Exhibit 3.4
SECOND AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
CHEVRON XXXXXXXX CHEMICAL COMPANY LLC
EFFECTIVE AS OF JULY 1, 2002
TABLE OF CONTENTS
PAGE
ARTICLE 1 Definitions........................................................2
ARTICLE 2 Offices and Statutory Agent.......................................10
2.1 Registered Office and Statutory Agent...............................10
2.2 Principal Executive Office..........................................10
2.3 Business............................................................11
ARTICLE 3 Members; Classes; Voting Rights; Meetings of Members..............11
3.1 Members.............................................................11
3.2 Classes of Members..................................................11
3.3 Duties of Members...................................................11
3.4 Voting Rights.......................................................11
3.5 Place of Meetings...................................................11
3.6 Meetings of Members; Notice of Meetings.............................12
3.7 Quorum..............................................................12
3.8 Waiver of Notice....................................................12
3.9 Action by Members Without a Meeting.................................12
ARTICLE 4 Board of Directors................................................13
4.1 General.............................................................13
4.2 Number and Classes of Directors.....................................14
4.3 Election and Removal of Directors...................................14
4.4 Vacancies; Resignations, Replacements...............................14
4.5 Term................................................................15
4.6 Compensation of Directors...........................................15
4.7 Fiduciary Duties of Directors.......................................15
4.8 Limitation of Liability.............................................15
ARTICLE 5 Meetings of Board of Directors....................................15
5.1 Place of Meetings...................................................15
5.2 Meetings of Directors...............................................15
5.3 Quorum; Alternates; Participation in Meetings By Conference
Telephone Permitted; Vote Required for Action.......................16
5.4 Waiver of Notice; Consent to Meeting................................16
5.5 Action by Board of Directors Without a Meeting......................16
5.6 Committees and Subcommittees........................................16
ARTICLE 6 Officers..........................................................17
6.1 General.............................................................17
6.2 Appointment and Removal.............................................17
6.3 Chief Executive Officer and President...............................17
6.4 Vice Presidents.....................................................17
6.5 Secretary...........................................................18
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6.6 Chief Financial Officer.............................................18
6.7 Term................................................................18
ARTICLE 7 Operational Matters...............................................18
7.1 Board of Director Approval..........................................18
7.2 Strategic and Business Plans; Reports...............................20
ARTICLE 8 Capital Contributions and Percentage Interests....................21
8.1 Capital Contributions and Percentage Interests......................21
8.2 Additional Capital Contributions....................................22
8.3 Withdrawal or Reduction of Capital Contributions....................22
8.4 No Return on or of Capital Contributions............................22
8.5 Capital Accounts....................................................22
8.6 Loans by Members to the Company.....................................23
8.7 Treatment of Certain Indemnity Payments.............................23
8.8 Treatment of Certain Deferred Capital Contributions.................24
8.9 Special Rule........................................................24
8.10 Application of the Basket, Tax Basket Amount and Cap................24
ARTICLE 9 Allocation of Profits and Losses; Distributions; Tax and
Accounting Matters................................................24
9.1 Allocations.........................................................24
9.2 Distributions.......................................................28
9.3 Accounting Matters..................................................34
9.4 Tax Status and Returns..............................................34
9.5 754 Election and Other Tax Elections................................34
9.6 Tax Matters Partner.................................................34
ARTICLE 10 Restrictions on Transfer.........................................35
10.1 Transfer of Interests...............................................35
10.2 Conditions of Transfer..............................................35
10.3 Admission of Substitute Member......................................35
10.4 Effect of Transfer without Approval.................................36
10.5 Liability for Breach................................................36
10.6 Permitted Transfers Subject to Right of First Refusal...............36
10.7 Permitted Transfers Among Wholly-Owned Affiliates...................37
10.8 Transfers of Equity Interests in a Member...........................37
ARTICLE 11 Competition......................................................38
11.1 General.............................................................38
11.2 Resolution of Competitive Conflicts.................................38
ARTICLE 12 Term and Dissolution.............................................39
12.1 Term................................................................39
12.2 Dissolution.........................................................39
12.3 Liquidation.........................................................39
12.4 Liabilities.........................................................40
12.5 Settling of Accounts................................................40
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12.6 Distribution of Proceeds.............................................40
12.7 Certificate of Cancellation..........................................41
ARTICLE 13 Indemnification...................................................41
13.1 Indemnification: Proceeding Other Than by Company...................41
13.2 Indemnification: Proceeding by Company..............................42
13.3 Mandatory Advancement of Expenses....................................42
13.4 Effect and Continuation..............................................43
13.5 Insurance and Other Financial Arrangements...........................43
13.6 Notice of Indemnification and Advancement............................44
13.7 Repeal or Modification...............................................44
ARTICLE 14 Inspection of Company Records; Annual and Other Reports...........44
14.1 Records to be Kept...................................................44
14.2 Access to Company Information........................................44
14.3 Annual and Quarterly Reports.........................................45
ARTICLE 15 Defaults and Remedies.............................................45
15.1 Defaults.............................................................45
15.2 Remedies.............................................................45
15.3 No Waiver............................................................45
ARTICLE 16 Miscellaneous.....................................................46
16.1 Amendments...........................................................46
16.2 Representation of Shares of Companies or Interests in Other Entities
16.3 Seal.................................................................46
16.4 Actions by Class P Members and Class C Members.......................46
16.5 Entire Agreement.....................................................46
16.6 Third Parties........................................................46
16.7 Governing Law; Jurisdiction and Forum; Waiver of Jury Trial..........47
16.8 Counterparts.........................................................47
16.9 Titles and Subtitles; Form of Pronouns; Construction and Definitions.47
16.10 Delaware Limited Liability Company Act Prevails......................47
16.11 Severability.........................................................48
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SECOND AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
CHEVRON XXXXXXXX CHEMICAL COMPANY LLC
THIS SECOND AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT (this
"Agreement") is made and entered into effective as of July 1, 2002 (the
"Preferred Contribution Effective Date") by and between ChevronTexaco
Corporation, a Delaware corporation ("ChevronTexaco"), Xxxxxxxx Petroleum
Company, a Delaware corporation ("Xxxxxxxx," or the "Initial Xxxxxxxx Member"),
Chevron U.S.A. Inc., a Pennsylvania corporation ("CUSA," or the "Initial Chevron
Member"), Xxxxxxxx Chemical Holdings Company (formerly Drilling Specialties
Co.), a Delaware corporation ("Chemical Holdings"), WesTTex 66 Pipeline Co., a
Delaware corporation ("WesTTex 66"), and Xxxxxxxx Petroleum International
Corporation, a Delaware corporation ("PPIC").
W I T N E S S E T H:
WHEREAS, on May 23, 2000, a Certificate of Formation (the "Certificate")
for Chevron Xxxxxxxx Chemical Company LLC (the "Company"), a limited liability
company organized under the laws of the State of Delaware, was filed with the
Secretary of State of the State of Delaware; and
WHEREAS, the Initial Chevron Member and the Initial Xxxxxxxx Member
entered into the original Limited Liability Company Agreement of the Company
(the "Original LLC Agreement") on May 23, 2000; and
WHEREAS, on July 1, 2000, the Members (as defined herein), including the
Initial Chevron Member and the Initial Xxxxxxxx Member, entered into an Amended
and Restated Limited Liability Company Agreement (the "Amended & Restated LLC
Agreement") that amended and restated the Original LLC Agreement in its
entirety; and
WHEREAS, the Amended & Restated LLC Agreement was amended, effective as
of July 1, 2000, by Amendment No. 1 to the Amended and Restated Limited
Liability Company Agreement of Chevron Xxxxxxxx Chemical Company ("Amendment
No. 1 to the Amended & Restated LLC Agreement"); and
WHEREAS, the Members desire to make a preferred contribution to the
capital of the Company in consideration of the issuance by the Company of
Preferred Interests (as hereinafter defined); and
WHEREAS, pursuant to Section 16.1(a) of the Amended & Restated LLC
Agreement, the Members desire to amend and restate the Amended & Restated LLC
Agreement in its
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entirety to incorporate in one document the amendments made by Amendment No. 1
to the Amended & Restated LLC Agreement, to provide for the issuance of the
Preferred Interests, and to make certain other revisions to the Amended &
Restated LLC Agreement:
NOW, THEREFORE, the Members by this Agreement set forth the limited
liability company agreement for the Company under the Delaware Limited Liability
Company Act (6 Del.C. ss. 18-101 et seq., the "Act") upon the following terms
and conditions:
ARTICLE 1
DEFINITIONS
Capitalized terms used in this Agreement without other definition shall,
unless expressly stated otherwise, have the meanings specified in this Article
1.
"ADJUSTED CAPITAL ACCOUNT BALANCE" means each Member's Capital Account,
increased by the amount of such Member's share of "minimum gain" and "partner
nonrecourse debt minimum gain" as such terms are defined in Treasury Regulation
1.704-2 and such other amounts as such Member is unconditionally obligated to
contribute hereunder.
"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:
(a) Credit such Capital Account by any amounts which such Member is
obligated to restore pursuant to this Agreement (including any note
obligations) or is deemed to be obligated to restore pursuant to the
penultimate sentence of each of sections 1.704-2(i)(5) and 1.704-2(g)(1)
of the Income Tax Regulations; and
(b) Debit such Capital Account by the items described in sections
1.704-1(b)(2)(ii)(d)(4), (5) and (6) of the Income Tax Regulations.
The foregoing definition of Adjusted Capital Account Deficit is intended
to comply with the provisions of section 1.704-1(b)(2)(ii)(d) of the Income Tax
Regulations and shall be interpreted consistently therewith.
"ADJUSTED CLASS C FINANCIAL STATEMENT NET CONTRIBUTION" has the meaning
set forth in Section 8.1(c)(ii).
"ADJUSTED CLASS P FINANCIAL STATEMENT NET CONTRIBUTION" has the meaning
set forth in Section 8.1(c)(ii).
"ADJUSTED TAXABLE INCOME" means, for a Fiscal Year, Fiscal Quarter or
other period, the federal taxable income allocated by the Company to the Member
for such Fiscal Year, Fiscal Quarter or other period; PROVIDED, that such
taxable income shall be computed by taking into account any special basis
adjustment with respect to such Member resulting from an election by the Company
under Code Section 754.
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"AFFILIATE" has the meaning set forth in Rule 405 under the Securities Act
of 1933, as amended.
"AGREEMENT" means this Second Amended and Restated Limited Liability
Company Agreement, as originally executed and as amended, modified or
supplemented from time to time. Words such as "herein," "hereinafter," "hereof,"
"hereto," "hereby" and "hereunder," when used with reference to this Agreement,
refer to this Agreement as a whole, unless the context otherwise requires.
"BASKET" has the meaning set forth in Article I of the Contribution
Agreement.
"BOARD OF DIRECTORS" has the meaning set forth in Section 4.1.
"CAP" has the meaning set forth in Article I of the Contribution
Agreement.
"CAPITAL ACCOUNT" has the meaning set forth in Section 8.5.
"CAPITAL CONTRIBUTIONS" means the contributions made by the Members to the
capital of the Company pursuant to Section 8.1 or 8.2 hereof and, in the case of
all the Members, the aggregate of all such Capital Contributions.
"CARRYING VALUE" means, with respect to any Company asset, such asset's
adjusted basis for federal income tax purposes, except as follows:
(a) The fair market value as agreed by the Members, when
contributed, of an asset contributed to the Company by any Member. The
aggregate Carrying Value effective as of the Closing of the assets
initially contributed by each Member to the Company pursuant to Section
8.1(a) of the Amended & Restated LLC Agreement, is the amount that was
determined in accordance with Section 8.1(c) of the Amended & Restated LLC
Agreement.
(b) The Carrying Values of all Company assets shall be adjusted to
equal their respective fair market values as agreed to by the Board of
Directors, and the resulting unrecognized gain or loss allocated to the
Capital Accounts of the Members as though such assets had been sold for
their respective fair market values as of the following times: (i)
immediately before the acquisition of an additional interest in the
Company by any new or existing Member in exchange for more than a de
minimis capital contribution; (ii) upon the distribution by the Company to
a Member of more than a de minimis amount of Company assets, unless all
Members receive simultaneous distributions of either undivided interests
in the distributed property or identical Company assets in proportion to
their interests in the Company; (iii) the date the Company is liquidated
within the meaning of section 1.704-1(b)(2)(ii)(g) of the Income Tax
Regulations; and (iv) the termination of the Company pursuant to the
provisions of this Agreement.
(c) The Carrying Value of the Company assets shall be increased or
decreased to the extent required under section 1.704-1(b)(2)(iv)(m) of the
Income
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Tax Regulations in the event that the adjusted tax basis of Company
assets are adjusted pursuant to section 732, 734 or 743 of the Code,
PROVIDED, however, that the Carrying Value shall not be adjusted pursuant
to this subparagraph (c) to the extent that an adjustment pursuant to
subparagraph (b) is required in connection with a transaction that would
otherwise result in an adjustment pursuant to this subparagraph (c).
(d) The Carrying Value of a Company asset that is distributed
(whether in liquidation of the Company or otherwise) to one or more
Members shall be adjusted to equal its fair market value at the time of
such distribution as determined by the Board of Directors, and the
resulting unrecognized gain or loss shall be allocated to the Capital
Accounts of the Members as though such asset had been sold for such fair
market value.
(e) The Carrying Value of a Company asset shall be adjusted by the
Depreciation attributable to such asset.
"CASH EARNINGS" shall mean the Company's Net Profit for each Fiscal
Quarter, (i) exclusive of any net income as so computed of the Company's
non-United States subsidiaries that has not been distributed by such
subsidiaries to the Company or the Company's United States subsidiaries, (ii)
increased by depreciation, amortization, cost recovery allowances and other
non-cash charges deducted in determining the Company's Net Profit, and (iii)
decreased by any income or franchise taxes (including without limitation
withholding or branch profits taxes on distributions made or deemed made to the
Company) imposed on the Company (as distinguished from income taxes imposed on
the Members), to the extent not already deducted in computing Net Profit.
"CHEMICALS BUSINESS" means the lines of business comprising P Chem and C
Chem (as defined in the Contribution Agreement), other petrochemicals businesses
and related businesses; PROVIDED, HOWEVER, that Chemicals Business shall not
include any specific businesses comprising Chevron Excluded Assets or Xxxxxxxx
Excluded Assets (as defined in the Contribution Agreement).
"CHEVRON PIPE LINE CONTRIBUTION" shall have the meaning set forth in
Exhibit A-2 of the Contribution Agreement.
"CLASS C FINANCIAL STATEMENT NET CONTRIBUTION" has the meaning set forth
in Section 8.1(c)(i).
"CLASS C MEMBER" includes CUSA and any other Member to whom a Class C
Member Transfers a Membership Interest in accordance with this Agreement;
PROVIDED, HOWEVER, that a Class C Member shall cease to be a Class C Member upon
the Transfer of all of such Person's Membership Interest in accordance with this
Agreement.
"CLASS C MEMBERS AGGREGATE ALLOCABLE SHARE" means, for each Fiscal Year,
Fiscal Quarter or other period of the Company, the sum of the Adjusted Taxable
Income of the Company allocated to all Class C Members for such Fiscal Year,
Fiscal Quarter or other period.
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"CLASS P FINANCIAL STATEMENT NET CONTRIBUTION" has the meaning set forth
in Section 8.1(c)(i).
"CLASS P MEMBER" includes Xxxxxxxx, Chemical Holdings, WesTTex 66 and
PPIC, and any other Member to whom a Class P Member Transfers a Membership
Interest in accordance with this Agreement; PROVIDED, HOWEVER, that a Class P
Member shall cease to be a Class P Member upon the Transfer of all of such
Person's Membership Interest in accordance with this Agreement.
"CLASS P MEMBERS AGGREGATE ALLOCABLE SHARE" means, for each Fiscal Year,
Fiscal Quarter or other period of the Company, the sum of the Adjusted Taxable
Income of the Company allocated to all Class P Members for such Fiscal Year,
Fiscal Quarter or other period.
"CLASS MEMBERSHIP INTEREST" means the aggregate Membership Interest of all
of the Class C Members or all of the Class P Members, as the case may be.
"CLOSING" has the meaning provided for in the Contribution Agreement.
