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EXHIBIT 3.2
LIMITED LIABILITY COMPANY AGREEMENT
OF
MARINER ENERGY LLC
A DELAWARE LIMITED LIABILITY COMPANY
DATED AND EFFECTIVE AS OF SEPTEMBER 2, 1998
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LIMITED LIABILITY COMPANY AGREEMENT
OF
MARINER ENERGY LLC
A DELAWARE LIMITED LIABILITY COMPANY
TABLE OF CONTENTS
ARTICLE I: DEFINITIONS ................................................................. 1
SECTION 1.1 DEFINITIONS .............................................................. 1
SECTION 1.2 CONSTRUCTION ............................................................. 5
ARTICLE II: FORMATION AND ORGANIZATION ................................................. 6
SECTION 2.1 FORMATION ................................................................ 6
SECTION 2.2 NAME ..................................................................... 6
SECTION 2.3 REGISTERED OFFICE; REGISTERED AGENT; PRINCIPAL AND OTHER OFFICES ......... 6
SECTION 2.4 PURPOSE .................................................................. 6
SECTION 2.5 FOREIGN QUALIFICATION .................................................... 6
SECTION 2.6 TERM ..................................................................... 7
SECTION 2.7 TAXATION AS CORPORATION; NO STATE-LAW PARTNERSHIP ........................ 7
SECTION 2.8 TITLE TO COMPANY ASSETS .................................................. 7
SECTION 2.9 ORGANIZATION; ORGANIZATIONAL MEMBER ...................................... 7
ARTICLE III: SHAREHOLDERS; CERTIFICATES; TRANSFER OF COMPANY SECURITIES ................ 8
SECTION 3.1 SHAREHOLDERS ............................................................. 8
SECTION 3.2 NO LIABILITY TO THIRD PARTIES ............................................ 8
SECTION 3.3 NO EXPULSION ............................................................. 8
SECTION 3.4 CERTIFICATES ............................................................. 8
SECTION 3.5 REGISTER, REGISTRATION OF TRANSFER AND EXCHANGE .......................... 9
SECTION 3.6 MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES ........................ 10
ARTICLE IV: AUTHORIZATION AND ISSUANCE OF COMPANY SECURITIES ........................... 11
SECTION 4.1 COMPANY SECURITIES ....................................................... 11
SECTION 4.2 ADDITIONAL COMPANY SECURITIES ............................................ 11
SECTION 4.3 COMMON SHARES ............................................................ 13
SECTION 4.4 PREFERRED SHARES ......................................................... 13
SECTION 4.5 SPLITS AND COMBINATIONS; FRACTIONAL SHARES ............................... 15
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SECTION 4.6 WITHHOLDING .............................................................. 15
ARTICLE V: MANAGEMENT .................................................................. 16
SECTION 5.1 MANAGEMENT OF THE COMPANY'S AFFAIRS ...................................... 16
SECTION 5.2 BOARD OF DIRECTORS ....................................................... 17
SECTION 5.3 RESTRICTIONS ON BOARD AUTHORITY; REQUIRED BOARD APPROVAL ................. 20
SECTION 5.4 OFFICERS ................................................................. 21
SECTION 5.5 COMPENSATION ............................................................. 23
SECTION 5.6 BUSINESS OPPORTUNITIES ................................................... 23
SECTION 5.7 INTERESTED OFFICERS OR DIRECTORS ......................................... 24
SECTION 5.8 INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS ............. 25
SECTION 5.9 EXCULPATION OF LIABILITY OF OFFICERS AND DIRECTORS ....................... 28
SECTION 5.10 DUTIES OF OFFICERS AND DIRECTORS ........................................ 29
SECTION 5.11 ADDITIONAL LIMITATIONS ON DUTIES; RESOLUTION OF CONFLICTS OF INTEREST ... 29
SECTION 5.12 FACSIMILE SIGNATURES .................................................... 31
ARTICLE VI: BOOKS AND RECORDS, INFORMATION AND ACCOUNTS ................................ 31
SECTION 6.1 MAINTENANCE OF BOOKS AND RECORDS ......................................... 31
SECTION 6.2 INFORMATION .............................................................. 31
SECTION 6.3 ACCOUNTS ................................................................. 32
ARTICLE VII: DISSOLUTION, WINDING-UP AND TERMINATION ................................... 32
SECTION 7.1 DISSOLUTION .............................................................. 32
SECTION 7.2 WINDING-UP AND TERMINATION ............................................... 32
ARTICLE VIII: DIVIDENDS; ACQUISITION BY COMPANY OF COMPANY SECURITIES .................. 33
SECTION 8.1 DIVIDENDS ................................................................ 33
SECTION 8.2 REDEMPTION OF COMPANY SECURITIES ......................................... 34
ARTICLE IX: AMENDMENT OF AGREEMENT; SHAREHOLDER MEETINGS; RECORD DATE .................. 35
SECTION 9.1 AMENDMENT PROCEDURES ..................................................... 35
SECTION 9.2 AMENDMENT REQUIREMENTS ................................................... 35
SECTION 9.3 SHAREHOLDER MEETINGS ..................................................... 36
SECTION 9.4 NOTICE OF SHAREHOLDER MEETINGS ........................................... 37
SECTION 9.5 RECORD DATE .............................................................. 37
SECTION 9.6 SHAREHOLDER LISTS ........................................................ 38
SECTION 9.7 ADJOURNMENT .............................................................. 38
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SECTION 9.8 WAIVER OF NOTICE; APPROVAL OF MEETING; APPROVAL OF MINUTES ............... 38
SECTION 9.9 QUORUM; REQUIRED VOTE FOR SHAREHOLDER ACTION ............................. 39
SECTION 9.10 CONDUCT OF MEETING ...................................................... 39
SECTION 9.11 ACTION WITHOUT A MEETING ................................................ 40
SECTION 9.12 VOTING AND OTHER RIGHTS ................................................. 40
ARTICLE X: MERGER OR SALE OF ASSETS .................................................... 41
SECTION 10.1 AUTHORITY ............................................................... 41
SECTION 10.2 PROCEDURE FOR MERGER, CONSOLIDATION OR SALE ............................. 41
SECTION 10.3 APPROVAL BY SHAREHOLDERS OF MERGER, CONSOLIDATION OR SALE ............... 42
SECTION 10.4 CERTIFICATE OF MERGER OR CONSOLIDATION .................................. 43
SECTION 10.5 APPRAISAL RIGHTS ........................................................ 43
SECTION 10.6 EFFECT OF MERGER OR CONSOLIDATION ....................................... 43
SECTION 10.7 LIMITATIONS ON TRANSACTIONS WITH INTERESTED SHAREHOLDERS ................ 44
ARTICLE XI: GENERAL PROVISIONS ......................................................... 49
SECTION 11.1 FISCAL YEAR ............................................................. 49
SECTION 11.2 OFFSET .................................................................. 49
SECTION 11.3 NOTICES ................................................................. 49
SECTION 11.4 ENTIRE AGREEMENT ........................................................ 50
SECTION 11.5 EFFECT OF WAIVER OR CONSENT ............................................. 50
SECTION 11.6 BINDING EFFECT .......................................................... 50
SECTION 11.7 GOVERNING LAW; SEVERABILITY ............................................. 50
SECTION 11.8 FURTHER ASSURANCES ...................................................... 50
SECTION 11.9 WAIVER OF CERTAIN RIGHTS ................................................ 50
ANNEX A ................................................................................ A-1
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LIMITED LIABILITY COMPANY AGREEMENT
OF
MARINER ENERGY LLC
A DELAWARE LIMITED LIABILITY COMPANY
This Limited Liability Company Agreement of Mariner Energy LLC (the
"Company") dated and effective as of September 2, 1998, is adopted, executed and
agreed to, for good and valuable consideration, by and among Mariner Holdings,
Inc., a Delaware corporation, and any Persons or entities who become
Shareholders (as defined below) of the Company or parties hereto as provided
herein.
ARTICLE I: DEFINITIONS
SECTION 1.1 DEFINITIONS. As used in this Agreement, the following terms
have the respective meanings set forth below:
Act - means the Delaware Limited Liability Company Act and any
successor statute, as amended from time to time.
Affiliate - means, with respect to any Person, any other Person
controlling, controlled by or under common control with that first Person. As
used in this definition, the term "control" includes, with respect to any
Entity, (a) the ownership of or power to vote, directly or indirectly, shares or
the equivalent representing 50% or more of the power to vote in the election of
directors, managers or Persons performing similar functions, (b) ownership of
50% or more of the equity or equivalent interest in such Entity and (c) the
ability to direct the business and affairs of such Entity by acting as a general
partner, manager or otherwise.
Agreement - means this Limited Liability Company Agreement, as amended
from time to time.
Bankruptcy or Bankrupt - means with respect to any Person, that (a)
such Person (i) makes an assignment for the benefit of creditors; (ii) files a
voluntary petition in bankruptcy; (iii) is insolvent, or has entered against
such Person an order for relief in any bankruptcy or insolvency proceeding; (iv)
files a petition or answer seeking for such Person any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief under any Law; (v) files an answer or other pleading admitting or failing
to contest the material allegations of a petition filed
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against such Person in a proceeding of the type described in subclauses (i)
through (iv) of this clause (a); or (vi) seeks, consents to or acquiesces in the
appointment of a trustee, receiver or liquidator of such Person or of all or any
substantial part of such Person's properties; or (b) 120 days have passed after
the commencement of any proceeding seeking reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief under any
Law, if the proceeding has not been dismissed, or 90 days have passed after the
appointment without such Person's consent or acquiescence of a trustee, receiver
or liquidator of such Person or of all or any substantial part of such Person's
properties, if the appointment is not vacated or stayed, or 90 days have passed
after the date of expiration of any such stay, if the appointment has not been
vacated.
Board of Directors - has the meaning assigned to it in Section 5.1.
Certificate of Formation - has the meaning assigned to it in Section
2.1.
Certificates - has the meaning assigned to it in Section 3.4.
Chairman of the Board - has the meaning assigned to it in Section
5.2(i).
Code - means the United States Internal Revenue Code of 1986, as
amended from time to time. All references herein to sections of the Code shall
include any corresponding provision or provisions of succeeding Law.
Common Share - means an undivided fractional equity interest in the
Company having the powers, preferences, rights and duties set forth in Section
4.3. Each Common Share shall represent an equal right or interest as any other
Common Share and shall have a par value of $.01.
Company - means Mariner Energy LLC, a Delaware limited liability
company.
Company Securities - means Common Shares and Preferred Shares. To the
extent set forth in Article 4 and in any Designation creating a series of
Preferred Shares, Company Securities represent a fractional part of the
Shareholder Interests.
Court of Chancery - has the meaning of such term as used in the Act and
the GCLD.
Designation - has the meaning assigned to it in Section 4.4.
Director - means a member of the Board of Directors.
Dissolution Event - has the meaning assigned to it in Section 7.1.
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Dividends - means all distributions of cash, securities or other
property of the Company, other than distributions on liquidation, lawfully paid
or payable to any Shareholder pursuant to the terms of the Company Securities
held by such Shareholder.
Enron - means Enron Corp., an Oregon corporation, and any successor
(but not assignee) of Enron Corp.
Entity - means a corporation, limited liability company, partnership,
limited partnership, venture, trust, estate, governmental entity or other
entity.
GCLD - means the General Corporation Law of the State of Delaware, as
amended from time to time.
Indemnitee - has the meaning assigned to it in Section 5.8(a).
Initial Public Offering - means the consummation of the first
underwritten public offering of Common Shares pursuant to an effective
registration statement filed under the Securities Act (other than any
registration statement relating to warrants, options or shares of capital stock
granted or to be granted or sold primarily to employees, directors, or officers
of the Company, a registration statement filed in connection with a transaction
subject to Rule 145 under the Securities Act or any successor rule, a
registration statement relating to employee benefit plans or interests therein
and any registration statement covering preferred stock or securities issued in
connection with any debt or preferred stock financing of the Company).
Law - means any applicable constitutional provision, statute, act, code
(including the Code), law, regulation, rule, ordinance, order, decree, ruling,
proclamation, resolution, judgment, decision, declaration or interpretative or
advisory opinion or letter of a governmental authority, and includes any
applicable rule of any exchange or automated quotation system on which Company
Securities are traded or listed.
Majority Interest - means, with respect to any matter, Shareholders
holding Outstanding Company Securities possessing a majority of the voting power
of all Outstanding Company Securities entitled to vote with respect to such
matter.
Officer - means any Person appointed as an officer of the Company as
provided in Section 5.4(c), but such term does not include any Person who has
ceased to be an officer of the Company.
Organizational Member - means Mariner Holdings, Inc., a Delaware
corporation.
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Outstanding - means, with respect to the Company Securities, all
Company Securities that are issued by the Company and reflected as outstanding
on the Company's books and records as of the date of determination, but excludes
any Company Securities held by the Company.
Oversight Committee - has the meaning assigned to it in Section
5.11(d).
Person - means a natural person or an Entity.
Preferred Share - means an undivided fractional equity interest in the
Company having the powers, preferences, rights and duties set forth in the
Designation establishing the applicable series of Preferred Shares. Each
Preferred Share shall have a par value of $.01.
Record Date - has the meaning assigned to it in Section 9.5.
Record Holder - means the Person in whose name a Company Security is
registered in the books and records of the Transfer Agent as contemplated in
Section 3.5.
Securities Act - means the United States Securities Act of 1933, as
amended from time to time, and all rules and regulations promulgated thereunder.
Shareholder - means any Person executing this Agreement as of the date
of this Agreement and any Person who thereafter purchases or otherwise lawfully
acquires any Company Securities (with or without execution of this Agreement)
and becomes a Record Holder of any Company Security as provided in this
Agreement, 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 Interests - means all the limited liability company
interests (as such term is defined in the Act) of the Shareholders, including
(i) the right to receive Dividends and other distributions from the Company,
(ii) all other rights, benefits and privileges enjoyed by the Shareholders
(under the Act, the Certificate of Formation, this Agreement or otherwise) in
their capacity as Shareholders, including rights to vote, consent and approve
and (iii) all obligations, duties and liabilities imposed on the Shareholders
(under the Act, the Certificate of Formation, this Agreement or otherwise) in
their capacity as Shareholders.
Shareholders' Agreement - means that certain agreement originally among
Enron Capital & Trade Resources Corp., Mariner Holdings, Inc. and the
stockholders of Mariner Holdings, Inc., as amended to date and as to be amended
and/or restated at any future date.
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Shares - means Common Shares and/or Preferred Shares, as the context
requires.
Surviving Business Entity - has the meaning assigned to it in Section
10.2.
Transfer Agent - means any bank, trust company or other Person
(including Affiliates of any Shareholder) appointed from time to time by the
Board of Directors to act as registrar and transfer agent for the Company
Securities. The initial Transfer Agent shall be the Company.
Treasury Regulations - means the regulations promulgated by the United
States Department of the Treasury pursuant to and in respect of provisions of
the Code. All references herein to sections of the Treasury Regulations shall
include any corresponding provisions of succeeding, similar, substitute,
proposed or final Treasury Regulations.
