THE MEMBERSHIP INTERESTS REPRESENTED HEREBY (OR BY CERTIFICATES IF ANY ARE
ISSUED) HAVE BEEN ACQUIRED FOR INVESTMENT AND WERE ISSUED WITHOUT REGISTRATION
UNDER THE SECURITIES ACT OF 1933, AS AMENDED ("SECURITIES ACT"), OR UNDER THE
SECURITIES LAWS OF ANY STATE. THESE INTERESTS MAY NOT BE SOLD, PLEDGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED AT ANY TIME EXCEPT IN ACCORDANCE WITH THE
RESTRICTIONS CONTAINED IN THIS AGREEMENT AND PURSUANT TO AN EFFECTIVE REGISTRA
TION STATEMENT UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAW
OR IN THE EVENT THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL IN FORM AND
SUBSTANCE SATISFACTORY TO IT THAT SUCH TRANSFER DOES NOT REQUIRE REGISTRATION
UNDER ANY APPLICABLE LAWS.
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
TEJAS-MAGNOLIA ENERGY, L.L.C.
A Delaware Limited Liability Company
This Amended and Restated Limited Liability Company Agreement of
TEJAS-MAGNOLIA ENERGY, L.L.C. (the "Agreement") dated as of December 18, 1995,
is (a) adopted by the Managers (as defined below), (b) executed and agreed to,
for good and valuable consideration, by the Members identified on the signature
pages hereof, and (c) amends and restates in its entirety that certain Limited
Liability Company Agreement of the Company dated as of September 29, 1995 (the
"Prior Agreement").
ARTICLE I
DEFINITIONS
The following terms, when used in this Agreement, shall have the respective
meanings assigned to them in this Article unless the context otherwise requires:
ACT means the Delaware Limited Liability Company Act, Chapter 18, Title 6
of the Delaware Code, and any successor statute, as amended from time to time.
ADDITIONAL CONTRIBUTION shall have the meaning set forth in Section 5.2.
ADJUSTED CAPITAL ACCOUNT means the Capital Account maintained for each
Member as of the end of each taxable year of the Company (a) increased by any
amounts which such Member is obligated to restore under the standards set by IRS
Regulations Section 1.704-1(b)(2)(ii)(c) (or is deemed obligated to restore
under IRS Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5)) and (b)
decreased by (i) the amount of all losses and deductions that, as of
1
the end of such taxable year, are reasonably expected to be allocated to such
Member in subsequent years under Sections 704(e)(2) and 706(d) of the Code and
IRS Regulations Section 1.751- 1(b)(2)(ii), and (ii) the amount of all
distributions that, as of the end of such taxable year, are reasonably expected
to be made to such Member in subsequent years in accordance with the terms of
this Agreement or otherwise to the extent they exceed offsetting increases to
such Member's Capital Account that are reasonably expected to occur during (or
prior to) the year in which such distributions are reasonably expected to be
made. The foregoing definition of Adjusted Capital Account is intended to comply
with the provisions of IRS Regulations Section 1.704-1(b)(2)(ii)(d) and shall be
interpreted consistently therewith.
ADJUSTED PROPERTY means any property the Carrying Value of which has been
adjusted pursuant to IRS Regulations Section 1.704-1(b)(2)(iv)(f). Once an
Adjusted Property is deemed distributed by, and recontributed to, the Company
for federal income tax purposes upon a termination thereof pursuant to Section
708 of the Code, such property shall thereafter constitute a Contributed
Property until the Carrying Value of such property is further adjusted pursuant
to IRS Regulations Section 1.704- 1(b)(2)(iv)(f).
AFFILIATE means (i) with regard to PNG and MCN, any entity that, directly
or indirectly, through one or more intermediaries, controls, or is controlled
by, or is under common control with Tejas Gas Corporation, and (ii) with regard
to any other Person, any Person or entity that, directly or indirectly, through
one or more intermediaries, controls, or is controlled by, or is under common
control with, such Person. The term "control" as used in the immediately
preceding sentence means, with respect to a corporation, the right to the
exercise, directly or indirectly, of ten percent (10%) or more of the voting
rights attributable to the shares of the controlled corporation and, with
respect to a person or entity other than a corporation, the possession, directly
or indirectly, of the power to direct or cause the direction of the management
or policies of the controlled person or entity.
AGREED VALUE of any Contributed Property means the fair market value of
such property or other consideration at the time of contribution as determined
by the Managers and approved by the Required Interests using such reasonable
method of valuation as they may adopt. The Managers shall, in their sole
discretion, use such method as they mutually deem reasonable and appropriate to
allocate the aggregate Agreed Value of Contributed Properties contributed to the
Company in a single or integrated transaction among such properties on a basis
proportional to their fair market values.
BANKRUPT MEMBER means any Member (a) that (i) makes a general assignment
for the benefit of creditors; (ii) files a voluntary bankruptcy petition; (iii)
becomes the subject of an order for relief or is declared insolvent in any
federal or state bankruptcy or insolvency proceedings; (iv) files a petition or
answer seeking for the Member a reorganization, arrangement, composition,
readjustment, liquidation, dissolution, or similar relief under any Law; (v)
files an answer or other pleading admitting or failing to contest the material
allegations of a petition filed against the Member 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
2
trustee, receiver, or liquidator of the Member's or all or any substantial part
of the Member's properties; or (b) against which a proceeding seeking
reorganization, arrangement, composition, readjustment, liquidation,
dissolution, or similar relief under any Law has been commenced and 90 days have
expired without dismissal thereof or with respect to which, without the Member's
consent or acquiescence, a trustee, receiver, or liquidator of the Member or of
all or any substantial part of the Member's properties has been appointed and 60
days have expired without the appointment having been vacated or stayed, or 60
days have expired after the date of expiration of a stay, if the appointment has
not previously been vacated.
BASE INTEREST RATE means a rate per annum equal to the lesser of (a) a
varying rate per annum then most recently announced by Citibank, N.A. at New
York, New York, from time to time as its base rate for dollar loans in the
United States, which base rate may not be the lowest rate charged by Citibank,
N.A. on loans to any of its customers, with adjustments in that varying rate to
be made on the same date as any change in that rate, and (b) the maximum rate
permitted by applicable Law.
BOOK-TAX DISPARITY means, with respect to any item of Contributed Property
or Adjusted Property, as of the date of any determination, the difference
between the Carrying Value of such Contributed Property or Adjusted Property and
the adjusted basis thereof for federal income tax purposes as of such date. A
Member's share of the Company's Book-Tax Disparities in all of its Contributed
Properties and Adjusted Properties will be reflected by the difference between
such Member's Capital Account balance as maintained pursuant to Section 5.8 of
this Agreement and the hypothetical balance of such Member's Capital Account
computed as if it had been maintained strictly in accordance with federal income
tax accounting principles.
BUSINESS DAY means any day other than a Saturday, Sunday or any other day
on which banking institutions in New York City, New York; Boston, Massachusetts;
or Houston, Texas, are required or authorized by Law to suspend operations.
CAPITAL ACCOUNT means, with respect to any Member, that Capital Account
determined and maintained in accordance with the rules of IRS Regulations
Section 1.704-1(b)(2)(iv).
CAPITAL CONTRIBUTION means any contribution by a Member to the capital of
the Company.
CARRYING VALUE means (a) with respect to a Contributed Property, the Agreed
Value of such property reduced (but not below zero) by all depreciation,
amortization and cost recovery deductions charged to the Members' Capital
Accounts and (b) with respect to any other Company property, the adjusted basis
of such property for federal income tax purposes, all as of the time of
determination. The Carrying Value of any property shall be adjusted from time to
time in accordance with IRS Regulations Section 1.704-1(b)(2)(iv)(f), and to
reflect changes, additions or other adjustments to the Carrying Value for
dispositions and acquisitions of
3
Company properties, as deemed appropriate by the Managers and approved by the
Required Interests.
CERTIFICATE means the Certificate of Formation of the Company filed with
the Secretary of State of Delaware on September 28, 1995.
CLASS A MEMBER means a Member who is a holder of Class A Units.
CLASS A UNITS means the Class A Units of Membership Interest described in
Section 2.6.
CLASS B GUARANTEED PAYMENT DISTRIBUTIONS means those distributions
described in Section 6.4 hereof and payable to Class B Members in accordance
with the Distribution Schedule (the "Distribution Schedule") agreed upon by all
the Class A Members and the Class B Members at the time of the issuance of the
Class B Units.
CLASS B LIQUIDATING DISTRIBUTIONS means those distributions described in
Section 6.6 hereof and payable to Class B Members.
CLASS B MANDATORY DISTRIBUTIONS means those distributions described in
Section 6.5 hereof and payable to Class B Members in accordance with the
mandatory distribution schedule (the "Mandatory Distribution Schedule") agreed
upon by all the Class A Members and the Class B Members at the time of the
issuance of the Class B Units.
CLASS B MEMBER means a Member who is a holder of Class B Units.
CLASS B OBLIGATIONS mean Class B Guaranteed Payment Distributions and Class
B Mandatory Distributions.
CLASS B UNITS means the Class B Units of Membership Interest described in
Section 2.6.
CODE means the Internal Revenue Code of 1986, and any successor statute, as
amended from time to time.
COMMITMENT means the total contribution to the capital of the Company for
which a Member is legally bound and obligated and which for the initial Members
shall be in the amount set forth for such Member on EXHIBIT A hereto.
COMPANY means Tejas-Magnolia Energy, L.L.C., the limited liability company
formed pursuant to the Certificate.
COMPANY MINIMUM GAIN means that amount determined in accordance with the
principles of IRS Regulations Section 1.704-2(d).
4
CONTRACT YEAR shall have the meaning ascribed to such term in the
Pontchartrain-▇▇▇▇▇▇▇▇▇▇ Contract or the Standby Contract, as applicable.
CONTRIBUTED PROPERTY means each property or other asset, but excluding
cash, contributed to the Company (or deemed contributed to the Company on
termination and reconstitution thereof pursuant to Section 708 of the Code).
Once the Carrying Value of a Contributed Property is adjusted pursuant to IRS
Regulations Section 1.704-1(b)(2)(iv)(f), such property shall no longer
constitute a Contributed Property for purposes of Section 6.2(b) hereof, but
shall be deemed an Adjusted Property for such purposes.
DGCL means the Delaware General Corporation Law and any successor statute,
as amended from time to time.
DEFAULT INTEREST RATE means a rate per annum equal to the lesser of (a) two
percent (2%) plus a varying rate per annum that is equal to the interest rate
publicly quoted by Citibank, N.A. in New York, New York, from time to time as
its base rate, with adjustments in that varying rate to be made on the same date
as any change in that rate, and (b) the maximum rate permitted by applicable
Law.
DISTRIBUTION PERIOD means the period from the date of any purchase of the
Class B Units through and including the Retirement Date.
ECONOMIC RISK OF LOSS shall have the meaning set forth in IRS Regulations
Section 1.752-2.
ERISA shall have the meaning ascribed to such term in the Participation
Agreement.
$55,000,000 INTERCOMPANY NOTE shall mean the $55,000,000 intercompany note
described in Section 5.1 hereof, as amended or replaced from time to time.
GUARANTOR'S CREDIT AGREEMENT shall mean the Secured Credit Agreement dated
as of January 12, 1995, among Tejas-Acadian Holding Company, as the Borrower,
the lenders from time to time parties thereto and Canadian Imperial Bank of
Commerce, as Administrative Agent, as the same may be amended from time to time.
INDEBTEDNESS shall have the meaning ascribed to such term in the
Participation Agreement.
IRS REGULATIONS means the Income Tax Regulations promulgated under the
Code, and any successor IRS Regulations as amended from time to time.
LAW shall have the meaning ascribed to such term in the Participation
Agreement.
5
LIEN shall have the meaning ascribed to such term in the Participation
Agreement.
LP&L means Louisiana Power & Light Company, a Louisiana corporation, and
any of its successors or assigns.
MANAGER means any Person designated as a manager of the Company as provided
in this Agreement, but does not include any Person who has ceased to be a
manager of the Company.
MCN means MCN Pelican Interstate Gas Corp., a Delaware corporation.
MEMBER means the Persons identified as members on the signature pages of
this Agreement and any other Persons hereafter admitted to the Company as a
member as provided in this Agreement, but does not include any Person who has
ceased to be a member in the Company.
MEMBER NONRECOURSE DEBT shall have the meaning set forth in IRS Regulations
Section 1.704-2(b)(4).
MEMBER NONRECOURSE DEDUCTIONS means any and all items of loss, deduction or
expenditure (described in Section 705(a)(2)(B) of the Code) that, in accordance
with the principles of IRS Regulations Section 1.704-2(i)(2), are attributable
to a Member Nonrecourse Debt.
MEMBERSHIP INTEREST means the entire ownership interests and rights of a
Member in the Company represented by the total of all Units of Membership
Interest held by such Member, including, without limitation, rights to
distributions (liquidating or otherwise), redemptions, exchange rights,
allocations and information, and to consent to or approve of actions.
MINIMUM GAIN ATTRIBUTABLE TO MEMBER NONRECOURSE DEBT means that amount
determined in accordance with the principles of IRS Regulations Section
1.704-2(i)(3).
MONTHLY DEFICIENT QUANTITY shall have the meaning ascribed to such term in
the Pontchartrain-▇▇▇▇▇▇▇▇▇▇ Contract or the Standby Contract, as applicable.
NET AGREED VALUE means (a) in the case of any Contributed Property, the
Agreed Value of such property reduced by any liabilities either assumed by the
Company upon such contribution or to which such property is subject when
contributed, and (b) in the case of any property distributed to a Member by the
Company, the Company's Carrying Value of such property at the time such property
is distributed, reduced by any indebtedness either assumed by such Member upon
such distribution or to which such property is subject at the time of
distribution as determined under Section 752 of the Code.
6
NONRECOURSE BUILT-IN GAIN means, with respect to any Contributed Properties
or Adjusted Properties that are subject to a mortgage or negative pledge
securing a Nonrecourse Liability, the amount of any taxable gain that would be
allocated to the Members pursuant to Sections 6.2(b)(i)(A), 6.2(b)(ii)(A) or
6.2(b)(iii) hereof if such properties were disposed of in a taxable transaction
in full satisfaction of such liabilities and for no other consideration.
NONRECOURSE DEDUCTIONS means any and all items of loss, deduction or
expenditures (described in Section 705(a)(2)(B) of the Code) that, in accordance
with the principles of IRS Regulations Section 1.704-2(b)(1), are attributable
to a Nonrecourse Liability.
NONRECOURSE LIABILITY shall have the meaning set forth in IRS Regulations
Section 1.704-2(b)(3).
OPERATIVE DOCUMENTS shall have the meaning ascribed to such term in the
Participation Agreement.
PARTICIPATION AGREEMENT means the Amended and Restated Participation
Agreement dated as of December 18, 1995, by and among the Seller, PNG, the Trust
and Citibank, N.A. as Agent, and the other financial institutions from time to
time parties thereto, as it may be amended from time to time.
PERCENTAGE INTEREST means, with respect to any Member, a fraction
(expressed as a percentage), the numerator of which is the aggregate number of
Class A or Class B Units of Membership Interest, as applicable, owned by such
Member and the denominator of which is the total number of all then issued and
outstanding Class A or Class B Units of Membership Interest, as applicable.
PERSON has the meaning given that term in Section 18-101 of the Act.
PNG means Pontchartrain Natural Gas System, a Texas general partnership
whose general partners are TXO-Acadian Gas Pipeline Corp. and MCN Acadian Gas
Pipeline Corp.
