EXHIBIT 10.2
EXECUTION COPY
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OPERATING AGREEMENT
OF
XXXXXX OFFSHORE LLC
DATED AS OF AUGUST 5, 1997
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NYFS12...:\93\73293\0016\1915\AGR7247P.24F
TABLE OF CONTENTS
Section Page
ARTICLE 1 DEFINITIONS................................................ 1
ARTICLE 2 FORMATION AND OFFICES...................................... 12
2.1 Formation.................................................. 12
2.2 Principal Office .......................................... 13
2.3 Registered Office and Registered Agent .................... 13
2.4 Purpose of Company ........................................ 13
2.5 Date of Dissolution........................................ 13
2.6 Qualification.............................................. 13
ARTICLE 3 CAPITALIZATION OF THE COMPANY.............................. 14
3.1 Admission of Members; Capital Contributions................ 14
3.2 Additional Capital Contributions .......................... 14
3.3 Loans; Repayment of Bridge Loans .......................... 15
3.4 Contributions by SEACOR of certain Promoted Interests;
Certain SEACOR Transactions................................ 16
3.5 Maintenance of Capital Accounts............................ 17
3.6 Capital Withdrawal Rights, Interest and Priority .......... 18
3.7 Preemptive Rights.......................................... 18
3.8 Group A Preferred Return; Group B Preferred Return ........ 19
3.9 Right of First Offer ...................................... 21
ARTICLE 4 DISTRIBUTIONS.............................................. 22
4.1 Distributions of Net Cash Flow ............................ 22
4.2 Persons Entitled to Distributions.......................... 22
4.3 Limitations on Distributions .............................. 22
ARTICLE 5 ALLOCATIONS................................................ 23
5.1 Profits.................................................... 23
5.2 Losses .................................................... 23
5.3 Special Allocations........................................ 23
5.4 Curative Allocations ...................................... 25
5.5 Loss Limitation............................................ 25
5.6 Tax Allocations: Code Section 704(c)...................... 26
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ARTICLE 6 MEMBERS' MEETINGS.......................................... 26
6.1 Meetings of Members; Place of Meetings .................... 26
6.2 Quorum; Voting Requirement ................................ 27
6.3 Proxies.................................................... 27
6.4 Action Without Meeting .................................... 27
6.5 Notice .................................................... 27
6.6 Waiver of Notice .......................................... 27
6.7 No Authority .............................................. 27
6.8 Certain Approvals.......................................... 28
ARTICLE 7 MANAGEMENT AND CONTROL .................................... 28
7.1 Management Committee ...................................... 28
7.2 Management Committee Meetings; Proxies .................... 29
7.3 Management Committee's Authority; Certain Limitations...... 29
7.4 Officers; Agents .......................................... 30
7.5 Resignation of a Management Committee Member .............. 30
7.6 Compensation .............................................. 30
ARTICLE 8 LIABILITY AND INDEMNIFICATION.............................. 31
8.1 Liability of Members ...................................... 31
8.2 Indemnification............................................ 31
8.3 Effect of Certain Amendments .............................. 32
ARTICLE 9 TRANSFERS OF MEMBERSHIP INTERESTS.......................... 33
9.1 General Restrictions ...................................... 33
9.2 Permitted Transfers........................................ 33
9.3 Substitute Members ........................................ 34
9.4 Effect of Admission as a Substitute Member ................ 34
9.5 Consent.................................................... 35
9.6 No Dissolution ............................................ 35
9.7 Additional Members; Certain Representations of Members .... 35
9.8 Right of First Offer ...................................... 35
9.9 Tag-Along Rights .......................................... 36
9.10 Drag-Along Rights.......................................... 38
9.11 Piggyback Registration .................................... 40
ARTICLE 10 DISSOLUTION AND TERMINATION................................ 41
10.1 Events Causing Dissolution ................................ 41
10.2 Notices to Secretary of State.............................. 42
10.3 Cash Distributions Upon Dissolution........................ 42
10.4 In-Kind.................................................... 43
10.5 No Action for Dissolution.................................. 43
ARTICLE 11 TAX MATTERS MEMBER ........................................ 43
11.1 Tax Matters Member ........................................ 43
11.2 Certain Authorizations .................................... 44
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11.3 Indemnity of Tax Matters Member............................ 45
11.4 Information Furnished...................................... 45
11.5 Notice of Proceedings, etc................................. 45
11.6 Notices to Tax Matters Member.............................. 45
11.7 Preparation of Tax Returns ................................ 45
11.8 Tax Elections.............................................. 46
11.9 Taxation as a Partnership.................................. 46
ARTICLE 12 ACCOUNTING AND BANK ACCOUNTS .............................. 46
12.1 Fiscal Year and Accounting Method.......................... 46
12.2 Books and Records.......................................... 46
12.3 Delivery to Members; Inspection............................ 47
12.4 Financial Statements ...................................... 47
12.5 Filings.................................................... 47
12.6 Non-Disclosure ............................................ 47
12.7 Bank Accounts.............................................. 48
ARTICLE 13 MISCELLANEOUS.............................................. 48
13.1 Title to Property.......................................... 48
13.2 Waiver of Default.......................................... 48
13.3 Amendment.................................................. 49
13.4 No Third Party Rights...................................... 49
13.5 Severability .............................................. 49
13.6 Nature of Interest in the Company.......................... 49
13.7 Binding Agreement.......................................... 49
13.8 Headings .................................................. 50
13.9 Word Meanings.............................................. 50
13.10 Counterparts .............................................. 50
13.11 Entire Agreement .......................................... 50
13.12 Partition.................................................. 50
13.13 Governing Law; Consent to Jurisdiction and Venue .......... 50
13.14 Discretion ................................................ 50
SCHEDULE 1................................................................. 54
SCHEDULE 3.1(b).............................................................55
SCHEDULE 7.5............................................................... 56
SCHEDULE 9.7............................................................... 57
Annex I.....................................................................58
Annex II....................................................................59
Annex III(a)................................................................60
Annex III(b)................................................................62
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Annex IV....................................................................63
Annex V.....................................................................64
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OPERATING AGREEMENT
OF
XXXXXX OFFSHORE LLC
THIS OPERATING AGREEMENT (this "AGREEMENT") of XXXXXX OFFSHORE LLC (the
"COMPANY"), is made and entered into as of the 5th day of August, 1997 by and
among the Persons executing this Agreement on the signature pages hereto as a
member (together with such other Persons that may hereafter become members as
provided herein, referred to collectively as the "MEMBERS" or, individually, as
a "MEMBER").
WHEREAS, the Members have caused Xxxxxx Offshore LLC to be formed on as a
limited liability company under the Delaware Limited Liability Company Act by
causing a certificate of formation of the Company to be filed with the Delaware
Secretary of State and, as required thereunder, do hereby adopt this Agreement
as the limited liability company agreement of the Company pursuant to Section
18-201(d) of the Act effective as of the date hereof;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
contained herein, the parties agree as follows:
ARTICLE 1
DEFINITIONS
As used herein, the following terms shall have the following meanings,
unless the context otherwise requires:
"ACT" means the Delaware Limited Liability Company Act, 6 Del. L. ss.
18-101, et seq., as amended from time to time.
"ADJUSTED CAPITAL ACCOUNT DEFICIT" means, with respect to a Member, the
deficit balance, if any, in such Member's Capital Account as of the end of the
relevant Taxable Year, after giving effect to the following adjustments:
(a) Credit to such Capital Account any amounts which such Member
is obligated to restore pursuant to any provision of this Agreement or is
deemed to be obligated to restore pursuant to the penultimate sentences of
Regulation Sections 1.704-2(g)(1) and 1.704-2(i)(5); and
(b) Debit to such Capital Account the items described in
Regulation Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), and
1.704- 1(b)(2)(ii)(d)(6).
The foregoing definition of Adjusted Capital Account Deficit is intended to
comply with the provisions of Regulation Section 1.704-1(b)(2)(ii)(d) and shall
be interpreted consistently therewith.
"AFFILIATE" of a specified Person means any Person (a) who directly or
indirectly controls, is controlled by, or is under common control with, such
Person or (b) who has any relationship with such Person by blood, marriage or
adoption, not more remote than first cousin.
"AGREEMENT" means this Operating Agreement, which shall constitute the
limited liability company agreement of the Company for purposes of the Act, as
amended from time to time.
"ASSIGNMENT AND ASSUMPTION AGREEMENT" means an assignment and assumption
agreement to be entered into by COI and the Company contemporaneously herewith,
in the form of Annex I attached hereto, pursuant to which COI assigns all of its
properties and assets identified on Schedule 3.1(b) attached hereto to the
Company and the Company assumes certain related liabilities of COI identified on
Schedule 3.1(b) attached hereto, including liabilities arising under the Lease
and the Construction Contracts.
"BASE RATE" means, at the applicable time, the Prime Rate as announced by
The Chase Manhattan Bank, N.A. in New York, New York.
"BASSOE" means Bassoe Rig Partners Ltd., a Bermuda corporation.
"BRIDGE LOAN" means that loan in the principal amount of $3,150,000 made
by SEACOR SMIT to and evidenced by that certain Promissory Note dated July 18,
1997 issued by Xxxxxx Offshore Inc. to SEACOR SMIT in the principal amount of
$3,150,000, the proceeds of which were used to repay certain indebtedness which
had been incurred to make certain payments due under the Construction Contracts
and the repayment of which is secured by first priority liens on the assets and
properties, and a pledge of the outstanding capital stock, of Xxxxxx Offshore
Inc. pursuant to the Bridge Loan Security Documents.
"BRIDGE LOAN SECURITY DOCUMENTS" means that (i) certain Security Agreement
dated as of July 18, 1997 by Xxxxxx Offshore Inc. in favor of SEACOR SMIT, and
the Financing Statement (UCC-1) filed with the Secretary of State, State of
Texas in
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connection therewith, and (ii) those certain Pledge Agreements dated as of July
18, 1997 by each of Bassoe, Xxxxxx X. Xxxxx, Xxxxxxx X. Xxxxxxxxx III and
Xxxxxxx Xxxxxxxxx and Xxxxxx.
"BROKERAGE AGREEMENT" means that certain letter agreement to be entered
into by the Company and Bassoe contemporaneously herewith, in the form of Annex
II attached hereto, providing, among other things, for Bassoe to receive a
brokerage fee in connection with the Construction Contracts upon the delivery of
each of CJ1 and CJ2.
"BUSINESS" shall have the meaning set forth in Section 3.9(a).
"BUSINESS DAY" means any day (other than a day which is a Saturday, Sunday
or legal holiday in the state of New York) on which banks are open for business
in New York City.
"CJ1" means the Le Tourneau Enhanced 116-C xxxx-up drilling rig which as
of the date hereof is under construction pursuant to the Construction Contracts
and, upon completion, will be owned by CJP1.
"CJ1 3.8(A) EVENT" shall have the meaning set forth in Section 3.8(a).
"CJ1 3.8(B) EVENT" shall have the meaning set forth in Section 3.8(b).
"CJ2" means the Le Tourneau Super 116 xxxx-up drilling rig which may be
constructed pursuant to the Construction Contracts and, if so constructed, would
be owned by CJP2.
"CJ2 3.8(A) EVENT" shall have the meaning set forth in Section 3.8(a).
"CJ2 3.8(B) EVENT" shall have the meaning set forth in Section 3.8(b).
"CJP1" means a Delaware limited partnership to be formed to own and
operate CJ1 as provided in the Letter Agreement and whose managing general
partner will be the Company.
"CJP2" means a Delaware limited partnership to be formed to own and
operate CJ2 as provided in the Letter Agreement and whose managing general
partner will be the Company.
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"CAPITAL ACCOUNT" means, with respect to any Member, a separate account
established by the Company and maintained for each Member in accordance with
Section 3.5 hereof.
"CAPITAL CONTRIBUTION" means, with respect to any Member, the amount of
money and the initial Gross Asset Value of any Property (other than money)
contributed to the Company with respect to the interests purchased by such
Member pursuant to the terms of this Agreement, in return for which the Member
contributing such capital shall receive a Membership Interest.
"CERTIFICATE" means the Certificate of Formation of the Company filed with
the Secretary of State of Delaware, as amended or restated from time to time.
"XXXXXX" shall mean Xxxxxxx X. Xxxxxx.
"XXXXXX OFFSHORE INC." means Xxxxxx Offshore Inc., a Delaware corporation
that was merged into COI effective July 31, 1997.
"CODE" means the United States Internal Revenue Code of 1986, as amended.
"COI" means COI, LLC, a Delaware limited liability company and the
successor by merger to Xxxxxx Offshore Inc., a Delaware corporation merged with
and into COI effective July 31, 1997.
"COMPANY" means Xxxxxx Offshore LLC.
"COMPANY AFFILIATE" shall have the meaning set forth in Section 8.2.
"COMPANY MINIMUM GAIN" shall have the meaning set forth for "partnership
minimum gain" in Regulation Section 1.704-2(b)(2) and shall be determined in
accordance with the provisions of Regulation Section 1.704-2(d).
"CONSTRUCTION CONTRACTS" means, collectively, that certain (i) Platform
Construction Agreement dated April 30, 1997 between Xxxxxx Offshore Inc. and
Amfels, Inc., a Texas corporation ("AMFELS"), (ii) Ancillary Agreement dated
April 30, 1997 between Xxxxxx Offshore Inc. and Amfels, and (iii)
Confidentiality Agreement dated April 30, 1997 between Xxxxxx Offshore Inc. and
Amfels and (iv) such other agreements as may be entered into between the Company
or its successors or assigns and Amfels from time to time relating to the
construction of CJ2.
"DEPRECIATION" means, for each Taxable Year or other period, an amount
equal to the depreciation, amortization or other cost recovery deduction
allowable with respect
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to an asset for such Taxable Year, except that if the Gross Asset Value of an
asset differs from its adjusted basis for federal income tax purposes at the
beginning of such Taxable Year, Depreciation shall be an amount which bears the
same ratio to such beginning Gross Asset Value as the federal income tax
depreciation, amortization or other cost recovery deduction for such Taxable
Year bears to such beginning adjusted tax basis; provided, however, that if the
adjusted basis for federal income tax purposes of an asset at the beginning of
such Taxable Year is zero, Depreciation shall be determined with reference to
such beginning Gross Asset Value using any reasonable method selected by the
Management Committee.
"DISPOSITION" shall have the meaning set forth in Section 3.9(a).
"DISPOSITION NOTICE" shall have the meaning set forth in Section 3.9(a).
