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EXHIBIT 3.1
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
KANEB SERVICES LLC
A DELAWARE LIMITED LIABILITY COMPANY
DATED AND EFFECTIVE JUNE 28, 2001
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AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
KANEB SERVICES LLC
A DELAWARE LIMITED LIABILITY COMPANY
TABLE OF CONTENTS
Article I: DEFINITIONS ............................................................... 1
Section 1.1 Definitions ........................................................... 1
Section 1.2 Construction .......................................................... 1
Article II: FORMATION AND ORGANIZATION ............................................... 1
Section 2.1 Formation ............................................................. 1
Section 2.2 Name .................................................................. 1
Section 2.3 Registered Office; Registered Agent; Principal and Other Offices ...... 1
Section 2.4 Purpose; Powers ....................................................... 2
Section 2.5 Foreign Qualification ................................................. 2
Section 2.6 Term .................................................................. 2
Section 2.7 No State-Law Partnership .............................................. 2
Section 2.8 Title to Company Assets ............................................... 2
Section 2.9 Purchase of Common Shares on the Closing Date ......................... 3
Article III: SHAREHOLDERS; CERTIFICATES; TRANSFER OF MEMBER INTERESTS ................ 3
Section 3.1 Shareholders .......................................................... 3
Section 3.2 No Liability to Third Parties ......................................... 3
Section 3.3 No Expulsion .......................................................... 3
Section 3.4 Certificates .......................................................... 3
Section 3.5 Register, Registration of Transfer and Exchange ....................... 4
Section 3.6 Possible Restrictions on Transfer ..................................... 5
Section 3.7 Mutilated, Destroyed, Lost or Stolen Certificates ..................... 5
Article IV: AUTHORIZATION AND ISSUANCE OF MEMBER INTERESTS ........................... 6
Section 4.1 Issuance of Member Interests; Rights and Options ...................... 6
Section 4.2 Common Shares ......................................................... 7
Section 4.3 Other Member Interests ................................................ 8
Section 4.4 Splits and Combinations ............................................... 9
Section 4.5 Interest ............................................................. 9
Section 4.6 Record of Contributions .............................................. 9
Section 4.7 No Fractional Member Interests ....................................... 10
Section 4.8 No Preemptive Rights ................................................. 10
Article V: MANAGEMENT ............................................................... 10
Section 5.1 Management of the Company's Affairs .................................. 10
Section 5.2 Board of Directors ................................................... 11
Section 5.3 Required Board Approval .............................................. 14
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Section 5.4 Officers ........................................................... 14
Section 5.5 Compensation ....................................................... 16
Section 5.6 Interested Officers or Directors ................................... 16
Section 5.7 Indemnification .................................................... 17
Section 5.8 Exculpation of Liability of Officers and Directors ................. 19
Section 5.9 Duties of Officers and Directors ................................... 20
Section 5.10 Facsimile Signatures ............................................... 21
Section 5.11 Authorization of Certain Agreements ................................ 21
Article VI: BOOKS AND RECORDS, INFORMATION AND ACCOUNTS ............................ 21
Section 6.1 Maintenance of Books and Records ................................... 21
Section 6.2 Information ........................................................ 21
Section 6.3 Accounts ........................................................... 22
Article VII: DISSOLUTION, WINDING-UP AND TERMINATION .............................. 22
Section 7.1 Dissolution ........................................................ 22
Section 7.2 Winding-Up and Termination ......................................... 22
Article VIII: DISTRIBUTIONS; ACQUISITION BY COMPANY OF MEMBER INTERESTS ............ 23
Section 8.1 Distributions ...................................................... 23
Section 8.2 Repurchase of Member Interests ..................................... 23
Section 8.3 Mandatory Quarterly Distributions .................................. 23
Article IX: CAPITAL ACCOUNTS; TAX ALLOCATIONS ...................................... 24
Section 9.1 Capital Accounts ................................................... 24
Section 9.2 Determination of Net Income and Net Loss ........................... 25
Section 9.3 Loans from Shareholders ............................................ 26
Section 9.4 Record of Contributions ............................................ 26
Section 9.5 Allocation of Net Income and Net Loss .............................. 26
Section 9.6 Special Allocations ................................................ 26
Section 9.7 Allocations for Tax Purposes ....................................... 28
Article X: AMENDMENT OF AGREEMENT; SHAREHOLDER MEETINGS; RECORD DATE .............. 31
Section 10.1 Amendment of Limited Liability Company Agreement ................... 31
Section 10.2 Shareholder Meetings ............................................... 33
Section 10.3 Place of Shareholder Meetings; Notice of Shareholder Meetings ...... 33
Section 10.4 Record Date ........................................................ 33
Section 10.5 Shareholder Lists .................................................. 34
Section 10.6 Adjournment ........................................................ 34
Section 10.7 Waiver of Notice; Approval of Meeting; Approval of Minutes ......... 34
Section 10.8 Quorum; Required Vote for Shareholder Action ....................... 34
Section 10.9 Conduct of Meeting ................................................. 35
Section 10.10 Action Without a Meeting ........................................... 35
Section 10.11 Voting and Other Rights ............................................ 35
Section 10.12 Proxies ............................................................ 35
Section 10.13 Voting Procedures and Inspectors of Elections ...................... 37
Section 10.14 Contests of Elections .............................................. 38
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Article XI: MERGER OR SALE OF ASSETS ............................................... 38
Section 11.1 Authority .......................................................... 38
Section 11.2 Procedure for Merger, Consolidation, Sale or Conversion ............ 38
Section 11.3 Shareholder Approval of Merger, Consolidation or Sale .............. 39
Section 11.4 Certificate of Merger or Consolidation ............................ 40
Section 11.5 Appraisal Right .................................................... 40
Section 11.6 Effect of Merger or Consolidation .................................. 40
Section 11.7 Business Combination Limitations ................................... 41
Article XII: TAX MATTERS ........................................................... 41
Section 12.1 Classification ..................................................... 41
Section 12.2 Preparation of Tax Returns ......................................... 41
Section 12.3 Tax Elections ...................................................... 41
Section 12.4 Section 754 Allocations ............................................ 42
Section 12.5 Tax Controversies .................................................. 42
Section 12.6 Tax Basis and Value Determinations ................................. 42
Section 12.7 Entity-Level Deficiency Collections ................................ 42
Section 12.8 Withholding ........................................................ 43
Article XIII: GENERAL PROVISIONS .................................................. 43
Section 13.1 Fiscal Year ........................................................ 43
Section 13.2 Offset ............................................................. 43
Section 13.3 Notices ............................................................ 43
Section 13.4 Entire Agreement ................................................... 43
Section 13.5 Effect of Waiver or Consent ........................................ 44
Section 13.6 Binding Effect ..................................................... 44
Section 13.7 Governing Law; Severability ........................................ 44
Section 13.8 Further Assurances ................................................. 44
Section 13.9 Waiver of Certain Rights ........................................... 44
Annex A - Defined Terms ............................................................ A-1
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LIMITED LIABILITY COMPANY AGREEMENT
OF
KANEB SERVICES LLC
A DELAWARE LIMITED LIABILITY COMPANY
This Amended and Restated Limited Liability Company Agreement of Kaneb
Services LLC (the "Company") dated and effective June 28, 2001, is adopted,
executed and agreed to, for good and valuable consideration, by and among any
Persons or entities who are or become Shareholders (as defined below) of the
Company as provided herein.
ARTICLE I: DEFINITIONS
SECTION 1.1 DEFINITIONS. As used in this Agreement, terms shall have
the respective meanings set forth in Annex A hereto. Other terms defined herein
have the meanings so given them.
SECTION 1.2 CONSTRUCTION.
(a) Unless the context requires otherwise: the gender (or lack of
gender) of all words used in this Agreement includes the masculine, feminine and
neuter; references to Articles and Sections (other than in connection with the
Code, the Treasury Regulations, the Act or the GCLD) refer to Articles and
Sections of this Agreement; and "including" means "including, without
limitation."
(b) If the provisions of this Agreement directly conflict with any
mandatory, non-waivable provision of the Act, such provision of the Act shall
control. In that regard, to the extent this Agreement or the Act does not
control, the Company shall be subject to the provisions of the GCLD, mutatis
mutandis. If any provision of the Act provides that it may be varied or
superseded in the limited liability company agreement (or otherwise by agreement
of the members or managers of a limited liability company), such provision shall
be deemed superseded and waived in its entirety if this Agreement contains a
provision addressing the same issue or subject matter.
ARTICLE II: FORMATION AND ORGANIZATION
SECTION 2.1 FORMATION. The Company has been formed as a Delaware
limited liability company by the filing of a Certificate of Formation (the
"Certificate of Formation") on April 9, 2001, under and pursuant to the Act.
SECTION 2.2 NAME. The name of the Company is "Kaneb Services LLC" and
all Company business must be conducted in that name or such other names that
comply with Law and as the Board of Directors may select.
SECTION 2.3 REGISTERED OFFICE; REGISTERED AGENT; PRINCIPAL AND OTHER
OFFICES. The registered office of the Company required by the Act to be
maintained in the State of Delaware shall be the office of the initial
registered agent for service of process named in the Certificate of
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Formation or such other office (which need not be a place of business of the
Company) as the Board of Directors may designate in any manner permitted by Law.
The registered agent for service of process of the Company in the State of
Delaware shall be the initial registered agent for service of process named in
the Certificate of Formation or such other Person or Persons as the Board of
Directors may designate in the manner provided by Law. The principal office of
the Company in the United States shall be located at 0000 X. Xxxxxxx Xxxxxxxxxx,
Xxxxxxxxxx, Xxxxx 00000, or such other place as the Board of Directors may from
time to time designate, which need not be in the State of Delaware, and the
Company shall maintain records there and shall keep the street address of such
principal office at the registered office of the Company in the State of
Delaware. The Company may have such other offices as the Board of Directors may
designate and may maintain records (including records of minutes of meetings of,
and actions taken by, the Board of Directors) at such other places as the Board
of Directors may designate.
SECTION 2.4 PURPOSE; POWERS. The Company is formed for the object and
purpose of, and the nature of the business to be conducted and promoted by the
Company is, engaging in any lawful act or activity for which limited liability
companies may be formed under the Act and engaging in any and all activities
necessary, convenient, desirable or incidental to the foregoing, including,
without limitation, the transportation of refined petroleum products, the
storage of these and other liquids and motor fuels marketing. The Company shall
possess and may exercise all the powers and privileges granted under the Act or
by any other Law, together with any powers incidental thereto, including, but
not limited to, such powers and privileges as are necessary or convenient to the
conduct, promotion or attainment of the purpose for which the Company is being
formed as is set forth in the immediately preceding sentence.
SECTION 2.5 FOREIGN QUALIFICATION. Before the Company conducts business
in any jurisdiction other than the state of Delaware, the Board of Directors
shall cause the Company to comply, to the extent procedures are available and
those matters are reasonably within the control of the Board of Directors, with
all requirements necessary to qualify the Company as a foreign limited liability
company or other relevant entity in that jurisdiction, which qualifications may
be under the name of the Company or such other assumed name as the Board of
Directors may designate.
SECTION 2.6 TERM. The term of the Company commenced on the effective
date of this Agreement and its existence shall be perpetual, unless and until it
is dissolved in accordance with Article VII.
SECTION 2.7 NO STATE-LAW PARTNERSHIP. The Shareholders intend (i) that
the Company not be a partnership (including a limited partnership) or a joint
venture, (ii) that no Shareholder be a partner or joint venturer of any other
Shareholder under Delaware law, or the laws of any state, and (iii) that this
Agreement may not be construed to suggest otherwise.
SECTION 2.8 TITLE TO COMPANY ASSETS. Title to Company assets, whether
real, personal or mixed and whether tangible or intangible, shall be deemed to
be owned by the Company as an Entity, and no Shareholder, Director or Officer,
individually or collectively, shall have any ownership interest in such Company
assets or any portion thereof. Title to any or all of the Company assets may be
held in the name of the Company or one or more of its Affiliates or one or
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more nominees, as the Board of Directors may determine. All Company assets shall
be recorded as the property of the Company in its books and records,
irrespective of the name in which record title to such Company assets is held.
SECTION 2.9 PURCHASE OF COMMON SHARES ON THE CLOSING DATE. On the
Closing Date, the Company shall issue the Initial Common Shares to Kaneb
Financial Corporation in consideration for the transfer to the Company of all of
the issued and outstanding shares of capital stock of KPL, and Kaneb Financial
Corporation shall transfer all of the issued and outstanding shares of capital
stock of KPL to the Company. Upon the issuance of the Certificates representing
such Common Shares and the transfer of such capital stock, such Common Shares
shall be deemed to be duly authorized, validly issued, fully paid and
non-assessable. The Company and Kaneb Financial Corporation hereby agree that
the Agreed Value of all of the issued and outstanding shares of capital stock of
KPL transferred by Kaneb Financial Corporation to the Company shall be
$41,061,000.
ARTICLE III: SHAREHOLDERS; CERTIFICATES; TRANSFER OF MEMBER INTERESTS
SECTION 3.1 SHAREHOLDERS.
(a) A Person shall be admitted as a Shareholder and shall become
bound by this Agreement if such Person purchases or otherwise lawfully acquires
any Member Interests and becomes the Record Holder of such Member Interests in
accordance with the provisions of Section 3.5. A Person may become a Record
Holder without the consent or approval of any of the Shareholders.
(b) The name and mailing address of each Shareholder shall be listed
on the books and records of the Company maintained for such purpose by the
Company or the Transfer Agent. The Secretary of the Company shall update the
books and records from time to time as necessary to reflect accurately the
information therein (or to cause the Transfer Agent to do so, as applicable). A
Shareholder's Member Interests shall be represented by the Certificate(s) held
by such Shareholder, as provided in Section 3.4.
SECTION 3.2 NO LIABILITY TO THIRD PARTIES. The debts, obligations and
liabilities of the Company, whether arising in contract, tort or otherwise,
shall be solely the debts, obligations and liabilities of the Company. No
Shareholder, beneficial owner of Member Interests, Officer or Director shall be
liable for the debts, obligations or liabilities of the Company, whether arising
in contract, tort or otherwise, solely by reason of being a Shareholder,
beneficial owner, Officer or Director.
SECTION 3.3 NO EXPULSION. A Shareholder may not be expelled or removed
as a Shareholder of the Company.
SECTION 3.4 CERTIFICATES. Certificates ("Certificates") evidencing
Member Interests shall be in such form, not inconsistent with that required by
the Act or any other Law and this Agreement, as shall be approved by the Board
of Directors. The Company shall issue to each Shareholder one or more
Certificates, signed by (a) the Chairman of the Board, the President or any Vice
President and (b) the Secretary, any Assistant Secretary, the Treasurer or any
Assistant Treasurer of the
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Company and countersigned by the Transfer Agent, certifying the number of Member
Interests (and, if there shall be more than one class or series of Member
Interests, the class and series of such Member Interests) owned by such
Shareholder; provided, however, that any of or all of the signatures on the
Certificate may be a facsimile. If any Officer or Transfer Agent who shall have
signed or whose facsimile signature or signatures shall have been placed upon
any such Certificate or Certificates shall have ceased to be such Officer or
Transfer Agent before such Certificate is issued by the Company, such
Certificate may nevertheless be issued by the Company with the same effect as if
such Person were such Officer or Transfer Agent at the date of issue.
Certificates shall be consecutively numbered and shall be entered in the books
and records of the Company as they are issued and shall exhibit the holder's
name and number of Member Interests. No Certificate shall be valid for any
purpose until it has been countersigned by the Transfer Agent.
SECTION 3.5 REGISTER, REGISTRATION OF TRANSFER AND EXCHANGE.
(a) The Company shall keep or cause to be kept on behalf of the
Company a register that, subject to any requirements of the Board of Directors
and subject to the provisions of Section 3.5(b), will provide for the
registration and transfer of Member Interests. The Transfer Agent is hereby
appointed registrar and transfer agent for the purpose of registering Member
Interests and transfers of Member Interests as herein provided. The Company
shall not recognize transfers of Member Interests unless the same are effected
in the manner described in this Section 3.5. Upon surrender for registration of
transfer of any Certificate and subject to the provisions of Section 3.5(b), the
appropriate Officers of the Company shall execute (or cause a facsimile
signature to be attached to) and the Transfer Agent shall countersign and
deliver, in the name of the holder or the designated transferee or transferees,
as required pursuant to the Record Holder's instructions, one or more new
Certificates evidencing the same aggregate number and type of Member Interests
as were evidenced by the Certificate so surrendered.
(b) The Company shall not recognize any transfer of Member Interests
until the Certificates evidencing such Member Interests are surrendered to the
Transfer Agent for registration of transfer. No charge shall be imposed by the
Company for such transfer, provided, that, as a condition to the issuance of any
new Certificate under this Section 3.5, the Company may require the payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
with respect thereto.
(c) By transfer of Member Interests in accordance with this Section
3.5, (i) each transferee of Member Interests (including any nominee holder or an
agent acquiring such Member Interests for the account of another Person) shall
be admitted to the Company as a Shareholder with respect to the Member Interests
so transferred to such Person when any such transfer and admission is reflected
in the books and records of the Company, with or without execution of this
Agreement and (ii) each transferee of Member Interests (including any nominee
holder or an agent acquiring such Member Interests for the account of another
Person) shall be deemed to agree to be bound by the terms of this Agreement.
(d) The Company shall be entitled to recognize the Record Holder as
the owner of Member Interests and, accordingly, shall not be bound to recognize
any equitable or other claim to or interest in such Member Interests on the part
of any other Person, whether or not the Company shall have actual or other
notice thereof, except as otherwise provided by Law or any applicable
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rule, regulation, guideline or requirement of any securities exchange on which
the Member Interests are listed for trading. Subject to (i) the foregoing
sentence, (ii) Section 3.5, (iii) with respect to any series of Member
Interests, the provisions of any Member Interest Designation creating such
series, (iv) any contractual provision binding upon any Shareholder, including
this Agreement and (v) the provisions of any Law including the Securities Act,
Member Interests shall be freely transferable to any Person. The transfer of any
Member Interests and the admission of any new Shareholder shall not constitute
an amendment to this Agreement.
(e) Any Distributions in respect of Member Interests shall be paid
by the Company, directly or through the Transfer Agent or through any other
Person or agent, only to the Record Holders thereof as of the Record Date set
for the Distributions. Such payment shall constitute full payment and
satisfaction of the Company's liability in respect of such payment regardless of
any claim of any Person who may have an interest in such payment by reason of an
assignment or otherwise.
