EXHIBIT 3.8
EXECUTION VERSION
SECOND AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
GP NATURAL RESOURCE PARTNERS LLC
DATED AS OF OCTOBER 17, 2002
ARTICLE I
DEFINITIONS
ARTICLE II
GENERAL
2.1 Formation........................................................................................ 9
2.2 Principal Office................................................................................. 9
2.3 Registered Office and Registered Agent........................................................... 10
2.4 Purpose of the Company........................................................................... 10
2.5 Date of Dissolution.............................................................................. 10
2.6 Qualification.................................................................................... 10
2.7 Members.......................................................................................... 10
2.8 Reliance by Third Parties........................................................................ 11
ARTICLE III
CAPITALIZATION OF THE COMPANY
3.1 Initial Capital Contributions.................................................................... 11
3.2 Additional Capital Contributions................................................................. 11
3.3 Loans............................................................................................ 11
3.4 Maintenance of Capital Accounts.................................................................. 12
3.5 Capital Withdrawal Rights, Interest and Priority................................................. 13
ARTICLE IV
DISTRIBUTIONS
4.1 Distributions of Available Cash.................................................................. 13
4.2 Persons Entitled to Distributions................................................................ 13
4.3 Limitations on Distributions..................................................................... 13
ARTICLE V
ALLOCATIONS
5.1 Profits.......................................................................................... 13
5.2 Losses........................................................................................... 13
5.3 Regulatory Allocations........................................................................... 14
5.4 Tax Allocations: Code Section 704(c)............................................................. 15
5.5 Change in Percentage Interests................................................................... 16
5.6 Withholding...................................................................................... 16
ARTICLE VI
MEMBERS' MEETINGS
6.1 Meetings of Members; Place of Meetings........................................................... 16
6.2 Quorum; Voting Requirement....................................................................... 17
6.3 Proxies.......................................................................................... 17
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6.4 Action Without Meeting........................................................................... 17
6.5 Notice........................................................................................... 17
6.6 Waiver of Notice................................................................................. 17
ARTICLE VII
MANAGEMENT AND CONTROL
7.1 Management by Board of Directors and Executive Officers.......................................... 17
7.2 Board of Directors............................................................................... 18
7.3 Meetings of the Board............................................................................ 19
7.4 Quorum and Acts of the Board..................................................................... 19
7.5 Electronic Communications........................................................................ 20
7.6 Committees of Directors.......................................................................... 20
7.7 Compensation of Directors........................................................................ 20
7.8 Directors as Agents.............................................................................. 21
7.9 Officers; Agents................................................................................. 21
7.10 Specific Matters Requiring Board Approval........................................................ 21
ARTICLE VIII
LIABILITY AND INDEMNIFICATION
8.1 Limitation on Liability of Members, Directors and Officers....................................... 23
8.2 Indemnification.................................................................................. 23
ARTICLE IX
TRANSFERS OF MEMBERSHIP INTERESTS
9.1 General Restrictions............................................................................. 24
9.2 Permitted Transferees............................................................................ 25
9.3 Substitute Members............................................................................... 26
9.4 Effect of Admission as a Substitute Member....................................................... 27
9.5 Consent.......................................................................................... 27
9.6 Additional Members............................................................................... 27
9.7 Right of First Refusal........................................................................... 27
ARTICLE X
DISSOLUTION AND TERMINATION
10.1 Events Causing Dissolution....................................................................... 28
10.2 Final Accounting................................................................................. 28
10.3 Distributions Following Dissolution and Termination.............................................. 29
10.4 Termination of the Company....................................................................... 30
10.5 No Action for Dissolution........................................................................ 30
ARTICLE XI
TAX MATTERS
11.1 Tax Matters Member............................................................................... 30
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11.2 Certain Authorizations........................................................................... 30
11.3 Indemnity of Tax Matters Member.................................................................. 31
11.4 Information Furnished............................................................................ 31
11.5 Notice of Proceedings, etc....................................................................... 32
11.6 Notices to Tax Matters Member.................................................................... 32
11.7 Preparation of Tax Returns....................................................................... 32
11.8 Tax Elections.................................................................................... 32
11.9 Taxation as a Partnership........................................................................ 32
ARTICLE XII
ACCOUNTING AND BANK ACCOUNTS
12.1 Fiscal Year and Accounting Method................................................................ 32
12.2 Books and Records................................................................................ 32
12.3 Delivery to Members; Inspection.................................................................. 33
12.4 Financial Statements............................................................................. 33
12.5 Filings.......................................................................................... 33
12.6 Non-Disclosure................................................................................... 33
ARTICLE XIII
MISCELLANEOUS
13.1 Waiver of Default................................................................................ 34
13.2 Amendment........................................................................................ 34
13.3 No Third Party Rights............................................................................ 35
13.4 Severability..................................................................................... 35
13.5 Nature of Interest in the Company................................................................ 35
13.6 Binding Agreement................................................................................ 35
13.7 Headings......................................................................................... 35
13.8 Word Meanings.................................................................................... 35
13.9 Counterparts..................................................................................... 35
13.10 Entire Agreement................................................................................. 35
13.11 Partition........................................................................................ 35
13.12 Governing Law; Consent to Jurisdiction and Venue................................................. 36
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SECOND AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
GP NATURAL RESOURCE PARTNERS LLC
THIS SECOND AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT (this
"AGREEMENT") of GP NATURAL RESOURCE PARTNERS LLC, a Delaware limited liability
company (the "COMPANY"), is made and entered into as of the 17th day of October,
2002 by and among the Persons executing this Agreement on the signature pages
hereto as a member (together with such other Persons that may hereafter become
members as provided herein, referred to collectively as the "MEMBERS" or
individually, as a "MEMBER").
WHEREAS, Xxxxxx X. Xxxxxxxxx, Xx. ("CJR") and Ark Land Company, a Delaware
corporation ("ARK LAND"), as the Company's initial members, formed the Company
on April 9, 2002 as a limited liability company under the Act (as defined below)
by causing a certificate of formation of the Company to be filed with the
Delaware Secretary of State and made capital contributions to the Company:
WHEREAS, CJR and Ark Land entered into that certain Limited Liability
Company Agreement of GP Natural Resource Partners LLC dated as of April 9, 2002
(the "ORIGINAL AGREEMENT");
WHEREAS, CJR formed Xxxxxxxxx Coal Management LLC, a Delaware limited
liability company ("XXXXXXXXX COAL MANAGEMENT"), and contributed the entirety of
his Membership Interest in the Company to Xxxxxxxxx Coal Management in exchange
for all of the limited liability company interests in Xxxxxxxxx Coal Management;
WHEREAS, Ark Land and Xxxxxxxxx Coal Management entered into that certain
First Amended and Restated Limited Liability Company Agreement of GP Natural
Resource Partners LLC dated as of July 12, 2002, which amended and restated the
Original Agreement (the "FIRST AMENDED AND RESTATED AGREEMENT");
WHEREAS, Xxxxxxxxx Coal Management and Ark Land desire to enter into this
Agreement to amend the First Amended and Restated Agreement.
NOW, THEREFORE, in consideration of the covenants, conditions and
agreements contained herein, the parties hereto hereby amend the First Amended
and Restated Agreement and, as so amended, restate it in its entirety as
follows:
ARTICLE I
DEFINITIONS
As used herein, the following terms shall have the following meanings,
unless the context otherwise requires:
"ACCEPTANCE NOTICE" is defined in Section 9.8(b).
"ACT" means the Delaware Limited Liability Company Act. 6 Del. C. Section
18-101, et seq., as amended from time to time.
"ADJUSTED CAPITAL ACCOUNT DEFICIT" means with respect to any Member, the
deficit balance, if any, in such Member's Capital Account as of the end of the
relevant Taxable Year, after giving effect to the following adjustments:
(a) Credit to such Capital Account any amounts which such Member is
obligated to restore pursuant to any provision of this Agreement or is
deemed to be obligated to restore pursuant to Regulation Sections
1.704-1(b)(2)(ii)(c), 1.704-2(g)(1) and 1.704-2(i)(5); and
(b) Debit to such Capital Account the items described in Regulation
Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), and
1.704-1(b)(2)(ii)(d)(6).
The foregoing definition of Adjusted Capital Account Deficit is intended
to comply with the provisions of Regulations Section 1.704-1(b)(2)(ii)(d) and
shall be interpreted consistently therewith.
"AFFILIATE" means, with respect to any specified Person, any other Person
that directly, or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such specified Person. For the
purposes of this definition, "control" when used with respect to any Person
means the power to direct the management and policies of such Person, directly
or indirectly, whether through the ownership of voting securities, by contract
or otherwise; and the terms "controlling" and "controlled' have meanings
correlative to the foregoing.
"AGREEMENT" shall have the meaning set forth in the preamble hereof, as
the same may be amended from time to time in accordance with the terms hereof.
"ARCH COAL" means Arch Coal, Inc., a Delaware corporation.
"ARK LAND" is defined in the recitals hereof.
"AUDIT COMMITTEE" is defined in Section 7.6(b).
"AUTHORIZED REPRESENTATIVE" is defined in Section 6.1.
"AVAILABLE CASH" means, with respect to a fiscal quarter, all cash and
cash equivalents of the Company at the end of such quarter less the amount of
cash reserves that is necessary or appropriate in the reasonable discretion of
the Board to (a) provide for the proper conduct of the business of the Company
(including reserves for future capital expenditures and for anticipated future
credit needs of the Company) subsequent to such quarter or (b) comply with
applicable law or any loan agreement, security agreement, mortgage, debt
instrument or other agreement or obligation to which the Company is a party or
by which it is bound or its assets or Property is subject; provided, however,
that disbursements made by the Partnership to the Company or cash reserves
established, increased or reduced after the expiration of such quarter but on or
before the date of determination of Available Cash with respect to such quarter
shall be deemed to have
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been made, established, increased or reduced, for purposes of determining
Available Cash, during such quarter if the Board so determines in its reasonable
discretion.
"BOARD" means the Board of Directors of the Company.
"BUSINESS DAY" means Monday through Friday of each week, except that a
legal holiday recognized as such by the government of the United States of
America or the State of Texas shall not be regarded as a Business Day.
"CAPITAL ACCOUNT" means with respect to any Member, a separate account
established by the Company and maintained for each Member in accordance with
Section 3.4 hereof.
"CAPITAL CONTRIBUTION" means, with respect to any Member, the amount of
money and the initial Gross Asset Value of any Property (other than money)
contributed to the Company by such Member with respect to its Membership
Interest pursuant to the terms of this Agreement. Any reference in this
Agreement to the Capital Contribution of a Member shall include a Capital
Contribution of its predecessors in interest.
"CERTIFICATE" means the Certificate of Formation of the Company filed with
the Secretary of State of Delaware, as amended or restated from time to time.
"CJR" is defined in the recitals hereof.
"CODE" means the United States Internal Revenue Code of 1986, as amended.
"COMPANY" is defined in the preamble hereof.
"COMPANY AFFILIATE" is defined in Section 8.2.
"COMPENSATION COMMITTEE" is defined in Section 7.6(c).
"CONFLICTS COMMITTEE" is defined in the MLP Partnership Agreement.
"DEPRECIATION" means, for each Taxable Year or other period, an amount
equal to the depreciation, amortization or other cost recovery deduction
allowable with respect to an asset for such Taxable Year, except that if the
Gross Asset Value of an asset differs from its adjusted basis for federal income
tax purposes at the beginning of such Taxable Year, Depreciation shall be an
amount which bears the same ratio to such beginning Gross Asset Value as the
federal income tax depreciation, amortization or other cost recovery deduction
for such Taxable Year bears to such beginning adjusted tax basis; provided,
however, that if the adjusted basis for federal income tax purposes of an asset
at the beginning of such Taxable Year is zero, Depreciation shall be determined
with reference to such beginning Gross Asset Value using any reasonable method
selected by the Board.
"DIRECTORS" is defined in Section 7.2(a).
"ECONOMIC RISK OF LOSS" is defined in Regulation Section 1.752-2(a).
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"ENCUMBRANCE" means any security interest, pledge, mortgage, lien
(including, without limitation, environmental and tax liens), charge,
encumbrance, adverse claim, any defect or imperfection in title, preferential
arrangement or restriction, right to purchase, right of first refusal or other
burden or encumbrance of any kind other than those imposed by this Agreement.