Other terms defined herein have the meanings so given them.
SECTION 1.2 CONSTRUCTION.
(a) Unless the context requires otherwise: (i) the gender (or lack of
gender) of all words used in this Agreement includes the masculine, feminine and
neuter; (ii) references to Articles and Sections (other than in connection with
the Code or the Treasury Regulations) refer to Articles and Sections of this
Agreement; and "including" means "including, without limitation."
(b) In the event of a direct conflict between the provisions of this
Agreement and any mandatory, non-waivable provision of the Act or the GCLD, such
provision of the Act or the GCLD shall control; provided that the provisions of
Section 5.3, Section 5.6, Section 5.7, Section 5.8, Section 5.9, Section 5.10
and Section 5.11 shall control over any contrary provision of the GCLD to the
extent permitted under the Act and applicable Law. In that regard, to the extent
this Agreement or the Act does not control, the Company shall be subject to the
provisions of the GCLD mutatis mutandis. If any provision of the Act provides
that it may be varied or superseded in the limited liability company agreement
(or otherwise by agreement of the members or managers of a limited liability
company), such provision shall be deemed superseded and waived in its entirety
if this Agreement contains a provision addressing the same issue or subject
matter. In the event of a direct conflict between the provisions of this
Agreement and the provisions of the Shareholders' Agreement, (i) before
completion of an Initial Public Offering, the provisions of the Shareholders'
Agreement shall control, and (ii) following completion of an Initial Public
Offering, the provisions of this Agreement shall control.
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ARTICLE II: FORMATION AND ORGANIZATION
SECTION 2.1 FORMATION. The Company has been formed as a Delaware
limited liability company by the filing of a Certificate of Formation (the
"Certificate of Formation") on September 1, 1998, under and pursuant to the Act.
SECTION 2.2 NAME. The name of the Company is "Mariner Energy LLC" and
all Company business must be conducted in that name or such other names that
comply with Law and as the Board of Directors may select.
SECTION 2.3 REGISTERED OFFICE; REGISTERED AGENT; PRINCIPAL AND OTHER
OFFICES. The registered office of the Company required by the Act to be
maintained in the State of Delaware shall be the office of the initial
registered agent for service of process named in the Certificate of Formation 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 Certificate of
Formation or such other Person or Persons as the Board of Directors may
designate in the manner provided by Law. The principal office of the Company in
the United States shall be located at 000 XxxxXxxx Xxxx Xxxx., Xxxxx 0000,
Xxxxxxx, Xxxxx 00000-0000, or such other place as the Board of Directors may
from time to time designate, which need not be in the State of Delaware, and the
Company shall maintain records there and shall keep the street address of such
principal office at the registered office of the Company in the State of
Delaware. The Company may have such other offices as the Board of Directors may
designate and may maintain records (including records of minutes of meetings of
and actions taken by the Board of Directors) at such other places as the Board
of Directors may designate.
SECTION 2.4 PURPOSE. The Company is formed for the object and purpose
of, and the nature of the business to be conducted and promoted by the Company
is, engaging in any lawful act or activity for which limited liability companies
may be formed under the Act and engaging in any and all activities necessary,
convenient, desirable or incidental to the foregoing, including, without
limitation, the acquisition, disposition, ownership, exploration, development
and operation of oil or natural gas producing properties and the purchase,
transportation, sale and marketing of natural gas, crude oil, natural gas
liquids and other hydrocarbons.
SECTION 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
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company or other relevant entity in that jurisdiction, which qualifications may
be under the name of the Company, the name (Delaware) Mariner Energy LLC or such
other assumed name as the Board of Directors may designate.
SECTION 2.6 TERM. The term of the Company commenced on the effective
date of this Agreement and its existence shall be perpetual, unless and until it
is dissolved in accordance with Article VII.
SECTION 2.7 TAXATION AS CORPORATION; NO STATE-LAW PARTNERSHIP. The
Company shall elect pursuant to Section 301.7701-2 and 3 of the Treasury
Regulations to be treated as a corporation for all purposes under the Code. Any
Officer of the Company is authorized to cause the Company to make any and all
necessary filings with the United States Internal Revenue Service or any other
applicable body to effect this election. 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.
SECTION 2.8 TITLE TO COMPANY ASSETS. Title to Company assets, whether
real, personal or mixed and whether tangible or intangible, shall be deemed to
be owned by the Company as an Entity, and no Shareholder, Director or Officer,
individually or collectively, shall have any ownership interest in such Company
assets or any portion thereof. Title to any or all of the Company assets may be
held in the name of the Company or one or more of its Affiliates or one or more
nominees, as the Board of Directors may determine. All Company assets shall be
recorded as the property of the Company in its books and records, irrespective
of the name in which record title to such Company assets is held.
SECTION 2.9 ORGANIZATION; ORGANIZATIONAL MEMBER. The Organizational
Member is organizing the Company by executing this Agreement, and until issuance
of Company Securities is the sole "member" of the Company as defined in the Act.
Immediately following the issuance of any Company Securities and the admission
to the Company of at least one other Person as a member of the Company, the
Organizational Member shall no longer be a "member" of the Company as defined in
the Act. By executing this Agreement, the Organizational Member is vesting the
management of the Company in the initial Board of Directors designated herein.
Notwithstanding anything to the contrary herein, before any Company Securities
are issued, any act required by this Agreement to be approved by the
Shareholders may be approved by the Board of Directors.
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ARTICLE III: SHAREHOLDERS; CERTIFICATES; TRANSFER OF COMPANY SECURITIES
SECTION 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 lawfully acquires any Company
Securities and becomes the Record Holder of such Company Securities in
accordance with the provisions of Section 3.5. Unless otherwise provided in the
Shareholders' Agreement or as otherwise provided with respect to a series of
Preferred Shares in any Designation creating such series, a Person may become a
Record Holder without the consent or approval of any of the Shareholders.
(b) The name and mailing address of each Shareholder shall be listed on
the books and records of the Company. The Secretary of the Company shall update
the books and records from time to time as necessary to reflect accurately the
information therein (or to cause the Transfer Agent to do so, as applicable). A
Shareholder's Company Securities shall be represented by the Certificate(s) held
by such Shareholder.
SECTION 3.2 NO LIABILITY TO THIRD PARTIES. The debts, obligations and
liabilities of the Company, whether arising in contract, tort or otherwise,
shall be solely the debts, obligations and liabilities of the Company. No
Shareholder, beneficial owner of Company Securities or Director shall be liable
for the debts, obligations or liabilities of the Company, whether arising in
contract, tort or otherwise, solely by reason of being a Shareholder, beneficial
owner or Director.
SECTION 3.3 NO EXPULSION. A Shareholder may not be expelled or removed
as a Shareholder of the Company.
SECTION 3.4 CERTIFICATES. Certificates ("Certificates") evidencing
Company Securities shall be in such form, not inconsistent with that required by
the Act or any other Law and this Agreement, as shall be approved by the Board
of Directors. The Company shall issue to each Shareholder one or more
Certificates, signed by (a) the Chairman of the Board, the President or a Vice
President and (b) the Secretary, an Assistant Secretary, the Treasurer or an
Assistant Treasurer of the Company and countersigned by the Transfer Agent (if
the Company is not the Transfer Agent), certifying the number of Company
Securities (and, if there shall be more than one class or series of Company
Securities, the class and series of such Company Securities) owned by such
Shareholder; provided, however, that any of or all the signatures on the
Certificate may be a facsimile. If any Officer or Transfer Agent who shall have
signed or whose facsimile signature or signatures shall have been placed upon
any such Certificate or Certificates shall have ceased to be such Officer or
Transfer Agent before such Certificate is issued by the Company, such
Certificate may nevertheless be issued by the Company with the same effect as if
such Person were such Officer or Transfer
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Agent at the date of issue. Certificates shall be consecutively numbered and
shall be entered in the books and records of the Company as they are issued and
shall exhibit the holder's name and number of Company Securities. No Certificate
shall be valid for any purpose until it has been countersigned by the Transfer
Agent (if the Company is not the Transfer Agent).
SECTION 3.5 REGISTER, REGISTRATION OF TRANSFER AND EXCHANGE.
(a) The Company shall keep or cause to be kept on behalf of the Company
a register that, subject to any requirements of the Board of Directors and
subject to the provisions of Section 3.5(b), will provide for the registration
and transfer of 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. 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 Section 3.5(b), the
appropriate Officers of the Company shall execute (or cause a facsimile
signature to be attached to) and the Transfer Agent shall countersign and
deliver, in the name of the holder or the designated transferee or transferees,
as required pursuant to the Record Holder's instructions, one or more new
Certificates evidencing the same aggregate number and type of Company Securities
as were evidenced by the Certificate so surrendered.
(b) The Company shall not recognize any transfer of Company Securities
until the Certificates evidencing such Company Securities are surrendered to the
Transfer Agent for registration of transfer. No charge shall be imposed by the
Company for such transfer, provided, that, as a condition to the issuance of any
new Certificate under this Section 3.5, the Company may require the payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
with respect thereto.
(c) By transfer of Company Securities in accordance with this Section,
(i) each transferee of Company Securities (including any nominee holder or an
agent acquiring such Company Securities for the account of another Person) shall
be admitted to the Company as 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 Company, with or without execution of
this Agreement and (ii) each transferee of Company Securities (including any
nominee holder or an agent acquiring such Company Securities for the account of
another Person) shall be deemed to agree to be bound by the terms of this
Agreement.
(d) The Company shall be entitled to recognize the Record Holder as the
owner of Company Securities and, accordingly, shall not be bound to recognize
any equitable or other claim
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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, the Shareholders' Agreement or any applicable rule,
regulation, guideline or requirement of any securities exchange on which the
Company Securities are listed for trading. Subject to (i) the foregoing
sentence, (ii) with respect to any series of Preferred Shares, the provisions of
any Designation creating such series, (iii) any contractual provision binding
upon any Shareholder, including this Agreement and the Shareholders' Agreement
and (iv) the provisions of any 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 Dividends in respect of Company Securities shall be paid by the
Company, directly or through the Transfer Agent or through any other Person or
agent, only to the Record Holders thereof as of the Record Date set for the
Dividends. Such payment shall constitute full payment and satisfaction of the
Company's liability in respect of such payment regardless of any claim of any
Person who may have an interest in such payment by reason of an assignment or
otherwise.
SECTION 3.6 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 (or cause a
facsimile signature to be attached to), and, upon the Company's request, the
Transfer Agent shall countersign and deliver in exchange therefor, a new
Certificate evidencing the same aggregate number and type of Company Securities
as the Certificate so surrendered.
(b) The appropriate Officers on behalf of the Company shall execute (or
cause a facsimile signature to be attached to), and, upon the Company's request,
the Transfer Agent shall countersign and deliver, a new Certificate in place of
any Certificate previously issued if the Record Holder of the Certificate:
(i) makes proof by affidavit in form and substance satisfactory to
an Officer that a previously issued Certificate has been lost,
destroyed or stolen;
(ii) requests the issuance of a new Certificate before the Company
has notice that the Certificate has been acquired by a "protected
purchaser" (as defined in 6 Del.C. 8-303);
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(iii) if requested, delivers to the Company a bond, in form and
substance satisfactory to the Company, with surety or sureties and with
fixed or open penalty as the Company may reasonably direct, in its sole
discretion, to indemnify the Company and the Transfer Agent against any
claim that may be made on account of the alleged loss, destruction or
theft of the Certificate; and
(iv) satisfies any other reasonable requirements imposed by the
Company.
If a Shareholder fails to notify the Company within a reasonable time after he
has notice of the loss, destruction or theft of a Certificate and a transfer of
the 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 IV: AUTHORIZATION AND ISSUANCE OF COMPANY SECURITIES
SECTION 4.1 COMPANY SECURITIES. The total number of Company Securities
which the Company shall have authority to issue is 51,000,000 Shares, of which
50,000,000 Shares are to be Common Shares, par value $0.01 per Share, and
1,000,000 Shares are to be Preferred Shares, par value $0.01 per Share. The
number of Company Securities authorized for issuance pursuant to this Section
4.1 may be increased or decreased only by amendment of this Agreement in
accordance with the provisions hereof. The "par value" of Company Securities
shall have the same meaning and application as that term does to the capital
stock of a Delaware corporation, and the "capital" and "surplus" of the Company,
and the "impairment" of capital, shall have corresponding meanings and be
calculated in accordance with the GCLD.
SECTION 4.2 ADDITIONAL COMPANY SECURITIES.
(a) Subject to the guidelines set forth in this Section 4.2 and the
requirements of the Act and other applicable Law, the Board of Directors may, at
any time and from time to time, if all of the Company Securities authorized by
Section 4.1 have not been issued, subscribed for, or otherwise
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committed to be issued, issue or take subscriptions for additional Company
Securities up to the maximum number authorized in Section 4.1.
(b) Company Securities may be issued for such consideration, having a
value not less than the par value thereof, as determined from time to time by
the Board of Directors.
(c) The consideration for subscriptions to, or the purchase of, Company
Securities shall be paid in such form and in such manner as the Board of
Directors shall determine. In the absence of actual fraud in the transaction,
the judgment of the Board of Directors as to the value of such consideration
shall be conclusive. Company Securities so issued in accordance with the
determination of the Board of Directors shall be deemed to be fully paid and,
except to the extent specified in Section 18-607(b) of the Act, non-assessable
if the entire amount of such consideration has been received by the Company for
such Company Securities in the form of cash, services rendered, personal
property, real property, leases of real property or a combination thereof; or
not less than the par value of such Company Securities has been received by the
Company in such form and the Company has received a binding obligation of the
subscriber or purchaser to pay the balance of the subscription or purchase
price.
(d) The Board of Directors shall have the power to create and cause the
Company to issue, whether or not in connection with the issue and sale of any
Company Securities or other securities of the Company, rights or options
entitling the holders thereof to purchase from the Company any Company
Securities of any class or series (whether or not such class or series have
theretofore been created), such rights or options to be evidenced by such
instrument or instruments as shall be approved by the Board of Directors. The
terms upon which, including the time or times (which may be limited or unlimited
in duration) at or within which, and the price or prices at which any such
Company Securities may be purchased from the Company upon the exercise of any
such right or option shall be such as shall be stated in a resolution adopted by
the Board of Directors providing for the creation and issue of such rights or
options and, in every such case, shall be set forth or incorporated by reference
in the instrument or instruments evidencing such rights or options. In the
absence of actual fraud in the transaction, the judgment of the Board of
Directors as to the consideration for the issuance of such rights or options and
the sufficiency thereof shall be conclusive; provided that the price or prices
to be received for Company Securities to be issued upon the exercise of such
rights or options shall not be less than the par value thereof.
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SECTION 4.3 COMMON SHARES.
(a) The voting powers, designations, preferences and relative,
participating, optional or other special rights, powers and duties, and
qualifications, limitations and restrictions thereof, relating to the Common
Shares are as set forth in this Section 4.3.
