EXHIBIT 3.2
TRAVELCENTERS OF AMERICA LLC
AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT
This Amended and Restated Limited Liability Company Agreement of
TravelCenters of America LLC, a Delaware limited liability company (the
"COMPANY"), dated _______________, is entered into by and among Hospitality
Properties Trust, a Maryland real estate investment trust ("HPT"), together with
any other Persons who hereafter become Shareholders in TravelCenters of America
LLC or parties hereto as provided herein. This Agreement amends and restates in
its entirety the Limited Liability Company Agreement of TravelCenters of America
LLC, dated October 10, 2006 (the "ORIGINAL LLC AGREEMENT"). HPT was the original
holder of the limited liability company interests of the Company; subsequent
transfers of such interests were made, but at the time of the execution hereof
HPT is the owner of all of the outstanding limited liability company
interests of the Company.
In consideration of the covenants, conditions and agreements contained
herein, the parties hereto hereby agree to amend and restate the Original LLC
Agreement in its entirety as follows:
ARTICLE I
DEFINITIONS
Section 1.1 DEFINITIONS.
The following definitions shall be for all purposes, unless otherwise
clearly indicated to the contrary, applied to the terms used in this Agreement.
Additional definitions related to restrictions on ownership of Shares are
contained in Article VIII.
"ACQUIRING PERSON" has the meaning assigned to such term in Section
13.1(b).
"AFFILIATE" means, with respect to any Person, any other Person that
directly or indirectly through one or more intermediaries controls, is
controlled by or is under common control with the Person in question. As used
herein, the term "control" means the possession, direct or indirect, of the
power to direct or cause the direction of the management and policies of a
Person, whether through ownership of voting securities, by contract or
otherwise.
"AGREEMENT" means this Amended and Restated Limited Liability Company
Agreement of TravelCenters of America LLC, as it may be amended, supplemented or
restated from time to time.
"BOARD OF DIRECTORS" has the meaning assigned to such term in Section
7.1(a).
"BUSINESS DAY" means Monday through Friday of each week, except that a
legal holiday recognized as such by the U.S. Government shall not be regarded as
a Business Day.
"CERTIFICATE" means a certificate (i) issued in global form in accordance
with the rules and regulations of the Depository or (ii) in such other form as
may be adopted by the Board of Directors that is issued by the Company to
evidence ownership of one or more Shares or one or more other securities of the
Company.
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"CERTIFICATE OF FORMATION" means the Certificate of Formation of the
Company filed with the Secretary of State of the State of Delaware on October
10, 2006, which filing is hereby ratified and approved in all respects, as such
Certificate of Formation may be amended, supplemented or restated from time to
time.
"CHAIRMAN OF THE BOARD" has the meaning assigned to such term in Section
7.1(k).
"CODE" means the Internal Revenue Code of 1986, as amended and in effect
from time to time, or any successor to such statute.
"COMMISSION" means the United States Securities and Exchange Commission.
"COMMON SHARES" means Shares representing common limited liability company
interests in the Company, as further described in Article V.
"COMPANY" has the meaning assigned to such term in the preamble.
"DELAWARE GENERAL CORPORATION LAW" means the Delaware General Corporation
Law, as amended, supplemented or restated from time to time, or any successor to
such statute.
"DELAWARE LLC ACT" means the Delaware Limited Liability Company Act, as
amended, supplemented or restated from time to time, or any successor to such
statute.
"DELIVERY DATE" has the meaning assigned to such term in Section 9.1(i).
"DEPOSITORY" means, with respect to any Shares issued in global form, The
Depository Trust Company and its successors and permitted assigns.
"DIRECTOR" means a member of the Board of Directors of the Company.
"DISTRIBUTION" means the distribution by HPT of all of the issued and
outstanding Common Shares of the Company to the Transfer Agent, which
distribution shall be effected by written instructions to distribute such Common
Shares to each holder of record of HPT common shares, as further described in
the Transaction Agreement.
"DISTRIBUTION DATE" means the date on which the Distribution takes place.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
supplemented or restated from time to time, or any successor to such statute,
and the applicable rules and regulations thereunder.
"EXCHANGE RULE" means a rule of the National Securities Exchange on which
the Common Shares or other securities of the Company are listed for trading.
"HPT" has the meaning assigned to such term in the prologue to this
Agreement.
"INDEMNITEE" means (a) any natural Person who is or was an officer
(including any Officer), director (including any Director), trustee, manager or
partner of the Company or any Subsidiary of the Company, (b) any natural Person
who is or was serving at the request of the Company as an officer, director,
member, trustee, manager or partner of another Person (PROVIDED THAT a Person
shall not be an Indemnitee by reason of providing, on a fee-for-services basis,
trustee, fiduciary or custodial services)
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and (c) any Person the Board of Directors designates as an "Indemnitee" for
purposes of this Agreement. For purposes of this Agreement, HPT and Reit
Management & Research LLC, together with their respective officers and
directors, are each designated as Indemnitees.
"INITIAL SHAREHOLDER" means HPT.
"LIQUIDATION DATE" means the date on which an event giving rise to the
dissolution of the Company occurs.
"LIQUIDATOR" means one or more Persons selected by the Board of Directors
to perform the functions described in Section 12.2 as liquidating trustee of the
Company within the meaning of the Delaware LLC Act.
"MEETING RECORD DATE" has the meaning assigned to such term in Section
9.1(i).
"MERGER AGREEMENT" has the meaning assigned to such term in Section 14.1.
"NATIONAL SECURITIES EXCHANGE" means an exchange registered with the
Commission under Section 6(a) of the Exchange Act, as amended, supplemented or
restated from time to time, and any successor to such statute.
"OFFICERS" has the meaning assigned to such term in Section 7.3(a).
"OPINION OF COUNSEL" means a written opinion of counsel (who may be regular
counsel to the Company or any of its Affiliates) acceptable to the Board of
Directors.
"OUTSTANDING" means, with respect to any securities of the Company, all
securities of the Company that are issued by the Company and reflected as
outstanding on the Company's books and records as of the date of determination.
"PERSON" means an individual or a corporation, limited liability company,
partnership, joint venture, trust, unincorporated organization or other
enterprise (including an employee benefit plan), association, government agency
or political subdivision thereof or other entity.
"PLAN OF CONVERSION" has the meaning assigned to such term in Section 14.1.
"PRIME RATE" means the prime rate of interest as quoted from time to time
by The Wall Street Journal or another source reasonably selected by the Company.
"PRO RATA" means apportioned equally among all Shares of the class or
series in question.
"QUARTER" means, unless the context requires otherwise, a fiscal quarter of
the Company, or, with respect to the first fiscal quarter ending after the
Distribution Date, the portion of such fiscal quarter after the Distribution
Date.
"RECORD DATE" means the date established by the Board of Directors for
determining (a) the identity of the Record Holders entitled to notice of, or to
vote at, any meeting of Shareholders or entitled to exercise rights in respect
of any lawful action of Shareholders or (b) the identity of Record Holders
entitled to receive any report or distribution or to participate in any offer.
"RECORD DATE REQUEST NOTICE" has the meaning assigned to such term in
Section 9.1(f).
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"RECORD HOLDER" means the Person in whose name Shares are registered on the
books of the Transfer Agent as of the opening of business on a particular
Business Day, or with respect to other securities of the Company, the Person in
whose name any such other securities are registered on the books that the
Company has caused to be kept as of the opening of business on such Business
Day.
"REQUEST RECORD DATE" has the meaning assigned to such term in Section
9.1(f).
"SECURITIES ACT" means the Securities Act of 1933, as amended, supplemented
or restated from time to time, or any successor to such statute, and the
applicable rules and regulation thereunder.
"SHARE DESIGNATION" has the meaning assigned to such term in Section
5.3(b).
"SHARE MAJORITY" means a majority of the Outstanding Common Shares.
"SHARE PLURALITY" means a majority of the Outstanding Shares of all classes
and series of Shares with voting power, voting together as a single class, that
have voted on the matter in question at the conclusion of voting thereon, as
prescribed or determined by the Board of Directors.
"SHARE SEPARATE CLASS APPROVAL" means a majority of the Outstanding Shares
of each class and series of Shares with voting power, voting separately by class
and series.
"SHARE SUPER-MAJORITY APPROVAL" means 75% of the Outstanding Shares of each
class and series of Shares with voting power, voting together as a single class.
"SHARES" means the shares of any class or series of limited liability
company interest in the Company (but excluding any options, rights, warrants and
appreciation rights relating to a limited liability company interest in the
Company), including Common Shares.
"SHAREHOLDERS" means the holders of Shares that have been admitted to the
Company as members of the Company in accordance with this Agreement.
"SHAREHOLDER REQUESTED MEETING" has the meaning assigned to such term in
Section 9.1(i).
"SHAREHOLDER ASSOCIATED PERSON" has the meaning assigned to such term in
Section 9.7(a).
"SPECIAL MEETING PERCENTAGE" has the meaning assigned to such term in
Section 9.1(e).
"SPECIAL MEETING REQUEST" has the meaning assigned to such term in Section
9.1(g).
"SUBSIDIARY" means, with respect to any Person, (a) a corporation of which
more than 50% of the voting power of shares entitled (without regard to the
occurrence of any contingency) to vote in the election of directors or other
governing body of such corporation is owned, directly or indirectly, at the date
of determination, by such Person, by one or more Subsidiaries of such Person or
a combination thereof, (b) a partnership (whether general or limited) in which
such Person or a Subsidiary of such Person is, at the date of determination, a
general or limited partner of such partnership, but only if more than 50% of the
partnership interests of such partnership (considering all of the partnership
interests of the partnership as a single class) is owned, directly or
indirectly, at the date of determination, by such Person, by one or more
Subsidiaries of such Person, or a combination thereof, or (c) any other Person
(other than a corporation or a partnership) in which such Person, one or more
Subsidiaries of such Person, or a combination thereof, directly or indirectly,
at the date of determination, has (i) at least a
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majority ownership interest or (ii) the power to elect or direct the election of
a majority of the directors or other governing body of such Person.
"SURVIVING BUSINESS ENTITY" has the meaning assigned to such term in
Section 14.2.
"TRANSACTION AGREEMENT" means the Transaction Agreement made on or about
the date hereof by and among HPT, HPT TA Properties Trust, HPT TA Properties
LLC, Reit Management & Research LLC and the Company, as the same may be amended,
supplemented or restated from time to time.
"TRANSFER" has the meaning assigned to such term in Section 4.4.
"TRANSFER AGENT" means such bank, trust company or other Person (including
the Company or one of its Affiliates) as shall be appointed from time to time by
the Company to act as registrar and transfer agent for the Shares; PROVIDED THAT
if no Transfer Agent is specifically designated for Shares or any other
securities of the Company, the Company shall act in such capacity.
"TREASURY REGULATIONS" means the Treasury Regulations (including temporary
and proposed regulations) promulgated by the United States Department of
Treasury with respect to the Code or other federal tax statutes.
"U.S. GAAP" means United States generally accepted accounting principles as
in effect from time to time.
Section 1.2 CONSTRUCTION.
Unless the context requires otherwise: (a) any pronoun used in this
Agreement shall include the corresponding masculine, feminine or neuter forms,
and the singular form of nouns, pronouns and verbs shall include the plural and
vice versa; (b) references to Articles and Sections refer to Articles and
Sections of this Agreement; and (c) the term "include" or "includes" means
include(s), without limitation, and "including" means including, without
limitation.
ARTICLE II
ORGANIZATION
Section 2.1 FORMATION. The Initial Shareholder formed the Company as a limited
liability company pursuant to the provisions of the Delaware LLC Act and hereby
adopts this Agreement in its entirety as an amendment and restatement of the
Original LLC Agreement of the Company. Except as expressly provided to the
contrary in this Agreement, the rights, duties (including fiduciary duties),
liabilities and obligations of the Directors and Shareholders and the
administration, dissolution and termination of the Company shall be governed by
the Delaware LLC Act. All Shares shall constitute personal property of the owner
thereof for all purposes, and a Shareholder has no interest in specific Company
property.
Section 2.2 NAME. The name of the Company shall be TravelCenters of America LLC.
The Company's business may be conducted under any other name or names, as
determined by the Board of Directors. The Board of Directors may change the name
of the Company at any time and from time to time and shall notify the
Shareholders of such change in the next regular communication to the
Shareholders.
Section 2.3 REGISTERED OFFICE; REGISTERED AGENT; PRINCIPAL OFFICE; OTHER
OFFICES. The Board of Directors may establish and change the principal office or
place of business of the Company at any time and may cause the Company to
establish other offices or places of business in various
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jurisdictions. The name and address of the registered agent and the address of
the registered office for service of process on the Company as required by the
Delaware LLC Act are The Corporation Service Company, 0000 Xxxxxxxxxxx Xxxx,
Xxxxxxxxxx, Xxxxxxxx.
Section 2.4 PURPOSES AND POWERS. The Company shall have the authority to engage
in any lawful business, purpose or activity permitted by the Delaware LLC Act.
The Company shall possess and may exercise all powers and privileges granted or
permitted by the Delaware LLC Act.
Section 2.5 POWER OF ATTORNEY. Each Shareholder hereby constitutes and appoints
each of the Chief Executive Officer, the President and the Secretary of the
Company and, if a Liquidator shall have been selected pursuant to Section 12.2,
the Liquidator and each of their authorized officers and attorneys-in-fact, as
the case may be, with full power of substitution, as his true and lawful agent
and attorney-in-fact, with full power and authority in the name, place and stead
of such Person, to execute (i) all agreements, instruments, certificates and
other documents and take all actions necessary or appropriate to or for the
furtherance and accomplishment of the purposes described in Section 2.4, and
(ii) any duly adopted amendments to this Agreement. The foregoing power of
attorney is hereby declared to be irrevocable and a power coupled with an
interest, and it shall survive and, to the maximum extent permitted by law,
shall not be affected by the subsequent death, incompetency, disability,
incapacity, dissolution, bankruptcy or termination of any Shareholder or the
transfer of all or any portion of such Shareholder's Shares and shall extend to
such Shareholder's heirs, successors, assigns and personal representatives.
Section 2.6 TERM. The Company's existence shall be perpetual, unless and until
it is dissolved in accordance with the provisions of Article XII. The existence
of the Company as a separate legal entity shall continue until the cancellation
of the Certificate of Formation as provided in the Delaware LLC Act.
Section 2.7 TITLE TO COMPANY ASSETS. Title to Company assets, whether real,
personal or mixed and whether tangible or intangible, shall be deemed to be
owned by the Company as an entity, and no Shareholder, Director or Officer,
individually or collectively, shall have any ownership interest in such Company
assets or any portion thereof. Title to any or all of the Company assets may be
held in the name of the Company or one or more nominees, as the Board of
Directors may determine.
ARTICLE III
RIGHTS OF SHAREHOLDERS AND LIMITATIONS THEREOF
Section 3.1 SHAREHOLDERS.
(a) A Person shall be admitted as a Shareholder and shall, without further
action, including execution of this Agreement, become a party to and become
bound by the terms of this Agreement if such Person purchases or otherwise
lawfully acquires any Shares and becomes the Record Holder of such Shares in
accordance with the provisions of this Agreement. A Person may become a Record
Holder without the consent or approval of any of the Shareholders. A Person may
not become a Shareholder without acquiring one or more Shares. To the fullest
extent permitted by law, this Agreement shall also be binding on certain
Constructive Owners of Shares, as defined and provided in Article VIII.
(b) The name and mailing address of each Shareholder shall be listed on the
books and records of the Company maintained for such purpose by the Company or
the Transfer Agent. The Secretary of the
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Company shall update, or cause to be updated, the books and records of the
Company from time to time as necessary to reflect accurately the information
therein.
(c) Except as otherwise provided by the Delaware LLC Act, the debts,
obligations and liabilities of the Company, whether arising in contract, tort or
otherwise, shall be solely the debts, obligations and liabilities of the
Company. The Directors, Officers and Shareholders shall have no liability under
this Agreement or for any such debt, obligation or liability of the Company, in
their capacity as such, except as expressly provided in this Agreement or the
Delaware LLC Act.
(d) Shareholders shall not have any right to resign from the Company;
PROVIDED THAT when a transferee of all of a Shareholder's Shares acquires such
Shares, such transferring Shareholder shall cease to be a Shareholder (and
member of the Company).
Section 3.2 MANAGEMENT OF BUSINESS. No Shareholder, in his capacity as such,
shall participate in the operation or management of the Company's business,
transact any business in the Company's name or have the power to sign documents
for or otherwise bind the Company by reason of being a Shareholder.
Section 3.3 OUTSIDE ACTIVITIES OF THE SHAREHOLDERS. Notwithstanding any duty
(including any fiduciary duty) that might otherwise exist at law or in equity,
any Shareholder shall be entitled to and may have business interests and engage
in business activities in addition to those relating to the Company, including
business interests and activities in direct competition with the Company.
