EXHIBIT 3.3
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
MARKWEST ENERGY GP, L.L.C.
A DELAWARE LIMITED LIABILITY COMPANY
DATED AS OF
MAY 24, 2002
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
MARKWEST ENERGY GP, L.L.C.
A DELAWARE LIMITED LIABILITY COMPANY
This AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT (this
"AGREEMENT") of MARKWEST ENERGY GP, L.L.C. (the "COMPANY") is made and entered
into as of May 24, 2002 (the "EFFECTIVE DATE"), by and among each person or
entity listed as a member of the Company on the Schedule of Members attached
hereto as EXHIBIT A, and such other holders of membership interests in the
Company who become parties hereto from time to time.
ARTICLE 1
DEFINITIONS
The following definitions shall be applicable to the terms set forth below
as used in this Agreement:
"ACT" shall mean the Delaware Limited Liability Company Act (Delaware
General Corporations Code Sections 18-101 et seq.), as it may be amended from
time to time, and any corresponding provisions of succeeding law. All references
in this Agreement to provisions of the Act shall be deemed to refer, if
applicable, to their successor statutory provisions to the extent appropriate in
light of the context herein in which such references are used.
"AFFILIATE" shall mean, with respect to any person or entity, any other
person or entity that directly or indirectly controls, or is controlled by, or
is under common control with, such first party. For the purposes of this
definition, "CONTROL" when used with respect to any Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"AGREEMENT" shall mean this Amended and Restated Limited Liability Company
Agreement of MarkWest Energy GP, L.L.C., as the same may be amended,
supplemented or restated from time to time in accordance with the terms hereof.
"APPROVED SALE" shall have the meaning set forth in Section 15.6 hereof.
"ASE" shall mean the American Stock Exchange.
"ASSIGNEE" shall mean any party to whom a Membership Interest or Membership
Interests have been Transferred in a manner permitted under this Agreement, but
who has not been admitted as a Substitute Member and thus has only the rights
set forth in Section 12.4.
"AUDIT COMMITTEE" shall have the meaning set forth in Section 7.9(b)
hereof.
"BOARD" shall have the meaning set forth in Section 7.1 hereof.
"CALL ELECTION" shall have the meaning set forth in Section 13.1(a) hereof.
"CALL PERIOD" shall have the meaning set forth in Section 13.1(a) hereof.
"CALL PRICE" shall have the meaning set forth in Section 13.1(b) hereof.
"CALL TERMS" shall have the meaning set forth in Section 13.1(c) hereof.
"CALL MEMBERSHIP INTERESTS" shall have the meaning set forth in Section
13.1(b) hereof.
"CAPITAL ACCOUNT" shall mean the capital account maintained by the Company
with respect to each Member in accordance with the capital accounting rules
described in Article 3.
"CAPITAL ACCOUNT GROSS INCOME" AND "CAPITAL ACCOUNT DEDUCTION" shall mean,
respectively, items of gross income and deduction of the Company determined in
accordance with Section 703(a) of the Code (including all items of income, gain,
loss or deduction required to be stated separately pursuant to Section 703(a)(1)
of the Code), with the following adjustments:
(a) Any income of the Company that is exempt from Federal income tax
shall be taken into account as Capital Account Gross Income;
(b) Any expenditures of the Company described in Section 705(a)(2)(B)
of the Code shall be taken into account as Capital Account Deductions;
(c) In the event the book value of any Company asset as determined
for Capital Account purposes is adjusted pursuant to Section 3.7(b) or Section
3.7(c), the amount of such adjustment shall be taken into account as an item of
Capital Account Gross Income or Capital Account Deduction; and
(d) With respect to property reflected in the Capital Accounts at a
book value different from its adjusted basis, items of depreciation,
amortization and gain or loss shall be computed in the same manner as such items
are computed for federal income tax purposes, except that the computation shall
be made with reference to such property's book value as determined for purposes
of maintaining the Capital Accounts instead of its adjusted tax basis, in
accordance with Treasury Regulations Section 1.704-1(b)(2)(iv)(g).
"CAPITAL CONTRIBUTION" shall mean the amount of money and/or the fair
market value of any property (net of any liabilities encumbering such property
that the Company is considered to assume or take subject to under Code Section
752) contributed to the capital of the Company by any Member. "CERTIFICATE OF
FORMATION" shall mean the certificate of formation for the Company as originally
filed in the Office of the Secretary of State of Delaware, as such certificate
may be amended from time to time.
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"CHANGE OF CONTROL" shall mean (a) a dissolution or liquidation of a
Person, or (b) a consolidation or merger of a Person with or into any other
corporation or other entity or person, or any other corporate reorganization, in
which the stockholders of the affected Person immediately prior to such
consolidation, merger or reorganization, own less than 50% of the affected
Person's voting power immediately after such consolidation, merger or
reorganization; PROVIDED, HOWEVER, that a "Change of Control" shall not include
(i) any transaction with an Affiliate or Affiliates of MarkWest or any
consolidation or merger effected exclusively to change the domicile of MarkWest
or (ii) the acquisition by Xxxx X. Xxx, directly or indirectly, of beneficial
ownership of more than 50% of the voting power of MarkWest.
"CLASS A MEMBERS" shall mean the holders of Class A Membership Interests.
"CLASS B MEMBERS" shall mean the holders of Class B Membership Interests.
"CLASS A MEMBERSHIP INTERESTS" shall have the meaning set forth in Section
3.1 hereof.
"CLASS B MEMBERSHIP INTERESTS" shall have the meaning set forth in Section
3.1 hereof.
"CODE" shall mean the Internal Revenue Code of 1986, as amended. All
references in this Agreement to provisions of the Code shall be deemed to refer,
if applicable, to their successor statutory provisions to the extent appropriate
in light of the context herein in which such references are used.
"COMPANY" shall mean the limited liability company organized and continuing
under this Agreement, notwithstanding changes in its membership.
"COMPENSATION COMMITTEE" shall have the meaning defined in the Partnership
Agreement.
"CONFLICTS COMMITTEE" shall have the meaning set forth in Section 7.9(d)
hereof.
"CO-SALE NOTICE" shall have the meaning set forth in Section 15.1 hereof.
"CO-SALE OBLIGATION" shall have the meaning set forth in Section 15.2
hereof.
"CO-SALE TERMS" shall have the meaning set forth in Section 15.1 hereof.
"CONFLICTS DIRECTOR" shall mean a Director who is a member of the Conflicts
Committee.
"CONVERSION DATE" shall mean the date on which all of the Subordinated
Units of the Partnership have been converted to common units of the Partnership.
"CONVEYANCE AGREEMENT" means that certain Contribution, Conveyance and
Assumption Agreement, of even date herewith, among the Company, MarkWest Energy
Partners, L.P., MarkWest Energy Operating Company, L.L.C., MarkWest Michigan,
Inc., MarkWest Energy Appalachia, L.L.C., and MarkWest Hydrocarbon, Inc.
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"COVERED PERSON" shall mean any Director, any Member, any Affiliate of any
Director or Member, any employee, officer, shareholder, partner or member of any
Director or Member or their respective Affiliates, or any of the Company's
officers, employees, representatives or agents or their respective Affiliates.
"DIRECTOR" or "DIRECTORS" shall have the meaning set forth in Section 7.2
hereof.
"DISCRETION" shall have the meaning set forth in Section 19.11 hereof.
"DISSOLUTION EVENT" shall have the meaning set forth in Section 17.1
hereof.
"EFFECTIVE DATE" shall have the meaning set forth in the preamble to this
Agreement.
"EXCESS NONRECOURSE LIABILITIES" shall have the meaning set forth in
Section 5.6 hereof.
"INCENTIVE PLANS" shall mean any plan or arrangement pursuant to which the
Company or the Partnership may compensate its directors, officers, employees,
consultants and/or service providers.
"INDEPENDENT DIRECTOR" shall mean a Director meeting the independence and
experience requirements to serve on an audit committee of a board of directors
as set forth most recently by the ASE or such other exchange as may be
applicable to the Partnership.
"LIQUIDATING GAINS" and "LIQUIDATING LOSSES" shall mean taxable income or
loss of the Company as determined by taking into account only items of Capital
Account Gross Income and Capital Account Deduction that arise from the sale or
deemed sale of all or substantially all of the assets of the Company, and by
excluding items that are specifically allocated pursuant to Items 1 through 3
and Item 7 on EXHIBIT B hereto.
"MANDATORY SALE" shall have the meaning set forth in Section 13.3 hereof.
"MANDATORY SALE PRICE" shall have the meaning set forth in Section 13.3(a)
hereof.
"MANDATORY SALE TERMS" shall have the meaning set forth in Section 13.3(b)
hereof.
"MANDATORY SALE MEMBERSHIP INTERESTS" shall have the meaning set forth in
Section 13.3(a) hereof.
"MARKWEST" shall mean MarkWest Hydrocarbon, Inc., a Delaware corporation,
or any successor thereto.
"MEMBER NONRECOURSE DEBT MINIMUM GAIN" shall have the meaning set forth in
Item 1 on EXHIBIT B hereto.
"MEMBERS" shall mean collectively, and as of any date of reference, all
Persons who as of such date are admitted as either a Class A or Class B Member
of the Company in accordance with the provisions of this Agreement, in each case
in such Person's capacity as a Member of the
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Company. The term "Member" may be used herein to refer individually to any of
such Members.
"MEMBERSHIP INTERESTS" shall mean a percentage of the ownership interests
in the Company, including but not limited to, a percentage ownership interest in
Profits, Losses, and any other distributions, allocations, or rights set forth
herein. Membership Interests shall be divided into Class A Membership Interests
and Class B Membership Interests, as provided for in Sections 3.1 and 3.2
hereof.
"MINIMUM GAIN" shall have the meaning set forth in Item 1 on EXHIBIT B
hereto.
"NEW MEMBERSHIP INTERESTS" shall have the meaning set forth in Section 14.2
hereof.
"OTHER SIMILAR ACTIVITIES" shall have the meaning set forth in Section 10.1
hereof.
"PARTNER NONRECOURSE DEDUCTIONS" shall have the meaning set forth in Item 4
on EXHIBIT B hereto.
"PARTNERSHIP" shall mean MarkWest Energy Partners, L.P., a Delaware limited
partnership, of which the Company is the general partner.
"PARTNERSHIP AGREEMENT" means the Amended and Restated Agreement of Limited
Partnership of the Partnership, as it from time to time exists.
"PERSON" shall mean any individual, corporation, association, partnership
(general or limited), joint venture, limited liability company, limited
liability partnership, joint stock company, unincorporated organization,
government entity (or any agency or political subdivision thereof), trust
(including any beneficiary thereof), estate or other legal entity or
organization.
"PROFITS" and "LOSSES" shall mean, for each fiscal year or other period, an
amount equal to the Company's net income or loss for such year or period,
determined by taking into account only items of Capital Account Gross Income and
Capital Account Deduction, and excluding Liquidating Gain and Liquidating Loss,
and excluding items that are specifically allocated pursuant to Items 1 through
5 and Item 7 on EXHIBIT B hereto.
"PROHIBITED TRANSFER" shall have the meaning set forth in Section 15.11
hereof.
"REGULATIONS" shall mean the federal income tax regulations as promulgated
by the U.S. Treasury Department, as such regulations may be in effect from time
to time. All references in this Agreement to provisions of the Regulations shall
be deemed to refer, if applicable, to their successor regulatory provisions to
the extent appropriate in light of the context herein in which such references
are used.
"REGULATORY ALLOCATIONS" shall have the meaning set forth in Item 7 on
EXHIBIT B hereto.
"SALE OF THE COMPANY" shall mean (a) a dissolution, liquidation or sale of
substantially all of the assets of the Company, (b) a consolidation or merger of
the Company with or into any
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other corporation or other entity or person, or any other corporate
reorganization, in which the Members of the Company immediately prior to such
consolidation, merger or reorganization, own less than 50% of the Company's
voting power immediately after such consolidation, merger or reorganization, or
(c) any transaction or series of related transactions to which the Company is a
party in which in excess of fifty percent (50%) of the Company's voting power is
transferred; PROVIDED, HOWEVER, that a "Sale of the Company" shall not include
any transaction with an Affiliate or Affiliates of the Company or any
consolidation or merger effected exclusively to change the domicile of the
Company.
"SECURITIES ACT" shall have the meaning set forth in Section 19.1 hereof.
"SELLING HOLDER" shall have the meaning set forth in Section 13.2(a)
hereof.
"SUBORDINATED UNITS" means Subordinated Units of the Partnership (as
defined and described in the Partnership Agreement) as such Subordinated Units
exist as of the date of this Agreement.
"SUBSEQUENT CAPITAL CONTRIBUTION" shall mean any Capital Contribution
subsequent to a Member's initial Capital Contribution described in Section 3.5.
"SUBSTITUTE MEMBER" shall mean a Transferee who is admitted as a Member of
the Company pursuant to Section 12.3.
"TAX MATTERS MEMBER" shall have the meaning set forth in Section 11.3(a).
"TERMINATING HOLDER" shall have the meaning set forth in Section 13.3
hereof.
"TERMINATION DATE" shall have the meaning set forth in Section 13.3 hereof.
"TOTAL DISABILITY" or "TOTALLY DISABLED" shall mean a Person's physical or
mental inability for 180 consecutive days to provide such Person's historic,
customary services to the Company, as determined by the Board.
"TRANSFER" (and related words) shall mean any sale, assignment, gift
(outright or in trust), hypothecation, pledge, encumbrance, mortgage, exchange
or other disposition, whether voluntary or involuntary, by operation of law or
otherwise, of all or any portion of a Member's Membership Interests.
"TRANSFEREE" shall mean a person who receives a Membership Interest or
Membership Interests by means of a Transfer.
"TRANSFEROR" shall mean a Member whose Membership Interests are subject to
a Transfer in whole or in part.