(b) Subject to the rights, if any, of the holders of any other classes
or series of Company Securities, the Record Holders of Common Shares shall be
entitled on a pro rata basis to such Dividends, if any, as shall be declared
thereon from time to time by the Board of Directors, except to the extent
otherwise provided in Section 7.2, upon liquidation or dissolution of the
Company shall be entitled on a pro rata basis to all remaining assets after
satisfaction (by payment or reasonable provision for payment) of the Company's
liabilities to creditors, shall not be subject to any right of redemption by the
Company, shall have no conversion or exchange rights and shall be entitled to
one vote per Common Share on matters submitted to a vote or consent of
Shareholders, which votes shall not be cumulative in the election of Directors
or on any other matter. Each Common Share shall be identical in all respects
with each other Common Share. Holders of Common Shares shall have no preemptive
or similar rights, except as may otherwise be provided in the Shareholders'
Agreement.
SECTION 4.4 PREFERRED SHARES.
(a) Without the need for the consent of any Shareholder, Preferred
Shares shall be issuable from time to time in one or more series, with such
voting powers, full or limited, or no voting powers, and such designations,
preferences and relative, participating, optional or other special rights,
powers and duties, and qualifications, limitations and restrictions thereof, as
shall be fixed by the Board of Directors in the exercise of its sole discretion
(subject to the guidelines set forth in this Section 4.4 and the requirements of
applicable Law) and reflected in a written action or actions approved by the
Board of Directors (each, a "Designation," each of which shall be deemed an
amendment to this Agreement). Each Designation when approved by the Board of
Directors shall be deemed to be set forth in this Article IV and shall
constitute a part of this Agreement. Each Designation shall provide for the
issue of Preferred Shares of a particular series and may set forth, without
limitation, (i) the rights of such series of Preferred Shares to share in
Dividends, and the priority of such series relative to the rights of other
classes or series of Company Securities to share in Dividends; (ii) the rights
of such series of Preferred Shares upon dissolution of or upon any distribution
of the assets of the Company and the priority of such series relative to the
rights of other classes or series of Company Securities upon dissolution of or
upon any distribution of the assets of the Company; (iii) whether such series of
Preferred Shares is redeemable by the Company and, if so, the price at which,
and the terms and conditions upon which, such series of Preferred Shares may
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be redeemed by the Company; (iv) whether such series of Preferred Shares is
issued with the privilege of conversion into, or exchange for, at the option of
the holder or the Company or upon the happening of a specified event, Company
Securities or another security or other property of the Company and, if (vi) so,
the rate at which, and the terms and conditions upon which, such series of
Preferred Shares may be so converted; (v) the terms and conditions upon which
such series of Preferred Shares will be issued and assigned or transferred; and
(vi) the right, if any, of such series of Preferred Shares to vote on Company
matters, including matters relating to the relative rights, powers, preferences
and privileges of such series. Without limitation of the foregoing, the Board of
Directors may, in its sole discretion, authorize the issuance of Preferred
Shares that have preference over each or certain other classes or series of
Company Securities in any of the foregoing rights, including with respect to
voting rights, participation in the profits and assets of the Company, including
the right to receive Dividends and the right to receive in-kind payments of the
assets of the Company upon voluntary or involuntary dissolution, winding up or
termination of the Company, conversion or redemption rights, or other rights,
privileges or matters. The Board of Directors may authorize one or more Officers
to execute, certify, acknowledge, deliver, file and record whatever documents
may be required, convenient or desirable in connection with the issue from time
to time of such Preferred Shares and to do all other things necessary to comply
with the Act and other applicable Law. A Designation shall be effective when a
duly executed and attested original of the same is delivered to the Secretary of
the Company for inclusion among the permanent records of the Company and upon
the satisfaction of any requirements of the Act.
(b) Subject to the rights of the holders of any series of Preferred
Shares as set forth in any Designation, the number of Shares of any series of
Preferred Shares may be increased (but not above the total number of authorized
Preferred Shares) or decreased (but not below the number of Shares thereof then
Outstanding) only by a certificate duly executed by the Secretary of the Company
for inclusion among the permanent records of the Company setting forth a
statement that a specified increase or decrease therein has been authorized by a
resolution or resolutions adopted by the Board of Directors. If the number of
such Shares shall be decreased, the number of Shares so specified in the
certificate shall resume the status of authorized Preferred Shares undesignated
as to series. Any such certificate shall be deemed to be set forth in the
applicable Designation and shall constitute a part of that Designation. When no
Shares of a series of Preferred Shares are Outstanding, either because none were
issued or no issued Shares remain outstanding, a certificate setting forth a
resolution or resolutions adopted by the Board of Directors that no Shares of
such series are Outstanding and that none will be issued may be executed,
attested and delivered to the Secretary of the Company for inclusion among the
permanent records of the Company, and such certificate shall have the effect of
eliminating from this Agreement all matters set forth in the Designation with
respect to such series, and all Shares of such series shall resume the status of
authorized Preferred Shares undesignated as to series.
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SECTION 4.5 SPLITS AND COMBINATIONS; FRACTIONAL SHARES .
(a) Except as otherwise provided with respect to a series of Preferred
Shares in any Designation creating such series and, subject to Section 4.5(b),
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 any class or
series of Company Securities; provided, however, that after such distribution,
subdivision or combination, each Shareholder shall have the same Shareholder
Interest (except by operation of Section 4.5(b)) as before such distribution,
subdivision or combination.
(b) The Company may, but shall not be required to, issue fractions of a
share with respect to any Company Securities. If it does not issue fractions of
a share, it shall (i) arrange for the disposition of fractional interests by
those entitled hereto, (ii) pay in cash the fair value of fractions of a share
as of the time when those entitled to receive such fractions are determined or
(iii) issue scrip or warrants in registered form (either represented by a
certificate or uncertificated) or in bearer form (represented by a certificate)
which shall entitle the holder to receive a full share upon the surrender of
such scrip or warrants aggregating a full share. A certificate for a fractional
share or an uncertificated fractional share shall, but scrip or warrants shall
not unless otherwise provided therein, entitle the holder to exercise voting
rights, to receive dividends thereon and to participate in any of the assets of
the Company in the event of liquidation or dissolution of the Company. The Board
of Directors may cause scrip or warrants to be issued subject to the conditions
that they shall become void if not exchanged for certificates representing the
full Shares or uncertificated full Shares before a specified date, or subject to
the condition that the Shares for which scrip or warrants are exchangeable may
be sold by the Company and the proceeds thereof distributed to the holders of
scrip or warrants, or subject to any other conditions which the Board of
Directors may impose.
SECTION 4.6 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 Dividends 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 distribution, the
Company may reduce subsequent distributions by the amount of such required
withholding. Each Shareholder agrees to furnish the Company such forms or other
documentation as are necessary to assist the Company in determining the extent
of, and in fulfilling, its withholding obligations.
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ARTICLE V: MANAGEMENT
SECTION 5.1 MANAGEMENT OF THE COMPANY'S AFFAIRS. As provided in this
Agreement, all management powers over the business and affairs of the Company
shall be exclusively vested in a Board of Directors (the "Board of Directors")
and, subject to the direction of the Board of Directors, the Officers, who shall
collectively (Officers and Directors) constitute "managers" of the Company
within the meaning of the Act. No Shareholder, by virtue of having the status of
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. Except as otherwise specifically provided
in this Agreement, the authority and functions of the Board of Directors on the
one hand and of the Officers on the other shall be identical to the authority
and functions of the board of directors and officers, respectively, of a
corporation organized under the GCLD. Thus, except as otherwise specifically
provided in this Agreement, the business and affairs of the Company shall be
managed under the direction of the Board of Directors, and the day-to-day
activities of the Company shall be conducted on the Company's behalf by the
Officers, who shall be agents of the Company with such authority as specifically
provided in this Agreement or as authorized by the Board of Directors. In
addition to the powers that now or hereafter can be granted to managers under
the Act and to all other powers granted under any other provision of this
Agreement, the Board of Directors (subject to Section 5.3) and the Officers
(subject to Section 5.4 and the direction of the Board of Directors) shall have
full power and authority to do all things on such terms as they, in their
individual sole discretion, may deem necessary or appropriate to conduct, or to
cause to be conducted, the business and affairs of the Company, including (a)
the making of any expenditures, the lending or borrowing of money, the
assumption or guarantee of, or other contracting for, indebtedness and other
liabilities, the issuance of evidences of indebtedness and the incurring of any
other obligations; (b) the making of tax, regulatory and other filings, or
rendering of periodic or other reports to governmental or other agencies having
jurisdiction over the business or assets of the Company; (c) subject to the
requirements of Article X, the merger or other combination of the Company with
or into, or the sale, lease or exchange of substantially all of the assets to,
another Person; (d) the use of the assets of the Company (including cash on
hand) for any purpose consistent with the terms of this Agreement and the
repayment of obligations of the Company; (e) the negotiation, execution and
performance of any contracts, conveyances or other instruments; (f) the
distribution of Company cash; (g) the selection, engagement and dismissal of
Officers, employees and agents, outside attorneys, accountants, engineers,
consultants and contractors and the determination of their compensation and
other terms of employment or hiring; (h) the maintenance of such insurance for
the benefit of the Company, as it deems necessary or appropriate; (i) the
acquisition or disposition of assets; (j) the formation of, or acquisition of an
interest in, or the contribution of property to, any Entity; (k) the control of
any matters affecting the rights and obligations of the Company, including the
commencement, prosecution and defense of actions at law or in equity and
otherwise engaging in the conduct of litigation and the incurring of legal
expense and the settlement of claims and litigation; (l) the indemnification of
any Person
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against liabilities and contingencies to the extent permitted by law; and the
entering into of listing agreements with any securities exchange and the
delisting of some or all of the Company Securities from, or requesting that
trading be suspended on, any such exchange.
SECTION 5.2 BOARD OF DIRECTORS.
(a) Composition; Term; Initial Directors. The Board of Directors shall
consist of not less than one natural person. Each Director shall be elected as
provided in Section 5.2(b) and shall serve in such capacity until his successor
has been duly elected and qualified or until such Director dies, resigns or is
removed. The Board of Directors may from time to time determine the number of
Directors then constituting the whole Board of Directors, but the Board of
Directors shall not decrease the number of Persons that constitute the whole
Board of Directors if such decrease would shorten the term of any Director. The
initial Board of Directors shall consist of nine Directors, who shall be the
following Persons:
Xxxxxxx X. Buy
Xxxxxxx X. Xxxxx
Xxxx X. Xxxxxxxx
Xxxxxx X. Xxxxxxxxx
Xxxxxxx X. Xxxx
Xxxxxxx XxXxxxx
Xxxxx Xxxxxxx
Xxxxxxx X. Xxxxxxxxx
Xxxx X. Xxxxxxxx, Xx.
(b) Election of Directors. At each annual meeting of Shareholders, an
election of Directors shall be held and new Directors shall be elected (or
existing Directors shall be re-elected), each to serve until his successor has
been duly elected and qualified or until such Director dies, resigns or is
removed, except as provided by Section 5.2(d). To be elected as a Director, a
natural person must (i) be elected in accordance with Section 5.2(c) or (ii)
have been properly nominated for a position as a Director in accordance with
Section 5.2(e) and must receive a majority of the votes cast in respect of
Company Securities for the position at a meeting of Shareholders held for such
purpose at which a quorum is present in Person or by proxy, or if there are more
than two nominees for such position, a plurality of the votes cast in respect of
Company Securities for the position.
(c) Vacancies and Removal. Subject to applicable Law and the rights of
the holders of any series of Preferred Shares, vacancies existing on the Board
of Directors (including a vacancy created by virtue of an increase in the size
of the Board of Directors) may be filled by the affirmative
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vote of a majority of the Directors then serving, even if less than a quorum.
Any Director chosen to fill a vacancy shall hold office for a term expiring at
the next annual meeting of Shareholders and until his successor has been duly
elected and qualified. Subject to the rights of the holders of any series of
Preferred Shares, any Director, or the entire Board of Directors, may be removed
from office at any time, with or without cause, but only by the affirmative vote
or consent of the holders of a majority of the Company Securities entitled to
vote with respect to the election of Directors.
(d) Rights of Classes Separately to Elect Directors. Notwithstanding
anything else contained in this Agreement to the contrary, whenever holders of
any one or more series of Preferred Shares shall have the right, voting
separately by class, classes or series, to elect Directors at any annual or
special meeting of Shareholders, the election, term of office, filling of
vacancies and other features of such directorships shall be governed by the
provisions of this Agreement, including any applicable Designation creating any
series of Preferred Shares pursuant to Section 4.4 hereof. Directors so elected
shall not be divided into classes and shall be elected by such holders annually
unless expressly provided otherwise by those provisions or resolutions, and,
during the prescribed terms of office of those Directors, the Board of Directors
shall consist of a number of Directors equal to the number of those Directors
plus the number of Directors determined as provided in Section 5.2(a).
(e) Nominations; Qualifications. Prior to a meeting of the Shareholders
at which an election of Directors is to be held, the Board of Directors shall
nominate its slate of persons to be presented for election at such meeting.
Other nominations for Directors may be made by any Shareholder, but any such
Shareholder nominations must be in writing and delivered to the Secretary of the
Company not less than 120 days prior to the anniversary of the date on which
proxy materials were first mailed to Shareholders in connection with the
previous year's annual meeting of the Shareholders at which an election of
Directors is to be held. To be in proper form, such Shareholder nomination must
set forth in writing as to each person whom such Shareholder proposes to
nominate for election or re-election as a Director all information relating to
such person as is required to be disclosed in solicitations of proxies for the
election of directors, or is otherwise required, in each case pursuant to
Regulation 14A under the Securities Exchange Act of 1934, as amended, or any
successor or regulation promulgated thereunder.
(f) Voting; Quorum; Required Vote for Action. Unless otherwise required
by the Act, other Law or the provisions hereof,
(i) each member of the Board of Directors shall have one vote;
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(ii) the presence at a meeting of the Board of Directors of a
majority of the members of the Board of Directors shall constitute a
quorum at any such meeting for the transaction of business; and
(iii) the act of a majority of the members of the Board of
Directors present at a meeting of the Board of Directors at which a
quorum is present shall be deemed to constitute the act of the Board of
Directors.
(g) Meetings. Regular meetings of the Board of Directors and any
committee thereof shall be held at such times and places as shall be designated
from time to time by resolution of the Board of Directors or such committee.
Notice of such regular meetings shall not be required. Special meetings of the
Board of Directors or meetings of any committee thereof may be called by the
Chairman of the Board, the President (should the President be a director) or on
the written request of any two Directors or committee members, as applicable, by
the Secretary, in each case on at least twenty-four (24) hours personal,
written, facsimile, electronic, telegraphic, cable or wireless notice to each
Director or committee member, which notice may be waived by any Director. Any
such notice, or waiver thereof, need not state the purpose of such meeting
except as may otherwise be required by Law. Attendance of a Director at a
meeting (including pursuant to the last sentence of this Section 5.02(g)) shall
constitute a waiver of notice of such meeting, except where such Director
attends the meeting for the express purpose of objecting to the transaction of
any business on the ground that the meeting is not lawfully called or convened.
