EXHIBIT 10.3
LIMITED LIABILITY COMPANY AGREEMENT
OF
WOOD RIVER PIPE LINES LLC
This LIMITED LIABILITY COMPANY AGREEMENT (this "Agreement") of Wood River
Pipe Lines LLC (the "Company"), dated as of September 27, 2004, is adopted,
executed and agreed to by Buckeye Partners, L.P., a Delaware limited partnership
("BPL"), as a sole member.
RECITALS
WHEREAS, this Agreement is made and entered into for the purpose of
setting forth various terms and provisions regarding the management, ownership
and governance of Wood River Pipe Lines LLC, a limited liability company
organized under the laws of the State of Delaware (the "Company");
WHEREAS, Wood River Pipe Lines, L.P., a Delaware limited partnership
("Wood River LP"), was formed on August 12, 2004, under the Delaware Revised
Uniform Limited Partnership Act (the "DRULPA");
WHEREAS, on the date hereof, Wood River LP converted (the "Conversion")
into a limited liability company pursuant to and in accordance with Section
17-219 of the DRULPA and Section 18-214 of the Delaware Limited Liability
Company Act, as amended from time to time (the "Act"); and
WHEREAS, BPL, the sole limited partner of Wood River LP prior to the
Conversion shall be the sole owner of Membership Interests in the Company (the
"Initial Member") upon the effectiveness of the Conversion.
1. DEFINITIONS
1.1. Definitions.
(a) As used in this Agreement, the following terms have the
respective meanings set forth below or set forth in the Sections referred
to below:
"Act" has the meaning given such term in the Recitals.
"Adjusted Capital Account Deficit" means, with respect to any Member, the
deficit balance, if any, in such Member's Capital Account as of the end of the
relevant fiscal year, after giving effect to the following adjustments:
(i) Credit to such Capital Account any amounts which such Member is
obligated to restore pursuant to any provision of this Agreement or
pursuant to Treasury
Regulation Section 1.704-1(b)(2)(ii)(c) or is deemed to be obligated to
restore pursuant to the penultimate sentences of Treasury Regulations
Sections 1.704-2(g)(1) and 1.704-2(i)(5); and
(ii) Debit to such Capital Account the items described in Treasury
Regulation Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), and
1.704-1(b)(2)(ii)(d)(6).
The foregoing definition of Adjusted Capital Account Deficit is intended
to comply with the provisions of Treasury Regulations Section
1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.
"Affiliate" means, with respect to any Person, any other Person directly
or indirectly controlling, controlled by, or under direct or indirect common
control with, such Person. For the purposes of this definition, "control" when
used with respect to any Person means the power to direct the management and
policies of such Person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Agreement" has the meaning given such term in the Recitals, as the same
may be amended from time to time.
"Applicable Law" means any United States Federal, state or local law,
statute, rule, regulation, order, writ, injunction, judgment, decree or permit
of any Governmental Authority.
"Assignee" means any Person that acquires a Member's share of the income,
gain, loss, deduction and credits of, and the right to receive distributions
from, the Company or any portion thereof through a Disposition; provided,
however, that an Assignee shall have no right to be admitted to the Company as a
Member except in accordance with Article 4. The Assignee of a dissolved Member
is the shareholder, partner, member or other equity owner or owners of the
dissolved Member to whom such Member's Membership Interest is assigned by the
Person conducting the liquidation or winding up of such Member.
"Bankruptcy" or "Bankrupt" means, with respect to any Person, that (a)
such Person (i) makes a general assignment for the benefit of creditors; (ii)
files a voluntary bankruptcy petition; (iii) becomes the subject of an order for
relief or is declared insolvent in any federal or state bankruptcy or insolvency
proceedings; (iv) files a petition or answer seeking for such Person a
reorganization, arrangement, composition, readjustment, liquidation,
dissolution, or similar relief under any Applicable 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) a
proceeding seeking reorganization, arrangement, composition, readjustment,
liquidation, dissolution, or similar relief under any Applicable Law has been
commenced against such Person and 120 Days have expired without dismissal
thereof or with respect to which, without such Person's consent or acquiescence,
a trustee, receiver, or liquidator of such Person or of all or any substantial
part of such Person's properties has been appointed and 90 Days have expired
without the appointment's having been vacated or stayed, or
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90 Days have expired after the date of expiration of a stay, if the appointment
has not previously been vacated. The foregoing definition of "Bankruptcy" is
intended to replace and shall supercede and replace the definition of
"Bankruptcy" set forth in the Act.
"Board" has the meaning given such term in Section 7.1.
"BPL" has the meaning given such term in the Preamble.
"Business Day" means any day other than a Saturday, a Sunday, or a day
when banks in New York, New York are authorized or required by Applicable Law to
be closed.
"Capital Account" means, with respect to any Member, the Capital Account
maintained for such Member in accordance with the following provisions:
(i) To each Member's Capital Account there shall be credited such
Member's Capital Contributions, such Member's distributive share of
Profits and any items in the nature of income or gain which are specially
allocated pursuant to Section 6.3 hereof, and the amount of any Company
liabilities assumed by such Member or which are secured by any property
(other than money) distributed to such Member.
(ii) To each Member's Capital Account there shall be debited the
amount of cash and the Gross Asset Value of any property (other than
money) distributed to such Member pursuant to any provision of this
Agreement, such Member's distributive share of Losses and any items in the
nature of expenses or losses which are specially allocated pursuant to
Section 6.3 hereof, and the amount of any liabilities of such Member
assumed by the Company or which are secured by any property (other than
money) contributed by such Member to the Company.
(iii) In the event all or a portion of a Membership Interest is
transferred in accordance with the terms of this Agreement, the transferee
shall succeed to the Capital Account of the transferor to the extent it
relates to the Membership Interest so transferred.
(iv) In determining the amount of any liability for purposes of the
foregoing subparagraphs (i) and (ii) of this definition of "Capital
Account," there shall be taken into account Section 752(c) of the Code and
any other applicable provisions of the Code and Treasury Regulations.
The foregoing provisions and the other provisions of this Agreement
relating to the maintenance of Capital Accounts are intended to comply with
Treasury Regulations Section 1.704-1(b) and shall be interpreted and applied in
a manner consistent with such Treasury Regulations.
"Capital Contribution" means, with respect to any Member, the amount of
money and the net agreed value of any property (other than money) contributed to
the Company by such Member. Any reference in this Agreement to the Capital
Contribution of a Member shall include a Capital Contribution of its
predecessors in interest.
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"Certified Public Accountants" means a firm of independent public
accountants selected from time to time by the Board.
"Claim" means any and all judgments, claims, causes of action, demands,
lawsuits, suits, proceedings, Governmental investigations or audits, losses,
assessments, fines, penalties, administrative orders, obligations, costs,
expenses, liabilities and damages (whether actual, consequential or punitive),
including interest, penalties, reasonable attorneys' fees, disbursements and
costs of investigations, deficiencies, levies, duties and imposts.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Company" has the meaning given such term in the Preamble.
"Conversion" has the meaning given such term in the Recitals.
"Day" means a calendar day; provided, however, that if any period of Days
referred to in this Agreement shall end on a Day that is not a Business Day,
then the expiration of such period shall be automatically extended until the end
of the next succeeding Business Day.
"Depreciation" means, for each fiscal year or other period, an amount
equal to the depreciation, amortization, or other cost recovery deduction
allowable with respect to an asset for such year or other period, except that if
the Gross Asset Value of an asset differs from its adjusted basis for Federal
income tax purposes at the beginning of such year or other period, Depreciation
shall be an amount which bears the same ratio to such beginning Gross Asset
Value as the Federal income tax depreciation, amortization, or other cost
recovery deduction for such year or other period bears to such beginning
adjusted tax basis; provided, however, that if the Federal income tax
depreciation, amortization, or other cost recovery deduction for such year is
zero, Depreciation shall be determined with reference to such beginning Gross
Asset Value using any reasonable method selected by the Tax Matters Officer.
"DRULPA" has the meaning given such term in the Recitals.
"Dispose," "Disposing" or "Disposition" means with respect to any asset
(including a Membership Interest or any portion thereof), a sale, assignment,
transfer, conveyance, gift, exchange or other disposition of such asset, whether
such disposition be voluntary, involuntary or by operation of Applicable Law.
"Disposing Member" has the meaning given such term in Section 4.2.