"VALUATION FORMULA" shall mean the price obtained for a Class B Membership
Interest by reference to the following formula:
Class B Member's Membership Interest Price = ((CAD X PMI)/CTY) + SCC
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Where:
CAD means the total distributions paid by the Partnership to
the Company with respect to the quarter in which the
measurement date occurs, multiplied by four;
CTY means the total distributions to be paid by the
Partnership on each common unit of the Partnership during
the quarter in which the measurement date occurs, multiplied
by four, and divided by the average closing price of the
Partnership's common units for the twenty trading days
preceding the measurement date.
PMI means the Member's Membership Interest expressed as a
decimal of the total Membership Interests of the Company.
SCC means any Subsequent Capital Contributions made by the
Member to the extent that distributions by the Partnership
with respect to the calendar quarter in which the Class B
Member's Membership Interest Price is determined did not
include a portion attributable to the additional equity
interests issued in connection with such Subsequent Capital
Contribution.
For purposes of determining the total distributions to be paid by the
Partnership to the Company or on each common unit of the Partnership during a
particular quarter, reference shall be made to the distribution that is publicly
announced to be paid by the Partnership during the quarter or, if the
Partnership has not made such a public announcement, reference shall be made to
the distribution that was paid during the immediately preceding quarter.
ARTICLE 2
ORGANIZATION
2.1 FORMATION OF COMPANY. Pursuant to and under the Act, the Company was
formed as a Delaware limited liability company under the laws of the State of
Delaware by the filing of the Certificate of Formation with the Office of the
Secretary of State of Delaware. The rights and liabilities of the Members shall
be determined pursuant to the Act and this Agreement. To the extent that the
rights or obligations of any Member are different by reason of any provision of
this Agreement than they would be in the absence of such provision, this
Agreement shall, to the extent permitted by the Act, control.
2.2 COMPANY NAME. The name of the Company shall be "MarkWest Energy GP,
L.L.C.". The business of the Company shall be conducted under such name or under
such other name or names as the Company may from time to time determine.
2.3 TERM. The term of the Company shall commence on the Effective Date
and, unless dissolved earlier pursuant to this Agreement, shall continue
indefinitely.
2.4 BUSINESS PURPOSES. The Company may carry on any lawful businesses and
activities as from time to time are permitted under the Act and that the Board
deems appropriate; provided, however, the Company shall have no authority to
carry on any businesses or engage in
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any other activities or conduct that would cause the Company to be in violation
of the Partnership Agreement. Subject to the limitations expressly set forth in
this Agreement, the Company shall have the authority to do any and all acts and
things deemed necessary or desirable by the Board to further the Company's
purposes and carry on the Company's or the Partnership's business, including the
following:
(a) acting as the General Partner of the Partnership;
(b) owning a 2% General Partnership Interest, or such other amounts
of the General Partnership Interest, as it from time to time owns, in the
Partnership and owning the Incentive Distribution Rights (both as defined in the
Partnership Agreement), except as the transfer of either of such interests may
be permitted under the Partnership Agreement;
(c) entering into any kind of activity and performing contracts of
any kind necessary or desirable for the accomplishment of its business
(including the business of the Partnership);
(d) except as restricted in the Partnership Agreement, borrowing
money and issuing evidence of indebtedness and securing any such indebtedness by
mortgage or pledge of, or other lien on, the assets of the Company;
(e) except as restricted in the Partnership Agreement, issuing a
guaranty of indebtedness and securing any such indebtedness by mortgage or
pledge of, or other lien on, the assets of the Company;
(f) acquiring any property, real or personal, in fee or under lease
or license, or any rights therein or appurtenant thereto, necessary or desirable
for the accomplishment of the business (including the business of the
Partnership);
(g) entering into any such instruments and agreements as the Board
may deem necessary or desirable for the ownership, management, operation,
leasing and sale of the Company's or the Partnership's property; and
(h) negotiating and concluding agreements for the sale, exchange, or
other disposition of substantially all of the property of the Company, or the
refinancing of any loan obligation of the Company.
The Members hereby specifically consent to and approve the execution and
delivery by the Officers of the Company, on its behalf, all loan agreements,
notes, security agreements or other documents or instruments, if any, as
required by any lender providing funds to the Company or the Partnership and
ancillary documents contemplated thereby.
2.5 POWERS. In furtherance of its business purposes, the Company shall
have and may exercise all the powers conferred by the laws of Delaware upon
limited liability companies formed under the Act, as now in effect or at any
time hereafter amended, which are necessary or convenient to the conduct,
promotion or attainment of the business purposes set forth in Section 2.4.
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2.6 PLACE OF BUSINESS, AGENT AND OFFICE OF THE COMPANY. The principal
business office of the Company shall be 000 Xxxxxxxxx Xxxxx Xxxx, Xxxxx 000,
Xxxxxxxxx, Xxxxxxxx 00000. The Company may at any time and from time to time (i)
establish (and change as deemed appropriate) a principal business office for the
Company within or outside of the State of Colorado, and (ii) establish such
additional offices of the Company within or outside the State of Colorado as it
may from time to time deem appropriate for the conduct of the Company's business
affairs. The Company shall establish a registered office in the State of
Delaware, and shall register as a foreign limited liability company and take
such other actions as the Company deems necessary or appropriate to allow the
Company to conduct business in such jurisdictions as the Company deems
appropriate. The Company shall designate initial agents for the service of
process in the State of Delaware and such other jurisdictions as the Company
deems appropriate, and shall maintain the names and business addresses of such
agents in the records of the Company. The Company may from time to time change
the designation of any such party who is to serve as such agent and may provide
for additional agents for service in such other jurisdictions as the Company
deems appropriate.
2.7 FILING OF FICTITIOUS BUSINESS NAME STATEMENT. The Company shall
execute such fictitious business name statement or statements and cause the same
to be filed, recorded and/or published, as may be required from time to time (if
at all) by applicable law, in the counties or other locations deemed appropriate
by the Company.
2.8 OTHER FILINGS. The Company shall execute, deliver, publish, file
and/or record any other instrument(s) as are appropriate in furtherance of the
Company's business or as may be required in accordance with applicable law,
including but not limited to any certificate or application (or any amendments
and/or restatements thereof) necessary for the Company to qualify to do business
in the jurisdictions in which the Company conducts business.
ARTICLE 3
CAPITAL AND CAPITAL ACCOUNTS
3.1 CAPITAL STRUCTURE. The ownership interests in the Company shall be
evidenced by Membership Interests, with each Membership Interest evidencing a
specific percentage interest in the Company during its existence and in its
assets upon its dissolution. The Membership Interests shall be designated as
"CLASS A MEMBERSHIP INTERESTS" and "CLASS B MEMBERSHIP INTERESTS," with each
such class having the right, powers and privileges as set forth in this
Agreement.
3.2 CLASS A AND CLASS B MEMBERSHIP INTERESTS. A percentage of Class A
Membership Interest shall have an equivalent economic interest in the Company as
a percentage of Class B Membership Interest. Class A Membership Interests shall
only be issued to or held by MarkWest, and any Class B Membership Interests
acquired by MarkWest shall, automatically and without any further action on
MarkWest's or the Company's part, be converted into equivalent Class A
Membership Interests. At its Discretion, MarkWest may convert Class A Membership
Interests into Class B Membership Interests for the purposes of distribution or
transfer of such Membership Interests to other Persons. Class B Membership
Interests shall only be issued to or held by Persons other than MarkWest.
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3.3 INITIAL CAPITAL CONTRIBUTIONS. MarkWest has made the initial capital
contributions to the Company as described in and set forth in the Conveyance
Agreement.
3.4 MEMBERS. Following the initial capital contribution of MarkWest under
Section 3.3, above, MarkWest has sold certain Membership Interests to the
Persons set forth on EXHIBIT A such that as of the date hereof, all of the
Members and their respective Membership Interests in the Company are as
reflected in EXHIBIT A attached hereto. Persons may be admitted to the Company
as Members, on such terms and conditions as the Board determines at the time of
admission, or as otherwise provided in this Agreement. The terms of admission or
issuance may provide for the creation of different classes or groups of Members
having different rights, powers and duties. Subject to the provisions of
Sections 6.8(b)(i) and 18.1, the Board may reflect the creation of any new class
or group in an amendment to this Agreement indicating the different rights,
powers and duties, and such an amendment shall be approved by the Board and
executed by the officers of the Company authorized by the Board to execute such
amendment. Any such admission is effective only after such new Member has
executed and delivered to the Members and the Company an instrument containing
the notice address of the new Member, the Member's ratification of this
Agreement and agreement to be bound by it.
3.5 SUBSEQUENT CAPITAL CONTRIBUTIONS. Except as provided herein with
respect to MarkWest, no Member shall be required to make any Subsequent Capital
Contribution to the Company, except as may be required under applicable law. If
the Company is required to make a capital contribution to the Partnership under
the provisions of Section 5.2(b) of the Partnership Agreement, each Class B
Member shall have the right to make a Subsequent Capital Contribution to the
Company for that purpose in an amount equal to, and only equal to, its
Membership Interest percentage of the required capital contribution to the
Partnership. If any Class B Member does not make such Subsequent Capital
Contribution ("Non-Contributing Member"), then MarkWest will be required to
make, in addition to its owns Subsequent Capital Contribution, the amount of the
Subsequent Capital Contribution not made by the Non-Contributing Member in order
for the Company to make its required contribution to the Partnership. If the
Subsequent Capital Contributions made to the Company are other than in
proportion to each Member's Membership Interest, then the Membership Interests
shall be adjusted to reflect the disproportionate Subsequent Capital
Contributions in the following manner:
MI(R) = MI(CAD/CTY) + PI(ACC)
---------------------
(CAD/CTY) + ACC
Where:
MI is the Member's Membership Interest, as a percentage, before the
Subsequent Capital Contributions
ACC is the total Subsequent Capital Contribution of all Members making a
Subsequent Capital Contribution
PI is the Member's percentage Subsequent Capital Contribution of the ACC
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MI(R) is the Member's revised Membership Interest, as a percentage, after
the Subsequent Capital Contributions made in order for the Company to make
any required contributions under the Partnership Agreement
3.6 LOANS TO THE COMPANY. Any Member, directly or through an Affiliate,
may at any time or from time to time lend funds to the Company with the consent
of the Board. Any such loan shall be repayable by the Company to the Member (or
its Affiliate, if applicable) at such date or dates as they may agree, and shall
bear interest and carry such other terms as they may agree at a fair market
interest rate and terms for similar loans between unaffiliated parties. The
Members expressly agree and acknowledge that nothing in this Section 3.6 shall
be deemed to require or otherwise obligate any Member to make any such loan to
the Company. A loan by a Member to the Company shall not increase the interest
of the lending Member in the capital of the Company and shall not entitle such
Member to any increased share in the Company's capital, Profits or Losses.
3.7 CAPITAL ACCOUNTS.
(a) A Capital Account shall be established for each Member and shall
be determined and maintained in accordance with the provisions of Code Section
704 and the Regulations thereunder. A Member that has more than one class or
series of Membership Interests shall have a single Capital Account that reflects
all such class, classes or series of Membership Interests and regardless of time
or manner in which such Membership Interests were acquired. In addition to such
other adjustments as may be required under this Agreement or pursuant to such
Regulations, each Member's Capital Account shall be (a) increased by (i) such
Member's Capital Contribution to the Company, plus (ii) the amount of any
Profits and Liquidating Gains allocated to such Member and items of Capital
Account Gross Income specially allocated to such Member pursuant to Article 5,
and (b) decreased by (i) the amount of any Losses and Liquidating Losses
allocated to such Member and items of Capital Account Deduction specially
allocated to such Member pursuant to Article 5, (ii) the amount of any cash or
other assets distributed to such Member by the Company, and (iii) the fair
market value, as determined by the Board, of any property distributed, or deemed
hereunder to be distributed, to such Member by the Company (net of any
liabilities that such Member is considered to assume or take subject to under
Code Section 752 upon any such distribution of property).
(b) In accordance with Regulations Section 1.704-1(b)(2)(iv)(e),
immediately prior to the actual or deemed distribution of any Company asset in
kind, the Capital Accounts of all Members and the Company's book carrying value
of such Company asset shall be adjusted upward or downward to reflect any
unrealized gain or unrealized loss attributable to such Company asset as if such
unrealized gain or unrealized loss had been recognized upon an actual sale of
such Company asset immediately prior to such distribution and had been allocated
to the Members at such time pursuant to Article 5. For purposes of determining
such unrealized gain or unrealized loss, the fair market value, as determined by
the Board, of Company assets shall be used.
(c) Upon any event described in Regulation Section
1.704-1(b)(2)(iv)(f)(5), the Capital Accounts may, at the Discretion of the
Board, be restated to reflect a revaluation of the assets of the Company in
order to reflect the manner in which the unrealized income, gain,
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loss, or deduction inherent in such property (that has not been reflected in the
Capital Accounts previously) would be allocated among the Members if there were
a taxable sale of such assets for their fair market value as determined by the
Board.
(d) Upon any Transfer of Membership Interests, the Transferee shall
be credited on the Company's books with the portion of the Transferor's Capital
Account that corresponds to the Transferred Membership Interests.
3.8 GENERAL PROVISIONS REGARDING CAPITAL CONTRIBUTIONS. Except as
otherwise expressly provided in this Agreement (a) no Member shall have the
right to demand or receive a return of its Capital Contribution, (b) under
circumstances requiring hereunder a return of any Capital Contribution, no
Member shall have the right to demand or receive property other than cash, and
(c) no Member shall receive any interest, salary or draw with respect to its
Capital Contribution or its Capital Account. An unrepaid Capital Contribution is
not a liability of the Company or of any Member. A Member shall not be required
to contribute or to lend any cash or property to the Company to enable the
Company to return any Member's Capital Contribution.