Notwithstanding any duty (including any fiduciary duty) that might otherwise
exist at law or in equity, neither the Company nor any of the other Shareholders
shall have any rights by virtue of this Agreement in any business ventures of
any Shareholder.
ARTICLE IV
CERTIFICATES; RECORD HOLDERS; TRANSFER OF SHARES; REDEMPTION OF SHARES
Section 4.1 CERTIFICATES. Upon the Company's issuance of Shares or other
securities to any Person, the Company may, but shall not be obligated to, issue
one or more Certificates in the name of such Person evidencing the number of
such Shares or securities being so issued. Certificates shall be executed on
behalf of the Company by the Chairman of the Board, President or any Vice
President and the Secretary or any Assistant Secretary. No Certificate shall be
valid for any purpose until it has been countersigned by the Transfer Agent;
PROVIDED, HOWEVER, that if the Board of Directors elects to issue Shares or
other securities in global form, the Certificates with regard thereto shall be
valid upon receipt by the Depository and need not be countersigned. Any or all
of the signatures required on the Certificate may be by facsimile. If any
Officer or Transfer Agent who shall have signed or whose facsimile signature
shall have been placed upon any such Certificate shall have ceased to be such
Officer or Transfer Agent before such Certificate is issued by the Company, such
Certificate may nevertheless be issued by the Company with the same effect as if
such Person were such Officer or Transfer Agent at the date of issue.
Section 4.2 MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES.
(a) If any mutilated Certificate is surrendered to the Transfer Agent, the
appropriate Officers on behalf of the Company shall execute, and the Transfer
Agent shall countersign and deliver in exchange therefor, a new Certificate
evidencing the same number and type of securities as the Certificate so
surrendered.
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(b) The appropriate Officers on behalf of the Company shall execute and
deliver, and the Transfer Agent shall countersign, a new Certificate in place of
any Certificate previously issued if the Record Holder of the Certificate:
(i) makes proof by affidavit, in form and substance satisfactory to the
Company or to the Transfer Agent, that a previously issued Certificate
has been lost, destroyed or stolen;
(ii) requests the issuance of a new Certificate before the Company has
notice that the Certificate has been acquired by a purchaser for value
in good faith and without notice of an adverse claim;
(iii) if requested by the Company or the Transfer Agent, delivers to the
Company a bond, in form and substance satisfactory to the Company or
the Transfer Agent, with a surety or sureties and with fixed or open
penalty as the Company or the Transfer Agent may direct to indemnify
the Company and the Transfer Agent against any claim that may be made
on account of the alleged loss, destruction or theft of the
Certificate; and
(iv) satisfies any other reasonable requirements imposed by the Company or
the Transfer Agent.
If a Shareholder fails to notify the Company within a reasonable time after such
Shareholder has notice of the loss, destruction or theft of a Certificate, and a
transfer of the Shares represented by the Certificate is registered before the
Company or the Transfer Agent receives such notification, the Shareholder shall
be precluded from making any claim against the Company or the Transfer Agent for
such transfer or for a new Certificate.
(c) As a condition to the issuance of any new Certificate under this
Section 4.2, the Company may require the payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in relation thereto and
any other expenses (including the fees and expenses of the Transfer Agent)
reasonably connected therewith.
Section 4.3 RECORD HOLDERS. The Company shall be entitled to recognize the
Record Holder as the owner of Shares or other securities issued by the Company
and, accordingly, shall not be bound to recognize any equitable or other claim
to or interest in such Shares or other securities on the part of any other
Person, regardless of whether the Company shall have actual or other notice
thereof, except as otherwise provided by law or any applicable rule, regulation,
guideline or requirement of any National Securities Exchange on which such
Shares or securities are listed for trading. Without limiting the foregoing,
when a Person (such as a broker, dealer, bank, trust company or clearing
corporation or an agent of any of the foregoing) is acting as nominee, agent or
in some other representative capacity for another Person in acquiring and/or
holding Shares or other securities, as between the Company on the one hand, and
such other Persons on the other, such representative Person shall be the Record
Holder of such Shares.
Section 4.4 TRANSFER GENERALLY. Except as otherwise set forth in this Agreement,
the term "transfer," when used in this Agreement with respect to any Shares,
shall be deemed to refer to a transaction by which the holder of Shares assigns
such Shares to another Person who is or becomes a Shareholder, and includes a
sale, assignment, gift, exchange or any other disposition by law or otherwise,
including any transfer upon foreclosure of any pledge, encumbrance,
hypothecation or mortgage. No Shares shall be transferred, in whole or in part,
except in accordance with the terms and conditions set forth in this Article IV.
To the fullest extent permitted by law, any transfer or purported transfer of
Shares not made in accordance with this Article IV shall be null and void.
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Section 4.5 REGISTRATION AND TRANSFER OF SHARES.
(a) The Company shall keep or cause to be kept on behalf of the Company a
register that, subject to such reasonable regulations as it may prescribe, will
provide for the registration and transfer of both certificated and
uncertificated Shares. The Transfer Agent is hereby appointed registrar and
transfer agent for the purpose of registering Shares and transfers of such
Shares as herein provided.
(b) The Company shall not recognize transfers of Certificates evidencing
Shares unless such transfers are effected in the manner described in this
Section 4.5. Upon surrender of a Certificate for registration of transfer of any
Shares evidenced by a Certificate in accordance with this Agreement, the
appropriate Officers of the Company shall execute and deliver, and the Transfer
Agent shall countersign and deliver, in the name of the holder or the designated
transferee or transferees, as required pursuant to the Record Holder's
instructions, one or more new Certificates evidencing the same aggregate number
and type of Shares as were evidenced by the Certificate so surrendered. The
Company shall not recognize any transfer of certificated Shares until any
Certificates evidencing such Shares are surrendered for registration of
transfer. No charge shall be imposed by the Company for such transfer; PROVIDED
THAT as a condition to the issuance of any new Certificate under this Section
4.5(b), the Company may require the payment of a sum sufficient to cover any tax
or other governmental charge that may be imposed with respect thereto.
(c) By acceptance of the transfer of any Shares in accordance with this
Section 4.5, each transferee of Shares (including any nominee holder or an agent
or representative acquiring such Shares for the account of another Person) (i)
shall be admitted to the Company as a Shareholder with respect to the Shares so
transferred to such Person when any such transfer or admission is reflected in
the books and records of the Company, with or without execution of this
Agreement, (ii) shall be bound by the terms of this Agreement, (iii) shall
become the Record Holder of the Shares so transferred, (iv) represents that the
transferee has the capacity, power and authority to enter into this Agreement,
(v) grants the power of attorney contained herein to the Officers of the Company
and any Liquidator of the Company and (vi) makes the consents and waivers
contained in this Agreement. The transfer of any Shares and the admission of any
new Shareholder shall not constitute an amendment to this Agreement.
ARTICLE V
ISSUANCE OF SHARES
Section 5.1 ISSUANCE TO INITIAL SHAREHOLDER. Pursuant to the Original LLC
Agreement, the Company issued ten Common Shares to the Initial Shareholder. The
Initial Shareholder owns 10 Common Shares at the time of the execution of this
Agreement, representing all of the issued and outstanding Shares. Immediately
prior to the Distribution on the Distribution Date, the Company will
automatically be deemed to issue or have issued to the Initial Shareholder
(which will continue to be a member of the Company through completion of the
Distribution) such additional Common Shares so that the total number of
Common Shares held by the Initial Shareholder will be equal to the number of
Common Shares required to be distributed pursuant to the Transaction
Agreement. Unless otherwise specified by the Board of Directors, no interest
shall be paid by the Company on the capital contributions of any Shareholder,
and no Shareholder shall be entitled to the withdrawal or return of its
capital contribution.
Section 5.2 RIGHTS OF HOLDERS OF COMMON SHARES.
(a) The only class or series of Shares authorized and Outstanding on the
date of this Agreement is the Common Shares. All preferences, voting powers,
relative, participating, optional or other special rights and privileges, and
qualifications, limitations, or restrictions of the Common Shares are expressly
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made subject and subordinate to those that may be fixed by the Board of
Directors with respect to any additional classes or series of Shares.
(b) Except as otherwise required by law or this Agreement and subject to
the preferential rights of any additional classes or series of Shares authorized
by the Board of Directors, each holder of Common Shares shall have one vote in
respect of each Common Share held by such Shareholder of record on the books of
the Company on all matters submitted to a vote of Shareholders.
(c) Subject to the preferential rights of any additional classes or series
of Shares authorized by the Board of Directors, the holders of Common Shares
shall be entitled to receive, when, as and if declared by the Board of Directors
of the Company, out of the assets of the Company which are by law available
therefor, distributions payable either in cash, in property or in securities of
the Company.
(d) In the event of any dissolution, liquidation or winding up of the
affairs of the Company, after satisfaction (whether by payment or reasonable
provision for payment) of creditors of the Company and after distribution in
full of the preferential amounts, if any, to be distributed to the holders of
other securities of the Company, the holders of Common Shares shall be entitled
to receive (with or without participation of the holders of other securities of
the Company, as determined by the Board of Directors at the time of
authorization of such securities) all of the remaining assets of the Company of
whatever kind available for distribution to the holders of the Common Shares
ratably in proportion to the number of Common Shares by them unless otherwise
provided by law.
Section 5.3 ISSUANCES OF ADDITIONAL COMPANY SECURITIES.
(a) The Company may issue additional Shares and other securities of the
Company, and unsecured and secured debt obligations, debt obligations
convertible into any class or series of Shares, or any combination of the
foregoing, and options, rights, warrants, appreciation rights and other
derivative rights relating to the securities of the Company, for any Company
purpose at any time and from time to time to such Persons for such consideration
and on such terms and conditions as the Board of Directors shall determine, all
without the approval of any Shareholder.
(b) Additional Shares authorized to be issued by the Company pursuant to
Section 5.3(a) may be authorized and/or issued in one or more classes or series,
with such designations, preferences, rights, powers and duties (which may be
senior to existing classes and series of Shares or other securities of the
Company), as shall be fixed by the Board of Directors and reflected in a written
action or actions approved by the Board of Directors in compliance with Section
7.1(i) (each, a "SHARE DESIGNATION"), including (i) the right to share in
Company distributions; (ii) the rights upon dissolution and liquidation of the
Company; (iii) whether, and the terms and conditions upon which, the Company may
redeem such class or series of Shares; (iv) whether such class or series of
Shares is issued with the privilege of conversion or exchange and, if so, the
terms and conditions of such conversion or exchange; (v) the terms and
conditions upon which each class or series of Shares will be issued, evidenced
(or not evidenced) by certificates and assigned or transferred; and (vii) the
right, if any, of each such class or series of Shares to vote on Company
matters, including matters relating to the relative rights, preferences and
privileges of such class or series of Shares. A Share Designation (or any
resolution of the Board of Directors amending any Share Designation) shall be
effective when a duly executed (executed in accordance with Section 7.1(i))
original of the same is delivered to the Secretary of the Company for inclusion
among the permanent records of the Company. For the avoidance of doubt, any
securities of the Company, in addition to additional classes or series of
Shares, may be issued on such terms and conditions as the Board of Directors may
determine.
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(c) The Board of Directors shall take all actions that it determines to be
necessary or appropriate in connection with (i) each issuance of Shares and
other securities of the Company, unsecured and secured debt obligations, debt
obligations convertible into any class or series of Shares, or any
combination of the foregoing, and options, rights, warrants, appreciation
rights and other derivative rights relating to securities, issued pursuant to
this Section 5.3; (ii) the admission of additional Shareholders; and (iii)
all additional issuances of securities by the Company. The Board of Directors
shall determine the relative designations, preferences, rights, powers and
duties of the holders of the Shares or other securities being so issued. The
Board of Directors shall do all things necessary to comply with the Delaware
LLC Act and is authorized and directed to do all things that it determines to
be necessary or appropriate in connection with any future issuance of
securities pursuant to the terms of this Agreement, including compliance with
any statute, rule, regulation or guideline of any federal, state or other
governmental agency or any National Securities Exchange on which the Common
Shares or other securities of the Company are listed for trading.
Section 5.4 NO PREEMPTIVE RIGHTS. No Person shall have any preemptive,
preferential or other similar right with respect to the issuance of any
securities of the Company, whether unissued, held in the treasury or hereafter
created.
Section 5.5 RIGHTS OF ADDITIONAL CLASSES AND SERIES OF SHARES. Notwithstanding
anything to the contrary contained in this Agreement, the voting and other
rights of a particular class or series of Shares are subject to the voting and
other rights of any class or series of Shares designated by the Board of
Directors.
Section 5.6 SPLITS AND COMBINATIONS.
(a) The Company may make a Pro Rata distribution of securities to all
Record Holders of one or more classes or series of Shares, or may effect a
subdivision or combination of any class or series of Shares.
(b) Whenever such a distribution, subdivision or combination is declared,
the Board of Directors shall select a Record Date as of which the distribution,
subdivision or combination shall be effective and shall send notice thereof to
each applicable Record Holder thereof in compliance with all applicable laws and
rules of any National Securities Exchange on which the Common Shares or other
securities of the Company are listed for trading.
(c) Unless otherwise determined by the Board of Directors, the Company
shall not issue fractional Shares upon any distribution, subdivision or
combination of Shares. If a distribution, subdivision or combination of Shares
would result in the issuance of fractional Shares but for the contrary
provisions hereof, then unless otherwise determined by the Board of Directors,
each fractional Share shall be rounded to the nearest whole Share (and a 0.5
Share shall be rounded to the next higher Share).
Section 5.7 FULLY PAID AND NON-ASSESSABLE NATURE OF SHARES. All Shares issued
pursuant to, and in accordance with the requirements of, this Article V shall be
validly issued, fully paid and non-assessable Shares of the Company, except to
the extent otherwise provided in this Agreement or a Share Designation.
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ARTICLE VI
TAX TREATMENT
Section 6.1 TAX TREATMENT OF THE COMPANY AND THE INITIAL SHAREHOLDER PRIOR TO
THE DISTRIBUTION. Prior to the time of the Distribution, the Company shall be
treated as a disregarded entity for all purposes under the Code pursuant to
Section 301.7701-2(c)(2)(i) of the Treasury Regulations. The Initial Shareholder
intends that no action be taken to treat the Company as a corporation under the
Code prior to the Distribution.
Section 6.2 TAX TREATMENT OF THE COMPANY AND THE SHAREHOLDERS SUBSEQUENT TO THE
DISTRIBUTION. Subsequent to the Distribution, pursuant to Section 7704 of the
Code, the Company will be a publicly traded partnership and be treated as if it
were a corporation for all purposes under the Code. As a result, all Company
items of income, gain, loss, deduction, expense and credit will be treated as
tax attributes of the Company, and, for purposes of the Delaware LLC Act, each
Shareholder will have no claim on and no right to any such tax attributes of the
Company, in the same manner as corporate shareholders under the Code and the
Delaware General Corporation Law.
ARTICLE VII
MANAGEMENT AND OPERATION OF BUSINESS
Section 7.1 BOARD OF DIRECTORS.