"DRAG-ALONG NOTICE" shall have the meaning set forth in Section 9.10(a).
"DRAG-ALONG RIGHT" shall have the meaning set forth in Section 9.10(a).
"EMPLOYMENT AGREEMENT" means an employment agreement to be entered into
between the Company and Xxxxxx pursuant to which Xxxxxx will be employed to
serve as President and Chief Executive Officer of the Company for a term of
three years upon the other terms and conditions set forth in the Letter
Agreement.
"GROSS ASSET VALUE" means with respect to any asset, the asset's adjusted
basis for federal income tax purposes, except as follows and as otherwise
provided in clause (ii) of Section 3.2(b):
(a) The initial Gross Asset Value of any asset contributed by a
Member to the Company shall be the gross fair market value of such asset,
as reasonably determined by the Management Committee; provided, however,
that the initial Gross Asset Values of the assets contributed to the
Company pursuant to Section 3.1 hereof shall be as set forth in such
section or the schedule referred to therein;
(b) The Gross Asset Values of all Company assets shall be
adjusted to equal their respective gross fair market values (taking Code
Section 7701(g) into account), as reasonably determined by the Management
Committee as of the following times: (i) the acquisition of an additional
interest in the Company by any new or existing Member in exchange for more
than a de minimis Capital Contribution; (ii) the distribution by the
Company to a Member of more than a de minimis amount of Company property
as consideration for an interest in the Company; and (iii) the liquidation
of the
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Company within the meaning of Regulation Section 1.704-1(b)(2)(ii)(g);
provided, however, that an adjustment described in clauses (i) and (ii) of
this paragraph shall be made only if the Management Committee reasonably
determines that such adjustment is necessary to reflect the relative
economic interests of the Members in the Company;
(c) The Gross Asset Value of any item of Company assets
distributed to any Member shall be adjusted to equal the gross fair market
value (taking Code Section 7701(g) into account) of such asset on the date
of distribution as reasonably determined by the Management Committee; and
(d) The Gross Asset Values of Company assets shall be increased
(or decreased) to reflect any adjustments to the adjusted basis of such
assets pursuant to Code Section 734(b) or Code Section 743(b), but only to
the extent that such adjustments are taken into account in determining
Capital Accounts pursuant to Regulation Section 1.704-1(b)(2)(iv)(m) and
subparagraph (f) of the definition of "Profits" and "Losses" or Section
5.3(g) hereof; provided, however, that Gross Asset Values shall not be
adjusted pursuant to this subparagraph (d) to the extent that an
adjustment pursuant to subparagraph (b) is required in connection with a
transaction that would otherwise result in an adjustment pursuant to this
subparagraph (d).
If the Gross Asset Value of an asset has been determined or adjusted pursuant to
subparagraph (b) or (d), such Gross Asset Value shall thereafter be adjusted by
the Depreciation taken into account with respect to such asset, for purposes of
computing Profits and Losses.
"GROUP A MEMBERS" means SEACOR and its permitted successors or assigns.
"GROUP B MEMBERS" means COI and its permitted successors or assigns.
"GROUP A PREFERRED RETURN" shall have the meaning set forth in Section
3.8(a).
"GROUP B PREFERRED RETURN" shall have the meaning set forth in Section
3.8(b).
"INITIAL TAG-ALONG NOTICE" shall have the meaning set forth in Section
9.9(a).
"LEASE" means the office lease between Xxxxxx Offshore Inc. and 0000 Xxxx
Xxxx Ltd. expiring on March 31, 1998 for approximately 850 square feet at the
premises located at 0000 Xxxx Xxxx Xxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx 00000.
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"LETTER AGREEMENT" means that certain Letter Agreement dated the date
hereof among the Company, SEACOR, SEACOR SMIT and Xxxxxx setting forth, among
other things, certain understandings relating to the formation after the date
hereof of CJP1 and CJP2 and the terms and conditions of the Employment
Agreement.
"LOSSES" has the meaning set forth in the definition of "Profits" and
"Losses".
"MAJORITY IN INTEREST" means, with respect to any specified group or class
of Members, Members owning more than fifty percent (50%) of the total Percentage
Interests held by all such specified group or class of Members.
"MANAGEMENT COMMITTEE" means the management committee of the Company
established pursuant to Section 7.1.
"MANAGERS" means, collectively, the Persons designated and serving in
accordance with Article 7 as members of the Management Committee.
"MEMBER" or "MEMBERS" shall have the meaning set forth in the preamble
hereof.
"MEMBER NONRECOURSE DEBT" has the meaning set forth for "partner
nonrecourse debt" in Regulation Section 1.704-2(b)(4).
"MEMBER NONRECOURSE DEBT MINIMUM GAIN" means an amount, with respect to
each Member Nonrecourse Debt, equal to the Company Minimum Gain that would
result if such Member Nonrecourse Debt were treated as a Nonrecourse Liability,
determined in accordance with Regulation Section 1.704-2(i)(3).
"MEMBER NONRECOURSE DEDUCTIONS" has the meaning set forth for "partner
nonrecourse deductions" in Regulation Sections 1.704-2(i)(1) and 1.704-2(i)(2).
"MEMBERSHIP INTEREST" means a Member's limited liability company interest
in the Company which refers to all of a Member's rights and interests in the
Company in such Member's capacity as a Member, all as provided in this Agreement
and the Act.
"NET CASH FLOW" shall mean the gross cash proceeds from the Company's
operations and any distributions received from CJP1 or CJP2 (excluding the
proceeds of Company borrowings and capital contributions) and from all sales and
other dispositions of the Company's Property and any amount released by the
Management Committee from Reserves, less the portion of gross proceeds (other
than the proceeds of the Company's borrowings and capital contributions) used to
pay or establish
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Reserves for all the Company's expenses, debt payments (including principal,
interest and required redemption payments), capital improvements, replacements
and contingencies, all as reasonably determined by the Management Committee. Net
Cash Flow shall not be reduced by Depreciation or similar allowances (but shall
be reduced by the Group A Preferred Return and the Group B Preferred Return, if
any, as accrued pursuant to Section 3.8 unless Section 3.8(d) shall be
applicable) and shall include the net cash proceeds of all principal and
interest payments actually received by the Company with respect to any
promissory note or other deferred payment obligation held by the Company in
connection with sales and other dispositions of the Company's Property.
"NONRECOURSE DEDUCTIONS" has the meaning set forth in Regulation Section
1.704- 2(b)(1).
"NONRECOURSE LIABILITY" has the meaning set forth in Regulation Section
1.704- 2(b)(3).
"NOTICE" means a writing, containing the information required by this
Agreement to be communicated to a party, and shall be deemed to have been
received (a) when personally delivered or sent by telecopy, (b) one day
following delivery by overnight delivery courier, with all delivery charges
pre-paid, or (c) on the third Business Day following the date on which it was
sent by United States mail, postage prepaid, to such party at the address or fax
number, as the case may be, of such party as shown on the records of the
Company.
"NOTICE OF ACCEPTANCE" shall have the meaning set forth in Section 3.9(a).
"PERCENTAGE INTEREST" of a Member means the aggregate limited liability
company percentage interest set forth on Schedule 1 hereto, as the same may be
modified from time to time as provided herein.
"PERMITTED TRANSFEREE" shall have the meaning set forth in Section 9.2.
"PERSON" means any individual, partnership, limited liability company,
corporation, cooperative, trust, estate or other entity.
"PROFITS" and "LOSSES" means, for each Taxable Year, an amount equal to
the Company's taxable income or loss for a taxable year, determined in
accordance with Section 703(a) of the Code (for this purpose, all items of
income, gain, loss or deduction required to be stated separately pursuant to
Section 703(a)(1) of the Code shall be included in taxable income or loss), with
the following adjustments:
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(a) Any income of the Company that is exempt from federal income
tax and not otherwise taken into account in computing Profits or Losses
shall be added to such taxable income or loss;
(b) Any expenditures of the Company described in Section
705(a)(2)(B) of the Code or treated as Code Section 705(a)(2)(B)
expenditures pursuant to Regulation Section 1.704-1(b)(2)(iv)(i), and not
otherwise taken into account in computing Profits or Losses, shall be
subtracted from such taxable income or loss;
(c) In the event the Gross Asset Value of any Company asset is
adjusted pursuant to subparagraphs (b) or (c) of the definition of Gross
Asset Value, the amount of such adjustment shall be treated as an item of
gain (if the adjustment increases the Gross Asset Value of the asset) or
an item of loss (if the adjustment decreases the Gross Asset Value of the
asset) from the disposition of such asset and shall be taken into account
for purposes of computing Profits or Losses;
(d) Gain or loss resulting from any disposition of Property with
respect to which gain or loss is recognized for federal income tax
purposes shall be computed by reference to the Gross Asset Value of the
Property disposed of, notwithstanding that the adjusted tax basis of such
Property differs from its Gross Asset Value;
(e) In lieu of the depreciation, amortization, and other cost
recovery deductions taken into account in computing such taxable income or
loss, there shall be taken into account Depreciation for such Taxable
Year, computed in accordance with the definition of Depreciation;
(f) To the extent an adjustment to the adjusted tax basis of any
Company asset pursuant to Code Section 734(b) or Code Section 743(b) is
required, pursuant to Regulation Sections 1.704-(b)(2)(iv)(m)(4) to be
taken into account in determining Capital Accounts as a result of a
distribution other than in liquidation of a Member's interest in the
Company, the amount of such adjustment 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) from the disposition of such asset and
shall be taken into account for purposes of computing Profits or Losses;
and
(g) Notwithstanding any other provision of this definition, any
items which are specially allocated pursuant to Section 5.3 or Section 5.4
hereof shall not be taken into account in computing Profits or Losses.
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The amounts of the items of Company income, gain, loss or deduction
available to be specially allocated pursuant to Sections 5.3 and 5.4 hereof
shall be determined by applying rules analogous to those set forth in
subparagraphs (a) through (f) above.
"PROMOTED INTEREST" shall have the meaning set forth in Section 3.4(d).
"PROPERTY" means all assets, real or intangible, that the Company may own
or otherwise have an interest in from time to time.
"PURCHASING GROUP B MEMBERS" shall have the meaning set forth in Section
3.9(a).
"REGULATIONS" means the regulations, including temporary regulations,
promulgated by the United States Department of Treasury with respect to the
Code, as such regulations are amended from time to time, or corresponding
provisions of future regulations.
"REGULATORY ALLOCATIONS" shall have the meaning set forth in Section 5.4.
"RESERVES" means the cash reserves established by the Management Committee
to provide for working capital, future investments, debt service and such other
purposes as may be deemed reasonably necessary or advisable by the Management
Committee.
"SEACOR" means SEACOR Offshore Rigs Inc., a Delaware corporation, and its
permitted successors or assigns.
"SEACOR GROUP" shall have the meaning set forth in Section 3.4(a).
"SEACOR SMIT" means SEACOR SMIT Inc., a Delaware corporation and, as of
the date hereof, the parent of SEACOR.
"SEC" means the Securities and Exchange Commission.
"SECRETARY" shall mean the Secretary of the Treasury or his/her delegate
or the Internal Revenue Service.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"SECTION 9.8 OFFEREE" shall have the meaning set forth in Section 9.8(a).
"SECTION 9.8 PROPOSED PURCHASER" shall have the meaning set forth in
Section 9.8(a).
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"SECTION 9.8 SELLING MEMBER" shall have the meaning set forth in Section
9.8(a).
"SECTION 9.9 PARTICIPATING TAGGED MEMBERS" shall have the meaning set
forth in Section 9.9(a).
"SECTION 9.9 PROPOSED PURCHASER" shall have the meaning set forth in
Section 9.9(a).
"SECTION 9.9 TAG-ALONG MEMBERSHIP INTEREST" shall have the meaning set
forth in Section 9.9(a).
"SECTION 9.9 TAGGED MEMBERS" shall have the meaning set forth in Section
9.9(a).
"SECTION 9.10 DRAG ALONG MEMBERSHIP INTERESTS" shall have the meaning set
forth in Section 9.10(a).
"SECTION 9.10 DRAGGED MEMBERS" shall have the meaning set forth in Section
9.10(a).
"SECTION 9.10 PROPOSED PURCHASER" shall have the meaning set forth in
Section 9.10(a).
"SECTION 9.10 SELLING MEMBER" shall have the meaning set forth in Section
9.10(a).
"TAG-ALONG RIGHT" shall have the meaning set forth in Section 9.9(a).
"TAG-ALONG NOTICE" shall have the meaning set forth in Section 9.9(a).
"TAXABLE YEAR" shall mean the taxable year of the Company in accordance
with the provisions of Section 706 of the Code.
"TAX DISTRIBUTION" means an amount equal to (i) the taxable income of the
Company allocated to the Group B Members for a Taxable Year multiplied by the
sum of (x) the highest federal income tax rate applicable to individuals for
such Taxable Year and (y) 6%, divided by (ii) the lowest aggregate Percentage
Interests held by the Group B Members during such Taxable Year. Cash
Distributions in respect of the Tax Distribution shall be made quarterly as
provided in Section 4.1 hereof, based on a reasonable estimate of the amount of
Tax Distribution for such Taxable Year. The amount of Tax Distribution shall be
computed by the Company's regular independent public accounting firm.
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"TAX MATTERS MEMBER" shall have the meaning set forth in Article 11.
"TRANSFER" or "TRANSFERRED" means (a) when used as a verb, to give, sell,
exchange, assign, transfer, pledge, hypothecate, bequeath, devise or otherwise
dispose of or encumber, and (b) when used as a noun, the nouns corresponding to
such verbs, in either case voluntarily or involuntarily, by operation of law or
otherwise. When referring to a Membership Interest, "TRANSFER" shall mean the
Transfer of such Membership Interest whether of record, beneficially, by
participation or otherwise.
ARTICLE 2
FORMATION AND OFFICES
2.1 FORMATION. Pursuant to the Act, the Members have formed a Delaware
limited liability company effective upon the filing of the Certificate of the
Company with the Secretary of State of Delaware. 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, to the extent
permitted by the Act, this Agreement shall control.
2.2 PRINCIPAL OFFICE. The principal office of the Company shall be located at
0000 Xxxx Xxxx Xxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx 00000 or at such other place(s)
as the Management Committee may determine from time to time.
2.3 REGISTERED OFFICE AND REGISTERED AGENT. The location of the registered
office and the name of the registered agent of the Company in the State of
Delaware shall be as stated in the Certificate, as determined from time to time
by the Management Committee.
