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EXHIBIT 3.2
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
XXXXXX XXXXXX MANAGEMENT, LLC
Dated [__________ __], 2001
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AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
XXXXXX XXXXXX MANAGEMENT, LLC
A DELAWARE LIMITED LIABILITY COMPANY
TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS.................................................................................... 1
1.1 Definitions.................................................................................... 1
1.2 Construction................................................................................... 7
ARTICLE 2 ORGANIZATION................................................................................... 7
2.1 Formation...................................................................................... 7
2.2 Name........................................................................................... 8
2.3 Registered Office; Registered Agent; Principal Office; Other Offices........................... 8
2.4 Purpose; Powers................................................................................ 8
2.5 Foreign Qualification.......................................................................... 8
2.6 Power of Attorney.............................................................................. 8
2.7 Term........................................................................................... 9
2.8 Taxation as Corporation; No State-Law Partnership.............................................. 9
2.9 Title to Company Assets........................................................................ 9
ARTICLE 3 SHAREHOLDERS; CERTIFICATES; TRANSFER OF COMPANY SECURITIES....................................10
3.1 Shareholders...................................................................................10
3.2 No Liability to Third Parties..................................................................10
3.3 No Expulsion...................................................................................10
3.4 Certificates...................................................................................10
3.5 Register, Registration of Transfer and Exchange................................................11
3.6 Mutilated, Destroyed, Lost or Stolen Certificates..............................................12
ARTICLE 4 AUTHORIZATION AND ISSUANCE OF COMPANY SECURITIES...............................................13
4.1 Company Securities.............................................................................13
4.2 Voting Shares..................................................................................14
4.3 Listed Shares..................................................................................15
4.4 Other Shares...................................................................................18
4.5 Splits and Combinations........................................................................18
4.6 Withholding....................................................................................18
ARTICLE 5 MANAGEMENT.....................................................................................19
5.1 Management of the Company's Affairs............................................................19
5.2 Board of Directors.............................................................................20
5.3 Restrictions on the Board of Directors' Authority..............................................22
5.4 Officers.......................................................................................23
5.5 Compensation...................................................................................25
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5.6 Business Opportunities.........................................................................25
5.7 Interested Officers or Directors...............................................................25
5.8 Duties of Officers and Directors...............................................................26
5.9 Indemnification................................................................................26
5.10 Liability of Officers and Directors............................................................28
5.11 Facsimile Signatures...........................................................................29
ARTICLE 6 BOOKS AND RECORDS, INFORMATION AND ACCOUNTS....................................................29
6.1 Maintenance of Books and Records...............................................................29
6.2 Information....................................................................................29
6.3 Accounts.......................................................................................29
ARTICLE 7 DISSOLUTION, WINDING-UP AND TERMINATION........................................................29
7.1 Dissolution....................................................................................29
7.2 Winding-Up and Termination.....................................................................30
ARTICLE 8 ACQUISITION BY COMPANY OF COMPANY SECURITIES...................................................30
ARTICLE 9 AMENDMENT OF AGREEMENT; SHAREHOLDER MEETINGS; RECORD DATE......................................31
9.1 Amendment Procedures...........................................................................31
9.2 Meetings.......................................................................................31
9.3 Notice of a Meeting............................................................................32
9.4 Record Date....................................................................................32
9.5 Adjournment....................................................................................32
9.6 Waiver of Notice; Approval of Meeting; Approval of Minutes.....................................32
9.7 Quorum.........................................................................................33
9.8 Special Voting Requirements....................................................................33
9.9 Conduct of Meeting.............................................................................33
9.10 Action Without a Meeting.......................................................................33
9.11 Voting and Other Rights........................................................................34
ARTICLE 10 COVENANTS......................................................................................34
ARTICLE 11 GENERAL PROVISIONS.............................................................................34
11.1 Fiscal Year....................................................................................34
11.2 Offset.........................................................................................34
11.3 Notices........................................................................................35
11.4 Entire Agreement...............................................................................35
11.5 Waiver.........................................................................................35
11.6 Binding Effect.................................................................................35
11.7 Governing Law; Severability....................................................................35
11.8 Further Action.................................................................................35
11.9 Waiver of Certain Rights.......................................................................36
11.10 Third-Party Beneficiaries......................................................................36
11.11 Creditors......................................................................................36
11.12 Counterparts...................................................................................36
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ANNEX A - Exchange Provisions
ANNEX B - Purchase Provisions
ANNEX C - Delegation of Control Agreement
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AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
XXXXXX XXXXXX MANAGEMENT, LLC
This Amended and Restated Limited Liability Company Agreement of Xxxxxx
Xxxxxx Management, LLC, a Delaware limited liability company (the "Company"),
dated as of [__________ __], 2001, is adopted, executed and agreed to, for good
and valuable consideration, by and among Kinder Xxxxxx X.X., Inc., a Delaware
corporation (the "Organizational Shareholder"), and any other Persons (as
defined below) who become Shareholders (as defined below) of the Company or
parties hereto as provided herein.
ARTICLE 1
Definitions
1.1 Definitions. As used in this Agreement, except as defined otherwise
in the Exchange Provisions and the Purchase Provisions, the following terms
shall have the following respective meanings:
"Act" means the Delaware Limited Liability Company Act, as amended,
supplemented or restated from time to time.
"Affiliate" means, with respect to any Person, any other Person that
directly or indirectly controls, is controlled by or is under common control
with, the Person in question. As used herein, the term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through ownership
of voting securities, by contract or otherwise.
"Agreement" means this Amended and Restated Limited Liability Company
Agreement, including the Exchange Provisions and the Purchase Provisions, as
amended, supplemented or restated from time to time.
"Assignee" means a Person to whom one or more Company Securities have
been transferred in a manner permitted under this Agreement.
"Average Market Price" means the average Closing Price of a Listed
Share or Common Unit, as the case may be, during the ten consecutive Trading
Days prior to the relevant ex-dividend date, declaration date or other date for
the Listed Share or Common Unit, respectively, but not including that date. For
the purpose of this definition, the term "ex-dividend date" means the date on
which "ex-dividend" trading commences for a Distribution on the National
Securities Exchange on which the Listed Shares or Common Units, as applicable,
are then listed.
"Bankruptcy" or "Bankrupt" means, with respect to any Person, that (a)
such Person (i) makes an assignment for the benefit of creditors; (ii) files a
voluntary petition in bankruptcy;
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(iii) is insolvent or has entered against such Person an order for relief in any
bankruptcy or insolvency proceeding; (iv) files a petition or answer seeking for
such Person any reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under any Law; (v) files an answer or
other pleading admitting or failing to contest the material allegations of a
petition filed against such Person in a proceeding of the type described in
subclauses (i) through (iv) of this clause (a); or (vi) seeks, consents to or
acquiesces in the appointment of a trustee, receiver or liquidator of such
Person or of all or any substantial part of such Person's properties; or (b) 120
days have passed after the commencement of any proceeding seeking
reorganization, arrangement, composition, readjustment, liquidation, dissolution
or similar relief under any Law, if the proceeding has not been dismissed, or 90
days have passed after the appointment without such Person's consent or the
acquiescence of a trustee, receiver or liquidator of such Person or of all or
any substantial part of such Person's properties, if the appointment is not
vacated or stayed, or 90 days have passed after the date of expiration of any
such stay, if the appointment has not been vacated.
"Board of Directors" has the meaning assigned to it in Section 5.1.
"Business Day" means any day other than a Saturday, a Sunday or a day
on which national banking associations in the State of New York or the State of
Texas are closed.
"Certificate" has the meaning assigned to it in Section 3.4.
"Chairman of the Board" has the meaning assigned to it in Subsection
5.2(g).
"Class B Unit" has the meaning assigned to it in the Partnership
Agreement.
"Closing Date" means the date of the sale by the Company of Listed
Shares to the Underwriters pursuant to the Underwriting Agreement.
"Closing Price" means (a) for securities that are listed on a National
Securities Exchange, the last sale price for that day, regular way, or, if there
are no sales on that day, the average of the closing bid and asked prices for
that day, regular way, in either case as reported in the principal composite
transactions reporting system for the National Securities Exchange on which the
securities are listed; or (b) for securities that are not listed on a National
Securities Exchange, (i) the last quoted price on that day, or if no price is
quoted, the average of the high bid and low asked prices on that day, each as
reported by the NASDAQ; (ii) if on that day the securities are not so quoted,
the average of the closing bid and asked prices on that day furnished by a
professional market maker in the securities selected by the Board of Directors
or, in the case of an exchange pursuant to the Exchange Provisions or a purchase
pursuant to the Purchase Provisions, the board of directors of KMI; or (iii) if
on that day no market maker is making a market in the securities, the fair value
of the securities as determined by the Board of Directors or, in the case of an
exchange pursuant to the Exchange Provisions or a purchase pursuant to the
Purchase Provisions, the board of directors of KMI.
"Code" means the United States Internal Revenue Code of 1986, as
amended, supplemented or restated from time to time and as interpreted by the
applicable regulations
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thereunder. All references herein to a specific section or sections of the Code
shall be deemed to include a reference to any corresponding provision or
provisions of future Law.
"Common Unit" has the meaning assigned to it in the Partnership
Agreement.
"Company" means Xxxxxx Xxxxxx Management, LLC, a Delaware limited
liability company.
"Company Securities" means Voting Shares, Listed Shares and/or Other
Shares, as the context requires. To the extent set forth in Article 4, each
Company Security represents a fractional part of the Shareholder Interest.
"Delaware General Corporation Law" means Title 8 of the Delaware Code,
as amended, supplemented or restated from time to time.
"Delegation of Control Agreement" means the Delegation of Control
Agreement by and among KMGP, KMEP, the Operating Partnerships and the Company,
attached hereto as Annex C.
"Director" means a member of the Board of Directors elected as provided
in Section 5.2, but such term does not include any Person who has ceased to be a
member of the Board of Directors.
"Dissolution Event" has the meaning assigned to it in Subsection
7.1(a).
"Distribution" means a distribution in respect of a Company Security,
other than a distribution upon winding up and termination pursuant to Subsection
7.2(b) or payable pursuant to Subsection 4.1(b) or Section 4.5, lawfully paid or
payable in an additional Company Security or a fraction thereof to any
Shareholder pursuant to the terms of the Company Securities held by such
Shareholder.
"Entity" means a corporation, limited liability company, venture,
partnership, trust, unincorporated organization, association or other entity.
"Exchange Act" means the United States Securities Exchange Act of 1934,
as amended, supplemented or restated from time to time and any successor to such
statute and all rules and regulations promulgated thereunder.
"Exchange Provisions" means the exchange provisions which were
originally agreed between KMEP and the Company, attached hereto as Annex A. On
the Closing Date, the Exchange Provisions are being adopted by KMI, KMI is
assuming all of KMEP's obligations thereunder, and KMEP is being fully released.
"Group" means a "group" of Persons as defined in Section 13(d)(3) of
the Exchange Act.
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"Indemnitee" means the Organizational Shareholder, any Person who is or
was an Affiliate of the Organizational Shareholder, any Person who is or was an
officer, director, employee, partner, agent or trustee of the Organizational
Shareholder, the Company or any of their Affiliates, or any Person who is or was
serving at the request of the Organizational Shareholder, the Company or any of
their Affiliates as a director, officer, employee, partner, agent or trustee of
another Person.
"Initial Public Offering" means the consummation of the first
underwritten public offering of Listed Shares pursuant to an effective
registration statement filed under the Securities Act, as underwritten by the
Underwriters pursuant to the Underwriting Agreement.
"I-Unit" has the meaning assigned to it in the Partnership Agreement.
"KMEP" means Xxxxxx Xxxxxx Energy Partners, L.P., a Delaware limited
partnership.
"KMI" means Xxxxxx Xxxxxx, Inc., a Kansas corporation.
"Law" means any applicable constitutional provision, statute, act, code
(including the Code), law, regulation, rule, ordinance, order, decree, ruling,
proclamation, resolution, judgment, decision, declaration or interpretative or
advisory opinion or letter of a governmental authority, and includes any
applicable rule of any National Securities Exchange on which Company Securities
are traded or listed.
"Listed Share" has the meaning assigned to it in Subsection 4.1(a).
"NASDAQ" means the National Association of Securities Dealers Automatic
Quotation System.
"National Securities Exchange" means an exchange registered with the
Securities and Exchange Commission under Section 6(a) of the Exchange Act.
"Officer" means any Person elected as an officer of the Company as
provided in Section 5.4, but such term does not include any Person who has
ceased to be an officer of the Company.
"Operating Partnerships" means Xxxxxx Xxxxxx Operating L.P. "A", a
Delaware limited partnership, Xxxxxx Xxxxxx Operating L.P. "B", a Delaware
limited partnership, Xxxxxx Xxxxxx Operating L.P. "C", a Delaware limited
partnership, Xxxxxx Xxxxxx Operating, L.P. "D", a Delaware limited partnership,
and Xxxxxx Xxxxxx CO2 Company, L.P., a Texas limited partnership.
"Opinion of Counsel" means a written opinion of counsel (who may be
regular counsel to the Company or any Affiliate thereof) acceptable to the Board
of Directors, any committee thereof or any Officer.
"Organizational Certificate" has the meaning assigned to it in Section
2.1.
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"Organizational Shareholder" means Kinder Xxxxxx X.X., Inc., a Delaware
corporation.
"Other Share" has the meaning assigned to it in Section 4.4.
"Outstanding" means, with respect to any Company Securities and any
Units, all Company Securities or Units that are issued by the Company or KMEP,
respectively, and reflected as outstanding on the books and records of the
Company (including the Transfer Agent) or KMEP (including any transfer agent),
respectively, as of the date of determination; provided, however, that if, at
any time prior to the date on which all Listed Shares that are issued by the
Company and reflected as outstanding on the books and records of the Company
(including the Transfer Agent) are owned by KMI or its Affiliates pursuant to
the Exchange Provisions or the Purchase Provisions or otherwise, any Listed
Shares are owned beneficially:
(a) by KMEP or any subsidiary thereof, except on any matter presented
to the Record Holders of Listed Shares pursuant to Subsection 4.3(c),
(b) by any Person or Group, excluding KMI, and its Affiliates (other
than KMEP and its subsidiaries), if such Person or Group owns
beneficially 20% or more of the aggregate number of Listed Shares and
Common Units that are issued by the Company and KMEP, taken together,
and reflected as outstanding on the books and records of the Company
(including the Transfer Agent) and KMEP (including any transfer agent)
as of the date of determination, or
(c) by KMI or its Affiliates (other than KMEP and its subsidiaries)
with respect to (i) a matter that is presented to the Record Holders of
Listed Shares pursuant to Subsection 4.3(c) in order to determine the
manner in which I-Units shall be voted with respect to (A) the proposed
removal of the Organizational Shareholder in its capacity as the
general partner of KMEP or (B) a proposed amendment to the terms of the
I-Units pursuant to Subsection 15.3(c) of the Partnership Agreement
that would have a material adverse effect on the rights and preferences
of the I-Units in relation to the other classes of Units, as
determined in the sole discretion of the Board of Directors, or (ii) a
matter that the Record Holders of Listed Shares vote upon pursuant to
Subsection 4.3(d)(ii)(B),
then such Listed Shares so owned shall not be considered to be Outstanding for
the purpose of Section 7.1 and Articles 9 and 10.
"Partnership Agreement" means the Third Amended and Restated Agreement
of Limited Partnership of KMEP, as amended, supplemented or restated from time
to time.
"Person" means a natural person or an Entity.
"Purchase Provisions" means the purchase provisions which were
originally agreed to between KMEP and the Company, attached hereto as Annex B.
On the Closing Date, the Purchase Provisions are being adopted by KMI, KMI is
assuming all of KMEP's obligations thereunder, and KMEP is being fully released.
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"Quarterly Period" means a three-month period from January 1 to March
31, April 1 to June 30, July 1 to September 30, or October 1 to December 31, as
applicable.
"Record Date" means the date established by the Board of Directors for
determining (a) the identity of the Record Holders entitled to notice of, or to
vote at, any meeting of the Shareholders or entitled to vote by ballot or give
approval of Company action in writing without a meeting or entitled to exercise
rights in respect of any lawful action of the Shareholders, or (b) the identity
of Record Holders entitled to receive any distribution.
"Record Holder" means the Person in whose name a Company Security is
registered on the books and records of the Company or the Transfer Agent as
contemplated in Section 3.5.
"Registration Rights Agreement" means the Registration Rights Agreement
among KMEP, KMI and the Company.
"Securities Act" means the United States Securities Act of 1933, as
amended, supplemented or restated from time to time and any successor to such
statute and all rules and regulations promulgated thereunder.
"Securities and Exchange Commission" means the Securities and Exchange
Commission of the United States.
"Shareholder" means any Person executing this Agreement as of the date
of this Agreement and any Person who thereafter becomes a Record Holder of any
Company Security as provided in this Agreement, but such term does not include
any Person who has ceased to be a Record Holder of any Company Security.
Shareholders are "members" (as such term is defined in the Act) of the Company.
"Shareholder Interest" means a limited liability company interest (as
such term is defined in the Act) of a Shareholder, including, as applicable, (a)
the right to receive Distributions and other distributions from the Company, (b)
all other rights, benefits and privileges enjoyed by the Shareholder (under the
Act, the Organizational Certificate, this Agreement or otherwise) in its
capacity as a Shareholder, including the right to vote, consent and approve, and
(c) all obligations, duties and liabilities imposed on the Shareholder (under
the Act, the Organizational Certificate, this Agreement or otherwise) in its
capacity as a Shareholder.
"Tax Indemnification Agreement" means the Tax Indemnification Agreement
by and between KMI and the Company.
"Trading Day" means a day on which the National Securities Exchange on
which the Listed Shares or Common Units, as the case may be, are listed is open
for business or, if the Listed Shares or Common Units, as the case may be, are
not listed on any National Securities Exchange, a day in which banking
institutions in the City of New York generally are open.
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"Transfer Agent" means any bank, trust company or other Person
(including the Company or any Affiliate) appointed from time to time by the
Board of Directors to act as registrar and transfer agent for the Company
Securities. Initially, First Chicago Trust Company of New York shall be the
Transfer Agent for the Listed Shares.
"Treasury Regulations" means the regulations promulgated by the United
States Department of the Treasury pursuant to and in respect of provisions of
the Code. All references herein to sections of the Treasury Regulations shall
include any corresponding provisions of succeeding, similar, substitute,
proposed or final Treasury Regulations.
"Underwriters" means Xxxxxxx, Sachs & Co., Credit Suisse First Boston,
Xxxxxx Brothers, Xxxx Xxxxxxxx Xxxxxxx, and First Union Securities, Inc.
"Underwriting Agreement" means the Underwriting Agreement dated
[_______ __], 2001, among the Underwriters, the Company, KMI and KMEP, providing
for the purchase of Listed Shares by such Underwriters.
"Unit" has the meaning assigned to it in the Partnership Agreement.
"Voting Share" has the meaning assigned to it in Subsection 4.1(a).
Other terms defined herein have the meanings so given them.
1.2 Construction. Unless the context requires otherwise:
(a) the gender (or lack of gender) of all words used in this
Agreement includes the masculine, feminine and neuter;
(b) references to Articles, Sections and Subsections (other
than in connection with the Code or the Treasury Regulations) refer to
Articles, Sections and Subsections of this Agreement;
(c) the words "herein," "hereof," "hereunder" and other words
of similar import refer to this Agreement as a whole and not to any
particular Article, Section or Subsection, except as otherwise provided
in the Exchange Provisions and the Purchase Provisions;
(d) "including" means "including, without limitation;" and
(e) terms defined herein include the plural as well as the
singular.
ARTICLE 2
Organization
2.1 Formation. The Company has been organized as a Delaware limited
liability company by the filing of a Certificate of Formation dated February 14,
2001, as amended by a
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Certificate of Amendment dated February 16, 2001 (as amended, supplemented or
restated from time to time, the "Organizational Certificate"), pursuant to the
Act. The initial Shareholder of the Company is the Organizational Shareholder.
2.2 Name. The name of the Company is "Xxxxxx Xxxxxx Management, LLC"
and all Company business must be conducted in that name or such other names that
comply with Law and as the Board of Directors may select.