SECTION 3.6 POSSIBLE RESTRICTIONS ON TRANSFER. Notwithstanding Section
3.5(d), in the event of (i) the enactment (or imminent enactment) of any
legislation, (ii) the publication of any temporary or final regulation by the
United States Department of Treasury, (iii) any ruling by the Internal Revenue
Service or (iv) any judicial decision, that, in any such case, in the opinion of
counsel to the Company, would result in the taxation of the Company for federal
income tax purposes as a corporation or as an association taxable as a
corporation, then, either (a) the Board of Directors may impose such
restrictions on the transfer of Common Shares or any Member Interests as may be
required, in the opinion of counsel to the Company, to prevent the taxation of
the Company for federal income tax purposes as a corporation or as an
association taxable as a corporation, including making any amendments to this
Agreement as the Board of Directors in its sole discretion may determine to be
necessary or appropriate to impose such restrictions, provided, that any such
amendment to this Agreement that would result in the delisting or suspension of
trading of any class of Member Interests on any National Securities Exchange on
which such class of Member Interests is then traded must be approved by the
Record Holders of at least a majority of the Member Interests of such class,
which consent, notwithstanding Section 10.10, may be effected through the use of
a written consent of such Record Holders, or (b) upon the recommendation of the
Board of Directors and the approval at a meeting of the Shareholders (whether
special or annual) of the Record Holders of a majority of the voting power of
the Company, and the Record Holders of a majority of the Shares of each series
of Member Interests entitled to vote thereon pursuant to the Member Interest
Designation of such series (or such higher percentage as required by any Member
Interest Designation), the Company may be converted into and reconstituted as a
trust or any other type of legal entity (the "New Entity") in the manner and on
other terms so recommended and approved. In such event, the business of the
Company shall be continued by the New Entity in the manner and on the terms so
recommended and approved. Notwithstanding the foregoing, no such reconstitution
shall take place unless the Company shall have received an opinion of counsel to
the Company to the effect that the liability of the Shareholders for the debts
and obligations of the New Entity shall not exceed that which otherwise had been
applicable to such Shareholders as members of the Company under the Act.
SECTION 3.7 MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES.
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(a) If any mutilated Certificate is surrendered to the Transfer
Agent, then the appropriate Officers on behalf of the Company shall execute (or
cause a facsimile signature to be attached to), and, upon the Company's request,
the Transfer Agent shall countersign and deliver in exchange therefor, a new
Certificate evidencing the same aggregate number and type of Member Interests as
the Certificate so surrendered.
(b) The appropriate Officers on behalf of the Company shall execute
(or cause a facsimile signature to be attached to), and, upon the Company's
request, the Transfer Agent shall countersign and deliver, a new Certificate in
place of any Certificate previously issued if the Record Holder of the
Certificate:
(i) makes proof by affidavit in form and substance
satisfactory to an Officer that a previously issued Certificate
has been lost, destroyed or stolen;
(ii) requests the issuance of a new Certificate
before the Company has notice that the Certificate has been
acquired by a "protected purchaser" (as defined in 6 Del.C.
8-303);
(iii) if requested, delivers to the Company a bond, in
form and substance satisfactory to the Company, with surety or
sureties and with fixed or open penalty as the Company may
reasonably direct, in its sole discretion, to indemnify the
Company and the Transfer Agent against any claim that may be
made on account of the alleged loss, destruction or theft of the
Certificate; and
(iv) satisfies any other reasonable requirements
imposed by the Company.
If a Shareholder fails to notify the Company within a reasonable time after he
has notice of the loss, destruction or theft of a Certificate and a transfer of
the Member Interests represented by the Certificate is registered before the
Company or the Transfer Agent receives such notification, the Shareholder shall
be precluded from making any claim against the Company or the Transfer Agent for
such transfer or for a new Certificate.
(c) As a condition to the issuance of any new Certificate under this
Section 3.6, the Company may require the payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in relation thereto and
any other expenses (including the fees and expenses of the Transfer Agent)
reasonably connected therewith.
ARTICLE IV: AUTHORIZATION AND ISSUANCE OF MEMBER INTERESTS
SECTION 4.1 ISSUANCE OF MEMBER INTERESTS; RIGHTS AND OPTIONS.
(a) Subject to the provisions of this Section 4.1, the requirements
of the Act and other applicable Law, and any requirements of any National
Securities Exchange on which the Common Shares or any other series of Member
Interests are listed, the Board of Directors shall have the sole authority to
cause the Company to issue from time to time Member Interests or classes or
series thereof, or options, rights, warrants or appreciation rights relating
thereto, or any other type of
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equity security that the Company may lawfully issue, any unsecured or secured
debt obligations of the Company or debt obligations of the Company convertible
into any class or series of equity securities of the Company, all without the
consent or approval of the holders of Member Interests or any percentage or
class thereof. There shall be no limit as to the number of Shares of Member
Interests (including Common Shares) that the Board of Directors shall have the
authority to issue hereunder.
(b) Member Interests may be issued for such consideration as
determined from time to time by the Board of Directors, in its sole discretion.
The Company may assume liabilities in connection with any such issuance.
(c) The consideration for, subscriptions to or the purchase of
Member Interests shall be paid in such form and in such manner as the Board of
Directors shall determine. In the absence of actual fraud in the transaction,
the judgment of the Board of Directors as to the value of such consideration
shall be conclusive. Member Interests so issued in accordance with the
determination of the Board of Directors shall be deemed to be fully paid and,
except to the extent specified in Section 18-607(b) of the Act, non-assessable.
The consideration determined by the Board of Directors for the issuance of
Member Interests shall be the sole contribution (as such term is defined in the
Act) that the Shareholders shall be required to make and, unless set forth in
the resolution of the Board of Directors approving the issuance of Member
Interests, the purchase of any particular Member Interests shall have no
continuing responsibility or obligation to make additional contributions other
than the contribution made by such Person upon the purchase of such Member
Interests.
(d) The Board of Directors shall have the power to create and cause
the Company to issue, whether or not in connection with the issue and sale of
any Member Interests or other securities of the Company, rights or options
entitling the holders thereof to purchase from the Company any Member Interests
of any class or series (whether or not such class or series has theretofore been
created), such rights or options to be evidenced by such instrument or
instruments as shall be approved by the Board of Directors. The terms upon
which, including the time or times (which may be limited or unlimited in
duration) at or within which, and the price or prices at which any such Member
Interests may be purchased from the Company upon the exercise of any such right
or option shall be such as shall be stated in a resolution adopted by the Board
of Directors providing for the creation and issue of such rights or options and,
in every such case, shall be set forth or incorporated by reference in the
instrument or instruments evidencing such rights or options. In the absence of
actual fraud in the transaction, the judgment of the Board of Directors as to
the consideration for the issuance of such rights or options and the sufficiency
thereof shall be conclusive.
SECTION 4.2 COMMON SHARES. The voting powers, designations,
preferences and relative, participating, optional or other special rights,
powers and duties, and qualifications, limitations and restrictions thereof,
relating to the Common Shares are as set forth in this Section 4.2. Subject to
the rights, if any, of the holders of any other series of Member Interests
established pursuant to Section 4.3 hereof, each Common Share shall entitle the
Record Holder thereof to share pro rata in such Distributions, if any, as shall
be declared thereon from time to time by the Board of Directors and except to
the extent otherwise provided in Section 7.2, upon liquidation or dissolution
of the Company, to share pro rata to all remaining assets after satisfaction
(by payment or
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reasonable provision for payment) of the Company's liabilities to creditors. The
Common Shares shall not be subject to any right of redemption by the Company and
shall have no conversion or exchange rights. Each Common Share shall be entitled
to one vote on matters submitted to a vote or consent of Shareholders, which
votes shall not be cumulative in the election of Directors or on any other
matter. Each Common Share shall be identical in all respects, and shall
represent an equal right and interest, with each other Common Share.
SECTION 4.3 OTHER MEMBER INTERESTS.
(a) Without the need for the consent of any Shareholder, the Board
of Directors shall have the sole authority to create and designate other classes
and series of Member Interests in one or more series, with such voting powers,
full or limited, or no voting powers, and such designations, preferences and
relative, participating, optional or other special rights, powers and duties,
and qualifications, limitations and restrictions thereof, as shall be fixed by
the Board of Directors in the exercise of its sole discretion (subject to the
guidelines set forth in this Section 4.3 and the requirements of applicable Law)
and reflected in a written action or actions approved by the Board of Directors
at a meeting or by written consent in compliance with Section 5.2(g) (each, a
"Member Interest Designation"). Each Member Interest Designation shall provide
for the issue of Member Interests of a particular series and may set forth,
without limitation, the rights of such series of Member Interests to share in
Distributions, and the priority of such series relative to the rights of other
classes or series of Member Interests to share in Distributions, the rights of
such series of Member Interests upon dissolution of or upon any distribution of
the assets of the Company and the priority of such series relative to the rights
of other classes or series of Member Interests upon dissolution of or upon any
distribution of the assets of the Company, whether such series of Member
Interests is redeemable, or must be redeemed, by the Company and, if so, the
price at which, and the terms and conditions upon which, such series of Member
Interests may (or must) be redeemed by the Company, whether such series of
Member Interests is issued with the privilege of conversion into, exercisable
into or exchangeable for, at the option of the holder or the Company or upon the
happening of a specified event, Member Interests or another security or other
property of the Company and, if so, the rate at which, and the terms and
conditions upon which, such series of Member Interests may be so converted,
exercised or exchanged, the terms and conditions upon which such series of
Member Interests will be issued and assigned or transferred and the right, if
any, of such series of Member Interests to vote on Company matters, including
matters relating to the relative rights, powers, preferences and privileges of
such series or any other series. Without limitation of the foregoing, the Board
of Directors may, in its sole discretion, designate and authorize the issuance
of any series of Member Interests that have preference over each or certain
other classes or series of Member Interests, including the Common Shares, in any
of the foregoing rights, including with respect to voting rights, participation
in the profits and assets of the Company, including the right to receive
Distributions and the right to receive in-kind payments of the assets of the
Company upon voluntary or involuntary dissolution, winding up or termination of
the Company, conversion or redemption rights, or other rights, privileges or
matters. The Board of Directors may authorize one or more Officers to execute,
certify, acknowledge, deliver, file and record whatever documents may be
required, convenient or desirable in connection with the issue from time to time
of such Member Interests and to do all other things necessary to comply with the
Act and other applicable Law. A Member Interest Designation (or any resolution
of the Board of Directors amending any Member Interest Designation) shall be
effective when a duly executed and attested original of the same is delivered to
the Secretary of the Company for inclusion among the
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permanent records of the Company.
(b) When no Shares of a series of Member Interests are Outstanding,
either because none were issued or no issued Shares remain outstanding, a
certificate setting forth a resolution or resolutions adopted by the Board of
Directors that no Shares of such series are Outstanding and that none will be
issued may be executed, attested and delivered to the Secretary of the Company
for inclusion among the permanent records of the Company, and such certificate
shall have the effect of eliminating from this Agreement all matters set forth
in the Member Interest Designation with respect to such series.
SECTION 4.4 SPLITS AND COMBINATIONS.
(a) Subject to the provisions of Section 4.4(d), the Board of
Directors may make a distribution in Member Interests to all Record Holders or
may effect a subdivision or combination of Member Interests, but in each case
only on a pro rata basis.
(b) Whenever such a distribution, subdivision or combination is
declared, the Board of Directors shall select a Record Date as of which the
distribution, subdivision or combination shall be effective and shall notify
each Record Holder of the distribution, subdivision or combination. The Board of
Directors may, but shall not be required to, cause a firm of independent public
accountants selected by it to calculate the number of Member Interests to be
held by each Record Holder after giving effect to such distribution, subdivision
or combination. The Board of Directors shall be entitled to rely on any
certificate provided by such firm as conclusive evidence of the correctness of
such a calculation.
(c) Promptly following such distribution, subdivision or
combination, the Board of Directors may cause the Company to issue to the Record
Holders as of such Record Date new Certificates representing the new number of
Member Interests held by such Record Holders, or adopt such other procedures as
it may deem appropriate to reflect such distribution, subdivision or
combination; provided, however, that in the case of any such distribution,
subdivision or combination resulting in a smaller total number of Outstanding
Member Interests, the Board of Directors may require, as a condition to the
delivery of such new Certificate, the surrender of any Certificate representing
the Member Interests prior to such declaration.
(d) The Company shall not issue fractional Member Interests upon any
distribution, subdivision or combination of Member Interests. If a distribution,
subdivision or combination of Member Interests would result in the issuance of
fractional Member Interests but for the provisions of Section 4.8 and this
Section 4.4(d), each fractional Member Interest shall be rounded to the nearest
whole Member Interest (and a 0.5 Member Interest shall be rounded to the next
higher Member Interests).
SECTION 4.5 INTEREST. No interest shall be paid by the Company on
Capital Contributions or on balances in Shareholders' Capital Accounts.
SECTION 4.6 RECORD OF CONTRIBUTIONS. The books and records of the
Company shall include true and full information regarding the amount of cash and
cash equivalents and a designation and statement of the Net Agreed Value of any
other property contributed by each
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Shareholder to the Company.
SECTION 4.7 NO FRACTIONAL MEMBER INTERESTS. No fractional Member
Interests shall be issued by the Company.
SECTION 4.8 NO PREEMPTIVE RIGHTS. Unless specified in a Member
Interest Designation with respect to any series of Member Interest, no Person
shall have any preemptive, preferential or other similar right with respect to
(i) the issuance or sale of any class or series of Member Interests, whether
unissued or held in the treasury or hereafter created, (ii) the issuance of any
obligations, evidences of indebtedness or other securities of the Company
convertible into or exchangeable for, or carrying or accompanied by any rights
to receive, purchase or subscribe to, any such Member Interests, (iii) the
issuance of any right of subscription to or right to receive, or any warrant or
option for the purchase of, any of the foregoing securities or (iv) the
issuance or sale of any other securities that may be issued or sold by the
Company.
ARTICLE V: MANAGEMENT
SECTION 5.1 MANAGEMENT OF THE COMPANY'S AFFAIRS. As provided in this
Agreement, all management powers over the business and affairs of the Company
shall be exclusively vested in a Board of Directors (the "Board of Directors")
and, subject to the direction of the Board of Directors, the Officers, who shall
collectively (Officers and Directors) constitute the "managers" of the Company
within the meaning of the Act. No Shareholder, by virtue of its status as a
Shareholder, shall have any management power over the business and affairs of
the Company or actual or apparent authority to enter into, execute or deliver
contracts on behalf of, or to otherwise bind, the Company. Except as otherwise
specifically provided in this Agreement, the authority and functions of the
Board of Directors on the one hand and of the Officers on the other shall be
identical to the authority and functions of the board of directors and officers,
respectively, of a corporation organized under the GCLD. Thus, except as
otherwise specifically provided in this Agreement, the business and affairs of
the Company shall be managed under the direction of the Board of Directors, and
the day-to-day activities of the Company shall be conducted on the Company's
behalf by the Officers, who shall be agents of the Company with such authority
as specifically provided in this Agreement or as authorized by the Board of
Directors. In addition to the powers that now or hereafter can be granted to
managers under the Act and to all other powers granted under any other provision
of this Agreement, the Board of Directors shall have full power and authority to
do, and to direct the Officers to do, all things on such terms as it, in its
sole discretion, may deem necessary or appropriate to conduct, or to cause to be
conducted, the business and affairs of the Company, including the making of any
expenditures, the lending or borrowing of money, the assumption or guarantee of,
or other contracting for, indebtedness and other liabilities, the issuance of
evidences of indebtedness and the incurring of any other obligations; the making
of tax, regulatory and other filings, or rendering of periodic or other reports
to governmental or other agencies having jurisdiction over the business or
assets of the Company; subject to the requirements of Article XI, the merger or
other combination of the Company with or into, or the sale, lease or exchange of
all or substantially all of the assets to, another Person; the use of the assets
of the Company (including cash on hand) for any purpose consistent with the
terms of this Agreement and the repayment of obligations of the Company; the
negotiation, execution and performance of any contracts, conveyances or other
instruments; the declaration and payment of any
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Distribution (in cash or otherwise); the selection, engagement and dismissal of
Officers, employees and agents, outside attorneys, accountants, engineers,
consultants and contractors and the determination of their compensation and
other terms of employment or hiring; the maintenance of such insurance for the
benefit of the Company, as it deems necessary or appropriate; the acquisition or
disposition of assets; the formation of, or acquisition of an interest in, or
the contribution of property to, any Entity; the control of any matters
affecting the rights and obligations of the Company, including the commencement,
prosecution and defense of actions at law or in equity and otherwise engaging in
the conduct of litigation and the incurring of legal expense and the settlement
of claims and litigation; the indemnification of any Person against liabilities
and contingencies to the extent permitted by law; and the entering into of
listing agreements with any National Securities Exchange or other securities
exchange and the delisting of some or all of the Member Interests from, or
requesting that trading be suspended on, any such National Securities Exchange
or other securities exchange.
SECTION 5.2 BOARD OF DIRECTORS.
(a) Composition; Term; Initial Directors. The Board of Directors
shall consist of not less than three natural persons. Each Director shall be
elected as provided in Section 5.2(b) and shall serve in such capacity until his
successor has been dufly elected and qualified or until such Director dies,
resigns or is removed. The Board of Directors may from time to time determine
the number of Directors then constituting the whole Board of Directors, but the
Board of Directors shall not decrease the number of Persons that constitute the
whole Board of Directors if such decrease would shorten the term of any
Director. The initial Board of Directors shall consist of six Directors, who
shall be the following Persons: Xxxxxxx Xxx, Xxxx X. Xxxxxx, Xxxxx X. Xxxxx,
Xx., Xxxxxxx X. Xxx, Xxxx Xxxxxxx and Xxxxx X. Xxxxxxx.
