
ARTICLE XIII. FRANCHISES
Sec. 13.01. Franchises: public utilities.
(a) The city council may by ordinance grant, renew and extend all franchises of all public
utilities operating within the city, and, with the consent of the franchise holder, amend such
franchise. No franchise shall ever be granted for a longer term than twenty (20) years. No
franchise for a term of twenty (20) years shall be granted except upon the condition that the
City of Denton shall have the right, at any time after the expiration of eighteen (18) years, to
purchase the property of such franchise holder, or cause a purchaser to buy such property and
thereby terminate or transfer the franchise and all privileges enjoyed thereunder, provided
that the purchase when made by the city shall not in the case of a fixed term franchise take
effect until the expiration of twenty (20) years from the time such franchise was granted.
(b) The city shall have the power to provide and fix in any franchise the amount or amounts
(or the basis for determining the same), to be paid in case it shall buy or cause a purchaser to
buy any such property.
Supp. No. 10 33
§ 13.01 DENTON CODE
(c) Every ordinance granting, amending, renewing or extending a public utility franchise
shall be passed by a majority vote of the entire city council at three (3) regular meetings of the
council; no such ordinance shall take effect until thirty (30) days after its final passage;
pending such time the full text of the ordinance shall be published once each week for three (3)
consecutive weeks in the official newspaper published in the City of Denton, and the expense
of such publication shall be borne by the grantee of the franchise; and such ordinance shall be
subject to referendum as provided in Article IV of this Charter. No public utility franchise shall
be transferable except with the approval of the council expressed by ordinance.
(d) After due notice and hearing, the council may by ordinance cancel or repeal a pu~Ht:
utility franchise for failure of the grantee to comply with the terms _of the franchise.
Sec. 13.02. Franchises: use of streets.
The city may by ordinance grant franchises or permits for the use and occupancy of streets,
avenues, alleys or other public grounds belonging to or under the control of the city. Before such
ordinance can become effective it shall be passed by a majority vote of the entire city council
at two (2) regular meetings of the council; no such ordinance shall take effect until twenty-one
(21) days after its final passage; pending such time the full text of the ordinance shall be
published once each week for two (2) consecutive weeks in the official newspaper of the City of
Denton, and the expense of such publication shall be borne by the grantee of the franchise and
such ordinance shall be subject to referendum as provided in Article IV of this Charter.
Sec. 13.03. Franchise fee.
The holder or grantee of any franchise or license to use public streets, alleys, highways, or
other public property may be required, as compensation for the right or privilege enjoyed, to
pay to the City of Denton each year such reasonable sum (not less than two (2) percent of the
gross receipts of the business pursued by the holder of the franchise earned for service
rendered in the City of Denton), or to pay compensation, rent, or any other fee or charge
authorized by law, including, without limitation, specific charges per service line, access line
fees, and all other legally permissible charges for the use of its streets, alleys, highways, and
other public property, as the council may determine by ordinance or by contract with any such
utility, which compensation shall be in addition to all ad valorem and corporation taxes paid
by the utility.
(Ord. No. 99-057, Amend. No. 24, 2-16-99, ratified 5-1-99)
Sec. 13.04. Regulati on of utilities.
The city council shall have the power and the duty to:
(a) Determine, fix and regulate the charges, fares or rates of all public utilities operating
within the city, provided the council shall not prescribe any rate of compensation which
will yield more than a fair return upon the fair value of the physical property used and
useful in rendering service to the public.
Supp. No. 10 34
CHARTER § 13.04
(b) Require such franchise holders who request an increase in rates, charges or fares to
reimburse the city for reasonable expenses incurred in employing independent rate
consultants to conduct investigations, present evidence and advise the council on such
requested increase ..
(c) Prescribe reasonable' standards of service and quality of products to be furnished by
each utility and prevent unjust discrimination.
(d) Require such extensions of plant and service and such maintenance of plant Rnd
fixturP.s as may be necessary to provide adequate and efficient service.
(e) Collect from every public utility operating in the city its fair-and just proportion of the
expense of excavating, grading, paving, repaving, constructing, reconstructing, drain-
ing, repairing, maintaining, lighting, sweeping and sprinkling such portions of the
alleys, bridges, culverts, viaducts and other public places and ways of the city as may
be occupied or used in whole or in part by such utilities; or compel such public utility
to perform, at its own expense, its just share of such excavating, grading, paving,
repaving, constructing, reconstructing, draining, repairing, maintaining, lighting,
sweeping and sprinkling.
(f) Prescribe the form of accounts which shall be kept by each utility; provided, that if the
utility shall keep its accounts in accordance with the uniform system of accounts for
said utility as prescribed by the National Association of Railroad and Public Utility
Commissioners, the Federal Power Commission, the Federal Communications Com-
mission, the Railroad Commission of Texas, or their respective successors, this shall be
deemed sufficient compliance with this paragraph.
(g) Examine or cause to be examined at any time the accounts and other records of any
utility operating within the city for the purpose of ascertaining any fact relating to the
business done by such utility and pertinent to the council's power of regulation.
(h) The council shall provide means and prescribe regulations for independent testing of
all gas, water, light and other public utility meters on complaint of any person who may
be dissatisfied with the readings of the employees of those utilities, whether owned by
private corporations or by the City of Denton.
(i) Enact and enforce such reasonable regulations and restrictions as may be deemed
desirable or conducive to the safety, welfare and accommodation of the public.
(j) The City of Denton shall have power to prohibit the use of any street, alley, highway,
boulevard or grounds of the city by any telegraph, telephone, electric light, street
railway, interurban railway, gas company or any other character of public utility
without first obtaining the consent of the governing authorities expressed by ordi-
nance, and upon paying such compensation as may be prescribed and upon such
conditions as may be provided for by such ordinances, and the City of Denton shall
have the power to require all telegraph, telephone and electric light companies to place
their wires underground.
Supp. No. 10 35
§ 13.04 DENTON CODE
(k) Require each utility to file an annual written report, sworn to by its secretary or
president, with the city secretary within sixty (60) days after the close of the fiscal year
of such utility, which report shall show:
(1) The actual cos~ of the plant and property devoted to public _use m. serving
customers in the,City of Denton, stating the location and cost of each unit thereof,
together with the depreciation and present value of each plant and property.
(2) The other cost~ or value claimed for such plant or property, showing whether such
cost OJ value i:,. arrived at by book costs, purchase costs, appraised value, present
investment value, reproduction cost new[,) less accrued depreciation or some
other described method, if the historical cost is not available.
(3) The properties shall be listed in detail showing the intangible and tangible
properties, such as lands, machinery, buildings, pipes, poles, circuits, mains, etc.,
each treated separately.
( 4) If any federal or state regulatory authority has prescribed any method or
yardstick by which the property or plant has been valued, such value and the
name of such authority shall be stated with a reference to the order relied upon.
(5) The amount of any lien or mortgage upon the properties composing such plant; if
the lien or mortgage covers several plants or properties, then the report shall
show the proportionate value of the plant and property in Denton to all the
property covered by the lien or mortgage and shall state whether such propor-
tionate values are based on actual historical costs, book costs, appraised values or
other method, and the report shall further show the comparative number of
meters or customers served by the Denton plant and their aggregate use of service
in relation to the whole property covered by the lien or mortgage; likewise all
other indebtedness pertaining to such enterprise shall be shown.
(6) The annual cost of operating such plant or system showing as separate items the
amount paid for salaries and wages, fixed charges, including interest, taxes and
insurance, giving each separately, amount paid for fuel, extensions and repairs,
giving each separately and particularizing the extensions and repairs, the cost of
maintenance, amount paid for damages, identifying each claim or suit, amount
paid for miscellaneous expenses, and, if any machinery or equipment is aban-
doned, worn out or its use discontinued, the same shall be stated, the original cost
and present value thereof shall be given; and the allocation and the method of
allocating cost of the business of such utility in Denton shall be shown in detail
with a statement of the basis for each such allocation, proration or division of
costs and expenses.
(7) The report shall show the gross earnings of such utility from its operations in
Denton; the cost of producing such earnings, including an itemization of any
over-all prorated costs or expenses charged against the utility's operations in
Denton; and the net profits from the operations in Denton.
(8) The report shall also contain any other information requested by resolution of the
council.
Supp. No. 10 36
CHARTER § 14.03
(1) Fix appropriate penalties to enforce compliance with all rules and regulations enacted
by the council.
(m) Give due notice and a fair hearing to persons or corporations to be affected by such
rules and regulations before they shall be adopted.
Sec. 13.05. Other conditions.
All franchises heretofore. granted are recognized as contracts between the City of D c 0 t-;m.
and the grantee, and the contractuai right aF-contained in any such franchise shal] flt)'·, he
impaired by Jhe provisions of this Charter, except that the power of the City of Dent,-.;; 1;o
exercise the right of eminent domain in the acquisition of any utility property is in all t',· .ngs
reserved, an9: except the general power of the city heretofore existing and herein providf, ._ for:
to regulate the rates and services of a grantee which shall include the right to require p,:,,per
and adequate extension of plant and service and the maintenance of the plant and fixtures at
the highest reasonable standard of efficiency. Every public utility franchise hereafter granted
shall be held subject to all of the terms and conditions contained in the various sections of this
Article whether or not such terms are specifically mentioned in the franchise. Nothing in this
Charter shall operate to limit in any way, as specifically stated, the discretion of the council or
the electors of the city in imposing such terms and conditions as may be reasonable in
connection with any franchise grant.
Sec. 13.06. Franchise records.
The city secretary shall compile and maintain a public record of all franchises heretofore or
hereafter granted by the City of Denton.
ARTICLE XIV. GENERAL PROVISIONS
Sec. 14.01. Reserved.
Editor's note-Ord. No. 79-86, § 2, adopted Dec. 11, 1979, and ratified Jan. 19, 1980,
deleted former section 14.01 which pertained to the health officer and was derived unamended
from the Charter adopted Feb. 24, 1959.
Sec. 14.02. Publicity of records.
All public records collected, assembled, or maintained by the city in accordance with the
transaction of official business shall be available to the public during normal business hours,
subject to the exceptions and regulations authorized by applicable state law.
(Ord. No. 79-86, § 2, 12-11-79, ratified 1-19-80)
Sec. 14.03. Official newspaper.
The city council shall annually select and designate by resolution the official newspaper of
the city in which all ordinances and official notices that are required to be published shall be
published.
Supp. No. 10 37
§ 14.04 DENTON CODE
Sec. 14.04. Personal interest.
Any officer or employee of the city having a substantial interest in a business entity or real
property, as those terms are defined in chapter 171 of the Texas Local Government Code as it
now reads or may hereafter be amended, shall comply. with Chapter 171 and, if necessary, shall
abstain from voting on a matter involving the business entity or real property and file an
affidavit setting forth the substantial interest in the matter to be voted upon.
(Ord. No. 79-86, § 2, 12-11-79, ratified 1-19-80; Ord. No. 99-057, .Amend. No. 25, 2-16-99,
ratified 5-1-99)
Sec. 14.05. Nepotism.
No person ::;hall be appointed to an office or be employed by the City of Denton who is reh·,;ed
to any member of the council within the second degree of affinity or the third degree of
consanguinity, and this shall apply to heads of departments in their respective departments.
Sec. 14.06. Oath of office.
Every officer of the city shall before entering upon the duties of his office take and subscribe
to the following oath or affirmation, to be filed and kept in the office of the city secretary:
"I,--------~ do solemnly swear (or affirm) that I will faithfully execute the
duties of the office of of the City of Denton, Texas, and will to the
best of my ability preserve, protect and defend the Constitution and laws of the United
States and of this State and the Charter and ordinances of this City; and I furthermore
solemnly swear (or affirm) that I have not directly or indirectly paid, offered or promised to
pay, contributed or promised to contribute any money, or valuable thing, or promised any
public office or employment, as a reward for the giving or withholding a vote at the election
at which I was elected. (or if the office is one of appointment, "to secure my appointment.")
So Help Me God."
Sec. 14.07. Continuation of present offices.
All persons holding administrative office either by election or appointment at the time this
Charter becomes effective shall continue in office and in the performance of their duties until
provision shall have been made in accordance therewith for the performance of such duties or
the discontinuance of such office. The powers conferred and the duties imposed upon any office,
department or agency of the city by the laws of the state shall, if such office, department or
agency be abolished by this Charter or under its authority, be thereafter exercised and
discharged by the office, department or agency designated by the council unless otherwise
provided herein.
Secs. 14.08, 14.09. Reserved.
Editor's note-Ord. No. 79-86, § 2, adopted Dec. 11, 1979, and ratified Jan. 19, 1980,
deleted former sections 14.08 and 14.09 which pertained to the commissioners and mayor
holding office when the present Charter was adopted and which were derived unamended from
said Charter adopted on Feb. 24, 1959.
Supp. No. 10 38
CHARTER § 14.15
Sec. 14.10. Continuance of contracts and public improvements.
All contracts entered into by the city, or for its benefit, prior to the taking effect of this
Charter, shall continue in full force and effect. Public improvements for which legislative steps
have been taken under laws-or charter provisions existing at the time this Charter takes effect
may be carried to completion' as nearly as practicable in accordance with the provisions of such
existing laws and charter provisions.
Sec. 14.11. Effect of charter on existing law.
All ordinances, resolutions, rules and regulations now in force under the city govern.rnent
and not in conflict with any provisions of this Charter shall remain in force under this Ci1arter
until altered, amended or repealed by the council after this Charter takes effect.
Sec. 14.12. Severable provisions.
If any section, subsection, sentence, clause or phrase of this Charter, or the application
thereof to any person or circumstance, is held invalid by a court of competent jurisdiction, such
invalidity shall not affect any other provisions or applications of this Charter which can be
given effect without the invalid provision or application, and to this end the provisions of this
Charter are declared severable.
Sec. 14.13. Amending the charter.
Amendments to this Charter may be framed and submitted to the voters of the city in the
manner provided by Vernon's Texas Codes Annotated, Texas Local Government Code Chapter
9 and all other applicable laws, as they now read or may hereafter be amended.
(Ord. No. 99-057, Amend. No. 26, 2-16-99, ratified 5-1-99)
Sec. 14.14. Submission of charter to electors.
The Charter Commission in preparing this Charter finds and decides that it is impracticable
to segregate each subject so as to permit a vote of "yes" or "no" on the same, for the reason that
the Charter is so constructed that in order to enable it to work and function it is necessary that
it should be adopted in its entirety. For these reasons the Charter Committee directs that this
Charter be voted upon as a whole and that it shall be submitted to the qualified voters of the
City of Denton at an election to be held for that purpose on the 24th day of February, 1959.
Sec. 14.15. When provisions take effect.
If a majority of the qualified voters voting in such election shall vote in favor of the adoption
of this Charter the present city commission, after canvassing the returns, shall enter an official
order upon the records of the city declaring the same adopted and this Charter shall be in full
force and effect on and after the date of official adoption.
Supp. No. 10 39
§ 14.15 DENTON CODE
We, the undersigned members of the Denton Charter Commission, heretofore duly elected
to prepare a Charter for the City of Denton, Texas, do hereby certify that this publication
constitutes a true copy of the proposed Charter for the City of Denton, Texas, as unanimously
adopted by the members thereof.
Tom Harpool
Don Robinson
Roland Laney
M. G. Ramey
W. D. Barrow
Lee E. Johnson
'SAM B. McALISTER, Chairman
STANLEY A. MUNSON, Vice Chairman
ETHELYN DAVIS, Secretary
Walter B. McClurkan
H. W~Camp
James R. Reed
David Mulkey
Mrs. W. F. "Pat" Hamilton
Paul P. Young
Sec. 14.16. Boards and commissions.
Members of boards and commissions of the City of Denton shall serve at the pleasure of the
council. Members of such boards and commissions may be removed by the council only for
cause and only after being given notice by the council.
(Ord. No. 79-86, § 2, 12-11-79, ratified 1-19-80)
[The next page is 91]
Supp. No. 10 40
EXHIBIT B
ORDINANCENO~OQ/ -:Ub
AN ORDINANCE OF THE ClTY OF DENTON. TEXAS PROVIDJNG FOR,
AUTHORIZING. AND APPROVING TIIE EXECUTION BY THE CITY MANAGER OF AN
ASSET PURCHASE AGREEMENT BY AND AMONG 1HE CITY OF DENTON, SPENCER
STATION GENERATING COMPANY, L.P., A DELAWARE LIMITED PAR1NERSIIlP,
AND PG&E GENERATING COMPANY, LLC, A DELAWARE LJMITED LIABILITY
COMP ANY; AUTHORIZING AND APPROVING THE EXECUTION BY THE CI1Y
MANAGER OF A TRANSITION POWER AGREEMENT BY AND BETWEEN TIIE CITY
OF DENTON AND PG&E ENERGY TRADING -POWE~ L.P., A DELAWARE LIMTIED
PARTNERSHIP; APPROVING AND AUTHORIZING THF. RXF.ClITION BY THE CITY
MANAGER OF A TRANSITION POWER AGREEMENT GUARANTEE BY AND
BETWEEN THE CITY OF DENTON AND PG&E 1RADING HOLDINGS, LLC; A
DELAWARE LIMITED LIABILITY COMPANY; AUTIIORIZING AND APPROVING THE
EXECUTION BY TIIB CITY MANAGER OF A BILL OF SALE BY AND BETWEEN THE
CITY OF DENTON AND SPENCER STATION GENERATING CO:MPANY, L.P.;
AU1HORIZING AND APPROVING THE EXECUTION BY THE CITY MANAGER OF AN
ASSIGNMENT AND ASSUMPTION AGREEMENT BY AND BETWEEN TIIE CITY OF
DENTON AND SPENCER STATION GENERATING COMPANY, L.P.; AUTHORIZING
AND APPROVING THE EXECUTION BY THE CITY MANAGER OF A CONTINUING
SITE/INTERCONNECTION AGREEMENT BY AND BETWEEN THE CITY OF DENTON
AND SPENCER STATION GENERATING COMPANY, L.P.; AUTHORIZING AND
APPROVING THE EXECUTION BY THE CITY MANAGER OF AN EASEMENT,
LICENSE AND ATTACHMENT AGREEMENT BY AND BETWEEN THE CITY OF
DENTON AND SPENCER STATION GENERATING COMPANY, L.P.; AUTIIORIZING
AND APPROVING THE EXECUTION BY THE CITY MANAGER OF A GUARANTEE BY
AND BE1WEEN TIIE CITY OF DENTON AND SPENCER STATION GENERATING
COMPANY, L.P.; AUTHORIZING AND APPROVING THE EXECUTION BY TIIE CITY
MANAGER OF A WATER RJGHTS AGREEMENT BY AND BETWEEN TIIE CITY OF
DENTON AND SPENCER STATION GENERATING COMPANY, L.P.; AUTIIORIZING
AND APPROVING TIIB EXECUTION BY TIIB CITY MANAGER OF A RECLAlMED
WATER SERVICE AND WASTEWATER RETURN AGREEMENT BY AND BETWEEN
TIIE CITY OF DENTON AND SPENCER STATION GENERATING COMPANY, L.P.;
AUTHORIZING AND APPROVING THE EXECUTION BY TIIB CITY MANAGER OF A
POWER TRANSFER AGREEMENT BY AND BETWEEN THE CITY OF DENTON AND
PG&E ENERGY TRADING -POWER, L.P.; AUTHORIZING AND APPROVING THE
EXECUTION BY THE CITY MANAGER OF A SPECIAL WARRANTY DEED BY AND
BETWEEN THE CITY OF DENTON AND SPENCER STATION GENERATING
COMP ANY, L.P .; AUTHORIZING AND APPROVING THE EXECUTION BY TiiE CITY
MANAGER OF BLANKET CONVEYANCES BY AND BETWEEN THE CITY OF DENTON
AND SPENCER STATION GENERATING COMPANY, L.P.; AUTHORIZING AND
APPROVING THE EXECUTION OF SUCH OTHER AGREEMENTS AND OTHER
DOCUMENTS, INCLUDING, WITHOUT LIMITATION, CERTIFICATES, CONTRACTS,
ASSIGNMENTS, LICENSES, LEASES, DIRECTIONS, INSTRUMENTS, AND
STATEMENTS BY THE CITY MANAGER, WIDCH ARE INCIDENT OR RELATED
TIIERETO, AS SHALL BE REASONABLY DETERMINED BY TIIB CTIY ATTORNEY OR ms DESIGNEE; CONFIRMJNG AND RATIFYING THAT THE CITY OF DENTON, ITS
MAYO~ ITS CITY COUNCIL, ITS CITY MANAGE~ AND ITS CITY ATTORNEY SHALL
BE AUTIIORIZED AND EMPOWERED TO PERFORM SUCH ACTS AND OBLIGATIONS
AS ARE REASONABLY REQUIRED TO CONSUMMATE TillS TRANSACTION;
RATIFYJNG ALL PRIOR ACTIONS TAKEN BY TIIE CITY COUNCIL IN FURTHERANCE
OF 11:IE FOREGOING TRANSACTIONS; MAKING SUCH F1NDINGS AS ARE REQum.ED
BY TIIE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935, AS AMENDED, AND
THE FEDERAL ENERGY REGULATORY COMMISSION IMPLEMENTING
REGULATIONS; FINDING AND DETERMINING TilAT SEVERAL OF SAID
· AGREEMENTS PERTAIN TO A COMPEffilVE ELECTRIC MATIER AS SET FORTI!
UNDER TIIE PROVISIONS OF SECTION 551.086 AND SECTION ;1;52.131 OF THE TEXAS
GOVERNMENT CODE, AS AMENDED; FINDING AND DETERMINING TIIAT TEXAS
GOVERNMENT CODE SECTION 252.022(a)(15) AND SECTION 272.00IG) APPLY;
ADOPTING SIGNIFICANT FINDINGS, CONCLUSIONS, AND RECITATIONS AS ARE
SET FORTH IN THE PREAMBLE OF TIIlS ORDINANCE; FINDING THAT TIIE SALE OF
THESE ELECTRIC GENERATION RESOURCES OWNED BY THE CITY IN
CONNECTION WITH ITS ELECTRIC UTILITY UNDER THE ASSET PURCHASE
AGREEMENT ARE NOT ESSENTIAL TO CONTINUED EFFECTIVE UTILITY SERVICE
WHEN CONSIDERING THE PURCHASE OF CAPACITY AND ENERGY, AND OTHER
ARRANGEMENTS MADE BY TIIE CITY UNDER THE TERMS OF TIIE TRANSITION
POWER AGREEMENT AND OTHER AGREEMENTS; AUTHORIZING THE
EXPENDITURE OF FUNDS THEREFOR; AND PROVIDING AN EFFECTIVE DATE.
WHEREAS, the City of Denton, Texas ("Denton") is a Home-Rule City governed by the
constitution and laws of the State of Texas; and
WHEREAS, in accordance with the provisions of Section 551.086 of the Texas
Government Code, after due public notice being given, the City Council, a ''Public Power Utility
Governing Body'' under Senate Bill 7, has discussed, delibenrted, and considered the matter~ the
subject of this ordinance, in a Closed Meeting of the City Council on the 12th day of June, 2001,
after determining by a preliminary majority vote of its members, that the consideration of the
items which are the subject of this ordinance are related to the competitive activity, including
commercial information, which if disclosed, would give advantage to its competitors or
prospective competitors; and
WHEREAS, thereafter, after due public notice being given, the City Council, proceeded
to discuss, deliberate, and consider the matter of the transactions which are the subject of this
ordinance, in its Open Meeting on the 12th day of June, 2001, and the City Council proceeded to
take final action. and voted in favor of the transactions described in said ordinance, as set forth
below; and
WHEREAS, the City Council has further determined that several of those documents to
be entered into by and between the City of Denton and Spencer Station Generating Company,
L.P., a Delaware Limited Partnership; PG&E Generating Company, LLC, a Delaware Limited
Liability Company; PG&E Trading Holdings, a Delaware Limited Liability Company; PG&E
Energy Trading -Power, L.P ., a Delaware Limited Partnership; and other affiliates of these
entities, namely the Asset Purchase Agreement. the Transition Power Agreement, the Guarantees
related to both of said agreements, as well as the Continuing Site/Interconnection Agr;eement
should be excepted from any public disclosure, as permitted by the provisions of Section 552.13 l
of the Texas Government Code, as documents that are reasonably related to a competitive
electric matter, the disclosure of which documents would provide an advantage to the
competitors or prospective competitors of Denton Municipal Electric; and
WHEREAS. the City Council has further determined that it is in the public interest that it
should exercise its right under the Texas Government Code to lawfully safeguard and keep
certain of these documents sealed. as they are competitive documents and contain competitive
electric infonnation; and
WHEREAS, the City Council finds that the sale or other disposition of assets as provided
by this ordinance, does not constitute the entire assets of Denton MtDJicipal Electric ("DME");
and
WHEREAS, the City Council finds that the sale or other disposition of electric generation
assets does not consist of any part essential to the continuation of effective utility service by
DME;and
WHEREAS, the City Council finds that those electric generation resources which are to
be sold as provided by tlris ordinance, are no longer needed by DME, and will be replaced by
other sources of power; and
WHEREAS, the City Council finds that the generation resources which are to be sold are
obsolete and inefficient; and
WHEREAS, the City Council finds that simultaneously with the conveyance of its
electric generation resources, that the City, by a Transition Power Agreement, and other
agreements, shall receive replacement power an~ energy that is advantageous, more reliable, and
cost-effective; and
WHEREAS, the City Council finds that the transaction as provided by this ordinance,
will not impair the ability of the City to comply with the provisions of any of its utility revenue
bonds, as amended, which are issued and outstanding; and
WHEREAS, the City Council considering the overall effect of the transactions set forth
within this ordinance, is of the conclusion that no essential portion of the electric utility, DME, is
being conveyed; but that the assets conveyed are being simultaneously replaced by cost-
effective, power and energy, in the form of a Transition Power Agreement, with a term of five
(5) years, with no detriment to the DME electric service ratepayers; and
WHEREAS, the City Council finds that Section 252.022(a)(15) of the Texas Government
Code is applicable to this transaction and that competitive bidding law is not applicable to the
purchase by the City of electricity; and
WHEREAS, the City Council finds that Section 272.00l(j) of the Texas Government
Code is applicable to this transaction and that the provisions of Section 272.00l(a) do not apply
to this sale of real property; and
WHEREAS, the City Council finds that the sale or exchange of real property, as more
particularly set forth within this ordinance, is in the best interests of DME ratepayers; and
WHEREAS. Denton desirf"n~ to sell and assign to Spencer Sttrtion Generating Company,
L.P. certain fossil fuel and hydro-electric generating facilities and certain facilities and other
generating assets associated therewith and ancillary thereto, namely, the Spencer Station, the Ray
Roberts Station, and the Lewisville Station;
WHEREAS, the City of Denton and PG&E Energy Trading -Power, L.P •; an affiliate of
the Spencer Station Generating Company, LP., desire to enter into an agreement to provide
energy capacity and energy management for Denton; and
WHEREAS, the City of Denton desires to enter into such other agreements with Spencer
Station Generating Company, L.P. and PG&E Energy Trading-Power, L.P. (or their affiliates)
which are incident and related to the Asset Purchase Agreement and the Transition Power
Agreement, and to take such additional actions as the City Manager shall determine to be
necessary and advisable to effectuate the matters set forth herein; NOW THERFORE
THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS:
SECTION 1. That the City Council, hereby approves and authorizes the City
Manager and the City Secretary, to execute and attest respectively. the Asset Purchase
Agreement, by and among the City of Denton, Spencer Station Generating Company. L.P., and
PG&E Generating Company, LLC, under the tenns and conditions being contained in
substantially the form which is attached hereto as Exhibit A and made a part hereof, with such
amendments, changes and additions as the City Manager may approve, and the execution and
delivery thereof on behalf of the City of Denton by or at the direction of the City Manager shall
constitute such approval.