"Dissolution Event" has the meaning given such term in Section 12.1(a).
"Encumber," "Encumbering," or "Encumbrance" means the creation of a
security interest, lien, pledge, mortgage or other encumbrance, whether such
encumbrance be voluntary, involuntary or by operation of Applicable Law.
"GAAP" means generally accepted accounting principles.
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"Governmental Authority" or "Governmental" means any Federal, state or
local court or governmental or regulatory agency or authority or any arbitration
board, tribunal or mediator having jurisdiction over the Company or its assets
or Members.
"Gross Asset Value" means, with respect to any asset, the asset's adjusted
basis for Federal income tax purposes, except as follows:
(i) The initial Gross Asset Value of any asset contributed by a
Member to the Company shall be the gross fair market value of said asset,
as determined by the contributing Member and the Board, in a manner that
is consistent with Section 7701(g) of the Code;
(ii) The Gross Asset Values of all Company assets shall be adjusted
to equal their respective gross fair market values, as determined by the
Board, in a manner that is consistent with Section 7701(g) of the Code, as
of the following times: (a) the acquisition of an additional Membership
Interest by any new or existing Member in exchange for more than a de
minimis Capital Contribution; (b) the distribution by the Company to a
Member of more than a de minimis amount of property other than money as
consideration for an Membership Interest; and (c) the liquidation of the
Company within the meaning of Treasury Regulations Section
1.704-1(b)(2)(ii)(g); provided, however, that adjustments pursuant to
clauses (a) and (b) above shall be made only if the Tax Matters Officer
reasonably determines that such adjustments are necessary or appropriate
to reflect the relative economic interests of the Members in the Company;
(iii) The Gross Asset Value of any Company asset distributed to any
Member shall be the gross fair market value (taking Section 7701(g) of the
Code into account) of such asset on the date of distribution; and
(iv) The Gross Asset Values of any Company assets shall be increased
(or decreased) to reflect any adjustments to the adjusted basis of such
assets pursuant to Section 734(b) of the Code or Section 743(b) of the
Code, but only to the extent that such adjustments are taken into account
in determining Capital Accounts pursuant to Treasury Regulations Section
1.704-1 (b)(2)(iv)(m) and the definition of Capital Account hereof;
provided, however, that Gross Asset Values shall not be adjusted pursuant
to this subparagraph (iv) to the extent the Tax Matter Officer determines
that an adjustment pursuant to the foregoing subparagraph (ii) of this
definition is necessary or appropriate in connection with a transaction
that would otherwise result in an adjustment pursuant to this subparagraph
(iv).
If the Gross Asset Value of an asset has been determined or adjusted
pursuant to the foregoing subparagraphs (i), (ii) or (iv), such Gross Asset
Value shall thereafter be adjusted by the Depreciation taken into account with
respect to such asset for purposes of computing Profits and Losses.
"Incentive Plan" means any plan or arrangement pursuant to which the
Company may compensate its employees, consultants, managers and/or service
providers.
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"Indemnitee" means (a) any Person who is or was an Affiliate of the
Company, (b) any Person who is or was a member, partner, officer, manager,
employee, agent or trustee of the Company or any Affiliate of the Company and
(c) any Person who is or was serving at the request of the Company or any
Affiliate of the Company as an officer, manager, employee, member, partner,
agent, fiduciary or trustee of another Person; provided, however, that a Person
shall not be an Indemnitee by reason of providing, on a fee-for-services basis,
trustee, fiduciary or custodial services.
"Initial Member" has the meaning given such term in the Recitals.
"Majority Interest" means greater than 50% of the Sharing Ratios.
"Manager" or "Managers" has the meaning given such term in Section 7.2.
"Member" means any Person executing this Agreement as of the date of this
Agreement as a member of the Company or hereafter admitted to the Company as a
member as provided in this Agreement, but such term does not include any Person
who has ceased to be a member in the Company.
"Membership Interest" means, with respect to any Member, (a) that Member's
status as a Member; (b) that Member's share of the income, gain, loss, deduction
and credits of, and the right to receive distributions from, the Company; (c)
all other rights, benefits and privileges enjoyed by that Member (under the Act,
this Agreement, or otherwise) in its capacity as a Member, including that
Member's rights to vote, consent and approve and otherwise to participate in the
management of the Company, including through the Board; and (d) all obligations,
duties and liabilities imposed on that Member (under the Act, this Agreement or
otherwise) in its capacity as a Member, including any obligations to make
Capital Contributions.
"Notices" has the meaning given such term in Section 13.2.
"Person" means any individual, firm, partnership, corporation, limited
liability company, association, joint-stock company, unincorporated
organization, joint venture, trust, court, governmental agency or any political
subdivision thereof, or any other entity.
"Profits" and "Losses" means, for each fiscal year or other period, an
amount equal to the Company's taxable income or loss for such year or period,
determined in accordance with Section 703(a) of the Code (for this purpose, all
items of income, gain, loss, or deduction required to be stated separately
pursuant to Section 703(a)(1) of the Code shall be included in taxable income or
loss), with the following adjustments:
(i) Any income of the Company that is exempt from Federal income tax
and not otherwise taken into account in computing Profits or Losses
pursuant to this definition shall be added to such taxable income or loss;
(ii) Any expenditures of the Company described in Section
705(a)(2)(B) of the Code, and not otherwise taken into account in
computing Profits or Losses pursuant to this definition shall be
subtracted from such taxable income or loss;
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(iii) In the event the Gross Asset Value of any Company asset is
adjusted pursuant to subparagraph (ii) or (iv) of the definition of Gross
Asset Value hereof, the amount of such adjustment shall be taken into
account as gain or loss from the disposition of such asset for purposes of
computing Profits or Losses;
(iv) Gain or loss resulting from any disposition of property (other
than money) with respect to which gain or loss is recognized for Federal
income tax purposes shall be computed by reference to the Gross Asset
Value of the property disposed of notwithstanding that the adjusted tax
basis of such property differs from its Gross Asset Value;
(v) In lieu of the depreciation, amortization and other cost
recovery deductions taken into account in computing such taxable income or
loss, there shall be taken into account Depreciation for such fiscal year
or other period, computed in accordance with the definition of
Depreciation hereof; and
(vi) Notwithstanding any other provision of this definition of
"Profits and Losses," any items which are specially allocated pursuant to
Section 6.3(d) and Section 6.3(e) hereof shall not be taken into account
in computing Profits or Losses.
"Proper Officer" or "Proper Officers" means those officers authorized by
the Board to act on behalf of the Company.
"Sharing Ratio" means, subject in each case to adjustments in accordance
with this Agreement or in connection with Dispositions of Membership Interests,
(a) in the case of a Member executing this Agreement as of the date of this
Agreement or a Person acquiring such Member's Membership Interest, the
percentage specified for that Member as its Sharing Ratio on Exhibit A, and (b)
in the case of Membership Interests issued pursuant to Section 3.1, the Sharing
Ratio established pursuant thereto; provided, however, that the total of all
Sharing Ratios shall always equal 100%.
"Subsidiary" means, with respect to any Person, (a) a corporation of which
more than 50% of the voting power of shares entitled (without regard to the
occurrence of any contingency) to vote in the election of managers or other
governing body of such corporation is owned, directly or indirectly, at the date
of determination, by such Person, by one or more Subsidiaries of such Person or
a combination thereof, (b) a partnership (whether general or limited) in which
such Person or a Subsidiary of such Person is, at the date of determination, a
general or limited partner of such partnership, but only if more than 50% of the
partnership interests of such partnership (considering all of the partnership
interests of the partnership as a single class) is owned, directly or
indirectly, at the date of determination, by such Person, by one or more
Subsidiaries of such Person, or a combination thereof, or (c) any other Person
(other than a corporation or a partnership) in which such Person, one or more
Subsidiaries of such Person, or a combination thereof, directly or indirectly,
at the date of determination, has (i) at least a majority ownership interest or
(ii) the power to elect or direct the election of a majority of the managers or
other governing body of such Person.
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"Target Capital Account Amount" means, with respect to a Member, the
distribution the Member would receive pursuant to Section 6.2 if the amount to
be distributed to the Member equaled the product of (i) the amount described in
Section 12.2(a)(iii)(C) multiplied by (ii) the Member's Sharing Ratio.
"Tax Matters Officer" has the meaning given such term in Section 10.3(a).
"Term" has the meaning given such term in Section 2.6.
