1
EXHIBIT 3.2
CALAIR L.L.C.
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AMENDED AND RESTATED
COMPANY AGREEMENT
DATED AS OF
APRIL 17, 1998
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TABLE OF CONTENTS
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SECTION 1
DEFINED TERMS; RULES OF CONSTRUCTION
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Computation of Time Periods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Accounting Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.4 No Presumption Against Any Party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.5 Use of Certain Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.6 Headings and References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 2
ORGANIZATIONAL MATTERS
2.1 Formation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.2 Members . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.3 Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.4 Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.5 Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(a) Limited Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(b) Prohibited Acts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.6 Principal Place of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.7 Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.8 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.9 Certificate of Formation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.10 Agent for Service of Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.11 Cancellation Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.12 Compensation and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.13 Independent Activities; Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . 4
(a) Managing Member's Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(b) Other Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.14 Liability to Third Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 3
MEMBERS
3.1 Rights of Members . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.2 Member Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.3 Management Rights of CEA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
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3.4 Voting Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.5 Meetings of the Members . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(a) Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(b) Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(c) Proxy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(d) Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(e) Conduct of Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(f) Consent in Lieu of Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(g) No Meeting Required for Certain Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.6 Partition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.7 Covenant Not to Dissolve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.8 Termination of Status as Member . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(a) Certain Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(b) Resignation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(c) Continuing Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(d) Transferee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 4
MANAGEMENT
4.1 Management of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(a) Managing Member . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(b) Initial Managing Member . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(c) Authority of the Managing Member . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.2 Reliance by Third Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.3 Restrictions on Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(a) Contravention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(b) Impossibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(c) Litigation, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(d) Possession of Company Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(e) Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(f) Bankruptcy, Insolvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(g) Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(h) Extraordinary Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(i) Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(j) Dissolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(k) Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(l) Tax and Accounting Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(m) Admission of Members . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(n) Operative Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(o) Affiliate Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(s) Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(t) Reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.4 CEA's Rights upon Certain Extraordinary Events . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.5 Separate Identity and Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
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4.6 Compliance with Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.7 No Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.8 Affiliate Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.9 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 5
COMPANY CAPITAL
5.1 Capital Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.2 Closing Date Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.3 Additional Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.4 Voluntary Capital Contributions by Calfinco . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.5 No Withdrawal of Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.6 No Interest on Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.7 Company Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 6
ALLOCATIONS
6.1 Profits and Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.2 Special Allocations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(a) Gross Income Allocation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(b) Qualified Income Offset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(f) Expense Allocation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
6.3 Curative Allocations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
6.4 Other Allocation Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
6.5 Tax Allocations: Code Section 704(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 7
DISTRIBUTIONS AND REDEMPTIONS
7.1 Proceeds from the Sale of Slots . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
7.2 Other Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 8
ACCOUNTING; BOOKS AND RECORDS; REPORTS
8.1 Accounting; Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(a) Maintenance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(b) Accounting Methods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(c) Access to Books, Records, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
8.2 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
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(a) Partnership Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(b) Tax Matters Member . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(c) Tax Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
(d) Section 754 Election . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
8.3 Periodic Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
(a) Annual Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
(b) Quarterly Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
(c) Other Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(d) Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 9
TRANSFERS OF MEMBER INTEREST
9.1 Restriction on Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
9.2 Permitted Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(a) Calfinco . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(b) CEA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(c) Calfinco's Right of First Refusal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
9.3 Conditions to Permitted Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(a) Documentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(b) Tax Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(c) Securities Law Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(d) Investment Company Act Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(e) Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(f) Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(g) No Withholding Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
9.4 Prohibited Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
9.5 Admission as Substituted Members . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
9.6 Distributions with Respect to a Transferred Member Interest . . . . . . . . . . . . . . . . . . . 24
SECTION 10
POWER OF ATTORNEY
10.1 Managing Member as Attorney-in-Fact . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
10.2 Nature of Special Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 11
DISSOLUTION AND WINDING UP
11.1 Liquidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
(a) Termination Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
(b) Company Termination Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
11.2 Winding Up . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
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11.3 No Restoration of Deficit Capital Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
11.5 Rights of Members . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
11.6 The Company Liquidator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(a) Definition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(b) Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(c) Resignation of Company Liquidator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
11.7 Liquidation Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(a) Termination of Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(b) Sale of Company Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(c) Repayment of Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(d) Liquidating Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
11.8 Form of Liquidating Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 12
INDEMNIFICATION
12.1 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
12.2 Nonexclusive Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
12.3 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
12.4 Limitations on Indemnification Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(a) Limitation by Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(b) Misconduct, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(c) No Duplication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
12.5 Payments; No Reduction of Capital Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
12.6 Procedural Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
(a) Notice of Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
(b) Defense of Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
(c) Settlement of Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(d) Indemnification Despite Negligence of Indemnified Person . . . . . . . . . . . . . . . . . 31
12.7 Tax Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
12.8 Survival of Indemnification Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 13
MISCELLANEOUS
13.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
13.2 Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
13.3 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
13.4 Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
13.5 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
13.6 Counterpart Execution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
13.7 Specific Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
13.8 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
13.9 Fair Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
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Schedules
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Schedule 5.7 Assets of the Company
Exhibits
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Exhibit A Definitions
Exhibit B Transferee ▇▇▇▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇.▇.▇.
AMENDED AND RESTATED
COMPANY AGREEMENT
THIS AMENDED AND RESTATED COMPANY AGREEMENT ("Agreement") is dated as
of April 17, 1998, by and between CALFINCO INC., a Delaware corporation
("Calfinco"), and Chase Equity Associates, L.P., a California limited
partnership ("CEA").
W I T N E S S E T H:
In consideration of the premises and intending to be legally
bound by this Agreement, the parties hereby agree as follows:
SECTION 1
DEFINED TERMS; RULES OF CONSTRUCTION
1.1 Definitions. As used in this Agreement, each capitalized term
defined in the preamble, any Sections of this Agreement or in Exhibit A shall
have the meaning ascribed to such term therein.
1.2 Computation of Time Periods. In this Agreement in the
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" mean
"to but excluding."
1.3 Accounting Terms. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP applied consistently,
except with respect to Capital Accounts and items entering into the computation
of Capital Accounts, and except to the extent otherwise specified in the terms
hereof.
1.4 No Presumption Against Any Party. Neither this Agreement nor
any uncertainty or ambiguity herein shall be construed against any particular
party, whether under any rule of construction or otherwise. On the contrary,
this Agreement has been reviewed by each of the parties and their counsel and
shall be construed and interpreted according to the ordinary meaning of the
words used so as to fairly accomplish the purposes and intentions of all
parties hereto.
1.5 Use of Certain Terms. Unless the context of this Agreement
requires otherwise, the plural includes the singular, the singular includes the
plural, and "including" has the inclusive meaning of "including, without
limitation." The words "hereof," "herein," "hereby," "hereunder," and other
similar terms of this Agreement refer to this Agreement as a whole and not
exclusively to any particular provision of this Agreement. All pronouns and
any variations thereof shall be deemed to refer to masculine, feminine, or
neuter, singular or plural, as the identity of the Person or Persons may
require.
9
1.6 Headings and References. Section and other headings are for
reference purposes only, and shall not affect the interpretation or meaning of
any provision of this Agreement. Unless otherwise provided, references to
Articles, Sections, Schedules, and Exhibits shall be deemed references to
Articles, Sections, Schedules, and Exhibits of this Agreement. References in
this Agreement and in Exhibit A to this Agreement and to any other Operative
Document or any other agreement include this Agreement and the other Operative
Documents and agreements as the same may be modified, amended, restated or
supplemented from time to time pursuant to the provisions hereof or thereof as
permitted by the Operative Documents, including any exhibits and schedules
thereto. A reference to any Law shall mean that Law as it may be amended,
modified or supplemented from time to time, and any successor Law. A reference
to a Person includes the successors and assigns of such Person, but such
reference shall not increase, decrease or otherwise modify in any way the
provisions in this Agreement governing the assignment of rights and obligations
under or the binding effect of any provision of this Agreement.
SECTION 2
ORGANIZATIONAL MATTERS
2.1 Formation. The Company was formed as of March 31, 1998 as a
limited liability company under the Act. This Agreement amends and restates
the terms upon which the Company is organized and upon which its business is
authorized and intended to be conducted. The Company shall be treated for
federal income tax purposes as a partnership, upon the terms and conditions in
this Agreement.
2.2 Members. Calfinco and CEA are the initial Members of the
Company. The names of and addresses for notice to the Members, as of the date
hereof, are as follows:
Calfinco: CALFINCO Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Vice President - Corporate Finance
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to the attention of Managing
Attorney-Finance at the above address, Suite 1466;
telecopy no: ▇▇▇-▇▇▇-▇▇▇▇
CEA: Chase Equity Associates L.P.
c/o Chase Capital Partners
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
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with a copy to:
Weil, Gotshal & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
2.3 Name. The name of the Company shall be Calair L.L.C. All
business of the Company shall be conducted in such name.
2.4 Powers. The Company shall possess and may exercise all of the
powers and privileges granted by the Act or by any other Law or by this
Agreement, together with any powers incidental thereto, so far as such powers
and privileges are necessary or convenient to the conduct, promotion or
attainment of the permitted business purposes or activities of the Company.
2.5 Purpose. (a) Limited Purpose. The purposes of the Company
are to (i) acquire the Slots, (ii) lease and/or sell the Slots, (iii) manage,
protect and conserve the Company Property, (iv) enter into the Operative
Documents, (v) own all of the issued and outstanding capital stock of Calair
Capital Corporation, a Delaware corporation, (vi) engage in activities related
or incidental to, and necessary or appropriate for, any of the foregoing, as
permitted by this Agreement, and (vii) engage in such additional business
activities as are permitted under this Agreement or otherwise as the Members
may unanimously agree in writing.
(b) Prohibited Acts. Notwithstanding any other provision of this
Agreement or any provision of Law that otherwise so empowers the Company,
except as provided in Sections 4.3(j), 4.4 and 11.1, the Company shall not (i)
dissolve or liquidate, in whole or in part; (ii) merge or consolidate with any
other enterprise; (iii) transfer all or substantially all of the Company
Property; or (iv) amend this Agreement or any Operative Document to alter in
any manner, or to delete, this Section 2.5.
2.6 Principal Place of Business. The initial principal place of
business of the Company shall be c/o Continental Airlines, Inc., ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Attention: Corporate Secretary. The
Managing Member may not change the principal place of business of the Company
to any other place without the prior written consent of CEA, such consent not
to be unreasonably withheld; provided, however, that, in any event, such
location shall be within the United States and such location shall be within a
state that permits the qualification as a foreign limited liability company of
a limited liability company organized under the Laws of the State of Delaware,
and the Company duly qualifies to do business under the applicable Laws of such
state. The registered office of the Company in the State of Delaware is
located at The Corporation Trust Company, Corporation Trust Center, ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
2.7 Term. The term of the Company shall commence on the date its
certificate of formation described in Section 18-201 of the Act is filed with
the Secretary of State of the State of
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Delaware in accordance with the Act and shall continue until the winding up and
liquidation of the Company and its business is completed following a
Termination Event, as provided in Section 11.2
2.8 Fiscal Year. The fiscal year of the Company for financial
statement and federal income tax purposes shall be the same and shall end on
December 31 of each year, except as may be required by the Code.
2.9 Certificate of Formation. The Managing Member is hereby
designated as an "Authorized Person," within the meaning of the Act, to
execute, deliver and file any amendments, restatements, corrections or
cancellation of the Company's certificate of formation, all in accordance with
the provisions of this Agreement.
2.10 Agent for Service of Process. The registered agent for
service of process on the Company in the State of Delaware shall be The
Corporation Trust Company, Corporation Trust Center, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ or any successor as appointed by
the Managing Member in accordance with the Act.
2.11 Cancellation Certificates. Upon the happening of any event
specified in Section 18-203 of the Act with respect to the Company, the
Managing Member (or, if any Company Liquidator has been appointed, such Company
Liquidator) shall promptly execute and cause to be filed certificates of
cancellation in accordance with the Act and the Laws of any other states or
other jurisdictions in which the Managing Member or such Company Liquidator, as
the case may be, deems such filing necessary or advisable.
2.12 Compensation and Expenses. Except as otherwise expressly
provided in this Agreement, and except as otherwise contemplated by the
Operative Documents, no Member or Affiliate of any Member shall receive any
salary, fee, or draw for services rendered to or on behalf of the Company or
otherwise in its capacity as a Member, nor shall any Member or Affiliate of any
Member be reimbursed by the Company for any expenses incurred by such Member or
Affiliate on behalf of the Company or otherwise in its capacity as a Member.
2.13 Independent Activities; Transactions with Affiliates.
(a) Managing Member's Activities. The Managing Member and any of
its officers and directors (each a "Managing Entity") shall be required to
devote only such time to the affairs of the Company as the Managing Member
determines in its reasonable discretion may be necessary to manage and operate
the Company, and each Managing Entity shall be free to serve any other Person
in any capacity that such Managing Entity may deem appropriate in its
discretion.
(b) Other Activities. Each Member acknowledges that each other
Member and the Affiliates of the other Members are free to engage or invest in
an unlimited number of activities or businesses, any one or more of which may
be related to the activities or businesses of the Company, without having or
incurring any obligation to offer any interest in such activities or businesses
to the Company or any Member, and neither this Agreement nor any activity
undertaken pursuant to this Agreement shall prevent any such Affiliate of any
such Member from engaging in such activities, or require any Member to permit
the Company or any such Affiliate of any such Member to
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participate in any such activities, and as a material part of the consideration
for the execution of this Agreement by each Member, each Member hereby waives,
relinquishes, and renounces any such right or claim of participation. No
Member shall have or owe any fiduciary duty to any other Member, by virtue of
its Member Interest in the Company, or otherwise; provided, however, that each
Member agrees to act with good faith in performing its obligations under this
Agreement.
2.14 Liability to Third Parties. The debts, obligations and
liabilities of the Company, whether arising in contract, tort or otherwise,
shall be solely the debts, obligations and liabilities of the Company; and no
Member shall be obligated personally for any such debt, obligation or liability
of the Company solely by reason of being a Member of the Company.
SECTION 3
MEMBERS
3.1 Rights of Members. Members shall have the rights and
obligations provided in this Agreement and, to the extent consistent with this
Agreement, the Act.
3.2 Member Interests. The Members shall have the following rights
under this Agreement (in addition to the other rights granted hereunder):
(a) the right to receive Distributions and to share in the Profits
and Losses of the Company, in accordance with their Sharing Ratios, all to the
extent provided in this Agreement;
(b) the right to receive liquidating Distributions to the extent
provided in Section 11;
(c) the right to vote upon, approve or consent to actions of the
Company and to participate in the management of the Company, all to the extent
provided in this Agreement; and
(d) the right to appoint the Company Liquidator as provided in
Section 11.6.