Any action required or permitted to be taken at a meeting of the Board of
Directors, or any committee thereof, may be taken without a meeting, without
prior notice and without a vote if a consent or consents in writing, setting
forth the action so taken, are signed by all members of the Board of Directors
or committee. Members of the Board of Directors or any committee thereof may
participate in and hold a meeting by means of conference telephone, video
conference or similar communications equipment by means of which all Persons
participating in the meeting can hear each other, and participation in such
meetings shall constitute presence in Person at the meeting.
(h) Committees. The Board of Directors may designate one or more
committees, each committee to consist of one or more of the Directors. The Board
of Directors may designate one or more Directors as alternate members of any
committee, who may replace any absent or disqualified Director at any meeting of
such committee. Any such committee, to the extent provided in the resolution of
the Board of Directors or in this Agreement, shall have and may exercise all
powers and authority of the Board of Directors in the management of the business
and affairs of the Company, and may authorize the seal of the Company to be
affixed to all papers which may require it; but no such committee shall have the
power or authority in reference to the following matters: (i) approving or
adopting, or recommending to the Shareholders, any action or matter expressly
required by this Agreement or the Act or the GCLD to be submitted to the
Shareholders for approval or (ii)
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adopting, amending or repealing any provision of this Agreement. Any
committee designated pursuant to this Section 5.2(h) shall choose its own
chairman, shall keep regular minutes of its proceedings and report the same to
the Board of Directors when requested, and, subject to Section 5.2(g), shall fix
its own rules or procedures and shall meet at such times and at such place or
places as may be provided by such rules 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 affirmative vote of a majority of the members present shall be necessary
for the adoption by the committee of any resolution.
(i) Chairman. The Board of Directors may elect one of its members as
Chairman of the Board (the "Chairman of the Board"). The Chairman of the Board,
if any, and if present and acting, shall preside at all meetings of the Board of
Directors and of Shareholders, unless otherwise directed by the Board of
Directors. If the Board of Directors does not elect a Chairman, the President,
if present and a Director, or any other Director chosen by the Board of
Directors, shall preside. Unless the Board of Directors provides otherwise, the
Chairman of the Board shall be an Officer of the Company and shall have the same
power and authority as the President.
SECTION 5.3 RESTRICTIONS ON BOARD AUTHORITY; REQUIRED BOARD APPROVAL.
(a) The Board of Directors may not without approval of the specific act
by a Majority Interest take any action in contravention of this Agreement,
including, (i) any act that would make it impossible to carry on the ordinary
business of the Company, except as otherwise provided in this Agreement; (ii)
possessing Company property, or assigning any rights in specific Company
property, for other than a Company purpose; or (iii) amending or modifying this
Agreement in any manner, except as otherwise provided in this Agreement. For
purposes of this Section, "Company purposes" shall include, without limitation,
the assignment of overriding royalty interests in minerals pursuant to the terms
of any employment agreement or consulting agreement between the Company or any
Affiliate of the Company and any of its or their employees or consultants.
Except as otherwise expressly permitted by this Agreement or by resolution of
the Board of Directors, (A) no Director or group of Directors shall have any
actual or apparent authority to enter into contracts on behalf of, or to
otherwise bind, the Company, nor take any action in the name of or on behalf of
the Company or conduct any business of the Company other than by action of the
Board of Directors taken in accordance with the provisions of this Agreement,
and (B) 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.
(b) Until after completion of the Initial Public Offering,
notwithstanding anything to the contrary in this Agreement, the provisions of
Annex A hereto shall apply to the management of the
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business and affairs of the Company. Upon completion of the Initial Public
Offering, this Agreement shall be deemed to be amended to delete Annex A in its
entirety. Following the completion of the Initial Public Offering, the Board of
Directors, by resolution, may establish policies regarding the authority of the
Company to take action without approval of the Board of Directors.
SECTION 5.4 OFFICERS.
(a) Generally. The Board of Directors, as set forth below, shall
appoint agents of the Company, having the authority set forth in this Agreement
or otherwise as authorized by the Board of Directors, which agents are referred
to as "Officers" of the Company. Unless provided otherwise by resolution of the
Board of Directors, the Officers shall have the titles, power, authority and
duties described below in this Section 5.4.
(b) Titles and Number. The Officers of the Company shall be the
Chairman of the Board (unless the Board of Directors provides that the Chairman
shall not be an officer), the President, any and all Vice Presidents, the
Secretary and any Treasurer, any and all Assistant Secretaries and Assistant
Treasurers and any other officer position or title as the Board of Directors may
desire. There shall be appointed from time to time, in accordance with Section
5.4(c) below, such Vice Presidents, Secretaries, Assistant Secretaries,
Treasurers, Assistant Treasurers and other officers as the Board of Directors
may desire. Any Person may hold two or more offices.
(c) Appointment and Term of Office. The Officers shall be appointed by
the Board of Directors at such times and for such terms as the Board of
Directors shall determine. Any Officer may be removed, with or without cause,
only by the Board of Directors. Vacancies in any office may be filled only by
the Board of Directors.
(d) Chairman of the Board. Subject to the limitations imposed by this
Agreement, any employment agreement, any employee plan or any determination or
resolution of the Board of Directors, the Chairman of the Board, subject to the
direction of the Board of Directors, shall be the chief executive officer of the
Company and, as such, shall preside at all meetings of the Shareholders and the
Board of Directors, shall supervise generally the President and the other
Officers and shall have full authority to execute all documents and take all
actions that the Company may legally take. The Chairman of the Board shall
exercise such other powers and perform such other duties as may be assigned to
him by this Agreement or the Board of Directors, including any duties and powers
stated in any employment agreement approved by the Board of Directors.
(e) President. Subject to the limitations imposed by this Agreement,
any employment agreement, any employee plan or any determination or resolution
of the Board of Directors, the
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President, subject to the direction of the Board of Directors, shall be
responsible for the management and direction of the day-to-day business and
affairs of the Company, its other Officers, employees and agents, shall
supervise generally the affairs of the Company and shall have full authority to
execute all documents and take all actions that the Company may legally take.
The President shall exercise such other powers and perform such other duties as
may be assigned to him by this Agreement or the Board of Directors, including
any duties and powers stated in any employment agreement approved by the Board
of Directors.
(f) Vice Presidents. In the absence of the President and the Chairman
of the Board (if one is appointed), each Vice President appointed by the Board
of Directors shall have all of the powers and duties conferred upon the
President, including the same power as the President to execute documents on
behalf of the Company. Each such Vice President shall perform such other duties
and may exercise such other powers as may from time to time be assigned to him
by the Board of Directors, the Chairman of the Board or the President. Vice
Presidents may be designated Executive Vice Presidents, Senior Vice Presidents,
or any other title determined by the Board of Directors.
(g) Secretary and Assistant Secretaries. The Secretary shall record or
cause to be recorded in books provided for that purpose the minutes of the
meetings or actions of the Board of Directors and Shareholders, shall see that
all notices are duly given in accordance with the provisions of this Agreement
and as required by law, shall be custodian of all records (other than
financial), shall see that the books, reports, statements, certificates and all
other documents and records required by applicable Law are properly kept and
filed, and, in general, shall perform all duties incident to the office of
Secretary and such other duties as may, from time to time, be assigned to him by
this Agreement, the Board of Directors, the Chairman of the Board or the
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
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the appointed Treasurer and Assistant Treasurer, such other Officer as the Board
of Directors shall select shall have the powers and duties conferred upon the
Treasurer.
(i) Powers of Attorney. The Company may xxxxx xxxxxx of attorney or
other authority as appropriate to establish and evidence the authority of the
Officers and other Persons.
(j) Delegation of Authority. Unless otherwise provided by resolution of
the Board of Directors, no Officer shall have the power or authority to delegate
to any Person such Officer's rights and powers as an Officer to manage the
business and affairs of the Company.
SECTION 5.5 COMPENSATION. The Officers shall receive such compensation
for their services as may be designated by the Board of Directors. In addition,
the Officers shall be entitled to be reimbursed for out-of-pocket costs and
expenses incurred in the course of their service hereunder. The members of the
Board of Directors who are not employees of the Company or its subsidiaries
shall receive such compensation for their services as Directors or committee
members as the Board of Directors shall determine. In addition, the members of
the Board of Directors shall be entitled to be reimbursed for out-of-pocket
costs and expenses incurred in the course of their service hereunder.
SECTION 5.6 BUSINESS OPPORTUNITIES.
(a) None of Enron, any Affiliate (other than the Company and its
subsidiaries) of Enron or any Officer or Director of the Company who is an
officer, director or employee of Enron or any of its Affiliates (other than the
Company and its subsidiaries) shall have any obligation to offer or otherwise
share any business opportunities with the Company or its subsidiaries. Enron and
its Affiliates may compete directly with the Company or its subsidiaries. The
Company and each Shareholder waive any claim that any business opportunity
pursued by or to be pursued by Enron or any of its Affiliates (other than the
Company and its subsidiaries) or any Officer or Director of the Company who is
an officer, director or employee of Enron or any of its Affiliates (other than
the Company and its subsidiaries) constitutes a business opportunity of the
Company that was misappropriated. The Company and each Shareholder further
acknowledge that, and agree that Enron and its Affiliates may, among other
things (i) continue to engage in oil and gas exploration and development in
competition with the Company; (ii) continue to engage in oil and gas marketing
activities; (iii) continue to engage in financing other entities or in
furnishing services in connection therewith (including financing of or services
in connection with business opportunities pursued by others in competition with
the Company); and (iv) acquire other entities, or interests therein, engaged in
oil and gas exploration and production or 3-D seismic interpretation and
analysis that will compete with the Company. No activity described in this
paragraph (a) shall constitute a breach of any
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fiduciary duty by Enron or any of its Affiliates (other than the Company and its
subsidiaries), or any Officer or Director of the Company who is an officer,
director or employee of Enron or any of its Affiliates (other than the Company
and its subsidiaries), to the Company or the Shareholders. However, nothing in
this Agreement shall be construed to permit (x) a natural person to usurp,
solely for his or her personal benefit, a business opportunity of the Company
presented to that person in his or her capacity as an Officer or Director unless
the Officer or Director first presented the opportunity to the Company and the
Company declined to pursue it or (y) Enron or any of its Affiliates (other than
the Company and its subsidiaries) to usurp a business opportunity of the Company
presented to an Officer or Director serving as such at the request of Enron
solely in his or her capacity as an Officer or Director unless such Officer or
Director first presented the opportunity to the Company and the Company declined
to pursue it; provided that Enron or any of its Affiliates (other than the
Company and any of its subsidiaries) may pursue any business opportunity that is
separately presented to or identified by Enron or any of its Affiliates (other
than the Company and any of its subsidiaries), even if it has also been
presented to an Officer or Director of the Company.
(b) For purposes of this Section 5.6, a "business opportunity" means
any opportunity for a Person (i) to enter into any transaction pursuant to which
the Person would acquire (whether by purchase, lease or other transaction), own,
invest in, finance, lend funds to, contribute capital to, manage, operate or
otherwise participate in any Person, assets or transaction, or (ii) to act as a
broker, finder, financial adviser or investment banker with respect to any such
transaction by any other Person.
(c) The benefits of this Section 5.6 shall inure to the benefit of
Enron and any of its Affiliates (other than the Company and its subsidiaries)
and any successor owner of Company Securities who purchases such Company
Securities directly from Enron or any of its Affiliates (other than through a
public offering) and any Affiliates of such successor owner.
SECTION 5.7 INTERESTED OFFICERS OR DIRECTORS. No contract or
transaction between the Company and one or more of its Officers or Directors, or
between the Company and any other Entity in which one or more such Officers or
Directors owns an interest or of which such Officer or Director is an Affiliate,
officer, director or employee, shall be void or voidable or be deemed to
constitute a breach of duty if:
(a) The material facts as to his or its relationship or interest and as
to the contract or transaction are disclosed or are known to the Board of
Directors or the committee and the Board of Directors or committee in good faith
authorizes the contract or transaction by the affirmative votes of a majority of
the disinterested Directors, even though the disinterested Directors be less
than a
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quorum and even though interested directors are present at or participate in the
meeting that authorizes the contract or transaction;
(b) The material facts as to his or its relationship or interest and as
to the contract or transaction are disclosed or are known to the Shareholders
entitled to vote thereon and the contract or transaction is specifically
approved in good faith by vote of the Shareholders; or
(c) The contract or transaction is fair as to the Company as of the
time it is authorized, approved or ratified by the Board of Directors, a
committee of the Board of Directors or the Shareholders (as determined in
accordance with Section 5.11).
Interested directors may be counted in determining the presence of a quorum at a
meeting of the Board of Directors or a committee thereof that authorizes the
contract or transaction in question.
SECTION 5.8 INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND
AGENTS.
(a) To the fullest extent permitted by Law but subject to the
limitations expressly provided in this Agreement, the Company shall indemnify
any Person who was or is a party or is threatened to be made a party to any
threatened, pending or complete action, suit or proceeding (each an
"Indemnitee"), whether civil, criminal, administrative or investigative (other
than an action by or in the right of the Company) by reason of the fact that
such Indemnitee is or was a Director or Officer, or was serving at the request
of the Company as a director or officer of another Entity, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by such Indemnitee in connection with such
action, suit or proceeding if such Indemnitee acted in good faith and in a
manner that such Indemnitee reasonably believed to be in or not opposed to the
best interests of the Company, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe such Indemnitee's conduct was
unlawful. The termination of any action, suit or proceeding by judgment, order,
settlement, conviction or upon a plea of nolo contendere, or its equivalent,
shall not, of itself, create a presumption that the Indemnitee did not act in
good faith and in a manner that such Indemnitee reasonably believed to be in or
not opposed to the best interests of the Company, or, with respect to any
criminal action or proceeding, had reasonable cause to believe such Indemnitee's
conduct was unlawful. Any indemnification pursuant to this Section 5.8 shall be
made only out of the assets of the Company.
(b) To the fullest extent permitted by Law but subject to the
limitations expressly provided in this Agreement, the Company shall indemnify
any Indemnitee who was or is a party or is threatened to be made a party to any
threatened, pending or complete action or suit by or in the
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right of the Company to procure a judgment in its favor by reason of the fact
that such Indemnitee is or was a Director or Officer, or was serving at the
request of the Company as a director or officer of another Entity, against
expenses (including attorneys' fees) actually and reasonably incurred by such
Indemnitee in connection the defense or settlement of such action or suit if
such Indemnitee acted in good faith and in a manner which such Indemnitee
reasonably believed to be in or not opposed to the best interests of the
Company, except that no indemnification shall be made in respect of any claim,
issue or matter as to which such person shall have been adjudged to be liable to
the Company unless and only to the extent that the Court of Chancery or the
court in which such action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all the circumstances
of the case, such person is fairly and reasonably entitled to indemnity for such
expenses which the Court of Chancery or such other court shall deem proper.