2.4 PURPOSE OF COMPANY. The Company's purposes, and the nature of the
business to be conducted and promoted by the Company are, (a) to acquire
partnership interests in each of CJP1 and CJP2 in exchange for the contribution
of the Construction Contracts, the progress payments and deposits made in
accordance therewith of $5,400,000 in the aggregate and the obligation to make
additional cash contributions of $9,450,000 in the aggregate, (b) to manage and
supervise all aspects of the construction of CJ1 and CJ2 and, upon their
completion, manage all aspects of their operation for CJP1 or CJP2, as the case
may be, and receive therefor certain construction supervision fees and
management fees, (c) to act as managing general partner of each of CJP1 and
CJP2, (d) to engage in any other lawful act or activity for which limited
liability companies may be formed under the Act, and (e) to engage in any and
all activities necessary, advisable, convenient or incidental to the foregoing.
12
2.5 DATE OF DISSOLUTION. The term of the Company shall continue until the
close of business on August 1, 2032 or until the earlier dissolution under
Article 10 hereof. The existence of the Company as a separate legal entity shall
continue until cancellation of the Certificate in the manner required by the
Act.
2.6 CERTIFICATE; QUALIFICATION. The execution, delivery and filing of the
Certificate by Xxxxx X. Xxxxxxx, in his capacity as an authorized person, within
the meaning of the Act, is hereby ratified, approved and confirmed in all
respects. The President and Chief Executive Officer, any Vice President, the
Secretary and any Assistant Secretary of the Company is hereby authorized to
qualify the Company to do business as a foreign limited liability company in
Texas and any other state or territory in the United States in which the Company
may wish to conduct business and each is hereby designated as an authorized
person, within the meaning of the Act, to execute, deliver and file any
amendments or restatements of the Certificate and any other certificates and any
amendments or restatements thereof necessary for the Company to so qualify to do
business in any such state or territory.
ARTICLE 3
CAPITALIZATION OF THE COMPANY
3.1 INITIAL CAPITAL CONTRIBUTIONS.
(a) On the date hereof, each Member shall make Capital Contributions to the
capital of the Company consisting of cash and/or property as specified and as
set forth opposite such Member's name on Schedule 1 hereto. The amount of such
Capital Contributions, or the Gross Asset Value of any property contributed, if
other than cash, and the Percentage Interest of each Member on the date hereof,
is likewise set forth on Schedule 1.
(b) COI hereby represents and warrants to each of the Company and the Group A
Members that, as of the date hereof and immediately prior to the Capital
Contribution of the Group B Member pursuant to Section 3.1(a), the sole assets
and liabilities of COI are as set forth on Schedule 3.1(b), and such assets are
owned free and clear of any lien or encumbrances of any nature whatsoever (other
than liens or encumbrances arising out of this Agreement, the Bridge Loans and
the Bridge Loan Documents, the Construction Contracts and the other agreements
referred to on Schedule 3.1(b), to the extent relating to the rights thereunder
of the parties thereto).
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3.2 ADDITIONAL CAPITAL CONTRIBUTIONS.
(a) Except as otherwise expressly provided in this Agreement, no Member shall
be required to make any additional Capital Contribution. No Member shall be
permitted to make any additional Capital Contribution without the approval of
the Management Committee.
(b) Subject to the rights of each Member to purchase its proportionate share
of additional Membership Interests issued by the Company in accordance with
Section 3.7, the Company may offer additional Membership Interests to:
(i) any person that is not an Affiliate of a Member with the
approval of the Management Committee; or
(ii) any person that is a Member or is an Affiliate of a Member with
the approval of (A) the Management Committee, (B) a Majority in Interest of the
Group A Members and (C) a Majority in Interest of the Group B Members, it being
expressly understood that such approval of the Members shall also include their
approval of any related valuations of Gross Asset Value by the Management
Committee and, if such Members approve the Transfer without approving said
valuation, Gross Asset Value shall be determined by a third Person familiar with
the valuation of such transactions selected jointly by a Majority in Interest of
the Group A Members and a Majority in Interest of the Group B Members not later
than ten (10) days after their approval of the Transfer or, if the Members fail
to so select a third Person, then such third Person will be selected in
accordance with the rules and procedures of the American Arbitration Association
in New York, New York.
If any additional Capital Contributions are made by Members but not
in proportion to their respective Percentage Interests, the Percentage Interest
of each Member shall be adjusted such that each Member's revised Percentage
Interest determined immediately following the additional Capital Contributions
shall be equal to a fraction (1) the numerator of which is the sum of (a) the
positive Capital Account balance of the Member determined immediately preceding
the date the additional Capital Contribution is made (such Capital Account to be
computed by adjusting the book value for Capital Account purposes of each
Company asset to equal its Gross Asset Value as of such date, as provided in
subparagraph (b) of the definition herein of "Gross Asset Value"), and (b) the
additional Capital Contribution, if any, made by such Member, and (2) the
denominator of which is the sum of the positive Capital Account balances and
additional Capital Contributions of all Members, including any new Members (in
each case calculated as provided in Section 3.2(b)(ii)(1)). The names, addresses
and Capital Contributions of the Members shall be reflected in the books and
records of the Company.
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3.3 LOANS; REPAYMENT OF BRIDGE LOANS.
(a) Each Member shall have the right, but not the obligation, to purchase
debt securities hereafter issued by the Company, CJP1 or CJP2; provided,
however, that, if any Member so purchases debt securities from the Company, CJP1
or CJP2, such purchase shall not increase the Capital Account balance of such
Member. No Member shall be obligated to loan funds to the Company. Loans by a
Member to the Company shall not be considered Capital Contributions. The amount
of any such purchases shall be a debt of the Company owed to such Member in
accordance with the terms and conditions upon which such purchases are made.
(b) A Member may (but shall not be obligated to) guarantee a loan made to the
Company. If a Member guarantees a loan made to the Company and is required to
make payment pursuant to such guarantee to the maker of the loan, then the
amounts so paid to the maker of the loan shall be treated as a loan by such
Member to the Company and not as an additional capital contribution.
(c) On the date hereof, the Company shall use a portion of the Members'
Capital Contributions to satisfy the Bridge Loans in full and the Company,
contemporaneously therewith, agrees to repay in full the Bridge Loans and take
all necessary steps to release any security granted pursuant to the Bridge Loan
Security Documents, including liens granted with respect to the Construction
Contracts.
(d) The Members acknowledge and agree that SEACOR is making a loan to the
Company as of the date hereof in the amount of $5,465,000 which will be
evidenced by a promissory note of the Company in such principal amount and
secured by a pledge of the assets of the Company pursuant to a Security
Agreement in the forms attached as Annexes IV and V. The Members agree that
SEACOR may enforce its right thereunder as if it were an unaffiliated third
Person without any violation of fiduciary or other duties to the Company or its
Members.
3.4 CONTRIBUTIONS BY SEACOR OF CERTAIN PROMOTED INTERESTS;
CERTAIN SEACOR TRANSACTIONS.
(a) In the event SEACOR or its parent, SEACOR SMIT, or any other consolidated
subsidiary of SEACOR SMIT (collectively, the "SEACOR GROUP"), shall engage in
any offshore drilling rig investment transaction pursuant to which it receives a
"Promoted Interest" (as defined below), then SEACOR shall be obligated to
contribute such Promoted Interest, or to cause the contribution of such Promoted
Interest, to the Company without the payment of any consideration by the Company
therefor, and the contribution of any such Promoted Interest hereunder to the
Company shall not be considered an additional capital contribution and shall not
in
15
any way increase SEACOR's Capital Account; provided, however, that in the event
any member of the SEACOR Group was required to make an equity or other
investment to obtain such Promoted Interest, either (i) the Company shall make
such investment or acquire such investment from the applicable member of the
SEACOR Group at the cost incurred by SEACOR with respect thereto or (ii)
SEACOR's Capital Account shall be increased by an amount determined by the
Management Committee and approved by a Majority in Interest of the Group B
Members, which approval shall not be unreasonably withheld or delayed; provided,
further, in the event that the Group B Members do not approve an increase in
SEACOR's Capital Account as contemplated by clause (ii) of the foregoing
proviso, the Company shall not be precluded from engaging in the related
offshore rig investment transaction and the amount of any increase in SEACOR's
Capital Account shall be determined by a third Person familiar with the
valuation of such transactions selected jointly by SEACOR and a Majority in
Interest of the Group B Members not later than ten (10) days after the
consummation of said investment or, if SEACOR and such Group B Members fail to
so select a third Person, then such third Person will be selected in accordance
with the rules and procedures of the American Arbitration Association in New
York, New York.
(b) Notwithstanding anything herein to the contrary, members of the SEACOR
Group may freely (i) make equity or equivalent investments in offshore or other
oil rig investment transactions without any obligation to contribute any
interest therein to the Company (so long as any related Promoted Interest shall
be contributed to the Company pursuant to Section 3.4(a) and shall not at any
time accrue to any member of the SEACOR Group as a result thereof), and (ii)
acquire or combine with any other Person engaged in offshore drilling activities
so long as such Person has net assets in excess of $50,000,000 (whether or not
such Person has the benefit of any Promoted Interest).
(c) Notwithstanding anything herein to the contrary, in the event any member
of the SEACOR Group provides administrative, financial or investment- banking
type services to the Company, CJP1 or CJP2 with the respect to any rig
transactions or otherwise, such member of the SEACOR Group shall be entitled to
receive reasonable fees and reimbursement for expenses incurred in connection
with the provision of such services so long as such fees are not in excess of
fees charged by unrelated Persons for comparable services.
(d) For purposes of this Section 3.4, a "Promoted Interest" shall mean a
Person's right to receive any equity interest in, or percentage of the cash flow
or profits of, an enterprise in excess of the amount of equity or percentage
attributable to such Person's investment of cash or other property in such
enterprise (i.e., a
16
disproportionate share of equity, cash flow or profits when such Person's
investment is compared to comparable investments of other investors in the
enterprise).
3.5 MAINTENANCE OF CAPITAL ACCOUNTS.
(a) The Company shall maintain for each Member, a separate Capital Account
with respect to the Membership Interest owned by such Member in accordance with
the following provisions:
(i) To each Member's Capital Account there shall be credited (A)
such Member's Capital Contributions, (B) such Member's distributive share of
Profits and any items in the nature of income or gain which are specially
allocated pursuant to Section 5.3 or Section 5.4 hereof, and (C) the amount
of any Company liabilities assumed by such Member or which are secured by any
Property distributed to such Member. The principal amount of a promissory
note which is not readily traded on an established securities market and
which is contributed to the Company by the maker of the note (or a Member
related to the maker of the note within the meaning of Regulation Section
1.704-1(b)(2)(ii)(c)) shall not be included in the Capital Account of any
Member until the Company makes a taxable disposition of the note or until
(and only to the extent) principal payments are made on the note, all in
accordance with Regulation Section 1.704-1(b)(2)(iv)(d)(2);
(ii) To each Member's Capital Account there shall be debited (A) the
amount of money and the Gross Asset Value of any Property distributed or
treated as an advance distribution to such Member pursuant to any provision
of this Agreement (including without limitation any distributions pursuant to
Section 4.1(a)), (B) such Member's distributive share of Losses and any items
in the nature of expenses or losses which are specially allocated pursuant to
Section 5.3 or Section 5.4 hereof, and (C) the amount of any liabilities of
such Member assumed by the Company or which are secured by any Property
contributed by such Member to the Company;
(iii) In the event Membership Interests are Transferred in
accordance with the terms of this Agreement, the transferee shall succeed to
the Capital Account of the transferor to the extent it relates to the
Transferred Membership Interests; and
(iv) In determining the amount of any liability for purposes of
Sections 3.5(a)(i) and 3.5(a)(ii) there shall be taken into account Code
Section 752(c) and any other applicable provisions of the Code and
Regulations.
17
(b) The foregoing Section 3.5(a) and the other provisions of this Agreement
relating to the maintenance of Capital Accounts are intended to comply with
Regulation Section 1.704-1(b), and shall be interpreted and applied in a manner
consistent with such Regulation. The Management Committee shall (i) make any
adjustments that are necessary or appropriate to maintain equality between the
Capital Accounts of the Members and the amount of capital reflected on the
Company's balance sheet, as computed for book purposes, in accordance with
Regulation Section 1.704-1(b)(2)(iv)(q), and (ii) make any appropriate
modifications in the event unanticipated events might otherwise cause this
Agreement not to comply with Regulation Section 1.704-1(b).
3.6 CAPITAL WITHDRAWAL RIGHTS, INTEREST AND PRIORITY. Except as expressly
provided in this Agreement, no Member shall be entitled (a) to withdraw or
reduce such Member's Capital Contribution or to receive any distributions from
the Company, or (b) to receive or be credited with any interest on the balance
of such Member's Capital Contribution at any time.
3.7 PREEMPTIVE RIGHTS. If the Company elects to offer and sell Membership
Interests other than the Membership Interests set forth on Schedule 1, such
additional Membership Interests shall be in the form of Membership Interests
having such Percentage Interest, designations and such rights and provisions,
including, but not limited to, provisions relating to distributions and
allocations of Profits and Losses, as shall be reasonably determined by the
Management Committee to be in the best interest of the Company; provided,
however, that the Company may not offer and sell any Membership Interests having
preferences to the rights of Group A Members or the Group B Members with respect
to distributions, allocations or rights upon liquidation, without the prior
written consent of a Majority in Interest of the Group A Members, and a Majority
in Interest the Group B Members (it being understood that no such consent shall
be required for the offering or sale of Membership Interests that are entitled
to distributions, allocations and rights upon liquidation that are pari passu to
the rights of the Group A Members and the Group B Members). Prior to the
consummation of any sale of additional Membership Interests, the Company shall
offer the additional Membership Interests to the Members, on the terms and
conditions set forth below:
(a) The Company shall give Notice to each Member, setting forth the
price, terms and conditions of the proposed sale of the additional Membership
Interests, including the date of the proposed sale, which shall not be less
than thirty (30) days after the date of the Notice.