3.3 Management Rights of CEA. Except as expressly provided
herein, CEA shall have no right, power or authority to take part in the
management or control of the Company or its business and affairs or to act for
or bind the Company in any way.
3.4 Voting Rights. Except as provided in Section 18-213 of the
Act, the Members shall have the right to vote only on those matters
specifically reserved for their vote that are set forth in this Agreement.
3.5 Meetings of the Members. (a) Notice. Meetings of the Members
shall be called upon the written request of any Member. The request shall
state the nature of the business to be transacted. Notice of any such meeting
shall be given to all Members not less than five (5) Business Days nor more
than thirty (30) days prior to the date of such meeting. Members may vote in
person, by proxy or by telephone at such meeting.
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13
(b) Record Date. For the purpose of determining the Members
entitled to vote on, or to vote at, any meeting of the Members or any
adjournment thereof, the Member requesting such meeting may fix, in advance, a
date as the record date for any such determination. Such date shall not be
more than thirty (30) days nor less than seven (7) Business Days before any
such meeting.
(c) Proxy. Any Member may authorize any Person or Persons to act
for it by proxy on all matters in which such Member is entitled to participate,
including waiving notice of any meeting, or voting or participating at a
meeting. Every proxy must be signed by such Member or its attorney-in-fact.
No proxy shall be valid after the expiration of eleven (11) months from the
date thereof unless otherwise provided in the proxy. Every proxy given by a
Member shall be revocable at the pleasure of the Member executing it unless
otherwise expressly stated in such proxy.
(d) Consents. The approval or consent of any Member required
under this Agreement may, except as expressly provided to the contrary in this
Agreement, be given or withheld in the sole and absolute discretion of such
Member.
(e) Conduct of Meeting. Except as expressly provided herein, each
meeting of Members shall be conducted by the Managing Member or such other
Person as the Managing Member may appoint pursuant to such rules for the
conduct of the meeting as the Managing Member or such other Person deems
appropriate.
(f) Consent in Lieu of Meeting. In the event the consent of any
Member is required for any action to be taken by the Company, such consent may
be given at a meeting, which may be conducted by conference telephone call, or
provided in writing, executed by the Member necessary to authorize such action
at a meeting.
(g) No Meeting Required for Certain Actions. Any action, consent
or approval that by the terms of this Agreement may be taken by any Member
acting alone may be taken without the necessity of calling or holding a meeting
of Members.
3.6 Partition. To the fullest extent permitted under applicable
Law, each Member waives any and all rights that it may have to maintain an
action for partition of any Company Property.
3.7 Covenant Not to Dissolve. Except as otherwise permitted by
this Agreement, to the fullest extent permitted under applicable Law, each
Member hereby covenants and agrees not to (a) take any action to file a
certificate of dissolution or its equivalent with respect to itself, (b)
exercise any power under the Act to dissolve the Company or (c) petition for
judicial dissolution of the Company.
3.8 Termination of Status as Member. (a) Certain Events. A
Person shall cease to be a Member only upon the first to occur of:
(i) The Transfer of all of its Member Interest, provided
that the transferee of such Member Interest is admitted as a
substituted Member in accordance with this Agreement.
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(ii) The involuntary Transfer by operation of Law of its
Member Interest (which shall not relieve the transferor from any
liability under this Agreement, including liabilities for an
unpermitted resignation).
The happening of the foregoing events shall not cause a dissolution of the
Company except as provided in Section 11. Except to the extent specifically
set forth herein, upon the termination of a Person's status as a Member, such
Person shall not be entitled to any Distributions from the Company, including
any Distribution based on the fair value of such Person's Member Interest. A
Member shall not cease to be a Member solely as a result of the happening of
any of the events specified in 18-304(a) of the Act.
(b) Resignation. No Member may resign from the Company except (i)
upon cancellation of the certificate of formation as provided in Section 18-203
of the Act or (ii) incident to a Permitted Transfer pursuant to which the
Transferee is admitted as a Member.
(c) Continuing Obligations. Any debts, obligations, or
liabilities in damages to the Company of any Person who ceases to be a Member
shall be collectible by any legal means and the Company is authorized, in
addition to any other remedies at Law or in equity, to apply any amounts
otherwise distributable or payable by the Company to such Person to satisfy
such debts, obligations, or liabilities.
(d) Transferee. Except as otherwise provided in this Agreement,
in the event a Person ceases to be a Member without having Transferred all of
its Member Interest in accordance with this Agreement (including upon removal
or resignation), such Person shall be treated as an unadmitted transferee of an
interest as a result of a Transfer (other than a Permitted Transfer) of a
Member Interest pursuant to Section 9.5.
SECTION 4
MANAGEMENT
4.1 Management of the Company. (a) Managing Member. The
management of the Company shall be vested in the Managing Member and except as
otherwise provided in this Agreement in Sections 2.5, 4.3, 4.4, 4.5 and 11, the
Managing Member shall have full power and authority to manage the business and
affairs of the Company to the extent provided in the Act, and no other Member
shall have any such management power and authority.
(b) Initial Managing Member. Calfinco shall be the initial
Managing Member. CEA shall have the right to replace Calfinco as the Managing
Member (i) if Calfinco Transfers its Member Interest to a Person that is not an
Affiliate of Calfinco, or (ii) as provided in Section 4.4.
(c) Authority of the Managing Member. The Managing Member shall
have the authority on behalf and in the name of the Company to perform all acts
necessary and desirable to the objects and purposes of the Company, subject
only to the restrictions expressly set forth in this Agreement (including
Sections 4.3 and 4.4 ) and subject to the rights of the Company Liquidator to
liquidate the
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Company and take all actions incidental thereto during the Liquidation Period.
Subject to such restrictions, the authority of the Managing Member shall
include the authority to:
(i) engage in transactions and dealings on behalf of the
Company, including transactions and dealings with any Member or any
Affiliate of any Member;
(ii) call meetings of Members or any class or series
thereof;
(iii) make Distributions on account of Member Interests in
accordance with the provisions of this Agreement and the Act,
provided, that all such Distributions shall be in cash unless
otherwise consented to by all Members;
(iv) appoint (and dismiss from appointment) officers,
attorneys and agents on behalf of the Company, and engage (and dismiss
from engagement) any and all persons providing legal, accounting or
financial services to the Company, or such other Persons as the
Managing Member deems necessary or desirable for the management and
operation of the Company;
(v) incur and pay all expenses and obligations incident
to the operation and management of the Company;
(vi) subject to the provisions of Section 11, effect a
dissolution of the Company after the occurrence of a Termination Event
and, to the extent provided in Section 11, act as Company Liquidator
for the purpose of winding up the Company's affairs, all in accordance
with the provisions of this Agreement and the Act;
(vii) bring and defend (or settle) on behalf of the Company
actions and proceedings at law or equity before any court or
governmental, administrative or other regulatory agency, body or
commission or any arbitrator or otherwise;
(viii) prepare or cause to be prepared reports, statements
and other relevant information for distribution to Members as may be
required by this Agreement or the Act and any additional information
determined to be appropriate by the Managing Member from time to time;
(ix) execute, deliver and perform the Company's
obligations under any Operative Documents to which the Company is a
party, including any certificates and other documents and instruments
related thereto;
(x) prepare and file all necessary returns and statements
and pay all taxes, assessments and other impositions applicable to the
Company Property pursuant to Section 8.2; and
(xi) execute all other documents or instruments, perform
all duties and powers and do all things for and on behalf of the
Company in all matters necessary or desirable for or incidental to the
foregoing.
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4.2 Reliance by Third Parties. Persons dealing with the Company
are entitled to rely conclusively upon the power and authority of the Managing
Member set forth in this Agreement.
4.3 Restrictions on Authority. Except as provided in Section 11,
the Managing Member shall not be authorized to take any of the actions set
forth in this Section 4.3 without the prior written approval of the other
Member. The Managing Member covenants and agrees that it shall not, without
such approval:
(a) Contravention. Do any act in contravention of this Agreement
or, when acting on behalf of the Company, engage in activities other than those
contemplated by Section 2.5(a);
(b) Impossibility. Do any act that would make it impossible to
carry on the ordinary business of the Company, except as otherwise expressly
provided in this Agreement;
(c) Litigation, Etc. Confess a judgment against the Company or
settle on behalf of the Company actions and proceedings at law or in equity
before any court, any governmental, administrative or other regulatory agency,
body or commission or any arbitrator or otherwise (i) to which the Members or
any of their Affiliates is a party in opposition to the Company or (ii) as a
result of which it is reasonably likely that the rights, assets or interests of
the Company or its Members as such would be materially adversely affected;
(d) Possession of Company Property. Possess Company Property or
assign rights in Company Property, for other than a Company purpose;
(e) Liability. Perform any act that would cause, or knowingly
fail to perform any act which failure would cause, any Member to be obligated
personally for any debt, obligation, tax or liability of the Company in any
jurisdiction solely by reason of such Member being a Member of the Company;
(f) Bankruptcy, Insolvency. Cause or permit the Company
voluntarily to take any action of the type referred to in clauses (i)(c) or
(ii) of the definition of "Voluntary Bankruptcy," or clause (iii) of the
definition of "Voluntary Bankruptcy," insofar as such clause (iii) refers to
clauses (i)(c) or (ii) of such definition;
(g) Indebtedness. Cause or permit the Company to incur, assume or
obligate itself for any Indebtedness, except that the Company may enter into
and incur obligations under the Operative Documents (and any refinancings of
the Credit Documents as described in Section 4.3(r)) and accounts payable
associated with Company Expenses incurred in the ordinary course of business;
(h) Extraordinary Transactions. Make any material change to the
Slots other than (i) like-kind exchanges of one or more of the Slots pursuant
to Section 13 of the Slot Lease, and (ii) sales pursuant to Section 13 of the
Slot Lease to or at the direction of Calfinco, or its Affiliates, of Slots
whose aggregate sales price, when combined with the aggregate sales price, of
all Slots previously sold to or at the direction of Calfinco, or its
Affiliates, do not exceed $50,000,000; provided, that any sale of Slots
permitted by this clause (h) shall be at a price not less than the fair market
value of the Slots at the time of sale, as set forth in an appraisal prepared
by an appraiser
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reasonably acceptable to all Members, dated within thirty (30) days of the sale
of such Slots; and provided, further, that any such sale or exchange must be to
a Person that is not an Affiliate of Calfinco and must be otherwise in
accordance with the provisions of Section 13 of the Slot Lease, unless
concurrently with such sale to Calfinco or an Affiliate of Calfinco all of
CEA's remaining Member Interest is being redeemed;
(i) Liens. Cause or permit the Company to incur or suffer to
exist any Liens on any of its assets, except for Permitted Liens;
(j) Dissolution. Cause or permit the Company voluntarily to take
any of the actions described in Section 2.5(b);
(k) Merger. Cause or permit the Company to merge or consolidate
with or into any other Person;
(l) Tax and Accounting Matters. Except as may be required by Law,
cause or permit changes in any tax position or policy of the Company, or cause
or permit changes in or adoption of any accounting position, practice or policy
(including a change in its fiscal year) of the Company not in accordance with
GAAP;
(m) Admission of Members. Cause or permit the admission of any
Member to the Company other than pursuant to Section 9;
(n) Operative Documents. Cause or consent to (i) any termination
or cancellation of, (ii) any assignment, delegation or other transfer of the
Company's or any other Person's rights or obligations under, or (iii) any
amendment, modification, supplement or waiver of the Company's or any other
Person's rights or obligations under, this Agreement or any other Operative
Document to which the Company is a party;
(o) Affiliate Transactions. Cause or permit the Company to enter
into any contracts (including any indemnification agreements) or transactions
with any Member or any Affiliate of any Member, other than as expressly
provided for or contemplated by this Agreement (including Sections 4.3(r) and
4.8) or by any other Operative Document;
(p) Renewal of Slot Lease. Cause or permit the renewal of the
Slot Lease upon the expiration of the original term thereof;
(q) Exercise of Slot Lease Remedies. Exercise any remedy under
Section 11 of the Slot Lease Agreement other than pursuant to Sections
11(a)(ii) and (b) of the Slot Lease;
(r) Prepayment or Refinancing of Indebtedness. Cause or permit
the Company to prepay any of the Company's Indebtedness; provided, that the
Managing Member shall have the right, without the approval of the other Member,
to refinance the Company's Indebtedness with any Person, including, at any time
after the third (3rd) anniversary of the Closing Date, with any Member or an
Affiliate of a Member, upon terms no less favorable to the Company and the
Members than the terms
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of such refinanced Indebtedness; provided further, that if the Company's
Indebtedness has been refinanced with a Member or an Affiliate of a Member, the
terms of such refinancing shall include a requirement that, upon a default
thereunder, the holders of such Indebtedness shall not take any action to
enforce any remedies with respect to such default for one hundred eighty (180)
days after written notice to all Members of such default;
(s) Distributions. Cause or permit Distributions to the Members,
except as expressly provided in this Agreement; or
(t) Reimbursement. Cause or permit the Company to reimburse any
Member for any liability, loss, cost or Expense other than as expressly
provided for in or contemplated by this Agreement or any other Operative
Document.
4.4 CEA's Rights upon Certain Extraordinary Events. (a) Upon the
occurrence of any of the following (each, a "Trigger Event"):
(i) Calfinco, as the Managing Member, shall have engaged
in willful misconduct in managing or otherwise conducting the business
and affairs of the Company; or
(ii) the occurrence of any of the events described in
clauses (iii) through (xi) of the definition of Termination Event;
CEA shall have the right to notify Calfinco of the occurrence of a Trigger
Event (a "Trigger Event Notice"), and if (x) such Trigger Event is not cured or
otherwise resolved to CEA's satisfaction within five (5) Business Days after
delivery of the Trigger Event Notice, and (y) the Company does not exercise its
redemption option provided in paragraph 3 of the Redemption Option Agreement,
and consummate such redemption in accordance with the provisions of the
Redemption Option Agreement, CEA shall have the right to remove Calfinco as the
Managing Member and to be substituted for Calfinco as the Managing Member. CEA
may rescind any Trigger Event Notice by delivery of a rescission notice to
Calfinco prior to the fifth (5th) Business Day after delivery of the Trigger
Event Notice to Calfinco.
(b) Upon the occurrence of any Termination Event (other than
those Termination Events listed in clauses (i) and (ii) of the definition of
Termination Events) at any time, CEA shall have the right (i) to cause the
Company to terminate the Slot Lease, (ii) to act as the Company Liquidator or
appoint an experienced third party, institutional liquidator to act as the
Company Liquidator, and (iii) to cause a liquidation of the Company in
accordance with Section 11.