PONTCHARTRAIN-▇▇▇▇▇▇▇▇▇▇ CONTRACT means that certain Gas Sales Contract by
and between PNG as Seller and ▇▇▇▇▇▇▇▇▇▇ Gas Pipeline Company, L.P. as Buyer
dated as of December 31, 1991, as amended from time to time.
RECAPTURE INCOME means any gain recognized by the Company (computed without
regard to any adjustment required by Sections 734 or 743 of the Code) upon the
disposition of any property or asset of the Company, which gain is characterized
as ordinary income because it represents the recapture of deductions previously
taken with respect to such property or asset.
REDUCTION OPTION AMOUNT shall have the meaning ascribed to such term in the
▇▇▇▇▇▇▇▇▇▇-LP&L Contract.
7
REQUIRED CLASS A INTERESTS means at any time those Members who, in the
aggregate, own fifty percent (50%) or more of the issued and outstanding Class A
Units.
REQUIRED CLASS B INTERESTS means at any time those Members who, in the
aggregate, own all of the issued and outstanding Class B Units.
RETIREMENT DATE shall have the meaning ascribed to such term in the
Participation Agreement (excluding the A-Notes and the A-Certificates).
SELLER'S MARGIN shall have the meaning ascribed to such term in the
Pontchartrain-▇▇▇▇▇▇▇▇▇▇ Contract or the Standby Contract, as applicable.
STANDBY CONTRACT means that certain Standby Gas Sales Contract by and
between PNG as Seller and LP&L as Buyer dated as of December 31, 1991, as
amended from time to time.
TRANCHE A ASSIGNMENT means the Amended and Restated Assignment of Tranche A
Economic Interest dated as of December 18, 1995, but effective as of September
29, 1995, from PNG to Magnolia.
TRANCHE A ECONOMIC INTEREST shall have the meaning ascribed to such term in
the Tranche A Assignment.
TRANCHE B ASSIGNMENT means the Assignment of Tranche B Economic Interest
described in Section 5.1 hereof.
TRANCHE B ECONOMIC INTEREST shall have the meaning ascribed to such term in
the Tranche B Assignment.
TRUST means Magnolia Energy Venture Trust, a trust organized under the laws
of the State of Massachusetts.
$20,000,000 INTERCOMPANY NOTE shall mean the $20,000,000 intercompany note
described in Section 5.1 hereof, as amended or replaced from time to time.
UNIT OF MEMBERSHIP INTEREST means each share or portion (or the aggregate
thereof, as applicable) of Membership Interest in the Company issued to a Member
pursuant to this Agreement, whether now or hereafter, but does not include any
interest held by a Person who has ceased to be a Member in the Company. Units of
Membership Interest may be either Class A Units or Class B Units.
UNREALIZED GAIN attributable to any item of Company property means, as of
any date of determination, the excess, if any, of (a) the fair market value of
such property as of such date, over (b) the Carrying Value of such property as
of such date (prior to any adjustment to
8
be made pursuant to IRS Regulations Section 1.704-1(b)(2)(iv)(f)). In
determining such Unrealized Gain, the aggregate cash amount and fair market
value of all Company assets (including cash or cash equivalents) shall be
determined by the Managers and approved by the Required Interests using such
reasonable method of valuation as they may adopt. The Managers shall allocate
such aggregate value among the assets of the Company (in such manner as they
determine in their sole discretion to be reasonable) to arrive at a fair market
value for individual properties.
UNREALIZED LOSS attributable to any item of Company property means, as of
any date of determination, the excess, if any, of (a) the Carrying Value of such
property as of such date (prior to any adjustment to be made pursuant to IRS
Regulation Section 1.704-1(b)(2)(iv)(f)), over (b) the fair market value of such
property as of such date. In determining such Unrealized Loss, the aggregate
cash amount and fair market value of all Company assets (including cash or cash
equivalents) shall be determined by the Managers and approved by the Required
Interests using such reasonable method of valuation as they may adopt. The
Managers shall allocate such aggregate value among the assets of the Company (in
such manner as they determine in their sole discretion to be reasonable) to
arrive at a fair market value for individual properties.
ARTICLE II
ORGANIZATION
2.1 FORMATION.
(a) The Company has been organized as a Delaware limited liability company
by the filing of the Certificate under and pursuant to the Act and the execution
and delivery of this Agreement.
(b) The rights and liabilities of the Members shall be as provided in the
Act, except as may be expressly provided otherwise herein. Prior to transacting
business in any jurisdiction other than the State of Delaware, the Company shall
qualify to do business in such other jurisdiction if such a procedure is
provided by statute or regulation in such other jurisdiction.
(c) A Member's Membership Interest in the Company shall be personal
property for all purposes. All real and other property owned by the Company
shall be deemed owned by the Company as an entity and no Member, individually,
shall have any ownership of such property.
2.2 NAME. The name of the Company is "Tejas-Magnolia Energy, L.L.C." and
all Company business must be conducted in that name or such other names that
comply with applicable Law as the Managers may select from time to time.
9
2.3 OFFICES. The registered office of the Company in the State of Delaware
shall be the office of the initial registered agent named in the Certificate or
such other office (which need not be a place of business of the Company) as the
Managers may designate from time to time in the manner provided by ▇▇▇. The
registered agent of the Company in the State of Delaware shall be the initial
registered agent named in the Certificate or such other Person or Persons as the
Managers may designate from time to time in the manner provided by Law. The
principal office of the Company shall be at ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇, or such other place as the Managers shall designate from time to
time, and the Company shall maintain records there as required by Section 18-
305 of the Act. The Company may have such other offices as the Managers may
designate from time to time.
2.4 TERM. The Company commenced on the date of the filing of the
Certificate with the Secretary of State of the State of Delaware and shall
continue in existence until terminated in accordance with Article XIII of this
Agreement.
2.5 MERGERS AND EXCHANGES. The Company may be a party to (a) a merger, or
(b) an exchange or acquisition of the type described in Section 18-209 of the
Act, each subject to the requirements of Section 2.8(a) hereof.
2.6 AUTHORIZED NUMBER OF UNITS OF MEMBERSHIP INTEREST.
(a) The aggregate number of Units of Membership Interest that the
Company is authorized to issue is 20,000, in the following classes:
(i) the Company shall be authorized to issue 10,000 Class A Units of
Membership Interest ("Class A Units"); and
(ii) the Company shall be authorized to issue 10,000 Class B Units of
Membership Interest ("Class B Units").
2.7 CLASS A UNITS VOTING RIGHTS. Each holder of Class A Units admitted to
the Company as a Member shall have the right to cast one vote for each Class A
Unit held by such holder on all matters upon which Members of the Company are
entitled to vote.
2.8 CLASS B CONSENT RIGHTS.
(a) So long as any Class B Units are outstanding or there are any
unpaid Class B Obligations, the Company shall not, without the consent of
the Required Class B Interests, (i) amend, alter or repeal any of the
provisions of this Agreement so as to affect adversely the preferences,
special rights, privileges or powers of the holders of the Class B Units,
(ii) repurchase, redeem or otherwise acquire any Membership Units except
Class B Units, (iii) sell, otherwise transfer or materially impair the
Tranche B Economic Interest or sell or otherwise transfer any intercompany
promissory note evidencing the loan by the Company of the proceeds of the
Class B Units to any Affiliate
10
of the Company or amend any such note so as to reduce the interest rate per
annum or change the amortization, each except pursuant to Section 6.6
hereof, (iv) authorize, create or issue any additional units or any class
of units, (v) merge or consolidate the Company with or into any other
Person; (vi) liquidate, wind-up or dissolve itself (or suffer any
liquidation or dissolution); (vii) except as permitted by the Operative
Documents, convey, sell, lease, sublease, transfer or otherwise dispose of,
in one transaction or a series of transactions, any part of its business or
assets, or grant any Person an option to acquire any such business or
assets; or (viii) generally not pay its debts as such debts become due, or
admit in writing its inability to pay its debts generally, or make a
general assignment for the benefit of creditors, or take any action to file
any voluntary bankruptcy petition or consent to any involuntary bankruptcy
petition. Each Class B Member shall have only those rights, preferences,
privileges and immunities expressly provided for in this Agreement or as
otherwise provided by Law.
(b) Notwithstanding anything stated herein to the contrary, to the
maximum extent permitted by Law, except as expressly set forth in Section
2.8(a) hereof or otherwise herein, the Class B Members hereby waive and
release any and all rights under the Act, any other statute, Law,
regulation, rule or common Law to vote as a Member holding Class B Units on
any matter concerning or relating to the Company, including, without
limitation, any action, omission or transaction of the Company, or any
matter relating to the internal affairs of the company, or relating to the
continued existence or structure of the Company.
2.9 EXCHANGE RIGHTS. In the event (a) the Company fails to pay or satisfy
any of its Class B Obligations when due, or an Event of Default shall have
occurred and be continuing under Sections 12.1.1 or 12.1.2 of Guarantor's Credit
Agreement (or any similar provision of any replacement credit facility), or a
default or Event of Default shall have occurred and be continuing under any of
the Operative Documents which would reasonably be expected to have a Material
Adverse Effect (as defined in the Participation Agreement), or an Event of
Default shall have occurred and be continuing under Section 12.1.4 of
Guarantor's Credit Agreement (or any similar provision of any replacement credit
facility) with respect to Guarantor, PNG or the Company only, or a Default shall
have occurred under Sections 9.4.1, 9.4.2., or 9.4.3. of Guarantor's Credit
Agreement (or any financial covenants of any replacement credit facility) and
such Default shall have continued for ten (10) days, or an acceleration shall
occur of the loans under Guarantor's Credit Agreement or any replacement credit
facility, then the Required Class B Interests may, by written notice to the
Company, require that the Company exchange their Class B Units for an ownership
interest of the Tranche B Economic Interest. Any such exchange shall be
automatically effective on the third Business Day following the delivery of such
written notice unless prior to such time, a final Liquidating Distribution shall
have been paid, and without limiting the automatic exchange specified herein,
the Company agrees to execute and deliver to the Class B Members an assignment
to evidence such exchange. On delivery of such assignment to the Class B
Members, the Class B Members shall deliver the Class B Units to the Company.
11
2.10 CANCELLATION OF CLASS B UNITS. Class B Units that have been issued and
repurchased, exchanged or reacquired in any manner by the Company shall be
cancelled and shall not be reissued.
ARTICLE III
PURPOSES AND POWERS
3.1 PURPOSES OF THE COMPANY. (a) The purposes for which the Company is
organized are to obtain and sell the Tranche A Economic Interest and to obtain
and realize the Tranche B Economic Interest, and, except as provided in Section
2.8(a) and in Section 3.1(b), to engage in any lawful business activity that now
or hereafter may be necessary, incidental, proper, advisable, or convenient to
accomplish the foregoing purposes (including, without limitation, obtaining
financing therefor) and that is not forbidden by the Law of the jurisdiction in
which the Company engages in that business.
(b) It shall not be within the Company's purposes and powers to do any
of the following:
(i) to incur any Indebtedness or enter into any contracts other
than (A) under the Operative Documents, (B) guaranties and an
intercompany note by Magnolia as required by the Guarantor's Credit
Agreement or any replacement credit facility, and (C) Indebtedness
incurred in the ordinary course of business evidencing accruals and
payables (including intercompany payables in respect thereof and
taxes, assessments and other governmental charges) or the entering
into of contracts in the ordinary course of business including tax
sharing, insurance or similar agreements, in either case for which any
Member shall have agreed to be liable or for which sufficient Company
funds shall be available not attributable to the Tranche B Economic
Interest;
(ii) to have any employees or to create or suffer to exist any
ERISA liabilities;
(iii) to make any loans, advances or investments except for
Permitted Investments as defined in the Guarantor's Credit Agreement
and the $55,000,000 Intercompany Note (as defined in the Participation
Agreement) and the $20,000,000 Intercompany Note from the Guarantor to
the Company;
(iv) to acquire by purchase or otherwise any part of the business
or assets of, or stock or other evidence of beneficial ownership of,
any Person except for any repurchase of the Tranche A Economic
Interest; or
(v) create, incur, assume or suffer to exist any Lien upon any of
its assets, property or revenues whether now owned or hereafter
acquired except for
12
Liens for taxes, assessments or other governmental charges or levies
not at the time delinquent or thereafter payable without penalty or
being contested in good faith by appropriate proceedings and for which
adequate reserves in accordance with GAAP shall have been set aside on
its books and except for negative pledges.
3.2 POWERS OF THE COMPANY. The Company purposes set forth in Section 3.1
hereof may be accomplished by taking any action which is permitted under the Act
and which is customary, directly related or incidental thereto.
ARTICLE IV
MEMBERSHIP
4.1 INITIAL MEMBERS. The initial Members of the Company were the Persons
executing the Prior Agreement as Members, each of which was admitted to the
Company as a Member effective contemporaneously with the execution by such
Person of the Prior Agreement. On the Tranche B Financing Funding Date (as
defined in the Participation Agreement) and upon the payment of its initial
Capital Contribution of $55,000,000, the Class B Units will be issued to the
Trust.
4.2 ADDITIONAL MEMBERS. Additional Persons may be admitted to the Company
as Class A Members and Class A Units may be issued to those Persons and to
existing Members on such terms and conditions as may be determined at the time
of admission, upon approval by the Required Class A Interests; provided,
however, PNG or an Affiliate of PNG shall own fifty percent (50%) or more of
Class A Units. The terms of admission or issuance must specify the Percentage
Interests and the Commitments applicable thereto. Any admission will only be
effective after the new Member has executed and delivered to the Managers a
document including the new Member's notice address and an agreement to be bound
by this Agreement. There shall be no additional classes of Members created.
4.3 REPRESENTATIONS AND WARRANTIES. Each Member hereby represents and
warrants to the Company and each other Member that (a) if that Member is a
corporation, it is duly organized, validly existing, and in good standing under
the Law of the state of its incorporation and is duly qualified and in good
standing in such other states and jurisdictions as may be required by its
business, except for any states wherein the failure to be so qualified would not
materially adversely affect the financial condition of such corporation; (b) if
that Member is a limited liability company, it is duly organized, validly
existing, and (if applicable) in good standing under the Law of the state of its
organization and is duly qualified and (if applicable) in good standing as a
foreign limited liability company in the jurisdiction of its principal place of
business (if not organized therein); (c) if that Member is a partnership, trust,
or other entity, it is duly formed, validly existing, and (if applicable) in
good standing under the Law of the state of its formation, and if required by
Law is duly qualified to do business and (if applicable) in good standing in the
jurisdiction of its principal place of business (if not formed therein), and
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the representations and warranties in clause (a), (b) or (c), as applicable, are
true and correct with respect to each partner (other than limited partners),
trustee, or other member thereof that is a corporation, limited liability
company, partnership, trust or other business entity or association; (d) it has
full corporate, limited liability company, partnership, trust,or other
applicable power and authority to execute and agree to this Agreement and to
perform its obligations hereunder and all necessary actions by the board of
directors, shareholders, managers, members, partners, trustees, beneficiaries,
or other Persons necessary for the due authorization, execution, delivery, and
performance of this Agreement by that Member have been duly taken; (e) it has
duly executed and delivered this Agreement; and (f) its authorization,
execution, delivery, and performance of this Agreement do not conflict with any
other agreement or arrangement to which it is a party or by which it is bound or
any judgment, decree or order by which it is bound.
4.4 INTERESTS IN A MEMBER. A Member that is not a natural person may not
cause or permit an interest, direct or indirect, in itself to be transferred or
assigned, such that after the transfer or assignment the Company would be
considered to have terminated within the meaning of Section 708 of the Code.
