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EXHIBIT 3.2
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
XXXXXX XXXXXX MANAGEMENT, LLC
Dated as of [__________ __], 2001
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AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
XXXXXX XXXXXX MANAGEMENT, LLC
A DELAWARE LIMITED LIABILITY COMPANY
TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS.................................................................................... 1
1.1 Definitions.................................................................................... 1
1.2 Construction................................................................................... 7
ARTICLE 2 ORGANIZATION................................................................................... 8
2.1 Continuation................................................................................... 8
2.2 Name........................................................................................... 8
2.3 Registered Office; Registered Agent; Principal Office; Other Offices........................... 8
2.4 Purpose; Powers................................................................................ 8
2.5 Foreign Qualification.......................................................................... 8
2.6 Power of Attorney.............................................................................. 9
2.7 Term........................................................................................... 9
2.8 Taxation as Corporation; No State-Law Partnership.............................................. 9
2.9 Title to Company Assets........................................................................ 9
ARTICLE 3 SHAREHOLDERS; CERTIFICATES; TRANSFER OF COMPANY SECURITIES................................... 10
3.1 Shareholders.................................................................................. 10
3.2 No Liability to Third Parties................................................................. 10
3.3 No Expulsion.................................................................................. 10
3.4 Certificates.................................................................................. 10
3.5 Register, Registration of Transfer and Exchange............................................... 11
3.6 Mutilated, Destroyed, Lost or Stolen Certificates............................................. 12
ARTICLE 4 AUTHORIZATION AND ISSUANCE OF COMPANY SECURITIES.............................................. 13
4.1 Company Securities............................................................................ 13
4.2 Voting Shares................................................................................. 14
4.3 Listed Shares................................................................................. 16
4.4 Splits and Combinations....................................................................... 19
4.5 Withholding................................................................................... 19
ARTICLE 5 MANAGEMENT.................................................................................... 20
5.1 Management of the Company's Affairs........................................................... 20
5.2 Board of Directors............................................................................ 20
5.3 Restrictions on the Board of Directors' Authority............................................. 22
5.4 Officers...................................................................................... 22
5.5 Compensation.................................................................................. 24
5.6 Business Opportunities........................................................................ 25
5.7 Interested Officers or Directors.............................................................. 25
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5.8 Duties of Record Holders of Voting Shares and Directors....................................... 26
5.9 Indemnification............................................................................... 26
5.10 Liability of Indemnitees...................................................................... 28
5.11 Facsimile Signatures.......................................................................... 28
ARTICLE 6 BOOKS AND RECORDS, INFORMATION AND ACCOUNTS................................................... 29
6.1 Maintenance of Books and Records.............................................................. 29
6.2 Information................................................................................... 29
6.3 Accounts...................................................................................... 29
ARTICLE 7 DISSOLUTION, WINDING-UP AND TERMINATION....................................................... 29
7.1 Dissolution................................................................................... 29
7.2 Winding-Up and Termination.................................................................... 30
ARTICLE 8 AMENDMENT OF AGREEMENT; SHAREHOLDER MEETINGS; RECORD DATE..................................... 30
8.1 Amendment Procedures.......................................................................... 30
8.2 Meetings...................................................................................... 31
8.3 Notice of a Meeting........................................................................... 31
8.4 Record Date................................................................................... 31
8.5 Adjournment................................................................................... 31
8.6 Waiver of Notice; Approval of Meeting; Approval of Minutes.................................... 31
8.7 Quorum; Voting................................................................................ 32
8.8 Special Voting Requirements................................................................... 32
8.9 Conduct of Meeting............................................................................ 32
8.10 Action Without a Meeting...................................................................... 32
8.11 Voting and Other Rights....................................................................... 33
ARTICLE 9 COVENANTS..................................................................................... 33
ARTICLE 10 GENERAL PROVISIONS............................................................................ 34
10.1 Fiscal Year................................................................................... 34
10.2 Offset........................................................................................ 34
10.3 Notices....................................................................................... 34
10.4 Entire Agreement.............................................................................. 34
10.5 Waiver........................................................................................ 34
10.6 Binding Effect................................................................................ 34
10.7 Governing Law; Severability................................................................... 34
10.8 Further Action................................................................................ 35
10.9 No Right to Action for Dissolution or Partition............................................... 35
10.10 Third-Party Beneficiaries..................................................................... 35
10.11 Creditors..................................................................................... 35
10.12 Counterparts.................................................................................. 35
ANNEX A - Exchange Provisions
ANNEX B - Purchase Provisions
ANNEX C - Delegation of Control Agreement
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AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
XXXXXX XXXXXX MANAGEMENT, LLC
This Amended and Restated Limited Liability Company Agreement of Xxxxxx
Xxxxxx Management, LLC, a Delaware limited liability company (the "Company"),
dated as of [__________ __], 2001, is adopted, executed and agreed to, for good
and valuable consideration, by and among Kinder Xxxxxx X.X., Inc., a Delaware
corporation (the "Organizational Shareholder"), and any other Persons (as
defined below) who become Shareholders (as defined below) of the Company or
parties hereto as provided herein.
ARTICLE 1
Definitions
1.1 Definitions. As used in this Agreement, except as defined otherwise
in the Exchange Provisions and the Purchase Provisions (within each of which the
definitions in which shall control), the following terms shall have the
following respective meanings:
"Act" means the Delaware Limited Liability Company Act, as amended from
time to time, and any successor to such statute.
"Affiliate" means, with respect to any Person, any other Person that
directly or indirectly controls, is controlled by or is under common control
with, the Person in question. As used in this definition of "Affiliate," the
term "control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person,
whether through ownership of voting securities, by contract or otherwise.
"Agreement" means this Amended and Restated Limited Liability Company
Agreement, including the Exchange Provisions and the Purchase Provisions, as
amended, supplemented or restated from time to time.
"Assignee" means a Person to whom one or more Company Securities have
been transferred in a manner permitted under this Agreement.
"Average Market Price" means, except as otherwise provided in the
Purchase Provisions, the average Closing Price of a Listed Share during the ten
consecutive Trading Days prior to the applicable ex-dividend date, but not
including that date. For the purpose of this definition, the term "ex-dividend
date" means the date on which "ex-dividend" trading commences for a Share
Distribution on the principal National Securities Exchange on which the Listed
Shares are then listed.
"Bankruptcy" or "Bankrupt" means, with respect to any Person, that (a)
such Person (i) makes a general assignment for the benefit of creditors; (ii)
files a voluntary petition in bankruptcy; (iii) is insolvent or has entered
against such Person an order for relief in any
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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) files an answer or
other pleading admitting or failing to contest the material allegations of a
petition filed against such Person in a proceeding of the type described in
subclauses (i) through (iv) of this clause (a); or (vi) seeks, consents to or
acquiesces in the appointment of a trustee, receiver or liquidator of such
Person or of all or any substantial part of such Person's properties; or (b) 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 the
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.
"Beneficial Owner" has the meaning set forth in Rules 13d-3 and 13d-5
under the Exchange Act, as in effect on the date of this Agreement, and the
terms "Beneficial Ownership," "Beneficially Own," "Beneficially Owned" and
similar terms have correlative meanings.
"Board of Directors" has the meaning assigned to it in Subsection
5.1(a).
"Business Day" means any day other than a Saturday, a Sunday or a day
on which national banking associations in the State of New York or the State of
Texas are closed.
"Certificate" has the meaning assigned to it in Subsection 3.4(a).
"Chairman of the Board" has the meaning assigned to it in Subsection
5.2(g).
"Class B Unit" has the meaning assigned to it in the Partnership
Agreement.
"Closing Date" means the date of the sale by the Company of Listed
Shares to the Underwriters pursuant to the Underwriting Agreement.
"Closing Price" means (a) for securities that are listed on a National
Securities Exchange, the last sale price for that day, regular way, or, if there
are no sales on that day, the average of the closing bid and asked prices for
that day, regular way, in either case as reported in the principal composite
transactions reporting system for the principal National Securities Exchange on
which the securities are listed; or (b) for securities that are not listed on a
National Securities Exchange, (i) the last quoted price on that day, or if no
price is quoted, the average of the high bid and low asked prices on that day,
each as reported by the NASDAQ; (ii) if on that day the securities are not so
quoted, the average of the closing bid and asked prices on that day furnished by
a professional market maker in the securities selected by the Board of Directors
in its sole discretion; or (iii) if on that day no market maker is making a
market in the securities, the fair value of the securities as determined by the
Board of Directors in its sole discretion.
"Code" means the United States Internal Revenue Code of 1986, as
amended from time to time and as interpreted by the applicable regulations
thereunder. All references herein to a
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specific section or sections of the Code shall be deemed to include a reference
to any corresponding provision or provisions of future Law.
"Common Unit" has the meaning assigned to it in the Partnership
Agreement.
"Company" means Xxxxxx Xxxxxx Management, LLC, a Delaware limited
liability company.
"Company Securities" means the shares into which the interest in the
Company is divided and includes Voting Shares, Listed Shares and any other
shares that may be approved in accordance with Subsection 4.1(a), as the context
requires.
"Delegation of Control Agreement" means the Delegation of Control
Agreement dated as of [___________ __], 2001 among the Organizational
Shareholder, KMEP, the Operating Partnerships and the Company, attached hereto
as Annex C, as amended, supplemented or restated from time to time.
"Director" means a member of the Board of Directors elected as provided
in Section 5.2, but such term does not include any Person who has ceased to be a
member of the Board of Directors. Directors are "managers" (as such term is
defined in the Act) of the Company.
"Dissolution Event" has the meaning assigned to it in Subsection
7.1(a).
"Entity" means a corporation, limited liability company, venture,
partnership, trust, unincorporated organization, association or other entity.
"Exchange Act" means the United States Securities Exchange Act of 1934,
as amended from time to time, and any successor to such statute and all rules
and regulations promulgated thereunder.
"Exchange Provisions" means the Exchange Provisions executed and
adopted by KMI and attached hereto as Annex A, as amended, supplemented or
restated from time to time, which are an integral part of this Agreement.
"Group" means a "group" of Persons as defined in Section 13(d)(3) of
the Exchange Act.
"Indemnitees" means (a) the Record Holders of Voting Shares; (b) any
Person who is or was an Affiliate of the Record Holders of Voting Shares; (c)
any Person who is or was an officer, director, employee, partner, agent or
trustee of the Record Holders of Voting Shares, the Company or any of their
respective Affiliates; or (d) any Person who is or was serving at the request of
the Record Holders of Voting Shares, the Company or any of their respective
Affiliates as a director, officer, employee, partner, agent or trustee of
another Person.
"Initial Public Offering" means the consummation of the first
underwritten public offering of Listed Shares pursuant to an effective
registration statement filed under the Securities Act, as underwritten by the
Underwriters pursuant to the Underwriting Agreement.
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"I-Unit" has the meaning assigned to it in the Partnership Agreement.
"KMEP" means Xxxxxx Xxxxxx Energy Partners, L.P., a Delaware limited
partnership.
"KMI" means Xxxxxx Xxxxxx, Inc., a Kansas corporation, and its
successor by merger, consolidation or acquisition of all or substantially all of
its assets.
"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 National Securities Exchange on which Company Securities
are traded or listed.
"Listed Share" has the meaning assigned to it in Subsection 4.1(a).
"NASDAQ" means the National Association of Securities Dealers Automatic
Quotation System.
"National Securities Exchange" means an exchange registered with the
Securities and Exchange Commission under Section 6(a) of the Exchange Act.
"Officer" means any Person elected as an officer of the Company as
provided in Section 5.4, but such term does not include any Person who has
ceased to be an officer of the Company. Officers are "managers" (as such term is
defined in the Act) of the Company.
"Operating Partnerships" has the meaning assigned to it in the
Partnership Agreement.
"Opinion of Counsel" means a written opinion of counsel (who may be
regular counsel to the Company or any Affiliate thereof) acceptable to the Board
of Directors, any committee thereof or any Officer.
"Organizational Certificate" has the meaning assigned to it in Section
2.1.
"Organizational Shareholder" means Kinder Xxxxxx X.X., Inc., a Delaware
corporation.
"Outstanding" means, with respect to any Company Securities and any
Units, all Company Securities or Units that are issued by the Company or KMEP,
respectively, and reflected as outstanding on the books and records of the
Company (including the Transfer Agent) or KMEP (including any transfer agent),
respectively, as of the date of determination, excluding Company Securities and
Units held in the treasury; provided, however, that if any Listed Shares are
Beneficially Owned:
(a) by any Person or Group, excluding the Record Holders of
Voting Shares and their Affiliates, if the sum of the number of Listed
Shares Beneficially Owned by such Person or Group plus the number of
Common Units Beneficially Owned by such
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Person or Group equals 20% or more of the sum of the aggregate number
of Listed Shares that are issued by the Company and reflected as
outstanding on the books and records of the Company (including the
Transfer Agent) as of the date of determination, but not including
Listed Shares held in the treasury, plus the aggregate number of Common
Units that are issued by KMEP and reflected as outstanding on the books
and records of KMEP (including any transfer agent) as of the date of
determination, but not including Common Units held in the treasury; or
(b) by the Record Holders of Voting Shares or their Affiliates
with respect to (i) a matter that is presented to the Record Holders of
Listed Shares pursuant to Subsection 4.3(c) in order to determine the
manner in which I-Units shall be voted with respect to (A) the proposed
removal of the general partner of KMEP, (B) any vote required to be
taken under Subsection 11.2(a) of the Partnership Agreement with
respect to the transfer of all, but not less than all, of the
Partnership Interest (as defined in the Partnership Agreement) of the
general partner of KMEP and the admission of any such transferee as a
general partner of KMEP, (C) a proposed amendment to the terms of the
I-Units pursuant to Subsection 15.2 of the Partnership Agreement that
would have a material adverse effect on the rights and preferences of
the I-Units in relation to other classes of Units, as determined in the
sole discretion of the Board of Directors, or (D) the proposed
withdrawal of the general partner of KMEP pursuant to Section 13.1(b)
of the Partnership Agreement, or (ii) a matter that the Record Holders
of Listed Shares vote upon pursuant to Subsection 4.3(d),
then such Listed Shares so Beneficially Owned pursuant to clauses (a) and (b)
above shall not be considered to be Outstanding for the purposes of Subsections
7.1(a)(ii) and 7.1(a)(iii) and Articles 8 and 9.
"Partnership Agreement" means the Third Amended and Restated Agreement
of Limited Partnership of KMEP dated as of [__________ __], 2001, as amended,
supplemented or restated from time to time.
"Partnerships" means KMEP and the Operating Partnerships.
"Person" means a natural person or an Entity.
"Purchase Provisions" means the Purchase Provisions executed and
adopted by KMI and attached hereto as Annex B, as amended, supplemented or
restated from time to time, which are an integral part of this Agreement.
"Record Date" means the date established by the Board of Directors for
determining (a) the identity of the Record Holders entitled to notice of, or to
vote at, any meeting of the Shareholders or entitled to vote by ballot or give
approval of a Company action in writing without a meeting or entitled to
exercise rights in respect of any lawful action of the Shareholders, (b) the
identity of the Record Holders entitled to notice with respect to any other
matter, or (c) the identity of the Record Holders entitled to receive any
distribution, including a Share Distribution.
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"Record Holder" means the Person in whose name a Company Security is
registered on the books and records of the Company or the Transfer Agent as
contemplated in Section 3.5.
"Registration Rights Agreement" means the Registration Rights Agreement
dated as of [___________ __], 2001 among KMEP, KMI and the Company, as amended,
supplemented or restated from time to time.
"Securities Act" means the United States Securities Act of 1933, as
amended from time to time, and any successor to such statute and all rules and
regulations promulgated thereunder.
"Securities and Exchange Commission" means the Securities and Exchange
Commission of the United States and any successor thereto.
"Share Distribution" means a distribution in respect of a Company
Security made or required to be made in an additional Company Security or a
fraction thereof to any Shareholder pursuant to the terms of the Company
Securities held by such Shareholder.
"Shareholder" means any Person admitted as a shareholder in accordance
with Subsection 3.1(a), but such term does not include any Person who has ceased
to be a Record Holder of any Company Security. Shareholders are "members" (as
such term is defined in the Act) of the Company.
"Shareholder Interest" means a limited liability company interest (as
such term is defined in the Act) of a Shareholder, including the right to
receive Share Distributions and other distributions from the Company, together
with all other rights, benefits and privileges enjoyed by the Shareholder (under
the Act, the Organizational Certificate, this Agreement or otherwise) in its
capacity as a Shareholder, including the right to vote, consent and approve, and
all obligations, duties and liabilities imposed on the Shareholder (under the
Act, the Organizational Certificate, this Agreement or otherwise) in its
capacity as a Shareholder.
"Tax Indemnification Agreement" means the Tax Indemnification Agreement
dated as of [____________ __], 2001 between KMI and the Company, as amended,
supplemented or restated from time to time.
"Trading Day" means, with respect to Listed Shares or Common Units, a
day on which the principal National Securities Exchange on which the Listed
Shares or Common Units, as the case may be, are listed is open for business or,
if the Listed Shares or Common Units, as the case may be, are not listed on any
National Securities Exchange, a day on which banking institutions in New York,
New York generally are open.
"Transfer Agent" means any bank, trust company or other Person
(including the Company or any Affiliate) appointed from time to time by the
Board of Directors to act as registrar and transfer agent for the Company
Securities. Initially, EquiServe Trust Company, N.A. shall be the Transfer Agent
for the Listed Shares.
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"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.
"Underwriters" means Xxxxxxx, Sachs & Co., Credit Suisse First Boston
Corporation, Xxxxxx Brothers Inc., Xxxx Xxxxxxxx Incorporated, and First Union
Securities, Inc., as representatives of the several underwriters named in
Schedule I to the Underwriting Agreement.
"Underwriting Agreement" means the Underwriting Agreement dated as of
[_______ __], 2001 among the Underwriters, the Company, the Organizational
Shareholder, KMI and KMEP, providing for the purchase of Listed Shares by the
Underwriters, as amended, supplemented or restated from time to time.
"Unit" has the meaning assigned to it in the Partnership Agreement.
"Voting Share" has the meaning assigned to it in Subsection 4.1(a).