"FIRST AMENDED AND RESTATED AGREEMENT" is defined in the recitals hereof.
"FIRST REFUSAL NOTICE" is defined in Section 9.8(a).
"GENERAL PARTNER" means the General Partner of the MLP.
"GENERAL PARTNER'S PERCENTAGE" means the Percentage Interest as to the
General Partner (with respect to its General Partner Interest) as such terms are
defined in the MLP Partnership Agreement.
"GREAT NORTHERN" means Great Northern Properties Limited Partnership, a
Delaware limited partnership.
"GROSS ASSET VALUE" means with respect to any asset, the asset's adjusted
basis for federal income tax purposes, except as follows and as otherwise
provided in Section 3.2(b):
(a) The initial Gross Asset Value of any asset contributed by a
Member to the Company shall be the gross fair market value of such asset,
as reasonably determined by the Board, in a manner that is consistent with
Section 7701(g) of the Code; provided, however, that the initial Gross
Asset Values of the assets contributed to the Company pursuant to Section
3.1 hereof shall be as set forth in such section or the schedule referred
to therein;
(b) The Gross Asset Values of all Company assets shall be adjusted
to equal their respective gross fair market values, as reasonably
determined by the Board, in a manner that is consistent with Section
7701(g) of the Code, as of the following times: (i) the acquisition of an
additional interest in the Company by any new or existing Member in
exchange for more than a de minimis Capital Contribution; (ii) the
distribution by the Company to a Member of more than a de minimis amount
of Company property other than money as consideration for an interest in
the Company; and (iii) the liquidation of the Company within the meaning
of Regulation Section l.704-1(b)(2)(ii)(g); provided, however, that
adjustments pursuant to clauses (i) and (ii) above shall be made only if
the Tax Matters Member reasonably determines that such adjustments are
necessary or appropriate to reflect the relative economic interests of the
Members in the Company.
(c) The Gross Asset Value of any Company assets distributed to any
Member shall be adjusted to equal the gross fair market value of such
asset on the date of distribution as reasonably determined by the Board,
in a manner that is consistent with Section 7701(g) of the Code.
(d) The Gross Asset Values of any Company assets shall be increased
(or decreased) to reflect any adjustments to the adjusted basis of such
assets pursuant to Section 734(b) of the Code or Section 743(b) of the
Code, but only to the extent that such
4
adjustments are taken into account in determining Capital Accounts
pursuant to Regulation Section 1.704-1(b)(2)(iv)(m) and clause (f) of the
definition of Profits and Losses, provided, however, that Gross Asset
Values shall not be adjusted pursuant to this subparagraph (d) to the
extent the Tax Matters Member determines that an adjustment pursuant to
the foregoing subparagraph (b) of this definition is necessary or
appropriate in connection with a transaction that would otherwise result
in an adjustment pursuant to this subparagraph (d).
If the Gross Asset Value of an asset has been determined or adjusted pursuant to
subparagraphs (a), (b) or (d), such Gross Asset Value shall thereafter be
adjusted by the Depreciation taken into account with respect to such asset, for
purposes of computing Profits and Losses.
"INDEPENDENT DIRECTOR" means a Director who is eligible to serve on the
Conflicts Committee (as defined, and provided for in the MLP Partnership
Agreement) and is otherwise independent as defined in Sections 303.01(B)(2)(a)
and (3) or any successor provisions of the listing standards of the New York
Stock Exchange.
"INITIAL DIRECTORS" is defined in Section 7.2(a)(i).
"LIMITED PARTNERSHIP INTEREST" means a limited partnership interest in the
Partnership which refers to all of a limited partner's rights and interests in
the Partnership in such Person's capacity as a limited partner thereof, all as
provided in the Partnership Agreement and the Delaware Revised Uniform Limited
Partnership Act.
"LIQUIDATING TRUSTEE" is defined in Section 10.3.
"LOSSES" is defined in the definition of "Profits" and "Losses".
"MEMBER" OR "MEMBERS" is defined in the preamble hereof.
"MEMBERSHIP INTEREST" means a Member's limited liability company interest
in the Company, which refers to all of a Member's rights and interests in the
Company in such Member's capacity as a Member, all as provided in this Agreement
and the Act.
"MEMBER NONRECOURSE DEBT" shall have the meaning assigned to the term
"partner nonrecourse debt" in Regulation Section 1.704-2(b)(4).
"MEMBER NONRECOURSE DEBT MINIMUM GAIN" shall have the meaning assigned to
the term "partner nonrecourse debt minimum gain" set forth in Regulation Section
1.704-2(i)(2).
"MEMBER NONRECOURSE DEDUCTIONS" shall have the meaning assigned to the
term "partner nonrecourse deduction" in Regulation Section 1.704-2(i)(1).
"MEMBERSHIP TRANSFER" is defined in Section 9.1(b).
"MINIMUM GAIN" is defined in Regulation Section 1.704-2(d).
"MLP" means Natural Resource Partners L.P., a Delaware limited
partnership.
5
"MLP PARTNERSHIP AGREEMENT" means the First Amended and Restated Agreement
of Limited Partnership of Natural Resource Partners L.P., as amended from time
to time.
"NEW GAULEY" means New Gauley Coal Corporation, a West Virginia
corporation.
"NONRECOURSE DEDUCTIONS" is defined in Regulation Section 1.704-2(b)(1).
"NONRECOURSE LIABILITY" is defined in Regulation Section 1.752-1(a)(2).
"NON-SELLING MEMBERS" is defined in Section 9.8(b).
"NOTICE" means a writing, containing the information required by this
Agreement to be communicated to a party, and shall be deemed to have been
received (a) when personally delivered or sent by telecopy, (b) one day
following delivery by overnight delivery courier, with all delivery charges
prepaid, or (c) on the third Business Day following the date on which it was
sent by United States mail, postage prepaid, to such party at the address or fax
number, as the case may be, of such party as shown on the records of the
Company.
"OFFER" is defined in Section 9.8(a).
"OFFEROR" is defined in Section 9.8(a).
"OFFICER" is defined in Section 7.8.
"OMNIBUS AGREEMENT" means the Omnibus Agreement dated as of October 17,
2002 among the Company, the General Partner, the Operating Company, the MLP,
Arch Coal, Ark Land, New Gauley, Western Pocahontas, Great Northern and
Xxxxxxxxx Coal Management.
"OPERATING COMPANY" means NRP (Operating) LLC, a Delaware limited
liability company.
"OPTIONED INTEREST" is defined in Section 9.8(a).
"ORIGINAL AGREEMENT" is defined in the recitals hereof.
"PARTNERSHIP" means NRP (GP) LP, a Delaware limited partnership.
"PARTNERSHIP AGREEMENT" means the Amended and Restated Agreement of
Limited Partnership of the Partnership, dated as of the date hereof, by and
between the Company, as the general partner, New Gauley, Western Pocahontas,
Great Northern, Ark Land, and any other Persons who become partners in the
Partnership as provided therein, as amended from time to time in accordance with
the terms thereof.
"PARTNERSHIP TRANSFER" is defined in Section 9.1(b).
"PERCENTAGE INTEREST" of a Member means the aggregate percentage of
Membership Interests of such Member set forth on Schedule 1 hereto, as the same
may be modified from time to time as provided herein.
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"PERMITTED TRANSFER" means:
(a) a Transfer of all of a Membership Interest by any Member who is
a natural person to (i) such Member's spouse, children (including legally
adopted children and stepchildren), spouses of children or grandchildren
or spouses of grandchildren; (ii) a trust for the benefit of the Member
and/or any of the Persons described in clause (i); or (iii) a limited
partnership or limited liability company whose sole partners or members,
as case may be, are the Member and/or any of the Persons described in
clause (i) or clause (ii); provided, that in any of clauses (i), (ii) or
(iii), the Member transferring such Membership Interest retains exclusive
power to exercise all rights under this Agreement;
(b) a Transfer of all of a Membership Interest by any Member to the
Company; or
(c) a Transfer of all of a Membership Interest by a Member to any
Affiliate of such Member; provided, however, that such transfer shall be a
Permitted Transfer only so long as such Membership Interest is held by
such Affiliate or is otherwise transferred in another Permitted Transfer.
Provided, however, that no Permitted Transfer shall be effective unless
and until the transferee of the Membership Interest so transferred complies with
Section 9.1(b). Except in the case of a Permitted Transfer pursuant to clause
(b) above, from and after the date on which a Permitted Transfer becomes
effective, the Permitted Transferee of the Membership Interest so transferred
shall have the same rights, and shall be bound by the same obligations, under
this Agreement as the transferor of such Membership Interest and shall be deemed
for all purposes hereunder a Member and such Permitted Transferee shall, as a
condition to such Transfer, agree in writing to be bound by the terms of this
Agreement. No Permitted Transfer shall conflict with or result in any violation
of any judgment, order, decree, statute, law, ordinance, rule or regulation or
require the Company, if not currently subject, to become subject, or if
currently subject, to become subject to a greater extent, to any statute, law,
ordinance, rule or regulation, excluding matters of a ministerial nature that
are not materially burdensome to the Company.
"PERMITTED TRANSFEREE" means any Person who shall have acquired and who
shall hold a Membership Interest pursuant to a Permitted Transfer.
"PERSON" means any individual, partnership, corporation, limited liability
company, trust, incorporated or unincorporated organization or other legal
entity of any kind.
"PROFITS" and "LOSSES" means, for each Taxable Year, an amount equal to
the Company's net taxable income or loss for a taxable year, determined in
accordance with Section 703(a) of the Code (for this purpose, all items of
income, gain, loss or deduction required to be stated separately pursuant to
Section 703(a)(1) of the Code shall be included in computing such taxable income
or loss), with the following adjustments (without duplication):
(a) Any income of the Company that is exempt from federal income tax
and not otherwise taken into account in computing Profits or Losses shall
be added to such taxable income or loss;
7
(b) Any expenditures of the Company described in Section
705(a)(2)(B) of the Code or treated as Code Section 705(a)(2)(B)
expenditures pursuant to Regulation Section l.704-1(b)(2)(iv)(i), and not
otherwise taken into account in computing Profits or Losses, shall be
subtracted from such taxable income or loss;
(c) In the event the Gross Asset Value of any Company asset is
adjusted pursuant to subparagraphs (b) or (c) of the definition of Gross
Asset Value, the amount of such adjustment shall be treated as an item of
gain (if the adjustment increases the Gross Asset Value of the asset) or
an item of loss (if the adjustment decreases the Gross Asset Value of the
asset) from the disposition of such asset and shall be taken into account
for purposes of computing Profits or Losses;
(d) Gain or loss resulting from any disposition of the Property
(other than money) with respect to which gain or loss is recognized for
federal income tax purposes shall be computed by reference to the Gross
Asset Value of the Property disposed of, notwithstanding that the adjusted
tax basis of such Property differs from its Gross Asset Value;
(e) In lieu of the depreciation, amortization, and other cost
recovery deductions taken into account in computing such taxable income or
loss, there shall be taken into account Depreciation for such Taxable
Year, computed in accordance with the definition of Depreciation;
(f) To the extent an adjustment to the adjusted tax basis of any
Company asset pursuant to Code Section 734(b) or Code Section 743(b) is
required, pursuant to Regulations Section 1.704-1(b)(2)(iv)(m)(4), to be
taken into account in determining Capital Accounts as a result of a
distribution other than in liquidation of a Member's interest in the
Company, the amount of such adjustment shall be treated as an item of gain
(if the adjustment increases the basis of the asset) or loss (if the
adjustment decreases such basis) from the disposition of such asset and
shall be taken into account for purposes of computing Profits or Losses;
and
(g) Any items that are allocated pursuant to the Regulatory
Allocations shall not be taken into account in computing Profits and
Losses. The amounts of the items of Company income, gain, loss or
deduction available to be allocated pursuant to the Regulatory Allocations
shall be determined by applying rules analogous to those set forth in
clauses (a) through (f) hereof.
"PROPERTY" means all assets, real or intangible, that the Company may own
or otherwise have an interest in from time to time.
"REGULATIONS" means the regulations, including temporary regulations,
promulgated by the United States Department of Treasury with respect to the
Code, as such regulations are amended from time to time, or corresponding
provisions of future regulations.
"REGULATORY ALLOCATIONS" is defined in Section 5.3(c).
"RESTRICTED BUSINESS" is defined in the Omnibus Agreement.
8
"XXXXXXXXX COAL MANAGEMENT" is defined in the recitals hereof.