(b) Election of Directors. The Directors, other than as provided in
any Member Interest Designation related to the election of any Directors by a
particular series of Member Interests, shall be classified, with respect to the
time for which they severally hold office, into three classes. One class (Class
I) shall hold office initially for a term expiring at the first annual meeting
of Shareholders following the date of this Agreement, another class (Class II)
shall hold office initially for a term expiring at the second annual meeting of
Shareholders following the date of this Agreement, and another class (Class III)
shall hold office initially for a term expiring at the third annual meeting of
Shareholders following the date of this Agreement, with the members of each
class to hold office until their successors are elected and qualified or until
their earlier resignation or removal. The following Directors listed in Section
5.2(a) shall be Class III Directors: Messrs. Ahn and Xxxxxx. The following
Directors listed in Section 5.2(a) shall be Class II Directors: Messrs. Xxxxx
and Xxx. The following Directors listed in Section 5.2(a) shall be Class I
Directors: Messrs. Xxxxxxx and Xxxxxxx. At each annual meeting of the
Shareholders, the successors to the class of Directors whose term expires at
that meeting shall be elected to hold office for a term expiring at the annual
meeting of Shareholders to be held in the third year following the year of their
election. To be elected as a Director, a natural person must (a)(i) be elected
in accordance with Section 5.2(c) or (ii) have been properly nominated for a
position as a Director in accordance with Section 5.2(e) and (b) must receive a
majority of the votes cast in respect of Member Interests for the position at a
meeting of Shareholders held for such purpose at which a quorum is present in
Person or by proxy, or if there are more than two nominees for such position, a
plurality of the votes cast in respect of Member Interests for the position.
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(c) Vacancies and Removal. Subject to applicable Law and the rights
of the holders of any series of Member Interests, vacancies existing on the
Board of Directors (including a vacancy created by virtue of an increase in the
size of the Board of Directors) may only be filled by the affirmative vote of a
majority of the Directors then serving, even if less than a quorum. Any Director
chosen to fill a vacancy shall hold office for the remainder of the full term of
the class of Directors in which the new directorship was created or the vacancy
occurred and until his successor has been duly elected and qualified or until
their earlier resignation or removal. Subject to the rights of the holders of
any series of Member Interests, any Director, and the entire Board of Directors,
may only be removed from office at any time (i) with Cause and (ii) by the
affirmative vote of the Record Holders of a majority of the voting power of the
Company; provided, however, that any Director, and the entire Board of
Directors, may be removed from office with or without Cause by the affirmative
vote of the Record Holders of at least 80% of the voting power of the Member
Interests.
(d) Rights of Classes Separately to Elect Directors. Notwithstanding
this Section 5.2, whenever holders of any one or more series of Member Interests
shall have the right, voting separately by class, classes or series, to elect
Directors at any annual or special meeting of Shareholders, the election, term
of office, filling of vacancies and other features of such directorships shall
be governed by the provisions of this Agreement, including any applicable Member
Interest Designation creating any series of Member Interests pursuant to Section
4.3 hereof.
(e) Nominations; Qualifications. Before a meeting of the
Shareholders at which an election of Directors is to be held, the Board of
Directors shall nominate its slate of persons to be presented for election at
such meeting. Other nominations for Directors may be made by any Shareholder,
but any Shareholder nominations must be in writing, in proper form and delivered
to the Secretary of the Company not less than 120 days before the anniversary of
the date on which proxy materials were first mailed to Shareholders in
connection with the previous year's annual meeting of the Shareholders at which
an election of Directors was held. To be in proper form, such Shareholder
nomination must set forth in writing as to each person whom such Shareholder
proposes to nominate for election or re-election as a Director all information
relating to such person as is required to be disclosed in solicitations of
proxies for election of Directors, or is otherwise required, in each case
pursuant to Regulation 14A under the Securities Exchange Act of 1934, as
amended, or any successor regulation promulgated thereunder, and Rule 14a-11
thereunder (including such person's written consent to being named in the proxy
statement as a nominee and to serving as a Director if elected). Directors need
not be Shareholders unless required by a resolution adopted by the Board of
Directors. The Board of Directors may, from time to time and by the adoption of
resolutions, establish qualifications for Directors.
(f) Voting; Quorum; Required Vote for Action. Unless otherwise
required by the Act, other Law or the provisions hereof,
(i) each member of the Board of Directors shall have
one vote;
(ii) the presence at a meeting of the Board of
Directors of a majority of the members of the Board of Directors
shall constitute a quorum at any such meeting for the
transaction of business; and
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(iii) the act of a majority of the members of the
Board of Directors present at a meeting of the Board of
Directors at which a quorum is present shall be deemed to
constitute the act of the Board of Directors.
(g) Meetings. Regular meetings of the Board of Directors and any
committee thereof shall be held at such times and places as shall be designated
from time to time by resolution of the Board of Directors or such committee.
Notice of such regular meetings shall not be required. Special meetings of the
Board of Directors or meetings of any committee thereof may be called by the
Chairman of the Board, the President (should the President be a Director) or on
the written request of any two Directors or committee members, as applicable, to
the Secretary, in each case on at least twenty-four (24) hours personal,
written, facsimile, electronic, telegraphic, cable or wireless notice to each
Director or committee member, which notice may be waived by any Director. Any
such notice, or waiver thereof, need not state the purpose of such meeting
except as may otherwise be required by Law. Attendance of a Director at a
meeting (including pursuant to the last sentence of this Section 5.02(g)) shall
constitute a waiver of notice of such meeting, except where such Director
attends the meeting for the express purpose of objecting to the transaction of
any business on the ground that the meeting is not lawfully called or convened.
Any action required or permitted to be taken at a meeting of the Board of
Directors, or any committee thereof, may be taken without a meeting, without
prior notice and without a vote if a consent or consents in writing, setting
forth the action so taken, are signed by all members of the Board of Directors
or committee. Members of the Board of Directors or any committee thereof may
participate in and hold a meeting by means of conference telephone, video
conference or similar communications equipment by means of which all Persons
participating in the meeting can hear each other, and participation in such
meetings shall constitute presence in Person at the meeting.
(h) Committees. The Board of Directors may designate one or more
committees, each committee to consist of one or more of the Directors. The Board
of Directors may designate one or more Directors as alternate members of any
committee, who may replace any absent or disqualified Director at any meeting of
such committee. Any such committee, to the extent provided in the resolution of
the Board of Directors or in this Agreement, shall have and may exercise all
powers and authority of the Board of Directors in the management of the business
and affairs of the Company, and may authorize the seal of the Company to be
affixed to all papers that require it; but no such committee shall have the
power or authority in reference to the following matters: approving or adopting,
or recommending to the Shareholders, any action or matter expressly required by
this Agreement or the Act to be submitted to the Shareholders for approval or
adopting, amending or repealing any provision of this Agreement. Unless
specified by resolution of the Board of Directors, any committee designated
pursuant to this Section 5.2(h) shall choose its own chairman, shall keep
regular minutes of its proceedings and report the same to the Board of Directors
when requested, and, subject to Section 5.2(g), shall fix its own rules or
procedures and shall meet at such times and at such place or places as may be
provided by such rules. At every meeting of any such committee, the presence of
a majority of all the members thereof shall constitute a quorum and the
affirmative vote of a majority of the members present shall be necessary for the
adoption by the committee of any resolution.
(i) Chairman. The Board of Directors may elect one of its members as
Chairman of the Board (the "Chairman of the Board"). The Chairman of the Board,
if any, and if present and acting,
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shall preside at all meetings of the Board of Directors and of Shareholders,
unless otherwise directed by the Board of Directors. If the Board of Directors
does not elect a Chairman, the President, if present and a Director, or any
other Director chosen by the Board of Directors, shall preside. Unless the Board
of Directors provides otherwise, the Chairman of the Board shall be an Officer
of the Company and shall have the same power and authority as the President.
(j) Tax Matters Shareholder.
(1) The Board of Directors shall designate one Director or
Officer who is a Shareholder to be the "tax matters partner" of the
Company pursuant to Section 6231(a)(7) of the Code (any Director or
Officer who is designated as the "tax matters partner" is referred to
herein as the "Tax Matters Shareholder"). The Tax Matters Shareholder
shall represent the Company (at the Company's expense) in connection
with all examinations of the Company's affairs by tax authorities,
including resulting administrative and judicial proceedings, and may
expend Company funds for professional services and costs associated
therewith. Each Shareholder agrees to cooperate with the Tax Matters
Shareholder and to do or refrain from doing any or all things reasonably
required by the Tax Matters Shareholder to conduct such proceedings.
(2) Notwithstanding Section 5.2(j)(1), the Tax Matters
Shareholder shall not be liable to the Company or the Shareholders for
monetary damages for losses sustained or liabilities incurred as a
result of any act or omission by the Tax Matters Shareholder, unless
such act or omission (i) was not performed in good faith, (ii) involved
intentional misconduct or a knowing violation of law or (iii)
constituted gross negligence.
SECTION 5.3 REQUIRED BOARD APPROVAL. Except as otherwise expressly
permitted by this Agreement or by resolution of the Board of Directors, no
Director or group of Directors shall have any actual or apparent authority to
enter into contracts on behalf of, or to otherwise bind, the Company, nor take
any action in the name of or on behalf of the Company or conduct any business of
the Company other than by action of the Board of Directors taken in accordance
with the provisions of this Agreement, and no Director shall have the power or
authority to delegate to any Person such Director's rights and powers as a
Director to manage the business and affairs of the Company. The Board of
Directors, by resolution, may establish policies regarding the authority of the
Company to take action without approval of the Board of Directors.
SECTION 5.4 OFFICERS.
(a) Generally. The Board of Directors, as set forth below, shall
appoint agents of the Company, having the authority set forth in this Agreement
or otherwise as authorized by the Board of Directors, which agents are referred
to as "Officers" of the Company. Unless provided otherwise by resolution of the
Board of Directors, the Officers shall have the titles, power, authority and
duties described below in this Section 5.4.
(b) Titles and Number. The Officers of the Company shall be the
Chairman of the Board (unless the Board of Directors provides that the Chairman
shall not be an officer), the President, any and all Vice Presidents, the
Secretary and any Treasurer, any and all Assistant Secretaries and
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Assistant Treasurers and any other officer position or title as the Board of
Directors may desire. There shall be appointed from time to time, in accordance
with Section 5.4(c) below, such Vice Presidents, Secretaries, Assistant
Secretaries, Treasurers, Assistant Treasurers and other officers as the Board of
Directors may desire. Any Person may hold two or more offices.
(c) Appointment and Term of Office. The Officers shall be appointed
by the Board of Directors at such times and for such terms as the Board of
Directors shall determine. Any Officer may be removed, with or without cause,
only by the Board of Directors. Vacancies in any office may be filled only by
the Board of Directors.
(d) Chairman of the Board. Subject to the limitations imposed by
this Agreement, any employment agreement, any employee plan or any determination
or resolution of the Board of Directors, the Chairman of the Board, subject to
the direction of the Board of Directors, shall be the chief executive officer of
the Company and, as such, shall preside at all meetings of the Shareholders and
the Board of Directors, shall supervise generally the President and the other
Officers and shall have full authority to execute all documents and take all
actions that the Company may legally take. The Chairman of the Board shall
exercise such other powers and perform such other duties as may be assigned to
him by this Agreement or the Board of Directors, including any duties and powers
stated in any employment agreement approved by the Board of Directors.
(e) President. Subject to the limitations imposed by this Agreement,
any employment agreement, any employee plan or any determination or resolution
of the Board of Directors, the President, subject to the direction of the Board
of Directors, shall be responsible for the management and direction of the
day-to-day business and affairs of the Company, its other Officers, employees
and agents, shall supervise generally the affairs of the Company and shall have
full authority to execute all documents and take all actions that the Company
may legally take. The President shall exercise such other powers and perform
such other duties as may be assigned to him by this Agreement or the Board of
Directors, including any duties and powers stated in any employment agreement
approved by the Board of Directors.
(f) Vice Presidents. In the absence of the President and the
Chairman of the Board (if one is appointed), each Vice President appointed by
the Board of Directors shall have all of the powers and duties conferred upon
the President, including the same power as the President to execute documents on
behalf of the Company. Each such Vice President shall perform such other duties
and may exercise such other powers as may from time to time be assigned to him
by the Board of Directors, the Chairman of the Board or the President. Vice
Presidents may be designated Executive Vice Presidents, Senior Vice Presidents,
or any other title determined by the Board of Directors.
(g) Secretary and Assistant Secretaries. The Secretary shall record
or cause to be recorded in books provided for that purpose the minutes of the
meetings or actions of the Board of Directors and Shareholders, shall see that
all notices are duly given in accordance with the provisions of this Agreement
and as required by law, shall be custodian of all records (other than
financial), shall see that the books, reports, statements, certificates and all
other documents and records required by applicable Law are properly kept and
filed, and, in general, shall perform all duties incident to the office of
Secretary and such other duties as may, from time to time, be assigned to him by
this Agreement, the Board of Directors, the Chairman of the Board or the
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President. The Assistant Secretaries shall exercise the powers of the Secretary
during that Officer's absence or inability or refusal to act.
(h) Treasurer and Assistant Treasurers. The Treasurer shall keep or
cause to be kept the books of account of the Company and shall render statements
of the financial affairs of the Company in such form and as often as required by
this Agreement, the Board of Directors, the Chairman of the Board or the
President. The Treasurer, subject to the order of the Board of Directors, shall
have the custody of all funds and securities of the Company. The Treasurer shall
perform all other duties commonly incident to his office and shall perform such
other duties and have such other powers as this Agreement, the Board of
Directors, the Chairman of the Board or the President shall designate from time
to time. The Assistant Treasurers shall exercise the power of the Treasurer
during that Officer's absence or inability or refusal to act. Each of the
Assistant Treasurers shall possess the same power as the Treasurer to sign all
certificates, contracts, obligations and other instruments of the Company. If no
Treasurer or Assistant Treasurer is appointed and serving or in the absence of
the appointed Treasurer and Assistant Treasurer, such other Officer as the Board
of Directors shall select shall have the powers and duties conferred upon the
Treasurer.
(i) Powers of Attorney. The Company may xxxxx xxxxxx of attorney or
other authority as appropriate to establish and evidence the authority of the
Officers and other Persons.
(j) Delegation of Authority. Unless otherwise provided by resolution
of the Board of Directors, no Officer shall have the power or authority to
delegate to any Person such Officer's rights and powers as an Officer to manage
the business and affairs of the Company.
SECTION 5.5 COMPENSATION. The Officers shall receive such
compensation for their services as may be designated by the Board of Directors.
In addition, the Officers shall be entitled to be reimbursed for out-of-pocket
costs and expenses incurred in the course of their service hereunder. The
members of the Board of Directors who are not employees of the Company or its
subsidiaries shall receive such compensation for their services as Directors or
committee members as the Board of Directors shall determine. In addition, the
members of the Board of Directors shall be entitled to be reimbursed for
out-of-pocket costs and expenses incurred in the course of their service
hereunder.
SECTION 5.6 INTERESTED OFFICERS OR DIRECTORS. No contract or
transaction between the Company and one or more of its Officers or Directors, or
between the Company and any other Entity in which one or more such Officers or
Directors owns a financial interest or of which such Officer or Director is an
Affiliate, officer, director or employee, shall be void or voidable or be deemed
to constitute a breach of duty if:
(a) The material facts as to his or its relationship or interest and
as to the contract or transaction are disclosed or are known to the Board of
Directors or the committee and the Board of Directors or committee in good faith
authorizes the contract or transaction by the affirmative votes of a majority of
the disinterested Directors, even though the disinterested Directors be less
than a quorum and even though interested directors are present at or participate
in the meeting that authorizes the contract or transaction;
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(b) The material facts as to his or its relationship or interest and
as to the contract or transaction are disclosed or are known to the Shareholders
entitled to vote thereon and the contract or transaction is specifically
approved in good faith by vote of the Shareholders; or
(c) The contract or transaction is fair as to the Company as of the
time it is authorized, approved or ratified by the Board of Directors, a
committee of the Board of Directors or the Shareholders.
Interested directors may be counted in determining the presence of a quorum at a
meeting of the Board of Directors or a committee thereof that authorizes the
contract or transaction in question.
SECTION 5.7 INDEMNIFICATION.
(a) To the fullest extent permitted by Law but subject to the
limitations expressly provided in this Agreement, the Company shall indemnify
any Person who was or is a party or is threatened to be made a party to any
threatened, pending or complete action, suit or proceeding (each an
"Indemnitee"), whether civil, criminal, administrative or investigative (other
than an action by or in the right of the Company) by reason of the fact that
such Indemnitee is or was a Director, Officer or Tax Matters Shareholder against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by such Indemnitee in connection
with such action, suit or proceeding if such Indemnitee acted in good faith and
in a manner that such Indemnitee reasonably believed to be in or not opposed to
the best interests of the Company, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe such Indemnitee's conduct was
unlawful. The termination of any action, suit or proceeding by judgment, order,
settlement, conviction or upon a plea of nolo contendere, or its equivalent,
shall not, of itself, create a presumption that the Indemnitee did not act in
good faith and in a manner that such Indemnitee reasonably believed to be in or
not opposed to the best interests of the Company, or, with respect to any
criminal action or proceeding, had reasonable cause to believe such Indemnitee's
conduct was unlawful. Any indemnification pursuant to this Section 5.7 shall be
made only out of the assets of the Company.
(b) To the fullest extent permitted by Law but subject to the
limitations expressly provided in this Agreement, the Company shall indemnify
any Indemnitee who was or is a party or is threatened to be made a party to any
threatened, pending or complete action or suit by or in the right of the Company
to procure a judgment in its favor by reason of the fact that such Indemnitee is
or was a Director, Officer or Tax Matters Shareholder against expenses
(including attorneys' fees) actually and reasonably incurred by such Indemnitee
in connection the defense or settlement of such action or suit if such
Indemnitee acted in good faith and in a manner that such Indemnitee reasonably
believed to be in or not opposed to the best interests of the Company, except
that no indemnification shall be made in respect of any claim, issue or matter
as to which such Person shall have been adjudged to be liable to the Company
unless and only to the extent that the Court of Chancery or the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
such Person is fairly and reasonably entitled to indemnity for such expenses
that the Court of Chancery or such other court shall deem proper.
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(c) The Company may indemnify any employee or agent of the Company,
or any Person serving at the request of the Company as an employee or agent of
another Entity, in the same manner and to the same extent that the Company is
required, pursuant to Sections 5.7(a) and 5.7(b) above, to indemnify Directors,
Officers and the Tax Matters Shareholder.
(d) To the extent that any Indemnitee has been successful on the
merits or otherwise in defense of any action, suit or proceeding referred to in
Sections 5.7(a) and 5.7(b), or in defense of any claim, issue or matter therein,
such Indemnitee shall be indemnified against expenses (including attorney's
fees) actually and reasonably incurred by such Indemnitee in connection
therewith.