(a) Except as otherwise expressly provided in this Agreement, the business
and affairs of the Company shall be managed by or under the direction of a Board
of Directors (the "BOARD OF DIRECTORS"). As provided in Section 7.3, the Board
of Directors shall have the power and authority to appoint Officers of the
Company. The Directors shall constitute "managers" within the meaning of the
Delaware LLC Act. No Shareholder, by virtue of such Shareholder's status as
such, shall have any management power over the business and affairs of the
Company or actual or apparent authority to enter into, execute or deliver
contracts on behalf of, or to otherwise bind, the Company. Except as otherwise
specifically provided in this Agreement and to the extent permitted by law, as
near as practical, the authority, powers, functions and duties (including
fiduciary duties) of the Board of Directors shall be identical to the authority,
powers, functions and duties (including fiduciary duties) of the board of
directors of a business corporation organized under the Delaware General
Corporation Law. In addition to the powers that now or hereafter can be granted
to managers under the Delaware LLC Act and to all other powers granted under any
other provision of this Agreement subject to Section 7.3, the Board of
Directors, without Shareholder approval, shall have full power and authority to
do, and to direct the Officers to do, all things (and on such terms as it
determines to be necessary or appropriate) to conduct the business of the
Company, to exercise all powers set forth in Section 2.4 and to effectuate the
purposes set forth in Section 2.4, including the following:
(i) the making of any expenditures, the lending or borrowing of money, the
assumption or guarantee of, or other contracting for, indebtedness and
other liabilities, the issuance of evidences of indebtedness,
including indebtedness that is convertible into or exchangeable for
Shares, and the incurring of any other obligations;
(ii) the making of tax, regulatory and other filings, or rendering of
periodic or other reports to governmental or other agencies having
jurisdiction over the business or assets of the Company;
(iii) the acquisition, disposition, mortgage, pledge, encumbrance,
hypothecation or exchange of any or all of the assets of the Company
or the transactions contemplated by Section 14.3(d);
(iv) the use of the assets of the Company (including cash on hand) for any
purpose consistent with the terms of this Agreement, including the
financing of the conduct of the operations of the
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Company and its Subsidiaries; the lending of funds to other Persons;
and the repayment of obligations of the Company and its Subsidiaries;
(v) the negotiation, execution and performance of any contracts,
conveyances or other instruments (including instruments that limit the
liability of the Company under contractual arrangements to all or
particular assets of the Company);
(vi) the distribution of Company cash or other Company assets;
(vii) the selection and dismissal of Officers, employees, agents, outside
attorneys, accountants, consultants and contractors and the
determination of their compensation and other terms of employment or
hiring, the creation and operation of employee benefit plans, employee
programs and employee practices;
(viii) the maintenance of insurance for the benefit of the Company, the
Shareholders and the Indemnitees;
(ix) the formation of, or acquisition of an interest in, and the
contribution of property and the making of loans to, any limited or
general partnerships, joint ventures, corporations, limited liability
companies or other relationships;
(x) the control of any matters affecting the rights and obligations of the
Company, including the bringing and defending of actions at law or in
equity and otherwise engaging in the conduct of litigation,
arbitration or remediation, and the incurring of legal expense and the
settlement of claims and litigation;
(xi) the indemnification of any Person including, without limitation, as
set forth in Article X to the extent permitted by law;
(xii) the entering into of listing agreements with any National Securities
Exchange and the delisting of some or all of the Shares from, or
requesting that trading be suspended on, any such exchange;
(xiii) the purchase, sale or other acquisition or disposition of securities
of the Company, or the issuance of unsecured and secured debt
obligations, debt obligations convertible into any class or series of
Shares, or any combination of the foregoing, or options, rights,
warrants, appreciation rights and other derivative rights relating
thereto; and
(xiv) the entering into of agreements with any of its Affiliates.
(b) The Board of Directors may from time to time determine the number of
Directors then constituting the whole Board of Directors, PROVIDED THAT,
effective immediately after the Distribution, such number shall be at least
three and no more than seven. Notwithstanding the foregoing, the Board of
Directors, by unanimous vote of the Directors then in office, may change the
minimum and maximum number of Directors; provided that the Board of Directors
shall not decrease the number of Persons that constitutes the whole Board of
Directors if such decrease would shorten the term of any Director.
(c) Except as may be provided by the Board of Directors in setting the
terms of any class or series of Shares, any and all vacancies on the Board of
Directors may be filled only by the affirmative vote of
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a majority of the remaining Directors in office, even if the remaining Directors
do not constitute a quorum, and any Director elected to fill a vacancy shall
serve for the remainder of the full term of the directorship in which such
vacancy occurred.
(d) Effective upon the Distribution, the Directors (other than any Director
subsequently elected solely by holders of one or more classes or series of
Shares as specified by the Board of Directors upon the authorization of such
Shares) shall be classified into three groups, Group I, Group II and Group III.
The number of Directors in each class shall be as nearly equal in number as
possible, as determined by the Board of Directors. Directors in Group I shall
serve for a term ending at the annual meeting of Shareholders to be held in
2008; Directors in Group II shall serve for a term ending at the annual meeting
of Shareholders to be held in 2009; and Directors in Group III shall serve for a
term ending at the annual meeting of Shareholders to be held in 2010 and, in
each such case, until their successors are duly elected or until their earlier
death, resignation or removal. At each annual meeting of the Shareholders, the
successors to the class of Directors whose term expires at such meeting shall be
elected by the Shareholders to hold office for a term expiring at the annual
meeting of Shareholders held in the third year following the year of their
election and until their successors are duly elected.
(e) Effective upon the Distribution, three of the Directors shall be
"Independent Directors," as defined below, and the remaining two Directors shall
be "Managing Directors." "Independent Directors" shall be those directors who
meet the qualifications as independent directors under the applicable rules of
each National Securities Exchange on which the Common Shares or other securities
of the Company are listed for trading and the Commission from time to time.
"Managing Directors" shall mean Directors who are not Independent Directors. If
at any time the Board of Directors shall not be comprised of a majority of
Independent Directors, the Board of Directors shall take such actions as will
cure such condition, including increasing the size of the Board of Directors and
electing one or more Independent Directors; provided that the fact that the
Board of Directors does not have a majority of Independent Directors at any time
or from time to time shall not affect the validity of any action taken by the
Board of Directors.
(f) Effective upon the Distribution, the Group I Directors, the Group II
Directors and the Group III Director shall be as specified in a unanimous
written consent of Shareholders to take effect immediately prior to
Distribution.
(g) Directors need not be Shareholders. The Board of Directors may, from
time to time and by the adoption of resolutions, establish qualifications for
Directors.
(h) Unless otherwise required by law or the provisions hereof,
(i) each member of the Board of Directors shall have one vote;
(ii) the presence at a meeting of the Board of Directors of a majority
of the members of the Board of Directors shall constitute a
quorum at any such meeting (or at any adjournment thereof) for
the transaction of business; and
(iii) the act of a majority of the members of the Board of Directors
present at a meeting of the Board of Directors at which a quorum
is present shall be deemed to constitute the act of the Board of
Directors.
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(i) Regular meetings of the Board of Directors and any committee thereof
shall be held at such times and places as shall be designated from time to time
by resolution of the Board of Directors or such committee. Notice of such
regular meetings shall not be required. Special meetings of the Board of
Directors or meetings of any committee thereof may be called by the Chairman of
the Board or the chairman of such committee, as the case may be, or on the
written request of a majority of the Directors then in office or a majority of
the committee members then in office, as applicable, to the Secretary, in each
case on at least twenty-four hours personal, written, fax or other electronic
notice to each Director or committee member, which notice may be waived by any
Director. Any such notice, or waiver thereof, need not state the purpose of such
meeting except as may otherwise be required by law. Attendance of a Director at
a meeting shall constitute a waiver of notice of such meeting, except where such
Director attends the meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened. Any action required or permitted to be taken at a meeting of
the Board of Directors, or any committee thereof, may be taken without a
meeting, without prior notice and without a vote if a consent or consents in
writing, setting forth the action so taken, are signed by a majority of the
members of the Board of Directors or committee. Members of the Board of
Directors or any committee thereof may participate in and hold a meeting by
means of conference telephone, video conference or similar communications
equipment by means of which all Persons participating in the meeting can hear
each other at the same time, and participation in such meetings shall constitute
presence in Person at the meeting.
(j) The Board of Directors may designate one or more committees, each
committee to consist of one or more of the Directors. The Board of Directors may
designate one or more Directors as alternate members of any committee, who may
replace any absent or disqualified Director at any meeting of such committee.
Any such committee, to the extent provided in the resolution of the Board of
Directors or in this Agreement, shall have and may exercise all powers and
authority of the Board of Directors in the management of the business and
affairs of the Company; but no such committee shall have the power or authority
in reference to the following matters: approving or adopting, or recommending to
the Shareholders, any action or matter expressly required by this Agreement or
the Delaware LLC Act to be submitted to the Shareholders for approval, or
adopting, amending or repealing any provision of this Agreement. The Board of
Directors, or, if authorized by the Board in a committee charter or otherwise,
the members of any committee may choose a chairman, shall keep regular minutes
of its proceedings and report the same to the Board of Directors when requested,
and, unless the same shall be determined by the Board of Directors, shall fix
its own rules or procedures and shall meet at such times and at such place or
places as may be provided by such rules. Unless otherwise required by law or the
provisions hereof,
(i) each member of a committee shall have one vote;
(ii) the presence at a meeting of a committee of a majority of the members
of the committee shall constitute a quorum at any such meeting for the
transaction of business; and
(iii) the act of a majority of the members of a committee present at a
meeting of the committee at which a quorum is present shall be deemed
to constitute the act of the committee.
(k) The Board of Directors may elect one of its members as Chairman of the
Board (the "CHAIRMAN OF THE BOARD"). The Chairman of the Board, if any, and if
present and acting, shall preside at all meetings of the Board of Directors and
of Shareholders, unless otherwise directed by the Board of Directors. If the
Board of Directors does not elect a Chairman or if the Chairman is absent from
the meeting, the Chief Executive Offer, if present and a Director, or any other
Director chosen by the
15
Board of Directors, shall preside. In the absence of a Secretary, the person
presiding over the meeting may appoint any Person to serve as secretary of the
meeting.
(l) Unless otherwise restricted by law, the Board of Directors shall have
the authority to fix the compensation of the Directors. The Directors may be
paid their expenses, if any, of attendance at each meeting of the Board of
Directors and may be paid a fixed sum for attendance at each meeting of the
Board of Directors or paid a stated salary or paid other compensation as
Director. No such payment shall preclude any Director from serving the Company
in any other capacity and receiving compensation therefor. Directors serving on
special or standing committees may also be paid their expenses, if any, of and
allowed compensation for attending committee meetings.
(m) Subject to the rights of holders of one or more future classes or
series of Shares to elect or remove one or more Directors, any Director may be
removed from office at any time, but only for cause and then only by the
unanimous vote of the other Directors then in office. In addition, subject to
the rights of holders of one or more future classes or series of Shares to elect
or remove one or more Directors, the entire Board of Directors (but not less
than the entire Board of Directors) may be removed from office at any time, but
only for cause and then only by Share Super-Majority Approval. For the purpose
of this paragraph, "cause" shall mean, with respect to any particular Director,
incapacity, conviction of a felony or a final judgment of a court of competent
jurisdiction holding that such Director caused demonstrable, material harm to
the Company through bad faith or active and deliberate dishonesty.
Section 7.2 CERTIFICATE OF FORMATION. The Certificate of Formation has been
filed with the Secretary of State of Delaware as required by the Delaware LLC
Act. The Board of Directors shall use all reasonable efforts to cause to be
filed such other certificates or documents that it determines to be necessary or
appropriate for the formation, continuation, qualification and operation of a
limited liability company in the State of Delaware or any other state in which
the Company may elect to do business or own property. To the extent that the
Board of Directors determines such action to be necessary or appropriate, the
Board of Directors shall direct the appropriate Officers of the Company to file
amendments to and restatements of the Certificate of Formation and do all things
to maintain the Company as a limited liability company under the laws of the
State of Delaware or of any other state in which the Company may elect to do
business or own property. The Company shall not be required, before or after
filing, to deliver or mail a copy of the Certificate of Formation, any
qualification document or any amendment thereto to any Shareholder.
Section 7.3 OFFICERS.
(a) The Board of Directors shall have the power and authority to appoint
such officers with such titles, authority and duties as determined by the Board
of Directors. Such Persons so designated by the Board of Directors shall be
referred to as "OFFICERS." Except as otherwise specifically provided in this
Agreement and to the extent permitted by law, as near as practical, the
authority, powers, functions and duties (including fiduciary duties) of the
Officers shall be identical to the authority, powers, functions and duties
(including fiduciary duties) of the officers of a business corporation organized
under the Delaware General Corporation Law. Unless provided otherwise by
resolution of the Board of Directors, the Officers shall have the titles, power,
authority and duties described below in this Section 7.3.
(b) The Officers of the Company shall include a Chief Executive Officer, a
President, and a Secretary, and may also include a Chairman of the Board, a Vice
Chairman, Chief Financial Officer, Chief Operating Officer, Treasurer, one or
more Vice Presidents (who may be further classified by such descriptions as
"executive," "senior," "assistant" or otherwise, as the Board of Directors shall
16
determine), one or more Assistant Secretaries and one or more Assistant
Treasurers. Officers shall be elected by the Board of Directors, from time as
the Board of Directors considers appropriate. Each Officer shall hold
office until his successor is elected and qualified or until his earlier
death, resignation or removal. Any number of offices may be held by the same
Person. The compensation of Officers elected by the Board of Directors shall
be fixed from time to time by the Board of Directors or by such Officers as
may be designated by resolution of the Board of Directors.
(c) Any Officer may resign at any time upon written notice to the Company.
Any Officer, agent or employee of the Company may be removed by the Board of
Directors with or without cause at any time. The Board of Directors may delegate
the power of removal as to officers, agents and employees who have not been
appointed by the Board of Directors. Such removal shall be without prejudice to
a Person's contract rights, if any, but the appointment of any Person as an
Officer, agent or employee of the Company shall not of itself create contract
rights.
(d) Subject to the control of the Board of Directors and the executive
committee (if any) of the Board of Directors, the Chief Executive Officer
shall have general executive charge, management and control of the
properties, business and operations of the Company with all such powers as
may be reasonably incident to such responsibilities; he or she may employ and
discharge employees and agents of the Company except such as shall be
appointed by the Board of Directors, and he or she may delegate these powers;
he or she may agree upon and execute all leases, contracts, evidences of
indebtedness and other obligations in the name of the Company, and shall have
such other powers and duties as designated in accordance with this Agreement
and as from time to time may be assigned by the Board of Directors.
(e) If elected, the Chairman of the Board shall have such powers and duties
as are designated in this Agreement and as from time to time may be assigned by
the Board of Directors.
(f) Unless the Board of Directors otherwise determines, the President shall
have such powers and duties as are designated in accordance with this Agreement
and as from time to time may be assigned by the Board of Directors.
(g) In the absence of the President, or in the event of the President's
inability or refusal to act, a Vice President designated by the Board of
Directors shall perform the duties of the President, and when so acting shall
have all the powers of and be subject to all the restrictions upon the
President. In the absence of a designation by the Board of Directors of a Vice
President to perform the duties of the President, or in the event of his absence
or inability or refusal to act, the Vice President who is present and who is
senior in terms of uninterrupted time as a Vice President of the Company shall
so act. The Vice President shall perform such other duties and have such other
powers as the President or the Board of Directors may from time to time
prescribe.
(h) The Treasurer shall have responsibility for the custody and control of
all the funds and securities of the Company and shall have such other powers and
duties as are designated in accordance with this Agreement and as from time to
time may be assigned to the Treasurer by the Board of Directors. The Treasurer
shall perform all acts incident to the position of Treasurer, subject to the
control of the Chief Executive Officer and the Board of Directors. Each
Assistant Treasurer shall have such powers and duties as are designated in
accordance with this Agreement and as from time to time
17
may be assigned by the Treasurer or the Board of Directors. The Assistant
Treasurers shall exercise the powers of the Treasurer during that Officer's
absence or inability or refusal to act.
(i) The Secretary shall issue all authorized notices for, and shall keep
minutes of, all meetings of the Shareholders and the Board of Directors. The
Secretary shall have charge of the Company's minute books and shall perform such
other duties as the Board of Directors may from time to time prescribe. In the
absence or inability to act of the Secretary, any Assistant Secretary may
perform all the duties and exercise all the powers of the Secretary. The
performance of any such duty shall, in respect of any other Person dealing with
the Company, be conclusive evidence of the power to act. An Assistant Secretary
shall also perform such other duties as the Secretary or the Board of Directors
may assign.
(j) Unless the Board of Directors otherwise determines and subject to such
limitations as the Board of Directors may adopt, each Officer shall have the
authority to agree upon and execute all leases, contracts, evidences of
indebtedness and other obligations in the name of the Company. The Board of
Directors may from time to time delegate all or a portion of the powers or
duties of any Officer to any other Officers or agents, notwithstanding any
provision hereof.
(k) Unless otherwise directed by the Board of Directors, the Chief
Executive Officer, the President or any Officer of the Company authorized by the
Chief Executive Officer shall have power to vote and otherwise act on behalf of
the Company, in person or by proxy, at any meeting of shareholders of or with
respect to any action of equity holders of any other entity in which the Company
may hold securities and otherwise to exercise any and all rights and powers
which the Company may possess by reason of its ownership of securities in such
other entities.
Section 7.4 OUTSIDE ACTIVITIES. Unless otherwise provided in a written agreement
with the Company, notwithstanding any duty (including any fiduciary duty) that
might otherwise exist in law or equity, it shall not be a breach of any duty
(including any fiduciary duty) or any other obligation of any type whatsoever of
any Director for such Director or Affiliates of such Director to engage in
outside business interests and activities in preference to or to the exclusion
of the Company or in direct competition with the Company; PROVIDED THAT no
confidential information of the Company may be used by any such Person.
Notwithstanding any duty (including any fiduciary duty) that might otherwise
exist in law or equity, Directors shall have no obligation hereunder or as a
result of any duty expressed or implied by law to present business opportunities
to the Company that may become available to such Director or to Affiliates of
such Director.
Section 7.5 RESOLUTION OF CONFLICTS OF INTEREST; STANDARDS OF CONDUCT AND
MODIFICATION OF DUTIES.