SECTION 2. That the City Council, hereby approves and authorizes the City
Manager and City Secretary, to execute and attest respectively, the Transition Power Agreement.
by and between the City of Denton and PG&E Energy Trading -Power, L.P ., under the tenns
and conditions being contained in substantially the form which is attached hereto as Exhibit B
and made a part hereof, with such amendments, changes and additions as the City Manager may
approve, and the execution and delivery thereof on behalf of the City of Denton by or at the
direction of the City Manager shall constitute such approval.
4
SECTION 3. That the City Council, hereby approves and authorizes the City
Manager and City Secretary, to execute and attest respectively, the Transition Power Agreement
Guarantee, by and between the City of Denton and PG&E Trading Holdings, LLC, under the
terms and conditions being contained in substantially the form which is attached hereto as
Exhibit C and made a part hereof, with such amendments, changes and additions as the City
Manager may approve, and the execution and delivery thereof on behalf of the City of Denton by
or at the direction of the City Manager shall constitute such approval.
SECTION 4. That the City Council, hereby approves and authorizes the City
Manager and City Secretary, to execute and attest respectively, the Bill of Sale, by and between
the City of Denton and Spencer Station Generating Company, L.P., llnder the terms and
conditions being contained in substantially the form which is attac:hP.d hereto as Exhibit D and
made a part hereof, with such amendments, changes and additions as the City Manager may
approve, and the execution and delivery thereof on behalf of the City of Denton by or at the
direction of the City Manager shall constitute such approval.
SECTION 5. That the City Council, hereby approves and authorizes the City
Manager and City Secretary, to execute and attest respectively, the Assignnumt and Assumption
Agreement, by and between the City of Denton and Spencer Station Generating Company, L.P.,
under the terms and conditions being contained in substantially the fonn which is attached hereto
as Exhibit E and made a part hereof, with such amendments, changes and additions as the City
Manager may approve, and the execution and delivery thereof on behalf of the City of Denton by
or at the direction of the City Manager shall constitute such approval.
SECTION 6. That the City Council, hereby approves and authorizes the City
Manager and City Secretary, to execute and attest respectively, the Continuing
Site/Interconnection Agreement, by and between the City of Denton and Spencer Station
Generating Company, L.P., under the terms and conditions being contained in substantially the
form which is attached hereto as Exhibit F and made a part hereof, with such amendments,
changes and additions as the City Manager may approve, and the execution and delivery thereof
on behalf of the City of Denton by or at the direction of the City Manager shall constitute such
approval.
SECTION 7. That the City Council, hereby approves and authorizes the City
Manager and City Secretary, to execute and attest respectively, the Easement, License and
Attachment Agreement, by and between the City of Denton and Spencer Station Generating
Company, LP., under the terms and conditions being contained in substantially the fonn which
is attached hereto as Exhibit G and made a part hereof, with such amendments, changes and
additions as the City Manager may approve, and the execution and delivery thereof on behalf of
the City of Denton by or at the direction of the City Manager shall constitute such approval.
SECTION 8. That the City Council, hereby approves and authorizes the City
Manager and City Secretary, to execute and attest respectively, the Guarantee, by and between
the City of Denton and PG&E Generating Company, LLC, under the terms and conditions being
contained in substantially the form which is attached hereto as Exhibit H and made a part hereof,
5
with such amendments, changes and additions as the City Manager may approve, and the
execution and delivery thereof on behalf of the City of Denton by or at the direction of the City
Manager shall constitute such approval.
SECTION 9. That the City Council, hereby approves and authorizes the City
Manager and City Secretary, to execute and attest respectively, the Water Rights Agreement, by
and between the City of Denton and Spencer Station Generating Company, L.P .• under the terms
and conditions being contained in substantially the form which is attached hereto as Exhibit I and
made a part hereof, with such amendments, changes and additions as the City Manager may
approve, and the execution and delivery thereof on behalf of the City of Denton by or at the
direction of the City Manager shall constitute such approval.
SECTION 10. That the City Council, hereby approves and authorizes the City
Manager and City Secretary, to execute and attest respectively, the Reclaimed Water Se.rv:ice and
Wastewater Return Agreement, by and between the City of Denton and Spencer Station
Generating Company, L.P., under the terms and conditions being contained in substantially the
fonn which is attached hereto as Exhibit J and made a part hereof, with such amendments,
changes and additions as the City Manager may approve, and the execution and delivery thereof
on behalf of the City of Denton by or at the direction of the City Manager shall constitute such
approval.
SECTION 11. That the City Council, hereby approves and authorizes the City
Manager and City Secretary, to execute and attest respectively, the Power Transfer Agreement,
by and between the City of Denton and PG&E Energy Trading-Power, L.P., under the terms
and conditions being contained in substantially the form which is attached hereto as Exhibit K
and made a part hereof, with such amendments, changes and additions as the City Manager may
approve. and the e'x'.ecution and delivery thereof on behalf of the City of Denton by or at the
direction of the City Manager shall constitute such approval.
SECTION 12. That the City Council, hereby approves and authorfaes the City
Manager and City Secretary, to execute and attest respectively, the Special Warranty Deed, by
and between the City of Denton and Spencer Station Generating Company, L.P ., under the terms
and conditions contained in substantially the form which is attached hereto as Exhibit L and
made a part hereof, with such amendments, changes and additions as the City Manager may
approve, and the execution and delivery thereof on behalf of the City of Denton by or at the
direction of the City Manager shall constitute such approval.
SECTION 13. That the City Council, hereby approves and authorizes the City
Manager and City Secretary, to execute and attest respectively. the Blanket Conveyances, by and
between the City of Denton and Spencer Station Generating Company, L.P., under the terms and
conditions being contained in substantially the form which is attached hereto as Exhibit M and
made a part hereof, with such amendments, changes and additions as the City Manager may
approve, and the execution and delivery thereof on behalf of the City of Denton by or at the
direction of the City Manager shall constitute such approval.
6
SECTION 14. That the City Council; hereby approves and authorizes the City
Manager and City Secretary to execute and attest respectively, all other documents which are
incident and related to those agreements referenced above and to take such additional actions as
the City Manager shall determine to be necessary and advisable to effectuate the matters set forth
above.
SECTION 15. That the City of Dento~ the Mayor, the City Manager, the City
Attorney or their designees be, and each of them individually hereby is, authorized and
empowered to perform all such acts and obligations as required with respect to the agreements
and documents described herein.
SECTION 16. That the City Council, ht::r~by makes the following findings:
Section 32 of the Public Utility Holding Company Act of 1935, as amended (''PUHCA"), and the
Federal Energy Regulatory Commission's implementing regulations require that the Denton City
Collllcil, as the entity with exclusive jurisdiction over rates for electricity in the City of Denton,
make certain determinations prior to the transfer of ownership and/or operation of the Spencer
Generating Plant, the Ray Roberts Dam Project and the Lewisville Dam Project to Spencer
Station Generating Company, L.P. so that Spencer Station Generating Company, L.P. may obtain
Exempt Wholesale Generator status.1 The City of Denton hereby determines that allowing•the
three electric generating facilities noted above to be Eligible Facilities will benefit consumers, is
in the public interest and does not violate State law.
SECTION 17. That the Mayor, the City Manager, the City Attorney or their
designees be, and each of them individually hereby is, authorized, empowered and directed to
negotiate, deliver and perfonn all such acts and things and to sign all such docmnents,
certificates, contracts, assignments, licenses, leases, agreements, directions, instruments and
statements, each together with such amendments, changes and additions thereto as the Mayor,
the Cjty Manager, the City Attomey or their designees shall determine to be necessary or
advisable to effectuate the matter set forth herein, any such determination to be conclusively
evidenced by the taking or causing to be taken of such action or the execution and delivery of
any such document, certificate, agreement, license, lease, direction, instrument or statement by
the Mayor, the City Manager, the City Attorney or their designees.
SECTION 18. That all prior actions taken by the Mayor, the City Manager, the
City Attorney or their designees in furtherance of the foregoing matters be and hereby are
ratified, approved and authorized in all respects as of the dates and times such actions were
taken.
SECTION 19. That immediately following the execution and delivery of the
documents described as the Asset Purchase Agreement, the Transition Power Agreement, the
Guarantees incident to both such agreements, and the Continuing Site/Interconnection
Agreement. as provided for in this ordinance, the City Secretary is hereby directed to seal and
The tenns "Exempt Wholesale Generator," "Eligible Facility" and ''State" as used here:in have the same
meanings established in PUHCA.
7
maintain said documents in her custody and control, as documents excepted from public
disclosure under the provisions of Section 552.131 of the Texas Government Code (the .. 'Public
Power Exception'')~ unless otheiwise lawfully ordered to disclose said documents.
SECTJON20
hereby authorized.
That the expenditure of funds as provided for in this ordinance is
SECTION 21. That this ordinance shall become effective immediately upon its
passage and approval.
PASSED AND APPROVED this the /lf: day of f}w jl. , 2001.
EULINE BROCK. MAYOR
ATTEST:
.JENNIFER WALTERS, CITY SECRETARY
B,c ~ID+ U1ifuR
APPROVED AS TO LEGAL FORM:
HERBERT L. PROUTY, CITY ATTORNEY
S:\Our Docume-nts\Ordinanccs\01 \Electlic Partial Divestiture and Acquisition Ordinance S.doc
8
Spencer Station Generating Company, L.P.
Assistant Secretary's Certificate
June 13_, 2001
Reference is hereby made to that certain Asset Purchase Agreement (the
"Agreement") dated June'1.!t-, 2001, by and among the City of Denton, Texas, a
municipal corporation of the State of Texas and a home rule city, Spencer Station
Generating Company, L.P., a Delaware limited partnership ("Spencer"), and PG&E
Generating Company, LLC, a Delaware limited liability company. Pursuant to Sections
3.6(d) and (e) of the Agreement, the undersigned hereby certifies that he is the Assistant
Secretary of Spencer, and as such officer, hereby certifies, in his capacity as such and not
individually, as follows:
1. Attached hereto as Exhibit A is a true, correct and complete copy
of resolutions that have been duly adopted by the Board of Control of Spencer
authorizing the execution and delivery of the Agreement and all of the other agreements
and instruments to be executed and delivered by Spencer in connection therewith, and the
consummation of the transactions contemplated thereby. None of such resolutions have
been amended, modified or repealed in any respect, and all of such resolutions are in full
force and effect on the date hereof.
2. The persons listed on Exhibit B have been duly elected or
appointed, have been duly qualified, have been authorized to execute and deliver the
Agreement and all of the other agreements and instruments contemplated thereby, and on
the date hereof, are officers of Spencer, holding the respective offices set forth opposite
their names, and the signatures set forth opposite their names are their genuine signatures.
3. Attached hereto as Exhibit C is a true, correct and complete copy
of the Limited Partnership Agreement of Spencer, as in effect on the date hereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
DAl:\262327\02\5M#V02!.DOC\78599.0028
IN WITNESS WHEREOF, the undersigned has hereunto set his name on
behalf of Spencer and not individually.
SPENCER STATION GENERATING
:~MP7f/k_z)L
Name: Peter E. Meier
Title: Assistant Secretary
The undersigned hereby certifies that he is the duly elected, qualified and acting President
of Spencer and hereby certifies that Peter E. Meier is the duly elected, qualified and
acting Assistant Secretary of Spencer and that the above signature is his genuine
signature.
DAI :\262327\02\5M#V02 ! .DOC\78599 .0028 2
EXHIBIT A
See Attached.
DA I :\262327\02\5M#V02! .DOC\78599 .0028 3
SPENCER STATION GENERATING COMPANY, L.P.
ACTION BY WRITTEN CONSENT
OF THEBOARDOFCONTROL
June ij, 2001
The undersigned, being all of the members of the Board of Control of Spencer
Station Generating Company, L.P., a Delaware limited partnership (the "Company"),
acting by written consent in lieu of a meeting pursuant to Section 5.2(b)(vii) of the
Limited Partnership Agreement of the Company, does hereby consent to the adoption of
the following resolutions and direct that this consent be filed with the Company's minute
books:
WHEREAS, there has been made available to the Board of Control of the
Company the form of Asset Purchase Agreement among the City of Denton, TX, the
Company and PG&E Generating Company, LLC (the "Purchase Agreement") and the
other documents listed on Schedule A hereto (collectively, the "Agreements"); and
WHEREAS, on the basis of review of the proposed transactions provided for in
the Agreements, the Board of Control deems it advisable and in the best interest of the
Company that the transactions referred to in the Agreements be consummated
substantially in accordance with the terms and provisions thereof, and that the President,
any Vice President, Treasurer, Assistant Treasurer, Secretary, Assistant Secretary or any
other officer of the Company ("Authorized Signatories") be severally authorized to take
all actions to execute and deliver all certificates, instruments, agreements, and other
documents necessary to effect and carry out any and all acts and transactions
contemplated by the Agreements.
RESOLVED, that the Company enter into and perform the Agreements
thereunder and that the Authorized Signatories are severally authorized to execute and
deliver, in the name and on behalf of the Company, the Agreements to be substantially in
the form thereof approved by this Board of Control, with such changes therein as shall be
approved by the Authorized Signatory executing and delivering the same, such approval
to be evidenced conclusively by such execution and delivery; and
RESOLVED, that the form of and each of the terms and provisions contained in
the Agreements are hereby authorized and approved in each and every respect; and each
and every transaction effected or to be effected pursuant to and substantially in
accordance with the terms of the Agreements, including, but not limited to, those specific
transactions which are described, authorized and approved in each of these resolutions,
are hereby authorized and approved in each and every respect; and
RESOLVED, that the Authorized Signatories be and hereby are severally
authorized to do and perform or cause to be done and performed, in the name of and on
behalf of the Company, all other acts, to pay or cause to be paid on behalf of the
Company, all related costs and expenses and to execute and deliver or cause to be
executed and delivered all other notices, requests, demands, directions, consents,
approvals, orders, applications, agreements, certificates, undertakings, supplements,
amendments and further assurances or other communications of any kind under the
corporate seal of the Company or otherwise as he, she or they may deem necessary,
advisable or appropriate to effect the intent of the foregoing resolutions or to comply with
the requirements of the instruments approved and authorized by the foregoing
resolutions; and
RESOLVED, that any and all acts of the Authorized Signatories of the Company,
which acts would have been authorized by the foregoing resolutions except that such acts
were taken prior to the adoption of such resolutions, are hereby ratified, confirmed,.
approved and adopted as the acts of the Company.
REPRESENTATIVE OF
PG&E GENERA TING ENERGY HOLDINGS, INC.
REPRESENTATIVE OF
SPENCER STATION POWER CORPORATION
J :\LEGAL\CORPORA T\Spencer Station\GenCo L.P\r'denton-06~.doc
Schedule A
AGREE1\1ENTS TO BE EXECUTED BY SPENCER STATION GENERATING
COMPANY,L.P.
1. Assignment and Assumption Agreement, dated as of June ?!I, 2001, between the
City of Denton, TX and the Company
2. Continuing Site/Interconnection Agreement, dated as of June~ 2001, between
the City of Denton, TX and the Company
3. Easement, License and Attachment Agreement, dated as of June 1t[., 2001,
between the City of Denton, TX and the Company
4. Water Rights Agreement Related to Lewisville Lake and Ray Roberts Lake, dated
as of June_, 2001, between the City of Denton, TX and the Company
5. Reclaimed Water Service and Wastewater Return Agreement, dated as of June1=.i..,
2001, between the City of Denton, TX and the Company
6. Deed of Trust, dated as of JuneZi, 2001, between the City of Denton, TX and the
Company
7. Consent, dated as of June a, 2001, given by the City of Garland, Texas and the.
Greenville Electric Utility System, and acknowledged by the Company and
PG&E Energy Trading -Power, L.P.
8. Assignment, dated as of June1J?, 2001 between the Company and PG&E Energy
Trading -Power, L.P.
J:\LEGAL\CORPORA l\Spencer Station\GenCo L.P\r'denton-06QJ.doc
EXHIBIT B
Name Office Sign ature
Thomas B. King President ~~~
John R. Cooper Senior Vice President ~5
David N. Bassett Vice President, Controller ~ & Treasurer
Peter E. Meier Assistant Secretary tfllg)k
Suzanne Rich Assistant Secretary
Nancy A. Manning Assistant Secretary ~~g
DAI :\262327\0 I \SM#V0I ! .DOC\78599 .0028 4
Thomas B. King
John R. Cooper
William F. Quinn
David N. Bassett
Peter E. Meier
Suzanne Rich
Nancy A. Manning
DAl:l262327\0215M#V02!.DOC\78599.0028
EXHIBIT B
Office
President
Senior Vice President
Vice President
Vice President, Controller
& Treasurer
Assistant Secretary
Assistant Secretary
Assistant Secretary
4
Signature
CffF
06/21/01 THU 15:23 FAX 617 7883800 USGEN LEGAL
LIMITED PARTNERSHIP AGREEMENT
OF
SPENCER STATION GENERATING COMPANY, L.P.
Dated as of April 11, 2001
between
PG&E Generating Energy Holdings, Inc.
and
Spencer Station Power Corporatioia
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06/21/01 THU 15:23 FAX 6177883800 USGEN LEGAL
LIMITED PARTNERSHIP AGREEMENT
OF
SPENCER STATION GENERATING COMPANY, L.P.
THIS LIMITED PARTNERSHIP AGREEMENT ("Agreement•~, is entered into as of the
11th day of April, 2001, by and between PG&E Generating Energy Holdings, Inc., a Delaware
corporation ("PGen Energy Holdings"), in its role as a general partner, and Spencer Station
Power Corporation, a Delaware corporation ("SSPC"), in its role as a. general partner (PGen
Energy Holdings and SSPC are sometimes referred to herein collectively as the ''Partners"), with
reference to the following:
RECITALS:
WHEREAS., the parties hereto desire to form a limited partner:;hip under the Delaware
Revised Uniform Limited Partnership Act (the "Act") in order to engage in certain activities in
connection with the acquisition, ownership, development, financing, construction, operation and
maintenance of electric generation and related facilities, including, without limitation,
transmission facilities, in the City of Denton, Texas (the ''Facility"), and all estates, rights and
interests in property (real, personal and mixed) as may be appropriate for acquisition, ownership,
development, construction, operation and maintenance of the Facility (the Facility together with
such estates, rights and interests being herein referred to as the "Project");
NOW, THEREFORE, in consideration of the mutual covenants and conditions contained
herein, the Partners hereby agree as follows:
SECTION 1 -GENERAL TERMS
1.1 Definitions. Unless otherwise defined herein, capitalized terms used
throughout this Agreement shall have the respective meanings set forth
below:
"Act" means the Delaware Revised Uniform Lim:Jed Partnership Act, and
any successor statute, as the same may be amended from time to time.
S:ILEGAL\Corporate Scc'y\Denton TX\Spencer Station LP Agr«ment.doc
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06/21/01 THU 15:24 FAX 6177883800 USGEN LEGAL
"Adjusted Capital Account Deficit" means with respect to any Partner, the
deficit balance, if any, in such Partner's Capital Account as of the end of the relevant fiscal year,
after giving effect to (i) credit to such Capital Account of any amounts which such Partner is
obligated to restore pursuant to any provisions of this Agreement or is deemed to be obligated to
restore pursuant to Treasury Regulations §§ l.704-2(g)(l) and l.704-2(i>(5), and (ii) debit to
such Capital Account of the items described in Treasury Regulations§§ 1.704-l(b)(2)(ii)(d)(4),
1. 704-l(b)(2)(ii)(d)(5), and 1.704-l(b)(2)(ii)(d)(6). The definition of Adjusted Capital Account
Deficit is intended to comply with the provisions of Treasury RegulatioIJ.s § l.704-l(b)(2)(ii)(d)
and shall be interpreted consisten1ly therewith.
"Agreement" means this Limited Partnership Agreement of Spencer
Station. Generating Company, L.P., dated as of April 11, 2001, as the same may be amended,
modified or supplemented from time to time.
"Board of Control" has the meaning set forth in Section 5.1 hereof.
"Capital Account" means an account of each Partner's Capital
Contributions to the Partnership maintained for each Partner pursuant to Section 2.1 hereof.
"Capital Contribution" means the Agreement Date Capital Contributions
as set forth in Section 2.2(a) hereof, and all oilier amounts contributed by the Partners from time
to time.
"Code" means the United States Internal Revenue Code of 1986, and any
successor statute, as amended from time to time.
"Dis.pose," "Disposing," or "Disposition" means a. sale, assignment,
transfer, exchange, mortgage, pledge, grant of a security interest or other disposition or
encumbrance (including, without limitation, by operation of law, but excluding any transfer
occurring as a result of a technical dissolution), or the acts thereof.
"Entity" means any corporation, limited liability company, partnership,
limited partnership, joint venture, trust, estate or other entity. All references to an Entity shall be
deemed to include its successors and assigns, to the extent such succession or assignment is not
restricted herein or by the Act.
"General Partner" means a general partner of the Partnership or any
substitute therefor approved or permitted herewider.
"Limited Partner" means any Person who has been admitted to the
Partnership as a limited partner in accordance with the terms of this Agreement, at the time of
reference thereto, in such Person's capacity as a limited partner for so long as .such Person has not
ceased to be a Limited Partner hereunder.
2
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06/21/01 THU 15:24 FAX 6177883800 USGEN LEGAL
"Partner" or "Partners" means PGen Energy Holdings and SSPC and/or
any other Person that has been admitted as a Partner pursuant to the terms hereof.
"Partner Nomecourse Debt Minimum Gain" shall have the meaning set
forth in Treas. Reg. § 1. 704-(i)(2).
"Partner Nonrecourse Deductions" shall have the meaning set forth in
Treas. Reg.§§ 1.704-2(i)(l) and l.704-2(i)(2).
"Partner's Percentage" means the percentage equaling the ratio of ( a) the
Partnership Interest of the Partner for whom the percentage is calculated, divided by (b) the sum
of the Partnership Interests of all the Partners in the Partnership.
"Partnership" means Spencer Station Generating Company, L.P., a
Delaware limited partnership first fonned on April 11, 2001, pursuant to the Act.
"Partnership Interest" means the ownership intereHt of a Partner in the
Partnership, which shall be expressed as a percentage and set forth in Exhibit A hereto,
including, without limitation, a Partner's share of the Profit and Loss of1he Partnership and a
Partner's rights to receive distributions of assets (liquidating or otherwise) and allocations
according to such Partner's Percentage, and a Partner's right to receive information and to
consent to or approve such actions or omissions of the Partnership or another Partner with
respect to which the consent or approval of such Partner is required.
"Minimum Gain" has the meaning set forth in Treas. Reg. § l.704-2(d).
Minimum Gain shall be computed separately for each Partner in a manm:r consistent with the
Treasury Regulations under Code § 704(b ).
l.704-2(b)(l).
"Nonrecourse Deductions" has the meaning set frn:th in Treas. Reg. §
"Officer" has the meaning set forth in Section 5.4 hereof.
"Person" means any Entity or natural person.