4.5 Separate Identity and Operations. The Managing Member shall
cause the Company to conduct its business and operations separate and apart
from that of any Member or any Affiliates of any Member, including (i)
segregating Company Property and not allowing funds or other assets of the
Company to be commingled with the funds or other assets of, held by, or
registered in the name of, any Member or any Affiliates of any Member, (ii)
maintaining books and financial records of the Company separate from the books
and financial records of any Member or any Affiliates of any Member, and
observing all Company procedures and formalities, including maintaining minutes
or records of meetings of the Company and acting on behalf of the Company only
pursuant to due
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authorization of the Members (including any authorization as is given in this
Agreement), (iii) causing the Company to pay its liabilities from assets of the
Company and (iv) causing the Company to conduct its dealings with third parties
in its own name and as a separate and independent entity.
4.6 Compliance with Agreement. The Managing Member shall cause
the Company to comply with all of the obligations of the Company set forth in
this Agreement and the other Operative Documents to which it is a party.
4.7 No Employees. The Managing Member shall not permit the
Company to have any employees.
4.8 Affiliate Transactions. Except as otherwise provided in this
Agreement, the Managing Member, when acting on behalf of the Company, is hereby
authorized to deal with any Member, acting on its own behalf, or any Affiliate
of any Member, provided that any such transaction, other than any transaction
otherwise permitted or contemplated by the Operative Documents, shall be made
on terms and conditions that, taken as a whole, are no less favorable to the
Company than if the transaction had been made with an independent third party
and shall be in the ordinary course of the Company's business. The Members
agree that the Operative Documents (and the transactions contemplated thereby)
shall satisfy this third party standard and the Members hereby authorize the
Managing Member to cause the Company to enter into the Operative Documents to
which the Company is a party (and to consummate the transactions contemplated
thereby).
4.9 Compliance with Laws. The Managing Member shall cause the
Company to comply with all applicable Laws except for such non-compliance as is
attributable solely to any action taken or omitted to be taken by the other
Member.
SECTION 5
COMPANY CAPITAL
5.1 Capital Accounts. A Capital Account shall be established for
each Member on the books of the Company. Upon the making of the initial
Capital Contributions pursuant to Section 5.2, the initial Capital Account of
Calfinco shall be $31,666,667, the initial Capital Account of CEA shall be
$10,000,000 in each case reflecting the initial Capital Contribution of each
such Member to the Company. The Capital Account of any such Member shall be
maintained in accordance with the following provisions:
(i) To each Member's Capital Account there shall be
credited such Member's Capital Contributions made pursuant to Sections
5.2 or 5.4, as the case may be, such Member's distributive share of
Profits, any items in the nature of income or gain that are specially
allocated to such Member pursuant to this Agreement, and the amount of
any Company liabilities paid, discharged or assumed (pursuant to an
enforceable instrument of
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assumption and release) by such Member or any Affiliate of such Member
or that are secured at the time of distribution by the Company
Property distributed to such Member.
(ii) To each Member's Capital Account there shall be
debited the amount of cash and the fair market value of any Company
Property distributed to such Member pursuant to Sections 7 or 11, such
Member's distributive share of Losses and any items in the nature of
expenses or losses that are specially allocated to such Member
pursuant to Section 6 and the amount of the liabilities of such Member
assumed by the Company or that are secured by any property contributed
by such Member to the Company.
(iii) In the event all or any portion of any Member
Interest is transferred in accordance with the terms of this
Agreement, the transferee shall succeed to the Capital Account of the
transferor to the extent it relates to the Transferred Member
Interest.
(iv) In determining the amount of any liability for
purposes of clauses (i) and (ii) of this Section 5.1, there shall be
taken into account Code Section 752(c) and any other applicable
provisions of the Code and Regulations.
The Managing Member shall maintain the Members' Capital Accounts in accordance
with the terms and provisions of this Agreement. However, in the event any
Member disputes in an appropriate judicial proceeding the determination of its
Capital Account, an independent de novo determination of the Members' Capital
Accounts shall be made .
5.2 Closing Date Contribution. On the Closing Date, Calfinco
shall make a Capital Contribution to the Company in cash in the amount of
$31,666,667 and CEA shall make a Capital Contribution to the Company in cash in
the amount of $10,000,000, subject to the satisfaction (or waiver in writing by
each Member) of the following terms and conditions:
(a) Execution and delivery of the Operative Documents.
(b) No Termination Event or event which, with the giving of notice
or passage of time (or both), would constitute a Termination Event shall have
occurred and be continuing before or after giving effect to any such Capital
Contribution.
(c) Opinions of ▇▇▇▇▇▇ & ▇▇▇▇▇▇ and other parties acceptable to
Calfinco and CEA shall have been delivered to the Company and the Members.
Such opinions shall be addressed to the Company and the Members.
5.3 Additional Contributions. Except as provided in Section 5.2
and as provided by Section 18-607 of the Act, no Member shall have any
obligation of any kind to make Capital Contributions to or assume or pay
liabilities of the Company. No additional Capital Contribution, in and of
itself, including any Capital Contribution pursuant to Section 5.4, shall
increase the contributing Member's Sharing Ratio or otherwise effect such
Member's Member Interest, except for such Member's right to receive repayment
of any additional Capital Contribution referred to in clause (i) of Section 5.4
and in accordance with the provisions of Section 7.2.
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5.4 Voluntary Capital Contributions by Calfinco. In addition to
Capital Contributions described in or required by Section 5.2, Calfinco may
make additional Capital Contributions (i) to fund any exercise of the Company's
redemption options under the Redemption Option Agreement, or (ii) to pay any
make whole premium, expenses, or other amounts in excess of the outstanding
principal balance of any Indebtedness of the Company that is incurred in
prepaying or refinancing such Indebtedness.
5.5 No Withdrawal of Capital. Except as otherwise provided in
this Agreement, no Member shall demand or receive a return of its Capital
Contributions. Under circumstances requiring a return of any Capital
Contributions, no Member shall have the right to receive property other than
cash except as may be specifically provided in this Agreement.
5.6 No Interest on Capital. No Member shall receive any interest
or draw with respect to its Capital Contributions or its Capital Account,
except as otherwise provided in this Agreement.
5.7 Company Assets. After giving effect to the transactions on
the Closing Date, the Company Property shall consist of the assets listed on
Schedule 5.7.
SECTION 6
ALLOCATIONS
6.1 Profits and Losses. (a) After giving effect to the special
allocations set forth in Sections 6.2 and 6.4 and subject, in the case of
Losses, to the limitation set forth in Section 6.1(b) Profits and Losses for
any Fiscal Year shall be allocated to the Members in accordance with their
respective Sharing Ratios.
(b) The Losses and items of deduction or loss allocated pursuant
to Sections 6.1(a) and 6.2 shall not exceed the maximum amount of Losses and
items of deduction and loss that can be so allocated without causing any Member
to have an Adjusted Capital Account Deficit at the end of any Fiscal Year. All
Losses and items of deduction or loss in excess of the limitations set forth in
this Section 6.1(b) shall be allocated, first, to the Members to whom amounts
of Losses and items of deduction or loss can be allocated without causing such
Members to have an Adjusted Capital Account Deficit at the end of the Fiscal
Year, ratably in proportion to the amounts that can be so allocated, and the
balance, if any, to Calfinco.
6.2 Special Allocations. The following special allocations shall
be made in the following order to the extent items of income, gain, loss or
deduction are available:
(a) Gross Income Allocation. In the event any Member has a
deficit Capital Account at the end of any Fiscal Year that is in excess of the
sum of (i) the amount such Member is obligated to restore pursuant to any
provision of this Agreement, and (ii) the amount such Member is deemed to be
obligated to restore pursuant to the penultimate sentences of Sections
1.704-2(g)(1) and 1.704-2(i)(5) of the Regulations, each such Member shall be
specially allocated items of Company income and gain in the amount of such
excess as quickly as possible, provided that an allocation
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pursuant to this Section 6.2(a) shall be made only if and to the extent that
such Member would have a deficit Capital Account in excess of such sum after
all other allocations provided for in this Section 6 have been made as if this
Section 6.2(a) and Section 6.2(b) were not in the Agreement.
(b) Qualified Income Offset. In the event any Member unexpectedly
receives any adjustments, allocations or distributions described in 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) of
the Regulations, items of Company income and gain shall be specially allocated
to each such Member in an amount and manner sufficient to eliminate, to the
extent required by the Regulations, the Adjusted Capital Account Deficit of
such Member as quickly as possible, provided that an allocation pursuant to
this Section 6.2(b) shall be made only if and to the extent that such Member
would have an Adjusted Capital Account Deficit after all other allocations
provided for in this Section 6 have been tentatively made as if this Section
6.2(b) were not in the Agreement.
(c) Minimum Gain Chargeback. Notwithstanding any other provision
hereof to the contrary, if there is a net decrease in Minimum Gain for a
taxable year (or if there was a net decrease in Minimum Gain for a prior
taxable year and the Company did not have sufficient amounts of income and gain
during prior years to allocate among the Members under this Section 6.2(c)),
items of income and gain shall be allocated to each Member in an amount equal
to such Member's share of the net decrease in such Minimum Gain (as determined
pursuant to Section 1.704-2(g)(2) of the Regulations). This Section 6.2(c) is
intended to constitute a minimum gain chargeback under Section 1.704-2(f) of
the Regulations and shall be interpreted consistently therewith.
(d) Member Nonrecourse Deductions. Member Nonrecourse Deductions
attributable to Member Nonrecourse Debt shall be allocated to the Members
bearing the economic risk of loss for such Member Nonrecourse Debt as
determined under Section 1.704-2(b)(4) of the Regulations. If more than one
Member bears the economic risk of loss for such Member Nonrecourse Debt, the
Member Nonrecourse Deductions attributable to such Member Nonrecourse Debt
shall be allocated among the Members according to the ratio in which they bear
the economic risk of loss. This Section 6.2(d) is intended to comply with the
provisions of Section 1.704-2(i) of the Regulations and shall be interpreted
consistently therewith.
(e) Member Nonrecourse Debt Minimum Gain Chargeback.
Notwithstanding any provision hereof to the contrary except Section 6.2(c)
(dealing with Minimum Gain), if there is a net decrease in Member Nonrecourse
Debt Minimum Gain for a taxable year (or if there was a net decrease in Member
Nonrecourse Debt Minimum Gain for a prior taxable year and the Company did not
have sufficient amounts of income and gain during prior years to allocate among
the Members under this Section 6.2(e), items of income and gain shall be
allocated to each Member in an amount equal to such Member's share of the net
decrease in Member Nonrecourse Debt Minimum Gain (as determined pursuant to
Section 1.704-2(i)(4) of the Regulations). This Section 6.2(e) is intended to
constitute a partner nonrecourse debt minimum gain chargeback under Section
1.704-2(i)(4) of the Regulations and shall be interpreted consistently
therewith.
(f) Expense Allocation. Any deduction attributable to the payment
of the amounts described in Section 12.7 shall, without duplication, be
allocated 100% to Calfinco. Any deduction
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attributable to the payment of other Company Expenses shall, without
duplication, be allocated in accordance with the Member's Sharing Ratios.
6.3 Curative Allocations. The allocations set forth in Sections
6.1(b), 6.2(a) and 6.2(b) (the "Regulatory Allocations") are intended to comply
with certain requirements of the Regulations. It is the intent of the Members
that, to the extent possible, all Regulatory Allocations shall be offset either
with other Regulatory Allocations or with special allocations of other items of
Company income, gain, loss or deduction pursuant to this Section 6.3.
Therefore, notwithstanding any other provision of this Section 6 (other than
the Regulatory Allocations), the Managing Member shall make such offsetting
special allocations of Company income, gain, loss or deduction in whatever
manner it determines appropriate so that, after such offsetting allocations are
made, each Member's Capital Account balance is, to the extent possible, equal
to the Capital Account balance such Member would have had if the Regulatory
Allocations were not part of this Agreement and all Company items were
allocated pursuant to this Section 6 without regard to the Regulatory
Allocations.
6.4 Other Allocation Rules. (a) For purposes of determining the
Profits, Losses, or any other items allocable to any period, Profits, Losses,
and any such other items shall be determined on a daily, monthly, or other
basis, as determined by Calfinco using any permissible method under Code
Section 706 and the Regulations thereunder.
(b) The Members hereby agree to be bound by the provisions of this
Section 6 in reporting their shares of Company income, and loss for income tax
purposes, except as may otherwise be required by Law.
6.5 Tax Allocations: Code Section 704(c). (a) Except as otherwise
provided in this Section 6.5, each item of income, gain, loss, deduction and
credit determined for federal income tax purposes shall be allocated among the
Members in the same manner as each correlative item of income, gain, loss,
deduction and credit is allocated to the Members for purposes of maintaining
their respective Capital Accounts.
(b) Income, gain, loss, and deduction with respect to property
contributed to the Company by a Member or revalued pursuant to Section
1.704-1(b)(2)(iv)(f) of the Regulations shall be allocated among the Members in
a manner that takes into account the variation between the adjusted tax basis
of such property and its book value, as required by Section 704(c) of the Code
and Section 1.704-1(b)(4)(i) of the Regulations, using the remedial allocation
method permitted by Section 1.704-3T(d) of the Regulations or, if agreed to by
all Members, the traditional method with curative allocations permitted by
Section 1.704-3(c) of the Regulations.
(c) Any elections or other decisions relating to such allocations
shall be made by Calfinco in any manner that reasonably reflects the purpose
and intention of this Agreement. Allocations pursuant to this Section 6.5 are
solely for purposes of federal, state and local taxes and shall not affect, or
in any way be taken into account in computing, any Member's Capital Account or
share of Profits, Losses, other items, or Distributions pursuant to any
provision of this Agreement.
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(d) Except as otherwise provided in this Agreement, all items of
Company income, gain, loss, deduction and any other allocations not otherwise
provided for, shall be divided among the Members in the same proportions as
they share Profits or Losses, or amounts specially allocated pursuant to
Sections 6.2 or 6.3, as the case may be, for the Fiscal Year.