(c) The Company may indemnify any employee or agent of the Company, or
any Person serving at the request of the Company as an employee or agent of
another Entity, in the same manner and to the same extent that the Company is
required, pursuant to clauses (a) and (b) above, to indemnify Directors and
Officers and Indemnitees serving at the request of the Company as a director or
officer of another Entity.
(d) Any indemnification under subsections (a), (b) and (c) of this
Section 5.8 (unless ordered by a court) shall be made by the Company only as
authorized in the specific case upon a determination that indemnification of the
Indemnitee is proper in the circumstances because such Indemnitee has met the
applicable standard of conduct set forth in subsections (a) and (b) of this
section. Such determination shall be made, with respect to an Indemnitee who is
a Director or Officer at the time of such determination, promptly (i) by a
majority vote of the Directors who are not parties to such action, suit or
proceeding, even though less than a quorum, or (ii) by a committee of such
Directors designated by majority vote of such Directors, even though less than a
quorum, or (iii) if there are no such Directors or if such Directors so direct,
by independent legal counsel in a written opinion, or (iv) by the Shareholders.
(e) Expenses (including attorney's fees) incurred by an Indemnitee who
is indemnified pursuant to this Section 5.8 in defending any civil, criminal,
administrative or investigative action, suit or proceeding shall, from time to
time, be paid by the Company in advance of the final disposition of such action,
suit or proceeding upon receipt by the Company of an undertaking by or on behalf
of such Indemnitee to repay such amount if it shall ultimately be determined
that the such Person is not entitled to be indemnified by the Company as
authorized in this Section 5.8.
(f) The indemnification and advancement of expenses provided by, or
granted pursuant to, this Section 5.8 shall not be deemed exclusive of any other
rights to which those seeking indemnification or advancement of expenses may be
entitled under any agreement, vote of
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Shareholders or disinterested Directors, as a matter of Law or otherwise, both
as to actions in the Indemnitee's official capacity and as to action in another
capacity while holding such office or position, and shall continue as to an
Indemnitee who has ceased to serve in such capacity and shall inure to the
benefit of the heirs, successors, assigns and administrators of the Indemnitee.
(g) The Company may purchase and maintain insurance, on behalf of any
person who is or was a member of the Board of Directors or an Officer and on
behalf of such other Persons as the Board of Directors shall determine, against
any liability that may be asserted against or expense that may be incurred by
such Person in connection with the Company's activities, regardless of whether
the Company would have the power to indemnify such Person against such liability
under the provisions of this Agreement.
(h) For purposes of this Section 5.8, the Company shall be deemed to
have requested an Indemnitee to serve as fiduciary of an employee benefit plan
whenever the performance by the Indemnitee of such Indemnitee's duties to the
Company also imposes duties on, or otherwise involves services by, the
Indemnitee to the plan or participants or beneficiaries of the plan; excise
taxes assessed on an Indemnitee with respect to an employee benefit plan
pursuant to applicable Law shall constitute "fines" within the meaning of this
Section 5.8; action taken or omitted by the Indemnitee with respect to an
employee benefit plan in the performance of such Indemnitee's duties for a
purpose reasonably believed by such Indemnitee to be in the interest of the
participants and beneficiaries of the plan shall be deemed to be for a purpose
which is in, or not opposed to, the best interests of the Company.
(i) In no event may an Indemnitee subject the Shareholders to personal
liability by reason of the indemnification provisions set forth in this
Agreement.
(j) An Indemnitee shall not be denied indemnification in whole or in
part under this Section 5.8 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.
(k) The provisions of this Section 5.8 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.
(l) No amendment, modification or repeal of this Section 5.8 or any
provision hereof shall in any manner terminate, reduce or impair either the
right of any past, present or future Indemnitee to be indemnified by the Company
or the obligation of the Company to indemnify any such Indemnitee under and in
accordance with the provisions of this Section 5.8 as in effect immediately
prior to such amendment, modification or repeal with respect to claims arising
from or
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relating to matters occurring, in whole or in part, prior to such amendment,
modification or repeal, regardless of when such claims may be asserted.
(m) THE PROVISIONS OF THE INDEMNIFICATION PROVIDED IN THIS SECTION 5.8
ARE INTENDED BY THE PARTIES TO APPLY EVEN IF SUCH PROVISIONS HAVE THE EFFECT OF
EXCULPATING THE INDEMNITEE FROM LEGAL RESPONSIBILITY FOR THE CONSEQUENCES OF
SUCH PERSON'S OWN SIMPLE, FULL, PARTIAL OR CONCURRENT NEGLIGENCE.
SECTION 5.9 EXCULPATION OF LIABILITY OF OFFICERS AND DIRECTORS.
(a) Notwithstanding anything to the contrary set forth in this
Agreement, no Director shall be liable to the Company or the Shareholders for
monetary damages for losses sustained or liabilities incurred as a result of any
act or omission constituting a breach of such Director's fiduciary duty, except:
(i) For a breach of the Director's duty of loyalty to the Company or the
Shareholders; (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law; (iii) for liabilities that
would be imposed on such Director under Section 174 of the GCLD if the Company
were a Delaware corporation; or (iv) for any transaction from which the Director
derived an improper personal benefit. No action permitted to be taken by any
Director or by Enron or any of its Affiliates (other than the Company and its
subsidiaries) pursuant to the provisions of Section 5.6 shall be deemed to be a
breach of the duty of loyalty or a transaction from which such Director derived
an improper personal benefit. If the GCLD is amended after the date of this
Agreement to authorize Delaware corporations to further eliminate or limit the
personal liability of directors of Delaware corporations, then the liability of
a director to the Company, in addition to the personal limitation provided
herein, shall be further limited to the fullest extent permitted of Delaware
corporations under the GCLD as so amended.
(b) Subject to its obligations and duties as set forth in this
Article V, the Board of Directors and any committee thereof may exercise any of
the powers granted to it by this Agreement and perform any of the duties imposed
upon it hereunder either directly or by or through the Company's agents, and
neither the Board of Directors nor any committee thereof shall be responsible
for any misconduct or negligence on the part of any such agent appointed by the
Board of Directors or any committee thereof in good faith.
(c) Any amendment, modification or repeal of this Section 5.9 or any
provision hereof shall be prospective only and shall not in any way affect the
limitations on liability under 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 be asserted.
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SECTION 5.10 DUTIES OF OFFICERS AND DIRECTORS. Except as otherwise
specifically provided in Section 5.3, Section 5.6, Section 5.7, Section 5.8,
Section 5.9, Section 5.10 or Section 5.11, the duties and obligations owed to
the Company and to the Shareholders by the Officers of the Company and by
members of the Board of Directors of the Company, and any such duties that may
be owed by any Shareholder or by any Affiliates of any Shareholder, shall be the
same as the respective duties and obligations owed to a corporation organized
under the GCLD by its officers and directors and any such duties that may be
owed to such corporation by any similarly situated stockholder or Affiliate
thereof, respectively.
SECTION 5.11 ADDITIONAL LIMITATIONS ON DUTIES; RESOLUTION OF CONFLICTS
OF INTEREST.
(a) The duties and obligations owed to the Company and to the
Shareholders by the Officers of the Company and by members of the Board of
Directors of the Company, and any such duties that may be owed by any
Shareholder or by any Affiliates of any Shareholder, are specifically modified
or limited as follows (which are in addition to any modifications or limitations
elsewhere in this Agreement):
(i) an Officer, Director or Affiliate of the Company will not
be liable for errors in judgment or for any act or omission
if such Person acted in good faith;
(ii) Enron and its Affiliates (other than the Company and its
subsidiaries) will have no obligation to offer to sell to
the Company any assets or interest therein;
(iii) it will not constitute a breach of fiduciary or other duty
for Enron and its Affiliates to engage in activities of the
type conducted by the Company and its subsidiaries, even if
in direct competition with the Company, including without
limitation the ownership and operation of interests in
companies that engage in oil and gas exploration and
production activities;
(iv) the approval by the Oversight Committee of the Board of
Directors of the terms of any proposed transaction between
Enron or its Affiliates (other than the Company and its
subsidiaries) on one hand and the Company or any of its
subsidiaries on the other hand, including the amendment of
any contract, shall be deemed to be a conclusive
determination that such transaction does not constitute a
breach of fiduciary or other duty owed by Enron or its
Affiliates (other than the Company and its subsidiaries),
as long as the material facts known to the officers and
directors of Enron or its Affiliates (to the extent
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Enron or such Affiliate is a party to the transaction)
regarding such proposed transaction were disclosed to the
Oversight Committee at the time it gave its approval;
(v) it will not constitute a breach of fiduciary or other duty
for Enron and its Affiliates and the Officers or Directors
of the Company (including the Oversight Committee) to
resolve conflicts of interest, as long as the resolution of
such conflicts is fair to the Company and its subsidiaries
(taking into account the relevant interests of the
parties);
(vi) it will not constitute a breach of fiduciary or other duty
for an Officer or Director of the Company to engage
attorneys, accountants, engineers and other advisors on
behalf of the Company, its Board of Directors or any
committee thereof, even though such Persons may also be
retained from time to time by Enron or its Affiliates, and
such Persons may be engaged with respect to any matter in
which the interests of the Company and its subsidiaries, on
one hand, and Enron and its Affiliates, on the other, may
differ, or may be engaged by both the Company and Enron or
its Affiliates with respect to a matter, as long as such
Officer or Director reasonably believes that any conflict
between the Company and its subsidiaries, on one hand, and
Enron and its Affiliates (other than the Company and its
subsidiaries), on the other, with respect to such matter is
not material.
(b) Any resolution or course of action in respect of a conflict of
interest regarding Enron and its Affiliates, including, without limitation, any
course of action involving the issuance of any Company Securities to Enron or
any of its Affiliates, shall be conclusively deemed fair to the Company and its
subsidiaries if such resolution or course of action is (i) approved, in the
absence of bad faith, by the Oversight Committee of the Board of Directors, as
long as the material facts known to the officers and directors of Enron or its
Affiliates (to the extent Enron or such Affiliate is a party to the transaction
or involved in such course of action) regarding such proposed transaction or
course of action were disclosed to the Oversight Committee at the time it gave
its approval (ii) made or taken on terms no less favorable to the Company than
those generally being provided to or available from unrelated third parties, or
(iii) a commercially fair resolution or course of action, taking into account
the circumstances surrounding the course of action or conflict of interest and
the totality of the relationships between the parties involved and the relative
interests of the parties.
(c) In connection with a determination of what is "fair" to the Company
and in connection with a resolution of any conflict of interest, the following
factors, along with any other appropriate factors, shall be considered: (i) the
relative interests of each of the parties to such
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conflict, agreement, transaction or situation and the benefits and burdens
relating to such interest; (ii) any customary or accepted industry practices and
any customary or historical dealings with a particular Person; (iii) any
applicable generally accepted accounting or engineering practices or principles;
and (iv) such additional factors as such member of the Oversight Committee of
the Board of Directors or such Officer, Director or employee of the Company
determines in his sole discretion to be relevant, reasonable or appropriate
under the circumstances. In the absence of bad faith by any such Person, the
resolution, action or terms so made, taken or provided by any such Person with
respect to such matter shall not constitute a breach of this Agreement or any
other agreement contemplated herein or a breach of any standard of care or duty
imposed herein or therein or under the Act or any other Law.
(d) For purposes of this Section, the "Oversight Committee" shall be a
committee of the Board of Directors established in accordance with the terms of
this Agreement, which committee shall consist of at least two Directors and a
majority of which shall not be officers, directors or employees of Enron or any
Affiliate of Enron.
SECTION 5.12 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.
ARTICLE VI: BOOKS AND RECORDS, INFORMATION AND ACCOUNTS
SECTION 6.1 MAINTENANCE OF BOOKS AND RECORDS. The Company shall keep at
its principal office or such other office designated by the Board of Directors
complete and accurate books and records of the Company, supporting documentation
of the transactions with respect to the conduct of the Company's business and
affairs and minutes of the proceedings of the Board of Directors, the
Shareholders and each committee of the Board of Directors. The records shall
include, but not be limited to, complete and accurate information regarding the
state of the business and financial condition of the Company; a copy of the
Certificate of Formation and this Agreement and all amendments thereto; a
current list of the names and last known business, residence, or mailing
addresses of all Directors and Officers; and the Company's federal, state and
local tax returns for the Company's six most recent tax years.
SECTION 6.2 INFORMATION. In addition to the other rights specifically
set forth in this Agreement and subject to such reasonable standards (including
standards governing what information and documents are to be furnished and at
what time and location and at whose expense) as may be established by the Board
of Directors or any Officer, for a purpose reasonably related to such
Shareholder's interest in the Company, each Shareholder is entitled to all
information to which
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a member of a Delaware limited liability company is entitled to have access
pursuant to the Act under the circumstances and subject to the conditions
therein stated, including the condition that the Board of Directors shall have
the right to keep certain information confidential in accordance with Section
18-305(c) of the Act.
SECTION 6.3 ACCOUNTS. The Board of Directors may establish, or direct
or authorize any Officer to establish, one or more separate bank and investment
accounts and arrangements for the Company, which shall be maintained in the
Company's name with financial institutions and firms that the Board of
Directors, or any Officer so directed or authorized, determines.
ARTICLE VII: DISSOLUTION, WINDING-UP AND TERMINATION
SECTION 7.1 DISSOLUTION.
(a) The Company shall dissolve and its affairs shall be wound up on the
first to occur of the following events (each a "Dissolution Event"):
(i) the consent of the Board of Directors and a Majority
Interest; or
(ii) the last remaining Shareholder's ceasing to be a member of
the Company, unless the Company is continued without
dissolution in accordance with the Act; or
(iii) entry of a decree of judicial dissolution of the Company
under Section 18-802 of the Act.
(b) Except as provided in Section 7.1(a)(ii), the death, dissolution or
Bankruptcy of any Shareholder or the occurrence of any other event that causes a
Shareholder to cease to be a member of the Company shall not constitute a
Dissolution Event (and the business of the Company shall be continued without
dissolution after such event). The bankruptcy (as defined in Section 18-101 of
the Act) of a Shareholder shall not, of itself, cause the Shareholder to cease
to be a member of the Company.
SECTION 7.2 WINDING-UP AND TERMINATION.
(a) On the occurrence of a Dissolution Event, the Board of Directors
shall select one or more Persons to act as liquidating trustee. The liquidating
trustee shall proceed diligently to wind up the affairs of the Company and make
final distributions as provided herein and in the Act. The
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costs of winding up shall be borne as a Company expense. Until final
distribution, the liquidating trustee shall continue to operate the Company's
properties with all of the power and authority of the Board of Directors.
(b) Any assets of the Company remaining after satisfaction of the
creditors of the Company (whether by payment or reasonable provision for
payment) shall be distributed among the Shareholders pro rata, subject to the
provisions of any Designation.
(c) On completion of such final distribution, the liquidating trustee,
as an authorized person, shall file a Certificate of Cancellation with the
Secretary of State of the State of Delaware, cancel any other filings made
pursuant to Section 2.5, and take such other actions as may be necessary to
terminate the existence of the Company.
ARTICLE VIII: DIVIDENDS; ACQUISITION BY COMPANY OF COMPANY SECURITIES
SECTION 8.1 DIVIDENDS.