1.2 Construction. Unless the context requires otherwise:
(a) terms defined in Section 1.1 have the meanings assigned to
them in that Section for purposes of this Agreement; terms defined in
the Exchange Provisions and also in this Agreement shall in the
Exchange Provisions have the meanings ascribed to them therein; and
terms defined in the Purchase Provisions and also in this Agreement
shall in the Purchase Provisions have the meanings ascribed to them
therein;
(b) the gender (or lack of gender) of all words used in this
Agreement includes the masculine, feminine and neuter;
(c) references to Articles, Sections and Subsections (other
than in connection with the Code, the Treasury Regulations or the Act)
refer to Articles, Sections and Subsections, respectively, of this
Agreement;
(d) the words "herein," "hereof," "hereunder" and other words
of similar import refer to this Agreement as a whole and not to any
particular Article, Section or Subsection, except as otherwise provided
in the Exchange Provisions and the Purchase Provisions;
(e) "include," "includes" and "including" mean "include,
without limitation," "includes, without limitation" and "including,
without limitation," respectively;
(f) terms defined herein include the plural as well as the
singular; and
(g) "or" is not exclusive.
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ARTICLE 2
Organization
2.1 Continuation. The Company was organized as a Delaware limited
liability company by the filing of a Certificate of Formation on February 14,
2001, as amended by a Certificate of Amendment filed on February 16, 2001 (as
amended, supplemented or restated from time to time, the "Organizational
Certificate"), pursuant to the Act. The Organizational Shareholder, as the
initial Shareholder, hereby continues the existence of the Company as a limited
liability company pursuant to the provisions of the Act.
2.2 Name. The name of the Company is "Xxxxxx Xxxxxx Management, 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.
2.3 Registered Office; Registered Agent; Principal Office; 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 Organizational Certificate
or such other office (which need not be a place of business of the Company) as
the Board of Directors may designate in the manner provided 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
Organizational Certificate 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 One Xxxxx Center, Suite
1000, 000 Xxxxxx Xxxxxx, Xxxxxxx, 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.
2.4 Purpose; Powers. The purposes of the Company are to be a limited
partner in KMEP, to manage and control, directly or through one or more
Affiliates, the business and affairs of KMEP and the Operating Partnerships
pursuant to the Delegation of Control Agreement and to engage in any lawful
business, purpose or activity related thereto. The Company shall possess and may
exercise all the powers and privileges granted by the Act, by any other Law or
by this Agreement, together with any powers incidental thereto, including such
powers and privileges as are necessary or convenient to the conduct, promotion
or attainment of the business, purposes or activities of the Company.
2.5 Foreign Qualification. Prior to the Company's conducting business
in any jurisdiction other than 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 in that
jurisdiction.
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2.6 Power of Attorney.
(a) Each Shareholder does hereby constitute and appoint each
Person specifically authorized by the Board of Directors to act as its
true and lawful representative and attorney-in-fact, in its name, place
and stead, to make, execute, sign, deliver and file (i) any amendment
of the Organizational Certificate; (ii) any amendment to this
Agreement, including any amendment to the Exchange Provisions and the
Purchase Provisions, made in accordance with the terms of this
Agreement; and (iii) all such other instruments, documents and
certificates that may from time to time be required by Law to
effectuate, implement and continue the valid and subsisting existence
of the Company or to dissolve the Company or for any other purpose
consistent with this Agreement and the transactions contemplated
hereby.
(b) The foregoing power of attorney is hereby declared to be
irrevocable and a power coupled with an interest, and it shall survive
and not be affected by the subsequent death, incompetency, disability,
incapacity, dissolution, bankruptcy or termination of any Shareholder
and the transfer of all or any portion of such Shareholder's
Shareholder Interest, and shall extend to all Assignees. Each
Shareholder hereby agrees to be bound by any representation made by the
Board of Directors or any Person authorized by the Board of Directors
acting in good faith pursuant to such power of attorney, and each
Shareholder hereby waives any and all defenses that may be available to
contest, negate or disaffirm the action of the Board of Directors or
such authorized Person taken in good faith under such power of
attorney. Each Shareholder shall execute and deliver to the Board of
Directors or such authorized Person, within 15 days after receipt of a
request therefor from the Board of Directors or such authorized Person,
such further designation, powers of attorney and other instruments as
the Board of Directors or such authorized Person deems necessary to
effectuate this Agreement and the purposes of the Company.
2.7 Term. The term of the Company commenced on February 14, 2001, which
was the date of the filing of the Organizational Certificate in the office of
the Secretary of State of the State of Delaware, and the Company's existence
shall be perpetual, unless and until the Company is dissolved in accordance with
Article 7.
2.8 Taxation as Corporation; No State-Law Partnership. The Company
shall elect pursuant to Sections 301.7701-2 and 301.7701-3 of the Treasury
Regulations to be treated as a corporation for all purposes under the Code. The
Shareholders intend that the Company not be a partnership (including a limited
partnership) or joint venture, that no Shareholder be a partner or joint
venturer of any other Shareholder, and that this Agreement may not be construed
to suggest otherwise.
2.9 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 more
nominees, as the Board of Directors may determine. All Company assets shall be
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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.
ARTICLE 3
Shareholders; Certificates;
Transfer of Company Securities
3.1 Shareholders.
(a) A Person shall be admitted as a Shareholder, and shall
become bound by this Agreement, if such Person executes this Agreement
or, without such execution, if such Person purchases or otherwise
acquires a Company Security and becomes the Record Holder of such
Company Security in accordance with the provisions of Section 3.5.
Unless otherwise provided in this Agreement, a Person may become a
Record Holder without the consent or approval of any of the
Shareholders. All rights of Shareholders under this Agreement are
owned, and may be exercised, only by Record Holders.
(b) The name and mailing address of each Record Holder shall
be listed on the books and records of the Company or the Transfer
Agent. The Secretary of the Company shall be required to 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. Company Securities shall be represented by the Certificates
held by the Shareholders, except as provided in Subsection 3.4(b).
3.2 No Liability to Third Parties. No Record Holder, Shareholder or
Beneficial Owner of any Company Security shall be liable for the debts,
obligations or liabilities of the Company, whether arising in contract, tort or
otherwise, by reason of being a Record Holder, Shareholder or Beneficial Owner.
3.3 No Expulsion. A Shareholder may not be expelled or removed as a
Shareholder.
3.4 Certificates.
(a) Certificates evidencing any of the Company Securities
("Certificates") 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. Each Certificate shall certify the
number of Company Securities and the class of such Company Securities
which the Certificate represents and shall be signed by (i) the
Chairman of the Board, the President or any Vice President and (ii) the
Secretary, any Assistant Secretary, the Treasurer or any Assistant
Treasurer of the Company and countersigned by the Transfer Agent (in
the event that the Company is not the Transfer Agent); provided,
however, that any or all of the signatures, including the
countersignature, on the Certificate may be facsimile. In the event
that any Officer or Transfer Agent who shall have signed, or whose
facsimile signature or signatures shall have been placed upon, any such
Certificate shall have ceased to be such Officer or Transfer Agent
before such Certificate is issued
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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 on the date of issue. Certificates for each class of
Company Securities 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 Company Securities, except as
provided in Subsection 3.4(b). No Certificate shall be valid for any
purpose until it has been countersigned by the Transfer Agent (in the
event that the Company is not the Transfer Agent).
(b) The Company Securities may be represented by global
certificates issued in the name of Cede & Co. (or such other name as
the depositary may direct), as nominee for the Depositary Trust
Company, as depositary for the Company Securities, and Certificates
shall not be issued to owners of beneficial interests in global
certificates held by the depositary. Any provision herein calling for
delivery of Certificates for Company Securities may be satisfied by
delivering such Company Securities by book-entry transfer to such
owners of beneficial interests at an account maintained for that
purpose by the Transfer Agent with the depositary, in accordance with
arrangements among the depositary and its participants and subject to
the various policies and procedures that may be adopted by the
depositary from time to time.
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 requirement of the Board of
Directors and subject to the provisions of Subsection 3.5(b), shall
provide for the registration and transfer of Company Securities. The
Transfer Agent is hereby appointed registrar and transfer agent for the
purpose of registering Company Securities and transfers of Company
Securities as herein provided. At any time the Transfer Agent may
resign, by notice to the Board of Directors, or may be removed, with or
without cause, by the Board of Directors. Such resignation or removal
shall be effective upon the earlier of (i) the appointment by the Board
of Directors of a successor Transfer Agent and the acceptance by such
successor of such appointment, or (ii) the 30th day after notice of
such resignation or removal was given, whereupon the Company shall act
as the Transfer Agent until a successor is appointed. The Company shall
not recognize transfers of Company Securities 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 Subsection 3.5(b), the appropriate Officers of the
Company shall execute, 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 Company Securities as were evidenced by the Certificate so
surrendered.
(b) The Company shall not recognize any transfer of Company
Securities until (i) the Certificates evidencing such Company
Securities are surrendered to the Transfer Agent for registration of
transfer or (ii) such Company Securities are delivered by book- entry
transfer to the Shareholder in accordance with Section 3.4(b). No
charge shall be
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imposed by the Company for such transfer; provided, however, 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, surety bond premium, special
charges for services requested by the transferor or transferee, or
similar fees or charges that may be imposed with respect thereto.
(c) By transfer of Company Securities in accordance with this
Section 3.5, the transferor shall be deemed to have given the
transferee the right to be admitted to the Company as a Shareholder,
and each transferee of Company Securities (including any nominee holder
or an agent acquiring such Company Securities for the account of
another Person) shall become a Shareholder with respect to the Company
Securities so transferred to such Person when any such transfer and
admission is reflected in the books and records of the Transfer Agent,
and such Person thereby becomes a Record Holder of such Company
Securities.
(d) The Company shall be entitled to recognize the Record
Holder as the owner of Company Securities and, accordingly, shall not
be bound to recognize any equitable or other claim to or interest in
such Company Securities 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. Except as otherwise provided in this
Agreement or by Law, including the Securities Act, Company Securities
shall be freely transferable to any Person. The transfer of any Company
Securities and the admission of any new Shareholder shall not
constitute an amendment to this Agreement.
(e) Any Share Distribution or other distribution in respect of
Company Securities shall be made 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 by the Board of
Directors for the Share Distribution or other distribution. The making
of such Share Distribution or other distribution shall constitute full
payment and satisfaction of the Company's liability in respect of such
Share Distribution or other distribution regardless of any claim of any
Person who may have an interest in such Share Distribution or other
distribution by reason of an assignment or otherwise.
3.6 Mutilated, Destroyed, Lost or Stolen Certificates.
(a) If any mutilated Certificate is surrendered to the
Transfer Agent, then the appropriate Officers on behalf of the Company
shall execute, and upon the Company's request the Transfer Agent shall
countersign and deliver in exchange for, a new Certificate evidencing
the same aggregate number and type of Company Securities as the
Certificate so surrendered.
(b) The appropriate Officers on behalf of the Company shall
execute, 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:
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(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 purchaser for value in good faith and without
notice of an adverse claim;
(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, including the requirement to make a
payment pursuant to Subsection 3.6(c).
If a Shareholder fails to notify the Company within a reasonable time
after such Shareholder has notice of the loss, destruction or theft of
a Certificate, and a transfer of the Company Securities 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 4
Authorization and Issuance of Company Securities
4.1 Company Securities.
(a) The Company shall have authority to issue an unlimited
number of Company Securities, including Company Securities with the
rights set forth in Section 4.2 (the "Voting Shares") and Company
Securities with the rights set forth in Section 4.3, the Exchange
Provisions and the Purchase Provisions (the "Listed Shares"). Subject
to the requirements of the Act and other applicable Law, the Board of
Directors shall have the power to cause the Company to issue additional
Listed Shares and Voting Shares. The Board of Directors shall also have
the power to cause the Company to issue shares into which the interest
in the Company may be further divided other than the Voting Shares and
the Listed Shares, subject to the requisite approval by the Record
Holders of Listed Shares pursuant to Subsection 4.3(d)(ii).
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(b) The total number of Company Securities that are issued by
the Company and reflected as outstanding on the books and records of
the Company (including the Transfer Agent) as of the date of
determination, excluding Company Securities held in the treasury, shall
at all times equal the number of I-Units held by the Company. If the
number of I-Units held by the Company increases or decreases, the
Company shall by the same number increase or decrease, as the case may
be, the number of Company Securities that are issued by the Company and
reflected as outstanding on the books and records of the Company
(including the Transfer Agent) as of the date of determination,
excluding Company Securities held in the treasury, (i) in the event of
an increase in the number of I-Units, by making to each Record Holder
of Company Securities a pro rata Share Distribution or by effecting a
split of Company Securities pursuant to Section 4.5, or (ii) in the
event of a decrease in the number of I-Units, by effecting a
combination of Company Securities pursuant to Section 4.5.
(c) Company Securities issued as Share Distributions or issued
for such consideration as the Board of Directors determines to be
appropriate shall be deemed to be fully paid, and except to the extent
specified in Section 18-607(b) of the Act, non-assessable if the entire
amount of such consideration has been received by the Company for such
Company Securities.
4.2 Voting Shares.
(a) Prior to the execution of this Agreement, one (1) Voting
Share was issued to the Organizational Shareholder. The Organizational
Shareholder and its Affiliates shall be the sole Record Holders of
Voting Shares. The designations, preferences and relative,
participating, optional or other special rights, powers and duties
relating to the Voting Shares are as set forth in this Section 4.2.
Each Voting Share shall be identical in every respect with each other
Voting Share.
(b) The Record Holders of Voting Shares shall be entitled to
one vote per Voting Share on matters submitted to a vote or consent of
the Record Holders of Voting Shares, as provided in Subsection 4.2(d)
and elsewhere in this Agreement; provided, however, that neither any
Record Holder of Voting Shares nor any of its Affiliates may vote any
Voting Shares with respect to a matter that is presented to the Record
Holders of Voting Shares pursuant to Subsection 4.2(d) in order to
determine the manner in which I-Units shall be voted with respect to
(i) the proposed removal of the general partner of KMEP, (ii) any vote
required to be taken under Section 11.2(a) of the Partnership Agreement
with respect to the transfer of all, but not less than all, of the
Partnership Interest (as defined in the Partnership Agreement) of the
general partner of KMEP and the admission of any such transferee as a
general partner of KMEP, (iii) a proposed amendment to the terms of the
I-Units pursuant to Subsection 15.3(c) of the Partnership Agreement
that would have a material adverse effect on the rights and preferences
of the I-Units in relation to other classes of Units, as determined in
the sole discretion of the Board of Directors, or (iv) the proposed
withdrawal of the general partner of KMEP pursuant to Section 13.1(b)
of the Partnership Agreement.
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(c) Except as otherwise provided in Subsection 4.1(b) and
Section 4.5, a Share Distribution in respect of each Voting Share shall
be made only in the event that (i) KMEP makes a cash distribution in
respect of each Common Unit and makes a corresponding distribution of
an additional I-Unit, or fraction thereof, in respect of each I-Unit,
or (ii) in a merger, consolidation, exchange, reorganization,
recapitalization or similar transaction the record holders of Common
Units and Class B Units receive a cash distribution and the record
holder of I-Units receives a corresponding distribution of additional
I-Units, or fractions thereof; and no other Share Distribution shall be
made in respect of Voting Shares. Such Share Distribution in respect of
each Voting Share shall be made on the date on which KMEP makes a cash
distribution in respect of each Common Unit. Each such Share
Distribution per Voting Share shall be an additional Voting Share, or a
fraction thereof, equal to the amount of the cash distribution made by
KMEP in respect of each Common Unit divided by the Average Market Price
per Listed Share. Except as otherwise provided in Section 7.2, no
distribution in respect of Voting Shares shall be made in cash. Each
fractional Voting Share that is created as a result of any Share
Distribution in respect of Voting Shares pursuant to this Subsection
4.2(c) shall be equal to and represented by a fraction that is
calculated to six decimal places (without rounding), and any
calculation that would result in a fractional interest in excess of
one-millionth (1/1,000,000) of a Voting Share shall be disregarded
without payment or other consideration and shall not be accumulated.
Each Voting Share or fraction thereof issued as a Share Distribution
shall bear a date of original issuance which is the same as the date on
which such Share Distribution was made and shall be duly authorized,
fully paid and nonassessable. The Company shall identify the Record
Holders entitled to receive any Share Distributions pursuant to this
Subsection 4.2(c) in accordance with Section 3.5.
(d) The Partnership Agreement provides that, except with
respect to certain matters, including certain amendments to the
Partnership Agreement, the transfer of all, but not less than all, of
the Partnership Interest (as defined in the Partnership Agreement) of
the general partner of KMEP, the withdrawal of the general partner of
KMEP and the treatment of KMEP as an association taxable as a
corporation or other entity for federal income tax purposes, I-Units,
Class B Units and Common Units are entitled to vote together as a
single class, and each I-Unit is entitled to one vote. The Company or
the Board of Directors shall submit to the vote of the Record Holders
of Voting Shares any matter on which the Company is entitled to vote as
a record holder of I-Units in order to ascertain the manner in which
such I-Units shall be voted. For each Voting Share or fraction thereof
that has been voted "for" the matter presented to the Record Holders of
Voting Shares, the Company shall vote one I-Unit or an equivalent
fraction "for" such corresponding matter when presented to the record
holder of I-Units, such that the number of Voting Shares voted "for"
such matter presented to the Record Holders of Voting Shares, in
addition to the number of Listed Shares voted "for" such matter
presented to the Record Holders of Listed Shares pursuant to Subsection
4.3(c), shall equal the number of I-Units voting "for" such
corresponding matter when presented to the record holder of I-Units.
For each Voting Share or fraction thereof that has been voted "against"
the matter presented to the Record Holders of Voting Shares, the
Company shall vote one I-Unit or an equivalent fraction "against" such
matter when presented to the record holder of I-Units, such that the
number of Voting Shares voted "against" such matter presented to the
Record Holders of Voting Shares, in addition to the number of Listed
Shares voted
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"against" such matter presented to the Record Holders of Listed Shares
pursuant to Subsection 4.3(c), shall equal the number of I-Units voting
"against" such corresponding matter when presented to the record holder
of I-Units. For each Voting Share or fraction thereof that has
abstained from the vote or has not been voted, whether by broker
non-vote or otherwise, on the matter presented to the Record Holders of
Voting Shares, the Company shall abstain from voting one I-Unit or an
equivalent fraction on such matter when presented to the record holder
of I-Units, such that the number of Voting Shares that have abstained
from voting or have not been voted on such matter presented to the
Record Holders of Voting Shares, in addition to the number of Listed
Shares that have abstained from voting or have not been voted on such
matter presented to the Record Holders of Listed Shares pursuant to
Subsection 4.3(c), shall equal the number of I-Units abstaining from
voting on such corresponding matter when presented to the record holder
of I-Units.