"SELLING MEMBER" is defined in Section 9.8(a).
"SUBSIDIARY" means, with respect to a Person, any corporation,
partnership, association or other business entity of which (i) if a corporation,
a majority of the total voting power of shares of stock entitled (irrespective
of whether, at the time, stock of any other class or classes of such corporation
shall have or might have voting power by reason of the happening of any
contingency) to vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly by that Person or one
or more of the other Subsidiaries of that Person or a combination thereof, or
(ii) if a partnership, association or other business entity, a majority of
either (x) the partnership or other similar ownership interest thereof or (y)
the stock or equity interest of such partnership, association or other business
entity's general partner managing member or other similar controlling Person, is
at the time owned or controlled, directly or indirectly, by such Person or one
or more Subsidiaries of that Person or a combination thereof. For purposes of
this Agreement, with respect to the Company, each of the Partnership and the MLP
and each of their respective Subsidiaries, shall be a Subsidiary of the Company.
"SUPERMAJORITY" means, with respect to a decision of the Board, the
affirmative vote of six of the eight Directors.
"TAXABLE YEAR" means the calendar year.
"TAX MATTERS MEMBER" is defined in Article 11.
"TRANSFER OR TRANSFERRED" means to give, sell exchange, assign, transfer,
pledge, hypothecate, bequeath, devise or otherwise dispose of or encumber,
voluntarily or involuntarily, by operation of law or otherwise. When referring
to a Membership Interest, "Transfer" shall mean the Transfer of such Membership
Interest whether of record, beneficially, by participation or otherwise.
"WESTERN POCAHONTAS" shall mean Western Pocahontas Properties Limited
Partnership, a Delaware limited partnership.
ARTICLE II
GENERAL
2.1 FORMATION. The name of the Company is GP Natural Resource Partners
LLC. The rights and liabilities of the Members shall be as provided in the Act
for Members except as provided herein. To the extent that the rights or
obligations of any Member are different by reason of any provision of this
Agreement than they would be in the absence of such provision, to the extent
permitted by the Act, this Agreement shall control.
2.2 PRINCIPAL OFFICE. The principal office of the Company shall be located
at 000 Xxxxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx 00000 or at such other
place(s) as the Board may determine from time to time.
9
2.3 REGISTERED OFFICE AND REGISTERED AGENT. The location of the registered
office and the name of the registered agent of the Company in the State of
Delaware shall be as stated in the Certificate or as determined from time to
time by the Board.
2.4 PURPOSE OF THE COMPANY. The Company's purposes, and the nature of the
business to be conducted and promoted by the Company, are (a) to act as the
general partner of the Partnership in accordance with the terms of the
Partnership Agreement, (b) as general partner of the Partnership, to manage the
MLP on behalf of the Partnership, in its capacity as general partner of the MLP
and (c) to engage in any and all activities necessary, advisable, convenient or
incidental to the foregoing.
2.5 DATE OF DISSOLUTION. The Company shall have perpetual existence unless
the Company is dissolved pursuant to Article 10 hereof. The existence of the
Company as a separate legal entity shall continue until cancellation of the
Certificate in the manner required by the Act.
2.6 QUALIFICATION. The Chief Executive Officer, the President and Chief
Operating Officer, any Vice President, the Secretary and any Assistant Secretary
of the Company is hereby authorized to qualify the Company to do business as a
foreign limited liability company in any jurisdiction in which the Company may
wish to conduct business and each is hereby designated as an authorized person,
within the meaning of the Act, to execute, deliver and file any amendments or
restatements of the Certificate and any other certificates and any amendments or
restatements thereof necessary for the Company to so qualify to do business in
any such state or territory.
2.7 MEMBERS.
(a) Powers of Members. The Members shall have the power to exercise any
and all rights or powers granted to the Members pursuant to the express terms of
this Agreement. Except as expressly provided herein, the Members shall have no
power to bind the Company and no authority to act on behalf of the Company.
(b) Partition. Each Member waives any and all rights that it may have to
maintain an action for partition of the Company's Property.
(c) Resignation. Except upon a Transfer of all of its Membership Interest
in accordance with this Agreement, a Member may not resign from the Company
prior to the dissolution and winding up of the Company. A Member ceases to be a
Member only upon: (i) a Permitted Transfer of all of such Member's Membership
Interest and the transferee's admission as a substitute Member, all in
accordance with the terms of this Agreement, or (ii) completion of dissolution
and winding up of the Company pursuant to Article 10.
(d) Ownership. Each Member shall be entitled to receive a Membership
Interest in exchange for a Capital Contribution. Each Membership Interest shall
correspond to a "limited liability company interest" as is provided in the Act.
The Company shall be the owner of the Property. No Member shall have any
ownership interest or right in the Property, including Property conveyed by a
Member to the Company, except indirectly by virtue of a Member's ownership of a
Membership Interest.
10
2.8 RELIANCE BY THIRD PARTIES. Except with respect to certain tax matters,
Persons dealing with the Company shall be entitled to rely conclusively upon the
power and authority of an Officer.
ARTICLE III
CAPITALIZATION OF THE COMPANY
3.1 INITIAL CAPITAL CONTRIBUTIONS. On April 9, 2002 in connection with the
formation of the Company, CJR made an initial Capital Contribution to the
Company of $577.50, and Ark Land made an initial Capital Contribution to the
Company of $422.50. On July 9, 2002, in connection with the formation of
Xxxxxxxxx Coal Management, CJR transferred the entirety of his Membership
Interest in the Company to Xxxxxxxxx Coal Management. The initial Percentage
Interest of the Members following such Capital Contributions are as set forth on
Schedule 1 hereto, which shall be amended from time to time in accordance with
the terms hereof (including, but not limited to, upon the making of additional
Capital Contributions pursuant to Section 3.2(b)) to reflect appropriate
adjustments to such Percentage Interests and Capital Contributions.
3.2 ADDITIONAL CAPITAL CONTRIBUTIONS.
(a) Except for Capital Contributions from each Member in proportion to
such Member's then outstanding Percentage Interest in respect of the General
Partner's Percentage for equity issuances by the MLP, and for equity issuances
approved pursuant to Section 7.10(b)(v), no Member shall be required to make any
additional Capital Contribution.
(b) Subject to the approval of a Supermajority of the Board pursuant to
Section 7.10, the Company may offer additional Membership Interests to any
Person. If any additional Capital Contributions are made by Members but not in
proportion to their respective Percentage Interests, the Percentage Interest of
each Member shall be adjusted such that each Member's revised Percentage
Interest determined immediately following each such additional Capital
Contribution shall be equal to a fraction (i) the numerator of which is the sum
of (A) the positive Capital Account balance of the Member determined immediately
preceding the date such additional Capital Contribution is made (such Capital
Account to be computed by adjusting the book value for Capital Account purposes
of each Company asset to equal its Gross Asset Value as of such date, as
provided in subparagraph (b) of the definition herein of "GROSS ASSET VALUE"),
and (B) such additional Capital Contribution, if any, made by such Member, and
(ii) the denominator of which is the sum of the positive Capital Account
balances immediately preceding the date such additional Capital Contribution is
made plus additional Capital Contributions of all Members on the date of such
additional Capital Contribution, including Capital Contributions of any new
Members (in each case calculated as provided in (i) above). The names, addresses
and Capital Contributions of the Members shall be reflected in the books and
records of the Company.
3.3 LOANS.
(a) No Member shall be obligated to loan funds to the Company. Loans by a
Member to the Company shall not be considered Capital Contributions. The amount
of any such
11
loan shall be a debt of the Company owed to such Member in accordance with the
terms and conditions upon which such loan is made.
(b) A Member may (but shall not be obligated to) guarantee a loan made to
the Company. If a Member guarantees a loan made to the Company and is required
to make payment, pursuant to such guarantee, to the maker of the loan, then the
amounts so paid to the maker of the loan shall be treated as a loan by such
Member to the Company and not as an additional Capital Contribution.
3.4 MAINTENANCE OF CAPITAL ACCOUNTS.
(a) The Company shall maintain for each Member a separate Capital Account
with respect to the Membership Interest owned by such Member in accordance with
the following provisions:
(i) To each Member's Capital Account there shall be credited (A)
such Member's Capital Contributions, (B) such Member's share of Profits
and any items in the nature of income or gain which are allocated to such
Member pursuant to the Regulatory Allocations and (C) the amount of any
Company liabilities assumed by such Member or which are secured by any
Property distributed to such Member. The principal amount of a promissory
note which is not readily traded on an established securities market and
which is contributed to the Company by the maker of the note (or a Member
related to the maker of the note within the meaning of Regulation Section
l.704-1(b)(2)(ii)(c)) shall not be included in the Capital Account of any
Member until the Company makes a taxable disposition of the note or until
(and only to the extent) principal payments are made on the note, all in
accordance with Regulation Section 1 .704-1(b)(2)(iv)(d)(2);
(ii) To each Member's Capital Account there shall be debited (A) the
amount of money and the Gross Asset Value of any Property distributed or
treated as an advance distribution to such Member pursuant to any
provision of this Agreement (including without limitation any
distributions pursuant to Section 4.1), (B) such Member's share of Losses
and any items in the nature of deduction or loss which are allocated to
such Member pursuant to the Regulatory Allocations and (C) the amount of
any liabilities of such Member assumed by the Company or which are secured
by any Property contributed by such Member to the Company;
(iii) In the event Membership Interests are Transferred in
accordance with the terms of this Agreement, the transferee shall succeed
to the Capital Account of the transferor to the extent such Capital
Account relates to the Transferred Membership Interests;
(iv) In determining the amount of any liability for purposes of
Sections 3.4(a)(i) and (ii) there shall be taken into account Code Section
752(c) and any other applicable provisions of the Code and Regulations;
and
(b) The foregoing Section 3.4(a) and the other provisions of this
Agreement relating to the maintenance of Capital Accounts are intended to comply
with Regulation Section 1.704-1(b) and, to the greatest extent practicable,
shall be interpreted and applied in a manner
12
consistent with such Regulation. The Board in its discretion and to the extent
otherwise consistent with the terms of this Agreement shall (i) make any
adjustments that are necessary or appropriate to maintain equality between the
Capital Accounts of the Members and the amount of capital reflected on the
Company's balance sheet, as computed for book purposes, in accordance with
Regulation Section l.704-l(b)(2)(iv)(q), and (ii) make any appropriate
modifications in the event unanticipated events might otherwise cause this
Agreement not to comply with Regulation Section 1.704-1(b).
3.5 CAPITAL WITHDRAWAL RIGHTS, INTEREST AND PRIORITY. Except as expressly
provided in this Agreement, no Member shall be entitled to (a) withdraw or
reduce such Member's Capital Contribution or to receive any distributions from
the Company, or (b) receive or be credited with any interest on the balance of
such Member's Capital Contribution at any time. An unrepaid Capital Contribution
is not a liability of the Company or of any Member.
ARTICLE IV
DISTRIBUTIONS
4.1 DISTRIBUTIONS OF AVAILABLE CASH. An amount equal to 100% of Available
Cash with respect to each fiscal quarter of the Partnership shall be distributed
simultaneously to the Members in proportion to their relative Percentage
Interests within forty-five days after the end of such quarter.
4.2 PERSONS ENTITLED TO DISTRIBUTIONS. All distributions of Available Cash
to Members for a fiscal quarter pursuant to Section 4.1 shall be made to the
Members shown on the records of the Company to be entitled thereto as of the
last day of such quarter, unless the transferor and transferee of any Membership
Interest otherwise agree in writing to a different distribution and such
distribution is consented to in writing by the Board.
4.3 LIMITATIONS ON DISTRIBUTIONS. Notwithstanding any provision of this
Agreement to the contrary, no distributions shall be made except pursuant to
this Article 4 or Article 10.
(b) Notwithstanding any provision of this Agreement to the contrary, no
distribution hereunder shall be permitted if such distribution would violate
Section 18-607 of the Act or other applicable law.
ARTICLE V
ALLOCATIONS
5.1 PROFITS. Profits for any Taxable Year shall be allocated:
(a) first, to those Members to which Losses have previously been allocated
pursuant to Section 5.2(c) hereof so as to bring each such Member's Capital
Account to zero, pro rata in accordance with the sum of each such Member's
Losses; and
(b) second, any remaining Profits shall be allocated among the Members in
proportion to their respective Percentage Interests.