3.9 LIMITATION ON LIABILITY. Except as otherwise required under 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 no Member shall be personally liable for or
otherwise obligated with respect to any such debt, obligation or liability of
the Company by reason of being a Member of the Company. The Members agree that
the rights, duties and obligations of the Members in their capacities as members
of the Company are only as set forth in this Agreement and as otherwise arise
under the Act. Furthermore, the Members agree that the existence of any rights
of a Member, or the exercise or forbearance from exercise of any such rights
shall not create any duties or obligations of the Member in their capacities as
members of the Company, nor shall such rights be construed to enlarge or
otherwise alter in any manner the duties and obligations of the Members.
ARTICLE 4
DISTRIBUTION OF COMPANY FUNDS
4.1 DISTRIBUTIONS GENERALLY. Except as provided in Section 4.3 hereof,
distributions to the Members shall be made only to all Members simultaneously on
a PRO RATA basis in accordance with the percentage of Membership Interests held
by each Member; PROVIDED, HOWEVER, that any loans from Members pursuant to
Section 3.6 hereof that are then due and payable shall be repaid prior to any
distributions to Members. Any distributions by the Company will be made only to
Persons who, according to the books and records of the Company, were the Members
who were holders of record of Membership Interests in the Company on the date
determined by the Board as of which the Members are entitled to the distribution
or distributions in question.
4.2 OPERATING DISTRIBUTIONS. Distributions, other than distributions
payable in accordance with Sections 4.3 hereof, shall be made at such times and
in such amounts equal to all distributions of any nature received by the Company
from the Partnership, except for such amounts determined by the Board to be
retained for the necessary expenses of the Company and
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for the reasonable and necessary reserves as determined from time to time by the
Board in its sole Discretion.
4.3 DISTRIBUTIONS ON DISSOLUTION AND WINDING UP. Upon the dissolution and
winding up of the Company, the proceeds of liquidation after the payment of
creditors as specified in Section 17.2 hereof shall be distributed to all of the
Members in accordance with their positive Capital Account balances as property
adjusted through the time of distribution.
4.4 LIMITATION ON DISTRIBUTIONS. Notwithstanding any other provision to
the contrary in this Agreement, the Company shall not make a distribution to any
Member if such distribution would violate the Act or other applicable law.
4.5 WITHHOLDING OF TAXES. The Company will withhold taxes from
distributions to the extent required to do so by applicable law. Any amounts so
withheld and paid or required to be paid to a taxing authority will be treated
as if they had been distributed to the Member from whose distribution the amount
was withheld.
ARTICLE 5
ALLOCATIONS
5.1 ALLOCATIONS OF PROFIT AND LOSS. Profit and Loss for a taxable year of
the Company, and each item thereof, shall be allocated among the Members on a
PRO RATA basis on account of the percentage of Membership Interests held by each
Member.
5.2 ALLOCATIONS OF LIQUIDATING GAIN AND LOSS. Liquidating Gains and
Liquidating Losses shall be allocated among the Members so that, to the maximum
extent possible, the Members' resulting Capital Account balances are in
proportion to the percentage of Membership Interests held by each Member.
5.3 TRANSFERS. In the event of a transfer of Membership Interests during
a taxable year, the Company shall make an interim closing of its books (or, at
the election of the applicable transferor and transferee and with the consent of
the Board, utilize any other method permitted under Section 706 of the Code) for
purposes of determining the allocations and distributions required under this
Agreement.
5.4 ADDITIONAL ALLOCATIONS. Additional allocations shall be made in
accordance with the allocation rules set forth in EXHIBIT B hereto.
5.5 AGREEMENT TO ALLOCATIONS. The Members understand and approve the
allocations of tax items set forth in Items 8, 9 and 10 of EXHIBIT B hereto, and
agree to report for federal income tax purposes consistently therewith.
5.6 NONRECOURSE LIABILITIES. For purposes of Regulations Section
1.752-3(a)(3), the Members agree that "EXCESS NONRECOURSE LIABILITIES" of the
Company, as defined in Regulations Section 1.752-3(a)(3), shall be allocated to
the Members in proportion to their percentage Membership Interests.
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5.7 NEGATIVE CAPITAL ACCOUNTS. In no event shall any Member be obligated
to pay to the Company, any Member or any creditor of the Company any deficit
balance in its Capital Account.
ARTICLE 6
MEETINGS OF MEMBERS
6.1 TIME AND PLACE. Any meeting of the Members may be held at such time
and place, within or outside the State of Colorado, as may be fixed by the Board
or as shall be specified in the notice or waiver of notice of the meeting. If
the place for a meeting is not fixed by the Board, such meeting shall be held at
the Company's principal office.
6.2 ANNUAL MEETING. The annual meeting shall be held on the date and at
the time and place fixed from time to time by the Board. The annual meeting
shall be for the purpose of electing a board of directors and transacting such
other business as may properly be brought before the meeting.
6.3 SPECIAL MEETING. A special meeting for any purpose or purposes may be
called by the Board.
6.4 RECORD DATE FOR DETERMINATION OF MEMBERSHIP. In order that the
Company may determine the Members entitled to notice of or to vote at any
meeting, or at any adjournment of a meeting, of Members, or entitled to express
consent to action in writing without a meeting, or entitled to exercise any
rights in respect of any change, conversion, or exchange of stock, or for the
purpose of any other lawful action, the Board may fix, in advance, a record
date, which record date shall not precede the date upon which the resolution
fixing the record date is adopted by the Board. The record date for determining
the Members entitled to notice of or to vote at any meeting of the Members or
any adjournment thereof shall not be more than sixty nor less than ten days
before the date of such meeting. The record date for determining the Members
entitled to consent to corporate action in writing without a meeting shall not
be more than ten days after the date upon which the resolution fixing the record
date is adopted by the Board. The record date for any other action shall not be
more than sixty days prior to such action. If no record date is fixed, (a) the
record date for determining Members entitled to notice of or to vote at any
meeting shall be at the close of business on the day next preceding the day on
which notice is given or, if notice is waived by all Members, at the close of
business on the day next preceding the day on which the meeting is held, (b) the
record date for determining Members entitled to express consent to corporate
action in writing without a meeting, when no prior action by the Board is
required, shall be the first date on which a signed written consent setting
forth the action taken or to be taken is delivered to the Company and, when
prior action by the Board is required, shall be at the close of business on the
day on which the Board adopts the resolution taking such prior action, and (c)
the record date for determining Members for any other purpose shall be at the
close of business on the day on which the Board adopts the resolution relating
to such other purpose. A determination of the Members of record entitled to
notice of or to vote at a meeting of Members is effective for any adjournment of
the meeting unless the Board fixes a new record date, which the Board shall do
if the meeting is adjourned to a date more than 120 days after the date fixed
for the original meeting.
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6.5 NOTICE TO MEMBERS. Written notice stating the place, date, and hour
of the meeting and, in case of a special meeting, the purpose or purposes for
which the meeting is called, shall be given not less than ten nor more than 60
days before the date of the meeting, except as otherwise required by the Act,
either by depositing the notice in the United States mail, addressed to each
Member of record entitled to vote at such meeting, postage paid, and registered
or certified with return receipt requested, or by delivering the notice to each
Member of record entitled to vote at such meeting in person, by courier, or by
facsimile transmission. If mailed or delivered by courier, such notice shall be
deemed to be given when deposited in the United States mail, postage prepaid, or
when deposited with a reputable overnight courier, addressed to the Member at
its address as it appears in the records of the Company. If given by facsimile
transmission, such notice shall be deemed to be given when upon receipt of
confirmation of a successful facsimile transmission to the facsimile number of
the Member as it appears in the records of the Company. If given personally or
otherwise than by mail, courier or facsimile transmission, such notice shall be
deemed to be given when either handed to the Member or delivered to the Member's
address as it appears in the records of the Company. If an annual or special
meeting of Members is adjourned to a different date, time, or place, notice need
not be given of the new date, time, or place if the new date, time, or place is
announced at the meeting before adjournment; provided, however, that, if a new
record date for the adjourned meeting is fixed pursuant to Section 6.4(c)
hereof, notice of the adjourned meeting shall be given to persons who are
Members as of the new record date.
6.6 WAIVER. Attendance of a Member, either in person or by proxy, at any
meeting, whether annual or special, shall constitute a waiver of notice of such
meeting, except where a Member attends a meeting for the express purpose of
objecting, at the beginning of the meeting, to the transaction of any business
because the meeting is not lawfully called or convened. A written waiver of
notice of any such meeting signed by a Member or Members entitled to such
notice, whether before, at, or after the time for notice or the time of the
meeting, shall be equivalent to notice. Neither the business to be transacted
at, nor the purpose of, any meeting need be specified in any written waiver of
notice.
6.7 QUORUM. The holders of a majority of the percentage of Membership
Interests entitled to vote at the meeting, present in person or represented by
proxy, shall constitute a quorum at all meetings of the Members for the
transaction of business, except as otherwise provided by the Act. If, however,
such a quorum shall not be present at any meeting of Members, the Chairman of
the Board or Members entitled to vote, present in person or represented by
proxy, shall have the power to adjourn the meeting from time to time, without
notice if the time and place are announced at the meeting, until a quorum shall
be present. At such adjourned meeting at which a quorum shall be present, any
business may be transacted which might have been transacted at the original
meeting. If the adjournment is for more than thirty days or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each Member of record entitled to vote
at the meeting.
6.8 VOTING RIGHTS.
(a) The holders of Class A and Class B Membership Interests shall
each have the right and power to vote on any and all matters on which the
holders of any Membership
15
Interest are entitled to vote. Each Class A Member or Class B Member shall be
entitled to that number of votes equal to the percentage of Membership Interests
held by such Member. Except as provided in Sections 6.8(b), (c) or (d) hereof or
in the Act, Class A and Class B Members shall vote together as a single class on
all matters submitted to a vote of Members.
(b) For so long as any Class A Membership Interests are outstanding,
in addition to any other vote or consent required herein or by law, the vote or
written consent of the Class A Members, without any separate consent or voting
by the Class B Members as a class, shall be necessary for effecting or
validating the following actions:
(i) Any amendment, alteration, or repeal of any provision of
this Agreement;
(ii) Any authorization, designation or issuance, whether by
reclassification or otherwise, of any new Membership Interests;
(iii) Any transaction involving a Sale of the Company; and
(iv) Any increase or decrease in the authorized number of
members of the Board.
(c) For so long as any Class A Membership Interests are outstanding,
the Class A Members shall be entitled to elect all of the members of the Board
(the "CLASS A DIRECTORS") at each meeting or pursuant to each consent of the
Members for the election of Directors, and to remove from office such Directors
and to fill any vacancy caused by the resignation, death or removal of such
Directors.
6.9 VOTING AND PROXIES. At every meeting of the Members, each Member
shall be entitled to vote in person or by proxy, but no proxy shall be voted on
after three years from its date unless the proxy provides for a longer period.
When a quorum is present at any meeting, the vote of the holders of a majority
of the percentage Membership Interests present in person or represented by proxy
shall decide any question brought before such meeting, unless the question is
one upon which, by express provision of the Act or this Agreement, a different
vote is required, in which case such express provision shall govern.
6.10 ACTION BY CONSENT OF THE MEMBERS. Any action required or permitted to
be taken at a meeting of the Members, including at the annual meeting, may be
taken without a meeting if a written consent setting forth the action so taken
is signed by Members holding the percentage of Membership Interests as is
required by the Act or this Agreement for approval of the action in question.
Such consent may be in one instrument or in several instruments, and shall have
the same force and effect as a vote of the Members at a meeting duly called and
held.
6.11 TELEPHONIC MEETINGS. Members may participate in any meeting of the
Members through the use of any means of conference telephones or similar
communications equipment as long as all persons participating can hear one
another. A Member so participating shall be deemed to be present in person at
the meeting.
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6.12 COMPENSATION OF MEMBERS. Except as expressly provided in any written
agreement between the Company and a Member, no Member shall receive any
compensation from the Company for services provided to the Company in its
capacity as a Member.
ARTICLE 7
MANAGEMENT
7.1 MANAGEMENT BY BOARD OF DIRECTORS. The conduct and operation of the
Company's business and affairs shall be fully vested in, and managed by, a Board
of Directors (the "BOARD"). In addition to the powers and authorities expressly
conferred on the Board by this Agreement, the Board may exercise all such powers
of the Company and do all such acts and things as are not restricted by the Act,
this Agreement or applicable law.
7.2 NUMBER; QUALIFICATION; TENURE. The number of directors constituting
the Board shall be 6 (each a "DIRECTOR" and collectively, the "DIRECTORS"),
unless otherwise fixed from time to time pursuant to a resolution adopted by a
majority of the Directors. A Director need not be a Member. The Directors shall
be elected or approved by the Members at an annual meeting of the Members and
shall serve as directors of the Company until their death or removal from office
or until their successors are elected and qualified. The initial Directors of
the Company shall be Xxxx X. Xxx, Xxxxxx X. Xxxxxx, Xxxxxx X. Xxxxxxxx, Xxxxxx
X. Xxxxxxxxxx, Xxxxxxx X. Xxxxxxxxx and Xxxxxxx X. Xxxxxxxxx.
7.3 NOTICE. Written notice of all regular meetings of the Board must be
given to all Directors at least 5 calendar days prior to the regular meeting of
the Board and two business days prior to any special meeting of the Board. All
notices and other communications to be given to Directors shall be sufficiently
given for all purposes hereunder if in writing and delivered either by
depositing the notice in the United States mail, addressed to the Director,
postage paid, and registered or certified with return receipt requested, or by
delivering the notice to each Director in person, by courier, or by facsimile
transmission. If mailed or delivered by courier, such notice shall be deemed to
be given when deposited in the United States mail, postage prepaid, or when
deposited with a reputable overnight courier, addressed to the Director at his
address as it appears in the records of the Company. If given by facsimile
transmission, such notice shall be deemed to be given when upon receipt of
confirmation of a successful facsimile transmission to the facsimile number of
the Director as it appears in the records of the Company. If given personally or
otherwise than by mail, courier or facsimile transmission, such notice shall be
deemed to be given when either handed to the Director or delivered to the
Director's address as it appears in the records of the Company. Neither the
business to be transacted at, nor the purpose of, any regular or special meeting
of the Board need be specified in the notice of such meeting. A meeting may be
held at any time without notice if all the Directors are present or if those not
present waive notice of the meeting either before or after such meeting.