(a) The Board of Directors may declare, and the Company may pay,
Dividends either (i) out of surplus or (ii) if there shall be no such surplus,
out of its net profits for the fiscal year in which the Dividend is declared
and/or the preceding fiscal year. If the capital of the Company shall have been
diminished by depreciation in the value of its property, or by losses, or
otherwise, to an amount less than the aggregate amount of the capital
represented by the issued and outstanding Company Securities of all classes
having a preference on the distribution of assets, the Directors shall not
declare and pay out of such net profits any Dividends upon any Company
Securities until the deficiency in the amount of capital represented by the
issued and outstanding Company Securities of all classes having a preference on
the distribution of assets shall have been repaired. The Directors may determine
the net profits derived from the exploitation of the Company's wasting assets
(including oil and natural gas reserves) or the net proceeds derived from such
liquidation without taking into consideration the depletion of such assets
resulting from the lapse of time, consumption, liquidation or exploitation of
such assets.
(b) Dividends may be paid in cash, property, or Company Securities. If
a Dividend is to be paid in unissued Company Securities, the Board of Directors
shall, by resolution, direct that there be designated as capital in respect of
such Company Securities an amount that is not less than the aggregate par value
of Company Securities being declared as a Dividend. No such designation of
capital shall be necessary if Company Securities are being distributed pursuant
to a split-up or division of Company Securities rather than as payment of a
Dividend declared payable in Company Securities.
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(c) In order that the Company may determine the Shareholders entitled
to receive payment of any dividend or other distribution or allotment of any
rights or the Shareholders entitled to exercise any rights in respect of any
change, conversion or exchange of Company Securities, or for the purpose of any
other lawful action, the Board of Directors may fix a Record Date, which Record
Date shall not precede the date upon which the resolution fixing the Record Date
is adopted, and which Record Date shall be not more than 60 days prior to such
action. If no Record Date is fixed, the Record Date for determining Shareholders
for any such purpose shall be at the close of business on the day on which the
Board of Directors adopts the resolution relating thereto.
(d) Notwithstanding anything in this Agreement to the contrary, the
Company, and the Board of Directors on behalf of the Company, may not declare
and pay Dividends to the extent that the payment of such Dividends violates
Section 18-607 of the Act or other applicable Law.
SECTION 8.2 REDEMPTION OF COMPANY SECURITIES.
(a) Unless otherwise provided in this Agreement or as otherwise
provided with respect to a class or series of Company Securities in any
Designation creating such class or series, the Board of Directors may cause the
Company to purchase, redeem or otherwise acquire Company Securities; provided
that the Company may not:
(i) purchase or redeem Company Securities for cash or other
property when the capital of the Company is impaired or when such
purchase or redemption would cause any impairment of the capital of the
Company, except that the Company may purchase or redeem out of capital
any Company Securities that are entitled upon any distribution of the
Company's assets, whether by Dividend or in liquidation, to a
preference over another class or series of stock, or, if no Shares
entitled to such a preference are Outstanding, any Company Securities
if such Company Securities will be retired upon their acquisition and
the capital of the Company will be reduced accordingly;
(ii) purchase, for more than the price at which they may be
redeemed, any Company Securities that are redeemable at the option of
the Company; or
(iii) redeem any Company Securities unless their redemption
would be authorized under the GCLD if the Company were a Delaware
corporation, and then only in accordance with the provisions thereof.
(b) Shares of any class of Company Securities that are converted into
other securities or property, redeemed, purchased or otherwise acquired by the
Company or any wholly-owned
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subsidiary of the Company, shall resume the status of authorized and unissued
Shares of such class and, in the case of Preferred Shares, undesignated as to
series, and shall no longer be Outstanding. The Company shall not vote any
Company Securities held by it, nor shall such Company Securities be counted in
determining a quorum.
ARTICLE IX: AMENDMENT OF AGREEMENT; SHAREHOLDER MEETINGS; RECORD DATE
SECTION 9.1 AMENDMENT PROCEDURES. Except as provided in Section 4.4
(with respect to the adoption or termination of a Designation) and Section 9.3,
all amendments to this Agreement shall be made in accordance with the following
requirements. A proposed amendment shall be effective upon its approval by at
least a Majority Interest unless a greater or different percentage is required
under this Agreement. Each proposed amendment that requires the approval of the
holders of a specified percentage of Company Securities shall be set forth 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
holders of the requisite percentage of Company Securities, call a meeting of the
Shareholders to consider and vote on such proposed amendment or direct that the
proposed amendment be considered and voted on at the next annual meeting of
Shareholders. The Board of Directors shall notify all Record Holders upon final
adoption of any such proposed amendments that are adopted other than at a duly
called meeting of Shareholders at which a quorum is present in person or by
proxy.
SECTION 9.2 AMENDMENT REQUIREMENTS.
(a) Notwithstanding the provisions of Section 9.1, no provision of this
Agreement or any Designation that establishes a specified percentage of Company
Securities, the approval of the holders of which is required to take any action,
shall be amended, altered, changed, repealed or rescinded in any respect that
would have the effect of reducing such voting requirements unless such amendment
is approved by the written consent or the affirmative vote of Shareholders whose
aggregate Company Securities constitute not less than the voting requirement
sought to be reduced.
(b) Notwithstanding the provisions of Section 9.1, no amendment to this
Agreement may enlarge the obligations of any Shareholder without its consent.
(c) Except as otherwise provided in this Agreement or as otherwise
provided with respect to a series of Preferred Shares in any Designation
creating such series, any amendment to this Agreement that would increase or
decrease the aggregate number of authorized Shares of any class of Company
Securities, increase or decrease the par value of the Shares of any class of
Company Securities, or alter or change the powers, preferences, or special
rights of any class or series of
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Company Securities so as to affect them adversely must be approved by the Record
Holders of not less than a majority of the Company Securities of the class or
series affected; provided, however, that any increase in the number of
authorized Common Shares shall not be deemed or construed to have such an
adverse effect on any series of Preferred Shares, and provided further that this
provision shall not limit the authority of the Board of Directors to designate
and issue series of Preferred Shares pursuant to Section 4.4.
SECTION 9.3 SHAREHOLDER MEETINGS.
(a) Except as otherwise provided in this Agreement, all acts of
Shareholders to be taken hereunder shall be taken in the manner provided in this
Article IX. An annual meeting of the Shareholders for the transaction of such
business as may properly come before the meeting shall be held at such time and
place as the Board of Directors shall specify in the notice of the meeting,
which date shall be within thirteen (13) months subsequent to the last annual
meeting of shareholders and which notice shall be delivered to each Shareholder
entitled to vote at such meeting at least 10 and not more than 60 days prior to
such meeting.
(b) A failure to hold the annual meeting at the designated time or to
elect a sufficient number of Directors to conduct the business of the Company
shall not affect otherwise valid acts of the Company or work a forfeiture or
dissolution of the Company. If the annual meeting for election of Directors is
not held on the date designated therefor or action by written consent to elect
Directors in lieu of an annual meeting has not been taken, the Directors shall
cause the meeting to be held as soon as is convenient. If there be a failure to
hold the annual meeting or to take action by written consent to elect Directors
in lieu of an annual meeting for a period of 30 days after the date designated
for the annual meeting, or if no date has been designated, for a period of 13
months after the latest to occur of the organization of the corporation, its
last annual meeting or the last action by written consent to elect Directors in
lieu of an annual meeting, the Court of Chancery may summarily order a meeting
to be held upon the application of any Shareholder or Director. The Company
Securities represented at such meeting, either in person or by proxy, and
entitled to vote thereat, shall constitute a quorum for the purpose of such
meeting, notwithstanding any other provision of this Agreement to the contrary.
The Court of Chancery may issue such orders as may be appropriate, including,
without limitation, orders designating the time and place of such meeting, the
Record Date for determination of Shareholders entitled to vote, and the form of
notice of such meeting.
(c) Special meetings of the Shareholders may be called by the Board of
Directors, the Chairman of the Board or by Shareholders owning at least
thirty-five percent (35%) of the voting power of the Company Securities of the
class or classes for which a meeting is proposed. Shareholders shall call a
meeting by delivering to the Board of Directors one or more requests in
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writing stating that the signing Shareholders wish to call a meeting and
indicating the general or specific purposes for which the meeting is to be
called. Within 60 days after receipt of such a call from Shareholders or within
such greater time as may be reasonably necessary for the Company to comply with
any statutes, rules, regulations, listing agreements or similar requirements
governing the holding of a meeting or the solicitation of proxies for use at
such meeting, the Board of Directors shall send a notice of the meeting to the
Shareholders owning Company Securities of the class or classes for which a
meeting is being called either directly or indirectly through the Transfer
Agent. Such meeting shall be held at a time and place determined by the Board of
Directors on a date not more than 60 nor less than 10 days after the mailing of
notice of the meeting.
SECTION 9.4 NOTICE OF SHAREHOLDER MEETINGS. Notice of a meeting called
pursuant to Section 9.3 shall be given to the Record Holders in writing by mail
or other means of written communication in accordance with Section 11.3. The
notice shall be deemed to have been given at the time when deposited in the
mail, postage prepaid, directed to the Shareholder at his address as it appears
on the records of the Company or sent by other means of written communication.
SECTION 9.5 RECORD DATE.
(a) For purposes of determining the Shareholders entitled to notice of
or to vote at a meeting of the Shareholders or to give approvals without a
meeting as provided in Section 9.11, the Board of Directors may set a record
date ("Record Date"), which shall not be less than 10 nor more than 60 days
before the date of the meeting. If no Record Date is fixed by the Board of
Directors, the Record Date for determining Shareholders entitled to notice of or
to vote at a meeting of Shareholders shall be at the close of business on the
day next preceding the day on which notice is given, or, if notice is waived, at
the close of business on the day next preceding the day on which the meeting is
held. A determination of Shareholders of record entitled to notice of or to vote
at a meeting of Shareholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new Record Date for the
adjourned meeting.
(b) In order that the Company may determine the Shareholders entitled
to consent to action in writing without a meeting, the Board of Directors may
fix a Record Date, which Record Date shall not precede the date upon which the
resolution fixing the Record Date is adopted by the Board of Directors, and
which date shall not be more than 10 days after the date upon which the
resolution fixing the Record Date is adopted by the Board of Directors. If no
Record Date has been fixed by the Board of Directors, the Record Date for
determining Shareholders entitled to consent to action in writing without a
meeting, when no prior action by the Board of Directors is required, shall be
the first date on which a signed written consent setting forth the action taken
or proposed to be taken is delivered to the Company by delivery to its
registered office in Delaware, its principal
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place of business or an Officer or agent of the Company having custody of the
book in which proceedings of meetings of Shareholders are recorded. Delivery
made to the Company's registered office shall be by hand or by certified or
registered mail, return receipt requested. If no Record Date has been fixed by
the Board of Directors and prior action by the Board of Directors is required,
the Record Date for determining Shareholders entitled to consent to action in
writing without a meeting shall be at the close of business on the day on which
the Board of Directors adopts the resolution taking such prior action.
SECTION 9.6 SHAREHOLDER LISTS. A complete list of Shareholders entitled
to vote at any meeting of Shareholders, arranged in alphabetical order for each
class of Company Securities and showing the address of each such Shareholder and
the number of Shares registered in the name of such Shareholder, shall be open
to the examination of any Shareholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten (10) days prior to
the meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The Shareholder list
shall also be produced and kept at the time and place of the meeting during the
whole time thereof, and may be inspected by any Shareholder who is present. Upon
the wilful neglect or refusal of the Directors to produce such a list at any
meeting for the election of Directors, they shall be ineligible for election to
any office at such meeting.
SECTION 9.7 ADJOURNMENT. When a meeting is adjourned to another time or
place, notice need not be given of the adjourned meeting and a new Record Date
need not be fixed, if the time and place thereof are announced at the meeting at
which the adjournment is taken, unless such adjournment shall be for more than
30 days. At the adjourned meeting, the Company may transact any business which
might have been transacted at the original meeting. If the adjournment is for
more than 30 days or if a new Record Date is fixed for the adjourned meeting, a
notice of the adjourned meeting shall be given in accordance with this Article
IX.
SECTION 9.8 WAIVER OF NOTICE; APPROVAL OF MEETING; APPROVAL OF MINUTES.
The transactions of any meeting of Shareholders, however called and noticed, and
whenever held, shall be as valid as if had 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 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 except that attendance at a
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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.
SECTION 9.9 QUORUM; REQUIRED VOTE FOR SHAREHOLDER ACTION. The holders
of a majority of the voting power of the Company Securities of the class or
classes entitled to vote at a meeting of Shareholders, present in person or
represented by proxy, shall constitute a quorum at a meeting of Shareholders of
such class or classes unless (a) the provisions of this Agreement or the Act
require (or the GCLD would require, if the Company were a Delaware corporation)
that any act of the Shareholders to be taken at such meeting be approved by
holders of a different amount of Company Securities or (b) the Board of
Directors designates a different amount (which amount shall not be less than
one-third of the Shares entitled to vote at the meeting), in which case the
quorum with respect to such act shall be such different amount. In all matters
other than the election of directors, the vote of Shareholders holding Company
Securities in the aggregate possessing a majority of the voting power of the
Company Securities entitled to vote and present in person or represented by
proxy at such meeting shall be deemed to constitute the act of the Shareholders,
unless (i) the provisions of this Agreement, applicable Law or the Act require
(or the GCLD would require, if the Company were a Delaware corporation) that
such act be approved by holders of a different amount of Company Securities or
(ii) the Board of Directors designates that such act need be approved by holders
of a different amount of Company Securities, in which case the act of the
Shareholders holding Company Securities that in the aggregate represent at least
such different amount shall be required. The Shareholders present at a duly
called or held meeting at which a quorum is present may continue to transact
business until adjournment, notwithstanding the withdrawal of enough
Shareholders to leave less than a quorum, if any action taken (other than
adjournment) is approved by the required percentage of Company Securities
specified in this Agreement. In the absence of a quorum, any meeting of
Shareholders may be adjourned from time to time by the affirmative vote of a
majority of the Company Securities represented either in Person or by proxy.
SECTION 9.10 CONDUCT OF MEETING. The Board of Directors shall have full
power and authority concerning the manner of conducting any meeting of the
Shareholders or solicitation of approvals in writing, including the
determination of Persons entitled to vote, the existence of a quorum, the
satisfaction of the requirements of this Article IX, the conduct of voting, the
validity and effect of any proxies and the determination of any controversies,
votes or challenges arising in connection with or during the meeting or voting.
The Board of Directors shall designate a Person to serve as chairman of any
meeting and shall further designate a Person to take the minutes of any meeting.
All minutes shall be kept with the records of the Company. The Board of
Directors may make such other regulations consistent with applicable Law and
this Agreement as it may deem advisable concerning the conduct of any meeting of
the Shareholders or solicitation of approvals in
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writing, including regulations in regard to the appointment of proxies, the
appointment and duties of inspectors of votes and approvals, the submission and
examination of proxies and other evidence of the right to vote and the
revocation of approvals in writing.