2.3 Registered Office; Registered Agent; Principal Office; Other
Offices. The registered office of the Company required by the Act to be
maintained in the State of Delaware shall be the office of the initial
registered agent for service of process named in the Organizational Certificate
or such other office (which need not be a place of business of the Company) as
the Board of Directors may designate in the manner provided by Law. The
registered agent for service of process of the Company in the State of Delaware
shall be the initial registered agent for service of process named in the
Organizational Certificate or such other Person or Persons as the Board of
Directors may designate in the manner provided by Law. The principal office of
the Company in the United States shall be located at One Xxxxx Center, Suite
1000, 000 Xxxxxx Xxxxxx, Xxxxxxx, Xxxxx 00000, or such other place as the Board
of Directors may from time to time designate, which need not be in the State of
Delaware, and the Company shall maintain records there and shall keep the street
address of such principal office at the registered office of the Company in the
State of Delaware. The Company may have such other offices as the Board of
Directors may designate.
2.4 Purpose; Powers. The purpose of the Company is to engage in any
lawful business, purpose or activity in which limited liability companies are
permitted to engage under the Act; provided, however, that as long as any Listed
Shares are held by any Person other than KMI or any Affiliate thereof, the
purpose of the Company is limited to being a limited partner in, and managing
and controlling the business and affairs of, KMEP pursuant to the Delegation of
Control Agreement. The Company shall possess and may exercise all the powers and
privileges granted by the Act, by any other Law or by this Agreement, together
with any powers incidental thereto, including such powers and privileges as are
necessary or convenient to the conduct, promotion or attainment of the business,
purposes or activities of the Company.
2.5 Foreign Qualification. Prior to the Company's conducting business
in any jurisdiction other than Delaware, the Board of Directors shall cause the
Company to comply, to the extent procedures are available and those matters are
reasonably within the control of the Board of Directors, with all requirements
necessary to qualify the Company as a foreign limited liability company in that
jurisdiction.
2.6 Power of Attorney.
(a) Each Shareholder does hereby constitute and appoint each
Person specifically authorized by the Board of Directors to act as its
true and lawful representative and attorney-in-fact, in its name, place
and stead, to make, execute, sign, deliver and file (i) any amendment
of the Organizational Certificate; (ii) any amendment to this
Agreement, including the Exchange Provisions and the Purchase
Provisions, made
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in accordance with the terms of this Agreement; and (iii) all such
other instruments, documents and certificates which may from time to
time be required by Law to effectuate, implement and continue the valid
and subsisting existence of the Company or to dissolve the Company or
for any other purpose consistent with this Agreement and the
transactions contemplated hereby.
(b) The foregoing power of attorney is hereby declared to be
irrevocable and a power coupled with an interest, and it shall survive
and not be affected by the subsequent death, incompetency, disability,
incapacity, dissolution, bankruptcy or termination of any Shareholder
and the transfer of all or any portion of such Shareholder's
Shareholder Interest, and shall extend to all Assignees. Each
Shareholder hereby agrees to be bound by any representation made by the
Board of Directors or any Person authorized by the Board of Directors
acting in good faith pursuant to such power of attorney, and each
Shareholder hereby waives any and all defenses that may be available to
contest, negate or disaffirm the action of the Board of Directors or
such authorized Person taken in good faith under such power of
attorney. Each Shareholder shall execute and deliver to the Board of
Directors or such authorized Person, within 15 days after receipt of a
request therefor from the Board of Directors or such authorized Person,
such further designation, powers of attorney and other instruments as
the Board of Directors or such authorized Person deems necessary to
effectuate this Agreement and the purposes of the Company.
2.7 Term. The term of the Company shall commence on the date of
the filing of the Organizational Certificate in the office of the Secretary of
State of the State of Delaware, and the Company's existence shall be perpetual,
unless and until the Company is dissolved in accordance with Article 7.
2.8 Taxation as Corporation; No State-Law Partnership. The Company
shall elect pursuant to Sections 301.7701-2 and 301.7701-3 of the Treasury
Regulations to be treated as a corporation for all purposes under the Code. The
Shareholders intend that the Company not be a partnership (including a limited
partnership) or joint venture, that no Shareholder be a partner or joint
venturer of any other Shareholder, and that this Agreement may not be construed
to suggest otherwise.
2.9 Title to Company Assets. Title to Company assets, whether real,
personal or mixed and whether tangible or intangible, shall be deemed to be
owned by the Company as an Entity, and no Shareholder, Director or Officer,
individually or collectively, shall have any ownership interest in such Company
assets or any portion thereof. Title to any or all of the Company assets may be
held in the name of the Company or one or more of its Affiliates or one or more
nominees, as the Board of Directors may determine. All Company assets shall be
recorded as the property of the Company in its books and records, irrespective
of the name in which record title to such Company assets is held.
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ARTICLE 3
Shareholders; Certificates;
Transfer of Company Securities
3.1 Shareholders.
(a) A Person shall be admitted as a Shareholder, and shall
become bound by this Agreement, if such Person executes this Agreement
or, without such execution, if such Person purchases or otherwise
lawfully acquires a Company Security and becomes the Record Holder of
such Company Security in accordance with the provisions of Section 3.5.
Unless otherwise provided in this Agreement, a Person may become a
Record Holder without the consent or approval of any of the
Shareholders.
(b) The name and mailing address of each Shareholder shall be
listed on the books and records of the Company or the Transfer Agent.
The Secretary of the Company shall be required to update the books and
records from time to time as necessary to reflect accurately the
information therein or to cause the Transfer Agent to do so, as
applicable. Company Securities shall be represented by the Certificates
held by the Shareholders, except as provided in Subsection 3.4(b).
3.2 No Liability to Third Parties. No Shareholder or beneficial
owner of any Company Security shall be liable for the debts, obligations or
liabilities of the Company, whether arising in contract, tort or otherwise,
solely by reason of being a Shareholder or beneficial owner.
3.3 No Expulsion. A Shareholder may not be expelled or removed as
a Shareholder of the Company.
3.4 Certificates.
(a) Certificates evidencing any of the Company Securities
("Certificates") shall be in such form, not inconsistent with that
required by the Act or any other Law and this Agreement, as shall be
approved by the Board of Directors. Each Certificate shall certify the
number of Company Securities and the class and series of such Company
Securities which the Certificate represents and shall be signed by (i)
the Chairman of the Board, the President or any Vice President and (ii)
the Secretary, any Assistant Secretary, the Treasurer or any Assistant
Treasurer of the Company and countersigned by the Transfer Agent (in
the event that the Company is not the Transfer Agent); provided,
however, that any or all of the signatures on the Certificate may be
facsimile. In the event that any Officer or Transfer Agent who shall
have signed, or whose facsimile signature or signatures shall have been
placed upon, any such Certificate shall have ceased to be such Officer
or Transfer Agent before such Certificate is issued by the Company,
such Certificate may nevertheless be issued by the Company with the
same effect as if such person were such Officer or Transfer Agent on
the date of issue. Certificates shall be consecutively numbered and
shall be entered in the books and records of the Company as they are
issued and shall exhibit the holder's name and number of Company
Securities, except as provided in Subsection 3.4(b). No Certificate
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shall be valid for any purpose until it has been countersigned by the
Transfer Agent (in the event that the Company is not the Transfer
Agent).
(b) The Company Securities may be represented by global
certificates issued in the name of Cede & Co. (or such other name as
the depositary may direct), as nominee for the Depositary Trust
Company, as depositary for the Listed Shares, and Certificates need not
be issued to Record Holders of Company Securities other than to the
depositary.
Any provision herein calling for delivery of Certificates for Company
Securities may be satisfied by delivering such Company Securities by
book-entry transfer to the Shareholder at an account maintained for
that purpose by the Transfer Agent with the depositary, in accordance
with arrangements among the depositary and its participants and subject
to the various policies and procedures that may be adopted by the
depositary from time to time.
3.5 Register, Registration of Transfer and Exchange.
(a) The Company shall keep or cause to be kept on behalf of
the Company a register that, subject to any requirement of the Board
of Directors and subject to the provisions of Subsection 3.5(b), will
provide for the registration and transfer of Company Securities. The
Transfer Agent is hereby appointed registrar and transfer agent for the
purpose of registering Company Securities and transfers of Company
Securities as herein provided. At any time the Transfer Agent may
resign, by notice to the Board of Directors, or may be removed, with or
without cause, by the Board of Directors. Such resignation or removal
shall be effective upon the earlier of (i) the appointment by the Board
of Directors of a successor Transfer Agent and the acceptance by such
successor of such appointment, or (ii) the 30th day after notice of
such resignation or removal was given, whereupon the Company shall act
as the Transfer Agent until a successor is appointed. The Company shall
not recognize transfers of Company Securities unless the same are
effected in the manner described in this Section 3.5. Upon surrender
for registration of transfer of any Certificate, and subject to the
provisions of Subsection 3.5(b), the appropriate Officers of the
Company shall execute, and the Transfer Agent shall countersign and
deliver, in the name of the holder or the designated transferee or
transferees, as required pursuant to the Record Holder's instructions,
one or more new Certificates evidencing the same aggregate number and
type of Company Securities as were evidenced by the Certificate so
surrendered.
(b) The Company shall not recognize any transfer of Company
Securities until (i) the Certificates evidencing such Company
Securities are surrendered to the Transfer Agent for registration of
transfer or (ii) such Company Securities are delivered by book-entry
transfer to the Shareholder in accordance with Section 3.4(b). No
charge shall be imposed by the Company for such transfer; provided,
however, that, as a condition to the issuance of any new Certificate
under this Section 3.5, the Company may require the payment of a sum
sufficient to cover any tax or other governmental charge, surety bond
premium, special charges for services requested by the transferor or
transferee, or similar fees or charges that may be imposed with respect
thereto.
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(c) By transfer of Company Securities in accordance with this
Section 3.5, the transferor shall be deemed to have given the
transferee the right to be admitted to the Company as a Shareholder,
and each transferee of Company Securities (including any nominee holder
or an agent acquiring such Company Securities for the account of
another Person) shall become a Shareholder with respect to the Company
Securities so transferred to such Person when any such transfer and
admission is reflected in the books and records of the Transfer Agent.
(d) The Company shall be entitled to recognize the Record
Holder as the owner of Company Securities and, accordingly, shall not
be bound to recognize any equitable or other claim to or interest in
such Company Securities on the part of any other Person, whether or not
the Company shall have actual or other notice thereof, except as
otherwise provided by Law. Except as otherwise provided in this
Agreement or by Law, including the Securities Act, Company Securities
shall be freely transferable to any Person. The transfer of any Company
Securities and the admission of any new Shareholder shall not
constitute an amendment to this Agreement.
(e) Any Distribution or other distribution in respect of
Company Securities shall be paid by the Company, directly or through
the Transfer Agent or through any other Person or agent, only to the
Record Holders thereof as of the Record Date set by the Board of
Directors for the Distribution or other distribution. Such payment
shall constitute full payment and satisfaction of the Company's
liability in respect of such payment regardless of any claim of any
Person who may have an interest in such payment by reason of an
assignment or otherwise.
3.6 Mutilated, Destroyed, Lost or Stolen Certificates.
(a) If any mutilated Certificate is surrendered to the
Transfer Agent, then the appropriate Officers on behalf of the Company
shall execute, and upon the Company's request the Transfer Agent shall
countersign and deliver in exchange therefor, a new Certificate
evidencing the same aggregate number and type of Company Securities as
the Certificate so surrendered.
(b) The appropriate Officers on behalf of the Company shall
execute, and upon the Company's request the Transfer Agent shall
countersign and deliver, a new Certificate in place of any Certificate
previously issued if the Record Holder of the Certificate:
(i) makes proof by affidavit in form and substance
satisfactory to an Officer that a previously issued
Certificate has been lost, destroyed or stolen;
(ii) requests the issuance of a new Certificate
before the Company has notice that the Certificate has been
acquired by a purchaser for value in good faith and without
notice of an adverse claim;
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(iii) if requested, delivers to the Company a bond,
in form and substance satisfactory to the Company, with surety
or sureties and with fixed or open penalty as the Company may
reasonably direct, in its sole discretion, to indemnify the
Company and the Transfer Agent against any claim that may be
made on account of the alleged loss, destruction or theft of
the Certificate; and
(iv) satisfies any other reasonable requirements
imposed by the Company, including the requirement to make a
payment pursuant to Subsection 3.6(c).
If a Shareholder fails to notify the Company within a reasonable time
after he has notice of the loss, destruction or theft of a Certificate,
and a transfer of the Company Securities represented by the Certificate
is registered before the Company or the Transfer Agent receives such
notification, the Shareholder shall be precluded from making any claim
against the Company or the Transfer Agent for such transfer or for a
new Certificate.
(c) As a condition to the issuance of any new Certificate
under this Section 3.6, the Company may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be
imposed in relation thereto and any other expenses (including the fees
and expenses of the Transfer Agent) reasonably connected therewith.
ARTICLE 4
Authorization and Issuance of Company Securities
4.1 Company Securities.
(a) The total number of Company Securities which the Company
shall have authority to issue is [__________] shares, of which (i)
[__________] shares are to be limited liability company interests with
the rights set forth in Section 4.2 (the "Voting Shares"), and (ii)
[__________] shares are to be limited liability company interests with
the rights set forth in Section 4.3, the Exchange Provisions and the
Purchase Provisions (the "Listed Shares").
(b) The total number of Company Securities Outstanding shall
at all times equal the number of I-Units held by the Company. If the
number of I-Units held by the Company increases or decreases, the
Company shall by the same number increase or decrease, as the case may
be, the number of Company Securities Outstanding (i) in the event of an
increase in the number of I-Units, by paying to each Record Holder of
Company Securities a pro rata distribution of additional Company
Securities or fractions thereof or effecting a split of Company
Securities pursuant to Section 4.5, or (ii) in the event of a decrease
in the number of I-Units, by effecting a combination of Company
Securities pursuant to Section 4.5.
(c) Company Securities issued for such consideration as the
Board of Directors determines to be appropriate shall be deemed to be
fully paid, and except to the
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extent specified in Section 18-607(b) of the Act, non-assessable if the
entire amount of such consideration has been received by the Company
for such Company Securities in the form of cash, property or services
rendered, or a promissory note or other obligation to contribute cash
or property or to perform services.
4.2 Voting Shares.
(a) Prior to the execution of this Agreement, one (1) Voting
Share was issued to the Organizational Shareholder. The Organizational
Shareholder shall be the sole Record Holder of the Voting Shares. The
designations, preferences and relative, participating, optional or
other special rights, powers and duties relating to the Voting Shares
are as set forth in this Section 4.2. Each Voting Share shall be
identical in every respect with each other Voting Share.
(b) The Organizational Shareholder, as the sole Record Holder
of the Voting Shares, shall be entitled to one vote per Voting Share on
matters submitted to a vote or consent of the Record Holder of the
Voting Shares, as provided in Subsection 4.2(d) and elsewhere in this
Agreement.
(c) A Distribution in respect of each Voting Share shall be
payable only in the event that KMEP makes a cash distribution in
respect of each Common Unit and makes a corresponding distribution of
an additional I-Unit, or fraction thereof, in respect of each I-Unit,
and no other Distribution shall be paid in respect of Voting Shares.
Such Distribution in respect of each Voting Share shall be payable no
later than the 45th Business Day following (i) the completion of the
Quarterly Period for which KMEP declares a cash distribution, in the
event that KMEP declares such cash distribution in respect of each
Common Unit upon the completion of a Quarterly Period, or (ii) the date
on which KMEP declares a cash dividend, in the event that KMEP declares
such cash dividend in respect of each Common Unit other than upon the
completion of a Quarterly Period. Each such Distribution per Voting
Share shall be an additional Voting Share, or a fraction thereof, equal
to the amount of the cash dividend declared by KMEP in respect of each
Common Unit divided by the Average Market Price per Listed Share. No
Distribution in respect of Voting Shares shall be paid in cash. Each
fractional Voting Share that is created as a result of any Distribution
in respect of Voting Shares pursuant to this Subsection 4.2(c) shall be
equal to and represented by a fraction that is calculated to the exact
or next lowest one-millionth (1/1,000,000) of a Voting Share, and any
calculation that would result in a fractional interest in excess of
one-millionth (1/1,000,000) of a Voting Share shall be disregarded
without payment or other consideration and will not be accumulated.
Each Voting Share or fraction thereof issued as a Distribution shall
bear a date of original issuance which is the same as the date on which
such Distribution was payable and will be duly authorized, fully paid
and nonassessable. The Company shall identify the Record Holders
entitled to receive any Distributions in accordance with Section 3.5.
(d) The Partnership Agreement provides that, except with
respect to certain amendments to the Partnership Agreement, I-Units,
Class B Units and Common Units are
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entitled to vote together as a single class, and each I-Unit is
entitled to one vote. The Board of Directors shall submit to the vote
of the Organizational Shareholder, as the Record Holder of the Voting
Shares, any matter on which the Company is entitled to vote as a record
holder of I-Units in order to ascertain the manner in which such
I-Units shall be voted. For each Voting Share or fraction thereof that
has been voted "for" the matter presented to the Organizational
Shareholder, as the Record Holder of the Voting Shares, the Company
shall vote one I-Unit or the same fraction "for" such corresponding
matter when presented to the record holder of I-Units. For each Voting
Share or fraction thereof that has been voted "against" the matter
presented to the Organizational Shareholder, as the Record Holder of
the Voting Shares, the Company shall vote one I-Unit or the same
fraction "against" such matter when presented to the record holder of
I-Units. For each Voting Share or fraction thereof that has abstained
from the vote or has not been voted, whether by broker non-vote or
otherwise, on the matter presented to the Organizational Shareholder,
as the Record Holder of the Voting Shares, the Company shall abstain
from voting one I-Unit or the same fraction on such matter when
presented to the record holder of I-Units.
4.3 Listed Shares.
(a) As of the Closing Date, there shall be Outstanding
[_________] Listed Shares or, in the event that the Underwriters
exercise their option to purchase additional Listed Shares pursuant to
the Underwriting Agreement, there shall be Outstanding up to
[_________] Listed Shares. The Listed Shares will initially be listed
on a National Securities Exchange. The designations, preferences and
relative, participating, optional or other special rights, powers and
duties relating to the Listed Shares are as set forth in this Section
4.3. Each Listed Share shall be identical in every respect with each
other Listed Share.
(b) The Record Holders of Listed Shares, in their capacity as
such, shall not be entitled to vote except that each Record Holder of
Listed Shares shall be entitled to one vote per Listed Share on any
matter submitted by the Company to the Record Holders of Listed Shares
pursuant to Subsections 4.3(c) or (d) or Article 10 of this Agreement,
Section 6 of the Exchange Provisions or Section 7 of the Purchase
Provisions, subject to Subsection 4.3(e).
(c) The Partnership Agreement provides that, except with
respect to certain amendments to the Partnership Agreement, I-Units,
Class B Units and Common Units are entitled to vote together as a
single class, and each I-Unit is entitled to one vote. The Company
shall submit to the vote of the Record Holders of Listed Shares
entitled to vote any matter on which the Company is entitled to vote as
a record holder of I-Units in order to ascertain the manner in which
such I-Units shall be voted. For each Listed Share or fraction thereof
that has been voted "for" the matter presented to Record Holders of
Listed Shares entitled to vote thereon, the Company shall
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vote one I-Unit or the same fraction "for" such corresponding matter
when presented to the record holder of I-Units. For each Listed Share
or fraction thereof that has been voted "against" the matter presented
to Record Holders of Listed Shares entitled to vote thereon, the
Company shall vote one I-Unit or the same fraction "against" such
matter when presented to the record holder of I-Units. For each Listed
Share or fraction thereof that has abstained from the vote or has not
been voted, whether by broker non-vote or otherwise, on the matter
presented to Record Holders of Listed Shares entitled to vote thereon,
the Company shall abstain from voting one I-Unit or the same fraction
on such matter when presented to the record holder of I-Units.