(b) Each Member shall have the option to acquire all or a portion of
such Member's pro rata portion (which shall be in proportion to the
18
Percentage Interest of all the Members) at the time of the offering of the
additional Membership Interests proposed to be sold, on the same terms and
conditions as are set forth in the Notice. The option of Members to purchase
all or a portion of their pro rata portions of the additional Membership
Interests shall be exercised by delivery of a Notice to the Company of
exercise within twenty (20) days following receipt of the Company's Notice of
the price, terms and conditions of the sale of the additional Membership
Interests. If any Member fails or declines to purchase all or a portion of
such Member's pro rata portion of the additional Membership Interests, then
such Member's remaining portion of the additional Membership Interests shall
be offered to the Members who have exercised their options to purchase their
pro rata portions. This procedure shall continue until such time as all the
Membership Interests offered hereby have been purchased by such Members or
until no such Member desires to purchase any additional Membership Interests
hereunder. Each such Member shall have the right to offer to acquire such
additional Membership Interests by delivering to the Company such Member's
Notice of such offer within ten (10) days following receipt of the Company's
Notice that additional portions are available. If less than all the
Membership Interests to be sold by the Company are purchased by the Members,
the Company may within one hundred twenty (120) days from the initial Notice
sell such Membership Interests as shall not have been purchased by the
Members upon terms and conditions no less favorable to the Company than those
set forth in the Notice.
(c) The sale of additional Membership Interests to Members who
exercise their options to purchase additional Membership Interests shall
occur on the date set forth in the Company's Notice of the price, terms and
conditions of the sale.
3.8 GROUP A PREFERRED RETURN; GROUP B PREFERRED RETURN . (a) If any of the
following events occur: (i) delivery of CJ1 is not completed until a date that
is 120 days after the "Scheduled Delivery Date" (as such term is defined in the
Construction Contracts with respect to CJ1) and such delayed delivery date is
not due to force majeure (the "CJ1 3.8(A) EVENT"), or (ii) the construction and
delivery of CJ2 is not completed until a date that is 120 days after the
"Scheduled Delivery Date" (as defined in the Construction Contracts with respect
to CJ2) and such delivery date is not due to force majeure (the "CJ2 3.8(A)
EVENT"), then upon such occurrence, the Group A Members shall be entitled to a
Group A preferred return (the "GROUP A PREFERRED RETURN") equal to (1) the total
equity investment made by SEACOR and its successors or assigns in the Company
and in (a) CJP1, in the case of a CJ1 3.8(a) Event, or (b) CJP2, in the case of
a CJ2 3.8(a) Event, multiplied by (2) the product of (A) the Base Rate in effect
on the date CJ1 or CJ2, as the case may be, is actually
19
delivered, plus 2%, multiplied by (B) (x) the number of days in excess of 120
days after the applicable "Scheduled Delivery Date," that CJ1 or CJ2, as the
case may be, is actually delivered, divided by (y) 365 days. Notwithstanding
anything to the contrary contained in the preceding sentence, if the Management
Committee duly approves and authorizes a "Change Order" (as defined in the
Construction Contracts as of the date hereof) that results in an adjustment to a
"Scheduled Delivery Date," the date used in determining whether a CJ1 3.8(a)
Event or CJ2 3.8(b) Event has occurred therein shall be adjusted accordingly.
(b) If any of the following events occur: (i) delivery of CJ1 is completed on
a date that is 120 days before the "Scheduled Delivery Date" (as such term is
defined in the Construction Contracts with respect to CJ1) (the "CJ1 3.8(B)
EVENT") or (ii) the construction and delivery of CJ2 is completed on a date that
is 120 days before the "Scheduled Delivery Date" (as defined in the Construction
Contracts with respect to CJ2) (the "CJ2 3.8(B) EVENT"), then upon such
occurrence, the Group B Members shall be entitled to a Group B preferred return
(the "GROUP B PREFERRED RETURN") equal to (1) the total equity investment made
by the Group B Members and their successors or assigns in the Company and (a)
CJP1, in the case of a CJ1 3.8(b) Event, or (b) CJP2, in the case of a CJ2
3.8(b) Event, multiplied by (2) the product of (A) the Base Rate in effect on
the date CJ1 or CJ2, as the case may be, is actually delivered, plus 2%,
multiplied by (B) (x) the number of days in advance of 120 days before the
applicable "Scheduled Delivery Date," that CJ1 or CJ2, as the case may be, is
actually delivered, divided by (y) 365 days. Notwithstanding anything to the
contrary contained in the preceding sentence, if the Management Committee duly
approves and authorizes a "Change Order" (as defined in the Construction
Contracts as of the date hereof) that results in an adjustment to a "Scheduled
Delivery Date," the date used in determining whether a CJ1 3.8(b) Event or CJ2
3.8(b) Event has occurred therein shall be adjusted accordingly.
(c) Anything to the contrary herein notwithstanding, the Group A Preferred
Return and the Group B Preferred Return shall be paid or distributed to the
Group A Members or the Group B Members, as applicable, on a priority basis prior
to the making of any other distribution or allocation hereunder to Members and
shall be treated for federal income tax purposes as a "guaranteed payment" under
Section 707(c) of the Code.
(d) In the event that the Construction Contracts are amended to provide that
both CJ1 and CJ2 shall be constructed on a priority basis as described under the
heading "Adjustment to the Order of Distributions in the Event of Early or Late
Delivery" in the outline of terms attached to the letter of intent between COI
and SEACOR SMIT dated July 18, 1997, this Section 3.8 shall be null and void and
of no further force or effect.
20
3.9 RIGHT OF FIRST OFFER ON SALE OF THE BUSINESS.
(a) If (i) the Management Committee proposes to sell all or substantially all
of the business and operations of the Company (the "BUSINESS") to any Person by
means of merger, sale of assets or otherwise (a "DISPOSITION"), other than
pursuant to a sale of outstanding Membership Interests (as to which the
provisions of Article 9 shall be applicable) and (ii) a Majority in Interest of
the Group B Members shall not have consented in writing to such Disposition,
then the Management Committee shall provide Notice of the proposed Disposition
to the Group B Members setting forth in reasonable detail the price, terms and
conditions of the proposed Disposition (the "DISPOSITION NOTICE"). One or more
of the Group B Members (the "PURCHASING GROUP B MEMBERS") shall have the option,
exercisable by a Notice to the Company delivered within thirty (30) days after
the date of the Disposition Notice and signed by a Majority in Interest of the
Group B Members (the "NOTICE OF ACCEPTANCE"), to elect to acquire the Business
on the price, terms and conditions set forth in the Disposition Notice. The
Notice of Acceptance shall indicate the identity of the Purchasing Group B
Members, state their acceptance of the price, the terms and conditions of the
proposed Disposition and may provide that consummation of the proposed
Disposition is conditioned upon the Purchasing Group B Members obtaining
financing therefor; provided, however, that if such consummation is conditioned
upon obtaining financing therefor, Purchasing Group B Members shall provide, not
later than forty-five (45) days after the date of the Disposition Notice,
commitments from recognized financial institutions evidencing their commitment
to provide any financing required to consummate the proposed Disposition, which
commitments shall be in form and substance reasonable satisfactory to the
Company; and, provided further, that, if such Purchasing Group B Members fail to
provide any commitments required by the immediately preceding proviso, the
Purchasing Class B Members shall be deemed not to have exercised their option to
acquire the Business and the Company shall be free to effect the Disposition as
contemplated by this Section. If the Purchasing Class B Members fail or for any
reason (other than a default or breach by the Company) are unable to consummate
the proposed Disposition within sixty (60) days from the date of the Disposition
Notice in accordance with Section 3.9(b), the Company may effect a Disposition
to any Person upon terms and conditions no less favorable to the Company than
those set forth in the Disposition Notice during a period of 180 days after the
expiration of such 60-day period. Thereafter, any Disposition will again be
subject to the rights of the Group B Members under the provisions of this
Section 3.9(a).
(b) The sale of the Business to the Purchasing Group B Members pursuant to
this Section 3.9 shall occur at the office of the Company on a Business Day
specified by not less than five (5) Business Days' prior Notice from the
Purchasing Group B Members to the Company, which Business Day shall not be later
than sixty (60) days
21
after the date of the Disposition Notice. At the closing, the Purchasing Group B
Members shall deliver the consideration payable pursuant to the Disposition
Notice in the form and amount specified therein against the simultaneous
delivery of instruments of assignment in form and substance reasonably
satisfactory to the Purchasing Group B Members, evidencing the sale of the
Business contemplated by the Disposition Notice.
ARTICLE 4
DISTRIBUTIONS
4.1 DISTRIBUTIONS OF NET CASH FLOW. Except as otherwise provided in
Section 3.8(c), distributions of Net Cash Flow to the Members shall be made as
follows:
(a) quarterly, to the Group A Members and Group B Members in
proportion to and to the extent of their relative Percentage Interests, an
amount not in excess of the Tax Distribution for the Taxable Year; provided,
however, that distributions under this Section 4.1(a) shall be treated as
advance distributions under Section 4.1(b), with the result that
distributions otherwise made under Section 4.1(b) to such Member shall be
reduced by the amount of advances made pursuant to this Section 4.1(a)); and
(b) upon the approval of and in the amount so approved by the
Management Committee acting in its sole discretion, to the Group A Members
and Group B Members in proportion to their relative Percentage Interests.
4.2 PERSONS ENTITLED TO DISTRIBUTIONS. All distributions of Net Cash Flow to
the Members under this Article 4 shall be made to the Persons shown on the
records of the Company to be entitled thereto as of the last day of the fiscal
period prior to the time for which such distribution is to be made, unless the
transferor and transferee of any Membership Interest otherwise agree in writing
to a different distribution and such distribution is consented to in writing by
the Management Committee.
4.3 LIMITATIONS ON DISTRIBUTIONS. Notwithstanding anything to the contrary
herein provided, no distribution hereunder shall be permitted to the extent
prohibited by Section 18-607 of the Act.
22
ARTICLE 5
ALLOCATIONS
5.1 PROFITS. After giving effect to the special allocations set forth in
Sections 5.3 and 5.4 hereof and subject to Section 5.7 hereof, Profits for any
Taxable Year shall be allocated to the Group A Members and Group B Members in
proportion to their Percentage Interests.
5.2 LOSSES. After giving effect to the special allocations set forth in
Sections 5.3 and 5.4, subject to the limitation in Section 5.5 hereof and
subject to Section 5.7 hereof, Losses for any Taxable Year shall be allocated to
the Group A Members and Group B Members in proportion to their Percentage
Interests.
5.3 SPECIAL ALLOCATIONS. The following special allocations shall be made
in the following order:
(a) Minimum Gain Chargeback. Except as otherwise provided in Section
1.704-2(f) of the Regulations, notwithstanding any other provision of this
Article 5, if there is a net decrease in Company Minimum Gain during any
Taxable Year, each Member shall be specially allocated items of Company
income and gain for such year (and, if necessary for subsequent years) in
proportion to, and to the extent of, an amount equal to each Member's share
of the net decrease in Company Minimum Gain during such taxable year as
determined in accordance with the provisions of Regulation Section
1.704-2(g). Allocations pursuant to the previous sentence shall be made in
proportion to the respective amounts required to be allocated to each Member
pursuant thereto. The items to be so allocated shall be determined in
accordance with Sections 1.704-2(f) (6) and 1.704-2(j) (2) of the
Regulations. This Section 5.3(a) is intended to comply with the minimum gain
chargeback requirement in Section 1.704-2(f) of the Regulations and shall be
interpreted consistently therewith.
(b) Member Minimum Gain Chargeback. Except as otherwise provided in
Section 1.704-2(i) (4) of the Regulations, notwithstanding any other
provision of this Section 5, if there is a net decrease in Member Nonrecourse
Debt Minimum Gain attributable to a Member Nonrecourse Debt during any
Taxable Year, each Member who has a share of the Member Nonrecourse Debt
Minimum Gain attributable to such Member Nonrecourse Debt, determined in
accordance with Section 1.704-2(i) (5) of the Regulations, shall be specially
allocated items of Company income and gain for such Taxable Year (and, if
necessary, subsequent Taxable Years) in an amount equal to such Member's
share of the net decrease in Member
23
Nonrecourse Debt, determined in accordance with Regulation Section 1.704-
2(i) (4). Allocations pursuant to the previous sentence shall be made in
proportion to the respective amounts required to be allocated to each Member
pursuant thereto. The items to be so allocated shall be determined in
accordance with Sections 1.704-2(i) (4) and 1.704-2(j) (2) of the
Regulations. This Section 5.3(b) is intended to comply with the minimum gain
chargeback requirement in Section 1.704-2(i) (4) of the Regulations and shall
be interpreted consistently therewith.
(c) Qualified Income Offset. In the event any Member unexpectedly
receives any adjustments, allocations, or distributions described in Sections
1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), or 1.704- 1(b)(2)(ii)(d)(6)
of the Regulations, items of Company income and gain shall be specially
allocated to such Member in an amount and manner sufficient to eliminate, to
the extent required by the Regulations, the Adjusted Capital Account Deficit
of the Member as quickly as possible, provided that an allocation pursuant to
this Section 5.3(c) shall be made only if and to the extent that the Member
would have an Adjusted Capital Account Deficit after all other allocations
provided for in this Section 5 have been tentatively made.
(d) Gross Income Allocation. In the event any Member has a deficit
Capital Account at the end of any Taxable Year which is in excess of the sum
of (i) the amount such Member is obligated to restore pursuant to any
provision of this Agreement and (ii) the amount such Member is obligated to
restore pursuant to the penultimate sentences of Regulations Sections 1.704-
2(g)(1) and 1.704-2(i)(5), each such Member shall be specially allocated
items of Company income and gain in the amount of such excess as quickly as
possible; provided, however, that an allocation pursuant to this Section
5.3(d) shall be made only if and to the extent that such Member would have a
deficit Capital Account in excess of such sum after all other allocations
provided for in this Section 5 have been made other than those allocations
pursuant to Section 5.3(c) and this Section 5.3(d).
(e) Nonrecourse Deductions. Nonrecourse Deductions for any
Taxable Year shall be specially allocated to the Members in proportion to
their respective Percentage Interests.
(f) Member Nonrecourse Deductions. Any Member Nonrecourse Deductions
for any Taxable Year shall be specially allocated to the Member who bears the
economic risk of loss with respect to the Member Nonrecourse Debt to which
such Member Nonrecourse Deductions are attributable in accordance with
Regulation Section 1.704-2(i) (1).
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(g) Section 754 Adjustments. To the extent an adjustment to the
adjusted tax basis of any Company asset, pursuant to Code Section 734(b) or
Code Section 743(b) is required pursuant to Regulations Section
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 as the result of a transfer of a Member's
Membership Interest or a distribution to a Member in complete liquidation of
such Member's Membership Interest, 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 Members in accordance with
their interests in the Company in the event Regulation Section
1.704-1(b)(2)(iv)(m)(2) applies, or to the Member to whom such distribution
was made in the event Regulation Section 1.704-1(b)(2)(iv)(m)(4) applies.