5.2 LOSSES. Losses for any Taxable Year shall be allocated:
13
(a) first, to the Members to which Profits have previously been allocated
pursuant to Section 5.1(b) to the extent of such Profits;
(b) second, to Members in proportion to their positive Capital Account
balances until such Capital Account balances have been reduced to zero; and
(c) third, any remaining Losses shall be allocated among the Members in
proportion to their respective Percentage Interests.
5.3 REGULATORY ALLOCATIONS. The following allocations shall be made in the
following order:
(a) Nonrecourse Deductions. Nonrecourse Deductions shall be allocated to
the Members in accordance with their Percentage Interests.
(b) Member Nonrecourse Deductions. Member Nonrecourse Deductions
attributable to Member Nonrecourse Debt shall be allocated to the Members
bearing the Economic Risk of Loss for such Member Nonrecourse Debt as determined
under Regulation Section 1.704-2(b)(4). If more than one Member bears the
Economic Risk of Loss for such Member Nonrecourse Debt, the Member Nonrecourse
Deductions attributable to such Member Nonrecourse Debt shall be allocated among
the Members according to the ratio in which they bear the Economic Risk of Loss.
This Section 5.03(b) is intended to comply with the provisions of Regulation
Section 1.704-2(i) and shall be interpreted consistently therewith.
(c) Minimum Gain Chargeback. Notwithstanding any other provision hereof to
the contrary, if there is a net decrease in Minimum Gain for a Taxable Year (or
if there was a net decrease in Minimum Gain for a prior Taxable Year and the
Company did not have sufficient amounts of income and gain during prior years to
allocate among the Members under this Section 5.03(c)), items of income and gain
shall be allocated to each Member in an amount equal to such Member's share of
the net decrease in such Minimum Gain (as determined pursuant to Regulation
Section 1.704-2(g)(2)). This Section 5.03(c) is intended to constitute a minimum
gain chargeback under Regulation Section 1.704-2(f) and shall be interpreted
consistently therewith.
(d) Member Minimum Gain Chargeback. Notwithstanding any provision hereof
to the contrary except Section 5.03(c) (dealing with Minimum Gain), if there is
a net decrease in Member Nonrecourse Debt Minimum Gain for a Taxable Year (or if
there was a net decrease in Member Nonrecourse Debt Minimum Gain for a prior
Taxable Year and the Company did not have sufficient amounts of income and gain
during prior years to allocate among the Members under this Section 5.03(d)),
items of income and gain shall be allocated to each Member in an amount equal to
such Member's share of the net decrease in Member Nonrecourse Debt Minimum Gain
(as determined pursuant to Regulation Section 1.704-2(i)(4)). This Section
5.03(d) is intended to constitute a partner nonrecourse debt minimum gain
chargeback under Regulation Section 1.704-2(i)(4) and shall be interpreted
consistently therewith.
(e) Gross Income Allocation. In the event any Member has an Adjusted
Capital Account Deficit at the end of any Taxable Year, such Member shall be
specially allocated items of Company income and gain in the amount of such
deficit balance as quickly as possible;
14
provided, that an allocation pursuant to this Section 5.3(e) shall be made only
if and to the extent that such Member would have an Adjusted Capital Account
Deficit balance after all other allocations provided for in this Article 5 have
been made.
(f) Qualified Income Offset. In the event any Member unexpectedly receives
any adjustments, allocations, or distributions described in Regulation Sections
1.704-l(b)(2)(ii)(d)(4), 1.704-l(b)(2)(ii)(d)(5) or 1.704-l(b)(2)(ii)(d)(6),
items of Company income and gain shall be specially allocated to such Member in
an amount and manner sufficient to eliminate, to the extent required by the
Regulations, the Adjusted Capital Account Deficit of such Member as quickly as
possible, provided, that an allocation pursuant to this Section 5.3(f) shall be
made only if and to the extent that such Member would have an Adjusted Capital
Account Deficit after all other allocations provided for in this Article 5 have
been made.
(g) Curative Allocations. The allocations set forth in Sections 5.3(a),
(b), (c), (d), (e) and (f) hereof (the "REGULATORY ALLOCATIONS") are intended to
comply with certain requirements of the Regulations. It is the intent of the
Members that, to the extent possible, all Regulatory Allocations shall be offset
either with other Regulatory Allocations or with special allocations of other
items of Company income, gain, loss or deduction pursuant to this Section
5.3(g). Therefore, notwithstanding any other provision of this Article 5 (other
than the Regulatory Allocations), the Board shall make such offsetting special
allocations of income, gain, loss or deduction in whatever manner it determines
appropriate so that, after such offsetting allocations are made, each Member's
Capital Account balance is, to the extent possible, equal to the Capital Account
balance such Member would have had if the Regulatory Allocations were not part
of this Agreement and all such items were allocated pursuant to Sections 5.1 and
5.2 without regard to the Regulatory Allocations.
5.4 TAX ALLOCATIONS: CODE SECTION 704(C).
(a) Except as otherwise provided herein, for federal income tax purposes,
(i) each item of income, gain, loss and deduction shall be allocated among the
Members in the same manner as its correlative item of "book" income, gain, loss
or deduction is allocated pursuant to Sections 5.1 and 5.2, and (ii) each tax
credit shall be allocated to the Members in the same manner as the receipt or
expenditure giving rise to such credit is allocated pursuant to Section 5.1 or
5.2.
(b) In accordance with Code Section 704(c) and the Regulations thereunder,
income, gain, loss and deduction with respect to any Property contributed to the
capital of the Company shall, solely for tax purposes, be allocated among the
Members so as to take account of any variation between the adjusted basis of
such Property to the Company for federal income tax purposes and its initial
Gross Asset Value (computed in accordance with the definition herein of "GROSS
ASSET VALUE"). The Company shall use the remedial method of allocations
specified in Regulation Section 1.704-3(d) or successor regulations, unless
otherwise required by law, with respect to the initial contribution set forth on
Schedule 1.
(c) In the event the Gross Asset Value of any Company asset is adjusted
pursuant to subparagraph (b) of the definition of Gross Asset Value, subsequent
allocations of income, gain, loss and deduction with respect to such asset shall
take account of any variation between the
15
adjusted basis of such asset for federal income tax purposes and its Gross Asset
Value in the same manner as under Code Section 704(c) and the Regulations
thereunder.
(d) Any elections or other decisions relating to such allocations shall be
made by the Board in any manner that reasonably reflects the purpose and
intention of this Agreement; provided, that the Company, in the discretion of
the Board, may make, or not make, "curative" or "remedial" allocations (within
the meaning of the Regulations under Code Section 704(c)) including, but not
limited to "curative" allocations which offset the effect of the "ceiling rule"
for a prior Taxable Year (within the meaning of Regulation Section
1.704-3(c)(3)(ii)) and "curative" allocations from disposition of contributed
property (within the meaning of Regulation Section 1.704-3(c)(3)(iii)(B)).
Allocations pursuant to this Section 5.4 are solely for purposes of federal,
state, and local taxes and shall not affect, or in any way be taken into account
in computing, any Member's Capital Account or share of Profits, Losses, other
items, or distributions pursuant to any provision of this Agreement.
5.5 CHANGE IN PERCENTAGE INTERESTS. In the event that the Members'
Percentage Interests change during a Taxable Year, Profits and Losses shall be
allocated taking into account the Members' varying Percentage Interests for such
Taxable Year, determined on a daily, monthly or other basis as determined by the
Board, using any permissible method under Code Section 706 and the Regulations
thereunder.
5.6 WITHHOLDING. Each Member hereby authorizes the Company to withhold
from income or distributions allocable to such Member and to pay over any taxes
payable by the Company or any of its Affiliates as a result of such Member's
participation in the Company; if and to the extent that the Company shall be
required to withhold any such taxes, such Member shall be deemed for all
purposes of this Agreement to have received a distribution from the Company as
of the time such withholding is required to be paid, which distribution shall be
deemed to be a distribution to such Member to the extent that the Member is then
entitled to receive a distribution. To the extent that the aggregate of such
distributions in respect of a Member for any period exceeds the distributions to
which such Member is entitled for such period, the amount of such excess shall
be considered a demand loan from the Company to such Member, with interest at
the rate of interest per annum that Citibank, N.A., or any successor entity
thereto, announces from time to time as its prime lending rate, which interest
shall be treated as an item of Company income, until discharged by such Member
by repayment, which may be made in the sole discretion of the Board out of
distributions to which such Member would otherwise be subsequently entitled. The
withholdings referred to in this Section 5.6 shall be made at the maximum
applicable statutory rate under applicable tax law unless the Board shall have
received an opinion of counsel or other evidence, satisfactory to the Board, to
the effect that a lower rate is applicable, or that no withholding is
applicable.
ARTICLE VI
MEMBERS' MEETINGS
6.1 MEETINGS OF MEMBERS; PLACE OF MEETINGS. Regular meetings of the
Members shall be held on an annual basis or more frequently as determined by the
Members or the Board. All meetings of the Members shall be held at a location
either within or outside the State of Delaware as designated from time to time
by the Board and stated in the Notice of the meeting or
16
in a duly executed waiver of the Notice thereof. Special meetings of the Members
may be held for any purpose or purposes, unless otherwise prohibited by law, and
may be called by the Board or by any Member. A Member expecting to be absent
from a meeting shall be entitled to designate in writing (or orally; provided,
that such oral designation is later confirmed in writing) a proxy (an
"AUTHORIZED REPRESENTATIVE") to act on behalf of such Member with respect to
such meeting (to the same extent and with the same force and effect as the
Member who has designated such Authorized Representative). Such Authorized
Representative shall have full power and authority to act and take actions or
refrain from taking actions as the Member by whom such Authorized Representative
has been designated. Members and Authorized Representatives may participate in a
meeting of the Members by means of conference telephone or other similar
communication equipment whereby all Members or Authorized Representatives
participating in the meeting can hear each other. Participation in a meeting in
this manner shall constitute presence in person at the meeting, except when a
Member or Authorized Representative participates for the express purpose of
objecting to the transaction of any business on the ground that the meeting was
not lawfully called or convened.
6.2 QUORUM; VOTING REQUIREMENT. The presence, in person or by proxy, of a
majority of the Members (but if there are less than three Members, all Members)
shall constitute a quorum for the transaction of business by the Members. The
affirmative vote of all of the Members present at a meeting shall constitute a
valid decision of the Members.
6.3 PROXIES. At any meeting of the Members, every Member having the right
to vote thereat shall be entitled to vote in person or by proxy appointed by an
instrument in writing signed by such Member and bearing a date not more than one
year prior to the date of such meeting.
6.4 ACTION WITHOUT MEETING. Any action required or permitted to be taken
at any meeting of Members of the Company may be taken without a meeting, without
prior Notice and without a vote if a consent in writing setting forth the action
so taken is signed by all of the Members.
6.5 NOTICE. Notice stating the place, day and hour of the meeting of
Members and the purpose for which the meeting is called shall be delivered
personally or sent by mail or by telecopier not less than two Business Days nor
more than 60 days before the date of the meeting by or at the direction of the
Board or other Persons calling the meeting, to each Member entitled to vote at
such meeting.
6.6 WAIVER OF NOTICE. When any Notice is required to be given to any
Member hereunder, a waiver thereof in writing signed by the Member, whether
before, at or after the time stated therein, shall be equivalent to the giving
of such Notice.
ARTICLE VII
MANAGEMENT AND CONTROL
7.1 MANAGEMENT BY BOARD OF DIRECTORS AND EXECUTIVE OFFICERS. Except as
delegated to the executive officers appointed pursuant to Section 7.9 hereof or
as otherwise provided hereunder, the business and affairs of the Company shall
be managed by or under the
17
direction of the Board. The Directors and executive officers shall collectively
constitute "managers" of the Company within the meaning of the Act. Except as
otherwise specifically provided in this Agreement, the authority and functions
of the Board, on the one hand, and the executive officers, on the other hand,
shall be identical to the authority and functions of the board of directors and
officers, respectively, of a corporation organized under the General Corporate
Law of the State of Delaware. The executive officers shall be vested with such
powers and duties as are set forth in Section 7.9 hereof and as may be further
specified by the Board from time to time. Accordingly, except as otherwise
specifically provided in this Agreement, the business and affairs of the Company
shall be managed under the direction of the Board, and the day-to-day activities
of the Company shall be conducted on the Company's behalf by the executive
officers who shall be agents of the Company.