4.5 LIABILITY TO THIRD PARTIES. Except as may be expressly provided in a
separate, written guaranty or other agreement executed by a Member or Manager,
no Member or Manager shall be liable for the debts, obligations or liabilities
of the Company, including under a judgment, decree or order of a court or
arbitrator.
4.6 WITHDRAWAL. Except as otherwise provided herein, no Member shall have
the right to resign or withdraw from the Company as a Member.
4.7 LACK OF AUTHORITY. Except as otherwise provided herein, no Member
(other than a Member acting as a Manager or an officer) has the authority or
power to act for or on behalf of the Company, to do any act that would be
binding on the Company, or to incur any expenditures on behalf of the Company.
4.8 NO STATE LAW PARTNERSHIP. The Members intend that the Company not be a
partnership (including, without limitation, a limited partnership) or joint
venture, and intend that no Member or Manager be a partner or joint venturer of
any other Member or Manager for any purposes other than federal and state tax
purposes, and this Agreement may not be construed to suggest otherwise.
ARTICLE V
CONTRIBUTIONS
5.1 INITIAL CONTRIBUTIONS. Each Class A Member has contributed to the
Company the amount in cash and/or property of its initial Capital Contribution
reflected on EXHIBIT A. Each Class B Member shall contribute to the Company the
amount in cash of its initial Capital
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Contribution reflected on EXHIBIT A on the Tranche B Financing Funding Date. In
exchange for their respective initial Capital Contributions reflected on EXHIBIT
A, the Members shall own, hold and be entitled to the Units of Membership
Interest reflected on EXHIBIT A, such Membership Interest to be subject to all
of the terms, provisions and conditions of this Agreement. The Commitment shall
constitute the full obligation of the Members to furnish funds or property to
the Company and, except as otherwise provided for by the Act or pursuant to
Section 5.2, no additional funds or other property shall be required of any
Member. The Capital Contributions may be used by the Managers for any Company
purpose; provided, however, the initial Capital Contribution of $55,000,000 of
the Class B Members shall be loaned by the Company to an Affiliate of PNG
pursuant to an intercompany promissory note as approved by the Managers and the
Trust (the "Intercompany Note"). PNG shall contribute to the Company the Tranche
B Economic Interest pursuant to the Assignment of Tranche B Economic Interest in
the form of Exhibit B hereto on the Tranche B Financing Funding Date (the
"Tranche B Assignment").
5.2 ADDITIONAL CONTRIBUTIONS. No Class A Member, except as provided below,
and no Class B Member shall be obligated to make any additional contribution of
cash or property to the capital of the Company. In the event the Company is (a)
characterized as an association taxable as a corporation for federal or state
income tax purposes, and the Company incurs an income tax liability to any
taxing authority (including any type of tax measured by income, such as a
franchise tax computed with reference to the income of the taxpayer), or (b)
required to make any payments or reimbursements provided in Article VII or
Article X, the Class A Members agree to make mandatory additional capital
contributions (the "Mandatory Additional Contributions") equal to the amount of
such income taxes and such payments and reimbursements to the extent the Company
has insufficient funds to pay such items (excluding any funds attributable to
the Tranche B Economic Interest or the Intercompany Note). In such event, any
Manager shall give written notice to the Class A Members stating (i) the
aggregate amount of the Mandatory Additional Contribution required, (ii) the
portion of such Mandatory Additional Contribution that is required by each Class
A Member, and (iii) the date on which the Mandatory Additional Contribution must
be made. Such contribution shall be due five days prior to the time such tax is
due, including estimated taxes, or such payment or reimbursement is required, as
the case may be. The Mandatory Additional Contributions shall be a joint and
several liability of all the Class A Members.
All other additional capital contributions of the Class A Members shall be
made after the expenditure or commitment of all funds of the Company and upon
the election of the Required Class A Interests ("Additional Contribution"). Such
election to make additional capital contributions shall not create any rights in
favor of third parties. Upon the election of the Required Class A Interests,
each Class A Member agrees to contribute from time to time, its pro rata share,
determined in accordance with its respective Class A Units of Membership, of the
Additional Contribution as necessary to enable the Company to cause the business
of the Company to be properly operated and maintained and to discharge its
costs, expenses, obligations and liabilities. In such event, any Manager shall
give written notice to the Class A Members stating (i) the aggregate amount of
the Additional Contribution required, (ii) the purpose or purposes for which
such Additional Contribution is proposed to be used, (iii) the portion of such
Additional Contribution that is required to be contributed by each Class A
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Member, and (iv) the date on which the Additional Contribution must be made,
which shall be not less than thirty (30) days from the giving of such notice,
unless waived by the Class A Members.
5.3 FAILURE TO PAY CERTAIN AMOUNTS. In the event a Class A Member fails to
timely pay any Additional Contribution, such Class A Member shall be deemed a
defaulting Class A Member and any Manager of the Company shall give written
notice to the non-defaulting Class A Members who shall then have the option, at
their discretion (by decision of a majority of the Units of Membership Interest
held by the non-defaulting Class A Members), to exercise any one or more of the
following rights or remedies:
(a) Take such action (including, without limitation, the filing of a
lawsuit) as the non-defaulting Class A Members deem appropriate to obtain
payment by the defaulting Member of that portion of the Additional
Contribution which is in default, together with interest thereon at the
Base Interest Rate from the date that such contribution or loan was due, at
the cost and expense of the defaulting Class A Member;
(b) Permit the non-defaulting Class A Members to advance pro rata (or
in such other percentages as they may agree) that portion of the Additional
Contribution that is in default, with the following result:
(i) the sums thus advanced shall be deemed to be loans from the
non-defaulting Class A Members ("Lending Members") making such
payments to the defaulting Class A Member and a contribution of such
sum to the Company by the defaulting Class A Member pursuant to this
Agreement;
(ii) the principal balance of such loans and all accrued unpaid
interest thereon shall be due and payable in whole within ten (10)
days after written demand therefor has been given to the defaulting
Class A Member by the Lending Members;
(iii) the loans shall bear interest at the Default Interest Rate
from the date that the loan was made until the date that such loan,
together with all interest accrued thereon, is repaid to the Lending
Members;
(iv) all distributions from the Company that would otherwise be
made to the defaulting Class A Member (whether before or after
dissolution of the Company) shall, instead, be paid to the Lending
Members until the loans and all interest accrued thereon have been
repaid in full to the Lending Members (with all such payments being
applied first to interest earned and unpaid and then to principal);
and
(v) the repayment of the loans and all interest accrued thereon
shall be secured by a security interest in the defaulting Class A
Member's Membership Interest;
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(c) Permit one or more of the non-defaulting Class A Members to make
an additional Capital Contribution to the Company of that portion of the
Additional Contribution of the defaulting Member that is in default,
whereupon the Company shall issue (in the same class or series as owned by
such non-defaulting Member) additional Class A Units to the non-defaulting
Class A Members making such additional Capital Contributions such that the
Percentage Interests of each of the Class A Members shall be adjusted in
proportion to the aggregate Capital Accounts of all Class A Members after
such additional Capital Contributions have been made; provided, however,
that no fractional Class A Units shall be issued, and, therefore, in
connection with the above, all calculations of additional Class A Units to
be issued shall be rounded up to the nearest whole number, the aggregate of
all Class A Units not to exceed 100%; and provided further that, in the
event that compliance with this Section 5.3(c) requires the Company to
issue Class A Units for any particular class or series in excess of that
which the Company is expressly authorized to issue under the terms hereof,
the number of Units of Membership Interest for such class or series shall
automatically be amended and increased, without further action by or notice
to any party, to the number necessary to allow the Percentage Interests of
the non-defaulting Members making such additional Capital Contributions to
be increased in accordance with this Section 5.3(c);
(d) Exercise the rights of a secured party under the Uniform
Commercial Code as in effect in the State of Texas ("UCC"); or
(e) Exercise any other rights and remedies available at Law or in
equity.
5.4 LOANS BY A MEMBER. If any additional funds are required for additional
working capital to operate the Company and without regard to the ability of the
Managers to call for additional contributions, then, in lieu of borrowing funds
from unaffiliated lenders, one or more Members may make one or more loans to the
Company in such amounts as may reasonably be required and as are necessary to
operate the Company as shall be determined by the Managers with the approval of
the Required Class A Interests; provided, however, any such loans by a Member
shall be repaid only after all Class B Units shall have been fully liquidated or
otherwise are no longer outstanding and the loan documents evidencing any such
loan shall contain subordination provisions satisfactory to the Managers.
Nothing herein shall obligate any Member to make any such loans to the Company.
5.5 RETURN OF CAPITAL. No Member shall be entitled to have any Capital
Contribution returned to it or to receive any distributions from the Company
upon withdrawal or otherwise, except in accordance with the express provisions
of this Agreement. No interest shall be paid by the Company on any Capital
Contributions by the Members. No unrepaid Capital Contribution shall be deemed
or considered to be a liability of the Company, any Manager or any Member. No
Member shall be required to contribute any cash or property to the Company to
enable the Company to return any Member's Capital Contribution.
5.6 CAPITAL ACCOUNTS.
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(a) A Capital Account shall be established and maintained for each Member
in accordance with the rules of IRS Regulations Section 1.704-a(b)(a)(iv). Each
Member's Capital Account (i) shall be increased by (A) the amount of money
contributed by that Member to the Company, (B) the Net Agreed Value of property
contributed by that Member to the Company, and (C) allocations to that Member of
Company income and gain (or items thereof) computed in accordance with Section
5.6(b), including income and gain exempt from tax, and (ii) shall be decreased
by (A) the amount of money distributed to that Member by the Company, (B) the
Net Agreed Value of property distributed to that Member by the Company, and (C)
allocations of Company loss and deduction (or items thereof), computed in
accordance with Section 5.6(b). A Member that has more than one Unit of
Membership Interest shall have a single Capital Account that reflects all its
Membership Interests, regardless of the class of Units of Membership Interest
owned by that Member and regardless of the time or manner in which those
Membership Interests were acquired.
(b) For purposes of computing the amount of any item of income, gain, loss
or deduction to be reflected in the Members' Capital Accounts, the
determination, recognition and classification of any such item shall be the same
as its determination, recognition and classification for federal income tax
purposes (including, without limitation, any method of depreciation, cost
recovery or amortization used for that purpose), provided, that:
(i) All fees and other expenses incurred by the Company to
promote the sale of (or to sell) Membership Interests, if any, that
can neither be deducted nor amortized under Section 709 of the Code,
shall, for purposes of Capital Account maintenance, be treated as an
item of deduction at the time such fees and other expenses are
incurred and shall be allocated among the Members pursuant to the
provisions of Article VI.
(ii) Except as otherwise provided in IRS Regulation Section
1.704-1(b)(2)(iv)(m), the computation of all items of income, gain,
loss and deduction shall be made without regard to any election under
Section 754 of the Code which may be made by the Company and, as to
those items described in Section 705(a)(1)(B) or 705(a)(2)(B) of the
Code, without regard to the fact that such items are not includable in
gross income or are neither currently deductible nor capitalized for
federal income tax purposes.
(iii) Any income, gain or loss attributable to the taxable
disposition of any Company property shall be determined as if the
adjusted basis of such property as of such date of disposition were
equal in amount to the Company's Carrying Value with respect to such
property as of such date.
(iv) In accordance with the requirements of Section 704(b) of the
Code, any deductions for depreciation, cost recovery or amortization
attributable to any Contributed Property shall be determined as if the
adjusted basis of such property
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on the date it was acquired by the Company were equal to the Agreed
Value of such property. Upon an adjustment pursuant to IRS Regulations
Section 1.704-1(b)(a)(iv)(f) to the Carrying Value of any Company
property subject to depreciation, cost recovery or amortization, any
further deductions for such depreciation, cost recovery or
amortization attributable to such property shall be determined (A) as
if the adjusted basis of such property were equal to the Carrying
Value of such property immediately following such adjustment and (B)
using a rate of depreciation cost recovery or amortization derived
from the same method and useful life (or, if applicable, the remaining
useful life) as is applied for federal income tax purposes; provided
however, that if the asset has a zero adjusted basis for federal
income tax purposes, depreciation, cost recovery or amortization
deductions shall be determined using any reasonable method that the
Managers may adopt.
(c) A transferee of a Membership Interest shall succeed to a pro rata
portion of the Capital Account of the transferor relating to the Membership
Interest so transferred; provided, however, that if the transfer causes a
termination of the Company under Section 708(b)(1)(B) of the Code, the
Company's properties shall be deemed to have been distributed in
liquidation of the Company to the Members (including any transferee of a
Membership Interest that is a party to the transfer causing such
termination) pursuant to Section 13.3 and recontributed by such Members in
reconstitution of the Company. Any such deemed distribution shall be
treated as an actual distribution for purposes of this Section 5.6. In such
event the Carrying Values of the Company properties shall be adjusted
immediately prior to such deemed distribution pursuant to IRS Regulations
Section 1.704-1(b)(a)(iv)(f) and such Carrying Values shall then constitute
the Agreed Values of such properties upon such deemed contribution to the
reconstituted Company. The Capital Accounts of such reconstituted Company
shall be maintained in accordance with the principles of this Section 5.6.
5.7 NEGATIVE CAPITAL ACCOUNT. No Member with a negative balance in its
Capital Account shall have any obligation to provide funds to the Company or the
other Members to restore the negative balance, and any such deficit in the
Capital Account of any Member shall not constitute an obligation of such Member
to the Company or the other Members.
ARTICLE VI
ALLOCATIONS AND DISTRIBUTIONS
6.1 ALLOCATIONS. Except as otherwise provided herein, all items of income,
gain, loss, deduction, and credit of the Company shall be allocated among the
holders of Class A Units in accordance with their Percentage Interests.
6.2 SPECIAL ALLOCATIONS. The following special allocations shall be made in
the following order:
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(a) COMPANY MINIMUM GAIN CHARGEBACK. Notwithstanding the other
provisions of this Article VI, except as provided in Treasury Regulation
Section 1.704-2(f)(2), if there is a net decrease in Company Minimum Gain
during any Company taxable period, each Member shall be allocated items of
Company income and gain for such period (and, if necessary subsequent
periods) in the manner and in the amounts provided in Treasury Regulation
Sections 1.704-2(i)(4), 1.704-2(j)(2)(ii), 1.704- 2(g) and in the manner
provided in Treasury Regulation Section 1.704-2(f)(6) or any successor
provisions. For purposes of this Article VI, each Member's Adjusted Capital
Account balance shall be determined, and the allocation of income or gain
required hereunder shall be effected, prior to the application of any other
allocations pursuant to this Article VI with respect to such taxable period
(other than an allocation pursuant to Sections 6.2(e) or 6.2(f).
(b) CHARGEBACK OF MINIMUM GAIN ATTRIBUTABLE TO MEMBER NONRECOURSE
DEBT. Notwithstanding the other provisions of this Section 6.2, except as
provided in Treasury Regulation Section 1.704-2(i)(4), if there is a net
decrease in Minimum Gain Attributable to Member Nonrecourse Debt determined
in accordance with Treasury Regulation Section 1.704-2(i)(5) at the
beginning of such taxable period during any Company taxable period, any
Member with a share of Minimum Gain Attributable to Member Nonrecourse Debt
at the beginning of such taxable period shall be allocated items of Company
income and gain for such period (and, if necessary, subsequent periods) in
the manner and in the amounts provided in Treasury Regulation Sections
1.704-2(i)(4) and 1.704-2(j)(2)(ii), or any successor provisions. For
purposes of this Section 6.2, each Member's Adjusted Capital Account
balance shall be determined, and the allocation of income or gain required
hereunder shall be effected, prior to the application of any other
allocations pursuant to this Section 6.2 with respect to such taxable
period (other than an allocation pursuant to Sections 6.2(e) or 6.2(f).