4.3 Listed Shares.
(a) As of the Closing Date, there shall be Outstanding
[_________] Listed Shares, and, in the event that the Underwriters
exercise their option to purchase additional Listed Shares pursuant to
the Underwriting Agreement, there shall be Outstanding up to
[_________] Listed Shares. The Listed Shares shall initially be listed
on a National Securities Exchange. The designations, preferences and
relative, participating, optional or other special rights, powers and
duties relating to the Listed Shares are as set forth in this Section
4.3. Each Listed Share shall be identical in every respect with each
other Listed Share.
(b) The Record Holders of Listed Shares, in their capacity as
such, shall not be entitled to vote except that each Record Holder of
Listed Shares shall be entitled to one vote per Listed Share on any
matter submitted by the Company to the Record Holders of Listed Shares
pursuant to Subsections 4.3(c) or (d) or Article 9 of this Agreement,
Section 6 of the Exchange Provisions or Section 8 of the Purchase
Provisions, subject to Subsection 4.3(e).
(c) The Partnership Agreement provides that, except with
respect to certain matters, including certain amendments to the
Partnership Agreement, the transfer of all, but not less than all, of
the Partnership Interest (as defined in the Partnership Agreement) of
the general partner of KMEP, the withdrawal of the general partner of
KMEP and the treatment of KMEP as an association taxable as a
corporation or other entity for federal income tax purposes, the
I-Units, Class B Units and Common Units are entitled to vote together
as a single class, and each I-Unit is entitled to one vote. The Company
or the Board of Directors shall submit to the vote of the Record
Holders of Listed Shares entitled to vote any matter on which the
Company is entitled to vote as a record holder of I-Units in order to
ascertain the manner in which such I-Units shall be voted. For each
Listed Share or fraction thereof that has been voted "for" the matter
presented to Record Holders of Listed Shares entitled to vote thereon,
the Company shall vote one I-Unit or an equivalent fraction "for" such
corresponding matter when presented to the record
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holder of I-Units, such that the number of Listed Shares voted "for"
such matter presented to the Record Holders of Listed Shares, in
addition to the number of Voting Shares voted "for" such matter
presented to the Record Holders of Voting Shares pursuant to Subsection
4.2(d), shall equal the number of I-Units voting "for" such
corresponding matter when presented to the record holder of I-Units.
For each Listed Share or fraction thereof that has been voted "against"
the matter presented to Record Holders of Listed Shares entitled to
vote thereon, the Company shall vote one I-Unit or an equivalent
fraction "against" such matter when presented to the record holder of
I-Units, such that the number of Listed Shares voted "against" such
matter presented to the Record Holders of Listed Shares, in addition to
the number of Voting Shares voted "against" such matter presented to
the Record Holders of Voting Shares pursuant to Subsection 4.2(d),
shall equal the number of I-Units voting "against" such corresponding
matter when presented to the record holder of I-Units. For each Listed
Share or fraction thereof that has abstained from the vote or has not
been voted, whether by broker non-vote or otherwise, on the matter
presented to Record Holders of Listed Shares entitled to vote thereon,
the Company shall abstain from voting one I-Unit or an equivalent
fraction on such matter when presented to the record holder of I-Units,
such that the number of Listed Shares that have abstained from voting
or have not been voted on such matter presented to the Record Holders
of Listed Shares, in addition to the number of Voting Shares that have
abstained from voting or have not been voted on such matter presented
to the Record Holders of Voting Shares pursuant to Subsection 4.2(d),
shall equal the number of I-Units abstaining from voting on such
corresponding matter when presented to the record holder of I-Units.
(d) The Company or the Board of Directors shall submit to the
vote of Record Holders of Listed Shares entitled to vote thereon, in
addition to the matters referred to in Subsection 4.3(c), (i) any
matter for which the approval of the Record Holders of Listed Shares is
required pursuant to Article 9, (ii) any proposed issuance of any new
shares into which the interest in the Company may be divided other than
the Voting Shares and the Listed Shares, and (iii) any proposed
amendment to, or alteration or repeal of, this Agreement, including the
Exchange Provisions and the Purchase Provisions, the Registration
Rights Agreement, the Delegation of Control Agreement, or the Tax
Indemnification Agreement if such proposed amendment, alteration or
repeal would (A) reduce the time for any notice to which Record Holders
of Listed Shares would be entitled, or (B) have a material adverse
effect on the Company or the rights or preferences of Listed Shares, as
determined in the sole discretion of the Board of Directors; provided,
however, that any of the following amendments shall not be deemed to
have a material adverse effect on the rights and preferences of Listed
Shares: (1) any amendment that is necessary or desirable to comply with
applicable Law, compliance with which the Board of Directors determines
in its sole discretion to be in the best interests of the Company and
the Shareholders, and (2) any amendment that is required to effect the
intent of the provisions of this Agreement or is otherwise contemplated
by this Agreement.
(e) The following Persons or Groups, as the case may be, shall
not be entitled to vote in their capacities as Record Holders of Listed
Shares: (i) any Person or Group, excluding the Record Holders of Voting
Shares and their Affiliates, if the sum of the
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number of Listed Shares Beneficially Owned by such Person or Group plus
the number of Common Units Beneficially Owned by such Person or Group
equals 20% or more of the sum of the aggregate number of Listed Shares
that are Outstanding plus the aggregate number of Common Units that are
Outstanding, and (ii) the Record Holders of Voting Shares and their
Affiliates with respect to (A) a matter that is presented to the Record
Holders of Listed Shares pursuant to Subsection 4.3(c) in order to
determine the manner in which I-Units shall be voted with respect to
(1) the proposed removal of the general partner of KMEP, (2) any vote
required to be taken under Section 11.2(a) of the Partnership Agreement
with respect to the transfer of all, but not less than all, of the
Partnership Interest (as defined in the Partnership Agreement) of the
general partner of KMEP and the admission of any such transferee as a
general partner of KMEP, (3) a proposed amendment to the terms of the
I-Units pursuant to Subsection 15.3(c) of the Partnership Agreement
that would have a material adverse effect on the rights and preferences
of the I-Units in relation to other classes of Units, as determined in
the sole discretion of the Board of Directors, or (4) the proposed
withdrawal of the general partner of KMEP pursuant to Section 13.1(b)
of the Partnership Agreement, and (B) a matter that is presented to the
Record Holders of Listed Shares pursuant to Subsection 4.3(d).
(f) Except as otherwise provided in Subsection 4.1(b) and
Section 4.5, a Share Distribution in respect of each Listed Share shall
be made only in the event that (i) KMEP pays a cash distribution in
respect of each Common Unit and pays a corresponding distribution of
additional I-Units, or fractions thereof, in respect of the I-Units, or
(ii) in a merger, consolidation, exchange, reorganization,
recapitalization or similar transaction, the record holders of Common
Units and Class B Units receive a cash distribution and the record
holder of I-Units receives a corresponding distribution of additional
I-Units, or fractions thereof; and no other Share Distribution shall be
made in respect of each Listed Share. Except as provided in the
Purchase Provisions, such Share Distribution in respect of each Listed
Share shall be made on the date on which KMEP makes a cash distribution
in respect of each Common Unit. Each such Share Distribution per Listed
Share shall be an additional Listed Share, or a fraction thereof, equal
to the amount of the cash distribution made by KMEP in respect of each
Common Unit divided by the Average Market Price per Listed Share.
Except as otherwise provided in Subsection 7.2(b), no distribution in
respect of Listed Shares shall be made in cash. Each fractional Listed
Share that is created as a result of any Share Distribution in respect
of Listed Shares pursuant to this Subsection 4.3(f) shall be equal to
and represented by a fraction that is calculated to six decimal places
(without rounding), and any calculation that would result in a
fractional interest in excess of one-millionth (1/1,000,000) of a
Listed Share shall be disregarded without payment or other
consideration and shall not be accumulated. Each Listed Share or
fraction thereof issued as a Share Distribution shall bear a date of
original issuance which is the same as the date on which such Share
Distribution was made and shall be duly authorized, fully paid and
nonassessable. The Company shall identify the Record Holders entitled
to receive any Share Distribution in accordance with Section 3.5.
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(g) Record Holders of Listed Shares are entitled to exchange
any or all of their Listed Shares for Common Units held by KMI or its
Affiliates or, at the election of KMI, for cash, subject to the terms
and conditions set forth in the Exchange Provisions.
(h) Under certain circumstances set forth in the Purchase
Provisions, Shareholders may be required to sell their Listed Shares to
the Purchaser (as defined in the Purchase Provisions). The Purchase
Provisions also set forth the rights of the Record Holders of Listed
Shares to any distributions, including Share Distributions, on Listed
Shares that have been declared (or a record date for which has been
set) but that have not been paid or made. The Purchase Provisions are
attached as Annex B and are an integral part of this Agreement.
(i) Fractions of Listed Shares shall not be sold on a National
Securities Exchange until they equal, in the aggregate, whole Listed
Shares.
4.4 Splits and Combinations. The Board of Directors may make a pro rata
distribution of Company Securities to all Record Holders or may effect a
subdivision or combination of Company Securities; provided, however, that after
such distribution, subdivision or combination, each Shareholder shall have the
same relative Shareholder Interest as before such distribution, subdivision or
combination. In the event that (a) KMEP makes a pro rata distribution of KMEP
securities to the record holder of all I-Units, (b) KMEP effects a subdivision
or combination of the I-Units, or (c) KMEP is involved in a merger or similar
transaction which has the effect of converting, subdividing or combining the
I-Units, then the Board of Directors shall be required to make a corresponding
distribution, adjustment, conversion, subdivision or combination of the Company
Securities so that the number of outstanding I-Units and the aggregate number of
Company Securities that are issued by the Company and reflected as outstanding
on the books and records of the Company (including the Transfer Agent) as of the
date of determination, excluding Company Securities held in the treasury, shall
always be equal. Each fractional Company Security that is created as a result of
any distribution, subdivision or combination pursuant to this Section 4.5 shall
be equal to and represented by a fraction that is calculated to six decimal
places (without rounding), and any calculation that would result in a fractional
interest in excess of one-millionth (1/1,000,000) of a Company Security shall be
disregarded without payment or other consideration and shall not be accumulated.
4.5 Withholding. Notwithstanding any other provision of this Agreement,
the Company shall comply with any withholding requirements under any Law in
connection with the payment of Share Distributions and other distributions in
respect of Company Securities 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 Share Distribution or other distribution, the Company
may reduce subsequent Share Distributions or other distributions by the amount
of such required withholding. Each Shareholder agrees to furnish the Company
such forms or other documentation as are necessary to assist the Company in
determining the extent of, and in fulfilling, its withholding obligations.
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ARTICLE 5
Management
5.1 Management of the Company's Affairs.
(a) As provided in this Agreement, all management powers over
the business and affairs of the Company shall be vested exclusively in
a board of directors (the "Board of Directors") and, subject to the
direction of the Board of Directors, the Officers. Officers and
Directors constitute "managers" of the Company within the meaning of
the Act.
(b) No Shareholder, in its capacity as a Shareholder, shall
have any management power over the business and affairs of the Company
or actual or apparent authority to enter into contracts on behalf of,
or to otherwise bind, the Company.
(c) The Board of Directors (subject to Section 5.3 and Article
9) and the Officers (subject to Section 5.4 and the direction of the
Board of Directors) shall have full power and authority, 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 or the Partnership Agreement to do all things on such terms
as they, in their individual sole discretion, may deem necessary or
appropriate, to conduct, or cause to be conducted, the business and
affairs of the Company, except as set forth in the Delegation of
Control Agreement.
(d) It is expected that KMEP shall pay, or shall reimburse the
Company for the payment of, all expenses incurred by the Company,
including expenses in connection with (i) audits; (ii) filings with the
Securities and Exchange Commission and any state securities agency;
(iii) meetings of the Record Holders of Company Securities; (iv) the
preparation, filing and distribution of proxy materials; (v)
compensation to, and reimbursement of expenses incurred by, Officers
and Directors, as provided under Section 5.5; (vi) winding up, as
provided under Section 7.2; and (vii) foreign, state and local taxes
not paid or reimbursed pursuant to the Tax Indemnification Agreement.
However, to the extent that KMEP does not pay, or reimburse the Company
for the payment of, the aforementioned expenses, Organizational
Shareholder shall pay, or shall reimburse the Company for the payment
of, all such expenses.
5.2 Board of Directors.
(a) Number. The number of Directors of the Company shall be
established from time to time by the Record Holders of Voting Shares.
Each Director shall be elected as provided in Subsection 5.2(b) and
shall serve in such capacity until his successor has been elected and
qualified or until such Director dies, resigns or is removed. The
initial Board of Directors shall consist of six Directors.
(b) Election of Directors; Term. The Record Holders of Voting
Shares shall elect annually, whether at a meeting of the Record Holders
of Voting Shares or by
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consent in accordance with Section 8.10, new Directors or shall
re-elect existing Directors, each to serve a one-year term.
(c) Vacancies and Removal. Subject to applicable Law,
vacancies existing on the Board of Directors (including a vacancy
created by virtue of an increase in the size of the Board of Directors)
shall be filled by the Record Holders of Voting Shares or by the
affirmative vote of a majority of the Directors then serving, even if
less than a quorum. Each Director elected to fill any vacancy shall
serve in such capacity until his successor has been elected and
qualified or until such Director dies, resigns or is removed. Any
Director, or the entire Board of Directors, may be removed from office
at any time, with or without cause, but only by the approval of the
Record Holders of Voting Shares.
(d) 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 a majority of the
members of the Board of Directors shall constitute a quorum at
any such meeting for the transaction of business; and
(iii) the act of a majority of the members of the
Board of Directors present at a meeting at which a quorum is
present shall be deemed to constitute the act of the Board of
Directors.
(e) Meetings. Regular meetings of the Board of Directors shall
be held at such times and places as shall be designated from time to
time by resolution of the Board of Directors. 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, by the Secretary, in each case on at least 24
hours personal, written, telegraphic, cable or wireless notice to each
Director or committee member, as applicable. 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 Subsection 5.2(e))
shall constitute a waiver of notice of such meeting, except where such
Director attends the meeting for the express purpose of objecting to
the transaction of any business on the ground that the meeting is not
lawfully called or convened. Any action required or permitted to be
taken at a meeting of the Board of Directors or any committee thereof
may be taken without a meeting, without prior notice and without a vote
if a consent or consents in writing, setting forth the action so taken,
are signed by a majority of the members of the Board of Directors or
committee. Members of the Board of Directors or any committee thereof
may participate in and hold a meeting by means of conference telephone,
video conference or similar communications equipment by means of which
all Persons participating in the meeting
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can hear each other, and participation in such meetings shall
constitute presence in person at the meeting.
(f) Committees. The Board of Directors, by a majority of the
whole Board of Directors, may appoint one or more other committees of
the Board of Directors to consist of two or more Directors, which
committee(s) shall have and may exercise such of the powers and
authority of the Board of Directors with respect to the management of
the business and affairs of the Company as may be provided in a
resolution of the Board of Directors. Any committee designated pursuant
to this Subsection 5.2(f) shall choose its own chairman, shall keep
regular minutes of its proceedings and report the same to the Board of
Directors when requested, 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 or by resolution of such committee or resolution of the
Board of Directors. At every meeting of any such committee, the
presence of a majority of all the members thereof shall constitute a
quorum and the act of a majority of such members present shall be
deemed to constitute the act of such committee. The Board of Directors
may designate one or more Directors as alternate members of any
committee who may replace any absent or disqualified member at any
meeting of such committee. In the absence or disqualification of a
member of a committee, the member or members present at any meeting and
not disqualified from voting, whether or not constituting a quorum, may
unanimously appoint another member of the Board of Directors to act at
the meeting in the place of the absent or disqualified member.
(g) Chairman. The Board of Directors shall elect a chairman of
the Board of Directors (the "Chairman of the Board"). The Chairman of
the Board, if present and acting, shall preside at all meetings of the
Board of Directors and of the Shareholders. Otherwise, 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.
5.3 Restrictions on the Board of Directors' Authority. Except as
otherwise specifically provided in this Agreement or by resolution of the Board
of Directors, (1) 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 to 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 (2) 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.
5.4 Officers.
(a) Generally. The Board of Directors shall appoint agents of
the Company, referred to as "Officers" of the Company, to serve in the
offices set forth in this Section 5.4. Unless provided otherwise by
resolution of the Board of Directors, the
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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, the President, any and all Vice Presidents,
the Secretary, the Treasurer, any and all Assistant Secretaries, and
any and all Assistant Treasurers and any other officer position or
title as the Board of Directors may desire. Any person may hold two or
more offices simultaneously.
(c) Appointment and Term of Office. The Officers shall be
appointed by the Board of Directors at such time and for such term 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 of the Board of Directors, the Chairman of the Board,
subject to the direction of the Board of Directors, shall preside at
all meetings of the Shareholders and the Board of Directors, shall
supervise generally the President 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. The President shall be the Chief Executive
Officer of the Company unless the Chairman of the Board is so
designated, in which event the President shall be the Chief Operating
Officer of the Company. In the absence of the Chairman of the Board, or
if there be no Chairman of the Board, he shall preside at all meetings
of the Shareholders and Directors. The Chief Executive Officer, whether
the Chairman of the Board or the President, shall be ex officio a
member of all standing committees, shall have general and active
management and control of the business and affairs of the Company
subject to the control of the Board of Directors, and shall see that
all orders and resolutions of the Board of Directors are carried into
effect.
(f) Vice Presidents. In the absence of the President and the
Chairman of the Board, 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.
(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
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custodian of all records (other than financial), shall see that the
books, reports, statements, certificates and all other documents and
records required by 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
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.
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 any Affiliate thereof shall
receive such compensation for their services as Directors or committee members
as the Board of Directors shall determine. The members of the Board of Directors
who are employees of the Company or any Affiliate thereof shall receive no
compensation for their services as Directors or committee members. All 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.