5.4 CURATIVE ALLOCATIONS. The allocations set forth in Sections 5.3(a),
5.3(b), 5.3(c), 5.3(d), 5.3(e), 5.3(f), 5.3(g) and 5.5 (the "REGULATORY
ALLOCATIONS") are intended to comply with certain requirements of the
Regulations. It is the intent of the Members that, to the extent possible, all
Regulatory Allocations shall be offset either with other Regulatory Allocations
or with special allocations of other items of Company income, gain, loss or
deduction pursuant to this Section 5.4. Therefore, notwithstanding any other
provision of this Section 5 (other than the Regulatory Allocations), following
any Regulatory Allocation, the Management Committee shall use its best efforts
to make such offsetting special allocations of Company income, gain, loss or
deduction in whatever reasonable manner it 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 had not been made and all Company items were
allocated pursuant to Sections 5.1 and 5.2.
5.5 LOSS LIMITATION. Losses allocated pursuant to Section 5.2 hereof shall
not exceed the maximum amount of Losses that can be allocated without causing
any Member to have an Adjusted Capital Account Deficit at the end of any Taxable
Year. In the event some but not all the Members would have Adjusted Capital
Account Deficits as a consequence of an allocation of Losses pursuant to Section
5.2 hereof, the limitation set forth in this Section 5.5 shall be applied on a
Member by Member basis and Losses not allocable to any Member as a result of
such limitation shall be allocated to the other Members pro rata in accordance
with the positive balances in such Members' Capital Accounts so as to allocate
the maximum permissible Losses to each Member under Section 1.704-1(b)(2)(ii)(d)
of the Regulations.
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5.6 TAX ALLOCATIONS: CODE SECTION 704(C).
(a) In accordance with Code Section 704(c) and the Regulations thereunder,
income, gain, loss and deduction with respect to any Property contributed to the
capital of the Company shall, solely for tax purposes, be allocated among the
Members so as to take account of any variation between the adjusted basis of
such Property to the Company for federal income tax purposes and its initial
Gross Asset Value (computed in accordance with the definition of Gross Asset
Value).
(b) In the event the Gross Asset Value of any Company asset is adjusted
pursuant to subparagraph (b) of the definition of Gross Asset Value, subsequent
allocations of income, gain, loss and deduction with respect to such asset shall
take account of any variation between the adjusted basis of such asset for
federal income tax purposes and its Gross Asset Value in the same manner as
under Code Section 704(c) and the Regulations thereunder.
(c) Any elections or other decisions relating to such allocations shall be
made by the Management Committee in any manner that reasonably reflects the
purpose and intention of this Agreement; provided, that the Company, in the
discretion of SEACOR, may make, or not make, "curative" or "remedial"
allocations (within the meaning of the Regulations under Code Section 704(c))
including, but not limited to, "curative" allocations which offset the effect of
the "ceiling rule" for a prior Taxable Year (within the meaning of Regulation
Section 1.704-3(c)(3)(ii)) and "curative" allocations from disposition of
contributed property (within the meaning of Regulation Section
1.704-3(c)(3)(iii)(B)). Allocations pursuant to this Section 5.6 are solely for
purposes of federal, state, and local taxes and shall not affect, or in any way
be taken into account in computing, any Member's Capital Account or share of
Profits, Losses, other items, or distributions (other than Tax Distributions)
pursuant to any provision of this Agreement.
5.7 CHANGE IN PERCENTAGE INTERESTS. In the event that the Members' Percentage
Interests change during a Taxable Year, Profits and Losses shall be allocated
taking into account the Members' varying Percentage Interests for such Taxable
Year, determined on a daily, monthly or other basis as determined by the
Management Committee, using any permissible method under Code Section 706 and
the Regulations thereunder.
5.8 WITHHOLDING. Each Member hereby authorizes the Company to withhold and to
pay over any taxes payable by the Company or any of its Affiliates as a result
of such Member's participation in the Company; if and to the extent that the
Company shall be required to withhold any such taxes, such Member shall be
deemed for all purposes of this Agreement to have received a payment from the
Company as
26
of the time such withholding is required to be paid, which payment shall be
deemed to be a distribution to such Member to the extent that the Member is then
entitled to receive a distribution. To the extent that the aggregate of such
payments in respect of a Member for any period exceeds the distributions to
which such Member is entitled for such period, the amount of such excess shall
be considered a demand loan from the Company to such Member, with interest at 8%
per annum, which interest shall be treated as an item of Company income, until
discharged by such Member by repayment, which may be made in the sole discretion
of the Management Committee out of distributions to which such Member would
otherwise be subsequently entitled. The withholdings referred to in this Section
5.7 shall be made at the maximum applicable statutory rate under the applicable
tax law unless the Management Committee shall have received an opinion of
counsel or other evidence, satisfactory to the Management Committee, to the
effect that a lower rate is applicable, or that no withholding is applicable.
ARTICLE 6
MEMBERS' MEETINGS
6.1 MEETINGS OF MEMBERS; PLACE OF MEETINGS. Regular meetings of the Members
may be held on an annual basis or more frequently as determined by a Majority in
Interest of the Members. All meetings of the Members shall be held in New York,
New York or Houston, Texas as designated from time to time by the Management
Committee and stated in the Notice of the meeting or in a duly executed waiver
of the Notice thereof. The Company shall reimburse each Member for reasonable
travel expenses incurred to attend such meeting provided that such expenses do
not exceed the reasonable cost of travel between New York, New York and Houston,
Texas. Special meetings of the Members may be held for any purpose or purposes,
unless otherwise prohibited by law, and may be called by the Management
Committee or by Members owning not less than thirty percent (30%) of the
Percentage Interests. Members may participate in a meeting of the Members by
means of conference telephone or other similar communication equipment whereby
all Members participating in the meeting can hear each other. Participation in a
meeting in this manner shall constitute presence in person at the meeting.
6.2 QUORUM; VOTING REQUIREMENT. The presence, in person or by proxy, of a
Majority in Interest of the Members shall constitute a quorum for the
transaction of business by the Members. The affirmative vote of a Majority in
Interest of the Members present, in person or by proxy, at any meeting shall
constitute a valid decision of the Members, except where a larger vote is
required by the Act or this Agreement.
27
6.3 PROXIES. At any meeting of the Members, every Member having the right to
vote thereat shall be entitled to vote in person or by proxy appointed by an
instrument in writing signed by such Member and bearing a date not more than one
year prior to such meeting.
6.4 ACTION WITHOUT MEETING. Any action required or permitted to be taken at
any meeting of Members of the Company may be taken without a meeting, without
prior notice and without a vote if a consent in writing setting forth the action
so taken is signed by Members having not less than the minimum Percentage
Interests that would be necessary to authorize or take such action at a meeting
of the Members. Prompt Notice of the taking of any action taken pursuant to this
Section 6.4 by less than the unanimous written consent of the Members shall be
given to those Members who have not consented in writing.
6.5 NOTICE. Notice stating the place, day and hour of the meeting and the
purpose for which the meeting is called shall be delivered personally or sent by
mail or by telecopier not less than five (5) days nor more than sixty (60) days
before the date of the meeting by or at the direction of the Management
Committee or other persons calling the meeting, to each Member entitled to vote
at such meeting.
6.6 WAIVER OF NOTICE. When any Notice is required to be given to any Member
hereunder, a waiver thereof in writing signed by the Member, whether before, at
or after the time stated therein, shall be equivalent to the giving of such
Notice.
6.7 NO AUTHORITY. Unless expressly authorized herein or by action of the
Members or the Management Committee in accordance herewith and the Act, no
Member shall have any authority to act on behalf of the Company or bind the
Company in any manner whatsoever, including, without limitation, entering into
any agreement on behalf of the Company.
6.8 CERTAIN APPROVALS. The Company may enter into, and perform the Assignment
and Assumption Agreement, Construction Contracts, the Brokerage Agreement and
the Employment Agreement and all agreements instruments and other documents
relating thereto contemplated to be executed and delivered by the Company. The
President and Chief Executive Officer and any Vice President of the Company are
hereby authorized to enter into on behalf of the Company the agreements,
instruments and documents referred to in the preceding sentence.
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ARTICLE 7
MANAGEMENT AND CONTROL
7.1 MANAGEMENT COMMITTEE; MANAGERS.
(a) Except as otherwise provided hereunder, the business and affairs of the
Company shall be managed by a Management Committee comprised of seven Managers:
(i) four (4) Managers designated by a Majority in Interest of the Group A
Members, and (ii) three (3) Managers designated by a Majority in Interest of the
Group B Members. The Group A Members shall have the right to remove or replace
(following death or resignation) any or all of the Persons referred to in clause
(i) above and designate their successors, and the Group B Members shall have the
right to remove or replace (following death or resignation) any or all of the
Persons referred to in clause (ii) above and designate their successors, such
that the Group A Members shall at all times have the right to designate four
Managers and the Group B Members shall at all times have the right to designate
three Managers. The initial Managers designated by the Group A Members are: (i)
Xxxxxxx Xxxxxxxxx, (ii) Xxxxxxx Xxxxx, (iii) Xxxx X. Xxxxxxxxx, and (iv) Xxxxxx
Xxxxxxxx. The initial managers designated by the Group B Members are: (i)
Xxxxxxx X. Xxxxxxxxx III, (ii) Xxxxxxx X. Xxxxxx, and (iii) Xxxxxxxx X.
Xxxxxxxxx.
(b) Except as otherwise expressly provided herein, the power and authority
granted to the Management Committee hereunder shall include all those necessary
or convenient for the furtherance of the purposes of the Company and shall
include the power to make all decisions with regard to the management,
operations, assets, financing and capitalization of the Company.
(c) Anything to the contrary herein notwithstanding, no Manager shall have
any authority to bind the Company or the Management Committee in his individual
capacity in any manner whatsoever, except for such authority as shall be
expressly delegated to a Manager in this Agreement or by the Management
Committee.
7.2 MANAGEMENT COMMITTEE MEETINGS; AUTHORITY; PROXIES.
(a) The Management Committee will establish a regular meeting schedule, and
will use its reasonable best efforts to meet at least once every quarter. Unless
otherwise agreed by a majority of the Managers, meetings of the Management
Committee shall be held in New York, New York or Houston, Texas. The Company
shall reimburse each Manager for reasonable travel expenses incurred to attend
such meeting; provided, that such expenses do not exceed the reasonable cost of
travel between New York, New York and Houston, Texas. Meetings may be conducted
in person, by telephone or in any other manner agreed to by the Management
29
Committee. Any two (2) Managers may call a meeting of the Management Committee
upon delivery of written or telephonic Notice at least three (3) Business Days
prior to the date of such meeting, which Notice shall be accompanied by a
proposed agenda or statement of purpose and by copies of all documents,
agreements and information to be considered at such meeting; provided, however,
at any such meeting, the Managers may address any and all business matters which
may come before it, whether or not such items were provided for in the proposed
agenda.
(b) A quorum shall exist when a majority of the Managers are present in
person or by proxy. Each Manager is entitled to vote at any meeting of the
Management Committee. The vote of a majority of the Managers present in person
or by proxy at any meeting of the Management Committee where a quorum is present
shall be required for action by the Management Committee.
(c) At each meeting of the Management Committee, every Manager shall be
entitled to vote in person or by proxy appointed by instrument in writing,
subscribed by such Manager.
7.3 MANAGEMENT COMMITTEE'S AUTHORITY; CERTAIN LIMITATIONS. (a) Except as
expressly set forth herein, the Management Committee shall have the maximum
power and authority with respect to the business and operations of the Company
permitted by law, including, without limitation, the right to cause the Company
to merge or consolidate with, or sell all, or substantially all, of its asset to
any Person.
(b) Notwithstanding the grant of authority to the Management Committee
pursuant to Section 7.3(a) and except as otherwise contemplated in Sections
10.1(a), (b) and (c), the Management Committee shall not authorize the Company
to merge or consolidate with, or sell all, or substantially all, of its assets
to, a Member or an Affiliate of a Member without the prior written consent of a
Majority in Interest of the Group A Members and a Majority in Interest of the
Group B Members.
7.4 OFFICERS; AGENTS. The Management Committee shall have the power to
appoint any Person or Persons as agents (who may be referred to as officers) to
act for the Company with such titles, if any, as the Management Committee deems
appropriate and to delegate to such officers or agents such of the powers as are
granted to the Management Committee hereunder. Any decision or act of an officer
appointed under this Section 7.4 within the scope of the officer's designated or
delegated authority shall control and shall bind the Company. The officers or
agents so appointed may have such titles as the Management Committee shall deem
appropriate, which may include (but need not be limited to) President and Chief
Executive Officer, Executive Vice President, Vice President, Chief Operating
Officer,
30
Chief Financial Officer, Treasurer or Controller. The initial officers of the
Company are set forth on Schedule 7.4. Unless the authority of the agent
designated as the officer in question is limited by the Management Committee,
any officer so appointed shall have the same authority to act for the Company as
a corresponding officer of a Delaware corporation would have to act for a
Delaware corporation in the absence of a specific delegation of authority. The
Management Committee, in its sole discretion, may by vote, resolution or
otherwise ratify any act previously taken by an officer or agent acting on
behalf of the Company.
7.5 RESIGNATION OF A MANAGEMENT COMMITTEE MEMBER. A Manager may resign from
such position at any time upon giving Notice to the Management Committee. Any
vacancy created by any such resignation of a Manager shall be filled by the
Persons or Person who designated such vacating Manager in accordance with the
provisions of Section 7.1(a).
7.6 COMPENSATION Except as otherwise provided herein, each Manager shall be
entitled to reimbursement from the Company for all reasonable direct
out-of-pocket expenses incurred on behalf of the Company. Commencing upon the
completion, delivery and successful operation of both CJ1 and CJ2, any Manager
that is not also employed by the Company shall be entitled to such compensation
for services rendered on behalf of the Company as may be approved to by the
Management Committee.
ARTICLE 8
LIABILITY AND INDEMNIFICATION
8.1 LIABILITY OF MEMBERS. A Member shall only be liable to make the payment
of its Capital Contribution. No Member, except as otherwise specifically
provided in the Act, shall be obligated to pay any distribution to or for the
account of the Company or any creditor of the Company.