(d) The Company shall submit to the vote of Record Holders of
Listed Shares entitled to vote thereon (i) any proposed issuance of
Other Shares pursuant to Section 4.4 and (ii) (A) a proposed amendment
to the terms of the I-Units pursuant to Subsection 15.3(c) of the
Partnership Agreement that would have a material adverse effect on the
rights or preferences of the I-Units in relation to the other classes
of Units, as determined in the sole discretion of the Board of
Directors, and (B) any proposed amendment to, or alteration or repeal
of, this Agreement, including the Exchange Provisions and the Purchase
Provisions, the Registration Rights Agreement, the Delegation of
Control Agreement, or the Tax Indemnification Agreement if such
proposed amendment, alteration or repeal would (1) reduce the time for
any notice to which Record Holders of Listed Shares would be entitled
under this Agreement, or (2) have a material adverse effect on the
rights or preferences of Listed Shares, as determined in the sole
discretion of the Board of Directors; provided, however, that any of
the following amendments shall not be deemed to have a material adverse
effect on the rights and preferences of Listed Shares: (I) any
amendment that is necessary or desirable to comply with applicable Law,
compliance with which the Board of Directors determines in its sole
discretion to be in the best interests of the Company and the
Shareholders, (II) any amendment that is required to effect the intent
of the provisions of this Agreement or is otherwise contemplated by
this Agreement, and (III) any amendment that increases or decreases the
number of any of the Company Securities authorized for issuance
pursuant to Subsection 4.1(a).
(e) The following Persons or Groups, as the case may be, shall
not be entitled to vote in their capacities as Record Holders of Listed
Shares: (i) KMEP or any subsidiary thereof, except on any matter that
is presented to the Record Holders of Listed Shares pursuant to
Subsection 4.3(c), (ii) any Person or Group, excluding KMI and its
Affiliates (other than KMEP and its subsidiaries), if such Person or
Group owns beneficially 20% or more of the aggregate number of Listed
Shares and Common Units that are Outstanding, and (iii) KMI and its
Affiliates (other than KMEP and its subsidiaries) with respect to (A) a
matter that is presented to the Record Holders of Listed Shares
pursuant to Subsection 4.3(c) in order to determine the manner in which
I-Units shall be voted with respect to either (1) the proposed removal
of the Organizational Shareholder in its capacity as the general
partner of KMEP or (2) a proposed amendment to the terms of the I-Units
pursuant to Subsection 15.3(c) of the Partnership Agreement that would
have a material adverse effect on the rights or preferences of the
I-Units in relation to the other classes of Units, as determined in the
sole discretion of the Board of Directors, and (B) a matter that is
presented to the Record Holders of Listed Shares pursuant to Subsection
4.3(d)(ii)(B).
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(f) A Distribution in respect of each Listed Share shall be
payable only in the event that KMEP pays a cash dividend in respect of
each Common Unit and a corresponding distribution of additional
I-Units, or fractions thereof, in respect of the I-Units, and no other
Distribution shall be paid in respect of each Listed Share. Except as
provided in Subsection 4.3(h), such Distribution in respect of each
Listed Share shall be payable no later than the 45th Business Day
following (i) the completion of a Quarterly Period for which KMEP
declares a cash dividend, in the event that KMEP declares such cash
dividend in respect of each Common Unit upon the completion of a
Quarterly Period, or (ii) the date on which KMEP declares a cash
dividend, in the event that KMEP declares such cash dividend in respect
of each Common Unit other than upon the completion of a Quarterly
Period. Each such Distribution per Listed Share shall be an additional
Listed Share, or a fraction thereof, equal to the amount of the cash
dividend declared by KMEP in respect of each Common Unit divided by the
Average Market Price per Listed Share. No Distribution in respect of
Listed Shares shall be paid in cash. Each fractional Listed Share that
is created as a result of any Distribution in respect of Listed Shares
pursuant to this Subsection 4.3(f) shall be equal to and represented by
a fraction that is calculated to the exact or next lowest one-millionth
(1/1,000,000) of a Listed Share, and any calculation that would result
in a fractional interest in excess of one-millionth (1/1,000,000) of a
Listed Share shall be disregarded without payment or other
consideration and will not be accumulated. Each Listed Share or
fraction thereof issued as a Distribution shall bear a date of original
issuance which is the same as the date on which such Distribution was
payable and will be duly authorized, fully paid and nonassessable. The
Company shall identify the Record Holders entitled to receive any
Distribution in accordance with Section 3.5.
(g) Record Holders of Listed Shares are entitled to exchange
any or all of their Listed Shares for Common Units held by KMI or, at
the election of KMI, for cash, subject to the terms and conditions set
forth the Exchange Provisions. The Exchange Provisions are attached as
Annex A.
(h) Upon the occurrence of any of the events set forth in
Section 2 of the Purchase Provisions, the Purchaser (as defined in the
Purchase Provisions) shall purchase, and all Shareholders shall be
required to sell, all of the Listed Shares under the terms and
conditions of the Purchase Provisions. The Purchaser may elect, but
shall not be obligated, to purchase all, but not less than all, of the
Outstanding Listed Shares that are not held by the Purchaser or its
Affiliates at the Optional Purchase Price upon the existence of the
Optional Purchase Condition, as those terms are defined in the Purchase
Provisions. The Purchase Provisions are attached as Annex B.
Distributions in respect of Listed Shares shall be suspended upon (i)
the occurrence of any of the events set forth in Section 2 of the
Purchase Provisions, or (ii) the receipt by the Company of notice from
the Purchaser stating that the Purchaser will effect a purchase
pursuant to the terms of the Purchase Provisions. Upon the consummation
of the purchase pursuant to the Purchase Provisions, any Distributions
that would have been paid but for the suspension of
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Distributions as provided in the previous sentence shall be paid, and
Distributions in respect of Listed Shares shall continue to be payable
thereafter in accordance with Subsection 4.3(f).
4.4 Other Shares. Subject to Subsection 4.3(d), the requirements
of the Act and other applicable Law, the Board of Directors shall have the power
to cause the Company to issue additional shares of limited liability company
interests (the "Other Shares") up to the maximum number authorized in Subsection
4.1(a), for any Company purpose, at any time or from time to time, with such
designations, preferences and relative, participating, optional or other special
rights, powers and duties for such consideration and on such terms and
conditions as shall be established by the Board of Directors. The consideration
for subscriptions to, or the purchase of, the Other Shares shall be paid in such
form and in such manner as the Board of Directors shall determine.
4.5 Splits and Combinations. The Board of Directors may make a pro rata
distribution of Company Securities to all Record Holders or may effect a
subdivision or combination of Company Securities; provided, however, that after
such distribution, subdivision or combination, each Shareholder shall have the
same Shareholder Interest as before such distribution, subdivision or
combination. In the event that (a) KMEP makes a pro rata distribution of KMEP
securities to the Company or the holder of all I-Units, (b) KMEP effects a
subdivision or combination of the I-Units, or (c) KMEP is involved in a merger
or similar transaction which has the effect of converting, subdividing or
combining the I-Units, then the Board of Directors shall be required to make a
corresponding distribution, adjustment, conversion, subdivision or combination
of the Company Securities so that the number of outstanding I-Units and the
aggregate number of Outstanding Company Securities shall always be equal. Each
fractional Company Security that is created as a result of any distribution
pursuant to this Section 4.5 shall be equal to and represented by a fraction
that is calculated to the exact or next lowest one-millionth (1/1,000,000) of a
Company Security, and any calculation that would result in a fractional interest
in excess of one-millionth (1/1,000,000) of a Company Security shall be
disregarded without payment or other consideration and will not be accumulated.
4.6 Withholding. Notwithstanding any other provision of this
Agreement, the Company shall comply with any withholding requirements under any
Law in connection with the payment of Distributions and other distributions in
respect of Company Securities and shall remit amounts withheld to and file
required forms with applicable taxing authorities. In the event of any claimed
over-withholding, Shareholders shall be limited to an action against the
applicable taxing authority. If an amount required to be withheld was not
withheld from an actual distribution, the Company may reduce subsequent
distributions by the amount of such required withholding. Each Shareholder
agrees to furnish the Company such forms or other documentation as are necessary
to assist the Company in determining the extent of, and in fulfilling, its
withholding obligations.
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ARTICLE 5
Management
5.1 Management of the Company's Affairs.
(a) As provided in this Agreement, all management powers over
the business and affairs of the Company shall be vested exclusively in
a board of directors (the "Board of Directors") and, subject to the
direction of the Board of Directors, the Officers. Officers and
Directors constitute "managers" of the Company within the meaning of
the Act.
(b) No Shareholder, in its capacity as a Shareholder, shall
have any management power over the business and affairs of the Company
or actual or apparent authority to enter into contracts on behalf of,
or to otherwise bind, the Company. Except as otherwise specifically
provided in this Agreement, the authority and functions of the Board of
Directors, on the one hand, and of the Officers, on the other, shall be
identical to the authority and functions of the board of directors and
officers, respectively, of a corporation organized under the Delaware
General Corporation Law. Thus, except as otherwise specifically
provided in this Agreement, the business and affairs of the Company
shall be managed under the direction of the Board of Directors, and the
day-to-day activities of the Company shall be conducted on the
Company's behalf by the Officers, who shall be agents of the Company.
(c) The Board of Directors (subject to Section 5.3) and the
Officers (subject to Section 5.4 and the direction of the Board of
Directors) shall have full power and authority, in addition to the
powers that now or hereafter can be granted to managers under the Act
and to all other powers granted under any other provision of this
Agreement to do all things on such terms as they, in their individual
sole discretion, may deem necessary or appropriate, to conduct, or
cause to be conducted, the business and affairs of the Company, except
as set forth in the Delegation of Control Agreement.
(d) It is expected that KMEP shall pay, or shall reimburse the
Company for the payment of, all expenses incurred by the Company,
including expenses in connection with (i) audits; (ii) filings with the
Securities and Exchange Commission and any state securities agency;
(iii) meetings of the Record Holders of Company Securities; (iv) the
preparation, filing and distribution of proxy materials; (v)
compensation to, and reimbursement of expenses incurred by, Officers
and Directors, as provided under Section 5.5; and (vii) winding up, as
provided under Section 7.2. However, to the extent that KMEP does not
pay, or reimburse the Company for the payment of, the aforementioned
expenses, the Organizational Shareholder shall pay, or shall reimburse
the Company for the payment of, all such expenses.
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5.2 Board of Directors.
(a) Number. The number of Directors of the Company shall be at
all times one more than the number of directors of the Organizational
Shareholder. Each Director shall be elected as provided in Subsection
5.2(b) and shall serve in such capacity until his successor has been
elected and qualified or until such member dies, resigns or is removed.
The initial Board of Directors shall consist of six Directors.
(b) Election of Directors; Term. The Organizational
Shareholder, as the Record Holder of the Voting Shares, shall elect,
whether at a meeting of the Record Holder of the Voting Shares or by
consent in accordance with Section 9.10, new Directors or shall
re-elect existing Directors, each to serve a one-year term.
(c) Vacancies and Removal. Subject to applicable Law,
vacancies existing on the Board of Directors (including a vacancy
created by virtue of an increase in the size of the Board of Directors)
shall be filled by the affirmative vote of a majority of the Directors
then serving, even if less than a quorum. Each Director elected to fill
any vacancy shall serve in such capacity until his successor has been
elected and qualified or until such Director dies, resigns or is
removed. Any Director, or the entire Board of Directors, may be removed
from office at any time, with or without cause, but only by the
approval of the Organizational Shareholder, as the Record Holder of the
Voting Shares.
(d) Voting; Quorum; Required Vote for Action. Unless otherwise
required by the Act, other Law, or the provisions hereof:
(i) each member of the Board of Directors shall have
one vote;
(ii) the presence at a meeting of a majority of the
members of the Board of Directors shall constitute a quorum at
any such meeting for the transaction of business; and
(iii) the act of a majority of the members of the
Board of Directors present at a meeting at which a quorum is
present shall be deemed to constitute the act of the Board of
Directors.
(e) Meetings. Regular meetings of the Board of Directors shall
be held at such times and places as shall be designated from time to
time by resolution of the Board of Directors. Notice of such regular
meetings shall not be required. Special meetings of the Board of
Directors or meetings of any committee thereof may be called by the
Chairman of the Board, the President (should the President be a
Director) or on the written request of any two Directors or committee
members, as applicable, by the Secretary, in each case on at least 24
hours personal, written, telegraphic, cable or wireless notice to each
Director or committee member. Any such notice, or waiver thereof, need
not state the purpose of such meeting except as may otherwise be
required by Law. Attendance of a Director at a meeting (including
pursuant to the last sentence of
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this Subsection 5.2(e)) shall constitute a waiver of notice of such
meeting, except where such Director attends the meeting for the express
purpose of objecting to the transaction of any business on the ground
that the meeting is not lawfully called or convened. Any action
required or permitted to be taken at a meeting of the Board of
Directors, or any committee thereof, may be taken without a meeting,
without prior notice and without a vote if a consent or consents in
writing, setting forth the action so taken, are signed by all members
of the Board of Directors or committee. Members of the Board of
Directors or any committee thereof may participate in and hold a
meeting by means of conference telephone, video conference or similar
communications equipment by means of which all Persons participating in
the meeting can hear each other, and participation in such meetings
shall constitute presence in person at the meeting.
(f) Committees. The Board of Directors, by a majority of the
whole Board of Directors, may appoint one or more other committees of
the Board of Directors to consist of two or more Directors, which
committee(s) shall have and may exercise such of the powers and
authority of the Board of Directors with respect to the management of
the business and affairs of the Company as may be provided in a
resolution of the Board of Directors, except that this Agreement shall
not be amended to increase or decrease the number of any of the Company
Securities authorized for issuance pursuant to Subsection 4.1(a) by
committee action only. Any committee designated pursuant to this
Subsection 5.2(f) shall choose its own chairman, shall keep regular
minutes of its proceedings and report the same to the Board of
Directors when requested, shall fix its own rules or procedures and
shall meet at such times and at such place or places as may be provided
by such rules or by resolution of such committee or resolution of the
Board of Directors. At every meeting of any such committee, the
presence of a majority of all the members thereof shall constitute a
quorum and the affirmative vote of a majority of the members present
shall be necessary for the adoption by it of any resolution. The Board
of Directors may designate one or more Directors as alternate members
of any committee who may replace any absent or disqualified member at
any meeting of such committee. In the absence or disqualification of a
member of a committee, the member or members present at any meeting and
not disqualified from voting, whether or not constituting a quorum, may
unanimously appoint another member of the Board of Directors to act at
the meeting in the place of the absent or disqualified member.
(g) Chairman. The Board of Directors shall elect a chairman of
the Board of Directors (the "Chairman of the Board"). The Chairman of
the Board, if present and acting, shall preside at all meetings of the
Board of Directors and of the Shareholders. Otherwise, the President,
if present, and a Director, or any other Director chosen by the Board
of Directors, shall preside. Unless the Board of Directors provides
otherwise, the Chairman of the Board shall be an Officer of the Company
and shall have the same power and authority as the President.
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5.3 Restrictions on the Board of Directors' Authority. Without the
approval of the specific act by the Organizational Shareholder, as the sole
Record Holder of the Voting Shares, the Board of Directors may not:
(a) amend or propose an amendment to the Partnership
Agreement;
(b) change the amount of the distribution made on Common
Units;
(c) allow a merger or consolidation involving KMEP;
(d) allow a sale or exchange of all or substantially all of
the assets of KMEP;
(e) dissolve or liquidate KMEP;
(f) take any action requiring the approval of any class of
Units;
(g) call any meetings of the record holders of any class of
Units;
(h) take any action that, under the terms of the Partnership
Agreement, must or should receive special approval by the Conflicts and
Audit Committee of the Organizational Shareholder;
(i) take any action that, under the terms of the Partnership
Agreement, cannot be taken by the Organizational Shareholder in its
capacity as general partner of KMEP without the approval of all
Units then Outstanding;
(j) settle or compromise any claim, dispute or litigation
directly against or otherwise relating to indemnification of the
Company, the Organizational Shareholder or their Affiliates, or any of
their officers, directors, managers or members;
(k) settle or compromise any claim, dispute or litigation
relating to the I-Units, the Company Securities or the Initial Public
Offering, including any transaction pertaining thereto;
(l) settle or compromise any claim, dispute or litigation
involving tax matters;
(m) allow KMEP to incur indebtedness if the aggregate amount
of KMEP's indebtedness exceeds 50% of the market value of the then
Outstanding Units; or
(n) allow KMEP to issue Units in one transaction, or in a
series of related transactions, having a market value in excess of 20%
of the market value of Units then Outstanding.
Except as otherwise specifically provided in this Agreement or by resolution of
the Board of Directors, (1) no Director or group of Directors shall have any
actual or apparent authority to
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enter into contracts on behalf of, or to otherwise bind, the Company,
nor to take any action in the name of or on behalf of the Company or
conduct any business of the Company other than by action of the Board
of Directors taken in accordance with the provisions of this Agreement,
and (2) no Director shall have the power or authority to delegate to
any Person such Director's rights and powers as a Director to manage
the business and affairs of the Company.
5.4 Officers.
(a) Generally. The Board of Directors shall appoint agents of
the Company, referred to as "Officers" of the Company, to serve in the
offices set forth in this Section 5.4. Unless provided otherwise by
resolution of the Board of Directors, the Officers shall have the
titles, power, authority and duties described below in this Section
5.4.
(b) Titles and Number. The Officers of the Company shall be
the Chairman of the Board, the President, any and all Vice Presidents,
the Secretary and any Treasurer, any and all Assistant Secretaries and
Assistant Treasurers and any other officer position or title as the
Board of Directors may desire. Any person may hold two or more offices.
(c) Appointment and Term of Office. The Officers shall be
appointed by the Board of Directors at such time and for such term as
the Board of Directors shall determine. Any Officer may be removed,
with or without cause, only by the Board of Directors. Vacancies in any
office may be filled only by the Board of Directors.
(d) Chairman of the Board. Subject to the limitations imposed
by this Agreement, any employment agreement, any employee plan or any
determination of the Board of Directors, the Chairman of the Board,
subject to the direction of the Board of Directors, shall be the chief
executive officer of the Company and, as such, shall preside at all
meetings of the Shareholders and the Board of Directors, shall
supervise generally the President and shall have full authority to
execute all documents and take all actions that the Company may legally
take. The Chairman of the Board shall exercise such other powers and
perform such other duties as may be assigned to him by this Agreement
or the Board of Directors, including any duties and powers stated in
any employment agreement approved by the Board of Directors.
(e) President. Subject to the limitations imposed by this
Agreement, any employment agreement, any employee plan or any
determination of the Board of Directors, the President, subject to the
direction of the Board of Directors, shall be responsible for the
management and direction of the day-to-day business and affairs of the
Company, its other Officers, employees and agents, shall supervise
generally the affairs of the Company and shall have full authority to
execute all documents and take all actions that the Company may legally
take. The President shall exercise such other powers and perform such
other duties as may be assigned to him by this Agreement or the Board
of Directors, including any duties and powers stated in any employment
agreement approved by the Board of Directors.
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(f) Vice Presidents. In the absence of the President and the
Chairman of the Board, each Vice President appointed by the Board of
Directors shall have all of the powers and duties conferred upon the
President, including the same power as the President to execute
documents on behalf of the Company. Each such Vice President shall
perform such other duties and may exercise such other powers as may
from time to time be assigned to him by the Board of Directors, the
Chairman of the Board or the President.
(g) Secretary and Assistant Secretaries. The Secretary shall
record or cause to be recorded in books provided for that purpose the
minutes of the meetings or actions of the Board of Directors and
Shareholders, shall see that all notices are duly given in accordance
with the provisions of this Agreement and as required by Law, shall be
custodian of all records (other than financial), shall see that the
books, reports, statements, certificates and all other documents and
records required by Law are properly kept and filed, and, in general,
shall perform all duties incident to the office of Secretary and such
other duties as may, from time to time, be assigned to him by this
Agreement, the Board of Directors, the Chairman of the Board or the
President. The Assistant Secretaries shall exercise the powers of the
Secretary during that Officer's absence or inability or refusal to act.