7.4 REGULAR MEETINGS. The board shall meet at least quarterly, and a
regular meeting of the Board shall be held without notice other than this
Section 7.4 immediately after, and at the same place as, the annual meeting of
the Members. The Board may, by resolution, provide the time and place for the
holding of additional regular meetings without other notice than such
resolution.
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7.5 SPECIAL MEETINGS. Special Meetings of the Board may be called at any
time at a request of the Chairman or of any 3 Directors.
7.6 ACTION BY CONSENT OF THE BOARD. Any action required or permitted to
be taken at a meeting of the Board, including at the annual meeting, may be
taken without a meeting if a written consent setting forth the action so taken
is signed by the number of Directors as is required by this Agreement for
approval of the action in question. Such consent may be in one instrument or in
several instruments, and shall have the same force and effect as a vote of the
Directors at a meeting duly called and held.
7.7 TELEPHONIC MEETINGS. Directors may participate in any meeting of the
Board through the use of any means of conference telephones or similar
communications equipment as long as all persons participating can hear one
another. A Director so participating shall be deemed to be present in person at
the meeting.
7.8 QUORUM; VOTING REQUIREMENT. A majority of the Directors, present in
person or participating in accordance with Section 7.7 hereof, shall constitute
a quorum for the transaction of business, but if at any meeting of the Board
there shall be less than a quorum present, a majority of the Directors present
may adjourn the meeting from time to time without further notice. An act by the
majority of the Directors present at a meeting at which a quorum is present
shall be the act of the Board. The Directors present at a duly organized meeting
may continue to transact business until adjournment, notwithstanding the
withdrawal of enough Directors to leave less than a quorum.
7.9 COMMITTEES.
(a) The Board may establish committees of the Board and may delegate
certain of its responsibilities to such committees.
(b) The Board shall have an audit committee comprised of three (3)
Directors (the "AUDIT COMMITTEE"), all of whom shall be Independent Directors.
The Audit Committee shall establish a written audit committee charter in
accordance with the rules of the ASE or other applicable exchanges, and/or the
Securities and Exchange Commission, as amended from time to time. The Audit
Committee shall review the external financial reporting of the Partnership,
recommended engagement of the Partnership's independent auditors and review
procedures for internal auditing and the adequacy of the Partnership's internal
accounting controls.
(c) The Board shall have a compensation committee comprised of three
(3) Directors (the "COMPENSATION COMMITTEE"), all of whom shall be Independent
Directors. The Compensation Committee shall be charged with setting compensation
for officers of the Company and the Partnership, as well as administering any
Incentive Plans put in place by the Company or the Partnership.
(d) The Board shall have a conflicts committee comprised of no fewer
than 2 Directors (the "CONFLICTS COMMITTEE"), who shall be Conflicts Directors.
The Conflicts Committee shall review, and approve or disapprove, transactions in
which a potential conflict of interest exists or arises between the Company, or
any of its Affiliates, on the one hand, and the Partnership, MarkWest Energy
Operating Company, L.L.C., any Partner of the Partnership or
18
any Assignee (as defined in the Partnership Agreement) all in accordance with
the applicable provisions of the Partnership Agreement Any matter approved by
the Conflicts Committee in accordance with the provisions, and subject to the
limitations, of the Partnership Agreement, shall be conclusively deemed to be
fair and reasonable to the Partnership, and not a breach by the Company of any
fiduciary or other duties owed to the Partnership by the Company.
(e) A majority of any committee may determine its action and fix the
time and place of its meetings unless the Board shall otherwise provide. Notice
of such meetings shall be given to each member of the committee in the manner
provided for in Section 7.3 hereof. The Board shall have power at any time to
fill vacancies in, to change the membership of, or to dissolve any such
committee. Nothing herein shall be deemed to prevent the Board from appointing
one or more committees consisting in whole or in part of persons who are not
Directors; provided, however, that no such committee shall have or may exercise
any authority of the Board.
7.10 VACANCIES; INCREASES IN THE NUMBER OF DIRECTORS. Unless otherwise
provided by this Agreement, vacancies and newly created directorships resulting
from any increase in the authorized number of Directors may be filled by a
majority of the Directors then in office, although less than a quorum, or a sole
remaining Director; and any Director so chosen shall hold office until the next
annual election and until death or removal from office or until their successor
shall be duly elected and qualified.
7.11 REMOVAL. Any Director or the entire Board may be removed, with or
without cause, by the holders of a majority of the percentage of Membership
Interests then entitled to vote at an election of Directors.
7.12 COMPENSATION OF DIRECTORS. Except as expressly provided in any
written agreement between the Company and a Director or by resolution of the
Board, no Director shall receive any compensation from the Company for services
provided to the Company in its capacity as a Director, except that each Director
shall be compensated for attendance at Board meetings at rates of compensation
as from time to time established by the Board. In addition to the foregoing, the
members of the Conflicts Committee shall receive such additional compensation as
from time to time established by the Board.
ARTICLE 8
OFFICERS
8.1 ELECTED OFFICERS. The executive officers of the Company shall be
selected by, and serve at the pleasure of, the Board. Such officers shall have
the authority and duties delegated to each of them, respectively, by the Board
from time to time. The elected officers of the Company shall be a Chairman of
the Board, a President and Chief Executive Officer, a Secretary, a Chief
Financial Officer, and such other officers (including, without limitation,
Executive Vice Presidents, Senior Vice Presidents and Vice Presidents) as the
Board from time to time may deem proper. The Chairman of the Board shall be
chosen from among the Directors. All officers elected by the Board shall each
have such powers and duties as generally pertain to their respective offices,
subject to the specific provisions of this Article 8. Any Person may be selected
by the Board to hold multiple offices. The Board or any committee thereof may
from
19
time to time elect, such other officers (including one or more Vice
Presidents, Controllers, Assistant Secretaries and Assistant Treasurers), as may
be necessary or desirable for the conduct of the business of the Company. Such
other officers and agents shall have such duties and shall hold their offices
for such terms as shall be provided in this Agreement or as may be prescribed by
the Board or such committee, as the case may be.
8.2 ELECTION AND TERM OF OFFICE. The elected officers of the Company
shall be elected annually by the Board at the regular meeting of the Board held
after the annual meeting of the Members. If the election of officers shall not
be held at such meeting, such election shall be held as soon thereafter as
convenient. Each officer shall hold office until such person's successor shall
have been duly elected and shall have qualified or until such person's death or
until he shall resign or be removed pursuant to Section 8.8 hereof.
8.3 CHAIRMAN OF THE BOARD. The Chairman of the Board shall preside at all
meetings of the Members and of the Board. The Directors also may elect a
Vice-Chairman to act in the place of the Chairman upon his or her absence or
inability to act. The Chairman of the Board shall have the power to enter into
binding contracts on behalf of the Company.
8.4 PRESIDENT AND CHIEF EXECUTIVE OFFICER. The President and Chief
Executive Officer shall be responsible for the general management of the affairs
of the Company and shall perform all duties incidental to such person's office
which may be required by law and all such other duties as are properly required
of him by the Board. He shall make reports to the Board and the Members and
shall see that all orders and resolutions of the Board and of any committee
thereof are carried into effect. The President and Chief Executive Officer, if
he is also a Director, shall, in the absence of or because of the inability to
act of the Chairman of the Board or any Vice Chairman elected by the Board,
perform all duties of the Chairman of the Board and preside at all meetings of
Members and of the Board.
8.5 VICE PRESIDENTS. Each Executive Vice President and Senior Vice
President and any Vice President shall have such powers and shall perform such
duties as shall be assigned to him by the Board.
8.6 CHIEF FINANCIAL OFFICER AND ASSISTANT TREASURERS. The Chief Financial
Officer shall act as the Chief Financial Officer of the Company and shall
exercise general supervision over the receipt, custody and disbursement of
corporate funds. The Chief Financial Officer shall cause the funds of the
Company to be deposited in such banks as may be authorized by the Board, or in
such banks as may be designated as depositories in the manner provided by
resolution of the Board. The Chief Financial Officer shall, in general, perform
all duties incident to the office of the Chief Financial Officer and shall have
such further powers and duties and shall be subject to such directions as may be
granted or imposed from time to time by the Board. Assistant Treasurers shall
have such of the authority and perform such of the duties of the Chief Financial
Officer as may be provided in this Agreement or assigned to them by the Board or
the Chief Financial Officer. Assistant Treasurers shall assist the Chief
Financial Officer in the performance of the duties assigned to the Chief
Financial Officer, and in assisting the Chief Financial Officer, each Assistant
Treasurer shall for such purpose have the powers of the Chief Financial Officer.
During the Chief Financial Officer's absence or inability, the Chief Financial
20
Officer's authority and duties shall be possessed by such Assistant Treasurer or
Assistant Treasurers as the Board may designate.
8.7 SECRETARY AND ASSISTANT SECRETARIES. The Secretary shall keep or
cause to be kept, in one or more books provided for that purpose, the minutes of
all meetings of the Board, the committees of the Board and the Members. The
Secretary shall see that all notices are duly given in accordance with the
provisions of this Agreement and as required by law; shall be custodian of the
records and the seal of the Company and affix and attest the seal to all
documents to be executed on behalf of the Company under its seal; and shall see
that the books, reports, statements, certificates and other documents and
records required by law to be kept and filed are properly kept and filed; and in
general, shall perform all the duties incident to the office of Secretary and
such other duties as from time to time may be assigned to the Secretary by the
Board. Assistant Secretaries shall have such of the authority and perform such
of the duties of the Secretary as may be provided in this Agreement or assigned
to them by the Board or the Secretary. Assistant Secretaries shall assist the
Secretary in the performance of the duties assigned to the Secretary, and in
assisting the Secretary, each Assistant Secretary shall for such purpose have
the powers of the Secretary. During the Secretary's absence or inability, the
Secretary's authority and duties shall be possessed by such Assistant Secretary
or Assistant Secretaries as the Board may designate.
8.8 REMOVAL. Any officer elected, or agent appointed, by the Board may be
removed by the affirmative vote of a majority of the Board whenever, in their
judgment, the best interests of the Company would be served thereby. No elected
officer shall have any contractual rights against the Company for compensation
by virtue of such election beyond the date of the election of such person's
successor, such person's death, such person's resignation or such person's
removal, whichever event shall first occur, except as otherwise provided in an
employment contract or under an employee deferred compensation plan.
8.9 VACANCIES. A newly created elected office and a vacancy in any
elected office because of death, resignation or removal may be filled by the
Board for the unexpired portion of the term at any meeting of the Board.
ARTICLE 9
INDEMNIFICATION
9.1 LIABILITY, EXCULPATION AND INDEMNIFICATION.
(a) No Covered Person shall be liable to the Company, the Partnership
or any other Covered Person for any loss, damage or claim incurred by reason of
any act or omission performed or omitted by such Covered Person in good faith on
behalf of the Company or the Partnership and in a manner reasonably believed by
the Covered Person to be within the scope of authority conferred on such Covered
Person by the Act or this Agreement, except that a Covered Person shall be
liable for any such loss, damage or claim incurred by reason of such Covered
Person's gross negligence or willful misconduct.
(b) A Covered Person shall be fully protected in relying in good
faith upon the records of the Company, the records of the Partnership, and upon
such information, opinions,
21
reports or statements presented to the Company by any Person as to matters the
Covered Person believes are within such other Person's professional or expert
competence, including information, opinions, reports or statements as to the
value and amount of the assets, liabilities, profits, losses, or any other facts
pertinent to the existence and amount of assets from which distributions to
Members might properly be paid.
(c) To the extent that, at law or in equity, a Covered Person has
duties (including fiduciary duties) and liabilities relating thereto to the
Company, to the Partnership, or to any other Covered Person, a Covered Person
acting under this Agreement shall not be liable to the Company, the Partnership
or to any other Covered Person for its good faith reliance on the provisions
this Agreement. The provisions of this Agreement, to the extent that they
restrict the duties and liabilities of a Covered Person otherwise existing at
law or in equity, are agreed by the parties hereto to replace such other duties
and liabilities of such Covered Person.
(d) To the fullest extent permitted by applicable law, a Covered
Person shall be entitled to indemnification from the Company for any loss,
damage or claim incurred by such Covered Person by reason of any act or omission
performed or omitted by such Covered Person in good faith on behalf of the
Company or on behalf of the Partnership and in a manner reasonably believed to
be within the scope of authority conferred on such Covered Person by this
Agreement, except that no Covered Person shall be entitled to be indemnified in
respect of any loss, damage or claim incurred by reason of such Covered Person's
gross negligence or willful misconduct with respect to such acts or omissions;
provided, however, that any indemnity under this subsection (d) shall be
provided out of and to the extent of Company assets only, and no Covered Person
shall have any personal liability on account thereof.
(e) The Company may purchase and maintain insurance, to the extent
and in such amounts as the Company determines to be reasonable, on behalf of
Covered Persons and such other persons as the Company shall determine, against
any liability that may be asserted against or expenses that may be incurred by
any such Covered Person or other indemnitee in connection with the activities of
the Company or such indemnitees. The Company may enter into indemnity contracts
with Covered Persons or other indemnitees and adopt written procedures pursuant
to which arrangements are made for the advancement of expenses and the funding
of obligations and containing such other procedures regarding indemnification as
are appropriate.