In addition to the powers and authorities expressly conferred on the Board
by this Agreement, the Board may exercise all such powers of the Company and do
all such acts and things as are not restricted by the Act, this Agreement or
applicable law.
7.2 BOARD OF DIRECTORS.
(a) The Board shall consist of eight individuals designated as directors
of the Company (the "DIRECTORS") as follows: (i) Xxxxxxxxx Coal Management shall
be entitled to designate five Directors, two of whom shall be Independent
Directors and (ii) Ark Land shall be entitled to designate three Directors, one
of whom shall be an Independent Director. As of the date hereof, the Directors
shall be the individuals set forth on Schedule 7.2 to this Agreement (the
"INITIAL DIRECTORS"), each to hold office until his or her successor is elected
pursuant to this Section 7.2(a) or until his or her earlier death, resignation
or removal. The Independent Directors shall be appointed as soon as possible
following the date of this Agreement. A Member shall assign its right to
designate Directors (including Independent Directors) in connection with the
transfer of all of such Member's Membership Interest in compliance with the
provisions of Article IX.
(b) At each annual meeting of the Members and at each special meeting of
the Members called for the purpose of electing Directors, each Member shall be
entitled to designate the number of Directors as set forth in Section 7.2(a).
Each Member shall cooperate with respect to calling and attending meetings of
Members and electing the Directors designated by the Members, including voting
in favor of Directors designated pursuant to Section 7.2(a) and any replacement
Directors pursuant to Section 7.2(c); provided, that the failure to hold any
such meetings shall not limit or eliminate a Member's right to designate
Directors pursuant to Section 7.2(a). The initial term of the Initial Directors,
and any successors thereto, shall expire on the first anniversary of the date
hereof. Thereafter, Directors shall be elected to serve annual terms expiring on
the date of the annual meeting of Members following such election. Each Director
shall hold office until his or her successor is elected pursuant to this Section
7.2(a) or until his or her earlier death, resignation or removal.
(c) Any individual designated by a Member as a Director (other than
Independent Directors) may be removed at any time, with or without cause, only
by such designating Member, and the Members shall cooperate with respect to such
removal, including voting in favor of such removal. Persons elected as an
Independent Director may be removed at any time,
18
with or without cause, by a vote of a Supermajority of the Board. In the event
of the death, resignation or removal of a Director (including an Independent
Director), the Member that designated such Director may designate a replacement
Director.
(d) Notwithstanding the foregoing, if at any time the Minority Sponsor or
any of its Affiliates (each term used as defined in the Omnibus Agreement for
purposes of this 7.2(d) only) is required by Section 2.1(b)(ii) of the Omnibus
Agreement to cause its Directors to resign from the Board, (i) the Minority
Sponsor shall immediately deliver a Notice to the Members informing them of such
event, and from such time the Minority Sponsor shall have no further right to
designate any Directors to the Board, (ii) each Director (other than the
Independent Director) designated by the Minority Sponsor shall immediately
deliver a letter of resignation to the Members and (iii) Xxxxxxxxx Coal
Management shall convene a special meeting of the Members to fill the vacancies
on the Board. The Independent Director designated by the Minority Sponsor shall
deliver a letter of resignation immediately prior to the next annual meeting.
Thereafter, at each annual or special meeting of the Members called for the
purpose of electing Directors (or with respect to any action to elect Directors
taken by consent pursuant to Section 6.4), Xxxxxxxxx Coal Management shall be
entitled to designate all of the Directors (including the Independent
Directors); provided, however, if the Minority Sponsor or its Affiliate divests
itself of its interest in the Restricted Business and Section 2.1(b)(ii) of the
Omnibus Agreement is no longer applicable, at the next annual meeting of the
Members called for the purpose of electing Directors (or with respect to any
action to elect Directors taken by consent pursuant to Section 6.4) and
thereafter, the Minority Sponsor shall again have the right to designate
Directors (including Independent Directors).
7.3 MEETINGS OF THE BOARD. The Board may hold meetings, both regular and
special, within or outside the State of Delaware. Regular meetings of the Board
may be called by the Chief Executive Officer or two or more of the Directors
upon delivery of written Notice at least 10 days prior to the date of such
meeting. Special meetings of the Board may be called at the request of the Chief
Executive Officer or any two or more of the Directors upon delivery of written
Notice sent to each other Director, such notice to be received at least 24 hours
prior to the time of such meeting. Notwithstanding anything contained herein to
the contrary, such Notice may be telephonic if no other reasonable means are
available. Such Notices shall be accompanied by a proposed agenda or statement
of purpose. A Director expecting to be absent from a meeting shall be entitled
to designate in writing (or orally; provided, that such oral designation is
later confirmed in writing) an Authorized Representative to act on behalf of
such Director with respect to such meeting (to the same extent and with the same
force and effect as the Director who has designated such Authorized
Representative). Such Authorized Representative shall have full power and
authority to act and take actions or refrain from taking actions as the Director
by whom such Authorized Representative has been designated.
7.4 QUORUM AND ACTS OF THE BOARD. A majority of the Directors shall
constitute a quorum for the transaction of business at all meetings of the
Board, and, except as otherwise provided in this Agreement, the act of a
majority of the Directors present at any meeting at which there is a quorum
shall be the act of the Board. If a quorum shall not be present at any meeting
of the Board, the Directors present thereat may adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum
shall be present. Any action required or permitted to be taken at any meeting of
the Board or of any committee thereof may
19
be taken without a meeting, if all members of the Board or committee, as the
case may be, consent thereto in writing, and the writing or writings are filed
with the minutes of proceedings of the Board or committee.
7.5 ELECTRONIC COMMUNICATIONS. Members of the Board and their Authorized
Representatives, or any committee designated by the Board, may participate in a
meeting of the Board or any committee thereof by means of conference telephone
or similar communications equipment through which all persons participating in
the meeting can hear each other, and such participation in a meeting shall
constitute presence in person at the meeting. If all the participants are
participating by conference telephone or similar communications equipment, the
meeting shall be deemed to be held at the Company's principal place of business.
7.6 COMMITTEES OF DIRECTORS.
(a) The Board may establish committees of the Board and may delegate
certain of its responsibilities to such committees.
(b) The Board shall have an audit committee comprised of three Directors
(the "AUDIT COMMITTEE"), all of whom shall be Independent Directors. Such Audit
Committee shall establish a written audit committee charter in accordance with
the rules of the New York Stock Exchange, Inc. (the "NYSE"), as amended from
time to time.
(c) The Board shall have a Conflicts Committee comprised of three
Directors, all of whom shall be Independent Directors. Such Conflicts Committee
shall act in accordance with the provisions of the MLP Partnership Agreement.
Any matter approved by the Conflicts Committee in the manner provided for in the
MLP Partnership Agreement shall be conclusively deemed to be fair and reasonable
to the General Partner and to the MLP, and not a breach by the Company of any
fiduciary or other duties owed to the General Partner or to the MLP by the
Company.
(d) The Board shall have a compensation committee comprised of three
Directors (the "COMPENSATION COMMITTEE"). The Compensation Committee shall be
charged with setting compensation for officers of the Company, as well as
administering any incentive plans put in place by the Company.
(e) A majority of any committee may determine its action and fix the time
and place of its meetings unless the Board shall otherwise provide. Notice of
such meetings shall be given to each member of the committee in the manner
provided for in Section 7.3. The Board shall have the power at any time to fill
vacancies in, to change the membership of, or to dissolve any such committee.
Nothing herein shall be deemed to prevent the Board from appointing one or more
committees consisting in whole or in part of persons who are not Directors;
provided, however, that no such committee shall have or may exercise any
authority of the Board.
7.7 COMPENSATION OF DIRECTORS. Each Director shall be entitled to
reimbursement from the Company for all reasonable direct out-of-pocket expenses
incurred by such Director in connection with attending Board and committee
meetings and such compensation as may be approved by the Members.
20
7.8 DIRECTORS AS AGENTS. No Director, in such capacity, acting singly or
with any other Director, shall have any authority or right to act on behalf of
or bind the Company other than by exercising the Director's voting power as a
member of the Board, unless specifically authorized by the Board in each
instance.
7.9 OFFICERS; AGENTS. The Board shall have the power to appoint any Person
or Persons as the Company's officers (the "OFFICERS") to act for the Company and
to delegate to such Officers such of the powers as are granted to the Board
hereunder. Any decision or act of an Officer within the scope of the Officer's
designated or delegated authority shall control and shall bind the Company (and
any business entity for which the Company exercises direct or indirect executory
authority). The Officers may have such titles as the Board shall deem
appropriate, which may include (but need not be limited to) Chairman of the
Board, President, Chief Executive Officer, Vice President, Chief Operating
Officer, Chief Financial Officer, Treasurer, Controller or Secretary. A Director
may be an Officer. The initial Officers are set forth on Schedule 7.9. Any one
person may hold one or more offices. Unless the authority of an Officer is
limited by the Board, any Officer so appointed shall have the same authority to
act for the Company as a corresponding officer of a Delaware corporation would
have to act for a Delaware corporation in the absence of a specific delegation
of authority. The Officers shall hold office until their respective successors
are chosen and qualify or until their earlier death, resignation or removal. Any
Officer elected or appointed by the Board may be removed at any time by the
affirmative vote of a majority of the Board. Any vacancy occurring in any office
of the Company shall be filled by a majority of the Board.
7.10 SPECIFIC MATTERS REQUIRING BOARD APPROVAL.
(a) Without the prior approval of the Board, the Company shall not, and
shall not permit the Partnership to, effect any:
(i) except for distributions of Available Cash pursuant to Section
4.1 and distributions pursuant to Section 10.3, and distributions required
or permitted pursuant to the Partnership Agreement (as amended from time
to time in accordance with the terms thereof), declaration or payment of
any dividends or other distributions on the Membership Interests,
partnership interests, capital stock or other debt or equity securities by
the Company or the Partnership, including, without limitation, any
dividend or other distribution by means of a redemption or repurchase of
such securities;
(ii) (a) incurrence of any indebtedness by the Company or the
Partnership, (b) the assumption, incurrence, or undertaking by the Company
or the Partnership of, or the grant by the Company or the Partnership of
any security (other than a pledge of substantially all of the properties
or assets of the Company or the Company and any of its Subsidiaries taken
as a whole) for, any financial commitment of any type whatsoever,
including without limitation, any purchase, sale, lease, loan, contract,
borrowing or expenditure, or (c) the lending of money by the Company or
the Partnership to, or the guarantee by the Company or the Partnership of
the debts of, any other Person;
21
(iii) capital expenditures, or commitment to make capital
expenditures, in excess of 15% of the amount budgeted for capital
expenditures in any fiscal year by the Company or the Partnership; or
(iv) any repurchase or redemption by the Company of any of its
Membership Interests, or other debt or equity securities or any repurchase
or redemption by the Partnership of any of its partnership interests, or
other debt or equity securities.
(b) Without the prior approval of a Supermajority of the Board, the
Company shall not, and shall not permit any of its Subsidiaries to, effect any:
(i) merger, consolidation or share exchange into or with any other
Person, or any other similar business combination transaction (other than
any such transaction entered into solely between the Company and any of
its Subsidiaries or among any of them) involving the Company or any of its
Subsidiaries or financial restructuring of the Company or the Partnership;
provided, however, that in the event not all Members (or their Affiliates
in the case of the Partnership, if applicable) receive identical
consideration, whether in their capacity as a Member or as a limited
partner of the Partnership, both in form and amount (in proportion to
their Membership Interests or Limited Partner Interests, as the case may
be) in such transaction, such transaction shall require the prior written
consent of any Member (or such Member's Affiliate in the case of the
Partnership, if applicable) receiving consideration that differs from the
consideration to be received by the other Member(s) or limited partners,
as applicable;
(ii) voluntary filing for bankruptcy, liquidation, dissolution or
winding up of the Company or any of its Subsidiaries or any event that
would cause a dissolution or winding up of the Company or any of its
Subsidiaries or any consent by the Company or any of its Subsidiaries to
any action brought by any other Person relating to any of the foregoing;
(iii) amendment or repeal of the Certificate, the Partnership
Agreement or the Partnership's certificate of limited partnership;
(iv) sale, lease, transfer, pledge or other disposition of all or
substantially all of the properties or assets of the Company or the
Company and any of its Subsidiaries taken as a whole, other than sales,
leases, transfers, pledges or other dispositions of assets in the ordinary
course of business or as security for the indebtedness incurred pursuant
to any credit agreement or any indenture;
(v) other than equity securities issued upon exercise of convertible
securities subsequently approved pursuant to this Section 7.10,
authorization, sale and/or issuance by the Company or the Partnership of
any of their respective Membership Interests, partnership interests,
capital stock, or other equity securities, whether in a private or public
offering, including an initial public offering, or the grant, sale or
issuance of other securities (including rights, warrants and options)
convertible into, exchangeable for or exercisable for any of their
respective Membership Interests, partnership interests, capital
22
stock, or other equity securities, whether or not presently convertible,
exchangeable or exercisable; and
(vi) admission of any person as an additional member of the Company
pursuant to Section 9.6 hereof.