(h) Treasurer and Assistant Treasurers. The Treasurer shall
keep or cause to be kept the books of account of the Company and shall
render statements of the financial affairs of the Company in such form
and as often as required by this Agreement, the Board of Directors, the
Chairman of the Board or the President. The Treasurer, subject to the
order of the Board of Directors, shall have the custody of all funds
and securities of the Company. The Treasurer shall perform all other
duties commonly incident to his office and shall perform such other
duties and have such other powers as this Agreement, the Board of
Directors, the Chairman of the Board or the President shall designate
from time to time. The Assistant Treasurers shall exercise the power of
the Treasurer during that Officer's absence or inability or refusal to
act. Each of the Assistant Treasurers shall possess the same power as
the Treasurer to sign all certificates, contracts, obligations and
other instruments of the Company. If no Treasurer or Assistant
Treasurer is appointed and serving or in the absence of the appointed
Treasurer and Assistant Treasurer, such other Officer as the Board of
Directors shall select shall have the powers and duties conferred upon
the Treasurer.
(i) Powers of Attorney. The Company may xxxxx xxxxxx of
attorney or other authority as appropriate to establish and evidence
the authority of the Officers and other Persons.
(j) Delegation of Authority. Unless otherwise provided by
resolution of the Board of Directors, no Officer shall have the power
or authority to delegate to any Person such Officer's rights and powers
as an Officer to manage the business and affairs of the Company.
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5.5 Compensation. The Officers shall receive such compensation for
their services as may be designated by the Board of Directors. In addition, the
Officers shall be entitled to be reimbursed for out-of-pocket costs and expenses
incurred in the course of their service hereunder. The members of the Board of
Directors who are not employees of the Company or any Affiliate thereof shall
receive such compensation for their services as Directors or committee members
as the Board of Directors shall determine. The members of the Board of Directors
who are employees of the Company or any Affiliate thereof shall receive no
compensation for their services as Directors or committee members. All the
members of the Board of Directors shall be entitled to be reimbursed for
out-of-pocket costs and expenses incurred in the course of their service
hereunder.
5.6 Business Opportunities.
(a) Neither the Organizational Shareholder, any Affiliate
thereof (other than the Company or any subsidiary thereof) nor any
Officer or Director of the Company who is an officer, director or
employee of the Organizational Shareholder or any Affiliate thereof
(other than the Company or any subsidiary thereof) shall have any
obligation to bring to, offer to or otherwise share with the Company or
any subsidiary thereof any business opportunity. The Organizational
Shareholder and any Affiliate thereof may compete directly with the
Company or any subsidiary thereof. The Company and each Shareholder
waive any claim that any business opportunity pursued, or to be
pursued, by the Organizational Shareholder and its Affiliates (other
than the Company and any subsidiary thereof) or any Officer or Director
of the Company who is an officer, director or employee of the
Organizational Shareholder or any Affiliate thereof (other than the
Company or any subsidiary thereof) constitutes a business opportunity
of the Company that was misappropriated and waive any right to complain
or make any claim as a result of the fact that the aforementioned
Persons may, among other things (i) engage in business operations in
competition with the Company or any subsidiary thereof; (ii) engage in
financing other entities or in furnishing services in connection
therewith (including the financing of, or services in connection with,
business opportunities pursued by others in competition with the
Company or any subsidiary thereof); and (iii) acquire other entities,
or interests therein, engaged in business operations that will compete
with the Company or any subsidiary thereof. No activity described in
this Subsection 5.6(a) shall constitute a breach of any fiduciary duty,
if any such duty is owed, to the Company or the Shareholders.
(b) For purposes of this Section 5.6, a "business opportunity"
means any opportunity for a Person (i) to enter into any transaction
pursuant to which the Person would acquire (whether by purchase, lease
or other transaction), own, invest in, finance, lend funds to,
contribute capital to, manage, operate or otherwise participate in any
Person, asset or transaction, or (ii) to act as a broker, finder,
financial adviser or investment banker with respect to any such
transaction by any other Person.
5.7 Interested Officers or Directors. No contract or transaction
between the Company, on one hand, and the Organizational Shareholder or any
other Entity, on the other hand, in which an Officer or Director owns an
interest or of which such Officer or Director is an Affiliate,
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or between the Company, on one hand, and any of its Officers or Directors, on
the other hand, shall be void or voidable for this reason or because the Officer
or Director is present at or participates in the meeting of the Board of
Directors or committee thereof that authorizes the contract or transaction, or
because his votes are counted for such purpose, if such contract or transaction
is:
(a) approved by a conflicts committee of the Board of
Directors;
(b) on terms no less favorable than those generally being
provided to or available from unrelated third parties, as determined in
the sole discretion of the Board of Directors; or
(c) fair, taking into account the totality of the
relationships between the parties involved, including other
transactions between parties, as determined in the sole discretion of
the Board of Directors.
5.8 Duties of Officers and Directors. Except as otherwise provided
in this Agreement, the Organizational Shareholder, the Directors and any of
their Affiliates shall have no obligations whatsoever, by virtue of the
relationships established pursuant to this Agreement, to take or refrain from
taking any action that may impact the Company, the Shareholders or any Affiliate
of the Company or a Shareholder. The provisions of this Section 5.8 constitute
an agreement to modify or eliminate fiduciary duties pursuant to the provisions
of Section 18-1101 of the Act.
5.9 Indemnification.
(a) The Indemnitees shall be entitled to mandatory
indemnification and shall be entitled to be held harmless by KMEP to
the extent and subject to the conditions provided in Section 6 of the
Delegation of Control Agreement, with the Organizational Shareholder,
in its capacity as general partner of KMEP, hereby deeming it advisable
that such indemnification and holding harmless shall (rather than may)
be done and provided by KMEP to the fullest extent and subject to the
conditions provided therein. To the extent that the indemnification
provisions of Section 6 of the Delegation of Control Agreement do not
hold harmless any of the Indemnitees, then to the fullest extent
permitted by Law but subject to the limitations expressly provided in
this Agreement, such Indemnitees shall be indemnified and held harmless
by the Company, to the extent deemed advisable by the Board of
Directors, from and against any and all losses, claims, damages,
liabilities, joint or several, expenses (including legal fees and
expenses), judgments, fines, penalties, interest, settlements and other
amounts arising from any and all claims, demands, actions, suits or
proceedings, whether civil, criminal, administrative or investigative,
in which any Indemnitee may be involved, or is threatened to be
involved, as a party or otherwise, by reason of its status as (i) the
Organizational Shareholder or any Affiliate thereof; (ii) an officer,
director, employee, partner, agent or trustee of the Organizational
Shareholder, the Company, or any of their Affiliates; or (iii) a Person
serving at the request of the Company in another Entity in a similar
capacity, provided, that in each case the Indemnitee acted in good
faith and in the manner which such Indemnitee believed to be in, or not
opposed to, the best interests of the Company, and, with respect to any
criminal
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proceeding, had no reasonable cause to believe its conduct was
unlawful. 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 create a presumption that the
Indemnitee acted in a manner contrary to that specified above. Any
indemnification pursuant to this Section 5.9 shall be made only out of
the assets of the Company, it being agreed that neither the
Organizational Shareholder nor any Shareholder, in their capacities as
such, shall be personally liable for such indemnification nor shall it
have any obligation to contribute or loan any monies or property to the
Company to enable the Company to effectuate such indemnification.
(b) To the fullest extent permitted by Law, expenses
(including legal fees and expenses) incurred by an Indemnitee who is
indemnified pursuant to Subsection 5.9(a) in defending any claim,
demand, action, suit or proceeding shall, from time to time, be
advanced by the Company prior to the final disposition of such claim,
demand, action, suit or proceeding upon receipt by the Company of an
undertaking by or on behalf of the Indemnitee to repay such amount if
it shall be determined that the Indemnitee is not entitled to be
indemnified as authorized in this Section 5.9.
(c) The indemnification provided by this Section 5.9 shall
be secondary to any other rights to which an Indemnitee may be entitled
under the Delegation of Control Agreement or any other agreement,
pursuant to any vote of the Record Holders of Voting Shares, as a
matter of Law or otherwise, both as to actions in the Indemnitee's
capacity as (i) the Organizational Shareholder or an Affiliate thereof;
(ii) an officer, director, employee, partner, agent or trustee of the
Organizational Shareholder, the Company or any of their Affiliates; or
(iii) a Person serving at the request of the Company in another Entity
in a similar capacity, and as to actions in any other capacity
(including any capacity under the Underwriting Agreement), and shall
continue as to an Indemnitee who has ceased to serve in such capacity
and shall inure to the benefit of the heirs, successors, assigns and
administrators of the Indemnitee.
(d) The Organizational Shareholder shall purchase and
maintain insurance, on behalf of the Persons as the Board of Directors
shall determine, against any liability that may be asserted against, or
expense that may be incurred by, such Person in connection with the
Company's activities, regardless of whether the Company would have the
power to indemnify such Person against such liability under the
provisions of this Agreement. Such insurance shall provide at least as
much coverage as the insurance maintained on behalf of the directors
and officers of the Organizational Shareholder.
(e) For purposes of this Section 5.9, the Company shall be
deemed to have requested an Indemnitee to serve as fiduciary of an
employee benefit plan whenever the performance by it of its duties to
the Company also imposes duties on, or otherwise involves services by,
it to the plan or participants or beneficiaries of the plan; excise
taxes assessed on an Indemnitee with respect to an employee benefit
plan pursuant to applicable law shall constitute "fines" within the
meaning of Subsection 5.9(a); and action taken or omitted by it with
respect to an employee benefit plan in the performance of its duties
for a purpose reasonably believed by it to be in the interest of the
participants and beneficiaries
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of the plan shall be deemed to be for a purpose which is in, or not
opposed to, the best interests of the Company.
(f) In no event may an Indemnitee subject the Shareholders
to personal liability by reason of the indemnification provisions set
forth in this Agreement.
(g) An Indemnitee shall not be denied indemnification in
whole or in part under this Section 5.9 because the Indemnitee 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.
(h) The provisions of this Section 5.9 are for the benefit
of the Indemnitees, their heirs, successors, assigns and administrators
and shall not be deemed to create any rights for the benefit of any
other Persons.
(i) No amendment, modification or repeal of this Section
5.9 or any provision hereof shall in any manner terminate, reduce or
impair the right of any past, present or future Indemnitee to be
indemnified by the Company, nor the obligation of the Company to
indemnify any such Indemnitee under and in accordance with the
provisions of this Section 5.9 as in effect immediately prior to such
amendment, modification or repeal with respect to claims arising from
or relating to matters occurring, in whole or in part, prior to such
amendment, modification or repeal, regardless of when such claims may
arise or be asserted.
5.10 Liability of Officers and Directors.
(a) Notwithstanding anything to the contrary set forth in this
Agreement, no Officer or Director shall be liable for monetary damages
to the Company, the Shareholders or any other Person for losses
sustained or liabilities incurred as a result of any act or omission
constituting a breach of such Officer's or Director's fiduciary duty,
in the event that such a duty is found to exist, notwithstanding
Section 5.8, if such act or omission does not constitute fraud, willful
misconduct, bad faith or gross negligence.
(b) Subject to its obligations and duties as set forth in this
Article 5, the Board of Directors and any committee thereof may
exercise any of the powers granted to it by this Agreement and perform
any of the duties imposed upon it hereunder either directly or by or
through the Company's agents, and neither the Board of Directors nor
any committee thereof shall be responsible for any misconduct or
negligence on the part of any such agent appointed by the Board of
Directors or any committee thereof in good faith.
(c) Any amendment, modification or repeal of this Section 5.10
or any provision hereof shall be prospective only and shall not in any
way affect the limitations on liability under this Section 5.10 as in
effect immediately prior to such amendment, modification or repeal with
respect to claims arising from or relating to matters occurring,
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in whole or in part, prior to such amendment, modification or repeal,
regardless of when such claims may be asserted.
5.11 Facsimile Signatures. In addition to the provisions for the use of
facsimile signatures elsewhere specifically authorized in this Agreement,
facsimile signatures of any Officer of the Company may be used whenever and as
authorized by the Board of Directors.
ARTICLE 6
Books and Records;
Information and Accounts
6.1 Maintenance of Books and Records. The Company shall keep at its
principal office complete and accurate books and records of the Company,
supporting documentation of the transactions with respect to the conduct of the
Company's business and affairs and minutes of the proceedings of the Board of
Directors, the Shareholders and each committee of the Board of Directors. The
records shall include: (a) complete and accurate information regarding the state
of the business and financial condition of the Company; (b) a copy of the
Agreement and the Organizational Certificate; (c) a current list of the names
and last known business, residence, or mailing addresses of all Directors and
Officers; and (d) the Company's federal, state and local tax returns for the
Company's six most recent tax years.
6.2 Information. In addition to the other rights specifically set forth
in this Agreement and subject to such reasonable standards (including standards
governing what information and documents are to be furnished and at what time
and location and at whose expense) as may be established by the Board of
Directors or any Officer, each Shareholder is entitled to all information to
which a member of a Delaware limited liability company is entitled to have
access pursuant to the Act under the circumstances and subject to the conditions
therein stated.
6.3 Accounts. The Board of Directors may establish, or direct or
authorize any Officer to establish, one or more separate bank and investment
accounts and arrangements for the Company, which shall be maintained in the
Company's name with financial institutions and firms that the Board of
Directors, or any Officer so directed or authorized, determines.
ARTICLE 7
Dissolution, Winding-Up and Termination
7.1 Dissolution.
(a) The Company shall dissolve and its affairs shall be wound
up on the first to occur of the following events (each a "Dissolution
Event"):
(i) entry of a decree of judicial dissolution of the
Company under Section 18-802 of the Act;
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(ii) the approval of the Organizational Shareholder,
as the Record Holder of the Voting Shares, and the Record
Holders of a majority of the Listed Shares then Outstanding;
or
(iii) the approval of Record Holders of Listed Shares
owning at least 66 2/3% of the Listed Shares then Outstanding.
(b) Neither the death, dissolution or Bankruptcy of any
Shareholder nor the occurrence of any other event that causes a
Shareholder to cease to be a member of the Company shall constitute a
Dissolution Event, and the business of the Company shall be continued
after such event.
7.2 Winding-Up and Termination.
(a) On the occurrence of a Dissolution Event, the Board of
Directors shall select one or more Persons to act as liquidator. The
liquidator shall proceed diligently to wind up the affairs of the
Company and make final distributions as provided herein and in the Act.
The costs of winding up shall be borne as a Company expense. Until
final distribution, the liquidator shall continue to operate the
Company's properties with all of the power and authority of the Board
of Directors.
(b) Any assets of the Company remaining after satisfaction of
the liabilities of the Company (whether by payment or by reasonable
provisions for payment) shall be distributed on a share-for-share basis
for all Outstanding Company Securities.
(c) On completion of such final distribution, the liquidator
shall file a Certificate of Cancellation with the Secretary of State of
the State of Delaware, cancel any other filings made pursuant to
Section 2.5, and take such other actions as may be necessary to
terminate the existence of the Company.
ARTICLE 8
Acquisition by Company of Company Securities
Unless otherwise provided in this Agreement, the Board of Directors may
cause the Company to purchase, redeem or otherwise acquire Company Securities.
Upon acquisition thereof the Certificates representing such Company Securities
shall be canceled, and such Company Securities shall no longer be considered
issued or Outstanding for any purpose.
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ARTICLE 9
Amendment of Agreement;
Shareholder Meetings; Record Date
9.1 Amendment Procedures.
(a) Any provision of this Agreement, including the Exchange
Provisions and the Purchase Provisions, may be amended by the Board of
Directors without the approval of any Shareholder; provided, however,
that with respect to any matter for which the approval of the Record
Holders of Listed Shares entitled to vote thereon is required pursuant
to Subsection 4.3(d)(ii)(B), then such amendment shall be not be
effective until such Record Holders of Listed Shares have so approved.
(b) Any proposed amendment that requires the approval of the
Record Holders of any Company Securities shall be explained in a
writing that contains the text of the proposed amendment. If such an
amendment is proposed, the Board of Directors shall seek the written
approval of the Record Holders of the requisite percentage of Company
Securities or call a meeting of the Shareholders entitled to vote
thereon to consider and vote on such proposed amendment.
(c) The Board of Directors shall notify all Record Holders of
Company Securities upon final adoption of any such proposed amendment.
9.2 Meetings. Except as otherwise provided in this Agreement, all acts
of the Shareholders to be taken hereunder shall be taken in the manner provided
in this Article 9. An annual meeting of the Record Holder of the Voting Shares
for the transaction of such business as may properly come before the meeting
shall be held at such time and place as the Board of Directors shall specify in
the notice of the meeting, which date shall be within 13 months subsequent to
the last annual meeting of the Record Holder of the Voting Shares and which
notice shall be delivered to the Record Holder of the Voting Shares at least 10
and not more than 60 days prior to such meeting. Other meetings of the
Shareholders may be called by the Board of Directors, the Chairman of the Board
or by the Organizational Shareholder. The Organizational Shareholder shall call
a meeting by delivering to the Board of Directors one or more requests in
writing stating that the Organizational Shareholder wishes to call a meeting and
indicating the general or specific purposes for which the meeting is to be
called. Within 60 days after receipt of such a call or within such greater time
as may be reasonably necessary for the Company to comply with applicable Law,
the Board of Directors shall send a notice of the meeting to the Shareholders
owning Company Securities of the class or classes for which a meeting is being
called either directly or indirectly through the Transfer Agent. Such meeting
shall be held at a time and place determined by the Board of Directors on a date
not more than 60 nor less than 10 days after the mailing of notice of the
meeting.
9.3 Notice of a Meeting. Notice of a meeting called pursuant to Section
9.3 shall be given in writing by mail or other means of written communication in
accordance with Section 11.3 to the Record Holders of Company Securities for
whom the meeting is called. The
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notice shall be deemed to have been given at the time when deposited in the
mail or sent by other means of written communication.
9.4 Record Date. The Record Date for purposes of determining the
Shareholders entitled to notice of, or to vote at, any meeting of the
Shareholders or entitled to vote by ballot or give approval of Company action in
writing without a meeting or entitled to exercise rights in respect of any
lawful action of the Shareholders shall not be less than 10 nor more than 60
days before (a) the date of the meeting (unless such requirement conflicts with
any Law, in which case the Law shall govern), or (b) in the event that approvals
are sought without a meeting, the date by which the Shareholders are requested
in writing by the Board of Directors to give such approvals.
9.5 Adjournment. When a meeting is adjourned to another time or place,
notice need not be given of the adjourned meeting and a new Record Date need not
be fixed if the time and place thereof are announced at the meeting at which the
adjournment is taken, unless such adjournment shall be for more than 45 days. At
the adjourned meeting, the Company may transact any business which might have
been transacted at the original meeting. If the adjournment is for more than 45
days or if a new Record Date is fixed for the adjourned meeting, a notice of the
adjourned meeting shall be given in accordance with this Article 9.
9.6 Waiver of Notice; Approval of Meeting; Approval of Minutes. The
transactions of any meeting of the Shareholders, however called and noticed, and
whenever held, shall be as valid as if they had been authorized at a meeting
duly held after regular call and notice, if a quorum is present either in person
or by proxy, and if, either before or after the meeting, Shareholders
representing such quorum who were present in person or by proxy and entitled to
vote, sign a written waiver of notice or an approval of the holding of the
meeting or an approval of the minutes thereof. All waivers and approvals shall
be filed with the Company records or made a part of the minutes of the meeting.
Attendance of a Shareholder at a meeting shall constitute a waiver of notice of
the meeting, except (a) when the Shareholder does not approve, at the beginning
of the meeting, of the transaction of any business because the meeting is not
lawfully called or convened; and (b) that attendance at a meeting is not a
waiver of any right to disapprove the consideration of matters required to be
included in the notice of the meeting, but not so included, if the disapproval
is expressly made at the meeting.