(c) QUALIFIED INCOME OFFSET. In the event any Member unexpectedly
receives adjustments, allocations or distributions described in Treasury
Regulation Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), or
1.704-1(b)(2)(ii)(d)(6), items of Company income and gain shall be
specifically allocated to such Member in an amount and manner sufficient to
eliminate, to the extent required by the Treasury regulations promulgated
under Section 704(b) of the Code, the deficit balance, if any, in its
Adjusted Capital Account created by such adjustments, allocations or
distributions as quickly as possible unless such deficit balance is
otherwise eliminated pursuant to Section 6.2(a) or 6.2(b) hereof.
(d) GROSS INCOME ALLOCATIONS. In the event any Member has a deficit
balance in its Adjusted Capital Account at the end of any Company taxable
period, such Member shall be specially allocated items of Company gross
income and gain in the amount of such excess as quickly as possible;
PROVIDED, HOWEVER THAT an allocation pursuant to this Section 6.2(d) shall
be made only if and to the extent that such Member would have a deficit
balance in its Adjusted Capital Account after all other allocations
provided in this Section 6.2 have been tentatively made as if this Section
6.2(d) was not in effect.
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(e) NONRECOURSE DEDUCTIONS. Nonrecourse Deductions for any taxable
period shall be allocated in accordance with Section 6.1. If all of the
Members unanimously determine in their good faith discretion that the
Company's Nonrecourse Deductions must be allocated in a different ratio to
satisfy the safe harbor requirements of the Treasury regulations
promulgated under Section 704(b) of the Code, then the Members by vote as
provided hereunder are authorized to revise the prescribed ratio to the
numerically closest ratio which satisfies such requirements.
(f) MEMBER NONRECOURSE DEDUCTIONS. Member Nonrecourse Deductions for
any taxable period shall be allocated 100% to the Member that bears the
Economic Risk of Loss for such Company Nonrecourse Debt to which such
Member Nonrecourse Deductions are attributable in accordance with IRS
Regulation Section 1.704-2(i). If more than one Member bears the Economic
Risk of Loss with respect to a Member Nonrecourse Debt, such Member
Nonrecourse Deductions attributable thereto shall be allocated between or
among such Members in accordance with the ratios in which they share such
Economic Risk of Loss.
(g) SECTION 754 ADJUSTMENTS. To the extent an adjustment to the
adjusted tax basis of any Company asset pursuant to Code Section 734 (b) or
Code Section 743 (b) is required, pursuant to Regulations Section 1.704-1
(b)(2)(iv)(m)(2) or (4), to be taken into account in determining Capital
Accounts, the amount of such adjustment to the Capital Accounts shall be
treated as an item of gain (if the adjustment increases the basis of the
asset) or loss (if the adjustment decreases such basis) and such gain or
loss shall be specially allocated to the Members in accordance with their
Member Interests in the Company in the event IRS Regulation Section
1.704-1(b)(2)(iv)(m)(2) applies, or to the Members to whom such
distribution was made in the event IRS Regulation Section
1.704-1(b)(2)(iv)(m)(4) applies.
(h) CURATIVE ALLOCATIONS. The allocations set forth in Section 6.2
hereof (the "Special Allocations") are intended to comply with certain
requirements of the Code and the IRS Regulations promulgated thereunder. It
is the intent of the Members that, to the extent possible, all Special
Allocations will be offset either with other Special Allocations or with
special allocations of other items of Company income, gain, loss or
deduction pursuant to this Section 6.2(h). Therefore, notwithstanding any
other provision of this Section 6.2 (other than the Special Allocations),
the Members shall make such offsetting special allocations in whatever
manner they deem appropriate so that, after such offsetting allocations are
made, each Member's capital account balance is, to the extent possible,
equal to the capital account balance such Member would have had if the
Special Allocations provisions of this Agreement did not apply and all
Company items were allocated pursuant to Section 6.1 above.
6.3 ALLOCATIONS FOR TAX PURPOSES.
(a) Except as otherwise provided herein, for federal income tax
purposes, each item of income, gain, loss and deduction which is recognized
by the Company, for
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federal income tax purposes, shall be allocated among the holders of Class
A Units in the same manner as its correlative item of "book" income, gain,
loss or deduction is allocated pursuant to Sections 6.1 and 6.2 hereof.
(b) In an attempt to eliminate Book-Tax Disparities attributable to a
Contributed Property or Adjusted Property, each item of income, gain, loss,
depreciation, depletion and cost recovery deduction which is recognized by
the Company, for federal income tax purposes, shall be allocated for
federal income tax purposes among the Members as follows:
(i) (A) In the case of a Contributed Property, such items
attributable thereto shall be allocated among the Members in the
manner provided under Section 704(c) of the Code that takes into
account the variation between the Agreed Value of such property and
its adjusted basis at the time of contribution; and (B) except as
otherwise provided in Section 6.3(b)(iii) hereof, any item of Residual
Gain or Residual Loss attributable to a Contributed Property shall be
allocated among the Members in the same manner as its correlative item
of "book" gain or loss is allocated pursuant to Article VI hereof.
(ii) (A) In the case of an Adjusted Property, such items shall
(1) first, be allocated among the Members in a manner consistent with
the principles of Section 704(c) of the Code to take into account the
Unrealized Gain or Unrealized Loss attributable to such property and
the allocations thereof pursuant to IRS Regulations Section
1.704-1(b)(2)(iv)(f), and (2) second, in the event such property was
originally a Contributed Property, be allocated among the Members in a
manner consistent with Section 6.3(b)(i)(A) hereof; and (B) except as
otherwise provided in Section 6.3(b)(iii) hereof, any item of Residual
Gain or Residual Loss attributable to an Adjusted Property shall be
allocated among the Members in the same manner as its correlative item
of "book" gain or loss is allocated pursuant to Article VI hereof.
Any items of income, gain, loss or deduction otherwise allocable
under Section 6.3(b)(i)(B) or 6.3(b)(ii)(B) hereof shall be subject to
allocation by the Managers in a manner designed to eliminate, to the
maximum extent possible, Book-Tax Disparities in a Contributed
Property or Adjusted Property otherwise resulting from the application
of the "ceiling" limitation (under Section 704(c) of the Code or
Section 704(c) principles) to the allocations provided under Section
6.3(b)(i)(A) or 6.3(b)(ii)(A) hereof.
(c) Any gain allocated to the Members upon the sale or other taxable
disposition of any Company asset shall, to the extent possible, after
taking into account other required allocations of gain pursuant to this
Section 6.3 be characterized as Recapture Income in the same proportions
and to the same extent as such Members have been allocated any deductions
directly or indirectly giving rise to the treatment of such gains as
Recapture Income.
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(d) All items of income, gain, loss, deduction and credit recognized
by the Company for federal income tax purposes and allocated to the Members
in accordance with the provisions hereof shall be determined without regard
to any election under Section 754 of the Code which may be made by the
Company; provided, however, that such allocations, once made, shall be
adjusted as necessary or appropriate to take into account those adjustments
permitted or required by Sections 734 and 743 of the Code.
(e) Each item of income, gain, expense, loss, deduction or credit
allocable to any Membership Interest which may have been transferred during
any year shall, if permitted by Law, be allocated during such year, in
proportion to the number of calendar days for which each such holder was
recognized as the owner of the Membership Interest during such year,
without regard to the results of Company operations during the period in
which such holders were recognized as the owner thereof and without regard
to the date, amount or recipient of any distributions which may have been
made with respect to such Membership Interest.
6.4 CLASS B GUARANTEED PAYMENT DISTRIBUTIONS.
(a) On the dates set forth on the Distribution Schedule attached
hereto and made a part hereof, through and including the Retirement Date,
each holder of Class B Units shall be entitled to receive, cumulative
quarterly cash distributions, in accordance with the Class B Guaranteed
Payment Distribution column on such Distribution Schedule (the "Class B
Guaranteed Payment Distributions"). To the extent any Class B Guaranteed
Payment Distribution is not paid to the Class B Members when due, such
unpaid Class B Guaranteed Payment Distribution, or the portion thereof,
shall bear interest from the date of such scheduled payment to the date of
payment thereof at the Default Rate (as defined in the Participation
Agreement). Any payment of Class B Guaranteed Payment Distributions shall
be to the record holders on the date of payment. Amounts paid pursuant to
this Section 6.4 are intended to constitute guaranteed payments within the
meaning of Section 707(c) of the Code and shall not be treated as
distributions for purposes of computing the Class B Members Capital
Accounts. Class B Guaranteed Payment Distributions shall be timely paid if
the Company has funds legally available therefor. Such distribution rate
shall be appropriately adjusted to reflect any unit distribution, split-up
or reverse unit split with respect to the Class B Units.
(b) Class B Guaranteed Payment Distributions on all issued and
outstanding Class B Units shall accrue from day to day, whether or not the
Company has earned or declared such Class B Guaranteed Payment
Distributions. Such Class B Guaranteed Payment Distributions shall be paid
in full for such quarter before any distributions whatsoever (whether in
cash, stock or otherwise) shall be declared, paid or set apart for any
junior units as provided in Section 6.8, and shall be cumulative, so that
if in any quarter(s) or year(s) the Class B Guaranteed Payment
Distributions upon the outstanding Class B Units shall not have been
declared, paid or set apart, the amount of the deficiency, but without
interest, shall be fully declared, paid and set apart for payment before
any distribution shall be declared, paid or set apart for any class of
junior units
23
as provided in Section 6.8. The term "junior units" as used herein shall
mean the Class A Units and all other interests in and units issued by the
Company other than the Class B Units.
(c) If payment in full of any Class B Guaranteed Payment Distributions
to be paid under Section 6.4(a) in any given quarter are not made by the
Company, then the Company will make demand under the $55,000,000
Intercompany Note for the difference between the amount necessary to make
payment in full of such Class B Guaranteed Payment Distributions in
accordance with the Amortization Schedule and the amount available to pay
the Class B Guaranteed Payment Distributions in any given quarter.
6.5 CLASS B MANDATORY DISTRIBUTIONS. On the dates set forth on the
Distribution Schedule through and including the Retirement Date, each holder of
Class B Units shall be entitled to receive cash distributions in accordance with
the Class B Mandatory Distribution column on such Distribution Schedule (the
"Class B Mandatory Distributions"). Class B Mandatory Distributions shall be
made from the proceeds received by the Company of the Tranche B Economic
Interest, and to the extent necessary, the Intercompany Note. To the extent any
Class B Mandatory Distribution amount is not paid to the Class B Members when
due, such unpaid Class B Mandatory Distribution amount, or the portion thereof,
shall bear interest from the date of such scheduled payment to the date of
payment thereof at the Default Rate (as defined in the Participation Agreement).
6.6 CLASS B LIQUIDATING DISTRIBUTIONS. The Company may liquidate all or any
portion of the Class B Units earlier than or in excess of the Class B Mandatory
Distributions (the "Class B Liquidating Distributions") at any time upon at
least three (3) Business Days' written notice (the "Liquidation Notice") to each
holder of record of Class B Units at such holder's address as the same may
appear on the books of the Company and provided no Class B Liquidating
Distribution shall be less than $1,000,000 other than a final Class B
Liquidating Distribution. The liquidation price to be paid by the Company for
any Class B Liquidating Distribution is (a) $5,500 per Unit (or any pro rata
portion thereof), plus (b) any accrued and unpaid Class B Guaranteed Payment
Distributions (or any pro rata portion thereof) to the date of such Class B
Liquidating Distribution, plus (c) an early liquidation fee equal to any loss,
cost or expense incurred by the Class B Members as a result of any prepayment of
any loan to the Class B Members made pursuant to the Trust Credit Agreement, as
adjusted by any benefit or liability received or incurred by the Class B Members
under any interest rate hedging obligations with respect thereto at such time
(the "Liquidation Price").
6.7 RIGHTS SUBSEQUENT TO LIQUIDATION. If on each liquidation date, the
Liquidation Price payable upon liquidation of the Class B Units to be liquidated
on such date is paid, then notwithstanding that certificates evidencing any of
the Class B Units, the Class B Guaranteed Payment Distributions and the Class B
Mandatory Distributions with respect to such Class B Units shall cease to accrue
after the liquidation date to the extent so paid and all rights with respect to
such Class B Units shall terminate except as to any remaining scheduled Class B
Guaranteed Payment Distributions and Class B Mandatory Distributions and except
for the right to receive any remaining Liquidation Price.
24
6.8 OTHER DISTRIBUTIONS. Provided that all current Class B Obligations have
been satisfied, the Managers (a) shall cause the Company to loan to an Affiliate
of PNG any remaining funds available for distribution to Class A Members during
the course of any calendar year commencing the calendar year 1996 (excluding any
Capital Contributions of any Class A Members) until at least the last Business
Day of the January following such calendar year pursuant to the $20,000,000
Intercompany Note which shall provide any such funds advanced shall be repaid to
the Company to the extent necessary to pay any current Class B Obligations, and
(b) may cause the Company to make a distribution to the Members with Class A
Units, in accordance with their Percentage Interests subject to clause (a)
above.
6.9 RECORD OWNERSHIP. The Company and the Managers shall be entitled to
treat the record owner of a Membership Interest as the absolute owner thereof in
all respects and shall incur no liability for distributions of cash or other
property made in good faith to such record owner until such time as the
assignment of such Membership Interest has become effective on the books of the
Company. From the date of the receipt of any instrument relating to transfer of
a Membership Interest or at any time if the Company is in doubt as to the person
entitled to receive distributions in respect of such Membership Interest, the
Company may withhold any such distributions until the transfer is completed or
abandoned or the dispute is resolved.
6.10 ACCOUNTING MATTERS.
(a) The fiscal year of the Company shall be the calendar year, with
the first fiscal year of the Company ending on December 31, 1995. The books
and records of account of the Company shall be, at the expense of the
Company, (i) kept, or caused to be kept, by the Company at the principal
place of business of the Company, (ii) on a basis consistent with the
method of accounting used for federal income tax purposes, and (iii)
appropriate and adequate for conducting the Company business.
(b) Company books and records (including all files, documents and
computer records/programs), as well as any tangible assets of the Company,
will be available for inspection by any Member or such Member's duly
authorized representative (at the expense of such Member) during normal
business hours upon reasonable notice and upon reasonable frequency at (in
the case of books and records) the principal office of the Company or (in
the case of tangible assets) the place where such assets are physically
located. Any Member may reasonably request an audit of the Company books
and records, provided that an audit requested by a Member shall be at such
Member's expense.
(c) Within a reasonable time after the end of each Company fiscal year
during the existence of the Company and in any event no later than the
fifteenth day of the fourth month after the commencement of the next
succeeding fiscal year (unless an extension request has been filed with the
Internal Revenue Service), the Managers will prepare (or cause to be
prepared) and file for the Company appropriate tax returns and send all
Members a copy thereof. The tax matters partner (or the Company) shall
submit
25
to each Member for review a copy of the filed return within a reasonable
time after the filing thereof.
6.11 MAINTENANCE OF BOOKS. The Company shall keep minutes of the
proceedings of its Members, its Managers and each committee, if any, of the
Managers.