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5.6 Business Opportunities.
(a) No Indemnitee shall be expressly or implicitly restricted
or proscribed pursuant to this Agreement, by Law or otherwise from
engaging in other activities for profit, whether in the businesses
engaged in by the Company or any Shareholder or anticipated to be
engaged in by the Company or any Shareholder. Without limitation of and
subject to the foregoing, each Indemnitee shall have the right to
engage in businesses of every type and description and to engage in and
possess an interest in other business ventures of any and every type or
description, independently or with others, including, without
limitation, business interests and activities in direct competition
with the Company or any Shareholder, and none of the same shall breach
any duty to the Company or any Shareholder. Neither the Company, the
Shareholder nor any other Person shall have any rights by virtue of
this Agreement, by Law or otherwise in any business ventures of any
Indemnitee and such Indemnitees shall have no obligation to offer any
interest in any such business ventures to the Company, any Shareholder
or any other Person.
(b) Without limitation of Subsection 5.6(a), and
notwithstanding anything to the contrary in this Agreement, the
competitive activities of Indemnitees and the restrictions on the
Company's activities described in Section 2.4 are hereby approved by
the Company and all Shareholders, and it shall not be deemed to be a
breach of the fiduciary duty (if any such duty is owed) of the Board of
Directors or the Record Holders of Voting Shares for the Board of
Directors or the Record Holders of Voting Shares to permit an
Indemnitee to engage in a business opportunity in preference to or to
the exclusion of the Company or any other Shareholder, if such
activities are permitted by this Agreement.
5.7 Interested Officers or Directors. No contract or transaction
between the Company, on one hand, and the Record Holders of Voting Shares, any
Affiliate thereof or any other Entity, on the other, in which an Officer or
Director Beneficially Owns an interest or of which such Officer or Director is
an Affiliate, or between the Company, on one hand, and any of its Officers or
Directors, on the other, shall be void or voidable for this reason or because
the Officer or Director is present at or participates in the meeting of the
Board of Directors or committee thereof that authorizes the contract or
transaction, or because his vote is counted for such purpose, if such contract
or transaction is:
(a) approved by a committee of the Board composed solely of
members who have no interest in the contract or transaction;
(b) on terms no less favorable than those generally being
provided to or available from unrelated third parties, as determined in
the sole discretion of the Board of Directors; or
(c) fair, taking into account the totality of the
relationships between the parties involved, including other
transactions between the parties, as determined in the sole discretion
of the Board of Directors.
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5.8 Duties of Record Holders of Voting Shares and Directors.
(a) Except as otherwise provided in this Agreement, the Record
Holders of Voting Shares, the Directors and any of their Affiliates
shall have no obligations whatsoever, by virtue of the relationships
established pursuant to this Agreement, to take or refrain from taking
any action that may impact the Company, the Shareholders or any
Affiliate of the Company or a Shareholder.
(b) The provisions of this Agreement, including Sections 5.6,
5.7 and 5.8, constitute an agreement to restrict or eliminate fiduciary
and other duties pursuant to the provisions of Section 18-1101 of the
Act.
5.9 Indemnification.
(a) The Indemnitees shall be entitled to mandatory
indemnification and shall be entitled to be held harmless by KMEP and
the Operating Partnerships to the extent and subject to the conditions
provided in Section 6 of the Delegation of Control Agreement with the
Organizational Shareholder, in its capacity as general partner of KMEP
and the Operating Partnerships, hereby deeming it advisable that such
indemnification and holding harmless shall (rather than may) be done
and provided by KMEP and the Operating Partnerships to the fullest
extent and subject to the conditions provided therein.
(b) To the extent that the indemnification provisions of
Section 6 of the Delegation of Control Agreement do not fully hold
harmless any of the Indemnitees, then to the fullest extent permitted
by Law but subject to the limitations expressly provided in this
Agreement, such Indemnitees shall be indemnified and held harmless by
the Company, to the extent deemed advisable by the Board of Directors,
from and against any and all losses, claims, damages, liabilities,
joint or several, expenses (including legal fees and expenses),
judgments, fines, penalties, interest, settlements and other amounts
arising from any and all claims, demands, actions, suits or
proceedings, whether civil, criminal, administrative or investigative,
in which any Indemnitee may be involved, or is threatened to be
involved, as a party or otherwise, by reason of its status as (i) a
Record Holder of Voting Shares or any Affiliate thereof; (ii) an
officer, director, employee, partner, agent or trustee of a Record
Holder of Voting Shares, the Company or any of their Affiliates; or
(iii) a Person serving at the request of the Company in another Entity
in a similar capacity, provided, that in each case the Indemnitee acted
or failed to act in good faith and in the manner which such Indemnitee
reasonably believed to be in, or not opposed to, the best interests of
the Company, and, with respect to any criminal proceeding, had no
reasonable cause to believe such conduct was unlawful. The termination
of any action, suit or proceeding by judgment, order, settlement,
conviction or upon a plea of nolo contendere, or its equivalent, shall
not create a presumption that the Indemnitee acted in a manner contrary
to that specified above. Any indemnification pursuant to this
Subsection 5.9(b) shall be made only out of the assets of the Company,
it being agreed that no Shareholder, in its capacity as such, shall be
personally liable for such indemnification nor shall it have any
obligation to contribute or loan any monies or property to the Company
to enable the
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Company to effectuate such indemnification. The indemnification
provided by this Subsection 5.9(b) shall be secondary to any other
rights to which an Indemnitee may be entitled as contemplated under the
Delegation of Control Agreement or any other agreement, pursuant to any
vote of the Record Holders of Voting Shares, as a matter of Law or
otherwise, both as to actions in the Indemnitee's capacity as (A) a
Record Holder of Voting Shares or an Affiliate thereof; (B) an officer,
director, employee, partner, agent or trustee of a Record Holder of
Voting Shares, the Company or any of their Affiliates; or (C) a Person
serving at the request of the Company in another Entity in a similar
capacity, and as to actions in any other capacity (including any
capacity under the Underwriting Agreement), 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.
(c) To the fullest extent permitted by Law, expenses
(including legal fees and expenses) incurred by an Indemnitee who is
indemnified pursuant to Subsections 5.9(a) or 5.9(b) in defending any
claim, demand, action, suit or proceeding shall, from time to time, be
advanced by the Company prior to the final disposition of such claim,
demand, action, suit or proceeding upon receipt by the Company of a
written undertaking by or on behalf of the Indemnitee to repay such
amount if it shall be determined that the Indemnitee is not entitled to
be indemnified as authorized in this Section 5.9.
(d) The Organizational Shareholder may purchase and maintain
insurance, on behalf of the 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.
(e) For purposes of this Section 5.9, the Company shall be
deemed to have requested an Indemnitee to serve as fiduciary of an
employee benefit plan whenever the performance by it of its duties to
the Company also imposes duties on, or otherwise involves services by,
it to the plan or participants or beneficiaries of the plan; excise
taxes assessed on an Indemnitee with respect to an employee benefit
plan pursuant to applicable law shall constitute "fines" for purposes
of indemnities contemplated by Subsections 5.9(a) and 5.9(b); and
action taken or omitted by it with respect to an employee benefit plan
in the performance of its duties for a purpose reasonably believed by
it to be in the interest of the participants and beneficiaries of the
plan shall be deemed to be for a purpose which is in, or not opposed
to, the best interests of the Company.
(f) In no event may an Indemnitee subject the Shareholders to
personal liability by reason of the indemnification provisions set
forth in this Agreement.
(g) An Indemnitee shall not be denied indemnification in whole
or in part contemplated under this Section 5.9 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.
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(h) The provisions of this Section 5.9 are for the benefit of
the Indemnitees, their heirs, successors, assigns and administrators
and shall not be deemed to create any rights for the benefit of any
other Persons.
(i) No amendment, modification or repeal of this Section 5.9
or any provision hereof shall in any manner terminate, reduce or impair
the right of any past, present or future Indemnitee to be indemnified
by the Company, nor the obligation of the Company to indemnify any such
Indemnitee under and in accordance with the provisions of this Section
5.9 as in effect immediately prior to such amendment, modification or
repeal with respect to claims arising from or relating to matters
occurring, in whole or in part, prior to such amendment, modification
or repeal, regardless of when such claims may arise or be asserted.
Notwithstanding the foregoing, nothing herein shall limit the power or
authority of the Partnership or any Operating Partnership to amend any
provisions of the Partnership Agreement regarding indemnification and
reimbursement or similar provisions.
5.10 Liability of Indemnitees.
(a) Notwithstanding anything to the contrary set forth in this
Agreement, no Indemnitee shall be liable for monetary damages to the
Company, the Shareholders or any other Person for losses sustained or
liabilities incurred as a result of any act or omission constituting a
breach of such Indemnitee's fiduciary duty, in the event that such a
duty is found to exist, if such Indemnitee acted in good faith and in
the manner which such Indemnitee reasonably believed to be in, or not
opposed to, the best interests of the Company, and, with respect to any
criminal proceeding, had no reasonable cause to believe such conduct
was unlawful.
(b) Subject to its obligations and duties as set forth in this
Article 5, 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) Any amendment, modification or repeal of this Section 5.10
or any provision hereof shall be prospective only and shall not in any
way affect the limitations on liability under this Section 5.10 as in
effect immediately prior to such amendment, modification or repeal with
respect to claims arising from or relating to matters occurring, in
whole or in part, prior to such amendment, modification or repeal,
regardless of when such claims may arise or be asserted.
5.11 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.
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ARTICLE 6
Books and Records;
Information and Accounts
6.1 Maintenance of Books and Records. The Company shall keep at its
principal office 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: (a) complete and accurate information regarding the state
of the business and financial condition of the Company; (b) a copy of this
Agreement and the Organizational Certificate; (c) a current list of the names
and last known business, residence, or mailing addresses of all Directors and
Officers; and (d) the Company's federal, state and local tax returns for the
Company's six most recent tax years.
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, 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.
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 7
Dissolution, Winding-Up and Termination
7.1 Dissolution.
(a) The Company shall dissolve and its affairs shall be wound
up on the first to occur of the following events (each a "Dissolution
Event"):
(i) entry of a decree of judicial dissolution of the
Company under Section 18-802 of the Act;
(ii) the approval of the Record Holders of Voting
Shares and the Record Holders of a majority of the Listed
Shares then Outstanding; or
(iii) the approval of Record Holders of Listed Shares
owning at least 66 2/3% of the Listed Shares then Outstanding.
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(b) Neither the death, dissolution or Bankruptcy of any Shareholder nor
the occurrence of any other event that causes a Shareholder to cease to be a
member of the Company shall constitute a Dissolution Event, and the business of
the Company shall be continued after such event.
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 liquidator. The liquidator shall
proceed diligently to wind up the affairs of the Company and make final
distributions as provided herein and in the Act. The costs of winding up shall
be borne as a Company expense. Until final distribution, the liquidator shall
continue to operate the Company'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
liabilities of the Company (whether by payment or by reasonable provisions for
payment) shall be distributed on a share-for-share basis on all Outstanding
Company Securities.
(c) On completion of such final distribution, the liquidator shall file
a Certificate of Cancellation with the Secretary of State of the State of
Delaware, cancel any other filings made pursuant to Section 2.5, and take such
other actions as may be necessary to terminate the existence of the Company.
ARTICLE 8
Amendment of Agreement;
Shareholder Meetings; Record Date
8.1 Amendment Procedures.
(a) Any provision of this Agreement, including the Exchange Provisions
and the Purchase Provisions, may be amended by the Record Holders of Voting
Shares without the approval of any other Shareholder; provided, however, that
with respect to any matter for which the approval of the Record Holders of
Listed Shares entitled to vote thereon is required pursuant to Subsection
4.3(d), then such amendment shall be not be effective until such Record Holders
of Listed Shares have so approved.
(b) Any proposed amendment that requires the approval of the Record
Holders of any Company Securities shall be explained in a writing that contains
the text of the proposed amendment. If such an amendment is proposed, the Board
of Directors shall seek the written approval of the Record Holders of the
requisite percentage of Company Securities or call a meeting of the Shareholders
entitled to vote thereon to consider and vote on such proposed amendment.
(c) The Board of Directors shall notify all Record Holders of Company
Securities upon final adoption of any such proposed amendment.
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8.2 Meetings. Except as otherwise provided in this Agreement, all acts
of the Shareholders to be taken hereunder shall be taken in the manner provided
in this Article 8. A meeting of the Record Holders of Company Securities 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, the Chairman of the Board
or a Record Holder of Voting Shares shall specify in the notice of the meeting;
provided, however, that a meeting of the Record Holders of Voting Shares and
Listed Shares at which such Record Holders shall vote pursuant to Subsections
4.2(d) and 4.3(c), respectively, shall be held at the same time and place as a
meeting of the record holder of I-Units at which the Company shall be entitled
to vote as the record holder of I-Units.
8.3 Notice of a Meeting. Notice of a meeting called pursuant to Section
8.2 shall be given in writing by mail or other means of written communication in
accordance with Section 10.3 to the Record Holders of Company Securities for
whom the meeting is called. The notice shall be deemed to have been given at the
time when deposited in the mail or sent by other means of written communication.
8.4 Record Date. For purposes of determining the Shareholders entitled
to notice of, or to vote at, any meeting of the Shareholders or entitled to vote
by ballot or give approval of Company action in writing without a meeting or
entitled to exercise rights in respect of any lawful action of the Shareholders,
the Record Date shall not be less than 10 nor more than 60 days before (a) the
date of the meeting (unless such requirement conflicts with any Law, in which
case the Law shall govern), or (b) in the event that approvals are sought
without a meeting, the date by which the Shareholders are requested in writing
by the Board of Directors to give such approvals.
8.5 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 45 days. At
the adjourned meeting, the Company may transact any business which might have
been transacted at the original meeting. If the adjournment is for more than 45
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 8.
8.6 Waiver of Notice; Approval of Meeting; Approval of Minutes. The
transactions of any meeting of the Shareholders, however called and noticed, and
whenever held, shall be as valid as if they had been authorized at a meeting
duly held after regular call and notice, if a quorum is present either in person
or by proxy, and if, either before or after the meeting, Shareholders
representing such quorum who were present in person or by proxy and entitled to
vote, sign a written waiver of notice or an approval of the holding of the
meeting or an approval of the minutes thereof. All waivers and approvals shall
be filed with the Company records or made a part of the minutes of the meeting.
Attendance of a Shareholder at a meeting shall constitute a waiver of notice of
the meeting, except (a) when the Shareholder does not approve, at the beginning
of the meeting, of the transaction of any business because the meeting is not
lawfully called or convened; and (b) that attendance at a meeting is not a
waiver of any right to disapprove the consideration of matters required to be
included in the notice of the meeting, but not so included, if the disapproval
is expressly made at the meeting.
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8.7 Quorum; Voting. The Record Holders of a majority of those
Outstanding Company Securities for which a meeting has been called who are
entitled to vote and be present in person or by proxy shall constitute a quorum
at a meeting of the Shareholders of such class or classes. At any meeting of the
Shareholders duly called and held in accordance with this Agreement at which a
quorum is present, the act of the Record Holders of a majority of all
Outstanding Company Securities present and entitled to vote thereon shall be
deemed to constitute the act of the Record Holders of such Company Securities,
except as approval by holders of a different amount of Company Securities is
required by any other provision of this Agreement, including Section 8.8, or by
the Act, in which case the act of the Shareholders holding a number of
Outstanding Company Securities representing 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 Company Securities specified in this Agreement. In the absence of
a quorum, any meeting of the Shareholders may be adjourned from time to time by
the affirmative vote of the Record Holders of a majority of the Company
Securities represented either in person or by proxy.
8.8 Special Voting Requirements. Without regard to any provision to the
contrary in Section 8.7, with respect to any matter that shall be submitted to
the Record Holders of Listed Shares entitled to vote thereon pursuant to
Subsection 4.3(d), the act of the Record Holders of a majority of the Listed
Shares then Outstanding shall be deemed to constitute the act of the Record
Holders of Listed Shares.
8.9 Conduct of Meeting. The Board of Directors shall have full power
and authority concerning the manner of conducting any meeting of the
Shareholders or the 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 8, 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 the 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.
8.10 Action Without a Meeting. Any action that may be taken at a
meeting of Shareholders may be taken without a meeting if consents in writing
setting forth such action are signed by the Record Holders holding not less than
the minimum percentage of the Company Securities that would be necessary to
authorize or take such action at a meeting at which all the Company Securities
entitled to vote on such matter were present and voted. Prompt notice of the
taking of action without a meeting shall be given to the Record Holders who were
entitled to, but
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did not, authorize the action taken. The Board of Directors may specify that any
written consent submitted to Record Holders for the purpose of taking any action
without a meeting shall be returned to the Company within the time period, which
shall be not less than 20 days, specified by the Board of Directors. If a ballot
returned to the Company does not vote all of the Company Securities held by the
Shareholder, the Company shall be deemed to have failed to receive a ballot for
the Company Securities that were not voted. If approval of the taking of any
action by the Shareholders is solicited by any Person other than by or on behalf
of the Board of Directors, the written approvals shall have no force and effect
unless and until (a) they are deposited with the Company in care of the Board of
Directors, (b) approvals sufficient to take the action proposed are dated as of
a date not more than 90 days prior to the date sufficient approvals are
deposited with the Company and (c) an Opinion of Counsel is delivered to the
Board of Directors to the effect that the exercise of such right and the action
proposed to be taken with respect to any particular matter is otherwise
permissible under applicable Law, including any statutes then governing the
rights, duties and liabilities of the Company and the Shareholders.
8.11 Voting and Other Rights.
(a) Only those Record Holders of Company Securities on the
Record Date set pursuant to Section 8.4 (and also subject to Subsection
4.3(e)) shall be entitled to notice of, and to vote at, a meeting of
the Shareholders or to act with respect to matters as to which the
holders of the Company Securities have the right to vote or to act. All
references in this Agreement to votes of, or other acts that may be
taken by, the Company Securities shall be deemed to be references to
the votes or acts of the Record Holders of such Company Securities.