"Treasury Regulations" means the regulations (including temporary
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 provision
or provisions of succeeding, similar or substitute, temporary or final Treasury
Regulations.
"Units" has the meaning given such term in Section 3.1(a).
"Withdraw," "Withdrawing" or "Withdrawal" means the withdrawal,
resignation or retirement of a Member from the Company as a Member. Such terms
shall not include any Dispositions of Membership Interest (which are governed by
Article 4), even though the Member making a Disposition may cease to be a Member
as a result of such Disposition.
(b) Other terms defined herein have the meanings so given them.
"Wood River LP" has the meaning given such term in the Recitals.
1.2. Construction. Whenever the context requires, (a) the gender of all
words used in this Agreement includes the masculine, feminine and neuter, (b)
the singular forms of nouns, pronouns and verbs shall include the plural and
vice versa, (c) all references to Articles and Sections refer to articles and
sections in this Agreement, each of which is made a part for all purposes and
(d) the term "include" or "includes" means includes, without limitation, and
"including" means including, without limitation.
2. ORGANIZATION
2.1. Formation. By execution of this Agreement and upon the filing of the
Certificate of Formation (the "Delaware Certificate"), the Certificate of
Conversion with the Secretary of State of the State of Delaware, the Initial
Member hereby forms the Company in connection with the Conversion pursuant to
the Act for the purposes set forth in this Agreement. The parties intend that
the Company shall be taxed as a partnership. Promptly following the execution
hereof, the Members shall execute or cause to be executed all necessary
certificates and documents, and shall make all such filings and recordings, and
shall do all other acts as may be necessary or appropriate from time to time to
comply with all requirements for the formation, continued existence and
operation of a limited liability company in the State of Delaware. This
Agreement is intended to serve as a "limited liability company agreement" as
such term is defined in Section 18-101(7) of the Act.
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2.2. Name. The name of the Company is "Wood River Pipe Lines LLC" and all
Company business must be conducted in that name or such other names that comply
with Applicable Law as the Board may select.
2.3. Registered Office; Registered Agent; Principal Office. The initial
registered agent for the Company shall be The Corporation Trust Company. The
initial registered office of the Company in the State of Delaware shall be
Corporation Trust Center, 0000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxx Xxxxxx Xxxxxx,
Xxxxxxxx 00000. The registered office and the registered agent may be changed
from time to time by action of the Managers by filing notice of such change with
the Secretary of State of the State of Delaware. The Managers shall promptly
notify the Members of any change of the registered office or registered agent.
The Company may also have offices in such other places within or outside of the
State of Delaware as the Managers may from time to time determine.
2.4. Purposes.
(a) The Company may carry on any lawful business or activity
permitted by the Act.
(b) Subject to the limitations expressly set forth in this
Agreement, the Company shall have the power and authority to do any and all acts
and things deemed necessary or desirable by the Board to further the Company's
purposes and carry on its business, including, without limitation, the
following:
(i) entering into any kind of activity and performing
contracts of any kind necessary or desirable for the accomplishment of its
business;
(ii) acquiring any property, real or personal, in fee or under
lease or license, or any rights therein or appurtenant thereto, necessary
or desirable for the accomplishment of its business;
(iii) borrowing money, issuing evidences of indebtedness,
issuing guarantees of indebtedness and securing any such indebtedness by
mortgage or pledge of, or other lien on, the assets of the Company;
(iv) entering into any such instruments and agreements as the
Board may deem necessary or desirable for the ownership, management,
operation, leasing and sale of the Company's property and for the
accomplishment of its business; and
(v) negotiating and concluding agreements for the sale,
exchange or other disposition of all or substantially all of the
properties of the Company, or for the refinancing of any loan or payment
obtained by the Company.
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2.5. Foreign Qualification. Prior to the Company's conducting business in
any jurisdiction other than Delaware, the Proper Officers shall cause the
Company to comply, to the extent procedures are available and those matters are
reasonably within the control of such officers, with all requirements necessary
to qualify the Company as a foreign limited liability company in that
jurisdiction. At the request of the Proper Officers, the Members shall execute,
acknowledge, swear to, and deliver all certificates and other instruments
conforming with this Agreement that are necessary or appropriate to qualify,
continue, and, if applicable, terminate the Company as a foreign limited
liability company in all such jurisdictions in which the Company may conduct
business or in which it has ceased to conduct business.
2.6. Term. The period of existence of the Company (the "Term") commenced
upon effectiveness of the Conversion and shall end at such time as a certificate
of cancellation is filed with the Secretary of State of Delaware in accordance
with Section 12.4.
2.7. No State Law Partnership. The Members intend that the Company not be
a partnership (including a limited partnership) or joint venture, and that no
Member be a partner or joint venturer of any other Member, for any purposes
other than (if the Company has more than one Member) Federal and state income
tax purposes, and this Agreement may not be construed to suggest otherwise.
2.8. Outside Activities. Subject to the terms of any applicable employment
contract or other agreement, each Member, Manager and officer of the Company may
engage in any capacity (as owner, employee, consultant, or otherwise) in any
activity, whether or not such activity competes with or is benefited by the
business of the Company, without being liable to the Company or the other
Members or Managers for any income or profit derived from such activity. Subject
to the terms of any applicable employment contract or other agreement, no
Member, Manager or officer of the Company shall be obligated to make available
to the Company or any other Member, Manager or officer of the Company any
business opportunity of which such Member, Manager or officer of the Company is
or becomes aware.
2.9. Membership Interests Uncertificated. All Membership Interests shall
be uncertificated.
3. MEMBERSHIP
3.1. Membership Interests; Additional Members.
(a) The Members own Membership Interests in the Company as reflected
in Exhibit A attached hereto. The Company shall issue to each holder of record
from time to time of a Membership Interest a certificate denominated in units
representing such Membership Interest ("Units"). As used herein, references to
"Membership Interests" in a context that implies divisibility of a Membership
Interest into equal units shall be deemed references to Units.
(b) Persons may be admitted to the Company as Members, on such terms
and conditions as the Members, without any approval of the Board, determine at
the time of admission. The terms of admission or issuance must specify the
Sharing Ratios applicable thereto and may provide for the creation of different
classes or groups of Members having
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different rights, powers, and duties. The Members may reflect the creation of
any new class or group in an amendment to this Agreement indicating the
different rights, powers, and duties, and such an amendment shall be approved
and executed by the Members. Any such admission is effective only after such new
Member has executed and delivered to the Members and the Company an instrument
containing the notice address of the new Member, the new Member's ratification
of this Agreement and agreement to be bound by it.
3.2. Access to Information. Each Member shall be entitled to receive any
information that it may request concerning the Company; provided, however, that
this Section 3.2 shall not obligate the Company to create any information that
does not already exist at the time of such request (other than to convert
existing information from one medium to another, such as providing a printout of
information that is stored in a computer database). Each Member shall also have
the right, upon reasonable notice, and at all reasonable times during usual
business hours to inspect the properties of the Company and to audit, examine
and make copies of the books of account and other records of the Company. Such
right may be exercised through any agent or employee of such Member designated
in writing by it or by an independent public accountant, engineer, attorney or
other consultant so designated. All costs and expenses incurred in any
inspection, examination or audit made on such Member's behalf shall be borne by
such Member.
3.3. Liability.
(a) No Member shall be liable for the debts, obligations or
liabilities of the Company solely by reason of being a member of the Company.
(b) The Company and the Members agree that the rights, duties and
obligations of the Members in their capacities as members of the Company are
only as set forth in this Agreement and as otherwise arise under the Act.
Furthermore, the Members agree that the existence of any rights of a Member, or
the exercise or forbearance from exercise of any such rights shall not create
any duties or obligations of the Member in their capacities as members of the
Company, nor shall such rights be construed to enlarge or otherwise alter in any
manner the duties and obligations of the Members.
3.4. Withdrawal. A Member does not have the right or power to Withdraw.
3.5. Actions by Members. Except as provided herein to the contrary, any
approval, election or other action to be taken or decision or exercise of
authority to be made by the Members pursuant to this Agreement shall be made at
the discretion of a Majority Interest of the Members.
3.6. Relationship of Members. Without limiting the generality of Section
2.8, nothing contained herein shall be deemed to restrict or limit in any way
the carrying on of separate businesses or activities by any Member now or in the
future, even if such businesses or activities are competitive with the Company.