SECTION 7
DISTRIBUTIONS AND REDEMPTIONS
7.1 Proceeds from the Sale of Slots. (a) Except as provided in
Section 11, the Managing Member shall cause the Company to Distribute, retain,
invest, and lend the proceeds from the sale of any Slots, including any cash
proceeds received in any like-kind exchange described in Section 13(b)(5) of
the Slot Lease, as follows: (i) first the Company shall Distribute to each
Member an amount sufficient to pay such Member's Taxes in respect of such sale;
(ii) second, (A) if such proceeds are received prior to the fifth (5th)
anniversary of the Closing Date, the Company shall retain the amount by which
$12,392,200 exceeds all amounts then being held by the Company (the "Retained
Proceeds") in respect of the purchase prices the Company would be obligated to
pay if it exercised the redemption options under Paragraphs 1 and 2 of the
Redemption Option Agreement, (B) if such proceeds are received after the fifth
(5th) anniversary of the Closing Date, and if the Company has exercised and
consummated the redemption option under Paragraph 1 of the Redemption Option
Agreement, the Company shall retain the amount by which $6,834,200 exceeds the
Retained Proceeds, and (C) if such proceeds are received after the fifth (5th)
anniversary of the Closing Date, and if the Company has not exercised and
consummated the redemption option under Paragraph 1 of the Redemption Option
Agreement, the Company shall retain the amount by which $13,668,400 exceeds the
Retained Proceeds, and such retained amount shall be invested in Cash
Equivalents, and used by the Company to pay the purchase price for CEA's Member
Interest, if the Company chooses to exercise its redemption option(s) pursuant
to the Redemption Option Agreement; and (iii) the balance, if any, shall be
held by the Company, invested in Cash Equivalents, and at the discretion of the
Managing Member, be lent to any Member or an Affiliate of a Member solely in
accordance with the provisions of Section 7.1(b).
(b) Any Indebtedness of a Member or an Affiliate of a Member shall
be evidenced by a promissory note or other evidence of the Indebtedness
providing that (i) the interest rate payable in respect thereof shall be the
blended rate earned by the Company on all Cash Equivalents held pursuant to
Section 7.1(a)(ii), plus 225 basis points, such interest rate to change as and
when the blended rate on such cash equivalents changes and (ii) the
Indebtedness shall be due and payable upon the occurrence of a Termination
Event or, if the senior, unsecured, long-term debt rating of the borrowing
Member, or the borrowing Affiliate of the Member, as the case may be, is lower
than BB by S&P, or lower than Ba2 by ▇▇▇▇▇'▇ Investors Service, Inc.
(c) Any portion of the proceeds from the sale of Slots that is
Distributed to CEA shall be credited to the amount payable to CEA upon the
redemption, if any, of CEA's Member Interest pursuant to the Redemption Option
Agreement.
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7.2 Other Cash. On each Payment Date, the Managing Member shall
cause the Company to Distribute to the Members all cash on hand of the Company
(other than any proceeds from the sale of any Slots) that will not be required
to pay amounts due or to become due (i) under the Credit Documents on such
Payment Date, (ii) in respect of the Company's redemption of CEA's Member
Interest under the Redemption Option Agreement, or (iii) in respect of Company
Expenses; provided, however, that not more than (a) $3,575,000 may be held by
the Company in respect of the redemption, if any, to be made by the Company on
the fifth anniversary of the Closing Date, and (b) $3,575,000 may be held by
the Company in respect of the redemption, if any, to be made by the Company on
the Tenth Anniversary. Except as provided in Section 11, all cash available
for Distribution, other than the cash described in Section 7.1, shall be
distributed first, in repayment of any additional Capital Contributions made
pursuant to Section 5.4(i), and second, to each of the Members in accordance
with their Sharing Ratios on each Payment Date, after giving effect to any
redemption of any portion of CEA's Member Interest on such Payment Date. If
the Company has redeemed a portion of CEA's Member Interest pursuant to the
Redemption Option Agreement following the immediately preceding Distribution of
available cash pursuant to this Section 7.2, the Distribution following such
redemption shall be paid to each Member based upon such Member's average
Sharing Ratio for the period since the immediately preceding Distribution.
SECTION 8
ACCOUNTING; BOOKS AND RECORDS; REPORTS
8.1 Accounting; Books and Records. (a) Maintenance. The Company
shall maintain at its principal place of business or, upon notice to the
Members, at such other place within the United States as the Managing Member
shall determine, separate books of account for the Company, which shall include
a record of all costs and expenses incurred, all charges made, all credits made
and received, and all income derived in connection with the conduct of the
Company and the operation of its business in accordance with this Agreement.
(b) Accounting Methods. The Company shall use the accrual method
of accounting in preparation of its annual reports and for tax purposes and
shall keep its books and records accordingly.
(c) Access to Books, Records, Etc. Any Member or any agents or
representatives of such Member, at the Company's expense, may visit and inspect
any of the properties of the Company and examine any information it may
reasonably request and make copies of and abstracts from the Company financial
and operating records and books of account of the Company, and discuss the
affairs, finances and accounts of the Company with the Managing Member and its
officers, all at such reasonable times (i.e., during normal business hours, at
reasonable intervals and upon reasonable notice). In addition, any Member may
discuss the affairs, finances and accounts of the Company with the independent
accountants of the Company at reasonable intervals and with the knowledge of
the Managing Member where feasible. The Company hereby authorizes its
independent accountants to engage in such discussions with Members. The rights
granted to a Member pursuant to this Section 8.1(c) are expressly subject to
compliance by such Member with the reasonable confidentiality procedures and
guidelines of the Company, as such procedures and
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guidelines may be established by the Managing Member in its reasonable judgment
from time to time.
8.2 Tax Matters. (a) Partnership Reporting. All returns filed by
the Company in respect of federal, state and local income taxes shall be filed
on the basis that the Company is a partnership for federal, state and local
income tax purposes unless otherwise (x) required by law, or (y) unanimously
agreed by all Members. The Members shall take all steps pursuant to applicable
Regulations and applicable state or local law in order to achieve partnership
classification for the Company for federal, state and local income tax purposes
and, in this connection, CEA will join in the making of any election requested
in good faith by the Managing Member in furtherance of this objective.
(b) Tax Matters Member. The Managing Member is authorized, in the
case of material elections with the consent of the other Member, not to be
unreasonably withheld, to make any and all elections for federal, state, and
local tax purposes. If the other Member fails to respond within a reasonable
period of time, under the circumstances to a written request by the Managing
Member for consent to an election sought to be made for the Company, the
Managing Member may treat such failure to respond as consent to such request.
The Managing Member is authorized, to the extent provided in Code Sections 6221
through 6231, to represent the Company and the Members before taxing
authorities or courts of competent jurisdiction in tax matters affecting the
Company or the Members in their capacities solely as Members, and to file any
tax returns and execute any agreements or other documents relating to or
affecting such tax matters, including agreements or other documents that bind
the Members with respect to such tax matters or otherwise affect the rights of
the Company and the Members. The Managing Member is specifically authorized to
act as the "tax matters partner" under the Code and in any similar capacity
under state or local Law. Notwithstanding the generality of the foregoing, the
Tax Matters Member shall make regular and current reports to the other Member
on the status of all representations of the Company and the Members before
taxing authorities and courts of competent jurisdiction. Furthermore, without
the prior written consent of CEA (which consent shall not be unreasonably
withheld), the Tax Matters Member may not enter into any agreements or
documents that would affect the amount, timing or character of any items of
income, gain, loss, deduction or credit allocated to or otherwise realized by,
the other Member.
(c) Tax Information. Necessary tax information shall be delivered
to each Member as soon as practicable after the end of each Fiscal Year of the
Company but not later than 90 days after the end of each such Fiscal Year. The
Managing Member shall cause tax returns to be filed for the Company prepared,
at the Company's expense, in accordance with the Code and the Regulations.
(d) Section 754 Election. If a distribution of the Company's
property as described in Code Section 734 occurs or if a transfer of a Member
Interest as described in Code Section 743 occurs, upon the written request of
any Member, the Company shall elect, pursuant to Code Section 754, to adjust
the basis of the Company's properties.
8.3 Periodic Reporting. The Company shall furnish or cause to be
furnished to each Member, at the Company's expense, the following:
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(a) Annual Reports. Within ninety (90) days after the end of each
Fiscal Year beginning with the Fiscal Year ending December 31, 1998, the
following:
(i) a Compliance Certificate executed by a senior
financial or senior accounting officer of the Managing Member;
(ii) balance sheets (which shall, at the request of any
Member, be audited) as of the last day of such Fiscal Year and the
preceding Fiscal Year and income statements (which shall, at the
request of any Member, be audited) and statements of cash flows for
such periods and the notes associated with each, for the Company; and
(iii) a statement of the Member's Capital Account balances
at the end of the Fiscal Year and a statement of the changes therein
since the end of the prior Fiscal Year (or the Closing Date, in the
case of the Fiscal Year ending December 31, 1998).
(b) Quarterly Reports. Within thirty (30) days after the close of
each Fiscal Quarter (other than the final Fiscal Quarter of any Fiscal Year)
and within ninety (90) days after the close of the final Fiscal Quarter of each
Fiscal Year, the following:
(i) unaudited statements of cash flows of the Company for
such Fiscal Quarter and the notes associated therewith;
(ii) balance sheets of the Company as of the end of such
Fiscal Quarter and for the comparable quarter of the prior year, if
applicable;
(iii) income statements of the Company for such Fiscal
Quarter, for the year to date ending such Fiscal Quarter and for the
comparable periods of the prior Fiscal Year, if applicable;
(iv) a certification by the Managing Member that the
statements described in Section 8.3(b)(i) include all adjustments
necessary in the opinion of the Managing Member for fair presentation
of the results of such Fiscal Quarter.
(c) Other Notices. A notice of the occurrence of any Termination
Event or any event which, with the giving of notice or passage of time (or
both), would constitute a Termination Event and the action that the Managing
Member has taken or proposes to take with respect thereto, promptly, but in any
event no later than two (2) Business Days after the Managing Member has actual
knowledge of such occurrence.
(d) Additional Information. Promptly following any such request,
such other information as is reasonably requested by any Member.
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SECTION 9
TRANSFERS OF MEMBER INTEREST
9.1 Restriction on Transfers. Except as otherwise permitted by
this Agreement, no Member shall pledge or Transfer all or any portion of its
Member Interest.
9.2 Permitted Transfers. (a) Calfinco. Subject to the conditions
and restrictions set forth in Section 9.3, all, but not less than all of the
Member Interest of Calfinco may be Transferred to any single Person or in the
case of the foreclosure of any collateral security interest, to any trustee,
collateral agent, or other Person acting on behalf of one or more financial
institutions.
(b) CEA. Subject to Calfinco's right of first refusal set forth
in Section 9.2(c) and the conditions and restrictions set forth in Section 9.3,
all, but not less than all of the Member Interest of CEA may be Transferred to
any single Person or in the case of the foreclosure of any collateral security
interest, to any trustee, collateral agent, or other Person acting on behalf of
one or more financial institutions; provided, however, that, in no event, shall
CEA transfer its Member Interest to any foreign or domestic air carrier or to
any Affiliate of such an air carrier. Without limiting the generality of the
foregoing, any Transfer by CEA of all of its Member Interest to any Affiliate
of CEA that is not a foreign or domestic air carrier or an Affiliate of such an
air carrier and in compliance with Section 9.3, shall be a Permitted Transfer.
(c) Calfinco's Right of First Refusal. If CEA receives a bona
fide offer to Transfer its Member Interest that CEA desires to accept (an
"Offer"), CEA shall deliver to Calfinco a complete copy of the Offer, together
with a letter from the chief financial officer (or equivalent) of the offeror,
certifying that the offeror's net worth, determined in accordance with GAAP, is
greater than $10,000,000. Calfinco shall have twenty (20) days to review the
Offer and to decide whether to acquire CEA's Member Interest upon the terms of
the Offer. If Calfinco decides to acquire CEA's Member Interest upon the terms
of the Offer, Calfinco shall so notify CEA within such 20 day period, and
Calfinco shall be obligated to acquire CEA's Member Interest upon such terms.
If Calfinco notifies CEA that Calfinco has decided not to acquire the Member
Interest upon the terms of the Offer, or if Calfinco fails to notify CEA of
Calfinco's decision within such twenty (20) day period, Calfinco shall be
deemed to have waived Calfinco's right to acquire CEA's Member Interest
pursuant to the Offer, and CEA shall be free to Transfer its Member Interest to
the offeror pursuant to the Offer. If CEA fails to Transfer its Member
Interest to the offeror pursuant to the Offer within one hundred twenty (120)
days following the expiration of such twenty (20) day period, or if the Offer
is modified or extended, Calfinco's right of first refusal hereunder shall
again apply to any new offer from any offeror or to the modified or extended
Offer. The price for CEA's Member Interest payable pursuant to any Offer that
CEA is entitled to accept pursuant to the terms of this Section 9.2(c) must be
stated in terms of cash or cash and a promissory note, and if the terms of the
Offer provide for all or a portion of the purchase price to be paid with a
promissory note, Calfinco's promissory note shall be deemed to be equivalent to
any promissory note to be provided by the offeror; provided, however, that any
such promissory note shall be on the same terms and conditions as the offeror's
promissory note. Notwithstanding anything in this Section 9.2(c) to the
contrary, this Section 9.2(c) shall not apply to a Transfer by CEA of its
Member Interest to an Affiliate of CEA.
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9.3 Conditions to Permitted Transfers. A Transfer shall not be
treated as a Permitted Transfer under (i) Section 9.2(a) unless and until the
following conditions set forth in clauses (b) and (f) are satisfied, or (ii)
Section 9.2(b), if applicable, unless and until the following conditions are
satisfied:
(a) Documentation. The transferor and transferee shall execute
and deliver to the Company such documents and instruments of conveyance as may
be necessary or appropriate, in the reasonable opinion of counsel to the
Company, to effect such Transfer and to confirm the agreement of the transferee
to be bound by the provisions of this Agreement.
(b) Tax Information. The transferor and transferee shall furnish
the Company with the transferee's taxpayer identification number, sufficient
information to determine the transferee's initial tax basis in the Transferred
Member Interest, and any other information reasonably necessary to permit the
Company to file all required federal and state tax returns and other legally
required information statements or returns. Without limiting the generality of
the foregoing, the Company shall not be required to make any Distribution
otherwise provided for in this Agreement with respect to any Transferred Member
Interest until it has received such information.
(c) Securities Law Opinion. Such Transfer will be exempt from all
applicable registration requirements, including the requirements under the
Securities Act, and any applicable state securities Law, and will not violate
any applicable Laws regulating the Transfer of securities, and, except in the
case of a Transfer of a Member Interest to another Member or to a Wholly Owned
Affiliate of the transferor or of any other Member or, unless waived by the
Required Members, the transferor shall provide an opinion of counsel to such
effect. Such counsel and opinion shall be reasonably satisfactory to the
non-transferring Members.
(d) Investment Company Act Opinion. Such Transfer will not cause
the Company to be deemed to be an "investment company" under the Investment
Company Act, and the transferor shall provide an opinion of counsel to such
effect. Such counsel and opinion shall be reasonably satisfactory to the
non-transferring Members, and the Members shall provide to such counsel any
information available to the Members, as the case may be, and relevant to such
opinion.
(e) Certificates. The transferee of the Member shall execute a
Transferee Certificate.
(f) Expenses. The Company shall be reimbursed by the transferor
and/or transferee for all Company Expenses that it reasonably incurs in
connection with such Transfer.