(b) With respect to Company Securities that are held for a
Person's account by another Person (such as a broker, dealer, bank,
trust company or clearing corporation, or an agent of any of the
foregoing), in whose name such Company Securities are registered, such
broker, dealer or other agent shall, in exercising the voting rights in
respect of such Company Securities on any matter, and unless the
arrangement between such Persons provides otherwise, vote such Company
Securities on the behalf, and at the direction, of the Person who is
the Beneficial Owner, and the Company shall be entitled to assume it is
so acting without further inquiry.
(c) With respect to any Shareholder action, broker non-votes
and other non-votes shall not be counted as votes "for" or "against"
any matter unless otherwise required by Law.
ARTICLE 9
Covenants
The Company (a) shall use the net proceeds from the Initial Public
Offering for the purchase of I-Units and other rights as contemplated by this
Agreement; (b) shall not sell, pledge or otherwise transfer any I-Units or such
other rights except as contemplated by this Agreement; (c) shall not issue
options, warrants or other securities entitling the holder thereof to subscribe
for or purchase Company Securities; (d) shall not borrow money or issue debt;
(e) shall not effect a
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liquidation, merger, recapitalization or similar transaction involving the
Company; and (f) shall not purchase Company Securities; provided, however, that
the Company may take or abstain from taking any of the actions prohibited or
required, as applicable, in this Article 9 upon obtaining the approval of the
Record Holders who (i) are entitled to vote thereon and (ii) are the Record
Holders of a majority of the Listed Shares then Outstanding.
ARTICLE 10
General Provisions
10.1 Fiscal Year. The fiscal year of the Company shall be the calendar
year.
10.2 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.
10.3 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, the Organizational Certificate 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.
10.4 Entire Agreement. This Agreement, including the Exchange
Provisions and the Purchase Provisions, constitutes the entire agreement of the
Shareholders pertaining to the subject matter hereof and supersedes all prior
agreements and understandings pertaining thereto.
10.5 Waiver. No failure by any party to insist upon the strict
performance of any covenant, duty, agreement or condition of this Agreement or
to exercise any right or remedy consequent upon a breach thereof shall
constitute waiver of any such breach or any other covenant, duty, agreement or
condition.
10.6 Binding Effect. This Agreement is binding upon and shall inure to
the benefit of the Shareholders, the Assignees and their respective executors,
administrators, successors and legal representatives.
10.7 Governing Law; Severability. This Agreement shall be construed in
accordance with, and governed by, the laws of the State of Delaware without
regard to the principles of conflicts of law. In the event of a direct conflict
between the provisions of this Agreement and (a) any provision of the
Organizational Certificate, or (b) any mandatory, non-waivable provision of the
Act, such provision of the Organizational Certificate or the Act shall control.
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. If any provision of
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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.
10.8 Further Action. The parties shall execute and deliver all
documents, provide all information and take or refrain from taking action as may
be necessary or appropriate to achieve the purposes of this Agreement.
10.9 No Right to Action for Dissolution or Partition. No Shareholder
has any right to maintain any action for dissolution of the Company or for
partition of the property of the Company.
10.10 Third-Party Beneficiaries. The Shareholders, the Assignees, the
Indemnitees and their respective executors, administrators, successors and legal
representatives shall be considered to be third-party beneficiaries of this
Agreement, including the Exchange Provisions and the Purchase Provisions.
10.11 Creditors. None of the provisions of this Agreement shall be for
the benefit of, or shall be enforceable by, any creditor of the Company in its
capacity as such.
10.12 Counterparts. This Agreement may be executed in counterparts, all
of which together shall constitute an agreement binding on all parties hereto,
notwithstanding that all such parties are not signatories to the original or the
same counterpart. Each party shall become bound by this Agreement immediately
upon affixing its signature hereto or, in the case of a Person acquiring a
Company Security, upon (a) the acquisition by such Person of the Certificate
evidencing such Company Security, or (b) the transfer of such Company Security
to such Person by book-entry transfer in accordance with Subsection 3.4(b).
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first set forth above.
Organizational Shareholder:
KINDER XXXXXX X.X., INC.
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
All holders of Listed Shares
By:
----------------------------------------
By:
-------------------------------
Attorney-in-fact authorized by the
Board of Directors
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ANNEX A
EXCHANGE PROVISIONS
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ANNEX B
PURCHASE PROVISIONS
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ANNEX C
DELEGATION OF CONTROL AGREEMENT
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ANNEX A TO
EXHIBIT 3.2
EXCHANGE PROVISIONS
ANNEX A TO THE
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
XXXXXX XXXXXX MANAGEMENT, LLC
These Exchange Provisions, dated as of _____________, 2001, are an
integral part of the Amended and Restated Limited Liability Company Agreement of
Xxxxxx Xxxxxx Management, LLC, dated as of ____________, 2001.
SECTION 1
Definitions
1.1 Definitions. In these Exchange Provisions, the following terms
have the following respective meanings:
"Affiliate" means, with respect to any Person, any other Person that
directly or indirectly controls, is controlled by or is under common control
with, the Person in question. As used herein, the term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through ownership
of voting securities, by contract or otherwise.
"Average Market Price" for any security means the average of the
Closing Prices for such security for the consecutive Trading Days in the period
specified in the relevant Section of these Exchange Provisions ending on the
Trading Day specified in the relevant Section of these Exchange Provisions.
"Beneficial Owner" has the meaning set forth in Rules 13d-3 and 13d-5
under the Securities Exchange Act, as in effect on the date of these Exchange
Provisions, and the terms "Beneficial Ownership," "Beneficially Own,"
"Beneficially Owned" and similar terms have correlative meanings.
"Board of Directors of the Company" means the board of directors of the
Company established pursuant to the LLC Agreement, and any committee of such
board duly authorized to act in respect thereof.
"Board of Directors of the Exchange Party" means (a) if KMI is the
Exchange Party, the board of directors of KMI; (b) if the Exchange Party is a
limited partnership with a corporate general partner or any other corporation,
the board of directors of such corporate general partner or corporation; (c) if
the Exchange Party is any other form of entity, the board of directors or
44
other comparable governing body of such entity; and (d) in each case, any
committee of such board or body duly authorized to act in respect thereof.
"Cash Settlement" has the meaning set forth in Section 2.1(c).
"Cash Settlement Amount" for a Common Unit means the Average Market
Price for a Common Unit for the three consecutive Trading Day period beginning
on the second Trading Day next following the date on which the Exchange Party
gives notice of its election to settle the Exchange Feature in cash pursuant to
Section 2.1(c).
"Closing" means the closing of the initial public offering of the
Listed Shares, effected pursuant to the Registration Statement of the Company on
Form S-1 (Registration No. 333-55866), which occurred on the date of these
Exchange Provisions.
"Closing Price" for a security on any day means:
(a) for securities listed on a National Securities Exchange,
the last sale price for that day, regular way, or if there are no sales on that
day, the average of the closing bid and asked prices for that day, regular way,
in either case as reported in the principal composite transactions reporting
system for the principal National Securities Exchange on which such securities
are listed; or
(b) if such securities are not listed on a National Securities
Exchange on that day, the last quoted price on that day, or if no price is
quoted, the average of the high bid and low asked prices on that day, each as
reported by the National Association of Securities Dealers Automated Quotation
system; or
(c) if such securities are not so quoted on that day, the
average of the closing bid and asked prices on that day furnished by a
professional market maker in such securities selected by the Board of Directors
of the Exchange Party; or
(d) if on that day no market maker is making a market in such
securities, the fair value of such securities on such day as determined by the
Board of Directors of the Exchange Party.
"Common Units" has the meaning assigned to it in the Partnership
Agreement.
"Company" means Xxxxxx Xxxxxx Management, LLC, a Delaware limited
liability company.
"Controlling Entity" has the meaning set forth in clause (b)(i) of the
definition of Mandatory Purchase Event.
"Distribution Date" means the payment date for regular quarterly
distributions or any special distributions with respect to the Listed Shares
pursuant to the LLC Agreement.
"Entity" means a corporation, limited liability company, venture,
partnership, trust, unincorporated organization, association or other entity.
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"Exchange Date" means, with respect to any Listed Share, the time
immediately prior to the close of business on the date on which a certificate
representing such Listed Share and a duly signed Exchange Notice have been
received by the Exchange Party or its office or agency maintained for such
purpose pursuant to Section 3.2, all in accordance with Section 2.2.
"Exchange Feature" has the meaning set forth in Section 2.1(a).0
"Exchange Notice" means the notice described in Section 2.7.
"Exchange Party" means the Person with the obligation pursuant to these
Exchange Provisions to deliver Common Units or cash to the holder of Listed
Shares surrendering such Listed Shares for exchange in accordance with these
Exchange Provisions. The initial Exchange Party is KMI.
"Exchange Provisions" means these exchange provisions attached to the
LLC Agreement as Annex A and hereby made a part of the LLC Agreement.
"Exchange Rate" has the meaning set forth in Section 2.1(b).
"General Partner" means the general partner of the Partnership. On the
date of these Exchange Provisions, the General Partner is Kinder Xxxxxx X.X.,
Inc.
"Holder" means the holder of record of a Listed Share.
"I-Units" has the meaning assigned to it in the Partnership Agreement.
"KMI" means Xxxxxx Xxxxxx, Inc., a Kansas corporation, its successors
by merger and any Person who succeeds to its obligations under these Exchange
Provisions, the Purchase Provisions, the Registration Rights Agreement and the
Tax Indemnification Agreement in connection with an acquisition of all or
substantially all of its assets by such Person.
"LLC Agreement" means the Amended and Restated Limited Liability
Company Agreement of the Company dated as of __________, 2001, including these
Exchange Provisions and the Purchase Provisions.
"Listed Shares" means the limited liability company interests in the
Company designated in the LLC Agreement as "Listed Shares."
"Mandatory Purchase Event" means any one of the following:
(a) the occurrence of the first day on which the aggregate
amount of distributions or other payments by the Partnership on the Common Units
(other than distributions or payments made in Common Units or Similar Common
Unit Securities, but including distributions and other payments pursuant to an
issuer tender offer by the Partnership) during the immediately preceding 360-day
period exceeds 50% of the Average Market Price of a Common Unit during the ten
consecutive Trading Day period ending on the last Trading Day prior to the first
day of such 360-day period;
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(b) the occurrence of an event resulting in KMI and its
Affiliates ceasing to be the Beneficial Owners of more than 50% of the total
voting power of all shares of capital stock of the General Partner, unless:
(i) the event results in another Person becoming the
Beneficial Owner of more than 50% of the total voting power of all shares of
capital stock of the General Partner (such other Person being referred to herein
as the "Controlling Entity");
(ii) the Controlling Entity is organized under the
laws of a state in the United States;
(iii) the Controlling Entity has long term unsecured
debt with an investment grade credit rating, as determined by Xxxxx'x Investor
Services, Inc. and Standard & Poor's Rating Service, immediately prior to the
event that results in the Controlling Entity becoming the Beneficial Owner of
more than 50% of the total voting power of all shares of capital stock of the
General Partner; and
(iv) the Controlling Entity assumes all obligations
of KMI and the Exchange Party to the Company and to the holders of the Listed
Shares under these Exchange Provisions, the Purchase Provisions, the
Registration Rights Agreement and the Tax Indemnification Agreement.
(c) the merger of the Partnership with or into another Person
in any case where the Partnership is not the surviving entity, or the sale of
all or substantially all of the assets of the Partnership and its subsidiaries,
taken as a whole, to another Person, unless:
(i) in the transaction the holders of Common Units
receive in exchange for all of their Common Units a Similar Common Unit Security
of the Person that is the surviving Entity or that purchased the assets;
(ii) in the transaction the Company receives in
exchange for all of its I-Units a Similar I-Unit Security of the Person that is
the surviving Entity or that purchased the assets;
(iii) no consideration is received in the transaction
in respect of Common Units other than Similar Common Unit Securities and/or cash
and the amount of cash received per Common Unit does not exceed 33-1/3% of the
Average Market Price of a Common Unit for the ten consecutive Trading Day period
ending on the Trading Day immediately preceding the date of the execution of the
definitive agreement for the transaction; and
(iv) no consideration is received in the transaction
in respect of I-Units other than Similar I-Unit Securities of the Person that is
the surviving Entity or that purchased the assets.
"National Securities Exchange" means an exchange registered with the
Securities and Exchange Commission under Section 6(a) of the Securities Exchange
Act.
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"Partnership" means Xxxxxx Xxxxxx Energy Partners, L.P., a Delaware
limited partnership.
"Partnership Agreement" means the Third Amended and Restated Agreement
of Limited Partnership of the Partnership, dated as of _________, 2001.
"Person" means a natural person or an Entity.
"Purchase Date" means either a Mandatory Purchase Date or an Optional
Purchase Date, each as defined in the Purchase Provisions.
"Purchase Notice" means a Mandatory Purchase Notice, an Optional
Purchase Notice or an Optional Purchase Notice for Common Units and Listed
Shares, each as defined in the Purchase Provisions.
"Purchase Provisions" means the purchase provisions attached to the LLC
Agreement as Annex B and thereby made a part of the LLC Agreement.
"Record Date" means, with respect to any Distribution Date, the date
fixed for determining the holders of Listed Shares entitled to receive the
distribution on such Distribution Date.
"Registration Rights Agreement" means the Registration Rights Agreement
dated as of the Closing between KMI and the Partnership.
"Section" means a section of these Exchange Provisions.
"Securities Act" means the United States Securities Act of 1933, as
amended from time to time and any successor to such statute and all rules and
regulations promulgated thereunder.
"Securities Exchange Act" means the United States Securities Exchange
Act of 1934, as amended from time to time and any successor to such statute and
all rules and regulations promulgated thereunder.
"Similar Common Unit Security" means a security that has in all
material respects the same rights and privileges as the Common Units.
"Similar I-Unit Security" means a security that has in all material
respects the same rights and privileges as the I-Units.
"Subsidiary," when used in connection with the Partnership, means any
Affiliate of the Partnership which the Partnership controls, and of which the
Partnership owns, directly or indirectly, a majority of the aggregate shares,
partnership interests or other equity interests.
"Tax Indemnification Agreement" means the Tax Indemnification Agreement
dated as of the Closing between KMI and the Company.
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"Trading Day" for any security means a day on which:
(a) the principal National Securities Exchange on which such
security is listed is open for business, or
(b) if such security is not listed on any National Securities
Exchange, a day in which banking institutions in The City of New York generally
are open.
"Transfer Agent" means any bank, trust company or other Person
(including the Company or any Affiliate of the Company) appointed from time to
time by the Board of Directors of the Company to act as registrar and transfer
agent for the Listed Shares. On the date of these Exchange Provisions, First
Chicago Trust Company of New York is the Transfer Agent.
1.2 Rules of Construction. Unless the context otherwise clearly
requires:
(a) the terms defined in Section 1.1 have the meanings
assigned to them in that Section for purposes of these Exchange Provisions;
terms defined in the Purchase Provisions and also in these Exchange Provisions
shall in the Purchase Provisions have the meanings ascribed to them therein;
terms defined elsewhere in the LLC Agreement and also in these Exchange
Provisions shall in such other portions of the LLC Agreement have the meanings
ascribed to them therein;
(b) terms defined include the plural as well as the singular
and vice versa;
(c) references to any document, agreement, instrument or
provision thereof mean such document, agreement, instrument or provisions
thereof as the same may be duly amended, supplemental or restated from time to
time;
(d) "including" means including without limitation;
(e) "or" is not exclusive; and
(f) the words "herein," "hereof," "hereunder" and other words
of similar import refer to these Exchange Provisions as a whole and not to any
particular Section or other subdivision.
SECTION 2
Exchange of Listed Shares
2.1 Exchange Feature and Exchange Rate; Cash Settlement.
(a) Subject to and upon compliance with these Exchange
Provisions, at the option of the Holder thereof, each Listed Share may be
exchanged with the Exchange Party for fully paid and nonassessable Common Units
of the Partnership (calculated in Common Units as to each exchange to seven
decimal places and rounded down to six decimal places) at the Exchange Rate,
determined as hereinafter provided, in effect at the time of exchange. Such
exchange right (the "Exchange Feature") shall commence on the date which is 45
days after the Closing and shall terminate on the earlier of (i) the occurrence
of a Mandatory Purchase Event,
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and (ii) the date on which the Exchange Party has either mailed to the Holders
of Listed Shares, or delivered to the Transfer Agent for mailing to the Holders
of Listed Shares, a Purchase Notice in accordance with the Purchase Provisions.
From and after the occurrence of either of the events in clauses (i) or (ii) in
the preceding sentence, any Listed Share surrendered for exchange shall not be
exchanged, but shall be held for purchase pursuant to the Purchase Provisions,
and shall be so purchased on the relevant Purchase Date. The right to exchange
Listed Shares for Common Units is subject to Section 2.1(c).
(b) The rate at which Common Units shall be delivered by the
Exchange Party upon exchange for Listed Shares (herein called the "Exchange
Rate") shall be initially one Common Unit for each one Listed Share. The
Exchange Rate may be adjusted in certain instances as provided in Section 2.4.
(c) At any time, the Exchange Party may elect to make a cash
settlement ("Cash Settlement") in respect of any Listed Share surrendered for
exchange by giving notice of such election to the tendering Holder not more than
three Trading Days after such Listed Share is surrendered for exchange. Any such
notice mailed to the Holder of the Listed Shares at his address as reflected in
the records of the Transfer Agent, or as shown on the Exchange Notice, shall be
deemed to be validly given, whether or not actually received by such Holder.
Such Cash Settlement shall be in an amount per Listed Share equal to the Cash
Settlement Amount and shall be paid as promptly as practicable after the
completion of the three Trading Day period used to calculate the Cash Settlement
Amount. Such payment may be mailed to the Holder of the Listed Shares
surrendered for exchange at his address as reflected in the records of the
Transfer Agent, or as shown on the Exchange Notice, or made in such other
fashion as the Exchange Party may elect.