"Prime Ratett means the prime or base rate of Citibank:, N.A., as
announced and in effect from time to time.
"Profits" or ''Losses" means, for each fiscal year or part thereof, the
Partnership's taxable income or loss for such year determined in accordance with Code § 703(a)
{for this purpose, all items of income, gain, loss or deduction required to be stated separately
pursuant to Code§ 703(a)(l) shall be included in taxable income or loss:, with the following
adjustments: (i) any income of the Partnership that is exempt from U.S. federal income tax shall
be added to such taxable income or loss; and (ii) any expenditures of the Partnership described in
3
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06/21/01 THU 15:25 FAX 6177883800 USGEN LEGAL
Code§ 705(a)(2)(B) or treated as such pursuant to Treas. Reg. § 1. 704-1 (b )(2)(iv)(i) shall be
subtracted from such taxable income or loss.
"Tax Matters Partner" has the meaning set forth in Section 6.5(d) hereof.
''Treasury Regulations" or 'Treas. Reg." means the regulations
promulgated by the United States Department of the Treasury with respf:ct to the Code, or
corresponding provisions of future regulations as such regulations may be amended from time to
time.
1.2 Formation. The Partners hereby confirm the fomurion and existence
of a limited partnership (the "Partnership") under the Act, effective as of April 11, 2001, the date of
filing of the Certificate of Limited Partnership for the Partnership.
1.3 Name of Partnership. The name of the Partnership shall be Spencer Station
Generating Company, L.P.
1.4 Principal Place of Business. The Partnership's principal office and place of
business shall be 7500 Old Georgetown.Road, 13th Floor, Bethesda, Maryl.and 20814.
1.5 Purposes of Partnership. The sole purposes of the Partnership are to (i)
acquire, OWI4 develop, finance, construct, operate and maintain electric generation and related
facilities in Denton, Texas (the "Project" or the "Facility"), including, without limitation,
transmission facilities, (ii) negotiate and enter into one or more power purchase agreements, power
marketing agreements, power brokering agreements, or other agreements for the sale of electricity
from the Facility, (iii) seek and obtain debt and equity financing for the Project, (iv) negotiate and
enter into agreements for the supply of fuel and water to the Facility, (v) undertake other
development activities with respect to the Project, and (vi) sell interests in the Project or the
Partnership or all or a part of the assets of the Project. The Partnership shall engage in no other
business without the consent of the Partners.
1.6 Term of Partnership. The term of the Partnership commenced on April 11,
2001, the date the Certificate of Limited Partnership for the Partnership wns filed with the Delaware
Secretary of State (the "Effective Date"), and shall continue until terminated in accordance with
Section 8.
1. 7 fj]jng of Other Certificates. The Board of Control shall cause to be
executed, filed and published all such certificates, notices, statements or other instruments, and
amendments thereto from time to time in order to maintain the limited pari:nership under the laws of
the State of Delaware and the operation of a limited pa;rtnership under all applicable laws as the
Board of Control may deem necessary or advisable for the operation of the: Partnership.
4
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06/21/01 TIIU 15:25 FAX 617i883800 USGEN LEGAL
SECTION 2 -CAPITALIZATION
2.1 Capital Accounts. A separate Capital Account shall be maintained on the
books of the Partnership for each Partner. Any Partner which is both a General Partner and a
Limited Partner shall have a single Capital Account. The Capital Account of each Partner shall
be
2.2
(a) increased by (i) the aggregate amount of such Partner's additional
Capital Contributions to the Partnership, (ii) the fair market value of
property contributed by such Partner to the Partnership, net of
liabilities secured by such property that the Partnership is considered
to assume or take subject to under Code § 752, and (iii) Profits and
items of income and gain allocated to such Pm1ner in accordance with
its Partnership Interest, and
(b) decreased by (i) cash distributions to such Partner from the
Partnership, (ii) the fair market value of prop~irty distributed in kind to
such Partner, net of liabilities secured by ;such property that such
Partner is deemed to assume or take subject tD under Code§ 752, and
(iii) Losses and items of loss or deduction allocated to such Partner in
accordance with its Partnership Interest.
(c) The foregoing provisions and any other provisions of this Agreement
relating to the maintenance of Capital Ac:counts are intended to
comply with § 1.704-l(b) of Treasury Regulations pursuant to the
Code and shall be interpreted and applied in a manner consistent with
such regulation. To the extent such provisiC1ns are inconsistent with
such regulations or are incomplete with res:pect thereto, the Capital
Accounts of the Partners shall be maintained in accordance with sucb
regulations.
Capital Contributions.
(a) Agreement Date Capital Contributions.
The Capital Contribution of each of the Partners on April 11, 2001,
which has been paid in full, is set forth opposite such Partner's name below ( collectively, the
"Agreement Date Capital Contributions"). No Partner shall be deemed to have made any Capital
Contribution prior to such date other than its Agreement Date Capital Corrtribution.
5
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06/21/01 THU 15:26 FAX 6177883800 USGEN LEGAL
PG&E Generating Energy Holdings, Inc. $ 20
Spencer Station Power Corporation $980
(b) Additional Capital Contributions. Partne~ may make additional
Capital Contributions to the Partnership, but only with the consent of the other Partners. Other than
as descnbed in Section 2.2(a), no Partner shall have any obligation to make any Capital
Contributions to the Partnership.
2.3 No Interest on Capital Account Balances. No Partner shall be entitled to
receive any interest on the balance in its Capital Accourrt.
2.4 Loans to Partnership.
(a) Required Loans. No Partner shall be required to lend any money to
the Partnership.
(b) Permitted Loans. In the event that Partnewbip funds are insufficient
to meet its costs, expenses, obligations or liabilities, or to make any expenditure authorized by this
Agree:r:nent any Partner may (but shall not be required to) lend all or a portion of the amount of
needed funds to the Partnership. Any such loans shall bear interest at market rates and be repayable
at the earliest possible time.
SECTION 3 -PROFITS AND LOSSES
·3.1 Allocation of Profits and Losses.
(a) Profits and Losses of the Partnership for each fiscal year shall be
allocated pro rata to the Partners according to their respective Partner's Percentages.
(b) Every item of income, gain, loss, deduction, credit or tax preference
entering into the computation of Profits and Losses, or applicable to the period during which
such Profits or Losses were recognized, shall be considered allocated to each Partner in the same
proportion as Profits or Losses are allocated to such Partners.
( c) Nomecourse Deductions for any fiscal year or other period shall be
specifically allocated to the Partners in the same proportion as net Profit, and net Losses are
allocated under this Section 3 .1 in such year. Any Partner Nonrecourse Deductions for any fiscal
year or other period shall be specifically allocated to the Partner who bears the economic risk of
loss with respect to the Partner Nomecourse Deductions, attributed in accordance with Treas.
Reg. § 1. 704-2(i). fu order to comply with the "minimum gain cbargeba.ck" requirements of
6
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06/21/01 THU 15:26 FAX 6177883800 USGEN LEGAL
Treas. Reg. §§ 1.704-2(£)(1) and 1.704-2(i)(4), and notwithstanding any other provision of this
Agreement to the contrary, in the event there is a net decrease in a Partner's share of Minimum
Gain and/or Partner Nomecourse Debt Minimum Gain during a Partnership taxable year, such
Partner shall be allocated items of income and gain for that year (and if necessary, other years) as
required by and in accordance with Treas. Reg. §§ l.704~2(f)(l) and 1.704-2(i)(4) before any
other allocation is made. It is the intent of the parties hereto that any allocation pursuant to this
Section 3.l(c) shall constitute a "minimum gain chargeback" under Treru:. Reg, §§ l.704-2(f) and
l.704-2(i)(4).
( d) To the extent an adjustment to the adjusted tax basis of any
Partnership asset pursuant to Code § 734(b) or Code§ 743(b) is required, pursuant to Treasury
Regulations§ 1.704-1 (b)(2)(iv)(m), to be taken into account in determining Capital Accounts,
the amount of such adjustment to the Capital Accounts shall be treated as an item of gain (if the
adjustment increases the basis of the asset) or loss (if the adjustment decreases such basis) and
such gain or loss shall be specially allocated to the Partners in a manner consistent with the
manner in which their Capital Accounts are required to be adjusted pursu.ant to Treasury
Regulations§ l.704-l(b)(2)(iv)(m).
(e) The allocation of Profits and Losses, pursuant to this Section 3.1, shall
not result in any Partner having an Adjusted Capital Account Deficit at the end of any fiscal year.
(f) In the event any Partner unexpectedly receives any adjustments,
allocations, or distn'butions described in Treasury Regulations§§ 1.704-l(b)(2)(ii)(d)(4}, 1.704-
l(b)(2)(ii)(d}(5), or l.704-1(b)(2)(ii)(d)(6), items of Partnership gross income and gain shall be
specially allocated to such Partner in an amount and manner sufficient to eliminate, to the extent
required by the Treasury Regulations, the Adjusted Capital Account Deficit of such Partner as
quickly as possible, provided that an allocation pursuant to this Section 3 .1 (f) shall be made only
if and to the extent that such Partner would have an Adjusted Capital Account Deficit after
making all other allocations provided for hereunder on the basis that the .allocation provisions of
this Section 3. l{f) are of no force or effect and such allocation does not create or increase an
Adjusted Capital Account Deficit of any other Partner.
(g) If there is a change in any Partner's share of the Partnership's Profits,
Losses or other items during a fiscal year, allocations among the Partners shall be made in
accordance with their interests in the Partnership from time to time during such fiscal year in
accordance with the closing of the books method under Code§ 706, except that depreciation,
amortization and similar items shall be deemed to accrue ratably on a daily basis over the entire
fiscal year during which the corresponding asset is owned by the Partner:~bip for the entire year,
over the portion of the fiscal year after which such asset is placed in services by the Partnership if
such asset is placed in service during the fiscal year,
7
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06/21/01 THU 15:27 FAX 6177883800 USGEN LEGAL
(h) In connection with any distribution, whether upon winding up of the
Partnership or otherwise and whether or not it shall constitute a return of capital, no Partner shall
have the right to demand or receive property other than cash, although the liquidator may
distribute property other than cash. No Partner shall have priority over any other Partner either
as to the return of its Capital Contribution or as to allocation of Pro.fits or Losses of the
Partnership.
(i) If any Partnership property has a book value different from its adjusted
tax basis to the Partnership for U.S. federal income tax purposes (whether by reason of the
contribution of such property to the Partnership, the revaluation of such property hereunder~ or
otherwise), allocations of taxable income, gain, loss and deductions under this Section 3.l(i) with
respect to such asset shall take account of any variation between the adjusted tax basis of such
asset for federal income tax purposes and its book value in the same manner as under Code §
704(c) or the principle set forth in Treas. Reg. § l.704-l(b)(2)(iv)(g), as the case may be. Each
item of income, gain, loss, deduction and credit and all other items govemed by Code § 702(a)
shall be allocated among the Partners in proportion to the allocation of Pro.fits, Losses and other
items to such Partners hereunder, provided that any gain recognized from any Disposition of a
Partnership asset which is treated as ordinary income because it is attributable to the recapture of
any depreciation or amortization shall be allocated among the Partners in the same ratio as the
prior allocations of Profits, Losses or other items which include such depreciation or
amortization, but not in excess of the gain otherwise allocable to each such Partner. Except as
set forth in this Section 3. l(i), allocations for tax purposes of items of income, gain, loss and
deduction, and credit.s and basis therefor, shall be made in the same :r:ianner as allocations for
book purposes as set forth in Section 3.l(a) hereof Allocations pursuant to this Section 3.l(i)
are solely for purposes of federal, state and local income taxes and shall not affect, or in any way
be taken into account in computing, any Partner's Capital Account or share of Pro.fits, Losses,
other items or distributions pursuant to any provision of this Agreement.
SECTION 4 -DISTRIBUTIONS
4.1 Operating Cash Flow Distdbutions. All distributions to the Partners, other
than liquidating distributions, shall be shared pro rata according to their respective Partner's
Percentages. Distributions may be made from time to time in such am01mts and at such times as
the Board of Control shall determine. Immediately prior to a distribution of property other than
cas~ the Capital Accounts shall be adjusted as provided in Treas. Reg. s· l.704-l(b)(2)(iv)(f).
4.2 Liquidating Distributions. Distributions in liquidation of the Partnership
shall be made in the manner described in Section 8.2( d).
8
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06 /21/01 THU 15:27 FAX 61 77883800 USGEN LEGAL
4.3 Other Distributions. Except as provided in Section 4.1, 4.2 or otherwise in
this Agreement, no Partner shall be entitled to receive any distribution from the Partnership without
the consent of the other Partners.
SECTION 5 -MANAGEMENT
5.1 Generally. The overall management and control o:f the Partnership shall be
exercised by a board (the "Board of Control") which, except as otherwise provided in this
Agreement, shall have all rights and powers pennitted a general partner under the Act. Except as
permitted by the Board of Control or this Agreement, no Partner shall hav1~ any right or authority to
take any action on behalf of the Partnership with respect to third parties.
5.2 Board of Control.
( a) M embership. The Board of Control shall consist of four individuals,
two of whom shall be appointed by PGen Energy Holdings and two of whom shall be appointed by
SSPC. The initial members of the Board of Control are:
PGen Energy Holdings Representatives:
SSPC Representatives:
P. Chrisman Iribe
Thomas B. King
John R. Cooper
Sanford L. Hartman
In the absence of one or more members of the Board of Control, the Partner which appointed the
absent member may designate an alternate to act for such absent member. The Partners may also
designate the CEO (as defined in Section 5.4(a)) as an ex officio. nonvofng member of the Board
of Control. Each member of the Board of Control shall hold office u:rtil death, resignation or
removal at the pleasure of the Partner which appointed him. If a vacancy occurs on the Board of
Control, the Partner which appointed such vacating member shall appoint his successor.
Designation, removal and appointment shall be by notice to the other Partners, with a copy to the
CEO (as defined m. Section 5.4(a)).
(b) Meetin2S and Approval Requirements.
(i) Regular Meetings. The Board of Control shall meet at times
and places determined by the Board of Control.
(ii) Special Meetings. A special meeting of the Board of Control
shall be held at the request of any Board of Control member.
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(iii) Telephonic Meetings. Any meeting of the Board of Control
may be held by conference telephone call or through similar communications equipment by means
of which all persons participating in the meeting can hear each other. Participation in a telephonic
meeting held pursuant to this Section shall constitute presence in person a1 such meeting.
(iv) Notices. Notices of regular meeting:s of the Board of Control
are not reqlrired. Notices of special meetings of the Board of Control shall state the date and hour
of the meeting and the purpose or purposes for which the meeting is called. Special meetings shall
be held at the address of the party requesting the special meeting as set forth in Section 9.1, or at
such other place as shall be agreed to by the members of the Board of Control. The notice of a
special meeting shall be given in writing not less than ten (10) nor more than twenty (20) days
before the date of the meeting to each Board of Control member. Board of Control members may
waive in writing the requirements for notice before, at or after the special meeting involved.
(v) Quorum. At each meeting of th::: Board of Control, the
presence in person or by telephone, as appropriate, of at least two members of the Board of Control,
including at least one member appointed by each Partner, or, in the case of the absence of a
member, such member's alternate, shall be necessary to constitute a quomm for the transaction of
business. An alternate may only act for one absent member at a time.
(vi) Approval Requirements. An afiirmative vote of each
member of the Board of Control (other than the CEO) present in person or by telephone, as
appropriate, and voting at a duly held meeting of the Board of Control shall be necessary for any
action of the Board of Control.
(vii) Written Consents. Any action re~:uired or pennitted to be
taken at a meeting of the Board of Control may be taken without a meeting if at least one member
of the Board of Control appointed by each Partner consents thereto in writing. Such consents shall
be filed with the minutes of the proceedings of the Board of Control.
( d) Compensation and Reimbursement Board of Control members shall
not be entitled to receive compensation for, or reimbursement of expenses incurred in, attending
meetings of the Board of Control.
5.3 Authority.
(a) All Partners. Notwithstanding any other pr,:>vision in this Agreement
to the contrary, the following acts require the prior written approval of all :Partners:
(i) amendment of this Agreement in accordance with Section
9.3, as provided therein;
(ii) admission of a new Partner in accordance with Section 7.1;
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(iii) dissolution and termination of the Partnership in accordance
with Section 8.l(a);
(iv) the sale of all or substantially all of the assets of the
Partnership, except in the liquidation and winding up of the business of the Partnership upon its
dissolution and termination (for purposes of this Section 5.3(aXiv), "substantially all" means greater
than seventy~five percent (75%)); and
(v) talcing any act which would constii:ute a bankruptcy of the
Partnership.
(b) Board of Control. The Board of Control sb.all have full power and
authority in the management and control of the Partnership with respect tc, matters other than those
reserved to the Partners in Section 5.3(a) above.
5.4 Officers of the Partnership.
(a) Chief Executive Officer. The Board of Control shall appoint a
President and Chief Executive Officer for the Partnership (the 11CEO") who may be an employee of
a Partner or an affiliate of a Partner~ and who shall have primary resporuiibility for the day-to-day
affairs of the Partnership, subject to (i) the provisions of this Agreement, (ii) an obligation to keep
the Board of Control informed of all material decisions within his authority, and (iii) any
requirements or conditions established from time to time by the Board of Control.
(b) Other Officers. The Board of Control shall appoint such other
officers for the Partnership, with such authority, as it deems
necessary or advisable.
( c) Initial Officers. The officers of the Partner:;hip as of the date hereof
are:
President
Senior Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President, Controller
and Treasurer
Secretary
Assistant Secretary
Assistant Secretary
11
Thomas B. :King
John R. Cooper
Mark V. Camey
Francis X. DeRosa
F. Joseph Feyder
J.W. Maitlan.d Horner
Gregory B. Kelly
David W. M:igill
William F. Quinn
David N. Ba3sett
Sanford L. Hartman
Peter E. Mei,er
Suzanne Rieb.
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Assistant Secretary
Assistant Treasurer
Assistant Treasurer
5.5 Power of Attomev.
Nancy A. Manning
Dena Chapin Nolte
J. TracyMey
(a) Attorney-in-Fact. The Limited Partner heDeby grants to the General
Partners a special power of attorney irrevocably making, constituting and appointing each General
Partner and its authorized officers as the Limited Partner's attorney-in-fact, with power and
authority to act in its name and on its behalf to execute, acknowledge and swear to in the execution,
acknowledgment and filing of: (i) all certificates and other instrume:1ts deemed necessary or
advisable by the General Partners to permit the Partnership to become or to continue as a limited
partnership or partnership wherein the Limited Partner has limited liability in the jurisdictions
where the Partnership may be doing business; (ii) all instruments that e:fiect an amendment to this
Agreement entered into pursuant to Section 9.3; and (iii) all fictitious or assumed name certificates
required or permitted to be filed on behalf of the Partnership.
(b) Terms of Power. The foregoing power of attorney: (i) is coupled
with an interest and shall be irrevocable and survive the COIJ>Orate di.ssolution of the Limited
Partner; and (ii) shall survive an assignment by the Limited Partner of all or any portion of its
interest in the Partnership but only until the assignee of the interest is admitted as a substituted
Limited Partner.
5.6 No Compensation. No Partner shall be entitled 1o compensation from the
Partnership for services rendered to the Partnership except as otherwise provided herein.
5.7 Indemnification.
(a) The Partnership shall indemnify, to the full extent that it shall have
power under applicable law to do so and in a manner permitted by such law. any Person made or
threatened to be made a party to any threatened, pencting, or completed action, suit, or
proceeding, whether civil; criminal administrative, or investigative (here:inafter, a "Proceeding''),
by reason of the fact that such Person is or was a Partner, a member of the Board of Control or
Officer of the Partnership, or is or was serving at the request of the Partnership as a director or
officer of another corporation, partnership, joint venture, trust, or other enterprise. The
Partnership may indemnify, to the full extent that it shall have power under applicable law to do
so and in a manner permitted by such law, any Person made or threatened to be made party to
any Proceeding, by reason of the fact that such Person is or was an employee or agent of the
Partnership, or is or was serving at the request of the Partnership as an employee or agent of
another corporation, partnership, joint venture, trust, or other enterprise.
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(b) Advancement of Expenses. With respect to any Person made or
threatened to be made a party to any threatened, pending, or completed Proceeding, by reason of
the fact that such Person is or was a Partner, a member of the Board of Control or Officer of the
Partnership, the Partnership shall pay the expenses (including attorneys' fees) incurred by such
Person in defending any such Proceeding in advance of its :final disposition (hereinafter an
"advancement of exvenses"); provided, however, that the payment of expenses (including
attorneys' fees) incurred by such Person in advance of the final disposition of such Proceeding
shall be made only upon receipt of an undertaking (hereinafter an "undertaking") by such Person
to repay all amounts advanced if it shall ultimately be determined by final judicial decision from
which there is no further right to appeal (hereinafter "final adjudication•~, that such Person is not
entitled to be indemnified for such expenses under this Section 5. 7 or otherwise; and further
provided that with respect to a Proceeding initiated against the Partnership by a Partner, a
member of the Board of Control or Officer of the Partnership (including a Person serving at the
request of the Partnership as a director or officer of another corporation, partnership, joint
venture, trust or other enterprise), such director or officer shall be entitled under this Section to
the payment of expenses (including attorneys' fees) incurred by such Person in defending any
counterclaim, cross-claim, affirmative defense, or like claim of the Partnership in connection
with such Proceeding in advance of the final disposition of such proceeding only if such
proceeding was authorized by the Board of Control of the Partnership. W'ith respect to any
Person made or threatened to be made a party to any Proceeding, by reason of the fact that such
Person is or was an employee or agent of the Partnership, or is or was serving at the request of
the Partnership as a director, officer, employee, or agent of another corporation, partnership, joint
venture, trust, or other enterprise, the Partnership may, in its discretion and upon such terms and
conditions, if any, as the Board of Control deems appropriate, pay the expenses (including
attorneys' fees) incurred by such Person in defending any such Proceeding in advance ofits final
disposition.
( c) Claims. With respect to any Person made or 1hreatened to be made a
party to any Proceeding, by reason of the fact that such Person is or was a Partner, a member of
the Board of Control or Officer of the Partnership, or is or was serving at the request of the
Partnership as a director or officer of another corporation, partnership, joint venture, trust, or
other enterprise, the rights to indemnification and to the advancement of expenses conferred in
(a) and (b) of this Section 5.7 shall be contract rights. If a claim under (a) or (b) of this Section
5. 7with respect to such rights is not paid in full by the Partnership within sixty days after a
written demand has been received by the Partnership, except in the case of a claim for an
advancement of expenses by a Partner, an Officer or member of the Board of Control of the
Partnership, in which case the applicable period shall be twenty days, the Person seeking to
enforce a right to indenmification or an advancement of expenses herew1der may at any time
thereafter bring suit against the Partnership to recover the unpaid amount of the claim. If
successful in whole or in part in any such suit, or in a suit brought by th1~ Partnership to recover
an advancement of expenses pursuant to the tenns of an undertaking, th1~ Person seeking to
enforce a right to indemnification or an advancement of expenses hereunder or the Person from
whom the Partnership seeks to recover an advancement of expenses shaU also be entitled to be
paid the expenses (including attorneys' fees) of prosecuting or defendin_g such suit. In any suit
brought by a Person seeking to enforce a right to indemnification hereunder (but not in a suit
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brought by a Person seeking to enforce a right to an advancement of expenses hereunder) it shall
be a defense that the Person seeking to enforce a right to indemnification has not met any
applicable standard for indemnification under applicable law. In any suit brought by the
Partnership to recover an advancement of expenses pursuant to the tenns of an undertaking, the
Partnership shall be entitled to recover such expenses upon a final adjudication that the Person
from whom the Partnership seeks to recover an advancement of expenseH has not met any
applicable standard for indemnification under applicable law. With resp,~ct to any suit brought
by a Person seeking to enforce a right to indemnification hereunder (including any suit seeking to
enforce a right to the advancement of expenses hereunder) or any suit brought by the Partnership
to recover an advancement of expenses pursuant to the terms of an undertaking, neither the
failure of the Partnership {including the members of the Board of Control, independent legal
counsel, or its Partner) to have made a determination prior to commencement of such suit that
indemnification of such Person is proper in the circumstances because such Person has met the
applicable standards of conduct under applicable law, nor an actual detemrination by the
Partnership (including the members of the Board of Control, independent legal counsel, or its
Partner) that such Person has not met such applicable standards of condu.ct, shall create a
presumption that such Person has not met the applicable standards of conduct or, in a case
brought by such Person seeking to enforce a right to indemnification, be a defense to such suit.
In any suit brought by a Person seeking to enforce a right to indemnification or to an
advancement of expenses hereunder, or by the Partnership to recover an advancement of
expenses pursuant to the terms of an undertaking, the burden of proving that the Person seeking
to enforce a right to indemnification or to an advancement of expenses or the Person from whom
the Partnership seeks to recover an advancement of expenses is not entitled to be indemnified, or
to such advancement of expenses, under this Section 5. 7 or otherwise shall be on the Partnership.
(d) Non•exclusive Rights. The indemnification and advancement of
expenses provided in this Section 5. 7 shall not be deemed exclusive of any other rights to which
any Person indemnified may be entitled under any agreement, consent of the Partners or
disinterested members of the Board of Control, or otherwise, both as to action in such Person's
official capacity and as to action in another capacity while holding such office, and shall continue
as to a Person who has ceased to be such Partner, member of the Board of Control, Officer,
employee, or agent and shall inure to the benefit of the heirs, executors, and administrators of
such Person.