(g) No Withholding Tax. Neither the transferee nor any Person who
owns a direct or indirect interest in the transferee and who may be treated for
federal tax purposes as a partner in the Company is a nonresident alien
individual, foreign partnership, foreign corporation or other foreign person
with respect to whom (taking into account statutory or treaty exemptions)
distributions, allocations or payments from the Company are subject to
withholding tax at a rate in excess of zero percent under Sections 1441, 1442,
1446 or any other provision of the Code imposing U.S. federal tax withholding
requirements upon distributions, allocations or payments by a partnership to a
foreign person.
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9.4 Prohibited Transfers. Except for involuntary transfers as
described in Section 3.8(a)(ii), any purported Transfer of a Member Interest
that is not a Permitted Transfer shall be null and void and of no effect
whatsoever; provided, however, that, if the Company is required to recognize a
Transfer that is not a Permitted Transfer, the transferor shall be deemed no
longer to have a Member Interest and the interest received by the transferee
shall be strictly limited to the transferor's rights to allocations and
Distributions as provided by this Agreement with respect to the Transferred
Member Interest, which allocations and Distributions may be applied (without
limiting any other legal or equitable rights of the Company) to satisfy any
debts, obligations, or liabilities for damages that the transferor or
transferee of such Member Interest may have to the Company. In the case of a
Transfer or attempted Transfer of a Member Interest that is not a Permitted
Transfer, the parties engaging or attempting to engage in such Transfer shall
indemnify and hold harmless the Company and the other Members from all cost,
liability, and damage that any of such indemnified Persons may incur (including
incremental tax liability and attorneys' fees and expenses) as a result of such
Transfer or attempted Transfer and efforts to enforce the indemnity granted
hereby.
9.5 Admission as Substituted Members. Subject to the other
provisions of this Section 9, a transferee of a Member Interest may be admitted
to the Company as a substituted Member only upon satisfaction of the conditions
set forth below:
(i) The Member Interest with respect to which the
transferee is being admitted was acquired by means of a Permitted
Transfer;
(ii) The transferee becomes a party to this Agreement as a
Member and executes such documents and instruments as the other
Members may reasonably request as may be necessary or appropriate to
confirm such transferee as a Member in the Company, including such
transferee's agreement to be bound by the terms and conditions of this
Agreement; and
(iii) Unless the requirements of this Section 9.5(iii) have
been waived by the Members consenting to such admission, the
transferee pays or reimburses the Company for all reasonable legal,
filing, publication and other costs that the Company incurs in
connection with the admission of the transferee as a Member with
respect to the Transferred Member Interest.
9.6 Distributions with Respect to a Transferred Member Interest.
If any Member Interest is Transferred in compliance with the provisions of this
Section 9, all Distributions on or before the date of such Permitted Transfer
shall be made to the transferor, and all Distributions thereafter shall be made
to the transferee. Solely for purposes of making such Distributions, the
Company shall recognize such Permitted Transfer not later than the end of the
calendar month during which it is given notice of such Permitted Transfer;
provided, however, that if the Company is given notice of a Permitted Transfer
at least fourteen (14) days prior to the Permitted Transfer, the Company shall
recognize such Permitted Transfer as of the date of such Permitted Transfer,
and provided, further that if the Company does not receive a notice stating the
date such Member Interest was Transferred and such other information as the
Member may reasonably require within thirty (30) days after the end of the
Fiscal Quarter during which the Permitted Transfer occurs, all Distributions
shall be made to the Person who, according to the books and records of the
Company, on the last day of the Fiscal Quarter during which the Permitted
Transfer occurs, was the record owner of the Member Interest.
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Neither the Company nor Calfinco shall incur any liability for making
Distributions in accordance with the provisions of this Section 9.7, whether or
not Calfinco or the Company has knowledge of any Transfer of ownership of any
Member Interest.
SECTION 10
POWER OF ATTORNEY
10.1 Managing Member as Attorney-in-Fact. Each Member hereby
makes, constitutes, and appoints the Managing Member and, effective as of the
Liquidation Start Date, the Company Liquidator, severally, with full power of
substitution and resubstitution, its true and lawful attorney-in-fact for it
and in its name, place, and stead and for its use and benefit, to sign,
execute, certify, acknowledge, swear to, file, publish and record (i) all
certificates of the Company, amended name or similar certificates, and other
certificates and instruments (including counterparts of this Agreement in the
form identical to the original counterpart thereof manually executed by such
Member (as amended, restated or modified in accordance with clause (ii) below))
that Calfinco or the Company Liquidator may deem necessary to be filed by the
Company under the Laws of the State of Delaware or any other state or
jurisdiction in which the Company is doing or intends to do business approved
by the Members; (ii) any and all amendments, restatements or modifications to
this Agreement and the instruments described in (i), as now or hereafter
amended, which Calfinco or the Company Liquidator may deem necessary to effect
a change or modification of the Company in the form approved by the Members in
accordance with the terms of this Agreement, including amendments, restatements
or modifications to reflect (A) the exercise by any Member of any power granted
to it under this Agreement, (B) any amendments adopted by the Members in
accordance with the terms of this Agreement, (C) the admission of any
substituted Member and (D) the disposition by any Member of its Member Interest
in the Company; (iii) all certificates of cancellation and other instruments
that Calfinco or the Company Liquidator deems necessary or appropriate to
effect the dissolution and termination of the Company pursuant to the terms of
this Agreement and (iv) any other instrument that is now or may hereafter be
required by law to be filed on behalf of the Company or is deemed necessary by
Calfinco or the Company Liquidator to carry out fully the provisions of this
Agreement in accordance with its terms; provided, however, that nothing in this
Section 10 shall authorize or be deemed to authorize any such attorney-in-fact
to take any action for or in the name, place or stead of any Member, or
otherwise referred to in this Section 10 with respect to any Member, to the
extent such action requires the consent of such Member pursuant to the terms of
this Agreement and such Member has not so consented. Each Member authorizes
each such attorney-in-fact to take any further action that such
attorney-in-fact shall consider necessary in connection with any of the
foregoing, hereby giving each such attorney-in-fact full power and authority to
do and perform each and every act or thing whatsoever requisite to be done in
connection with the foregoing as fully as such Member might or could do
personally, and hereby ratifying and confirming all that any such
attorney-in-fact shall lawfully do or cause to be done by virtue thereof or
hereof.
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10.2 Nature of Special Power. The power of attorney granted
pursuant to this Section 10:
(i) is a special power of attorney coupled with an
interest and is irrevocable;
(ii) may be exercised by any such attorney-in-fact by
listing the Members executing any agreement, certificate, instrument,
or other document with the single signature of any such
attorney-in-fact acting as attorney-in-fact for such Members; and
(iii) shall survive and not be affected by the subsequent
Bankruptcy, insolvency, dissolution, or cessation of existence of a
Member and shall survive the delivery of an assignment by a Member of
the whole or a portion of its Member Interest in the Company (except
that where the assignment is of all of such Member's Member Interest
in the Company and the assignee is admitted as a substituted Member,
the power of attorney shall survive the delivery of such assignment
for the sole purpose of enabling any such attorney-in-fact to effect
such substitution) and shall extend to such Member's or assignee's
successors and assigns.
SECTION 11
DISSOLUTION AND WINDING UP
11.1 Liquidation. (a) Termination Events. The Company shall
dissolve and commence winding up and liquidating upon, and only upon, the
occurrence of (i) a Termination Event, and (ii) the failure of the Company
either (1) to exercise and consummate its redemption option provided in
paragraphs 5 or 7, as applicable, of the Redemption Option Agreement, or (2) to
exercise and consummate its redemption option provided in paragraph 6 of the
Redemption Option Agreement within thirty (30) days after Calfinco's receipt of
a Termination Notice. The date of the Company's dissolution and commencement
of winding up shall be referred to as the "Liquidation Start Date".
(b) Company Termination Notice. At any time on or after the
occurrence of any Termination Event, either Member may elect to deliver to the
other Member a notice (a "Termination Notice") of such event. Such Termination
Notice shall be effective on the date specified in the Termination Notice as
its effective date (which shall be no earlier than the fifth Business Day after
delivery to the other Members), or if no date is specified, the Termination
Notice shall be effective the fifth Business Day after it is delivered to the
other Members, unless (x) such Termination Event has been cured on or before
such effective date or otherwise resolved to all Members' satisfaction on or
before such effective date, or (y) the Company has exercised and consummated
its redemption option (1) provided in paragraphs 5 or 7, as applicable, of the
Redemption Option Agreement, or (2) the Company has exercised and consummated
its redemption option provided in paragraph 6 of the Redemption Option
Agreement within thirty (30) days after Calfinco's receipt of a Termination
Notice. Any such Termination Notice may be rescinded by the Member giving such
notice prior to its effectiveness by delivery of a rescission notice to the
other Members.
11.2 Winding Up. Upon the occurrence of the Termination Event, the
Company shall continue solely for the purposes of winding up its affairs in an
orderly manner, liquidating its assets, and satisfying the claims of its
creditors and Members, and no Member shall take any action with
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respect to the Company that is inconsistent with the winding up of the
Company's business and affairs; provided, however, that all covenants contained
in this Agreement and obligations provided for in this Agreement shall continue
to be fully binding upon the Members until the Company Property has been
distributed pursuant to this Section 11.2 and the certificate of formation has
been canceled pursuant to the Act. The Company Liquidator shall be responsible
for overseeing the winding up and dissolution of the Company (including taking
any actions required by Section 11.7), shall take full account of the Company's
liabilities and the Company Property, and shall cause the Company Property or
the proceeds from the Disposition thereof, to the extent sufficient therefor,
to be applied and distributed, to the maximum extent permitted by Law, in the
following order:
(i) First, as provided in Section 18-804(a)(1) of the
Act; and
(ii) Second, the balance, if any, to the Members in an
amount equal to their Capital Account balances, after
giving effect to all contributions, Distribution, and
allocations made for all periods through the end of
the Liquidation Period.
11.3 No Restoration of Deficit Capital Accounts. Notwithstanding
anything in this Agreement to the contrary, if a Termination Event has occurred
and the Company is wound up in accordance with Section 11.2, no Member shall be
obligated to make any Capital Contributions to the Company in respect of a
deficit balance in its Capital Account, and such deficit shall not be
considered to be a debt owed to the Company or to any other Person for any
purpose whatsoever.
11.4 No Constructive Liquidation. In the event the Company is
liquidated within the meaning of Section 1.704-1(b)(2)(ii)(g) of the
Regulations but no Termination Event has occurred, the Company Property shall
not be liquidated, the Company's liabilities shall not be paid or discharged,
the Company's affairs shall not be wound up, and no adjustments to the Members'
Capital Accounts shall be made (except as otherwise specifically provided in
Section 6).
11.5 Rights of Members. Each Member shall look solely to the
Company Property for the return of its Capital Contribution and shall have no
right or power to demand or receive property other than cash from the Company.
11.6 The Company Liquidator. (a) Definition. The "Company
Liquidator" shall mean the Managing Member, or a Person appointed by the
Managing Member, unless a Termination Event (other than a Termination Event
listed in clauses (i) and (ii) of the definition of Termination Event) has
occurred, in which case, the "Company Liquidator" shall mean CEA (regardless of
whether CEA has elected to become the Managing Member) or any Person appointed
as Company Liquidator by CEA. The Company Liquidator shall have the rights set
forth in Section 18-803(b) of the Act and shall have the exclusive right, power
and authority to effect the dissolution, winding up and liquidation of the
Company. The actions of the Company Liquidator shall for all purposes be the
actions of the Company.
(b) Fees. In the event that the Company Liquidator is other than
the Managing Member or an Affiliate of the Managing Member, the Company is
authorized to pay a reasonable fee to the
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Company Liquidator for its services performed pursuant to this Section 11 and
to reimburse the Company Liquidator for its reasonable costs and expenses
incurred in performing those services.
(c) Resignation of Company Liquidator. At any time, any Company
Liquidator may, in its discretion, resign as Company Liquidator and the Member
then entitled to appoint the Company Liquidator shall appoint a replacement
Company Liquidator.
11.7 Liquidation Procedures. The Company Liquidator shall commence
the winding up of the Company's business and in so doing may, among other
things, cause one or more of the following to occur:
(a) Termination of Lease. If the Slot Lease is then subject to
termination, the Company Liquidator shall cause the Company to terminate the
Slot Lease.
(b) Sale of Company Property. (i) The Company Liquidator shall
commence the sale and/or liquidation of Company Property in such order as the
Company Liquidator shall determine in its reasonable, good faith judgment to be
best calculated to obtain the highest price for the Company Property; and (ii)
the Company Liquidator may engage on behalf of the Company one or more agents
to conduct sales of the Company Property.
(c) Repayment of Indebtedness. From the proceeds of the sale of
the Company Property, the Company Liquidator shall repay the Indebtedness under
the Credit Facility and all other Indebtedness of the Company.
(d) Liquidating Distributions. All Distributions to be made
pursuant to Section 11.2 shall be made by the Company Liquidator from time to
time immediately after repayment of the Indebtedness of the Company from the
proceeds of the liquidation of Company Property.
11.8 Form of Liquidating Distributions. In addition to the
Distributions made by the Managing Member pursuant to Section 4.1(c)(iii), the
Company Liquidator shall make all liquidating distributions in cash.
SECTION 12
INDEMNIFICATION
12.1 Indemnification. Subject to the limitations set forth in
Section 12.4, (a) the Company hereby agrees, to the fullest extent permitted by
Law, to indemnify, hold harmless and pay, and (b) the Company Liquidator, or
any receiver or trustee of the Company (each of the foregoing Persons being an
"Indemnitor") (in the case of the Company Liquidator, receiver or trustee, to
the extent of Company Property) shall indemnify, hold harmless and pay, all
Expenses ("Indemnified Amounts") of any Member, and the direct and indirect
members, partners, shareholders and other equity holders of any Member, and the
successors and permitted assignees of each such Person (whether pursuant to an
assignment for security or otherwise) and creditors of and surety providers
with respect to, any of the foregoing, and their respective successors and
assigns (whether pursuant to an assignment for security or otherwise) and each
of the respective directors, officers, employees,
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administrators and agents of any of the foregoing (each an "Indemnified
Person"), which may be incurred or realized by or asserted against such
Indemnified Person, relating to, growing out of or resulting from:
(i) Company Obligations. Any failure by the Company to
perform or observe each of its covenants and obligations under this
Agreement or any other Operative Document to which it is a party
(collectively, the "Covered Documents"), including Indemnified Amounts
resulting from or arising out of or in connection with enforcement of
the Covered Documents (or determining whether or how to enforce any
Covered Documents, whether through negotiations, legal proceedings or
otherwise), or responding to any subpoena or other legal process or
informal investigative demand in connection herewith or therewith; or
(ii) Representations and Warranties. Any inaccuracy in,
or any breach of, any written certification, representation or
warranty made by or on behalf of the Company in any Covered Document
or in any written report or certification required hereunder or under
any other Covered Document, in each case (A) if but only if such
certification, representation or warranty is made as of a specific
date, as of the date as of which the facts stated therein were
certified, represented or warranted and (B) in all other cases, as of
any date or during any period to which such certification,
representation or warranty may be applicable; or
(iii) Investigations; Litigation; Proceedings. Any
investigation, litigation or proceeding, whether or not such
Indemnified Person is a party thereto, that (A) relates to, grows out
of or results from any action or omission, or alleged action or
omission, by or on behalf of or attributable to the Company and (B)
would not have resulted in Indemnified Amounts incurred or realized by
or asserted against such Indemnified Person but for the Covered
Documents or the transactions thereunder or contemplated thereby.