6.12 INVESTMENTS. The Managers may establish and maintain one or more bank
and investment accounts and arrangements for Company funds with financial
institutions and firms that the Managers determine. Company funds may be
invested in a manner the same as or similar to the Managers' investment of their
own funds or investments by any Affiliates of the Company.
ARTICLE VII
MANAGERS AND OFFICERS
7.1 MANAGEMENT BY MANAGERS. Except for situations in which the approval of
the Members or any portion of the Members is required by this Agreement or by
non-waivable provisions of applicable Law, and subject to the provisions of
Section 7.2, (a) the powers of the Company shall be exercised by or under the
authority of, and the business and affairs of the Company shall be managed under
the direction of, the Managers; and (b) the Managers may make all decisions and
take all actions for the Company not otherwise provided for in this Agreement,
including, without limitation, the following:
(i) entering into, making, and performing contracts, agreements,
and other undertakings binding the Company that may be necessary,
appropriate, or advisable in furtherance of the purposes of the
Company and making all decisions and waivers thereunder;
(ii) opening and maintaining bank and investment accounts and
arrangements, drawing checks and other orders for the payment of
money, and designating individuals with authority to sign or give
instructions with respect to those accounts and arrangements;
(iii) maintaining the assets of the Company in good order;
(iv) collecting sums due the Company;
(v) to the extent that funds of the Company are available
therefor, paying debts and obligations of the Company;
(vi) acquiring, utilizing for Company purposes, and disposing of
any asset of the Company;
26
(vii) borrowing money or otherwise committing the credit of the
Company for Company activities and voluntary prepayments or extensions
of debt except as may be restricted herein;
(viii) selecting, removing, and changing the authority and
responsibility of lawyers, accountants, and other advisers and
consultants;
(ix) obtaining insurance for the Company;
(x) determining distributions of Company cash and other property
as provided herein; and
(xi) taking any and all other action that may be necessary,
appropriate or advisable in furtherance of the purposes of the
Company;
provided, however, that nothing contained in this Agreement shall obligate any
Manager to take any action on behalf of the Company that the Manager deems (i)
not in the best interests of the Company, or (ii) not reasonably necessary to
accomplish the intended business of the Company.
7.2 ACTIONS BY MANAGERS; COMMITTEES; DELEGATION OF AUTHORITY
AND DUTIES.
(a) In managing the business and affairs of the Company and exercising its
powers, the Managers shall act (i) collectively through meetings and written
consents pursuant to Sections 7.5 and 7.7; (ii) through committees pursuant to
Section 7.2(b); and (iii) through Managers to whom authority and duties have
been delegated pursuant to Section 7.2(c).
(b) The Managers may, from time to time, designate one or more committees,
each of which shall be composed of one or more Managers. Any such committee, to
the extent provided in the resolutions establishing such committee or in the
Certificate or this Agreement, shall have and may exercise all of the authority
of the Managers, subject to the limitations set forth in the Act. At every
meeting of any such committee, the presence of a majority of all the committee
members shall constitute a quorum, and the affirmative vote of a majority of the
committee members present shall be necessary for the adoption of any resolution.
The Managers may dissolve any committee at any time.
(c) The Managers may, from time to time, delegate to one or more of the
Managers such authority and duties as the Managers may deem advisable. Unless
this Agreement otherwise provides or the Managers otherwise decide, if the
Managers assign a title to a Manager and the title is one commonly used for
officers of a business corporation formed under the DGCL, the assignment of such
title shall constitute the delegation to such Manager of the authority and
duties normally associated with that office, subject to any specific delegation
of authority and duties made pursuant to the first sentence of this Section
7.2(c).
27
(d) Any Person dealing with the Company, other than a Member, may rely on
the authority of any Manager or officer in taking any action in the name of the
Company without inquiry into the provisions of this Agreement or compliance
herewith, regardless of whether that action actually is taken in accordance with
the provisions of this Agreement.
7.3 NUMBER AND TERM OF OFFICE OF MANAGERS.
(a) The number of Managers of the Company shall be determined from
time to time by the Required Class A Interests; provided, however, that no
decrease in the number of Managers that would have the effect of shortening
the term of an incumbent Manager may be made by the Members. Each Manager
shall hold office for a period as elected by the Managers, and thereafter
until his successor shall have been elected, or until his earlier death,
resignation or removal in accordance with the Act and this Agreement.
Managers need not be Members or residents of the State of Delaware.
(b) Initially, there shall be four (4) Managers of the Company. Two
(2) of the Managers shall be designated by PNG (collectively, "PNG
Managers", and individually, a "PNG Manager"), and two (2) of the Managers
(collectively, "MCN Managers" and individually, a "MCN Manager") shall be
designated by MCN. The PNG Managers and the MCN Managers shall be referred
to herein collectively as the "Managers."
(c) The PNG Managers shall be any officers or directors of PNG or any
Affiliate thereof. The initial PNG Managers shall be:
▇▇▇ ▇. ▇▇▇▇▇▇▇▇; and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
(d) The MCN Managers shall be any officers or directors of MCN or any
Affiliate thereof. The initial MCN Managers shall be:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇; and
▇▇▇▇ ▇. ▇▇▇▇▇
(e) Only PNG shall be entitled to make determinations relating to the
election of, removal of or the filling of any vacancy attributable to any
PNG Manager. Only MCN shall be entitled to make determinations relating to
the election of, removal of or the filling of any vacancies relating to any
MCN Manager. A Manager elected to fill a vacancy occurring other than by
reason of an increase in the number of Managers shall be elected for the
unexpired term of his predecessor in office. At any meeting of the Members
at which a quorum of Members is present called expressly for that purpose,
or upon a written consent adopted by the Members entitled to make such
determination, any Manager may be removed, with or without cause, by the
Member(s) entitled to appoint the same under this Agreement.
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7.4 RESIGNATION OF MANAGERS. Any Manager may resign at any time. Such
resignation shall be made in writing and shall take effect at the time specified
therein, or if no time be specified, at the time of its receipt by the remaining
Managers. The acceptance of a resignation shall not be necessary to make it
effective, unless expressly so provided in the resignation.
7.5 MEETINGS.
(a) Unless otherwise required by Law, a majority of the number of
Managers set by the Required Class A Interests pursuant to Section 7.3(a)
hereof shall constitute a quorum for the transaction of business of the
Managers, and the act of a majority or more of the Managers present at a
meeting at which a quorum is present shall be the act of the Managers
(unless the Act requires the approval of a greater number of the Managers
for such action).
(b) Meetings of the Managers shall be held at the Company's principal
place of business or at such other place or places as shall be determined
from time to time by resolution of the Managers. At all meetings of the
Managers, business shall be transacted in such order as shall be determined
by resolution of the Managers. Attendance of a Manager at a meeting shall
constitute a waiver of notice of such meeting, except where a Manager
attends a 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.
(c) In connection with any annual meeting of Members at which Managers
were elected, the Managers may, if a quorum is present, hold their first
meeting for the transaction of business immediately after and at the same
place as such annual meeting of the Members. Notice of such meeting at such
time and place shall not be required.
(d) Regular (or annual) meetings of the Managers shall be held at such
times as shall be designated from time to time by resolution of the
Managers. Notice of regular meetings shall not be required.
(e) Special meetings of the Managers may be called by any Manager on
at least two (2) Business Days' notice to each other Manager. Such notice
need not state the purpose or purposes of, nor the business to be
transacted at, such meeting, except as may otherwise be required by Law or
provided for by the Certificate or this Agreement.
7.6 APPROVAL OR RATIFICATION OF ACTS OR CONTRACTS BY MEMBERS. The Managers
in their discretion may submit any act or contract for approval or ratification
at any annual meeting of the Members, or at any special meeting of the Members
called for the purpose of considering any such act or contract, and any act or
contract that shall be approved or be ratified by the Required Class A Interests
shall be as valid and as binding upon the Company and upon all the Members as if
it shall have been approved or ratified by every Member of the Company except to
the extent the consent of the Required Class B Interests is required hereunder.
29
7.7 ACTION BY WRITTEN CONSENT OR TELEPHONE CONFERENCE. Any action permitted
or required by the Act, this Agreement to be taken at a meeting of the Managers
or any committee designated by the Managers may be taken without a meeting if a
consent in writing, setting forth the action to be taken, is signed by all of
the Managers or committee members, as the case may be. Such consent shall have
the same force and effect as a unanimous vote at a meeting and may be stated as
such in any document or instrument filed with the Secretary of State of
Delaware, and the execution of such consent shall constitute attendance or
presence in person at a meeting of the Managers or any such committee, as the
case may be. Subject to the requirements of the Act or this Agreement for notice
of meetings, Managers, or members of any committee designated by the Managers,
may participate in and hold a meeting of the Managers or any committee of
Managers, as the case may be, by means of a conference telephone or similar
communications equipment by means of which all Persons participating in the
meeting can hear each other, and participation in such meeting shall constitute
attendance and presence in person at such meeting, except where a Person
participates in 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.
7.8 COMPENSATION. Managers as such shall not receive any salary for their
service in the capacity of Managers, but by resolution of the Managers, a fixed
sum and reimbursement for reasonable expenses of attendance, if any, may be
allowed for attendance at each regular or special meeting of the Managers or at
any meeting of a committee of Managers, if any, to which such Manager may be
elected; but nothing herein shall preclude any Manager from serving the Company
in any other capacity or receiving compensation therefor.
7.9 OFFICERS.
(a) GENERAL. The officers of the Company shall be chosen by the
Managers and shall be a President, a Secretary and a Treasurer.
Additionally, the Managers, in their discretion may choose a Chairman of
the Managers (who must be a Manager), a Vice-Chairman of the Managers (who
must be a Manager), a Chief Executive Officer, an Executive Vice President
and one or more Vice Presidents, Assistant Vice Presidents, Assistant
Secretaries, Assistant Treasurers and such other officers as the Managers
may from time to time designate. Any number of offices may be held by the
same person, unless otherwise prohibited by Law, the Certificate or this
Agreement. The officers of the Company need not be Members of the Company
or, except in the case of the Chairman of the Managers, Managers of the
Company. The salaries of all officers of the Company shall be fixed by the
Managers and may be altered by the Managers from time to time except as
otherwise provided by contract. All officers shall be entitled to be paid
or reimbursed for all costs and expenditures incurred in the Company's
business.
(b) ELECTION AND RESIGNATION. The Managers at their first meeting held
after each annual meeting of Members shall elect the officers of the
Company, who shall hold their offices for such terms and shall exercise
such powers and perform such duties as described in the Agreement and as
shall be determined from time to time by the
30
Managers; and all officers of the Company shall hold office until their
successors are chosen and qualified or until their earlier resignation or
removal.
(c) VACANCIES. Whenever any vacancies shall occur in any office by
death, resignation, removal, increase in the number of officers of the
Company, or otherwise, the same shall be filled by the Managers, and the
officer so elected shall hold office until his successor is chosen and
qualified.
(d) REMOVAL. Any officer or agent elected or appointed by the Managers
may be removed by the Managers. Such removal may be with or without
prejudice to the contract rights, if any, of the person so removed.
Election or appointment of an officer or agent shall not of itself create
contract rights.
(e) CHAIRMAN OF THE MANAGERS. The Chairman of the Managers shall
preside, if present, at all meetings of the Managers and shall perform such
additional functions and duties as the Managers may prescribe from time to
time. The Chairman of the Managers may sign certificates representing units
of the Company.
(f) CHIEF EXECUTIVE OFFICER. The Chief Executive Officer, who may be
the Chairman or Vice Chairman of the Managers and/or the President, shall
have general and active management of the business of the Company and shall
see that all orders and resolutions of the Managers are carried into
effect. The Chief Executive Officer may sign deeds, mortgages, bonds,
contracts or other instruments, except in cases where the signing and
execution thereof shall be expressly delegated by the Managers or by the
Agreement to some other officer or agent of the Company, or shall be
required by Law to be otherwise signed and executed. The Chief Executive
Officer shall also perform such other duties and may exercise such other
powers as may be assigned by the Agreement or prescribed by the Managers
from time to time.
(g) PRESIDENT. The President shall, subject to the control of the
Managers and the Chief Executive Officer, in general, supervise and control
all of the business and affairs of the Company. In the absence of the
Chairman of the Managers, or if there is none, the President shall preside
at all meetings of the Members and, if the President is a director, of the
Managers. The President may sign certificates for units of the Company, any
deeds, mortgages, bonds, contracts or other instruments, except in cases
where the signing and execution thereof shall be expressly delegated by the
Managers or by the Agreement to some other officer or agent of the Company,
or shall be required by Law to be otherwise signed and executed. The
President shall also perform all duties incident to the office of President
and such other duties as may be prescribed by the Managers from time to
time.
(h) VICE PRESIDENT. Any Vice President, in the order of seniority,
unless otherwise determined by the Managers, shall, in the absence or
disability of the President, perform the duties and exercise the powers of
the President. They shall also perform the usual and customary duties that
pertain to such office and generally assist
31
the President by executing contracts and agreements and exercising such
other powers and performing such other duties as are delegated to them by
the President and as the Managers may further prescribe. In addition to
exercising such powers and performing such duties as are conferred upon the
Vice President(s) by the Certificate of Formation, the Agreement or
applicable statutes, any Executive Vice President(s) or Senior Vice
President(s) shall have such further power and perform such other duties as
may be prescribed by the Managers from time to time.
(i) SECRETARY. The Secretary shall attend, to the extent possible, all
meetings of the Managers and all meetings of Members and record all the
proceedings thereat in a book or books to be kept for that purpose. The
Secretary shall give, or cause to be given, notice of all meetings of the
Members and special meetings of the Managers, and shall perform such other
duties as may be prescribed by the Managers or President, under whose
supervision he or she shall be. If the Secretary shall be unable or shall
refuse to cause to be given notice of all meetings of the Members and
special meetings of the Managers, and if there is no Assistant Secretary,
then the Managers may choose another officer to cause such notice to be
given. The Secretary shall have custody of the seal of the Company and the
Secretary shall have authority to affix the same to any instrument
requiring it, and when so affixed, it may be attested by the signature of
the Secretary. The Managers may give general authority to any other officer
to affix the seal of the Company and to attest the affixing by his or her
signature. The Secretary shall see that all books, reports, statements,
certificates and other documents and records required by Law to be kept or
filed are properly kept or filed, as the case may be. The duties of the
Secretary may be performed by any Assistant Secretary.
(j) TREASURER. The Treasurer shall have custody of the funds of the
Company as may be entrusted to his or her keeping and account for the same.
The Treasurer shall be prepared at all times to give information as to the
condition of the Company and shall make an annual report of the entire
business and financial condition of the Company. The Treasurer shall also
perform, under the direction and subject to the control of the Managers,
such other duties as may be assigned to him or her. The duties of the
Treasurer may also be performed by any Assistant Treasurer.
(k) ASSISTANT VICE PRESIDENTS. The Assistant Vice President(s) shall
generally assist the President and Vice President(s) and exercise such
other powers and perform such other duties as may be prescribed by the
Managers from time to time.
(l) ASSISTANT SECRETARIES. Except as may be otherwise provided in the
Agreement, any Assistant Secretary shall perform such duties and have such
powers as from time to time may be assigned to him or her by the Managers,
the President or the Secretary and, in the absence of the Secretary, or in
the event of his or her disability or refusal to act, shall perform the
duties of the Secretary, and when so acting, shall have all the powers of
and be subject to all the restrictions upon the Secretary.