ARTICLE 10
OTHER ACTIVITIES
10.1 OTHER ACTIVITIES OF THE CLASS B MEMBERS. Each Class B Member
acknowledges, agrees and understands that, from and after the date of this
Agreement (or, in the case of any new Member or Substitute Member, from and
after the date such Person becomes a Class B Member), the ability of such Class
B Member and any of its Affiliates to engage in business activities that may be
the same as or similar to and may compete with the Company's business (herein
"OTHER SIMILAR ACTIVITIES") shall be limited, restricted and prohibited in
accordance with the provisions set forth in the Non-Competition,
Non-Solicitation and Confidentiality Agreements between the Class B Member and
MarkWest.
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10.2 OTHER ACTIVITIES OF THE CLASS A MEMBER. The Members acknowledge,
agree and understand that the Class A Member and its Affiliates have heretofore
engaged and may hereafter engage in Other Similar Activities. Each of the
Members hereby agrees that nothing in this Agreement or in the business
relationship between the Members established hereunder shall be deemed to
prohibit the Class A Member or any of its Affiliates from engaging in such Other
Similar Activities; PROVIDED, HOWEVER, that nothing in this Agreement shall
prevent the Company and the Class A Member from entering into any agreement that
limits, restricts or prohibits the Class A Member from engaging in Other Similar
Activities.
10.3 CONTRACTS WITH THE COMPANY. Subject to the approval of the Company,
any Member or Director or any of their respective Affiliates may directly or
indirectly, through one or more corporations, partnerships or other entities in
which such Person has an interest, contract with the Company for any purpose in
furtherance of the business of the Company.
ARTICLE 11
TAXES
11.1 TAX RETURNS. The Tax Matters Member shall prepare and timely file (on
behalf of the Company) all federal, state and local tax returns required to be
filed by the Company. Each Member shall furnish to the Company all pertinent
information in its possession relating to the Company's operations that is
necessary to enable the Company's tax returns to be timely prepared and filed.
The Company shall bear the costs of the preparation and filing of its returns.
11.2 TAX ELECTIONS.
(a) The Company shall make the following elections on the appropriate
tax returns:
(i) to adopt as the Company's fiscal year the calendar year;
(ii) to adopt the accrual method of accounting;
(iii) to make the election under Section 754 of the Code in
accordance with applicable regulations thereunder, subject to the
reservation of the right to seek to revoke any such election upon the
Tax Matters Member's determination that such revocation is in the
best interests of the Members;
(iv) to elect to amortize the organizational expenses of the
Company ratably over a period of 60 months as permitted by Section
709(b) of the Code; and
(v) any other election the Board may deem appropriate.
(b) Neither the Company nor any Member shall make an election for the
Company to be excluded from the application of the provisions of subchapter K of
chapter 1 of subtitle A of the Code or any similar provisions of applicable
state law and no provision of this Agreement shall be construed to sanction or
approve such an election.
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11.3 TAX MATTERS MEMBER.
(a) MarkWest, or such other Member selected by the Board, shall act
as the "tax matters partner" of the Company pursuant to Section 6231(a)(7) of
the Code (the "TAX MATTERS MEMBER"). The Tax Matters Member shall take such
action as may be necessary to cause to the extent possible each Member to become
a "notice partner" within the meaning of Section 6223 of the Code. The Tax
Matters Member shall inform each Member of all significant matters that may come
to its attention in its capacity as Tax Matters Member by giving notice thereof
on or before the fifth business day after becoming aware thereof and, within
that time, shall forward to each Member copies of all significant written
communications it may receive in that capacity.
(b) The Tax Matters Member shall take no action without the
authorization of the Board, other than such action as may be required by
applicable law. Any cost or expense incurred by the Tax Matters Member in
connection with its duties, including the preparation for or pursuance of
administrative or judicial proceedings, shall be paid by the Company.
(c) The Tax Matters Member shall not enter into any extension of the
period of limitations for making assessments on behalf of the Members without
first obtaining the consent of the Board. The Tax Matters Member shall not bind
any Member to a settlement agreement without obtaining the consent of such
Member. Any Member that enters into a settlement agreement with respect to any
Company item (as described in Section 6231(a)(3) of the Code) shall notify the
other Members of such settlement agreement and its terms within 90 days from the
date of the settlement.
(d) No Member shall file a request pursuant to Section 6227 of the
Code for an administrative adjustment of Company items for any taxable year
without first notifying the other Members. If the Board consents to the
requested adjustment, the Tax Matters Member shall file the request for the
administrative adjustment on behalf of the Members. If such consent is not
obtained within 30 days from such notice, or within the period required to
timely file the request for administrative adjustment, if shorter, any Member
may, subject to Section 5.5 hereof, file a request for administrative adjustment
on its own behalf. Any Member intending to file a petition under Sections 6226,
6228 or other Section of the Code with respect to any item involving the Company
shall notify the other Members of such intention and the nature of the
contemplated proceeding. In the case where the Tax Matters Member is intending
to file such petition on behalf of the Company, such notice shall be given
within a reasonable period of time to allow the Members to participate in the
choosing of the forum in which such petition will be filed.
(e) If any Member intends to file a notice of inconsistent treatment
under Section 6222(b) of the Code, such Member shall give reasonable notice
under the circumstances to the other Members of such intent and the manner in
which the Member's intended treatment of an item is (or may be) inconsistent
with the treatment of that item by the other Members.
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ARTICLE 12
TRANSFER OF MEMBERS' INTERESTS;
ADMISSION OF ADDITIONAL MEMBERS
12.1 RESTRICTIONS ON TRANSFERS OF MEMBERSHIP INTERESTS. Except as provided
in Section 12.2 hereof, no Member may Transfer all or any portion of its
Membership Interests, to any Person (other than pursuant to Section 12.1, (a),
below, to a Person who at the time is already a Member of the Company) without
obtaining the approval of the Class A Members, which approval or disapproval
shall be in the Class A Member's Discretion. Any attempted Transfer of any
Membership Interest, other than in strict accordance with this Article 12, shall
be, and is hereby declared, null and void AB INITIO, and the purported
Transferee shall not (a) be admitted as a Member, (b) be deemed to be an
Assignee of the Membership Interests purported to be Transferred, or (c) have
any rights to share in Profits or Losses, to receive any distributions, or to
receive any allocations of income, gain, loss, deduction or credit or other
similar items with respect to the Membership Interests purported to be
Transferred. Any Member who purports to effect a Transfer of Membership
Interests without fully complying with the provisions of this Article 12 shall
have breached his or her contractual obligations hereunder and shall be liable
to the remaining Members for any damages caused thereby, including legal fees
and other costs incurred by the Company and/or such other Members incident to or
in any manner attributable to such noncomplying Transfer. If, notwithstanding
the prohibition hereunder, applicable law requires that a Transfer of Membership
Interests in breach of this Article 12 must be given effect, the Transferee of
such noncomplying Transfer shall have only the rights of an Assignee, the
Membership Interests so Transferred shall be subject to the repurchase
provisions of Section 12.9 hereof, and shall also be subject to such legal and
equitable remedies as may be available to the Company and the remaining Members.
The Members acknowledge and understand that interests in the Company cannot be
readily purchased or sold in the open market, and that each of the Members has
entered into this Agreement in substantial reliance upon the strict enforcement
of the covenants and conditions of this Agreement. Because of such limited
marketability of interests, such substantial reliance on the covenants and
conditions hereof, and the unique relationship that exists among Members
entering into a common business venture, among other reasons, it is expressly
agreed and acknowledged that the Members will be irreparably damaged in the
event that this Agreement is not specifically enforced. Should any dispute arise
concerning the Transfer of Membership Interests, whether any such Transfer is
being carried out or contemplated, an injunction may be issued restraining such
Transfer pending the determination of such controversy. Such remedy shall,
however, be cumulative and not exclusive, and shall be in addition to any other
remedy which the parties may have.
(a) If a Class B Member ("Offeror") desires to sell all or a portion
of its Class B Membership Interests to a Person, who prior to such sale is
already a Class B Member ("Transferee"), then:
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(1) The Offeror shall give MarkWest written notice (the "Offer
Notice") which shall include a copy of the offer from the
Transferee that the Offeror is willing to accept ("Purchase
Offer") for the purchase of its interests (the "Offered
Interest") and offer to sell the Offered Interest to MarkWest for
the price contained in the offer that such party is willing to
accept ("Offer Price") and in accordance with the same terms as
those contained in the Purchase Offer.
(2) The offer to MarkWest shall be irrevocable for a period ending at
5:00 p.m. Mountain Time on the thirtieth (30th) Day following the
Day the Offer Notice is delivered (the "Offer Period").
(3) In the event that the offer to sell the Offered Interest is
accepted by MarkWest, the closing date of the sale of the Offered
Interest so accepted shall take place within thirty (30) days
after the offer is accepted or, if later, the date of the closing
set forth in the Purchase Offer. The Offeror and MarkWest shall
execute such documents and instruments as may be necessary or
appropriate to effect the sale of the Offered Interest.
(4) If the offer is rejected, the Offeror may sell the Offered
Interest so rejected to the Transferee identified in the Purchase
Offer at any time within sixty (60) days after the last day of
the Offer Period; provided that such sale shall be made on terms
no more favorable to that Transferee than the terms contained in
the Purchase Offer
12.2 RIGHTS OF MARKWEST TO TRANSFER MEMBERSHIP INTERESTS. Subject to the
obligations set forth in Article 15 hereof, MarkWest shall have the right to
transfer all or a portion of the Membership Interests held by MarkWest to any
Person without the approval of the Board or any other Member. Upon a Transfer of
Membership Interests held by MarkWest in accordance with this Section 12.2, the
Transferee shall be admitted as a Substitute Member without further approval of
the Board or the other Members but otherwise in accordance with this Article 12.
12.3 SUBSTITUTE MEMBERS.
(a) If a Member Transfers all or any portion of its Membership
Interests to a Person who is not already a Member, the Board shall have the
right and authority (but, except as provided in Section 12.2 hereof, not the
obligation) to cause the Transferee to be admitted as a Member, subject to the
requirements set forth in this Section 12.3. Except in the case of a Transferee
that is already a Member, no Member shall have the right to substitute a
Transferee (including Transferees pursuant to Transfers permitted by Section
12.1) as a Member in his place unless:
(i) the Transferor gives the Transferee such right in writing;
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(ii) except for Transfers pursuant to Section 12.2 hereof, for
which no Board approval shall be required, the admission of the
Transferee as a Substitute Member is approved by the Board, which
approval may be granted or withheld in the Discretion of the Board;
and
(iii) the Transferee and the Transferor execute and deliver such
instruments, in form and substance satisfactory to the Company, as
the Company may deem necessary or desirable to effect such
substitution and to confirm the agreement of the Transferee to be
bound by all of the terms and provisions of this Agreement.
(b) A Transferee who has been admitted as a Substitute Member in
accordance with this Section 12.3 shall have all the rights and powers and be
subject to all the restrictions and liabilities of a Member holding the same
class of Membership Interests under this Agreement and shall become a signatory
hereto.
(c) The Company and the Members shall be entitled to treat the record
owner of any Membership Interests as the absolute owner thereof in all respects,
and shall incur no liability for distributions of cash or other property made in
good faith to such owner until such time as a written assignment of such
Membership Interests has been received, accepted and approved by the Company and
recorded on the books of the Company.
12.4 ASSIGNEES. Unless admitted as a Substitute Member, no Transferee,
whether by a voluntary Transfer, by operation of law or otherwise, shall have
any rights hereunder, other than the rights of an Assignee as provided in this
Section 12.4. If any Transferee, including any permitted Transferee under
Section 12.1, is not admitted as a Substitute Member in accordance with the
provisions of Section 12.3, such Transferee shall be considered an Assignee for
purposes of this Agreement. An Assignee shall be entitled to all the rights of
an assignee of a Member's interest under the Act, including the right to receive
distributions from the Company and the share of Profits and Losses attributable
to the Membership Interests assigned to such Transferee, and the rights to
transfer the Membership Interests provided in this Article, but shall not be
deemed to be a holder of a Membership Interests or any other purpose under this
Agreement and shall not be entitled to vote or otherwise to effect a consent
with respect to such Membership Interests on any matter presented to the Members
for approval (such power and right to make such consents remaining with the
Transferor Member). In the event any such Transferee desires to make a further
assignment of any such Membership Interests, such Transferee shall be subject to
all the provisions of this Article 12 to the same extent and in the same manner
as any Member desiring to make an assignment of Membership Interests.
12.5 REQUIREMENTS APPLICABLE TO ALL TRANSFERS. Any Transfer of Membership
Interests and any admission of Transferee as a Member shall also be subject to
the following requirements, and such Transfer (and admission, if applicable)
shall not be effective unless such requirements are complied with; provided,
however, that the Board, in its Discretion, may waive any of the following
requirements:
(a) The following documents must be delivered to the Board and must
be satisfactory, in form and substance, to the Board:
27
(i) A copy of the instrument pursuant to which the Transfer is
effected.
(ii) An instrument, executed by the Transferor and the
Transferee, containing the following information and agreements, to
the extent they are not contained in the instrument described in
Section 12.3(a)(i):
(A) the notice address of the Transferee;
(B) the class of Membership Interests transferred to the
Transferee;
(C) the Membership Interest to be transferred expressed as
a percentage of the Membership Interests outstanding; and
(D) representations and warranties by the Transferor and
Transferee:
(1) that the Transfer (and admission, if applicable) is
being made in accordance with applicable laws, and
(2) that the matters set forth in Section 12.5(a)(i)
and this Section 12.5(a)(ii) are true and correct.
(iii) Such opinions of counsel regarding tax and securities law
matters as the Board, in its Discretion, may require.
(b) The Transferor and Transferee shall pay, or reimburse the Company
for, all reasonable costs and expenses incurred by the Company in connection
with the Transfer and, if applicable, admission of the Transferee as a Member,
including the legal fees incurred in connection with the legal opinions referred
to in Section 12.5(a)(iii) and costs incurred in amending this Agreement and/or
the Company's Certificate of Formation.