(a) Unless otherwise expressly provided in this Agreement or required by
the Delaware LLC Act, whenever a potential conflict of interest exists or arises
between any Shareholder or an Affiliate thereof, and/or one or more Directors or
their respective Affiliates and/or the Company, any resolution or course of
action by the Board of Directors in respect of such conflict of interest shall
be permitted and deemed approved by all Shareholders, and shall not constitute a
breach of this Agreement, of any agreement contemplated herein, or of any duty
stated or implied by law or equity, including any fiduciary duty, if the
resolution or course of action in respect of such conflict of interest is (i)
approved by a Share Plurality (with interested Shareholders not counted for any
purpose), or (ii) on terms no less favorable to the Company than those generally
being provided to or available from unrelated third parties or (iii) fair and
reasonable to the Company, taking into account the totality of the relationships
between the parties involved (including other transactions that may be
particularly favorable or advantageous to the Company). It shall be presumed
that, in making its decision and notwithstanding that such decision may be
interested, the Board of Directors acted properly and in accordance with its
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duties (including fiduciary duties), and in any proceeding brought by or on
behalf of any Shareholder or the Company challenging such approval, the Person
bringing or prosecuting such proceeding shall have the burden of overcoming such
presumption by clear and convincing evidence.
Section 7.6 DUTIES OF OFFICERS AND DIRECTORS.
(a) Except as otherwise expressly provided in this Agreement, the duties
(including fiduciary duties) and obligations owed to the Company and to the
Shareholders by the Officers and Directors shall be the same as the respective
duties and obligations owed to a business corporation organized under the
Delaware General Corporation Law and its shareholders by its officers and
directors, respectively.
(b) Each Director shall, in the performance of his or her duties, be fully
protected in relying in good faith upon the records of the Company and on such
information, opinions, reports or statements presented to the Company by any of
the Company's Officers or employees, or committees of the Board of Directors, or
by any other Person as to matters the Director reasonably believes are within
such other Person's professional or expert competence.
(c) The Board of Directors shall have the right, in respect of any of its
powers or obligations hereunder, to act through a duly appointed attorney or
attorneys-in-fact or the duly authorized Officers of the Company.
Section 7.7 PURCHASE OR SALE OF COMPANY SECURITIES. The Board of Directors may
cause the Company or its designee to purchase or otherwise acquire Shares or any
other securities of the Company.
Section 7.8 RELIANCE BY THIRD PARTIES. Notwithstanding anything to the contrary
in this Agreement, any Person dealing with the Company shall be entitled to
assume that the Board of Directors and any Officer authorized by the Board of
Directors to act on behalf of and in the name of the Company has full power and
authority to encumber, sell or otherwise use in any manner any and all assets of
the Company and to enter into any authorized contracts on behalf of the Company,
and such Person shall be entitled to deal with the Board of Directors or any
Officer as if it were the Company's sole party in interest, both legally and
beneficially. Each Shareholder hereby waives any and all defenses or other
remedies that may be available against such Person to contest, negate or
disaffirm any action of the Board of Directors or any Officer in connection with
any such dealing. In no event shall any Person dealing with the Board of
Directors or any Officer or its representatives be obligated to ascertain that
the terms of this Agreement have been complied with or to inquire into the
necessity or expedience of any act or action of the Board of Directors or any
Officer or its representatives. Each and every certificate, document or other
instrument executed and delivered on behalf of the Company by the Board of
Directors or any Officer or its representatives shall be conclusive evidence in
favor of any and every Person relying thereon or claiming thereunder that (a) at
the time of the execution and delivery of such certificate, document or
instrument, this Agreement was in full force and effect, (b) the Person
executing and delivering such certificate, document or instrument was duly
authorized and empowered to do so for and on behalf of the Company and (c) such
certificate, document or instrument was duly executed and delivered in
accordance with the terms and provisions of this Agreement and is binding upon
the Company.
ARTICLE VIII
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RESTRICTIONS ON TRANSFER AND OWNERSHIP OF SHARES
Section 8.1 DEFINITIONS. For the purpose of this Article VIII, the following
terms shall have the following meanings:
"CHARITABLE BENEFICIARY" shall mean one or more beneficiaries of the
Charitable Trust as determined pursuant to Section 8.3(g), PROVIDED THAT each
such organization must be described in Sections 501(c)(3), 170(b)(1)(A) (other
than clause (vii) or (viii) thereof) and 170(c)(2) of the Code and contributions
to each such organization must be eligible for deduction under each of Sections
170(b)(1)(A), 2055 and 2522 of the Code.
"CHARITABLE TRUST" shall mean any trust provided for in Section 8.2(a)(ii)
and Section 8.3(a).
"CHARITABLE TRUSTEE" shall mean the Person, unaffiliated with the Company
and a Prohibited Owner, that is appointed by the Company from time to time to
serve as trustee of the Charitable Trust.
"CLOSING PRICE" with respect to Shares on any date shall mean the last sale
price for such Shares, regular way, or, in case no such sale takes place on such
day, the average of the closing bid and asked prices, regular way, for such
Shares, in either case as reported on the principal consolidated transaction
reporting system with respect to such Shares, or if such Shares are not listed
or admitted to trading on any National Securities Exchange, the last sale price
in the over-the-counter market, or if no trading price is available for such
Shares, the fair market value of such Shares as determined in good faith by the
Board of Directors.
"CONSTRUCTIVE OWNERSHIP" shall mean ownership of Shares by a Person,
whether the interest in Shares is held directly or indirectly (including by a
nominee), and shall include any interests that would be treated as owned through
the application of Section 318(a) of the Code, as modified by Section 856(d)(5)
of the Code. The terms "Constructive Owner," "Constructively Owns" and
"Constructively Owned" shall have the correlative meanings.
"EXCEPTED HOLDER" shall mean a Shareholder for whom an Excepted Holder
Limit is created by the Board of Directors pursuant to Section 8.2(g)(i).
"EXCEPTED HOLDER LIMIT" shall mean, provided that and only so long as the
affected Excepted Holder complies with all of the requirements established by
the Board of Directors pursuant to Section 8.2(g), and subject to adjustment
pursuant to Section 8.2(g)(iv), the percentage limit established by the Board of
Directors pursuant to Section 8.2(g).
"EXCLUDED HOLDER" shall mean any Person who acquires Constructive Ownership
of Common Shares solely by reason of the Transfer of Common Shares in the
Distribution and who, immediately following the Distribution, Constructively
Owns Common Shares in excess of the Ownership Limit solely by reason of such
Transfer of Common Shares in the Distribution.
"EXCLUDED HOLDER LIMIT" shall mean, with respect to any Excluded Holder,
the Shares that such Excluded Holder was considered to Constructively Own
immediately following the Distribution solely by reason of the Distribution
(taking into account only such Shares and no other Shares as to which such
Person may thereafter become, for any reason, the Constructive Owner); PROVIDED,
HOWEVER, that (i) if the amount of Shares such Excluded Holder is considered to
Constructively Own decreases by disposition or otherwise, but remains higher
than the Ownership Limit, then such decreased amount shall become the Excluded
Holder Limit, and (ii) if at any time the Excluded Holder
20
Limit for any Excluded Holder would be less than the Ownership Limit, such
Excluded Holder shall cease to be an Excluded Holder and the Ownership Limit
shall thereafter apply to such Person.
"MARKET PRICE" on any date shall mean, with respect to any class or series
of Shares, the Closing Price for such Shares on such date.
"OWNERSHIP LIMIT" shall mean (i) with respect to Common Shares, 9.8% (in
value or number of shares, whichever is more restrictive) of the Outstanding
Common Shares; and (ii) with respect to any other class or series of Shares,
9.8% (in value or number of shares, whichever is more restrictive) of the
Outstanding Shares of such class or series.
"PERSON" shall have the meaning set forth in Section 1.1 and also includes
a group as that term is used for purposes of Section 13(d)(3) of the Exchange
Act; provided, however, that the term "Person" shall not include any "group" as
that term is used for purposes of Section 13(d)(3) of the Exchange Act, if such
"group" would be an Excluded Holder (but any Person that is a member of such
"group" shall still be considered to be a "Person" for purposes hereof).
"PROHIBITED OWNER" shall mean any Person who, but for the provisions of
Section 8.2(a), would Constructively Own Shares, and if appropriate in the
context, shall also mean any Person who would have been the Record Holder of
Shares that the Prohibited Owner would have so owned.
"TRANSFER" shall mean any issuance, sale, transfer, gift, assignment,
devise or other disposition, as well as any other event (or any agreement to
take any such actions or cause any such events) that causes any Person to
acquire Constructive Ownership of Shares or the right to vote or receive
distributions on Shares, including without limitation, (a) the transfer of
Shares to holders of common shares of HPT in the Distribution, (b) any change in
the capital structure of the Company which has the effect of increasing the
total equity interest of any Person in the Company, (c) a change in the
relationship between two or more Persons which causes a change in ownership of
Shares by application of Section 318(a) of the Code, as modified by Section
856(d)(5) of the Code, (d) the grant or exercise of any option or warrant (or
any disposition of any option or warrant, or any event that causes any option or
warrant not theretofore exercisable to become exercisable), pledge, security
interest or similar right to acquire Shares, (e) any disposition of any
securities or rights convertible into or exchangeable for Shares or any interest
in Shares or any exercise of any such conversion or exchange right, and (f)
transfers of interests in other entities that result in changes in Constructive
Ownership of Shares, in
21
each case, whether voluntary or involuntary, whether owned of record or
Constructively Owned, and whether by operation of law or otherwise. The terms
"Transferring" and "Transferred" shall have the correlative meanings.
Section 8.2 RESTRICTIONS ON OWNERSHIP AND TRANSFER OF SHARES.
(a) OWNERSHIP LIMITATIONS. Commencing on the Distribution Date:
(i) BASIC RESTRICTIONS. (A) No Person, other than an Excepted Holder or an
Excluded Holder, shall Constructively Own Shares in excess of the
Ownership Limit, (B) no Excepted Holder shall Constructively Own
Shares in excess of the Excepted Holder Limit for such Excepted
Holder, and (C) no Excluded Holder shall Constructively Own Shares in
excess of the Excluded Holder Limit for such Excluded Holder.
(ii) TRANSFER IN TRUST. If any Transfer of Shares occurs (whether or not
such Transfer is the result of a transaction entered into through the
facilities of a National Securities Exchange or automated inter-dealer
quotation system) which, if effective, would result in any Person
Constructively Owning Shares in violation of Section 8.2(a)(i)(A),
8.2(a)(i)(B) or 8.2(a)(i)(C), as applicable; (x) then that number of
Shares the Constructive Ownership of which otherwise would cause such
Person to violate Section 8.2(a)(i)(A), 8.2(a)(i)(B) or 8.2(a)(i)(C)
(rounded upward to the nearest whole share) shall be automatically
transferred to a Charitable Trust for the benefit of a Charitable
Beneficiary, as described in Section 8.3, effective as of the close of
business on the Business Day prior to the date of such Transfer (or as
of the close of business on the Distribution Date as to any such
Transfer that occurs on the Distribution Date), and such Person shall
acquire no rights in such Shares; or (y) if the transfer to the
Charitable Trust described in clause (i) of this sentence would not be
effective for any reason to prevent the violation of Section
8.2(a)(i)(A), 8.2(a)(i)(B) or 8.2(a)(i)(C), as applicable, then, to
the fullest extent permitted by law, the Transfer of that number of
Shares that otherwise would cause any Person to violate Section
8.2(a)(i)(A), 8.2(a)(i)(B) or 8.2(a)(i)(C), as applicable, shall be
void AB INITIO, and the intended transferee shall acquire no rights in
such Shares.
(b) REMEDIES FOR BREACH. If the Board of Directors or any duly
authorized committee thereof shall at any time determine that a Transfer or
other event has taken place that results in a violation of Section 8.2(a)(i)
or that a Person intends to acquire or has attempted to acquire Constructive
Ownership of any Shares in violation of Section 8.2(a)(i) (whether or not
such violation is intended), the Board of Directors or a committee thereof
shall take such action as it deems advisable to refuse to give effect to or
to prevent such Transfer or other event, including, without limitation,
causing the Company to redeem Shares, refusing to give effect to such
Transfer on the books of the Company or instituting proceedings to enjoin
such Transfer or other event (and such Person shall be liable, without
limitation, for all costs in connection therewith and pursuant to Section
10.3); PROVIDED, HOWEVER, that any Transfer or attempted Transfer or other
event in violation of Section 8.2(a)(i) shall automatically result in the
transfer to the Charitable Trust described above, and, where applicable under
Section 8.2(a)(ii)(y) such Transfer (or other event) shall be void AB INITIO
as provided above irrespective of any action (or non-action) by the Board of
Directors or a committee thereof.
(c) NOTICE OF RESTRICTED TRANSFER. Any Person who acquires or attempts or
intends to acquire Constructive Ownership of Shares that will or may violate
Section 8.2(a)(i), or any Person who would have owned Shares that resulted in a
transfer to the Charitable Trust pursuant to the provisions of Section
8.2(a)(ii)(x), shall immediately give written notice to the Company of such
event, or in the case of such a proposed or attempted transaction, give at least
15 days prior written notice, and shall provide
22
to the Company such other information as the Company may request.
(d) OWNERS REQUIRED TO PROVIDE INFORMATION. Commencing on the
Distribution Date, every Shareholder of record of more than five percent of
the Outstanding Shares of any series or class, within 30 days after the end
of each taxable year and also within 30 days after a request from the
Company, shall give written notice to the Company stating the name and
address of such owner, the number of Shares owned, and a description of the
manner in which such Shares are held; PROVIDED THAT a Shareholder of record
who holds Outstanding Shares as nominee for another Person, which other
Person is required to include in gross income the distributions received on
such Shares (an "ACTUAL OWNER"), shall give written notice to the Company
stating the name and address of such Actual Owner and the number of Shares
of such Actual Owner with respect to which the Shareholder of record is
nominee. Each such Shareholder of record and each Actual Owner shall provide
to the Company such additional information as the Company may request in
order to ensure compliance with the Ownership Limit.
(e) AMBIGUITY. In the case of an ambiguity in the application of any of the
provisions of this Section 8.2, Section 8.3 or any definition contained in
Section 8.1, the Board of Directors shall have the power to determine the
application of the provisions of this Section 8.2 or Section 8.3 with respect to
any situation based upon the facts known to it. If Section 8.2 or 8.3 requires
an action by the Board of Directors and this Agreement does not contain a
specific provision authorizing such action, the Board of Directors shall have
the power to determine the action to be taken so long as such action is not
contrary to the provisions of Section 8.1, Section 8.2 or Section 8.3.
(f) EXCEPTIONS.
(i) The Board of Directors, in its sole and absolute discretion, may grant
to any Person who makes a request therefor (a "REQUESTING PERSON") an
exception to the Ownership Limit (or one or more elements thereof)
with respect to the ownership of any series or class of Shares,
subject to the following conditions and limitations: (A) (1) the Board
of Directors shall have determined, in its sole and absolute
discretion, that the Requesting Person's ownership of Shares in excess
of the Ownership Limit pursuant to the exception requested hereunder
(together with the ownership of Shares by all other Persons as
permitted under this Article VIII, taking into account any previously
granted exceptions pursuant hereto) would not cause
23
a default under the terms of any lease relating to real or personal
property to which the Company is a party or reasonably expects to
become a party, and (2) the Board of Directors shall have determined,
in its sole and absolute discretion, and in the case of each
individual Director, in his business judgment, that the Requesting
Person's ownership of Shares in excess of the Ownership Limit
pursuant to the exception requested hereunder (together with the
ownership of Shares by all other Persons as permitted under this
Article VIII, taking into account any previously granted exceptions
pursuant hereto) is in the best interests of the Company, and (B) such
Requesting Person provides to the Board of Directors, for the benefit
of the Company such representations and undertakings, if any, as the
Board of Directors may, in its sole and absolute discretion determine
to be necessary in order for it to make the determination that the
conditions set forth in clause (A) above of this Section 8.2(g)(i)
have been and/or will continue to be satisfied (including, without
limitation, an agreement as to a reduced Ownership Limit or
Excepted Holder Limit for such Requesting Person with respect
to the Constructive Ownership of one or more other classes or series
of Shares not subject to the exception), and such Requesting Person
agrees that any violation of such representations and undertakings or
any attempted violation thereof will result in the application of the
remedies set forth in Section 8.2(b) with respect to Shares held in
excess of the Ownership Limit or the Excepted Holder Limit (as may be
applicable) with respect to such Requesting Person (determined without
regard to the exception granted such Requesting Person under this
subparagraph (i)). If a member of the Board of Directors requests that
the Board of Directors grant an exception pursuant to this subsection
(g) with respect to such member, or with respect to any other Person
if such member of the Board of Directors would be considered to be the
Constructive Owner of Shares owned by such other Person, such member
of the Board of Directors shall not participate in the decision of the
Board of Directors as to whether to grant any such exception.