8.2 INDEMNIFICATION.
(a) The Company shall indemnify and hold harmless each Manager and Member and
their respective Affiliates and all officers, directors, members, partners,
managers and employees thereof, and each officer of the Company and any Person
serving in any similar capacity for another Person affiliated with the Company
at the request of the Company (solely for purposes of this Section 8.2, each
such Person being referred to as, a "COMPANY AFFILIATE"), from and against any
and all losses, claims, demands, costs, damages, liabilities, expenses of any
nature (including reasonable attorneys' fees and disbursements), judgments,
fines, settlements and other
31
amounts arising from any and all claims, demands, actions, suits or proceedings,
whether civil, criminal, administrative or investigative, in which a Company
Affiliate may be involved, or threatened to be involved, as a party or
otherwise, arising out of or incidental to the business of the Company,
including, without limitation, liabilities under the Federal and state
securities laws, regardless of whether a Company Affiliate continues to be a
Company Affiliate, at the time any such liability or expense is paid or
incurred, if (i) the Company Affiliate acted in good faith and in a manner it or
he reasonably believed to be in, or not opposed to, the interests of the Company
and, with respect to any criminal proceeding, had no reason to believe its or
his conduct was unlawful, and (ii) the Company Affiliate's conduct did not
constitute actual fraud, gross negligence or willful or wanton misconduct. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere, or its equivalent, shall not, in
and of itself, create a presumption or otherwise constitute evidence that the
Company Affiliate acted in a manner contrary to that specified in (i) or (ii)
above.
(b) Expenses (including reasonable legal fees and expenses) incurred in
defending any proceeding subject to subsection (a) of this Section 8.2 shall be
paid by the Company in advance of the final disposition of such proceeding upon
receipt of a written affirmation by the Company Affiliate of his or its good
faith belief that he or it has met the standard of conduct necessary for
indemnification under this Section 8.2 and a written undertaking (which need not
be secured) by or on behalf of the Company Affiliate to repay such amount if it
shall ultimately be determined, by a court of competent jurisdiction or
otherwise, that the Company Affiliate is not entitled to be indemnified by the
Company as authorized hereunder.
(c) The indemnification provided by this Section 8.2 shall be in addition to
any other rights to which each Company Affiliate may be entitled under any
agreement or vote of the Management Committee by the vote of Managers that are
disinterested and unaffiliated with such Company Affiliate, as a matter of law
or otherwise, both as to action in the Company Affiliate's capacity as a Company
Affiliate or as a Person serving at the request of the Company and shall
continue as to a Company Affiliate who has ceased to serve in such capacity and
shall inure to the benefit of the heirs, successors, assigns, administrators and
personal representatives of such Company Affiliate.
(d) The Company may purchase and maintain directors and officers insurance
or, similar coverage, for its Managers and its officers in such amounts and with
such deductibles or self-insured retentions as are customary for Persons engaged
in businesses similar in size and type to those engaged in by the Company. The
Company shall use reasonable commercial efforts to purchase and maintain such
32
insurance in the event and to the extent such insurance is available on
commercially reasonable terms, as determined by the Management Committee in its
discretion.
(e) Any indemnification hereunder shall be satisfied only out of the assets
of the Company and the Members shall not be subject to personal liability by
reason of these indemnification provisions. To the extent the Company does not
have adequate cash available to satisfy its obligations under this Article 8,
the Company shall pay its obligations under this Article 8 out of Net Cash Flow
prior to making any distributions (other than distributions under Section 4.1(a)
hereof) to the Members.
(f) A Company Affiliate shall not be denied indemnification in whole or in
part under this Section 8.2 because the Company Affiliate had an interest in the
transaction with respect to which the indemnification applies if the transaction
was otherwise permitted by the terms of this Agreement and all material facts
relating to such indemnitee's interest were adequately disclosed to the
Management Committee at the time the transaction was consummated.
(g) The provisions of this Section 8.2 are for the benefit of the Company
Affiliates and the heirs, successors, assigns, administrators and personal
representatives of the Company Affiliates and shall not be deemed to create any
rights for the benefit of any other Persons.
(h) Any repeal or amendment of any provisions of this Section 8.2 shall be
prospective only and shall not adversely affect any Company Affiliates's right
existing at the time of such repeal or amendment.
ARTICLE 9
TRANSFERS OF MEMBERSHIP INTERESTS
9.1 GENERAL RESTRICTIONS.
(a) No Member may Transfer all or any part of such Member's Membership
Interest, except as provided in this Agreement. Any purported Transfer or
purported purchase of a Membership Interest or a portion thereof in violation of
the terms of this Agreement shall be null and void and of no effect. A permitted
Transfer shall be effective as of the date specified in the instruments relating
thereto. Any transferee desiring to make a further Transfer shall become subject
to all the provisions of this Article 9 to the same extent and in the same
manner as any Member desiring to make any Transfer. No Member shall have the
right to withdraw as a Member of the Company.
33
(b) In the event that the Membership Interests are registered under the
Securities Act, the Transfer restrictions set forth in this Article 9 shall
terminate.
(c) No Group B Member shall transfer any Membership Interests prior to the
completion of the construction and delivery of CJ1 and CJ2 except pursuant to
Sections 3.9, 9.2, 9.9 or 9.10. Following such construction and delivery, all
Group B Members shall also have the right to Transfer their Membership Interests
pursuant to Section 9.8.
9.2 PERMITTED TRANSFEREES.
(a) Notwithstanding the provisions of Sections 9.8 and 9.9, each Group A
Member shall have the right to Transfer (but not to substitute the transferee as
a substitute Member in such Member's place, except in accordance with Section
9.3), by a written instrument, all or any part of such Group A Member's
Membership Interest, to any member of the SEACOR Group (each a "PERMITTED
TRANSFEREE"); it being understood that any such Permitted Transferee shall be
deemed to be an additional or substitute Member as of the date of such Transfer
and each Member agrees to take such action and execute such documents as such
transferee may deem reasonably necessary and appropriate for such transferee to
become a substitute or additional Member. Notwithstanding the provisions of
Sections 9.8 and 9.9, each Member shall have the right to pledge such Member's
interest as collateral security for a loan to another Member or to a financial
institution generally in the business of making commercial loans; provided,
however, that no such pledge shall be made for the purpose of effecting a
disguised sale to the pledgee and; provided further, that any such pledgee shall
agree in a writing delivered to the Company to be bound by all the terms and
conditions of this Agreement, including,without limitation, the terms and
conditions set forth in Section 9.10.
(b) Unless and until admitted as a substitute Member pursuant to Section 9.3,
a transferee of a Member's Membership Interest in whole or in part shall be an
assignee with respect to such Transferred Membership Interest and shall not be
entitled to participate in the management of the business and affairs of the
Company or to become or to exercise the rights of a Member, including the right
to vote, the right to require any information or accounting of the Company's
business or the right to inspect the Company's books and records. Such
transferee shall only be entitled to receive, to the extent of the Membership
Interest transferred to such transferee, the share of distributions and profits,
including distributions representing the return of Capital Contributions, to
which the transferor would otherwise be entitled with respect to the Transferred
Interest. The transferror shall have the right to vote such Transferred Interest
until the transferee is admitted to the Company as a substituted Member with
respect to the Transferred Interest.
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9.3 SUBSTITUTE MEMBERS. No transferee of all or part of a Member's
Membership Interest shall become a substitute Member in place of the transferor
unless and until:
(a) the transferee has executed an instrument in form and substance
reasonably satisfactory to the Management Committee accepting and adopting
the terms and provisions of the Certificate and this Agreement; and
(b) the transferee has caused to be paid all reasonable expenses of
the Company in connection with the admission of the transferee as a
substitute Member.
Upon satisfaction of all the foregoing conditions with respect to a
particular transferee, the President and Chief Executive Officer shall cause the
books and records of the Company to reflect the admission of the transferee as a
substitute Member to the extent of the Transferred Interest held by the
transferee.
9.4 EFFECT OF ADMISSION AS A SUBSTITUTE MEMBER. A transferee who has become a
substitute Member has, to the extent of the transferred Membership Interest, all
the rights, powers and benefits of, and is subject to the restrictions and
liabilities of a Member under the Certificate, this Agreement and the Act. Upon
admission of a transferee as a substitute Member, the transferor of the
Membership Interest so held by the substitute Member shall cease to be a Member
of the Company to the extent of such transferred Membership Interest.
9.5 CONSENT. Each Member hereby agrees that upon satisfaction of the terms
and conditions of this Article 9 with respect to any proposed Transfer, the
Person proposed to be such transferee may be admitted as a Member.
9.6 NO DISSOLUTION. If a Member transfers all of its Membership Interest
pursuant to this Article 9 and the transferee of such Membership Interest is
admitted as a Member pursuant to Section 9.3, such Person shall be admitted to
the Company as a Member effective on the effective date of the Transfer or such
other date as may be specified when the Member is admitted. In such event, the
Company shall not dissolve if the business of the Company is continued without
dissolution in accordance with clause (c) of Section 10.1 hereof.
9.7 ADDITIONAL MEMBERS; CERTAIN REPRESENTATIONS OF MEMBERS.
(a) Subject to Section 3.7, after the formation of the Company, any Person
acceptable to the Management Committee may become an additional Member of the
Company for such consideration as the Management Committee shall determine,
35
provided that such additional Member complies with all the requirements of a
transferee under Sections 9.3(a) and (b).
(b) Each of COI and SEACOR hereby represents to the Company that, as of the
date hereof, its outstanding membership interests or issued and outstanding
shares of capital stock, as the case may be, are as set forth on Schedule 9.7
and such membership interests or shares, as the case may be, are owned
beneficially and of record by the Persons identified on such Schedule.
(c) In order to prevent any indirect transfer of interests in the Company,
each of COI and SEACOR represents that it has caused each of its members or
stockholders, as the case may be, to agree to certain transfer restrictions with
respect to their membership interests or shares, as the case may be, by
executing an agreement in the form of Annex III(a), in the case of COI, or Annex
III(b), in the case of SEACOR.
9.8 RIGHT OF FIRST OFFER.
(a) Subject to Section 9.1(c), if at any time any Member (hereinafter for
purposes of this Section 9.8, the "SECTION 9.8 SELLING MEMBERS") proposes to
Transfer to any Person other than a Permitted Transferee (hereinafter for
purposes of this Section 9.8, the "SECTION 9.8 PROPOSED PURCHASER") its
Membership Interest (or any portion thereof), such Section 9.8 Selling Member
shall provide Notice of the proposed Transfer to the other Members (hereinafter
for purposes of Section 9.8, the "SECTION 9.8 OFFEREES") setting forth the
price, terms and conditions of the proposed sale of the Membership Interest.
Each of the Section 9.8 Offerees shall have the option to acquire such Member's
pro rata portion (which shall be in proportion to the Percentage Interests of
all Section 9.8 Offerees) at the time of such Notice on the terms and conditions
set forth in such Notice. The option of Section 9.8 Offerees to purchase their
pro rata portions of the Membership Interest shall be exercised by delivery of a
Notice to the Section 9.8 Selling Member and the Company of exercise within
twenty (20) days following receipt of the Section 9.8 Selling Member's Notice of
the price, terms and conditions of the sale. A Section 9.8 Offeree may exercise
such Member's option to purchase such Membership Interest only as to the entire
portion thereof that such Member is entitled to purchase. If any Section 9.8
Offeree fails or declines to purchase such Member's pro rata portion of such
Membership Interest, then such Member's portion of such Membership Interest
shall be offered to the Section 9.8 Offerees who have exercised their options to
purchase their pro rata portions. This procedure shall continue until such time
as the entire Membership Interest offered hereby has been purchased by such
Section 9.8 Offerees or until no such Member desires to purchase any additional
Membership Interest hereunder. Each Section 9.8 Offeree shall have the right to
offer to acquire such Membership
36
Interest by delivering to the Section 9.8 Selling Member and the Company such
Member's Notice of acceptance within three (3) Business Days following receipt
of the Company's Notice that additional portions are available. If less than the
entire Membership Interest to be sold by the Section 9.8 Selling Member is
purchased by the Section 9.8 Offerees, the Section 9.8 Selling Member may sell
the entire Membership Interest to be sold within forty-five (45) days after the
expiration of the last option to expire under this Section 9.8(a), upon terms
and conditions no less favorable to the Section 9.8 Selling Member than were set
forth in the initial Notice.
(b) The sale of any Membership Interest to Section 9.8 Offerees who exercise
their options to purchase any Membership Interest shall occur thirty (30) days
after the expiration of the last option to expire under Section 9.8(a) above. At
the closing, each of the Section 9.8 Offerees shall deliver a certified or bank
cashier's check in the appropriate amount to the Section 9.8 Selling Member
against the simultaneous delivery of an assignment in form and substance
reasonably satisfactory to each Section 9.8 Offeree of the Member Interest (or
portion thereof) being transferred to such Section 9.8 Offeree, such assignment
shall be made free and clear of all liens, claims and encumbrances, except as
provided by this Agreement or as otherwise agreed to by such Section 9.8
Offeree.
9.9 TAG-ALONG RIGHTS. (a) In the event of any proposed Transfer by any Member
(hereinafter for purposes of this Section 9.9, the "SECTION 9.9 SELLING MEMBER")
of its Membership Interests (or any portion thereof) to any Person (such Person
being hereinafter referred to as the "SECTION 9.9 PROPOSED PURCHASER"), other
than to a Permitted Transferee or in a bona fide public distribution pursuant to
an effective Registration Statement under the Securities Act, each of the other
Members (hereinafter for purposes of this Section 9.9, the "SECTION 9.9 TAGGED
MEMBERS") shall have the irrevocable and exclusive right, but not the obligation
(the "TAG-ALONG RIGHT"), to require the Section 9.9 Proposed Purchaser to
purchase from each of them such Section 9.9 Tagged Member's pro rata portion
(i.e., such Tagged Member's Percentage Interest) of the Membership Interests
proposed to be sold by the Section 9.9 Selling Members to the Section 9.9
Proposed Purchaser (collectively, the "SECTION 9.9 TAG-ALONG MEMBERSHIP
INTEREST"). The Section 9.9 Selling Members shall give Notice (the "INITIAL
TAG-ALONG NOTICE") to the Section 9.9 Tagged Members contemporaneously, or as
part of the Notice as Section 9.8 Selling Members given pursuant to Section 9.8,
and the option of the Section 9.9 Tagged Members to exercise their Tag-Along
Rights shall expire on the later of (i) five (5) days after the last option of
Section 9.8 Offerees to expire pursuant to Section 9.8 (the "SECTION 9.8 OFFER
EXPIRATION DATE") and (ii) five (5) days after the Section 9.9 Tagged Members
receive Notice from the Section 9.9 Selling Members of the Section 9.8 Offer
Expiration Date, stating:
37
(i) the name and address of the Section 9.9 Proposed Purchaser;
(ii) the proposed amount of consideration and terms and conditions
of payment offered by such Section 9.9 Proposed Purchaser (if the proposed
consideration is not cash, the Notice shall describe the terms of the
proposed consideration) and any other material terms and conditions of the
Section 9.9 Proposed Purchaser's offer;
(iii) the Membership Interest proposed to be transferred; and
(iv) that the Section 9.9 Proposed Purchaser has been informed of
the Tag-Along Right and has agreed to purchase Membership Interests in
accordance with the terms hereof.