4. DISPOSITION OF MEMBERSHIP INTERESTS
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4.1. General Restriction. A Member may not Dispose of all or any portion
of its Membership Interests except in strict accordance with this Article 4.
References in this Article 4 to Dispositions of a Membership Interest shall also
refer to Dispositions of a portion of a Membership Interest. Any attempted
Disposition of a Membership Interest, other than in strict accordance with this
Article 4, shall be, and is hereby declared, null and void ab initio. The
Members agree that a breach of the provisions of this Article 4 may cause
irreparable injury to the Company and to the other Members for which monetary
damages (or other remedy at law) are inadequate in view of (a) the complexities
and uncertainties in measuring the actual damages that would be sustained by
reason of the failure of a Member to comply with such provision and (b) the
uniqueness of the business of the Company and the relationship among the
Members. Accordingly, the Members agree that the provisions of this Article 4
may be enforced by specific performance.
4.2. Admission of Assignee as a Member. An Assignee has the right to be
admitted to the Company as a Member, with the Membership Interests (and
attendant Sharing Ratio) so transferred to such Assignee, only if (a) the Member
making the Disposition (a "Disposing Member") has granted the Assignee either
(i) all, but not less than all, of such Disposing Member's Membership Interests
or (ii) the express right to be so admitted; and (b) such Disposition is
effected in strict compliance with this Article 4.
4.3. Requirements Applicable to All Dispositions and Admissions. Any
Disposition of Membership Interests and any admission of an Assignee as a Member
shall also be subject to the following requirements, and such Disposition (and
admission, if applicable) shall not be effective unless such requirements are
complied with:
(a) The Disposing Member and its Assignee shall pay, or reimburse
the Company for, all reasonable costs and expenses incurred by the Company in
connection with the Disposition and admission of the Assignee as a Member.
(b) No Disposition of Membership Interests shall effect a release
of the Disposing Member from any liabilities to the Company or the other Members
arising from events occurring prior to the Disposition, except as otherwise may
be provided in any instrument or agreement pursuant to which a Disposition of
Membership Interests is effected.
5. CAPITAL CONTRIBUTIONS
5.1. Initial Capital Contributions. At the time of the effectiveness of
the Conversion or contemporaneously with the adoption by the Members of this
Agreement, as appropriate, each Member shall be deemed to have made Capital
Contributions as set forth next to the Member's name on Exhibit A.
5.2. Loans. If the Company does not have sufficient cash to pay its
obligations, any Member(s) that may agree to do so with the consent of the Board
may advance all or part of the needed funds to or on behalf of the Company. An
advance described in this Section 5.2 constitutes a loan from the Member to the
Company, bears interest at a rate determined by the Board from the date of the
advance until the date of payment, and is not a Capital Contribution.
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5.3. Return of Contributions. Except as expressly provided herein, no
Member is entitled to the return of any part of its Capital Contributions or to
be paid interest in respect of either its Capital Account or its Capital
Contributions. An unrepaid Capital Contribution is not a liability of the
Company or of any Member. A Member is not required to contribute or to lend any
cash or property to the Company to enable the Company to return any Member's
Capital Contributions.
5.4. Capital Accounts. An individual Capital Account shall be established
and maintained for each Member. A Member that has more than one class or series
of Membership Interest shall have a single Capital Account that reflects all
such classes or series of Membership Interests, regardless of the classes or
series of Membership Interests owned by such Member and regardless of the time
or manner in which such Membership Interests were acquired. Upon the Disposition
of all or a portion of a Membership Interest, the Capital Account of the
Disposing Member that is attributable to such Membership Interest shall carry
over to the Assignee in accordance with the provisions of Treasury Regulation
Section 1.704-1(b)(2)(iv)(l).
6. DISTRIBUTIONS AND ALLOCATIONS
6.1. Distributions. Except as otherwise provided in Section 6.2 and
Section 6.5, distributions to the Members shall be made only to all Members
simultaneously in proportion to their respective Sharing Ratios (at the time the
amounts of such distributions are determined) and in such aggregate amounts and
at such times as shall be determined by the Members representing a Majority
Interest (at the time the amounts of such distributions are determined);
provided, however, that, if requested a Member, any loans from such Member
pursuant to Section 5.2 shall be repaid prior to any distributions to Members
pursuant to this Section 6.1.
6.2. Distributions on Dissolution and Winding Up. Upon the dissolution
and winding up of the Company, after adjusting the Capital Accounts, if any, for
all distributions made under Section 6.1 and all allocations under Article 6,
all available proceeds distributable to the Members as determined under Section
12.2 shall be distributed (i) to all of the Members in amounts equal to the
Members' positive Capital Account balances, or (ii) if the obligation to
maintain Capital Accounts has been suspended under Section 13.13 of this
Agreement, to the sole Member.
6.3. Allocations. Subject to the allocation rules of Section 6.3(c), (d)
and (e) hereof, Profits and Losses of the Company for any fiscal year shall be
allocated as follows:
(a) Profits for any fiscal year shall be allocated in the
following order of priority:
(i) First, to all Members, in proportion to the deficit
balances (if any) in their Capital Accounts, in an amount necessary to
eliminate any deficits in the Members' Capital Accounts and restore such
Capital Accounts balances to zero;
(ii) Second, to the Members until each Member has been
allocated an amount equal to the amount distributed to such Member
pursuant to Section 6.1 in the
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current and in all previous fiscal years in excess of amounts previously
allocated to such Members pursuant to this Section 6.3(a)(ii);
(iii) Third, to the Members, to the greatest extent possible,
an amount required to cause the positive Capital Account balances of each
of the Members to be in the same proportion as the Member's respective
Sharing Ratios; and
(iv) Thereafter, to the Members in proportion their
respective Sharing Ratios.
(b) Losses for any fiscal year shall be allocated in the following
order of priority:
(i) First, to the Members, to the greatest extent possible,
an amount required to cause the positive Capital Account balances of each
of the Members to be in the same proportion as the Member's respective
Sharing Ratios;
(ii) Next, to the Members in proportion to their respective
Sharing Ratios until the Capital Account balances of such Members have
been reduced to zero;
(iii) Next, to any Member that has a positive Capital Account
balance until the Capital Account balances of all of the Members have been
reduced to zero; and
(iv) Thereafter, to the Members in proportion to their
respective Sharing Ratios.
(c) Notwithstanding the allocation provisions of Section 6.3(a)
and (b), if the allocation of Profits or Losses to a Member pursuant to Sections
6.3(a) and (b) in the current fiscal year would cause a Member to have a
positive Capital Account balance that is greater than or less than the amount
that has been distributed to such Member in the current fiscal year pursuant to
Section 6.1, then the allocations of Profits and Losses in the current fiscal
year shall be adjusted, to the greatest extent possible, to cause the positive
Capital Account balances of each Member to equal the amount of distributions
made to such Member in the current fiscal year. In addition, in the event of the
dissolution of the Company pursuant to Section 12.1 hereof, if the allocation of
Profits or Losses to a Member pursuant to Sections 6.3(a) and (b) would cause a
Member to have a Capital Account balance in an amount that is greater than or
less than the Member's Target Capital Account Amount, then the allocations of
Profits and Losses shall be adjusted, to the greatest extent possible, to cause
the positive Capital Account balances of each Member to equal such an amount.
(d) The following special allocations shall be made in the
following order:
(i) Qualified Income Offset. In the event any Member
unexpectedly receives any adjustments, allocations, or distributions
described in Treasury Regulation Sections 1.704-1(b)(2)(ii)(d)(4),
1.704-1(b)(2)(ii)(d)(5), or 1.704-1(b)(2)(ii)(d)(6), items of Company
income and gain shall be specially allocated to each such Member in an
amount and manner sufficient to restore, to the extent required by the
Treasury Regulations, the Member's Adjusted Capital Account Deficit of
such Member as quickly
14
as possible, provided that an allocation pursuant to this Section
6.3(d)(i) shall be made only if and to the extent that such Member would
have an Adjusted Capital Account Deficit after all other allocations
provided for in this Article 6 have been tentatively made as if this
Section 6.3(d)(i) was not in this Agreement.