ARTICLE VIII
LIABILITY AND INDEMNIFICATION
8.1 LIMITATION ON LIABILITY OF MEMBERS, DIRECTORS AND OFFICERS. No Member
(when not acting in violation of this Agreement or applicable law), Director or
Officer shall have any liability to the Company or the Members for any losses
sustained or liabilities incurred as a result of any act or omission of such
Member, Director or Officer in connection with the conduct of the business of
the Company if, in the case of an Officer, the Officer acted in a manner he or
she reasonably believed to be in, or not opposed to, the interests of the
Company or applicable law and to be within the scope of his or her authority
and, in the case of a Member (when not acting in violation of this Agreement or
applicable law), Director or Officer, the conduct did not constitute bad faith,
fraud, gross negligence or willful misconduct. To the fullest extent permitted
by Section 18-1101(c) of the Act, a Director (other than Independent Directors)
in performing his or her obligations under this Agreement, shall be entitled to
act or omit to act at the direction of the Member who designated such Director,
considering only such factors, including the separate interests of the
designating Member, as such Director or the designating Member chooses to
consider, and any action of a Director or failure to act, taken or omitted in
good faith reliance on the foregoing provisions of this Section 8.1 shall not
constitute a breach of any duty including any fiduciary duty on the part of the
Director or designating Member to the Company or any other Member or Director.
Except as required by the Act, the Company's debts, obligations, and
liabilities, whether arising in contract, tort or otherwise, shall be solely the
debts, obligations and liabilities of the Company, and no Officer, Member or
Director shall be personally responsible for any such debt, obligation or
liability of the Company solely by reason of being an Officer, Member or
Director. No Member shall be responsible for any debts, obligations or
liabilities, whether arising in contract, tort or otherwise, of any other
Member.
8.2 INDEMNIFICATION.
(a) The Company shall indemnify and hold harmless the Members (when not
acting in violation of this Agreement or applicable law), Directors and Officers
(individually a "COMPANY AFFILIATE") from and against any and all losses,
claims, demands, costs, damages, liabilities, expenses of any nature (including
reasonable attorneys' fees and disbursements), judgments, fines, settlements and
other amounts arising from any and all claims, demands, actions, suits or
proceedings, civil, criminal, administrative or investigative, in which a
Company Affiliate may be involved, or threatened to be involved, as a party or
otherwise, arising out of or incidental to the business of the Company,
regardless of whether a Company Affiliate continues to be a Company Affiliate at
the time any such liability or expense is paid or incurred, if, in the case of
an Officer, such Officer acted in a manner he or she reasonably believed to be
in, or not opposed to, the interests of the Company or applicable law and to be
in the scope of his or her authority and, in the case of a Member (when not
acting in violation of this Agreement or applicable law), Director or Officer,
the conduct of the Member, Director or Officer did not
23
constitute fraud, bad faith, gross negligence or willful misconduct and with
respect to any criminal proceeding, had no reason to believe his, her or its
conduct was unlawful.
(b) Expenses incurred by a Company Affiliate in defending any claim,
demand, action, suit or proceeding subject to Section 8.2(a) shall, from time to
time, be advanced by the Company prior to the final disposition of such claim,
demand, action, suit or proceeding upon receipt by the Company of an undertaking
by or on behalf of the Company Affiliate to repay such amounts if it is
ultimately determined that the Company Affiliate is not entitled to be
indemnified as authorized in this Section 8.2.
(c) The indemnification provided by this Section 8.2 shall be in addition
to any other rights to which a Company Affiliate may be entitled pursuant to any
approval of the Board, as a matter of law or equity, or otherwise, and shall
continue as to a Company Affiliate who has ceased to serve in such capacity and
shall inure to the benefit of the heirs, successors, assigns, and administrators
of such Company Affiliate. The Company shall not be required to indemnify any
Member in connection with any losses, claims, demands, actions, disputes, suits
or proceedings, of any Member against any other Member.
(d) The Company may purchase and maintain directors and officers insurance
or similar coverage for its Directors and Officers in such amounts and with such
deductibles or self-insured retentions as determined in the sole discretion of
the Board.
(e) Any indemnification hereunder shall be satisfied only out of the
assets of the Company, and the Members shall not be subject to personal
liability by reason of the indemnification provisions under this Section 8.2.
(f) A Company Affiliate shall not be denied indemnification in whole or in
part under this Section 8.2 because the Company Affiliate had an interest in the
transaction with respect to which the indemnification applies if the transaction
was otherwise permitted by the terms of this Agreement and all material facts
relating to such indemnitee's interest were adequately disclosed to the Board at
the time the transaction was consummated.
(g) Subject to Section 8.2(c), the provisions of this Section 8.2 are for
the benefit of the Company Affiliates and the heirs, successors, assigns and
administrators of the Company Affiliates and shall not be deemed to create any
rights for the benefit of any other Persons.
(h) Any repeal or amendment of any provisions of this Section 8.2 shall be
prospective only and shall not adversely affect any Company Affiliates' rights
existing at the time of such repeal or amendment.
ARTICLE IX
TRANSFERS OF MEMBERSHIP INTERESTS
9.1 GENERAL RESTRICTIONS.
(a) A Member may Transfer its Membership Interest only in its entirety. A
Member may Transfer all of such Member's Membership Interest (i) to a Permitted
Transferee pursuant to Section 9.2, or (ii) pursuant to the terms of Section
9.7; provided, however, any such Transfer
24
under (i) or (ii) above shall comply with the terms of Section 9.1(b). Any
purported Transfer of a Membership Interest in violation of the terms of this
Agreement shall be null and void and of no force and effect. Except upon a
Transfer of all of a Member's Membership Interest in accordance with this
Section 9.1, no Member shall have the right to withdraw as a Member of the
Company.
(b) As a condition to a Transfer by a Member of all of such Member's
Membership Interest to a transferee as permitted under Section 9.1(a)(i) or
(ii), (a "MEMBERSHIP TRANSFER"), such Member or such Member's Affiliate holding
a Limited Partnership Interest, as applicable, shall simultaneously Transfer
(the "PARTNERSHIP TRANSFER") to such transferee the entirety of such Member's or
such Member's Affiliate's Limited Partnership Interest. If for any reason the
Partnership Transfer does not occur simultaneously with the Membership Transfer,
then the Membership Transfer and the Partnership Transfer shall be null and void
and of no force and effect.
(c) Notwithstanding any other provision of this Agreement, no Member may
pledge, mortgage or otherwise subject its Member Interest to any Encumbrance.
9.2 PERMITTED TRANSFEREES.
(a) Notwithstanding the provisions of Section 9.7, each Member shall,
subject to Section 9.1(b), have the right to Transfer (but not to substitute the
transferee as a substitute Member in such Member's place, except in accordance
with Section 9.3), by a written instrument, all of a Member's Membership
Interest to a Permitted Transferee. Notwithstanding the previous sentence, if
the Permitted Transferee is such because it was an Affiliate of the transferring
Member at the time of such Transfer or the Transfer was a Permitted Transfer
under clause (a) of the definition of Permitted Transfer and, at any time after
such Transfer, such Permitted Transferee ceases to be an Affiliate of such
Member or such Transfer or such Permitted Transferee ceases to qualify under
such clause (a) (a "NON-QUALIFYING TRANSFEREE"), such Transfer shall be deemed
to not be a Permitted Transfer and shall be subject to Section 9.7. Pursuant to
Section 9.7, such transferring Member, or such transferring Member's legal
representative, shall deliver the First Refusal Notice promptly after the time
when such transferee ceases to be an Affiliate of such transferring Member, or
such Transfer or such Permitted Transferee ceases to qualify under clause (a) of
the definition of Permitted Transfer, and such transferring Member shall
otherwise comply with the terms of Section 9.7 with respect to such Transfer;
provided, that the purchase price for such Transfer for purposes of Section 9.7
shall be an amount agreed upon by such transferring Member and the Board, or, if
such Member and the Board cannot agree on a price within five Business Days
after delivery of the First Refusal Notice, such price shall be the fair market
value of the Membership Interest transferred pursuant to the Transfer as of the
date the transferee ceased to be an Affiliate of such transferring Member or
such Transfer or such Permitted Transferee ceases to qualify under clause (a) of
the definition of Permitted Transfer (such date, the "NON-QUALIFYING DATE"), as
determined at the Company's expense by a nationally recognized investment
banking firm mutually selected by such transferring Member and the Board. If
such transferring Member and the Board are unable, within 10 days after the
expiration of such five Business Day period, to mutually agree upon an
investment banking firm, then each of such transferring Member and the Board
shall choose a nationally recognized investment banking firm and the two
investment banking firms so chosen
25
shall choose a third nationally recognized investment banking firm which shall
determine the fair market value of the Membership Interest transferred pursuant
to such Transfer at the Company's expense. The determination of fair market
value shall be based on the value that a willing buyer with knowledge of all
relevant facts would pay a willing seller for all the outstanding equity
securities of the Company in connection with an auction for the Company as a
going concern and shall not take into account any acquisitions made by the
Company or its Affiliates or any other events subsequent to the Non-Qualifying
Date and shall not be subject to any discount for a sale of a minority interest.
If such transferring Member fails to comply with all the terms of Section 9.7,
such Transfer shall be null and void and of no force and effect. No
Non-Qualifying Transferee shall be entitled to receive any distributions from
the Company on or after the Non-Qualifying Date and any distributions made in
respect of the Membership Interests on or after the Non-Qualifying Date and held
by such Non-Qualifying Members shall be paid to the Member who transferred such
Membership Interest or otherwise to the rightful owner thereof as reasonably
determined by the Board.
(b) Unless and until admitted as a substitute Member pursuant to Section
9.3, a transferee of a Member's Membership Interest in whole or in part shall be
an assignee with respect to such Transferred Membership Interest and shall not
be entitled to participate in the management of the business and affairs of the
Company or to become, or to exercise the rights of, a Member, including the
right to designate Directors, the right to vote, the right to require any
information or accounting of the Company's business, or the right to inspect the
Company's books and records. Such transferee shall only be entitled to receive,
to the extent of the Transferred Membership Interest, the share of distributions
and profits, including distributions representing the return of Capital
Contributions, to which the transferor would otherwise be entitled with respect
to the Transferred Membership Interest. The transferor shall have the right to
vote such Transferred Membership Interest until the transferee is admitted to
the Company as a substitute Member with respect to the Transferred Membership
Interest.
9.3 SUBSTITUTE MEMBERS. No transferee of all or part of a Member's
Membership Interest shall become a substitute Member in place of the transferor
unless and until:
(a) Such Transfer is in compliance with the terms of Section 9.1;
(b) the transferee has executed an instrument in form and substance
reasonably satisfactory to the Board accepting and adopting, and agreeing to be
bound by, the terms and provisions of the Certificate and this Agreement;
(c) the transferee has executed an instrument in form and substance
reasonably satisfactory to the Board whereby it agrees to become a party to the
Omnibus Agreement and to be bound by the noncompetition provisions of Article II
of the Omnibus Agreement.
(d) the transferee has caused to be paid all reasonable expenses of the
Company in connection with the admission of the transferee as a substitute
Member.
Upon satisfaction of all the foregoing conditions with respect to a particular
transferee, the appropriate officers shall cause the books and records of the
Company to reflect the admission of
26
the transferee as a substitute Member to the extent of the Transferred
Membership Interest held by such transferee.