(ii) In determining whether to grant any exemption pursuant to Section
8.2(f)(i), the Board of Directors may, but need not, consider, among
other factors, (A) the general reputation and moral character of the
Requesting Person, (B) whether ownership of Shares would be direct or
through ownership attribution, (C) whether the Requesting Person's
ownership of Shares would adversely affect the Company's ability to
acquire additional properties or additional investments in other
issuers, (D) whether granting an exemption for the Requesting Person
requesting an exemption would adversely affect any of the Company's
existing contractual arrangements, and (E) whether the Requesting
Person to whom the exemption would apply is attempting to change
control of the Company or affect its policies in a way which the Board
of Directors, in its sole and absolute discretion, considers adverse
to the best interest of the Company or the Shareholders. Nothing in
this Section 8.2(f)(ii) shall be interpreted to mean that the Board of
Directors may not act in its sole and absolute discretion in making
any determination under Section 8.2(f)(i).
(iii) An underwriter or initial purchaser that participates in a public
offering or a private placement of Shares (or securities convertible
into or exchangeable for Shares) may Constructively Own Shares (or
securities convertible into or exchangeable for Shares) in excess of
the Ownership Limit, but only to the extent necessary to facilitate
such public offering or private placement as determined by the Board
of Directors.
(iv) The Board of Directors may reduce the Excepted Holder Limit for an
Excepted Holder only: (1) with the written consent of such Excepted
Holder or (2) pursuant to the terms and conditions of the agreements
and undertakings entered into with such Excepted Holder in connection
with the establishment of the Excepted Holder Limit for that Excepted
Holder.
24
(v) To the fullest extent permitted by law, any determination made by the
Board of Directors with respect to the provisions of Section 8.2(f)
may be made without regard to any fiduciary or other duties that
the Board of Directors may have to the Prohibited Owner or any other
Person.
(g) INCREASE OR DECREASE IN OWNERSHIP LIMIT. The Board of Directors may
from time to time increase or decrease the Ownership Limit, provided that any
decrease may be made only prospectively as to subsequent holders (other than
a decrease as a result of a retroactive change in existing law, in which case
such change shall be effective immediately).
(h) LEGEND. Unless otherwise provided by the Board of Directors, each
certificate for Shares (or securities exercisable for or convertible into
Shares) shall bear a legend with respect to the restrictions contained in this
Agreement in such form as shall be prescribed by the Board of Directors. Instead
of the foregoing legend, the certificate may state that the Company will furnish
a full statement about certain restrictions on transferability to a Shareholder
on request and without charge.
(i) NO RECOURSE. A Prohibited Owner shall have no claim, cause of action
or other recourse whatsoever against the purported transferor of Shares
causing the violation of the restrictions set forth in Section 8.2(a).
Section 8.3 TRANSFER OF SHARES.
(a) OWNERSHIP IN TRUST. Upon any purported Transfer or other event
described in Section 8.2(a)(ii) that would result in a transfer of Shares to a
Charitable Trust, such Shares shall be deemed to have been transferred to the
Charitable Trustee as trustee of a Charitable Trust for the exclusive benefit of
one or more Charitable Beneficiaries (except to the extent otherwise provided in
Section 8.3(e)). Such transfer to the Charitable Trustee shall be deemed to be
effective as of the close of business on the Business Day prior to any other
purported Transfer or other event that otherwise results in the transfer to the
Charitable Trust pursuant to Section 8.2(a)(ii) (or as of the close of business
on the Distribution Date if such other purported Transfer or other event occurs
on that date). The Charitable Trustee shall be appointed by the Company and
shall be a Person unaffiliated with the Company and any Prohibited Owner. Each
Charitable Beneficiary shall be designated by the Company as provided in Section
8.3(g).
(b) STATUS OF SHARES HELD BY THE CHARITABLE TRUSTEE. Shares held by the
Charitable Trustee shall be issued and Outstanding Shares of the Company. The
Prohibited Owner shall (i) have no rights in the Shares held by the Charitable
Trustee; (ii) not benefit economically from ownership of any Shares held in
trust by the Charitable Trustee (except to the extent otherwise provided in
Section 8.3(e)); (iii) have no rights to dividends or other distributions; (iv)
not possess any rights to vote or other rights attributable to the Shares held
in the Charitable Trust; and (v) have no claim, cause of action or other
recourse whatsoever against the purported transferor of such Shares.
(c) DIVIDEND AND VOTING RIGHTS. The Charitable Trustee shall have all
voting rights and rights to dividends or other distributions with respect to
Shares held in the Charitable Trust, which rights shall be exercised for the
exclusive benefit of the Charitable Beneficiary (except to the extent otherwise
provided in Section 8.3(e)). Any dividend or other distribution paid prior to
the discovery by the Company that Shares have been transferred to the Charitable
Trustee shall be paid with respect to such Shares to the Charitable Trustee by
the Prohibited Owner upon demand and any dividend or other
25
distribution authorized but unpaid shall be paid when due to the Charitable
Trustee. Any dividends or distributions so paid over to the Charitable Trustee
shall be held in trust for the Charitable Beneficiary. The Prohibited Owner
shall have no voting rights with respect to Shares held in the Charitable Trust
and, effective as of the date that Shares have been transferred to the
Charitable Trustee, the Charitable Trustee shall have the authority (at the
Charitable Trustee's sole discretion) (i) to rescind as void any vote cast by a
Prohibited Owner prior to the discovery by the Company that Shares have been
transferred to the Charitable Trustee and (ii) to recast such vote in accordance
with the desires of the Charitable Trustee acting for the benefit of the
Charitable Beneficiary; PROVIDED, HOWEVER, that if the Company has already taken
irreversible corporate action, then the Charitable Trustee shall not have the
power to rescind and recast such vote. Notwithstanding the provisions of this
Article VIII, until the Company has received notification that Shares have been
transferred into a Charitable Trust, the Company shall be entitled to rely on
its stock transfer and other Shareholder records for purposes of preparing lists
of Shareholders entitled to vote at meetings, determining the validity and
authority of proxies, and otherwise conducting votes of Shareholders.
(d) RIGHTS UPON LIQUIDATION. Upon any voluntary or involuntary liquidation,
dissolution or winding up of or any distribution of the assets of the Company,
the Charitable Trustee shall be entitled to receive, ratably with each other
holder of Shares of the class or series of Shares that is held in the Charitable
Trust, that portion of the assets of the Company available for distribution to
the holders of such class or series (determined based upon the ratio that the
number of Shares of such class or series of Shares held by the Charitable
Trustee bears to the total number of Shares of such class or series of Shares
then outstanding). The Charitable Trustee shall distribute any such assets
received in respect of the Shares held in the Charitable Trust in any
liquidation, dissolution or winding up or distribution of the assets of the
Company, in accordance with Section 8.3(e).
(e) SALE OF SHARES BY CHARITABLE TRUSTEE.
(i) Within 20 days of receiving notice from the Company that Shares have
been transferred to the Charitable Trust, the Charitable Trustee shall
sell the Shares held in the Charitable Trust (together with the right
to receive dividends or other distributions with respect to such
Shares as to any Shares transferred to the Charitable Trustee as a
result of the operation of Section 8.2(a)(ii)) to a Person, designated
by the Charitable Trustee, whose ownership of the Shares
will not violate the ownership limitations set forth in Section
8.2(a)(i). Upon such sale, the interest of the Charitable Beneficiary
in the Shares sold shall terminate and the Charitable Trustee
shall distribute the net proceeds of the sale to the Prohibited Owner
and to the Charitable Beneficiary as provided in this Section 8.3(e).
(ii) A Prohibited Owner shall receive the lesser of (1) the net price paid
by the Prohibited Owner for the Shares or, if the Prohibited Owner did
not give value for the Shares in connection with the event causing the
Shares to be held in the Charitable Trust (e.g., in the case of a
gift, devise or other such transaction), the Market Price of the
Shares on the day of the event causing the Shares to be held in the
Charitable Trust, and (2) the net sales proceeds received by the
Charitable Trustee from the sale or other disposition of the Shares
held in the Charitable Trust. Any net sales proceeds in excess of the
amount payable to the Prohibited Owner shall be immediately paid to
the Charitable Beneficiary. If, prior to the discovery by the Company
that Shares have been transferred to the Charitable Trustee, such
Shares are sold by a Prohibited Owner, then (i) such Shares shall be
deemed to have been sold on behalf of the Charitable Trust and (ii) to
the extent that the Prohibited Owner received an amount for such
Shares that exceeds the amount that such Prohibited Owner was entitled
to receive pursuant to this Section 8.3(e), such excess shall
be paid to the Charitable Trustee upon demand.
26
(f) PURCHASE RIGHT IN SHARES TRANSFERRED TO TRUSTEE. Shares transferred
to the Charitable Trustee shall be deemed to have been offered for sale to
the Company, or its designee, at a price per Share equal to the lesser of (i)
the price per Share in the transaction that resulted in such transfer to the
Charitable Trust (or, in the case of a devise, gift or other such
transaction, the Market Price per such Shares on the day of the event causing
the Shares to be held in the Charitable Trust) and (ii) the Market Price per
such Share on the date the Company, or its designee, accepts such offer. The
Company shall have the right to accept such offer until the Charitable
Trustee has sold the Shares held in the Charitable Trust pursuant to Section
8.3(e). Upon such a sale to the Company, the interest of the Charitable
Beneficiary in the Shares sold shall terminate and the Charitable Trustee
shall distribute the net proceeds of the sale to the Prohibited Owner and the
Charitable Beneficiary as provided in Section 8.3(e).
(g) DESIGNATION OF CHARITABLE BENEFICIARIES. By written notice to the
Charitable Trustee, the Company shall designate from time to time one or more
nonprofit organizations to be the Charitable Beneficiary of the interest in the
Charitable Trust such that (i) Shares held in the Charitable Trust would not
violate the restrictions set forth in Section 8.2(a)(i) in the hands of such
Charitable Beneficiary and (ii) contributions to each such organization must be
eligible for deduction under each of Sections 170(b)(1)(A), 2055 and 2522 of the
Code.
Section 8.4 TRANSACTIONS ON A NATIONAL SECURITIES EXCHANGE. Nothing in this
Article VIII shall preclude the settlement of any transaction entered into
through the facilities of a National Securities Exchange or any automated
inter-dealer quotation system. The fact that the settlement of any transaction
takes place shall not negate the effect of any other provision of this Article
VIII and any transferee in such a transaction shall be subject to all of the
provisions and limitations set forth in this Article VIII.
Section 8.5 ENFORCEMENT. The Company is authorized specifically to seek
equitable relief, including injunctive relief, to enforce the provisions of
this Article VIII (and such Person shall be liable, without limitation, for
all costs incurred in connection therewith and pursuant to Section 10.3).
Section 8.6 NON-WAIVER. No delay or failure on the part of the Company or the
Board of Directors in exercising any right hereunder shall operate as a waiver
of any right of the Company or the Board of Directors, as the case may be,
except to the extent specifically waived in writing.
Section 8.7 ENFORCEABILITY. If any of the restrictions on transfer of Shares
contained in this Article VIII are determined to be void, invalid or
unenforceable by any court of competent jurisdiction, then the Prohibited Owner
may be deemed, at the option of the Company, to have acted as an agent of the
Company in acquiring such Shares and to hold such Shares on behalf of the
Company.
ARTICLE IX
VOTING RIGHTS OF SHAREHOLDERS; MEETINGS OF SHAREHOLDERS
Section 9.1 GENERAL.
(a) The provisions of this Article IX shall be subject to the requirements
of the Exchange Act and any applicable Exchange Rule. If, in the Opinion of
Counsel, any of such provisions are inconsistent with such requirements, such
requirements shall supersede the provisions of this Agreement and the
27
Board of Directors shall amend the provisions of this Article IX so as to make
its provisions consistent with such requirements.
(b) Any matter, including the nomination of Directors, submitted by the
Board of Directors to the Shareholders for approval, and any matter otherwise
voted upon by the Shareholders and subject to the provisions of Section 5.5
(relating to the creation of new classes and series of Shares) and Section
7.1(m) (relating to the removal of Directors by the Shareholders), shall require
the following vote by the Shareholders for approval: (i) the election of
Directors nominated by the Board of Directors, a Share Majority; (ii) any other
matter that has been approved previously by the Board of Directors, a Share
Plurality; and (iii) any matter that has not been approved previously by the
Board of Directors, a Share Separate Class Approval. There shall not be
cumulative voting of Common Shares.
(c) All meetings of Shareholders shall be held at the principal
executive office of the Company or at such other place as shall be set by the
Board of Directors and stated in the notice of the meeting. For purposes of
determining the Shareholders entitled to notice of or to vote at a meeting of
the Shareholders, the Board of Directors may set a Record Date. If no Record
Date is fixed by the Board of Directors, the Record Date for determining
Shareholders entitled to notice of or to vote at a meeting of Shareholders
shall be at the close of business on the day next preceding the day on which
notice is given. A determination of Shareholders of record entitled to notice
of or to vote at a meeting of Shareholders shall apply to any adjournment or
postponement of the meeting; PROVIDED, HOWEVER, that the Board of Directors
may fix a new Record Date for the adjourned or postponed meeting.
(d) An annual meeting of the Shareholders shall be called by the Board
of Directors and shall be held on a date and at the time set by the Board of
Directors. The Board of Directors shall cause at least 30 days notice to be
given of an annual meeting of Shareholders.
(e) The Chairman of the Board, if any, or a majority of the entire Board of
Directors may call a special meeting of the Shareholders. Subject to subsection
(f) and the last sentence of this subsection (e), a special meeting of
Shareholders shall also be called by the Secretary of the Company upon the
written request of Shareholders entitled to cast not less than the Special
Meeting Percentage of all the votes entitled to be cast at such meeting. The
"SPECIAL MEETING PERCENTAGE" shall be a majority or, to the extent permitted by
any applicable Exchange Rule, such higher percentage as shall be specified from
time to time by the Board of Directors; PROVIDED, HOWEVER, that in no case shall
the Special Meeting Percentage be more than 75%. Nothing in this Agreement shall
be construed to permit the Shareholders to cause a special meeting of the
Shareholders to be called unless applicable law or Exchange Rule requires that
the Shareholders be able to do so.
(f) Subject to the last sentence of subsection (e), any Shareholder of
record seeking to have Shareholders request a special meeting shall, by sending
written notice to the Secretary (the "RECORD DATE REQUEST NOTICE") by registered
mail, return receipt requested, request the Board of Directors to fix a record
date to determine the Shareholders entitled to request a special meeting (the
"REQUEST RECORD DATE"). The Record Date Request Notice shall set forth the
purpose of the meeting and the matters proposed to be acted on at it, shall be
signed by one or more Shareholders of record as of the date of signature (or
their duly authorized agents), shall bear the date of signature of each such
Shareholder (or other agent) and shall set forth all information relating to
each such Shareholder that must be disclosed in solicitations of proxies for
election of Directors in an election contest (even if an election contest is not
involved), or is otherwise required, in each case pursuant to the Exchange Act.
Upon receiving the
28
Record Date Request Notice, the Board of Directors may fix a Request Record Date
and may also fix the Special Meeting Percentage for that meeting. The Request
Record Date shall not precede and shall not be more than ten days after the
close of business on the date on which the resolution fixing the Request Record
Date is adopted by the Board of Directors. If the Board of Directors, within ten
days after the date on which a valid Record Date Request Notice is received,
fails to adopt a resolution fixing the Request Record Date and make a public
announcement of such Request Record Date, the Request Record Date shall be the
close of business on the tenth day after the first date on which the Record Date
Request Notice is received by the Secretary.
(g) Subject to the last sentence of subsection (e), in order for any
Shareholder to request a special meeting, one or more written requests for a
special meeting (the "SPECIAL MEETING REQUEST") signed by Shareholders of record
(or their duly authorized agents) as of the Request Record Date entitled to cast
not less than the Special Meeting Percentage shall be delivered to the
Secretary. In addition, the Special Meeting Request shall set forth the purpose
of the meeting and the matters proposed to be acted on at it (which shall be
limited to the matters set forth in the Record Date Request Notice received by
the Secretary), shall bear the date of signature of each such Shareholder (or
other agent) signing the Special Meeting Request, shall set forth the name and
address, as they appear in the Company's books, of each Shareholder signing such
request (or on whose behalf the Special Meeting Request is signed) and the class
and number of Shares of the Company which are owned of record and beneficially
by each such Shareholder, shall be sent to the Secretary by registered mail,
return receipt requested, and must be received by the Secretary within 60 days
after the Request Record Date. Any requesting Shareholder may revoke his request
for a special meeting at any time by written revocation delivered to the
Secretary.