9.7 Quorum. The holders of a majority of those Company Securities for
which a meeting has been called who are entitled to vote and be present in
person or by proxy shall constitute a quorum at a meeting of the Shareholders of
such class or classes unless the provisions of this Agreement or the Act require
that any act of the Record Holders of such Company Securities to be taken at
such meeting be approved by a different amount of Company Securities, in which
case the quorum with respect to such act shall be such different amount. At any
meeting of the Shareholders duly called and held in accordance with this
Agreement at which a quorum is present, the act of the majority of all Company
Securities present and entitled to vote shall be deemed to constitute the act of
the Record Holders of such Company Securities, except as approval by holders of
a different amount of Company Securities is required by any other provision of
this Agreement, including Section 9.8, or by Law, in which case the act of the
Shareholders holding a number of Outstanding Company Securities representing at
least such
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different amount shall be required. The Shareholders present at a duly called or
held meeting at which a quorum is present may continue to transact business
until adjournment, notwithstanding the withdrawal of enough Shareholders to
leave less than a quorum, if any action taken (other than adjournment) is
approved by the required percentage of Company Securities specified in this
Agreement. In the absence of a quorum, any meeting of the Shareholders may be
adjourned from time to time by the affirmative vote of a majority of the Company
Securities represented either in person or by proxy.
9.8 Special Voting Requirements. With respect to any matter that shall
be submitted to the Record Holders of Listed Shares entitled to vote thereon
pursuant to Subsection 4.3(d)(ii), the act of no less than the majority of
all Listed Shares then Outstanding shall be deemed to constitute the act of the
Record Holders of Listed Shares, without regard to any provision to the contrary
in Section 9.7.
9.9 Conduct of Meeting. The Board of Directors shall have full power
and authority concerning the manner of conducting any meeting of the
Shareholders or the solicitation of approvals in writing, including the
determination of Persons entitled to vote, the existence of a quorum, the
satisfaction of the requirements of this Article 9, the conduct of voting, the
validity and effect of any proxies and the determination of any controversies,
votes or challenges arising in connection with or during the meeting or voting.
The Board of Directors shall designate a Person to serve as chairman of any
meeting and shall further designate a Person to take the minutes of any meeting.
All minutes shall be kept with the records of the Company. The Board of
Directors may make such other regulations consistent with applicable Law and
this Agreement as it may deem advisable concerning the conduct of any meeting of
the Shareholders or the solicitation of approvals in writing, including
regulations in regard to the appointment of proxies, the appointment and duties
of inspectors of votes and approvals, the submission and examination of proxies
and other evidence of the right to vote and the revocation of approvals in
writing.
9.10 Action Without a Meeting. Any action that may be taken at a
meeting of Shareholders may be taken without a meeting if consents in writing
setting forth such action are signed by the Record Holders holding not less than
the minimum percentage of the Company Securities that would be necessary to
authorize or take such action at a meeting at which all the Company Securities
entitled to vote on such matter were present and voted. Prompt notice of the
taking of action without a meeting shall be given to the Record Holders who were
entitled to, but did not, authorize the action taken. The Board of Directors may
specify that any written consent submitted to Record Holders for the purpose of
taking any action without a meeting shall be returned to the Company within the
time period, which shall be not less than 20 days, specified by the Board of
Directors. If a ballot returned to the Company does not vote all of the Company
Securities held by the Shareholder, the Company shall be deemed to have failed
to receive a ballot for the Company Securities that were not voted. If approval
of the taking of any action by the Shareholders is solicited by any Person other
than by or on behalf of the Board of Directors, the written approvals shall have
no force and effect unless and until (a) they are deposited with the Company in
care of the Board of Directors, (b) approvals sufficient to take the action
proposed are dated as of a date not more than 90 days prior to the date
sufficient approvals are deposited with the Company and (c) an Opinion of
Counsel is delivered to the Board of Directors
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to the effect that the exercise of such right and the action proposed to be
taken with respect to any particular matter is otherwise permissible under
applicable Law, including any statutes then governing the rights, duties and
liabilities of the Company and the Shareholders.
9.11 Voting and Other Rights.
(a) Only those Record Holders of Company Securities on the
Record Date set pursuant to Section 9.5 (and also subject to Subsection
4.3(e)) shall be entitled to notice of, and to vote at, a meeting of
the Shareholders or to act with respect to matters as to which the
holders of the Company Securities have the right to vote or to act. All
references in this Agreement to votes of, or other acts that may be
taken by, the Company Securities shall be deemed to be references to
the votes or acts of the Record Holders of such Company Securities.
(b) With respect to Company Securities that are held for a
Person's account by another Person (such as a broker, dealer, bank,
trust company or clearing corporation, or an agent of any of the
foregoing), in whose name such Company Securities are registered, such
broker, dealer or other agent shall, in exercising the voting rights in
respect of such Company Securities on any matter, and unless the
arrangement between such Persons provides otherwise, vote such Company
Securities in favor of, and at the direction of, the Person who is the
beneficial owner, and the Company shall be entitled to assume it is so
acting without further inquiry.
(c) With respect to any Shareholder action, broker non-votes
shall not be counted as votes "for" or "against" any matter unless
otherwise required by Law.
ARTICLE 10
Covenants
Notwithstanding anything to the contrary in this Agreement, the Company
(a) shall use the proceeds from the Initial Public Offering for the purchase of
I-Units and related rights from KMEP; (b) shall not sell, pledge or otherwise
transfer any I-Units or related rights; (c) shall not issue options, warrants or
other securities entitling the holder thereof to subscribe for or purchase
Company Securities; (d) shall not borrow money or issue debt; (e) shall not
effect a merger, recapitalization or similar transaction involving the Company;
and (f) shall not purchase Listed Shares; provided, however, that the Company
may take or abstain from taking any of the actions prohibited or required, as
applicable, in this Article 10 upon obtaining the approval of at least 50% of
the Listed Shares then Outstanding.
ARTICLE 11
General Provisions
11.1 Fiscal Year. The fiscal year of the Company shall be the calendar
year.
11.2 Offset. Whenever the Company is to pay any sum to any Shareholder,
any amounts that Shareholder owes the Company may be deducted from that sum
before payment.
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11.3 Notices. Except as expressly set forth to the contrary in this
Agreement, all notices, requests or consents provided for or permitted to be
given under this Agreement must be in writing and must be delivered to the
recipient in person, by courier or mail or by facsimile, telegram, telex,
cablegram or similar transmission; and a notice, request or consent given under
this Agreement is effective on receipt by the Person to receive it. Whenever any
notice is required to be given by Law, the Organizational Certificate or this
Agreement, a written waiver thereof, signed by the Person entitled to notice,
whether before or after the time stated therein, shall be deemed equivalent to
the giving of such notice.
11.4 Entire Agreement. This Agreement constitutes the entire agreement
of the Shareholders and their Affiliates pertaining to the subject matter hereof
and supersedes all prior agreements and understandings pertaining thereto.
11.5 Waiver. No failure by any party to insist upon the strict
performance of any covenant, duty, agreement or condition of this Agreement or
to exercise any right or remedy consequent upon a breach thereof shall
constitute waiver of any such breach or any other covenant, duty, agreement or
condition.
11.6 Binding Effect. This Agreement is binding upon and shall inure to
the benefit of the Shareholders, the Assignees and their respective executors,
administrators, successors and legal representatives.
11.7 Governing Law; Severability. This Agreement shall be construed in
accordance with, and governed by, the laws of the State of Delaware without
regard to the principles of conflicts of law. In the event of a direct conflict
between the provisions of this Agreement and (a) any provision of the
Organizational Certificate, or (b) any mandatory, non-waivable provision of the
Act or the Delaware General Corporation Law, such provision of the
Organizational Certificate, the Act or the Delaware General Corporation Law
shall control. In that regard, to the extent this Agreement, the Organizational
Certificate or the Act does not control, the Company shall be subject to the
provisions of the Delaware General Corporation Law mutatis mutandis. If any
provision of the Act provides that it may be varied or superseded in the limited
liability company agreement (or otherwise by agreement of the members or
managers of a limited liability company), such provision shall be deemed
superseded and waived in its entirety if this Agreement contains a provision
addressing the same issue or subject matter. If any provision of this Agreement
or the application thereof to any Person or circumstance is held invalid or
unenforceable to any extent, the remainder of this Agreement and the application
of that provision to other Persons or circumstances is not affected thereby and
that provision shall be enforced to the greatest extent permitted by Law.
11.8 Further Action. The parties shall execute and deliver all
documents, provide all information and take or refrain from taking action as may
be necessary or appropriate to achieve the purposes of this Agreement.
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11.9 Waiver of Certain Rights. To the extent permitted by the Act and
other Law, each Shareholder irrevocably waives any right it may have to maintain
any action for dissolution of the Company or for partition of the property of
the Company.
11.10 Third-Party Beneficiaries. The Shareholders, the Assignees and
their respective executors, administrators, successors and legal representatives
shall be considered to be third-party beneficiaries of the Agreement, including
the Exchange Provisions and the Purchase Provisions.
11.11 Creditors. None of the provisions of this Agreement shall be for
the benefit of, or shall be enforceable by, any creditor of the Company in its
capacity as such.
11.12 Counterparts. This Agreement may be executed in counterparts, all
of which together shall constitute an agreement binding on all parties hereto,
notwithstanding that all such parties are not signatories to the original or the
same counterpart. Each party shall become bound by this Agreement immediately
upon affixing its signature hereto or, in the case of a Person acquiring a
Listed Share or an Other Share, upon (a) the acceptance by such Person of the
Certificate evidencing such Listed Share or Other Share, or (b) the transfer of
such Listed Share or Other Share to such Person by book-entry transfer in
accordance with Subsection 3.4(b).
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first set forth above.
Organizational Shareholder and Record
Holder of the Voting Shares:
KINDER XXXXXX X.X., INC.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
All holders of Listed Shares
By:
-----------------------------------
By:
----------------------------
Attorney-in-fact authorized
by the Board of Directors
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ANNEX A
EXCHANGE PROVISIONS
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ANNEX B
PURCHASE PROVISIONS
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ANNEX C
DELEGATION OF CONTROL AGREEMENT
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DRAFT
APRIL 2, 2001
EXCHANGE PROVISIONS
ANNEX A TO THE
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
XXXXXX XXXXXX MANAGEMENT, LLC
These Exchange Provisions, dated as of _____________, 2001, are an
integral part of the Amended and Restated Limited Liability Company Agreement of
Xxxxxx Xxxxxx Management, LLC, dated as of ____________, 2001.
SECTION 1
Definitions
1.1 Definitions. In these Exchange Provisions, the following terms have
the following respective meanings:
"Affiliate" means, with respect to any Person, any other Person that
directly or indirectly controls, is controlled by or is under common control
with, the Person in question. As used herein, the term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through ownership
of voting securities, by contract or otherwise.
"Beneficial Owner" has the meaning set forth in Rules 13d-3 and 13d-5
under the Securities Exchange Act, as in effect on the date of these Exchange
Provisions, and the terms "Beneficial Ownership," "Beneficially Own,"
"Beneficially Owned" and similar terms have correlative meanings.
"Board of Directors of the Company" means the board of directors of the
Company established pursuant to the LLC Agreement, and any committee of such
board duly authorized to act in respect thereof.
"Board of Directors of the Exchange Party" means (a) if KMI is the
Exchange Party, the board of directors of KMI; (b) if the Exchange Party is a
limited partnership with a corporate general partner or any other corporation,
the board of directors of such corporate general partner or corporation; (c) if
the Exchange Party is any other form of entity, the board of directors or other
comparable governing body of such entity; and (d) in each case, any committee of
such board or body duly authorized to act in respect thereof.
"Cash Settlement" has the meaning set forth in Section 2.1(c).
46
"Cash Settlement Amount" for a Common Unit means the average of the
Closing Prices for a Common Unit for the three consecutive Trading Day period
beginning on the on the second Trading Day next following the date on which the
Exchange Party gives notice of its election to settle the Exchange Feature in
cash pursuant to Section 2.1(c).
"Closing" means the closing of the initial public offering of the
Listed Shares, effected pursuant to the Registration Statement of the Company on
Form S-1 (Registration No. 333-55866), which occurred on the date of these
Exchange Provisions.
"Closing Price" for a security on any day means:
(a) for securities listed on a National Securities Exchange,
the last sale price for that day, regular way, or if there are no sales
on that day, the average of the closing bid and asked prices for that
day, regular way, in either case as reported in the principal composite
transactions reporting system for the principal National Securities
Exchange on which such securities are listed; or
(b) if such securities are not listed on a National Securities
Exchange on that day, the last quoted price on that day, or if no price
is quoted, the average of the high bid and low asked prices on that
day, each as reported by the National Association of Securities Dealers
Automated Quotation system; or
(c) if such securities are not so quoted on that day, the
average of the closing bid and asked prices on that day furnished by a
professional market maker in such securities selected by the Board of
Directors of the Exchange Party; or
(d) if on that day no market maker is making a market in such
securities, the fair value of such securities on such day as determined
by the Board of Directors of the Exchange Party.
"Common Units" has the meaning assigned to it in the Partnership
Agreement.
"Company" means Xxxxxx Xxxxxx Management, LLC, a Delaware limited
liability company.
"Controlling Entity" has the meaning set forth in clause (b)(i) of the
definition of Mandatory Purchase Event.
"Distribution Date" means the payment date for regular quarterly
distributions or any special distributions with respect to the Listed Shares
pursuant to the LLC Agreement.
"Entity" means a corporation, limited liability company, venture,
partnership, trust, unincorporated organization, association or other entity.
"Exchange Date" means, with respect to any Listed Share, the time
immediately prior to the close of business on the date on which a certificate
representing such Listed Share (or if permitted by Section 7.1, book entry
delivery of such Listed Share) and a duly signed Exchange
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Notice have been received by the Exchange Party or its office or agency
maintained for such purpose pursuant to Section 3.2, all in accordance with
Section 2.2.
"Exchange Feature" has the meaning set forth in Section 2.1(a).
"Exchange Notice" means the notice described in Section 2.7.
"Exchange Party" means the Person with the obligation pursuant to these
Exchange Provisions to deliver Common Units or cash to the holder of Listed
Shares surrendering such Listed Shares for exchange in accordance with these
Exchange Provisions. The initial Exchange Party is KMI.
"Exchange Provisions" means these exchange provisions attached to the
LLC Agreement as Annex A and hereby made a part of the LLC Agreement.
"Exchange Rate" has the meaning set forth in Section 2.1(b).
"General Partner" means the general partner of the Partnership. On the
date of these Exchange Provisions, the General Partner is Kinder Xxxxxx X.X.,
Inc.
"Holder" means the holder of record of a Listed Share.
"I-Units" has the meaning assigned to it in the Partnership Agreement.
"KMI" means Xxxxxx Xxxxxx, Inc., a Kansas corporation.
"LLC Agreement" means the Amended and Restated Limited Liability
Company Agreement of the Company dated as of __________, 2001, including these
Exchange Provisions and the Purchase Provisions.
"Listed Shares" means the limited liability company interests in the
Company designated in the LLC Agreement as "Listed Shares."
"Mandatory Purchase Event" means any one of the following:
(a) the occurrence of the first day on which the aggregate
amount of distributions or other payments by the Partnership on the
Common Units (other than distributions or payments made in Similar
Common Unit Securities, but including distributions and other payments
pursuant to a self tender offer) during the immediately preceding
360-day period exceeds 50% of the average Closing Price of a Common
Unit during the 10 consecutive Trading Day period ending on the last
Trading Day prior to the first day of such 360-day period;
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(b) the occurrence of an event resulting in KMI and its
Affiliates ceasing to be the Beneficial Owner of more than 50% of the
total voting power of all shares of capital stock of the General
Partner, unless:
(i) the event results in another Person becoming the
Beneficial Owner of more than 50% of the total voting power of
all shares of capital stock of the General Partner (such other
Person being referred to herein as the "Controlling Entity");
(ii) the Controlling Entity is organized under the
laws of a state in the United States;
(iii) the Controlling Entity has long term unsecured
debt with an investment grade credit rating, as determined by
Xxxxx'x Investor Services, Inc. and Standard & Poor's Rating
Service, immediately prior to the event which results in the
Controlling Entity becoming the Beneficial Owner of more than
50% of the total voting power of all shares of capital stock
of the General Partner; and
(iv) the Controlling Entity assumes all obligations of
KMI and the Exchange Party to the Company and to the holders
of the Listed Shares under these Exchange Provisions, the
Purchase Provisions, the Registration Rights Agreement and the
Tax Indemnification Agreement.
(c) the merger of the Partnership with or into another Person
in any case where the Partnership is not the surviving entity, or the
sale of all or substantially all of the assets of the Partnership and
its subsidiaries, taken as a whole, to another Person, unless:
(i) in the transaction the holders of Common Units
receive in exchange for all of their Common Units a Similar
Common Unit Security of the Person that is the surviving
entity or that purchased the assets;
(ii) in the transaction the Company receives in
exchange for all of its I-Units a Similar I-Unit Security of
the Person that is the surviving Entity or that purchased the
assets;
(iii) no consideration is received in the transaction
by a holder of Common Units other than Similar Common Unit
Securities and/or cash and the amount of cash received per
Common Unit does not exceed 33-1/3% of the average Closing
Price of a Common Unit for the ten consecutive Trading Day
period ending on the Trading Day immediately preceding the
date of the transaction; and
(iv) no consideration is received in the transaction
by the Company or the holders of I-Units, each as holders of
I-Units, other than Similar I-Unit Securities.
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"National Securities Exchange" means an exchange registered with the
Securities and Exchange Commission under Section 6(a) of the Securities Exchange
Act.
"Partnership" means Xxxxxx Xxxxxx Energy Partners, L.P., a Delaware
limited partnership.
"Partnership Agreement" means the Third Amended and Restated Agreement
of Limited Partnership of the Partnership, dated as of _________, 2001.
"Person" means a natural person or an Entity.
"Purchase Date" means either a Mandatory Purchase Date or an Optional
Purchase Date, each as defined in the Purchase Provisions.
"Purchase Notice" means a Mandatory Purchase Notice, an Optional
Purchase Notice or an Optional Purchase Notice for Common Units and Listed
Shares, each as defined in the Purchase Provisions.
"Purchase Provisions" means the purchase provisions attached to the LLC
Agreement as Annex B and thereby made a part of the LLC Agreement.
"Record Date" means, with respect to any Distribution Date, the date
fixed for determining the holders of Listed Shares entitled to receive the
distribution on such Distribution Date.
"Registration Rights Agreement" means the Registration Rights Agreement
dated as of the Closing between KMI and the Partnership.
"Section" means a section of these Exchange Provisions.
"Securities Act" means the United States Securities Act of 1933, as
amended, supplemented or restated from time to time and any successor to such
statute and all rules and regulations promulgated thereunder.
"Securities Exchange Act" means the United States Securities Exchange
Act of 1934, as amended, supplemented or restated from time to time and any
successor to such statute and all rules and regulations promulgated thereunder.
"Similar Common Unit Security" means a security that has in all
material respects the same rights and privileges as the Common Units, including
Common Units.
"Similar I-Unit Security" means a security that has in all material
respects the same rights and privileges at the I-Units, including I-Units.
"Subsidiary," when used in connection with the Partnership, means any
Affiliate of the Partnership which the Partnership controls, and of which the
Partnership owns, directly or indirectly, a majority of the aggregate shares,
partnership interests or other equity interests.
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"Tax Indemnification Agreement" means the Tax Indemnification Agreement
dated as of the Closing between KMI and the Company.
"Transfer Agent" means any bank, trust company or other Person
(including the Company or any Affiliate of the Company) appointed from time to
time by the Board of Directors of the Company to act as registrar and transfer
agent for the Listed Shares. On the date of these Exchange Provisions, First
Chicago Trust Company of New York is the Transfer Agent.
"Trading Day" for any securities means a day on which:
(a) the principal National Securities Exchange on which such
securities are listed is open for business, or
(b) if such securities are not listed on any National
Securities Exchange, a day in which banking institutions in the City of
New York generally are open.