"CLOSING DATE" means the date of the Closing.
"CODE" means the United States Internal Revenue Code of 1986, as amended,
or any corresponding provision or provisions of any succeeding law.
"COMPANY INDEMNIFIABLE PAYMENT" has the meaning set forth in Section 8.7.
"COMPANY MINIMUM GAIN" has the meaning set forth in sections 1.704-2(b)(2)
and 1.704-2(d) of the Income Tax Regulations for the phrase "partnership minimum
gain."
"CONTRIBUTION AGREEMENT" means that certain Contribution Agreement, dated
as of May 23, 2000, by and among Chevron Corporation, Xxxxxxxx Petroleum Company
and the Company.
"COSTS" means the sum of all cash expenditures made by the Company in
connection with the ownership of the Company's assets and the operation of the
Company's business, including, without limitation, the cost of all materials
purchased, goods returned, services provided and other similar fees, costs and
expenses; all real estate and sales taxes; all insurance premiums; all payments
of principal and interest on Company indebtedness; any distributions to Members,
and other similar expenditures.
"DEPRECIATION" means, for a Fiscal Year or other period, an amount equal
to the federal income tax depreciation, amortization or other cost recovery
deduction allowable with respect to an asset for such Fiscal Year or other
period, except that if the Carrying Value of an asset differs from its adjusted
basis for federal income tax purposes at the beginning of such Fiscal Year or
other period, Depreciation shall be an amount that bears the same ratio to such
beginning Carrying Value as the federal income tax depreciation, amortization or
other cost recovery deduction for such Fiscal 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 Fiscal Year
or other period is zero, then Depreciation shall be determined with reference to
such beginning Carrying Value using any reasonable method selected by the Board
of Directors.
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"DIRECTOR" means a Person who is elected as a Director of the Company
pursuant to Section 4.3 or 4.4 of this Agreement.
"FISCAL QUARTER" means the three (3) month period beginning on the first
day of the Company's Fiscal Year, and each subsequent (3) month period within
the Company's Fiscal Year.
"FISCAL YEAR" means the Company's tax year for U.S. federal income tax
purposes specified in Section 9.3.
"INCOME TAX REGULATIONS" means the regulations issued with respect to the
Code.
"INDEMNIFIED PARTY" and "INDEMNIFYING PARTY" shall have the meanings set
forth in Article I of the Contribution Agreement.
"K-RESIN ACCIDENT" means the fire and explosion on March 27, 2000 that
took place at the Xxxxxxxx K-Resin plant located in Pasadena, Texas.
"LEVERAGE RATIO DEFICIT" means, as of any relevant date, the amount, if
any, by which the book value of the indebtedness for money borrowed would need
to increase, without the Company's receiving and holding an asset of
corresponding value, to cause the Company's Total Debt to Total Capitalization
Ratio, as of such date, to increase to 20%.
"MANDATORY REDEMPTION PAYMENT" shall have the meaning set forth in Section
9.2(j)(i).
"MEMBER" has the meaning set forth in Section 3.1.
"MEMBER NONRECOURSE DEBT MINIMUM GAIN" means an amount, with respect to
each Member, equal to the Company Minimum Gain that would result if all such
Member's Member Nonrecourse Debt were treated as a Nonrecourse Liability, as
determined in accordance with section 1.704-2(i)(3) of the Income Tax
Regulations.
"MEMBER NONRECOURSE DEBT" has the meaning set forth in section
1.704-2(b)(4) of the Income Tax Regulations for the phrase "partner nonrecourse
debt."
"MEMBER NONRECOURSE DEDUCTION" has the meaning set forth in section
1.704-2(i)(2) of the Income Tax Regulations for the phrase "partner nonrecourse
deduction."
"MEMBER'S PROPORTIONATE TAX SHARE" means (i) with respect to a Class C
Member, the product of (X) the Tax Distribution for the Fiscal Year, Fiscal
Quarter or other period, as applicable, and (Y) a fraction, the numerator of
which is the Percentage Interest of such Class C Member for such Fiscal Year,
Fiscal Quarter or other period and the denominator is the sum of the Percentage
Interests for all Class C Members for such Fiscal Year, Fiscal Quarter or other
period and (ii) with respect to a Class P Member, the product of (X) the Tax
Distribution for the Fiscal Year, Fiscal Quarter or other period, as applicable,
and (Y) a fraction, the numerator of which is the Percentage Interest of such
Class P Member for such Fiscal Year, Fiscal Quarter or other period and the
denominator is the sum of the Percentage Interests for all Class P Members for
such Fiscal Year, Fiscal Quarter or other period. In the event that the
Percentage Interest of a Member changes during any Fiscal Year, Fiscal Quarter
or other period, the Member's
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Proportionate Tax Share of such Member and the other Class P Members or Class C
Members, as the case may be, for such Fiscal Year, Fiscal Quarter or other
period shall be appropriately adjusted to take into account the Class P Members'
or Class C Members', as the case may be, varying interests. In no event shall
the application of the foregoing formula result in the Class C Members in the
aggregate or the Class P Members in the aggregate receiving an amount in excess
of the Tax Calculation Share applicable to such Fiscal Year, Fiscal Quarter or
other period.
"MEMBERSHIP INTEREST" means the ownership interest of a Member in the
Company, including a Member's Preferred Interest (to the extent not fully
redeemed in accordance with Sections 9.2(j) or 9.2(k)) and right to share in the
Company's items of income, gain, loss, deduction, credits and similar items, and
the right to receive distributions from the Company, as well as a Member's
rights to vote and otherwise participate in the operation or affairs of the
Company as provided for herein and under the Act.
"MINIMUM LEVERAGE DISTRIBUTION" means the lesser of (x) five (5) times the
amount of the Leverage Ratio Deficit or (y) the Net Cash Available for
Distribution.
"NET CASH AVAILABLE FOR DISTRIBUTION" means (i) the excess, for each
semi-annual period ending on the last day of the second and fourth Fiscal
Quarter of each Fiscal Year, of Revenues for such period over Costs for such
period; plus (ii) cash and cash equivalent securities on hand at the beginning
of such period; minus (iii) adequate reserves for working capital, approved
future expenditures and known liabilities.
"NET PROFIT" or "NET LOSS" means for each Fiscal Year or other period, an
amount equal to the Company's taxable income or loss for such Fiscal 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:
(a) Any income of the Company that is exempt from federal income tax
and not otherwise taken into account in computing Net Profit or Net Loss
pursuant to this definition shall be added to such taxable income or loss;
(b) Any expenditure of the Company described in section 705(a)(2)(B)
of the Code or treated as such expenditure pursuant to section
1.704-1(b)(2)(iv)(i) of the Income Tax Regulations, and not otherwise
taken into account in computing Net Profit or Net Loss, shall be
subtracted from such taxable income or loss;
(c) Gain or loss resulting from any disposition of Company assets
where such gain or loss is recognized for federal income tax purposes
shall be computed by reference to the Carrying Value of the Company assets
disposed of, notwithstanding that the adjusted tax basis of such Company
assets differs from its Carrying Value;
(d) 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;
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(e) To the extent an adjustment to the adjusted tax basis of any
asset included in Company assets pursuant to section 734(b) of the Code or
section 743(b) is required pursuant to section 1.704-1(b)(2)(iv)(m)(4) of
the Income Tax Regulations to be taken into account in determining Capital
Accounts as a result of a distribution other than in liquidation of a
Member's Membership Interest, the amount of such adjustment shall be
treated as an item of gain (if the adjustment increases the basis of the
asset) or loss (if the adjustment decreases the basis of the asset) from
the disposition of the asset and shall be taken into account for the
purposes of computing Net Profit and Net Loss;
(f) If the Carrying Value of any Company asset is adjusted in
accordance with either of clauses (b) or (d) of the definition of
"Carrying Value," the amount of such adjustment shall be taken into
account in the Fiscal Year of such adjustment as gain or loss from the
disposition of such asset for purposes of computing Net Profit or Net
Loss; and
(g) Notwithstanding any other provision of this definition, any
items that are specially allocated pursuant to Section 9.1(b) shall not be
taken into account in computing Net Profit or Net Loss.
"NONRECOURSE DEDUCTIONS" has the meaning set forth in section 1.704-2(c)
of the Income Tax Regulations.
"NONRECOURSE LIABILITY" has the meaning set forth in section 1.704-2(b)(3)
of the Income Tax Regulations.
"OPTIONAL REDEMPTION AMOUNT" shall have the meaning set forth in Section
9.2(k)(ii).
"PARENT" means, when used with respect to any Person, any corporation,
partnership, limited liability company, or other organization, whether
incorporated or unincorporated, which owns or controls, directly or indirectly,
50% or more of the outstanding voting securities (or equivalent voting
interests) of such Person.
"PERCENTAGE INTEREST" means a Member's percentage interest in the Company
as set forth opposite such Member's name on Schedule 2 hereto.
"PERSON" means any general partnership, limited partnership, joint
venture, association, corporation, limited liability company, trust or other
entity and, where the contexts so permits or requires, a natural person.
"PRE-ADJUSTMENT EXCESS" has the meaning set forth in Section 8.1(b).
"PREFERRED CONTRIBUTION" shall mean, with respect to each Member, such
Member's respective Capital Contribution made to the Company on the date of this
Agreement pursuant to Section 8.1(d).
"PREFERRED DISTRIBUTION" shall have the meaning set forth in Section
9.2(i)(i).
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"PREFERRED DISTRIBUTION DATE" shall have the meaning set forth in Section
9.2(i)(iii).
"PREFERRED INTEREST" shall mean a Member's equity interest in the Company
as set forth in Article 1 and Sections 7.1(a)(iv), 7.1(a)(xiii), 8.1(d), 8.5,
9.1(g), 9.1(i). 9.2(c), 9.2(i), 9.2(j), 9.2(k) and 12.6 of this Agreement.
"PREFERRED PERCENTAGE INTEREST" means with respect to a Member as of any
date of determination, the percentage determined by dividing the amount of
Unrecovered Preferred Contribution of such Member on such date by the aggregate
amount of Unrecovered Preferred Contributions of all Members on such date. The
Preferred Percentage Interests as of the effective date of this Agreement are
set forth opposite the names of the Members on Schedule 2 hereto.
"PREFERRED TARGET RATIO" shall mean a Total Debt to Total Capitalization
Ratio of 27% or less, as calculated based upon the Company's balance sheet as of
the last day of a Fiscal Quarter. Preferred Contributions shall be deemed
Member's equity for purposes of calculating the Preferred Target Ratio.
"PREFERRED YIELD" shall have the meaning set forth in Section 9.2(i)(i).
"QUARTERLY TAX DISTRIBUTION" means, for each Member for each of the first
three Fiscal Quarters of the Company during the term of the Company, such
Member's Proportionate Tax Share for such Fiscal Quarter.
"REVENUES" means revenues and receipts of every kind and nature (from both
cash and credit transactions), including sales proceeds, rental, license, lease
or other income, net proceeds from issuance of indebtedness, proceeds from
insurance and all other similar items, but excluding (i) payments received as an
advance or deposit, until actually applied by the Company; and (ii) except as
otherwise expressly agreed by the Members, the amount of any Capital
Contributions.
"RIGHT OF OPTIONAL REDEMPTION" shall have the meaning as set forth in
Section 9.2(k)(i).
"SUBSIDIARY" means, when used with respect to any Person, any corporation,
partnership, limited liability company, or other organization, whether
incorporated or unincorporated, of which such Person owns or controls, directly
or indirectly, 50% or more of the outstanding voting securities (or equivalent
voting interests).
"TAX BASKET AMOUNT" shall have the meaning set forth in Section 1.11 of
Annex B to the Contribution Agreement.
"TAX CALCULATION SHARE" means, for each Fiscal Year, Fiscal Quarter or
other period, the greater of (i) the Class P Members Aggregate Allocable Share
for such Fiscal Year, Fiscal Quarter or other period and (ii) the Class C
Members Aggregate Allocable Share for such Fiscal Year, Fiscal Quarter or other
period.
"TAX DISTRIBUTION" means, for each Fiscal Year, Fiscal Quarter or other
period of the Company during the term of the Company, the product of (i) the Tax
Calculation Share for such
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Fiscal Year, Fiscal Quarter or other period and (ii) the Tax Rate for such
Fiscal Year, Fiscal Quarter or other period.
"TAX RATE" means the marginal blended tax rate determined by assuming that
(i) such Person is a corporation subject to the highest marginal corporate
United States federal income tax rate applicable for the applicable period, (ii)
such Person is subject to franchise and other income taxes at a combined rate
initially determined to be 5% (which rate may be periodically changed to such
rate as shall be agreed upon by the Class C Member(s) and Class P Member(s)),
and (iii) the franchise and other income taxes described in the preceding clause
(ii) are deductible for United States federal income tax purposes.
"TOTAL DEBT TO TOTAL CAPITALIZATION RATIO" means the ratio, the numerator
of which is the sum of the Company's long-term debt plus current maturities,
commercial paper and other short-term borrowings, and the denominator of which
is the sum of the Company's long-term debt plus current maturities, commercial
paper and other short-term borrowings plus Members' equity plus minority
interest, if any, all as set forth in the Company's balance sheet as of the last
day of the relevant Fiscal Quarter or Fiscal Year.
"UNPAID PREFERRED YIELD" means, as of any date of determination, an amount
equal to the excess, if any, of (i) the aggregate amount of Preferred Yield
accrued on Preferred Contributions pursuant to Section 9.2(i) for all periods up
to and including such date, over (ii) the aggregate amount of Preferred
Distributions previously paid by the Company.
"UNRECOVERED PREFERRED CONTRIBUTION" means with respect to a Member, as of
any date of determination, (i) the total amount contributed to the capital of
the Company by such Member as a Preferred Contribution as of such date minus
(ii) the aggregate amount of distributions by the Company to such Member under
Section 9.2(j) and/or Section 9.2(k) as of such date to the extent made in
return of such Member's Preferred Contribution.
"ULTIMATE PARENT" means, with respect to any Person, a Parent who is not a
Subsidiary of any other Person.
"WHOLLY-OWNED AFFILIATE" means a wholly-owned Subsidiary of the Ultimate
Parent of a Member.
ARTICLE 2
OFFICES AND STATUTORY AGENT
2.1 REGISTERED OFFICE AND STATUTORY AGENT. The registered office and
statutory agent in Delaware required by the Act shall be as set forth in the
Certificate until such time as the registered office or statutory agent is
changed in accordance with the Act.
2.2 PRINCIPAL EXECUTIVE OFFICE. The location of the principal executive
office for the transaction of the business of the Company shall be Houston,
Texas, or such other location as determined by the Board of Directors from time
to time.
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2.3 BUSINESS. The Company may carry on any lawful business, purpose or
activity which is permitted to be carried on by a limited liability company
under the Act. The actual business of the Company shall be determined by the
Board of Directors.
ARTICLE 3
MEMBERS; CLASSES; VOTING RIGHTS; MEETINGS OF MEMBERS
3.1 MEMBERS. Each party to this Agreement, except for ChevronTexaco, and
each person admitted as a Member pursuant to this Agreement shall be a member of
the Company until they cease to be a member in accordance with the provisions of
the Act, the Certificate or this Agreement (the "Members"). The names of the
Members shall be set forth on Schedule 1 hereto.
3.2 CLASSES OF MEMBERS. The Membership Interests in the Company shall be
divided into two (2) classes of members, such classes being designated as Class
C Members and Class P Members.
3.3 DUTIES OF MEMBERS. Members shall not owe duties, fiduciary or
otherwise, or obligations to the Company or other Members, except as expressly
set forth herein.
3.4 VOTING RIGHTS.
(a) Except as may otherwise be provided by this Agreement or the Act or
the Certificate, the unanimous vote of the Members on a matter shall constitute
the act of the Members.
(b) The Members shall have the right to elect Directors in accordance with
Sections 4.3 and 4.4 of this Agreement.