12.2 Nonexclusive Rights. The right to indemnification and the
payment of expenses incurred in defending a proceeding in advance of its final
disposition conferred in this Section 12 shall not be exclusive of any other
right which any person may have or hereafter acquire under any statute,
provision of this Agreement, other contract, determination of the Managing
Member, or otherwise.
12.3 Insurance. The Company may maintain insurance, at its
expense, to protect itself and any Member, or agent of the Company or another
limited liability company, 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 the Act.
12.4 Limitations on Indemnification Obligations. The indemnities
provided herein shall be subject to the following limitations:
(a) Limitation by Law. Such sections shall be enforced only to
the maximum extent permitted by Law.
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(b) Misconduct, Etc. No Person, and no controlling Affiliate of
such Person in its own right (but without prejudice to the claims of Persons
who are Indemnified Persons by reason of a relationship to such controlling
Affiliate (such as an agent, employee, creditor or surety of such controlling
Affiliate)) shall be indemnified from any liability solely caused by or
resulting from (i) the actual fraud, willful misconduct, bad faith or gross
negligence of such Person or (ii) any inaccuracy in, or breach of, any written
certification, representation or warranty made by such Person in any Covered
Document or in any written report or certification required hereunder or under
any other Covered Document unless such inaccuracy or breach is attributable to
any written information provided by Calfinco or its Affiliates, in each case
under this clause (ii) (A) if, but only if, such certification, representation
or warranty is made as of a specific date, as of the date as of which the facts
stated therein were certified, represented or warranted and (B) in all other
cases, as of any date or during any period to which such certification,
representation or warranty may be applicable.
(c) No Duplication. Indemnified Amounts under this Section 12
shall be without duplication of any amounts payable under indemnification
provisions of any other Operative Document or any amounts actually paid
thereunder.
12.5 Payments; No Reduction of Capital Account. Any amounts
subject to the indemnification provisions of this Section 12 shall be paid by
the applicable Indemnitor within ten (10) Business Days following demand
therefor, accompanied, as may be appropriate in the context, by supporting
documentation in reasonable detail. Payments to a Member pursuant to this
Section 12 shall not reduce the Capital Account of such Member. To the extent
the Company is required to indemnify any Person hereunder, each such
Indemnified Party shall be a creditor of the Company to the extent of the
Indemnified Amounts owing to such Indemnified Party hereunder from time to
time. Payment shall be made to the bank account or at another location as such
Indemnified Person shall designate in writing or as is expressly required under
any Operative Document the obligations under which are the subject of any such
payment, not later than 1:00 pm (New York time) on the date for such payment in
immediately available funds.
12.6 Procedural Requirements.
(a) Notice of Claims. Any Indemnified Person that proposes to
assert a right to be indemnified under this Section 12 will, promptly after
receipt of notice of commencement of any action, suit or proceeding against
such Indemnified Person, or the incurrence or realization of Indemnified
Amounts, in respect of which a claim is to be made against the relevant
Indemnitor under this Section 12, notify the relevant Indemnitor of such
incurrence or realization or of the commencement of such action, suit or
proceeding, enclosing a copy of all papers served, but the omission so to
notify the relative Indemnitor promptly of any such incurrence, realization,
action, suit or proceeding shall not relieve (x) any Indemnitor from any
liability that it may have to such Indemnified Person under this Section 12 or
otherwise, except, as to such Indemnitor's liability under this Section 12, to
the extent, but only to the extent, that such Indemnitor shall have been
prejudiced by such omission, or (y) any other Indemnitor from liability that it
may have to any Indemnified Person under the Operative Documents.
(b) Defense of Proceedings. In case any such action, suit or
proceeding shall be brought against any Indemnified Person and it shall notify
the relevant Indemnitor of the commencement
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thereof, such Indemnitor shall be entitled to participate in, and to assume the
defense of, such action, suit or proceeding with counsel reasonably
satisfactory to such Indemnified Person, and after notice from such Indemnitor
to such Indemnified Person of such Indemnitor's election so to assume the
defense thereof and the failure by such Indemnified Person to object to such
counsel within ten (10) Business Days following its receipt of such notice.
Such Indemnitor shall not be liable to such Indemnified Person for legal or
other expenses incurred after such notice of election to assume such defense
except as provided below and except for the reasonable costs of investigating,
monitoring or cooperating in such defense subsequently incurred by such
Indemnified Person reasonably necessary in connection with the defense thereof.
Such Indemnified Person shall have the right to employ its counsel in any such
action, suit or proceeding, but the fees and expenses of such counsel shall be
at the expense of such Indemnified Person unless:
(i) the employment of counsel by such Indemnified Person
at the expense of such Indemnitor has been authorized in writing by
such Indemnitor;
(ii) such Indemnified Person shall have concluded in its
good faith (which conclusion shall be determinative unless a court
determines that conclusion was not reached in good faith) that there
is or may be a conflict of interest between such Indemnitor and such
Indemnified Person in the conduct of the defense of such action or
that there are or may be one or more different or additional defenses,
claims, counterclaims, or causes of action available to such
Indemnified Person (it being agreed that in any case referred to in
this clause (ii) such Indemnitor shall not have the right to direct
the defense of such action on behalf of the Indemnified Person);
(iii) such Indemnitor shall not have employed counsel to
assume the defense of such action within a reasonable time after
notice of the commencement thereof; or
(iv) any counsel employed by such Indemnitor shall fail to
timely commence or maintain the defense of such action,
in each of which cases the fees and expenses of counsel for such Indemnified
Person shall be at the expense of such Indemnitor; provided that without the
prior written consent of such Indemnified Person no Indemnitor shall settle or
compromise, or consent to the entry of any judgment in, any pending or
threatened claim, action, investigation, suit or other legal proceeding in
respect of which indemnification may be sought under this Section 12, unless
such settlement, compromise or consent includes an unconditional release of
such Indemnified Person from all liability for Expenses arising out of such
claim, action, investigation, suit or other legal proceeding.
(c) Settlement of Claims. No Indemnified Person shall settle or
compromise, or consent to the entry of any judgment in, any pending or
threatened claim, action, investigation, suit or other legal proceeding in
respect of which any payment would result hereunder or under the other
Operative Documents without the prior written consent of the relevant
Indemnitor, such consent not to be unreasonably withheld or delayed.
(d) Indemnification Despite Negligence of Indemnified Person. THE
INDEMNITY OBLIGATIONS OF THIS SECTION 12 SHALL EXPRESSLY INCLUDE ANY
INDEMNIFIED AMOUNTS
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ATTRIBUTABLE TO THE ORDINARY, SOLE OR CONTRIBUTORY NEGLIGENCE OF ANY
INDEMNIFIED PERSON, BUT SHALL EXCLUDE ANY SUCH INDEMNIFIED AMOUNTS ATTRIBUTABLE
TO THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH INDEMNIFIED PERSON. IT
IS THE INTENT OF THE PARTIES HERETO THAT THE INDEMNIFIED PERSONS, SHALL, TO THE
EXTENT PROVIDED IN THIS SECTION 12, BE INDEMNIFIED FOR THEIR OWN ORDINARY, SOLE
OR CONTRIBUTORY NEGLIGENCE.
12.7 Tax Indemnity. If as a result of any audit of the Company's
federal, state, or local income tax returns, the Company, CEA, any of the
Company's or CEA's direct or indirect members, partners, or shareholders, or
the successors or permitted assignees of any of them, is determined by final
order or judgment, not subject to appeal, to be liable for any interest or
penalties in respect of the underpayment of any federal, state, or local income
tax, Calfinco, any Affiliate of Calfinco to whom the Slots are Transferred,
through one or more successive Transfers, and any successor to Calfinco, if
Calfinco is dissolved, merged, or consolidated with another Person, shall pay
or shall reimburse the Company, CEA, direct and indirect members, partners,
shareholders and the successors and permitted assignees of each such Person, or
any of them, for all such interest and penalties.
12.8 Survival of Indemnification Obligations. All indemnities
provided for in this Agreement shall survive the Transfer of any Member
Interest and the liquidation of the Company. After any such Transfer or
liquidation, the provisions of this Section 12 shall inure to the benefit of
each Transferring Member with respect to Indemnified Amounts arising in respect
of the period during which such Transferring Member was a Member (including
with respect to actions taken or omitted to be taken, and events occurring and
circumstances existing, during such period).
SECTION 13
MISCELLANEOUS
13.1 Notices. Any notice, payment, demand, or communication
required or permitted to be given by any provision of this Agreement shall be
in writing or by facsimile and shall be deemed to have been delivered, given,
and received for all purposes (a) if delivered personally to the Person or to
an officer of the Person to whom the same is directed, or (b) when the same is
actually received (if a Business Day, or, if not, on the next succeeding
Business Day), if sent either by courier or delivery service or certified mail,
postage and charges prepaid, or by facsimile, if such facsimile is followed by
a hard copy of the facsimiled communication sent by certified mail, postage and
charges prepaid, addressed as follows, or to such other address as such Person
may from time to time specify by notice to the Members:
(i) If to the Company, to the address set forth in the
first sentence of Section 2.6, with copies sent to the Managing Member
at its address set forth in Section 2.2;
(ii) If to a Member, to the address set forth in Section
2.2; and
(iii) If to the Company Liquidator, at the address
specified by such party.
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13.2 Binding Effect. Except as otherwise provided in this
Agreement, every covenant, term and provision of this Agreement shall be
binding upon and inure to the benefit of the Members and their respective
permitted successors, transferees, and assigns (including any assignee for
security purposes or Person holding a security interest). This Agreement and
the rights and obligations hereunder may not be assigned to any Person other
than a Permitted Transferee.
13.3 Severability. Except as otherwise provided in the succeeding
sentence, every provision of this Agreement is intended to be severable, and,
if any term or provision of this Agreement is illegal or invalid for any reason
whatsoever, such illegality or invalidity shall not affect the validity or
legality of the remainder of this Agreement. The preceding sentence of this
Section shall be of no force or effect if the consequence of enforcing the
remainder of this Agreement without such illegal or invalid term or provision
would be to cause any Member to lose the benefit of its economic bargain.
13.4 Construction. The terms of this Agreement are intended to
embody the economic relationship among the Members and shall not be subject to
modification by or conform with any actions by any governmental authority
except as this Agreement may be explicitly so amended.
13.5 Governing Law. The Laws of the State of Delaware shall govern
the validity of this Agreement, the construction of its terms, and the
interpretation of the rights and duties of the Members.
13.6 Counterpart Execution. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
13.7 Specific Performance. Each Member agrees with the other
Members that the other Members would be irreparably damaged if any of the
provisions of this Agreement are not performed in accordance with their
specific terms and that monetary damages would not provide an adequate remedy
in such event. Accordingly, it is agreed that, in addition to any other remedy
to which the nonbreaching Members may be entitled, at law or in equity, the
nonbreaching Members shall be entitled to injunctive relief to prevent breaches
of the provisions of this Agreement and specifically to enforce the terms and
provisions of this Agreement in any action instituted in any court of the
United States or any state thereof having subject matter jurisdiction thereof.
13.8 Amendments. Amendments, restatements and corrections to and
cancellations of this Agreement may be proposed by any Member by notice to the
Company and the Managing Member. Following such proposal, the Managing Member
on behalf of the Company shall submit to the Members a verbatim statement of
any proposed amendment, restatement, correction or cancellation and shall seek
the written vote of the Members thereon or shall call a meeting to vote thereon
and to transact any other business that it may deem appropriate. A proposed
amendment, restatement, correction or cancellation shall be adopted and be
effective as an amendment, restatement, correction or cancellation of this
Agreement only if such amendment, restatement, correction or cancellation
receives the affirmative vote of all the Members.
-32-
40
13.9 Fair Price. EACH MEMBER AGREES THAT THE PROCEDURES SET FORTH
IN SECTION 11.7 ARE INTENDED TO ENSURE THAT A FAIR PRICE FOR THE COMPANY
PROPERTY IS RECEIVED IN RETURN FOR ANY DISPOSITIONS THEREOF.
-33-
41
IN WITNESS WHEREOF, the parties have entered into this
Agreement as of the day first above set forth.
Calfinco: CALFINCO INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice President
CEA: CHASE EQUITY ASSOCIATES, L.P.
By: Chase Capital Partners,
its General Partner
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
General Partner
34
42
Schedule 5.7
Assets of the Company after giving effect to Closing Date transactions
1. Rights under that certain Slot Lease Agreement, dated as of April 17,
1998, between the Company and Continental Airlines, Inc.
2. Rights under that certain Redemption Option Agreement, dated as of
April 17, 1998 between the Company and Chase Equity Associates, L.P.
3. Rights in the following Slots:
A. CHICAGO ▇'▇▇▇▇
-----------------
TIME SLOT NO.
---- --------
1. 07:15 7240*
2. 07:15 8270
3. 08:15 7664
4. 08:45 7742
5. 09:45 7796
6. 10:15 7475
7. 10:15 8659
8. 11:15 7971*
9. 11:45 8506*
10. 11:45 7439*
11. 12:15 8426*
12. 13:15 7609*
13. 13:45 7178*
14. 13:45 7377
15. 14:15 7320*
16. 14:15 8071*
17. 14:45 8316*
18. 14:45 7682
19. 15:15 8640
20. 15:45 7970*
21. 16:15 8327
22. 16:15 7659
23. 16:45 7924*
24. 16:45 8290
25. 17:15 7591*
26. 17:45 7743
27. 18:15 8200*
28. 18:15 7977
29. 18:15 7635*
* As of April 1998, licensed to a third-party commercial air carrier.
-1-
43
▇. ▇▇▇▇▇▇▇▇▇▇ NATIONAL
----------------------
TIME SLOT NO.