32
(m) ASSISTANT TREASURERS. Except as may be otherwise provided in the
Agreement, any Assistant Treasurer shall perform such duties and have such
powers as from time to time may be assigned to him or her by the Managers,
the President or the Treasurer, if there is one, and, in the absence of the
Treasurer or in the event of his or her disability or refusal to act, shall
perform the duties of the Treasurer, and when so acting, shall have all the
powers of and be subject to all the restrictions upon the Treasurer.
(n) OTHER OFFICERS. Such other officers as the Managers may choose
shall perform such duties and have such powers as from time to time may be
assigned to them by the Managers. The Managers may delegate to any other
officer of the Company the power to choose such other officers and to
prescribe their respective duties and powers.
(o) DELEGATION OF AUTHORITY. In the case of any absence of any officer
of the Company or for any other reason that the Managers may deem
sufficient, the Managers may delegate some or all of the powers or duties
of such officer to any other officer or to any director, employee,
unitholder or agent for whatever period of time seems desirable.
(p) VOTING SECURITIES OWNED BY THE COMPANY. Powers of attorney,
proxies, waivers of notice of meeting, consents and other instruments
relating to securities owned by the Company may be executed in the name and
on behalf of the Company by the Chief Executive Officer, President or any
Vice President and any such officer may, in the name of and on behalf of
the Company, take all such action as any such officer may deem advisable to
vote in person or by proxy at any meeting of security holders of any
corporation in which the Company may own securities and at any such meeting
shall possess and may exercise any and all rights and powers incident to
the ownership of such securities and which, as the owner thereof, the
Company might have exercised and possessed if present. The Managers may, by
resolution, from time to time, confer like powers upon any other person or
persons.
ARTICLE VIII
MEMBERS
8.1 MEETINGS.
(a) A quorum shall be present at a meeting of Members if the holders
of a majority of the outstanding Class A Units are represented at the
meeting in person or by proxy. Notwithstanding the other provisions of this
Agreement, Class B Members shall only be entitled to notice of, and to
attend, any annual meetings of the Members, but not any special meetings
thereof unless there is a vote upon any matter which requires the consent
of the Required Class B Interests. With respect to any matter, other than a
matter for which the consent of the holders of the Required Class B
Interests is required
33
by this Agreement, the affirmative vote of the Required Class A Interests
at a meeting of Members at which a quorum is present shall be the act of
the Members.
(b) All meetings of the Members shall be held at the principal place
of business of the Company or at such other place within or without the
State of Delaware as shall be specified or fixed in the notices or waivers
of notice thereof; provided that any or all Members may participate in any
such meeting by means of conference telephone or similar communications
equipment pursuant to Section 8.5.
(c) Notwithstanding the other provisions of the Certificate or this
Agreement, the chairman of the meeting or the holders of the Required Class
A Interests shall have the power to adjourn such meeting from time to time,
without any notice other than announcement at the meeting of the time and
place of the holding of the adjourned meeting. If such meeting is adjourned
by the Members, such time and place shall be determined by a vote of the
holders of the Required Class A Interests. Upon the resumption of such
adjourned meeting, any business may be transacted that might have been
transacted at the meeting as originally called.
(d) An annual meeting of the Members, for the election of the Managers
and for the transaction of such other business as may properly come before
the meeting, shall be held at such place, within or without the State of
Delaware, on such date and at such time as the Managers shall fix and set
forth in the notice of the meeting, which date shall be within 13 months
subsequent to the date of organization of the Company or the last annual
meeting of Members, whichever most recently occurred.
(e) Special meetings of the Members for any proper purpose or purposes
may be called at any time by the Managers or the holders of the Required
Class A Interests.
(f) Written or printed notice stating the place, day and hour of the
meeting and, in the case of a special meeting, the purpose or purposes for
which the meeting is called, shall be delivered not less than two (2) nor
more than sixty (60) days before the date of the meeting, either personally
or by mail, by or at the direction of the Managers or Person calling the
meeting, to each Member entitled to vote at such meeting.
(g) The date on which notice of a meeting of Members is mailed or the
date on which the resolution of the Managers declaring a distribution is
adopted, as the case may be, shall be the record date for the determination
of the Members entitled to notice of or to vote at such meeting, including
any adjournment thereof, or the Members entitled to receive such
distribution.
(h) The right of Members to cumulative voting in the election of
Managers is expressly denied.
34
8.2 ACTION BY WRITTEN CONSENT OR TELEPHONE CONFERENCE.
(a) Any action required or permitted to be taken at any annual or
special meeting of Members 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 holder or holders of not
less than the minimum Units of Membership Interests that would be necessary
to take the action that is the subject of the consent.
(b) Members may participate in and hold a meeting by means of
conference telephone or similar communications equipment by means of which
all Persons participating in the meeting can hear each other, and
participation in such meeting shall constitute attendance and presence in
person at such meeting, except where a Person participates in 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.
ARTICLE IX
MEMBERSHIP INTERESTS
9.1 CERTIFICATES REPRESENTING MEMBERSHIP INTERESTS. Units of Membership
Interest of the Company may be represented by certificates in such form or forms
as the Managers may approve, provided that such form or forms shall comply with
all applicable requirements of Law or of the Certificate. Such certificates
shall be signed by the president or a vice president, and by the secretary or an
assistant secretary, of the Company (or by at least two Managers, if the Company
has not appointed such officers) and may be sealed with the seal of the Company
or imprinted or otherwise marked with a facsimile of such seal. The signature of
any or all of the foregoing officers of the Company may be represented by a
printed facsimile thereof. If any officer whose signature, or a facsimile
thereof, shall have been set upon any certificate shall cease, prior to the
issuance of such certificate, to occupy the position in right of which his
signature, or facsimile thereof, was so set upon such certificate, the Company
may nevertheless adopt and issue such certificate with the same effect as if
such officer occupied such position as of such date of issuance; and issuance
and delivery of such certificate by the Company shall constitute adoption
thereof by the Company. The certificates shall be consecutively numbered, and as
they are issued, a record of such issuance shall be entered in the books of the
Company. Certificates merely evidence ownership of Membership Interests and
shall not be deemed to create ownership in and of themselves, which ownership
shall exist without regard to the issuance of a certificate.
9.2 CERTIFICATE TRANSFER BOOK AND MEMBERS OF RECORD. The secretary of the
Company (or, if none, the Managers) shall maintain, among other records, a stock
transfer book containing certificates evidencing the Units of Membership
Interest, the stubs in which shall set forth the names and addresses of the
holders of all issued Units of Membership Interest of the Company, the number of
Units of Membership Interest held by each such holder, the number of
certificates representing such Membership Interest, the date of issue of such
certificates, and
35
whether or not such Membership Interest originates from original issue or
transfer. The names and addresses of Members as they appear on the certificate
transfer book shall be the official list of Members of record of the Company for
all purposes except as otherwise provided herein. The Company shall keep this
record of Members at its registered office or principal place of business, or at
the office of its transfer agent or registrar. The Company shall be entitled to
treat the holder of record of any Membership Interests as the owner thereof for
all purposes, and shall not be bound to recognize any equitable or other claim
to, or interest in, such Membership Interests or any rights deriving from such
Membership Interests on the part of any other person, including, but without
limitation, a purchaser, assignee, or transferee, unless and until such other
person becomes the holder of record of such Membership Interests, whether or not
the Company shall have either actual or constructive notice of the interest of
such other person.
9.3 MEMBER'S CHANGE OF NAME OR ADDRESS. Each Member shall promptly notify
the Managers of the Company, at its principal business office, by written notice
sent by certified mail, return receipt requested, of any change in name or
address of the Member from that as it appears upon the official list of Members
of record of the Company. The Managers of the Company shall then enter such
changes into all affected Company records, including, but not limited to, the
official list of Members of record.
9.4 TRANSFER OF MEMBERSHIP INTERESTS. The Membership Interests represented
by any certificate of the Company are transferable only on the books of the
Company by the holder of record thereof or by its duly authorized attorney or
legal representative upon surrender of the certificate for such Membership
Interest, properly endorsed or assigned. The Managers may make such rules and
regulations concerning the issue, transfer, registration and replacement of
certificates as they deem desirable or necessary.
9.5 LOST, STOLEN OR DESTROYED CERTIFICATES. The Company may issue a new
certificate for Membership Interests in the place of any certificate theretofore
issued and alleged to have been lost, stolen or destroyed, but the Managers may
require the owner of such lost, stolen or destroyed certificate, or his legal
representative, to furnish an affidavit as to such loss, theft, or destruction
and to give a bond in such form and substance, and with such surety or sureties,
with fixed or open penalty, as the board may direct, in order to indemnify the
Company and its transfer agents and registrars, if any, against any claim that
may be made on account of the alleged loss, theft or destruction of such
certificate.
9.6 PREEMPTIVE RIGHTS. Except as provided by Law or the Certificate, the
Members shall not have a preemptive right to acquire additional, unissued or
treasury Units of Membership Interest of the Company, convertible into or
carrying a right to subscribe to acquire Units of Membership Interest.
ARTICLE X
INDEMNIFICATION
36
10.1 RIGHT TO INDEMNIFICATION. Subject to the limitations and conditions as
provided in this Article X, each Person who was or is made a party or is
threatened to be made a party to or is involved in any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative,
arbitrative or investigative (hereinafter a "Proceeding"), or any appeal in
such a Proceeding or any inquiry or investigation that could lead to such a
Proceeding, by reason of the fact that he or she, or a Person of whom he or she
is the legal representative, is or was a Manager of the Company or while a
Manager of the Company is or was serving at the request of the Company as a
Manager, director, officer, partner, venturer, proprietor, trustee, employee,
agent, or similar functionary of another foreign or domestic limited liability
company, corporation, partnership, joint venture, sole proprietorship, trust,
employee benefit plan or other enterprise that is an Affiliate of the Company
shall be indemnified, defended and held harmless by the Company to the fullest
extent permitted by the Act and the DGCL, as the same exist or may hereinafter
be amended (but, in the case of any such amendment, only to the extent that such
amendment permits the Company to provide broader indemnification rights than
said Law permitted the Company to provide prior to such amendment) against
judgments, penalties (including excise and similar taxes and punitive damages),
fines, settlements and reasonable expenses (including, without limitation,
attorneys' fees) actually incurred by such Person in connection with such
Proceeding, and indemnification under this Article X shall continue as to a
Person who has ceased to serve in the capacity which initially entitled such
Person to indemnity hereunder. The rights granted pursuant to this Article X
shall be deemed contract rights, and no amendment, modification or repeal of
this Article X shall have the effect of limiting or denying any such rights with
respect to actions taken or Proceedings arising prior to any such amendment,
modification or repeal. It is expressly acknowledged that the indemnification
provided in this Article X could involve indemnification for negligence of any
Person indemnified or under theories of strict liability.
10.2 ADVANCE PAYMENT. To the fullest extent permitted by applicable Law,
the right to indemnification conferred in this Article X shall include the right
to be paid or reimbursed by the Company the reasonable expenses incurred by a
Person of the type entitled to be indemnified under Article X who was, is or is
threatened to be made a named defendant or respondent in a Proceeding in advance
of the final disposition of the Proceeding and without any determination as to
the Person's ultimate entitlement to indemnification; provided, however, that
the payment of such expenses incurred by any such Person in advance of the final
disposition of a Proceeding, shall be made only upon delivery to the Company of
a written affirmation by such Manager of his or her good faith belief that he
has met the standard of conduct necessary for indemnification under this Article
X and a written undertaking, by or on behalf of such Person, to repay all
amounts so advanced if it shall ultimately be determined that such indemnified
Person is not entitled to be indemnified under this Article X or otherwise.
10.3 INDEMNIFICATION OF OFFICERS, EMPLOYEES AND AGENTS. The Company shall
indemnify, defend, hold harmless and advance expenses to an officer, employee or
agent of the Company to the same extent and subject to the same conditions under
which it may indemnify, defend, hold harmless and advance expenses to Managers
under this Article X; and, the Company shall indemnify and advance expenses to
Persons who are not or were not Managers, officers, employees or agents of the
Company but who are or were serving at the request of the
37
Company as a Manager, director, officer, partner, venturer, proprietor, trustee,
employee, agent or similar functionary of another foreign or domestic limited
liability company, corporation, partnership, joint venture, sole proprietorship,
trust, employee benefit plan or other enterprise against any liability asserted
against him and incurred by him in such a capacity or arising out of his status
as such a Person to the same extent that it may indemnify and advance expenses
to Managers under this Article X.
10.4 APPEARANCE AS A WITNESS. Notwithstanding any other provision of this
Article X, the Company may pay or reimburse expenses incurred by a Manager or
any other indemnified Person under Section 10.3 hereof, whether or not such
Person is still serving in such capacity at such time, in connection with his
appearance as a witness or other participation in a Proceeding at a time when he
is not a named defendant or respondent in the Proceeding.
10.5 REQUEST FOR INDEMNIFICATION. To obtain indemnification, a Person shall
submit to the secretary of the Company a written request with such information
as is reasonably available to such Person regarding the basis for such claim for
indemnification. The secretary of the Company shall promptly advise the Managers
of such request. Such Person shall be advanced all reasonable attorneys' fees,
retainers, court costs, transcript costs, fees of experts, witness fees, travel
expenses, duplicating costs, printing and binding costs, telephone charges,
postage, delivery service fees and all other disbursements or expenses of the
types customarily incurred in connection with prosecuting, defending, preparing
to prosecute or defend, investigating, or being or preparing to be a witness in
a Proceeding, within ten days after requesting them, to the fullest extent
permitted by the Act or the DGCL ("Expenses").
10.6 DETERMINATION OF INDEMNIFICATION. A Person's entitlement to
indemnification shall be determined in accordance with the Act and the DGCL. If
entitlement to indemnification is to be determined by a law firm, or member of a
law firm, that is experienced in matters of business organization Law and
neither presently is, nor in the five years previous to his selection or
appointment has been, retained to represent: (i) the Company or an indemnified
Person in any matter material to either such party; or (ii) any other party to
the Proceeding giving rise to a claim for indemnification hereunder
("Independent Counsel"), the Company shall furnish notice to such Person within
ten days after receipt of the request for indemnification, specifying the
identity and address of the Independent Counsel. Such Person may, within
fourteen days after receipt of such written notice of selection, deliver to the
Company a written objection to such selection. Such objection may be asserted
only on the ground that the Independent Counsel so selected does not meet the
requirements of Independent Counsel and the objection shall set forth with
particularity the factual basis of such assertion. If there is an objection to
the selection of Independent Counsel, either the Company or such Person may
petition the Court of Chancery of the State of Delaware or any other court of
competent jurisdiction for a determination that the objection is without a
reasonable basis and/or for the appointment of Independent Counsel selected by
the Court.
Except in the event that the determination of entitlement to
indemnification is to be made by Independent Counsel, if the person or persons
empowered under this Section to determine entitlement to indemnification shall
not have made and furnished to the Person in
38
writing a determination of whether such Person is entitled to indemnification
within thirty days after receipt by the Company of the Person's request
therefor, a determination of entitlement to indemnification shall be deemed to
have been made, and the Person shall be entitled to such indemnification unless
such Person knowingly misrepresented a material fact in connection with the
request for indemnification or such indemnification is prohibited by Law. The
termination of any Proceeding or of any matter therein, by judgment, order,
settlement or conviction, or upon a plea of NOLO CONTENDERE or its equivalent,
shall not (except as otherwise expressly provided in this Article) of itself
adversely affect the right of such Person to indemnification or create a
presumption such Person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
Company, or with respect to any criminal Proceeding, that such Person had
reasonable cause to believe that his conduct was unlawful.