(c) Only Persons whose names are listed as Members on the records of the
Company at the close of business on the business day immediately preceding the
day on which notice of the meeting is given or, if such notice is waived, at the
close of business on the business day immediately preceding the day on which the
meeting of Members is held (except that the record date for Members entitled to
give consent to action without a meeting shall be determined in accordance with
Section 3.9) shall be entitled to receive notice of and to vote at such meeting,
and such day shall be the record date for such meeting. Any Member entitled to
vote on any matter shall be entitled to cast that number of votes equal to such
Member's Percentage Interest and may cast part of the votes in favor of the
proposal and refrain from exercising the remaining votes or vote against the
proposal (other than elections of a Director), but if the Member fails to
specify the number of votes such Member is exercising affirmatively, it will be
conclusively presumed that the Member's approving vote is with respect to all
votes such Member is entitled to cast. Such vote may be viva voce or by ballot;
provided, however, that all elections for Directors must be by ballot upon
demand made by a Member at any election and before the voting begins.
3.5 PLACE OF MEETINGS. All meetings of the Members shall be held at any
place within or without the State of Delaware which may be designated either by
the Board of Directors or by
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the written consent of all Members entitled to vote thereat given either before
or after the meeting and filed with the secretary. In the event of any
inconsistency in the places designated by the Board of Directors or the Members
as herein provided, or in the absence of any such designation, Members' meetings
shall be held at the principal executive office of the Company.
3.6 MEETINGS OF MEMBERS; NOTICE OF MEETINGS. Meetings of the Members for
the purpose of taking any action permitted to be taken by the Members may be
called by a majority of the Directors or by Members holding a majority of the
Percentage Interests. Upon request in writing that a meeting of Members be
called for any proper purpose, the Secretary forthwith shall cause notice to be
given to the Members entitled to vote that a meeting will be held at a time
requested by the person or persons calling the meeting, not less than
thirty-five (35) nor more than sixty (60) days after receipt of the request.
Except in special cases where other express provision is made by statute, notice
of such meetings shall be given personally, in writing, via electronic means or
via facsimile to each Member entitled to vote not less than thirty-five (35) nor
more than sixty (60) days before the meeting. Such notices shall state:
(a) The place, date and hour of the meeting;
(b) Those matters which the Directors, at the time of the mailing of
the notice, intend to present for action by the Members; and
(c) The names of the Directors intended at the time of the notice to be
presented for election.
3.7 QUORUM. The presence at any meeting in person or by proxy of Members
holding one-hundred percent (100%) of the aggregate Percentage Interests
entitled to vote at such meeting shall constitute a quorum for the transaction
of business.
3.8 WAIVER OF NOTICE. The actions of any meeting of Members, however
called and noticed, and wherever held, shall be as valid as if taken at a
meeting duly held after regular call and notice, if a quorum be present either
in person or by proxy, and if, either before or after the meeting, each person
entitled to vote, not present in person or by proxy, signs a written waiver of
notice or a consent to a holding of the meeting, or an approval of the minutes
thereof. The waiver of notice, consent or approval need not specify either the
business to be transacted or the purpose of any regular or special meeting of
Members. All such waivers, consents or approvals shall be filed with the Company
records and made a part of the minutes of the meeting.
Attendance of a Member at a meeting shall also constitute a waiver of
notice of and presence at such meeting, except when the Member objects, at the
beginning of the meeting, to the transaction of any business because the meeting
is not lawfully called or convened, and except that attendance at a meeting is
not a waiver of any right to object to the consideration of matters required to
be included in the notice but not so included, if such objection is expressly
made at the meeting.
3.9 ACTION BY MEMBERS WITHOUT A MEETING. Directors may be elected or
removed without a meeting by a consent in writing, setting forth the action so
taken, signed by Members entitled to elect or remove Directors in accordance
with Section 4.3; in addition, a Director may be elected at any time to fill
a vacancy by a written consent signed by Members entitled to elect
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or remove Directors in accordance with Section 4.3. Notice of such election
shall be promptly given to nonconsenting Members.
Any other action which, under any provision of the Act or the Certificate
or this Agreement, may be taken at a meeting of the Members, may be taken
without a meeting, and without notice except as hereinafter set forth, if a
consent in writing, setting forth the action so taken, is signed by Members
having not less than the minimum number of votes that would be necessary to
authorize or take such action at a meeting at which all Members entitled to vote
thereon were present and voted. All such consents shall be filed with the
secretary of the Company and shall be maintained in the Company's records.
Unless the consents of all Members entitled to vote have been solicited in
writing, prompt notice shall be given of the taking of any action approved by
Members without a meeting by less than unanimous written consent to those
Members entitled to vote who have not consented in writing.
Unless the Board of Directors sets a record date for the determination of
Members entitled to notice of and to give such written consent, the record date
for such determination shall be the day on which the first written consent is
given.
Any Member giving a written consent, or the Member's proxyholders, or a
personal representative of the Member or their respective proxyholders, may
revoke the consent by a writing received by the secretary prior to the time that
written consents of the number of votes required to authorize the proposed
action have been filed with the secretary, but may not do so thereafter. Such
revocation is effective upon its receipt by the secretary or, if there shall be
no person then holding such office, upon its receipt by any other officer or
Director of the Company.
ARTICLE 4
BOARD OF DIRECTORS
4.1 GENERAL. Subject to the provisions of the Act and any limitations in
the Certificate and this Agreement as to action required to be authorized or
approved by the Members, the business and affairs of the Company shall be
managed and all its powers shall be exercised by the Members, who have in turn
delegated their authority to manage the business and affairs of the Company and
to exercise all of the Company's powers to the board of directors of the Company
(the "Board of Directors"), who have in turn delegated to the Officers (as
defined herein) such portions of the authority of the Board of Directors as set
forth herein (and as may be set forth in resolutions of the Board of Directors),
provided that any delegation of authority to the Officers set forth herein or
otherwise is subject to the discretion of the Board of Directors. Without
prejudice to such general powers, but subject to the same limitations, it is
hereby expressly declared that the Board of Directors shall have the following
powers:
(a) To conduct, manage and control the business and affairs of the
Company, including, to the extent determined by the Board of Directors, managing
any Subsidiary limited liability company and to make such rules and regulations
therefor not inconsistent with law or
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with the Certificate or with this Agreement, as the Board of Directors shall
deem to be in the best interests of the Company;
(b) To appoint and remove at pleasure the officers, agents and
employees of the Company, prescribe their duties and fix their compensation;
(c) To borrow money and incur indebtedness for the purposes of the Company
and to cause to be executed and delivered therefor, in the Company's name,
promissory notes, bonds, debentures, deeds of trust, mortgages, pledges,
hypothecations or other evidences of debt and securities therefor;
(d) To designate an executive and other committees, each consisting of two
or more Directors, to serve at the pleasure of the Board of Directors, and to
prescribe the manner in which proceedings of such committees shall be conducted;
and
(e) To acquire real and personal property, arrange financing, enter into
contracts and complete all other arrangements needed to effectuate the business
of the Company.
4.2 NUMBER AND CLASSES OF DIRECTORS. The Board of Directors shall consist
of four (4) voting Directors (the "Voting Directors") and two (2) non-voting
Directors (the "Non-Voting Directors").
4.3 ELECTION AND REMOVAL OF DIRECTORS. The Directors shall be elected as
follows:
(a) The Class C Member(s) shall elect two (2) Voting Directors
(individually, a "Class C Director", and together, the "Class C Directors").
(b) The Class P Member(s) shall elect two (2) Voting Directors
(individually, a "Class P Director", and together, the "Class P Directors").
(c) The Class C Member(s) may remove, at any time, either or both of the
Class C Directors, with or without cause. The Class P Member(s) may remove, at
any time, either or both of the Class P Directors, with or without cause.
(d) The chief executive officer and the chief financial officer of the
Company shall be ex officio the two Non-Voting Directors. The Non-Voting
Directors may be removed at any time by the Board of Directors. If either the
office of chief executive officer or the office of chief financial officer is
vacant, the Non-Voting Director position associated with such office shall also
be vacant.
4.4 VACANCIES; RESIGNATIONS, REPLACEMENTS.
(a) Upon the death, resignation or removal of any Voting Director, the
Member(s) that elected such Voting Director is authorized to fill the vacancy
and shall have power to elect a successor to take office when the resignation,
removal or deemed vacancy becomes effective.
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(b) Any Voting Director may resign effective upon giving thirty (30) days
written notice to each Member of the Company, unless the notice specifies a
later time for the effectiveness of such resignation.
4.5 TERM. The Class C Directors and Class P Directors shall hold office
until their removal pursuant to this Agreement or until their respective
successors are elected and qualified pursuant to this Agreement.
4.6 COMPENSATION OF DIRECTORS. Directors of the Company, as such, shall
not be entitled to compensation, unless otherwise unanimously approved by the
Members.
4.7 FIDUCIARY DUTIES OF DIRECTORS. The Class C Directors shall owe
fiduciary duties exclusively to the Class C Member(s), and the Class P Directors
shall owe fiduciary duties exclusively to the Class P Member(s). No person shall
be authorized to institute an action against a Voting Director for breach of
fiduciary duty other than a Member to whom a fiduciary duty is owed pursuant to
the previous sentence.
4.8 LIMITATION OF LIABILITY. The Voting Directors shall not be liable to
the Company or its Members for actions taken in good faith.
ARTICLE 5
MEETINGS OF BOARD OF DIRECTORS
5.1 PLACE OF MEETINGS. Meetings of the Board of Directors shall be held at
any place within or without the State of Delaware that has been designated from
time to time by the Board of Directors. In the absence of such designation,
meetings of the Board of Directors shall be held at the principal executive
office of the Company, except as provided in Section 5.2.
5.2 MEETINGS OF DIRECTORS. The Board of Directors shall meet at least six
(6) times per Fiscal Year, pursuant to a schedule established by the Board of
Directors as early as practicable each Fiscal Year. In addition, meetings of the
Board of Directors for any purpose or purposes may be called at any time by any
Director. Notice of the time and place of meetings shall be delivered personally
or by telephone to each Director, or sent by first-class mail or by telex,
telegram, electronic mail or facsimile transmission, charges prepaid, addressed
to him or her at his or her address as it appears upon the records of the
Company or, if it is not so shown on the records and is not readily
ascertainable, at the place at which the meetings of the Board of Directors are
regularly held. In case such notice is mailed, it shall be deposited in the
United States mail at least four (4) days prior to the time of the holding of
the meeting. In case such notice is telegraphed or sent by telex, electronic
mail or facsimile transmission, it shall be delivered to a common carrier for
transmission to the Director or actually transmitted by the person giving the
notice by electronic means to the Director at least forty-eight (48) hours prior
to the time of the holding of the meeting. In case such notice is delivered
personally or by telephone as above provided, it shall be so delivered at
least twenty-four (24) hours prior to the time of the holding of the meeting.
Any notice given personally or by telephone shall be communicated directly to
the Director. Such deposit in the mail, delivery to a common carrier,
transmission by electronic means or delivery, personally or by telephone, as
above provided,
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shall be due, legal and personal notice to such Directors. The notice need
not specify the purpose of the meeting.
5.3 QUORUM; ALTERNATES; PARTICIPATION IN MEETINGS BY CONFERENCE
TELEPHONE PERMITTED; VOTE REQUIRED FOR ACTION.
(a) The presence of at least one Class C Director and at least one Class P
Director constitutes a quorum for the transaction of business. If the meeting is
adjourned for more than twenty-four (24) hours, notice of any adjournment to
another time or place (other than adjournments until the time fixed for the next
regular meeting of the Board of Directors, as to which no notice is required)
shall be given prior to the time of the adjourned meeting to the Directors who
were not present at the time of the adjournment.
(b) Each Voting Director may, by written notice given to the chief
executive officer, appoint an alternate to attend and vote at meetings, or at
any particular meeting, if the Voting Director is unable to attend. The presence
of an alternate at any meeting shall be deemed to be presence of the Director at
such meeting for all purposes, and the vote of such alternate shall be deemed to
be the vote of the relevant Director. No Director may retract the vote of any
duly appointed alternate on behalf of such Director after the close of the
meeting at which such vote is made. In the event that the Director who appointed
an alternate attends a meeting, the appointment of such alternate shall be
ineffective for such meeting, and the alternate shall have no right to be
present or to participate in that meeting.
(c) Directors may participate in a meeting through use of conference
telephone or similar communications equipment, so long as all Directors
participating in such meeting can communicate with and hear one another.
(d) Every act or decision done or made the Board of Directors shall
require the unanimous consent of all Voting Directors present at a meeting duly
held at which a quorum is present.
5.4 WAIVER OF NOTICE; CONSENT TO MEETING. Notice of a meeting need not be
given to any Director who signs a waiver of notice or a consent to holding the
meeting or an approval of the minutes thereof, whether before or after the
meeting, or who attends the meeting without protesting, prior thereto or at its
commencement, the lack of notice to such Director. All such waivers, consents
and approvals shall be filed with the Company's records and made a part of the
minutes of the meeting.
5.5 ACTION BY BOARD OF DIRECTORS WITHOUT A MEETING. Any action required or
permitted to be taken by the Board of Directors may be taken without a meeting
if at least one Class C Director and at least one Class P Director (or their
alternates who have been appointed pursuant to Section 5.3(b) above) shall
individually or collectively consent in writing to such action. Such written
consent or consents shall be filed with the minutes of the proceedings of the
Board of Directors. Such action by written consent shall have the same force and
effect as a unanimous vote of the Board of Directors.
5.6 COMMITTEES AND SUBCOMMITTEES. The provisions of this Article 5 shall
also apply, with necessary changes in points of detail, to committees and
subcommittees of the Board of
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Directors, if any, and to actions by such committees or subcommittees (except
for the first sentence of Section 5.2, which shall not apply, and except that
special meetings of a committee or subcommittee may also be called at any time
by any two members of the committee or subcommittee), unless otherwise provided
by this Agreement or by the resolution of the Board of Directors designating
such committee or subcommittee. For such purpose, references to the Directors
collectively shall be deemed to refer to each such committee or subcommittee,
and references to "Directors" shall be deemed to refer to members of the
committee or subcommittee. In addition, the Members intend that the Board of
Directors appoint a separate committee responsible for taxes and that such
committee at least be given the authority to make routine and/or recurring
decisions with respect to taxes.
ARTICLE 6
OFFICERS
6.1 GENERAL. Subject to the provisions of the Act, the Certificate and
this Agreement, the Board of Directors shall from time to time to appoint one or
more individuals who shall be termed officers of the Company (the "Officers").
Subject to the decision and control of the Board of Directors, the Officers of
the Company shall manage the day-to-day activities and affairs and will have
discretion with regard to all matters not otherwise reserved to the Board of
Directors of the Company. Each Officer shall hold his or her respective office
at the pleasure of the Board of Directors. Except as otherwise specifically
provided for below, an Officer need not be a Member or Director of the Company,
and any number of offices may be held by the same person. The Officers of the
Company shall include a president and chief executive officer, a chief financial
officer, and a secretary. The Company may also have, at the discretion of the
Board of Directors, one or more vice presidents, and such other Officers as may
be designated from time to time by the Board of Directors.
6.2 APPOINTMENT AND REMOVAL. Officers shall be appointed by the Board of
Directors. Each Officer, including an Officer elected to fill a vacancy, shall
hold office until his or her successor is elected, except as otherwise provided
by the Act or the Certificate, unless earlier removed pursuant to this Section
6.2. Any Officer may be removed, with or without cause, at any time by the Board
of Directors.
6.3 CHIEF EXECUTIVE OFFICER AND PRESIDENT. The chief executive officer and
president shall, subject to the oversight and control of the Board of Directors,
have general supervision, direction and control of the business and affairs of
the Company. Subject to Section 7.1 hereof, the chief executive officer and
president shall have all of the powers which are ordinarily inherent in the
office of the chief executive officer and president of a corporation, and he
shall have such further powers and shall perform such further duties, as may be
prescribed for him by the Board of Directors.
6.4 VICE PRESIDENTS. In the absence or disability of the president, the
vice presidents in order of their rank as fixed by the chief executive officer,
or, if not ranked, the vice president designated by the chief executive officer,
shall perform all of the duties of the chief executive officer and when so
acting shall have all the powers of and be subject to all the restrictions upon
the chief executive officer. The vice presidents shall have such other powers
and perform such
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other duties as from time to time may be prescribed for them, respectively, by
president or by this Agreement or by the Board of Directors.