1.2 Rules of Construction. Unless the context otherwise clearly
requires:
(a) the terms defined in Section 1.1 have the meanings
assigned to them in that Section for purposes of these Exchange
Provisions; terms defined in the Purchase Provisions and also in these
Exchange Provisions shall in the Purchase Provisions have the meanings
ascribed to them therein; terms defined elsewhere in the LLC Agreement
and also in these Exchange Provisions shall in such other portions of
the LLC Agreement have the meanings ascribed to them therein;
(b) terms defined include the plural as well as the singular
and vice versa;
(c) references to any document, agreement, instrument or
provision thereof mean such document, agreement, instrument or
provisions thereof as the same may be duly amended, supplemental or
restated from time to time;
(d) "or" is not exclusive; and
(e) the words "herein," "hereof," "hereunder" and other words
of similar import refer to these Exchange Provisions as a whole and not
to any particular Section or other subdivision.
SECTION 2
Exchange of Listed Shares
2.1 Exchange Feature and Exchange Rate; Cash Settlement.
(a) Subject to and upon compliance with these Exchange
Provisions, at the option of the Holder thereof, each Listed Share may
be exchanged with the Exchange Party for fully paid and nonassessable
Common Units of the Partnership (calculated as to each exchange to the
nearest 1/100th of a Common Unit) at the Exchange Rate, determined as
hereinafter provided, in effect at the time of exchange. Such exchange
right (the "Exchange Feature") shall commence on the date which is 45
days after the
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Closing and shall terminate on the earlier of (i) the occurrence of a
Mandatory Purchase Event, and (ii) the date on which the Exchange Party
has either mailed to the Holders of Listed Shares, or delivered to the
Transfer Agent for mailing to the Holders of Listed Shares, a Purchase
Notice in accordance with the LLC Agreement. From and after the
occurrence of either of the events in clauses (i) or (ii) in the
preceding sentence, any Listed Share surrendered for exchange shall not
be exchanged, but shall be held for purchase pursuant to the Purchase
Provisions, and shall be so purchased on the relevant Purchase Date.
The right to exchange Listed Shares for Common Units is subject to
Section 2.1(c).
(b) The rate at which Common Units shall be delivered by the
Exchange Party upon exchange for Listed Shares (herein called the
"Exchange Rate") shall be initially one Common Unit for each one Listed
Share. The Exchange Rate may be adjusted in certain instances as
provided in Section 2.4.
(c) At any time, the Exchange Party may elect to make a cash
settlement ("Cash Settlement") in respect of any Listed Share
surrendered for exchange by giving notice of such election to the
tendering Holder not more than three Trading Days after such Listed
Share is surrendered for exchange. Any such notice mailed to the Holder
of the Listed Shares at his address as reflected in the records of the
Transfer Agent, or as shown on the Exchange Notice, shall be deemed to
be validly given, whether or not actually received by such Holder. Such
cash settlement shall be in an amount per Listed Share equal to the
Cash Settlement Amount and shall be paid as promptly as practicable
after the completion of the three Trading Day period used to calculate
the Cash Settlement Amount. Such payment may be mailed to the Holder of
the Listed Shares surrendered for exchange at his address as reflected
in the records of the Transfer Agent, or as shown on the Exchange
Notice, or made in such other fashion as the Exchange Party may elect.
2.2 Exercise of Exchange Feature.
(a) In order to exercise the Exchange Feature, the Holder of
any Listed Share to be exchanged shall surrender the certificate
representing such Listed Share, duly endorsed or assigned to the
Exchange Party or in blank, at any office or agency of the Exchange
Party maintained for that purpose pursuant to Section 3.2 (which may be
the Transfer Agent), accompanied by a duly signed Exchange Notice
substantially in the form provided in Section 2.7, stating that the
Holder elects to exchange the Listed Shares represented by such
certificate, or, if less than the entire number of Listed Shares
represented by such certificate are to be exchanged, the whole number
of such Listed Shares to be exchanged. Any such delivery of
certificates and the Exchange Notice shall be irrevocable. Only whole
numbers of Listed Shares may be exchanged. If a Listed Share is
surrendered for exchange during the period from the close of business
on any Record Date next preceding any Distribution Date to the opening
of business on such Distribution Date, the distribution payable on such
Distribution Date shall be paid to the Holder of such Listed Share on
the Record Date, notwithstanding that such Listed Share has been
surrendered for exchange or the Exchange Date with respect to such
Listed Share has occurred. If a Listed Share is surrendered for
exchange and the Exchange Date
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with respect to such Listed Share occurs prior to a Record Date, such
Listed Share will, as provided below, have been deemed transferred to
the Exchange Party on such Exchange Date, and therefore the Exchange
Party will be the holder of such Listed Share on the Record Date and
the Exchange Party will receive the distribution on the related
Distribution Date, whether or not the Exchange Party has yet delivered
to the Holder the certificates representing Common Units (or cash, if
the Exchange Party elects Cash Settlement) deliverable upon the
exchange. Distributions payable on any Distribution Date in respect of
any Listed Share surrendered for exchange on or after such Distribution
Date shall be paid to the Holder of such Listed Share as of the Record
Date related to such Distribution Date, notwithstanding the exercise of
the Exchange Feature. Except as provided in this Section 2.2, no cash
or other payment or adjustment shall be made upon any exchange on
account of any Distribution declared from the Distribution Date next
preceding the Exchange Date in respect of any Listed Share surrendered
for exchange, or on account of any distribution declared or payable on
the Common Units deliverable upon exchange.
(b) Listed Shares shall be deemed to have been exchanged on
the Exchange Date, and at such time the rights of the Holders of such
Listed Shares as Holders shall cease, including, without limitation,
any rights under the LLC Agreement, except the right to receive Common
Units or the Cash Settlement Amount from the Exchange Party in exchange
for such Listed Shares in accordance with these Exchange Provisions,
and such Listed Shares shall upon the Exchange Date be deemed to be
transferred to the Exchange Party and shall be transferred to the
Exchange Party on the record books of the Transfer Agent, and the
Exchange Party shall be deemed to be the owner of such Listed Shares
from and after the Exchange Date and shall have all rights as the owner
of such Listed Shares. Unless the Exchange Party has elected to make a
Cash Settlement, within three Trading Days after the Exchange Date, the
Exchange Party shall deliver to the Transfer Agent, for delivery to the
Holder, a certificate or certificates for the number of full Common
Units deliverable upon exchange, together with payment in lieu of any
fraction of a Common Unit, if any, as provided in Section 2.3. Such
certificate or certificates for Common Units shall be registered in the
name of the Holder of the Listed Shares surrendered for exchange, or
duly endorsed to such Holder or accompanied by a duly executed stock
power in favor of such Holder. Holders of Shares have no rights in
respect of Common Units unless and until the Shares are exchanged and
Common Units registered in the name of the Holder have been issued and
delivered to the Transfer Agent as described above. Unless the Exchange
Party has elected to make a Cash Settlement, if a record date with
respect to Common Units occurs between the Exchange Date and the
earlier of the date on which such Common Units are registered in the
name of the Holder and the date on which the Exchange Party delivers to
the Transfer Agent for delivery to the former Holder of Listed Shares
the certificates for Common Units deliverable upon such exchange, the
Exchange Party shall (i) with respect to a record date for a
distribution to be made with respect to the Common Units deliverable by
the Exchange Party with respect to such exchange, forward such
distribution with respect to such Common Units to the Holder
surrendering such Listed Shares for exchange at the address reflected
on the records of the Transfer Agent, or as shown on the Exchange
Notice, promptly upon the Exchange Party's receipt of such
distribution, and (ii) with respect to a record date for voting or
consent of Common Units, provide the Holder surrendering such Listed
Shares
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for exchange a proxy enabling such Holder to vote or consent with
respect to the vote or consent of such Common Units for the matters
related to such record date.
(c) In the case of any certificate representing Listed Shares
which is exchanged in part only, upon such exchange the Transfer Agent
shall authenticate and deliver to the Holder thereof, at the expense of
the Company, a new certificate representing the number of Listed Shares
not so exchanged.
2.3 Fractions of Common Units. No fractional Common Units shall be
delivered upon exchange of any Listed Shares. If more than one certificate
representing Listed Shares shall be surrendered for exchange with the same
Exchange Date by the same Holder, the number of full Common Units which shall be
deliverable upon exchange thereof shall be computed on the basis of the
aggregate number of whole Listed Shares so surrendered. Instead of any
fractional Common Unit which would otherwise be issuable upon exchange of any
Listed Shares, the Exchange Party shall calculate and pay a cash adjustment in
respect of such fraction (calculated to the nearest 1/100th of a Common Unit) in
an amount equal to the same fraction of the Closing Price on the Exchange Date
(or, if such day is not a Trading Day, on the Trading Day immediately preceding
such day), or at the Exchange Party's option, the Exchange Party may round the
number of Common Units delivered up to the next higher whole Common Unit.
2.4 Adjustment of Exchange Rate. The Exchange Rate shall be subject to
adjustments from time to time as follows:
(a) If all holders of Common Units, or all holders of Common
Units other than the Exchange Party and its Affiliates, are to receive,
in exchange for or in place of all of their Common Units, a Similar
Common Unit Security pursuant to any (i) merger in which the
Partnership is not the survivor, if the holders of units (of any kind)
of the Partnership immediately prior to the transaction own more than
50% of the total voting power of the voting securities of the survivor
immediately after the transaction, (ii) a merger in which the
Partnership is the survivor, or (iii) a recapitalization,
reorganization or similar transaction of the Partnership, then from and
after the effective date of such transaction the holder of a Listed
Share shall be entitled to receive, in exchange therefore, the same
number of Similar Common Unit Securities which the holder of one Common
Unit immediately prior to such transaction was entitled to receive in
such transaction. In such case, appropriate amendments will be made in
these Exchange Provisions to accommodate such change. If in any such
transaction the holders of Common Units receive only the same number, a
greater number or a lesser number of Common Units, then no adjustment
must be made pursuant to this Section 2.4(a) if a corresponding
adjustment has been made by the Company with respect to the Listed
Shares.
(b) The Exchange Party may at its election, but shall have no
obligation to, at any time when the Listed Shares are exchangeable as
provided in Section 2.1, increase the then current Exchange Rate by any
amount selected by the Exchange Party. If the Exchange Party elects so
to increase the then current Exchange Rate, such increase shall remain
in effect for at least 20 days following the effective date of such
election, after which time the Exchange Party may, at its election
(which may be made at the same time as the election to increase the
Exchange Rate), reinstate the Exchange Rate in effect prior
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to the time of such increase. Whenever the Exchange Rate is so to be
increased, the Exchange Party shall deliver to the Transfer Agent at
least 15 days before the effective date of such increase copies of a
notice for mailing to the Holders of the Listed Shares, stating the
increased Exchange Rate, the date on which such increase will take
effect and the period for which such increased Exchange Rate will be in
effect.
(c) The Exchange Party may, but shall not be obligated to,
make such increases in the Exchange Rate, in addition to those required
or allowed by this Section 2.4, as shall be determined by it to be
advisable in order to diminish any income tax to holders of Listed
Shares from any distribution of securities or from any event treated as
such for income tax purposes.
2.5 Notice of Adjustments of Exchange Rate. Whenever the Exchange Rate
is adjusted as provided in Section 2.4, a notice stating that the Exchange Rate
has been adjusted and setting forth the adjusted Exchange Rate shall forthwith
be prepared by the Exchange Party, and as soon as practicable after it is
prepared, such notice shall be provided by the Exchange Party to the Transfer
Agent and to the Holders of Listed Shares. Upon the request of the Exchange
Party, the Transfer Agent shall, and the Company shall use its reasonable
efforts to cause the Transfer Agent to, mail such notice to the Holders of the
Listed Shares.
2.6 Ownership of Exchanged Listed Shares. All Listed Shares delivered
for exchange shall be transferred to the Exchange Party and registered in the
name of the Exchange Party on the books and records of the Transfer Agent on the
related Exchange Date shall not be cancelled and shall remain outstanding.
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2.7 Exchange Notice. The Exchange Notice shall be in substantially the
following form:
EXCHANGE NOTICE
The undersigned record holder of Listed Shares of Xxxxxx Xxxxxx
Management, LLC (the "Company") hereby surrenders for exchange pursuant to
Section 2.1 of the Exchange Provisions of the Limited Liability Company
Agreement of the Company the Listed Shares represented by the certificates
described below.
Name of Record Holder:
----------------------------------------------------------
Title:
-------------------------------------------------------------------------
Address:
-----------------------------------------------------------------------
Telephone Number:
--------------------------------------------------------------
Tax Identification or Social Security Number:
----------------------------------
Certificates Surrendered
----------------------------------------------------------------------------------------------
Certificate Number Number of Listed Shares Represented by Certificate
------------------------------- --------------------------------------------------------------
------------------------------- --------------------------------------------------------------
------------------------------- --------------------------------------------------------------
------------------------------- --------------------------------------------------------------
------------------------------- --------------------------------------------------------------
------------------------------- --------------------------------------------------------------
Total Number of Listed Shares
------------------------------- -------------------- -----------------------------------------
(If you desire to exchange less than all Listed Shares scheduled above, complete
the blank below with respect to the number of Listed Shares to be exchanged.)
Number of Listed Shares to be exchanged:
----------------------------------------
Note: If no number of Listed Shares is indicated, all Listed Shares
represented by the certificates scheduled above will be exchanged.
Signatures
This Exchange Notice must be signed by the record holder(s) exactly as
the name(s) appear on the certificate(s) representing the Listed Shares
scheduled above, or if delivered by a participant in the depositary for the
Listed Shares, exactly as such participant's name appears on the security
position listing as the owner of Listed Shares. If signature is by trustees,
executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, please
set forth the full title. Proper evidence of such person's authority may be
required by the Exchange Party.
Dated:
-------------------------------------
Signature(s) of Record Holders:
------------------------------------------------
Print name(s) of Record Holders:
-----------------------------------------------
-----------------------------------------------
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Print title(s) of Signatories:
-------------------------------------------------
-------------------------------------------------
SECTION 3
Certain Covenants
3.1 Notice of Certain Action.
In case:
(a) the Partnership shall declare a dividend or any other
distribution on Common Units payable otherwise than exclusively in cash
or Common Units; or
(b) of the voluntary or involuntary dissolution, liquidation
or winding up of the Partnership; or
(c) the Partnership or any Affiliate of the Partnership shall
commence a tender offer for all or a portion of the outstanding Common
Units;
then the Company shall cause to be delivered to the Transfer Agent a soon as
reasonably practicable after the Company has become aware of such event, copies
of a notice for mailing to the Holders of (x) the date on which a record is to
be taken for the purpose of such distribution or, if a record is not to be
taken, the date as of which the holders of Common Units to be entitled to such
distribution are to be determined; (y) the date on which the right to make
tenders under such tender offer expires; or (z) the date on which such
dissolution, liquidation or winding up is expected to become effective, and the
date as of which it is expected that holders of Common Units shall be entitled
to exchange their Common Units for securities, cash or other property
deliverable upon such dissolution, liquidation or winding up. Neither the
failure to give such notice nor any defect therein shall affect the legality or
validity of the proceedings described in clauses (a) through (c) of this Section
3.1.
3.2 Maintenance of Office or Agency.
(a) The Exchange Party will maintain in the Borough of
Manhattan, The City of New York an office or agency where Listed Shares
may be surrendered for exchange and where notices and demands to or
upon the Exchange Party in respect of the Listed Shares and these
Exchange Provisions may be served. The Exchange Party will give prompt
written notice to the Transfer Agent of the location, and any change in
the location, of such office or agency. If at any time the Exchange
Party shall fail to maintain any such required office or agency or
shall fail to furnish the Transfer Agent with the address thereof, such
surrenders may be made or served at the office of the Transfer Agent,
and the Exchange Party hereby appoints the Transfer Agent as its agent
to receive all such surrenders in any such case.
(b) The Exchange Party may also from time to time designate
one or more other offices or agencies (in or outside the Borough of
Manhattan, The City of New York) where the Listed Shares may be
presented or surrendered for such purpose and
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may from time to time rescind such designations; provided, however,
that no such designation or rescission shall in any manner relieve the
Exchange Party of its obligation to maintain an office or agency in the
Borough of Manhattan, The City of New York for such purpose as provided
in Section 3.2(a). The Exchange Party will give prompt written notice
to the Transfer Agent of any such designation or rescission and of any
change in the location of any such other office or agency.
3.3 Covenants as to Common Units. The Exchange Party agrees that all
Common Units which are delivered upon exchange of Listed Shares, upon such
delivery, will have been duly authorized and validly issued and will be fully
paid and nonassessable and, except as provided in Section 3.5 of these Exchange
Provisions, the Exchange Party will pay all taxes, liens and charges with
respect to the delivery thereof. The Exchange Party agrees that it will at all
times own, directly or indirectly through subsidiaries, a number of Common Units
equal to no less than 20% of the number of outstanding Listed Shares not held by
the Exchange Party and its Affiliates.
3.4 Registration. The Company and the Exchange Party will use
reasonable efforts to effect or cause to be effected all registrations and
filings with, and obtain all consents, authorizations, approvals or failures to
object by, all governmental authorities that may be necessary for such party and
its subsidiaries and Affiliates under any United States Federal or state law
(including the Securities Act, the Securities Exchange Act and state securities
and Blue Sky laws) for any exchange pursuant to the Exchange Feature and for the
Common Units deliverable upon exchange of Listed Shares to be lawfully made and
delivered as provided herein.
3.5 Taxes on Exchanges. Except as provided in the next sentence, the
Exchange Party will pay any and all taxes and duties that may be payable in
respect of the delivery of Common Units pursuant hereto. The Exchange Party
shall not, however, be required to pay any tax or duty which may be payable in
respect of any transfer involved in the delivery of Common Units in a name other
than that of the Holder of the Listed Shares to be exchanged, and no such
delivery shall be made unless and until the Person requesting such delivery has
paid to the Exchange Party the amount of any such tax or duty, or has
established to the satisfaction of the Exchange Party that such tax or duty has
been paid.
3.6 Performance by Subsidiaries. The Exchange Party may cause its
Subsidiary or Subsidiaries to deliver and Common Units or cash which the
Exchange Party may be required to deliver hereunder. Such delivery shall
constitute performance of the obligations of the Exchange Party to the same
extent as delivery by the Exchange Party, but the ability of the Exchange Party
to cause a Subsidiary to make such deliveries shall not relieve the Exchange
Party of its obligation for such deliveries to be made.
SECTION 4
Responsibility of Transfer Agent
4.1 Responsibility of Transfer Agent for Exchange Provisions. The
Transfer Agent shall not at any time be under any duty or responsibility to any
Holder of Listed Shares to determine whether any facts exist which may require
any adjustment of the Exchange Rate, or
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with respect to the nature or extent of any such adjustment when made, or with
respect to the method employed, or herein provided to be employed, in making the
same. The Transfer Agent, in such capacity, shall not be accountable with
respect to the validity or value (or the kind or amount) of any Common Units, or
of any other securities or property or cash, which may at any time be delivered
upon the exchange of any Listed Shares; and it does not make any representation
with respect thereto. The Transfer Agent, in such capacity, shall not be
responsible for any failure of the Exchange Party to make or calculate any cash
payment or to transfer or deliver any Common Units or certificates for Common
Units or other securities or property or cash upon the surrender of any Listed
Share for the purpose of exchange; and the Transfer Agent shall not be
responsible for any failure of the Exchange Party to comply with any of the
covenants of the Exchange Party contained in these Exchange Provisions.
4.2 Deliveries to Holders and Former Holders. Whenever the Exchange
Party or the Company may deliver to the Transfer Agent for mailing or delivery
to the Holders or former Holders of Listed Shares any notice, communication,
certificate for Common Units or Listed Shares, Cash Settlement Amount or other
payment or other matter deliverable to Holders or former Holders of Listed
Shares under the Exchange Provisions, the Transfer Agent shall promptly mail or
deliver such notice, communication, certificate, cash or other payment or matter
to the relevant Holder or former Holder, and the Company shall use its
reasonable efforts to cause the Transfer Agent to do so.
SECTION 5
Binding Effect on the Exchange Party
5.1 Adoption of Exchange Provisions by Exchange Party. KMI, as the
initial Exchange Party pursuant to these Exchange Provisions, has executed in
the place provided below and delivered to the Company a copy of these Exchange
Provisions, pursuant to which KMI has, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, agreed to be subject
to and bound be these Exchange Provisions. KMI further acknowledges and agrees
that these Exchange Provisions and its obligations hereunder are for the benefit
of and shall be enforceable by any Holder of Listed Shares.