(h) The Secretary shall inform the requesting Shareholders of the
reasonably estimated cost of preparing and mailing the notice of meeting
(including the Company's proxy materials). The Secretary shall not be required
to call a special meeting upon Shareholder request and such meeting shall not be
held unless, in addition to the written requests required by subsection (g), the
Secretary receives payment from the requesting Shareholders of such reasonably
estimated cost prior to the mailing of any notice of the meeting.
(i) Except as provided in the next sentence, any special meeting shall
be held at such place, date and time as may be designated by the Officer who
called the meeting, if any, and otherwise by the Board of Directors. In the
case of any special meeting called by the Secretary upon the request of
Shareholders (a "SHAREHOLDER REQUESTED MEETING"), such meeting shall be held
at such place, date and time as may be designated by the Board of Directors;
(the "MEETING RECORD DATE"); provided, however that if the Board of Directors
fails to designate, within ten days after the date that a valid Special
Meeting Request is actually received by the Secretary (the "DELIVERY DATE"),
a date and time for a Shareholder Requested Meeting, then such meeting shall
be held at 2:00 p.m., local time on the 90(th) day after the Meeting Record
Date or, if such 90(th) day is not a Business Day, on the first preceding
Business Day; and provided further that in the event that the Board of
Directors fails to designate a place for a Shareholder Requested Meeting
within ten days after the Delivery Date, then such meeting shall be held at
the principal executive offices of the Company. In fixing a date for any
special meeting, the Chairman of the Board, if any, the President or the
Board of Directors may consider such factors as he, she or it deems relevant
within the good faith exercise of business judgment, including, without
limitation, the nature of the matters to be considered, the facts and
circumstances surrounding any request for meeting and any plan of the Board
of Directors to call an annual meeting or a special meeting. In the case of
any Shareholder Requested Meeting, if the Board
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of Directors fails to fix a Meeting Record Date that is a date within 30 days
after the Delivery Date, then the close of business on the 30(th) day after
the Delivery Date shall be the Meeting Record Date.
(j) If at any time as a result of written revocations of requests for the
special meeting, Shareholders of record (or their duly authorized agents) as of
the Request Record Date entitled to cast less than the Special Meeting
Percentage shall have delivered and not revoked requests for a special meeting,
the Secretary may refrain from mailing the notice of the meeting or, if the
notice of the meeting has been mailed, the Secretary may revoke the notice of
the meeting at any time not less than ten days before the meeting if the
Secretary has first sent to all other requesting Shareholders written notice of
such revocation and of intention to revoke the notice of the meeting. Any
request for a special meeting received after a revocation by the Secretary of a
notice of a meeting shall be considered a request for a new special meeting.
(k) The Chairman of the Board, if any, the President or the Board of
Directors may appoint regionally or nationally recognized independent inspectors
of elections to act as the agent of the Company for the purpose of promptly
performing a ministerial review of the validity of any Special Meeting Request
received by the Secretary. For the purpose of permitting the inspectors to
perform such review, no such request shall be deemed to have been delivered to
the Secretary until the earlier of (i) five Business Days after receipt by the
Secretary of such request and (ii) such date as the independent inspectors
certify to the Company that the Secretary has validly received requests signed
by Record Holders (or their duly authorized agents) entitled to cast not less
than the Special Meeting Percentage of all votes entitled to be cast at the
meeting to be called pursuant to such requests. Nothing contained in this
subsection (k) shall in any way be construed to suggest or imply that the
Company or any Shareholder shall not be entitled to contest the validity of any
request, whether during or after such five Business Day period, or to take any
other action (including, without limitation, the commencement, prosecution or
defense of any litigation with respect thereto, and the seeking of injunctive
relief in such litigation).
Section 9.2 NOTICE. Not less than ten nor more than 90 days before each meeting
of Shareholders, the Secretary shall give to each Shareholder entitled to vote
at such meeting and to each Shareholder not entitled to vote who is entitled to
notice of the meeting written notice stating the time and place of the meeting
and, in the case of a special meeting or as otherwise may be required by any
statute, the purpose for which the meeting is called, either by mail, by
recognized national courier service, by presenting it to such Shareholder
personally, by leaving it at the Shareholder's residence or usual place of
business or by any other means, including electronic delivery, permitted by the
Delaware LLC Act, the Exchange Act and any applicable Exchange Rule. If mailed,
such notice shall be deemed to be given when deposited in the United States mail
addressed to the Shareholder at the Shareholder's address as it appears on the
records of the Company, with postage thereon prepaid. No business shall be
transacted at a Shareholder Requested Meeting except as specifically designated
in the notice.
Section 9.3 QUORUM; ORGANIZATION AND CONDUCt.
(a) QUORUM. A quorum for action at an annual or special meeting of
Shareholders shall be the holders, present in person or by proxy, of a majority
of the Outstanding Shares entitled to vote at the meeting; PROVIDED, HOWEVER,
that a quorum for the approval of any proposal that requires a Share Separate
Class Approval or a Share Super-Majority Approval shall be the holders of that
number of each class and series of Shares required to approve the proposal in
question.
(b) ORGANIZATION AND CONDUCT. Every meeting of Shareholders shall be
conducted by an individual appointed by the Board of Directors to be chairman of
the meeting or, in the absence of such
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appointment, by the Chairman of the Board, if there be one, or, in the case
of the absence of the Chairman of the Board, by one of the following officers
present at the meeting: the Vice Chairman of the Board, if there be one, the
President, the Vice Presidents in their order of rank and seniority, or, in
the absence of such officers, a chairman chosen by the Shareholders by the
vote of a majority of the votes cast by Shareholders present in person or by
proxy. The Secretary, or, in the Secretary's absence, an Assistant Secretary,
or in the absence of both the Secretary and Assistant Secretaries, a person
appointed by the Board of Directors or, in the absence of such appointment, a
person appointed by the chairman of the meeting shall act as Secretary. In
the event that the Secretary presides at a meeting of the Shareholders, an
Assistant Secretary shall record the minutes of the meeting. The order of
business and all other matters of procedure at any meeting of Shareholders
shall be determined by the chairman of the meeting. The chairman of the
meeting may prescribe such rules, regulations and procedures and take such
action as, in the discretion of such chairman, are appropriate for the proper
conduct of the meeting, including, without limitation, (a) restricting
admission to the time set for the commencement of the meeting; (b) limiting
attendance at the meeting to Shareholders of record of the Company, their
duly authorized proxies or other such persons as the chairman of the meeting
may determine; (c) limiting participation at the meeting on any matter to
Shareholders of record of the Company entitled to vote on such matter, their
duly authorized proxies or other such persons as the chairman of the meeting
may determine; (d) limiting the time allotted to questions or comments by
participants; (e) maintaining order and security at the meeting; (f) removing
any Shareholder who refuses to comply with meeting procedures, rules or
guidelines as set forth by the chairman of the meeting; and (g) recessing or
adjourning the meeting to a later date and time and place announced at the
meeting. Unless otherwise determined by the chairman of the meeting, meetings
of Shareholders shall not be required to be held in accordance with the rules
of parliamentary procedure or any established rules of order. If a quorum
shall not be present at any meeting of the Shareholders, the chairman of the
meeting or the Shareholders entitled to vote at such meeting, present in
person or by proxy, shall have the authority to adjourn the meeting from time
to time to a specified date without notice other than announcement at the
meeting. At such adjourned meeting at which a quorum shall be present, any
business may be transacted which might have been transacted at the meeting as
originally notified. The Shareholders present either in person or by proxy,
at a meeting which has been duly called and convened, may continue to
transact business until adjournment, notwithstanding the withdrawal of enough
Shareholders to leave less than a quorum.
Section 9.4 PROXIES. A Shareholder may cast the votes entitled to be cast by
the Shares owned of record by the Shareholder in person or by proxy granted
by the Shareholder or by the Shareholder's duly authorized agent in writing,
by any means permitted by the Board of Directors or in any manner required by
law. Such proxy or evidence of authorization of such proxy shall be filed
with the Secretary of the Company before or at the meeting. No proxy shall be
valid more than eleven months after its date unless otherwise provided in the
proxy.
Section 9.5 VOTING OF SHARES BY CERTAIN HOLDERS.
(a) For all purposes of this Agreement, Shares registered in the name of a
corporation, partnership, trust or other entity, if entitled to be voted, may be
voted by the president or a vice president, a general partner or trustee
thereof, as the case may be, or a proxy appointed by any of the foregoing
individuals, unless some other person who has been appointed to vote such stock
pursuant to a bylaw or a resolution of the governing body of such corporation or
other entity or agreement of the partners of a partnership presents a certified
copy of such bylaw, resolution or agreement, in which case such person may vote
such stock. For all purposes of this Agreement, any director or other fiduciary
may vote stock registered in his name as such fiduciary, either in person or by
proxy. Shares directly or indirectly owned by the Company shall not be voted at
any meeting and shall not be counted in
31
determining the total number of Outstanding Shares entitled to be voted at any
given time, unless they are held by it in a fiduciary capacity, in which case
they may be voted and shall be counted in determining the total number of
Outstanding Shares at any given time.
(b) The Board of Directors may adopt by resolution a procedure by which a
Shareholder may certify in writing to the Company that any Shares registered in
the name of the Shareholder are held for the account of a specified person other
than the Shareholder. The resolution shall set forth the class of Shareholders
who may make the certification, the purpose for which the certification may be
made, the form of certification and the information to be contained in it; if
the certification is with respect to a record date or closing of the stock
transfer books, the time after the record date or closing of the stock transfer
books within which the certification must be received by the Company; and any
other provisions with respect to the procedure which the Board of Directors
considers necessary or desirable. On receipt of such certification, the person
specified in the certification shall be regarded as, for the purposes set forth
in the certification, the Shareholder of record of the specified stock in place
of the Shareholder who makes the certification.
Section 9.6 INSPECTORS. The Board of Directors, in advance of any meeting, may,
but need not, appoint one or more individual inspectors or one or more entities
that designate individuals as inspectors to act at the meeting or any
adjournment thereof. If an inspector or inspectors are not appointed, the person
presiding at the meeting may, but need not, appoint one or more inspectors. In
case any person who may be appointed as an inspector fails to appear or act, the
vacancy may be filled by appointment made by the Board of Directors in advance
of the meeting or at the meeting by the chairman of the meeting. The inspectors,
if any, shall determine the number of Shares outstanding and the voting power of
each, the Shares represented at the meeting, the existence of a quorum, the
validity and effect of proxies, and shall receive votes, ballots or consents,
hear and determine all challenges and questions arising in connection with the
right to vote, count and tabulate all votes, ballots or consents, determine the
result, and do such acts as are proper to conduct the election or vote with
fairness to all Shareholders. Each such report shall be in writing and signed by
him or her or by a majority of them if there is more than one inspector acting
at such meeting. If there is more than one inspector, the report of a majority
shall be the report of the inspectors. The report of the inspector or inspectors
on the number of Shares represented at the meeting and the results of the voting
shall be PRIMA FACIE evidence thereof.
Section 9.7 ADVANCE NOTICE OF SHAREHOLDER NOMINEES FOR DIRECTOR AND OTHER
SHAREHOLDER PROPOSALS.
(a) ANNUAL MEETINGS OF SHAREHOLDERS. (1) Nominations of persons for
election to the Board of Directors and the proposal of business to be considered
by the Shareholders may be made at an annual meeting of Shareholders (i)
pursuant to the Company's notice of meeting by or at the direction of the Board
of Directors or (ii) by any Shareholder of the Company who was a Shareholder of
record both at the time of giving of notice provided for in this Section 9.7 and
at the time of the annual meeting, who is entitled to vote at the meeting and
present in person or by proxy at the meeting to answer questions concerning the
nomination or business, and who complies with the notice procedures set forth in
this Section 9.7.
(2) For nominations or other business to be properly brought before an
annual meeting by a Shareholder pursuant to clause (ii) of Section 9.7(a)(1),
the Shareholder must have given timely notice thereof in writing to the
Secretary of the Company and such other business must otherwise be a proper
matter for Shareholder action. To be timely, a Shareholder's notice shall be
delivered to the Secretary at the principal executive offices of the Company
not later than the close of business on the ninetieth (90th) day nor earlier
than the close of business on the one hundred twentieth (120th) day prior to
the first anniversary of the date of mailing of the notice for the preceding
year's annual meeting; PROVIDED,
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HOWEVER, that in the event that the date of mailing of the notice for the annual
meeting is more than thirty (30) days before or after such anniversary date,
notice by the Shareholder to be timely must be so delivered not earlier than the
close of business on the one hundred twentieth (120th) day prior to the date of
mailing of the notice for such annual meeting and not later than the close of
business on the later of the ninetieth (90th) day prior to the date of mailing
of the notice for such annual meeting or the close of business on the tenth
(10th) day following the day on which public announcement of the date of mailing
of the notice for such meeting is first made by the Company. In no event shall
the public announcement of a postponement of the mailing of notice for such
annual meeting or of an adjournment of an annual meeting to a later date or time
commence a new time period for the giving of Shareholder's notice as described
above. Such Shareholder's notice shall set forth (a) as to each person whom the
Shareholder proposes to nominate for election or reelection as a director, (i)
such person's name, age, business address and residence address, (ii) the
principal occupation or employment of the person for the past five years, (iii)
the class and number of Shares of the Company that are beneficially owned or
owned of record by such person and the investment intent of such acquisition,
(iv) the record of all purchases and sales of securities of the Company by such
person during the previous 12 month period including the dates of the
transactions, the class, series and number of securities involved in the
transactions and the consideration involved, and (v) all other information
relating to such person that is required to be disclosed in solicitations of
proxies for election of directors, or is otherwise required, in each case
pursuant to the Exchange Act, including such person's written consent to being
named in the proxy statement as a nominee and to serving as a director if
elected; (b) as to any other business that the Shareholder proposes to bring
before the meeting, a brief description of the business desired to be brought
before the meeting, the reasons for conducting such business at the meeting and
any interest in such business of such Shareholder (including any anticipated
benefit to the Shareholder therefrom) and of each beneficial owner, if any, on
whose behalf the proposal is made; and (c) as to the Shareholder giving the
notice and any Shareholder Associated Person, (i) the class, series and number
of securities of the Company which are owned of record by such Shareholder and
by such Shareholder Associated Person, if any; (ii) the class, series and number
of, and the nominee holder for, Shares owned beneficially but not of record by
such Shareholder and by any Shareholder Associated Person, if any; (iii) the
name and address of such Shareholder as it appears on the Company's stock ledger
and the address, if different, of such Shareholder Associated Person; (iv) the
record of all purchases and sales of securities of the Company by such
Shareholder or Shareholder Associated Person during the previous 12 month period
including the dates of the transactions, the class, series and number of
securities involved in the transactions and the consideration involved; and (v)
to the extent known by such Shareholder, the name and address of any other
Shareholder supporting the Nominee for election or reelection as a director or
the proposal of other business on the date of such Shareholder's notice.
For the purposes of this Section 9.7, "Shareholder Associated Person" of
any Shareholder shall mean (i) any person controlling, directly or indirectly,
or acting in concert with, such Shareholder, (ii) any beneficial owner of Common
Shares or other securities issued by the Company owned of record or beneficially
by such Shareholder and (iii) any person controlling, controlled by or under
common control with such Shareholder or Shareholder Associated Person.
(3) Notwithstanding anything in the second sentence of Section 9.7(a)(2) to
the contrary, in the event that the number of directors to be elected to the
Board of Directors of the Company is increased and there is no public
announcement by the Company naming all of the nominees for director or
specifying the size of the increased Board of Directors at least one hundred
(100) days prior to the first anniversary of the date of mailing of notice for
the preceding year's annual meeting, a Shareholder's notice required by this
Section 9.7 shall also be considered timely, but only with respect to nominees
for any new positions created by such increase, if it shall be delivered to the
Secretary at the principal
33
executive office of the Company not later than the close of business on the
tenth (10th) day following the day on which such public announcement is first
made by the Company.
(b) SHAREHOLDER PROPOSALS CAUSING COVENANT BREACHES. At the same time as or
prior to the submission of any Shareholder proposal of business to be conducted
at an annual or special meeting that, if approved and implemented by the
Company, would cause the Company to be in breach of any covenant of the Company
in any existing or proposed debt instrument of the Company or agreement of the
Company with any lender, the proponent Shareholder or Shareholders must submit
to the Secretary at the principal executive offices of the Company (i) evidence
satisfactory to the Board of Directors of the lender's willingness to waive the
breach of covenant or (ii) a plan for repayment of the indebtedness to the
lender and the payment of all related interest, prepayment premiums, breakage
costs and other amounts due and payable in connection with such repayment
satisfactory to the Board of Directors, specifically identifying the source of
funds to be used in the repayment and related payments and presenting evidence
satisfactory to the Board of Directors that the identified funds could be
applied by the Company to the repayment.