---- --------
1. 07:00 1209*
2. 07:00 1270
3. 07:00 1568
4. 08:00 1610
5. 08:00 1498*
6. 09:00 1637
7. 09:00 1453
8. 09:00 1335*
9. 10:00 1026
10. 11:00 1120*
11. 11:00 1067*
12. 11:00 1020
13. 12:00 1572*
14. 12:00 1368
15. 13:00 1069*
16. 13:00 1656
17. 13:00 1068
18. 14:00 1545
19. 14:00 1615
20. 14:00 1520
21. 15:00 1600
22. 15:00 1054
23. 15:00 1164*
24. 16:00 1156
25. 16:00 1111*
26. 16:00 1527*
27. 17:00 1071*
28. 17:00 1280
29. 18:00 1324*
30. 19:00 1095*
31. 19:00 1129*
32. 19:00 1294*
33. 19:00 1550*
34. 19:00 1301
35. 20:00 1279
36. 20:00 1640*
37. 20:00 1288*
38. 20:00 1448*
39. 21:00 1647
40. 21:00 1558
41. 21:00 1239
* As of April 1998, licensed to a third-party commercial air carrier.
-2-
44
▇. ▇▇▇▇▇▇▇▇▇ - DEPARTURE
------------------------
TIME SLOT NO.
---- --------
1. 07:00 3851*
2. 08:30 3595*
3. 08:30 3336
4. 09:30 3181*
5. 10:00 3198*
6. 11:00 3663*
7. 12:00 3833
8. 13:00 3331
9. 13:30 3808
10. 14:30 3379*
11. 15:30 3363*
12. 16:30 3805
13. 17:00 3090*
14. 17:00 3274*
15. 17:30 3412*
16. 18:30 3398*
17. 19:30 3572
* As of April 1998, licensed to a third-party commercial air carrier.
-3-
45
▇. ▇▇▇▇▇▇▇▇▇ - ARRIVAL
----------------------
TIME SLOT NO.
---- --------
1. 08:30 3077*
2. 09:00 3087
3. 10:30 3827*
4. 12:30 3582
5. 13:30 3108*
6. 15:30 3618*
7. 16:00 3091*
8. 16:00 3810*
9. 17:00 3678*
10. 17:30 3288*
11. 18:00 3173*
12. 18:30 3800
13. 19:00 3620*
14. 19:30 3679*
15. 21:30 3053*
* As of April 1998, licensed to a third-party commercial air carrier.
-4-
46
EXHIBIT A
TO
AMENDED AND RESTATED COMPANY AGREEMENT
Definitions
"Act" means the Delaware Limited Liability Company Act.
"Adjusted Capital Account Deficit" means, with respect to any Member,
the deficit balance, if any, in such Member's Capital Account as of the end of
the relevant Fiscal Year, after giving effect to the following adjustments:
(a) Credit to such Capital Account any amounts that such
Member is obligated to restore pursuant to any provision of the
Agreement or is deemed to be obligated to restore pursuant to the
penultimate sentences of each of Sections 1.704-2(g)(1) and
1.704-2(i)(5) of the Regulations; and
(b) Debit to such Capital Account the items described in
Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) and
1.704-1(b)(2)(ii)(d)(6) of the Regulations.
The foregoing definition of Adjusted Capital Account Deficit is intended to
comply with the provisions of Section 1.704-1(b)(2)(ii)(d) of the Regulations
and shall be interpreted consistently therewith.
"Affiliate" means, with respect to any Person, (i) any Person directly
or indirectly controlling, controlled by or under common control with such
Person, (ii) any executive officer, director or general partner of such Person
or (iii) any Person who is an executive officer, director, general partner, or
trustee of any Person described in clauses (i) and (ii) of this sentence. For
the purpose of this definition, "control" (including, with correlative
meanings, the terms "controlling," "controlled by" and "under common control
with"), as used with respect to any Person, mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting securities or
by contract or agency or otherwise.
"Agreement" means the document to which this Exhibit A is attached.
"Bankruptcy" means, with respect to any Person, a Voluntary Bankruptcy
or an Involuntary Bankruptcy.
"Business Day" means any day of the year except Saturday or Sunday and
that is a day on which banks are not required or authorized by law to close in
New York City, Wilmington, Delaware or Houston, Texas.
A-1
47
"CAL" means Continental Airlines, Inc., a Delaware corporation.
"CAL Sale Agreement" means that certain Sale Agreement, effective as
of the Closing Date, between CAL and the Company, pursuant to which CAL agrees
to sell the Slots to the Company.
"Calfinco" means CALFINCO Inc., a Delaware corporation and the initial
managing member of the Company.
"Capital Account" means the capital account established for each
Member pursuant to Section 5.1 of the Agreement.
"Capital Contribution" means, with respect to any Member, the amount
of money and the initial fair market value of any property (other than money)
contributed to the Company by such Member (or its predecessors in interest)
with respect to the Member Interest in the Company held by such Member.
"Cash Equivalents" means cash and any of the following: (i) amounts
credited to current accounts, deposit accounts, time deposits, insured
certificates of deposit or freely marketable and transferable debt obligations
of any United States bank that is a member of the United States Federal Reserve
System and whose short-term unsecured and non-credit enhanced debt obligations
are rated at least A-1 and P-1 by S&P and Moody's, respectively, or any then
equivalent rating announced by S&P or Moody's, respectively, and which is not
subject to currency controls; (ii) U.S. Treasury securities or any other
freely negotiable and marketable debt securities issued by the government of
the United States or any agency or instrumentality thereof or obligations
unconditionally guaranteed by the full faith and credit of the same; and (iii)
any commercial paper issued in the United States by a Person whose short-term
unsecured and non-credit enhanced debt obligations are rated at least A-1 and
P-1 by S&P and Moody's, respectively, or any then equivalent rating announced
by S&P or Moody's, respectively (other than such commercial paper issued by CAL
or its Affiliates); provided, however, that items described in clauses (i)
through (iii) shall not constitute Cash Equivalents unless (A) such items are
denominated in Dollars, (B) if issued by a non-governmental entity, such items
are issued by an issuer whose long-term debt obligations are rated at least
"A-" by S&P, "A3" by Moody's, or any then equivalent rating announced by S&P or
Moody's, respectively, or an equivalent investment grade rating from a
nationally recognized debt rating agency, (C) such items are not issues the
interest or dividend on which is exempt from federal income tax (or would be so
exempt if the issue were held by a citizen or resident of the United States or
a domestic corporation (as defined in Section 7701(a) of the Code)) and (D) if
other than cash, such items have a remaining maturity of not longer than ninety
(90) days.
"CEA" has the meaning set forth in the introduction of the Agreement.
"Closing Date" means the date that the Members make their initial
Capital Contributions pursuant to Section 5.2 of the Agreement.
"Code" means the United States Internal Revenue Code of 1986, as
amended.
"Company" means Calair L.L.C.
A-2
48
"Company Expenses" means, without duplication, all interest, costs,
expenses, indemnities, fees (including reasonable attorneys' and accountants'
fees), Taxes and other payment obligations incurred or owing by the Company
(excluding any liquidating distributions of a Member's Capital Account pursuant
to Section 11 of the Agreement).
"Company Liquidator" has the meaning set forth in Section 11.6 of the
Agreement.
"Company Property" means, at any time, all assets owned at such time
by the Company, and shall include both tangible and intangible property.
"Compliance Certificate" means a written certification that no
Termination Event has occurred and is continuing, or if any such event has
occurred and is continuing, the action that the Company is taking or proposes
to take with respect to such event signed by a senior financial or accounting
officer of the Managing Member.
"Covered Documents" has the meaning specified in Section 12.1(i) of
the Agreement.
"Credit Documents" means the Indenture and the other documents
executed as further evidence of, security for, or in connection with the
Indebtedness evidenced by the Indenture.
"Disposition" means any sale, exchange, lease, conversion or other
disposition of any Company Property. "Dispose" and "Disposed" shall have the
correlative meanings.
"Distribution" means any distribution or dividend or return of capital
or any other distribution, payment, remittance or delivery of property or cash
in respect of, or the redemption, retirement, purchase or other acquisition,
directly or indirectly, of, any Member Interest now or hereafter outstanding or
the setting aside of any funds for any of the foregoing purposes. "Distribute"
and "Distributed" shall have the correlative meanings.
"Dollars" and the sign "$" each mean the lawful money of the United
States.
"Expenses" means (i) any and all judgments, damages or penalties with
respect to, or amounts paid in settlement of, claims (including negligence,
strict or absolute liability, liability in tort and liabilities arising out of
violation of laws or regulatory requirements of any kind), actions, or suits,
and (ii) any and all liabilities, obligations, losses, costs, expenses
(including reasonable fees and disbursements of counsel and claims, damages,
losses, liabilities and expenses relating to environmental matters) and
disbursements but excluding Taxes.
"Fiscal Quarter" means (i) the period commencing on April 1, 1998 and
ending on June 30, 1998 and (ii) any subsequent period commencing on each of
January 1, April 1, July 1 and October 1 and ending on the earlier to occur of
(x) the last date before the next such date and (y) the date on which all
Company Property is distributed pursuant to Section 11.2 of the Agreement and
Company's certificate of formation has been canceled pursuant to the Act.
"Fiscal Year" means (i) the period commencing on January 1 1998 and
ending on December 31, 1998 and (ii) any subsequent period commencing on
January 1 and ending on the
A-3
49
earlier to occur of (x) the next December 31 and (y) the date on which all
Company Property is distributed pursuant to Section 11.2 of the Agreement and
the Company's certificate of formation has been canceled pursuant to the Act.
"GAAP" means United States generally accepted accounting principles as
in effect from time to time.
"Hedge Agreements" means interest rate swap, cap or collar agreements,
interest rate future or option contracts, currency swap agreements, currency
future or option contracts and other similar agreements.
"Indebtedness" of any Person means, without duplication, (i) all
indebtedness of such Person for borrowed money, (ii) all obligations of such
Person for the deferred purchase price of property or services, (iii) all
obligations of such Person evidenced by bonds, notes, debentures or other
similar instruments, (iv) all obligations of such Person created or arising
under any conditional sale or other title retention agreement with respect to
property acquired by such Person (whether or not the rights and remedies of the
seller or lender under such agreement in the event of default are limited to
repossession or sale of such property), (v) all obligations of such Person as
lessee under leases that have been or should be, in accordance with GAAP,
recorded as capital leases, (vi) all obligations, contingent or otherwise, of
such Person under acceptance, letter of credit or similar facilities, (vii) all
obligations of such Person to purchase, redeem, retire, defease or otherwise
acquire for value any partnership or member or other equity interests of such
Person, (viii) all obligations of such Person in respect of Hedge Agreements,
(ix) all other financial obligations of such Person under any contract or other
agreement to which such Person is a party, (x) all Indebtedness of other
Persons of the type described in clauses (i) through (ix) above guaranteed
directly or indirectly in any manner by such Person, or in effect guaranteed
directly or indirectly by such Person through an agreement (A) to pay or
purchase such Indebtedness or to advance or supply funds for the payment or
purchase of such Indebtedness, (B) to purchase, sell or lease (as lessee or
lessor) property, or to purchase or sell services, primarily for the purpose of
enabling the debtor to make payment of such Indebtedness or to assure the
holder of such Indebtedness against loss, (C) to supply funds to or in any
other manner invest in the debtor (including any agreement to pay for property
or services irrespective of whether such property is received or such services
are rendered) or (D) otherwise to assure a creditor against loss, and (xi) all
Indebtedness of the type described in clauses (i) through (x) above secured by
(or for which the holder of such Indebtedness has an existing right, contingent
or otherwise, to be secured by) any Lien on property (including accounts and
contract rights) owned by such Person, even though such Person has not assumed
or become liable for payment of such Indebtedness.
"Indemnified Amount" has the meaning specified in Section 12.1 of the
Agreement.
"Indemnified Person" has the meaning specified in Section 12.1 of the
Agreement.
"Indemnitor" has the meaning specified in Section 12.1 of the
Agreement.
"Indenture" means that certain indenture dated as of the Closing Date,
among certain parties, including the Company and Calair Capital Corporation, as
issuers, and Bank One Texas, N.A., as
A-4
50
trustee, pursuant to which notes in the aggregate principal amount of
$115,000,000 will be issued, evidencing Indebtedness borrowed by the Company to
pay a portion of the consideration for the purchase of the Slots.
"Investment Company Act" means the United States Investment Company
Act of 1940.
"Involuntary Bankruptcy" means, with respect to any Person, without
the consent or acquiescence of such Person, the entering of an order for relief
or approving a petition for relief or reorganization or any other petition
seeking any reorganization, arrangement, composition, readjustment,
liquidation, dissolution or other similar relief under any present or future
bankruptcy, insolvency or similar Law, or the filing of any such petition
against such Person that shall not be dismissed or stayed within sixty (60)
days, or, without the consent or acquiescence of such Person, the entering of
an order appointing a trustee, custodian, receiver or liquidator of such Person
or of all or any substantial part of the property of such Person that shall not
be dismissed or stayed within sixty (60) days.
"Law" means any law, treaty, statute, rule, regulation, order, code,
judgment, decree, injunction, writ, requirement or decision of or agreement
with or by any government or governmental department, commission, board, court,
authority or agency having jurisdiction of the matter in question.
"Lien" means any mortgage, pledge, hypothecation, assignment,
encumbrance, lien (statutory or other), priority, security interest or other
security device or arrangement of any kind or nature whatsoever (including any
conditional sale or other title retention agreement, any financing or similar
statement or notice filed under the Uniform Commercial Code (as in effect from
time to time in the relevant jurisdiction), or any other similar recording or
notice statute, and any lease having substantially the same effect as any of
the foregoing).
"Liquidation Period" means the period commencing on the Liquidation
Start Date and ending on the date of the Disposition of all of the Company
Property and any proceeds received from the sales of the Company Property
pursuant to Section 11.7.
"Liquidation Start Date" has the meaning set forth in Section 11.1 of
the Agreement.
"Losses" has the meaning set forth in the definition of Profits and
Losses.
"Managing Member" means the Member designated as the Managing Member
pursuant to Section 4.1(b) of the Agreement, as such Member may be replaced as
provided therein.
"Member" means either Calfinco or CEA, or any permitted successor to,
or Permitted Transferee of, either Calfinco or CEA.
"Member Interest" means an interest in the Company described in
Section 3.2 of the Agreement.
A-5
51
"Member Nonrecourse Debt" - the meaning assigned to the term "partner
nonrecourse debt" in Section 1.704-2(b)(4) of the Regulations.
"Member Nonrecourse Debt Minimum Gain" shall have the meaning assigned
to the term "partner nonrecourse debt minimum gain" term in Section
1.704-2(i)(2) of the Regulations.
"Member Nonrecourse Deductions" shall have the meaning assigned to the
term "partner nonrecourse deductions" in Section 1.704-2(i)(1) of the
Regulations.
"Minimum Gain" shall have the meaning assigned to that term in Section
1.704-2(d) of the Regulations.