(e) Any indemnification under subsections (a), (b), (c) and (d) of
this Section 5.7 (unless ordered by a court) shall be made by the Company only
as authorized in the specific case upon a determination that indemnification of
the Indemnitee is proper in the circumstances because such Indemnitee has met
the applicable standard of conduct set forth in Sections 5.7(a) and 5.7(b). Such
determination shall be made, with respect to an Indemnitee who is a Director,
Officer or Tax Matters Shareholder at the time of such determination, promptly
(i) by a majority vote of the Directors who are not parties to such action, suit
or proceeding, even though less than a quorum, (ii) by a committee of such
Directors designated by majority vote of such Directors, even though less than a
quorum, or (iii) if there are no such Directors or if such Directors so direct,
by independent legal counsel in a written opinion, or (iv) by the Shareholders.
(f) Expenses (including attorney's fees) incurred by a Person who is
a potential Indemnitee in defending any civil, criminal, administrative or
investigative action, suit or proceeding shall, from time to time, be paid by
the Company in advance of the final disposition of such action, suit or
proceeding upon receipt by the Company of an undertaking by or on behalf of such
Indemnitee to repay such amount if it shall ultimately be determined that the
such Person is not entitled to be indemnified by the Company as authorized in
this Section 5.7.
(g) The indemnification and advancement of expenses provided by, or
granted pursuant to, this Section 5.7 shall not be deemed exclusive of any other
rights to which those seeking indemnification or advancement of expenses may be
entitled under any agreement, vote of Shareholders or disinterested Directors,
as a matter of Law or otherwise, both as to actions in the Indemnitee's official
capacity and as to action in another capacity while holding such office or
position, and shall continue as to an Indemnitee who has ceased to serve in such
capacity and shall inure to the benefit of the heirs, successors, assigns and
administrators of the Indemnitee.
(h) The Company may purchase and maintain insurance, on behalf of
any Person who is or was a member of the Board of Directors or an Officer and on
behalf of such other Persons as the Board of Directors shall determine, against
any liability that may be asserted against or expense that may be incurred by
such Person in connection with the Company's activities, regardless of whether
the Company would have the power to indemnify such Person against such liability
under the provisions of this Agreement.
(i) For purposes of this Section 5.7, the Company shall be deemed to
have requested an Indemnitee to serve as fiduciary of an employee benefit plan
whenever the performance by the Indemnitee of such Indemnitee's duties to the
Company also imposes duties on, or otherwise involves services by, the
Indemnitee to the plan or participants or beneficiaries of the plan; excise
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taxes assessed on an Indemnitee with respect to an employee benefit plan
pursuant to applicable Law shall constitute "fines" within the meaning of this
Section 5.7; action taken or omitted by the Indemnitee with respect to an
employee benefit plan in the performance of such Indemnitee's duties for a
purpose reasonably believed by such Indemnitee to be in the interest of the
participants and beneficiaries of the plan shall be deemed to be for a purpose
which is in, or not opposed to, the best interests of the Company.
(j) In no event may an Indemnitee subject the Shareholders to
personal liability by reason of the indemnification provisions set forth in this
Agreement.
(k) An Indemnitee shall not be denied indemnification in whole or in
part under this Section 5.7 because the Indemnitee had an interest in the
transaction with respect to which the indemnification applies if the transaction
was otherwise permitted by the terms of this Agreement.
(l) The provisions of this Section 5.7 are for the benefit of the
Indemnitees, their heirs, successors, assigns and administrators and shall not
be deemed to create any rights for the benefit of any other Persons.
(m) No amendment, modification or repeal of this Section 5.7 or any
provision hereof shall in any manner terminate, reduce or impair either the
right of any past, present or future Indemnitee to be indemnified by the Company
or the obligation of the Company to indemnify any such Indemnitee under and in
accordance with the provisions of this Section 5.7 as in effect immediately
prior to such amendment, modification or repeal with respect to claims arising
from or relating to matters occurring, in whole or in part, before such
amendment, modification or repeal, regardless of when such claims may be
asserted.
(n) THE PROVISIONS OF THE INDEMNIFICATION PROVIDED IN THIS SECTION
5.7 ARE INTENDED BY THE PARTIES TO APPLY EVEN IF SUCH PROVISIONS HAVE THE EFFECT
OF EXCULPATING THE INDEMNITEE FROM LEGAL RESPONSIBILITY FOR THE CONSEQUENCES OF
SUCH PERSON'S OWN SIMPLE, FULL, PARTIAL OR CONCURRENT NEGLIGENCE.
SECTION 5.8 EXCULPATION OF LIABILITY OF OFFICERS AND DIRECTORS.
(a) Notwithstanding Section 5.9, no Director or Officer shall be
liable to the Company or the Shareholders for monetary damages for losses
sustained or liabilities incurred as a result of any act or omission
constituting a breach of such Director's or Officer's fiduciary duty, except:
(1) For a breach of the Director's or Officer's duty of
loyalty to the Company or the Shareholders;
(2) For acts or omissions not in good faith or that involve
intentional misconduct or a knowing violation of law; or
(3) For any transaction from which the Director or Officer
derived an improper personal benefit.
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If the GCLD is amended after the date of this Agreement to authorize Delaware
corporations to further eliminate, limit or increase the personal liability of
directors of Delaware corporations beyond that permitted under Section 102(b)(7)
of the GCLD, then the liability of a Director or an Officer to the Company, in
addition to the personal liability limitation provided herein, shall be further
limited to the fullest extent permitted under the GCLD as so amended.
(b) Subject to its obligations and duties as set forth in this
Article V, the Board of Directors and any committee thereof may exercise any of
the powers granted to it by this Agreement and perform any of the duties imposed
upon it hereunder either directly or by or through the Company's agents, and
neither the Board of Directors nor any committee thereof shall be responsible
for any misconduct or negligence on the part of any such agent appointed by the
Board of Directors or any committee thereof in good faith.
(c) Notwithstanding Section 5.9, the Board of Directors and any
Officer of the Company may rely and shall be protected in acting or refraining
from acting upon any resolution, certificate, statement, instrument, opinion,
report, notice, request, consent, order, bond, debenture or other paper or
document believed by it or him to be genuine and to have been signed or
presented by the proper party or parties. Notwithstanding Section 5.9, the Board
of Directors and any Officer of the Company may consult with legal counsel,
accountants, appraisers, management consultants, investment bankers and other
consultants and advisers selected by it or him and any opinion of any such
Person as to matters that the Board of Directors or such Officers reasonably
believes to be within such Person's professional or expert competence shall be
full and complete authorization and protection in respect of any action taken or
suffered or omitted by the Board of Directors or such Officers hereunder in good
faith and in accordance with such opinion.
(d) Notwithstanding Section 5.9, the extension of, amendment of,
renewal of, or refusal to terminate (or the refusal to redeem the rights
pursuant thereto) the Rights Agreement shall be excluded from any fiduciary or
other duty that the Board of Directors or the Officers owe to the Shareholders
or the Company and shall be deemed to be within the authority of the Board of
Directors pursuant to Section 5.1. The Board of Directors shall perform, extend,
amend (within the subject matter thereof) or terminate (or redeem the rights
pursuant thereto) in its sole discretion and any such act shall not be subject
to any duty to the Shareholders.
(e) Any amendment, modification or repeal of this Section 5.8 or any
provision hereof shall be prospective only and shall not in any way affect the
limitations on liability under this Section 5.8 as in effect immediately prior
to such amendment, modification or repeal with respect to claims arising from or
relating to matters occurring, in whole or in part, before such amendment,
modification or repeal, regardless of when such claims may be asserted.
SECTION 5.9 DUTIES OF OFFICERS AND DIRECTORS.
(a) Except as otherwise specifically provided in Section 5.6,
Section 5.7 and Section 5.8, the duties and obligations owed to the Company and
to the Shareholders by the Officers and Directors of the Company, and any such
duties that may be owed by any Shareholder or by any Affiliates of any
Shareholder, shall be the same as the respective duties and obligations owed to
a corporation organized under the GCLD by its officers and directors and any
such duties that may be owed to such corporation by any similarly situated
stockholder or Affiliate thereof, respectively.
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(b) A Director, or a member of any committee of the Board of
Directors, shall, in the performance of such Director's duties be fully
protected in relying in good faith on the records of the Company and on such
information, opinions, reports or statements presented to the Company by any of
the Company's Officers or employees, or committees of the Board of Directors, or
by any other Person as to matters the Director reasonably believes are within
such other Person's professional or expert competence and who has been selected
with reasonable care by or on behalf of the Company.
SECTION 5.10 FACSIMILE SIGNATURES. In addition to the provisions for
the use of facsimile signatures elsewhere specifically authorized in this
Agreement, facsimile signatures of any Officer of the Company may be used
whenever and as authorized by the Board of Directors.
SECTION 5.11 AUTHORIZATION OF CERTAIN AGREEMENTS. All Persons who
own or hold, or acquire in the future, any Member Interests, including the
Common Shares, hereby approve, ratify and confirm the execution, delivery and
performance by the parties thereto of the Initial Agreements. The authorization,
approval or ratification by the Board of Directors of the execution, delivery or
performance of the Initial Agreements shall be deemed to not be a violation of
any duty that the Board of Directors owe to the Company and/or the Shareholders
(including, but no limited to, Section 5.9) and shall be deemed to be within the
authority of the Board of Directors under Section 5.1 hereof. The execution,
delivery and performance of the Initial Agreements by any Officer shall not be a
violation of any duty that such Officer or Officers owe to the Shareholders or
the Company (including, but not limited to, Section 5.9).
ARTICLE VI: BOOKS AND RECORDS, INFORMATION AND ACCOUNTS
SECTION 6.1 MAINTENANCE OF BOOKS AND RECORDS. The Company shall
keep at its principal office or such other office designated by the Board of
Directors complete and accurate books and records of the Company, supporting
documentation of the transactions with respect to the conduct of the Company's
business and affairs and minutes of the proceedings of the Board of Directors,
the Shareholders and each committee of the Board of Directors. The records shall
include, but not be limited to, (i) complete and accurate information regarding
the state of the business and financial condition of the Company, (ii) a copy of
the Certificate of Formation and this Agreement and all amendments thereto and
hereto, (iii) a current list of the names and last known business, residence, or
mailing addresses of all Directors and Officers and (iv) the Company's federal,
state and local tax returns for the Company's six most recent tax years.
SECTION 6.2 INFORMATION. In addition to the other rights
specifically set forth in this Agreement and subject to such reasonable
standards (including standards governing what information and documents are to
be furnished and at what time and location and at whose expense) as may be
established by the Board of Directors or any Officer, for a purpose reasonably
related to such Shareholder's interest in the Company, each Shareholder is
entitled to all information to which a member of a Delaware limited liability
company is entitled to have access pursuant to the Act under the circumstances
and subject to the conditions therein stated, including the condition that the
Board of Directors shall have the right to keep certain information confidential
in accordance with Section 18-305(c) of the Act.
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SECTION 6.3 ACCOUNTS. The Board of Directors may establish, or
direct or authorize any Officer to establish, one or more separate bank and
investment accounts and arrangements for the Company, which shall be maintained
in the Company's name with financial institutions and firms that the Board of
Directors, or any Officer so directed or authorized, determines.
ARTICLE VII: DISSOLUTION, WINDING-UP AND TERMINATION
SECTION 7.1 DISSOLUTION.
(a) The Company shall dissolve and its affairs shall be wound up on
the earlier to occur of the following events (each a "Dissolution Event"):
(i) the consent of the Board of Directors and the
Record Holders of a majority of the voting power of the Company;
(ii) the last remaining Shareholder's ceasing to be a
member of the Company, unless the Company is continued without
dissolution in accordance with the Act; or
(iii) entry of a decree of judicial dissolution of the
Company under Section 18-802 of the Act.
(b) Except as provided in Section 7.1(a)(ii), the death, dissolution
or Bankruptcy of any Shareholder or the occurrence of any other event that
causes a Shareholder to cease to be a member of the Company shall not constitute
a Dissolution Event (and the business of the Company shall be continued without
dissolution after such event). The bankruptcy (as defined in Section 18-101 of
the Act) of a Shareholder shall not, of itself, cause the Shareholder to cease
to be a member of the Company.
SECTION 7.2 WINDING-UP AND TERMINATION.
(a) On the occurrence of a Dissolution Event, the Board of Directors
shall select one or more Persons to act as liquidating trustee. The liquidating
trustee shall proceed diligently to wind up the affairs of the Company and make
final distributions as provided herein and in the Act. The costs of winding up
shall be borne as a Company expense. Until final distribution, the liquidating
trustee shall continue to operate the Company's properties with all of the power
and authority of the Board of Directors.
(b) Any assets of the Company remaining after satisfaction of the
creditors of the Company (whether by payment or reasonable provision for
payment) shall be distributed among the Shareholders pro rata, subject to the
provisions of any Member Interest Designation.
(c) On completion of such final distribution, the liquidating
trustee, as an authorized Person, shall file a Certificate of Cancellation with
the Secretary of State of the State of Delaware,
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cancel any other filings made pursuant to Section 2.5, and take such other
actions as may be necessary to terminate the existence of the Company.
ARTICLE VIII: DISTRIBUTIONS; ACQUISITION BY COMPANY OF MEMBER INTERESTS
SECTION 8.1 DISTRIBUTIONS
(a) Subject to the terms of any Member Interest Designation, Section
8.1(d) and Article 4, the Board of Directors may declare, and the Company may
pay, Distributions on the Common Shares and/or on any series of Member
Interests.
(b) Distributions may be paid in cash, property, or any Member
Interests.
(c) In order that the Company may determine the Shareholders
entitled to receive payment of any Distribution or other allotment of any rights
or the Shareholders entitled to exercise any rights in respect of any change,
conversion or exchange of Member Interests, or for the purpose of any other
lawful action, the Board of Directors may fix a Record Date, which Record Date
shall not precede the date upon which the resolution fixing the Record Date is
adopted, and which Record Date shall be not more than 60 days before such
action. If no Record Date is fixed, the Record Date for determining Shareholders
for any such purpose shall be at the close of business on the day on which the
Board of Directors adopts the resolution relating thereto.
(d) The Company, and the Board of Directors on behalf of the
Company, may not declare and pay Distributions to the extent that the payment of
such Distributions violates Section 18-607(a) of the Act or other applicable
Law.
SECTION 8.2 REPURCHASE OF MEMBER INTERESTS.
(a) Unless otherwise provided in this Agreement or as otherwise
provided with respect to a series of Member Interests in any Member Interest
Designation creating such class or series, the Board of Directors may cause the
Company to purchase or otherwise acquire any Member Interests (with the consent
of the holder or holders thereof); provided that the Company may not purchase
Member Interests for cash or other property if prohibited by Section 18-607 of
the Act.
(b) Shares of any class of Member Interests that are converted into
other securities or property, redeemed, purchased or otherwise acquired by the
Company or any wholly owned subsidiary of the Company, shall resume the status
of authorized and unissued Shares of such class or series, and shall no longer
be Outstanding. The Company shall not vote any Member Interests held by it, nor
shall such Member Interests be counted in determining a quorum.
SECTION 8.3 MANDATORY QUARTERLY DISTRIBUTIONS. Subject to Section
8.1(d), within 45 days following the end of each calendar quarter, an amount
equal to 100% of Available Cash with respect to such quarter (or period) shall
be distributed by the Company to the Shareholders (i) in accordance with the
rights and preferences of the Member Interests set forth in Article 4 and (ii)
in accordance with Section 8.1, as of the Record Date selected by the Board of
Directors.
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ARTICLE IX: CAPITAL ACCOUNTS; TAX ALLOCATIONS
SECTION 9.1 CAPITAL ACCOUNTS.
(a) CAPITAL ACCOUNT MAINTENANCE. The Company shall maintain for each
Shareholder (or a beneficial owner of Member Interests held by a nominee in any
case in which the nominee has furnished the identity of such owner to the
Company in accordance with Section 6031(c) of the Code or any other method
acceptable to the Board of Directors in its sole discretion) a separate Capital
Account in accordance with the rules of Treasury Regulation Section
1.704-1(b)(2)(iv). Such Capital Account shall be increased by (i) the amount of
all Capital Contributions made by such Shareholder to the Company and (ii) that
portion of the Company's Net Income allocated to such Shareholder under Section
9.5 and all items of income and gain specially allocated to such Shareholder
under Section 9.6, and decreased by (x) the amount of cash or Net Agreed Value
of all actual and deemed distributions of cash or property made to such
Shareholder pursuant to this Agreement and (y) that portion of the Company's Net
Loss allocated to such Shareholder under Section 9.5 and all items of Company
deduction and loss specially allocated to such Shareholder under Section 9.6.
(b) CAPITAL ACCOUNT OF TRANSFEREES. Generally, a transferee of a
Member Interest shall succeed to that portion of the Capital Account of the
transferor relating to the Member Interest so transferred.
(c) ADJUSTMENTS TO CAPITAL ACCOUNTS.
(1) Consistent with the provisions of Treasury Regulation
Section 1.704-1(b)(2)(iv)(f), on an issuance of additional Member
Interests for cash or Contributed Property, the Capital Accounts of all
Shareholders and the Carrying Value of each Company property immediately
before such issuance shall be adjusted upward or downward to reflect any
Unrealized Gain or Unrealized Loss attributable to such Company
property, as if such Unrealized Gain or Unrealized Loss had been
recognized on an actual sale of each such property immediately before
such issuance and had been allocated to the Shareholders at such time
pursuant to Sections 9.5 and 9.6. In determining Unrealized Gain or
Unrealized Loss for purposes of this Section 9.1(c)(1), the aggregate
cash amount and fair market value of all Company assets (including cash
or cash equivalents) immediately before the issuance of Member Interests
shall be determined by the Board of Directors using such reasonable
method of valuation as it may adopt. The Board of Directors shall
allocate such aggregate value among the assets of the Company (in such
manner as it determines in its sole discretion to be reasonable) to
arrive at a fair market value for individual properties.
(2) In accordance with Treasury Regulation Section
1.704-1(b)(2)(iv)(f), immediately before any actual or deemed
distribution to a Shareholder of any Company property (other than cash
or cash equivalents), the Capital Accounts of all Shareholders and the
Carrying Value of each Company property shall, immediately before any
such distribution, be adjusted upward or downward to reflect any
Unrealized Gain or Unrealized Loss attributable to such Company
property, as if such Unrealized Gain or Unrealized Loss had been
recognized in a sale of such property immediately before such
distribution for an
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amount equal to its fair market value, and had been allocated to the
Shareholders, at such time, pursuant to Sections 9.5 and 9.6.