(ii) Gross Income Allocation. In the event any Member has a
deficit Capital Account at the end of any Company fiscal year which is in
excess of the sum of (x) the amount such Member is obligated to restore
pursuant to any provision of this Agreement and (y) the amount such Member
is deemed to be obligated to restore pursuant to the penultimate sentence
of Treasury Regulation Sections 1.704-2(g)(1) and 1.704-2(i)(5), each such
Member shall be specially allocated items of Company income and gain in
the amount of such excess as quickly as possible, provided that an
allocation pursuant to this Section 6.3(d)(ii) shall be made only if and
to the extent that such Member would have a deficit Capital Account
balance in excess of such sum after all other allocations provided for in
this Article 6 have been made as if Section 6.3(d)(i) hereof and this
Section 6.3(d)(ii) were not in this Agreement.
(iii) Section 754 Adjustments. To the extent an adjustment of
the adjusted tax basis of any Company asset pursuant to Section 734(b) of
the Code or Section 743(b) of the Code is required, pursuant to Treasury
Regulation Section 1.704-1(b)(2)(iv)(m), to be taken into account in
determining Capital Accounts, the amount of such adjustment to the Capital
Accounts shall be treated as an item of gain (if the adjustment increases
the basis of the asset) or loss (if the adjustment decreases such basis)
and such gain or loss shall be specially allocated to the Members in a
manner consistent with the manner in which their Capital Accounts are
required to be adjusted pursuant to such section of the Treasury
Regulations.
(e) In accordance with Section 704(c) of the Code and the Treasury
Regulations thereunder, income, gain, loss, and deduction with respect to any
property contributed to the capital of the Company shall, solely for tax
purposes, be allocated among the Members to take account of any variation
between the adjusted basis of such property to the Company for federal income
tax purposes and its initial Gross Asset Value (computed in accordance with the
definition of same under this Agreement). In the event the Gross Asset Value of
any Company asset is adjusted pursuant to subparagraph (ii) of the definition of
Gross Asset Value hereof, subsequent allocations of income, gain, loss, and
deduction with respect to such asset shall take account of any variation between
the adjusted basis of such asset for federal income tax purposes and its Gross
Asset Value in the same manner as under Section 704(c) of the Code and the
Treasury Regulations thereunder. Any elections or other decisions relating to
such allocations shall be made by the Tax Matters Officer in any manner that
reasonably reflects the purpose and intention of this Agreement, provided that
the Company shall use the remedial allocation method set forth in Treasury
Regulation Section 1.704-3(d). Allocations pursuant to this Section 6.3(e) are
solely for purposes of federal, state, and local taxes and shall not affect, or
in any way be taken into account in computing, any Member's Capital Account or
share of Profits, Losses, other items, or distributions pursuant to any
provision of this Agreement.
6.4. Varying Interests. All items of income, gain, loss, deduction or
credit shall be allocated, and all distributions shall be made, to the Persons
shown on the records of the
15
Company to have been Members as of the last calendar day of the period for which
the allocation or distribution is to be made. Notwithstanding the foregoing, if
during any taxable year there is a change in any Member's Sharing Ratio, the
Members agree that their allocable shares of such items for the taxable year
shall be determined on any method determined by the Board to be permissible
under Code Section 706 and the related Treasury Regulations to take account of
the Members' varying Sharing Ratios.
6.5. Tax Distributions. To the extent the Board, in good faith,
determines the Company has sufficient funds, the Company shall make
distributions on a quarterly basis after the end of each fiscal quarter of the
Company, beginning with the third quarter for the fiscal year ending December
31, 2004, to each Member in an amount equal to (i) the total amount of taxable
income allocated to such Member for such fiscal year which exceeds the aggregate
allocation of Losses pursuant to Sections 6.3(b) and (c) for the succeeding
fiscal years multiplied by (ii) a tax rate reasonably selected by the Board;
provided, however, that subsequent distributions to the Members made during such
fiscal year and subsequent fiscal years shall be adjusted as necessary to ensure
that, over the entire Term of the Company, the aggregate cash distributed to a
Member shall be equal to the amount to which such Member would have been
entitled had there been no distributions made pursuant to this Section 6.5.
6.6. Withheld Taxes. All amounts withheld pursuant to the Code or any
provision of any state or local tax law with respect to any payment,
distribution or allocation to the Company or the Members shall be treated as
amounts distributed to the Members pursuant to this Article 6 for all purposes
of this Agreement. The Board is authorized to withhold from distributions, or
with respect to allocations, to the Members and to pay over to any federal,
state or local government any amounts required to be so withheld pursuant to the
Code or any provision of any other federal, state or local law and shall
allocate such amounts to those Members with respect to which such amounts were
withheld.
6.7. Limitations on Distributions. Notwithstanding any provision to the
contrary contained in this Agreement, the Company shall not make a distribution
to any Member on account of its interest in the Company if such distribution
would violate Section 18-607 of the Act or other Applicable Law.
7. MANAGEMENT
7.1. Management by Board of Managers and Executive Officers. The business
and affairs of the Company shall be fully vested in, and managed by, the Board
and any executive officers elected pursuant to Article 8 hereof. The Managers
and executive officers shall collectively constitute "managers" of the Company
within the meaning of the Act. Except as otherwise specifically provided in this
Agreement, the authority and functions of the Board, on the one hand, and the
executive officers, on the other hand, shall be identical to the authority and
functions of the board of directors and officers, respectively, of a corporation
organized under the General Corporation Law of the State of Delaware. The
executive officers shall be vested with such powers and duties as are set forth
in Article 8 hereof and as are specified by the Board. Accordingly, except as
otherwise specifically provided in this Agreement, the business and affairs of
the Company shall be managed under the direction of the Board, and the
day-to-day
16
activities of the Company shall be conducted on the Company's behalf by the
executive officers who shall be agents of the Company.
In addition to the powers and authorities expressly conferred on the Board
by this Agreement, the Board may exercise all such powers of the Company and do
all such acts and things as are not restricted by this Agreement, the Act or
Applicable Law.
7.2. Constitution of Board of Managers. The number of managers
constituting the Board shall be no less than two and no more than six (each a
"Manager" and collectively, the "Managers"), unless otherwise fixed from time to
time pursuant to a resolution adopted by a majority of the Managers. The initial
Managers of the Company shall be Xxxxxxx X. Xxxx, Xx., Xxxxxxx X. Xxxxxx and
Xxxxxx X. Xxxxxxx. A Manager need not be a Member. The Managers shall be elected
or approved by the Members at an annual meeting of the Members and shall serve
as Managers of the Company until their death or removal from office or until
their successors are elected and qualified.
7.3. Regular Meetings. The Board shall meet at least annually. The Board
may, by resolution, provide the time and place for the holding of additional
regular meetings without other notice than such resolution.
7.4. Special Meetings. A special meeting of the Board may be called at any
time at the request of (a) the Chairman of the Board or (b) a majority of the
Managers then in office.
7.5. Notice. Written notice of all regular meetings of the Board must be
given to all Managers at least five Days prior to the regular meeting of the
Board and one Business Day prior to any special meeting of the Board. All
notices and other communications to be given to Managers shall be sufficiently
given for all purposes hereunder if in writing and delivered by hand, courier or
overnight delivery service or three Days after being mailed by certified or
registered mail, return receipt requested, with appropriate postage prepaid, or
when received in the form of a telegram or facsimile, and shall be directed to
the address or facsimile number as such Manager shall designate by notice to the
Company. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the Board need be specified in the notice of such
meeting, except for amendments to this Agreement, as provided herein. A meeting
may be held at any time without notice if all the Managers are present or if
those not present waive notice of the meeting either before or after such
meeting.
7.6. Action by Consent of Board. Except as otherwise required by
Applicable Law, all decisions of the Board shall require the affirmative vote of
a majority of the Managers present at a meeting at which a quorum, as described
in Section 7.8, is present. To the extent permitted by Applicable Law, the Board
may act without a meeting so long as the number of Managers who would be
required to take such action at a duly held meeting at which all Managers were
present and voted shall have executed a written consent with respect to any
Board action taken in lieu of a meeting.
7.7. Conference Telephone Meetings. Managers or members of any committee
of the Board may participate in a meeting of the Board or such committee by
means of conference telephone or similar communications equipment by means of
which all persons participating in
17
the meeting can hear each other, and such participation in a meeting shall
constitute presence in person at such meeting.