The Tag-Along Right shall be exercised by any or all of the Section 9.9
Tagged Members by giving Notice to the Company ("TAG-ALONG NOTICE") with a copy
to each Section 9.9 Selling Member, within five (5) days following receipt of
the Initial Tag-Along Notice, indicating its election to exercise the Tag-Along
Right (hereinafter referred to for purposes of this Section 9.9, the "SECTION
9.9 PARTICIPATING TAGGED MEMBERS"). The Tag-Along Notice shall state the amount
of Membership Interests that such Section 9.9 Participating Tagged Member
proposes to include in such transfer to the Section 9.9 Proposed Purchaser.
Failure by any Section 9.9 Tagged Member to give such Tag-Along Notice within
such 5 day period shall be deemed an election by such Section 9.9 Tagged Member
not to sell its Membership Interests pursuant to the Tag-Along Notice. The
closing with respect to any sale to a Section 9.9 Proposed Purchaser pursuant to
this Section shall be held at the time and place specified in the Tag-Along
Notice but in any event within sixty (60) days of the date the Tag-Along Notice
is given. Consummation of the sale of Membership Interests by any Section 9.9
Selling Member to a Section 9.9 Proposed Purchaser shall be conditioned upon
consummation of the sale by each Section 9.9 Participating Tagged Member to such
Section 9.9 Proposed Purchaser of the Section 9.9 Tag-Along Membership Interest,
if any.
(b) In the event that the Section 9.9 Proposed Purchaser does not purchase
the Section 9.9 Tag-Along Membership Interest from the Section 9.9 Participating
Tagged Members on the same terms and conditions as purchased from the Section
9.9 Selling Member, then the Section 9.9 Selling Member making such Transfer
shall purchase on such terms and conditions such Section 9.9 Tag-Along
Membership Interest if the Transfer occurs.
(c) The Section 9.9 Selling Members who are parties to a sale to a Section
9.9 Proposed Purchaser shall arrange for payment directly by the Section 9.9
Proposed
38
Purchaser to each Section 9.9 Participating Tagged Member, upon delivery of an
appropriate assignment in form and substance reasonably satisfactory to the
Section 9.9 Proposed Purchaser, which assignment shall be made free and clear of
all liens, claims and encumbrances except as provided by this Agreement or as
otherwise agreed to by such Section 9.9 Proposed Purchaser.
(d) If at the end of 60 days following the date on which a Tag-Along Notice
was given, the sale of Membership Interests by the Section 9.9 Selling Members
and the sale of the Section 9.9 Tag-Along Membership Interests have not been
completed in accordance with the terms of the Section 9.9 Proposed Purchaser's
offer, all the restrictions on sale, transfer or assignment contained in this
Agreement with respect to Membership Interests owned by the Members shall again
be in effect.
9.10 DRAG-ALONG RIGHTS.
(a) In the event of any proposed Transfer of Membership Interest by the Group
A Members (hereinafter for purposes of this Section 9.10, a "SECTION 9.10
SELLING MEMBERS") of all of their Membership Interest to a Person (such Person
being hereinafter referred to as the "SECTION 9.10 PROPOSED PURCHASER"), other
than to an Affiliate of any Group A Member, a Permitted Transferee or in a bona
fide public distribution pursuant to an effective Registration Statement under
the Securities Act, such Section 9.10 Selling Members shall have the right (the
"DRAG-ALONG RIGHT"), to require each other Member (hereinafter for purposes of
this Section 9.10, the "SECTION 9.10 DRAGGED MEMBERS") to Transfer to the
Section 9.10 Proposed Purchaser each such Section 9.10 Dragged Member's entire
Membership Interest (such Membership Interests as may be required to be so
Transferred being hereinafter referred to as the "SECTION 9.10 DRAG-ALONG
MEMBERSHIP INTERESTS"). The Section 9.10 Selling Members shall exercise their
Drag-Along Right by giving Notice (the "DRAG-ALONG NOTICE") to each Section 9.10
Dragged Member at least twenty (20) days prior to the date of the proposed
Transfer and at least three (3) Business Days after the expiration of the last
option to expire under Section 9.8(a) above, stating:
(i) the name and address of the Section 9.10 Proposed Purchaser;
(ii) the proposed amount of consideration and terms and conditions
of payment offered by such Section 9.10 Proposed Purchaser (if the proposed
consideration is not cash, the notice shall describe the terms of the
proposed consideration);
(iii) the Membership Interests proposed to be transferred; and
39
(iv) that the Section 9.10 Proposed Purchaser has been informed of
the Drag-Along Right and has agreed to purchase Membership Interests in
accordance with the terms hereof.
The closing with respect to any sale to a Section 9.10 Proposed Purchaser
pursuant to this Section shall be held at the time and place specified in the
Drag- Along Notice but in any event within sixty (60) days of the date the
Drag-Along Notice is given. Consummation of the sale of Membership Interests by
any Member to a Section 9.10 Proposed Purchaser shall be conditioned upon
consummation of the sale by each Section 9.10 Selling Member to such Section
9.10 Proposed Purchaser of the Membership Interests proposed to be sold by the
Section 9.10 Selling Members.
(b) In the event that the Section 9.10 Proposed Purchaser does not purchase
the Section 9.10 Drag-Along Membership Interests from the Section 9.10 Dragged
Members on the same terms and conditions as purchased from the Section 9.10
Selling Members, then such Section 9.10 Dragged Members shall have the right to
require the Company to cause the Section 9.10 Selling Members making such
Transfer to purchase on such terms and conditions such Section 9.10 Drag-Along
Membership Interests if the Transfer occurs.
(c) The Section 9.10 Selling Members who are parties to a sale to a Section
9.10 Proposed Purchaser shall arrange for payment directly by the Section 9.10
Proposed Purchaser to each Section 9.10 Dragged Member, upon delivery of the an
appropriate assignment in form and substance reasonably satisfactory to the
Section 9.10 Proposed Purchaser, which assignment shall be made free and clear
of all liens, claims and encumbrances, except as provided by this Agreement or
as otherwise agreed to by such Section 9.10 Proposed Purchaser.
(d) If at the end of 60 days following the date on which a Drag-Along Notice
was given, the sale of Membership Interests by the Section 9.10 Selling Members
and the sale of the Section 9.10 Drag-Along Membership Interests have not been
completed in accordance with the terms of the Drag-Along Notice, all the
restrictions on sale, transfer or assignment contained in this Agreement with
respect to Membership Interests owned by the Section 9.10 Selling Members shall
again be in effect.
9.11 PIGGYBACK REGISTRATION.
(a) For the purposes of this Section 9.11, the following capitalized terms
shall have the following meanings:
(i) "COMMON STOCK" shall mean the common stock of the Company
issued upon conversion of the Company to a corporation;
40
(ii) "OTHER SHARES" shall mean at any time those shares of Common
Stock or other securities of the Company which do not constitute Primary
Shares or Registrable Shares;
(iii) "PRIMARY SHARES" shall mean at any time authorized but unissued
shares of Common Stock or shares of Common Stock held by the Company in
its treasury;
(iv) "REGISTRABLE SHARES" shall mean the shares of Common Stock held
by the Members in the Company which constitute Restricted Shares and which
are not then eligible for sale to the public pursuant to Rule 144 (other
than Rule 144(k)) in a single transaction (and including Membership
Interests held by Members prior to the conversion of the Company to a
corporation).
(v) "RESTRICTED SHARES" shall mean any Membership Interests, shares
of Common Stock or other securities received in respect thereof held or
which may be acquired from the Company by the Members as of the applicable
date, and which theretofore have not been sold to the public pursuant to a
registration statement under the Securities Act or pursuant to Rule 144;
and
(vi) "RULE 144" shall mean Rule 144 promulgated under the Securities
Act or any successor rule thereto or any complementary rule thereto (such
as Rule 144A).
(b) If the Company at any time proposes for any reason to register Primary
Shares or Other Shares under the Securities Act (other than on Form S-4 or Form
S-5 promulgated under the Securities Act or any successor forms thereto), it
shall promptly give Notice to the Members of its intention so to register the
Primary Shares or Other Shares and, upon the written request, given within 30
days after delivery of any such Notice by the Company, of the Members to include
in such registration Registrable Shares (which request shall specify the number
of Registrable Shares proposed to be included in such registration), the Company
shall use its best efforts to cause all such Registrable Shares to be included
in such registration on the same terms and conditions as the securities
otherwise being sold in such registration; provided, however, that if the
managing underwriter advises the Company that the inclusion of all Registrable
Shares or Other Shares proposed to be included in such registration would
interfere with the successful marketing (including pricing) of Primary Shares
proposed to be registered by the Company, then the number of Primary Shares,
Registrable Shares and Other Shares proposed to be included in such registration
shall be included in the following order:
(i) first, the Primary Shares; and
41
(ii) second, the Registrable Shares and Other Shares requested to be
included in such registration pro rata, based upon the respective numbers
of Restricted Shares owned at the time by each Member and the respective
numbers of Other Shares owned at the time by each holder of Other Shares.
(c) If at any time after giving written notice pursuant to this Section
9.11 of its intention to register any securities and prior to the effective date
of the registration statement filed in connection with such registration, the
Company shall determine for any reason either not to register or to delay
registration of such securities, the Company may, at its election, give Notice
of such determination to the Members and, thereupon, (i) in the case of a
determination not to register, shall be relieved of its obligation to register
any Registrable Securities in connection with such registration and (ii) in the
case of a determination to delay registering, shall be permitted to delay
registering any Registerable Securities, for the same period as the delay in
registering such other securities.
(d) If a registration under this Section 9.11 involves an underwritten
offering, the underwriter or underwriters and any additional investment bankers
and managers to be used in connection with such registration shall be selected
by the Company, and any Member desiring to have Registrable Shares included in
such registration, and any such Investor shall be required to sign an
underwriting agreement in customary form with such underwriter or underwriters.
ARTICLE 10
DISSOLUTION AND TERMINATION
10.1 EVENTS CAUSING DISSOLUTION. The Company shall be dissolved and its
affairs wound up upon the first to occur of the following events:
(a) The vote of a Majority in Interest of the Members to
dissolve;
(b) The sale, Transfer or other disposition of substantially all
of the assets of the Company and the receipt and distribution of all the
proceeds therefrom;
(c) The death, retirement, resignation, insanity, expulsion,
bankruptcy or dissolution of a Member, or any other event which terminates
the continued membership of a Member in the Company, unless there is at
least one remaining Member and the business of the Company is continued by
the consent of such remaining Member or not less than a Majority in
Interest of the remaining Members;
42
(d) The entry of a decree of judicial dissolution pursuant to
Section 18-802 of the Act; or
(e) The expiration of the term of the Company as provided in Section
2.5.
10.2 NOTICES TO SECRETARY OF STATE. When all the remaining property and
assets of the Company have been distributed, the Certificate shall be cancelled
by filing a certificate of cancellation with the Secretary of State of Delaware.
10.3 CASH DISTRIBUTIONS UPON DISSOLUTION. Upon the dissolution of the
Company as a result of the occurrence of any of the events set forth in Section
10.1, the Management Committee shall proceed to wind up the affairs of and
liquidate the Company and any cash and proceeds therefrom shall be applied and
distributed in the following order of priority:
(a) First, to the payment (or the making of reasonable provision for
payment) of debts and liabilities of the Company in the order of priority
as provided by law (including any loans or advances that may have been
made by any of the Members to the Company) and the expenses of liquidation
including the establishment of any Reserves which the Management Committee
may reasonably deem necessary for any contingent, conditional or
unasserted claims or obligations of the Company. Such Reserves may be paid
over by the Company to an escrow agent to be held for disbursement in
payment of any of the aforementioned liabilities and, at the expiration of
such period as shall be reasonably deemed advisable by the Management
Committee, for distribution of the balance in the manner provided in this
Article 10;
(b) Finally, the remaining balance, if any, to the Members in
proportion to their respective positive Capital Accounts, after giving
effect to all contributions, distributions and allocations for all
periods, in accordance with the requirements of Regulation Section 1.704-
1(b)(2)(ii)(b)(2).
10.4 IN-KIND. Notwithstanding the foregoing but subject to Section 18-
804(a)(1) of the Act, in the event the Management Committee shall determine that
an immediate sale of part of or all the Property would cause undue loss to the
Members, or the Management Committee determines that it would be in the best
interest of the Members to distribute the Property to the Members in-kind (which
distributions do not, as to the in-kind portions, have to be in the same
proportions as they would be if cash were distributed, but all such in-kind
distributions shall be equalized, to the
43
extent necessary, with cash), then the Management Committee may either defer
liquidation of, and withhold from distribution for a reasonable time, any of the
Property except that necessary to satisfy the Company's debts and obligations,
or distribute the Property to the Members in-kind.
10.5 NO ACTION FOR DISSOLUTION. The Members acknowledge that irreparable
damage would be done to the goodwill and reputation of the Company if any Member
should bring an action in court to dissolve the Company under circumstances
where dissolution is not required by Section 10.1. Accordingly, except where the
Manager has failed to liquidate the Company as required by Section 10.1 and
except as specifically provided in Section 18-802 and Section 18-803(a) of the
Act, each Member hereby to the fullest extent permitted by law waives and
renounces his right to initiate legal action to seek dissolution of the Company
or to seek the appointment of a receiver or trustee to wind up the affairs of
the Company, except in the cases of fraud, violation of law, bad faith, gross
negligence, willful misconduct or willful violation of this Agreement.
ARTICLE 11
TAX MATTERS MEMBER
11.1 TAX MATTERS MEMBER. SEACOR shall be the Tax Matters Member of
the Company as provided in the Regulations under Section 6231 of the Code and
analogous provisions of state law.