10.7 PAYMENTS TO INDEPENDENT COUNSEL. The Company shall pay any and all
reasonable fees and expenses of Independent Counsel incurred acting pursuant to
this Article X and in any proceeding to which it is a party or witness in
respect of its investigation and written report and shall pay all reasonable
fees and expenses incident to the procedures in which such Independent Counsel
was selected or appointed. No Independent Counsel may serve if a timely
objection has been made to his selection until a court has determined that such
objection is without a reasonable basis.
10.8 RIGHT TO BRING SUIT. In the event that (i) a determination is made
pursuant to Section 10.6 hereof that a Person is not entitled to indemnification
under this Article, (ii) advancement of Expenses is not timely made pursuant to
Section 10.5 hereof, (iii) Independent Counsel has not made and delivered a
written opinion determining the request for indemnification (a) within ninety
days after being appointed by the court, or (b) within ninety days after
objections to his selection have been overruled by the court, or (c) within
ninety days after the time for the Company or such Person to object to his
selection, or (iv) payment of indemnification is not made within five days after
a determination of entitlement to indemnification, such Person shall be entitled
to an adjudication in an appropriate court of the State of Delaware, or in any
other court of competent jurisdiction, of his entitlement to such
indemnification or advancement of Expenses. In the event that a determination
shall have been made that a Person is not entitled to indemnification, any
judicial proceeding or arbitration commenced pursuant to this Section 10.8 shall
be conducted in all respects as a DE NOVO trial on the merits and such Person
shall not be prejudiced by reason of that adverse determination. If a
determination shall have been made or deemed to have been made that a Person is
entitled to indemnification, the Company shall be bound by such determination in
any judicial proceeding commenced pursuant to this Section 10.8, or otherwise,
unless such Person knowingly misrepresented a material fact in connection with
the request for indemnification, or such indemnification is prohibited by Law.
The Company shall be precluded from asserting in any judicial proceeding
commenced pursuant to this Section 10.8 that the procedures and presumptions of
this Article are not valid, binding and enforceable and shall stipulate in any
such court that the Company is bound by all provisions of this Article. In the
event that a Person, pursuant to this Section 10.8,
39
seeks a judicial adjudication to enforce his rights under, or to recover damages
for breach of, this Article, such Person shall be entitled to recover from the
Company, and shall be indemnified by the Company against, any and all Expenses
actually and reasonably incurred by him in such judicial adjudication, but only
if he prevails therein. If it shall be determined in such judicial adjudication
that a Person is entitled to receive part but not all of the indemnification or
advancement of Expenses sought, the Expenses incurred by such Person in
connection with such judicial adjudication or arbitration shall be appropriately
prorated.
10.9 NONEXCLUSIVITY OF RIGHTS. The right to indemnification and the
advancement and payment of expenses conferred in this Article X shall not be
exclusive of any other right which a Manager or other Person indemnified
pursuant to Section 10.2 may have or hereafter acquire under any Law (common or
statutory), provision of the Certificate or this Agreement, agreement, vote of
Members or disinterested Managers or otherwise.
10.10 SAVINGS CLAUSE. If this Article X or any portion hereof shall be
invalidated on any ground by any court of competent jurisdiction, then the
Company shall nevertheless indemnify and hold harmless each Manager or any other
Person indemnified pursuant to this Article X as to Expenses to the full extent
permitted by any applicable portion of this Article X that shall not have been
invalidated and to the fullest extent permitted by applicable Law. The Company
shall be precluded from asserting in any judicial proceeding commenced pursuant
to this Article X that the procedures and presumptions of this Article X are not
valid, binding and enforceable and shall stipulate in any such court that the
Company is bound by all provisions of this Article X.
10.11 SURVIVAL OF RIGHTS. The provisions of this Article shall continue as
to any Person whose status has ceased and shall inure to the benefit of his
heirs, executors and administrators.
10.12 INSURANCE. The Company may maintaininsurance, at its expense, to
protect itself and any manager, officer, employee or agent of the Company or
another limited liability company, corporation, partnership, joint venture,
trust or other enterprise against any such expense, liability or loss, whether
or not the Company would have the power to indemnify such Person against such
expense, liability or loss under Delaware Law.
10.13 INDEMNITY AGREEMENTS. The Company may enter into indemnity agreements
with Persons who are Managers from time to time, and with such officers,
employees and agents as the Managers may designate.
10.14 RESTRICTIONS ON PAYMENT. Notwithstanding any other provision of
Article VII and Article X, no payments provided in Article X or reimbursements
provided in Article VII shall be made unless and only to the extent that the
Company shall have received either (a) Additional Contributions from the Class A
Members in accordance with Section 5.2, (b) shall have received repayments from
the $20,000,000 Intercompany Note or (c) shall have received repayments from the
$55,000,000 Intercompany Note, provided that the principal amount of the
[$55,000,000] Intercompany Note shall not be less than the aggregate principal
amounts and face amounts of
40
the Instruments (as defined in the Participation Agreement) and further provided
no payments or reimbursements shall be made from the Tranche B Economic
Interest.
ARTICLE XI
TAXES
11.1 TAX RETURNS. The Managers shall cause to be prepared and filed all
necessary federal and state income tax returns and all other necessary tax
returns for the Company, including making the elections described in Section
11.2. Each Member shall furnish to the Managers all pertinent information in its
possession relating to Company operations that is necessary to enable the
Company's income tax returns to be prepared and filed.
11.2 TAX ELECTIONS. The Company shall make the following elections on the
appropriate tax returns:
(a) to adopt the calendar year as the Company's taxable year;
(b) to adopt the cash method (or accrual method, as appropriate) of
accounting and to keep the Company's books and records on the income-tax
method;
(c) if a distribution of Company property as described in Section 734
of the Code occurs or if a transfer of a Membership Interest as described
in Section 743 of the Code occurs, on written request of any Member, to
elect, pursuant to Section 754 of the Code, to adjust the basis of Company
properties;
(d) to elect to amortize the organization expenses of the Company and
the startup expenditures of the Company under Section 195 of the Code
ratably over a period of 60 months as permitted by Section 709(b) of the
Code;
(e) any other election the Managers may deem appropriate and in the
best interests of the Members; and
(f) to use the maximum allowable accelerated tax method and shortest
permissible tax life for depreciation purposes.
Neither the Company nor any Manager or Member may make an election for the
Company to be excluded from the application of the provisions of subchapter K of
chapter 1 of subtitle A of the Code or any similar provisions of applicable
state Law, and no provision of this Agreement shall be construed to sanction or
approve such an election.
41
11.3 TAX MATTERS PARTNER.
(a) A majority of the Managers shall designate one Member to be the
"tax matters partner" of the Company pursuant to Section 6231(a)(7) of the
Code; or, if there is no Manager that is a Member, the "tax matters
partner" ("TMP") shall be a Member that is designated as such by the
Required Class A Interests. Any Member who is designated TMP shall inform
each other Member of all significant matters that may come to its attention
in its capacity as TMP as may be reasonably necessary. Any Member who is
designated TMP may not take any action contemplated by Sections 6222
through 6233 of the Code without the consent of the Required Class A
Interests, but this sentence does not authorize such Manager (or any other
Manager) to take any action left to the determination of an individual
Member under Sections 6222 through 6233 of the Code.
(b) PNG is designated as the initial TMP.
(c) COMPLIANCE. The TMP and other Members shall use reasonable
commercial effort to comply with responsibilities outlined in this Section
and Code Sections 6222 through 6233 and 6050K (and the IRS Regulations
thereunder) and in doing so shall incur no liability to any other Member.
Notwithstanding the TMP's obligation to use its reasonable efforts in the
fulfillment of its responsibilities, the TMP shall not be required to incur
any expenses for the preparation for, or pursuance of, administrative or
judicial proceedings, unless the Members agree on a method for sharing such
expenses.
(d) INFORMATION REQUESTED BY THE TMP. The Members and Managers shall
furnish the TMP, within two weeks from the receipt of the request, the
information (including information specified in Code Sections 6230(e) and
6050K) the TMP may reasonably request to comply with the requirements on
furnishing information to the Internal Revenue Service.
(e) TMP AGREEMENTS WITH THE IRS. (1) The TMP shall not agree to any
extension of the statute of limitations for making assessments on behalf of
the Company without first obtaining the written consent of all Members. The
TMP shall not bind any other Member to a settlement agreement in tax audits
without obtaining the written concurrence of any such Member. (2) Any other
Member who enters in a settlement agreement with the Secretary of the
Treasury with respect to any Company (partnership) items, as defined in
Code Section 6231(a)(3), shall notify the other parties of such items
within ninety (90) days from the date of such settlement.
(f) INCONSISTENT TREATMENT OF COMPANY ITEMS. If any Member intends to
file a notice of inconsistent treatment under Code Section 6222(b), such
Member shall, prior to the filing of such notice, notify the TMP of the
(actual or potential) inconsistency of the Member's intended treatment of
the Company (partnership) item with the treatment of that item by the
Company. The TMP shall remit copies of such notification to the other
Members. If an inconsistency notice is filed solely because a Member has
not
42
received a Schedule K-1 in time for filing of its income tax return, the
TMP need not be notified.
(g) REQUEST FOR ADMINISTRATIVE ADJUSTMENT. No Member shall file
pursuant to Code Section 6227 a request for an administrative adjustment of
Company (partnership) items without first notifying all other Members. If
all Members agree with the requested adjustment, the TMP shall file the
request on behalf of the Company. If unanimous consent is not obtained
within thirty (30) days from such notice, or within the period required to
timely file the request, if shorter, any Member, including the TMP, may
file a request for administrative adjustment on its own behalf.
(h) JUDICIAL PROCEEDINGS. Any Member intending to file a petition
under Code Sections 6226, 6228, or any other Code section with respect to
any Company (partnership) item, or other tax matters involving the Company,
shall notify the other Members prior to such filing of the nature of the
contemplated proceeding. In the case where the TMP is the Member intending
to file such petition, such notice shall be given within a reasonable time
to allow the other Members to participate in the choice of the forum for
such petition. If the Members do not agree on the appropriate forum, then
the forum shall be chosen by majority vote. Each Member shall have a vote
in accordance with its Percentage Interest in the Company for the year
under audit. If a majority cannot agree, the TMP shall choose the forum. If
a Member intends to seek review of any court decision rendered as a result
of such proceeding, the Member shall notify the other Members prior to
seeking such review.
ARTICLE XII
RESTRICTIONS ON TRANSFERS
12.1 RESTRICTIONS ON TRANSFER. Class A Units, or any portion thereof, may
be sold, assigned or transferred to any other Person subject to the consent of
the Required Class A Interests; provided, however, PNG or an Affiliate retains
ownership of fifty percent (50%) or more of the Class A Units. Class A Units may
be pledged to the Collateral Agent pursuant to the terms and provisions of that
certain Amended and Restated Secured Credit Agreement dated as of January 12,
1995, by and among Tejas-Acadian Holding Company, certain financial
institutions, Canadian Imperial Bank of Commerce, as Co-Agent, Administrative
Agent and Collateral Agent, Bank of Montreal, as Co-Agent, and Citibank, N.A.,
as Co-Agent, or in connection with any subsequent or replacement financing of an
Affiliate of the Company. Class B Units may not be sold, assigned or transferred
without the consent of the Required Class A Interests. Class B Units may be
pledged to the Collateral Agent pursuant to the terms of the Trust Credit
Agreement.
12.2 WITHDRAWAL; DISSOLUTION; BANKRUPT MEMBERS. No Member shall be
permitted to resign or withdraw from the Company. Except as set forth in Section
13.1(d) below, the withdrawal or dissolution of any Member shall not terminate
the Company nor shall a Member
43
becoming a Bankrupt Member. Subject to Section 13.1(d), upon the withdrawal or
dissolution of any Member, or if any Member becomes a Bankrupt Member, the
Company or any Class A Member shall have the option, exercisable by notice from
another Member to the withdrawing, dissolving or Bankrupt Member (or its
representative), as applicable, at any time prior to the 180th day after such
other Member's receiving notice of the withdrawal or dissolution or the
occurrence of the event causing the Bankrupt Member to become such, to buy, and
on the exercise of this option the withdrawing or dissolving Member or the
Bankrupt Member or its representative shall sell, its Membership Interest. The
purchase price of Class A Units shall be an amount equal to the fair market
value thereof determined by agreement by the withdrawing or dissolving Member or
the Bankrupt Member (or its representative) and the other Members; however, if
those Persons do not agree on the fair market value on or before the 30th day
following the exercise of the option, either such Person, by notice to the
other, may require the determination of fair market value to be made by an
independent appraiser specified in that notice. If the Person receiving that
notice objects on or before the tenth day following receipt to the independent
appraiser designated in that notice, and those Persons otherwise fail to agree
on an independent appraiser, either such Person may petition the United States
District Judge for the Southern District of Texas (Houston Division) then senior
in service to designate an independent appraiser. The determination of the
independent appraiser, however designated, is final and binding on all parties.
The withdrawing or dissolving Member or the Bankrupt Member, as applicable, and
the Company each shall pay one-half of the costs of the appraisal. The purchase
price of Class B Units shall be the Liquidation Price. The Company or the Class
A Member shall pay the fair market value of the Class A Units or the Class B
Liquidating Distributions as the case may be, in cash at the time of the
purchase. The payment to be made to the withdrawing or dissolving Member or the
Bankrupt Member, or its representative, as applicable, pursuant hereto shall be
in complete liquidation and satisfaction of all the rights and interest of the
withdrawing or dissolving Member or the Bankrupt Member and its representative
(and all Persons claiming by, through, or under the withdrawing or dissolving
Member or the Bankrupt Member and its representative) in and in respect of the
Company, including, without limitation, any Membership Interest, any rights in
specific Company property, and any rights against the Company and (insofar as
the affairs of the Company are concerned) against the Members, and constitutes a
compromise to which all Members have agreed pursuant to Section 5.02(D) of the
Act.
12.3 LEGEND AND APPLICATION. The Members shall cause any certificates
representing the ownership of the Membership Interests owned by them to be
conspicuously endorsed on the front or the back thereof with the following
legend (or such equivalent legends as counsel for the Company may approve) in
addition to any legend imposed pursuant to any other agreement or required to
comply with any applicable Law:
"The Membership Interests represented by this certificate are
subject to certain provisions found in the Limited Liability
Company Agreement of the Company, which in part restrict the
transfer of the Membership Interest. A copy of the Limited
Liability Company Agreement has been filed with the Company at
its principal place of business and its registered office and
will be
44
furnished by the Company to the holder of this certificate
without charge upon written request to the Company at its
principal place of business or registered office."
12.4 EFFECTIVE DATE OF TRANSFERS. In the event a transfer of a Membership
Interest is consummated in accordance with this Article, such transfer will be
recognized for the purpose of distributions and allocations as of the date on
which such transfer became effective, provided that the Company shall have been
given a copy of all documents or instruments executed in connection with such
transfer. A transferee shall be an assignee under the Act and shall not become a
substituted Member unless such admission is approved by all of the other
Members. Notwithstanding any assumption of liabilities by a transferee, the
transferring Member shall not be released from its obligations under this
Agreement or otherwise with respect to the Company unless such a release is
approved by the Members (exclusive of the transferor).
12.5 COMPLIANCE WITH SECURITIES LAWS. In addition to the restrictions on
transfer of the Membership Interests contained in this Agreement, no transfer of
any Membership Interest shall be made by or on behalf of any Member unless the
Membership Interests are registered under the Securities Act of 1933, as
amended, pursuant to an effective registration statement which contemplates the
proposed transfers and complies with the then-applicable regulations, rules and
administrative procedures and practices of the Securities and Exchange
Commission, and are registered or qualified in accordance with any applicable
state securities Laws, regulations, rules and administrative procedures and
practices, or unless the Company has received the written opinion of or
satisfactory to its legal counsel that the proposed transfer is exempt from
registration under applicable securities Laws. The Managers may waive the
requirements of this Section.