7.8. Quorum. A majority of Managers, present in person or participating
in accordance with Section 7.7, shall constitute a quorum for the transaction of
business, but if at any meeting of the Board there shall be less than a quorum
present, a majority of the Managers present may adjourn the meeting from time to
time without further notice. Any act of the majority of the Managers present at
a meeting at which a quorum is present shall be the act of the Board. The
Managers present at a duly organized meeting may continue to transact business
until adjournment, notwithstanding the withdrawal of enough Managers to leave
less than a quorum.
7.9. Vacancies; Increases in the Number of Managers. Unless otherwise
provided in this Agreement, vacancies and newly created Board seats resulting
from any increase in the authorized number of Managers may be filled by a
majority of the Managers then in office, although less than a quorum, or a sole
remaining Manager; and any Manager so chosen shall hold office until the next
annual election and until his successor shall be duly elected and shall qualify,
unless sooner displaced.
7.10. Committees.
(a) The Board may establish committees of the Board and may
delegate certain of its responsibilities to such committees.
(b) A majority of any committee may determine its action and fix
the time and place of its meetings unless the Board shall otherwise provide.
Notice of such meetings shall be given to each member of the committee in the
manner provided for in Section 7.5. The Board shall have power at any time to
fill vacancies in, or to change the membership of, any committee, or to dissolve
any such committee. Nothing herein shall be deemed to prevent the Board from
appointing one or more committees consisting in whole or in part of persons who
are not Managers; provided, however, that no such committee shall have or may
exercise any authority of the Board.
7.11. Removal. Any Manager or the entire Board may be removed, with or
without cause, by the holders of a Majority Interest then entitled to vote at an
election of Managers.
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8. OFFICERS
8.1. Elected Officers. The executive officers of the Company shall serve
at the pleasure of the Board. Such officers shall have the authority and duties
delegated to each of them, respectively, by the Board from time to time. The
elected officers of the Company shall be a Chairman of the Board, a President, a
Secretary, a Treasurer, and such other officers (including, without limitation,
Executive Vice Presidents, Senior Vice Presidents and Vice Presidents) as the
Board from time to time may deem proper. The Chairman of the Board shall be
chosen from among the Managers. All officers elected by the Board shall each
have such powers and duties as generally pertain to their respective offices,
subject to the specific provisions of this Article 8. The Board or any committee
thereof may from time to time elect such other officers (including one or more
Vice Presidents, Controllers, Assistant Secretaries and Assistant Treasurers) as
may be necessary or desirable for the conduct of the business of the Company.
Such other officers and agents shall have such duties and shall hold their
offices for such terms as shall be provided in this Agreement or as may be
prescribed by the Board or such committee, as the case may be.
8.2. Election and Term of Office. The initial officers of the Company
shall be elected by the Board in connection with the execution hereof.
Hereafter, the officers of the Company shall be elected annually by the Board at
the first meeting during each calendar year. If the election of officers shall
not be held at such meeting, such election shall be held as soon thereafter as
convenient. Each officer shall hold office until such person's successor shall
have been duly elected and shall have qualified or until such person's death or
until he shall resign or be removed pursuant to Section 8.8.
8.3. Chairman of the Board. The Chairman of the Board shall preside at
all meetings of the Members and the Board and shall perform all duties
incidental to such person's office which may be required by law and all such
other duties as are properly required of him by the Board. He shall make reports
to the Board and the Members as directed by the Board. The Managers also may
elect a Vice-Chairman to act in the place of the Chairman upon his or her
absence or inability to act.
8.4. President; Chief Executive Officer. The President shall act as the
Chief Executive Officer of the Company and shall be responsible for the
administration and operation of the Company's business and general supervision
of its policies and affairs and shall see that all orders and resolutions of the
Board and of any committee thereof are carried into effect. The President, if he
is also a Manager, shall, in the absence of or because of the inability to act
of the Chairman of the Board, perform all duties of the Chairman of the Board
and preside at all meetings of the Members and the Board.
8.5. Vice Presidents. Each Executive Vice President and Senior Vice
President and any Vice President shall have such powers and shall perform such
duties as shall be assigned to him by the Board.
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8.6. Treasurer.
(a) The Treasurer shall exercise general supervision over the
receipt, custody and disbursement of corporate funds. The Treasurer shall cause
the funds of the Company to be deposited in such banks as may be authorized by
the Board, or in such banks as may be designated as depositories in the manner
provided by resolution of the Board. The Treasurer shall, in general, perform
all duties incident to the office of the Treasurer and shall have such further
powers and duties and shall be subject to such directions as may be granted or
imposed from time to time by the Board.
(b) Assistant Treasurers shall have such of the authority and
perform such of the duties of the Treasurer as may be provided in this Agreement
or assigned to them by the Board or the Treasurer. Assistant Treasurers shall
assist the Treasurer in the performance of the duties assigned to the Treasurer,
and in assisting the Treasurer, each Assistant Treasurer shall for such purpose
have the powers of the Treasurer. During the Treasurer's absence or inability,
the Secretary's authority and duties shall be possessed by such Assistant
Treasurer or Assistant Treasurers as the Board may designate.
8.7. Secretary.
(a) The Secretary shall keep or cause to be kept, in one or more
books provided for that purpose, the minutes of all meetings of the Board, the
committees of the Board and the Members pursuant to Article 7. The Secretary
shall see that all notices are duly given in accordance with the provisions of
this Agreement and as required by law; shall be custodian of the records and the
seal of the Company and affix and attest the seal to all documents to be
executed on behalf of the Company under its seal; and shall see that the books,
reports, statements, certificates and other documents and records required by
law to be kept and filed are properly kept and filed; and in general, shall
perform all the duties incident to the office of Secretary and such other duties
as from time to time may be assigned to the Secretary by the Board.
(b) Assistant Secretaries shall have such of the authority and
perform such of the duties of the Secretary as may be provided in this Agreement
or assigned to them by the Board or the Secretary. Assistant Secretaries shall
assist the Secretary in the performance of the duties assigned to the Secretary,
and in assisting the Secretary, each Assistant Secretary shall for such purpose
have the powers of the Secretary. During the Secretary's absence or inability,
the Secretary's authority and duties shall be possessed by such Assistant
Secretary or Assistant Secretaries as the Board may designate.
8.8. Removal. Any officer elected, or agent appointed, by the Board may
be removed by the affirmative vote of a majority of the Board whenever, in their
judgment, the best interests of the Company would be served thereby. No elected
officer shall have any contractual rights against the Company for compensation
by virtue of such election beyond the date of the election of such person's
successor, such person's death, such person's resignation or such person's
removal, whichever event shall first occur, except as otherwise provided in an
employment contract or under an employee deferred compensation plan.
20
8.9. Vacancies. A newly created elected office and a vacancy in any
elected office because of death, resignation or removal may be filled by the
Board for the unexpired portion of the term at any meeting of the Board.
9. INDEMNIFICATION OF MANAGERS, OFFICERS, EMPLOYEES AND AGENTS
9.1. Indemnification.
(a) To the fullest extent permitted by law but subject to the
limitations expressly provided in this Agreement, all Indemnitees shall be
indemnified and held harmless by the Company from and against any and all
losses, claims, damages, liabilities, joint or several, expenses (including
legal fees and expenses), judgments, fines, penalties, interest, settlements or
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 an Indemnitee; provided, that in each case
the Indemnitee acted in good faith and in a manner that such Indemnitee
reasonably believed to be in, or not opposed to, the best interests of the
Company and, with respect to any criminal 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 9.1 shall be made only out of the
assets of the Company.
(b) To the fullest extent permitted by law, expenses (including
legal fees and expenses) incurred by an Indemnitee who is indemnified pursuant
to Section 9.1(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 any 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 9.1.
(c) The indemnification provided by this Section 9.1 shall be in
addition to any other rights to which an Indemnitee may be entitled under any
agreement, as a matter of law or otherwise, both as to actions in the
Indemnitee's capacity as an Indemnitee and as to actions in any other capacity,
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 Company may purchase and maintain insurance on behalf of the
Company, its Affiliates and such other Persons as the Company 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 or such
Person's activities on behalf of the Company, regardless of whether the Company
would have the power to indemnify such Person against such liability under the
provisions of this Agreement.
21
(e) For purposes of this Section 9.1, 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 Section 9.1(a); and action taken or omitted by the
Indemnitee with respect to any 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 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) An Indemnitee shall not be denied indemnification in whole or in
part under this Section 9.1 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.
(g) The provisions of this Section 9.1 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.