SECTION 6
Amendments
6.1 Amendments. These Exchange Provisions may be amended by an
agreement in writing signed by the Company and the Exchange Party without the
vote, approval or consent of the Holders of any of the Listed Shares, unless
such amendment would materially adversely affect the powers, preferences or
rights of the Company or the Holders of Listed Shares or reduces the time for
any notice to which the Holders may be entitled, in which case such amendment
shall, pursuant to the LLC Agreement require the affirmative vote or consent of
the Holders of at least a majority of the Listed Shares then outstanding. Any
amendment required by reason of the penultimate sentence of Section 2.4(b) shall
be deemed not to have such a material adverse effect or reduce the time for any
notice and therefore may be made without the vote, consent or approval of the
Holders of any of the Listed Shares. Further, if any Person becomes a
Controlling Entity in a transaction complying with the requirements of clauses
(b)(i) through (b)(iv) of the definition of "Mandatory Purchase Event" in these
Exchange Provisions,
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appropriate amendments shall be made in these Exchange Provisions to accommodate
the assumption by such Person of the obligations of the Exchange Party under
these Exchange Provisions, and such amendment shall be deemed not to have such a
material adverse effect or reduce the time for any notice, and therefore may be
made without the vote, consent or approval of the Holders of any of the Listed
Shares. For purposes of voting on amendments, as provided in the definition of
"Outstanding" in the LLC Agreement, Listed Shares held by the Partnership or any
of its Subsidiaries shall not have voting rights and, in determining if the
Holders of a majority of the Listed Shares outstanding have approved or
consented to such amendment, Listed Shares held by the Partnership or any of its
Subsidiaries shall be treated as if they were not outstanding. In addition, as
provided in the definition of "Outstanding" in the LLC Agreement, a Person or
group owning a number of Listed Shares and Common Units aggregating 20% or more
of the aggregate number of issued and outstanding Listed Shares plus the
aggregate number of issued and outstanding Common Units cannot vote such Listed
Shares. The limitation in the foregoing sentence, however, shall not apply to
KMI, Kinder Xxxxxx X.X., Inc., and their respective Affiliates. Additionally, in
certain limited instances specified in section __ of the LLC Agreement, Listed
Shares owned by KMI and its Affiliates are treated as not outstanding.
6.2 Amendment Without Vote. Notwithstanding the foregoing provisions
with respect to amendments, the Board of Directors of the Company has reserved
the right to make, and may make, with the written consent of the Exchange Party,
changes in the Listed Shares and these Exchange Provisions, to meet the
requirements of applicable securities and other laws and regulations, stock
exchange rules and other changes which the Board of Directors of the Company
determines in its sole discretion will not have a material adverse effect on the
rights and privileges of the Listed Shares. In addition, notwithstanding the
foregoing provisions with respect to amendments, (a) in the case of (i) any
merger of the Partnership, whether or not the Partnership is the survivor, and
(ii) any recapitalization, reorganization or similar transaction of the
Partnership, in each case that does not constitute a Mandatory Purchase Event,
or (b) if any Person becomes a Controlling Entity in a transaction complying
with the requirements of clauses (b)(i) through (b)(iv) of the definition of
"Mandatory Purchase Event" in these Exchange Provisions, appropriate amendments
shall be made in these Purchase Provisions to accommodate such merger,
recapitalization, reorganization, or similar transaction, or the assumption by
such Person of the obligations of the Exchange Party under these Exchange
Provisions, and such amendment shall be deemed not to have such a material
adverse effect or reduce the time for any notice, and therefore may be made
without the vote, consent or approval of the Holders of any of the Listed
Shares.
SECTION 7
Book-Entry Provisions
7.1 The Depositary; Book-Entry. If at any time the Listed Shares are
represented only by global certificates issued only as fully-registered
securities in the name of Cede & Co., as nominee for the Depositary Trust
Company, as depositary for the Listed Shares (or such other names as the
depositary may direct), and physical certificates are not being issued to owners
of Listed Shares other than the depositary, then any of the foregoing provisions
calling for delivery of physical certificates for Listed Shares may be satisfied
by delivering such Listed Shares by book entry transfer (a) if to the Exchange
Party, to the Exchange Party at an account maintained for that purpose by the
Transfer Agent with the depositary, or (b) if to a participant in the
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depositary, to the account of such participant or its nominee, in each case, in
accordance with arrangements among the depositary, its participants and subject
to various policies and procedures that may be adopted by the depositary from
time to time.
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ADOPTION BY XXXXXX XXXXXX, INC.
KMI, as the initial Exchange Party pursuant to these Exchange
Provisions, has executed in the place provided below and delivered to the
Company a copy of these Exchange Provisions, pursuant to which KMI has, for good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, adopted and agreed to be subject to and bound by these Exchange
Provisions as the Exchange Party hereunder. KMI further acknowledges and agrees
that these Exchange Provisions and its obligations hereunder are for the benefit
of and shall be enforceable by any record holder of Listed Shares.
Dated: , 2001
-----------------------
XXXXXX XXXXXX ENERGY, INC.
By:
----------------------------------
Authorized Officer
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DRAFT
APRIL 2, 2001
PURCHASE PROVISIONS
ANNEX B TO THE
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
XXXXXX XXXXXX MANAGEMENT, LLC
These Purchase Provisions, dated as of __________, 2001, are an
integral part of the Amended and Restated Limited Liability Company Agreement of
Xxxxxx Xxxxxx Management, LLC, dated as of ____________, 2001.
SECTION 1
Definitions
1.1 Definitions. In these Purchase Provisions, the following terms
shall have the following respective meanings:
"Affiliate" means, with respect to any Person, any other Person that
directly or indirectly controls, is controlled by or is under common control
with, the Person in question. As used herein, the term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through ownership
of voting securities, by contract or otherwise.
"Average Market Price" for any security means the average of the
Closing Prices for such security for the consecutive Trading Day period
specified in the relevant Section of these Purchase Provisions ending on the
Trading Day specified in the relevant Section of these Purchase Provisions.
"Beneficial Owner" has the meaning set forth in Rules 13d-3 and 13d-5
under the Securities Exchange Act, as in effect on the date of these Purchase
Provisions, and the terms "Beneficial Ownership," "Beneficially Own,"
"Beneficially Owned" and similar terms have correlative meanings.
"Board of Directors of the Company" means the board of directors of the
Company established pursuant to the LLC Agreement, and any committee of such
board duly authorized to act in respect thereof.
"Board of Directors of the Purchaser" means (a) if the Purchaser is
KMI, the board of directors of KMI; (b) if the Purchaser is a limited
partnership with a corporate general partner or any other corporation, the board
of directors of such corporate general partner or corporation; (c) if the
Purchaser is any other form of entity, the board of directors or other
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63
governing body of such entity; and (d) in each case, any committee of such board
or body duly authorized to act in respect thereof.
"Business Day" means any day other than a Saturday or Sunday or a day
on which national banking institutions in the State of New York or the State of
Texas are closed.
"Closing Price" for a security on any day means:
(a) for securities listed on a National Securities Exchange, the last
sale price for that day, regular way, or if there are no sales on that
day, the average of the closing bid and asked prices for that day,
regular way, in either case as reported in the principal composite
transactions reporting system for the principal National Securities
Exchange on which such securities are listed; or
(b) if such securities are not listed on a National Securities Exchange
on that day, the last quoted price on that day, or if no price is
quoted, the average of the high bid and low asked prices on that day,
each as reported by the National Association of Securities Dealers
Automated Quotation system; or
(c) if such securities are not so quoted on that day, the average of
the closing bid and asked prices on that day furnished by a
professional market maker in such securities selected by the Board of
Directors of the Purchaser; or
(d) if on that day no market maker is making a market in such
securities, the fair value of such securities as determined by the
Board of Directors of the Purchaser.
"Common Units" has the meaning assigned to it in the Partnership
Agreement.
"Company" means Xxxxxx Xxxxxx Management, LLC, a Delaware limited
liability company.
"Controlling Entity" has the meaning set forth in clause (b)(i) of the
definition of Mandatory Purchase Event in this Section 1.1.
"Entity" means a corporation, limited liability company, venture,
partnership, trust, unincorporated organization, association or other entity.
"Exchange Provisions" means the exchange provisions attached to the LLC
Agreement as Annex A and thereby made a part of the LLC Agreement.
"General Partner" means the general partner of the Partnership. On the
date of these Purchase Provisions, the General Partner is Kinder Xxxxxx X.X.,
Inc.
"I-Units" has the meaning assigned to it in the Partnership Agreement.
"KMI" means Xxxxxx Xxxxxx, Inc., a Kansas corporation.
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"LLC Agreement" means the Amended and Restated Limited Liability
Company Agreement of the Company dated as of __________, 2001, including these
Purchase Provisions and the Exchange Provisions.
"Listed Shares" means the limited liability company interests in the
Company designated in the LLC Agreement as "Listed Shares."
"Mandatory Purchase" means the purchase of Listed Shares pursuant to
Section 2.
"Mandatory Purchase Date" has the meaning set forth in Section 2.3(d).
"Mandatory Purchase Event" means any one of the following:
(a) the occurrence of the first day on which the aggregate amount of
distributions or other payments by the Partnership on the Common Units
(other than distributions or payments made in Similar Common Unit
Securities, but including distributions and other payments pursuant to
a self tender offer) during the immediately preceding 360 day period
exceeds 50% of the average Closing Price of a Common Unit during the 10
consecutive Trading Day period ending on the last Trading Day prior to
the first day of such 360 day period;
(b) the occurrence of an event resulting in KMI and its Affiliates
ceasing to be the Beneficial Owner of more than 50% of the total voting
power of all shares of capital stock of the General Partner, unless:
(i) the event results in another Person becoming the
Beneficial Owner of more than 50% of the total voting power of
all shares of capital stock of the General Partner (such other
Person being referred to herein as the "Controlling Entity");
(ii) the Controlling Entity is organized under the laws of a
state in the United States;
(iii) the Controlling Entity has long term unsecured debt with
an investment grade credit rating, as determined by Xxxxx'x
Investor Services, Inc. and Standard & Poor's Rating Service,
immediately prior to the event which results in the
Controlling Entity becoming the Beneficial Owner of more than
50% of the total voting power of all shares of capital stock
of the General Partner; and
(iv) the Controlling Entity assumes all obligations of KMI and
the Purchaser to the Company and to the holders of the Listed
Shares under these Purchase Provisions, the Exchange
Provisions, the Registration Rights Agreement and the Tax
Indemnification Agreement.
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(c) the merger of the Partnership with or into another Person in any
case where the Partnership is not the surviving entity, or the sale of
all or substantially all of the assets of the Partnership and its
subsidiaries, taken as a whole, to another Person, unless:
(i) in the transaction the holders of Common Units receive in
exchange for all of their Common Units a Similar Common Unit
Security of the Person that is the surviving entity or that
purchased the assets;
(ii) in the transaction the Company receives in exchange for
all of its I-Units a Similar I-Units Security of the Person
that is the surviving Entity or that purchased the assets;
(iii) no consideration is received in the transaction by a
holder of Common Units other than Similar Common Unit
Securities and/or cash and the amount of cash received per
Common Unit does not exceed 33-1/3% of the average Closing
Price of a Common Unit for the ten consecutive Trading Day
period ending on the Trading Day immediately preceding the
date of the transaction; and
(iv) no consideration is received by the Company or holders of
I-Units, each as holders of I-Units, other than Similar I-Unit
Securities.
"Mandatory Purchase Notice" has the meaning set forth in Section 2.3.
"Mandatory Purchase Price" means the higher of the Average Market Price
for the Listed Shares and the Average Market Price for the Common Units, in each
case for the ten consecutive Trading Day period ending on the Trading Day
immediately prior to the date of the Mandatory Purchase Event.
"National Securities Exchange" means an exchange registered with the
Securities and Exchange Commission under Section 6(a) of the Securities Exchange
Act.
"Notice Date" means the date on which the Purchaser either mails the
relevant Purchase Notice to the holders of Listed Shares or delivers copies of
the relevant Purchase Notice to the Transfer Agent for mailing to the holders of
Listed Shares.
"Optional Purchase" means the purchase of Listed Shares at the election
of the Purchaser pursuant to Section 3 or Section 4.
"Optional Purchase Condition for Common Units and Listed Shares" means
any time at which the sum of the number of Common Units held by the Purchaser
and its Affiliates plus the number of Listed Shares held by the Purchaser and
its Affiliates equals 80% or more of the sum of the aggregate number of Common
Units then outstanding plus the aggregate number of Listed Shares then
outstanding.
"Optional Purchase Condition for Listed Shares" means any time at which
the Purchaser and its Affiliates hold 80% or more of the then outstanding Listed
Shares.
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"Optional Purchase Date" means the date selected by the Purchaser for
the Optional Purchase of Listed Shares pursuant to Section 3.2 or Section 4.2.
"Optional Purchase Notice" has the meaning set forth in Section 3.2.
"Optional Purchase Notice for Common Units and Listed Shares" has the
meaning set forth in Section 4.2.
"Optional Purchase Price for Common Units and Listed Shares" means a
price which is equal to the greatest of: (a) the Average Market Price for the
Common Units for the 20 consecutive Trading Day period ending on the fifth
Trading Day prior to the Notice Date, (b) the highest price the Purchaser or its
Affiliates paid for Common Units in the 90 day period ending on the Notice Date,
(c) the Average Market Price for the Listed Shares for the 20 consecutive
Trading Day period ending on the fifth Trading Day prior to the Notice Date, and
(d) the highest price Purchaser or its Affiliates paid for Listed Shares (other
than pursuant to the Exchange Provisions) during the 90 calendar day period
ending on the Notice Date. To the extent that the price paid for Listed Shares
or Common Units in clauses (b) or (d) is paid in securities, the value of such
securities shall be the Closing Price for such securities on the day the
purchase of the Listed Shares or Common Units is effected. To the extent that
the price paid for Listed Shares or Common Units in clauses (b) or (d) is paid
other than in cash or securities, the value of such the other consideration (and
therefore the price paid for such Listed Shares or Common Units) shall be as
determined by the Board of Directors of the Purchaser.
"Optional Purchase Price for Listed Shares" means a price which is
equal to 110% of the greater of: (a) the Average Market Price for the Listed
Shares for the ten consecutive Trading Day period ending on the fifth Trading
Day prior to the Notice Date, and (b) the highest price Purchaser or its
Affiliates paid for Listed Shares (other than pursuant to the Exchange
Provisions) during the 90 calendar day period ending on the Notice Date. To the
extent that the price paid for Listed Shares in clause (b) is paid in
securities, the value of such securities shall be the Closing Price for such
securities on the day the purchase of the Listed Shares is effected. To the
extent that the price paid for Listed Shares in clause (b) is paid other than in
cash or securities, the value of such the other consideration (and therefore the
price paid for such Listed Shares) shall be as determined by the Board of
Directors of the Purchaser.
"Partnership" means Xxxxxx Xxxxxx Energy Partners, L.P., a Delaware
limited partnership.
"Partnership Agreement" means the Third Amended and Restated Agreement
of Limited Partnership of the Partnership, dated as of _________, 2001.
"Partnership Notice" has the meaning set forth in Section 4.2.
"Person" means a natural person or an Entity.
"Purchase Date" means either a Mandatory Purchase Date or an Optional
Purchase Date.
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"Purchase Notice" means a Mandatory Purchase Notice, an Optional
Purchase Notice or an Optional Purchase Notice for Common Units and Listed
Shares.
"Purchase Price" means the Mandatory Purchase Price, the Optional
Purchase Price for Listed Shares or the Optional Purchase Price for Common Units
and Listed Shares.
"Purchase Provisions" means these Purchase Provisions, which are
attached to the LLC Agreement as Annex B and hereby made a part of the LLC
Agreement.
"Purchaser" means the Person with the obligation to make the Mandatory
Purchase and the right to make an Optional Purchase pursuant to these Purchase
Provisions. The Purchaser initially is KMI.
"Registration Rights Agreement" means the registration rights agreement
between KMI and the Partnership, dated as of ___________, 2001.
"Section" means a section of these Purchase Provisions.
"Securities Act" means the United States Securities Act of 1933, as
amended, supplemented or restated from time to time and any successor to such
statute and all rules and regulations promulgated thereunder.
"Securities Exchange Act" means the United States Securities Exchange
Act of 1934, as amended, supplemented or restated from time to time and any
successor to such statute and all rules and regulations promulgated thereunder.
"Similar Common Unit Security" means a security which has in all
material respects the same rights and privileges as the Common Units, including
Common Units.
"Similar I-Unit Security" means a security that has in all material
respects the same rights and privileges as the I-Units, including I-Units.
"Subsidiary," when used in connection with the Partnership, means any
Affiliate of the Partnership which the Partnership controls, and of which the
Partnership owns, directly or indirectly, a majority of the aggregate shares,
partnership interests or other equity interests.
"Tax Indemnification Agreement" means the Tax Indemnification Agreement
dated as of ___________, 2001, between KMI and the Company.
"Transfer Agent" means any bank, trust company or other Person
(including the Company or any Affiliate of the Company) appointed from time to
time by the Board of Directors of the Company to act as registrar and transfer
agent for the Listed Shares. On the date of these Purchase Provisions, First
Chicago Trust Company of New York is the Transfer Agent.
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"Trading Day" for any securities means a day on which:
(a) the principal National Securities Exchange on which such securities
are listed is open for business, or
(b) if such securities are not listed on any National Securities
Exchange, a day in which banking institutions in the City of New York
generally are open.
1.2 Rules of Construction. Unless the context otherwise clearly
requires:
(a) the terms defined in Section 1.1 have the meanings assigned
to them in that Section for purposes of these Purchase Provisions; terms defined
in the Exchange Provisions and also in these Purchase Provisions shall in the
Exchange Provisions have the meanings ascribed to them therein; terms defined
elsewhere in the LLC Agreement and also in these Purchase Provisions shall in
such other portions of the LLC Agreement have the meanings ascribed to them
therein;
(b) terms defined include the plural as well as the singular and
vice versa;
(c) references to any document, agreement, instrument or
provision thereof mean such document, agreement, instrument or provisions
thereof as the same may be duly amended from time to time;
(d) "or" is not exclusive; and
(e) the words "herein," "hereof," "hereunder" and other words of
similar import refer to these Purchase Provisions as a whole and not to any
particular Section or other subdivision.
SECTION 2
Mandatory Purchase
2.1 Mandatory Purchase Event. Upon the occurrence of a Mandatory
Purchase Event, the Purchaser shall purchase all, but not less than all, of the
outstanding Listed Shares that are not held by the Purchaser or its Affiliates,
pursuant to the provisions of this Section 2.
2.2 Notice to Transfer Agent. Promptly, but in no case later than
three Business Days, following the occurrence of a Mandatory Purchase Event, the
Purchaser shall give notice to the Transfer Agent that a Mandatory Purchase
Event has occurred, and request that the Transfer Agent mail the Mandatory
Purchase Notice to the record holders of the Listed Shares as of earlier of the
date of the Mandatory Purchase Event or the most recent practicable date. If the
Purchaser so requests, the Transfer Agent shall, and the Company shall use its
reasonable efforts to cause the Transfer Agent to, mail the Mandatory Purchase
Notice to such record holders of Listed Shares.
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2.3 Purchase Notice. Within three Business Days following the
occurrence of the Mandatory Purchase Event, the Purchaser shall mail, or deliver
to the Transfer Agent for mailing and cause the Transfer Agent to mail, to the
record holders of the Listed Shares described in Section 2.2(a), a notice (the
"Mandatory Purchase Notice") which shall state:
(a) That a Mandatory Purchase Event has occurred and that
pursuant to the provisions of the LLC Agreement and these Purchase Provisions
the Purchaser will purchase all of the outstanding Listed Shares that are not
held by the Purchaser or its Affiliates at the Mandatory Purchase Price;
(b) A brief description of the circumstances and relevant facts
regarding the Mandatory Purchase Event;
(c) The dollar amount per Listed Share of the Mandatory Purchase
Price;
(d) The date on which the Listed Shares will be purchased (the
"Purchase Date"), which shall be no later than five Business Days from the date
the Mandatory Purchase Notice is mailed by the Purchaser or the Transfer Agent;
and
(e) The instructions a holder must follow, including any other
documents a holder of Listed Shares must deliver, in order to receive the
Mandatory Purchase Price.