( e) Insurance. The Partnership may purchase and maintain insurance on
behalf of any Person who is or was a Partner, member of the Board of Control, Officer,
employee, or agent of the Partnership, or is or was serving at the request of the Partnership as a
director, officer, employee, or agent of another corporation, partnership, joint venture, trust, or
other enterprise against any liability asserted against such Person and incurred by such Person in
any such capacity, or arising out of such Person's status as such, whethe:r or not the Partnership
would have the power to indemnify such Person against such liability w1der the provisions of this
Section 5.7 or otherwise.
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SECTION 6 • ACCOUNTING, RECORDS AND REPORTS
6.1 Fiscal Year. The fiscal year of the Partnership shall be the calendar year.
6.2 Method of Accounting. Unless otherwise provided herein. the Partnership,s
books of account shall be maintained in accordance with GAAP; provideg, however, that for. the
purposes of making allocations and distributions hereunder (including, without limitation,
distributions in liquidation of the Partnership in accordance with Capital Account balances as
required by Section 8.2(d)), Capital Accounts, Profits and Losses shall b,e determined in
accordance with federal income tax accounting principles utilizing the accrual method of
accounting, with the adjustments required by Treas. Reg. § 1. 704-1 (b) to properly maintain
Capital Accounts. Each Partner acknowledges that the Capital Account ·:,alances of the Partners
for the purposes described in the preceding sentence are not computed in accordance with GAAP
and accordingly that any GAAP :financial statements for the Partnership do not reflect their true
Capital Account balances for purposes of determining allocations and making liquidating
distributions to the Partners hereunder.
6.3 Books and Records and Inspection.
(a) Books of Account and Records. Proper and complete: records and books of
account of the Partnership's business, including all such transactions and other matters as are
usually entered into records and books of account maintained by Personn engaged in businesses
of like character or as are required by law, shall be kept by the Partnership at the Partnership's
principal office and place of business.
(b) Inspection. All books and records of the Partnership shall be open to
inspection and copying upon at least five (5) business days' prior written, notice by any of the
Partners or their representatives at any reasonable time during business hours and at such
Partner's expense. Any Partner who receives any proprietary information of the Partnership
pursuant to this Section 6.3(b) or otherwise shall hold such proprietary information in confidence
unless disclosure is required by law.
6.4 Financial Statements. As soon as practical after the end of each year, the Board of
Control shall cause to be furnished to each Partner financial statements 1:v.ith respect to each .fiscal
year of the Partnership, consisting of (a) a balance sheet showing the Pa:rtnership's :financial
position as of the end of such :fiscal year, (b) supporting profit and loss ~.tatements, and ( c) a
statement of cash flows for such year.
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6.5 Taxation.
(a) It is the intent of the Partners that the Partnership be taxed as a
partnership in the United States for U.S. federal, state and local income tax purposes. The
Partners hereby agree not to elect to be excluded from the application of Subchapter K of
Chapter 1 of Subtitle A of the Code or any similar state statute.
(b) Tax Elections and Reporting.
(i) Generally. The Partnership shall make the following
elections and take the following positions under United States income tax laws and regulations
and any similar state statutes:
(A) Adopt the calendar year as the annual accounting
period;
(B) Adopt the accrual method of accounting; and
(C) Insofar as permissible, report the Partnership's tax
attributes and results using -principles consistent
with those assumed in connection with entering into
this Agreement.
(ii) Code § 754 Election. The Board of Control shall, upon the
written request of any Partner, cause the Partnership to file an election under Code§ 754 and the
Treasury Regulations thereunder to adjust the basis oftb.e Partnership assets under Code§ 734(b)
or Code § 7 43 (b) and a corresponding election under the applicable sections of state and local
law.
(c) Partnership Tax ReturDB. The Partnership shall file a partnership
tax return in the United States at the end of each fiscal year. Other tax returns shall be prepared
in a manner directed by the Board of Control. Each Partner shall provide such information, if
any, as may be needed by the Partnership for purposes of preparing such. tax and information
returns, provided that such information is readily available from regularly ma:intained accounting
records. The Partnership shall deliver to each Partner a copy of the Partnership's federal and state
income tax and information returns for each fiscal year, together with 8.ll.Y additional tax-related
information in the possession of the Partnership that such Partner may reasonably and timely
request in order to properly prepare its own income tax returns.
( d) Tax Audits. PGen Energy Holdings shall be the 11tax matters
partner," as that term :is defined in Code § 6231(a)(7)(tbe "Tax Matters Partner") with all of the
rights, duties and powers provided for in Code §§ 6221 through 6234, inclusive. The Tax
Matters Partner, under the overall direction and control of the Board of Control, shall direct the
defense of any claims made by the Internal Revenue Service to the extent that such claims relate
to the adjustment of Partnership items at the Partnership level and, in connection therewith, shall
cause the Partnership to retain and to pay the fees and expenses of coun:,el and other advisors
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chosen by the Tax Matters Partner. The Tax Matters Partner shall promptly deliver to each
Partner a copy of all notices and communications with respect to income or similar taxes
received from the Internal Revenue Service or other taxing authority relating to the Partnership
which might materially adversely affect such Partner, and shall keep such Partner advised of all
significant developments in such matters coming to the attention of the Tax Matters Partner. All
expenses of the Tax Matters Partner and its agents (including reasonable internal time charges
and reasonable disbursements) and other fees and expenses in connection with such defense shall
be borne by the Partnership: provided, however, that amounts paid by the Partnership to the Tax
Matters Partner or any agent thereof under this Section 6.5( d) shall not duplicate any amount
paid by the Partnership under any management services agreement or similar agreement. Except
in the case of willful misconduct or gross negligence, neither the Tax Mc:.tters Partner nor the
Partnership shall be liable for any additional tax, interest or penalties payable by a Partner or any
costs of separate counsel chosen by such Partner to represent such Partne:r with respect to any
aspect of such challenge.
6.6 Bank Accounts. The operating bank accounts of the Partnership shall be
maintained in such bank or banks as may be designated and withdrawals from said accounts shall
be made as the Board of Control shall determine. The funds of the Partr.ership shall be deposited
in such account or accounts as are designated by the Board of Control. The Board of Control
may. at its discretion1 deposit funds of the Partnership in a central disbursing account maintained
by or in the name of one of the Partners in which funds of other Persons are also deposited,
provided that at all times, books of account are maintained which show the amount of funds of
the Partnership on deposit in such account and interest accrued with respect to such funds as
credited to the Partnership.
SECTION 7 -CHANGES IN MEMBERSIDP
7.1 New Partners. New Partners may be admitted to the Partnership only with
the prior written consent of each Partner.
7 .2 Transfer of Partnership futerests. A Partner shall not sell, assign or transfer
its interest in the Partnership without the prior written consent of the other Partners. Any such
purported sale, assignment, or transfer of a partnership interest by a Partner which has not been so
consented to in writing shall be null and void.
7.3 Conversion. Any General Partner may, upon thirty (30) days prior written
notice to the other Partners, convert all or a portion of its general partner interest to a limited partner
interest. Upon the conversion, such Partner shall become a Limited Partner, with all of the rights
and subject to all of the limitations of a Limited Partner hereunder, but re1aining its Capital Account
and financial rights -with respect to allocations and distributions in the same manner as then
provided in this Agreement. The converting Partner shall reasonably cooperate with the other
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Partners, at their request, to structure the conversion in a manner that will not cause a temrination of
the Partnership.
7.4 Effect. Neither the admission of a new Partner nor the transfer of a Partners
interest shall cause a dissolution or termination of the Partnership. The withdrawal of a Partner
from the Partnership or the conversion of a general partner interest to a limited partner interest shall
cause a dissolution of the Partnership only ifrequired by Section 8.l(c).
SECTION 8 -DISSOLUTION AND TERMINAT[ON
8.1 Events Causin!! Dissolution. The Partnership shdl be dissolved upon the
first to occur of the following events:
(a) the written consent of the Partners to dissolve the Partnership;
(b) a General Partner ceases to be a general partner of the Partnership, if:
(i) such Partner is not the sole General Partner and all remaining
General Partners elect within ninety (90) days after receiving knowledge of such cessation not to
continue the business of the Partnership; or
(ii) such Partner is the sole General Pwtner, unless all remaining
Partners agree in writing to continue the business of the Partnership and to admit one or more new
general partners;
( c) Entry of a decree of judicial dissolution under Act Section 17-802; or
( d) any other event which causes a dissolution of the Partnership under
the Act notwithstanding a provision of this Agreement to the contrary.
8.2 Procedures Upon Dissolution.
(a) General. In the event the Partnership disi,olves, it shall commence
winding up pursuant to the appropriate provisions of the Act and the procedures set forth in this
Section 8.2. Notwithstanding the dissolution of the Partnership, prior to the termination of the
Partnership, the business of the Partnership and the affairs of the Partners, as such, shall continue to
be governed by this Agreement.
(b) Control of Winding Up. The Board of Control shall have a.11 the
duties and responsibilities associated with the dissolution and winding up of the Partnership;
provided, however, that (i) if a General Partner at the time of such dissolution was the Partner with
respect to whom an event occurred causing such dissolution, then such winding up shall be
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conducted by the other General Partner, or if there is no General Partner other than the one with
respect to whom such an event has occurred, by a person selected by the Limited Partner (acting
without the participation of the Partner with respect to whom the event occurred causing such
dissolution) to wind up the Partnership for reasonable compensation (the: Board of Control, sucb
General Partner or such person selected by the Limited Partner, as the case may be, hereinafter
referred to as the "Liquidator"), and (ii) if the dissolution was caused by entry of a decree of judicial
dissolution pursuant to Section 8.l(c), the winding up shall be carried out in accordance with such
decree.
(c) Manner of Winding Up. Upon dissoluti.o:J. of the Partnership, the
Liquidator shall (i) cause the Certificate of Limited Partnership to be canceled as prescribed by the
Act Section 17-203, and (ii) determine the time, manner and terms of any sale or sales of
Partnership property pursuant to such winding up, consistent with its fic.uciary responsibility and
having due regard to the activity and condition of the relevant market and general financial and
economic conditions.
(d) Ap_plication of Assets. Upon dissolution of the Partnership, the
remaining assets shall be applied as follows:
(i) Creditors. First_, to payment of the liabilities of the
Partnership owing to third parties and to Partners. After payment of any such lmown liabilities, the
Liquidator shall set up such reserves as it deems reasonably necessai:y for any contingent or
unforeseen liabilities or obligations of the Partnership. Such reserves may be paid over by the
Liquidator to an escrow holder, to be held in escrow for the purpose of paying any such contingent
or unforeseen liabilities or obligatio~ and, at the expiration of such period as the Liquidator may
deem advisable, such reserves shall be distributed to the Partners or their assigns in the manner set
forth in Section 8.2( d)(ii) below.
(ii) · Partners. Second, to the Partners in accordance with their
Capital Account balances, after all allocations of profits or losses and after adjustment of the
Partners' Capital Account balances pursuant to the last sentence of this Section 8.2( d)(ii). If such
distributions are insufficient to return to any Partner the full amount of its Capital Account, he shall
have no recourse against the other Partners. If the Liquidator determines that the Partnership should
distribute any of its assets in kind, such assets shall be distributed on the basis of their fair market
values:, as determined by an appropriate appraisal procedure mutually agreed to by the Partners, and
the Capital Accounts of the Partners shall be adjusted prior to liquidating distributions being made
to reflect how any resulting gain or loss would have been allocated under Section 3.1 if such assets
had been sold
8.3 Termination of Partnership. Upon the completion of the liquidation of the
Partnership and the distribution of all Partnership assets, the Partnership's affairs shall terminate and
the General Partners, or if there is no General Partner, a majority of the Limited Partners, shall
cause to be executed and filed a Certificate of Cancellation of the Partnership's Certificate of
Limited Partnership, as well as any and all other documents required to effectuate the tennination of
the Partnership.
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SECTION 9 -MISCELLANEOUS
9 .1 Notices. Any written notice to any of the Partners or to the Partnership
required or pennitted hereunder shall be deemed to have been duly given on the date of service~ if
served personally on the party to whom such notice is to be given, or on th,~ fifth day after mailing if
mailed to such party by registered or certified mail, postage prepaid, and iu:ldressed to such party at
the address stated opposite its name below, or at such other address as may be specified by written
notice given to the Partnership by such party under this Section 9 .1.
PGen Energy Holdings:
SSPC:
Address
c/o PG&E National Energy Group
7500 Old Georgetown Road, 13th Floor
Bethesda, MD 20814
Attn: General Counsel
c/o PG&E National Energy Group
7500 Old Georgetown Road, 13th Floor
Bethesda, :MD 20814
Attn: General Counsel
9 .2 Binding Effect. This Agreement shall be bind.mg upon the respective
successors, assigns and legal representatives, and shall inure to the benefit of the permitted assigns,
of the parties hereto, except to the extent otherwise provided herein.
9 .3 Amendment. This Agreement may be amended, except as otherwise
provided herein, only upon the written consent of each Partner.
9.4 Entire Agreement. This Agreement constitutes fr.e entire understanding of
the parties hereto with respect to the subject matter hereof.
9.5 Severability. If any provisfon of this Agreement or the application thereof to
any party·or circumstances is held invalid or unenforceable, the remainder of this Agreement and
the application of such provision to other parties or circumstances shall not be affected thereby, and
to this end, the provisions hereof are declared severable.
9.6 Counterparts. This Agreement may be executed in one or more counterparts,
but all such counterparts shall constitute one and the same agreement.
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9.7 Applicable Law. Tb.is Agreement shall be deemed a. contract made under the
laws of the State of Delaware, and the rights and obligations of the parties hereto shall be governed
by and construed in accordance with the laws of such state.
[Remainder of Page Intentionally Left Blank]
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IN Wl1NES8 WHEREOF, the parties hereto have executed this
Agreement as of the date set forth in the preamble to this Agreement.
PG&E GENERATING ENERGY
HOLDINGS, INC.t a Delaware corporation
By:___.__/! _____ . C~1fu~~~-;l_....,./4 r/;Je'-----'-'· __ _
Name: I
Title: P. ChriSll!an Iribe
Presiclent
SPENCER STATION POWER
CORPORATION, a Delaware corporation
22
06/21/01 THU 15:34 FAX 6177883800 llSGEI\ LEGAL 141025
EXHIBIT A
General Partner:
PG&E Generating Energy Holdings, Inc. 2%
Limited Partner:
Spencer Station Power Corporation 98 %
23
OFFICER'S CERTIFICATE
I, Thomas B. King, hereby certify that I am the duly elected, qualified and
serving Executive Vice President of PG&E Energy Trading Holdings Corporation, a
California corporation (the "Company"). Capitalized terms used herein and not
otherwise defined herein shall have the meaning given to such terms in the Asset
Purchase Agreement (the "Agreement) dated as of June Jf!l, 2001, among Spencer
Station Generating Company, L.P., a Delaware limited partnership, the City of Denton,
Texas, a municipal corporation of the State of Texas and a home rule city, and PG&E
Generating Company, LLC, a Delaware limited liability company. This Certificate is
being delivered pursuant to Section 8.2(g) of the Agreement.
In the above capacity, I hereby certify on behalf of the Company, without
personal liability, the following matters:
(a) To my knowl~dge, the Company has in all material respects performed
and complied with the covenants and agreements contained in the Guarantee made by the
Company on the date hereof in favor of Denton (the "Guarantee") which are required to
be performed and complied with by it on or prior to the Closing Date.
(d) To my knowledge, the representations and warranties of the Company set
forth in the Guarantee are true and correct in all material respects as of the date hereof as
though made at and as of the date hereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
DAI :\264896\01\5_#801 !.DOC\78599.0028
IN WITNESS WHEREOF, I have duly executed this Certificate this -~ day of
June, 2001.
DAI :\264896\01\5_#801 !.DOC\78599.0028
PG&E ENERGY TRADING HOLDINGS
CORPORATION
By: ~vto ?o-k r
Name: Thomas B. King j
Title: Executive Vice President
2
. ..
OFFICER'S CERTIFICATE
I, Thomas B. King, hereby certify that I am the duly elected, qualified and
serving Executive Vice President of PG&E Energy Trading Holdings Corporation, a
California corporation and the sole general partner of PG&E Energy Trading-Power,
L.P., a Delaware limited partnership (the "Company"). Capitalized terms used herein
and not otherwise defined herein shall have the meaning given to such terms in the Asset
Purchase Agreement (the "Agreement") dated as of June'M,_, 2001, among Spencer
Station Generating Company, L.P., a Delaware limited partnership, the City ofDento~
Texas, a municipal corporation of the State of Texas and a home rule city, and PG&E
Generating Company, LLC, a Delaware limited liability company. This Certificate is
being delivered pursuant to Section 8.2(g) of the Agreement.
In the above capacity, I hereby certify on behalf of the Company, without
personal liability, the following matters:
(a) To my knowledge, the Company has in all material respects performed
and complied with the covenants and agreements contained in the Transition Power
Agreement and Power Transfer Agreement (and the agreements required to be entered
into by those agreements) which are required to be performed and complied with by it on
or prior to the Closing Date.
(b) To my knowledge, the representations and warranties of the Company set
forth in the Transition Power Agreement and Power Transfer Agreement (and the
agreements required to be entered into by those agreements) are true and correct in all
material respects as of the date hereof as though made at and as of the date hereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK}
· DA I :\264893\02\5 _# 502 !.DOC\ 78599 .0028
IN WITNESS WHEREOF, I have duly executed this Certificate this VZCf,/tt day of
June, 2001.
DAI :\264893\02\5 _#502!.DOC\78599.0028
PG&E ENERGY TRADING-POWER, L.P.
By: PG&E Energy Trading Holdings Corporation,
its General Partner
By: ~<Ao /~j
Name: Thomas B. King~
Title: Executive Vice President
2
, .
OFFICER'S CERTIFICATE
I, Thomas, B. King, hereby certify that I am the duly elected, qualified and
serving Executive Vice President of PG&E Generating Company, LLC, a Delaware
limited liability company (the "Company"). Capitalized terms used herein and not
otherwise defined herein shall have the meaning given to such terms in the Asset
Purchase Agreement (the "Agreement") dated as of June~' 2001, among the
Company, the City of Denton, Texas, a municipal corporation of the State of Texas and a
home rule city ("Denton"), and Spencer Station Generating Company, L.P ., a Delaware
limited partnership. This Certificate is being delivered pursuant to Sections 8.2(f) and (g)
of the Agreement.
In the above capacity, I hereby certify on behalf of the Company, without
personal liability, the following matters:
(a) To my knowledge, the Company has in all material respects performed
and complied with the covenants and agreements contained in the Agreement which are
required to be performed and complied with by it on or prior to the Closing Date
including, without limitation, execution and delivery of the Ancillary Agreements.
(b) To my knowledge, the representations and warranties of the Company set
forth in the Agreement are true and correct in all material respects as of the date hereof as
though made at and as of the date hereof.
(c) To my knowledge, the Company has in all material respects performed
and complied with the covenants and agreements contained in the Guarantee made by the
Company on the date hereof in favor of Denton (the "Guarantee") which are required to
be performed and complied with by it on or prior to the Closing Date.
(d) To my knowledge, the representations and warranties of the Company set
forth in the Guarantee are true and correct in all material respects as of the date hereof as
though made at and as of the date hereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
DAI :\262363\01\SMFVOI !.DOC\78599.0028
IN WITNESS WHEREOF, I have duly executed this Certificate this 15ff4 day of
June, 2001.
PG&E GENERA TING COMP ANY, LLC
By: ~MM~
Name: Thomas B. King
Title: Executive Vice President
DAI :\262363\01\SMFV0I !.DOC\78599.0028 2
PG&E Generating Company, LLC
Assistant Secretary's Certificate
June11_, 2001
Reference is hereby made to that certain Asset Purchase Agreement (the
"Agreement") dated June14-:, 2001 , by and among the City of Denton, Texas, a
municipal corporation of the State of Texas and a home rule city, Spencer Station
Generating Company, L.P., a Delaware limited partnership, and PG&E Generating
Company, LLC, a Delaware limited liability company (the "Company"). Pursuant to
Sections 3.6(d) and (e) of the Agreement, the undersigned hereby certifies that he is the
Assistant Secretary of the Company, and as such officer, hereby certifies, in his capacity
as such and not individually, as follows:
1. Attached hereto as Exhibit A is a true, correct and complete copy
of resolutions that have been duly adopted by the Board of Control of the Company
authorizing the execution and delivery by the Company of the Agreement and all of the
other agreements and instruments to be executed and delivered by the Company in
connection therewith, and the consummation of the transactions contemplated thereby.
None of such resolutions have been amended, modified or repealed in any respect, and all
of such resolutions are in full force and effect on the date hereof.
2. The persons listed on Exhibit B have been duly elected or
appointed, have been duly qualified, have been authorized to execute and deliver the
Agreement and all of the other agreements and instruments contemplated thereby, and on
the date hereof, are officers of the Company, holding the respective offices set forth
opposite their names, and the signatures set forth opposite their names are their genuine
signatures.
3. Attached hereto as Exhibit C is a true, correct and complete copy
of the Amended and Restated Limited Liability Company Agreement of the Company, as
in effect on the date hereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
DAl:\262348\02\SMFG02!.DOC\78599.0028
IN WITNESS WHEREOF, the undersigned has hereunto set his name on
behalf of the Company and not individually.
PG&E GENERATING COMPANY,
LLC 02 ~ By:1LZ-~
Name: Peter E. Meier
Title: Assistant Secretary
The undersigned hereby certifies that he is the duly elected, qualified and acting President
and Chief Operating Officer of the Company and hereby certifies that Peter E. Meier is
the duly elected, qualified and acting Assistant Secretary of the Company and that the
above signature is his genuine signature.
P. Chrisman Iribe, President & COO
DA I :\262348\02\5MFG-02! .DOC\78599 .0028 2
EXHIBIT A
See Attached.
DA I :\262348\0215MFG02! .DOC\78599 .0028 3
PG&E GENERATING COMPANY, LLC
ACTION BY WRITTEN CONSENT
OF THE BOARD OF CONTROL
June1f/.,2001
The undersigned, being all of the members of the Board of Control of PG&E
Generating Company, LLC, a Delaware limited liability company (the "Company"),
pursuant to the Delaware Limited Liability Company Act, hereby execute this consent for
the purpose of adopting the following resolutions:
WHEREAS, there has been submitted to the Board of Control of the Company (i)
that certain Asset Purchase Agreement dated as of June"Za, 2001 (the "Purchase
Agreement") by and among The City of Denton, Texas ("COD"), Spencer Station
Generating Company, L.P. ("SSGC") and the Company, and (ii) a Guarantee Agreement
in the form attached as Exhibit F to the Purchase Agreement (the "Guarantee"), pursuant
to which the Company will guarantee to COD the performance of all obligations of
SSGC under the Purchase Agreement, subject to the terms and conditions set forth in the
Guarantee; and
WHEREAS, the Board of Control has examined the drafts and the principal terms
and provisions of the Purchase Agreement and the Guarantee; and
WHEREAS, on the basis of review of the Purchase Agreement and the Guarantee,
and the principal terms and provisions of the transactions provided for therein, the Board
of Control deems it advisable and in the best interest of the Company that the transactions
referred to in the Purchase Agreement and the Guarantee be consummated substantially
in accordance with the terms and provisions thereof, and that the President, any Vice
President, Treasurer, Assistant Treasurer, Secretary, Assistant Secretary or any other
officer of the Company (the "Authorized Signatories") be severally authorized to take all
actions to execute and deliver all certificates, instruments, agreements, and other
documents necessary to effect and carry out any and all acts and transactions
contemplated by the Purchase Agreement and the Guarantee.
NOW, THEREFORE, BE IT RESOLVED, that the Company execute the
Purchase Agreement and make the Guarantee and perform the agreements contemplated
to be performed by it thereunder and that the Authorized Signatories are severally
authorized to execute and deliver, in the name and on behalf of the Company, the
Purchase Agreement and the Guarantee to be substantially in the form thereof approved
by this Board of Control, with such changes therein as shall be approved by the
Authorized Signatory executing and delivering the same, such approval to be evidenced
conclusively by such execution and delivery; and
RESOLVED, that the form of and each of the terms and provisions contained in
the Purchase Agreement and the Guarantee are hereby authorized and approved in each
and every respect; and each and every transaction effected or to be effected pursuant to
and substantially in accordance with the terms of the Purchase Agreement and the
Guarantee, including, but not limited to, those specific transactions which are described,
authorized and approved in each of these resolutions, are hereby authorized and approved
in each and every respect; and
RESOLVED, that the Authorized Signatories be and hereby are severally
authorized to do and perform or cause to be done and performed, in the name of and on
behalf of the Company, all other acts, to pay or cause to be paid on behalf of the
Company, all related costs and expenses and to execute and deliver or cause to be
executed and delivered all other notices, requests, demands, directions, consents,
approvals, orders, applications, agreements, certificates, undertakings, supplements,
amendments and further assurances or other communications of any kind under the
corporate seal of the Company or otherwise as he, she or they may deem necessary,
advisable or appropriate to effect the intent of the foregoing resolutions or to comply with
the requirements of the instruments approved and authorized by the foregoing
resolutions; and
RESOLVED, that any and all acts of the Authorized Signatories of the Company,
which acts would have been authorized by the foregoing resolutions except that such acts
were taken prior to the adoption of such resolutions, are hereby ratified, confirmed,
approved and adopted as the acts of the Company.