6.5 SECRETARY. The secretary shall keep or cause to be kept at the
principal executive office of the Company, or such other place as the president
may order, a book of minutes of all proceedings of the Members and of the Board
of Directors, with the time and place of holding, whether regular or special,
and if special how authorized, the notice thereof given, the names of those
present and the number of votes present or represented at Members' or Board of
Directors meetings. The secretary or an assistant secretary, or, if they are
absent or unable or refuse to act, any other officer of the Company, shall give
or cause to be given notice of all the meetings of the Members required by the
Agreement or by law to be given, and he shall keep the seal of the Company, if
any, in safe custody and shall have such other powers and perform such other
duties as may be prescribed by the president or by this Agreement or by the
Board of Directors.
6.6 CHIEF FINANCIAL OFFICER. The chief financial officer shall keep and
maintain, or cause to be kept and maintained, adequate and correct books and
records of account of the Company. The chief financial officer shall keep or
cause to be kept at the principal executive office of the Company a record of
Members showing (i) the names of the Members and their addresses, (ii) their
respective initial and all their respective subsequent Capital Contributions,
(and ) their respective Unpaid Preferred Yield, Unrecovered Preferred
Contributions, Percentage Interests and Preferred Percentage Interests, as they
may vary from time to time. The chief financial officer shall receive and
deposit all moneys and other valuables belonging to the Company in the name and
to the credit of the Company and shall disburse the same only in such manner as
the chief executive officer or the appropriate officers of the Company may from
time to time determine, shall render, whenever requested, an account of all his
transactions as chief financial officer and of the financial condition of the
Company, and shall perform such further duties as the chief executive officer or
this Agreement or the Board of Directors may prescribe.
6.7 TERM. The initial Officers of the Company were appointed for a term of
three years from the Closing, which term may be renewed by the Board of
Directors. Notwithstanding the foregoing sentence, the initial Officers shall
serve at the pleasure of the Board of Directors and may be removed by the Board
of Directors in its discretion at any time prior to the end of their three year
terms pursuant to Section 6.2 hereof. Any subsequent Officers shall serve at the
pleasure of the Board of Directors and may be removed by the Board of Directors
in its discretion at any time.
ARTICLE 7
OPERATIONAL MATTERS
7.1 BOARD OF DIRECTOR APPROVAL.
(a) Unless otherwise determined by the Board of Directors pursuant to
subsection (b) below, the Company shall not have the authority to approve or
undertake any of the following matters without the approval of the Board of
Directors (obtained as set forth in Section 5.3(d)):
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(i) The hiring, firing, renewal, compensation, evaluation and
planning for succession of the chief executive officer and president, the
chief financial officer and senior vice presidents and other Officers of
similar rank.
(ii) Compensation policies for Company employees, including specific
compensation and benefit plans and programs.
(iii) Annual strategic and business plans and amendments thereto
(including entering into any unrelated new lines of business) in
accordance with Section 7.2, Company-wide financing plans, and
Company-wide risk management plans (including a program of insurance).
(iv) Any distribution to the Members in excess of, or in an amount
less than, Tax Distributions and Minimum Leverage Distributions (both of
which are deemed automatically approved by the Board of Directors) other
than a distribution of a Mandatory Redemption Payment (which is deemed
automatically approved by the Board of Directors).
(v) The following material transactions:
(A) Projects, long-term contracts (including cancellation
thereof), mergers, consolidations, re-capitalization, acquisitions,
divestitures, joint ventures or alliances involving the commitment
or transfer by the Company of value in excess of $25 million and
shut-downs of material facilities; and
(B) Investments and transactions outside the normal lines of
business in excess of $10 million.
(vi) Capital expenditures in excess of 110% of the approved capital
expenditure budget or overruns on major projects greater than 10%.
(vii) Individual borrowings and leasing arrangements in excess of
$25 million, or if the Board of Directors in its discretion sets a debt
ceiling, any borrowing in excess of such debt ceiling.
(viii) Unusual, non-recurring uses of Company credit in support of
operations above a $10 million exposure.
(ix) The settlement of actions or claims against the Company
involving more than $10 million.
(x) Related-party transactions involving the receipt or payment of
more than $5 million in any one transaction or $10 million in any series
of related transactions, irrespective of individual amounts (other than
transactions reflected by the agreements referred to on Schedules 6.11(b)
and 6.11(c) of each of the Xxxxxxxx Disclosure Schedule to the
Contribution Agreement and the Chevron Disclosure Schedule to the
Contribution Agreement).
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(xi) Any amendment to the Certificate or this Agreement.
(xii) Except as otherwise specifically provided for in Article X,
the admission of an additional Member or other equity holder of the
Company.
(xiii) Any redemption of an equity interest in the Company, other
than a mandatory redemption of Preferred Interests pursuant to Section
9.2(j).
(xiv) Any adoption of or change in the Company's form of business
or accounting principles.
(xv) Any material consolidation or relocation of the Company's
research and development facilities, or the exercise or waiver of any
right affecting the term of any leasehold for research and development
facilities.
(xvi) The commencement of voluntary bankruptcy proceedings for the
Company.
(xvii) Any material decision regarding repair, replacement or
startup relating to the K-Resin Accident.
(xviii) The liquidation or dissolution of the Company.
(xix) Any use by the Company of the "Chevron," "ChevronTexaco" or
"Xxxxxxxx" name, by itself.
(b) The Board of Directors shall review periodically the appropriateness
of the list of items contained in Section 7.1(a) (including the related
threshold dollar amounts contained therein) which must be brought before the
Board of Directors, and will implement changes if and when appropriate. Any such
changes shall be set forth in a written resolution, and, to the extent that such
written resolution is inconsistent with Section 7.1(a), the written resolution
will control.
7.2 STRATEGIC AND BUSINESS PLANS; REPORTS.
(a) The Board of Directors and the Officers will conduct an interactive
strategic planning process on an annual basis. In connection with this process,
the Officers shall prepare and submit to the Board of Directors and the Board of
Directors shall review, consider and adopt:
(i) a strategic plan for the Company; and
(ii) a three (3) year business plan, including capital and operating
budgets.
Such process shall be conducted in accordance with the strategic planning
processes of the Members, as determined by the Board of Directors.
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(b) In the event that the Board of Directors fails to timely approve
capital or operating budgets for any period, the Officers will be authorized to
spend such amounts as are necessary or appropriate to meet the Company's prior
commitments and obligations and to conduct and maintain the Company's operations
and properties in a safe and efficient manner in accordance with industry
practice.
(c) The Officers shall provide the Board of Directors with monthly reports
of the operating results of the Company compared with the strategic and business
plan, including the capital and operating budgets, and annual and periodic
reports of compliance matters (e.g. financial controls, environmental, human
resources, etc.).
ARTICLE 8
CAPITAL CONTRIBUTIONS AND PERCENTAGE INTERESTS
8.1 CAPITAL CONTRIBUTIONS AND PERCENTAGE INTERESTS.
(a) Effective as of the Closing, each of the Members agreed (i) to make a
Capital Contribution to the Company as contemplated by Article II of the
Contribution Agreement and credit the Capital Account of each Member in respect
thereof in accordance with Section 8.1(b) of the Amended & Restated LLC
Agreement, (ii) to determine the Percentage Interest of each Class C Member and
each Class P Member in accordance with Section 8.1(a) of the Amended & Restated
LLC Agreement, and (iii) that (A) the aggregate Percentage Interests of all
Class C Members shall equal 50% and the aggregate Percentage Interests of all
Class P Members shall equal 50%, (B) such aggregate Percentage Interests shall
not change unless otherwise agreed by the Members, and (C) such aggregate
Percentage Interests shall not be affected by the Chevron Pipe Line
Contribution.
(b) Effective as of the Closing, ChevronTexaco and Xxxxxxxx agreed to (i)
determine the balance of the Capital Account of each Member as of the Closing
Date in accordance with Section 8.1(c) of the Amended & Restated LLC Agreement,
(ii) determine the Percentage Interest of each Member as of the Closing Date in
accordance with Section 8.1(c) of the Amended & Restated LLC Agreement, and
(iii) agree to schedules setting forth the Carrying Values of assets specified
in clause (i) of the first sentence of Section 8.1(c) of the Amended & Restated
LLC Agreement.
(c) The determination of Capital Account balances as described in Section
8.1(b) hereof was designed to result in the aggregate credit balances in the
Capital Accounts of the Class C Members being equal to the aggregate credit
balances in the Capital Accounts of the Class P Members as of Closing and after
giving effect to the distributions described in Section 9.2(f) which is
consistent with the agreement of the Members that the fair market value of the
net assets contributed to the Company by the Class C Members at Closing and the
fair market value of the net assets being contributed to the Company by the
Class P Members at Closing were equal after giving effect to the distributions
described in Section 9.2(f), and this result was not to be affected by the
Chevron Pipe Line Contribution.
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(d) On the Preferred Contribution Effective Date, (i) Chevron U.S.A. shall
make a Capital Contribution to the Company of $125,000,000, (ii) Xxxxxxxx shall
make a Capital Contribution to the Company of $94,750,000, (iii) Chemical
Holdings shall make a Capital Contribution to the Company of $1,000,000, (iv)
WesTTex 66 shall make a Capital Contribution to the Company of $5,250,000, and
(v) PPIC shall make a Capital Contribution to the Company of $24,000,000 (each
such Capital Contribution, a "PREFERRED CONTRIBUTION"). Each Member's Preferred
Contribution shall be credited to its Capital Account.
8.2 ADDITIONAL CAPITAL CONTRIBUTIONS. No Member may make additional
Capital Contributions other than pursuant to its obligations under the
Contribution Agreement or this Agreement without the consent of the Board of
Directors. The Board of Directors shall approve all material terms of any such
Capital Contribution, including its effect on the Members' relative Capital
Accounts and Percentage Interests.
8.3 WITHDRAWAL OR REDUCTION OF CAPITAL CONTRIBUTIONS.
(a) Except as expressly provided in this Agreement, no Member shall have
the right to withdraw from the Company all or any part of its Capital
Contribution.
(b) A Member, irrespective of the nature of its Capital Contribution,
shall not have the right to demand and receive a distribution in kind in return
for its Capital Contribution, unless the Members shall have otherwise
unanimously agreed.
8.4 NO RETURN ON OR OF CAPITAL CONTRIBUTIONS. No amounts shall be payable
on, with respect to, or in return of, Capital Contributions or Capital Accounts
of Members except as expressly provided in this Agreement.
8.5 CAPITAL ACCOUNTS. A single Capital Account shall be maintained for
each Member (regardless of the class of interests owned by such Member and
regardless of the time or manner in which such interests were acquired) in
accordance with the capital accounting rules of section 704(b) of the Code and
the Income Tax Regulations thereunder (including without limitation section
1.704-1(b)(2)(iv) of the Income Tax Regulations) and as further described in
this Section 8.5.
(a) There shall be established for each Member a Capital Account
reflecting the excess (or deficit) of (a) the sum of (i) the Carrying Value of
assets contributed to the Company by such Member and the amount of cash
contributed to the Company by such Member under Section 8.1 or Section 8.2 or
paid pursuant to a note contributed to the Company by such Member, (ii) such
Member's share of Net Profits calculated in accordance with Section 9.1 and any
items in the nature of income or gain that are specifically allocated to such
Member under Section 9.1, and (iii) the amount of any Company liabilities
assumed by such Member or which are secured by any property distributed to such
Member over (b) the sum of (i) such Member's share of Net Losses under Section
9.1 and any items in the nature of losses or expenses that are specifically
allocated to such Member under Section 9.1, (ii) any distributions to such
Member under Section 9.2 or Section 12.6, and (iii) liabilities of such Member
assumed by the Company or which are secured by any property contributed by such
Member. In determining the amount
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of any liability for purposes of this section, there shall be taken into account
section 752(c) of the Code and any other applicable provisions of the Code and
Income Tax Regulations.
(b) In the event of a transfer of all or any portion of a Member's
interest in the Company pursuant to Article 10 hereof, the Capital Account of
any transferee shall include the appropriate portion of the Capital Account of
the Member from which the transferee's interest in the Company was obtained.
(c) When Company property is distributed in kind (whether in connection
with liquidation and dissolution or otherwise), the Capital Accounts of the
Members shall first be adjusted to reflect the manner in which the unrealized
income, gain, loss and deduction inherent in such property (that has not been
reflected in the Capital Account previously) would be allocated among the
Members if there were a taxable disposition of such property for the fair market
value of such property (taking into account section 7701(g) of the Code) on the
date of distribution.
(d) The appropriate Officers shall make or cause to be made all necessary
adjustments in each Member's Capital Account as required by the capital
accounting rules of section 704(b) of the Code and the regulations thereunder.
8.6 LOANS BY MEMBERS TO THE COMPANY. No Member shall be obligated to lend
money to the Company. No Member may lend money to the Company without the
consent of the Board of Directors. The Board of Directors shall approve all
material terms of such a loan, including, without limitation, the interest rate
and term. Any loan by a Member to the Company with the required consent of the
Board of Directors shall be separately entered on the books of the Company as a
loan to the Company and not as a Capital Contribution, and shall be evidenced by
a promissory note duly executed by at least one Class C Director and one Class P
Director on behalf of the Company and delivered to the lending Member.
8.7 TREATMENT OF CERTAIN INDEMNITY PAYMENTS.
(a) If Company makes any payment to a third party that is subject to
indemnification by a Class C Member or a Class P Member (or any Affiliate
thereof) pursuant to the Contribution Agreement or Annex B or C thereto (a
"Company Indemnifiable Payment"), the Members intend such payment to be treated
as preserving the value of the contribution made pursuant to Article II of the
Contribution Agreement by the Member liable for the indemnity payment. Toward
that end, each indemnity obligation arising in respect of a Company
Indemnifiable Payment will be treated as having arisen immediately prior to such
contribution of assets by the Indemnifying Party, the Indemnifying Party will be
treated as if it had originally contributed assets with a Carrying Value
increased by the amount of the Company Indemnifiable Payment, and the Company
will be treated as having assumed an additional liability in the amount of the
Company Indemnifiable Payment. As a result, the amounts credited to the Capital
Accounts of the Class C Members in the aggregate and the Class P Members in the
aggregate will remain equal. The Members also intend that the tax consequences
of such Company Indemnifiable Payment and the indemnification payment itself
shall inure to the Indemnifying Party, but, except as otherwise agreed by the
Members, only to the extent that such tax result can
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be achieved without causing the Capital Accounts of the Class C Members in the
aggregate and the Capital Accounts of the Class P Members in the aggregate to
fail to be equal.
(b) If a Member makes any payment to a third party that is subject to
indemnification by the Company pursuant to the Contribution Agreement or Annex B
or C thereto (a "Member Indemnifiable Payment"), the Members intend that the tax
consequences of such Member Indemnifiable Payment and the indemnification
payment itself shall inure to the Company and be shared by the Members in
accordance with their respective Percentage Interests, but, except as otherwise
agreed by the Members, only to the extent that such tax results can be achieved
without causing the Capital Accounts of the Class C Members in the aggregate and
the Capital Accounts of the Class P Members in the aggregate to fail to be
equal.
8.8 TREATMENT OF CERTAIN DEFERRED CAPITAL CONTRIBUTIONS. As a result of
the K-Resin Accident, the value of certain assets contributed by the Class P
Members at Closing had declined from that which existed when the Members were
first agreeing on the economic terms of the arrangement described in this
Agreement. The Members could not agree on the amount of the decline in value, in
part because they were unable to reach an agreement on the likely time and
expense involved in repairing the damage caused by the K-Resin Accident and the
degree and permanence of any loss of customers that the K-Resin Accident may
cause. In order to resolve the issue, it was agreed that one or more of the
Class P Members might have to make capital contributions to the Company after
the Closing under the circumstances and in the amounts calculated under the
provisions of the Contribution Agreement. The Members view such deferred capital
contributions as necessary to preserve the pre K-Resin Accident value of the
business and assets contributed by the Class P Members. The Members agree that
any deferred contributions are capital contributions and will not be reported as
income by the Company.