(c) SHAREHOLDER PROPOSALS REQUIRING REGULATORY NOTICE, CONSENT OR APPROVAL.
At the same time or prior to the submission of any Shareholder proposal of
business to be conducted at an annual or special meeting that, if approved,
could not be implemented by the Company without notifying or obtaining the
consent or approval of any federal, state, municipal or other regulatory body,
the proponent Shareholder or Shareholders must submit to the Secretary at the
principal executive offices of the Company (i) evidence satisfactory to the
Board of Directors that any and all required notices, consents or approvals have
been given or obtained or (ii) a plan, satisfactory to the Board of Directors,
for making the requisite notices or obtaining the requisite consents or
approvals, as applicable, prior to the implementation of the proposal.
(d) SPECIAL MEETINGS OF SHAREHOLDERS. Only such business shall be conducted
at a special meeting of Shareholders as shall have been brought before the
meeting pursuant to the Company's notice of meeting. Nominations of persons for
election to the Board of Directors may only be made at a special meeting of
Shareholders at which directors are to be elected: (i) pursuant to the Company's
notice of meeting for a meeting called by the Chairman or the Board of Directors
by or at the direction of the Board of Directors or (ii) PROVIDED THAT the Board
of Directors has determined that directors shall be elected at such special
meeting, by any Shareholder of the Company who is a Shareholder of record both
at the time of giving of notice provided for in this Section 9.7(d) and at the
time of the special meeting, who is entitled to vote at the meeting and present
in person or by proxy at the meeting to answer questions concerning the
nomination or business and who complies with the notice procedures set forth in
this Section 9.7(d). If, pursuant to the request of the Chairman, the President
or a majority of the members of the Board of Directors, the Company calls a
special meeting of Shareholders for the purpose of electing one or more
directors to the Board of Directors, any such Shareholder may nominate a person
or persons (as the case may be) for election to such position(s) as specified in
the Company's notice of meeting, if the Shareholder's notice contains the
information required by Section 9.7(a)(2) and the notice has been delivered to
the Secretary at the principal executive offices of the Company not earlier than
the close of business on the one hundred twentieth (120th) day prior to such
special meeting nor later than the later of (x) the ninetieth (90th) day prior
to such special meeting or (y) the tenth (10th) day following the day on which
public announcement is first made of the date of such special meeting and of the
nominees proposed by the Board of Directors to be elected at such meeting. In no
event shall the public announcement of a postponement or adjournment of a
special meeting to a later date or time commence a new time period for the
giving of a Shareholder's notice as described above.
34
(e) GENERAL. (1) Upon written request by the Secretary or the Board of
Directors or any committee thereof, any Shareholder proposing a nominee for
election as a director or any proposal for other business at a meeting of
Shareholders shall provide, within three business days of delivery of such
request (or such other period as may be specified in such request), written
verification, satisfactory to the Secretary or the Board of Directors or any
committee thereof, in his, her or its sole discretion, of the accuracy of any
information submitted by the Shareholder pursuant to this Section 9.7. If a
Shareholder fails to provide such written verification within such period, the
Secretary or the Board of Directors or any committee thereof may treat the
information as to which written verification was requested as not having been
provided in accordance with the procedures set forth in this Section 9.7.
(2) Only such persons who are nominated in accordance with the procedures
set forth in this Section 9.7 shall be eligible to serve as directors and only
such business as shall have been brought before the meeting with the procedures
set forth in this Section 9.7 shall be transacted at a meeting of Shareholders.
The chairperson of the meeting shall have the power and duty to determine
whether a nomination proposed to be made or any business proposed to be brought
before the meeting was made at or brought before the meeting, as the case may
be, in accordance with the procedures set forth in this Section 9.7 and, if any
proposed nomination or business is not in compliance with this Section 9.7, to
declare that such nomination or business is out of order and should be
disregarded.
(3) For purposes of this Section 9.7, (a) the "date of mailing of the
notice" shall mean the date of the proxy statement for the solicitation of
proxies for election of directors and (b) "public announcement" shall mean
disclosure (i) in a press release reported by the Dow Xxxxx News Service,
Associated Press or comparable news service or (ii) in a document publicly filed
by the Company with the Commission.
(4) The Company shall not be required to include in the Company's proxy
statement a Shareholder nomination of one or more persons for election to the
Board of Directors unless (i) such nomination has been properly made in
accordance with the provisions of this Section 9.7 and (ii) the Board of
Directors has endorsed such nomination. The Company shall not be required to
include in the Company's proxy statement a Shareholder proposal other than a
Board of Directors nomination unless (i) such proposal has been properly made in
accordance with the provisions of this Section 9.7 and (ii) either the Board of
Directors has endorsed such proposal or the proposal has been made by
Shareholders holding not less than 25% of the Shares required to approve the
proposal (or such lesser percentage as may be required by law). In addition, the
Company shall not be required to include in the Company's proxy statement a
Shareholder proposal of business to be brought before an annual or special
meeting of Shareholders unless the proponent Shareholder or Shareholders shall
have complied with (i) all applicable requirements of state and federal law and
the rules and regulations thereunder, including without limitation Rule 14a-8
(or any successor provision) under the Exchange Act, and (ii) the applicable
procedures and other requirements set forth in this Section 9.7. Nothing in this
Section 9.7 shall be deemed to affect any right of the Company to omit a
Shareholder proposal from the Company's proxy statement under the Exchange Act,
including without limitation nominations of persons for election to the Board of
Directors and business to be brought before the Shareholders at an annual or
special meeting of Shareholders. A Shareholder proposal properly made in
accordance with the provisions of this Section 9.7 shall be considered at the
meeting with respect to which it was made even if such proposal does not appear
in the Company's proxy statement for that meeting.
(5) The Board of Directors may from time to time require any person
nominated to serve on the Board of Directors to agree in writing with regard to
matters of business ethics and confidentiality while such nominee serves as a
Director, such agreement to be on the terms and in a form determined
satisfactory by the Board of Directors, as amended and supplemented from time to
time in the discretion
35
of the Board of Directors. The terms of such agreement may be substantially
similar to the Code of Business Conduct and Ethics of the Company or any similar
code promulgated by the Company or may differ from or supplement such Code of
Business Conduct and Ethics or other code.
Section 9.8 ACTIONS OF SHAREHOLDERS BY WRITTEN CONSENT. Any action required or
permitted to be taken at a meeting of Shareholders may be taken without a
meeting only by a unanimous written consent of the Shareholders entitled to vote
on the matter which sets forth the action.
ARTICLE X
INDEMNIFICATION
Section 10.1 INDEMNIFICATION.
(a) To the fullest extent permitted by law but subject to the limitations
expressly provided in this Agreement or in any Bylaws of the Company, all
Indemnitees shall be indemnified and held harmless by the Company from and
against any and all losses, claims, damages, liabilities, joint or several,
expenses (including legal fees and expenses), judgments, fines, penalties,
interest, settlements or other amounts arising from any and all claims, demands,
actions, suits or proceedings, whether civil, criminal, administrative or
investigative, whether or not by or in the right of the Company, in which any
Indemnitee may be involved, or is threatened to be involved, as a party or
otherwise, in connection with any act or omission performed, or omitted to be
performed, by such Indemnitee in good faith on behalf of or with respect to the
Company or by reason of its status as an Indemnitee; PROVIDED THAT the
Indemnitee shall not be indemnified and held harmless if there has been a final
and non-appealable judgment entered by a court of competent jurisdiction
determining that, in respect of the matter for which the Indemnitee is seeking
indemnification pursuant to this Section 10.1, the Indemnitee acted in bad faith
or engaged in fraud, willful misconduct, or in the case of a criminal matter,
acted with knowledge that the Indemnitee's conduct was unlawful.
(b) To the fullest extent permitted by law, expenses (including legal fees
and expenses) incurred by an Indemnitee who is indemnified pursuant to Section
10.1 in defending any claim, demand, action, suit or proceeding shall, from time
to time, be advanced by the Company prior to a determination that the Indemnitee
is not entitled to be indemnified upon receipt by the Company of any undertaking
by or on behalf of the Indemnitee to repay such amount if it shall be determined
that the Indemnitee is not entitled to be indemnified as authorized in this
Section 10.1.
(c) The indemnification, advancement of expenses and other provisions of
this Section 10.1 shall be in addition to any other rights to which an
Indemnitee may be entitled under any agreement, pursuant to any vote of the
holders of Outstanding Shares entitled to vote on such matter, as a matter of
law or otherwise, both as to actions in the Indemnitee's capacity as an
Indemnitee and as to actions in any other capacity, and shall continue as to an
Indemnitee who has ceased to serve in such capacity and shall inure to the
benefit of the heirs, successors, assigns and administrators of the Indemnitee.
(d) The Company may purchase and maintain insurance, on behalf of its
Directors and Officers, and such other Persons as the Board of Directors shall
determine, against any liability that may be asserted against or expense that
may be incurred by such Person in connection with the Company's activities or
such Person's activities on behalf of the Company, regardless of whether the
Company would have the power to indemnify such Person against such liability
under the provisions of this Agreement or otherwise.
36
(e) For purposes of the definition of Indemnitee in Section 1.1, the
Company shall be deemed to have requested an Indemnitee to serve as fiduciary of
an employee benefit plan whenever the performance by such Indemnitee of his
duties to the Company also imposes duties on, or otherwise involves services by,
such Indemnitee to the plan or participants or beneficiaries of the plan; excise
taxes assessed on an Indemnitee with respect to an employee benefit plan
pursuant to applicable law shall constitute "fines" within the meaning of this
Section 10.1; and action taken or omitted by such Indemnitee with respect to any
employee benefit plan in the performance of such Indemnitee's duties for a
purpose reasonably believed by him to be in the interest of the participants and
beneficiaries of the plan shall be deemed to be for a purpose that is in, or not
opposed to, the best interests of the Company.
(f) Any indemnification pursuant to this Section 10.1 shall be made only
out of the assets of the Company, it being agreed that the Shareholders shall
not be personally liable for such indemnification and shall have no obligation
to contribute or loan any monies or property to the Company to enable it to
effectuate such indemnification.
(g) An Indemnitee shall not be denied indemnification in whole or in part
under this Section 10.1 because the Indemnitee had an interest in the
transaction with respect to which the indemnification applies if the transaction
was otherwise permitted by the terms of this Agreement or applicable law.
(h) The indemnification, advancement of expenses and other provisions of
this Section 10.1 are for the benefit of the Indemnitees, their heirs,
successors, assigns and administrators and shall not be deemed to create any
rights for the benefit of any other Persons.
(i) No amendment, modification or repeal of this Section 10.1 or any
provision hereof shall in any manner terminate, reduce or impair the right of
any past, present or future Indemnitee to be indemnified by the Company, nor the
obligations of the Company to indemnify any such Indemnitee under and in
accordance with the provisions of this Section 10.1 as in effect immediately
prior to such amendment, modification or repeal with respect to claims arising
from or relating to matters occurring, in whole or in part, prior to such
amendment, modification or repeal, regardless of when such claims may arise or
be asserted.
(j) The Company shall have the power, with the approval of the Board of
Directors, to provide such indemnification and advancement of expenses to a
person who served a predecessor of the Company in any of the capacities
described above and to any employee or agent of the Company or a predecessor of
the Company.
(k) The provisions of this Article X shall be applicable to all claims,
demands, actions, suits or proceedings made or commenced after the adoption
thereof whether arising from acts or omissions to act occurring before or after
its adoption.
Section 10.2 EXCULPATION OF LIABILITY.
(a) The personal liability of each member of its Board of Directors to the
Company, its Shareholders or any other Person bound by this Agreement is hereby
eliminated for monetary damages for breach of fiduciary duty as a Director;
PROVIDED, HOWEVER, that, the foregoing shall not eliminate the liability of a
director (i) for any breach of such director's duty of loyalty to the Company or
the Shareholders as modified by this Agreement, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, or (iii) for any transaction from which such director derived an improper
personal benefit.
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(b) Notwithstanding anything to the contrary set forth in this Agreement,
no Indemnitee shall be liable for monetary damages to the Company, the
Shareholders or any other Person bound by this Agreement for losses sustained or
liabilities incurred as a result of any act or omission of an Indemnitee unless
there has been a final, non-appealable judgment entered by a court of competent
jurisdiction determining that, in respect of the matter in question, the
Indemnitee acted in bad faith or engaged in fraud, willful misconduct or, in the
case of a criminal matter, acted with knowledge that the Indemnitee's conduct
was unlawful.
(c) The Board of Directors may exercise any of the powers granted to it by
this Agreement and perform any of the duties imposed upon it hereunder either
directly or by or through its agents, and the Board of Directors shall not be
responsible for any misconduct or negligence on the part of any such agent
appointed by the Board of Directors in good faith.
(d) The provisions of this Agreement, to the extent that they restrict or
eliminate or otherwise modify the duties (including fiduciary duties) and
liabilities of an Indemnitee otherwise existing at law or in equity, are agreed
by the Shareholders to replace such other duties and liabilities of such
Indemnitee.
(e) Any amendment, modification or repeal of this Section 10.2 or any
provision hereof shall be prospective only and shall not in any way affect the
limitations on the liability of any Indemnitee and other protective provisions
under this Section 10.2 as in effect immediately prior to such amendment,
modification or repeal with respect to claims arising from or relating to
matters occurring, in whole or in part, prior to such amendment, modification or
repeal, regardless of when such claims may arise or be asserted and provided
such Person became an Indemnitee hereunder prior to such amendment, modification
or repeal.
Section 10.3. INDEMNIFICATION OF THE COMPANY. Each Shareholder will indemnify
and hold harmless the Company (and any subsidiaries or affiliates thereof), from
and against all costs, expenses, penalties, fines or other amounts, including,
without limitation, attorneys' and other professional fees, whether third party
or internal, arising from such Shareholder's breach of any provision of this
Agreement or any Bylaws, including, without limitation, Sections 8.1 through 8.2
of Article VIII, and shall pay such indemnitee such amounts on demand, together
with interest on such amounts, which interest will accrue at the lesser of 15%
per annum compounded and the maximum amount permitted by law, from the date such
costs or the like are incurred until the receipt of repayment by the Company.
ARTICLE XI
BOOKS, RECORDS, ACCOUNTING AND REPORTS
Section 11.1 NO RIGHT OF INSPECTION OR ACCESS. Except as the Board of Directors
may specify in one or more instances or categories, to the maximum extent
permitted by Section 18-305(g) of the Delaware LLC Act, no Shareholder shall
have the right to inspect, or obtain a copy of, any of the books and records of
the Company, and no Shareholder shall have any right of access to any Director
or Officer of the Company. Any right of inspection or access granted by the
Board of Directors shall be subject to such restrictions, including
confidentiality restrictions, as the Board of Directors may impose. The Company
shall not be required to furnish any reports or other information to the
Shareholders except as otherwise required by applicable law, rule or regulation.
ARTICLE XII
DISSOLUTION AND LIQUIDATION
Section 12.1 DISSOLUTION. The Company shall dissolve, and its affairs shall be
wound up, only upon the first to occur of the following:
(a) an election to dissolve the Company by the Board of Directors that is
approved by the holders of a Share Plurality;
(b) the sale, exchange or other disposition of all or substantially all of
the assets and properties of the Company and the Company's Subsidiaries unless
otherwise determined by the Board of Directors;
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(c) the entry of a decree of judicial dissolution of the Company pursuant
to the provisions of the Delaware LLC Act; or
(d) the reduction of the number of Shareholders to zero.
Section 12.2 LIQUIDATOR. Upon dissolution of the Company, the Board of Directors
shall select one or more Persons to act as Liquidator. The Liquidator (if other
than the Board of Directors) shall be entitled to receive such compensation for
its services as may be approved by holders of a Share Majority. The Liquidator
(if other than the Board of Directors) shall agree not to resign at any time
without 15 days' prior notice and may be removed at any time, with or without
cause, by notice of removal approved by holders of a Share Majority. Upon
dissolution, removal or resignation of the Liquidator, a successor and
substitute Liquidator (who shall have and succeed to all rights, powers and
duties of the original Liquidator) shall within 30 days thereafter be approved
by holders of a Share Majority. The right to approve a successor or substitute
Liquidator in the manner provided herein shall be deemed to refer also to any
such successor or substitute Liquidator approved in the manner herein provided.
Except as expressly provided in this Article XII, the Liquidator approved in the
manner provided herein shall have and may exercise, without further
authorization or consent of any of the parties hereto, all of the powers
conferred upon the Board of Directors under the terms of this Agreement (but
subject to all of the applicable limitations, contractual and otherwise, upon
the exercise of such powers) necessary or appropriate to carry out the duties
and functions of the Liquidator hereunder for and during the period of time
required to complete the winding up and liquidation of the Company as provided
for herein.