2.2 Exercise of Exchange Feature.
(a) In order to exercise the Exchange Feature, the Holder of
any Listed Share to be exchanged shall surrender the certificate representing
such Listed Share, duly endorsed or assigned to the Exchange Party or in blank,
at any office or agency of the Exchange Party maintained for that purpose
pursuant to Section 3.2 (which may be the Transfer Agent), accompanied by a duly
signed Exchange Notice substantially in the form provided in Section 2.7,
stating that the Holder elects to exchange the Listed Shares represented by such
certificate, or, if less than the entire number of Listed Shares represented by
such certificate are to be exchanged, the whole number of such Listed Shares to
be exchanged. Any such delivery of certificates and the Exchange Notice shall be
irrevocable. Only whole numbers of Listed Shares may be exchanged. If a Listed
Share is surrendered for exchange during the period from the close of business
on any Record Date next preceding any Distribution Date to the opening of
business on such Distribution Date, the distribution payable on such
Distribution Date shall be paid to the Holder of such Listed Share on the Record
Date, notwithstanding that such Listed Share has been surrendered for exchange
or the Exchange Date with respect to such Listed Share has occurred. If a Listed
Share is surrendered for exchange and the Exchange Date with respect to such
Listed Share occurs prior to a Record Date, such Listed Share will, as provided
below, have been deemed transferred to the Exchange Party on such Exchange Date,
and therefore the Exchange Party will be the holder of such Listed Share on the
Record Date and the Exchange Party will receive the distribution on the related
Distribution Date, whether or not the Exchange
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Party has yet delivered to the Holder the certificates representing Common Units
(or cash, if the Exchange Party elects Cash Settlement) deliverable upon the
exchange. Except as provided in this Section 2.2, no cash or other payment or
adjustment shall be made upon any exchange on account of any Distribution
declared from the Distribution Date next preceding the Exchange Date in respect
of any Listed Share surrendered for exchange, or on account of any distribution
declared or payable on the Common Units deliverable upon exchange.
(b) Listed Shares shall be deemed to have been exchanged on
the Exchange Date, and at such time the rights of the Holders of such Listed
Shares as Holders shall cease, including any rights under the LLC Agreement,
except the right to receive Common Units or the Cash Settlement Amount from the
Exchange Party in exchange for such Listed Shares in accordance with these
Exchange Provisions, and such Listed Shares shall upon the Exchange Date be
deemed to be transferred to the Exchange Party and shall be transferred to the
Exchange Party on the record books of the Transfer Agent, and the Exchange Party
shall be deemed to be the owner of such Listed Shares from and after the
Exchange Date and shall have all rights as the owner of such Listed Shares.
Unless the Exchange Party has elected to make a Cash Settlement, within three
Trading Days after the Exchange Date, the Exchange Party shall deliver to the
Transfer Agent, for delivery to the Holder, a certificate or certificates for
the number of full Common Units deliverable upon exchange, together with payment
in lieu of any fraction of a Common Unit, if any, as provided in Section 2.3.
Such certificate or certificates for Common Units shall be registered in the
name of the Holder of the Listed Shares surrendered for exchange, or duly
endorsed to such Holder or accompanied by a duly executed stock power or other
appropriate instrument of transfer in favor of such Holder. Holders of Listed
Shares have no rights in respect of Common Units unless and until the Listed
Shares are exchanged and Common Units registered in the name of the Holder have
been issued and delivered to such Holder or to the Transfer Agent as described
above. Unless the Exchange Party has elected to make a Cash Settlement, if a
record date with respect to Common Units occurs between the Exchange Date and
the earlier of the date on which such Common Units are registered in the name of
the Holder and the date on which the Exchange Party delivers to the Transfer
Agent the certificates for Common Units deliverable upon such exchange as
provided above, the Exchange Party shall (i) with respect to a record date for a
distribution to be made with respect to the Common Units deliverable by the
Exchange Party with respect to such exchange, forward such distribution with
respect to such Common Units to the Holder surrendering such Listed Shares for
exchange at the address reflected on the records of the Transfer Agent, or as
shown on the Exchange Notice, promptly upon the Exchange Party's receipt of such
distribution, and (ii) with respect to a record date for voting or consent of
Common Units, provide the Holder surrendering such Listed Shares for exchange a
proxy enabling such Holder to vote or consent with respect to the vote or
consent of such Common Units for the matters related to such record date.
(c) In the case of any certificate representing Listed Shares
which is exchanged in part only, upon such exchange the Transfer Agent shall
authenticate and deliver to the Holder thereof, at the expense of the Company, a
new certificate representing the number of Listed Shares not so exchanged.
2.3 Fractions of Common Units. No fractional Common Units shall be
delivered upon exchange of any Listed Shares. If more than one certificate
representing Listed Shares shall be surrendered for exchange with the same
Exchange Date by the same Holder, the number
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of full Common Units which shall be deliverable upon exchange thereof shall be
computed on the basis of the aggregate number of whole Listed Shares so
surrendered. Instead of any fractional Common Unit which would otherwise be
issuable upon exchange of any Listed Shares, the Exchange Party shall calculate
and pay a cash adjustment in respect of such fraction (calculated with respect
to a Common Unit to seven decimal places and rounded down to six decimal places)
in an amount equal to the same fraction of the Closing Price on the Exchange
Date (or, if such day is not a Trading Day, on the Trading Day immediately
preceding such day), or at the Exchange Party's option, the Exchange Party may
round the number of Common Units delivered up to the next higher whole Common
Unit.
2.4 Adjustment of Exchange Rate. The Exchange Rate shall be
subject to adjustment from time to time as follows:
(a) In the case of (i) any merger of the Partnership, whether
or not the Partnership is the survivor, that does not constitute a Mandatory
Purchase Event, (ii) any recapitalization, reorganization or similar transaction
of the Partnership, in each case that does not constitute a Mandatory Purchase
Event, (iii) the Partnership makes a distribution to holders of Common Units of
Similar Common Unit Securities, or (iv) if any Person becomes a Controlling
Entity in a transaction complying with the requirements of clauses (b)(i)
through (b)(iv) of the definition of "Mandatory Purchase Event" in these
Exchange Provisions, if all holders of Common Units, or all holders of Common
Units other than the Exchange Party and its Affiliates, are to receive, in
addition to their Common Units or in exchange for or in place of all of their
Common Units, a Similar Common Unit Security, then such adjustments may be made
to the Exchange Rate (including providing for the receipt upon exchange of a
Listed Share of Similar Common Unit Securities in place of or in addition to
Common Units) as the Board of Directors of the Company in its good faith
discretion deems appropriate and are agreed to by the Exchange Party.
(b) The Exchange Party may at its election, but shall have no
obligation to, at any time when the Listed Shares are exchangeable as provided
in Section 2.1, increase the then current Exchange Rate by any amount selected
by the Exchange Party. If the Exchange Party elects so to increase the then
current Exchange Rate, such increase shall remain in effect for at least 20 days
following the effective date of such election, after which time the Exchange
Party may, at its election (which may be made at the same time as the election
to increase the Exchange Rate), reinstate the Exchange Rate in effect prior to
the time of such increase. Whenever the Exchange Rate is so to be increased, the
Exchange Party shall deliver to the Transfer Agent at least 15 days before the
effective date of such increase copies of a notice for mailing to the Holders of
the Listed Shares, stating the increased Exchange Rate, the date on which such
increase will take effect and the period for which such increased Exchange Rate
will be in effect.
2.5 Notice of Adjustments of Exchange Rate. Whenever the Exchange
Rate is adjusted as provided in Section 2.4, a notice stating that the Exchange
Rate has been adjusted and setting forth the adjusted Exchange Rate shall
forthwith be prepared by the Exchange Party, and as soon as practicable after it
is prepared, such notice shall be provided by the Exchange Party to the Transfer
Agent and to the Holders of Listed Shares. Upon the request of the
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Exchange Party, the Transfer Agent shall, and the Company shall use its
reasonable efforts to cause the Transfer Agent to, mail such notice to the
Holders of the Listed Shares.
2.6 Ownership of Exchanged Listed Shares. All Listed Shares
delivered for exchange shall be transferred to the Exchange Party and registered
in the name of the Exchange Party on the books and records of the Transfer Agent
on the related Exchange Date and will not be cancelled but will remain
outstanding.
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2.7 Exchange Notice. The Exchange Notice shall be in substantially
the following form:
EXCHANGE NOTICE
The undersigned record holder of Listed Shares of Xxxxxx Xxxxxx
Management, LLC (the "Company") hereby surrenders for exchange pursuant to
Section 2.1 of the Exchange Provisions of the Limited Liability Company
Agreement of the Company the Listed Shares represented by the certificates
described below.
Name of Record Holder:
-------------------------------------------------
Title:
-----------------------------------------------------------------
Address:
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
Telephone Number:
------------------------------------------------------
Tax Identification or Social Security Number:
-------------------------
Certificates Surrendered
Certificate Number Number of Listed Shares Represented by Certificate
------------------ --------------------------------------------------
-------------------------------------- --------------------------------------------------
-------------------------------------- --------------------------------------------------
-------------------------------------- --------------------------------------------------
-------------------------------------- --------------------------------------------------
-------------------------------------- --------------------------------------------------
Total Number of Listed Shares --------------------------------------------------
(If you desire to exchange less than all Listed Shares scheduled above, complete
the blank below with respect to the number of Listed Shares to be exchanged.)
Number of Listed Shares to be exchanged:
---------------------------------------
Note: If no number of Listed Shares is indicated, all Listed Shares
represented by the certificates scheduled above will be exchanged.
Signatures
This Exchange Notice must be signed by the record holder(s) exactly as
the name(s) appear on the certificate(s) representing the Listed Shares
scheduled above, or if delivered by a participant in the depositary for the
Listed Shares, exactly as such participant's name appears on the security
position listing as the owner of Listed Shares. If signature is by trustees,
executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, please
set forth the full title. Proper evidence of such person's authority may be
required by the Exchange Party.
Dated:
----------------------------------------------
Signature(s) of Record Holders:
-----------------------------------------
-----------------------------------------
Print name(s) of Record Holders:
-----------------------------------------
-----------------------------------------
Print title(s) of Signatories:
-----------------------------------------
-----------------------------------------
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SECTION 3
Certain Covenants
3.1 Notice of Certain Action.
In case:
(a) the Partnership shall declare a dividend or any other
distribution on Common Units payable otherwise than exclusively in cash or
Common Units; or
(b) of the voluntary or involuntary dissolution, liquidation
or winding up of the Partnership; or
(c) the Partnership or any Affiliate of the Partnership shall
commence a tender offer for all or a portion of the outstanding Common Units;
then the Company shall cause to be delivered to the Transfer Agent a soon as
reasonably practicable after the Company has become aware of such event, copies
of a notice for mailing to the Holders of (x) the date on which a record is to
be taken for the purpose of such distribution or, if a record is not to be
taken, the date as of which the holders of Common Units to be entitled to such
distribution are to be determined; (y) the date on which such dissolution,
liquidation or winding up is expected to become effective, and the date as of
which it is expected that holders of Common Units shall be entitled to exchange
their Common Units for securities, cash or other property deliverable upon such
dissolution, liquidation or winding up; or (z) the date on which the right to
make tenders under such tender offer expires. Neither the failure to give such
notice nor any defect therein shall affect the legality or validity of the
proceedings described in clauses (a) through (c) of this Section 3.1.
3.2 Maintenance of Office or Agency.
(a) The Exchange Party will maintain in the Borough of
Manhattan, The City of New York an office or agency where Listed Shares may be
surrendered for exchange and where notices and demands to or upon the Exchange
Party in respect of the Listed Shares and these Exchange Provisions may be
served. The Exchange Party will give prompt written notice to the Transfer Agent
of the location, and any change in the location, of such office or agency. As of
the date of these Exchange Provisions, such office or agency shall be the
Transfer Agent at its office at ______________, New York, New York 100__. If at
any time the Exchange Party shall fail to maintain any such required office or
agency or shall fail to furnish the Transfer Agent with the address thereof,
such surrenders may be made or served at the office of the Transfer Agent, and
the Exchange Party hereby appoints the Transfer Agent as its agent to receive
all such surrenders in any such case.
(b) The Exchange Party may also from time to time designate
one or more other offices or agencies (in or outside the Borough of Manhattan,
The City of New York) where
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the Listed Shares may be presented or surrendered for such purpose and may from
time to time rescind such designations; provided, however, that no such
designation or rescission shall in any manner relieve the Exchange Party of its
obligation to maintain an office or agency in the Borough of Manhattan, The City
of New York for such purpose as provided in Section 3.2(a). The Exchange Party
will give prompt written notice to the Transfer Agent of any such designation or
rescission and of any change in the location of any such other office or agency.
3.3 Covenants as to Common Units. The Exchange Party agrees that all
Common Units that are delivered upon exchange of Listed Shares, upon such
delivery, will have been duly authorized and validly issued and will be fully
paid and nonassessable and, except as provided in Section 3.5 of these Exchange
Provisions, the Exchange Party will pay all taxes, liens and charges with
respect to the delivery thereof. The Exchange Party agrees that it will at all
times own, directly or indirectly through subsidiaries, a number of Common Units
equal to no less than 20% of the number of outstanding Listed Shares not owned
by the Exchange Party and its Affiliates.
3.4 Registration. The Company and the Exchange Party will use
reasonable efforts to effect or cause to be effected all registrations and
filings with, and obtain all consents, authorizations, approvals or failures to
object by, all governmental authorities that may be necessary for such party and
its subsidiaries and Affiliates under any United States Federal or state law
(including the Securities Act, the Securities Exchange Act and state securities
and Blue Sky laws) for any exchange pursuant to the Exchange Feature and for the
Common Units deliverable upon exchange of Listed Shares to be lawfully made and
delivered as provided herein.
3.5 Taxes on Exchanges. Except as provided in the next sentence, the
Exchange Party will pay any and all taxes and duties that may be payable in
respect of the delivery of Common Units pursuant hereto. The Exchange Party
shall not, however, be required to pay any tax or duty which may be payable in
respect of any transfer involved in the delivery of Common Units in a name other
than that of the Holder of the Listed Shares to be exchanged, and no such
delivery shall be made unless and until the Person requesting such delivery has
paid to the Exchange Party the amount of any such tax or duty, or has
established to the satisfaction of the Exchange Party that such tax or duty has
been paid.
3.6 Performance by Subsidiaries. The Exchange Party may cause any one
or more of its Subsidiaries to deliver Common Units or cash that the Exchange
Party may be required to deliver hereunder. Such delivery shall constitute
performance of the obligations of the Exchange Party to the same extent as
delivery by the Exchange Party, but the ability of the Exchange Party to cause a
Subsidiary to make such deliveries shall not relieve the Exchange Party of its
obligation for such deliveries to be made.
SECTION 4
Responsibility of Transfer Agent
4.1 Responsibility of Transfer Agent for Exchange Provisions. The
Transfer Agent, in such capacity, shall not at any time be under any duty or
responsibility to any Holder of Listed Shares to determine whether any facts
exist which may require any adjustment of the Exchange
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Rate, or with respect to the nature or extent of any such adjustment when made,
or with respect to the method employed, or herein provided to be employed, in
making the same. The Transfer Agent, in such capacity, shall not be accountable
with respect to the validity or value (or the kind or amount) of any Common
Units, or of any other securities or property or cash, which may at any time be
delivered upon the exchange of any Listed Shares; and it does not make any
representation with respect thereto. The Transfer Agent, in such capacity, shall
not be responsible for any failure of the Exchange Party to make or calculate
any cash payment or to transfer or deliver any Common Units or certificates for
Common Units or other securities or property or cash upon the surrender of any
Listed Share for the purpose of exchange; and the Transfer Agent, in such
capacity, shall not be responsible for any failure of the Exchange Party to
comply with any of the covenants of the Exchange Party contained in these
Exchange Provisions.
4.2 Deliveries to Holders and Former Holders. Whenever the Exchange
Party or the Company may deliver to the Transfer Agent for mailing or delivery
to the Holders or former Holders of Listed Shares any notice, communication,
certificate for Common Units or Listed Shares, Cash Settlement Amount or other
payment or other matter deliverable to Holders or former Holders of Listed
Shares under the Exchange Provisions, the Transfer Agent shall promptly mail or
deliver such notice, communication, certificate, cash or other payment or matter
to the relevant Holder or former Holder, and the Company shall use its
reasonable efforts to cause the Transfer Agent to do so.
SECTION 5
Binding Effect on the Exchange Party
5.1 Adoption of Exchange Provisions by Exchange Party. KMI, as the
initial Exchange Party pursuant to these Exchange Provisions, has executed in
the place provided below and delivered to the Company a copy of these Exchange
Provisions, pursuant to which KMI has, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, agreed to be subject
to and bound be these Exchange Provisions. KMI further acknowledges and agrees
that these Exchange Provisions and its obligations hereunder are for the benefit
of and shall be enforceable by any Holder of Listed Shares.
SECTION 6
Amendments
6.1 Amendments. These Exchange Provisions may be amended by an
agreement in writing signed by the Company and the Exchange Party without the
vote, approval or consent of the Holders of any of the Listed Shares, unless
such amendment would (a) reduce the time for any notice to which the Holders of
the Listed Shares would be entitled under these Exchange Provisions, or (b) have
a material adverse effect on the powers, preferences or rights of the Listed
Shares as determined in the sole discretion of the Board of Directors of the
Company, in which case such amendment must be approved by such vote or consent
of the Holders of Listed Shares, if any, as may be required by the LLC
Agreement. Any amendment required by reason of an adjustment to the Exchange
Rate pursuant to Section 2.4 shall be deemed not to have such a material adverse
effect or reduce the time for any notice and therefore may be made without the
vote, consent or approval of the Holders of any of the Listed Shares.
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6.2 Amendment Without Vote. Notwithstanding the foregoing provisions
and the other provisions of the LLC Agreement with respect to amendments, the
Board of Directors of the Company has reserved the right to make, with the
written consent of the Exchange Party, and may make, with the written consent of
the Exchange Party, changes in the Listed Shares and these Exchange Provisions,
to meet the requirements of applicable securities and other laws and regulations
and stock exchange rules and to effect the intent of the provisions of the LLC
Agreement, and also may make other changes which the Board of Directors of the
Company determines in its sole discretion will not have a material adverse
effect on the rights and privileges of the Listed Shares, in each case without
the vote, consent or approval of the Holders of any Listed Shares. In addition,
notwithstanding the foregoing provisions with respect to amendments, (a) in the
case of (i) any merger of the Partnership, whether or not the Partnership is the
survivor, that is the subject of a unitholder vote and does not constitute a
Mandatory Purchase Event, and (ii) any recapitalization, reorganization or
similar transaction of the Partnership, in each case that is the subject of a
unitholder vote and does not constitute a Mandatory Purchase Event, or (b) if
any Person becomes a Controlling Entity in a transaction complying with the
requirements of clauses (b)(i) through (b)(iv) of the definition of "Mandatory
Purchase Event" in these Exchange Provisions, such amendments as of the Board of
Directors of the Company in its good faith discretion deems appropriate and are
agreed to by the Exchange Party may be made in these Purchase Provisions to
accommodate, in the case of clause (a), such merger, recapitalization,
reorganization, or similar transaction, or, in the case of clause (b), the
assumption by such Person of the obligations of the Exchange Party under these
Exchange Provisions, and any such amendment shall be deemed not to have such a
material adverse effect or reduce the time for any notice, and therefore may be
made without the vote, consent or approval of the Holders of any of the Listed
Shares.