9.4 EFFECT OF ADMISSION AS A SUBSTITUTE MEMBER. A transferee who has
become a substitute Member has, to the extent of the Transferred Membership
Interest, all the rights, powers and benefits of, and is subject to the
obligations, restrictions and liabilities of a Member under, the Certificate,
this Agreement and the Act. Upon admission of a transferee as a substitute
Member, the transferor of the Membership Interest so held by the substitute
Member shall cease to be a Member of the Company to the extent of such
Transferred Membership Interest.
9.5 CONSENT. Each Member hereby agrees that upon satisfaction of the terms
and conditions of this Article 9 with respect to any proposed Transfer, the
transferee may be admitted as a Member without any further action by a Member
hereunder.
9.6 ADDITIONAL MEMBERS. Subject to Section 3.2 and Section 7.10, any
Person acceptable to a Supermajority of the Board may become an additional
Member of the Company for such consideration as the Board shall determine,
provided that such additional Member complies with all the requirements of a
transferee under Section 9.3(b), (c) and (d).
9.7 RIGHT OF FIRST REFUSAL. The Members shall have the following right of
first refusal:
(a) If at any time any of the Members (a "SELLING MEMBER") has received
and wishes to accept a bona fide offer (the "OFFER") for cash from a third party
(the "OFFEROR") for all of such Selling Member's Membership Interest (and such
Selling Member's (or its Affiliate's) Limited Partnership Interest in accordance
with Section 9.1(b)), such Selling Member shall give Notice thereof (the "FIRST
REFUSAL NOTICE") to each of the other Members and the Company. The First Refusal
Notice shall state the amount of the Selling Member's Membership Interest and
the Selling Member's or its Affiliate's Limited Partnership Interest that the
Selling Member and its Affiliate, if applicable, wishes to sell (the "OPTIONED
INTEREST"), the price and all other material terms of the Offer, the name of the
Offeror, and certification from the Selling Member affirming that the Offer is
bona fide and that the description thereof is true and correct, and that the
Offeror has stated that it will purchase the Optioned Interest if the rights of
first refusal herein described are not exercised.
(b) Each of the Members other than the Selling Member (the "NON-SELLING
MEMBERS") shall have the right exercisable by Notice (an "ACCEPTANCE NOTICE")
given to the Selling Member and the Company within 20 days after receipt of the
First Refusal Notice, to agree that it will purchase up to 100% of the Optioned
Interest on the terms set forth in the First Refusal Notice; provided, however,
if the Non-Selling Members in the aggregate desire to purchase more than 100% of
the Optioned Interest, each such Non-Selling Member's right to purchase the
Optioned Interest shall be reduced (pro rata based on the percentage of Optioned
Interest for which such Non-Selling Member has exercised its right to purchase
hereunder compared to all other Non-Selling Members, but not below such
Non-Selling Member's Membership Interest as a percentage of the aggregate
Membership Interests of all Non-Selling Members who have exercised their right
to purchase) so that such Non-Selling Members
27
purchase no more than 100% of the Optioned Interest. If a Non-Selling Member
does not submit an Acceptance Notice within the 20 day period set forth in this
Section 9.7(b), such Non-Selling Member shall be deemed to have rejected the
offer to purchase any portion of the Optioned Interest.
(c) If the Non-Selling Members do not in the aggregate exercise the right
to purchase all of the Optioned Interest by the expiration of the 20 day period
set forth in Section 9.7(b), then any Acceptance Notice shall be void and of no
effect, and the Selling Member shall be entitled to complete the proposed sale
at any time in the 30 day period commencing on the date of the First Refusal
Notice, but only upon the terms set forth in the First Refusal Notice. If no
such sale is completed in such 30 day period, the provisions hereof shall apply
again to any proposed sale of the Optioned Interest.
(d) If any Non-Selling Member exercises the right to purchase the Optioned
Interest as provided herein and such Non-Selling Member(s) have elected to
purchase all of the Optioned Interest, the purchase of such Optioned Interest
shall be completed within the 30 day period commencing on the date of delivery
of the First Refusal Notice. If such Non-Selling Member does not consummate the
Purchase of such Optioned Interest, (x) the Selling Member shall be entitled to
all expenses of collection, (y) the Selling Member shall be entitled to pursue
all available legal remedies against the Non-Selling Member, including specific
enforcement of the purchase of the Optioned Interest on the terms set forth in
the First Refusal Notice and (z) notwithstanding the specific enforcement
remedy, the Selling Member may complete the sale of the Optioned Interest to the
third party on the terms set forth in the First Refusal Notice.
ARTICLE X
DISSOLUTION AND TERMINATION
10.1 EVENTS CAUSING DISSOLUTION.
(a) The Company shall be dissolved and its affairs wound up upon the first
to occur of the following events:
(i) The decision of a Supermajority of the Board to dissolve;
(ii) The Transfer of all or substantially all of the assets of the
Company and the receipt and distribution of all the proceeds therefrom; or
(iii) The entry of a decree of judicial dissolution pursuant to
Section 18-802 of the Act.
(b) The withdrawal, death, retirement, resignation, expulsion, bankruptcy
or dissolution of any Member or the occurrence of any other event that
terminates the continued membership of any Member in the Company shall not, in
and of itself, cause the Company's dissolution.
10.2 FINAL ACCOUNTING. Upon dissolution and winding up of the Company, an
accounting will be made of the accounts of the Company and each Member and of
the
28
Company's assets, liabilities and operations from the date of the last previous
accounting to the date of such dissolution.
10.3 DISTRIBUTIONS FOLLOWING DISSOLUTION AND TERMINATION.
(a) Liquidating Trustee. Upon the dissolution of the Company, such party
as is designated by the Members holding a majority in interest of the Membership
Interests will act as liquidating trustee of the Company (the "LIQUIDATING
TRUSTEE") and proceed to wind up the business and affairs of the Company in
accordance with the terms of this Agreement and applicable law. The Liquidating
Trustee will use its commercially reasonable efforts to sell all Company assets
(except cash) under the circumstances then presented, that it deems in the best
interest of the Members. The Liquidating Trustee will attempt to convert all
assets of the Company to cash so long as it can do so consistently with prudent
business practice. The Members and their respective designees will have the
right to purchase any Company property to be sold on liquidation, provided that
the terms on which such sale is made are no less favorable than would otherwise
be available from third parties. The gains and losses from the sale of the
Company assets, together with all other revenue, income, gain, deduction,
expense, loss and credit during the period, will be allocated in accordance with
Article 5. A reasonable amount of time shall be allowed for the period of
winding up in light of prevailing market conditions and so as to avoid undue
loss in connection with any sale of the Company's assets. This Agreement shall
remain in full force and effect during the period of winding up. In addition,
upon request of the Board and if the Liquidating Trustee determines that it
would be imprudent to dispose of any non-cash assets of the Company, such assets
may be distributed in kind to the Members in lieu of cash, proportionately to
their right to receive cash distributions under this Agreement.
(b) Accounting. Upon completion of its efforts under section 10.3(a), the
Liquidating Trustee will cause proper accounting to be made of the Capital
Account of each Member, including recognition of gain or loss on any asset to be
distributed in kind as if such asset had been sold for consideration equal to
the fair market value of the asset at the time of the distribution. The Members
intend that the allocations provided herein shall result in Capital Account
balances in proportion to the Percentage Interests of the Members.
(c) Liquidating Distributions. In settling accounts after dissolution of
the Company, the assets of the Company shall be paid to creditors of the Company
and to the Members in the following order:
(i) to creditors of the Company (including Members) in the order of
priority as provided by law whether by payment or the making of reasonable
provision for payment thereof, and in connection therewith there shall be
withheld such reasonable reserves for contingent, conditioned or
unconditioned liabilities as the Liquidating Trustee in its reasonable
discretion deems adequate, such reserves (or balances thereof) to be held
and distributed in such manner and at such times as the Liquidating
Trustee, in its discretion, deems reasonably advisable; provided, however,
that such amounts will be maintained in a separate bank account and that
any amounts in such bank account remaining after three years be
distributed to the Members or their successors and assigns as if such
amount had been available for distribution under Section 10.3(c)(ii); and
then
29
(ii) to the Members in proportion to the positive balances of their
Capital Accounts, as fully adjusted pursuant to Section 3.4, including
adjustment for all gains and losses actually or deemed realized upon
disposition or distribution of assets in connection with the liquidation
and winding up of the Company.
Any distribution to the Members in liquidation of the Company shall be
made by the later of the end of the taxable year in which the liquidation occurs
or 90 days after the date of such liquidation. For purposes of the preceding
sentence, the term "liquidation" shall have the same meaning as set forth in
Regulation Section l.704-l(b)(2)(ii) as in effect at such time and liquidating
distributions shall be further deemed to be made pursuant to this Agreement upon
the event of a liquidation as defined in such Regulation for which no actual
liquidation occurs with a deemed recontribution by the Members of such deemed
liquidating distributions to the continuing Company pursuant to this Agreement.
(d) The provisions of this Agreement, including, without limitation, this
Section 10.3, are intended solely to benefit the Members and, to the fullest
extent permitted by law, shall not be construed as conferring any benefit upon
any creditor of the Company. No such creditor of the Company shall be a
third-party beneficiary of this Agreement, and no Member or Director shall have
any duty or obligation to any creditor of the Company to issue any call for
capital pursuant to this Agreement.
10.4 TERMINATION OF THE COMPANY. The Company shall terminate when all
assets of the Company, after payment or due provision for all debts, liabilities
and obligations of the Company, shall have been distributed to the Members in
the manner provided for in this Article 10, and the Certificate shall have been
canceled in the manner required by the Act.
10.5 NO ACTION FOR DISSOLUTION. The Members acknowledge that irreparable
damage would be done to the goodwill and reputation of the Company if any Member
should bring an action in court to dissolve the Company under circumstances
where dissolution is not required by Section 10.1. Accordingly, except where the
Board has failed to cause the liquidation of the Company as required by Section
10.1 and except as specifically provided in Section 18-802, each Member hereby
to the fullest extent permitted by law waives and renounces his or its right to
initiate legal action to seek dissolution of the Company or to seek the
appointment of a receiver or trustee to wind up the affairs of the Company,
except in the cases of fraud, violation of law, bad faith, gross negligence,
willful misconduct or willful violation of this Agreement.
ARTICLE XI
TAX MATTERS
11.1 TAX MATTERS MEMBER. Xxxxxxxxx Coal Management shall be the tax
matters member (the "TAX MATTERS MEMBER") of the Company as provided in the
Regulations under Section 6231 of the Code and analogous provisions of state
law. The Board shall have the authority to remove or replace the Tax Matters
Member of the Company and designate its successor.
11.2 CERTAIN AUTHORIZATIONS. The tax matters member (the "TAX MATTERS
MEMBER") shall represent the Company, at the Company's expense, in connection
with all examinations of
30
the Company's affairs by tax authorities including any resulting administrative
or judicial proceedings. Without limiting the generality of the foregoing, and
subject to the restrictions set forth herein, the Tax Matters Member, but only
with the consent of the Board, is hereby authorized:
(a) to enter into any settlement agreement with respect to any tax audit
or judicial review, in which agreement the Tax Matters Member may expressly
state that such agreement shall bind the other Members except that such
settlement agreement shall not bind any Member that has not approved such
settlement agreement in writing;
(b) if a notice of a final administrative adjustment at the Company level
of any item required to be taken into account by a Member for tax purposes is
mailed to the Tax Matters Member, to seek judicial review of such final
adjustment, including the filing of a petition for readjustment with the Tax
Court, the District Court of the United States for the district in which the
Company's principal place of business is located, or elsewhere as allowed by
law, or the United States Claims Court;
(c) to intervene in any action brought by any other Member for judicial
review of a final adjustment;
(d) to file a request for an administrative adjustment at any time and, if
any part of such request is not allowed, to file a petition for judicial review
with respect to such request;
(e) to enter into an agreement with the Internal Revenue Service to extend
the period for assessing any tax that is attributable to any item required to be
taken into account by a Member for tax purposes, or an item affected by such
item; and
(f) to take any other action on behalf of the Members (with respect to the
Company) or the Company in connection with any administrative or judicial tax
proceeding to the extent permitted by applicable law or the Regulations.
Each Member shall have the right to participate in any such actions and
proceedings to the extent provided for under the Code and Regulations.