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc. and any successor
rating agency.
"Nonrecourse Deductions" shall have the meaning assigned to that term
in Section 1.704-2(b)(1) of the Regulations.
"Nonrecourse Liability" shall have the meaning assigned to that term
in Section 1.752-1(a)(2) of the Regulations.
"Offer" shall have the meaning set forth in Section 9.2(c) of the
Agreement.
"Operative Documents" means, collectively, the Organizational
Documents of the Company, the CAL Sale Agreement, the Slot Lease, the
Redemption Option Agreement, and the Credit Documents.
"Organizational Documents" means, with respect to any Person, any
certificate of incorporation, charter, by-laws, memorandum of association,
articles of association, partnership agreement, limited liability company
agreement (including the Agreement), certificate of limited partnership,
certificate of formation, certificate of trust, trust agreement, indenture or
other agreement or instrument under which such person is formed or organized
under applicable Laws.
"Payment Date" means the first Business Day of each April and October
in each year, commencing the first Business Day of October 1998.
"Permitted Liens" means (i) bankers' rights of set-off for uncollected
items and routine fees and expenses arising in the ordinary course of business,
(ii) Liens created by or pursuant to, or expressly permitted under, any
Operative Document, (iii) Liens for taxes and other governmental charges and
assessments (and other Liens imposed by Law) not yet delinquent or being
contested in good faith and by proper proceedings and as to which appropriate
reserves (in the good faith judgment of the relevant Person) are being
maintained, unless and until any Lien resulting therefrom attaches to its
property and becomes enforceable against its other creditors, (iv) restrictions
on transfers of securities or voting under applicable Laws, and (v)
restrictions on the transfer of assets of the Company under the Agreement and
any other Operative Documents.
A-6
52
"Permitted Transfer" means any Transfer of a Member Interest permitted
by Section 9.2 of the Agreement.
"Permitted Transferee" means any Person to which a Member Interest is
Transferred pursuant to a Permitted Transfer.
"Person" means any individual, partnership (whether general or
limited), corporation (including a business trust), joint stock company,
limited liability company, trust, estate, association, custodian, nominee,
joint venture, or other entity, or a government or any political subdivision or
agency thereof.
"Prime Rate" means the rate of interest from time to time announced by
The Chase Manhattan Bank at its principal office in the United States as its
prime commercial lending rate (or comparable rate, if such bank does not so
designate a "prime commercial lending rate") such Prime Rate to change when and
as such prime commercial lending rate (or such comparable rate) changes.
"Profits" and "Losses" means, for each Fiscal Year, an amount equal to
the Company's taxable income or loss for such Fiscal Year, determined in
accordance with Code Section 703(a) (for this purpose, all items of income,
gain, loss, or deduction required to be stated separately pursuant to Code
Section 703(a)(1) shall be included in taxable income or loss), with the
following adjustments:
(i) Any income of the Company that is exempt from federal
income tax and not otherwise taken into account in computing Profits
or Losses pursuant to this definition of "Profits" and "Losses" shall
be added to such taxable income or loss;
(ii) Any expenditures of the Company described in Code
Section 705(a)(2)(B) or treated as Code Section 705(a)(2)(B)
expenditures pursuant to Section 1.704-1(b)(2)(iv)(g) of the
Regulations and not otherwise taken into account in computing Profits
or Losses pursuant to this definition of "Profits" and "Losses" shall
be subtracted from such taxable income or loss;
(iii) In the event the carrying value of any Company
Property is adjusted, the amount of such adjustment shall be taken
into account as gain or loss from the Disposition of such asset for
purposes of computing Profits or Losses;
(iv) Gain or loss resulting from any Disposition of
Company Property with respect to which gain or loss is recognized for
federal income tax purposes shall be computed by reference to the
carrying value of the property Disposed of, notwithstanding that the
adjusted tax basis of such property differs from its carrying value;
(v) All Taxes paid or accrued by the Company shall be
treated as deductions in computing Profits and Losses; and
(vi) Any items that are specially allocated pursuant to
Section 6.2 of the Agreement shall not be taken into account in
computing Profits or Losses.
A-7
53
The amounts of the items of income, gain, loss or deduction available to be
specially allocated pursuant to Section 6.2 of the Agreement shall be determined
by applying rules analogous to those set forth in clauses (i) through (v) above.
"Redemption Option Agreement" means that certain Redemption Option
Agreement dated as of the Closing Date, between the Company and CEA.
"Regulations" means the income tax regulations, including temporary
regulations, promulgated under the Code.
"Regulatory Allocations" shall have the meaning set forth in Section
6.3 of the Agreement.
"Retained Amounts" shall have the meaning set forth in Section 7.1(a)
of the Agreement.
"S&P" means Standard & Poor's Ratings Group, a division of
▇▇▇▇▇▇-▇▇▇▇, Inc. and any successor rating agency.
"Securities Act" means the Securities Act of 1933, as amended.
"Sharing Ratio" means, in the case of CEA, twenty-four percent (24%),
unless and until (i) the Company redeems one-half ( 1/2) of CEA's Member
Interest pursuant to Section 1 of the Redemption Option Agreement, in which
case, CEA's Sharing Ratio after such redemption will be twelve percent (12%),
or (ii) the Company redeems CEA's entire remaining Member Interest pursuant to
paragraphs 2, 3, 4, 5, 6, 7, or 8 of the Redemption Option Agreement, in which
case CEA's Sharing Ratio after such redemption will be zero (0). Calfinco's
Sharing Ratio, at any particular time, shall equal one hundred percent (100%)
minus CEA's Sharing Ratio at such time.
"Slot Lease" means that certain Slot Lease Agreement, effective as of
the Closing Date, between CAL and the Company, pursuant to which the Company
leases the Slots to CAL.
"Slots" means the "Leased Slots" as defined in the Slot Lease.
"Tax Matters Member" means Calfinco when acting pursuant to its
authority under Section 8.2(b) of the Agreement.
"Taxes" or "Tax" means any and all taxes (including net income, gross
income, franchise, value added, ad valorem, gross receipts, leasing, excise,
fuel, excess profits, sales, use, property (personal or real, tangible or
intangible) and stamp taxes), levies, imposts, duties, charges, assessments, or
withholdings of any nature whatsoever, general or special, ordinary or
extraordinary, now existing or hereafter created or adopted, together with any
and all penalties, fines, additions to tax and interest thereon.
"Tenth Anniversary" means the tenth (10) anniversary of the Closing
Date.
A-8
54
"Termination Event" means the occurrence of any of the following
events; provided, that, in the case of clauses (iii) through (xi), (A) CEA has
delivered to Calfinco a Trigger Event Notice, (B) such event has not been cured
or otherwise resolved to CEA's satisfaction, within five (5) Business Days
after the delivery of such Trigger Event Notice, and (C) such Trigger Event
Notice has not been rescinded by CEA, in CEA's sole discretion, in accordance
with Section 4.4(a) of the Agreement:
(i) The unanimous vote of the Members to dissolve, wind
up, and liquidate the Company;
(ii) Any event that makes it unlawful or impossible to
carry on the business of the Company, or the Delaware court of
Chancery has entered a final decree of dissolution of the Company
pursuant to Section 18-802 of the Act;
(iii) The Transfer by Calfinco of all or any portion of its
Member Interest other than pursuant to a Permitted Transfer;
(iv) The occurrence of an event of default under any
Credit Document or under any document executed in connection with the
refinancing of the Indebtedness evidenced by the Credit Documents, and
(if any such Indebtedness is held by Persons who are not Affiliates of
the Managing Member) the exercise of any remedy, including
acceleration, in respect of such default;
(v) If the Company has received the "Redemption Notice"
as provided in the Redemption Option Agreement and the Company does
not notify CEA of the Company's election to redeem CEA's entire Member
Interest in accordance with the Redemption Option Agreement within ten
(10) Business Days after receipt of the Redemption Notice, at any time
after the expiration of such ten (10) day period;
(vi) If the Company has not acquired CEA's entire Member
Interest on the Tenth Anniversary in accordance with the Redemption
Option Agreement, at any time after the Tenth Anniversary;
(vii) CAL shall fail to pay any rent under the Slot Lease
when due and such failure shall continue unremedied for ten (10) days;
(viii) As long as Calfinco is the Managing Member, Calfinco
shall have willfully caused the Company to Transfer Slots in violation
of the Agreement; or CAL or Calfinco shall have failed to perform any
covenant or other obligation, other than as described in clause (vii)
above, contained in any Operative Document, including any failure to
cause the Company to pay Distributions pursuant to Section 7.2 of the
Agreement, and the failing party shall have failed to commence the
cure of such failure within thirty (30) days after such party shall
have been notified of such failure by CEA, or thereafter Calfinco
shall have failed to proceed diligently with such cure to completion;
(ix) Any certification, representation or warranty made or
deemed made by Calfinco under or in connection with the Agreement or
any other Operative Document shall
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prove to have been incorrect in any material respect when made and
such material inaccuracy is continuing;
(x) the failure of CAL to repay the Indebtedness
described in Section 7.1(a)(iii) of the Agreement, when due; and
(xi) the Bankruptcy of CAL or Calfinco.
"Termination Notice" has the meaning set forth in Section 11.1(b) of
the Agreement.
"Transfer" means, with respect to any Member Interest, as a noun, any
voluntary or involuntary transfer, sale, assignment of an interest in or other
disposition of such Member Interest (other than a retirement or redemption of
such Member's Member Interest), and, as a verb, voluntarily or involuntarily to
transfer, sell, assign or otherwise dispose of, such Member Interest (other
than to retire or redeem such Member's interest), including, in each case, any
transfer by operation of law, merger, bankruptcy or otherwise. The adjective
"Transferred" has the correlative meaning. "Transfer" does not include any
pledge, hypothecation, collateral assignment, or other creation of a security
interest, but does include any foreclosure of any such security interest.
"Transferee Certificate" means a certificate executed by a prospective
transferee of a Member Interest in accordance with Section 9.3(e) of the
Agreement and in the form of Exhibit B thereof.
"Trigger Event" has the meaning specified in Section 4.4(a) of the
Agreement.
"Trigger Event Notice" has the meaning specified in Section 4.4(a) of
the Agreement.
"United States" and "U.S." each mean the United States of America.
"Voluntary Bankruptcy" means, with respect to any Person: (i) (a) the
inability of such Person generally to pay its debts as such debts become due,
(b) the failure of such Person generally to pay its debts as such debts become
due, or (c) an admission in writing by such Person of its inability to pay its
debts generally or a general assignment by such Person for the benefit of
creditors; (ii) the filing of any petition by such Person under 11 U.S.C.
Section 101 et seq. seeking to adjudicate itself a bankrupt or insolvent, or
the filing of an answer or other pleading admitting or failing to contest the
allegations of a petition filed against it in any proceeding of this nature, or
seeking for itself any liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief, or composition of such Person or its debts
under any Law relating to bankruptcy, insolvency or reorganization or relief of
debtors, or seeking, consenting to, or acquiescing in the entry of an order for
relief or the appointment of a receiver, trustee, custodian or other similar
official for such Person or for any substantial part of its property; or (iii)
an action taken by such Person to authorize any of the actions set forth above.
"Wholly Owned Affiliate" of any Person means (i) an Affiliate of such
Person 100% of the capital stock (or its equivalent in the case of entities
other than corporations) of which is owned beneficially by such Person,
directly or indirectly through one or more Wholly Owned Affiliates, or by any
Person who, directly or indirectly, owns beneficially 100% of the capital stock
(or its equivalent in the case of entities other than corporations) of such
Person, or (ii) an Affiliate of such
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Person who, directly or indirectly, owns beneficially 100% of the capital stock
(or its equivalent in the case of entities other than corporations) of such
Person, provided that, for purposes of determining the ownership of the capital
stock of any Person, de minimis amounts of stock held by directors, nominees
and similar persons pursuant to statutory or regulatory requirements shall not
be taken into account.
▇-▇▇
▇▇
▇▇▇▇▇▇▇ ▇
TO
AMENDED AND RESTATED COMPANY AGREEMENT
Transferee Certificate
This Transferee Certificate is executed on this _____ day of ______,
199__, by each person or entity whose name appears in the signature blocks set
forth below (the "Transferee") in favor of Calair L.L.C., a Delaware limited
liability company ("Calair") and [the remaining Member] (the "Remaining
Member").
RECITALS
[The selling Member] (the "Selling Member") and the Remaining Member
are parties to that certain Company Agreement dated April __, 1998, among the
Remaining Member and the Selling Member (the "Company Agreement").
Pursuant to an agreement between the Selling Member and the
Transferee, the Selling Member is transferring its Member Interest to the
Transferee.
In order to satisfy the conditions set forth in Section 9.3(a) of the
Company Agreement, the Transferee has agreed to execute and deliver this
Transferee Certificate in favor of Calair and the Remaining Member.
AGREEMENTS
NOW, THEREFORE, for and in consideration of the premises, and other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Transferee hereby certifies and agrees as follows:
1. DEFINED TERMS. Any capitalized term used herein but not
defined shall have the meaning given such term in the Company Agreement.
2. CERTIFICATIONS. The Transferee hereby represents and
warrants, as of the date hereof, to Calair and the Remaining Member:
(a) ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Matters. The Transferee does not,
directly or indirectly, have (i) the right to 50% or more of the
profits of Calair or (ii) the right, in the event of a dissolution of
Purchaser, to 50% or more of the assets of Calair.
(b) Investment Company Matters. The Transferee is not an
"investment company" or a company "controlled" by an "investment
company" within the meaning of the
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58
Investment Company Act of 1940, as amended, or an "investment advisor"
within the meaning of the Investment Advisers Act of 1940, as amended.
(c) Investor Sophistication. Transferee (i) acknowledges
that it has performed all due diligence that it desires to perform to
enable it to evaluate the risks and merits of consummating the
transactions contemplated by the Company Agreement and the Operative
Documents, and (ii) is financially capable of owning, and bearing the
risks of ownership of, a Member Interest in Calair.
(d) Securities Law Matters. Transferee is acquiring the
Member Interests for its own account, for investment purposes only and
not with a view to the distribution or resale thereof.
(e) ERISA Matters. The Transferee is not (i) an
"employee benefit plan" within the meaning of Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended, or (ii)
an Entity that holds the assets of any such plan.
3. COVENANTS. Transferee covenants and agrees with Calair and
the Remaining Member that from and after the date hereof, Transferee will not
transfer all or any portion of its interest in Calair to another Person, or
take or fail to take any other action, if the effect thereof would be to cause
the representations and warranties of Transferee set forth in Sections 2(b) and
(e) above to cease to be true and correct as of the date of such transfer,
action or inaction.
EXECUTED as of the day and year first written above.
TRANSFEREE
By:
----------------------
Name:
----------------------
Title:
----------------------
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