8.9 SPECIAL RULE. An Indemnifying Party will indemnify the Indemnified
Party on a Net After-Tax Basis against any income or franchise tax incurred in
the event that any indemnification payment is treated as taxable income to the
Indemnified Party. For purposes of this paragraph, "Net After-Tax Basis" means
after any U.S. federal, state or local income or franchise taxes (computed using
the Tax Rate) incurred as a result of such indemnification (assuming the
deductibility of such state and local income and franchise taxes in calculating
federal income tax), reduced by any tax benefit arising as a result of such
indemnification.
8.10 APPLICATION OF THE BASKET, TAX BASKET AMOUNT AND CAP. No provision of
this Agreement or the Contribution Agreement (including the Annexes thereto)
shall be applied or interpreted in a manner that would cause any indemnification
payment to be made that otherwise would not be payable because of application of
the Basket, Tax Basket Amount or the Cap.
ARTICLE 9
ALLOCATION OF PROFITS AND LOSSES; DISTRIBUTIONS; TAX AND ACCOUNTING MATTERS
9.1 ALLOCATIONS. Net Profit and Net Loss of the Company shall be
determined and allocated with respect to each Fiscal Year, Fiscal Quarter or
other period of the Company as follows:
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(a) GENERAL ALLOCATION. Except as otherwise provided in this Article 9,
Net Profit and Net Loss for each Fiscal Year, Fiscal Quarter or other period
shall be allocated to the Members in accordance with their Percentage Interests.
(b) REGULATORY ALLOCATIONS. Notwithstanding the foregoing, the
following special allocations shall be made for each Fiscal Year or other
period in the following order of priority:
(i) If there is a net decrease in Company Minimum Gain during a
Company taxable year, then each Member shall be allocated items of Company
income and gain for such taxable year (and, if necessary, for subsequent
years) in an amount equal to such Member's share of net decrease in
Company Minimum Gain, determined in accordance with section 1.704-2(g)(2)
of the Income Tax Regulations. This subsection (b)(i) is intended to
comply with the minimum gain chargeback requirement of section 1.704-2(f)
of the Income Tax Regulations and shall be interpreted consistently
therewith.
(ii) If there is a net decrease in Member Nonrecourse Debt Minimum
Gain attributable to a Member Nonrecourse Debt during any Company taxable
year, each Member who has a share of the Member Nonrecourse Debt Minimum
Gain attributable to such Member Nonrecourse Debt, determined in
accordance with section 1.704-2(i)(5) of the Income Tax Regulations, shall
be specially allocated items of Company income and gain for such taxable
year (and, if necessary, subsequent years) in the amount equal to such
Member's share of net decrease in Member Nonrecourse Debt Minimum Gain
attributable to such Member Nonrecourse Debt, determined in a manner
consistent with the provisions of section 1.704-2(i)(4) of the Income Tax
Regulations. This subsection (b)(ii) is intended to comply with the
partner nonrecourse debt minimum gain chargeback requirement of section
1.704-2(i)(4) of the Income Tax Regulations and shall be interpreted
consistently therewith.
(iii) If any Member unexpectedly receives (or Members unexpectedly
receive) an adjustment, allocation or distribution of the type
contemplated by section 1.704-1(b)(2)(ii)(d)(4), (5) or (6) of the Income
Tax Regulations, items of income and gain shall be allocated to such
Member (or if more than one Member receives such an adjustment, allocation
or distribution, items of income and gain shall be allocated to such
Members in proportion to the amounts of their respective Adjusted Capital
Account Deficits) in an amount (or amounts) and manner sufficient to
eliminate the Adjusted Capital Account Deficit of such Member (or deficits
of such Members) as quickly as possible. It is intended that this
subsection (b)(iii) qualify and be construed as a "qualified income
offset" within the meaning of section 1.704-1(b)(2)(ii)(d) of the Income
Tax Regulations.
(iv) If the allocation of Net Loss to a Member as provided in
Section 9.1(a) would create or increase an Adjusted Capital Account
Deficit and one or more other Members would have a positive Capital
Account balance, there shall be allocated to such Member only that amount
of Net Loss as will not create or increase an Adjusted Capital Account
Deficit. The Net Loss that would, absent the
-25-
application of the preceding sentence, otherwise be allocated to such
Member shall, subject to the Adjusted Capital Account Deficit limitations
of such sentence, be allocated to those Members having positive Capital
Account balances up to the amount of such positive Capital Account
balances in the ratios that each such Member's positive Capital Account
Balance bears to the sum of such positive Capital Account balances. To the
extent that allocations of Net Losses have been made pursuant to this
subsection (b)(iv), future allocations of Net Profits, notwithstanding
anything to the contrary in this Agreement, shall be made first to restore
such Net Losses.
(v) Member Nonrecourse Deductions for any Fiscal Year or other
period shall be allocated each year to the Member that bears the economic
risk of loss (within the meaning of section 1.752-2 of the Income Tax
Regulations) for the Member Nonrecourse Debt to which such Member
Nonrecourse Deductions are attributable.
(vi) Nonrecourse Deductions for any Fiscal Year or other period
shall be allocated to the Members in proportion to their respective
Percentage Interests.
(vii) To the extent an adjustment to the adjusted tax basis of any
Company asset, pursuant to Code Section 734(b) or Code Section 743(b) is
required, pursuant to section 1.704-1(B)(2)(IV)(M)(2) or
1.704-1(b)(2)(iv)(M)(4) of the Income Tax Regulations, to be taken into
account in determining Capital Accounts as the result of a distribution to
a Member in compete liquidation of such Member's interest in the Company,
the amount of such adjustment to Capital Accounts shall be treated as an
item of gain (if the adjustment increases the basis of the asset) or loss
(if the adjustment decreases such basis) and such gain or loss shall be
specially allocated to the Members in accordance with their interests in
the Company in the event section 1.704-1(b)(2)(iv)(M)(2) of the Income Tax
Regulations applies, or to the Member to whom such distribution was made
in the event section 1.704-1(b)(2)(iv)(M)(4) of the Income Tax Regulations
applies
(viii) The allocations set forth in subsections (b)(i) through
(b)(vii) (the "REGULATORY ALLOCATIONS") are intended to comply with
certain requirements of sections 1.704-1(b), 1.704-2(f) and 1.704-2(i) of
the Income Tax Regulations. Notwithstanding the provisions of Section
9.1(a), the Regulatory Allocations shall be taken into account in
allocating other items of income, gain, loss and deduction among the
Members so that, to the extent possible, the net amount of such
allocations of other items and the Regulatory Allocations to each Member
shall be equal to the net amount that would have been allocated to each
Member if the Regulatory Allocations had not occurred.
(c) TAX ALLOCATIONS.
(i) Except as provided in subsection (c)(ii), for income tax
purposes under the Code and the Income Tax Regulations, Company taxable
income and loss
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shall be allocated to each Member in the same manner that Company Net
Profit and Net Loss (and items entering into the determination thereof)
are allocated.
(ii) SECTION 704(C). In accordance with section 704(c) of the Code
and the Income Tax Regulations thereunder, income, gain, loss and
deduction with respect to any property contributed to the capital of the
Company shall, solely for income tax purposes, be allocated so as to take
account of any variation between the adjusted basis of such property to
the Company for federal income tax purposes and the initial Carrying Value
of such property. If the Carrying Value of any Company property is
adjusted as described in the definition of "Carrying Value", subsequent
allocations of income, gain, loss, and deduction with respect to such
asset shall take account of any variation between the adjusted basis of
such asset for federal income tax purposes and the Carrying Value of such
asset in the manner prescribed under Sections 704(b) and 704(c) of the
Code and the Income Tax Regulations thereunder. With respect to assets
contributed or required to be contributed by the Members at the Closing
pursuant to the Contribution Agreement, for purposes of applying section
704(c) of the Code and this Section 9.1(c)(ii), the Company shall use the
traditional method with curative allocations set forth in section
1.704-3(c) of the Income Tax Regulations. Any elections or other decisions
relating to such allocations shall be made by the Board of Directors.
(d) DEPRECIATION RECAPTURE. Solely for tax purposes, a Member's share of
the Company's depreciation recapture recognized for tax purposes upon the
disposition of Company property shall be computed in the manner provided for in
sections 1.704-3(a)(11), 1.1245-1(e) and 1.1250-1(f) of the Income Tax
Regulations. The provisions of this Section 9.1(d) are intended to affect only
the character of the items of gain allocated by the Company to the Members. This
Section 9.1(d) shall not affect the aggregate amount of gain (including gain
characterized under this Section 9.1(d) as depreciation recapture) otherwise
allocable to a Member pursuant to this Section 9.1.
(e) CHANGE IN PERCENTAGE INTERESTS. Except as otherwise required by law,
if the Percentage Interests of the Members of the Company are changed during any
taxable year, all items to be allocated to the Members for such entire taxable
year shall be prorated on the basis of the portion of such taxable year which
precedes each such change and the portion of such taxable year on and after each
such change according to the number of days in each such portion, and the items
so allocated for each such portion shall be allocated to the Members in the
manner in which such items are allocated as provided in Section 9.1(a) during
each such portion of the taxable year in question.
(f) EXCESS NONRECOURSE LIABILITIES. Nonrecourse liabilities of the Company
that constitute "excess nonrecourse liabilities" within the meaning of section
1.752-3(a)(3) of the Income Tax Regulations, shall be allocated among the
Members in proportion to their respective Percentage Interests.
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(g) ALLOCATIONS IN RESPECT OF PREFERRED INTERESTS. Commencing on the date
of this Agreement, for each Fiscal Year, Fiscal Quarter, or other period of the
Company, before any allocation pursuant to Section 9.1(a), Net Profits for such
period shall be allocated to the Members holding Preferred Interests pro rata in
accordance with their respective Preferred Percentage Interests until the
cumulative amount of Net Profits allocated in respect of the Preferred
Percentage Interests pursuant to this section for the current Fiscal Year and
all prior Fiscal Years or portions thereof equals the cumulative amount of
Preferred Distributions made pursuant to Section 9.2(i) for all periods up to
and including the period in which the allocation of Net Profits under this
Section is being made. Net Losses shall not be allocated to a Member holding a
Preferred Interest to the extent the allocation of Net Losses would cause the
Capital Account of such Member to be less than the sum of such Member's Unpaid
Preferred Yield and Unrecovered Preferred Contribution.
(h) ALLOCATIONS RELATING TO CAPITAL TRANSACTIONS. In connection with the
sale or other disposition of all or substantially all of the assets of the
Company (including upon liquidation of the Company), items of income, gain, loss
and deduction shall, except as otherwise required by subsections (b) through (f)
above, be allocated to the Members in the following order and manner:
(i) First, in an amount equal to the Unpaid Preferred
Yield up to the date of such allocation.
(ii) Second, to each Member owning a Preferred Interest in the ratio
that its Unrecovered Preferred Contribution bears to the aggregate
Unrecovered Preferred Contributions of all Members up to an amount that
causes the Capital Account of each Member owning a Preferred Interest to
equal its respective Unrecovered Preferred Contribution. For purposes of
this Section 9.1(h)(ii), Capital Accounts shall be computed by excluding
therefrom allocations of items of income, gain, loss and deduction made
under Sections 9.1(h)(i).
(iii) Last, in such amounts as shall cause (A) the ratio of the
Capital Account of each Member to the aggregate Capital Accounts of all
Members to (B) equal as nearly as possible each Member's respective
Percentage Interest. For purposes of this Section 9.1(h)(iii), Capital
Accounts shall be computed by excluding therefrom allocations of items of
income, gain, loss and deduction made under Sections 9.1(h)(i) and (ii).
(i) STATE AND LOCAL ITEMS. Items of income, gain, loss, deduction, credit
and tax preference for state and local income tax purposes shall be allocated to
and among the Members in a manner consistent with the allocation of such items
for federal income tax purposes in accordance with the foregoing provisions of
this Section 9.1.
9.2 DISTRIBUTIONS.
(a) The Company shall distribute to each Member as promptly as practicable
(and in any event within forty-five (45) days) after the end of each of the
first three (3) Fiscal Quarters of each Fiscal Year of the Company an amount
equal to such Member's Quarterly Tax Distribution
-28-
for such Fiscal Quarter. In addition, the Company shall distribute to each
Member as promptly as practicable (and in any event within forty-five (45) days)
after the end of each Fiscal Year an amount equal to the excess, if any, of such
Member's Proportionate Tax Share for such Fiscal Year over the aggregate amount
of Quarterly Tax Distributions made to such Member with respect to such Fiscal
Year.
(b) At the end of each of the second Fiscal Quarter and the fourth Fiscal
Quarter, the Board of Directors shall determine if a Leverage Ratio Deficit
exists. If a Leverage Ratio Deficit exists, the Board of Directors, as promptly
as practicable after the end of such Fiscal Quarter, shall meet and take such
action as the Directors deem necessary to reduce the Leverage Ratio Deficit to
zero. If the Board of Directors fails to reduce the Leverage Ratio Deficit to
zero within forty-five (45) days following the end of the second or fourth
Fiscal Quarter, the Chief Executive Officer shall cause the Company to
distribute to the Members in proportion to their relative Percentage Interests
an amount equal to the Minimum Leverage Distribution for the applicable
six-month period.
(c) Any distributions by the Company to the Members, other than the Tax
Distribution, the Minimum Leverage Distribution and any distributions of a
Mandatory Redemption Payment, shall be payable at the discretion of the Board of
Directors.
(d) To the extent the Company is required by law to withhold or to make
tax payments on behalf of or with respect to any Member, the Company may
withhold such amounts and make such tax payments as so required. For purposes of
this Agreement, any such payments or withholdings shall be treated as a
distribution to the Member on behalf of whom the withholding or payment was
made.
(e) Notwithstanding anything to the contrary contained in this Section
9.2, the Company shall not make any distribution to the Members which would
render the Company insolvent or which is otherwise prohibited by applicable law.
(f) Subsequent to the Closing, the Company made distributions to the
Members as provided in Section 9.2(f) of the Amended & Restated LLC Agreement,
and, after such distributions, the aggregate Capital Accounts of the Class C
Members remained equal to the aggregate Capital Accounts of the Class P Members.
The Company will use its best efforts to avoid taking any action that, or
failing to take any action the failure of which to take, is likely to cause all
or part of the distributions made pursuant to Section 9.2(f) of the Amended &
Restated LLC Agreement to be taxable to one or more of the Members and in
connection therewith the Members shall cooperate with the Company and each
other.
(g) In the event that, within two years of the Closing or any contribution
of an asset to the Company, the Members desire for the Company to make a
distribution or payment to any of the Members or pay all or a portion of any
liability, and if such distribution or payment to a Member or such payment of a
liability may give rise to a disguised sale under section 707(a)(2)(B) of the
Code or corresponding provision of state or local law, the Members shall
cooperate to avoid such result without changing the intended economics of the
arrangement.
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(h) FORMATION AND REIMBURSEMENT FOR CAPITAL EXPENDITURES.
(i) The Members intended that the contributions of P Chem (as
defined in the Contribution Agreement) and C Chem (as defined in the
Contribution Agreement) constitute a nonrecognition transaction pursuant
to Section 721(a) of the Code, and the Members reported and caused the
Company to report and otherwise treat the transfers of P Chem and C Chem
to the Company as solely a nonrecognition transaction pursuant to Section
721(a) of the Code on all relevant tax returns and reports. Each Class P
Member states that it has made capital expenditures that are eligible for
reimbursement pursuant to Regulations Section 1.707-4(d) ("REIMBURSABLE
CAPITAL Expenditures") with respect to P Chem in an amount that is not
less than the amount set forth opposite its name on Schedule 3 attached
hereto, and the Class C Member states that it has made Reimbursable
Capital Expenditures with respect to C Chem in an amount that is not less
than the amount set forth opposite its name on Schedule 3 attached hereto.
(ii) If, absent this Section 9.2(h), any distribution to a Class P
Member would cause any of the P Chem property transferred by that Member
to the Company pursuant to the Contribution Agreement to be treated as a
sale of such property, or if, absent this Section 9.2(h), any distribution
to a Class C Member would cause any of the C Chem property transferred by
that Member to the Company pursuant to the Contribution Agreement to be
treated as a sale of such property, then, to the extent permitted by
Regulations Section 1.707-4(d), the Company and the Members shall treat
such distribution as a reimbursement of Reimbursable Capital Expenditures
made by such Member (up to the amount thereof as set forth on Schedule 3
less any portion of such amount that has been reimbursed by any prior
distribution treated as a reimbursement of Reimbursable Capital
Expenditures under this Section 9.2(h)).