Thomas G. Boren
Peter A. Darbee
? C~cw}jj,JJP
P. Chrisman lrib
Bruce R. Worthington
J :\LEGAL\CORPORAl\USGen-LLC\r'denton-060 I .doc 2
limited to, those specific transactions which are described, authorized and approved in each of
these resolutions, are hereby authorized and approved in each and every respect; and
RESOLVED, that the Authorized Signatories be and hereby are severally authorized to
do and perform or cause ter be done and performed, in the name of and on behalf of the
Company, all other acts, to pay or cause to be paid on behalf of the Company, all related costs
and expenses and to execute and deliver or cause to be executed and delivered all other notices,
requests, demands, directions, consents, approvals, orders, applications, agreements, certificates,
undertakings, supplements, amendments and further assurances or other communications of any
kind under the corporate seal of the Company or otherwise as he, she or they may deem
necessary, advisable or appropriate to effect the intent of th.e foregoing resolutions or to comply
with the requirements of the instruments approved and authorized by the foregoing resolutions;
and
RESOLVED, that any and all acts of the Authorized Signatories of the Company, which
acts would have been authorized by the foregoing resolutions except that such acts were taken
prior to the adoption of such resolutions, are hereby ratified, confirmed, approved and adopted as
the acts of the Company.
Thomas G. Boren
Peter A. Darbee
P. Chrisman Iribe
;Sr"-l'\.w~
Bruce R. Worthington
EXHIBITB
Name Office Signature
P. Chrisman Iribe President & COO e_ ct.,.;,,~L&e_,
Thomas B. King Executive Vice President 7tw,,,A,~
John R. Cooper Senior Vice President & CFO ~~
David N. Bassett Vice President, Controller & ~~ Treasurer
Peter E. Meier Assistant Secretary ifLf L
DAl :\262348\01\SMFG0J !.DOC\78599.0028 4
Wfrt jtaft of Wtxas
SECRETARY OF STATE
IT IS HEREBY CERTIFIED that
SPENCER STATION GENERATING COMPANY, L.P.
File No. 150581-11
a DELAWARE limited partnership, has filed a registration as a foreign limited partnership
and the partnership is currently authorized to transact business in Texas.
IT IS FURTHER CERTIFIED that the following documents are on file for this partnership
as of this date:
APPLICATION FOR REGISTRATION AS A
FOREIGN LIMITED PARTNERSHIP APRIL 24, 2001
IN TESTIMONY WHEREOF, I have hereunto
signed my name officially and caused to be
impressed hereon the Seal of State at my office in
Austin, Texas on June 18, 2001.
Henry Cuellar BAM
Secretary of State
State of Delaw are PAGE 1
Office of t he Secre t ary of State
I, HARRIET SMITH WINDSOR, SECRETARY OF STATE OF THE STATE OF
DELAWARE, DO HEREBY CERTIFY THAT "SPENCER STATION GENERATING
COMPANY, L.P." IS DULY FORMED UNDER THE LAWS OF THE STATE OF
DELAWARE AND IS IN GOOD STANDING AND HAS A LEGAL EXISTENCE NOT
HAVING BEEN CANCELLED OR REVOKED SO FAR AS THE RECORDS OF THIS
OFFICE SHOW AND IS DULY AUTHORIZED TO TRANSACT BUSINESS.
THE FOLLOWING DOCUMENTS HAVE BEEN FILED:
CERTIFICATE OF LIMITED PARTNERSHIP, FILED THE ELEVENTH DAY
OF APRIL, A.O. 2001, AT 9:01 O'CLOCK A.M.
AND I DO HEREBY FURTHER CERTIFY THAT THE AFORESAID
CERTIFICATES ARE THE ONLY CERTIFICATES ON RECORD OF THE
AFORESAID LIMITED PARTNERSHIP.
AND I DO HEREBY FURTHER CERTIFY THAT THE ANNUAL TAXES HAVE
NOT BEEN ASSESSED TO DATE.
3379884 8310
010290698
~~~<#-~
Harriet Smith Windsor, Secretary of State
AUTHENTICATION: 1194122
DATE: 06-18-01
Wfrc jtatc of Wcxas
SECRETARY OF STATE
IT IS HEREBY CERTIFIED that
PG&E ENERGY TRADING-POWER, L.P.
File No. 110010-11
a DELAWARE limited partnership, has filed a registration as a foreign limited partnership
and the partnership is currently authorized to transact business in Texas.
IT IS FURTHER CERTIFIED that the following docun1ents are on file for this partnership
as of this date:
APPLICATION FOR REGISTRATION AS A
FOREIGN LIMITED PARTNERSHIP
CHANGE OF REGISTERED OFFICE AND/OR AGENT
CHANGE OF REGISTERED OFFICE AND/OR AGENT
JUNE 23, 1998
JUNE 20,200
SEPTEMBER 27, 2000
IN TESTIMONY WHEREOF, I have hereunto
signed my name officially and caused to be
impressed hereon the Seal of State at my office in
Austin, Texas on June 20, 2001.
enry Cuellar
Secretary of State VT
State of Delaware PAGE 1
Office of the Se cretary of State
I, HARRIET SMITH WINDSOR, SECRETARY OF STATE OF THE STATE OF
DELAWARE, DO HEREBY CERTIFY THAT "PG&E ENERGY TRADING -POWER,
L. P. " IS DULY FORMED UNDER THE LAWS OF THE STATE OF DELAWARE AND
IS IN GOOD STANDING AND HAS A LEGAL EXISTENCE NOT HAVING BEEN
CANCELLED OR REVOKED SO FAR AS THE RECORDS OF THIS OFFICE SHOW
AND IS DULY AUTHORIZED TO TRANSACT BUSINESS.
THE FOLLOWING DOCUMENTS HAVE BEEN FILED:
CERTIFICATE OF LIMITED PARTNERSHIP, FILED THE FIRST DAY OF
JULY, A.D. 1992, AT 10 O'CLOCK A.M.
CERTIFICATE OF AMENDMENT, CHANGING ITS NAME FROM "INDIANA
GENERATING COMPANY, L. P. " TO "USGEN POWER SERVICES, L. P. ",
FILED THE TWENTY-EIGHTH DAY OF MARCH, A.D. 1995, AT 10:30
O'CLOCK A.M.
CERTIFICATE OF AMENDMENT, CHANGING ITS NAME FROM "USGEN
POWER SERVICES, L.P." TO "PG&E ENERGY TRADING -POWER, L.P.",
FILED THE THIRTY-FIRST DAY OF DECEMBER, A.D. 1997, AT 12:30
O'CLOCK P.M.
RESTATED CERTIFICATE, FILED THE SEVENTEENTH DAY OF MARCH,
A.D. 1999, AT 5 O'CLOCK P.M.
RESTATED CERTIFICATE, FILED THE FIFTEENTH DAY OF APRIL, A.D.
2302647 8310
010294258
~~ ~91--~
Harriet Smith Windsor, Secretary of State
AUTHENTICATION: 1197951
DATE: 06-19-01
State of Delaware
PAGE 2
Office of the Secretary of State
1999, AT 1 O'CLOCK P.M.
CERTIFICATE OF AMENDMENT, FILED THE FIFTEENTH DAY OF
SEPTEMBER, A.O. 2000, AT 9 O'CLOCK A.M.
AND I DO HEREBY FURTHER CERTIFY THAT THE AFORESAID
CERTIFICATES ARE THE ONLY CERTIFICATES ON RECORD OF THE
AFORESAID LIMITED PARTNERSHIP.
AND I DO HEREBY FURTHER CERTIFY THAT THE ANNUAL TAXES HAVE
BEEN PAID TO DATE.
2302647 8310
010294258
~~ ~91-~
Harriet Smith Windsor, Secretary of State
AUTHENTICATION: 1197951
DATE: 06-19-01
t
~
~ .. ~
_., . ,,..
~,t'. ~ !ft.,'
SECRETARY OF STATE
CERTIFICATE OF STATUS
DOMESTIC CORPORATION
I, BILL JONES, Secretary of State of the State of California, hereby certify:
That on the 18th day of October, 1991, PG&E ENERGY TRADING HOLDINGS
CORPORATION became incorporated under the laws of the State of California
by filing its Articles of Incorporation in this office; and
That no record exists in this office of a certificate of dissolution of said
corporation nor of a court order declaring dissolution thereof, nor of a merger or
consolidation which terminated its existence; and
That said corporation's corporate powers, rights and privileges are not
suspended on the records of this office; and
That according to the records of this office, the said corporation is authorized to
exercise all its corporate powers, rights and privileges and is in good legal
standing in the State of California; and
That no information is available in this office on the financial condition, business
activity or practices of this corporation.
NP-24 A (Rev. 1-96)
IN WITNESS WHEREOF, I execute this
certificate and affix the Great Seal
of the State of California this day
of June 22, 2001.
BILL JONES
Secretary of State
ch
OSP 99 21639 ~ =
State of Delaw are PAGE 1
Office of the Secretary of St at e
I, HARRIET SMITH WINDSOR, SECRETARY OF STATE OF THE STATE OF
DELAWARE, DO HEREBY CERTIFY THAT "PG&E GENERATING COMPANY, LLC"
IS DULY FORMED UNDER THE LAWS OF THE STATE OF DELAWARE AND IS IN
GOOD STANDING AND HAS A LEGAL EXISTENCE NOT HAVING BEEN
CANCELLED OR REVOKED SO FAR AS THE RECORDS OF THIS OFFICE SHOW
AND IS DULY AUTHORIZED TO TRANSACT BUSINESS.
THE FOLLOWING DOCUMENTS HAVE BEEN FILED:
CERTIFICATE OF FORMATION, FILED THE NINETEENTH DAY OF
DECEMBER, A.O. 1997, AT 9:30 O'CLOCK A.M.
CERTIFICATE OF AMENDMENT, FILED THE EIGHTH DAY OF FEBRUARY,
A.O. 1999, AT 9 O'CLOCK A.M.
CERTIFICATE OF AMENDMENT, CHANGING ITS NAME FROM "U.S.
GENERATING COMPANY, LLC" TO "PG&E GENERATING COMPANY, LLC",
FILED THE FIRST DAY OF JUNE, A.O. 1999, AT 9 O'CLOCK A.M.
AND I DO HEREBY FURTHER CERTIFY THAT THE AFORESAID
CERTIFICATES ARE THE ONLY CERTIFICATES ON RECORD OF THE
AFORESAID LIMITED LIABILITY COMPANY.
AND I DO HEREBY FURTHER CERTIFY THAT THE ANNUAL TAXES HAVE
BEEN PAID TO DATE.
2836246 8310
010290709
..JI~~<#--~
Harriet Smith Windsor, Secretary of State
AUTHENTICATION: 1194128
DATE: 06-18-01
Exhibit G
EASEMENT, LICENSE AND ATTACHMENT AGREEMENT
THIS EASEMENT, LICENSE AND ATTACHMENT AGREEMENT (this
"Agreement"), dated as. of June ~. 2001, is entered into by and between THE CITY OF
DENTON, TEXAS, a· municipal corporation of the State of Texas and a home rule
city("Denton"), having an office at c/o Denton Municipal Electric, 901-A Texas Street, Denton,
Texas 76201, and SPENCER STATION GENERATING COMPANY, L.P. ("Generating
Company"), a limited partnership organized and existing under the laws of the State of Delaware
and having an office at 7500 Old Georgetown Road, Bethesda, Maryland 20814. Denton and
Generating Company may be referred to individually as a "Party" and collectively as the
"Parties."
RECITALS
A. Denton and Generating Company have entered into an Asset Purchase
Agreement (the "APA"), dated June Zfi_, 2001, for the sale and conveyance of the fossil-fired
electric generating plant known as Spencer Station and associated assets and liabilities ("Spencer
Station").
B. After closing pursuant to the AP A, Denton will continue to own and operate
certain assets used in the normal conduct of its transmission and distribution business and other
municipal functions, some of which will be located at Spencer Station.
C. Following the conveyances contemplated by the APA, Denton will continue to
own the Denton Property ( as hereinafter defined) and certain personal property located thereon
and upon the Generating Company Property (as hereinafter defined), which Denton Uses (as
hereinafter defined) and will continue to Use in the normal conduct of its transmission and
distribution business and other municipal functions. Further, Denton and Generating Company
have entered into a Continuing Site/Interconnection Agreement (the "Connection Agreement"),
dated as of June 7.:1_, 2001, whereby Denton agrees to provide certain connection services to
Generating Company for the Generating Company Property at Spencer Station, and Generating
Company agrees to provide Denton Access to the Generating Company Property at Spencer
Station.
D. In order for the Parties each to (i) enjoy the full benefit of their respective
property rights, real or personal, and conduct their respective businesses thereat (ii) fulfill legal
requirements, and (iii) comply with their respective agreements under the Connection
Agreement, each Party requires certain easements, license, rights-of-way and/or attachment
rights in, on, over and above, or with respect to, real and /or personal property of the other Party.
1297297 vA; RT0104A.DOC
AGREEMENT
NOW, THEREFORE, the Parties, in consideration of the mutual covenants and
agreements contained herein and in the AP A and the Connection Agreement, and for One Dollar
($1.00) and other good and valuable consideration, the receipt whereof and sufficiency of which
are hereby acknowledged, each intending to be legally bound and to bind their respective
successors and assigns, hereby mutually agree as follows:
1. DEFINITIONS
1.1 Definitions in this Agreement. As used in this Agreement in addition
to terms defined in the heading and Recitals sections of this Agreement:
"Access" means, solely for the purposes authorized by this Agreement, and subject to
the conditions set forth in this Agreement and a Party's right to impose reasonable security and
safety restrictions protecting its officers, employees, agents, consultants, contractors,
subcontractors, invitees, property and confidential information, full and unimpeded access, in
common with Grantor over and through existing roads, paths, walkways, corridors, hallways,
doorways, and other means of entry or exit, as exist now and from time to time on Grantor's
property or, where no means of access exists, over and through those areas of Grantor's property
or improvements which are (i) reasonably necessary for achieving Grantee's underlying
purposes, and (ii) least likely, out of the alternatives reasonably available, to impede or damage
the property or operation of any Party hereto. Access shall also include access and right-of-way
for Grantee's employees, agents, consultants, contractors, subcontractors, vehicles, trucks,
trailers, heavy machinery, equipment, materials, and all other items reasonably necessary for
achieving Grantee's purposes as authorized hereunder.
"Affiliate" has the meaning set forth in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended.
"Agreement" means this Easement, License and Attachment Agreement.
"Communication Facilities" means wires, cables, fiber optic cables, devices, poles,
lines of poles, switches, microwave towers and dishes, antennae and other related equipment,
facilities and appurtenances, including all additions, replacements and expansions thereto, now
or hereafter installed or located on Generating Company Property, both above-ground and
underground, whether owned by a Party hereto or by a third party, and which are Used for the
transmission of telecommunications of any kind, including radio, telephone, microwave, "pcs,"
television, computer data and any other communications, data and/or information of any kind.
"Connection Agreement" means the Continuing Site/Interconnection Agreement,
dated as of June1If-, 2001, between Denton and Generating Company.
"Connection Equipment" means all equipment necessary for the connection of the
Facilities to Denton's Transmission System, which is identified in the Connection Agreement.
2
1297297 vA; RT0104A.DOC
"Denton Property" means the real property described in Exhibit A and any
improvements or betterments thereto now or hereinafter situated thereon. A survey of the.
Denton Property is attached hereto as Exhibit A-1.
"Distribution of Electric Current" means local transmission and distribution of
electricity to Dentort's end users.
"Distribution Facilities" means towers, lines of towers, poles, lines of poles,
supporting structures, cables, crossarms, overhead and underground wires, guys, braces, ducts,
conduits, cables, anchors, lightning protective wires, and all related above-ground and
underground facilities (including Communication Facilities), appurtenances and equipment,
including all additions, replacements and expansions thereto, now or hereafter installed or
located on Generating Company Property, and/or which Denton may reasonably require now and
from time to time on Generating Company Property for Distribution of Electric Current.
Distribution Facilities do not include Transmission Facilities.
"Distribution Substation Improvements" means all buildings, fencing, structures,
fixtures, grounding wire, transformers, switchboxes, distribution boxes, and other improvements
(together with any subterranean footings, foundations, columns and piles supporting same, and
any related piping, pumps and other underground appurtenances that are an integral part thereof)
as well as all incidents thereof and appurtenances thereto, which are Used now or in the future as
electrical substations ( or components thereof) for Distribution of Electric Current, including all
additions, replacements and expansions thereto.
"Emergency Condition" means an imminent or occurring condition on the
Transmission System or the Distribution Facilities, or on the system of a neighboring utility, or
in the Facilities owned by Generating Company, that is likely to result in significant disruption of
service or damage to any of the foregoing, or is likely to endanger life, or materially endanger
property or the environment.
"ERCOT" shall mean the Electric Reliability Council of Texas, Inc., or its successors.
"Facility" or "Facilities" means the Units and equipment related to operating the
Units and the Connection Equipment.
"Generating Company" means Spencer Station Generating Company, L.P., its
Affiliates, successors and assigns, as well as their respective officers, employees, consultants,
agents, contractors, subcontractors and invitees.
"Generating Company Improvements" means any and all buildings, structures, and
facilities situated or erected on Generating Company Property.
"Generating Company Property'' means the real property described in Exhibit B,
attached hereto and incorporated herein, by reference, as well as any and all Generating
Company Improvements now or hereafter situated or erected thereon, and all appurtenant rights,
easements, licenses, permits, rights of way and interests, including all rights, easements, licenses,
permits, rights of way and licenses to cross over and under, and to install and Use equipment,
lines, cables, conduits, pipelines, utility lines and other improvements and facilities. A survey of
the Generating Company Property is attached hereto as Exhibit B-1.
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"Good.Utility Practice" shall mean any of the practices, methods, and acts engaged in
or approved by a significant portion of the electric industry during the relevant time period, or
any of the practices, methods, and acts that, in the exercise of reasonable judgment in light of the
facts known at the time the decision was made, could have been expected to accomplish the
desired result at a reasonable cost consistent with good business practices, reliability, safety, and
expedition. Good utility practice is not intended to be limited to the optimum practice, method,
or act, to the exclusion of all others, but rather is intended to include acceptable practices,
methods, and acts generally accepted in the region.
"Grantee" means the Party or Parties who enjoy the principal benefit of the
referenced easement, license, right (including attachment rights) privilege or right-of-way.
"Grantor" means the owner or owners of the property and/or improvement affected
by the referenced easement license, right (including attachment rights), privilege or right-of-way.
"Metering Equipment" means metering related equipment facilities and
appurtenances installed, Used or maintained pursuant to the Connection Agreement to measure
the transfer of electric power between the Parties.
"PUCT" shall mean the Public Utility Commission of Texas.
"Qualified Personnel" means individuals trained for their positions pursuant to Good
Utility Practice.
"RTUs" means remote terminal units Used by any Party for gathering and
transferring information pertaining to generation, transmission and distribution operating
parameters.
"State" means the State of Texas.
"Transmission of Electric Current" means the transmission of such current typically
over long distances and at voltages not commonly used for service to end use customers.
"Transmission Facilities" means towers, lines of towers, poles, lines of poles,
supporting structures, cables, crossarms, overhead and underground wires, guys, braces, ducts,
conduits, cables, anchors, lightning protective wires, and all related above-ground and
underground facilities (including Communication Facilities), appurtenances and equipment,
including all additions, replacements and expansions thereto, now or hereafter installed or
located on Generating Company Property and/or which Denton may reasonably require now and
from time to time on Generating Company Property for the Transmission of Electric Current.
Transmission Facilities do not include Distribution Facilities.
"Transmission System" means all facilities of Denton, the Texas Municipal Power
Agency and others that are classified by ERCOT or PUCT as part of the transmission function.
"Unit" means any of the following individual units or equipment ( collectively
referred to herein as the "Units"): Spencer Station Units 1, 2, 3, 4 and 5 and the two diesel units
located on the Generating Company Property.
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"Use''. · means to operate, maintain, repair, upgrade, clean, install, add to, alter,
remove, inspect, construct, modify, restore, rebuild, replace, relocate and expand, subject to the
provisions of Section 2.6 ( c) hereof.
2. EASEMENTS
2.1 Grant of Easements to Denton. Generating Company does hereby
grant unto Denton the following easements on the Generating Company Property for the
following purposes:
(a) A sixteen (16) foot wide utility easement for the installation,
operation, repair and maintenance of above and/or below ground power and other utility lines
utilized in connection with the transmission and distribution business and other municipal
functions conducted upon the Denton Property, as more particularly described in Exhibit C
attached hereto.
(b) A twenty (20) foot wide utility easement for the installation,
operation, repair and maintenance of above and/or below ground power and other utility lines
utilized in connection with the transmission and distribution business and other municipal
functions conducted upon the Denton Property, as more particularly described in Exhibit D
attached hereto.
( c) A twenty-five (25) foot wide utility easement for the
installation, operation, repair and maintenance of above and/or below ground power and other
utility lines utilized in connection with the transmission and distribution business and other
municipal functions conducted upon the Denton Property, as more particularly described in
Exhibit E attached hereto.
( d) An easement for all purposes deemed reasonably necessary by
Denton (or, as appropriate, the owner of the Denton Property) to exercise any right or fulfill any
obligation under the Connection Agreement, including the right to Use any improvements
constructed or installed in connection therewith.
(e) An easement for, and Access to: (i) that certain tower known as
the "Spencer Tower" (and any replacements thereof) located upon the Generating Company
Property on which certain Communication Facilities and other facilities are owned by Denton, its
lessees or other parties of portions of said tower site, and (ii) that certain Water Production
Carbon House which contains the activated carbon feed system for the water supply.
(f) An easement of Access to that certain generating building (and
any replacements thereof) located upon the Generating Company Property in which certain of
Denton's Distribution Facilities and Transmission Facilities are located. Such easement shall
include the right to have keys, access codes or other access methods necessary to enter such
generating building. Denton shall, however, (i) provide Generating Company with a list of no
more than five (5) Qualified Personnel authorized to maintain keys, access codes or other access
methods to the generating building and (ii) limit access to such keys, access codes or other
access methods to the generating building to Qualified Personnel. In the event any such key is
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lost, or Denton has any reason to believe security of the keys and/or access codes has been
compromised, Denton shall notify Generating Company as soon as practicable. Furthermore, the
exercise of the easement right set forth in this subparagraph shall be subject to the provisions of
the Connection Agreement including, without limitation, Exhibit E thereof.
(g) An easement of Access to the Generating Company Property
for the purposes of exercising any of the rights granted in this Section 2.1 or in the Connection
Agreement or the AP A.
(h) The easements granted pursuant to this Section 2.1 shall be
deemed easements appurtenant to the Denton Property and shall run with such property.
(i) Any easement granted pursuant to Section 2.l(a), (b), (c) or (d)
includes the right to (i) trim, cut, treat and/or remove, by manual, mechanical, and chemical
means, any and all trees, brush, structures and other obstructions within the easement area, as
well as such trees, brush, structures and vegetation outside of the easement area deemed
reasonably necessary by Denton for the safe and secure operation of its facilities; and (ii) Access
to Generating Company Property for the purpose of performing the aforementioned acts.
(j) Denton's exercise of the rights, easements, privileges and
licenses granted to it pursuant to this Section 2.1 shall be limited to Qualified Personnel, or
employees of contractors employed by Denton who, in either event are under Denton's and/or-its
contractor's direct supervision and whose duties include, or who are engaged for the purpose of,
Use of the property described in this Section 2.1.
2.2 Reservation by Generating Company of Certain Rights. Without
limitation of the rights of Generating Company as the fee owner of the Generating Company
Property, and subject to the provisions hereof, Generating Company reserves to itself, from the
easements granted pursuant to Section 2.1 hereof, the following rights, subject, however, to the
provisions of the final paragraph of this Section 2.2:
(a) the rights to (i) keep and maintain Generating Company
Property and all improvements and facilities owned by Generating Company and located within
the Generating Company Property in their present locations, and (ii) Use such Generating
Company Property and improvements and facilities in the manner described in the Connection
Agreement, and (iii) change the location of any of the Access easements provided for in Section
2.1 provided that (A) there is no interruption of Access available to Denton, (B) relocation of the
Access easement does not significantly inconvenience or materially adversely affect Denton's
enjoyment of any of its rights hereunder, (C) the relocation shall be at the Generating Company's
sole cost and expense and (D) Denton consents in writing to such relocation, such consent not to
be unreasonably withheld so long as the remaining conditions of this clause (iii) are satisfied;
and
(b) the right to have Access to all portions of the Generating
Company Property for any and all purposes, including, without limitation, maintenance of the
aforesaid Generating Company Property in the manner described in the Connection Agreement.
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1297297 vA; RT0104A.DOC
(c) Generating Company's exercise of the rights reserved to
Generating Company in this Section 2.2, and the easements, rights, privileges and license
granted to Generating Company in Section 2.3 shall be exclusively limited to Qualified
Personnel or employees of contractors employed by Generating Company who, in either event,
are under Generating Company's and/or its contractors' direct supervision and whose duties
include, or who are engaged for the purpose of Use of the property described in clause (a) of this
Section.