(h) No amendment, modification or repeal of this Section 9.1 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
obligations of the Company to indemnify any such Indemnitee under and in
accordance with the provisions of this Section 9.1 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.
9.2. Liability of Indemnitees.
(a) Notwithstanding anything to the contrary set forth in this
Agreement, no Indemnitee shall be liable for monetary damages to the Company or
any other Persons who have acquired membership interests in the Company, for
losses sustained or liabilities incurred as a result of any act or omission if
such Indemnitee acted in good faith.
(b) To the extent that, at law or in equity, an Indemnitee has
duties (including fiduciary duties) and liabilities relating thereto to the
Company, such Indemnitee acting in connection with the Company's business or
affairs shall not be liable to the Company or to any Member for its good faith
reliance on the provisions of this Agreement. The provisions of this Agreement,
to the extent that they restrict or otherwise modify the duties and liabilities
of an Indemnitee otherwise existing at law or in equity, are agreed by the
Members to replace such other duties and liabilities of such Indemnitee.
(c) Any amendment, modification or repeal of this Section 9.2 or any
provision hereof shall be prospective only and shall not in any way affect the
limitations on the liability to the Company, and the Company's managers,
officers and employees under this Section 9.2 as in effect immediately prior to
such amendment, modification or repeal with
22
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.
10. TAXES
10.1. Tax Returns. The Tax Matters Officer (as defined below) of the
Company shall prepare and timely file (on behalf of the Company) all federal,
state and local tax returns required to be filed by the Company. Each Member
shall furnish to the Company all pertinent information in its possession
relating to the Company's operations that is necessary to enable the Company's
tax returns to be timely prepared and filed. The Company shall bear the costs of
the preparation and filing of its returns.
10.2. Tax Elections.
(a) The Company shall make the following elections on the
appropriate tax returns:
(i) to adopt as the Company's fiscal year the calendar year;
(ii) to adopt the accrual method of accounting;
(iii) if a distribution of the Company's property as described
in Section 734 of the Code occurs or upon a transfer of Membership
Interest as described in Section 743 of the Code occurs, on request by
notice from any Member, to elect, pursuant to Section 754 of the Code, to
adjust the basis of the Company's properties;
(iv) to elect to amortize the organizational expenses of the
Company ratably over a period of 60 months as permitted by Section 709(b)
of the Code; and
(v) any other election the Board may deem appropriate.
(b) Neither the Company nor any Member shall make an election for
the Company to be excluded from the application of the provisions of subchapter
K of chapter 1 of subtitle A of the Code or any similar provisions of applicable
state law and no provision of this Agreement (including Section 2.7) shall be
construed to sanction or approve such an election.
10.3. Tax Matters Officer.
(a) The Board shall select the President or the Chief Financial
Officer (or, if there are no officers serving under such titles, such other
officer in a comparable position), of the Company to act as the "tax matters
partner" of the Company pursuant to Section 6231(a)(7) of the Code (the "Tax
Matters Officer"). The Tax Matters Officer shall take such action as may be
necessary to cause to the extent possible each Member to become a "notice
partner" within the meaning of Section 6223 of the Code. The Tax Matters Officer
shall inform each Member of all significant matters that may come to its
attention in its capacity as Tax Matters Officer by giving notice thereof on or
before the fifth Business Day after becoming aware thereof and, within that
time, shall forward to each Member copies of all significant written
communications it may receive in that capacity.
23
(b) The Tax Matters Officer shall take no action without the
authorization of the Board, other than such action as may be required by
Applicable Law. Any cost or expense incurred by the Tax Matters Officer in
connection with its duties, including the preparation for or pursuance of
administrative or judicial proceedings, shall be paid by the Company.
(c) The Tax Matters Officer shall not enter into any extension of
the period of limitations for making assessments on behalf of the Members
without first obtaining the consent of the Board. The Tax Matters Officer shall
not bind any Member to a settlement agreement without obtaining the consent of
such Member. Any Member that enters into a settlement agreement with respect to
any Company item (as described in Section 6231(a)(3) of the Code) shall notify
the other Members of such settlement agreement and its terms within 90 Days from
the date of the settlement.
(d) No Member shall file a request pursuant to Section 6227 of the
Code for an administrative adjustment of Company items for any taxable year
without first notifying the other Members. If the Board consents to the
requested adjustment, the Tax Matters Officer shall file the request for the
administrative adjustment on behalf of the Members. If such consent is not
obtained within 30 Days from such notice, or within the period required to
timely file the request for administrative adjustment, if shorter, any Member
may file a request for administrative adjustment on its own behalf. Any Member
intending to file a petition under Sections 6226, 6228 or other Section of the
Code with respect to any item involving the Company shall notify the other
Members of such intention and the nature of the contemplated proceeding. In the
case where the Tax Matters Officer is intending to file such petition on behalf
of the Company, such notice shall be given within a reasonable period of time to
allow the Members to participate in the choosing of the forum in which such
petition will be filed.
(e) If any Member intends to file a notice of inconsistent treatment
under Section 6222(b) of the Code, such Member shall give reasonable notice
under the circumstances to the other Members of such intent and the manner in
which the Member's intended treatment of an item is (or may be) inconsistent
with the treatment of that item by the other Members.
11. BOOKS, RECORDS, REPORTS, AND BANK ACCOUNTS
11.1. Maintenance of Books.
(a) The Board shall cause to be kept a record containing the minutes
of the proceedings of the meetings of the Board and of the Members pursuant to
Article 7, appropriate registers and such books of records and accounts as may
be necessary for the proper conduct of the business of the Company.
(b) The books of account of the Company shall be (i) maintained on
the basis of a fiscal year that is the calendar year, (ii) maintained on an
accrual basis in accordance with GAAP, consistently applied and (iii) audited by
the Certified Public Accountants at the end of each calendar year.
11.2. Reports. With respect to each calendar year, the Board shall
prepare, or cause to be prepared, and deliver, or cause to be delivered, to each
Member:
24
(a) Within 120 Days after the end of such calendar year, a profit
and loss statement and a statement of cash flows for such year, a balance sheet
and a statement of each Member's Capital Account as of the end of such year,
together with a report thereon of the Certified Public Accountants; and
(b) Such federal, state and local income tax returns and such other
accounting, tax information and schedules as shall be necessary for the
preparation by each Member on or before June 15 following the end of each
calendar year of its income tax return with respect to such year.
11.3. Bank Accounts. Funds of the Company shall be deposited in such banks
or other depositories as shall be designated from time to time by the Board. All
withdrawals from any such depository shall be made only as authorized by the
Board and shall be made only by check, wire transfer, debit memorandum or other
written instruction.
12. DISSOLUTION, WINDING-UP, TERMINATION AND CONVERSION
12.1. 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) the unanimous consent of the Members;
(ii) entry of a decree of judicial dissolution of the Company
under Section 18-802 of the Act; or
(iii) at any time there are no Members of the Company, unless
the Company is continued in accordance with the Act or this Agreement.
(b) No other event shall cause a dissolution of the Company.
(c) Upon the occurrence of any event that causes there to be no
Members of the Company, to the fullest extent permitted by law, the personal
representative of the last remaining Member is hereby authorized to, and shall,
within 90 Days after the occurrence of the event that terminated the continued
membership of such Member in the Company, agree in writing (i) to continue the
Company and (ii) to the admission of the personal representative or its nominee
or designee, as the case may be, as a substitute Member of the Company,
effective as of the occurrence of the event that terminated the continued
membership of such Member in the Company.
(d) Notwithstanding any other provision of this Agreement, the
Bankruptcy of a Member shall not cause such Member to cease to be a member of
the Company and, upon the occurrence of such an event, the Company shall
continue without dissolution.