(c) Any Transferee, whether or not admitted as a Substitute Member,
shall take the Transferred Membership Interests subject to the obligations of
the Transferor hereunder.
(d) As a condition to the consummation of the Transfer, the
Transferor shall repay any indebtedness incurred in connection with the purchase
of the Membership Interests Transferred.
12.6 RELEASE OF TRANSFEROR'S LIABILITY. No Transfer (other than pursuant
to a statutory merger or consolidation wherein all obligations and liabilities
of the Transferor are assumed by a successor corporation by operation of law)
shall relieve the Transferor of its obligations under this Agreement without the
approval of the Board in its Discretion.
12.7 PROHIBITION AGAINST HYPOTHECATION. No part of a Class B Member's
Membership Interests shall be subject to the claims of any creditor or to legal
process, and may not be voluntarily or involuntarily alienated or encumbered
except (a) as may be authorized by
28
the Board, or (b) claims in favor of MarkWest arising from MarkWest lending a
portion of the purchase price to a Class B Member in connection with the Class B
Member's acquisition of its Membership Interest. Any attempted grant of a
security interest in any Membership Interests by a Member in violation of this
Agreement shall be a breach of this Agreement and such attempted grant shall be,
and is hereby declared, null and void AB INITIO.
12.8 FURTHER ADMISSIONS OF ADDITIONAL MEMBERS. The Company may authorize
the issuance of additional Membership Interests to any Person at any time for
such consideration as the Company deems appropriate. The issuance of additional
Membership Interests to any Person who is not then a Member shall be subject to
the approval of the holders of at least 51% of the Class A Membership Interests
then outstanding. If Membership Interests are issued hereunder to any Person who
is not already a Member, any such new Member shall, as a condition to admission,
execute and acknowledge such instruments as the Company determines to be
necessary or advisable to effect the admission of such Person as a Member,
including, without limitation, the written acceptance and adoption by such
Person of the provisions of this Agreement.
12.9 OPTION TO REPURCHASE MEMBERSHIP INTERESTS ASSIGNED BY OPERATION OF
LAW IN VIOLATION OF ARTICLE 12. If, notwithstanding the prohibition set forth in
Section 12.1 hereof, applicable law requires that a Transfer of Membership
Interests in breach of this Article 12 must be given effect, the Company shall
have, for a period of five (5) years following the date of such Transfer, the
right to purchase from the Transferee of such noncomplying Transfer the
Membership Interests so Transferred at the price established by the Valuation
Formula calculated as of the date the Transfer occurred ("Transfer Date"). If
the Company exercises the right to repurchase Membership Interests pursuant to
this Section 12.9, the purchase price shall be paid by the Company to the
Transferee of such noncomplying Transfer within 60 days after making an election
to repurchase such Membership Interests in, at MarkWest's Discretion, in either
or any combination of the following:
(A) cash, by wire transfer of immediately available funds
of MarkWest;
(B) delivery of common units or Subordinated Units of the
Partnership with a value as of the Transfer Date, based
on the average closing price of the Partnership's
common units for the twenty trading days preceding the
Transfer Date.
12.10 GENERAL PROVISIONS.
(a) No Member may withdraw from the Company other than (i) as a
result of a permitted Transfer of all of such Member's Membership Interests in
accordance with this Article 12 with respect to which the Transferee becomes a
Substitute Member in place of the Transferor, or (ii) upon the purchase of all
of a Member's Mandatory Sale Membership Interests in the case of a Terminating
Holder. Any Member who Transfers all of his or her Membership Interests in a
Transfer (A) permitted pursuant to this Article 12 where the Transferee is
admitted as a Substitute Member, or (B) pursuant to a Mandatory Sale, shall
cease to be a Member as of the effective date of the transfer.
29
(b) All distributions with respect to which the record date is before
the date of any Transfer shall be made to the Transferor, and all distributions
thereafter shall be made to the Transferee.
(c) In addition to any other restrictions on Transfer herein
contained, in no event may any Transfer or assignment of Membership Interests by
any Member be made (i) to any Person who lacks the legal right, power or
capacity to own Membership Interests, or (ii) in violation of applicable law.
ARTICLE 13
PURCHASE OF CLASS B MEMBERSHIP INTERESTS
13.1 CALL RIGHT UPON CHANGE OF CONTROL OF MARKWEST OR THE COMPANY. If
MarkWest or the Company undergoes a Change of Control, then MarkWest may make an
election, during the Call Period, to cause all Class B Members, to sell all, but
not less than all, of each holder's Class B Membership Interests at the Call
Price and on the Call Terms.
(a) Elections by MarkWest to cause a Class B Member to sell all of
such Member's Class B Membership Interests (a "CALL ELECTION") may be made
during the period beginning on the date of the Change of Control of MarkWest and
ending on the date that is 30 days after such Change of Control (the "CALL
PERIOD"). If MarkWest desires to make a Call Election, it shall give written
notice to the Class B Member whose Class B Membership Interests are to be
purchased (a "SELLING HOLDER") at its principal residence within the Call Period
that MarkWest desires to make a Call Election. Such notice shall state the
percentage of Membership Interests held by the Selling Holder and the Call Price
claimed by MarkWest to be applicable to such Call Election.
(b) The price (the "CALL PRICE") at which the Selling Holder shall be
obligated to sell its Class B Membership Interests that are subject to any Call
Election (the "CALL MEMBERSHIP INTERESTS") shall be (i) in the event that the
Change of Control of the Company occurs as a result of the sale of 50% or more
of MarkWest's Class A Membership Interests in accordance with Section 15.1, at
the same price, on a PRO RATA basis, and the same terms and conditions, on which
MarkWest is selling its Class A Membership Interests, and (ii) in all other
events, the price established by the Valuation Formula calculated as of the date
of the Change of Control.
(c) MarkWest shall purchase the Call Membership Interests in the
following manner (the "CALL TERMS"):
(i) The Call Price shall be paid to an Selling Holder in cash
by wire transfer of immediately available funds within 30 days
following MarkWest's delivery of a Call Election;
(ii) Each Selling Holder shall, as a condition to receiving the
Call Price, deliver such instruments, in form and substance
satisfactory to MarkWest, as MarkWest may deem necessary or desirable
to effect the purchase of the Call Membership Interests; and
30
(iii) MarkWest and the Selling Holder shall comply with the
provisions of Section 12.5 hereof regarding Transfers; provided,
MarkWest shall pay the costs set forth in Section 12.5 (d).
(d) The purchase by MarkWest of any Call Membership Interests shall
be deemed to have been made at the close of business on the date of delivery of
such documents effectuating Transfer and the Selling Holder's receipt of the
Call Price, and from and after such date, all rights of the holder of the Call
Membership Interests shall accrue to the benefit of MarkWest.
13.2 PUT RIGHTS OF CLASS B MEMBERS. If:
(A) either MarkWest or the Company undergoes a Change of Control, or
(B) additional Membership Interests are issued pursuant to Section 12.8,
and if the issuance of additional Membership Interests, on a PRO FORMA
basis, decreases the distributions to all then existing Members, or
(C) any amendment, alteration or repeal of any provisions of this Agreement
is undertaken in accordance with Section 6.8(b), or Section 18.1, which
materially and adversely affects the then existing rights, duties,
obligations or restrictions of the Class B Members, or
(D) a Class B Member (i) becomes Totally Disabled while a Director, officer
or employee of the Company, of MarkWest or of any of their Affiliates, or
(ii) dies, or (iii) retires as a Director, officer or employee of the
Company, of MarkWest or of any of their Affiliates after reaching the age
of 60 years,
(each being referred to as a "PUT EVENT"), then, with respect to Put Events
described in (A), (B) and (C), above, each Class B Member, and with respect to a
Put Event described in (D), above, the affected Class B Member or his estate,
may make an election, during the Put Period, to cause MarkWest to purchase all,
but not less than all, of that Class B Member's Membership Interests at the Put
Price and on the Put Terms. MarkWest will give prompt written notice to each
Class B Member upon the occurrence of any Put Event described in (A), (B) or
(C), above ("PUT EVENT NOTICE").
(a) Elections by a Class B Member, or his estate, to sell all of such
Member's Class B Membership Interests (a "PUT ELECTION") may be made (i) for a
Put Event described in (D), above, during the period beginning on the date of
the applicable Put Event and ending on the date that is 120 days after the Put
Event, and (ii) for a Put Event described in (A), (B), or (C), above, during the
period beginning on the date of receipt of the applicable Put Event Notice and
ending on the date that is 30 days after the date of receipt of the Put Event
Notice, (in each case, the "PUT PERIOD"). A Class B Member, or his estate, who
elects to sell its Class B Membership Interests (a "SELLING HOLDER") shall
provide notice to MarkWest within the Put Period.
(b) The price (the "PUT PRICE") at which MarkWest shall be obligated
to purchase the Class B Membership Interests that are subject to any Put
Election (the "PUT MEMBERSHIP INTERESTS") shall be the price established under
the terms of this Agreement as it
31
existed immediately prior to the Put Event and by the Valuation Formula
calculated as of the date of the Put Event.
(c) MarkWest shall purchase the Put Membership Interests in the
following manner (the "PUT TERMS"):
(i) The Put Price shall be paid to a Selling Holder in either
or any combination of the following:
(A) in cash by wire transfer of immediately available
funds within 30 days following delivery of a Put
Election; or
(B) by delivery of common units and/or Subordinated
Units, owned by MarkWest, (if the Subordinated Units
have been receiving the same distributions under the
Partnership Agreement as the common units during the
immediately preceding 4 quarters) of the Partnership
with a value as of the Put Event, based on the average
closing price of the Partnership's common units for the
twenty trading days preceding the date of the Put
Event, equal to the Put Price. It is provided, however,
that Subordinated Units cannot comprise more than 70%
of the payment of the Put Price.
(ii) Each Selling Holder shall, as a condition to receiving the
Put Price, deliver such instruments, in form and substance
satisfactory to MarkWest, as MarkWest may deem necessary or desirable
to effect the purchase of the Put Membership Interests; and
(iii) MarkWest and the Selling Holder shall comply with the
provisions of Section 12.5 hereof regarding Transfers.
The purchase by MarkWest of any Call Membership Interests shall be deemed to
have been made at the close of business on the date of delivery of such
documents effectuating Transfer and the Selling Holder's receipt of the Call
Price, and from and after such date, all rights of the holder of the Call
Membership Interests shall accrue to the benefit of MarkWest.
32
13.3 OPTIONAL PURCHASE OF CLASS B MEMBERSHIP INTERESTS. If a Class B
Member ceases to be a Director, officer or employee of the Company, of MarkWest
or of any of their Affiliates, whether voluntarily or involuntarily, (a
"TERMINATING HOLDER"), then, at the election and option of MarkWest such
Terminating Holder shall sell to MarkWest (a "MANDATORY SALE") all of such
Terminating Holder's Class B Membership Interests at the Mandatory Sale Price
and on the Mandatory Sale Terms. MarkWest shall have the right to exercise its
right to purchase those Membership Interests for a period following the date
such Terminating Holder ceased to be a Director, officer or employee of the
Company ("TERMINATION DATE") until 12 months following the Termination Date. To
exercise this right, MarkWest will provide a written notice to the applicable
Class B Member ("MANDATORY SALE NOTICE").
(a) The price (the "MANDATORY SALE PRICE") at which a Terminating
Holder shall be obligated to sell its Class B Membership Interests that are
subject to any Mandatory Sale (the "MANDATORY SALE MEMBERSHIP INTERESTS") shall
be the price established by the Valuation Formula calculated as of the date of
the Mandatory Sale Notice.
(b) If MarkWest has elected to purchase any Mandatory Sale Membership
Interests, MarkWest shall purchase the Mandatory Sale Membership Interests in
the following manner (the "MANDATORY SALE TERMS"):
(i) The Mandatory Sale Price shall be paid to a Terminating
Holder within 30 days following the date of the Mandatory Sale
Notice, in MarkWest's Discretion:
(A) cash by wire transfer of immediately available funds of
MarkWest;
(B) cash by wire transfer of immediately available funds of
a third party (including, but not limited to, a Member)
selected by MarkWest who agrees to purchase the
Mandatory Sale Membership Interests from the
Terminating Holder; or
(C) delivery of common units of the Partnership owned by
MarkWest with a value based on the average closing
price of the Partnership's common units for the twenty
trading days preceding the date of the Mandatory Sale
Notice, equal to the Mandatory Sale Price.
(ii) Each Terminating Holder shall, as a condition to receiving
the Mandatory Sale Price, deliver such instruments, in form and
substance satisfactory to MarkWest, as MarkWest may deem necessary or
desirable to effect the purchase of the Mandatory Sale Membership
Interests.
(iii) MarkWest and the Selling Holder shall comply with the
provisions of Section 12.5 hereof regarding Transfers; provided,
MarkWest shall pay the costs set forth in Section 12.5 (d).
33
(c) The purchase by MarkWest of any Mandatory Sale Membership
Interests shall be deemed to have been made at the close of business on the date
of delivery of such documents effectuating Transfer and the Terminating Holder's
receipt of the Mandatory Sale Price, and from and after such date, all rights of
the Terminating Holder with respect to the Mandatory Sale Membership Interests
shall cease and be of no further effect.
ARTICLE 14
PREEMPTIVE RIGHTS
14.1 GRANT OF PREEMPTIVE RIGHTS. The Company hereby grants to each Member
the right on the terms and conditions set forth in this Article 14 to purchase
such Member's PRO RATA share of New Membership Interests that the Company may,
after the date hereof, from time to time, propose to sell and issue for cash
consideration.