2.3 Grant of Easements, Right. Privilege and License from Denton to
Generating Company. Denton does hereby grant to Generating Company the following
easements, rights, privileges and license on and with respect to the Denton Property:
(a) A fifty (50) foot wide easement over the Denton Property to
Spencer Road from the Generating Company Property, as more particularly described in Exhibit
F attached hereto.
(b) An easement of Access to the Denton Property for the purposes
of exercising any of the rights granted in the Connection Agreement or the AP A.
( c) An easement of Access to designated parking areas ( current or
future) on the Denton Property for the purpose of parking for employees and visitors of
Generating Company.
( d) These easements shall be deemed easements appurtenant to the
Generating Company Property and shall run with such property.
2.4 General Scope of Easements.
(a) Except as otherwise provided in Sections 2.2 and 2.3 above and
Sections 2.4(b) and 2.4(c) below, each easement and each right, privilege and license granted
hereby is and shall be a perpetual grant, transfer, conveyance and right of Use (subject to the
terms of this Agreement) to Grantee thereof and to any future owner of the respective property
and/or improvements of Grantee. The cessation of Use of an easement, alone, shall not be
deemed an abandonment thereof resulting in a termination of such easement; provided, however,
that nothing shall prevent the Parties from mutually agreeing to terminate any easement granted
hereunder at any time. Notwithstanding the foregoing, all easements, rights, privileges and
licenses granted by this Agreement are and shall be subject to the terms and conditions of the
Connection Agreement.
(b) Any easement or right, privilege and license granted hereunder
for purposes of enabling a Party to exercise any right or fulfill any obligation set forth in the
Connection Agreement will continue for the term of the Connection Agreement, and thereafter if
and to the extent that the right or obligation (i) shall by its express terms survive the termination
or expiration of the Connection Agreement or (ii) is necessary for the conduct of business by
Grantee.
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(c) To the extent that any portion of Denton's Transmission
System consists of Distribution Facilities connected to Spencer Station Unit 1 and/or Unit 2 on _
the Generating Company Property which are physically located within the boundaries of either
Spencer Station Unit 1 or Unit 2 as of the closing date of the AP A, Denton will use
commercially reasonable efforts to physically separate and remove from the Units such
Distribution Facilities and replace them with connections to Denton's transmission facilities by
no later than December ·31, 2002, or such later date as may be mutually agreed to by the Parties.
Notwithstanding any other provision of this Agreement or the Connection Agreement, the
easement rights of Denton for the placement of Distribution Facilities within the boundaries of
Spencer Station Unit 1 and Spencer Station Unit 2 shall expire no later than December 31, 2002,
or such later date as may be mutually agreed to by the Parties.
( d) All equipment and facilities installed or maintained by Grantee
pursuant to an easement or right, privilege and license granted hereunder shall be maintained by
Grantee, at its sole cost and expense, in accordance with Good Utility Practice and the
Connection Agreement, and Grantee shall make all repairs and replacements necessary to keep
such equipment and facilities in such condition.
(e) Generating Company may not Use any portion of Generating
Company Property burdened by any easement, right or privilege granted to Denton hereunder if
such use would materially adversely affect the Use and enjoyment by Denton of the rights
granted to it hereunder, or materially increase the costs or risks associated with such Use.
(f) Denton .may not use any portion of Denton Property burdened
by any easement, right or privilege granted to Generating Company hereunder if such use would
materially adversely affect the Use and enjoyment by Generating Company of the rights granted
to it hereunder, or materially increase the cost or risks associated with such use.
(g) All easements granted herein shall be covenants running with
the land.
(h) The rights and easements granted hereby are subject to any
ex1stmg state of facts affecting the respective easement areas, and the parties make no
representation, covenant or warranty as to the condition of any such easement area.
2.5 Interpretation. The following shall apply in interpreting any easement
and any right, privilege and license granted pursuant to this Agreement:
(a) Each easement and each right, privilege and license granted
herein is irrevocable except by written agreement of the parties.
(b) With respect to any easement created by this Agreement, the
words "in " "upon " "to " "on " "over " "above " "through" and/or "under" shall be interpreted to ' ' ' ' , ' include all of such terms.
8
1297297 vA; RT0104A.DOC
( c) Except as otherwise specifically indicated herein, each
easement and each right privilege and license granted herein may be enjoyed without charge or
fee to Grantee of the easement.
( d) Each easement and each right, privilege and license granted
herein is also a grant ofthe additional right of Access over Grantor's property to accomplish the
purpose of such easement or right, privilege and license, to perform any obligations hereunder or
in the Connection Agreement, and to comply with any legal requirements affecting Grantee or its
property and/or improvements.
2.6 Limitations on Use of Easements. Use by a Grantee of any easement,
right, privilege or license granted hereunder shall be limited as follows:
(a) Exercise of any easement or any right, privilege and license
granted hereunder permitting or requiring maintenance, repairs, alteration, restoration,
rebuilding, construction, upgrading, cleaning, installation, removal, modification, replacement,
expansion, or other work by Grantee upon the property or improvements of Granter shall be
subject to the following conditions:
(i) Access to and work upon the Distribution Facilities and/or the
Transmission Facilities shall be permitted only to each Party's
Qualified Personnel and such consultants, agents, contractors, -
subcontractors and invitees as any Party may select; provided that
any consultant agent, contractor, subcontractor or invitee shall
agree to comply with all applicable provisions of this Agreement
and the Connection Agreement.
(ii) Work shall be performed using reasonable precautions to
avoid interference with the Use and enjoyment of Grantor's
property and improvements.
(iii) Notwithstanding any other provision of this Agreement,
Grantee shall not be liable for damage, if any, which may be
caused by Grantee's normal and reasonable Use of any easement,
or right, privilege or license granted hereunder.
(iv) Following completion of the work, Grantee shall, at Grantee's
sole expense, restore Grantor's property and improvements to the
same or as good a condition as existed before the commencement
of the work.
(b) Any easement and any right, privilege and license granted
herein which permits a Grantee to maintain its property, equipment, facilities and appurtenance
on the property and improvements owned by Granter also includes the right to maintain in place
on Grantor's property and improvements any and all wires and cables connecting such property,
equipment, facilities, and appurtenances to (i) the devices, machinery and equipment which they
9
1297297 vA; RT0104A.OOC
measure, regulate· and/or control, and (ii) power sources; provided, however, any such wires
which do not presently exist shall be located upon Grantor's property in a manner designed to
avoid unnecessary interference with Grantor's use or operations thereon.
(c) No Party shall Use any easement area in such a manner as to (i)
reduce, injure, overload, deface, harm or impair the applicable easement area, (ii) allow or suffer
any waste thereof or (iii) commit any public nuisance by its use thereof. In the event any
activities which fall within the definition of "Use" to be conducted by a Party pursuant to the
provisions hereof would unreasonably or materially burden the Grantor's property, the express,
prior written consent of the Granter shall be required, which consent shall not be unreasonably
withheld, delayed or conditioned.
(d) No Party hereto shall make any changes to the topography or
accesses on or to its respective property, including grading or drainage that could reasonably be
expected to adversely affect another . Party's facilities, common use drainage systems, or
pollution control systems, or the exercise of any right or fulfillment of any obligation in this
Agreement or in the Connection Agreement, without the prior written consent of the other Party
which consent shall not unreasonably be withheld, delayed or conditioned.
( e) Each Party to the extent possible shall require its
representatives, in exercising its rights hereunder, (i) to comply with the safety regulations of the
owner of the property when such safety regulations are posted on the easement property and/or
provided to the other Party in writing; (ii) to utilize the existing footpaths and paved roads and
drives; (iii) to park all vehicles in designated parking areas or as otherwise requested by the
owner of the property; (iv) to show identification when entering the property, if requested to do
so; (v) to notify the owner of the property when leaving the property, ifrequested to do so; (vi) to
permit a representative of the owner of the property to accompany such representatives, if
requested to do so, at all times when present on the property; (vii) to wear or display visitor
identification tags or badges, if requested to do so, and to return such identification before
exiting the property; (viii) not to knowingly enter any area of any building or other structure on
the property, or any fenced area of the property, in which no specific easement right exists, for
which purpose the present location of each Party's facilities, improvements and property located
on the property of the other Party are shown on Exhibit A-1 and Exhibit B-1, as the case may be
(such exhibits may be updated from time to time by the Parties to accurately reflect the correct
location of such facilities, improvements and property); (ix) not to knowingly enter any room in
any building or structure in which no specific easement right exists; (x) to request a guide
accompany such representative if such representative does not know where facilities,
improvements or property are located on the Property or within a building or structure ( or how to
reach them); (x1) to report any damage or injury to property or persons occurring as a result of
the use of the easement before exiting the property; (xii) to immediately report any dangerous
condition found on the owner's property; (xiii) to report any incomplete work or repair which
such Party intends to return to complete at a later date; and (xiv) to relock, shut and/or bar, as the
case may be, each locked door or gate or entryway on the property following the use thereof.
(f) The owner of a property shall notify the other Party promptly
in writing if any representative of the other Party has acted without due regard for safety
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regulations, dangerously or negligently when on its property, and if requested in writing by the
owner of the property, the other Party shall not permit such representative onto the owner's
property again.
. (g) Each Party may provide the other Party with 24-hour
emergency contact inf01111ation so that the other Party shall always be able to notify it in advance
before entering its property. If any Party desires such advance notification, its shall notify the
other Party in writing in advance and include emergency contact information therewith;
provided, however, that no Party shall be liable to the other Party for entering the property of the
other Party hereunder without such notice.
2. 7 Rules and Regulations.
Each Party may promulgate written rules regulating the conduct of the other Party in the
exercise of rights under this Agreement provided such rules and regulations do not unreasonably
interfere with or impede the affected Party's rights and easements as set forth herein or in the
Connection Agreement.
2.8 No Obstruction.
No Party hereto shall obstruct the easements or the rights, privileges and
licenses granted or created pursuant to this Agreement or render them impassable or unusable. in
any way or otherwise in any way interfere with the right to the Use and enjoyment of the
easements or rights, privileges and licenses granted or created pursuant to this Agreement.
2.9 Notice of Proposed Activity. Whenever a proposed activity of a Party
is reasonably expected to have an adverse iinpact on the use of an easement area on such Party's
property by the other Party, the Party proposing such activity shall notify the other Party of such
activity reasonably in advance so that the other Party (if consent is given to the proposed activity,
to the extent such consent is required under any provision of this Agreement) may implement
reasonable measures designed to mitigate the impact thereof. This advance notification
requirement shall apply in all cases except in the case of an Emergency Condition, in which case
the notification shall occur within a reasonable time after the occurrence of the activity.
3. TAXES. ASSESSMENTS AND OTHER CHARGES
3.1 Real Estate Taxes. Generating Company, with respect to the
Generating Company Property and Denton, with respect to the Denton Property, shall pay and
discharge all of the following ("Real Estate Taxes") whether or not now within the
contemplation of the Parties hereto: (i) all real estate taxes (including Public Utility Realty Tax
Act ("PURTA") levies), assessments (both general and special), and, except for water and sewer
charges and assessments, other governmental impositions and charges, taxes, rents, levies and
sums of every kind or nature whatsoever, extraordinary as well as ordinary, as shall at any time
be imposed by any governmental or public authority on, or become a lien in respect of, the
Generating Company Property or the Denton Property, as the case may be, or any part thereof, or
which may become due and payable with respect thereto, and any and all taxes assessments and
charges levied, assessed or imposed upon the Generating Company Property or the Denton
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Property, as the case may be, in lieu of or in addition to, the foregoing, under or by virtue of any
present or future laws, rules, requirements, orders, directives, ordinances or regulations of the
United States of America or of the State or of any subdivision thereof, or of any lawful
governmental authority whatsoever, and any interest or penalties thereon, and (ii) all other taxes
( excluding gains, saies and income taxes but including occupancy taxes which are measured by
income) measured by ownership of the Generating Company Property or the Denton Property, as
the case may be. Generating Company shall pay and discharge all levies and assessments for
water, water meter (including any expenses incident to the installation, repair or replacem~nt of
any water meter) and sewer and all rents with respect to water and sewer which provide service
to the Generating Company Property. Denton shall pay and discharge all levies and assessments
for water, water meter (including any expenses incident to the installation, repair or replacement
of any water meter) and sewer and all rents with respect to water and sewer, if any, which
provide service to the Denton Property.
3.2 Personal Property Taxes. Generating Company and Denton shall,
respectively, pay and discharge all of the following ("Personal Property Taxes") whether or not
now within the contemplation of the parties hereto: all taxes and assessments which shall or may
be charged, levied, assessed or imposed upon, or become a lien upon, the personal property of
Generating Company or Denton, as the case may be, Used in the operation or in connection with
the business conducted at the Generating Company Property or the Denton Property, as the cas~
maybe.
3.3 Timing of Payment. Subject to the prov1s1ons of Section 3.4,
Generating Company and Denton shall each comply with its covenant to pay and discharge all
Real Estate Taxes and Personal Property Taxes by paying all such taxes directly to the
appropriate taxing authorities prior to the expiration of the period within which payment is
permitted without penalty or interest. Generating Company and Denton shall within twenty (20)
days of written request of a Party, produce the most recent official receipts from the appropriate
taxing authorities evidencing such payment certified by Generating Company or Denton, as the
case may be, to the other Party hereto.
3.4 Tax Contests. Generating Company, with respect to the Generating
Company Property, and Denton, with respect to the Denton Property:
(a) May contest in good faith by appropriate proceedings diligently
and continuously conducted, at its or their sole cost and expense, any Real Estate Tax or charge
(including PURTA) or Personal Property Tax or charge, or similar tax or charge and, where
permitted by law, pay the same under protest.
(b) Shall pay and discharge such contested items as finally
adjudicated or settled, with interest and penalties, and all other charges directed to be paid in or
by any such adjudication or settlement.
( c) May, in its or their sole discretion, consolidate any proceeding
to obtain a reduction in the assessed valuation with any similar proceeding or proceedings
brought by it or them relating to any one or more other tax years.
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( d) Any refunds from any such contest shall belong wholly to the
Party or Parties that paid the tax.
4. MECHANICS' LIENS
4.1 . . Notice Regarding Labor and Material. Notice is hereby given that no
Party hereto shall be liable for any labor or materials furnished or to be furnished to or for
another Party hereto or to any other persons or entities claiming under such other Party on credit,
and that no mechanics' or other lien for any such labor or material furnished to a Party or such
other persons or entities shall attach to or affect any property interest of any other Party.
4.2 Disposition of Liens.
(a) Denton shall forthwith take such action necessary to discharge,
remove or satisfy any lien filed against the Generating Company Property or any portion thereof
for any labor or materials furnished or to be furnished for or on behalf of Denton, or any person
or entity holding any portion thereof through or under Denton.
(b) Generating Company shall forthwith take such action
necessary to discharge, remove or satisfy any lien filed against the Denton Property or any
portion thereof for any labor or materials furnished or to be furnished for or on behalf of
Generating Company, or any person or entity holding any portion thereof through or under
Generating Company.
( c) If either Denton or Generating Company, as the case may be,
shall fail to discharge, remove or satisfy any such lien which it is obligated to discharge, remove
or satisfy hereunder within thirty(30) days after notice of the existence of the lien has been given
to such defaulting Party, the non-defaulting Party or parties may pay the amount of such lien or
discharge the same by deposit or bonding, and the amount so paid or deposited, or the premium
paid for such bond, with interest at the rate provided for defaults in Section 6.3 hereof, shall be
paid by the defaulting Party upon demand to the non-defaulting Party who effected such cure.
5. CONDEMNATION
5.1 Right to Participate. In the event the Generating Company Property or
the Denton Property, or any part thereof, shall be taken in condemnation proceedings or by
exercise of any right of eminent domain or any agreement with those authorized to exercise such
right (any such matter being hereinafter referred to as a "Taking" or property "Taken"), whether
such Taking be a permanent taking or a temporary Taking, any person or entity having an
interest in. the award or awards shall have the right to participate in any such condemnation
proceedings or agreement for the purpose of protecting its interest hereunder. Each Party so
participating shall pay its own expenses.
5.2 Total Taking. A "Total Taking" shall be deemed to have occurred as
to the property of any Party when the entire property of such Party shall be Taken or a substantial
part of such property shall be Taken and the untaken portion of the property would, following the
completion of restoration, be unsuitable for the operation and the Use thereof in the manner so
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1297297 vA; RT0104A.DOC
operated and Used prior to the Taking. Upon a Total Taking, this Agreement shall terminate
except with respect to the disposition of the award.
5.3 Disposition of Award. In the event of a Taking, each Party shall be
entitled to share in the awards to the extent of its interest in the property subject to the Taking,
and for consequential damages to and dilution of value of the relevant property not so Taken.
5.4 Notice of Taking. In the event the Generating Company Property or
the Denton Property, or any part thereof, shall be the subject of any condemnation proceedings
or the subject of any eminent domain proceedings, and if any Party shall receive actual notice of
such proceedings, the Party receiving such notice shall notify the other Party of the existence of
such proceedings. Such notification shall occur within fifteen (15) days of the receipt of such
actual notice.
6. DEFAULTS
6.1 Events of Default. Each and every one of the following events shall
constitute an Event of Default ("Event of Default') under this Agreement:
(a) If a defaulting Party fails to make any payment due from such
defaulting Party to a non-defaulting Party within ten (10) business days of written demand for
such payment;
(b) If a defaulting Party fails, within thirty (30) business days of
written notice from a non-defaulting Party, to make any payment due from such defaulting party
to any person or entity other than a non-defaulting Party and such failure could result in the
imposition of a lien on the property or improvements of a non-defaulting Party; and
( c) If a defaulting Party fails to perform any non-monetary
obligations hereunder, and said defaulting Party fails to cure such default within thirty (30) days
of receipt of written notice from a non-defaulting Party stating with particularity the nature of the
default; provided, however, if such default is of such a nature that it cannot be cured within thirty
(30) days following receipt of such notice, an Event of Default shall not have occurred if the
defaulting Party shall within such thirty (30) days commence the necessary cure and shall at all
times thereafter diligently and continuously prosecute such cure to completion, and if the default
shall finally be cured no later than one hundred and twenty (120) days after receipt of such
notice.
6.2 Right of Self Help. A non-defaulting Party may at its election
following the occurrence of a non-monetary Event of Default (i) if no Emergency Condition
exists, on the thirtieth (30th) day after the receipt of the written notice specified in paragraph
6.1 ( c) hereof, or (ii) if an Emergency condition exists, immediately upon such written or verbal
notice that is practical under the circumstances, undertake the _cure of such default on behalf of
the defaulting Party. A non-defaulting Party is granted an easement to enter upon, through or
under the property or improvements of the defaulting Party to effect such cure. Following the
occurrence of an Event of Default involving the payment of money to a person or entity not
Party to this Agreement, a non-defaulting party of the non-defaulting Parties may make such
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1297297 vA; RT0104A.DOC
payment on behalf of the defaulting Party. All monies paid by the non-defaulting Party or non-
defaulting Parties and all reasonable costs and expenses (including, reasonable attorneys' fees)
incurred by it or them, as the case may be, in effecting such cure or payment, shall be paid by the
defaulting Party upc;m written demand, together with interest from the date of such demand at the
rate set forth in Section 6.3.
6.3 Interest. Following the occurrence of an Event of Default involving
the nonpayment of money by the defaulting party, all monies owed to the non-defaulting party
shall bear interest at the rate equal to the Citibank prime rate on commercial loans per month
("Interest Rate") accruing on a pro-rata basis from the due date through the date payment is
made, provided however, that such interest charge shall not exceed the maximum charge which
may be collected under provisions of Texas law. Any amounts deemed usurious by Texas law
shall be immediately returned to the defaulting party.
6.4 Enforcement Rights. In addition to any other rights set forth in this
Agreement, but without limitation, enforcement of this Agreement may be had by legal or
equitable proceedings against any defaulting Party either to specifically enforce, restrain or
enjoin the violation of any restriction, covenant, agreement, term, representation or warranty
herein contained or to recover damages.
6.5 No Forfeiture. Except by enforcement of a judgment lien against such
property, nothing contained in this Agreement shall create any reversion, condition or right of re-
entry or other provisions for forfeiture under which any Party can be cut off, subordinated or
otherwise disturbed in the possession of its property.
6.6 Independent Covenants. None of the rights and easements granted by
this Agreement and none of the performances required by this Agreement shall be dependent
upon the performance of any other term, promise, or condition of this Agreement or any
documents executed concurrently or in connection with this Agreement (except as specifically
provided to the contrary in the APA or the Connection Agreement), and such rights, easements
and requirements or performance shall continue in effect irrespective of whether anything else in
this Agreement or such other documents has been breached or has been terminated. The
separateness and independent survival of the rights, easements and requirements of performance
under this Agreement are essential terms hereof without which this Agreement would not have
been made.
7. LIABILITY AND INSURANCE
7.1 Liability.
(a) Except to the extent of the other Party's negligence or willful
misconduct (for which the Party who has committed an act of negligence or willful misconduct
shall be liable to the other Party, subject to the provisions hereof), each Party shall be responsible
for all physical damage to or destruction of the property, equipment and/or facilities owned by it
and its Affiliates, regardless of who brings the claim and regardless of who caused the damage,
and shall not seek recovery or reimbursement from the other Party for such damage; but in any
15
1297297 vA; RT0104A.DOC
such case the Parties will exercise due diligence to remove the cause of any damage or disability
at the earliest practicable time.
(b) To the fullest extent permitted by law and notwithstanding
other provisions of-this Agreement, in no event shall any Party, its Affiliates, or any of its
respective officers, · directors, employees, agents, successors or assigns be liable to any other
Party, whether in contract, warranty, tort negligence, strict liability, or otherwise, for special,
indirect, consequential (including, without limitation, replacement power costs, lost profits or
revenues, and lost business opportunities), or punitive damages, related to or resulting from
performance or nonperformance of this Agreement or any activity associated with or arising out
of this Agreement.
7 .2 Insurance. The Generating Company agrees to maintain, at its own
cost and expense, fire, liability, worker's compensation, and other forms of insurance relating to
its property and facilities in the manner and amounts and for the durations set forth in the
Connection Agreement. Denton agrees to maintain, at its own cost and expense, insurance
related to its property and facilities subject to this Agreement, worker's compensation and other
forms of insurance relating to its property and facilities in the manner and amounts and for the
durations set forth in the Connection Agreement.
7.3 Survival. The provisions of Section 7.1 shall survive termination;
cancellation, suspension, completion or expiration of this Agreement.
8. REMEDIES
8.1 Specific Performance; Remedies Cumulative. The Parties hereto agree
that the remedy at law for any breach of this Agreement may be inadequate and that, in such
instance, any Party by whom this Agreement is enforceable shall be entitled to specific
performance in addition to any other appropriate relief or remedy. Such Party may, in its sole
discretion, apply to a court of competent jurisdiction for specific performance or injunctive or
such other relief as such court may deem just and proper in order to enforce this Agreement or
prevent any violation hereof and, to the extent permitted by applicable law, each Party waives
any objection to the imposition of such relief. Specific performance shall include, where
applicable, taking all actions to cure any breach of a representation, warranty, covenant or
agreement hereof. For purposes of this Agreement, to cure a breach means to make the non-
breaching Party whole with respect to such breach. Except as otherwise herein provided, the
rights and remedies herein provided shall be cumulative and not exclusive of any rights or
remedies provided by applicable law.
9. MISCELLANEOUS
9.1 Effective Date. This Agreement will be effective on the date of
closing pursuant to the AP A.
9.2 Exhibits. All exhibits attached to this Agreement are part of this
Agreement and the material contained in such exhibits shall be construed and interpreted as if
contained within the text of the Agreement.
16
1297297 vA; RT0104A.DOC
9.3 Headings. The Article and Section headings of this Agreement are for
convenience and reference only and in no way define, limit or describe the scope and intent of
this Agreement, nor in any way affect this Agreement.
9A Interpretation. Words of any gender in this Agreement shall be held to
include any other gender and words in the singular number shall be held to include the plural
when the context requires. As used in this Agreement, the word "including" means "including,
without limitation."
9.5 GOVERNING LAW. TIDS AGREEME NT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE
STATE OF TEXAS, EXCLUSIVE OF ITS CHOICE OF LAW RULES.
9.6 Entire Agreement. This Agreement, together with the APA and the
Connection Agreement, constitutes the entire agreement of the Parties hereto and supersedes all
prior agreements and undertakings relating to the subject matter hereof.
9.7 Modifications, Waivers and Consents. This Agreement may not be
modified, amended or discharged except by an instrument in writing signed by all of the record
owners of the Generating Company Property and the Denton Property and the Excluded Assets
(as defined in the APA). No waiver or consent may be enforced unless such waiver or consent
shall be in writing and signed by the Party against whom enforcement thereof is sought.
9.8 Binding Effect. The covenants, conditions, restrictions,
encumbrances, easements, license and agreements set forth in this Agreement shall attach to,
burden, and run with the land and the Generating Company Property and the Denton Property or
the applicable portion or portions thereof, and shall be appurtenant to the Generating Company
Property or the Denton Property, as appropriate and, together with the remainder of this
Agreement, shall be binding upon the Parties hereto and their respective successors, assigns,
grantees, transferees and tenants and, together with the remainder of this Agreement, shall inure
to the benefit and Use of the Parties hereto and their respective heirs, successors, assigns,
grantees, transferees and tenants. Each Grantee of any portion of or interest in the property and
each mortgagee which succeeds to the fee simple ownership of any portion of the property shall
be deemed, by the acceptance of the deed conveying fee simple title to such Person, to have
agreed to perform each and every undertaking created hereunder attributable to the portion of the
property in which such Grantee or mortgagee has acquired an interest.