12.6 TAX TERMINATION. For the right of a Member to dispose of a Membership
Interest or any part thereof or of any Person to be admitted to the Company in
connection therewith to exist or be exercised, the Company must receive a
favorable opinion of the Company's legal counsel or of other legal counsel
acceptable to the Managers to the effect that the disposition or admission, when
added to the total of all other sales, assignments, or other dispositions within
the preceding 12 months, would not result in the Company's being considered to
have "terminated" within the meaning of the Code. The Managers may waive the
requirements of this Section.
12.7 INTERESTS IN A MEMBER. A Member that is not a natural person may not
cause or permit an interest, direct or indirect, in itself to be transferred or
assigned such that after the transfer or assignment the Company would be
considered to have terminated within the meaning of Section 708 of the Code.
45
ARTICLE XIII
DISSOLUTION AND LIQUIDATION
13.1 DISSOLUTION OF THE COMPANY. The Company shall be dissolved upon the
occurrence of any of the following events:
(a) The written consent of the Required Class A Interests and the
Required Class B Interests;
(b) The sale or other disposition of all or substantially all of the
Company assets and the receipt of all payments therefor in cash;
(c) October 1, 2025;
(d) The death, insanity, retirement, resignation or expulsion of a
Member, the occurrence of an event which causes a Member to become a
Bankrupt Member or the occurrence of any other event which terminates the
continued membership of a Member in the Company (other than as described in
Section 4.6 or 4.7), unless the business of the Company is continued by the
written consent of the remaining Members holding Class A Units and Class B
Units within 90 days after written notice thereof is provided to the
Members by the Company and there are at least two remaining Members; or
(e) Entry of a decree of judicial dissolution of the Company under
Section 18-802 of the Act.
13.2 LIQUIDATION AND TERMINATION. On dissolution of the Company, until all
Class B Guaranteed Payment Distributions and all Class B Mandatory Distributions
required to be made under the terms of this Agreement have been made, the
Required Class B Interests shall appoint the liquidator. After all Class B
Guaranteed Payment Distributions and all Class B Mandatory Distributions
required to be made under the terms of this Agreement have been made, the
Managers shall act as liquidator or may appoint one or more Members as
liquidator. The liquidator shall proceed diligently to wind up the affairs of
the Company and make final distributions as provided herein and in the Act. The
costs of liquidation shall be borne as a Company expense. Until final
distribution, the liquidator shall continue to operate the Company with all of
the power and authority of the Managers. Maintenance of property and borrowings
and expenditures of Company funds for legitimate Company purposes to effectuate
or facilitate the winding up or the liquidation of the Company affairs shall be
authorized if the liquidator, in the exercise of its business judgment, believes
that the interest of the Company would be best served thereby and shall not be
construed to involve a continuation of the Company. Upon dissolution of the
Company, a true, just and final accounting of all transactions relating to the
business of the Company shall be made. Liabilities of the Company shall be paid
and assets of the Company shall be distributed in accordance with the provisions
of Section 13.3 hereof as soon as is reasonably possible after the dissolution
of the Company.
46
13.3 PAYMENT OF LIABILITIES AND DISTRIBUTION OF ASSETS. Upon dissolution of
the Company, the liquidator shall determine and report to all the Members each
Member's Capital Account, any amounts owing to the Company from any Member, the
interest of the Company in its properties and the value of Company properties,
equipment and other assets. The assets of the Company remaining after the
payment of all Company debts shall be distributed as follows:
(a) The liquidator may sell any or all Company property, including to
Members, and any resulting gain or loss from each sale shall be computed
and allocated to the Capital Accounts of the Members;
(b) With respect to all Company property that has not been sold, the
fair market value of that property shall be determined and the Capital
Accounts of the Members shall be adjusted to reflect the manner in which
the unrealized income, gain, loss, and deduction inherent in property that
has not been reflected in the Capital Accounts previously would be
allocated among the Members if there were a taxable disposition of that
property for the fair market value of that property on the date of
distribution;
(c) Company property shall then be distributed to the Class B Members
to the extent of all Class B Guaranteed Payment Distributions during the
distribution period and all remaining scheduled Class B Mandatory
Distributions ("Terminating Distributions"), before any distribution shall
be made to the holders of any Class A Unit. The Class B Members shall not
otherwise participate in the distribution of assets upon liquidation. If
the assets of the Company are insufficient to permit the payment of the
full required termination payment, then all assets available for
distribution shall be distributed ratably to the holders of the Class B
Units. A consolidation, merger, sale of assets or the reduction of units of
the Company shall not be deemed to be a liquidation, dissolution or
winding-up of the Company within the meaning of this Section; and
(d) Company property shall then be distributed among the Class A
Members, first, in such proportions and in such amounts (to the extent of
available funds) as necessary to cause the respective balances in the
Members' Capital Accounts to be in proportion to their respective
Membership Interests and, thereafter, in accordance with the positive
Capital Account balances of the Members, as determined after taking into
account all Capital Account adjustments for the taxable year of the Company
during which the liquidation occurs (other than those made by reason of
this clause (iii)); and those distributions shall be made by the end of the
taxable year of the Company during which the liquidation of the Company
occurs (or, if later, 90 days after the date of the liquidation).
All distributions in kind to the Members shall be made subject to the
liability of each distributee for costs, expenses and liabilities theretofore
incurred or for which the Company has committed prior to the date of termination
and those costs, expenses and liabilities shall be allocated to the distributee
pursuant to this Section 13.3. The distribution of cash and/or
47
property to a Member in accordance with the provisions of this Section 13.3
constitutes a complete return to the Member of its Capital Contributions and a
complete distribution to the Member of its Membership Interests and all the
Company's property and constitutes a compromise to which all Members have
consented within the meaning of Section 18-502 of the Act. To the extent that a
Member returns funds to the Company, it has no claim against any other Member
for those funds.
Notwithstanding the foregoing, until the repayment of any Member's
indebtedness to the Company, the liquidator shall retain such Member's
distributive share of cash from such properties against such indebtedness and
the cost of operation of such properties during the period of liquidation. If,
after six (6) months after the liquidator's report, a Member's indebtedness to
the Company has not been satisfied, such Member's Membership Interest may be
foreclosed upon and sold at public or private sale at the best price immediately
obtainable which shall be determined in the sole judgment of the liquidator, the
proceeds applied to the indebtedness and the balance of such proceeds, if any,
delivered to such Member as its liquidating distribution.
ARTICLE XIV
MISCELLANEOUS PROVISIONS
14.1 NOTICES. Notices of any kind which may be or are required to be given
hereunder by any Member to another shall be in writing and personally delivered
or sent by telecopy or certified mail, return receipt requested, addressed to
the respective Member at the post office address appearing on EXHIBIT A hereto
or at such other address as may be designated by such Member by notice addressed
to the other Members. If mailed, notices shall be deemed to have been given
three (3) Business Days after deposited in the United States mail.
14.2 AMENDMENT OR MODIFICATION. This Agreement may be amended or modified
from time to time only by a written instrument adopted by the Managers and
executed and agreed to by the Required Class A Interests and the Required Class
B Interests; provided, however, that (a) an amendment or modification reducing a
Member's Percentage Interest or increasing its Commitment (other than to reflect
changes otherwise provided by this Agreement) is effective only with that
Member's consent, (b) an amendment or modification reducing the required
Percentage Interest or other measure for any consent or vote in this Agreement
is effective only with the consent or vote of Members having the Percentage
Interests or other measure theretofore required, and (c) no amendment or
modification affecting Section 2.8 hereof shall be effective unless the Required
Class B Interests shall consent.
14.3 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and shall
inure to the benefit of the Members, the Managers, and their respective
successors and assigns.
14.4 CONSTRUCTION. The captions used in this Agreement are for convenience
only and shall not be construed in interpreting this Agreement. Wherever the
context so requires, the
48
masculine shall include the feminine and the neuter and the singular shall
include the plural, and vice versa, unless the context clearly requires a
different interpretation.
14.5 GOVERNING LAW. ALL PROVISIONS OF THIS AGREEMENT SHALL BE CONSTRUED
ACCORDING TO THE SUBSTANTIVE LAWS OF THE STATE OF DELAWARE WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAWS. The rights and liabilities of the Members
shall, except as otherwise provided in this Agreement, be as provided for in the
Act.
14.6 SEVERABILITY. This Agreement is intended to be performed in accordance
with, and only to the extent permitted by, all applicable Laws, ordinances,
rules and regulations of the jurisdictions in which the Company does business.
In the event of a direct conflict between the provisions of this Agreement and
(a) any provision of the Certificate, or (b) any mandatory provision of the Act
or (to the extent such statutes are incorporated into the Act) the DGCL, the
applicable provision of the Certificate, the Act, or the DGCL shall control. If
any provision of this Agreement or the application thereof to any person or
circumstances is for any reason and to any extent invalid or unenforceable, the
remainder of this Agreement and the application of such provision to the other
persons or circumstances will not be affected thereby, but rather are to be
enforced to the greatest extent permitted by Law.
14.7 WAIVER OF PARTITION. Each Member hereby irrevocably waives during the
term of the Company any right that it may have to maintain any action for
partition with respect to any assets of the Company and, except as provided in
Article XIII, any right it may have to maintain any action for dissolution of
the Company.
14.8 COUNTERPARTS. This Agreement may be signed in multiple counterparts,
each of which shall be deemed one and the same instrument.
14.9 NOTICE TO MEMBERS OF PROVISIONS OF THIS AGREEMENT. By executing this
Agreement, each Member acknowledges that it has actual notice of (a) all of the
provisions of this Agreement, including, without limitation, the restrictions on
the transfer of Membership Interests set forth in Article XII, and (b) all of
the provisions of the Certificate, including, without limitation, the fact that
the Certificate provides that no Member shall have the preemptive right to
acquire any Membership Interests that may at any time be issued, sold or offered
for sale by the Company. Each Member hereby agrees that this Agreement
constitute adequate notice of all such provisions, including, without
limitation, any notice requirement under Article 2.19(D) of the DGCL and Article
8 of the UCC, and each Member hereby waives any requirement that any further
notice thereunder be given.
14.10 EXAMINATION OF AGREEMENT. A signed counterpart of this Agreement
shall be deposited with the Company. The Company shall maintain such counterpart
at its principal office and shall make the same available for examination by any
Member, in person or by agent or attorney, to the same extent that the books and
records of the Company are so available or are required to be so available by
applicable Law.
49
14.11 NO THIRD PARTY BENEFICIARIES. This Agreement are intended for the
exclusive benefit of the Members and their respective personal representatives,
successors and permitted assigns, and nothing contained in this Agreement shall
be construed as creating any rights or benefits in or to any third party.
MEMBERS:
PONTCHARTRAIN NATURAL GAS SYSTEM,
A TEXAS GENERAL PARTNERSHIP
By: TXO-ACADIAN GAS PIPELINE CORP.,
A DELAWARE CORPORATION
By: /S/ ▇▇▇▇▇ ▇▇▇▇
Name: ▇▇▇▇▇ ▇▇▇▇
Title: Vice President - Finance
By: MCN ACADIAN GAS PIPELINE CORP.,
A DELAWARE CORPORATION
By: /S/ ▇▇▇▇▇ ▇▇▇▇
Name: ▇▇▇▇▇ ▇▇▇▇
Title: Vice President - Finance
MCN PELICAN INTERSTATE GAS CORP.,
A DELAWARE CORPORATION
By: /S/ ▇▇▇▇▇ ▇▇▇▇
Name: ▇▇▇▇▇ ▇▇▇▇
Title: Vice President - Finance
50
MAGNOLIA ENERGY VENTURE TRUST
By: STATE STREET BANK AND TRUST
COMPANY, NOT IN ITS INDIVIDUAL
CAPACITY BUT SOLELY AS TRUSTEE
By: /S/ ▇▇▇▇ ▇. ▇▇▇▇▇
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Assistant Vice President
51
EXHIBIT "A"
NAME, ADDRESS,
COMMITMENT, UNITS OF MEMBERSHIP
INTEREST AND PERCENTAGE INTEREST
OF EACH MEMBER
1. CLASS A UNITS
INITIAL UNITS OF INITIAL
CAPITAL MEMBERSHIP PERCENTAGE
CONTRIBUTION INTEREST INTEREST
a. Pontchartrain Natural Tranche A 9660 96.6%
Gas System Economic
▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇. ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
b. MCN Pelican Interstate $2,300,000 340 3.4%
Gas Corp.
▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇. ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
2. CLASS B UNITS (to be issued on Tranche B Financing Funding Date)
a. Magnolia Energy $55,000,000 10,000 100%
Venture Trust
c/o State Bank and
Trust Company, Trustee
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
DISTRIBUTION SCHEDULE
CLASS B
GUARANTEED CLASS B
DISTRIBUTION TOTAL PAYMENT MANDATORY
DATE DISTRIBUTION DISTRIBUTIONS DISTRIBUTIONS
12/29/95
01/08/96 105,149.31 105,149.31 0.00
04/29/96 2,896,466.00 1,143,022.22 1,753,443.78
07/29/96 2,158,602.00 899,097.88 1,259,504.32
10/28/96 2,182,323.00 877,830.25 1,304,492.75
01/28/97 2,182,323.00 865,207.60 1,317,115.40
04/28/97 2,142,185.00 824,402.91 1,317,782.09
07/28/97 2,185,987.00 811,311.46 1,354,675.54
10/28/97 2,189,789.00 797,101.15 1,392,687.85
01/28/98 2,189,789.00 773,326.43 1,416,462.57
04/28/98 2,142,185.00 732,860.06 1,409,324.94
07/28/98 2,165,987.00 717,205.71 1,448,781.29
10/28/98 2,189,789.00 700,354.79 1,489,434.21
01/28/99 2,189,789.00 674,928.49 1,514,860.51
04/28/99 2,142,185.00 634,957.96 1,507,227.04
07/28/99 2,165,987.00 616,562.68 1,549,424.32
10/28/99 2,189,789.00 596,887.70 1,592,901.30
01/28/2000 2,189,789.00 569,695.11 1,620,093.89
04/28/2000 2,158,602.00 536,146.58 1,622,455.42
07/28/2000 2,158,602.00 508,750.52 1,649,851.48
10/30/2000 2,182,323.00 496,745.44 1,685,577.56
01/29/2001 2,182,323.00 452,429.95 1,729,893.05
04/30/2001 2,142,185.00 423,219.75 1,718,965.25
07/30/2001 2,165,987.00 394,194.06 1,771,792.94
10/29/2001 2,189,789.00 364,276.35 1,825,512.65
01/28/2002 2,189,790.00 333,451.56 1,856,338.44
04/29/2002 2,390,427.00 302,106.25 2,088,320.75
07/29/2002 2,416,987.00 266,843.80 2,150,143.20
10/28/2002 2,443,547.00 230,537.43 2,213,009.57
01/28/2003 2,443,547.00 195,292.28 2,248,254.72
04/28/2003 2,390,427.00 153,500.94 2,236,926.06
07/28/2003 2,416,987.00 117,434.77 2,299,552.23
10/28/2003 2,443,547.00 79,469.35 2,364,077.65
01/28/2004 2,330,229.00 39,111.92 2,291,117.08
-------------------------------------------------
$72,233,412 $17,233,412 $55,000,000
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