SECTION 9.11 ACTION WITHOUT A MEETING.
(a) Any action permitted or required to be taken at a meeting of
Shareholders 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,
shall be signed by the Record Holders of Outstanding Company Securities having
not less than the minimum number of votes that would be necessary to authorize
or take such action at a meeting at which all Company Securities entitled to
vote thereon were present and voted and shall be delivered to the Company by
delivery to its registered office in Delaware, its principal place of business,
or an Officer or agent of the Company having custody of the book in which
proceedings of meetings of Shareholders are recorded. Delivery made to the
Company's registered office shall be by hand or by certified or registered mail,
return receipt requested.
(b) Every written consent shall bear the date of signature of each
Shareholder who signs the consent, and no written consent shall be effective to
take the action referred to therein unless, within sixty (60) days of the
earliest dated consent delivered in the manner required by this Section to the
Company, written consents signed by a sufficient number of Shareholders to take
action are delivered to the Company by delivery to its registered office in
Delaware, its principal place of business, or an Officer or agent of the Company
having custody of the book in which proceedings of meetings of Shareholders are
recorded. Delivery made to the Company's registered office shall be by hand or
by certified or registered mail, return receipt requested.
(c) Prompt notice of the taking of action without a meeting by less
than a unanimous written consent shall be given by the Secretary to those
Shareholders who have not consented in writing.
SECTION 9.12 VOTING AND OTHER RIGHTS.
(a) Only those Record Holders of Company Securities on the Record Date
set pursuant to Section 9.5 (and also subject to the limitations contained in
the definition of Outstanding) shall be entitled to notice of, and to vote at, a
meeting of Shareholders or to act with respect to matters as to which the
holders of the Company Securities have the right to vote or to act, including
the election of Directors. All references in this Agreement to votes of, or
other acts that may be taken by, the
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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 in favor of, 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 shall not
be counted as votes for or against any matter unless otherwise required by Law.
ARTICLE X: MERGER OR SALE OF ASSETS
SECTION 10.1 AUTHORITY. The Company may merge or consolidate with, or
sell all or substantially all of its assets to, one or more limited liability
companies, corporations, business trusts or associations, real estate investment
trusts, common law trusts or unincorporated businesses, including a general
partnership or limited partnership, formed under the laws of the State of
Delaware or any other jurisdiction, pursuant to a written agreement of merger,
consolidation or sale, as applicable ("Transaction Agreement"), in accordance
with this Article X.
SECTION 10.2 PROCEDURE FOR MERGER, CONSOLIDATION OR SALE. The merger or
consolidation of the Company or the sale of all or substantially all of the
Company's assets pursuant to this Article X requires the prior approval of the
Board of Directors. If the Board of Directors shall determine, in the exercise
of its sole discretion, to consent to such transaction, the Board of Directors
shall approve the Transaction Agreement, which shall set forth:
(a) The names and jurisdictions of formation or organization of each of
the business entities to be parties to the proposed transaction;
(b) The name and jurisdiction of formation or organization of the
business entity that is to survive the proposed merger or consolidation or
acquire substantially all of the Company's assets (the "Surviving Business
Entity");
(c) The terms and conditions of the proposed transaction including the
consideration to be received in any sale transaction;
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(d) With respect to a proposed merger or consolidation, the manner and
basis of exchanging or converting the equity securities of each constituent
business entity for, or into, cash, property, interests, rights, securities or
obligations of the Surviving Business Entity; and (i) if any interests, rights,
securities or obligations of any constituent business entity are not to be
exchanged or converted solely for, or into, cash, property, interests, rights,
securities or obligations of the Surviving Business Entity, the cash, property,
interests, rights, securities or obligations of any general or limited
partnership, limited liability, company, corporation, trust or other entity
(other than the Surviving Business Entity) which the holders of such interests,
rights, securities or obligations of the constituent business entity are to
receive in exchange for, or upon conversion of, their interests, rights,
securities or obligations and (ii) in the case of securities represented by
certificates, upon the surrender of such certificates, which cash, property,
interests, rights, securities or obligations of the Surviving Business Entity or
any general or limited partnership, limited liability company, corporation,
trust or other entity (other than the Surviving Business Entity), or evidences
thereof, are to be delivered;
(e) With respect to a merger or consolidation, a statement of any
changes in the constituent documents or the adoption of new constituent
documents (the articles or certificate of incorporation, articles of trust,
declaration of trust, certificate or agreement of limited partnership or limited
liability company or other similar charter or governing document) of the
Surviving Business Entity to be effected by such merger or consolidation, or if
no such amendments or changes are desired, a statement that the constituent
documents of the Surviving Business shall be its constituent documents;
(f) The effective time of the merger or consolidation, which may be the
date of the filing of the certificate of merger pursuant to Section 10.4 or a
later date specified in or determinable in accordance with the Transaction
Agreement (provided, that if the effective time of the merger or consolidation
is to be later than the date of the filing of the certificate of merger or
consolidation, the effective time shall be fixed no later than the time of the
filing of the certificate of merger or consolidation and stated therein); and
(g) Such other provisions with respect to the proposed transaction as
are deemed necessary or appropriate by the Board of Directors.
SECTION 10.3 APPROVAL BY SHAREHOLDERS OF MERGER, CONSOLIDATION OR SALE.
(a) The Board of Directors, upon its approval of the Transaction
Agreement, shall direct that the Transaction Agreement be submitted to a vote of
Shareholders whether at a meeting or by written consent, in either case in
accordance with the requirements of Article IX. A copy or a
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summary of the Transaction Agreement shall be included in or enclosed with the
notice of a meeting or the written consent.
(b) The Transaction Agreement shall be adopted upon receiving the
affirmative vote or consent of at least a Majority Interest unless the
Transaction Agreement contains any provision which, if contained in an amendment
to this Agreement, the provisions of this Agreement or the Act would require the
vote or consent of a greater percentage of the Company Securities or of any
class thereof, in which case such greater percentage vote or consent shall be
required for adoption of the Transaction Agreement.
(c) After such adoption by vote or consent of the Shareholders and at
any time prior to the filing of the certificate of merger or consolidation
pursuant to Section 10.4, the proposed transaction may be abandoned by the Board
of Directors pursuant to provisions therefor, if any, set forth in the
Transaction Agreement.
(d) Notwithstanding any other provision of this Agreement, any
Transaction Agreement that would not be required to be submitted to a vote of
stockholders if the Company were a Delaware corporation will only require
adoption by the Shareholders if so provided pursuant to the provisions of such
Transaction Agreement or resolution of the Board of Directors.
SECTION 10.4 CERTIFICATE OF MERGER OR CONSOLIDATION. Upon the required
approval by the Board of Directors and the Shareholders of a Transaction
Agreement relating to a merger or consolidation, a certificate of merger or
consolidation shall be executed and filed with the Secretary of State of the
State of Delaware in conformity with the requirements of the Act.
SECTION 10.5 APPRAISAL RIGHTS. With respect to any Transaction
Agreement requiring Shareholder adoption, Shareholders shall have appraisal
rights in the same manner and to the same extent that such rights would be
available to the holder of stock of a Delaware corporation under the GCLD, and
those rights must be perfected by the same procedures that would be required of
a holder of common stock of a Delaware corporation.
SECTION 10.6 EFFECT OF MERGER OR CONSOLIDATION.
(a) The effect of any merger or consolidation shall be as set forth in
applicable Law.
(b) A merger or consolidation effected pursuant to this Article X shall
not be deemed to result in a transfer or assignment of assets or liabilities
from one entity to another having occurred.
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SECTION 10.7 LIMITATIONS ON TRANSACTIONS WITH INTERESTED SHAREHOLDERS.
(a) Notwithstanding any other provision of this Agreement, the Company
shall not engage in any Business Combination with any Interested Shareholder for
a period of 3 years following the time that such Shareholder became an
Interested Shareholder, unless:
(1) Prior to such time the Board of Directors of the Company
approved either the Business Combination or the transaction which
resulted in the Shareholder becoming an Interested Shareholder;
(2) Upon consummation of the transaction which resulted in the
Shareholder becoming an Interested Shareholder, the Interested
Shareholder owned at least 85% of the voting Shares of the Company
outstanding at the time the transaction commenced, excluding for
purposes of determining the number of Shares outstanding those Shares
owned (i) by Persons who are Directors and also Officers and (ii)
employee stock plans in which employee participants do not have the
right to determine confidentially whether Shares held subject to the
plan will be tendered in a tender or exchange offer; or
(3) At or subsequent to such time the Business Combination is
approved by the Board of Directors and authorized at an annual or
special meeting of Shareholders, and not by written consent, by the
affirmative vote of at least 66 2/3% of the outstanding voting Company
Securities not owned by the Interested Shareholder.
(b) The restrictions contained in this section shall not apply if:
(1) The Company does not have a class of voting stock that is:
(i) Listed on a national securities exchange; (ii) authorized for
quotation on the NASDAQ Stock Market; or (iii) held of record by more
than 2,000 Shareholders, unless any of the foregoing results from
action taken, directly or indirectly, by an Interested Shareholder or
from a transaction in which a Person becomes an Interested Shareholder;
(2) A Shareholder becomes an Interested Shareholder inadvertently
and (i) as soon as practicable divests itself of ownership of
sufficient Shares so that the Shareholder ceases to be an Interested
Shareholder; and (ii) would not, at any time within the 3-year period
immediately prior to a Business Combination between the Company and
such Shareholder, have been an Interested Shareholder but for the
inadvertent acquisition of ownership;
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(3) The Business Combination is proposed prior to the consummation
or abandonment of and subsequent to the earlier of the public
announcement or the notice required hereunder of a proposed transaction
which (i) constitutes one of the transactions described in the 2nd
sentence of this paragraph; (ii) is with or by a Person who either was
not an Interested Shareholder during the previous 3 years or who became
an Interested Shareholder with the approval of the Company's Board of
Directors or during the period described in paragraph (4) of this
subsection (b); and (iii) is approved or not opposed by a majority of
the members of the Board of Directors then in office (but not less than
1) who were directors prior to any Person becoming an Interested
Shareholder during the previous 3 years or were recommended for
election or elected to succeed such directors by a majority of such
directors. The proposed transactions referred to in the preceding
sentence are limited to (x) a merger or consolidation of the Company
(except for a merger in respect of which no vote of the Shareholders of
the Company is required); (y) a sale, lease, exchange, mortgage,
pledge, transfer or other disposition (in 1 transaction or a series of
transactions), whether as part of a dissolution or otherwise, of assets
of the Company or of any direct or indirect majority-owned subsidiary
of the Company (other than to any direct or indirect wholly-owned
subsidiary or to the Company) having an aggregate market value equal to
50% or more of either that aggregate market value of all of the assets
of the Company determined on a consolidated basis or the aggregate
market value of all the outstanding stock of the Company; or (z) a
proposed tender or exchange offer for 50% or more of the outstanding
voting stock of the Company. The Company shall give not less than 20
days' notice to all Interested Shareholders prior to the consummation
of any of the transactions described in clause (x) or (y) of the 2nd
sentence of this paragraph; or
(4) The Business Combination is with an Interested Shareholder who
became an Interested Shareholder at a time when the restrictions
contained in this section did not apply by reason of paragraph (1) of
this subsection (b). Specifically, the restrictions contained in this
section shall not apply to any Business Combination among the Company
or any of its subsidiaries, on one hand, and Enron or any of its
Affiliates on the other.
(c) As used in this Section 10.7 only, the term:
(1) "Affiliate" means a Person that directly, or indirectly through
1 or more intermediaries, Controls, or is Controlled by, or is under
common Control with, another Person.
(2) "Associate," when used to indicate a relationship with any
Person, means: (i) Any corporation, partnership, unincorporated
association or other entity of which such Person is a director, officer
or partner or is, directly or indirectly, the owner of 20% or more
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of any class of voting stock; (ii) any trust or other estate in which
such Person has at least a 20% beneficial interest or as to which such
Person serves as trustee or in a similar fiduciary capacity; and (iii)
any relative or spouse of such Person, or any relative of such spouse,
who has the same residence as such Person.
(3) "Business Combination," when used in reference to the Company
and any Interested Shareholder of the Company, means:
(i) Any merger or consolidation of the Company or any direct
or indirect majority-owned subsidiary of the Company with (A) the
Interested Shareholder, or (B) with any other corporation,
partnership, unincorporated association or other entity if the
merger or consolidation is caused by the Interested Shareholder and
as a result of such merger or consolidation subsection (a) of this
Section 10.7 is not applicable to the surviving entity;
(ii) Any sale, lease, exchange, mortgage, pledge, transfer or
other disposition (in 1 transaction or a series of transactions),
except proportionately as a Shareholder of the Company, to or with
the Interested Shareholder, whether as part of a dissolution or
otherwise, of assets of the Company or of any direct or indirect
majority-owned subsidiary of the Company which assets have an
aggregate market value equal to 10% or more of either the aggregate
market value of all the assets of the Company determined on a
consolidated basis or the aggregate market value of all the
outstanding Company Securities;
(iii) Any transaction which results in the issuance or
transfer by the Company or by any direct or indirect majority-owned
subsidiary of the Company of any Company Securities or stock of
such subsidiary to the Interested Shareholder, except: (A) Pursuant
to the exercise, exchange or conversion of securities exercisable
for, exchangeable for or convertible into Company Securities or
stock of such subsidiary which securities were outstanding prior to
the time that the Interested Shareholder became such; (B) pursuant
to a merger of the Company with or into a direct or indirect
wholly-owned subsidiary of the Company (to the extent that such
merger would be permitted of the Company pursuant to Section 251(g)
of the GCLD if the Company were a Delaware corporation); (C)
pursuant to a dividend or distribution paid or made, or the
exercise, exchange or conversion of securities exercisable for,
exchangeable for or convertible into Company Securities or stock of
such subsidiary, which security is distributed, pro rata, to all
holders of a class or series of Company Securities subsequent to
the time the Interested Shareholder became such; (D) pursuant to an
exchange offer by the Company to purchase any
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Company Securities made on the same terms to all holders of such
Company Securities; or (E) any issuance or transfer of Company
Securities by the Company; provided however, that in no case under
items (C)-(E) of this subparagraph shall there be an increase in
the Interested Shareholder's proportionate share of any class or
series of voting Company Securities.
(iv) Any transaction involving the Company or any direct or
indirect majority-owned subsidiary of the Company which has the
effect, directly or indirectly, of increasing the proportionate
share of any class or series of Company Securities, or securities
convertible into any class or series of Company Securities, or
stock of any such subsidiary, which is owned by the Interested
Shareholder, except as a result of immaterial changes due to
fractional share adjustments or as a result of any purchase or
redemption of any Company Securities or stock of such subsidiary
not caused, directly or indirectly, by the Interested Shareholder;
or
(v) Any receipt by the Interested Shareholder of the benefit,
directly or indirectly (except proportionately as a Shareholder of
the Company), of any loans, advances, guarantees, pledges or other
financial benefits (other than those expressly permitted in
subparagraphs (i)-(iv) of this paragraph) provided by or through
the Company or any direct or indirect majority-owned subsidiary.