9.9 Assignment. The Parties hereto may assign all or any part of their
rights hereunder upon written consent of the other Party (such consent not to be unreasonably
withheld or delayed) provided that:
(a) Except with respect to rights relating to the Transmission
Facilities, Distribution Facilities and the Communication Facilities, which may be assigned
without regard to this clause (a), such assignment may only be made together with any
assignment by the assignor of its rights and obligations under the Connection Agreement which
is permitted by the terms of the Connection Agreement; and
17
1297297 vA; RT0104A.DOC
(b) The assignee shall execute and deliver to each of the Parties an
agreement in writing to be bound by all of the obligations of the assignor hereunder with respect
to the assigned rights.
(c) The provisions of clause (a) in the immediately preceding
sentence shall fall out of this Agreement when the Connection Agreement has expired or been
terminated.
( d) Notwithstanding the foregoing, consent shall not be required
for transfers to Affiliates of Generating Company or Denton.
9.10 Covenants not Conditions. The provisions of this Agreement shall be
construed as covenants and not as conditions.
9.11 Severability of Void Provisions. In the event that any of the
provisions of this Agreement are held to be unenforceable or invalid by any court or regulatory
authority of competent jurisdiction, the Parties shall to the extent possible, negotiate an equitable
adjustment to the provisions of this Agreement, with a view toward effecting the purpose of this
Agreement, and the validity and enforceability of the remaining provisions hereof shall not be
affected by such holding.
9.12 Mortgagees' Status. The Parties acknowledge and agree that tjris
Agreement shall be superior to any mortgages or other instruments evidencing security for
indebtedness granted by either Party from time to time with respect to the Denton Property or the
Generating Company Property (as appropriate). Accordingly, each Party agrees, upon written
request of the other Party, to obtain and deliver to the other Party such documents and
instruments, in recordable form, as may from time to time be reasonably necessary to evidence
and confirm the subordination of any such mortgages or other security instruments to the
provisions of this Agreement.
9.13 Notices. Any notice, request, demand, or statement, which may be
given to or made upon a Party under this Agreement, shall be in writing unless it is specifically
provided otherwise herein, and shall be treated as duly delivered when the same is either (1)
personally delivered to a Party, or (2) deposited in the United States mail, by certified mail,
postage prepaid, and properly addressed to the Party to be served, and in each case as follows:
1297297 vA; RT0104A.DOC
(a) If the notice is to the Generating Company:
Spencer Station Generating Company, L.P.
c/o PG&E Generating Company
7500 Old Georgetown Road
Bethesda, Maryland 20814
18
(b) If the notice is to Denton:
Attn: Director of Denton Municipal Electric
901-A Texas Street
Denton, Texas 76201
The names, titles and addresses of either Party in this section may be changed by written
notification to the other Party.
19
1297297 vA; RT0104A.DOC
IN WITNESS WHEREOF, the Parties have executed and delivered this Agreement as
of the Effective Date.
Attest:
Jennifer Walters, City Secretary
By: w'I\\) f=1 !~
Approved as to Legal Form:
Herbert L. Prouty, Ci_cy Attorney
By::lw~4Jl
Attest:
By: ____________ _
1297297 vA; RT0104A.DOC
CITY OF DENTON, TEXAS
A Texas ._...,....,,, ... le
20
SPENCER STATION GENERATING
COMPANY, L.P.
By:. ______________ _
Name: ____________ _
Title: --------------
IN WITNESS WHEREOF, the Parties have executed and delivered this Agreement as
of the Effective Date.
Attest:
Jennifer Walters, City Secretary
By: __________ _
Approved as to Legal Form:
Herbert L. Prouty, City Attorney
By: __________ _
Attest:
By: ____________ _
1297297 vA; RTD104A.DOC
CITY OF DENTON, TEXAS
A Texas home rule municipal corporation
By: ___________ _
Michael A. Conduff
City of Manager
20
SPENCER STATION GENERATING
COMPANY, L.P. By ~C-ir~
Name: THOMA
Title: PRESIDENT
STATE OF TEXAS )
) SS:
COUNTY OF DENTON )
;d.
This instrument was acknowledged before me on this jJ__ day of June, 2001, by Michael A.
Conduff, City Manager of the City of Denton, Texas, a Texas home rule municipal corporation,
on behalf of said municipal corporation.
[SE A L;.i,,J -.,..~--,,,,_~__...-=-,:
,,•··~~·,:,::'?};-;;~~:.. ANN FORSYTHE
( (~".\ Notary Public, State of Texas
i ,'\~ / My CommlU!on Explret \~';:-, ___ _.. ,iY MAY 9 2002 ~,tOF1.,,, I
My Commission Expires:
STATE OF
COUNTY OF
)
) SS:
)
Not
Stat
Not
This instrument was acknowledged before me on this __ day of June, 2001 , by
__________ , ______ of Spencer Station Generating Company, L.P ., on
behalf of said limited partnership.
[SEAL]
My Commission Expires:
1297297 vA; RT0104A.DOC
Notary Public in and for the
State of Texas
Notary's Printed Name
21
STATE OF TEXAS )
) SS:
COUNTY OF DENTON )
This instrument was acknowledged before me on this __ day of June, 2001, by Michael A.
Conduff, City Manager of the City of Denton, Texas, a Texas home rule municipal corporation,
on behalf of said municipal corporation.
[SEAL]
My Commission Expires:
STATEOF ~l:\R.'-IL(:\-0b )
) SS:
COUNTY OF \.,.\C)"rn~cµ_e-e_i )
Notary Public in and for the
State of Texas
Notary's Printed Name
This instrument was acknowledged before me on this 2.Z-,.\ day of June, 2001, by
c:.J>ffi.OS.. 7:) -, l'r~,c\eD± of Spencer Station Generating Company, L.P., on
behalf of said limited rtnership.
[SEAL]
My Commission Expires:
1297297 vA; RT0104A.DOC
~~<;;aiu~
Notary Public in and for the
Stateof~ \.-A~'{L~~
MICHELE BRISTOL
NOTARY Pl !Bl IC SWE OF MARYLAND
Notary's Printed Mame mission Expires October J 5, 2002
21
LIST OF EXHIBITS
Exhibit A -Denton Property
Exhibit A-1 -Survey of Denton Property
Exhibit B -Generating Company Property
Exhibit B-1 -Survey of Generating Company Property
Exhibit C -16 Foot Utility Easement
Exhibit D -20 Foot Utility Easement
Exhibit E -25 Foot Utility Easement
Exhibit F -50 Foot Ingress/Egress Easement
22
1297297 vA; RT0104A.DOC
EXHIBIT A
SPENCER SITE, Surveyed May, 1988, 100.9 acres
Whereas, the City of Denton is the owner of a tract of land situated in the Mary
Austin Survey Abstract Number 4, Denton County, Texas; said tract being all or
parts of tracts 6f land shown by deed to the City of Denton recorded in Volume
398, Page 576; shown by deed recorded in Volume 399, Page 471; and those
parts shown by deed to the City of Denton recorded in Volume 478, Page 125 as
Tract 1 and Tract 2; of the Deed Records of Denton County, Texas and being
more fully described as follows:
Beginning for the most northerly northwest corner of the herein described tract at
a half inch rebar found at the northwest corner of said City of Denton tract
(Volume 648, Page 105);
Thence North 88 degrees 12 minutes 27 seconds East a distance of 385.10 feet
to a ¾ inch pipe found at an angle point in the north line of said City of Denton
tract (Volume 648, Page 105);
Thence North 66 degrees 29 minutes 35 seconds East a distance of 493.02 feet
to a ¾ inch pipe found at the northeast corner of said City of Denton tract
(Volume 648, Page 105);
Thence South 00 degrees 08 minutes 00 seconds East a distance of 2542.59
feet to a three inch pipe found at the most easterly southeast corner of said City
of Denton tract (Volume 648, Page 105), same being a southwest corner of a
tract shown by deed to Clark Brothers recorded in Volume 1546, Page 520 of the
Real Property Records; said pin also being on the north line of a tract shown by
deed to N. Alex Bickley, Trustee recorded in Volume 987, Page 548 of the Deed
Records of Denton County, Texas;
Thence South 89 degrees 38 minutes 08 seconds West a distance of 904.52 feet
to a half inch rebar pin found at the southwest corner of said City of Denton tract
(Volume 648, Page 105), the same being the northwest corner of said Bickley
tract; said pin also being the east line of said City of Denton tract (Volume 398,
Page 576) as recorded in the Deed Records of Denton County, Texas;
Thence South 00 degrees 53 minutes 14 seconds West with the west line of said
Bickley tract a distance of 1162.82 feet to a half inch rebar pin found at the
southeast corner of said City of Denton tract (Volume 398, Page 576), the same
being the north right-of-way line of Spencer Road;
Thence North 88 degrees 39 minutes 46 seconds West a distance of 596.20 feet
to a half inch rebar pin set for corner in Spencer Road at the point of intersection
of a curve to the right, having a radius of 520.00 feet, at a length of 292.74 feet
and a deflection angle of 32 degrees 15 minutes 18 seconds;
Thence North 52 degrees 50 minutes 00 seconds West a distance of 1222.03
feet to a half inch rebar pin set for the southwest corner of said City of Denton
tract (Volume 398, Page 576), said corner being in the north right-of-way line of
Spencer Road;-_
Thence North 04 degrees 23 minutes 39 seconds East a distance of 953.49 feet
with the west line of said City of Denton tract (Volume 398, Page 576), and the
east line of a tract shown by deed to Dallas Land Development, Inc. as recorded
in Volume 832, Page 79 of the Deed Records of Denton County, Texas, to a half
inch rebar pin set for the most westerly northwest corner of said City of Denton
tract (Volume 398, Page 576), the same being in the south right-of-way line of a
30 foot wide road right-of-way dedicated to the County of Denton as recorded in
Voume 407, Page 472 of the Deed Records of Denton County, Texas;
Thence North 88 degrees 05 minutes 58 seconds East a distance of 1531.18 feet
with the north line of said City of Denton tract (Volume 398, Page 576) and with
the south line of said 30 foot wide road to a half inch rebar pin set for an inside
corner of the herein described tract, the same being in the west line of said City
of Denton tract (Volume 648, Page 105);
Thence North 01 degrees 30 minutes 20 seconds East a distance of 30.05 feet to
a half in rebar set for an inside corner of the herein described tract, the same
being in the north right-of-way line of said 30 foot wide road and also a point in
the south line of a tract shown by deed to Denton TEC Center, Inc. as recorded
in Volume 2124, Page 775 of the Deed Records of Denton County, Texas;
Thence North 88 degrees 05 minutes 58 seconds East a distance of 23.06 feet
with the south line of said Denton TEC Center, Inc deed, (Volume 2124, Page
775) to a cross-tie fence corner post for an inside corner of said tract;
Thence North 00 degrees 36 minutes 10 seconds East a distance of 1572.24 feet
to a half in rebar found for an angle point in the most northern west line of the
herein described tract, the same being the southeast corner of the E. Morris
Survey, Abstract Number 868 and the northeast corner of the said Denton TEC
Center, Inc. tract (Volume 2124, Page 775);
Thence North 02 degrees 13 minutes 34 seconds East a distance of 145.82 feet
with the east line of the E. Morris Survey, Abstract Number 868 and continuing
with the west line of said City of Denton tract (Volume 648, Page 105) to the
point bf beginning of this portion of the herein described tract and containing
100.900 acres of land.
LESS AND EXCEPT:
TRANSFERRED PROPERTY, Surveyed July 25, 1995, 27.749 ACRES
TO PARTIES DIRECTLY CONCERNED WITH THE PREMISES SURVEYED -
DESCRIPTION
FIELD NOTES to all that certain tract of land situated in the City and County of
Denton, State of Texas, and being a part of the Mary Austin SuNey, Abstract No.
4 and being part of Lot 1, Block 1 and a part of Lot 1 and Block 2 of the Municipal
Utility Addition, an addition to the City and County of Denton, recorded in Cabin.et
G, Page 346 of the Plat Records of Denton County, Texas and being more
particularly described as follows:
COMMENCING at the Northwest corner of said Lot 1, Block 1;
THENCE South 02 Degrees 13 minutes 34 Seconds West along the West line of
said Lot 1, Block 1, a distance of 110.27 feet to a ½" iron rod set at the Northwest
corner of the tract being described herein and the POINT OF BEGINNING, said
iron rod also at the Southwest corner of a drainage and utility easement as
shown on said Plat;
THENCE North 88 Degrees 12 Minutes 27 Seconds East, along the said
easement South boundary line a distance of 149.37 feet to a ½" iron rod set for _
corner;
THENCE South 57 degrees 16 Minutes 37 Seconds East, continuing along said
easement South line a distance of 824.65 feet to a½" iron rod set for corner in
the East line of said Lot 1, Block 1;
THENCE South 00 Degrees 08 Minutes 00 Seconds East, along the East
boundary of said Lot 1, Block 1, passing at 394.04 feet the Southeast corner of
said Lot 1, Block 1, same being the North Right-of-Way line of Morse Road,
continuing and passing the South Right-of-Way of Morse Road, same being the
Northeast corner of said Lot 1, Block 2, continuing and along the East boundary
line of said Lot 1, Block 2, a total distance of 1137.91 feet to a 1 /2" iron rod set
for corner;
THENCE South 88 Degrees 05 Minutes 58 Seconds West, a distance of 864.11
feet to a railroad cross-tie found at a salient corner of said Lot 1, Block 2, and
also being the Easterly Southeast corner of a tract of land described in Volume
2124_, Page 775, Real Property Records, Denton County, Texas;
THENCE North 00 Degrees 36 Minutes 10 Seconds East along the most
Northerly West line of said Lot 1, Block 2, same being the East boundary line of
said tract described in Volume 2124, Page 775, of the Real Property Records of
Denton County, Texas, passing at 918.55 feet the Northwest corner of said Lot 1,
Block 2, same being the South Right-of-Way of Morse Road, continuing and
passing the North Right-of-Way of Morse Road, same being the Southwest
corner of said Lot 1, Block 1, a total distance of 1572.24 feet to ½" iron rod found
for corner;
THENCE North 02 Degrees 13 Minutes 34 Seconds East, continuing along the
West line of said Lot 1, Block 1, a distance of 35.55 feet to the POINT OF
BEGINNING and containing 27.749 acres of land more or less.
NOTES: The tract of land shown and described hereon is subject to the specific
easement recorded in Vol. 479, Pg. 582 (Western side of property) and is subject
to the general, "blanket-type" easements, which are not specifically located by
description(s), as recorded in Vol. 197, Pg. 21; Vol. 327, Pg. 437; Vol. 341, Pg .
269; Vol. 362, Pg. 524; Vol. 407, Pg. 575; Vol. 437, Pg. 612; of the Deed
Records of Denton County, Texas; and County Clerk's File No. 94-R0075562 of
the Real Property Records of Denton County, Texas.
CERTIFICATION: This Plat correctly represents the results of an on-the-ground
survey made under my direction and supervision on 10-22-94. There are no
visible or apparent intrusions, protrusions or easements except as shown hereon.
J.E. Thompson, R.P.L.S. No0 4857 DATE
Job# 94260
Southwest Land Title Co. GF # 94F 354018
LESS AND EXCEPT:
FIELD NOTES
17.751 ACRES
9911645a
BEING all that certain lot, tract or parcel of land situated in the Mary Austin
Survey Abstract Number 4, in the City of Denton, Denton County, Texas, being a
part of Lot 1, Block 2 of Municipal Utility Addition, an addition to the City of
Denton, Denton County, Texas according to the plat thereof recorded in Cabinet
G, Page 346, Plat Records, Denton County, Texas, and being more particularly
described as follows:
COMMENCING at an iron rod found for corner in the north line of Spencer Road,
a public roadway having a right-of-way of 60.0 feet, said point being the
southwest corner of that certain tract of land conveyed by deed to N. Alex
Bickley, Trustee recorded in Votume 987, Page 548, Deed Records, Denton
County, Texas;
THENCE N 88° 39' 46" W, 130.00 feet with said north line of said Spencer Road
to an iron rod set for PLACE OF BEGINNG;
THENCE N 88° 39' 46" W, 299.83 feet with said north line of said Spencer Road
to an iron rod set for corner;
THENCE along the arc of a curve to the right having a central angle of 32° 15'
19', a radius of 520.00 feet, an arc length of 292.74 feet, whose chord bears N
72° 32' 06" W, 288.89 feet with said north line of said Spencer Road to an iron
rod set for corner;
THENCE N 52° 50' 00" W, 281.92 feet with said north line of said Spencer Road
to an iron rod set for corner;
THENCE N 52° 36' 00" W, 111.50 feet with said north line of said Spencer Road
to an iron rod set for corner;
THENCE N 20° 02' 44" E, 92.00 feet to an iron rod set for corner;
THENCE N 02° 23' 36" W, 267.94 feet to an iron rod set for corner;
THE:NCE N 88° 09' 17" E, 48.91 feet to an iron rod set for corner;
THENCE N 01 ° 50' 44" W, 206.45 feet to an iron rod set for corner;
THENCE N 38° 22' 23" E, 161.33 feet to an iron rod set for corner;
THENCE N 88° 03' 43" E, 749.08 feet to an iron rod set for corner;
THENCE S 44° 06' 44" E, 53.08 feet to an iron rod set for corner;
THENCE S 00° 53' 14" W, 562.85 feet to an iron rod set for corner;
THENCE S 87° 46' 24" W, 258.02 feet to a fence corner for corner;
THENCE S 02° 25' 18" E, 114.07 feet to an iron rod set for corner;
THENCE S 86° 24' 16" W, 68.28 feet to an iron rod set for corner;
THENCE S 02° 32' 00" E, 151.23 feet to a fence corner for corner;
THENCE N 87° 35' 34" E, 294.01 feet to a fence corner for corner;
THENCE S 09° 41' 28" W, 180.28 feet to the PLACE OF BEGINNING and
containing 17.751 acres of land.
EXHIBIT B
FIELD NOTES
17.751 ACRES
9911645a
BEING all that -certain lot, tract or parcel of land situated in the Mary Austin
Survey Abstract Number 4, in the City of Denton, Denton County, Texas, being a
part of Lot 1, ~lock 2 of Municipal Utility Addition, an addition to the City of
Denton, Denton County, Texas according to the plat thereof recorded in Cabinet
G, Page 346, Plat Records, Denton County, Texas, and being more particularly
described as follows:
COMMENCING at an iron rod found for corner in the north line of Spencer Road,
a public roadway having a right-of-way of 60.0 feet, said point being the
southwest corner of that certain tract of land conveyed by deed to N. Alex
Bickley, Trustee recorded in Volume 987, Page 548, Deed Records, Denton
County, Texas;
THENCE N 88° 39' 46" W, 130.00 feet with said north line of said Spencer Road
to an iron rod set for PLACE OF BEGINNG;
THENCE N 88° 39' 46" W, 299.83 feet with said north line of said Spencer Road
to an iron rod set for corner;
THENCE along the arc of a curve to the right having a central angle of 32° 15'
19', a radius of 520.00 feet, an arc length of 292.74 feet, whose chord bears N
72° 32' 06" W, 288.89 feet with said north line of said Spencer Road to an iron
rod set for corner;
THENCE N 52° 50' 00" W, 281.92 feet with said north line of said Spencer Road
to an iron rod set for corner;
THENCE N 52° 36' 00" W, 111.50 feet with said north line of said Spencer Road
to an iron rod set for corner;
THENCE N 20° 02' 44" E, 92.00 feet to an iron rod set for corner;
THENCE N 02° 23' 36" W, 267.94 feet to an iron rod set for corner;
THENCE N 88° 09' 17" E, 48.91 feet to an iron rod set for corner;
THENCE N 01 ° 50' 44" W, 206.45 feet to an iron rod set for corner;
THENCE N 38° 22' 23" E, 161.33 feet to an iron rod set for corner;
THENCE N 88° 03' 43" E, 749.08 feet to an iron rod set for corner;
THENCE S 44° 06' 44" E, 53.08 feet to an iron rod set for corner;
THENCE S 00~-53' 14" W, 562.85 feet to an iron rod set for corner;
THENCE S 87° 46' 24" W, 258.02 feet to a fence corner for corner;
THENCE S 02° 25' 18" E, 114.07 feet to an iron rod set for corner;
THENCE S 86° 24' 16" W, 68.28 feet to an iron rod set for corner;
THENCE S 02° 32' 00" E, 151.23 feet to a fence corner for corner;
THENCE N 87° 35' 34" E, 294.01 feet to a fence corner for corner;
THENCE S 09° 41' 28" W, 180.28 feet to the PLACE OF BEGINNING and
containing 17. 751 acres of land.
FIELD NOTES
16.0 FOOT UTILITY EASEMENT
0.088 ACRE
EXHIBIT C
BEING all that certain lot, tract or parcel of land situated in the Mary Austin
Survey Abstract Number 4, in the City of Denton, Denton County, Texas, being a
part of Lot 1. Block 2 of Municipal Utility Addition, an addition to the City of
Denton, Denton County, Texas according to the plat thereof recorded in Cabinet
G. Page 346, Plat Records, Denton County, Texas, and being more particularly
described as follows:
COMMENCING at an iron rod found for corner in the north line of Spencer Road,
a public roadway having a right-of-way of 60.0 feet, said point being the
southwest corner of that certain-tract of land conveyed by deed to N. Alex
Bickley, Trustee recorded in Volume 987 , Page 548, Deed Records, Denton
County, Texas;
THENCE N 88° 39' 46" W, 429.83 feet with said north line of said Spencer Road
to an iron rod set for corner;
THENCE along the arc of a curve to the right having a central angle of 32° 15' -
19'. a radius of 520.00 feet, an arc length of 292. 7 4 feet, whose chord bears N
72° 32' 06" W, 288.89 feet with said north line of said Spencer Road to an iron
rod set for corner;
THENCE N 52° 50' 00" W, 281.92 feet with said north line of said Spencer Road
to an iron rod set for corner:
THENCE N 52° 36' 00" W, 111 .50 feet with said north line of said Spencer Road
to an iron rod set for corner;
THENCE N 20° 02' 44" E, 92.00 feet to an iron rod set for corner;
THENCE N 02° 23' 36" W, 267.94 feet to an iron rod set for corner;
THENCE N 88° 09' 17'' E, 48.91 feet to an iron rod set for corner;
THENCE N 01 ° 50' 44" W, 206.45 feet to an iron rod set for corner;
TH ENCE N 38° 22' 23" E, 41.49 feet to a point for PLACE OF BEGINNING;
THENCE N 38° 22' 23" E, 22.63 feet to a point for corner;
THENCE S 06° 36' 45" E, 116.01 feet to a point for corner;
THENCE S "Of0 56' 29" E, 131.21 feet to a point for corner in the face of a
building;
THENCE S 87° 24' 08" W, 16.00 feet with said face of said building to a point for
corner;
THENCE N 01° 56' 29" W, 130.75 feet to a point for corner;
THENCE N 06° 36' 45" W, 99.35 feet to the PLACE OF BEGINNING and
containing 0.088 acre of land.
EXHIBIT D
FIELD NOTES
20.0 FOOT UTILITY EASEMENT
0.661 ACRE
9911645d
BEING all that certain lot, tract or parcel of land situated in the Mary Austin
Survey Abstract Number 4, in the City of Denton, Denton County, Texas, being a
part of Lot 1, Block 2 of Municipal Utility Addition, an addition to the City of
Denton, Denton County, Texas according to the plat thereof recorded in Cabinet
G, Page 346, Plat Records, Denton County, Texas, and being more particularly
described as follows:
COMMENCING at an iron rod found for corner in the north line of Spencer Road,
a public roadway having a right-of-way of 60.0 feet, said point being the
southwest corner of that certain-tract of land conveyed by deed to N. Alex
Bickley, Trustee recorded in Volume 987 , Page 548. Deed Records, Denton
County, Texas:
THENCE N 88° 39' 46" W, 429.83 feet with said north line of said Spencer Road
to an iron rod set for corner;
THENCE along the arc of a curve to the right having a central angle of 32° 15' -
19', a radius of 520.00 feet, an arc length of 292.74 feet, Vvhose chord bears N
72° 32' 06" W, 288.89 feet with said north line of said Spencer Road to an iron
rod set for corner;
THENCE N 52° 50' 00" W, 281 . 92 feet with said north line of said Spencer Road
to an iron rod set for corner;
THENCE N 52° 36' 00" W, 111 .50 feet with said north line of said Spencer Road
to an iron rod set for corner;
THENCE N 20° 02' 44" E, 92.00 feet to an iron rod set for corner;
THENCE N 02° 23' 36" W, 267.94 feet to an iron rod set for corner;
THENCE N 88° 09' 17" E, 48.91 feet to an iron rod set for corner;
THENCE N 01 ° 50' 44" W, 206.45 feet to an iron rod set for corner;
THENCE N 38° 22' 23" E, 161.33 feet to an iron rod set for PLACE OF
BEGINNING;
THENCE N 88° 03' 43" E, 749.08 feet to an iron rod set for corner;
THENCE S 44° 06' 44" E, 22.85 feet to a point for corner;
THENCE S 14° 47' 41" W. 178.74 feet to a point for corner:
THENCE N 87° 03' 19" E. 64.48 feet to a point for corner:
THENCE S 00° 53' 14" W. 10.02 feet to a point for corner:
THENCE S 87° 03' 19" W, 67.01 feet to a point for corner:
THENCE S 14° 47' 41" W, 150.39 feet to a point for corner;
THENCE S 08° 53' 01" E, 261.53 feet to a point for corner in a fence line:
THENCE S 87° 46' 32" W, 20.14 feet with said fence to a point for corner;
THENCE N 08° 53' 01" W. 263.39 feet to a point for corner;
THENCE N 14° 47' 41" E. 148.18 feet to a point for corner;
THENCE S 87° 03' 19" W, 82.86 feet to a point for corner;
THENCE N 02° 56' 41" W, 10.00 feet to a point for corner;
THENCE N 87° 03' 19" E. 86.06 feet to a point for corner;
THENCE N 14° 47' 41" E, 175.92 feet to a point for corner;
THENCE S 88° 03' 43" W. 759.58 feet to a point for corner:
THENCE N 38° 22' 23" E, 26.23 feet to the PLACE OF BEGINNING and
containing 0.661 acre of land.