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ADOPTION BY XXXXXX XXXXXX, INC.
KMI, as the initial Exchange Party pursuant to these Exchange
Provisions, has executed in the place provided below and delivered to the
Company a copy of these Exchange Provisions, pursuant to which KMI has, for good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, adopted and agreed to be subject to and bound by these Exchange
Provisions as the Exchange Party hereunder. KMI further acknowledges and agrees
that these Exchange Provisions and its obligations hereunder are for the benefit
of and shall be enforceable by any record holder of Listed Shares.
Dated: , 2001
----------------
XXXXXX XXXXXX, INC.
By:
---------------------------------
Authorized Officer
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ANNEX B TO
EXHIBIT 3.2
PURCHASE PROVISIONS
ANNEX B TO THE
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
XXXXXX XXXXXX MANAGEMENT, LLC
These Purchase Provisions, dated as of __________, 2001, are an
integral part of the Amended and Restated Limited Liability Company Agreement of
Xxxxxx Xxxxxx Management, LLC, dated as of ____________, 2001.
SECTION 1
Definitions
1.1 Definitions. In these Purchase Provisions, the following terms
shall have the following respective meanings:
"Affiliate" means, with respect to any Person, any other Person that
directly or indirectly controls, is controlled by or is under common control
with, the Person in question. As used herein, the term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through ownership
of voting securities, by contract or otherwise.
"Average Market Price" for any security means the average of the
Closing Prices for such security for the consecutive Trading Days in the period
specified in the relevant Section of these Purchase Provisions ending on the
Trading Day specified in the relevant Section of these Purchase Provisions.
"Beneficial Owner" has the meaning set forth in Rules 13d-3 and 13d-5
under the Securities Exchange Act, as in effect on the date of these Purchase
Provisions, and the terms "Beneficial Ownership," "Beneficially Own,"
"Beneficially Owned" and similar terms have correlative meanings.
"Board of Directors of the Company" means the board of directors of the
Company established pursuant to the LLC Agreement, and any committee of such
board duly authorized to act in respect thereof.
"Board of Directors of the Purchaser" means (a) if the Purchaser is
KMI, the board of directors of KMI; (b) if the Purchaser is a limited
partnership with a corporate general partner or any other corporation, the board
of directors of such corporate general partner or corporation; (c) if the
Purchaser is any other form of entity, the board of directors or other
comparable
60
governing body of such entity; and (d) in each case, any committee of such board
or body duly authorized to act in respect thereof.
"Business Day" means any day other than a Saturday or Sunday or a day
on which banking institutions in the State of New York or the State of Texas are
authorized or required by law to close.
"Closing Price" for a security on any day means:
(a) for securities listed on a National Securities Exchange, the last
sale price for that day, regular way, or if there are no sales on that
day, the average of the closing bid and asked prices for that day,
regular way, in either case as reported in the principal composite
transactions reporting system for the principal National Securities
Exchange on which such securities are listed; or
(b) if such securities are not listed on a National Securities Exchange
on that day, the last quoted price on that day, or if no price is
quoted, the average of the high bid and low asked prices on that day,
each as reported by the National Association of Securities Dealers
Automated Quotation system; or
(c) if such securities are not so quoted on that day, the average of
the closing bid and asked prices on that day furnished by a
professional market maker in such securities selected by the Board of
Directors of the Purchaser; or
(d) if on that day no market maker is making a market in such
securities, the fair value of such securities on such day as determined
by the Board of Directors of the Purchaser.
"Common Units" has the meaning assigned to it in the Partnership
Agreement.
"Company" means Xxxxxx Xxxxxx Management, LLC, a Delaware limited
liability company.
"Controlling Entity" has the meaning set forth in clause (b)(i) of the
definition of Mandatory Purchase Event in this Section 1.1.
"Entity" means a corporation, limited liability company, venture,
partnership, trust, unincorporated organization, association or other entity.
"Exchange Provisions" means the exchange provisions attached to the LLC
Agreement as Annex A and thereby made a part of the LLC Agreement.
"General Partner" means the general partner of the Partnership. On the
date of these Purchase Provisions, the General Partner is Kinder Xxxxxx X.X.,
Inc.
"I-Units" has the meaning assigned to it in the Partnership Agreement.
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"KMI" means Xxxxxx Xxxxxx, Inc., a Kansas corporation, its successors
by merger and any Person who succeeds to its obligations under the Exchange
Provisions, these Purchase Provisions, the Registration Rights Agreement and the
Tax Indemnification Agreement in connection with an acquisition of all or
substantially all of its assets by such Person.
"LLC Agreement" means the Amended and Restated Limited Liability
Company Agreement of the Company dated as of __________, 2001, including these
Purchase Provisions and the Exchange Provisions.
"Listed Shares" means the limited liability company interests in the
Company designated in the LLC Agreement as "Listed Shares."
"Mandatory Purchase" means the purchase of Listed Shares pursuant to
Section 2.
"Mandatory Purchase Date" has the meaning set forth in Section 2.3(d).
"Mandatory Purchase Event" means any one of the following:
(a) the occurrence of the first day on which the aggregate amount of
distributions or other payments by the Partnership on the Common Units
(other than distributions or payments made in Common Units or Similar
Common Unit Securities, but including distributions and other payments
pursuant to an issuer tender offer by the Partnership) during the
immediately preceding 360-day period exceeds 50% of the Average Market
Price of a Common Unit during the ten consecutive Trading Day period
ending on the last Trading Day prior to the first day of such 360-day
period;
(b) the occurrence of an event resulting in KMI and its Affiliates
ceasing to be the Beneficial Owners of more than 50% of the total
voting power of all shares of capital stock of the General Partner,
unless:
(i) the event results in another Person becoming the
Beneficial Owner of more than 50% of the total voting power of
all shares of capital stock of the General Partner (such other
Person being referred to herein as the "Controlling Entity");
(ii) the Controlling Entity is organized under the laws of a
state in the United States;
(iii) the Controlling Entity has long term unsecured debt with
an investment grade credit rating, as determined by Xxxxx'x
Investor Services, Inc. and Standard & Poor's Rating Service,
immediately prior to the event that results in the Controlling
Entity becoming the Beneficial Owner of more than 50% of the
total voting power of all shares of capital stock of the
General Partner; and
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(iv) the Controlling Entity assumes all obligations of KMI and
the Purchaser to the Company and to the holders of the Listed
Shares under these Purchase Provisions, the Exchange
Provisions, the Registration Rights Agreement and the Tax
Indemnification Agreement.
(c) the merger of the Partnership with or into another Person in any
case where the Partnership is not the surviving entity, or the sale of
all or substantially all of the assets of the Partnership and its
subsidiaries, taken as a whole, to another Person, unless:
(i) in the transaction the holders of Common Units receive in
exchange for all of their Common Units a Similar Common Unit
Security of the Person that is the surviving Entity or that
purchased the assets;
(ii) in the transaction the Company receives in exchange for
all of its I-Units a Similar I-Unit Security of the Person
that is the surviving Entity or that purchased the assets;
(iii) no consideration is received in the transaction in
respect of Common Units other than Similar Common Unit
Securities and/or cash and the amount of cash received per
Common Unit does not exceed 33-1/3% of the Average Market
Price of a Common Unit for the ten consecutive Trading Day
period ending on the Trading Day immediately preceding the
execution of the definitive agreement for the transaction; and
(iv) no consideration is received in the transaction in
respect of I-Units other than Similar I-Unit Securities of the
Person that is the surviving Entity or that purchased the
assets.
"Mandatory Purchase Notice" has the meaning set forth in Section 2.3.
"Mandatory Purchase Price" means the higher of the Average Market Price
for the Listed Shares and the Average Market Price for the Common Units, in each
case for the ten consecutive Trading Day period ending on the Trading Day
immediately prior to the date of the Mandatory Purchase Event.
"National Securities Exchange" means an exchange registered with the
Securities and Exchange Commission under Section 6(a) of the Securities Exchange
Act.
"Notice Date" means the date on which the Purchaser either mails the
relevant Purchase Notice to the holders of Listed Shares or delivers copies of
the relevant Purchase Notice to the Transfer Agent for mailing to the holders of
Listed Shares.
"Optional Purchase" means the purchase of Listed Shares at the election
of the Purchaser pursuant to Section 3 or Section 4.
"Optional Purchase Condition for Common Units and Listed Shares" means
any time at which the sum of the number of Common Units held by the Purchaser
and its Affiliates plus the
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number of Listed Shares held by the Purchaser and its Affiliates equals 80% or
more of the sum of the aggregate number of Common Units then outstanding plus
the aggregate number of Listed Shares then outstanding.
"Optional Purchase Condition for Listed Shares" means any time at which
the Purchaser and its Affiliates hold 80% or more of the then outstanding Listed
Shares.
"Optional Purchase Date" means the date selected by the Purchaser for
the Optional Purchase of Listed Shares pursuant to Section 3.2 or Section 4.2.
"Optional Purchase Notice" has the meaning set forth in Section 3.2.
"Optional Purchase Notice for Common Units and Listed Shares" has the
meaning set forth in Section 4.2.
"Optional Purchase Price for Common Units and Listed Shares" means a
price which is equal to the greatest of: (a) the Average Market Price for the
Common Units for the 20 consecutive Trading Day period ending on the fifth
Trading Day prior to the Notice Date, (b) the highest price the Purchaser or its
Affiliates paid for Common Units during the 90 calendar day period ending on the
day prior to the Notice Date, (c) the Average Market Price for the Listed Shares
for the 20 consecutive Trading Day period ending on the fifth Trading Day prior
to the Notice Date, and (d) the highest price the Purchaser or its Affiliates
paid for Listed Shares (other than pursuant to the Exchange Provisions) during
the 90 calendar day period ending on the day prior to the Notice Date. To the
extent that the price paid for Listed Shares or Common Units in clauses (b) or
(d) is paid in securities, the value of such securities shall be the Closing
Price for such securities on the day the purchase of the Listed Shares or Common
Units is effected. To the extent that the price paid for Listed Shares or Common
Units in clauses (b) or (d) is paid other than in cash or securities, the value
of such the other consideration (and therefore the price paid for such Listed
Shares or Common Units) shall be as determined by the Board of Directors of the
Purchaser.
"Optional Purchase Price for Listed Shares" means a price which is
equal to 110% of the greater of: (a) the Average Market Price for the Listed
Shares for the ten consecutive Trading Day period ending on the fifth Trading
Day prior to the Notice Date, and (b) the highest price Purchaser or its
Affiliates paid for Listed Shares (other than pursuant to the Exchange
Provisions) during the 90 calendar day period ending on the day prior to the
Notice Date. To the extent that the price paid for Listed Shares in clause (b)
is paid in securities, the value of such securities shall be the Closing Price
for such securities on the day the purchase of the Listed Shares is effected. To
the extent that the price paid for Listed Shares in clause (b) is paid other
than in cash or securities, the value of such the other consideration (and
therefore the price paid for such Listed Shares) shall be as determined by the
Board of Directors of the Purchaser.
"Partnership" means Xxxxxx Xxxxxx Energy Partners, L.P., a Delaware
limited partnership.
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"Partnership Agreement" means the Third Amended and Restated Agreement
of Limited Partnership of the Partnership, dated as of _________, 2001.
"Partnership Notice" has the meaning set forth in Section 4.2.
"Person" means a natural person or an Entity.
"Purchase Date" means either a Mandatory Purchase Date or an Optional
Purchase Date.
"Purchase Notice" means a Mandatory Purchase Notice, an Optional
Purchase Notice, or an Optional Purchase Notice for Common Units and Listed
Shares.
"Purchase Price" means the Mandatory Purchase Price, the Optional
Purchase Price for Listed Shares or the Optional Purchase Price for Common Units
and Listed Shares.
"Purchase Provisions" means these Purchase Provisions, which are
attached to the LLC Agreement as Annex B and hereby made a part of the LLC
Agreement.
"Purchaser" means the Person with the obligation to make the Mandatory
Purchase and the right to make an Optional Purchase pursuant to these Purchase
Provisions. The Purchaser initially is KMI.
"Registration Rights Agreement" means the Registration Rights Agreement
between KMI and the Partnership, dated as of ___________, 2001.
"Section" means a section of these Purchase Provisions.
"Securities Act" means the United States Securities Act of 1933, as
amended from time to time and any successor to such statute and all rules and
regulations promulgated thereunder.
"Securities Exchange Act" means the United States Securities Exchange
Act of 1934, as amended from time to time and any successor to such statute and
all rules and regulations promulgated thereunder.
"Similar Common Unit Security" means a security which has in all
material respects the same rights and privileges as the Common Units.
"Similar I-Unit Security" means a security that has in all material
respects the same rights and privileges as the I-Units.
"Subsidiary," when used in connection with the Partnership, means any
Affiliate of the Partnership which the Partnership controls, and of which the
Partnership owns, directly or indirectly, a majority of the aggregate shares,
partnership interests or other equity interests.
"Tax Indemnification Agreement" means the Tax Indemnification Agreement
dated as of ___________, 2001, between KMI and the Company.
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"Trading Day" for any security means a day on which:
(a) the principal National Securities Exchange on which such security
is listed is open for business, or
(b) if such security is not listed on any National Securities Exchange,
a day on which banking institutions in The City of New York generally
are open.
"Transfer Agent" means any bank, trust company or other Person
(including the Company or any Affiliate of the Company) appointed from time to
time by the Board of Directors of the Company to act as registrar and transfer
agent for the Listed Shares. On the date of these Purchase Provisions, First
Chicago Trust Company of New York is the Transfer Agent.
1.2 Rules of Construction. Unless the context otherwise clearly
requires:
(a) the terms defined in Section 1.1 have the meanings
assigned to them in that Section for purposes of these Purchase Provisions;
terms defined in the Exchange Provisions and also in these Purchase Provisions
shall in the Exchange Provisions have the meanings ascribed to them therein;
terms defined elsewhere in the LLC Agreement and also in these Purchase
Provisions shall in such other portions of the LLC Agreement have the meanings
ascribed to them therein;
(b) terms defined include the plural as well as the singular
and vice versa;
(c) references to any document, agreement, instrument or
provision thereof mean such document, agreement, instrument or provisions
thereof as the same may be duly amended, supplemented or restated from time to
time;
(d) "including" means including without limitation;
(e) "or" is not exclusive; and
(f) the words "herein," "hereof," "hereunder" and other words
of similar import refer to these Purchase Provisions as a whole and not to any
particular Section or other subdivision.
SECTION 2
Mandatory Purchase
2.1 Mandatory Purchase Event. Upon the occurrence of a Mandatory
Purchase Event, the Purchaser shall purchase all, but not less than all, of the
outstanding Listed Shares that are not held by the Purchaser or its Affiliates
at the Mandatory Purchase Price, pursuant to the provisions of this Section 2.
The Mandatory Purchase Price for any fractional Listed Share shall be the
Mandatory Purchase Price for a whole Listed Share times the fraction of the
Listed Share
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to be purchased. In determining whether any fractional Listed Shares are
outstanding, all certificates registered in the name of the same holder of
Listed Shares shall be aggregated.
2.2 Notice to Transfer Agent. Promptly, but in no case later than three
Business Days, following the occurrence of a Mandatory Purchase Event, the
Purchaser shall give notice to the Transfer Agent that a Mandatory Purchase
Event has occurred, and request that the Transfer Agent mail the Mandatory
Purchase Notice to the record holders of the Listed Shares as of earlier of the
date of the Mandatory Purchase Event or the most recent practicable date. If the
Purchaser so requests, the Transfer Agent shall, and the Company shall use its
reasonable efforts to cause the Transfer Agent to, mail the Mandatory Purchase
Notice to such record holders of Listed Shares.
2.3 Purchase Notice. Within three Business Days following the
occurrence of a Mandatory Purchase Event, the Purchaser shall mail, or deliver
to the Transfer Agent for mailing and cause the Transfer Agent to mail, to the
record holders of the Listed Shares described in Section 2.2(a), a notice (the
"Mandatory Purchase Notice") which shall state:
(a) That a Mandatory Purchase Event has occurred and that
pursuant to the provisions of the LLC Agreement and these Purchase Provisions
the Purchaser will purchase all of the outstanding Listed Shares that are not
held by the Purchaser or its Affiliates at the Mandatory Purchase Price;
(b) A brief description of the circumstances and relevant
facts regarding the Mandatory Purchase Event;
(c) The dollar amount per Listed Share of the Mandatory
Purchase Price;
(d) The date on which the Listed Shares will be purchased (the
"Purchase Date"), which shall be no later than five Business Days from the date
the Mandatory Purchase Notice is mailed by the Purchaser or the Transfer Agent;
and
(e) The instructions a holder of Listed Shares must follow,
including any other documents such holder must deliver, in order to receive the
Mandatory Purchase Price.
Any such Mandatory Purchase Notice mailed to a record holder of Listed
Shares at such holder's address as reflected in the records of the Transfer
Agent as of the time set forth in Section 2.2, or delivered by the Purchaser to
the Transfer Agent for mailing to such holders, shall be conclusively presumed
to have been given, whether or not such holder receives such notice. Failure to
give any such notice to any particular holder or holders shall not affect the
validity of the Mandatory Purchase pursuant to these Purchase Provisions.