11.3 INDEMNITY OF TAX MATTERS MEMBER. To the maximum extent permitted by
applicable law and without limiting Article 8, the Company shall indemnify and
reimburse the Tax Matters Member for all expenses (including reasonable legal
and accounting fees) incurred as Tax Matters Member pursuant to this Article 11
in connection with any administrative or judicial proceeding with respect to the
tax liability of the Members as long as the Tax Matters Member has determined in
good faith that the Tax Matters Member's course of conduct was in, or not
opposed to, the best interest of the Company. The taking of any action and the
incurring of any expense by the Tax Matters Member in connection with any such
proceeding, except to the extent provided herein or required by law, is a matter
in the sole discretion of the Tax Matters Member.
11.4 INFORMATION FURNISHED. To the extent and in the manner provided by
applicable law and Regulations, the Tax Matters Member shall furnish the name,
address, profits and loss interest, and taxpayer identification number of each
Member to the Internal Revenue Service.
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11.5 NOTICE OF PROCEEDINGS, ETC. The Tax Matters Member shall use its
reasonable best efforts to keep each Member informed of any administrative and
judicial proceedings for the adjustment at the Company level of any item
required to be taken into account by a Member for income tax purposes or any
extension of the period of limitations for making assessments of any tax against
a Member with respect to any Company item, or of any agreement with the Internal
Revenue Service that would result in any material change either in Profits or
Losses as previously reported.
11.6 NOTICES TO TAX MATTERS MEMBER. Any Member that receives a notice of
an administrative proceeding under Section 6233 of the Code relating to the
Company shall promptly provide Notice to the Tax Matters Member of the treatment
of any Company item on such Member's Federal income tax return that is or may be
inconsistent with the treatment of that item on the Company's return. Any Member
that enters into a settlement agreement with the Internal Revenue Service or any
other government agency or official with respect to any Company item shall
provide Notice to the Tax Matters Member of such agreement and its terms within
60 days after the date of such agreement.
11.7 PREPARATION OF TAX RETURNS. The Tax Matters Member shall arrange for
the preparation and timely filing of all returns of Company income, gains,
deductions, losses and other items necessary for Federal, state and local income
tax purposes and shall use all reasonable efforts to furnish to the Members
within 60 days of the close of the taxable year a Schedule K-1 and such other
tax information reasonably required for Federal, state and local income tax
reporting purposes. The classification, realization and recognition of income,
gain, losses and deductions and other items shall be on the cash or accrual
method of accounting for Federal income tax purposes, as the Board shall
determine in its sole discretion in accordance with applicable law.
11.8 TAX ELECTIONS. Subject to Section 11.9, the Board shall, in its sole
discretion, determine whether to make any available election.
11.9 TAXATION AS A PARTNERSHIP. No election shall be made by the Company
or any Member for the Company to be excluded from the application of any of the
provisions of Subchapter K, Chapter I of Subtitle A of the Code or from any
similar provisions of any state tax laws or to be treated as a corporation for
federal tax purposes.
ARTICLE XII
ACCOUNTING AND BANK ACCOUNTS
12.1 FISCAL YEAR AND ACCOUNTING METHOD. The fiscal year and taxable year
of the Company shall be the calendar year. The Company shall use an accrual
method of accounting.
12.2 BOOKS AND RECORDS. The Company shall maintain at its principal
office, or such other office as may be determined by the Board, all the
following:
(a) A current list of the full name and last known business or residence
address of each Member, and of each member of the Board, together with
information regarding the amount of cash and a description and statement of the
agreed value of any other property or services
32
contributed by each Member and which each Member has agreed to contribute in the
future, and the date on which each Member became a Member of the Company;
(b) A copy of the Certificate and this Agreement, including any and all
amendments to either thereof, together with executed copies of any powers of
attorney pursuant to which the Certificate, this Agreement, or any amendments
have been executed;
(c) Copies of the Company's Federal, state, and local income tax or
information returns and reports, if any, which shall be retained for at least
six fiscal years;
(d) The financial statements of the Company; and
(e) The Company's books and records.
12.3 DELIVERY TO MEMBERS; INSPECTION. Upon the request of any Member, for
any purpose reasonably related to such Member's interest as a member of the
Company, the Officers shall cause to be made available to the requesting Member
the information required to be maintained by clauses (a) through (e) of Section
12.2 and such other information regarding the business and affairs and financial
condition of the Company as any Member may reasonably request.
12.4 FINANCIAL STATEMENTS. The Officers shall cause to be prepared for the
Members at least annually, at the Company's expense, financial statements of the
Company, and its subsidiaries, prepared in accordance with generally accepted
accounting principles and audited by a nationally recognized accounting firm.
The financial statements so furnished shall include a balance sheet, statement
of income or loss, statement of cash flows, and statement of Members' equity. In
addition, the Officers shall provide on a timely basis to the Members monthly
and quarterly financial statements, any available internal budgets or forecast
or other available financial reports, as well as any reports or notices as are
provided by the Company, or any of its Subsidiaries to any financial
institution.
12.5 FILINGS. At the Company's expense, the Officers shall cause the
income tax returns for the Company to be prepared and timely filed with the
appropriate authorities and to have prepared and to furnish to each Member such
information with respect to the Company as is necessary (or as may be reasonably
requested by a Member) to enable the Members to prepare their Federal, state and
local income tax returns. The Officers, at the Company's expense, shall also
cause to be prepared and timely filed, with appropriate Federal, state and local
regulatory and administrative bodies, all reports required to be filed by the
Company with those entities under then current applicable laws, rules, and
regulations. The reports shall be prepared on the accounting or reporting basis
required by the regulatory bodies.
12.6 NON-DISCLOSURE. Each Member agrees that, except as otherwise
consented to by the Board in writing, all non-public and confidential
information furnished to it pursuant to this Agreement will be kept confidential
and will not be disclosed by such Member, or by any of its agents,
representatives, or employees, in any manner whatsoever, in whole or in part,
except that
(a) each Member shall be permitted to disclose such information to those
of its agents, representatives, and employees who need to be familiar with such
information in
33
connection with such Member's investment in the Company (collectively
"Representatives") and are apprised of the confidential nature of such
information;
(b) each Member shall be permitted to disclose information to the extent
required by law, legal process or regulatory requirements, so long as such
Member shall have used its reasonable efforts to first afford the Company with a
reasonable opportunity to contest the necessity of disclosing such information,
provided that each member and its Affiliates may disclose any information
required to be disclosed under the federal securities laws without affording the
Company such opportunity;
(c) each Member shall be permitted to disclose such information to
possible purchasers of all or a portion of the Member's Membership Interest,
provided that such prospective purchaser shall execute a suitable
confidentiality agreement in a form approved by the Company containing terms not
less restrictive than the terms set forth herein; and
(d) each Member shall be permitted to disclose information to the extent
necessary for the enforcement of any right of such Member arising under this
Agreement.
Each Member shall be responsible for any breach of this Section 12.6 by its
Representatives.
ARTICLE XIII
MISCELLANEOUS
13.1 WAIVER OF DEFAULT. No consent or waiver, express or implied, by the
Company or a Member with respect to any breach or default by the Company or a
Member under this Agreement shall be deemed or construed to be a consent or
waiver with respect to any other breach or default by any party of the same
provision or any other provision of this Agreement. Failure on the part of the
Company or a Member to complain of any act or failure to act of the Company or a
Member or to declare such party in default shall not be deemed or constitute a
waiver by the Company or the Member of any rights under this Agreement.
13.2 AMENDMENT.
(a) Except as otherwise expressly provided elsewhere in this Agreement,
this Agreement shall not be altered, modified or changed except by an amendment
approved by a Supermajority of the Board; provided, however, that no
modification of the terms of this Agreement that (i) increases or extends any
financial obligation or liability of a Member, (ii) alters the method of
division of profits and losses or a method of distributions made to a Member,
(iii) adversely affects a Member's ability to designate Directors or (iv)
otherwise adversely affects the obligations or rights of a Member (as a Member
under this Agreement) in a manner different than the other Member(s) shall be
effective without the prior written consent of such Member.
(b) In addition to any amendments otherwise authorized herein, the Board
may make any amendments to any of the Schedules to this Agreement from time to
time to reflect transfers of Membership Interests and issuances of additional
Membership Interests. Copies of such amendments shall be delivered to the
Members upon execution thereof.
34
(c) The Board shall cause to be prepared and filed any amendment to the
Certificate that may be required to be filed under the Act as a consequence of
any amendment to this Agreement.
(d) Any modification or amendment to this Agreement or the Certificate
made in accordance with this Section 13.2 shall be binding on all Members and
the Board.
13.3 NO THIRD PARTY RIGHTS. Except as provided in Article 8, none of the
provisions contained in this Agreement shall be for the benefit of or
enforceable by any third parties, including creditors of the Company.
13.4 SEVERABILITY. In the event any provision of this Agreement is held to
be illegal, invalid or unenforceable to any extent, the legality, validity and
enforceability of the remainder of this Agreement shall not be affected thereby
and shall remain in full force and effect and shall be enforced to the greatest
extent permitted by law.
13.5 NATURE OF INTEREST IN THE COMPANY. A Member's Membership Interest
shall be personal property for all purposes.
13.6 BINDING AGREEMENT. The provisions of this Agreement shall be binding
upon, and inure to the benefit of, the parties hereto and their respective
heirs, personal representatives, successors and permitted assigns.
13.7 HEADINGS. The headings of the sections of this Agreement are for
convenience only and shall not be considered in construing or interpreting any
of the terms or provisions hereof.
13.8 WORD MEANINGS. The words "herein," "hereinafter," "hereof," and
"hereunder" refer to this Agreement as a whole and not merely to a subdivision
in which such words appear unless the context otherwise requires. The singular
shall include the plural, and vice versa, unless the context otherwise requires.
Whenever the words "include," "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words "without
limitation." When verbs are used as nouns, the nouns correspond to such verbs
and vice versa.
13.9 COUNTERPARTS. This Agreement may be executed in several counterparts,
all of which together shall constitute one agreement binding on all parties
hereto, notwithstanding that all the parties have not signed the same
counterpart.
13.10 ENTIRE AGREEMENT. This Agreement contains the entire agreement
between the parties hereto and thereto and supersedes all prior writings or
agreements with respect to the subject matter hereof.
13.11 PARTITION. The Members agree that the Property is not and will not
be suitable for partition. Accordingly, each of the Members hereby irrevocably
waives any and all right such Member may have to maintain any action for
partition of any of the Property. No Member shall have any right to any specific
assets of the Company upon the liquidation of, or any distribution from, the
Company.
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13.12 GOVERNING LAW; CONSENT TO JURISDICTION AND VENUE. This Agreement
shall be construed according to and governed by the laws of the State of
Delaware without regard to principles of conflict of laws. The parties hereby
submit to the exclusive jurisdiction and venue of the Court of Chancery of the
State of Delaware and the United States District Court for the Southern District
of Texas and of the United States District Court for the District of Delaware,
as the case may be, and agree that the Company or Members may, at their option,
enforce their rights hereunder in such courts.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first written above.
XXXXXXXXX COAL MANAGEMENT LLC
By: /s/ Xxxxxx X. Xxxxxxxxx, Xx.
-------------------------------
Name: Xxxxxx X. Xxxxxxxxx, Xx.
Title: Sole Member
ARK LAND COMPANY
By: /s/ Xxxxxx X. XxXxxxx
-------------------------------
Name: Xxxxxx X. XxXxxxx
Title: President
37
SCHEDULE 1
Members, Capital Contributions and Percentage Interests
TOTAL CAPITAL PERCENTAGE
NAME AND ADDRESS CASH CONTRIBUTED GROSS ASSET VALUE CONTRIBUTION INTEREST
---------------- ---------------- ----------------- ------------ --------
Xxxxxxxxx Coal Management LLC $ 577.50 -- $ 577.50 57.75%
Ark Land Company $ 422.50 -- $ 422.50 42.25%
SCHEDULE 7.2
INITIAL DIRECTORS
Xxxxxx X. Xxxxxxxxx, Xx.
Xxxxxx X. Xxxx
X. Xxxx Xxxxxx
Xxxxx X. Xxxxx
X. X. Xxxxx, Xx.
SCHEDULE 7.9
INITIAL SLATE OF OFFICERS
NAME TITLE
---- -----
Xxxxxx X. Xxxxxxxxx, Xx. Chairman and Chief Executive Officer
Xxxx Xxxxxx President and Chief Operating Officer
Xxxxxx X. Xxxxxx Chief Financial Officer, Secretary and Treasurer
Xxxxx Xxxx Vice President and Chief Engineer
Xxxxxxx Xxxxxx Controller