(iii) Without limiting the generality of the foregoing Section
9.2(h)(ii), if, absent this Section 9.2(h), any distribution to a Member
would cause any of the property transferred by that Member to the Company
pursuant to the Contribution Agreement to be treated as a sale of such
property, then, to the extent permitted by Regulations Section 1.707-4(d),
the Members and the Company shall treat (i) any excess of any of the
distribution to a Class C Member of the Initial Financing required by
Section 9.2(f) of the LLC Agreement and Section 6.16 of the Contribution
Agreement and any distribution in respect of Actual Contributed Cash
and/or Working Capital Difference required by Section 3.3 of the
Contribution Agreement (collectively, the "Special Distribution") over the
Class C Member's "allocable share" (within the meaning of Regulations
Section 1.707-5(b)) of the Interim Financing or other borrowing of the
Company, the proceeds of which are allocable (within the meaning of
Regulations Section 1.707-5(b) and Notice 89-35, 1989-1 C.B. 675) to such
Special Distribution, as reimbursements of Reimbursable Capital
Expenditures incurred by such Class C Member (up to the amount thereof as
set forth on Schedule 3 less any portion of such amount that has been
reimbursed by any prior distribution treated as a reimbursement of
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Reimbursable Capital Expenditures under this Section 9.2(h)), and (ii) any
excess of the Special Distribution to a Class P Member over the Class P
Member's "allocable share" (within the meaning of Regulations Section
1.707-5(b)) of the Interim Financing or other borrowing of the Company,
the proceeds of which are allocable (within the meaning of Regulations
Section 1.707-5(b) and Notice 89-35, 1989-1 C.B. 675) to such Special
Distribution, as reimbursements of Reimbursable Capital Expenditures
incurred by such Class P Member (up to the amount thereof as set forth on
Schedule 3 less any portion of such amount that has been reimbursed by any
prior distribution treated as a reimbursement of Reimbursable Capital
Expenditures under this Section 9.2(h)).
(i) PREFERRED DISTRIBUTIONS.
(i) A preferred return ("PREFERRED YIELD") shall accrue with respect
to each Preferred Interest at the rate of 9.0% per annum on the
Unrecovered Preferred Contribution of the Member holding such Preferred
Interest. Subject to the Board of Directors' discretion to declare
distributions as provided in Section 9.2(c), each Member holding a
Preferred Interest shall be entitled to receive distribution of its
respective Preferred Yield as and when declared by the Board of Directors
("PREFERRED DISTRIBUTIONS"). Preferred Distributions are payable only to
the extent that the Company has funds on hand legally available therefor.
(ii) The Preferred Yield will (A) accrue and accumulate from the
most recent date on which all accrued and unpaid Preferred Yield has been
paid or, if no Preferred Yield has been paid, from and including July 1,
2002; (B) be payable quarterly in arrears on March 31, June 30, September
30 and December 31 of each year, commencing on September 30, 2002, except
to the extent any such payment is deferred as permitted under Section
9.2(c); and (C) be payable from the Company's positive Cash Earnings, but
only to the extent of the Company's Net Profits for any Fiscal Quarter.
(iii) The amount of any Preferred Yield for any period will be
computed on the basis of a 360-day year consisting of twelve 30-day months
and for any period of less than a full calendar month on the basis of the
actual number of days elapsed in such month. If any date on which
Preferred Distributions are payable is not a Business Day, then payment of
the amount payable on such date shall be made on the next succeeding day
that is a Business Day (and without any interest or other payment in
respect of any such delay), except that, if such Business Day is in the
next succeeding calendar year, such payment shall be made on the
immediately preceding Business Day, in each case with the same force and
effect as if made on the date such payment was originally payable (each
date on which a Preferred Distribution is payable in accordance with the
foregoing, a "PREFERRED DISTRIBUTION DATE").
(iv) Each Preferred Distribution will be payable to the holders of
Preferred Interests as they appear on the Company's books and records as
of the
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close of business on the record date for such Preferred Distribution,
which shall be the Business Day before such Preferred Distribution Date.
(v) The Company shall notify each Member as promptly as practicable
upon determining that a Preferred Distribution is required under this
Section 9.2(i). Such notice shall specify as to each Member the amount of
such Preferred Distribution and the relevant Preferred Distribution Date
(j) MANDATORY REDEMPTION OF PREFERRED INTERESTS.
(i) Subject to the restriction in Section 9.2(e), if, in any Fiscal
Quarter, the Company has achieved the Preferred Target Ratio, the Company
shall redeem Preferred Interests by making cash distributions in return of
$25,000,000 of Preferred Contributions and, in addition, shall pay all
Unpaid Preferred Yield on such amount of Preferred Contributions to the
Mandatory Redemption Payment Date therefor (each such payment, a
"MANDATORY REDEMPTION PAYMENT"). Each Mandatory Redemption Payment shall
be apportioned among the Members pro rata according to their respective
Preferred Percentage Interests. Upon distribution of each Mandatory
Redemption Payment, (A) the Preferred Contributions of each Member holding
a Preferred Interest shall be reduced by an amount equal to the Mandatory
Redemption Payment apportioned to it less any amount of the Mandatory
Redemption Payment distributed in payment of Unpaid Preferred Yield and
(B) such Member's Preferred Percentage Interest shall be reduced
accordingly.
(ii) The Company shall notify each Member as promptly as practicable
upon determining that a Mandatory Redemption Payment is required under
this Section 9.2(j). Such notice shall specify as to each Member the
amount of such Mandatory Redemption Payment, the date upon which such
Mandatory Redemption Payment shall be made (the "MANDATORY REDEMPTION
PAYMENT DATE"), and the amount of Unpaid Preferred Yield to be included in
such payment.
(iii) The Company shall distribute each Mandatory Redemption Payment
to the Members as promptly as practicable (and in any event within
forty-five (45) days) after the end of each Fiscal Quarter in which it
achieves the Preferred Target Ratio.
(iv) Each Mandatory Redemption Payment will be distributable to the
holders of Preferred Interests as they appear on the Company's books and
records as of the close of business on the Business Day before the
relevant Mandatory Redemption Payment Date.
(v) Except as provided in Section 9.2(j)(i), no Member may require
the Company to redeem all or any part of its Preferred Interest.
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(k) RIGHT OF OPTIONAL REDEMPTION OF PREFERRED INTEREST.
(i) In addition to its mandatory redemption obligations under
Section 9.2(j)(i) above, the Company also shall have the right,
exercisable in its sole and absolute discretion, to redeem Preferred
Interests, in whole or in part, at any time by making cash distributions
in return of Preferred Contributions and, in addition, by paying all
Unpaid Preferred Yield on such amount of Preferred Contributions, in each
case to the date of such optional redemption distribution (this right
being the "RIGHT OF OPTIONAL REDEMPTION"). The Right of Optional
Redemption does not limit the Company's obligations under Section
9.2(j)(i).
(ii) To exercise its Right of Optional Redemption, the Company shall
declare the amount of Preferred Contributions to be returned and amount of
Unpaid Preferred Yield thereon to the Optional Redemption Payment Date
therefor (the "OPTIONAL REDEMPTION AMOUNT"). Distributions of the Optional
Redemption Amount shall be apportioned among the Members according to
their respective Preferred Percentage Interests. Upon each distribution of
an Optional Redemption Amount, (A) the Preferred Contribution of each
Member holding a Preferred Interest shall be reduced by an amount equal to
the Optional Redemption Amount apportioned to it less any amount of the
Optional Redemption Amount distributed in payment of Unpaid Preferred
Yield and (B) such Member's Preferred Percentage Interest shall be reduced
accordingly.
(iii) The Company shall not declare any redemption of less than ten
million dollars ($10,000,000) of Preferred Contributions.
(iv) The Company shall notify each Member as promptly as practicable
upon determining that it will exercise its Right of Optional Redemption
under this Section 9.2(k). Such notice shall specify as to each Member the
Optional Redemption Amount, the date upon which such redemption shall be
made (the "OPTIONAL REDEMPTION PAYMENT DATE"), and the amount of Unpaid
Preferred Yield to be included in such payment.
(v) The Company shall distribute the Optional Redemption Amount as
promptly as practicable (and in any event within fifteen (15) days) after
determining to exercise the Right of Optional Redemption.
(vi) Each Optional Redemption Amount will be distributable to the
holders of Preferred Interests as they appear on the Company's books and
records as of the close of business on the Business Day before the
relevant Optional Redemption Payment Date.
(l) PREFERRED INTERESTS TO BE RETIRED UPON REDEMPTION IN FULL. When (i)
all Unpaid Preferred Yield has been distributed and (ii) the Company has
returned all Preferred Contributions (whether pursuant to this Section 9.2(j)(i)
or pursuant to Section 9.2(k)), the Preferred Interests shall be deemed to be
retired, and the Members shall have no further rights with respect to such
Preferred Interests.
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9.3 ACCOUNTING MATTERS. The Company's tax year shall be the calendar year
unless otherwise required by section 706 of the Code or the Income Tax
Regulations thereunder. The Board of Directors shall cause to be maintained
complete books and records accurately reflecting the accounts, business and
transactions of the Company on a calendar-year basis and using such cash,
accrual, or hybrid method of accounting as in the judgment of the Board of
Directors is most appropriate; provided, however, that books and records with
respect to the Company's Capital Accounts and allocations under this Agreement
of Net Profit and Net Loss (and items entering into the determination thereof)
and income, gain, loss, deduction or credit (or item thereof) shall be kept on
the basis of the Company's Fiscal Year and under United States federal income
tax accounting principles as applied to partnerships.
9.4 TAX STATUS AND RETURNS.
(a) Any provision hereof to the contrary notwithstanding, solely for
United States federal income tax purposes, each of the Members hereby recognizes
that the Company is subject to all provisions of Subchapter K of Chapter 1 of
Subtitle A of the Code; PROVIDED, HOWEVER, that the filing of U.S. Partnership
Returns of Income shall not be construed to expand the purposes of the Company
or expand the obligations or liabilities of the Members.
(b) The chief financial officer shall prepare or cause to be prepared all
tax returns and statements, if any, that must be filed on behalf of the Company
with any taxing authority, and shall make timely filing thereof. Within
one-hundred eighty (180) days after the end of each calendar year, the Company
shall cause to be prepared and delivered to each Member a report setting forth
in reasonable detail the information with respect to the Company during such
calendar year reasonably required to enable each Member to prepare its federal,
state and local income tax returns in accordance with applicable law then
prevailing.
9.5 754 ELECTION AND OTHER TAX ELECTIONS. In the event of a distribution
of property to a Member, or a transfer of any interest in the Company permitted
under the Act or this Agreement, the Company, upon the written request of the
transferor or transferee, shall file a timely election under section 754 of the
Code and the Income Tax Regulations thereunder to adjust the basis of the
Company's assets under section 734(b) or 743(b) of the Code and a corresponding
election under the applicable provisions of state and local law, and the person
making such request shall pay all costs incurred by the Company in connection
therewith, including reasonable attorneys' and accountants' fees. Other tax
elections and decisions relating to Taxes not specifically governed by any other
express provision of this Agreement shall be made as agreed by the Board of
Directors.
9.6 TAX MATTERS PARTNER
(a) The Initial Xxxxxxxx Member shall be the Company's "tax matters
partner" for purposes of subchapter C of chapter 63 of subtitle F of the Code
(dealing with the tax treatment of partnership items); PROVIDED, HOWEVER, that
the tax matters partner shall not take any action without the approval of the
Board of Directors or its designee; and provided, further, that the tax matters
partner shall receive no compensation for its services as tax matters partner
but shall be reimbursed for any out-of-pocket expenses incurred in acting in
such capacity.
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(b) The Company shall indemnify the tax matters partner (including the
officers and directors of a corporate tax matters partner) against judgments,
fines, amounts paid in settlement, and expenses (including attorney fees)
reasonably incurred in any civil, criminal, or investigative proceeding in which
they are involved or threatened to be involved by reason of being the tax
matters partner unless the tax matters partner acted in bad faith or with gross
negligence. The indemnification provided hereunder shall not be deemed exclusive
of any other rights to which those indemnified may be entitled under any
applicable statute, agreement, vote of Partners, or otherwise.
ARTICLE 10
RESTRICTIONS ON TRANSFER
10.1 TRANSFER OF INTERESTS. No Member may sell, assign, transfer or
hypothecate ("Transfer") all or any part of its Membership Interest in the
Company, or any interest therein, except in accordance with the terms and
conditions set forth in this Article 10.
10.2 CONDITIONS OF TRANSFER. No Member may Transfer all or any part of
such Member's Membership Interest, or any interest therein, except in compliance
with Section 10.6, Section 10.7 or Article 11, such compliance to be jointly
determined by the chief executive officer and the chief financial officer and
documented by a certificate evidencing such Transfer. Moreover, no Member may
Transfer all or any part of such Member's Membership Interest, or any interest
therein, unless such Transfer will not (and, upon request of the Board of
Directors, the transferring Member provides an opinion of counsel in form and
substance reasonably satisfactory to the Board of Directors that such Transfer
will not): (A) violate any applicable federal or state securities laws or
regulations, subject the Company to registration as an investment company or
election as a "business development company" under the Investment Company Act of
1940; (B) require any Member or any affiliate of a Member to register as an
investment adviser under the Investment Advisers Act of 1940; (C) violate any
other federal, state or local laws; (D) effect a termination of the Company
under section 708 of the Code; (E) cause the Company to be treated as an
association taxable as a corporation for federal income tax purposes; (F) cause
the Company or any Member to be treated as an ERISA fiduciary; or (G) otherwise
violate this Agreement.
10.3 ADMISSION OF SUBSTITUTE MEMBER. In the event of a Transfer pursuant
to Section 10.6, 10.7 or Article 11, and the requirements of Section 10.2 and
this Section 10.3 are met, then the transferee of the Member's Membership
Interest shall be entitled to be admitted to the Company as a substitute Member,
and this Agreement (and all exhibits hereto) shall be amended to reflect such
admission, provided that the following conditions are complied with:
(a) The transferor and transferee shall have executed and acknowledged
such instruments as the Board of Directors may deem necessary or desirable to
effect the substitution;
(b) The transferee acknowledges all of the terms and provisions of this
Agreement as the same may have been amended and agrees in writing to be bound by
the same;
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(c) The transferee reimburses the Company for all reasonable expenses
connected with such admission including, but not limited to, legal fees and
costs;
(d) The filing with the Company, if required by the Board of Directors, of
such proof of the investment intent and financial status of the transferee as
the Board of Directors may request; and
(e) Compliance with all applicable federal and state securities laws.
10.4 EFFECT OF TRANSFER WITHOUT APPROVAL. Any purported Transfer of all or
any part of a Member's Membership Interest, or any interest therein, which is
not in compliance with this Article 10 shall be void and, except as provided for
in Section 10.5, below, shall be of no effect.
10.5 LIABILITY FOR BREACH. Notwithstanding anything to the contrary in
this Article 10, any Member purporting to Transfer its Membership Interest, or
any part thereof, in violation of this Article 10 shall be liable to the Company
and the other Members for all liabilities, obligations, damages, losses, costs
and expenses (including reasonable attorneys' fees and court costs) arising as a
direct or consequential result of such non-complying transfer, attempted
transfer or purported transfer, including specifically, any additional cost or
taxes created by non-compliance with any of the requirements and conditions
provided for in Section 10.2.
10.6 PERMITTED TRANSFERS SUBJECT TO RIGHT OF FIRST REFUSAL.
(a) At any time after the three (3) year anniversary of the Closing Date,
the Class C Member(s) or the Class P Member(s) (a "Transferring Class") may
Transfer not less than all of their respective Class Membership Interest to a
Person for cash, subject to the Right of First Refusal provided for in this
Section 10.6 and the last sentence of Section 10.2.