EXHIBIT E
FIELD NOTES
25.0 FOOT UTILITY EASEMENT
0.367 ACRE
BEING all that ce_rtain lot, tract or parcel of land situated in the Mary Austin
Survey Abstract Number 4, in the City of Denton, Denton County, Texas, being a
part of Lot 1, Block 2 of Municipal Utility Addition, an addition to the City of
Denton, Denton County, Texas according to the plat thereof recorded in Cabiriet
G, Page 346, Plat Records, Denton County, Texas, and being more particularly
described as follows:
COMMENCING at an iron rod found for corner in the north line of Spencer Road,
a public roadway having a right-of-way of 60.0 feet, said point being the
southwest corner of that certain-tract of land conveyed by deed to N. Alex
Bickley, Trustee recorded in Volume 987, Page 548, Deed Records, Denton
County, Texas;
THENCE N 88° 39' 46" W, 429.83 feet with said north line of said Spencer Road
to an iron rod set for corner;
THENCE along the arc of a curve to the right having a central angle of 32° 15' -
'19', a radius of 520.00 feet, an arc length of 292.74 feet, whose chord bears N
72° 32' 06" W, 288.89 feet with said north line of said Spencer Road to an iron
rod set for corner;
THENCE N 52° 50' 00" W, 281 .92 feet with said north line of said Spencer Road
to an iron rod set for corner;
THENCE N 52° 36' 00" W, 90.81 feet with said north line of said Spencer Road
to a point for PLACE OF BEGINNING;
THENCE N 52° 36' 00" W, 20.69 feet with said north line of said Spencer Road
to an iron rod set for corner;
THENCE N 20°-02• 44" E, 18.44 feet to a point for corner;
THENCE S 71 ° 05' 30" E, 358.51 feet to a point for corner;
THENCE S 85° 42' 08" E, 278-38 feet to a point for corner
in a fence line;
THENCE S 02° 31' 55" E, 25.18 feet with said fence to a point for corner;
THENCE N 85° 42' 08" W, 284.58 feet to a point for corner;
THENCE N 71 ° 05' 30" W, 342.47 feet to the PLACE OF BEGINNING and
containing 0.367 acre of land.
EXHIBIT F
FIELD NOTES
50.0 FOOT INGRESS/ EGRESS EASEMENT
0.528 ACRE
BEING all that certain lot, tract or parcel of land situated in the Mary Austin
Survey Abstract Number 4. in the City of Denton, Denton County, Texas, being a
part of Lot 1, Block 2 of Municipal Utility Addition, an addition to the City of
Denton, Denton County, Texas according to the plat thereof recorded in Cabinet
G, Page 346, Plat Records. Denton County, Texas, and being more particularly
described as follows:
COMMENCING at an iron rod found for corner in the north line of Spencer Road,
a public roadway having a right-of-way of 60.0 feet, said point being the
southwest corner of that certain tract of land conveyed by deed to N. Alex
Bickley, Trustee recorded in Volume 987, Page 548, Deed Records, Denton
County, Texas:
THENCE N 88° 39' 46" W, 429.83 feet with said north line of said Spencer Road
to an iron rod set for corner:
THENCE along the arc of a curve to the right having a central angle of 32° 15' _
19', a radius of 520.00 feet, an arc length of 292.74 feet, whose chord bears N
72° 32' 06" W, 288.89 feet with said north line of said Spencer Road to an iron
rod set for corner;
THENCE N 52° 50' 00" W, 281 .92 feet with said north line of said Spencer Road
to an iron rod set for corner;
THENCE N 52° 36' 00" W, 555.38 feet with said north line of said Spencer Road
to a point for PLACE OF BEGINNING;
THENCE N 52° 36' 00" W, 58.54 feet with said north line of said Spencer Road
to a point for corner:
THENCE N 68° 44' 09" E, 223.87 feet to a point for corner:
THENCE N 85° 07' 48" E, 258.98 feet to a point for corner;
THENCE S 01 ° 50' 44" E, 52.65 feet to an iron rod set for corner;
THENCE S 88° 09' 17" W, 48.91 feet to an iron rod set for corn er:
THENCE S 85° 07' 48" W, 200.15 feet to a point for corner;
THENCE S 68° 44' 09" E. 186.22 feet to the PLACE OF BEGINl\i NG and
containing 0.528 acre of land.
PREMIUM:
CODE:
G.F. NUMBER:
$100.00
3210
POLICY NUMBER:
EFFECTIVE DATE:
AMOUNT OF INSURANCE:
1. Name of Insured:
MORTGAGEE FORM
SCHEDULE A
214325-34
27-49-93-177713
July 2, 2001, at 11 :36 O'Clock am
$11,800,000.00
CITY OF DENTON, TEXAS, a municipal corporation
2. The estate or interest in the land that is insured as encumbered by the insured mortgage is:
Tract I:
Tract II and Ill:
Fee Simple
Easement Estate
3. Title to the estate or interest in the land is insured as vested in:
SPENCER STATION GEN ERATING COMPANY, LP., a Delaware limited partnership
4. The insured mortgage and assignments thereof, if any, are described as follows:
Deed of Trust dated June 29, 2001, executed by Spencer Station Generating Company L.P.,
a Delaware limited partnership, to Michael Copeland, Esq., Trustee, filed July 2, 2001, and
recorded under Clerk's Document No. 2001-R0064870, Deed of Trust Records, Denton
County, Texas, said Deed of Trust given to secure one note in the original principal amount of
$11,800,000.00, payable to the City of Denton, Texas.
5. The land referred to in this policy is described as follows:
See Exhibit "A" attached hereto and made a part hereof.
This policy valid only if Schedule B is attached
Mortgagee Policy No. 27-49-93-177713
GF# 214325-34 Page 1
EXHIBIT "A"
LEGAL DESCRIPTION
Tract I:
BElliG all that certain lot, tract or parcel of land situated in the Mary Austin Survey Abstract l'qumber 4, in
the City of Denton, Denton County, Texas, being a part of Lot 1, Block 2 of Municipal Utility Addition, an
addition to the City of Denton, Denton County, Texas according to the plat thereofrecorded in Cabinet G,
Page 346, Plat Records, Denton County, Texas, and being more particularly described as follows:
COl\1},,fENCING at an iron rod found for comer in the north line of Spencer Road, a public roadway having
a right-of-way of 60.0 feet, said point being the southwest comer of that certain tract of land conveyed by
deed to N. Alex Bickley, Trustee recorded in Volume 987, Page 548, Deed Records, Denton County, Texas;
THENCE North 88 degrees 39 minutes 46 seconds West, 130.00 feet with said north line of said Spencer
Road to an iron rod set for PLACE OF BEGINNING;
THENCE North 88 degrees 39 minutes 46 seconds West, 299.83 feet with said north line of said Spencer
Road to an iron rod set for comer;
THENCE along the arc of a curve to the right having a central angle of 32 degrees 15 minutes 19 seconds,
a radius of 520.00 feet, an arc length of 292.74 feet, whose chord bears North 72 degrees 32 minutes 06
seconds West, 288.89 feet with said north line of said Spencer Road to an iron rod set for corner;
THENCE North 52 degrees 50 minutes 00 seconds West, 281.92 feet with said north line of said Spencer
Road to an iron rod set for comer;
THENCE North 52 degrees 36 minutes 00 seconds West, 111.50 feet with said north line of said Spencer
Road to an iron rod set for comer;
THENCE North 20 degrees 02 minutes 44 seconds East, 92.00 feet to an iron rod set for corner;
THENCE North 02 degrees 23 minutes 36 seconds West, 267.94 feet to an iron rod set for corner;
THENCE North 88 degrees 09 minutes 17 seconds East, 48.91 feet to an iron rod set for corner;
THENCE North O 1 degrees 50 minutes 44 seconds West, 206.45 feet to an iron rod set for corner;
THENCE North 38 degrees 22 minutes 23 seconds East, 161.33 feet to an iron rod set for corner;
THENCE North 88 degrees 03 minutes 43 seconds East, 749.08 feet to an iron rod set for corner;
THENCE South 44 degrees 06 minutes 44 seconds East, 53.08 feet to an iron rod set for corner;
EXHIBIT "A"
LEGAL DESCRIPTION
(Continued)
THENCE South 00 degrees 53 minutes 14 seconds West, 562.85 feet to an iron rod set for coiner;
THENCE South 87 degrees 46 minutes 24 seconds West, 258.02 feet to a fence corner for comer;
THENCE South 02 degrees 25 minutes 18 seconds E, 114.07 feet to an iron rod set for comer;
THENCE South 86 degrees 24 minutes 16 seconds West, 68.28 feet to an iron rod set for comer;
THENCE South 02 degrees 32 minutes 00 seconds East, 151.23 feet to a fence comer for corner;.
THENCE North 87 degrees 35 minutes 34 seconds East, 294.01 feet to a fence comer for corner;
TIIENCE South 09 degrees 41 minutes 28 seconds West, 180.28 feet to the PLACE OF BEGINNING and
containing 17. 7 51 acres of land.
Note: The Company does not represent that the acreage and/or square footage calculations are correct.
Tract II: Easement Estate
BEING all that certain lot, tract or parcel of land situated in the Mary Austin Survey Abstract Number 4, in
the City of Denton, Denton County, Texas, being a part of Lot 1, Block 2 of Municipal Utility Addition, an
addition to the City ofDenton,Denton County, Texas according to the plat thereofrecorded in Cabinet G,
Page 346, Plat Records, Denton County, Texas, and being more particularly described as follows:
COrvfivfENCING at an iron rod found for corner in the north line of Spencer Road, a public roadway having
a right-of-way of 60.0 feet, said point being the southwest comer of that certain tract of land conveyed by
deed to N. Alex Bickley, Trustee recorded in Volume 987, Page 548, Deed Records, Denton County, Texas;
THENCE North 88 degrees 39 minutes 46 seconds West, 429.83 feet with said north line of said Spencer
Road to an iron rod set for comer;
THENCE along the arc of a curve to the right having a central angle of 32 degrees 15 minutes 19 seconds,
a radius of 520.00 feet, an arc length of 292.74 feet, whose chord bears North 72 degrees 32 minutes 06
seconds West, 288.89 feet with said north line of said Spencer Road to an iron rod set for comer;
EXHIBIT "A"
LEGAL DESCRIPTION
(Continued)
THENCE North 52 degrees 50 minutes 00 seconds West, 281.92 feet with said north line of-said Spencer
Road to an iron rod set for comer;
THENCE North 52 degrees 36 minutes 00 seconds West, 555.38 feet with said north line of said Spencer
Road to a point for PLACE OF BEGINNING;
THENCE North 52 degrees 36 minutes 00 seconds West, 58.54 feet with said North line of said Spencer
Road to a point for corner;
THENCE North 68 degrees 44 minutes 09 seconds East, 223.87 feet to a point for corner;
THENCE North 85 degrees 07 minutes 48 seconds East, 258.98 feet to a point for comer;
THENCE South O 1 degrees 50 minutes 44 seconds East, 52.65 feet to an iron rod set for corner;
THENCE South 88 degrees 09 minutes 17 seconds West, 48.91 feet to an iron rod set for corner;
THENCE South 85 degrees 07 minutes 48 seconds West, 200.15 feet to a point for corner;
THENCE South 68 degrees 44 minutes 09 seconds East, 186.22 feet to the PLACE OF BEGINNING and
containing 0.528 acre ofland.
Note: The Company does not represent that the acreage and/or square footage calculations are correct.
Tracts ill: Easement Estate
Whereas, the City of Denton is the owner of a tract of land situated in the Mary Austin Survey Abstract
Number 4, Denton County, Texas; said tract being all or parts of tracts of land shown by deed to the City of
Denton recorded in Volume 398, Page 576; shown by deed recorded in Volume 399, Page 471; and those
parts shown by deed to the City of Denton recorded in Volume 478, Page 125 as Tract 1 and Tract 2; of the
Deed Records of Denton County, Texas and being more fully described as follows:
BEGINNING for the most northerly northwest corner of the herein described tract at a half inch rebar found
at the northwest corner of said City of Denton tract (Volume 648, Page 105);
THENCE North 88 degrees 12 minutes 27 seconds East a distance of 385.10 feet to a 3/4 inch pipe found
at an angle point in the north line of said City of Denton tract (Volume 648, Page 105);
EXEIBIT "A"
LEGAL DESCRIPTION
(Continued)
THENCE North 66 degrees 29 minutes 35 seconds East a distance of 493.02 feet to a 3/4 inck pipe found
at the northeast comer of said City of Denton tract (Volume 648, Page 105);
THENCE South 00 degrees 08 minutes 00 seconds East a distance of 2542.59 feet to a three inch pipe found
at the most easterly southeast corner of said City of Denton tract (Volume 648, Page 105), same being a
southwest comer of a tract shown by deed to Clark Brothers recorded in Volume 1546, Page 520 of the Real
Property Records; said pin also being on the north line of a tract shown by deed to N. Alex Bickley, Trustee
recorded in Volume 987, Page 548 of the Deed Records of Denton County, Texas;
THENCE South 89 degrees 3 8 minutes 08 seconds West a distance of 904.52 feet to a half inch re bar pin
found at the southwest corner of said City of Denton tract (Volume 648, Page 105), the same being the
northwest corner of said Bickley tract; said pin also being the east line of said City of Denton tract (Volume
398, Page 576) as recorded in the Deed Records of Denton County, Texas;
THENCE South 00 degrees 53 minutes 14 seconds West with the west line of said Bickley tract a distance
of 1162. 82 feet to a half inch re bar pin found at the southeast corner of said City of Denton tract (Volume
398, Page 576), the same being the north right-of-way line of Spencer Road;
THENCE North 88 degrees 39 minutes 46 seconds West a distance of 596.20 feet to a half inch rebar pin
set for corner in Spencer Road at the point of intersection of a curve to the right, having a radius of 520.00
feet, at a length of292.74 feet and a deflection angle of 32 degrees 15 minutes 18 seconds;
THENCE North 52 degrees 50 minutes 00 seconds West a distance of 1222.03 feet to a half inch rebar pin
set for the southwest comer of said City of Denton tract (Volume 398, Page 576), said corner being in the
north right-of-way line of Spencer Road;
THENCE North 04 degrees 23 minutes 39 seconds East a distance of 953.49 feet with the west line of said
City of Denton tract (Volume 398, Page 576), and the east line of a tract shown by deed to Dallas Land
Development, Inc. as recorded in Volume 832, Page 79 of the Deed Records of Denton County, Texas, to
a half inch re bar pin set for the most westerly northwest corner of said City of Denton tract (Volume 3 98,
Page 576), the same being in the south right-of-way line of a 30 foot wide road right-of-way dedicated to
the County of Denton as recorded in Volume 407, Page 472 of the Deed Records of Denton County, Texas;
THENCE North 88 degrees 05 minutes 58 seconds East a distance of 1531.18 feet with the north line of said
City of Denton tract (Volume 398, Page 576) and with the south line of said 30 foot wide road to a half inch
rebar pin set for an inside corner of the herein described tract, the same being in the west line of said City
of Denton tract (Volume 648, Page 105);
EXHIBIT "A"
LEGAL DESCRIPTION
(Continued)
THENCE North O 1 degrees 30 minutes 20 seconds East a distance of 30.05 feet to a half in rebat set for an
inside comer of the herein described tract, the same being in the north right-of-way line of said 30 foot wide
road and also a point in the south line of a tract shown by need to Denton TEC Center, Inc. as recorded in
Volume 2124, Page 775 of the Deed Records of Denton County, Texas;
TIIENCE North 88 degrees 05 minutes 58 seconds East a distance of 23.06 feet with the south line of said
Denton TEC Center, Inc deed, (Volume 2124, Page 775) to a cross-tie fence comer post for an inside comer
of said tract;
THENCE North 00 degrees 36 minutes 10 seconds East a distance of 1572.24 feet to a half in rebar found
for an angle point in the most northern west line of the herein described tract, the same being the southeast
comer of the E. Morris Survey, Abstract Number 868 and the northeast corner of the said Denton TEC
Center, Inc. tract (Volume 2124, Page 775);
THENCE North 02 degrees 13 minutes 34 seconds East a distance of 145.82 feet with the east line of the
E. Morris Survey, Abstract Number 868 and continuing with the west line of said City of Denton tract
(Volume 648, Page 105) to the point of beginning ofthis portion of the herein described tract and containing
l 00 .900 acres of land.
LESS AND EXCEPT:
FIELD NOTES to all that certain tract ofland situated in the City and County of Denton, State of Texas, and
being a part of the Mary Austin Survey, Abstract No. 4 and being part of Lot 1, Block 1 and a part of Lot
1 and Block 2 of the Municipal Utility Addition, an addition to the City and County of Denton, recorded in
Cabinet G, Page 346 of the Plat Records of Denton County, Texas and being more particularly described as
follows:
COMMENCING at the Northwest corner of said Lot l, Block l;
THENCE South 02 degrees 13 minutes 34 seconds West along the West line of said Lot 1, Block 1, a
distance of 110.27 feet to a 1/2" iron rod set at the Northwest comer of the tract being described herein and
the POINT OF BEGINNING, said iron rod also at the Southwest comer of a drainage and utility easement
as shown on said Plat;
THENCE North 88 degrees 12 minutes 27 seconds East, along the said easement South boundary line a
distance of 149.37 feet to a 1/2" iron rod set for comer;
THENCE South 57 degrees 16 minutes 37 seconds East, continuing along said easement South fine a
distance of 824.65 feet to a 1/2" iron rod set for comer in the East line of said Lot 1, Block 1;
EXHIBIT "A"
LEGAL DESCRIPTION
(Continued)
THENCE South 00 degrees 08 minutes 00 seconds East, along the East boundary of said Lot 1; Block 1,
passing at 394.04 feet the Southeast comer of said Lot 1, Block 1, same being the North Right-o(-Way line
of Morse Road, continuing and passing the South Right-of-Way of Morse Road, same being the Northeast
comer of said Lot 1, Block 2, continuing and along the East boundary line of said Lot 1, Block 2, a total
distance of 1137.91 feet to a 1/2" iron rod set for corner;
THENCE South 88 degrees 05 minutes 58 seconds West, a distance of 864.11 feet to a railroad cross-tie
found at a salient comer of said Lot 1, Block 2, and also being the Easterly Southeast comer of a tract of land
described in Volume 2124, Page 775, Real Property Records, Denton County, Texas;
THENCE North 00 degrees 36 minutes 10 seconds East along the most Northerly West line of said Lot 1,
Block 2, same being the East boundary line of said tract described in Volume 2124, Page 775, of the Real
Property Records of Denton County, Texas, passing at 918.55 feet the Northwest comer of said Lot 1, Block
2, same being the South Right-of-Way of Morse Road, continuing and passing the North Right-of-Way of
Morse Road, same being the Southwest comer of said Lot 1, Block 1, a total distance of 1572.24 feet to 1/2"
iron rod found for corner;
THENCE North 02 degrees 13 minutes 34 seconds East, continuing along the West line of said Lot 1, Block
1, a distance of35.55 feet to the POINT OF BEGINNING and containing 27.749 acres ofland more or less.
AND LESS AND EXCEPT the 17.751 acres described as Tract 1 above.
MORTGAGEE FORM
SCHEDULE B
MORTGAGEE POLICY NUMBER: 27-49-93-177713
G.F. NUMBER: 214325-34
This policy does not insure against loss or damage (and the Company will not pay costs, attorney's
fees or expenses) that arise by reason of the terms and conditions of the leases and easements, if any,
shown in Schedule A, and the following matters:
1. Deleted.
2. Any discrepancies, conflicts, or shortages in area or boundary lines, or any encroachments or
protrusions, or any overlapping of improvements.
3. Standby fees, taxes and assessments by any taxing authority for the year 2001 and
subsequent years, and subsequent taxes and assessments by any taxing authority for prior
years due to change in land usage or ownership, but not those taxes or assessments for prior
years because of an exemption granted to a previous owner of the property under Section
11.13, Texas Tax Code, or because of improvements not assessed for a previous tax year.
4. (Insert here all other specific exceptions as to superior liens, easements, outstanding mineral
and royalty interests, inc.)
a. Easement for the installation, operation and maintenance of underground/overhead
electrical distribution systems granted to Texas Power & Light Company by Mrs. B.J.
Wills, by instrument dated September 25, 1924, filed December 1, 1924, recorded in
Volume 197, Page 21, of the Deed Records of Denton County, Texas.
b. Easement for the installation, operation and maintenance of underground/overhead
electrical distribution systems granted to Texas Power & Light Company by Alex
Dickie, by instrument dated August 22, 1946, filed September 26, 1946, recorded in
Volume 327, Page 437, of the Deed Records of Denton County, Texas.
c. Right of way Easement for pipeline granted to Sinclair Refining Company, by Alex
Dickie and Ollie R. Dickie, by instrument dated November 29, 1947, filed December
20, 1947, recorded in Volume 341, Page 269, as assigned to Sinclair Pipeline
Company by Assignment dated December 28, 1950, filed January 22, 1951, recorded
in Volume 362, Page 524, of the Deed Records of Denton County, Texas.
Mortgagee Policy No. 27-49-93-177713
GF# 214325-34 Page2
. .
d. Easement for sewer line granted to City of Denton, by M.S. Acuff and Mintie A. Acuff,
by instrument dated May 28, 1923, filed June 16, 1923, recorded in Volume 185,
Page 147, of the Deed Records of Denton County, Texas.
e. Easement for street purposes granted to City of Denton, by Alex Dickie, by instrument
dated March 3, 1955, filed March 9, 1955, recorded in Volume 407, Page 575, of the
Deed Records of Denton County, Texas.
f. Any portion of subject property lying within the right-of-way of any road, public or
private.
g. Rights of tenants in possession, as tenants only, under any unrecorded leases or rental
agreements.
h. Easement, License and Attachment Agreement between the City of Denton, Texas, and
Spencer Station Generating Company, L.P. dated June 29, 2001, filed July 2, 2001,
under Document No. 2001-R0064866, Deed records of Denton County, Texas.
i. Unrecorded Continuing Site/Interconnection Agreement between the City of Denton,
Texas, and Spencer Station Generating Company, L.P. dated June 29, 2001.
j. Easement for Pipeline granted to Lone Star Gas Company, by City of Denton, a
municipal corporation, by instrument dated June 22, 1955, filed July 15, 1955,
recorded in Volume 411, Page 413, of the Deed Records of Denton County, Texas.
(Affects Tract Ill only)
k. Easement for Electric Lines granted to Brazos River Transmission Electric Cooperative,
Inc., by Alex Dickie, an unmarried man, by instrument dated June 4, 1947, filed
October 24, 1949, recorded in Volume 357, Page 53 of the Deed Records of Denton
County, Texas. (Affects Tract Ill only)
I. Terms, conditions and stipulations of that certain Bill of Sale and Conveyance of
Easements by and between Texas Power and Light Company and City of Denton, dated
October 16, 1961, filed December 6, 1961, recorded in Volume 475, Page 496, of the
Deed Records of Denton County, Texas. (Affects Tract Ill only)
m. Oil, Gas and Mineral Lease filed October 10, 1957, recorded in Volume 432, Page 597
of the Deed Records of Denton County, Texas, in favor of Standard Oil Company of
Texas, executed by The City of Denton, Texas, a municipal corporation. (Title to said
lease not checked subsequent to date of execution.) (Affects Tracts Ill only)
n. Oil, Gas and Mineral Lease filed April 8, 1955, recorded in Volume 405, Page 457 of
the Deed Records of Denton County, Texas, in favor of Standard Oil Company of
Texas, executed by Mrs. Sally Simpson and husband, Paul Simpson. (Title to said
lease not checked subsequent to date of execution.) (Affects Tracts Ill only)
Mortgagee Policy No. 27-49-93-177713
GP# 214325-34 Page3
. ,
o. Easement for Communications granted to texas Municipal Power Agency and Brazos
Electric Power Cooperative, Inc., by The City of Denton, a municipal corporation, by
instrument dated August 19, 1980, filed September 2, 1980, recorded in Volume
1033, Page 856 of the Deed Records of Denton County, Texas. (Affects Tracts Ill
only)
FIDELITY NATIONAL TITLE INSURANCE COMPANY
Countersigned:
FIDELITY NATIONAL TITLE AGENCY, INC.
Schedule B of this policy consists of three pages.
Mortgagee Policy No. 27-49-93-177713
GP# 214325-34 Page4