SECTION 9.2 DETERMINATION OF NET INCOME AND NET LOSS. In computing
Net Income and Net Loss for purposes of maintaining the Capital Accounts, the
determination, recognition and classification of any item of income, gain,
deduction or loss shall be the same as its determination, recognition and
classification for federal income tax purposes (including any method of
depreciation, cost recovery or amortization used for that purpose), provided
that:
(a) All fees and other expenses incurred by the Company to promote
the sale of (or to sell) a Member Interest that can neither be deducted nor
amortized under Section 709 of the Code, if any, shall be treated as an item of
deduction at the time such fees and other expenses are incurred.
(b) Except as otherwise provided in Treasury Regulation Section
1.704-1(b)(2)(iv)(m), the computation of all items of income, gain, loss and
deduction shall be made without regard to any election under Section 754 of the
Code that may be made by the Company and, as to those items described in Section
705(a)(1)(B) or 705(a)(2)(B) of the Code (or treated as Section 705(a)(2)(B)
expenditures pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(i)),
without regard to the fact that such items are not includable in gross income or
are neither currently deductible nor capitalized for federal income tax
purposes. To the extent an adjustment to the adjusted tax basis of any Company
Asset pursuant to Section 734(b) or 743(b) of the Code is required, pursuant to
Treasury Regulation Section 1.704-1(b)(2)(iv)(m), to be taken into account in
determining Capital Accounts, the amount of such adjustment to the Capital
Accounts shall be treated as an item of gain (if the adjustment increases the
basis of the asset) or loss (if the adjustment decreases the basis of the
asset).
(c) Any income, gain or loss attributable to the taxable disposition
of any Company property shall be determined as if the adjusted basis of such
property as of such date of disposition were equal in amount to the Company's
Carrying Value with respect to such property as of such date.
(d) In accordance with the requirements of Section 704(b) of the
Code, any deductions for depreciation, cost recovery or amortization
attributable to any Contributed Property shall be determined as if the adjusted
basis of such property on the date it was acquired by the Company were equal to
the Agreed Value of such property. Upon an adjustment pursuant to Section 9.1(c)
to the Carrying Value of any Company property subject to depreciation, cost
recovery or amortization, any further deductions for such depreciation, cost
recovery or amortization attributable to such property shall be determined (A)
as if the adjusted basis of such property were equal to the Carrying Value of
such property immediately following such adjustment and (B) using a rate of
depreciation, cost recovery or amortization derived from the same method and
useful life (or, if applicable, the remaining useful life) as is applied for
federal income tax purposes; provided, however, that, if the asset has a zero
adjusted basis for federal income tax purposes, depreciation, cost recovery or
amortization deductions shall be determined using any reasonable method that the
Board of Directors may adopt.
(e) Any item of income, gain, loss and deduction which is specially
allocated pursuant to Section 9.6 shall not be taken into account in computing
Net Income or Net Loss.
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SECTION 9.3 LOANS FROM SHAREHOLDERS. Loans by a Shareholder to the
Company shall not constitute Capital Contributions. If any Shareholder shall
advance funds to the Company (other than funds to purchase Member Interests),
then the making of such excess advances shall not result in any increase in the
amount of the Capital Account of such Shareholder. The amount of any such excess
advances shall be a debt obligation of the Company to such Shareholder and shall
be payable or collectible only out of the Company Assets in accordance with the
terms and conditions upon which such advances are made.
SECTION 9.4 RECORD OF CONTRIBUTIONS. The books and records of the
Company shall include true and full information regarding the amount of cash and
cash equivalents and a designation and statement of the Net Agreed Value of any
other property contributed by each Shareholder to the Company.
SECTION 9.5 ALLOCATION OF NET INCOME AND NET LOSS. For purposes of
maintaining the Capital Accounts and in determining the rights of the
Shareholders among themselves, Net Income or Net Loss, as the case may be, shall
be allocated to each Shareholder pro rata in accordance with the number of
Common Shares held by such Shareholder.
SECTION 9.6 SPECIAL ALLOCATIONS. Notwithstanding any other provision
of this Article IX, the following special allocations shall be made for each
taxable period:
(a) Minimum Gain Chargeback. Notwithstanding any other provision of
this Section 9.6, if there is a net decrease in Minimum Gain during any taxable
period, each Shareholder shall be allocated items of Company income and gain for
such period (and, if necessary, subsequent periods) in the manner and amounts
provided in Treasury Regulation Sections 1.704-2(f)(6), 1.704-2(g)(2) and
1.704-2(j)(2)(i), or any successor provision. For purposes of this Section
9.6(a), each Shareholder's Adjusted Capital Account balance shall be determined,
and the allocation of income or gain required hereunder shall be effected, prior
to the application of any other allocations pursuant to this Section 9.6 with
respect to such taxable period. This Section 9.6(a) is intended to comply with
the "minimum gain chargeback requirement" in Treasury Regulation Section
1.704-2(f) and shall be interpreted consistently therewith;
(b) Chargeback of Minimum Gain Attributable to Shareholder
Nonrecourse Debt. Notwithstanding the other provisions of this Section 9.6
(other than Section 9.6(a)), except as provided in Treasury Regulation Section
1.704-2(i)(4), if there is a net decrease in Minimum Gain Attributable to
Shareholder Nonrecourse Debt during any taxable period, any Shareholder with a
share of Minimum Gain Attributable to Shareholder Nonrecourse Debt at the
beginning of such taxable period shall be allocated items of income and gain for
such period (and, if necessary, subsequent periods) in the manner and amounts
provided in Treasury Regulation Sections 1.704-2(i)(4) and 1.704-2(j)(2)(ii), or
any successor provisions. For purposes of this Section 9.6(b), each
Shareholder's Adjusted Capital Account balance shall be determined and the
allocation of income or gain required hereunder shall be effected, prior to the
application of any other allocations pursuant to this Section 9.6, other than
Section 9.6(a), with respect to such taxable period. This Section 9.6(b) is
intended to comply with the chargeback of items of income and gain requirement
in Treasury Regulation Section 1.704-2(i)(4) and shall be interpreted
consistently therewith;
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(c) Qualified Income Offset. Except as provided in Sections 9.6(a)
and 9.6(b), in the event any Shareholder unexpectedly receives any adjustments,
allocations or distributions described in Treasury Regulation Sections
1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) or 1.704-1(b)(2)(ii)(d)(6),
items of income and gain shall be specially allocated to such Shareholder in an
amount and manner sufficient to eliminate, to the extent required by the
Treasury Regulations, the deficit balance, if any, in its Adjusted Capital
Account created by such adjustments, allocations or distributions as quickly as
possible; provided, that an allocation pursuant to this Section 9.6(c) shall be
made only if and to the extent that such Shareholder would have a deficit
balance in its Adjusted Capital Account after all other allocations provided in
this Article IX have been tentatively made as if this Section 9.6(c) were not in
this Agreement;
(d) Gross Income Allocations. In the event any Shareholder has a
deficit balance in its Adjusted Capital Account at the end of any taxable
period, such Shareholder shall be specially allocated items of income and gain
in the amount of such excess as quickly as possible; provided, that an
allocation pursuant to this Section 9.6(d) shall be made only if and to the
extent that such Shareholder would have a deficit balance in its Adjusted
Capital Account in excess of such sum after all other allocations provided for
in this Article IX have been tentatively made as if Section 9.6(c) and this
Section 9.6(d) were not in this Agreement;
(e) Nonrecourse Deductions. Nonrecourse Deductions for any taxable
period shall be allocated to the Shareholders in the same ratios that Net Income
or Net Loss, as the case may be, is allocated for the taxable year. If the Board
of Directors determines in its good faith discretion that the Nonrecourse
Deductions must be allocated in a different ratio to satisfy the safe harbor
requirements of the Treasury Regulations promulgated under Section 704(b) of the
Code, the Board of Directors is authorized, upon notice to the Shareholders, to
revise the prescribed ratio to the numerically closest ratio which does satisfy
such requirements;
(f) Shareholder Nonrecourse Deductions. Shareholder Nonrecourse
Deductions for any taxable period shall be allocated 100% to the Shareholder
that bears the Economic Risk of Loss with respect to the Shareholder Nonrecourse
Debt to which such Shareholder Nonrecourse Deductions are attributable in
accordance with Treasury Regulation Section 1.704-2(i). If more than one
Shareholder bears the Economic Risk of Loss with respect to a Shareholder
Nonrecourse Debt, such Shareholder Nonrecourse Deductions attributable thereto
shall be allocated between or among such Shareholders in accordance with the
ratios in which they share such Economic Risk of Loss.
(g) Code Section 754 Adjustments. To the extent an adjustment to the
adjusted tax basis of any Company Asset pursuant to Section 734(b) or 743(b) of
the Code is to be taken into account in determining the Capital Accounts, the
amount of such adjustment to the Capital Accounts treated as an item of gain or
loss shall be specially allocated to the Shareholder in a manner consistent with
the manner in which the Capital Accounts are required to be adjusted pursuant to
Treasury Regulation Section 1.704-1(b)(2)(iv)(m);
(h) Curative Allocation.
(1) The Required Allocations are intended to comply with
certain requirements of the Treasury Regulations, and it is the intent
of the Shareholders that, to the extent
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possible, all Required Allocations shall be offset either with other
Required Allocations or with special allocations of items of income,
gain, loss, or deduction pursuant to this Section 9.6(h). Therefore,
notwithstanding any other provision of Sections 9.5 and 9.6, other than
the Required Allocations, the Board of Directors 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 Shareholder's Capital Account balance is, to
the extent possible, equal to the Capital Account balance such
Shareholder would have had if the Required Allocations were not part of
this Agreement and all items of income, gain, loss, and deduction were
allocated pursuant to Section 9.5. In exercising its discretion under
this Section 9.6(h), the Board of Directors shall take into account
future Required Allocations under Sections 9.6(a) and 9.6(b) that,
although not yet made, are likely to offset other Required Allocations
previously made under Sections 9.6(e) and 9.6(f). Allocations pursuant
to this Section 9.6(h)(1) shall only be made with respect to Required
Allocations to the extent the Board of Directors reasonably determines
that such allocations will otherwise be inconsistent with the economic
agreement among the Shareholders;
(2) The Board of Directors shall have reasonable discretion,
with respect to each taxable period, to (1) apply the provisions of
Section 9.6(h)(1) in whatever order is most likely to minimize the
economic distortions that might otherwise result from the Required
Allocations, and (2) divide all allocations pursuant to Section
9.6(h)(1) among the Shareholders in a manner that is likely to minimize
such economic distortions.
SECTION 9.7 ALLOCATIONS FOR TAX PURPOSES.
(a) Except as otherwise provided in this Section 9.7, for federal
income tax purposes, each item of income, gain, loss and deduction shall be
allocated among the Shareholders in the same manner as its correlative item of
income, gain, loss or deduction (computed in accordance with Section 9.2) is
allocated pursuant to Sections 9.5 and 9.6.
(b) In an attempt to eliminate Book-Tax Disparities attributable to
a Contributed Property or Adjusted Property, items of income, gain, loss,
depreciation and cost recovery deductions shall be allocated for federal income
tax purposes among the Shareholders as follows:
(1) (A) In the case of a Contributed Property, such items
attributable thereto shall be allocated among the Shareholders in the
manner provided under Section 704(c) of the Code that takes into account
the variation between the Agreed Value of such property and its adjusted
basis at the time of contribution; and (B) except as otherwise provided
in Section 9.7(b)(4), any item of Residual Gain or Residual Loss
attributable to a Contributed Property shall be allocated among the
Shareholders in the same manner as its correlative item of gain or loss
is allocated pursuant to Sections 9.5 and 9.6.
(2) (A) In the case of an Adjusted Property, such items
shall (1) first, be allocated among the Shareholders in a manner
consistent with the principles of Section 704(c) of the Code to take
into account the Unrealized Gain or Unrealized Loss attributable to such
property and the allocations thereof pursuant to Sections 9.1(c)(1) or
9.1(c)(2), and (2) second, in the event such property was originally a
Contributed Property, be allocated among the Shareholders in a manner
consistent with Section 9.7(b)(1)(A); and (B) except
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as otherwise provided in Section 9.7(b)(4), any item of Residual Gain or
Residual Loss attributable to an Adjusted Property shall be allocated
among the Shareholders in the same manner as its correlative item of
gain or loss is allocated pursuant to Sections 9.5 and 9.6.
(3) Except as otherwise provided in Section 9.7(b)(4), all
other items of income, gain, loss and deduction shall be allocated among
the Shareholders in the same manner as their correlative item of gain or
loss is allocated pursuant to Sections 9.5 and 9.6.
(4) Any items of income, gain, loss or deduction otherwise
allocable under Section 9.7(b)(1)(B), 9.7(b)(2)(B) or 9.7(b)(3) shall be
subject to allocation by the Board of Directors in a manner designed to
eliminate, to the maximum extent possible, Book-Tax Disparities in a
Contributed Property or Adjusted Property otherwise resulting from the
applications of the "ceiling" limitation (under Section 704(c) of the
Code or Section 704(c) principles) to the allocations provided under
Sections 9.7(b)(1)(A) or 9.7(b)(2)(A).
(c) For proper administration of the Company and for the
preservation of uniformity of the Member Interests (or any class or classes
thereof), the Board of Directors shall have sole discretion to (i) adopt such
conventions as it deems appropriate in determining the amount of depreciation,
amortization and cost recovery deductions; (ii) make special allocations for
federal income tax purposes of income (including gross income) or deductions;
and (iii) amend the provisions of this Agreement as appropriate (x) to reflect
the proposal or promulgation of Treasury Regulations under Section 704(b) or
Section 704(c) of the Code or (y) otherwise to preserve or achieve uniformity of
the Member Interests (or any class or classes thereof). The Board of Directors
may adopt such conventions, make such allocations and make such amendments to
this Agreement as provided in this Section 9.7(c) only if such conventions,
allocations or amendments would not have a material adverse effect on the
Shareholders, the holders of any class or classes of Member Interests issued and
outstanding or the Company, and if such allocations are consistent with the
principles of Section 704 of the Code.
(d) The Board of Directors in its sole discretion may determine to
depreciate the portion of an adjustment under Section 743(b) of the Code
attributable to unrealized appreciation in any Adjusted Property (to the extent
of the unamortized Book-Tax Disparity) using a predetermined rate derived from
the depreciation method and useful life applied to the Company's common basis of
such property, despite the inconsistency of such approach with Treasury
Regulation Section 1.167(c)-1(a)(6). If the Board of Directors later determines
that such reporting position cannot reasonably be taken, the Board of Directors
may adopt a depreciation convention under which all purchasers acquiring Member
Interests in the same month would receive depreciation, based upon the same
applicable rate as if they had purchased a direct interest in the Company's
property. If the Board of Directors chooses not to utilize such aggregate
method, the Board of Directors may use any other reasonable depreciation
convention to preserve the uniformity of the intrinsic tax characteristics of
any Member Interest that would not have a material adverse effect on the
Shareholders or the Record Holders of any class or classes of Member Interests.
(e) Any gain allocated to the Shareholders upon the sale or other
taxable disposition of any Company Asset shall, to the extent possible, after
taking into account other required allocations of gain pursuant to this Section
9.7, be characterized as Recapture Income in the same proportions and to the
same extent as such Shareholders have been allocated any deductions directly or
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indirectly giving rise to the treatment of such gains as Recapture Income.
(f) All items of income, gain, loss, deduction and credit recognized
by the Company for federal income tax purposes and allocated to the Shareholders
in accordance with the provisions hereof shall be determined without regard to
any election under Section 754 of the Code which may be made by the Company;
provided, however, that such allocations once made, shall be adjusted as
necessary or appropriate to take into account those adjustments permitted or
required by Sections 734 or 743 of the Code.
(g) Except as set forth below in this Section 9.7(g), each item of
income, gain, loss and deduction attributable to a transferred Member Interest
shall, for federal income tax purposes, be determined on an annual basis and
prorated on a monthly basis and shall be allocated to the Shareholders as of the
opening of the New York Stock Exchange on the first Business Day of each month.
Notwithstanding the first sentence of this Section 9.7(g), each item of income,
gain, loss and deduction attributed to any Member Interest pursuant to the first
sentence of this Section 9.7(g) during the month in which the Distribution (as
such term is defined in the Distribution Agreement) occurs shall be prorated (on
the basis of calendar days) to the Distribution Date (as such term is defined in
the Distribution Agreement) and the Shareholder(s) of Record on the first
Business Day of the month in which the Distribution occurs shall be attributed
all items of income, gain, loss and deduction for those calendar days of such
month that precede the Distribution Date and the Shareholders of Record on the
Business Day immediately after the Distribution Date shall be attributed all
items of income, gain, loss and deduction for those calendar days (including the
Distribution Date) of such month that follow the Distribution Date.
Notwithstanding the first sentence of this Section 9.7(g), the gain or loss on a
sale or other disposition of any Company Asset other than in the ordinary course
of business shall be allocated to the Shareholders as of the opening of the New
York Stock Exchange on the first Business Day of the month in which such gain or
loss is recognized for federal income tax purposes. Notwithstanding the
immediately preceding sentence of this Section 9.7(g), the gain or loss on a
sale or other disposition of any Company Asset other than in the ordinary course
of business that is allocated to the Shareholders pursuant to the immediately
preceding sentence of this Section 9.7(g) for a sale or other disposition of any
Company Asset made during the month in which the Distribution occurs shall be
allocated to the Shareholders as of the opening of the New York Stock Exchange
on the Business Day immediately following the day of such sale or other
disposition. The Board of Directors may revise, alter or otherwise modify such
methods of allocation as it determines necessary, to the extent permitted or
required by Section 706 of the Code and the Treasury Regulations or rulings
promulgated thereunder.
(h) Allocations that would otherwise be made to a Shareholder under
the provisions of Article IX shall instead be made to the beneficial owner of
Member Interests held by a nominee in any case in which the nominee has
furnished the identity of such owner to the Company in accordance with Section
6031(c) of the Code or any other method acceptable to the Board of Directors in
its sole discretion.
(i) The Board of Directors shall amend or supplement this Article IX
to provide for the allocation of any item of income, gain, loss, deduction or
credit for federal, state or local income tax purposes for which provision is
not otherwise made herein in the manner that the Board of Directors determines
to be reasonable, taking into account the requirements of the Code.
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ARTICLE X: AMENDMENT OF AGREEMENT; SHAREHOLDER MEETINGS; RECORD DATE
SECTION 10.1 AMENDMENT OF LIMITED LIABILITY COMPANY AGREEMENT.