14.2 DEFINITION OF "NEW MEMBERSHIP INTERESTS." "NEW MEMBERSHIP INTERESTS"
shall mean any newly authorized and not then issued Membership Interests;
PROVIDED HOWEVER, that the term "NEW MEMBERSHIP INTERESTS" does not include, and
the following circumstances shall not give rise to any preemptive rights of the
Members:
(a) Membership Interests issued to financial institutions (including
MarkWest) as consideration for or in connection with any credit facilities
obtained by the Company or the Partnership;
(b) Membership Interests purchased by MarkWest pursuant to any
Mandatory Sale or otherwise;
(c) Membership Interests issued in order to ensure compliance with
any of the Company's or the Partnership's debt instruments or credit agreements;
(d) Membership Interests issued or to be issued to Directors,
employees or officers of, or consultants or advisors to the Company or the
Partnership pursuant to stock purchase or equity option plans or other
arrangements that are approved by the Board;
(e) Membership Interests issued upon the conversion or exercise of
options or other rights that were issued in compliance with this Article 14; and
(f) Membership Interests issued to new Members in compliance with
Section 12.8.
14.3 TERMS OF THE PREEMPTIVE RIGHTS OFFERING. If the Company proposes to
undertake an issuance of New Membership Interests, it shall give the Members
written notice of such proposal describing the type of New Membership Interests,
the cash consideration to be paid for the New Membership Interests and the
general terms upon which the Company proposes to issue the New Membership
Interests. Each of the Members shall have thirty (30) days from the date of
receipt of the notice to agree to purchase up to its PRO RATA share of such New
Membership Interests for the cash consideration and upon the general terms
specified in the notice by giving written notice to the Company that states the
quantity of New Membership Interests to be purchased. If any Class B Member
elects to purchase less than its PRO RATA share
34
of the New Membership Interests so offered, the PRO RATA share of the Class B
Member not so purchased will be purchased within such period by MarkWest.
ARTICLE 15
CO-SALE OBLIGATIONS
15.1 SALES BY MARKWEST. If MarkWest proposes to Transfer 50% or more of
its Class A Membership Interests in one or more related arms'-length
transactions, other than a transaction specified in Section 15.6 hereof, to any
Person that is not an Affiliate of MarkWest, then MarkWest may give written
notice (the "CO-SALE NOTICE") to the Company and to each of the Class B Members,
which if given shall be at least 20 calendar days prior to the closing of such
Transfer. The Co-Sale Notice shall describe in reasonable detail the proposed
Transfer including, without limitation, the nature of such Transfer, the
consideration to be paid, whether such consideration is to be paid in one lump
sum or installments, the name and address of each prospective Transferee, and
the other material terms of the Transfer (the "CO-SALE TERMS").
15.2 CO-SALE OBLIGATIONS. Upon the Co-Sale Notice, each Class B Member
shall be required to participate in such Transfer by Transferring Class B
Membership Interests on the same terms and conditions specified in the Co-Sale
Notice (the "CO-SALE OBLIGATION").
15.3 DELIVERY OF DOCUMENTS TO EFFECTUATE TRANSFER. Each Class B Member
shall effect its participation in the Transfer by promptly delivering to
MarkWest such instruments, in form and substance satisfactory to MarkWest, as
MarkWest may deem necessary or desirable to effect the Transfer specified in the
Co-Sale Notice.
15.4 CONSUMMATION OF TRANSFER. Concurrently with the consummation of the
Transfer specified in the Co-Sale Notice, MarkWest shall remit or cause to be
remitted to each Class B Member that portion of the Transfer consideration to
which such Class B Member is entitled by reason of his participation in such
Transfer.
15.5 EXEMPT TRANSFERS. Notwithstanding the foregoing, the provisions of
this Section 15.1 shall not apply to (i) any pledge of Class A Membership
Interests made pursuant to a bona fide loan transaction that creates a mere
security interest, or (ii) any bona fide gift; PROVIDED, HOWEVER, that in the
event of a Transfer of all of MarkWest's Class A Membership Interests made
pursuant to Section 15.1 hereof, the Transferee shall own the Class A Membership
Interests subject to the rights and obligations of this Section 15.1 and the
Transferee shall be substituted for "MarkWest" for purposes of Section 15.1 of
this Agreement.
15.6 SALE OF THE COMPANY. If the Board and the Class A Members approve a
Sale of the Company (an "APPROVED SALE"), each Member shall raise no objections
against such Approved Sale and shall transfer, sell or exchange its Membership
Interests as required under the Approved Sale on the terms and conditions
approved by the Board and the Class A Members. Each Member shall take all
necessary or desirable actions in connection with the consummation of the
Approved Sale as requested by the Company.
15.7 CONDITIONS TO OBLIGATIONS UPON AN APPROVED SALE. The obligations of
each Member with respect to the Approved Sale of the Company are subject to the
satisfaction of the following conditions: (a) upon the consummation of the
Approved Sale, each Membership
35
Interest shall receive the same form of consideration and the same PRO RATA
consideration as the other Membership Interests, (b) if any Members are given an
option as to the form and PRO RATA consideration to be received, each Member
shall be given the same option, (c) each holder of then currently exercisable
rights to acquire Membership Interests shall be given an opportunity to either
(A) exercise such rights prior to the consummation of the Approved Sale and
participate in such sale as holders of Membership Interests, or (B) upon the
consummation of the Approved Sale, receive in exchange for such rights
consideration equal to the same PRO RATA consideration received by Members in
connection with the Approved Sale less the exercise price of such rights to
acquire such Membership Interests, and (d) no Member shall be obligated to make
any representations or warranties in connection with such Approved Sale (other
than representations as to itself and its ownership of the Membership Interests
held by such Member) or to provide indemnities with respect to such Approved
Sale.
15.8 TERMINATION OF RIGHTS CONFERRED IN THIS ARTICLE 15. The provisions of
this Article 15 shall terminate upon the closing of the Company's sale of all or
substantially all of its assets or the acquisition by the Company by another
entity by means of a merger or consolidation resulting in the exchange of
Membership Interests for securities or consideration issued, or caused to be
issued, by the acquiring entity or its subsidiary.
ARTICLE 16
BOOKS OF ACCOUNT, RECORDS AND REPORTS
16.1 PREPARATION AND MAINTENANCE OF BOOKS AND RECORDS. The Company shall
prepare and maintain records and books of account covering such matters relative
to the Company's business as are usually entered into records and books of
account maintained by limited liability companies engaged in businesses of like
character. The Company's books and records shall be maintained in accordance
with partnership accounting practices and procedures and shall incorporate such
method of tax accounting as the Company determines is permissible and would be
in the best interests of the Company.
16.2 COMPANY DOCUMENTATION REQUIREMENTS. The Company shall keep at its
principal office the following:
(a) A current list of the full name and last known business or
residence address of each Member and Assignee (if any) set forth in alphabetical
order together with the contribution of each Member and Assignee;
(b) Copies of the Company's federal, state and local income tax or
information returns and reports, if any, for the six most recent taxable years;
(c) A copy of the Certificate of Formation and all amendments
thereto;
(d) Copies of this Agreement and all amendments thereto;
(e) The books and records of the Company as they relate to the
business affairs and operations of the Company for the current and the four most
recent fiscal years; and
36
(f) Any other books and records that the Company is required to
maintain under the Act or other applicable law.
16.3 FISCAL YEAR. The Fiscal Year of the Company shall be the calendar
year.
16.4 COMPANY FUNDS. The funds of the Company 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 Board. All
withdrawals from any such bank accounts shall be made by the duly authorized
agent or agents of the Company.
16.5 STATEMENTS.
(a) The Company shall cause to be prepared at least annually, at
Company expense, the information related to the Company's business activities
necessary for the preparation of each Members' federal and state income tax
returns, and upon the written request of a Member, the Company shall send or
cause to be sent such information relevant for such Member to each requesting
Member within 90 days after the end of each taxable year, unless the Company
reasonably determines there is good reason to defer the sending of such
information, but in no event shall such information be sent to such Member later
than 180 days after the end of the taxable year. If the Company deems it
required or desirable, a copy of the Company's federal, state and/or local
income tax or information returns for that year shall also be sent to such
Member along with such information.
(b) The Company shall provide to the Members such annual or other
periodic reports on its business and financial affairs as may be required under
the Act, other applicable law, or as otherwise deemed appropriate by the Board.
(c) In addition to the information, reports and statements furnished
to the Members pursuant to subsections 16.5(a) and (b) hereof, the Company shall
obtain an annual audit of the Company certified to by an independent certified
public accountant, which shall be transmitted by the Company to each requesting
Member within three months after the close of each fiscal year, containing, at a
minimum:
(i) a balance sheet of the Company as of the beginning and
close of such fiscal year;
(ii) a statement of Company Profits and Losses for such fiscal
year; and
(iii) a statement of such Member's Capital Account as of the
close of such fiscal year, and changes therein during such fiscal
year.
ARTICLE 17
DISSOLUTION AND TERMINATION OF THE COMPANY
17.1 DISSOLUTION. The death, dissolution, bankruptcy, expulsion or removal
of a Member shall not cause the dissolution of the Company, and upon any such
event the business of the Company shall continue to be conducted pursuant to the
terms of this Agreement. The
37
Company shall be dissolved and its affairs wound up on the happening of any of
the following events (herein each a "DISSOLUTION EVENT"):
(a) By an election by the Members holding two-thirds of the
Membership Interests, to dissolve the Company;
(b) The entry of a decree of judicial dissolution of the Company
pursuant to Section 18-802 of the Act; or
(c) The occurrence of any event that makes it unlawful for the
business of the Company to be carried on or for the Members to carry it on in a
limited liability company form.
17.2 WINDING UP AND LIQUIDATION. Upon the occurrence of a Dissolution
Event, the Class A Members shall cause a full accounting of the assets and
liabilities of the Company to be taken and shall cause the assets to be
liquidated and the business of the Company to be wound up as promptly as
possible. To the extent permitted by the Act, the proceeds of such liquidation
shall be applied, first, to creditors in satisfaction of liabilities of the
Company (whether by payment or by making of reasonable provision for payment),
including any loans to the Company by Members, and any remaining assets of the
Company shall be distributed in accordance with Section 4.3 hereof. The holders
of Membership Interests shall continue to share distributions, profits, losses
and allocations during the period of liquidation in accordance with Articles 3,
4 and 5. Except as otherwise authorized by the Company, the Class A Members
shall not be entitled to any special compensation for serving as the liquidator
of the Company.
17.3 NO RECOURSE. A Member shall look solely to the assets of the Company
for the return of its Capital Contributions, and if the assets remaining after
the payment and discharge of Company debts and liabilities are insufficient to
provide for the return of its Capital Contributions, a Member shall have no
recourse against any other Member. No holder of an interest in the Company shall
have any right to demand or receive property other than cash upon dissolution,
winding up and termination of the Company.
17.4 NO DEFICIT CONTRIBUTION OBLIGATION. No Member shall have any
obligation, upon a liquidation, to make any Capital Contribution for purposes of
eliminating or diminishing any negative balance in such Member's Capital
Account.
ARTICLE 18
AMENDMENTS; POWER OF ATTORNEY
18.1 AMENDMENTS. Subject to the provisions of Section 6.8(b)(i), this
Agreement may be amended pursuant to any amendment that is approved by Members
holding a majority of the total Membership Interests outstanding.
18.2 POWER OF ATTORNEY. Each Member hereby appoints the Class A Members as
his or its true and lawful attorneys-in-fact, with full power and authority, on
behalf and in the name of such Member, to execute, acknowledge, swear to and
file pertinent instruments (i) amending this Agreement in accordance with
Section 18.1, above, (x) to admit additional or substitute Members as authorized
by this Agreement, and (y) in any other respect, provided there has been
compliance with this Agreement with respect to the amendment or amendments in
38
question, and (ii) required of the Company by applicable law or the regulations
thereunder. This power of attorney is coupled with an interest and is
irrevocable.
ARTICLE 19
MISCELLANEOUS
19.1 NO REGISTRATION OF MEMBERSHIP INTERESTS. Each Member agrees that the
Membership Interests being issued hereunder to the Members may be securities and
that such Membership Interests have been issued without registration under the
Securities Act of 1933, as amended (the "SECURITIES ACT"), or registration or
qualification under any state securities or "Blue Sky" laws, in reliance on
exemptions from those registration and qualification provisions. Each Member
represents and warrants to the Company that he, she or it has acquired or is
acquiring his, her or its Membership Interests for investment purposes and
without any view toward or intent to dispose of or distribute such Membership
Interests or any interest therein. Each Member also agrees that, in the absence
of an applicable exemption from registration and qualification, neither the
Membership Interests, nor any interest therein may be transferred without
registration under the Securities Act and registration or qualification under
applicable state securities or "Blue Sky" laws.
19.2 SECTION HEADINGS AND REFERENCES. The Article and Section headings
used in this Agreement are for reference purposes only and should not be used in
construing this Agreement. Unless specified otherwise, references herein to a
"Section" or an "Article" shall mean the specified Section or Article of this
Agreement. In any Section of this Agreement, reference to a "subsection" shall
mean the specified subsection within such Section.
19.3 GENDER AND NUMBER. Wherever from the context it appears appropriate,
each term in this Agreement stated in either the singular or the plural shall
include the singular and the plural, and pronouns stated in either the
masculine, feminine or the neuter gender shall include the masculine, the
feminine and the neuter.
19.4 EXHIBITS. Each of the Exhibits attached to this Agreement are
incorporated herein by reference and expressly made a part of this Agreement for
all purposes. References to any Exhibit in this Agreement shall be deemed to
include this reference and incorporation.
19.5 SEVERABILITY. If any provision of this Agreement or portion thereof,
or the application of such provision or portion thereof to any person or
circumstance, shall be held invalid, the remainder of this Agreement, or the
application of such provision or portion thereof to persons or circumstances
other than those to which it is held invalid, shall not be affected thereby.