(4) "Control," including the terms "Controlling," "Controlled
by" and "under common Control with," 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 the ownership of
voting stock, by contract or otherwise. A Person who is the owner of
20% or more of the outstanding voting stock of any corporation,
partnership, unincorporated association or other entity shall be
presumed to have Control of such entity, in the absence of proof by a
preponderance of the evidence to the contrary. Notwithstanding the
foregoing, a presumption of Control shall not apply where such Person
holds voting securities, in good faith and not for the purpose of
circumventing this section, as an agent, bank, broker, nominee,
custodian or trustee for 1 or more owners who do not individually or as
a group have Control of such entity.
(5) "Interested Shareholder" means any Person (other than the
Company and any direct or indirect majority-owned subsidiary of the
Company) that (i) is the owner of 15% or more of the outstanding voting
Company Securities, or (ii) is an Affiliate or Associate of the Company
and was the owner of 15% or more of the outstanding voting Company
Securities at any time within the 3-year period immediately prior to
the date on which it is sought to be determined whether such Person is
an Interested Shareholder; and the Affiliates
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and Associates of such Person; provided, however, that the term
"Interested Shareholder" shall not include any Person whose ownership
of Shares in excess of the 15% limitation set forth herein is the
result of action taken solely by the Company; provided that such Person
shall be an Interested Shareholder if thereafter such Person acquires
additional Shares of voting Company Securities, except as a result of
further action not caused, directly or indirectly, by such Person. For
the purpose of determining whether a Person is an Interested
Shareholder, the voting Company Securities deemed to be outstanding
shall include Shares deemed to be owned by the Person through
application of paragraph (8) of this subsection but shall not include
any other unissued Company Securities which may be issuable pursuant to
any agreement, arrangement or understanding, or upon exercise of
conversion rights, warrants or options, or otherwise.
(6) "Person" means any individual, corporation, limited liability
company, trust, partnership, unincorporated association or other
entity.
(7) "Stock" means, with respect to any corporation, capital stock
and, with respect to any other entity, any equity interest.
(8) "Voting stock" means, with respect to any corporation, stock of
any class or series entitled to vote generally in the election of
directors and, with respect to any entity that is not a corporation,
any equity interest entitled to vote generally in the election of the
governing body of such entity. With respect to the Company, "voting
stock" includes Common Shares and any Preferred Shares entitled to vote
generally in the election of Directors according to the Designation
applicable to such Preferred Shares.
(9) "Owner," including the terms "own" and "owned," when used with
respect to Company Securities or any stock, means a Person that
individually or with or through any of its Affiliate or Associates:
(i) Beneficially owns such Company Securities or stock,
directly or indirectly; or
(ii) Has (A) the right to acquire such Company Securities or
stock (whether such right is exercisable immediately or only after
the passage of time) pursuant to any agreement, arrangement or
understanding, or upon the exercise of conversion rights, exchange
rights, warrants or options, or otherwise; provided, however, that
a Person shall not be deemed the owner of Company Securities or
stock tendered pursuant to a tender or exchange offer made by such
Person or any of such Person's Affiliates or Associates until such
tendered Company Securities or
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stock is accepted for purchase or exchange; or (B) the right to vote
such Company Securities or stock pursuant to any agreement,
arrangement or understanding; provided, however, that a Person shall
not be deemed the owner of any Company Securities or stock because
of such Person's right to vote such Company Securities or stock if
the agreement, arrangement or understanding to vote such Company
Securities or stock arises solely from a revocable proxy or consent
given in response to a proxy or consent solicitation made to 10 or
more Persons; or
(iii) Has any agreement, arrangement or understanding for the
purpose of acquiring, holding, voting (except voting pursuant to a
revocable proxy or consent as described in item (B) of subparagraph
(ii) of this paragraph), or disposing of such Company Securities or
stock with any other Person that beneficially owns, or whose
Affiliates or Associates beneficially own, directly or indirectly,
such Company Securities or stock.
(d) Notwithstanding any other provision of this Agreement, no vote of
Shareholders required by this Section 10.7 shall require a greater vote of
Shareholders than that specified in this Section 10.7.
(e) The Company and the Shareholders acknowledge that the Court of
Chancery is vested with exclusive jurisdiction to hear and determine all matters
with respect to this Section 10.7.
ARTICLE XI: GENERAL PROVISIONS
SECTION 11.1 FISCAL YEAR. The fiscal year of the Company shall be the
calendar year unless otherwise designated by the Board of Directors.
SECTION 11.2 OFFSET. Whenever the Company is to pay any sum to any
Shareholder, any amounts that Shareholder owes the Company may be deducted from
that sum before payment.
SECTION 11.3 NOTICES. Except as expressly set forth to the contrary in
this Agreement, all notices, requests or consents provided for or permitted to
be given under this Agreement must be in writing and must be delivered to the
recipient in person, by courier or mail or by facsimile, telegram, telex,
cablegram or similar transmission; and a notice, request or consent given under
this Agreement is effective on receipt by the Person to receive it. Whenever any
notice is required to be given by Law or this Agreement, a written waiver
thereof, signed by the Person entitled to notice, whether before or after the
time stated therein, shall be deemed equivalent to the giving of such notice.
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SECTION 11.4 ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement of the Shareholders and their Affiliates relating to the Company and
supersedes all prior contracts or agreements with respect to the Company,
whether oral or written; provided that this Section shall not affect the
validity of any Shareholders' Agreement.
SECTION 11.5 EFFECT OF WAIVER OR CONSENT. A waiver or consent, express
or implied, to or of any breach or default by any Person in the performance by
that Person of its obligations with respect to the Company is not a consent to
or waiver of any other breach or default in the performance by that Person of
the same or any other obligations of that Person with respect to the Company.
Failure on the part of a Person to complain of any act of any Person or to
declare any Person in default with respect to the Company, irrespective of how
long that failure continues, does not constitute a waiver by that Person of its
rights with respect to that default until the applicable statute of limitations
period has run.
SECTION 11.6 BINDING EFFECT. This Agreement is binding on and shall
inure to the benefit of the Shareholders and their respective heirs, legal
representatives, successors and assigns.
SECTION 11.7 GOVERNING LAW; SEVERABILITY. THIS AGREEMENT IS GOVERNED BY
AND SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE,
EXCLUDING ANY CONFLICT OF LAWS RULE OR PRINCIPLE THAT MIGHT REFER THE GOVERNANCE
OR THE CONSTRUCTION OF THIS AGREEMENT TO THE LAWS OF ANOTHER JURISDICTION. If
any provision of this Agreement or the application thereof to any Person or
circumstance is held invalid or unenforceable to any extent, the remainder of
this Agreement and the application of that provision to other Persons or
circumstances is not affected thereby and that provision shall be enforced to
the greatest extent permitted by Law.
SECTION 11.8 FURTHER ASSURANCES. In connection with this Agreement and
the transactions contemplated hereby, each Shareholder shall execute and deliver
any additional documents and instruments and perform any additional acts that
may be necessary or appropriate to effectuate and perform the provisions of this
Agreement and those transactions.
SECTION 11.9 WAIVER OF CERTAIN RIGHTS. To the extent permitted by the
Act and other Law, each Shareholder irrevocably waives any right it may have to
maintain any action for dissolution of the Company or for partition of the
property of the Company.
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IN WITNESS WHEREOF, the Organizational Member has executed this
Agreement as of the date first set forth above.
ORGANIZATIONAL MEMBER:
MARINER HOLDINGS, INC.
By: /s/ XXXXXX X. XXXXXXXXX
--------------------------------
Xxxxxx X. Xxxxxxxxx, President
and Chief Executive Officer
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ANNEX A
PROVISIONS RELATING TO THE MANAGEMENT OF THE
BUSINESS AND AFFAIRS OF THE COMPANY
BEFORE AN INITIAL PUBLIC OFFERING
A. Following a merger of Mariner Holdings, Inc. with and into the Company,
the provisions of the Stockholders' Agreement by and among Mariner
Holdings, Inc. and its stockholders, as amended, shall apply to the
Company and its Shareholders mutatis mutandis.
B. The Company shall not take (or permit to be taken in its capacity as a
shareholder or partner or permit any subsidiary of the Company to take)
any of the actions set forth below unless approved by a majority of
Directors present at a meeting at which a quorum is in attendance:
(i) approving any capital or operating budget for any fiscal year;
(ii) making a commitment for any payment, whether as or in
connection with a capital expenditure, asset purchase, investment, rental,
settlement, equity contribution, loan, guaranty or otherwise, other than
specific commitments for projects included in any current capital or
operating budget approved by the Board of Directors, (a) in excess of
$1,500,000, but equal to or less than $3,000,000, per transaction or
contract (or series of related transactions or contracts) unless expressly
approved by a member of the Executive Committee of the Board of Directors
that is not a member of management of the Company, (b) in excess of
$3,000,000, but equal to or less than $5,000,000, per transaction or
contract (or series of related transactions or contracts) unless expressly
approved by the Executive Committee of the Board of Directors, and (c) in
excess of $5,000,000 per transaction or contract (or series of related
transactions or contracts); provided, that, in the event an Executive
Committee is not established, a director not a member of management of the
Company may provide the approvals contemplated above that may be granted
by the Executive Committee or a member thereof;
(iii) borrowing any amount (other than pursuant to a credit facility
or loan arrangement previously approved by the Board of Directors) (a) in
excess of $3,000,000, but equal to or less than $5,000,000, per
transaction or contract (or series of related transactions or contracts)
unless expressly approved by a member of the Executive Committee of the
Board of Directors that is not a member of management of the Company, (b)
in excess of $5,000,000, but equal to or less than $7,500,000, per
transaction or contract (or series of related transactions or contracts)
unless expressly approved by the Executive Committee of
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the Board of Directors, and (c) in excess of $7,500,000 per transaction or
contract (or series of related transactions or contracts); provided, that,
if an Executive Committee is not established, a director not a member of
management of the Company may provide the approvals contemplated above
that may be granted by the Executive Committee or a member thereof;
(iv) disposing of or otherwise transferring any capital asset (or
related capital assets) whose fair market value or book value is (a) in
excess of $1,500,000, but equal to or less than $3,000,000, unless
expressly approved by a member of the Executive Committee of the Board of
Directors that is not a member of management of the Company, (b) in excess
of $3,000,000, but equal to or less than $5,000,000, unless expressly
approved by the Executive Committee of the Board of Directors, and (c) in
excess of $5,000,000; provided, that, if an Executive Committee is not
established, a director not a member of management of the Company may
provide the approvals contemplated above that may be granted by the
Executive Committee or a member thereof;
(v) entering into any agreement, contract or transaction (or series
of contracts or transactions), not related solely to the marketing of
hydrocarbons in the ordinary course of business, pursuant to which the
Company or any subsidiary is to receive an amount that is (a) in excess of
$1,750,000, but equal to or less than $3,500,000, per transaction or
contract (or a series of related transactions or contracts) unless
expressly approved by a member of the Executive Committee of the Board of
Directors that is not a member of management of the Company, (b) in excess
of $3,500,000, but equal to or less than $5,000,000, per transaction or
contract (or series of related transactions or contracts) unless expressly
approved by the Executive Committee of the Board of Directors, and (c) in
excess of $5,000,000 per transaction or contract (or series of related
transactions or contracts); provided, that, in the event an Executive
Committee is not established, a director not a member of management of the
Company may provide the approvals contemplated above that may be granted
by the Executive Committee or a member thereof;
(vi) entering into any agreement, contract or transaction (or series
of contracts or transactions) related to the marketing of hydrocarbons in
the ordinary course of business pursuant to which the Company or any
subsidiary is to receive an amount that is (i) in excess of $1,750,000 but
equal to or less than $5,000,000, per transaction or contract (or a series
of related transactions or contracts) unless expressly approved by a
member of the Executive Committee of the Board of Directors that is not a
member of management of the Company, (ii) in excess of $5,000,000, but
equal to or less than $15,000,000, per transaction or contract (or series
of related transactions or contracts) unless expressly approved by the
Executive
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committee of the Board of Directors, and (iii) in excess of $15,000,000
per transaction or contract (or series of related transactions or
contracts); provided, that in the event an Executive Committee is not
established, a director not a member of management of the Company may
provide the approvals contemplated above that may be granted by the
Executive Committee or a member thereof;
(vii) entering into any agreement (a) pursuant to which the Company
or any subsidiary agrees not to enter into any negotiations, arrangements
or agreements relating to a consolidation or merger or, the sale or
disposition of its stock that would involve a change in control or a sale
of all or substantially all of its assets, (b) that binds or purports to
bind any Person affiliated with the Company other than the Company's
subsidiaries or (c) that restricts the Company or any of its subsidiaries,
directly or indirectly, from (1) acquiring or disposing of securities or
assets of any other Person, (2) voting or seeking proxies with respect to
securities of any other Person or (3) taking any other action the effect
of which involves the seeking of control or influence of the management of
any other Person;
(viii) the indemnification of any officer or any other Person except
as specifically provided in this Agreement;
(ix) executing or otherwise entering into any employment agreement,
appointing or removing (with or without cause) any officer or hiring or
firing (with or without cause) any officer or other similarly compensated
person;
(x) setting or amending the compensation level of any director,
officer, consultant or employee, which employee's aggregate annual
compensation from the Company or its affiliates would exceed $130,000;
(xi) making an equity investment in any non-affiliated Person;
(xii) filing any claim or lawsuit against any Person except where
the amount claimed is for less than $250,000 or (b) settling any claim or
lawsuit except where the fair market value of the settlement amount is
less than $250,000;
(xiii) adopting or amending this Agreement;
(xiv) any approval of any financial statements for any fiscal year;
and
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(xv) authorizing any merger (or other sale or disposition of stock
involving a change of control) or sale of all or substantially all of the
assets of the Company or any of its subsidiaries.
C. A quorum of the Board of Directors shall be deemed to be present at any
meeting if (a) a majority of the total number of Directors are present at
the meeting and (b) either (i) at least one Management Director
(comprising Xxxxxx X. Xxxxxxxxx, Xxxxxxx X. Xxxxx and Xxxxxxx X.
Xxxxxxxxx) is present at the meeting or (ii) all Management Directors
received at least three business days' written notice of the meeting; for
purposes of the foregoing, a notice given by electronic mail or other
electronic communication shall not constitute a "written notice". The vote
of a majority of the Directors present at a meeting at which a quorum is
present shall be the act of the Board of Directors. At every meeting of
any committee of the Board of Directors, a quorum shall be present if (a)
a majority of all the members of the committee are present and (b) if one
or more Management Directors is a member of the committee, either (i) at
least one Management Director who is a member of the committee is present
at the meeting or (ii) each Management Director who is a member of the
committee received at least three business days' written notice of the
meeting; for purposes of the foregoing, a notice given by electronic mail
or other electronic communication shall not constitute a "written notice".
The affirmative vote of a majority of the members present at a meeting at
which there is a quorum shall be necessary for the adoption by it of any
resolution.
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