(a) General Amendments. Except as provided in Section 10.1(b) and
Section 10.1(c), the Company may amend any of the terms of this Agreement but
only in compliance with the terms, conditions and procedures set forth in this
Section 10.1(a). If the Board of Directors desires to amend any provision of
this Agreement, then it shall first adopt a resolution setting forth the
amendment proposed, declaring its advisability, and either calling a special
meeting of the Shareholders entitled to vote in respect thereof for the
consideration of such amendment or directing that the amendment proposed be
considered at the next annual meeting of the Shareholders. Such special or
annual meeting shall be called and held upon notice in accordance with Sections
10.3 and 10.4 of this Agreement. The notice shall set forth such amendment in
full or a brief summary of the changes to be effected thereby, as the directors
shall deem advisable. At the meeting, a vote of Shareholders entitled to vote
thereon shall be taken for and against the proposed amendment. If the Record
Holders of a majority of the voting power of the Company, and the Record Holders
of a majority of the Shares of each series of Member Interests entitled to vote
on such amendment as a class pursuant to the Member Interest Designation of such
series (or such higher percentage as required by any Member Interest
Designation) approve such proposed amendment, then such proposed amendment shall
constitute a valid and effective amendment. The amendment shall be effective on
the date that the Shareholders have approved such amendment at such meeting.
(b) Super-Majority Amendments. Notwithstanding Section 10.1(a) but
subject to Section 10.1(c), the affirmative vote of the holders of at least 80%
of the voting power of all Member Interests then outstanding, voting together as
a single class, shall be required to alter, amend, adopt any provision
inconsistent with or repeal subsections (a), (b), (c) or (e) of Section 5.2 or
subsection (c) of Section 10.2.
(c) Amendments to be Adopted Solely by the Board of Directors.
Notwithstanding Section 10.1(a) and Section 10.1(b), the Board of Directors,
without the consent of any Shareholder (each Person who purchases or is
transferred Member Interests being deemed to approve of any such amendment), may
amend any provision of this Agreement, and execute, swear to, acknowledge,
deliver, file and record whatever documents may be required in connection
therewith:
(1) to reflect a change in the name of the Company or the
location of the principal place of business of the Company;
(2) to reflect a change that is necessary or advisable in
the opinion of the Board of Directors to ensure that the Company will
not be taxable as a corporation or treated as an association taxable as
a corporation for federal income tax purposes;
(3) to reflect a change that (i) in the sole discretion of
the Board of Directors does not adversely affect the Shareholders in any
material respect, (ii) is necessary or desirable to satisfy any
requirements, conditions or guidelines contained in any opinion,
directive, order, ruling or regulation of any federal or state agency or
contained in any federal or state statute,
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(iii) is necessary or desirable to facilitate the trading of the Common
Shares or any Member Interests or comply with any rule, regulation,
guideline or requirement of any National Securities Exchange on which
the Common Shares or any Member Interests are or will be listed for
trading, compliance with any of which the Board of Directors deems to be
in the best interests of the Company and the Shareholders or (iv) is
required or contemplated by this Agreement or the Information Statement;
(4) to reflect an amendment that is necessary, as reflected
in an opinion of the legal counsel of the Company, to prevent the
Company or its directors or officers from in any manner being subjected
to the provisions of the Investment Company Act of 1940, as amended, the
Investment Advisors Act of 1940, as amended, the Public Utility Holding
Company Act of 1935, as amended, or "plan asset" regulations adopted
under the Employee Retirement Income Security Act of 1974, as amended,
whether or not substantially similar to plan asset regulations currently
applied or proposed by the United States Department of Labor;
(5) to reflect a change in any provision of this Agreement
that requires any action to be taken by or on behalf of the Company
pursuant to the requirements of the Act if the provisions of the Act are
amended, modified or revoked so that the taking of such action is no
longer required; provided that this Section 10.1(c)(5) shall be
applicable only if such changes are not materially adverse to the
Shareholders;
(6) to amend the terms of any Member Interest Designation as
provided in and in compliance with Section 4.3; or
(7) to amend Sections 5.2(j), 10.10 or 10.12(d).
(d) Amendments to Member Interest Designations. Before the issuance
of any Member Interests in any series established by any Member Interest
Designation, the Board of Directors may adopt a resolution or resolutions
amending such Member Interest Designation, and such resolution shall have the
affect of amending such Member Interest Designation and the consent of any
Shareholder shall not be required. After the issuance of Member Interests in any
series established by any Member Interest Designation, the Board of Directors
may adopt any resolution or resolutions amending such Member Interest
Designation; provided, however, that such resolution shall not have the effect
of amending such Member Interest Designation until such time as the Record
Holders of at least a majority of the Shares of Member Interests in such series
(or such higher vote requirement contained in such Member Interest Designation)
approve such amendment at a meeting duly called for such purpose or by a written
consent or written consents executed by such Record Holders for such purpose,
and after the approval of such Record Holders, the amendment shall be effective
and the consent of any other Shareholder shall not be required.
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SECTION 10.2 SHAREHOLDER MEETINGS.
(a) Except as otherwise provided in this Agreement, all acts of
Shareholders to be taken hereunder shall be taken in the manner provided in this
Article X. An annual meeting of the Shareholders for the transaction of such
business as may properly come before the meeting shall be held at such time and
place as the Board of Directors shall specify in the notice of the meeting.
(b) A failure to hold the annual meeting of the Shareholders at the
designated time or to elect a sufficient number of Directors to conduct the
business of the Company shall not affect otherwise valid acts of the Company or
work a forfeiture or dissolution of the Company. If the annual meeting for
election of Directors is not held on the date designated therefor, the Directors
shall cause the meeting to be held as soon as is convenient.
(c) Special meetings of the Shareholders may be called only by the
Board of Directors or the Chairman of the Board. No Shareholder or group of
Shareholders, acting in its or their capacity as Shareholder or Shareholders,
shall have the right to call a special meeting of the Shareholders.
SECTION 10.3 PLACE OF SHAREHOLDER MEETINGS; NOTICE OF SHAREHOLDER
MEETINGS.
(a) Notice, stating the place, day and hour of any annual or special
meeting of the Shareholders and, in the case of a special meeting of the
Shareholders, the purpose or purposes for which the meeting is called, shall be
delivered by the Company not less than 10 calendar days nor more than 60
calendar days before the date of the meeting, either personally, by mail or by
other lawful means, to each Record Holder who is entitled to vote at such
meeting. If mailed, such notice shall be deemed to be delivered when deposited
in the United States mail with postage thereon prepaid, addressed to the
Shareholder at such Shareholder's address as it appears on the register of the
Member Interests of the Company. Such further notice shall be given as may be
required by Law. Only such business shall be conducted at a special meeting of
Shareholders as shall have been brought before the meeting pursuant to the
Company's notice of meeting. Meetings may be held without notice if all
Shareholders entitled to notice are present (except when Shareholders entitled
to notice attend the meeting for the express purpose of objecting, at the
beginning of the meeting, because the meeting is not lawfully called or
convened), or if notice is waived by those not present in accordance with
Section 10.8. Any previously scheduled meeting of the Shareholders may be
postponed, and any special meeting of the Shareholders may be canceled, by
resolution of the Board of Directors upon public notice given before the date
previously scheduled for such meeting of Shareholders.
(b) The Board of Directors or the Chairman of the Board, as the case
may be, may designate the place, if any, of meeting for any annual meeting or
for any special meeting of the Shareholders. If no designation is so made, the
place of meeting shall be the principal office of the Company.
SECTION 10.4 RECORD DATE. For purposes of determining the
Shareholders entitled to notice of or to vote at a meeting of the Shareholders,
the Board of Directors may set a record date ("Record Date"), which shall not be
less than 10 nor more than 60 days before the date of the meeting. If no Record
Date is fixed by the Board of Directors, the Record Date for determining
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Shareholders entitled to notice of or to vote at a meeting of Shareholders shall
be at the close of business on the day next preceding the day on which notice is
given, or, if notice is waived, at the close of business on the day next
preceding the day on which the meeting is held. A determination of Shareholders
of record entitled to notice of or to vote at a meeting of Shareholders shall
apply to any adjournment of the meeting; provided, however, that the Board of
Directors may fix a new Record Date for the adjourned meeting.
SECTION 10.5 SHAREHOLDER LISTS. A complete list of Shareholders
entitled to vote at any meeting of Shareholders, arranged in alphabetical order
for each class of Member Interests and showing the address of each such
Shareholder and the number of Shares registered in the name of such Shareholder,
shall be open to the examination of any Shareholder, for any purpose germane to
the meeting, during ordinary business hours, for a period of at least ten (10)
days before the meeting, at the principal place of business of the Company. The
Shareholder list shall also be produced and kept at the time and place of the
meeting during the whole time thereof, and may be inspected by any Shareholder
who is present. Upon the wilful neglect or refusal of the Directors to produce
such a list at any meeting for the election of Directors, they shall be
ineligible for election to any office at such meeting.
SECTION 10.6 ADJOURNMENT. When a meeting is adjourned to another
time or place, notice need not be given of the adjourned meeting and a new
Record Date need not be fixed, if the time and place thereof are announced at
the meeting at which the adjournment is taken, unless such adjournment shall be
for more than 30 days. At the adjourned meeting, the Company may transact any
business that might have been transacted at the original meeting. If the
adjournment is for more than 30 days or if a new Record Date is fixed for the
adjourned meeting, a notice of the adjourned meeting shall be given in
accordance with this Article X.
SECTION 10.7 WAIVER OF NOTICE; APPROVAL OF MEETING; APPROVAL OF
MINUTES. Whenever notice to the Shareholders (or to any class of Shareholders)
is required to be given under any this Agreement, a written waiver, signed by
the Person entitled to notice, whether before or after the time stated therein,
shall be deemed equivalent to notice. Attendance of a Person at any such meeting
of the Shareholders shall constitute a waiver of notice of such meeting, except
when the Person attends a meeting for the express purpose of objecting at the
beginning of the meeting, to the transaction of any business because the meeting
is not lawfully called or convened. Neither the business to be transacted at,
nor the purpose of, any regular or special meeting of the Shareholders need be
specified in any written waiver of notice unless so required by resolution of
the Board of Directors. All waivers and approvals shall be filed with the
Company records or made part of the minutes of the meeting.
SECTION 10.8 QUORUM; REQUIRED VOTE FOR SHAREHOLDER ACTION. The
Record Holders of a majority of the voting power of the Member Interests of the
class or classes entitled to vote at a meeting of Shareholders, present in
person or represented by proxy, shall constitute a quorum at a meeting of
Shareholders of such class or classes unless (a) the provisions of this
Agreement or the Act require that any act of the Shareholders to be taken at
such meeting be approved by Record Holders of a different amount of Member
Interests or (b) the Board of Directors designates a different amount (which
amount shall not be less than one-third of the Shares entitled to vote at the
meeting), in which case the quorum with respect to such act shall be such
different amount. In all matters other than the election of directors, the vote
of Shareholders holding Member Interests in
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the aggregate possessing a majority of the voting power of the Member Interests
entitled to vote and present in person or represented by proxy at such meeting
shall be deemed to constitute the act of the Shareholders, unless (i) the
provisions of this Agreement, applicable Law or the Act require that such act be
approved by the Record Holders of a higher percentage of Member Interests or
(ii) the Board of Directors designates that such act need be approved by Record
Holders of a higher percentage of Member Interests, in which case the act of the
Shareholders holding Member Interests that in the aggregate represent at least
such different amount shall be required. The Shareholders present at a duly
called or held meeting at which a quorum is present may continue to transact
business until adjournment, notwithstanding the withdrawal of enough
Shareholders to leave less than a quorum, if any action taken (other than
adjournment) is approved by the required percentage of Member Interests
specified in this Agreement. In the absence of a quorum, any meeting of
Shareholders may be adjourned from time to time by the affirmative vote of those
Shareholders holding a majority of the voting power held by those Shareholders
holding Member Interests entitled to vote and present in person or represented
by proxy at such meeting.
SECTION 10.9 CONDUCT OF MEETING. The Board of Directors shall have
full power and authority concerning the manner of conducting any meeting of the
Shareholders or solicitation of approvals in writing, including the
determination of Persons entitled to vote, the existence of a quorum, the
satisfaction of the requirements of this Article X, the conduct of voting, the
validity and effect of any proxies and the determination of any controversies,
votes or challenges arising in connection with or during the meeting or voting.
The Board of Directors shall designate a Person to serve as chairman of any
meeting and shall further designate a Person to take the minutes of any meeting.
All minutes shall be kept with the records of the Company. The Board of
Directors may make such other regulations consistent with applicable Law and
this Agreement as it may deem advisable concerning the conduct of any meeting of
the Shareholders or solicitation of approvals in writing, including regulations
in regard to the appointment of proxies, the appointment and duties of
inspectors of votes and approvals, the submission and examination of proxies and
other evidence of the right to vote and the revocation of approvals in writing.
SECTION 10.10 ACTION WITHOUT A MEETING. Subject to the rights set
forth in the Member Interest Designation of any series of Member Interests and
except as otherwise set forth in this Agreement, no action permitted or required
to be taken at a meeting of Shareholders may be taken by written consent or by
at any other means or manner than at a meeting of the Shareholders.
SECTION 10.11 VOTING AND OTHER RIGHTS.
(a) Only those Record Holders of Member Interests on the Record Date
set pursuant to Section 10.5 shall be entitled to notice of, and to vote at, a
meeting of Shareholders or to act with respect to matters as to which the Record
Holders of the Member Interests have the right to vote or to act, including the
election of Directors. All references in this Agreement to votes of, or other
acts that may be taken by, the Member Interests shall be deemed to be references
to the votes or acts of the Record Holders of such Member Interests.
(b) With respect to any Shareholder action, broker non-votes shall
not be counted as votes for or against any matter unless otherwise required by
Law.
SECTION 10.12 PROXIES.
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(a) Each Shareholder entitled to vote at a meeting of Shareholders
may authorize another Person or Persons to act for such Shareholder by proxy,
but no such proxy shall be voted or acted upon after 180 days from its date,
unless the proxy provides for a longer period.
(b) Without limiting the manner in which a Shareholder may authorize
another Person or Persons to act for such Shareholder as proxy pursuant to
Section 10.12(a), the following shall constitute a valid means by which a
Shareholder may grant such authority:
(1) A Shareholder may execute a writing authorizing another
Person or Persons to act for such Shareholder as proxy. Execution may be
accomplished by the Shareholder or such Shareholder's authorized
officer, director, employee or agent signing such writing or causing
such Person's signature to be affixed to such writing by any reasonable
means including, but not limited to, by facsimile signature.
(2) A Shareholder may authorize another Person or Persons to
act for such Shareholder as proxy by transmitting or authorizing the
transmission of a telegram, cablegram or other means of electronic
transmission to the Person who will be the holder of the proxy or to a
proxy solicitation firm, proxy support service organization or like
agent duly authorized by the Person who will be the holder of the proxy
to receive such transmission, provided that any such telegram, cablegram
or other means of electronic transmission must either set forth or be
submitted with information from which it can be determined that the
telegram, cablegram or other electronic transmission was authorized by
the Shareholder. If it is determined that such telegrams, cablegrams or
other electronic transmissions are valid, the inspectors or, if there
are no inspectors, such other Persons making that determination shall
specify the information upon which they relied.
(c) Any copy, facsimile telecommunication or other reliable
reproduction of the writing or transmission created pursuant to Section 10.12(b)
may be substituted or used in lieu of the original writing or transmission for
any and all purposes for which the original writing or transmission could be
used, provided that such copy, facsimile telecommunication or other reproduction
shall be a complete reproduction of the entire original writing or transmission.
(d) An instrument in writing signed by a Shareholder and appointing
a proxy may confer upon such proxy discretionary power to vote on any matter
that may come before an annual meeting of the Shareholders unless, with respect
to a particular matter to be presented at such annual meeting of Shareholders:
(i) the Company receives written notice, addressed to the Company's Secretary,
not less than 120 calendar days before the corresponding date of the Company's
proxy statement that was released to Shareholders in connection with the
previous year's annual meeting, that the matter will be presented at such annual
meeting (provided; however, that if the Company did not hold an annual meeting
during the previous year, or if the date of the annual meeting for the current
year has been changed by more than 30 days from the date of the previous year's
meeting, then such notice must be received by the Company in a reasonable time
before the Company begins to print and mail its proxy materials); and, (ii) the
Company fails to include in its proxy statement for the annual meeting advice on
the nature of the matter and how the Company intends to exercise its discretion
to vote on the matter.
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SECTION 10.13 VOTING PROCEDURES AND INSPECTORS OF ELECTIONS.
(a) The Company shall, in advance of any meeting of Shareholders,
appoint one or more inspectors to act at the meeting and make a written report
thereof. The Company may designate one or more Persons as alternate inspectors
to replace any inspector who fails to act. If no inspector or alternate is able
to act at a meeting of Shareholders, the Person presiding at the meeting shall
appoint one or more inspectors to act at the meeting. Each inspector, before
entering upon the discharge of the duties of inspector, shall take and sign an
oath faithfully to execute the duties of inspector with strict impartiality and
according to the best of such inspector's ability.
(b) The inspectors shall:
(1) Ascertain the number of Member Interests Outstanding and
the voting power of each;
(2) Determine the Member Interests represented at a meeting
and the validity of proxies and ballots;
(3) Count all votes and ballots;
(4) Determine and retain for a reasonable period a record of
the disposition of any challenges made to any determination by the
inspectors; and
(5) Certify their determination of the number of Member
Interests represented at the meeting, and their count of all votes and
ballots.
The inspectors may appoint or retain other Persons to assist the inspectors in
the performance of the duties of the inspectors.
(c) The date and time of the opening and the closing of the polls
for each matter upon which the Shareholders will vote at a meeting shall be
announced at the meeting. No ballot, proxies or votes, nor any revocations
thereof or changes thereto, shall be accepted by the inspectors after the
closing of the polls unless the Court of Chancery upon application by a
Shareholder shall determine otherwise.
(d) In determining the validity and counting of proxies and ballots,
the inspectors shall be limited to an examination of the proxies, any envelopes
submitted with those proxies, ballots and the regular books and records of the
Company, except that the inspectors may consider other reliable information for
the limited purpose of reconciling proxies and ballots submitted by or on behalf
of banks, brokers, their nominees or similar Persons which represent more votes
than the holder of a proxy is authorized by the Record Holder to cast or more
votes than the Shareholder holds of record. If the inspectors consider other
reliable information for the limited purpose permitted herein, the inspectors at
the time they make their certification pursuant to Section 10.14(b)(5) shall
specify the precise information considered by them including the Person or
Persons from whom they obtained the information, when the information was
obtained, the means by which the information was obtained and the basis for the
inspectors' belief that such information is accurate and reliable.