19.6 SUCCESSORS AND ASSIGNS. Except as otherwise herein provided, this
Agreement shall be binding upon and inure to the benefit of the parties hereto,
their respective heirs executors, administrators and successors, and all other
persons hereafter having or holding an interest in this Company, whether as
Assignees, Transferees, Substitute Members or otherwise.
19.7 GOVERNING LAW; NO FIDUCIARY DUTIES. This Agreement and the rights of
the parties hereunder shall be governed by and construed in accordance with the
internal laws, and not the laws pertaining to choice or conflict of laws, of the
State of Delaware. The obligations and duties of the Company to the Members and
of the Members to each other are only those
39
obligations and duties specifically assumed by them in this Agreement and not
any other obligations or duties (including without limitation fiduciary duties)
that would otherwise exist under applicable law. Each Member consents to the
exclusive jurisdiction of the federal and state courts located in the State of
Colorado with respect to any litigation arising under or related to this
Agreement.
19.8 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which taken
together shall constitute but one and the same instrument. Faxed signatures of
this Agreement shall be binding for all purposes.
19.9 NO THIRD PARTY BENEFICIARIES. The provisions of this Agreement shall
not be for the benefit of, nor shall they be enforceable by, any Person who is
not a party to this Agreement.
19.10 NOTICES. Except as expressly provided otherwise in this Agreement,
all notices, requests, or consents provided for or permitted to be given under
this Agreement must be in writing and must be given either by depositing that
writing in the United States mail, addressed to the Person, postage paid, and
registered or certified with return receipt requested, or by delivering that
writing to the Person in person, by courier, or by facsimile transmission. If
mailed or delivered by courier, such notice shall be deemed to be given when
deposited in the United States mail, postage prepaid, or when deposited with a
reputable overnight courier, addressed to the Person at its address as it
appears in the records of the Company. If given by facsimile transmission, such
notice shall be deemed to be given when upon receipt of confirmation of a
successful facsimile transmission to the facsimile number of the Person as it
appears in the records of the Company. If given personally or otherwise than by
mail, courier or facsimile transmission, such notice shall be deemed to be given
when either handed to the Person or delivered to the Person's address as it
appears in the records of the Company. All notices, requests, and consents to be
given to a Member must be sent or delivered to the address given for that Member
as reflected in this Agreement or such other address as that Member may specify
by written notice to the Company and to the other Members. Whenever any notice
is required to be given by law or this Agreement, a written waiver thereof,
signed by the Person entitled to notice, whether before or after the time stated
therein, shall be deemed equivalent to the giving of such notice.
19.11 ENTIRE AGREEMENT; INTERPRETATION; "DISCRETION"; COUNSEL. This
Agreement contains the entire understanding between the parties with respect to
the subject matter hereof and supersedes any prior understandings between them
with respect to said subject matter, and specifically, but without limiting the
foregoing, supercedes and replaces that certain Limited Liability Company
Agreement of MarkWest Energy GP, L.L.C., dated as of January 25, 2002. There are
no representations, agreements, arrangements or understandings, oral or written,
between and among the parties hereto relating to the subject matter of this
Agreement that are not fully expressed herein. This Agreement is not to be
interpreted for or against any Member or the Company, and no Person will be
deemed the draftsperson of this Agreement. As used in this Agreement,
"DISCRETION," when used with respect to any Person, means its sole and absolute
discretion. Xxxxx X. Xxxxxxx, counsel to the Company and the Class A Members,
has not represented the other Members in connection with this Agreement or the
transactions
40
contemplated thereby. Those other Members have been advised to consult their
attorneys with respect to this Agreement and those matters.
SIGNATURE PAGES FOLLOW
41
IN WITNESS WHEREOF, the parties hereto have executed this Limited Liability
Company Agreement effective as of the Effective Date.
MARKWEST HYDROCARBON, INC.
/s/ Xxxxxx X. Xxxxxx
---------------------------------------------
Name: XXXXXX X. XXXXXX
Title: EXECUTIVE VICE PRESIDENT
Address: 000 Xxxxxxxxx Xxxxx Xxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
(000) 000-0000 (phone)
(000) 000-0000 (facsimile)
XXXX X. XXX
/s/ Xxxx X. Xxx
---------------------------------------------
Address: 000 Xxxxxxxxx Xxxxx Xxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
(000) 000-0000 (phone)
(000) 000-0000 (facsimile)
XXXXXX X. XXXXXX
/s/ Xxxxxx X. Xxxxxx
---------------------------------------------
Address: 000 Xxxxxxxxx Xxxxx Xxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
(000) 000-0000 (phone)
(000) 000-0000 (facsimile)
XXXXXX XXXXXXXX
/s/ Xxxxxx Xxxxxxxx
---------------------------------------------
Address: 000 Xxxxxxxxx Xxxxx Xxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
(000) 000-0000 (phone)
(000) 000-0000 (facsimile)
42
XXXXX X. XXXXXXXXX
/s/ Xxxxx X. Xxxxxxxxx
---------------------------------------------
Address: 000 Xxxxxxxxx Xxxxx Xxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
(000) 000-0000 (phone)
(000) 000-0000 (facsimile)
XXXX X. XXXXXXXXXX
/s/ Xxxx X. Xxxxxxxxxx
---------------------------------------------
Address: 000 Xxxxxxxxx Xxxxx Xxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
(000) 000-0000 (phone)
(000) 000-0000 (facsimile)
XXXXXXXXX X. XXXXXXX
/s/ Xxxxxxxxx X. Xxxxxxx
---------------------------------------------
Address: 000 Xxxxxxxxx Xxxxx Xxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
(000) 000-0000 (phone)
(000) 000-0000 (facsimile)
XXXXX X. XXXXXX
/s/ Xxxxx X. Xxxxxx
---------------------------------------------
Address: 000 Xxxxxxxxx Xxxxx Xxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
(000) 000-0000 (phone)
(000) 000-0000 (facsimile)
43
EXHIBIT A
SCHEDULE OF MEMBERS
TYPE AND
NAME & ADDRESS PERCENTAGE OF
MEMBERSHIP
INTERESTS
----------------------------------- --------------------
MARKWEST HYDROCARBON, INC. 91.4% Class A
000 Xxxxxxxxx Xxxxx Xxxx, Xxxxx 000 Membership Interests
Xxxxxxxxx, Xxxxxxxx 00000
(000) 000-0000 (phone)
(000) 000-0000 (facsimile)
XXXX X. XXX 1.6% Class B
000 Xxxxxxxxx Xxxxx Xxxx, Xxxxx 000 Membership Interests
Xxxxxxxxx, Xxxxxxxx 00000
(000) 000-0000 (phone)
(000) 000-0000 (facsimile)
XXXXXX X. XXXXXX 1.6% Class B
000 Xxxxxxxxx Xxxxx Xxxx, Xxxxx 000 Membership Interests
Xxxxxxxxx, Xxxxxxxx 00000
(000) 000-0000 (phone)
(000) 000-0000 (facsimile)
XXXXXX XXXXXXXX 1.6% Class B
000 Xxxxxxxxx Xxxxx Xxxx, Xxxxx 000 Membership Interests
Xxxxxxxxx, Xxxxxxxx 00000
(000) 000-0000 (phone)
(000) 000-0000 (facsimile)
XXXXX X. XXXXXXXXX 1.6% Class B
000 Xxxxxxxxx Xxxxx Xxxx, Xxxxx 000 Membership Interests
Xxxxxxxxx, Xxxxxxxx 00000
(000) 000-0000 (phone)
(000) 000-0000 (facsimile)
XXXX X. XXXXXXXXXX 1.6% Class B
000 Xxxxxxxxx Xxxxx Xxxx, Xxxxx 000 Membership Interests
Xxxxxxxxx, Xxxxxxxx 00000
(000) 000-0000 (phone)
(000) 000-0000 (facsimile)
XXXXXXXXX X. XXXXXXX 0.3% Class B
000 Xxxxxxxxx Xxxxx Xxxx, Xxxxx 000 Membership Interests
Xxxxxxxxx, Xxxxxxxx 00000
(000) 000-0000 (phone)
(000) 000-0000 (facsimile)
XXXXX X. XXXXXX 0.3% Class B
000 Xxxxxxxxx Xxxxx Xxxx, Xxxxx 000 Membership Interests
Xxxxxxxxx, Xxxxxxxx 00000
(000) 000-0000 (phone)
(000) 000-0000 (facsimile)
ii
EXHIBIT B
ADDITIONAL ALLOCATIONS
The following Items are hereby incorporated into the Agreement:
1. Solely for purposes of determining a Member's Capital Account in
applying the provisions of Items 1 through 7 of this EXHIBIT B, the anticipated
adjustments, allocations and distributions described in Regulations Section
1.704-l(b)(2)(ii)(d)(4)-(6) shall be taken into account, and each Member shall
be deemed obligated to restore any deficit in its Capital Account to the extent
of the sum of its share of the "MINIMUM GAIN", as determined pursuant to
Regulations Section 1.704-2(g)(1), and its share of the "MEMBER NONRECOURSE DEBT
MINIMUM GAIN", as determined pursuant to Regulations Section 1.704-2(i)(5).
2. Notwithstanding any other provision of this EXHIBIT B or of
Article 5, no allocation of Capital Account Deduction shall be made to any
Member if such allocation would result in such Member having a negative balance
in its Capital Account at the close of such year in excess of the amount it
would be required to restore, or is deemed to be obligated to restore on a
liquidation of the Company at the close of such year. Any Capital Account
Deduction that cannot be allocated to a Member pursuant to the restrictions
contained in this Item 2 of EXHIBIT B shall be allocated to the other Members of
the Company (to the extent not inconsistent with the restrictions of this Item 2
of EXHIBIT B) in accordance with the ratio of their then respective Capital
Account balances.
3. Notwithstanding any other provision of this EXHIBIT B or of
Article 5, in the event any Member unexpectedly receives an adjustment,
allocation or distribution described in clause (4), (5) or (6) of Regulations
Section 1.704-1(b)(2)(ii)(d) that results in such Member having a negative
balance in its Capital Account at the close of such year in excess of the amount
that it is obligated to restore or deemed obligated to restore on a liquidation
of the Company at the close of such year, or for any other reason has a deficit
Capital Account balance in excess of such amount, such Member shall be allocated
Capital Account Gross Income, prior to the allocations pursuant to Section
5.1(a), in an amount and manner sufficient to eliminate such excess as promptly
as possible.
4. In accordance with and pursuant to Regulations Section 1.704-2(i)(1),
all "PARTNER NONRECOURSE DEDUCTIONS", as defined in that Regulation, shall be
allocated to the Member that bears the economic risk of loss on the Member
Nonrecourse Debt giving rise to such deductions as determined under that
Treasury Regulation.
5. In accordance with and pursuant to Regulation Sections 1.704-2(f) and
1.704-2(i)(4) (and subject to the exceptions set forth therein), if there is a
net decrease in either Minimum Gain or Member Nonrecourse Debt Minimum Gain or
both during any taxable year, all Members shall be allocated, before any other
allocation is made of Profit (and other income and gain) or Loss (or other loss
or deduction) for such taxable year, items of Capital Account Gross Income for
such year (and, if necessary, subsequent years) in an amount equal to the
Member's share in the decrease in Minimum Gain or Member Nonrecourse Debt
Minimum Gain, as determined pursuant to Regulation Sections l.704-2(g)(2) and
1.704-2(i)(4).
6. To the extent an adjustment to the adjusted tax basis of any Company
asset pursuant to Section 734(b) or 743(b) of the Code is required, pursuant to
Regulation Sections 1.704-1(b)(2)(iv)(m)(2) or 1.704-1(b)(2)(iv)(m)(4), to be
taken into account in determining Capital Accounts, the amount of such
adjustment to 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
Member or Members to whom such adjustment relates as determined in accordance
with such Regulations.
7. It is the intent of the parties to this Agreement that allocation
required by Items 1 through 5 of this EXHIBIT B (the "REGULATORY ALLOCATIONS")
satisfy the requirements of certain Regulations under Section 704(b) of the
Code. It is further intended that the allocations under this EXHIBIT B and under
Article 5 shall effect an allocation for Federal income tax purposes in a manner
consistent with Section 704(b) of the Code and comply with any limitations or
restrictions therein and, to the extent possible, that any allocations pursuant
to this Item 7 of EXHIBIT B shall be offset with other special allocations of
Capital Account Gross Income and Capital Account Deduction in whatever manner
the Board reasonably and in good faith determines so that, after such offsetting
allocations are made, each Member's Capital Account balance is (to the extent
possible) equal to the Capital Account balance such Member would have had if the
Regulatory Allocations were not part of this Agreement and all items of income,
gain, loss and deduction were allocated pursuant to Sections 5.1 and 5.2. In
exercising its Discretion under this Item 7 of EXHIBIT B, the Board shall take
into account future Regulatory Allocations that, although not yet made, are
likely to offset other Regulatory Allocations previously made. If for any reason
the allocations contained in this Agreement conflict with the Regulations
promulgated under Section 704 of the Code, the Members acknowledge that such
Regulations shall control.
8. For federal income tax purposes, except as otherwise provided in
Items 8, 9 or 10 of this EXHIBIT B, items of income, gain, loss and deduction
shall be allocated in accordance with the allocation of the corresponding item
of Capital Account Gross Income or Capital Account Deduction for purposes of
maintaining Capital Accounts.
9. For tax purposes, recapture of tax deductions arising out of a
disposition of property shall, to the extent consistent with the allocations for
tax purposes of the gain or amount realized giving rise to such recapture, be
allocated to the Members in the same proportions as the recaptured deduction was
originally allocated.
10. For tax purposes, income, gain, loss, and deduction with respect to
property reflected in the Capital Accounts at a book value other than its
adjusted basis shall be shared among the Members so as to take account of the
variation between the basis of the property to the Company and its fair market
value at the time of the contribution. The preceding sentence shall be
administered in any manner determined by the Board that is consistent with
Treasury Regulations under Code Sections 704(c) and 704(b).
ii