(b) In the event that any Transferring Class has received a bona fide
written cash offer, which such Transferring Class is willing to accept, for the
Transferring Class to sell not less than all of its respective Class Membership
Interest (the "Transferred Interest") to any Person, the Transferring Class
shall deliver a written notice (the "Transfer Notice") to all of the Members,
other than the Members in the Transferring Class, (the "Non-Transferring Class")
stating the Transferring Class's intent to sell the Transferred Interest
pursuant to a bona fide cash offer. The Transfer Notice shall (i) specify the
purchase price for and other material terms with respect to the sale of the
Transferred Interest, (ii) identify the proposed purchaser of the Transferred
Interest, (iii) specify the date scheduled for the transfer (which date shall
not be earlier than one hundred twenty (120) days from the date the Transfer
Notice is delivered), (iv) contain a statement that the offer has been accepted
pending compliance with the right of first refusal set forth herein and receipt
of required regulatory and other approvals, and (v) shall have attached thereto
a copy of the written offer containing all of the terms and conditions on which
the Transferred Interest is to be sold.
(c) The Non-Transferring Class shall have the exclusive option to purchase
all (but not less than all) of the Transferred Interest on terms and conditions
substantially the same in all material respects as, and at the same price, set
forth in the written offer delivered pursuant to subsection (b) above. The
Non-Transferring Class shall notify the Company and the
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Transferring Class of its intention to exercise or not to exercise the right of
first refusal hereunder within forty-five (45) days of receipt by the
Non-Transferring Class of a Transfer Notice.
(d) In the event that the Non-Transferring Class shall have duly elected
to purchase the Transferred Interest (the "Electing Class"), the Electing Class
and the Transferring Class shall diligently pursue obtaining all regulatory
approvals and use best commercially reasonable efforts to consummate the closing
of the purchase of the Transferred Interest as soon as practicable and in any
event within one year from receipt of the Transfer Notice; provided that, if
such closing does not occur within such one-year period due to the failure to
obtain any required regulatory approvals, the Electing Class's right to close
such sale may be extended at the option of the Electing Class, until such
regulatory approvals are obtained, but in no event for a period of greater than
one additional year. In the event of a failure of the Non-Transferring Class to
elect to purchase all of the Transferred Interest or a failure of the Electing
Class to consummate such purchase in accordance herewith, the Transferring Class
will be free, at any time within 120 days from the date the Non-Transferring
Class elect not to exercise their purchase rights hereunder or from the date the
time periods specified in this section for such election have expired, subject,
in each case, to extension for up to an additional eight (8) months to the
extent necessary to achieve any required regulatory approvals, to consummate the
sale of the Transferred Interest to the purchaser at a price and upon terms and
conditions no more favorable to the purchaser than those specified in the
Transfer Notice; provided that the purchaser shall assume all of the liabilities
and obligations of the Transferring Class under this Agreement by a binding
written instrument which shall be enforceable by the Company and the
Non-Transferring Class.
(e) A Transferring Class shall not be relieved of any of its obligations
arising under this Agreement prior to such Transfer. The Transferring Class and
any transferee shall execute such documents as the Non-Transferring Class shall
reasonably request to evidence the Transfer and the assumption and continuing
obligations under this Agreement.
(f) At the request of a Member, the Company will provide prospective
purchasers of such Member's Class Membership Interest with reasonable access to
financial, operating and other information of the Company, subject to customary
confidentiality agreements which shall include provisions to protect
competitively sensitive information. Each Member shall cooperate with, and shall
not oppose, the closing of any Transfer which is in Compliance with this Section
10.6.
10.7 PERMITTED TRANSFERS AMONG WHOLLY-OWNED AFFILIATES. Notwithstanding
anything contained herein to the contrary, any Member may Transfer all or any
portion of its Membership Interest to a Wholly-Owned Affiliate of such Member,
and such Transfer shall be deemed automatically approved by the Board of
Directors; provided, however, that such Transfer otherwise meets the conditions
and requirements of Sections 10.2 and 10.3.
10.8 TRANSFERS OF EQUITY INTERESTS IN A MEMBER. A sale, assignment,
transfer or hypothecation of any direct or indirect equity interest in a Member
by a Parent of such Member shall be deemed to be a Transfer by that Member of
its Membership Interest in the Company for purposes of this Article 10 and shall
not be permitted except in accordance with the terms and conditions set forth in
this Article 10. ChevronTexaco and Xxxxxxxx shall comply with this
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Section 10.8 and shall take all necessary action to cause their Affiliates to
comply with this Section 10.8. For the purpose of clarification of this Section
10.8, a change of control of the Ultimate Parent of any Member shall not be
considered a Transfer of such Member's Membership Interest or a Transfer of the
equity interest in such Member.
ARTICLE 11
COMPETITION
11.1 GENERAL. The Members expect that the Company shall be the primary
vehicle by which each the Members (together with their Affiliates) engage in the
Chemicals Business. If a majority in interest of the Members of one class (the
"Non-Competing Class") concludes in good faith that the Company is no longer the
primary vehicle by which the Members of the other class (together with its
Affiliates) (the "Competing Class") is engaged in the Chemicals Business, then
the Non-Competing Class shall have the right to send written notice of such good
faith conclusion ("Conflict Notice") to the Competing Class. Upon receipt of the
Conflict Notice, the Competing Class shall enter into good faith negotiations
with the Non-Competing Class to resolve any or all substantial conflicts of
interest resulting from the ownership of businesses competing with the
businesses of the Company.
11.2 RESOLUTION OF COMPETITIVE CONFLICTS.
(a) In the event that:
(i) A Non-Competing Class exercises its right to require a Competing
Class to engage in good faith negotiations pursuant to Section 11.1;
(ii) The Non-Competing Class and Competing Class are unable to
resolve the conflicts of interest within 150 days of the delivery of the
Conflict Notice; and
(iii) The value (in the opinion of a nationally recognized
investment bank selected by the Board of Directors) of the Competing
Class's (including its Affiliates') interests in businesses competing with
the businesses of the Company exceeds 50% of the enterprise value of the
Company;
then, in such case, the Non-Competing Class shall have the right, within 30 days
from the later of (x) the expiration of the period in (ii) above or (y) the
determination in (iii) above, to state a single cash price at which it is
prepared to purchase the Class Membership Interest of the Competing Class, which
will constitute a binding offer to purchase (the "Initial Offer"). In the event
of an Initial Offer, the Competing Class shall have 60 days to decide either to
accept the Initial Offer or to make a counter-offer by stating a single cash
price, which is at least 5% higher than the Initial Offer, at which it is
prepared to purchase the Class Membership Interest of the Non-Competing Class (a
"Counter-Offer"). In the event of a Counter-Offer, the Non-Competing Class shall
have 30 days to decide either to accept the Counter-Offer or to make another
offer by stating a single cash price, which is at least 5% higher than the
Counter-Offer, at which it is prepared to purchase the Class Membership Interest
of the Competing Class (a "Subsequent Offer"). In the event of a Subsequent
Offer by the Non-Competing Class, the Competing Class shall have 30 days to
decide either to accept the Subsequent Offer or to make another counter-
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offer by stating a single cash price, which is at least 5% higher than the
Subsequent Offer, at which it is prepared to purchase the Class Membership
Interest of the Non-Competing Class. The offering process described in this
paragraph shall continue in this manner until a price is reached at which either
the Competing Class or the Non-Competing Class is willing to sell its Class
Membership Interest to the other class. Notwithstanding anything to the contrary
in the foregoing, a Member may also sell its Class Membership Interest pursuant
to the right of first refusal provisions set forth in Section 10.6.
(b) In the event that a Non-Competing Class has concluded in good faith
that the Company is no longer the primary vehicle by which a Competing Class is
engaged in the Chemicals Business in accordance with Section 11.1, and:
(i) a sale pursuant to subsection (a) above is not
concluded (whether or not the condition expressed in subsection
(a)(iii) above is satisfied); and
(ii) the Competing Class and Non-Competing Class have not been able
to resolve, pursuant to Section 11.1 above, all substantial conflicts of
interest resulting from the ownership by the Competing Class of a
substantial business competing with the businesses of the Company;
then either the Competing Class or the Non-Competing Class may require the other
class from time to time to enter into good faith negotiations to cause the
Company (and/or the Members) to adopt such reasonable, mutually acceptable
provisions as would mitigate the potential adverse consequences of the conflicts
of interests on the continuing businesses of the Company. Such provisions could
include, for example, restrictions on the dissemination and use of confidential
information, greater delegation of authority to management of the Company, or
modification of minimum distribution requirements or the non-involvement of the
Competing Class in business decisions of the Company potentially affecting such
competing businesses.
ARTICLE 12
TERM AND DISSOLUTION
12.1 TERM. Except as provided in Section 12.2 hereof, the existence
of the Company shall be perpetual.
12.2 DISSOLUTION. The Company shall be dissolved and its affairs
wound up upon the first to occur of the following:
(a) The approval of dissolution by the Board of Directors; or
(b) The bankruptcy or dissolution of either all of the Class C Members or
all of the Class P Members.
12.3 LIQUIDATION.
(a) Upon the occurrence of an event of dissolution as defined in the Act
or in Section 12.2 of this Agreement, the Company shall cease to engage in any
further business, except to the
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extent necessary to perform existing obligations, and shall wind up its affairs
and liquidate its assets. The Board of Directors, or if there be no Directors
then in office the Members, shall appoint a liquidator (who may, but need not,
be a Member) who shall have sole authority and control over the winding up and
liquidation of the Company's business and affairs and shall diligently pursue
the winding up and liquidation of the Company. As soon as practicable after his
appointment, the liquidator shall cause to be filed a statement of intent to
dissolve as required by section 18-203 of the Act.
(b) During the course of liquidation, the Members shall continue to share
profits and losses as provided in Section 9.1 of this Agreement, but there shall
be no cash distributions or Preferred Distributions to the Members until the
Distribution Date (as defined in Section 12.4).
(c) A Member shall not have any obligation to contribute any amount to the
Company in the event of a negative balance in its Capital Account.
12.4 LIABILITIES. Liquidation shall continue until the Company's affairs
are in such condition that there can be a final accounting, showing that all
fixed or liquidated obligations and liabilities of the Company are satisfied or
can be adequately provided for under this Agreement. The assumption or guarantee
in good faith by one or more financially responsible persons shall be deemed to
be an adequate means of providing for such obligations and liabilities. When the
liquidator has determined that there can be a final accounting, the liquidator
shall establish a date (not to be later than the end of the taxable year of the
liquidation, i.e., the time at which the Company ceases to be a going concern as
provided in section 1.704-1(b)(2)(ii)(g) of the Income Tax Regulations, or, if
later, ninety (90) days after the date of such liquidation) for the distribution
of the proceeds of liquidation of the Company (the "Distribution Date"). The net
proceeds of liquidation of the Company shall be distributed to the Members as
provided in Section 12.6 hereof not later than the Distribution Date.
12.5 SETTLING OF ACCOUNTS. Subject to section 18-804 of the Act, upon the
dissolution and liquidation of the Company, the proceeds of liquidation shall be
applied as follows: (a) first, to pay all expenses of liquidation and winding
up; (b) second, to pay all debts, obligations and liabilities of the Company, in
the order of priority as provided by law, other than debts owing to the Members
or on account of Members' contributions; (c) third, to pay all debts of the
Company owing to a Member; and (d) to establish reasonable reserves for any
remaining contingent or unforeseen liabilities of the Company not otherwise
provided for, which reserves shall be maintained by the liquidator on behalf of
the Company in a regular interest-bearing trust account for a reasonable period
of time as determined by the liquidator. If any excess funds remain in such
reserves at the end of such reasonable time, then such remaining funds shall be
distributed by the Company to the Members pursuant to Section 12.6 hereof.
12.6 DISTRIBUTION OF PROCEEDS.
(a) Subject to section 18-804 of the Act, upon final liquidation of the
Company but not later than the Distribution Date, the net proceeds of
liquidation remaining following the
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settling of accounts in accordance with Section 12.5 hereof shall be distributed
to the Members in the following order and manner:
(i) Preferred Interests Liquidation Preference.
(A) First, to Members owning Preferred Interests in proportion
to their respective Preferred Percentage Interests up to an amount
equal to the Unpaid Preferred Yield, provided, however, no amount
distributed to a Member under this section 12.6(a)(i)(A) shall
exceed the positive balance in such Member's Capital Account.
(B) Second, to each Member owning a Preferred Interest in the
ratio that its Unrecovered Preferred Contribution bears to the
aggregate Unrecovered Preferred Contributions of all Members up to
the amount of its respective Unrecovered Preferred Contribution,
provided, however, no amount distributed to a Member under this
section 12.6(a)(i)(B) shall exceed the positive balance in such
Member's Capital Account after reflecting any distribution to such
Member made pursuant to and in accordance with Section
12.6(a)(i)(A).
(ii) Last, to the Members in proportion to and up to the balance of
their respective positive Capital Accounts after reflecting therein any
distributions to Members made pursuant to and in accordance with Section
12.6(a)(i).
(b) The balance of Members' Capital Accounts immediately prior to
distributions under Section 12.6(a) shall be determined after all adjustments to
such Capital Accounts for the taxable year of the Company during which the
liquidation occurs as are required by this Agreement and Income Tax Regulations
section 1.704-1(b), such adjustments to be made within the time specified in
such Income Tax Regulations.
12.7 CERTIFICATE OF CANCELLATION. Upon dissolution and liquidation of the
Company, the liquidator shall cause to be executed and filed with the Secretary
of State of the State of Delaware, a certificate of cancellation in accordance
with section 18-203 of the Act.
ARTICLE 13
INDEMNIFICATION
13.1 INDEMNIFICATION: PROCEEDING OTHER THAN BY COMPANY. The Company shall
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative, except an action by or in the
right of the Company, by reason of the fact that he is or was a Director, Member
or officer of the Company (and may similarly indemnify employees or agents of
the Company), or is or was serving at the request of the Company as a manager,
member, director, officer, employee or agent of another limited liability
company, corporation, partnership, joint venture, trust or other enterprise,
against expenses, including attorneys' fees, judgments, fines and amounts paid
in settlement actually and reasonably incurred by him in connection with the
action, suit or proceeding if he acted in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
Company, and, with
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respect to any criminal action or proceeding, had no reasonable cause to believe
his 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, does not, of itself, create a presumption that the person did
not act in good faith and in a manner which he reasonably believed to be in or
not opposed to the best interests of the Company, and that, with respect to any
criminal action or proceeding, he had reasonable cause to believe that his
conduct was unlawful.
13.2 INDEMNIFICATION: PROCEEDING BY COMPANY.
(a) The Company shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the Company to procure a judgment in its favor by
reason of the fact that he is or was an officer of the Company (and may
similarly indemnify employees or agents of the Company), or is or was serving at
the request of the Company as a manager, member, director, officer, employee or
agent of another limited liability company, corporation, partnership, joint
venture, trust or other enterprise against expenses, including amounts paid in
settlement and attorneys' fees actually and reasonably incurred by him in
connection with the defense or settlement of the action or suit if he acted in
good faith and in a manner which he reasonably believed to be in or not opposed
to the best interests of the Company.
(b) The Company will indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the Company to procure a judgment in its favor by
reason of the fact that he is or was a Director of the Company, or is or was a
Director of the Company serving at the request of the Company as a manager,
member, director, officer, employee or agent of another limited liability
company, corporation, partnership, joint venture, trust or other enterprise
against expenses, including amounts paid in settlement and attorneys' fees
actually and reasonably incurred by him in connection with the defense or
settlement of the action or suit if he acted in good faith in accordance with
Section 4.8 hereof.
(c) With respect to indemnification pursuant to subsection (a) or (b)
above, such indemnification may not be made for any claim, issue or matter as to
which such a person has been adjudged by a court of competent jurisdiction,
after exhaustion of all appeals therefrom, to be liable to the Company or for
amounts paid in settlement to the Company, unless and only to the extent that
the court in which the action or suit was brought or other court of competent
jurisdiction determines upon application that in view of all the circumstances
of the case, the person is fairly and reasonably entitled to indemnity for such
expenses as the court deems proper.
13.3 MANDATORY ADVANCEMENT OF EXPENSES. The expenses of Directors, Members
and officers incurred in defending a civil or criminal action, suit or
proceeding must be paid by the Company as they are incurred and in advance of
the final disposition of the action, suit or proceeding, upon receipt of an
undertaking by or on behalf of the Director, Member or officer to repay the
amount if it is ultimately determined by a court of competent jurisdiction that
he is not entitled to be indemnified by the Company. The provisions of this
Section 13.3 do not affect any rights to advancement of expenses to which
personnel of the Company other than Directors, Members or officers may be
entitled under any contract or otherwise.