Section 12.3 LIQUIDATION. The Liquidator shall proceed to dispose of the assets
of the Company, discharge its liabilities, and otherwise wind up its affairs in
such manner and over such period as determined by the Liquidator, subject to the
applicable provisions of the Delaware LLC Act.
Section 12.4 CANCELLATION OF CERTIFICATE OF FORMATION. Upon the completion of
the distribution of Company cash and property as provided in Section 12.3 in
connection with the liquidation of the Company, the Certificate of Formation and
all qualifications of the Company as a foreign limited liability company in
jurisdictions other than the State of Delaware shall be canceled and such other
actions as may be necessary to terminate the Company shall be taken.
Section 12.5 RETURN OF CONTRIBUTIONS. No Shareholder, Director or Officer of the
Company will be personally liable for, or have any obligation to contribute or
loan any monies or property to the Company to enable it to effectuate, the
return of any capital contributions of any Shareholder or Shareholders, or any
portion thereof, it being expressly understood that any such return shall be
made solely from Company assets.
Section 12.6 WAIVER OF PARTITION. To the maximum extent permitted by law, each
Shareholder hereby waives any right to partition of the Company property.
Section 12.7 SPECIAL SHAREHOLDER VOTE. If the Shareholders are permitted by law
to dissolve or liquidate the Company without the approval of the Board of
Directors, the required vote therefor shall be a Share Super-Majority Approval.
ARTICLE XIII
AMENDMENT OF AGREEMENT
Section 13.1 AMENDMENT OF LIMITED LIABILITY COMPANY AGREEMENT.
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(a) GENERAL AMENDMENTS. Except as provided in Section 13.1(b), the Board of
Directors may amend any of the terms of this Agreement but only in compliance
with the terms, conditions and procedures set forth in this Section 13.1(a). If
the Board of Directors desires to amend any provision of this Agreement other
than pursuant to Section 13.1(b), then it shall first adopt a resolution setting
forth the amendment proposed, declaring its advisability, and either calling a
special meeting of the Shareholders entitled to vote in respect thereof for the
consideration of such amendment or directing that the amendment proposed be
considered at the next annual meeting of the Shareholders. Amendments to this
Agreement may be proposed only by or with the consent of the Board of Directors.
In the event that applicable law requires that amendments may be proposed by the
Shareholders, such amendments may be proposed only by the holders of the
percentage of Shares specified by law or if no such percentage is specified then
by the holders of 25% of the Outstanding Shares; in addition, no such proposal
shall be considered unless such proposal has been properly made in accordance
with the provisions of Section 9.7. A special or annual meeting to consider any
such proposal shall be called and held upon notice in accordance with Article IX
of this Agreement. The notice shall set forth such amendment in full or a brief
summary of the changes to be effected thereby, as the Board of Directors shall
deem advisable. At the meeting, a vote of Shareholders entitled to vote thereon
shall be taken for and against the proposed amendment. A proposed amendment
shall be effective upon its approval in accordance with the provisions of
Section 9.1(b).
(b) AMENDMENTS TO BE ADOPTED SOLELY BY THE BOARD OF DIRECTORS.
Notwithstanding Section 13.1(a), the Board of Directors, without the approval or
any other action of any Shareholder, may amend any provision of this Agreement,
and execute, swear to, acknowledge, deliver, file and record whatever documents
may be required in connection therewith, to reflect:
(i) a change in the name of the Company, the location of the principal
place of business of the Company, the registered agent of the Company
or the registered office of the Company;
(ii) the admission, substitution, resignation or removal of Shareholders in
accordance with this Agreement;
(iii) a change that the Board of Directors determines (A) does not
adversely affect the Shareholders (including any particular class or
series of Shares as compared to other classes or series of Shares) in
any material respect, (B) to be necessary or appropriate to (1)
satisfy any requirements, conditions or guidelines contained in any
opinion, directive, order, ruling or regulation of any federal or
state agency or judicial authority or contained in any federal or
state statute (including the Delaware LLC Act) or (2) facilitate the
trading of the Shares (including the division of any class or series
of Outstanding Shares into different classes or series to facilitate
uniformity of tax consequences within such classes or series of
Shares) or comply with any rule, regulation, guideline or requirement
of any National Securities Exchange on which the Common Shares or
other securities of the Company are or will be listed for trading,
compliance with any of which the Board of Directors deems to be in the
best interests of the Company and the Shareholders, (C) is required to
effect the intent of the provisions of this Agreement or is otherwise
contemplated by this Agreement or (D) is required or desired to
correct any ambiguity or mistake in this Agreement determined to be
such by the Board of Directors;
(iv) a change in the fiscal year or taxable year of the Company and any
other changes that the Board of Directors determines to be necessary
or appropriate as a result of a change in the fiscal year or taxable
year of the Company including, if the Board of Directors shall so
determine, a change in the definition of "Quarter";
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(v) an amendment that the Board of Directors determines to be necessary or
appropriate in connection with the authorization of issuance of any
class or series of Shares or other securities of the Company pursuant
to Section 5.3;
(vi) an amendment that the Board of Directors, in its sole discretion,
determines to be necessary or appropriate to implement a defensive
shareholder rights plan similar to a shareholder rights plan, or
"poison pill," for corporations, including the issuance of a dividend
of rights to each Shareholder that would become exercisable if any
Person or group (an "ACQUIRING PERSON") acquires ownership in excess
of a specified percentage of the Outstanding Shares or initiates a
tender offer for in excess of that specified percentage of the
Outstanding Shares; and the provisions of such a plan may include
provisions that delegate all or certain decisions to Directors who
have specified qualifications, including a lack of a relationship to
the Acquiring Person and/or specified tenure on the Board of
Directors;
(vii) any amendment expressly permitted in this Agreement to be made by the
Board of Directors acting alone;
(viii) an amendment effected, necessitated or contemplated by a Merger
Agreement approved in accordance with Section 14.3;
(ix) an amendment that the Board of Directors determines to be necessary or
appropriate to reflect and account for the formation by the Company
of, or investment by the Company in, any corporation, partnership,
joint venture, limited liability company or other entity; or
(x) any other amendments substantially similar to the foregoing.
Section 13.2 AMENDMENT REQUIREMENTS.
(a) Notwithstanding the provisions of Section 13.1, no provision of this
Agreement that establishes a percentage of Outstanding Shares required to take
any action shall be amended, altered, changed, repealed or rescinded in any
respect that would reduce such voting percentage unless such amendment is
approved by the affirmative vote of holders of Outstanding Shares whose
aggregate Outstanding Shares constitute not less than the voting requirement
sought to be reduced.
(b) Notwithstanding the provisions of Section 13.1, no amendment to this
Agreement may (i) enlarge the obligations of any Shareholder without its
consent, unless such shall be deemed to have occurred as a result of an
amendment approved pursuant to Section 13.2(c), (ii) change Section 12.1(a),
(iii) give any Person the right to dissolve the Company other than in accordance
with Section 12.1 or (iv) change the term of existence of the Company.
(c) Except as provided in Section 14.3, and without limitation of the Board
of Directors' authority to adopt amendments to this Agreement without the
approval of any Shareholders as contemplated in Section 13.1, any amendment that
would have a material adverse effect on the rights or preferences of any class
of Shares in relation to other classes of Shares must be approved by the holders
of not less than a majority of the Outstanding Shares of the class affected.
ARTICLE XIV
MERGER, CONSOLIDATION OR CONVERSION
Section 14.1 AUTHORITY. The Company may merge or consolidate with one or more
limited liability companies or "other business entities" as defined in the
Delaware LLC Act, or convert into another
41
entity, whether such entity is formed under the laws of the State of Delaware or
any other state of the United States of America, pursuant to a written agreement
of merger or consolidation ("MERGER AGREEMENT") or a written plan of conversion
("PLAN OF CONVERSION"), as the case may be, in accordance with this Article XIV.
Section 14.2 PROCEDURE FOR MERGER, CONSOLIDATION OR CONVERSION. Merger,
consolidation or conversion of the Company pursuant to this Article XIV requires
the prior approval of the Board of Directors.
(a) If the Board of Directors shall determine to consent to the merger or
consolidation, the Board of Directors shall approve the Merger Agreement, which
shall set forth:
(i) the names and jurisdictions of formation or organization of each of
the business entities proposing to merge or consolidate;
(ii) the name and jurisdiction of formation or organization of the business
entity that is to survive the proposed merger or consolidation (the
"SURVIVING BUSINESS ENTITY");
(iii) the terms and conditions of the proposed merger or consolidation;
(iv) the manner and basis of canceling the rights or securities of, or
interests in, each constituent entity or of exchanging or converting
the rights or securities of, or interests in, each constituent
business entity for, or into, cash, property, rights, or securities of
or interests in, the Surviving Business Entity; and if any rights or
securities of, or interests in, any constituent business entity are
not to be exchanged or converted solely for, or into, cash, property,
rights, or securities of or interests in, the Surviving Business
Entity, the cash, property, rights, or securities of or interests in,
any limited liability company or other business entity which the
holders of such rights, securities or interests are to receive;
(v) a statement of any changes in the constituent documents or the
adoption of new constituent documents (the certificate of formation or
limited liability company agreement, articles or certificate of
incorporation, articles of trust, declaration of trust, certificate or
agreement of limited partnership or other similar charter or governing
document) of the Surviving Business Entity to be effected by such
merger or consolidation;
(vi) the effective time of the merger or consolidation, which may be the
date of the filing of the certificate of merger or consolidation
pursuant to Section 14.4 or a later date specified in or determinable
in accordance with the Merger Agreement (provided, that if the
effective time of the merger or consolidation is to be later than the
date of the filing of the certificate of merger or consolidation, the
effective time shall be fixed no later than the time of the filing of
the certificate of merger or consolidation and stated therein); and
(vii) such other provisions with respect to the proposed merger or
consolidation that the Board of Directors determines to be necessary
or appropriate.
(b) If the Board of Directors shall determine to consent to the conversion,
the Board of Directors may approve and adopt a Plan of Conversion containing
such terms and conditions that the Board of Directors determines to be necessary
or appropriate.
Section 14.3 APPROVAL BY SHAREHOLDERS OF MERGER, CONSOLIDATION OR CONVERSION.
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(a) Except as provided in Section 14.3(d), the Board of Directors, upon its
approval of the Merger Agreement or Plan of Conversion, as the case may be,
shall direct that the Merger Agreement or Plan of Conversion, as applicable, be
submitted to a vote of Shareholders, whether at an annual meeting or a special
meeting, in either case in accordance with the requirements of Article IX. A
copy or a summary of the Merger Agreement or Plan of Conversion, as applicable,
shall be included in or enclosed with the notice of meeting.
(b) Except as provided in Section 14.3(d), the Merger Agreement or Plan of
Conversion, as applicable, shall be approved upon receiving the affirmative vote
or consent of the holders of a Share Plurality.
(c) Except as provided in Section 14.3(d), after such approval by vote or
consent of the Shareholders, and at any time prior to the filing of the
certificate of merger or a certificate of conversion pursuant to Section 14.4,
the merger, consolidation or conversion may be abandoned or amended pursuant to
provisions therefor, if any, set forth in the Merger Agreement or the Plan of
Conversion, as the case may be.
(d) Notwithstanding anything else contained in this Article XIV or in this
Agreement, the Board of Directors is permitted without Shareholder approval to
create, dissolve, merge, consolidate or convert the Company or any Subsidiary,
or convey all of the Company's assets to another limited liability entity, if
the principal purpose of such action, as determined by the Board of Directors,
is to effect a change in the legal form of the Company's business, including to
change the Company into a corporation, limited partnership, trust or other legal
entity, to change the jurisdiction of organization of the Company or any
combination of the foregoing.
(e) Notwithstanding anything else contained in this Article XIV or in this
Agreement, the Board of Directors is permitted without Shareholder approval to
mortgage, sell and leaseback, pledge, hypothecate, or grant a security interest
in, some, all or substantially all of the assets of the Company or the Company's
Subsidiaries and permit the sale upon foreclosure or other realization of such
an encumbrance.
(f) Shareholders are not entitled to dissenters' rights of appraisal in the
event of a merger, consolidation or conversion involving the Company, a sale of
all or substantially all of the assets of the Company or the Company's
Subsidiaries, or any other transaction or event.
Section 14.4 CERTIFICATE OF MERGER OR CONVERSION. Upon the required approval by
the Board of Directors and the Shareholders (if required) of a Merger Agreement
or a Plan of Conversion, as the case may be, a certificate of merger or
consolidation or certificate of conversion, as applicable, shall be executed and
filed with the Secretary of State of the State of Delaware in conformity with
the requirements of the Delaware LLC Act.
Section 14.5 BUSINESS COMBINATION LIMITATIONS. Notwithstanding any other
provision of this Agreement, but in addition to the transfer restrictions
contained in this Agreement, with respect to any "Business Combination" (as
such term is defined in Section 203 of the Delaware General Corporation Law),
the provisions of Section 203 of the Delaware General Corporation Law shall
be applied with respect to the Company as though the Company were a Delaware
corporation, the Shareholders were stockholders of such corporation and the
Board of Directors was the board of directors of such corporation. Any
amendment of this Section shall be governed by Article XIII.
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ARTICLE XV
GENERAL PROVISIONS
Section 15.1 FISCAL YEAR. The fiscal year of the Company shall be a fiscal year
ending December 31 or as otherwise determined by the Board of Directors.
Section 15.2 ADDRESSES AND NOTICES. Any notice, demand, request, report or proxy
materials required or permitted to be given or made to a Shareholder under this
Agreement shall be in writing and shall be deemed given or made when delivered
in person, by mail, by recognized national courier service, by presenting it to
such Shareholder personally, by leaving it at the Shareholder's residence or
usual place of business or by any other means, including electronic delivery,
permitted by the Delaware LLC Act, the Exchange Act and any applicable Exchange
Rule. Any notice to the Company shall be deemed given if received by the
Secretary at the principal office of the Company designated by the Board of
Directors. The Board of Directors and the Officers may rely and shall be
protected in relying on any notice or other document from a Shareholder or other
Person if believed by it to be genuine.
Section 15.3 BYLAWS. The Board of Directors is authorized to adopt Bylaws
governing the affairs of the Company provided that such Bylaws are not
inconsistent with this Agreement.
Section 15.4 FURTHER ACTION. The parties shall execute and deliver all
documents, provide all information and take or refrain from taking action as may
be necessary or appropriate to achieve the purposes of this Agreement.
Section 15.5 BINDING EFFECT. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their heirs, executors, administrators,
successors, legal representatives and permitted assigns.
Section 15.6 INTEGRATION. This Agreement constitutes the entire agreement among
the parties hereto pertaining to the subject matter hereof and supersedes all
prior agreements and understandings pertaining thereto.
Section 15.7 CREDITORS. None of the provisions of this Agreement shall be for
the benefit of, or shall be enforceable by, any creditor of the Company.
Section 15.8 WAIVER. No failure by any party to insist upon the strict
performance of any covenant, duty, agreement or condition of this Agreement or
to exercise any right or remedy consequent upon a breach thereof shall
constitute waiver of any such breach of any other covenant, duty, agreement or
condition.
Section 15.9 COUNTERPARTS. This Agreement may be executed in counterparts, all
of which together shall constitute an agreement binding on all the parties
hereto, notwithstanding that all such parties are not signatories to the
original or the same counterpart. Each party shall become bound by this
Agreement immediately upon affixing its signature hereto or, in the case of a
Person acquiring a Share, as otherwise provided in this Agreement.
Section 15.10 APPLICABLE LAW. This Agreement shall be construed in accordance
with and governed by the laws of the State of Delaware, without regard to
principles of conflict of laws.
Section 15.11 INVALIDITY OF PROVISIONS. If any provision of this Agreement is or
becomes invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein shall not be
affected thereby.
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Section 15.12 CONSENT OF SHAREHOLDERS. Each Shareholder hereby expressly
consents and agrees that, whenever in this Agreement it is specified that an
action may be taken without the consent of Shareholders or upon the affirmative
vote or consent of less than all of the Shareholders, such action may be so
taken without the consent of Shareholders or upon the concurrence of less than
all of the Shareholders and each Shareholder shall be bound by the results of
such action.
Section 15.13 SIGNATURES. The use of facsimile signatures affixed in the name
and on behalf of the transfer agent and registrar of the Company on certificates
representing Shares is expressly permitted by this Agreement. Any Board of
Directors or Shareholder written consent or approval may be evidenced by faxed
signatures or other electronic representation delivered to the Secretary.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
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IN WITNESS WHEREOF, the parties hereto have executed or have otherwise
become bound by this Agreement as of the date first written above.
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INITIAL SHAREHOLDER: ADDITIONAL SHAREHOLDERS:
HOSPITALITY PROPERTIES TRUST All Shareholders hereafter admitted as
Shareholders of the Company pursuant
to the Distribution or otherwise
By: _____________________________ in accordance with this Agreement.
Name:
Title:
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