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SECTION 10.14 CONTESTS OF ELECTIONS.
(a) Upon application of any Shareholder or Director, or any Officer
whose title to office is contested, the Court of Chancery may hear and determine
the validity of any election of any Director or Officer, and the right of any
person to hold such office, and, in case any such office is claimed by more than
one person, may determine the Person entitled thereto; and to that end make such
order or decree in any such case as may be just and proper, with power to
enforce the production of any books, papers and records of the Company relating
to the issue. In case it should be determined that no valid election has been
held, the Court of Chancery may order an election to be held in accordance with
this Agreement. In any such application, service of copies of the application
upon the registered agent of the Company shall be deemed to be service upon the
Company and upon the person whose title to office is contested and upon the
person, if any, claiming such office; and the registered agent shall forward
immediately a copy of the application to the Company and to the Person whose
title to office is contested and to the Person, if any, claiming such office, in
a postpaid, sealed, registered letter addressed to the Company and such Person
at their post-office addresses last known to the registered agent or furnished
to the registered agent by the applicant Shareholder. The Court of Chancery may
make such order respecting further or other notice of such application as it
deems proper under the circumstances.
(b) Upon application of any Shareholder, the Court of Chancery may
hear and determine the result of any vote of Shareholders, as the case may be,
upon matters other than the election of Directors or Officers. Service of the
application upon the registered agent of the Company shall be deemed to be
service upon the Company, and no other party need be joined in order for the
Court to adjudicate the result of the vote. The Court may make such order
respecting notice of the application as it deems proper under the circumstances.
ARTICLE XI: MERGER OR SALE OF ASSETS
SECTION 11.1 AUTHORITY. The Company may merge or consolidate with, sell
all or substantially all of its assets or convert to, one or more limited
liability companies, corporations, business trusts or associations, real estate
investment trusts, common law trusts or unincorporated businesses, including a
general partnership or limited partnership, formed under the laws of the State
of Delaware or any other jurisdiction, pursuant to a written agreement of
merger, consolidation, sale or conversion, as applicable ("Transaction
Agreement"), in accordance with this Article XI.
SECTION 11.2 PROCEDURE FOR MERGER, CONSOLIDATION, SALE OR CONVERSION. The
merger or consolidation of the Company, the sale of all or substantially all of
the Company's assets or the conversion of the Company pursuant to this Article
XI requires the prior approval of the Board of Directors. If the Board of
Directors shall determine, in the exercise of its sole discretion, to consent to
such transaction, the Board of Directors shall approve the Transaction
Agreement, which shall set forth, to the extent applicable to the specific
transaction:
(a) The names and jurisdictions of formation or organization of each
of the business entities to be parties to the proposed transaction;
(b) The name and jurisdiction of formation or organization of the
business entity that is to survive the proposed merger or consolidation or
acquire substantially all of the Company's assets
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(the "Surviving Business Entity");
(c) The terms and conditions of the proposed transaction including
any consideration to be received in any sale transaction;
(d) With respect to a proposed merger or consolidation, the manner
and basis of exchanging or converting the equity securities of each constituent
business entity for, or into, cash, property, interests, rights, securities or
obligations of the Surviving Business Entity; and (i) if any interests, rights,
securities or obligations of any constituent business entity are not to be
exchanged or converted solely for, or into, cash, property, interests, rights,
securities or obligations of the Surviving Business Entity, the cash, property,
interests, rights, securities or obligations of any general or limited
partnership, limited liability company, corporation, trust or other entity
(other than the Surviving Business Entity) that the Record Holders of such
interests, rights, securities or obligations of the constituent business entity
are to receive in exchange for, or upon conversion of, their interests, rights,
securities or obligations and (ii) in the case of securities represented by
certificates, upon the surrender of such certificates, which cash, property,
interests, rights, securities or obligations of the Surviving Business Entity or
any general or limited partnership, limited liability company, corporation,
trust or other entity (other than the Surviving Business Entity), or evidences
thereof, are to be delivered;
(e) With respect to a merger or consolidation, a statement of any
changes in the constituent documents or the adoption of new constituent
documents (the articles or certificate of incorporation, articles of trust,
declaration of trust, certificate or agreement of limited partnership or limited
liability company or other similar charter or governing document) of the
Surviving Business Entity to be effected by such merger or consolidation, or if
no such amendments or changes are desired, a statement that the constituent
documents of the Surviving Business shall be its constituent documents;
(f) The effective time of the merger or consolidation, which may be
the date of the filing of the certificate of merger pursuant to Section 11.4 or
a later date specified in or determinable in accordance with the Transaction
Agreement (provided, that if the effective time of the merger or consolidation
is to be later than the date of the filing of the certificate of merger or
consolidation, the effective time shall be fixed no later than the time of the
filing of the certificate of merger or consolidation and stated therein); and
(g) Such other provisions with respect to the proposed transaction
as are deemed necessary or appropriate by the Board of Directors.
SECTION 11.3 SHAREHOLDER APPROVAL OF MERGER, CONSOLIDATION OR SALE.
(a) The Board of Directors, upon its approval of the Transaction
Agreement, shall direct that the Transaction Agreement be submitted to a vote of
Shareholders at a meeting in accordance with the requirements of Article X. A
copy or a summary of the Transaction Agreement shall be included in or enclosed
with the notice of a meeting.
(b) The Transaction Agreement shall be adopted upon receiving the
affirmative vote or consent of at least the Record Holders of a majority of the
voting power of the Company unless the
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Transaction Agreement contains any provision that amends any provision of this
Agreement, which provision, by its terms, requires the vote or consent of a
greater percentage of the Member Interests or of any class thereof, in which
case such greater percentage vote or consent shall be required for adoption of
the Transaction Agreement.
(c) After such adoption by vote or consent of the Shareholders and
at any time before the filing of the certificate of merger or consolidation
pursuant to Section 11.4, the effective date of a sale of all or substantially
all of the assets of the Company or the effective date of a conversion, the
proposed transaction may be abandoned by the Board of Directors pursuant to
provisions therefor, if any, set forth in the Transaction Agreement.
(d) Notwithstanding this Section 11.3 and Section 18-209 of the Act,
in the case of a merger or a consolidation, no submission to and approval by the
Shareholders of any Transaction Agreement is required if (i) the Transaction
Agreement does not amend this Agreement in any manner, (ii) in the case of a
merger or consolidation in which the Company is not the Surviving Business
Entity, each share of Member Interests Outstanding immediately prior to the
effective date of the merger is to be a substantially identical outstanding or
treasury share (or limited liability company interest) of the Surviving Business
Entity after the effective date of the merger and (iii) either the Shareholders,
in the case of a merger or consolidation in which the Company is not the
Surviving Business Entity, hold at least 80% of the voting power of the
Surviving Business Entity or, if the Company is the Surviving Business Entity,
the Company issues no more than the number of Common Shares (or Member Interests
or securities convertible into Common Shares, calculated on an as-converted
basis) equal to 20% of the Outstanding Common Shares (including for this
calculation Member Interests and other securities convertible or exercisable
into Common Shares, calculated on an as-converted basis).
(e) This Section 11.3 is intended to supercede any requirement
related to the approval of the Shareholders of any Transaction Agreement
contained in Section 18-209 of the Act.
SECTION 11.4 CERTIFICATE OF MERGER OR CONSOLIDATION. Upon the required
approval by the Board of Directors and the Shareholders of a Transaction
Agreement relating to a merger or consolidation, a certificate of merger or
consolidation shall be executed and filed with the Secretary of State of the
State of Delaware in conformity with the requirements of the Act.
SECTION 11.5 APPRAISAL RIGHTS. With respect to any Transaction Agreement
requiring Shareholder adoption, Shareholders shall have appraisal rights in the
same manner and to the same extent that such rights would be available to the
holder of stock of a Delaware corporation under the GCLD, mutatis mutandis, and
those rights must be perfected by the same procedures that would be required of
a holder of common stock of a Delaware corporation, mutatis mutandis.
SECTION 11.6 EFFECT OF MERGER OR CONSOLIDATION.
(a) The effect of any merger or consolidation shall be as set forth
in applicable Law.
(b) A merger or consolidation effected pursuant to this Article XI
shall not be deemed to result in a transfer or assignment of assets or
liabilities from one entity to another having occurred.
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SECTION 11.7 BUSINESS COMBINATION LIMITATIONS. Notwithstanding any other
provision of this Agreement, with respect to any Business Combination, the
Company shall be governed by Section 203 of the GCLD as though the Company were
a Delaware corporation, mutatis mutandis.
ARTICLE XII: TAX MATTERS
SECTION 12.1 CLASSIFICATION. During the period that there exists only one
Shareholder, the Company shall elect pursuant to Treasury Regulation Section
301.7701-3(c) to be disregarded as an entity separate from such Shareholder for
federal income tax purposes, and effective at such time that the Company has two
or more Shareholders, the Company shall elect pursuant to Treasury Regulation
Section 301.7701-3(c) to be classified as a partnership for federal income tax
purposes. Any Officer of the Company is authorized to cause the Company to make
any and all necessary filings with the United States Internal Revenue Service or
any other applicable body to effect these elections.
SECTION 12.2 PREPARATION OF TAX RETURNS. The Company shall arrange for
the preparation and timely filing of all returns of the Company necessary for
federal income tax purposes and state and local income tax purposes in the
jurisdictions in which the Company conducts business and shall use all
reasonable efforts to furnish to the Record Holders within 75 days of the close
of the taxable year the 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 accrual method of accounting for federal income tax purposes. The taxable
year of the Company shall be the calendar year.
SECTION 12.3 TAX ELECTIONS.
(a) The Company shall make the Section 754 Election in accordance
with applicable Treasury Regulations, subject to the reservation of the right to
seek to revoke any such election upon the Board of Director's determination that
such revocation is in the best interest of the Company and the Shareholders.
(b) Except as otherwise expressly provided herein, the Board of
Directors shall determine whether to make any other available elections
(including the elections provided for in Sections 167 and 168 of the Code) on
behalf of the Company under the Code.
(c) The Company shall elect to deduct expenses incurred in
organizing the Company ratably over a sixty-month period as provided in Section
709 of the Code.
(d) For purposes of computing adjustments under Section 743(b) of
the Code, the Board of Directors shall be authorized (but not required) to adopt
a convention whereby the price paid by a transferee of Member Interests will be
deemed to be the lowest quoted trading price of the Member Interests on any
National Securities Exchange on which such Member Interests are traded during
the calendar month in which such transfer is deemed to occur pursuant to Section
9.7(g) without regard to the actual price paid by such transferee.
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SECTION 12.4 SECTION 754 ALLOCATIONS. The adjustments to basis to
Company Assets that are attributable to the Section 754 Election shall be
allocated to the Shareholders in the manner that the Board of Directors
determines is reasonable; however, no such adjustment shall be credited or
charged to the Capital Accounts.
SECTION 12.5 TAX CONTROVERSIES. Subject to the provisions hereof, the
Shareholder designated from time to time by the Board of Directors as the "Tax
Matters Partner" (as defined in Section 6231 of the Code) shall be authorized
and required to represent the Company (at the Company's expense) in connection
with all examinations of the Company's affairs by tax authorities, including
resulting administrative and judicial proceedings, and to expend Company funds
for professional services and costs associated therewith. Each Shareholder
agrees to cooperate with the Tax Matters Partner and to do or refrain from doing
any or all things reasonably required by the Tax Matters Partner to conduct such
proceedings.
SECTION 12.6 TAX BASIS AND VALUE DETERMINATIONS. To the extent that the
Board of Directors is required to establish fair market values or allocate
amounts realized, tax basis, Carrying Values or Net Agreed Values, the Board of
Directors shall establish such values and make such allocations in a manner that
is reasonable and fair to the Shareholders, taking into account all applicable
laws, governmental regulations, rulings and decisions. The Board of Directors
may, in its sole discretion, modify or revise such allocations in order to
comply with such laws, governmental regulations, rulings or decisions or to the
extent it otherwise deems such modification or revision appropriate or
necessary. The Board of Directors is authorized, to the extent deemed by it to
be appropriate or necessary, to utilize the service of an independent appraiser
in establishing such values or allocations and the Board of Directors shall in
such cases be entitled to rely on the values or allocations established by such
independent appraiser.
SECTION 12.7 ENTITY-LEVEL DEFICIENCY COLLECTIONS. If the Company is
required by applicable law to pay any federal, state or local income tax on
behalf of, or withhold such amount with respect to, any Shareholder or former
Shareholder but the Company is not required by applicable law and does not elect
to pay such tax on behalf of, or withhold such amount with respect to, all
Shareholders (i) the Company shall pay such tax on behalf of, or withhold such
amount with respect to, such Shareholder or former Shareholder from the funds of
the Company and such payment of tax shall not be deducted as a cash expenditure
of the Company in calculating "Available Cash" but shall be deemed to be a
distribution of Available Cash to such Shareholder on whose behalf the tax was
paid; and (ii) to the extent any such Shareholder (but not a former Shareholder)
is not then entitled to such distribution under this Agreement, the Company
shall be authorized, without the approval of any Shareholder, to amend this
Agreement insofar as is necessary to maintain or establish the uniformity of
intrinsic tax characteristics as to all Member Interests or the uniformity of
Capital Accounts underlying all Member Interests and to make subsequent
adjustments to distributions in a manner that, in the reasonable judgment of the
Board of Directors, will make as little alteration in the priority and amount of
distributions otherwise applicable under this Agreement, and will not otherwise
alter the distributions to which Shareholders are entitled under the Agreement.
The Board of Directors shall be authorized (but not required) to cause the
Company to pay any state or local income tax on behalf of, or withhold such
amount with respect to, all the Shareholders even though such payment or amount
withheld may be greater than the amount that would have been required to be paid
if such payment or withholding had been made directly by a particular
Shareholder; provided, however, that such tax payment or amount withheld
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shall be pro rata with respect to all Member Interests and, in the Board's of
Directors sole discretion, that such payment of tax on behalf of, or such
withholding with respect to all of the Shareholders is in the best interests of
the Shareholders as a whole. Any amount so paid on behalf of all Shareholders
shall be deducted as a cash expenditure of the Company in calculating,
"Available Cash", and shall be treated as a distribution to the Shareholders for
purposes of Section 9.1. The Board of Directors shall be authorized (but not
required) to take all necessary or appropriate actions to collect all or any
portion of a deficiency in the payment of any such tax that relates to prior
periods that is attributable to Persons who were Shareholders when such
deficiencies arose, from such Persons.
SECTION 12.8 WITHHOLDING.
(a) Notwithstanding any other provision of this Agreement, the
Company shall comply with any withholding requirements under any Law in
connection with the payment of Distributions in respect of Member Interests and
shall remit amounts withheld to, and file required forms with, applicable taxing
authorities. In the event of any claimed over-withholding, Shareholders shall be
limited to an action against the applicable taxing authority. If an amount
required to be withheld was not withheld from an actual Distribution, the
Company may reduce subsequent distributions by the amount of such required
withholding. Each Shareholder agrees to furnish the Company such forms or other
documentation that are necessary to assist the Company in determining the extent
of, and in fulfilling, its withholding obligations.
(b) The Company is authorized to take any action determined by the
Board of Directors in its sole discretion to be necessary or appropriate to
cause the Company to comply with any withholding requirements established under
the Code or any other federal, state or local law including, without limitation,
pursuant to Section 1441, 1442, 1445 and 1446 of the Code.
ARTICLE XIII: GENERAL PROVISIONS
SECTION 13.1 FISCAL YEAR. The fiscal year of the Company shall be the
calendar year unless otherwise designated by the Board of Directors.
SECTION 13.2 OFFSET. Whenever the Company is to pay any sum to any
Shareholder, any amounts that Shareholder owes the Company may be deducted from
that sum before payment.
SECTION 13.3 NOTICES. Except as expressly set forth to the contrary in
this Agreement, all notices, requests or consents provided for or permitted to
be given under this Agreement must be in writing and must be delivered to the
recipient in person, by courier or mail or by facsimile, telegram, telex,
cablegram or similar transmission; and a notice, request or consent given under
this Agreement is effective on receipt by the Person to receive it. Whenever any
notice is required to be given by Law or this Agreement, a written waiver
thereof, signed by the Person entitled to notice, whether before or after the
time stated therein, shall be deemed equivalent to the giving of such notice.
SECTION 13.4 ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement of the Shareholders and their Affiliates relating to the Company and
supersedes all prior contracts or
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agreements with respect to the Company, whether oral or written.
SECTION 13.5 EFFECT OF WAIVER OR CONSENT. A waiver or consent, express
or implied, to or of any breach or default by any Person in the performance by
that Person of its obligations with respect to the Company is not a consent to
or waiver of any other breach or default in the performance by that Person of
the same or any other obligations of that Person with respect to the Company.
Failure on the part of a Person to complain of any act of any Person or to
declare any Person in default with respect to the Company, irrespective of how
long that failure continues, does not constitute a waiver by that Person of its
rights with respect to that default until the applicable statute of limitations
period has run.
SECTION 13.6 BINDING EFFECT. This Agreement is binding on and shall
inure to the benefit of the Shareholders and their respective heirs, legal
representatives, successors and assigns.
SECTION 13.7 GOVERNING LAW; SEVERABILITY. THIS AGREEMENT IS GOVERNED BY
AND SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE,
EXCLUDING ANY CONFLICT OF LAWS RULE OR PRINCIPLE THAT MIGHT REFER THE GOVERNANCE
OR THE CONSTRUCTION OF THIS AGREEMENT TO THE LAWS OF ANOTHER JURISDICTION. If
any provision of this Agreement or the application thereof to any Person or
circumstance is held invalid or unenforceable to any extent, the remainder of
this Agreement and the application of that provision to other Persons or
circumstances is not affected thereby and that provision shall be enforced to
the greatest extent permitted by Law.
SECTION 13.8 FURTHER ASSURANCES. In connection with this Agreement and
the transactions contemplated hereby, each Shareholder shall execute and deliver
any additional documents and instruments and perform any additional acts that
may be necessary or appropriate to effectuate and perform the provisions of this
Agreement and those transactions.