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13.4 EFFECT AND CONTINUATION. The indemnification and advancement of
expenses authorized in or ordered by a court pursuant to Section 13.1 to Section
13.3, inclusive:
(a) Does not exclude any other rights to which a person seeking
indemnification or advancement of expenses may be entitled under the Certificate
or any limited liability company agreement, vote of Members or disinterested
Directors, if any, or otherwise, for either an action in his official capacity
or an action in another capacity while holding his office, except that
indemnification, unless ordered by a court pursuant to Section 13.2 or for the
advancement of expenses made pursuant to Section 13.3, may not be made to or on
behalf of any Member, Director or officer if a final adjudication establishes
that his acts or omissions involved intentional misconduct, fraud or a knowing
violation of the law and was material to the cause of action.
(b) Continues for a person who has ceased to be a Member, Director,
officer, employee or agent and inures to the benefit of his heirs, executors and
administrators.
13.5 INSURANCE AND OTHER FINANCIAL ARRANGEMENTS.
(a) The Board of Directors may cause the Company to purchase and maintain
insurance or make other financial arrangements on behalf of any person who is or
was a Member, Director, officer, employee or agent of the Company, or is or was
serving at the request of the Company as a manager, Member, director, officer,
employee or agent of another limited liability company, corporation,
partnership, joint venture, trust or other enterprise for any liability asserted
against him and liability and expenses incurred by him in his capacity as a
Director, member, director, officer, employee or agent, or arising out of his
status as such, whether or not the Company has the authority to indemnify him
against such liability and expenses.
(b) The other financial arrangements made by the Company pursuant to
Section 13.5(a) may include:
(i) The creation of a trust fund;
(ii) The establishment of a program of self-insurance;
(iii) The securing of its obligation of indemnification by
granting a security interest or other lien on any assets of the
Company; or
(iv) The establishment of a letter of credit, guaranty or
surety.
No financial arrangement made pursuant to this Section 13.5(b) may provide
protection for a person adjudged by a court of competent jurisdiction, after
exhaustion of all appeals therefrom, to be liable for intentional misconduct,
fraud or a knowing violation of law, except with respect to the advancement of
expenses or indemnification ordered by a court.
(c) In the absence of fraud:
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(i) The decision of the Company as to the propriety of the terms and
conditions of any insurance or other financial arrangement made pursuant
to this Section 13.5 and the choice of the person to provide the insurance
or other financial arrangement is conclusive; and
(ii) The insurance or other financial arrangement:
(A) Is not void or voidable; and
(B) Does not subject any Director or Member
approving it to personal liability for his action,
even if a Director or Member approving the insurance or other financial
arrangement is a beneficiary of the insurance or other financial arrangement.
13.6 NOTICE OF INDEMNIFICATION AND ADVANCEMENT. Any indemnification of, or
advancement of expenses to, a Director, Member or officer in accordance with
this Article 13, if arising out of a proceeding by or on behalf of the Company,
shall be reported in writing to the Members with or before the notice of the
next Members' meeting.
13.7 REPEAL OR MODIFICATION. Any repeal or modification of this Article 13
by the Members of the Company shall not adversely affect any right of a
Director, Member or officer of the Company existing hereunder at the time of
such repeal or modification.
ARTICLE 14
INSPECTION OF COMPANY RECORDS; ANNUAL AND OTHER REPORTS
14.1 RECORDS TO BE KEPT. The Company shall keep at its registered office:
(a) A current list of the full name and last known business, residence or
mailing address of each Member and Director separately identifying the Members
in alphabetical order and the Directors, if any, in alphabetical order;
(b) A copy of the filed Certificate and all amendments thereto, together
with executed copies of any powers of attorney pursuant to which any document
has been executed;
(c) Copies of this Agreement, and all amendments hereto;
(d) Copies of the Company's federal income tax returns and reports, if
any, for, at least, the three most recent years; and
(e) Copies of any financial statements of the Company for, at least, the
three most recent years.
14.2 ACCESS TO COMPANY INFORMATION. The accounting books and records, the
record of Members, and minutes of proceedings of the Members of the Company,
including, without limitation such information necessary to conduct periodic
audits of various kinds (e.g. EHS,
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financial), shall be open to inspection upon the reasonable request of any
Member at any reasonable time during usual business hours, for a purpose
reasonably related to such Member's interest as a Member. Such inspection by a
Member may be made in person or by agent or attorney, and the right of
inspection includes the right to copy and make extracts. In addition, the
Members shall have reasonable access to the Officers of the Company in order to
discuss the Company's business.
14.3 ANNUAL AND QUARTERLY REPORTS.
(a) The Board of Directors shall within 45 days after the end of the first
three Fiscal Quarters and within 90 days after the close of a Fiscal Year,
deliver or mail to the Members, the quarterly and annual, respectively,
financial statements of the Company.
(b) The income statements and balance sheets referred to in this Section
14.3 shall be accompanied by the report thereon, if any, of any independent
accountants engaged by the Company or the certificate of an authorized officer
of the Company that such financial statements were prepared without audit from
the books and records of the Company.
(c) The annual financial statements of the Company shall be audited by
independent accountants, and independent accountants shall participate in the
preparation of quarterly financial statements of the Company, in each case
consistent with the rules of the Securities and Exchange Commission relating to
annual and quarterly financial statements of publicly traded companies.
ARTICLE 15
DEFAULTS AND REMEDIES
15.1 DEFAULTS. If a Member materially defaults in the performance of its
obligations under this Agreement, and such default is not cured within ten (10)
days after notice of such default is given by a Director to the defaulting
Member for a default that can be cured by the payment of money, or within thirty
(30) days after notice of such default is given by a Director to the defaulting
Member for any other default, then the non-defaulting Members shall have the
rights and remedies described in Section 15.2 hereunder in respect of the
default.
15.2 REMEDIES. If a Member fails to perform its obligations under this
Agreement, any other Member shall have, in addition to any rights and remedies
provided hereunder, all such rights and remedies as are provided at law or in
equity.
15.3 NO WAIVER. No consent or waiver, express or implied, by a Member to
or of any breach or default by another Member in the performance by such other
Member of its obligations under this Agreement shall constitute a consent to or
waiver of any similar breach or default by any other Member. Failure by a Member
to complain of any act or omission to act by another Member, or to declare such
other Member in default, irrespective of how long such failure continues, shall
not constitute a waiver by such Member of its rights under this Agreement.
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ARTICLE 16
MISCELLANEOUS
16.1 AMENDMENTS.
(a) Subject to any contrary provisions of the Act, this Agreement may be
amended only by the affirmative vote of Members owning all of the Class
Membership Interest of both Class C and Class P. Any such amendment shall be in
writing, duly executed by all the Members.
(b) Subject to any contrary provisions of the Act, the Certificate may
only be amended by the affirmative vote of Members owning one hundred percent
(100%) of all of the Percentage Interests entitled to vote. Any such amendment
shall be in writing, and shall be executed and filed in accordance with section
18-202 of the Act.
16.2 REPRESENTATION OF SHARES OF COMPANIES OR INTERESTS IN OTHER ENTITIES.
The chief executive officer, any vice president or the secretary or any
assistant secretary of this Company is authorized to vote, represent and
exercise on behalf of this Company all rights incident to any and all shares of
any other company or companies, or any interests in any other entity, standing
in the name of this Company. The authority herein granted to said officers to
vote or represent on behalf of this Company any and all shares held by this
Company in any other company or companies, or any interests in any other entity,
may be exercised either by such officers in person or by any other person
authorized so to do by proxy or power of attorney duly executed by said
officers.
16.3 SEAL. The Members or Board of Directors may adopt a seal of the
Company in such form as the Members or the Board of Directors (as the case may
be) shall decide.
16.4 ACTIONS BY CLASS P MEMBERS AND CLASS C MEMBERS. Xxxxxxxx shall ensure
that each of the Class P Members, and ChevronTexaco shall ensure that each of
the Class C Members, takes all actions necessary to be taken by such Member in
order to fulfill the obligations of such Member, or of Xxxxxxxx or
ChevronTexaco, as the case may be, under this Agreement.
16.5 ENTIRE AGREEMENT. This Agreement, including the exhibits and
schedules hereto, constitutes the entire agreement between the Members with
respect to the subject matter hereof, and supersedes all prior and
contemporaneous agreements, representations, and understandings of the parties.
No party hereto shall be liable or bound to the other in any manner by any
warranties, representations or covenants with respect to the subject matter
hereof except as specifically set forth herein.
16.6 THIRD PARTIES. Nothing in this Agreement, express or implied, is
intended to confer upon any party, other than the parties hereto, and their
respective successors and permitted assigns, any rights, remedies, obligations
or liabilities under or by reason of this Agreement, except that the provisions
of Article 13 are for the benefit of the persons to be indemnified by the
Company.
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16.7 GOVERNING LAW; JURISDICTION AND FORUM; WAIVER OF JURY TRIAL.
(a) This Agreement shall be governed by and construed under the
substantive laws of the State of Delaware, without regard to Delaware choice of
law provisions.
(b) Each party hereto irrevocably submits to the jurisdiction of any
Delaware state court or any federal court sitting in the State of Delaware in
any action arising out of or relating to this Agreement, and hereby irrevocably
agrees that all claims in respect of such action may be heard and determined in
such Delaware state or federal court. Each party hereto hereby irrevocably
waives, to the fullest extent it may effectively do so, the defense of an
inconvenient forum to the maintenance of such action or proceeding. The parties
hereto further agree, to the extent permitted by law, that final and
unappealable judgment against any of them in any action or proceeding
contemplated above shall be conclusive and may be enforced in any other
jurisdiction within or outside the United States by suit on the judgment, a
certified copy of which shall be conclusive evidence of the fact and amount of
such judgment.
(c) To the extent that any party hereto has or hereafter may acquire any
immunity from jurisdiction of any court or from any legal process (whether
through service or notice, attachment prior to judgment, attachment in aid of
execution, execution or otherwise) with respect to itself or its property, each
party hereto hereby irrevocably waives such immunity in respect of its
obligations with respect to this Agreement.
(d) Each party hereto waives, to the fullest extent permitted by
applicable laws, any right it may have to a trial by jury in respect of any
action, suit or proceeding arising out of or relating to this Agreement. Each
party hereto certifies that it has been induced to enter into this Agreement by,
among other things, the mutual waivers and certifications set forth above in
this Section 16.7.
16.8 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument, and shall become
effective when there exist copies hereof which, when taken together, bear the
authorized signatures of each of the parties hereto. Only one such counterpart
signed by the party against whom enforceability is sought needs to be produced
to evidence the existence of this Agreement.
16.9 TITLES AND SUBTITLES; FORM OF PRONOUNS; CONSTRUCTION AND DEFINITIONS.
The titles of the sections and paragraphs of this Agreement are for convenience
only and are not to be considered in construing this Agreement. All pronouns
used in this Agreement shall be deemed to include masculine, feminine and neuter
forms, the singular number includes the plural and the plural number includes
the singular. Unless otherwise specified, references to Sections or Articles are
to the Sections or Articles in this Agreement. Unless the context otherwise
requires, the term "including" shall mean "including, without limitation".
16.10 DELAWARE LIMITED LIABILITY COMPANY ACT PREVAILS. Unless the context
otherwise requires, the general provisions, rules of construction and
definitions contained in the Act and the Delaware General Corporation Law shall
govern the construction of this Agreement; provided,
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however, that in the event of any inconsistency between such laws, the
provisions of the Act shall prevail.
16.11 SEVERABILITY. If one or more provisions of this Agreement are held
by a proper court to be unenforceable under applicable law, portions of such
provisions, or such provisions in their entirety, to the extent necessary and
permitted by law, shall be severed herefrom, and the balance of this Agreement
shall be enforceable in accordance with its terms.
16.12 EFFECTIVE DATES OF AMENDMENTS. The amendments made by Amendment No.
1 to the Amended & Restated LLC Agreement which is restated in Section 9.2(h)
hereof remain effective as of July 1, 2000. All other amendments made by this
Agreement are effective as of the date first set forth above.
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IN WITNESS WHEREOF, the undersigned hereby execute this Second Amended and
Restated Limited Liability Company Agreement as of the date first set forth
above.
CHEVRON U.S.A. INC.
By /s/ XXXXXX X. XXXXXX
-------------------------------
Name Xxxxxx X. Xxxxxx
Title Assistant Treasurer
CHEVRONTEXACO CORPORATION
By /s/ XXXXXX X. XXXXXX
-------------------------------
Name Xxxxxx X. Xxxxxx
Title Assistant Treasurer
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XXXXXXXX PETROLEUM COMPANY
By /s/ X. X. XXXXXX
-------------------------------
Name X. X. Xxxxxx
Title Vice President and Treasurer
XXXXXXXX CHEMICAL HOLDINGS COMPANY
By /s/ XXXXXXX X. XXXXXXX
-------------------------------
Name Xxxxxxx X. Xxxxxxx
Title Vice President and Assistant Treasurer
WESTTEX 66 PIPELINE CO.
By /s/ XXXXXXX X. XXXXXXX
-------------------------------
Name Xxxxxxx X. Xxxxxxx
Title Vice President and Assistant Treasurer
XXXXXXXX PETROLEUM INTERNATIONAL
CORPORATION
By /s/ XXXXXXX X. XXXXXXX
-------------------------------
Name Xxxxxxx X. Xxxxxxx
Title Vice President and Assistant Treasurer
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SCHEDULE 1
NAMES AND ADDRESSES OF MEMBERS
Chevron U.S.A. Inc.
000 Xxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Xxxxxxxx Petroleum Company
Xxxxxxxx Xxxxxxxx
Xxxxxxxxxxxx, XX 00000
Xxxxxxxx Chemical
Holdings Company
0000 Xxxxx Xxxxxxxx
Xxxxxxxxxxxx, XX 00000
WesTTex 66 Pipeline Co.
0000 Xxxxx Xxxxxxxx
Xxxxxxxxxxxx, XX 00000
Xxxxxxxx International Petroleum Corporation
0000 Xxxxx Xxxxxxxx
Xxxxxxxxxxxx, XX 00000
S1-1
SCHEDULE 2
NAMES, CLASS OF MEMBERSHIP INTEREST, CAPITAL CONTRIBUTIONS AND PERCENTAGE
INTERESTS OF MEMBERS
PREFERRED
CLASS OF MEMBERSHIP PERCENTAGE PERCENTAGE
NAME OF MEMBER INTEREST DATES OF CONTRIBUTIONS INTEREST INTEREST
Chevron U.S.A. Inc.
000 Xxxxxx Xxxxxx Xxxxxxx xxx
Xxx Xxxxxxxxx, XX 00000 C July 1, 2002 50% 50%
Xxxxxxxx Petroleum Company
Xxxxxxxx Building Closing and
Xxxxxxxxxxxx, XX 00000 P July 1, 2002 37.9% 37.9%
Xxxxxxxx Chemical
Holdings Company
0000 Xxxxx Xxxxxxxx Xxxxxxx xxx
Xxxxxxxxxxxx, XX 00000 P July 1, 2002 .4% .4%
WesTTex 66 Pipeline Co.
0000 Xxxxx Xxxxxxxx Xxxxxxx xxx
Xxxxxxxxxxxx, XX 00000 P July 1, 2002 2.1% 2.1%
Xxxxxxxx International Petroleum
Corporation
0000 Xxxxx Xxxxxxxx Xxxxxxx xxx
Xxxxxxxxxxxx, XX 00000 P July 1, 2002 9.6% 9.6%
TOTAL ALL MEMBERS 100% 100%
----------------- ---- ----
S2-1
SCHEDULE 3
REIMBURSEABLE CAPITAL EXPENDITURES
NAME OF MEMBERS REIMBURSABLE CAPITAL EXPENDITURE
Chevron U.S.A. Inc. $310 Million
Xxxxxxxx Petroleum Company $200 Million
Drilling Specialties Co. $1.2 Million
WesTTex 66 Pipeline Co. $5 Million
Xxxxxxxx Petroleum International Corporation $47 Million
S3-1