25
12.2. Winding-Up and Termination.
(a) On the occurrence of a Dissolution Event, the Board shall 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 properties
with all of the power and authority of the Members. The steps to be accomplished
by the liquidator are as follows:
(i) as promptly as possible after dissolution and again after
final winding up, the liquidator shall cause a proper accounting to be
made by a recognized firm of certified public accountants of the Company's
assets, liabilities, and operations through the last Day of the month in
which the dissolution occurs or the final winding up is completed, as
applicable;
(ii) the liquidator shall discharge from Company funds all of
the debts, liabilities and obligations of the Company (including all
expenses incurred in winding up or otherwise make adequate provision for
payment and discharge thereof (including the establishment of a cash
escrow fund for contingent, conditional and unmatured liabilities in such
amount and for such term as the liquidator may reasonably determine); and
(iii) all remaining assets of the Company shall be distributed
to the Members as follows:
(A) the liquidator may sell any or all Company property,
including to Members, and any resulting gain or loss from each sale shall be
computed and allocated to the Capital Accounts of the Members in accordance with
the provisions of Article 6;
(B) with respect to all Company property that has not
been sold, the fair market value of that property shall be determined and the
Capital Accounts of the Members shall be adjusted to reflect the manner in which
the unrealized income, gain, loss, and deduction inherent in property that has
not been reflected in the Capital Accounts previously would be allocated among
the Members if there were a taxable disposition of that property for the fair
market value of that property on the date of distribution; and
(C) Company property (including cash) shall be
distributed among the Members in accordance with Section 6.2; and, to the extent
practicable, those distributions shall be made by the end of the taxable year of
the Company during which the liquidation of the Company occurs (or, if later, 90
Days after the date of the liquidation);
provided, however, that notwithstanding the foregoing provisions of clauses (A),
(B) and (C) immediately above, if the obligation to maintain Capital Accounts
has been suspended under Section 13.13 of this Agreement, no allocations shall
be made and all Company property shall be distributed to the sole Member.
(b) The distribution of cash or property to a Member in accordance
with the provisions of this Section 12.2 constitutes a complete return to the
Member of its Capital Contributions and a complete distribution to the Member of
its Membership Interest and all the
26
Company's property and constitutes a compromise to which all Members have
consented pursuant to Section 18-502(b) of the Act. To the extent that a Member
returns funds to the Company, it has no claim against any other Member for those
funds.
12.3. Deficit Capital Accounts. No Member will be required to pay to the
Company, to any other Member or to any third party any deficit balance that may
exist from time to time in the Member's Capital Account.
12.4. Certificate of Cancellation. On completion of the distribution of
Company assets as provided herein, the Members (or such other Person or Persons
as the Act may require or permit) shall file a certificate of cancellation with
the Secretary of 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. Upon the filing of such certificate of cancellation,
the existence of the Company shall terminate (and the Term shall end), except as
may be otherwise provided by the Act or by Applicable Law.
13. GENERAL PROVISIONS
13.1. Offset. Whenever the Company is to pay any sum to any Member, any
amounts that Member owes the Company may be deducted from that sum before
payment.
13.2. Notices. All notices, demands, requests, consents, approvals or
other communications (collectively, "Notices") required or permitted to be given
hereunder or which are given with respect to this Agreement shall be in writing
and shall be personally served, delivered by reputable air courier service with
charges prepaid, or transmitted by hand delivery, telegram, telex or facsimile,
addressed as set forth below, or to such other address as such party shall have
specified most recently by written notice. Notice shall be deemed given on the
date of service or transmission if personally served or transmitted by telegram,
telex or facsimile. Notice otherwise sent as provided herein shall be deemed
given upon delivery of such notice:
If to the Company, to it at:
0000 Xxxxxxx Xxxx
X.X. Xxx 000
Xxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx
(Fax) 000.000.0000
with a copy to:
Xxxxxx, Xxxxx & Bockius LLP
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx
(Fax) 000.000.0000
If to a Member, as listed on the signature page hereto
or as such Member shall designate to the Company in writing.
27
13.3. Entire Agreement; Superseding Effect. This Agreement constitutes the
entire agreement of the Members relating to the Company and the transactions
contemplated hereby, and supersedes all provisions and concepts contained in all
prior contracts or agreements between the Members with respect to the Company,
whether oral or written.
13.4. Effect of Waiver or Consent. Except as otherwise provided in this
Agreement, a waiver or consent, express or implied, to or of any breach or
default by any Member in the performance by that Member of its obligations with
respect to the Company is not a consent or waiver to or of any other breach or
default in the performance by that Member of the same or any other obligations
of that Member with respect to the Company. Except as otherwise provided in this
Agreement, failure on the part of a Member to complain of any act of any Member
or to declare any Member in default with respect to the Company, irrespective of
how long that failure continues, does not constitute a waiver by that Member of
its rights with respect to that default until the applicable
statute-of-limitations period has run.
13.5. Amendment or Restatement. This Agreement or the Delaware Certificate
may be amended or restated only by a written instrument executed (or, in the
case of the Delaware Certificate, approved) by a Majority Interest of the
Members; provided, however, that, any amendment to the provisions of Article 7
shall be approved by the Board, and that Section 7.1 may be amended or restated
only by approval of the Board and the Members.
13.6. Binding Effect. Subject to the restrictions on Dispositions set
forth in this Agreement, this Agreement is binding on and shall inure to the
benefit of the Members and their respective successors and permitted assigns.
13.7. Governing Law; Severability. THIS AGREEMENT IS GOVERNED BY AND SHALL
BE CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF DELAWARE, EXCLUDING ANY
CONFLICT-OF-LAWS RULE OR PRINCIPLE THAT MIGHT REFER THE GOVERNANCE OR THE
CONSTRUCTION OF THIS AGREEMENT TO THE LAW OF ANOTHER JURISDICTION. In the event
of a direct conflict between the provisions of this Agreement and any mandatory,
non-waivable provision of the Act, such provision of the Act shall control. If
any provision of the Act may be varied or superseded in a 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 Member or circumstance is held invalid or unenforceable to any extent,
(a) the remainder of this Agreement and the application of that provision to
other Members or circumstances is not affected thereby, and (b) the Members
shall negotiate in good faith to replace that provision with a new provision
that is valid and enforceable and that puts the Members in substantially the
same economic, business and legal position as they would have been in if the
original provision had been valid and enforceable.
13.8. Further Assurances. In connection with this Agreement and the
transactions contemplated hereby, each Member shall execute and deliver any
additional documents and instruments and perform any additional acts that may be
necessary or appropriate to effectuate and perform the provisions of this
Agreement and those transactions.
28
13.9. Waiver of Certain Rights. Each Member 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.
13.10. Counterparts. This Agreement may be executed in any number of
counterparts with the same effect as if all signing parties had signed the same
document. All counterparts shall be construed together and constitute the same
instrument.
13.11. Jurisdiction. Any and all Claims arising out of, in connection with
or in relation to (i) the interpretation, performance or breach of this
Agreement, or (ii) any relationship before, at the time of entering into, during
the term of, or upon or after expiration or termination of this Agreement,
between the parties hereto, shall be brought in any court of competent
jurisdiction in the State of Delaware. Each party hereto unconditionally and
irrevocably consents to the jurisdiction of any such court over any Claims and
waives any objection that such party may have to the laying of venue of any
Claims in any such court.
13.12. Suspension of Certain Provisions If Only One Member.
(a) The following definitions in Article 1 of this Agreement shall
be suspended and shall have no force or effect at any time that there is only
one Member of the Company:
(i) "Adjusted Capital Account Deficit",
(ii) "Capital Account",
(iii) "Depreciation",
(iv) "Gross Asset Value",
(v) "Profits" and "Losses",
(vi) "Target Capital Account Amount", and
(vii) "Treasury Regulations".
(b) The following provision of this Agreement shall be suspended and
shall have no force or effect at any time that there is only one Member of the
Company:
(i) Section 5.4 (Capital Accounts);
(ii) Section 6.3 (Allocations);
(iii) Section 6.4 (Varying Interests);
(iv) Section 6.5 (Tax Distributions);
(v) Section 6.6 (Withheld Taxes);
29
(vi) Section 10.1 (Tax Returns);
(vii) Section 10.2 (Tax Elections); and
(viii) Section 12.3 (Deficit Capital Accounts).
[SIGNATURE PAGE FOLLOWS]
30
IN WITNESS WHEREOF, the Member has executed this Agreement as of the
date first set forth above.
MEMBER:
BUCKEYE PARTNERS, L.P.,
its sole member
By: BUCKEYE PIPE LINE COMPANY LLC
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Senior Vice President -
Administration, General Counsel and
Secretary
31
EXHIBIT A
MEMBER SHARING RATIO EFFECTIVE CAPITAL CONTRIBUTION
--------------------- ------------- ------------------------------
Buckeye Partners, L.P. 100% $ 100
LIMITED LIABILITY COMPANY AGREEMENT
OF
WOOD RIVER PIPE LINES LLC
A DELAWARE LIMITED LIABILITY COMPANY
DATED AS OF
SEPTEMBER 27, 2004