SECTION 13.9 WAIVER OF CERTAIN RIGHTS. To the extent permitted by the
Act and other Law, each Shareholder irrevocably waives any right it may have to
maintain any action for dissolution of the Company or for partition of the
property of the Company.
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IN WITNESS WHEREOF, the undersigned hereby certifies that this Amended
and Restated Limited Liability Company Agreement has been duly authorized and
approved by the Board of Directors and the Shareholders of the Company in
accordance with the Agreement and is effective the date first set forth above.
/s/ XXXXXX X. XXXXXXXXX
------------------------------
Xxxxxx X. Xxxxxxxxx
Vice President
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ANNEX A
DEFINED TERMS
Act - means the Delaware Limited Liability Company Act and any successor
statute, as amended from time to time.
Adjusted Capital Account - means the Capital Account maintained for each
Shareholder as of the end of each fiscal year of the Company (a) increased by
any amounts which such Shareholder is obligated to restore under the standards
set by Treasury Regulation Section 1.704-1(b)(2)(ii)(c) (or is deemed obligated
to restore under Treasury Regulation Sections 1.704-2(g) and 1.704-2(i)(5) and
(b) decreased by (i) the amount of all losses and deductions that, as of the end
of such fiscal year, are reasonably expected to be allocated to such Shareholder
in subsequent years under Sections 704(e)(2) and 706(d) of the Code and Treasury
Regulation Section 1.751-1(b)(2)(ii), and (ii) the amount of all distributions
that, as of the end of such fiscal year, are reasonably expected to be made to
such Shareholder in subsequent years in accordance with the terms of this
Agreement or otherwise to the extent they exceed offsetting increases to such
Shareholder's Capital Account that are reasonably expected to occur during (or
before) the year in which such distributions are reasonably expected to be made.
The foregoing definition of Adjusted Capital Account is intended to comply with
the provisions of Treasury Regulation Section 1.704-1(b)(2)(ii)(d) and shall be
interpreted consistently therewith.
Adjusted Property - means any property the Carrying Value of which has
been adjusted pursuant to Section 9.1(c)(1) or 9.1(c)(2). Once an Adjusted
Property is deemed distributed by, and recontributed to, the Company for federal
income tax purposes pursuant to Section 708 of the Code, such property shall
thereafter constitute a Contributed Property until the Carrying Value of such
property is further adjusted pursuant to Section 9.1(d)(1) or 9.1(d)(2).
Administrative Services Agreement - means that certain Administrative
Services Agreement by and between the Company and KSI to be entered into after
the date hereof.
Affiliate - means, with respect to any Person, any other Person
controlling, controlled by or under common control with that first Person. As
used in this definition, the term "control" includes, with respect to any
Entity, (a) the ownership of or power to vote, directly or indirectly, shares or
the equivalent representing 50% or more of the power to vote in the election of
directors, managers or Persons performing similar functions, (b) ownership of
50% or more of the equity or equivalent interest in such Entity and (c) the
ability to direct the business and affairs of such Entity by acting as a general
partner, manager or otherwise.
Agreed Value - means, of any Contributed Property, the fair market value
of such property or other consideration at the time of contribution as
determined by the Board of Directors using such reasonable method of valuation
as it may adopt; provided, however, that the Agreed Value of any property deemed
contributed to the Company for federal income tax purposes upon termination and
reconstitution thereof pursuant to Section 708 of the Code shall be determined
in accordance with Section 9.1(c). Subject to Section 9.1(c), the Board of
Directors shall, in its sole discretion, use such method as it deems reasonable
and appropriate to allocate the aggregate Agreed Value of
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Contributed Properties contributed to the Company in a single or integrated
transaction among each separate property on a basis proportional to their fair
market values.
Agreement - means the Limited Liability Company Agreement of Kaneb
Services LLC dated April 9, 2001, as amended and restated by this Amended and
Restated Limited Liability Company Agreement and as the same is amended in force
from time to time, together with any Member Interest Designations.
Available Cash - means, with respect to any calendar quarter (i) the sum
of (a) all cash receipts of the Company during such quarter from all sources
(including distributions of cash received from KPL and/or the Partnership) and
(b) any reduction in reserves established in prior quarters, less (ii) the sum
of (aa) all cash disbursements of the Company during such quarter, including,
without limitation, disbursements for operating expenses, taxes on the Company
as an entity or paid by the Company on behalf of, or amounts withheld with
respect to, all, but not less than all of the Shareholders, if any, debt service
(including the payment of principal, premium and interest), capital expenditures
and contributions, if any, to a subsidiary corporation or partnership (but
excluding all cash Distributions to Shareholders), (bb) any reserves established
in such quarter in such amounts as the Board of Directors determines in its sole
discretion to be necessary or appropriate (x) to provide for the proper conduct
of the business of the Company (including reserves for future capital
expenditures and acquisitions) or (y) to provide funds for distributions with
respect to any one or more of the next four calendar quarters and (cc) any other
reserves established in such quarter in such amounts as the Company determines
in its sole discretion to be necessary because the distribution of such amounts
would be prohibited by applicable Law or by 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 are subject. Taxes
paid by the Company on behalf of, or amounts withheld with respect to, less than
all of the Shareholders shall not be considered cash disbursements of the
Company that reduce "Available Cash". Notwithstanding the foregoing, "Available
Cash" shall not include any cash receipts or reductions in reserves or take into
account any disbursements made or reserves established after commencement of the
dissolution and liquidation of the Company.
Bankruptcy or Bankrupt - means with respect to any Person, that (a) such
Person (i) makes an assignment for the benefit of creditors, (ii) files a
voluntary petition in bankruptcy, (iii) is insolvent, or has entered against
such Person an order for relief in any bankruptcy or insolvency proceeding, (iv)
files a petition or answer seeking for such Person any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief under any Law, (v) answer or other pleading admitting or failing to
contest the material allegations of a petition filed against such Person in a
proceeding of the type described in subclauses (i) through (iv) of this clause
(a) or (vi) seeks, consents to or acquiesces in the appointment of a trustee,
receiver or liquidator of such Person or of all or any substantial part of such
Person's properties; or (b) 120 days have passed after the commencement of any
proceeding seeking reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under any Law, if the proceeding has
not been dismissed, or 90 days have passed after the appointment without such
Person's consent or acquiescence of a trustee, receiver or liquidator of such
Person or of all or any substantial part of such Person's properties, if the
appointment is not vacated or stayed, or 90 days have passed after the date of
expiration of any such stay, if the appointment has not been vacated.
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Board of Directors - has the meaning assigned to it in Section 5.1.
Book-Tax Disparity - with respect to any item of Contributed Property or
Adjusted Property, as of the date of any determination, the difference between
the Carrying Value of such Contributed Property or Adjusted Property and the
adjusted basis thereof for federal income tax purposes as of such date. A
Shareholder's share of the Company's Book-Tax Disparities in all of its
Contributed Property and Adjusted Property will be reflected by the difference
between such Shareholder's Capital Account balance as maintained pursuant to
Section 9.1 and the hypothetical balance of such Shareholder's Capital Account
computed as if it had been maintained strictly in accordance with federal income
tax accounting principles.
Business Combination - has the meaning assigned to it in Section 203 of
the GCLD, mutatis mutandis.
Business Day - means Monday through Friday of each week, except that a
legal holiday recognized as such by the Government of the United States or the
State of New York shall not be regarded as a Business Day.
Capital Account - means the capital account maintained for a Shareholder
or transferee pursuant to Section 9.1.
Capital Contribution - means any cash, cash equivalents or the Net
Agreed Value of Contributed Property that a Shareholder contributes to the
Company pursuant to the purchase of any Member Interests.
Carrying Value - means (a) with respect to a Contributed Property, the
Agreed Value of such property reduced (but not below zero) by all depreciation,
amortization and cost recovery deductions charged to the Shareholder's and
transferee's Capital Accounts, and (b) with respect to any other Company
property, the adjusted basis of such property for federal income tax purposes,
all as of the time of determination. The Carrying Value of any property shall be
adjusted from time to time in accordance with Section 9.1(c)(1) and 9.1(c)(2),
and to reflect changes, additions or other adjustments to the Carrying Value for
dispositions and acquisitions of Company Assets, as deemed appropriate by the
Board of Directors.
Cause - means (i) the conviction of a Director, or pleading guilty or
nolo contendrere by such Director to, a charge that such Director has committed
a felony under the laws of the United States or any state or a crime involving
moral turpitude, including, but not limited to, fraud, theft, embezzlement or
any crime that results in or is intended to result in personal enrichment at the
expense of the Company or (ii) the act or omission by a Director that
constitutes willful misconduct or gross neglect in the performance of such
Director's duties under this Agreement.
Certificate of Formation - has the meaning assigned to it in Section
2.1.
Certificates - has the meaning assigned to it in Section 3.4.
Chairman of the Board - has the meaning assigned to it in Section
5.2(i).
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Closing Date - means June 20, 2001.
Code - means the Internal Revenue Code of 1986, as amended and hereafter
amended, and applicable regulations thereunder. Any reference herein to a
specific section or sections of the Code or applicable regulations shall be
deemed to include a reference to any corresponding provision of future law or
regulation.
Common Share - means an undivided fractional Member Interest in the
Company having the powers, preferences, rights and duties set forth in Section
4.2.
Company - means Kaneb Services LLC, a Delaware limited liability
company.
Company Assets - means all assets, whether tangible or intangible and
whether real, personal or mixed, at any time owned by the Company.
Contributed Property - means each property or other asset, in such form
as may be permitted by the Act, but excluding cash and cash equivalents,
contributed to the Company (or deemed contributed to the Company on termination
and reconstitution thereof pursuant to Section 708 of the Code or otherwise).
Once the Carrying Value of a Contributed Property is adjusted pursuant to
Section 9.1(c)(1), such property shall no longer constitute a Contributed
Property but shall be deemed an Adjusted Property for such purposes.
Court of Chancery - has the meaning of such term as used in the Act and
the GCLD.
Curative Allocation - means any allocation of an item of income, gain,
deduction, loss or credit pursuant to the provisions of Section 9.6(h).
Director - means a member of the Board of Directors, but such term does
not include any Person who has ceased to be a member of the Board of Directors.
Dissolution Event - has the meaning assigned to it in Section 7.1.
Distribution Agreement - means that certain Distribution Agreement by
and among the Company, KSI and certain of the subsidiaries of the Company to be
entered into after the date hereof.
Distributions - means all distributions of cash, securities or other
property of the Company, other than distributions on liquidation, lawfully paid
or payable to any Shareholder pursuant to the rights and preferences of the
Member Interests held by such Shareholder.
Economic Risk of Loss - has the meaning set forth in Treasury Regulation
Section 1.752-2(a).
Entity - means a corporation, limited liability company, partnership,
limited partnership, venture, trust, estate, governmental entity or other
entity.
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Xxxxxxxx Xxx - means the Securities Exchange Act of 1934, as amended,
and any successor to such statute.
GCLD - means the General Corporation Law of the State of Delaware, as
amended from time to time.
Indemnitee - has the meaning assigned to it in Section 5.7(a).
Information Statement - means the Information Statement of the Company
dated June 13, 2001, which is filed as Exhibit 99.1 to the Company's
registration statement on Form 10 filed by the Company on June 8, 2001.
Initial Agreements - means that Rights Agreement, the Distribution
Agreement, the Line of Credit and the Administrative Services Agreement.
Initial Common Shares - means that number of Common Shares equal to the
quotient obtained by (rounded up to the nearest whole Common Share) dividing (i)
the number of shares of the common stock, no par value, of Kaneb Services, Inc.,
a Delaware corporation, held of record as of the day before the Closing Date by
(ii)3.
KPL - means Kaneb Pipe Line Company LLC, a Delaware limited liability
company.
KSI - means Kaneb Services, Inc., a Delaware corporation.
Law - means any applicable constitutional provision, statute, act, code
(including the Code), law, regulation, rule, ordinance, order, decree, ruling,
proclamation, resolution, judgment, decision, declaration or interpretative or
advisory opinion or letter of a governmental authority, and includes any
applicable rule of any exchange or automated quotation system on which any
Member Interests are traded or listed.
Line of Credit - means that certain Line of Credit by and between the
Company and KSI to be entered into after the date hereof.
Member Interests - means the Common Shares and all shares of any other
class or series of equity interests in the Company created by the Board of
Directors pursuant to Section 4.4. The Member Interests comprise all of the
limited liability company interests (as such term is defined in the Act).
Member Interest Designations - has the meaning assigned to it in Section
4.3.
Minimum Gain - means that amount determined in accordance with the
principles of Treasury Regulation Section 1.704-2(d).
Minimum Gain Attributable to Shareholder Nonrecourse Debt - means that
amount determined in accordance with the principles of Treasury Regulation
Section 1.704-2(i)(3).
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National Securities Exchange - means an exchange registered with the
Securities and Exchange Commission under Section 6(a) of the Exchange Act.
Net Agreed Value - means, (a) in the case of any Contributed Property,
the Agreed Value of such property reduced by any liabilities either assumed by
the Company upon such contribution or to which such property is subject when
contributed and (b) in the case of any property distributed to a Shareholder or
transferee by the Company, the Company's Carrying Value of such property at the
time such property is distributed, reduced by any indebtedness either assumed by
such Shareholder or transferee upon such distribution or to which such property
is subject at the time of distribution, in either case, as determined under
Section 752 of the Code.
Net Income - means for any taxable period, the excess, if any, of the
Company's items of income and gain for such taxable period over the Company's
items of loss and deduction for such taxable period. The items included in the
calculation of Net Income shall be determined in accordance with Section 9.2 and
shall not include any items specially allocated under Section 9.6. Once an item
of income, gain, loss or deduction that has been included in the initial
computation of Net Income is subjected to a Required Allocation or a Curative
Allocation, Net Income or the resulting Net Loss, whichever the case may be,
shall be recomputed without regard to such item.
Net Loss - means for any taxable period, the excess, if any, of the
Company's items of loss and deduction for such taxable period over the Company's
items of income and gain for such taxable period. The items included in the
calculation of Net Loss shall be determined in accordance with Section 9.2 and
shall not include any items specially allocated under Section 9.6. Once an item
of income, gain, loss or deduction that has been included in the initial
computation of Net Loss is subjected to a Required Allocation or a Curative
Allocation, Net Loss or the resulting Net Income, whichever the case may be,
shall be recomputed without regard to such item.
Nonrecourse Deductions - means any and all items of loss, deduction or
expenditure (described in Section 705(a)(2)(B) of the Code) that, in accordance
with the principles of Treasury Regulation Section 1.704-2(b), are attributable
to a Nonrecourse Liability.
Nonrecourse Liability - has the meaning set forth in Treasury Regulation
Section 1.752-1(a)(2).
Officer - means any Person appointed as an officer of the Company as
provided in Section 5.4(c), but such term does not include any Person who has
ceased to be an officer of the Company.
Outstanding - means, with respect to the Member Interests, all Member
Interests that are issued by the Company and reflected as outstanding on the
Company's books and records as of the date of determination, but excludes any
Member Interests held by the Company.
Partnership - means Kaneb Pipe Line Partners, L.P.
Person - means a natural person or an Entity.
Recapture Income - means any gain recognized by the Company (computed
without regard
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to any adjustment required by Sections 734 or 743 of the Code) upon the
disposition of any property or asset of the Company, which gain is characterized
as ordinary income because it represents the recapture of deductions previously
taken with respect to such property or asset.
Record Date - has the meaning assigned to it in Section 10.5.
Record Holder - means the Person in whose name a Member Interest is
registered in the books and records of the Transfer Agent as contemplated in
Section 3.5. The Company shall not be a Record Holder by virtue of any Member
Interests it holds.
Required Allocation - means any allocation (or limitation imposed on any
allocation) of an item of income, gain, deduction or loss pursuant to Sections
9.6(a), 9.6(b), 9.6(c), 9.6(d), 9.6(e), 9.9(f) and 9.6(g), such allocations (or
limitations thereon) being directly or indirectly required by the Treasury
Regulations promulgated under Section 704(b) of the Code.
Residual Gain or Residual Loss - any item of gain or loss, as the case
may be, of the Company recognized for federal income tax purposes resulting from
a sale, exchange or other disposition of a Contributed Property or Adjusted
Property, to the extent such item of gain or loss is not allocated pursuant to
Sections 9.7(b)(1)(A) or 9.7(b)(2)(A) to eliminate Book-Tax Disparities.
Rights Agreement - means that certain Rights Agreement by and between
the Company and The Chase Manhattan Bank dated June 27, 2001.
Section 754 Election - means an election under Section 754 of the Code
relating to the adjustment of the adjusted basis of Company Assets as provided
in Sections 734 and 743 of the Code.
Securities Act - means the United States Securities Act of 1933, as
amended from time to time, and all rules and regulations promulgated thereunder.
Shareholder - means any Person who purchases, is transferred or
otherwise lawfully acquires any Member Interests and becomes a Record Holder of
any Member Interest as provided in this Agreement, but such term does not
include any Person who has ceased to be a Record Holder of any Member Interest.
Shareholders are "members" (as such term is defined in the Act) of the Company.
Shareholder Nonrecourse Debt - has the meaning of "partner nonrecourse
debt" set forth in Treasury Regulation Section 1.704-2(b)(4).
Shareholder Nonrecourse Deductions - has the meaning of "partner
nonrecourse deductions" set forth in Treasury Regulation Section 1.704-2(i).
Shares - means Common Shares and/or other Member Interests, as the
context requires.
Surviving Business Entity - has the meaning assigned to it in Section
11.2(b).
Transfer Agent - means any bank, trust company or other Person appointed
from time to
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time by the Board of Directors to act as registrar and transfer agent for the
Member Interests. The initial Transfer Agent shall be American Stock Transfer &
Trust Company.
Treasury Regulations - means the regulations promulgated by the United
States Department of the Treasury pursuant to and in respect of provisions of
the Code. All references herein to sections of the Treasury Regulations shall
include any corresponding provisions of succeeding, similar, substitute,
proposed or final Treasury Regulations.
Unrealized Gain - attributable to a Company property means, as of any
date of determination, the excess, if any, of the fair market value of such
property as of such date of determination over the Carrying Value of such
property as of such date of determination (before any adjustment to be made
pursuant to Section 9.1(c) as of such date).
Unrealized Loss - attributable to a Company property means, as of any
date of determination, the excess, if any, of the Carrying Value of such
property as of such date of determination (before any adjustment to be made
pursuant to Section 9.1(c) as of such date) over the fair market value of such
property as of such date of determination.
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