2.4 Deposit of Funds; Effect of Purchase. On or prior to the Mandatory
Purchase Date, the Purchaser shall irrevocably deposit with the Transfer Agent
funds sufficient to pay the Mandatory Purchase Price for all outstanding Listed
Shares that on the date of such deposit are not held by the Purchaser or its
Affiliates. After the date of such deposit and prior to the Mandatory Purchase
Date, neither the Purchaser nor any of its Affiliates shall dispose of any
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Listed Shares held by them, other than to the Purchaser or any of its
Affiliates. The Transfer Agent shall return to the Purchaser any funds not so
required for the purchase of Listed Shares that on the Mandatory Purchase Date
are not held by the Purchaser or its Affiliates. If the Purchaser so deposits
such funds with the Transfer Agent, and if the Purchaser has delivered the
Mandatory Purchase Notice to the Transfer Agent for mailing to the record
holders of the Listed Shares, then from and after the Mandatory Purchase Date,
notwithstanding that any certificate representing Listed Shares shall not have
been surrendered for purchase, all rights of the holders of such Listed Shares
as such, including any other rights under the LLC Agreement and the rights to
receive any distributions on Listed Shares that have been declared (or a record
date for which has been set) but that have not been paid or made, shall
thereupon cease, except the right to receive the Mandatory Purchase Price,
without interest, upon surrender to the Transfer Agent of the certificates
representing such Listed Shares, with such other documents as may be required by
the Mandatory Purchase Notice, in compliance with the instructions in the
Mandatory Purchase Notice, and such Listed Shares shall from and after the
Mandatory Purchase Date be deemed to be purchased by the Purchaser and shall be
transferred to the Purchaser on the record books of the Transfer Agent, and the
Purchaser shall be deemed to be the owner of such Listed Shares from and after
the Mandatory Purchase Date and shall have all rights as the owner and record
holder of such Listed Shares. As provided in the Exchange Provisions, the
ability of a holder of Listed Shares to exchange such Listed Shares for Common
Units shall terminate on the earlier of (i) the occurrence of a Mandatory
Purchase Event and (ii) the date on which the Purchaser has either mailed to the
record holders of Listed Shares, or delivered to the Transfer Agent for mailing
to the record holders of Listed Shares, a Purchase Notice. From and after the
occurrence of the earlier of clause (i) or clause (ii) in the preceding
sentence, any Listed Share surrendered for exchange shall not be exchanged but
shall be held for purchase pursuant to these Purchase Provisions, and shall be
so purchased on the relevant Purchase Date.
SECTION 3
Optional Purchase
3.1 Optional Purchase Condition for Listed Shares. At any time when the
Optional Purchase Condition for Listed Shares exists, the Purchaser may elect,
but shall not be obligated, to purchase all, but not less than all, of the
outstanding Listed Shares that are not held by the Purchaser or its Affiliates
at the Optional Purchase Price for Listed Shares pursuant to the provisions of
this Section 3. The Purchase Price for any fractional Listed Share purchased
pursuant to this Section 3 shall be the Optional Purchase Price for Listed
Shares times the fraction of the Listed Share to be purchased. In determining
whether any fractional Listed Shares are outstanding, all certificates
registered in the name of the same holder of Listed Shares shall be aggregated.
3.2 Optional Purchase Notice. The Purchaser may exercise its election
to make an Optional Purchase by delivering copies of a notice (the "Optional
Purchase Notice") to the Transfer Agent not less than ten days and not more than
60 days prior to the date the Purchaser selects for the Optional Purchase (the
"Optional Purchase Date"). The Transfer Agent shall, and the Company will use
its reasonable efforts to cause the Transfer Agent to, mail the Optional
Purchase Notice to the record holders of Listed Shares as of the most recent
practicable date. Any such Optional Purchase Notice mailed to a record holder of
Listed Shares at his address as
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reflected in the records of the Transfer Agent, or delivered by the Purchaser to
the Transfer Agent for mailing to such holders, shall be conclusively presumed
to have been given, whether or not such holder receives such notice. Failure to
give such notice to any particular holder or holders shall not affect the
validity of the Optional Purchase pursuant to these Purchase Provisions. So long
as the Optional Purchase Condition for Listed Shares exists on the date of the
Optional Purchase Notice, the Purchaser may purchase such Listed Shares pursuant
to these Optional Purchase provisions, whether or not the Optional Purchase
Condition for Listed Shares continues to exist on the Optional Purchase Date.
The Optional Purchase Notice shall state:
(a) that as of the date of such Optional Purchase Notice, the
Optional Purchase Condition for Listed Shares exists, and that the Purchaser has
elected to make the Optional Purchase pursuant to the terms of the LLC Agreement
and these Purchase Provisions;
(b) the Optional Purchase Price;
(c) the Optional Purchase Date; and
(d) the instructions a holder of Listed Shares must follow,
including any other documents a holder of Listed Shares must deliver, in order
to receive the Optional Purchase Price.
3.3 Deposit of Funds; Effect of Purchase. On or prior to the Optional
Purchase Date, the Purchaser shall irrevocably deposit with the Transfer Agent
funds sufficient to pay the Optional Purchase Price for Listed Shares for all
outstanding Listed Shares that on the date of such deposit are not held by the
Purchaser or its Affiliates. After the date of such deposit and prior to the
Optional Purchase Date, neither the Purchaser nor any of its Affiliates shall
dispose of any Listed Shares held by them, other than to the Purchaser or any of
its Affiliates. The Transfer Agent shall return to the Purchaser any funds not
so required for the purchase of Listed Shares that on the Optional Purchase Date
are not held by the Purchaser or its Affiliates. If the Purchaser so deposits
such funds with the Transfer Agent, and if the Purchaser has delivered the
Optional Purchase Notice to the Transfer Agent for mailing to the record holders
of the Listed Shares, then from and after the Optional Purchase Date,
notwithstanding that any certificate representing Listed Shares shall not have
been surrendered for purchase, all rights of the holders of such Listed Shares
as such, including any other rights under the LLC Agreement and the rights to
receive any distributions on Listed Shares that have been declared (or a record
date for which has been set) but that have not been paid or made, shall
thereupon cease, except the right to receive the Optional Purchase Price for
Listed Shares, without interest, upon surrender to the Transfer Agent of the
certificates representing such Listed Shares, with such other documents as may
be required by the Optional Purchase Notice, in compliance with the instructions
in the Optional Purchase Notice, and such Listed Shares shall from and after the
Optional Purchase Date be deemed to be purchased by the Purchaser and shall be
transferred to the Purchaser on the record books of the Transfer Agent, and the
Purchaser shall be deemed to be the owner of such Listed Shares from and after
the Optional Purchase Date and shall have all rights as the owner of such Listed
Shares. As provided in the Exchange Provisions, the ability of a holder of
Listed Shares to exchange such Listed Shares for Common Units shall terminate on
the earlier of (i) the occurrence of a Mandatory Purchase Event, and (ii) the
date on which the Purchaser has either
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mailed to the record holders of Listed Shares, or delivered to the Transfer
Agent for mailing to the record holders of Listed Shares, a Purchase Notice.
From and after the occurrence of the earlier of clause (i) or clause (ii) in the
preceding sentence, any Listed Share surrendered for exchange shall not be
exchanged, but shall be held for purchase pursuant to these Purchase Provisions,
and shall be so purchased on the relevant Purchase Date.
SECTION 4
Optional Purchase of Common Units and Listed Shares
4.1 Optional Purchase Condition for Common Units and Listed Shares. If
at any time when the Optional Purchase Condition for Common Units and Listed
Shares exists, the Purchaser may elect, but shall not be obligated, to purchase
all, but not less than all, of the outstanding Listed Shares that are not held
by the Purchaser or its Affiliates at the Optional Purchase Price for Common
Units and Listed Shares pursuant to the provisions of this Section 4, but only
if the General Partner or its assignee elects to purchase all, but not less than
all, of the outstanding Common Units that are not held by the Purchaser or its
Affiliates pursuant to the provisions of the Partnership Agreement. The Purchase
Price for any fractional Listed Share purchased pursuant to this Section 4 shall
be the Optional Purchase Price for Common Units and Listed Shares times the
fraction of the Listed Share to be purchased. In determining whether any
fractional Listed Shares are outstanding, all certificates registered in the
name of the same holder of Listed Shares shall be aggregated.
4.2 Optional Purchase Notice for Common Units and Listed Shares. The
Purchaser may exercise its election to make an Optional Purchase of Common Units
and Listed Shares by delivering copies of a notice (the "Optional Purchase
Notice for Common Units and Listed Shares") to the Transfer Agent not less than
ten days and not more than 60 days prior to the date the Purchaser selects for
the Optional Purchase (the "Optional Purchase Date"). The Optional Purchase
Notice for Common Units and Listed Shares shall not be effective, however,
unless and until the later to occur of (i) delivery of the Optional Purchase
Notice for Common Units and Listed Shares to the Transfer Agent and (ii)
delivery to the transfer agent for the Common Units of a similar notice with
respect to the purchase of all outstanding Common Units not owned by the
Purchaser and its Affiliates (the "Partnership Notice") pursuant to the
provisions of the Partnership Agreement. After both the Partnership Notice has
been given to the transfer agent for the Common Units and the Optional Purchase
Notice for Common Units and Listed Shares has been given to the Transfer Agent,
the Transfer Agent shall, and the Company will use its reasonable efforts to
cause the Transfer Agent to, mail the Optional Purchase Notice for Common Units
and Listed Shares to the record holders of Listed Shares as of the most recent
practicable date. Any such Optional Purchase Notice for Common Units and Listed
Shares mailed to a record holder of Listed Shares at his address as reflected in
the records of the Transfer Agent, or delivered by the Purchaser to the Transfer
Agent for mailing to such holders, shall be conclusively presumed to have been
given, whether or not such holder receives such notice. Failure to give such
notice to any particular holder or holders shall not affect the validity of the
purchase pursuant to these Purchase Provisions. So long as the Optional Purchase
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Condition for Common Units and Listed Shares exists on the date of the Optional
Purchase Notice for Common Units and Listed Shares, the Purchaser may purchase
such Listed Shares pursuant to these Optional Purchase provisions, whether or
not the Optional Purchase Condition for Common Units and Listed Shares continues
to exist on the Optional Purchase Date. The Optional Purchase Notice for Common
Units and Listed Shares shall state:
(a) that with respect to Listed Shares that on the Optional
Purchase Date are not held by the Purchaser or its Affiliates, the Purchaser has
elected to make the Optional Purchase for Common Units and Listed Shares
pursuant to the terms of the LLC Agreement and these Purchase Provisions and
that the General Partner or its assignee has elected to make the purchase of
Common Units pursuant to the similar provisions of the Partnership Agreement;
(b) the Optional Purchase Price for Common Units and Listed
Shares;
(c) the Optional Purchase Date; and
(d) the instructions a holder of Listed Shares must follow,
including any other documents such holder must deliver, in order to receive the
Optional Purchase Price for Common Units and Listed Shares.
4.3 Deposit of Funds; Effect of Purchase. On or prior to the Optional
Purchase Date, the Purchaser shall irrevocably deposit with the Transfer Agent
funds sufficient to pay the Optional Purchase Price for Common Units and Listed
Shares for all outstanding Listed Shares that on the date of such deposit are
not held by the Purchaser or its Affiliates. After the date of such deposit and
prior to the Optional Purchase Date, neither the Purchaser nor any of its
Affiliates shall dispose of any Listed Shares held by them, other than to the
Purchaser or any of its Affiliates. The Transfer Agent shall return to the
Purchaser any funds not so required for such purchase. If the Purchaser so
deposits funds with the Transfer Agent, and if the Purchaser has delivered the
Optional Purchase Notice for Common Units and Listed Shares to the Transfer
Agent for mailing to the record holders of the Listed Shares, then from and
after the Optional Purchase Date, notwithstanding that any certificate
representing Listed Shares shall not have been surrendered for purchase, all
rights of the holders of such Listed Shares as such, including any other rights
under the LLC Agreement and the right to receive any distributions on Listed
Shares that have been declared (or a record date for which has been set) but
that have not been paid or made, shall thereupon cease, except the right to
receive the Optional Purchase Price for Common Units and Listed Shares, without
interest, upon surrender to the Transfer Agent of the certificates representing
such Listed Shares, with such other documents as may be required by the Optional
Purchase Notice for Common Units and Listed Shares, in compliance with the
instructions in the Optional Purchase Notice for Common Units and Listed Shares,
and such Listed Shares shall from and after the Optional Purchase Date be deemed
to be purchased by the Purchaser and shall be transferred to the Purchaser on
the record books of the Transfer Agent, and the Purchaser shall be deemed to be
the owner of such Listed Shares from and after the Optional Purchase Date and
shall have all rights as the owner of such Listed Shares. As provided in the
Exchange Provisions, the ability of a holder of Listed Shares to exchange such
Listed Shares for Common Units shall terminate on the earlier of (i) the
occurrence of a Mandatory Purchase Event, and (ii) the date on which the
Purchaser has either mailed to the
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record holders of Listed Shares, or delivered to the Transfer Agent for mailing
to the record holders of Listed Shares, a Purchase Notice. From and after the
occurrence of the earlier of clause (i) or clause (ii) in the preceding
sentence, any Listed Share surrendered for exchange shall not be exchanged, but
shall be held for purchase pursuant to these Purchase Provisions, and shall be
so purchased on the relevant Purchase Date.
SECTION 5
Responsibility of Transfer Agent
5.1 Responsibility of Transfer Agent for Purchase Provisions. The
Transfer Agent, in such capacity, shall not at any time be under any duty or
responsibility to any holder of Listed Shares to determine whether any Mandatory
Purchase Event has occurred, or with respect to the amount of the Purchase Price
to be paid, or with respect to the method employed, or herein provided to be
employed, in calculating the same. The Transfer Agent, in such capacity, shall
not be responsible for any failure of the Purchaser to make or calculate any
cash payment or for any failure of the Purchaser to comply with any of the
Purchase Provisions.
5.2 Deliveries to Holders and Former Holders. Whenever the Purchaser or
the Company may deliver to the Transfer Agent for mailing or delivery to the
record holders or former record holders of Listed Shares any notice,
communication, Purchase Price or other payment or other matter deliverable to
record holders or former record holders of Listed Shares under these Purchase
Provisions, the Transfer Agent shall promptly mail or deliver such notice,
communication or payment or matter to the relevant record holder or former
record holder, and the Company shall use its reasonable efforts to cause the
Transfer Agent to do so.
SECTION 6
Binding Effect on the Purchaser
6.1 Adoption of Purchase Provisions by Purchaser. KMI, as the initial
Purchaser pursuant to these Purchase Provisions, has executed in the place
provided below and delivered to the Company a copy of these Purchase Provisions,
pursuant to which KMI has, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, adopted and agreed to be subject
to and bound by these Purchase Provisions as the Purchaser hereunder. KMI
further acknowledges and agrees that these Purchase Provisions and its
obligations hereunder are for the benefit of and shall be enforceable by any
record holder of Listed Shares.
SECTION 7
Certain Covenants
7.1 Filings and Consents. The Purchaser and the Company will use their
reasonable best efforts to make or cause to be made any registrations and
filings with governmental authorities required of such party or any of its
subsidiaries or Affiliates, and to obtain any consents, authorizations,
approvals or failures to object of governmental authorities required with
respect to such party or any of its subsidiaries or Affiliates, that are
necessary for the consummation of a Mandatory Purchase or an Optional Purchase
hereunder, (i) in the case of a
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Mandatory Purchase, prior to the occurrence of a Mandatory Purchase Event, and
(ii) in the case of an Optional Purchase, prior to the Optional Purchase Date.
SECTION 8
Amendments
8.1 Amendment. These Purchase Provisions may be amended by an agreement
in writing signed by the Company and the Purchaser without the vote, approval or
consent of the holders of any of the Listed Shares, unless such amendment would
(a) reduce the time for any notice to which the holders of the Listed Shares
would be entitled under these Purchase Provisions, or (b) have a material
adverse effect on the powers, preferences or rights of the Listed Shares, as
determined in the sole discretion of the Board of Directors of the Company, in
which case such amendment must be approved by such vote or consent of the
holders of Listed Shares, if any, as may be required by the LLC Agreement.
8.2 Certain Amendments Without Vote. Notwithstanding the foregoing
provisions and the other provisions of the LLC Agreement with respect to
amendments, the Board of Directors of the Company has reserved the right to
make, with the written consent of the Purchaser, and may make, with the written
consent of the Purchaser, changes in the Listed Shares and these Purchase
Provisions to meet the requirements of applicable securities and other laws and
regulations and stock exchange rules and to effect the intent of the LLC
Agreement, and also may make other changes which the Board of Directors of the
Company determines in its sole discretion will not have a material adverse
effect on the rights and privileges of the Listed Shares, in each case without
the vote, consent or approval of the holders of any Listed Shares. In addition,
notwithstanding the foregoing provisions with respect to amendments, (a) in the
case of (i) any merger of the Partnership, whether or not the Partnership is the
survivor, that is the subject of a unitholder vote and does not constitute a
Mandatory Purchase Event, and (ii) any recapitalization, reorganization or
similar transaction of the Partnership, in each case that is the subject of a
unitholder vote and does not constitute a Mandatory Purchase Event, or (b) if
any Person becomes a Controlling Entity in a transaction complying with the
requirements of clauses (b)(i) through (b)(iv) of the definition of "Mandatory
Purchase Event" in these Purchase Provisions, such amendments as the Board of
Directors of the Company deems appropriate in its good faith discretion and are
agreed to by the Purchaser may be made in these Purchase Provisions to
accommodate, in the case of clause (a), such merger, recapitalization,
reorganization, or similar transaction, or, in the case of clause (b), the
assumption by such Person of the obligations of the Purchaser under these
Purchase Provisions, and any such amendment shall be deemed not to have such a
material adverse effect or reduce the time for any notice, and therefore may be
made without the vote, consent or approval of the Holders of any of the Listed
Shares.
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ADOPTION BY XXXXXX XXXXXX, INC.
KMI, as the Purchaser pursuant to these Purchase Provisions, has
executed in the place provided below and delivered to the Company a copy of
these Purchase Provisions, pursuant to which KMI has, for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
adopted and agreed to be subject to and bound by these Purchase Provisions as
the Purchaser hereunder. KMI further acknowledges and agrees that these Purchase
Provisions and its obligations hereunder are for the benefit of and shall be
enforceable by any record holder of Listed Shares.
Dated: , 2001
----------------
XXXXXX XXXXXX, INC.
By:
-----------------------------
Authorized Officer
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