Any such Mandatory Purchase Notice mailed to a record holder of Listed
Shares at his address as reflected in the records of the Transfer Agent as of
the time set forth in Section 2.2, or delivered by the Purchaser to the Transfer
Agent for mailing to such holders, shall be conclusively presumed to have been
given, whether or not such holder receives such notice. Failure to give any such
notice to any particular holder or holders shall not affect the validity of the
Mandatory Purchase pursuant to these Purchase Provisions.
The Mandatory Purchase Price for any fractional Listed Share shall be
the Mandatory Purchase Price for a whole Listed Share times the fraction of the
Listed Share to be purchased. In determining whether any fractional Listed
Shares are outstanding, all certificates registered in the name of the same
holder of Listed Shares shall be aggregated.
2.4 Deposit of Funds; Effect of Purchase. On or prior to the
Purchase Date, the Purchaser shall irrevocably deposit with the Transfer Agent
funds sufficient to pay the Mandatory Purchase Price for all outstanding Listed
Shares that on the date of such deposit are not held by the Purchaser or its
Affiliates. After the date of such deposit and prior to the Purchase Date,
neither the Purchaser nor any of its Affiliates shall dispose of any Listed
Shares held by them, other than to the Purchaser or any of its Affiliates. The
Transfer Agent shall return to the Purchaser any funds not so required for the
purchase of Listed Shares that on the Purchase Date are not held by the
Purchaser or its Affiliates. If the Purchaser so deposits such funds with the
Transfer Agent, and if the Purchaser has mailed, or delivered to the Transfer
Agent for mailing, the Mandatory Purchase Notice to the record holders of the
Listed Shares, then from and after the Purchase Date, notwithstanding that any
certificate representing Listed Shares shall not have been surrendered for
purchase, all rights of the holders of such Listed Shares as such,
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including without limitation, any other rights under the LLC Agreement, shall
thereupon cease, except the right to receive the Mandatory Purchase Price,
without interest, upon surrender to the Transfer Agent of the certificates
representing such Listed Shares, with such other documents as may be required by
the Mandatory Purchase Notice, in compliance with the instructions in the
Mandatory Purchase Notice, and such Listed Shares shall thereupon be deemed to
be purchased by the Purchaser and shall be transferred to the Purchaser on the
record books of the Transfer Agent, and the Purchaser shall be deemed to be the
owner of such Listed Shares from and after the Purchase Date and shall have all
rights as the owner of such Listed Shares. Pursuant to the Exchange Provisions,
the ability of a holder of Listed Shares to exchange such Listed Shares for
Common Units shall terminate on the earlier of (i) the occurrence of a Mandatory
Purchase Event and (ii) the date on which the Purchaser has either mailed to the
record holders of Listed Shares, or delivered to the Transfer Agent for mailing
to the record holders of Listed Shares, a Mandatory Purchase Notice. From and
after the occurrence of a Mandatory Purchase Event, any Listed Share surrendered
for exchange shall not be exchanged but shall be held for purchase pursuant to
these Purchase Provisions, and shall be so purchased on the relevant Purchase
Date.
SECTION 3
Optional Purchase
3.1 Optional Purchase Condition for Listed Shares. At any time when
the Optional Purchase Condition for Listed Shares exists, the Purchaser may
elect, but shall not be obligated, to purchase all, but not less than all, of
the outstanding Listed Shares that are not held by the Purchaser or its
Affiliates at the Optional Purchase Price pursuant to the provisions of this
Section 3. The Purchase Price for any fractional Listed Share purchased pursuant
to Section 3 shall be the Optional Purchase Price for Listed Shares times the
fraction of the Listed Share to be purchased. In determining whether any
fractional Listed Shares are outstanding, all certificates registered in the
name of the same holder of Listed Shares shall be aggregated.
3.2 Optional Purchase Notice. The Purchaser may exercise its
election to make an Optional Purchase by delivering copies of a notice (the
"Optional Purchase Notice") to the Transfer Agent not less than ten days and not
more than 60 days prior to the date the Purchaser selects for the Optional
Purchase (the "Optional Purchase Date"). The Transfer Agent shall, and the
Company will use its reasonable efforts to cause the Transfer Agent to, mail the
Optional Purchase Notice to the record holders of Listed Shares as of a recent
date. Any such Optional Purchase Notice mailed to a record holder of Listed
Shares at his address as reflected in the records of the Transfer Agent, or
delivered by the Purchaser to the Transfer Agent for mailing to such holders,
shall be conclusively presumed to have been given, whether or not such holder
receives such notice. Failure to give such notice to any particular holder or
holders shall not affect the validity of the Optional Purchase pursuant to these
Purchase Provisions. So long as the Optional Purchase Condition exists on the
date of the Optional Purchase Notice, the Purchaser may purchase such Listed
Shares pursuant to these Optional Purchase provisions, whether or not the
Optional Purchase Condition continues to exist on the Optional Purchase Date.
The Optional Purchase Notice shall state:
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(a) that as of the date of such Optional Purchase Notice, the
Optional Purchase Condition exists, and that the Purchaser has elected to make
the Optional Purchase pursuant to the terms of the LLC Agreement and these
Purchase Provisions;
(b) the Optional Purchase Price;
(c) the Optional Purchase Date; and
(d) the instructions a holder of Listed Shares must follow,
including any other documents a holder of Listed Shares must deliver, in order
to receive the Optional Purchase Price.
3.3 Deposit of Funds; Effect of Purchase. On or prior to the
Optional Purchase Date, the Purchaser shall irrevocably deposit with the
Transfer Agent funds sufficient to pay the Optional Purchase Price for all
outstanding Listed Shares that on the date of such deposit are not held by the
Purchaser or its Affiliates. After the date of such deposit and prior to the
Optional Purchase Date, neither the Purchaser nor any of its Affiliates shall
dispose of any Listed Shares held by them, other than to the Purchaser or any of
its Affiliates. The Transfer Agent shall return to the Purchaser any funds not
so required for the purchase of Listed Shares that on the Optional Purchase Date
are not held by the Purchaser or its Affiliates. If the Purchaser so deposits
such funds with the Transfer Agent, and if the Purchaser has delivered the
Optional Purchase Notice to the Transfer Agent for mailing to the record holders
of the Listed Shares, then from and after the Optional Purchase Date,
notwithstanding that any certificate representing Listed Shares shall not have
been surrendered for purchase, all rights of the holders of such Listed Shares
as such, including without limitation, any other rights under the LLC Agreement,
shall thereupon cease, except the right to receive the Optional Purchase Price,
without interest, upon surrender to the Transfer Agent of the certificates
representing such Listed Shares, with such other documents as may be required by
the Optional Purchase Notice, in compliance with the instructions in the
Optional Purchase Notice, and such Listed Shares shall from and after the
Optional Purchase Date be deemed to be purchased by the Purchaser and shall be
transferred to the Purchaser on the record books of the Transfer Agent, and the
Purchaser shall be deemed to be the owner of such Listed Shares from and after
the Optional Purchase Date and shall have all rights as the owner of such Listed
Shares. Pursuant to the Exchange Provisions, the ability of a holder of Listed
Shares to exchange such Listed Shares for Common Units shall terminate on the
earlier of (i) the occurrence of a Mandatory Purchase Event, and (ii) the date
on which the Purchaser has either mailed to the record holders of Listed Shares,
or delivered to the Transfer Agent for mailing to the record holders of Listed
Shares, a Purchase Notice. From and after the occurrence of the date in clause
(ii) in the preceding sentence, any Listed Share surrendered for exchange shall
not be exchanged, but shall be held for purchase pursuant to these Purchase
Provisions, and shall be so purchased on the relevant Purchase Date.
SECTION 4
Optional Purchase of Common Units and Listed Shares
4.1 Optional Purchase Condition for Common Units and Listed Shares.
If at any time when the Optional Purchase Condition for Common Units and Listed
Shares exists, the
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Purchaser may elect, but shall not be obligated, to purchase all, but not less
than all, of the outstanding Listed Shares that are not held by the Purchaser or
its Affiliates at the Optional Purchase Price for Common Units and Listed Shares
pursuant to the provisions of this Section 4, but only if the Partnership elects
to purchase all, but not less than all, of the outstanding Common Units that are
not held by the Purchaser or its Affiliates pursuant to the provisions of the
Partnership Agreement. The Purchase Price for any fractional Listed Share
purchased pursuant to Section 4 shall be the Optional Purchase Price for Common
Units and Listed Shares times the fraction of the Listed Share to be purchased.
In determining whether any fractional Listed Shares are outstanding, all
certificates registered in the name of the same holder of Listed Shares shall be
aggregated.
4.2 Optional Purchase Notice for Common Units and Listed Shares. The
Purchaser may exercise its election to make an Optional Purchase of Common Units
and Listed Shares by delivering copies of a notice (the "Optional Purchase
Notice for Common Units and Listed Shares") to the Transfer Agent not less than
ten days and not more than 60 days prior to the date the Purchaser selects for
the Optional Purchase (the "Optional Purchase Date"). The Optional Purchase
Notice for Common Units and Listed Shares shall not be effective, however,
unless and until the later to occur of (i) delivery of the Optional Purchase
Notice for Common Units and Listed Shares to the Transfer Agent and (ii)
delivery by the Partnership to the transfer agent for its Common Units of a
similar notice with respect to the purchase of all outstanding Common Units not
owned by the Purchaser and its Affiliates (the "Partnership Notice") pursuant to
the provisions of the Partnership Agreement. After both the Partnership Notice
has been given to the transfer agent for the Common Units and the Optional
Purchase Notice for Common Units and Listed Shares has been given to the
Transfer Agent, the Transfer Agent shall, and the Company will use its
reasonable efforts to cause the Transfer Agent to, mail the Optional Purchase
Notice for Common Units and Listed Shares to the record holders of Listed Shares
as of a recent date. Any such Optional Purchase Notice for Common Units and
Listed Shares mailed to a record holder of Listed Shares at his address as
reflected in the records of the Transfer Agent, or delivered by the Purchaser to
the Transfer Agent for mailing to such holders, shall be conclusively presumed
to have been given, whether or not such holder receives such notice. Failure to
give such notice to any particular holder or holders shall not affect the
validity of the purchase pursuant to these Purchase Provisions. So long as the
Optional Purchase Condition for Common Units and Listed Shares exists on the
date of the Optional Purchase Notice for Common Units and Listed Shares, the
Purchaser may purchase such Listed Shares pursuant to these Optional Purchase
provisions, whether or not the Optional Purchase Condition for Common Units and
Listed Shares continues to exist on the Optional Purchase Date. The Optional
Purchase Notice for Common Units and Listed Shares shall state:
(a) that with respect to Listed Shares that on the Optional
Purchase Date are not held by the Purchaser or its Affiliates, the Purchaser has
elected to make the Optional Purchase for Common Units and Listed Shares
pursuant to the terms of the LLC Agreement and these Purchase Provisions and
that the Partnership has elected to make the purchase of Common Units pursuant
to the similar provisions of the Partnership Agreement;
(b) the Optional Purchase Price for Common Units and Listed
Shares;
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(c) the Optional Purchase Date; and
(d) the instructions a holder of Listed Shares must follow,
including any other documents a holder must deliver, in order to receive the
Optional Purchase Price for Common Units and Listed Shares.
4.3 Deposit of Funds; Effect of Purchase. On or prior to the
Optional Purchase Date, the Purchaser shall irrevocably deposit with the
Transfer Agent funds sufficient to pay the Optional Purchase Price for Common
Units and Listed Shares for all outstanding Listed Shares that on the date of
such deposit are not held by the Purchaser or its Affiliates. After the date of
such deposit and prior to the Optional Purchase Date, neither the Purchaser nor
any of its Affiliates shall dispose of any Listed Shares held by them, other
than to the Purchaser or any of its Affiliates. The Transfer Agent shall return
to the Purchaser any funds not so required for such purchase. If the Purchaser
has delivered the Optional Purchase Notice for Common Units and Listed Shares to
the Transfer Agent for mailing to the record holders of the Listed Shares, then
from and after the Optional Purchase Date, notwithstanding that any certificate
representing Listed Shares shall not have been surrendered for purchase, all
rights of the holders of such Listed Shares as such, including without
limitation, any other rights under the LLC Agreement, shall thereupon cease,
except the right to receive the Optional Purchase Price for Common Units and
Listed Shares, without interest, upon surrender to the Transfer Agent of the
certificates representing such Listed Shares, with such other documents as may
be required by the Optional Purchase Notice for Common Units and Listed Shares,
in compliance with the instructions in the Optional Purchase Notice for Common
Units and Listed Shares, and such Listed Shares shall from and after the
Optional Purchase Date be deemed to be purchased by the Purchaser and shall be
transferred to the Purchaser on the record books of the Transfer Agent, and the
Purchaser shall be deemed to be the owner of such Listed Shares from and after
the Optional Purchase Date and shall have all rights as the owner of such Listed
Shares. Pursuant to the Exchange Provisions, the ability of a holder of Listed
Shares to exchange such Listed Shares for Common Units shall terminate on the
earlier of (i) the occurrence of a Mandatory Purchase Event, and (ii) the date
on which the Purchaser has either mailed to the record holders of Listed Shares,
or delivered to the Transfer Agent for mailing to the record holders of Listed
Shares, a Purchase Notice. From and after the occurrence of the date in clause
(ii) in the preceding sentence, any Listed Share surrendered for exchange shall
not be exchanged, but shall be held for purchase pursuant to these Purchase
Provisions, and shall be so purchased on the relevant Purchase Date.
SECTION 5
Responsibility of Transfer Agent
5.1 Responsibility of Transfer Agent for Purchase Provisions. The
Transfer Agent shall not at any time be under any duty or responsibility to any
holder of Listed Shares to determine whether any Mandatory Purchase Event has
occurred, or with respect to the amount of the Purchase Price to be paid, or
with respect to the method employed, or herein provided to be employed, in
calculating the same. The Transfer Agent, in such capacity, shall not be
responsible for any failure of the Purchaser to make or calculate any cash
payment or for any failure of the Purchaser to comply with any of the Purchase
Provisions.
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5.2 Deliveries to Holders and Former Holders. Whenever the Purchaser
or the Company may deliver to the Transfer Agent for mailing or delivery to the
Holders or former Holders of Listed Shares any notice, communication, Purchase
Price or other payment or other matter deliverable to Holders or former Holders
of Listed Shares under these Purchase Provisions, the Transfer Agent shall
promptly mail or deliver such notice, communication or payment or matter to the
relevant Holder or former Holder, and the Company shall use its reasonable
efforts to cause the Transfer Agent to do so.
SECTION 6
Binding Effect on the Purchaser
6.1 Adoption of Purchase Provisions by Purchaser. KMI, as the
initial Purchaser pursuant to these Purchase Provisions, has executed in the
place provided below and delivered to the Company a copy of these Purchase
Provisions, pursuant to which KMI has, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, adopted and agreed to
be subject to and bound by these Purchase Provisions as the Purchaser hereunder.
KMI further acknowledges and agrees that these Purchase Provisions and its
obligations hereunder are for the benefit of and shall be enforceable by any
record holder of Listed Shares.
SECTION 7
Certain Covenants
7.1 Filings and Consents. The Purchaser and the Company will use
their reasonable best efforts to make or cause to be made any registrations and
filings with governmental authorities required of such party or any of its
subsidiaries or Affiliates, and obtain any consents, authorizations, approvals
or failures to object of governmental authorities required with respect to such
party or any of its subsidiaries or Affiliates, that are necessary for the
consummation of a Mandatory Purchase or an Optional Purchase hereunder, (i) in
the case of a Mandatory Purchase, prior to the occurrence of a Mandatory
Purchase Event, and (ii) in the case of an Optional Purchase, prior to the
Optional Purchase Date.
SECTION 8
Amendments
8.1 Amendment. These Purchase Provisions may be amended by an
agreement in writing signed by the Company and the Purchaser without the vote,
approval or consent or the holders of any of the Listed Shares, unless such
amendment would materially adversely affect the powers, preferences or rights of
the Company or such holders of Listed Shares or reduces the time for any notice
to which the holders of the Listed Shares may be entitled, in which case such
amendment shall, pursuant to the LLC Agreement require the affirmative vote or
consent of the holders of at least a majority of the Listed Shares then
outstanding. For this purpose, as provided in the definition of "Outstanding" in
the LLC Agreement, Listed Shares held by the Partnership or any of its
Subsidiaries will not have voting rights and, in determining if the holders of a
majority of the Listed Shares outstanding have approved or consented to such
amendment, Listed Shares held by the Partnership or any of its Subsidiaries will
be treated as if they were not outstanding. In addition, as provided in the
definition of "Outstanding" in the LLC Agreement, a
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Person or group owning a number of Listed Shares and Common Units aggregating
20% or more of the aggregate number of issued and outstanding Listed Shares plus
the aggregate number of issued and outstanding Common Units cannot vote such
Listed Shares. The limitation in the foregoing sentence, however, shall not
apply to the KMI, Kinder Xxxxxx X.X., Inc. and their respective Affiliates.
Additionally, in certain limited instances specified in section __ of the LLC
Agreement, Listed Shares owned by KMI and its Affiliates are treated as not
outstanding.
8.2 Certain Amendments Without Vote. Notwithstanding the foregoing
provisions with respect to amendments, the Board of Directors of the Company has
reserved the right to make, with the written consent of the Purchaser, and may
make, changes in the Listed Shares and these Purchase Provisions to meet the
requirements of applicable securities and other laws and regulations, stock
exchange rules and other changes which the Board of Directors of the Company
determines in its sole discretion will not have a material adverse effect on the
rights and privileges of the Listed Shares. In addition, notwithstanding the
foregoing provisions with respect to amendments, (a) in the case of (i) any
merger of the Partnership, whether or not the Partnership is the survivor, and
(ii) any recapitalization, reorganization or similar transaction of the
Partnership, in each case that does not constitute a Mandatory Purchase Event,
or (b) if any Person becomes a Controlling Entity in a transaction complying
with the requirements of clauses (b)(i) through (b)(iv) of the definition of
"Mandatory Purchase Event" in these Purchase Provisions, appropriate amendments
shall be made in these Purchase Provisions to accommodate such merger,
recapitalization, reorganization, or similar transaction, or the assumption by
such Person of the obligations of the Purchaser under these Purchase Provisions,
and such amendment shall be deemed not to have such a material adverse effect or
reduce the time for any notice, and therefore may be made without the vote,
consent or approval of the Holders of any of the Listed Shares.
SECTION 9
Book-Entry Provisions
9.1 The Depositary; Book-Entry. If at any time the Listed Shares are
represented only by global certificates issued only as fully-registered
securities in the name of Cede & Co., as nominee for the Depositary Trust
Company, as depositary for the Listed Shares (or such other names as the
depositary may direct), and physical certificates are not being issued to owners
of Listed Shares other than the depositary, then any of the foregoing provisions
calling for delivery of physical certificates for Listed Shares may be satisfied
by delivering such Listed Shares by book entry transfer to the Purchaser at an
account maintained for that purpose by the Transfer Agent with the depositary,
in accordance with arrangements among the depositary and its participants and
subject to various policies and procedures that may be adopted by the depositary
from time to time.
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ADOPTION BY XXXXXX XXXXXX, INC.
KMI, as the Purchaser pursuant to these Purchase Provisions, has
executed in the place provided below and delivered to the Company a copy of
these Purchase Provisions, pursuant to which KMI has, for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
adopted and agreed to be subject to and bound by these Purchase Provisions as
the Purchaser hereunder. KMI further acknowledges and agrees that these Purchase
Provisions and its obligations hereunder are for the benefit of and shall be
enforceable by any record holder of Listed Shares.
Dated: ________________, 2001
XXXXXX XXXXXX, INC.
By:
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Authorized Officer
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