11.2 CERTAIN AUTHORIZATIONS. The Tax Matters Member shall represent the
Company, at the Company's expense, in connection with all examinations of the
Company's affairs by tax authorities including any resulting administrative or
judicial proceedings. Without limiting the generality of the foregoing, and
subject to the restrictions set forth herein, the Tax Matters Member is hereby
authorized, but not required:
(a) to enter into any settlement with the Secretary with respect to
any tax audit or judicial review, in which agreement the Tax Matters
Member may expressly state that such agreement shall bind the other
Members except that such settlement agreement shall not bind any Member
that has not approved such settlement agreement in writing;
(b) if a notice of a final administrative adjustment at the Company
level of any item required to be taken into account by a Member for tax
purposes is mailed to the Tax Matters Member, to seek
44
judicial review of such final adjustment, including the filing of a
petition for readjustment with the Tax Court, the District Court of the
United States for the district in which the Company's principal place of
business is located, or elsewhere as allowed by law, or the United States
Claims Court;
(c) to intervene in any action brought by any other Member
for judicial review of a final adjustment;
(d) to file a request for an administrative adjustment with the
Secretary at any time and, if any part of such request is not allowed by
the Secretary, to file a petition for judicial review with respect to such
request;
(e) to enter into an agreement with the Internal Revenue Service to
extend the period for assessing any tax that is attributable to any item
required to be taken into account by a Member for tax purposes, or an item
affected by such item; and
(f) to take any other action on behalf of the Members (with respect
to the Company) or the Company in connection with any administrative or
judicial tax proceeding to the extent permitted by applicable law or the
Regulations.
Each Member shall have the right to participate in any such actions and
proceedings to the extent provided for under the Code and Regulations.
11.3 INDEMNITY OF TAX MATTERS MEMBER. To the maximum extent permitted by
applicable law and without limiting Article 8, the Company shall indemnify and
reimburse the Tax Matters Member for all expenses (including reasonable legal
and accounting fees) incurred as Tax Matters Member pursuant to this Article 13
in connection with any administrative or judicial proceeding with respect to the
tax liability of the Members as long as the Tax Matters Member has determined in
good faith that the Tax Matters Member's course of conduct was in, or not
opposed to, the best interest of the Company. The taking of any action and the
incurring of any expense by the Tax Matters Member in connection with any such
proceeding, except to the extent provided herein or required by law, is a matter
in the sole discretion of the Tax Matters Member.
11.4 INFORMATION FURNISHED. To the extent and in the manner provided by
applicable law and Regulations, the Tax Matters Member shall furnish the name,
45
address, profits and loss interest, and taxpayer identification number of each
Member to the Internal Revenue Service.
11.5 NOTICE OF PROCEEDINGS, ETC. The Tax Matters Member shall use best
efforts to keep each Member informed of any administrative and judicial
proceedings for the adjustment at the Company level of any item required to be
taken into account by a Member for income tax purposes or any extension of the
period of limitations for making assessments of any tax against a Member with
respect to any Company item, or of any agreement with the Internal Revenue
Service that would result in any material change either in Income or Loss as
previously reported.
11.6 NOTICES TO TAX MATTERS MEMBER. Any Member that receives a notice of
an administrative proceeding under Section 6233 of the Code relating to the
Company shall promptly provide Notice to the Tax Matters Member of the treatment
of any Company item on such Member's Federal income tax return that is or may be
inconsistent with the treatment of that item on the Company's return. Any Member
that enters into a settlement agreement with the Internal Revenue Service or any
other government agency or official with respect to any Company item shall
provide Notice to the Tax Matters Member of such agreement and its terms within
sixty (60) days after its date.
11.7 PREPARATION OF TAX RETURNS. The Tax Matters Member shall arrange for
the preparation and timely filing of all returns of Company income, gains,
deductions, losses and other items necessary for Federal, state and local income
tax purposes and shall use all reasonable efforts to furnish to the Members
within ninety (90) days of the close of the taxable year a Schedule K-1 and such
other tax information reasonably required for Federal, state and local income
tax reporting purposes. The classification, realization and recognition of
income, gain, losses and deductions and other items shall be on the cash or
accrual method of accounting for Federal income tax purposes, as the Management
Committee shall determine in its sole discretion in accordance with applicable
law.
11.8 TAX ELECTIONS. Except as otherwise provided herein, the Tax Matters
Member shall, in its sole discretion, determine whether to make any available
election.
11.9 TAXATION AS A PARTNERSHIP. No election shall be made by the Company
or any Member for the Company to be excluded from the application of any of the
provisions of Subchapter K, Chapter I of Subtitle A of the Code or from any
similar provisions of any state tax laws or to be treated as a corporation for
federal tax purposes.
46
ARTICLE 12
ACCOUNTING AND BANK ACCOUNTS
12.1 FISCAL YEAR AND ACCOUNTING METHOD. The fiscal year and taxable
year of the Company shall be as designated by the Management Committee in
accordance with the Code. The Company shall use an accrual method of accounting.
12.2 BOOKS AND RECORDS. The Company shall maintain at its principal
office, or such other office as may be determined by the Management Committee,
all the following:
(a) A current list of the full name and last known business or
residence address of each Member and of the Manager together with
information regarding the amount of cash and a description and statement
of the agreed value of any other property or services contributed by each
Member and which each Member has agreed to contribute in the future, and
the date on which each Member became a Member of the Company;
(b) A copy of the Certificate and this Agreement, including any and
all amendments to either thereof, together with executed copies of any
powers of attorney pursuant to which the Certificate, this Agreement, or
any amendments have been executed;
(c) Copies of the Company's Federal, state, and local income tax or
information returns and reports, if any, which shall be retained for at
least six fiscal years;
(d) The financial statements of the Company, which shall be
retained for at least six fiscal years; and
(e) The Company's books and records, which shall be retained for at
least six fiscal years.
12.3 DELIVERY TO MEMBERS; INSPECTION. Upon the request of any Member, for
any purpose reasonably related to such Member's interest as a member of the
Company, the Management Committee shall cause to be made available to the
requesting Member the information required to be maintained by clauses (a)
through (d) of Section 14.2 and such other information regarding the business
and affairs of the Company as any Member may reasonably request.
47
12.4 FINANCIAL STATEMENTS. The Management Committee shall cause to be
prepared for the Members at least annually, at the Company's expense, financial
statements of the Company, CJP1 and CJP2, prepared in accordance with generally
accepted accounting principles and audited by Xxxxxx Xxxxxxxx & Co., or another
nationally recognized accounting firm. The financial statements so furnished
shall include a balance sheet, statement of income or loss, statement of cash
flows, and statement of Members' equity. In addition, the Management Committee
shall provide on a timely basis to the Members monthly and quarterly financials,
statements of cash flow, any available internal budgets or forecast or other
available financial reports, as well as any reports or notices as are provided
by the Company, CJP1 or CJP2 to any financial institution.
12.5 FILINGS. At the Company's expense, the Management Committee shall
cause the income tax returns for the Company to be prepared and timely filed
with the appropriate authorities and to have prepared and to furnish to each
Member such information with respect to the Company as is necessary (or as may
be reasonably requested by a Member) to enable the Members to prepare their
Federal, state and local income tax returns. The Management Committee, at the
Company's expense, shall also cause to be prepared and timely filed, with
appropriate Federal, state and local regulatory and administrative bodies, all
reports required to be filed by the Company with those entities under then
current applicable laws, rules, and regulations. The reports shall be prepared
on the accounting or reporting basis required by the regulatory bodies.
12.6 NON-DISCLOSURE. Each Member agrees that, except as otherwise
consented to by the Management Committee in writing, all non-public and
confidential information furnished to it pursuant to this Agreement will be kept
confidential and will not be disclosed by such Member, or by any of its agents,
representatives, or employees, in any manner whatsoever, in whole or in part,
except that (a) each Member shall be permitted to disclose such information to
those of its agents, representatives, and employees who need to be familiar with
such information in connection with such Member's investment in the Company, so
long as such agents, representatives and employees agree to keep such
information confidential on the terms set forth herein, (b) each Member shall be
permitted to disclose such information to its partners, stockholders and
affiliates so long as they agree to keep such information confidential on the
terms set forth herein, (c) each Member shall be permitted to disclose
information to the extent required by law, legal process or regulatory
requirements, so long as such Member shall have used its reasonable efforts to
first afford the Company with a reasonable opportunity to contest the necessity
of disclosing such information, (d) each Member shall be permitted to disclose
such information to possible purchasers of all or a portion of the Member's
Interest, provided that such prospective purchaser shall execute a suitable
48
confidentiality agreement containing terms not less restrictive than the terms
set forth herein, and (e) each Member shall be permitted to disclose information
to the extent necessary for the enforcement of any right of such Member arising
under this Agreement.
12.7 BANK ACCOUNTS. All funds of the Company shall be deposited in a
separate bank, money market or similar account(s) approved by the Management
Committee and in the Company's name. Withdrawals therefrom shall be made only by
Persons authorized to do so by the Management Committee.
ARTICLE 13
MISCELLANEOUS
13.1 TITLE TO PROPERTY. Title to the Property shall be held in the name of
the Company. No Member shall individually have any ownership interest or rights
in the Property except indirectly by virtue of such Member's ownership of a
Membership Interest.
13.2 WAIVER OF DEFAULT. No consent or waiver, express or implied, by the
Company or a Member with respect to any breach or default by the Company or a
Member hereunder shall be deemed or construed to be a consent or waiver with
respect to any other breach or default by any party of the same provision or any
other provision of this Agreement. Failure on the part of the Company or a
Member to complain of any act or failure to act of the Company or a Member or to
declare such party in default shall not be deemed or constitute a waiver by the
Company or the Member of any rights hereunder.
13.3 AMENDMENT.
(a) Except as otherwise expressly provided elsewhere in this Agreement,
this Agreement shall not be altered, modified or changed except by an amendment
approved by Members holding a Majority in Interest of the Group A Members and a
Majority in Interest of the Group B Members; provided, however, that if any such
amendment adversely effects the economic rights of a Member, such amendment
shall only be effective if consented to in writing by such Member.
(b) In addition to any amendments otherwise authorized herein, the Manager
or Management Committee may make any amendments to any of the Schedules to this
Agreement from time to time to reflect transfers of Membership Interests and
issuances of additional Membership Interests. Copies of such amendments shall be
delivered to the Members upon execution thereof.
49
(c) The Manager shall cause to be prepared and filed any amendment to the
Certificate that may be required to be filed under the Act as a consequence of
any amendment to this Agreement.
(d) Any modification or amendment to this Agreement or the Certificate
made in accordance with this Section 13.3 shall be binding on all Members and
the Manager.
13.4 NO THIRD PARTY RIGHTS. Except as provided in Article 8, none of the
provisions contained in this Agreement shall be for the benefit of or
enforceable by any third parties, including creditors of the Company. Subject to
Article 8, the parties to this Agreement expressly retain any and all rights to
amend this Agreement as herein provided, notwithstanding any interest in this
Agreement or in any party to this Agreement held by any other Person.
13.5 SEVERABILITY. In the event any provision of this Agreement is held to
be illegal, invalid or unenforceable to any extent, the legality, validity and
enforceability of the remainder of this Agreement shall not be affected thereby
and shall remain in full force and effect and shall be enforced to the greatest
extent permitted by law.
13.6 NATURE OF INTEREST IN THE COMPANY. A Member's Membership
Interest shall be personal property for all purposes.
13.7 BINDING AGREEMENT. Subject to the restrictions on the disposition of
Membership Interests herein contained, the provisions of this Agreement shall be
binding upon, and inure to the benefit of, the parties hereto and their
respective heirs, personal representatives, successors and permitted assigns.
13.8 HEADINGS. The headings of the Certificate and sections of this
Agreement are for convenience only and shall not be considered in construing or
interpreting any of the terms or provisions hereof.
13.9 WORD MEANINGS. The words such as "herein", "hereinafter", "hereof",
and "hereunder" refer to this Agreement as a whole and not merely to a
subdivision in which such words appear unless the context otherwise requires.
The singular shall include the plural, and vice versa, unless the context
otherwise requires.
13.10 COUNTERPARTS. This Agreement may be executed in several
counterparts, all of which together shall constitute one agreement binding on
all parties hereto, notwithstanding that all the parties have not signed the
same counterpart.
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13.11 ENTIRE AGREEMENT. This Agreement contains the entire agreement
between the parties hereto and thereto and supersedes all prior writings or
agreements with respect to the subject matter hereof.
13.12 PARTITION. The Members agree that the Property is not and will not
be suitable for partition. Accordingly, each of the Members hereby irrevocably
waives any and all right such Member may have to maintain any action for
partition of any of the Property. No Member shall have any right to any specific
assets of the Company upon the liquidation of, or any distribution from, the
Company.
13.13 GOVERNING LAW; CONSENT TO JURISDICTION AND VENUE. This Agreement
shall be construed according to and governed by the laws of the State of
Delaware without regard to principles of conflict of laws. The parties hereby
submit to the exclusive jurisdiction and venue of the state courts of New York
County, New York or to the Court of Chancery of the State of Delaware and the
United States District Court for the Southern District of New York and of the
United States District Court for the District of Delaware, as the case may be,
and agree that the Company or Members may, at their option, enforce their rights
hereunder in such courts.
13.14 DISCRETION. Whenever a Manager shall have discretion to act
hereunder, such Person agrees to act in a reasonable manner on behalf of the
Company and its Affiliates.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first written above.
GROUP A MEMBER:
SEACOR OFFSHORE RIGS INC.
By:
Name:
Title:
GROUP B MEMBER:
COI, LLC
By:
Xxxxxxx X. Xxxxxx
Duly Authorized Member
Agreed and Accepted
as of the date first
written above solely
with respect to Section 3.4
SEACOR SMIT INC.
By:
Name:
Title:
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SCHEDULE 1
A. GROUP A MEMBERS
Total
Capital Percentage
Name and Address Cash Contributed Contribution Interest1
---------------- ---------------- ------------ ---------
SEACOR Offshore Rigs Inc. $8,850,000 $8,850,000 50%
1370 Avenue of the Americas
25th Floor
New York, N.Y. 10019-4602
Attn: Xxxxxxx Xxxxx
--------
1. Includes both Group A Members and Group B Members.
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SCHEDULE 1 (cont'd)
B. CLASS B MEMBERS
Total
Cash and/or Gross Asset Capital Percentage
Name and Address Property Contributed Value Contribution Interest1
---------------- -------------------- ----- ------------ ---------
COI, LLC The properties, assets $8,486,000 $8,850,000 50%
0000 Xxxx Xxxx Xxxxx, and rights assigned by
Suite 2130 COI to the Company
Xxxxxxx, XX 00000 pursuant to the
Assignment and
Assumption Agreement
$364,000 in cash N/A
--------
1. Includes both Group A Members and Group B Members.
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