EXHIBIT 3.1
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
AMERICAN COMMERCIAL LINES HOLDINGS LLC
AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT, dated as of
April 27, 1999, of American Commercial Lines Holdings LLC, a Delaware
limited liability company (the "COMPANY"), by and among the Company, and
those parties whose names appear on SCHEDULE A, attached hereto, such parties
being members of the Company (collectively referred to as the "MEMBERS" or
individually as a "MEMBER"). Capitalized terms used herein but not otherwise
defined shall have the meanings set forth in Article I below.
WHEREAS, the Company (of which CSX was the initial member) was formed on
February 3, 1998 pursuant to and in accordance with the Act; and
WHEREAS, in accordance with the Act and the Limited Liability Company
Agreement of the Company, dated as of February 3, 1998, as amended and restated
as of March 30, 1998, and as amended and restated as of June 30, 1998 (the
"PRIOR AGREEMENT"), and to effectuate the provisions of the Recapitalization
Agreement, the Members desire to, and hereby, amend and restate the Prior
Agreement in its entirety in accordance with this Agreement.
NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby
agree as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS. When used in this Agreement, the following terms shall
have the meanings set forth below (all terms used in this Agreement that are
not defined in this Article I shall have the meanings set forth elsewhere in
this Agreement):
"ACCOUNTANTS" means a nationally recognized firm of independent certified
public accountants selected in accordance with the provisions of Section 7.13.
"ACL" means American Commercial Lines LLC, a Delaware limited liability
company and a wholly owned Subsidiary of the Company.
"ACT" means the Delaware Limited Liability Company Act, Delaware Code,
Title 6, Sections 18-101, ET. SEQ., as in effect from time to time.
"ADJUSTED CAPITAL ACCOUNT DEFICIT" means, with respect to each Unitholder,
the deficit balance, if any, in such Unitholder'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 amount which such Member is
obligated to restore or is deemed obligated to restore pursuant to Treasury
Regulations Section 1.704-2(g)(1) and (without duplication) 1.704-2(i)(5); and
(b) Debit to such Capital Account the items described in Treasury
Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6).
The foregoing definition of Adjusted Capital Account Deficit is intended to
comply with the provisions of Treasury Regulations Section 1.704-1(b)(2)(ii)(d)
and shall be interpreted consistently therewith.
"ADJUSTED TAXABLE INCOME" has the meaning set forth in Section 5.3 hereof.
"AFFILIATE" means, as to any Person, any other Person directly or
indirectly, through one or more intermediaries, controlling, controlled by, or
under common control with such Person; PROVIDED, the term "control," as used in
this definition, shall mean with respect to any Person, the possession, directly
or indirectly, of the power to direct or cause the direction of the management
or policies of the controlled entity (whether through ownership of voting
securities, by contract or otherwise).
"AGGREGATE AMOUNT" has the meaning set forth in Section 5.3 hereof.
"AGREEMENT" means this Amended and Restated Limited Liability Company
Agreement, as amended, restated or modified from time to time, including any
exhibits hereto.
"APPLICABLE LAW" means, with respect to any Person, any statute, law,
regulation, ordinance, rule, injunction, order, decree, Governmental Approval,
directive, requirement, or other governmental restriction or any similar form of
decision of, or determination by, or any interpretation or administration of any
of the foregoing by, any Governmental Authority, applicable to such Person or
its subsidiaries or their respective assets.
"APPROVED SALE" means a Sale of the Company approved by Majority Approval
of each class of Units then held by the Vectura Members, subject to the
provisions of Section 7.12(a)(iv).
"BANKRUPTCY" means, with respect to any Person: (i) the filing of a
petition by or against a Person as "debtor" under Title 11 of the United States
Code (the "BANKRUPTCY CODE") seeking the adjudication of such Person as
bankrupt or the appointment of a trustee, receiver, or custodian of such
Person's assets and in case of a petition filed against such Person, such filing
not having been withdrawn or dismissed within 90 days after the date of such
filing; (ii) the making by such Person of a general assignment for the benefit
of creditors; (iii) the entry of an order, judgment, or decree by any court of
competent jurisdiction appointing a trustee, receiver, or custodian to take
possession of or control over the assets of such Person unless such proceedings
and the person appointed are dismissed within ninety (90) days of the date upon
which the court issued its order, judgment, or decree; or (iv) the determination
by the Bankruptcy Court or the written admission of such Person that such Person
is generally unable to pay his or her debts as they become due within the
meaning of Section 303(h)(1) of the Bankruptcy Code. With respect to a Member,
the term "Bankruptcy" as defined herein is intended to and shall supersede and
replace the events of bankruptcy defined in Section 18-304 of the Act.
"BASE RATE" means on any date of determination, a variable rate per annum
equal to the rate of interest published, from time to time, by THE WALL STREET
JOURNAL as the "prime rate" at large U.S. money center banks.
"BIG REGIME" has the meaning set forth in Section 5.3.
"BIG TAX" has the meaning set forth in Section 5.3.
"BOARD" means the Board of Representatives as specified in Article VII
hereof.
"BUILT-IN GAIN" has the meaning set forth in Section 5.3.
"CAPITAL ACCOUNT" means, for each Unitholder, the Capital Account
established for each Unitholder pursuant to Article VI as maintained for each
Unitholder as follows:
(A) to each Unitholder's Capital Account there shall be credited
(a) such Unitholder's Capital Contributions, if any, when and as received and
(b) the Net Profit, Gross Income and other items of Company income and gain
allocated to such Unitholder pursuant to Section 6.2;
(B) to each Unitholder's Capital Account there shall be debited (a)
the aggregate amount of cash distributed to such Unitholder, (b) the Net Loss
and other items of Company loss and deduction allocated to such Unitholder
pursuant to Section 6.2, and (c) the Gross Asset Value of any Company assets
(other than cash) distributed to such Unitholder in kind (net of any liabilities
secured by such distributed property that the Unitholder is considered to assume
or take under Code Section 752);
(C) Capital Accounts shall be otherwise adjusted in accordance with
Treasury Regulations Section 1.704-1(b); and
(D) if Units are 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 Units.
The foregoing provisions and the other provisions of this Agreement relating to
the maintenance of Capital Accounts are intended to comply with Treasury
Regulations Section 1.704-1(b), and shall be interpreted and applied in a manner
consistent with such Treasury Regulations.
"CAPITAL CONTRIBUTION" means for each Unitholder the total amount of cash
and the Gross Asset Value of property contributed to the Company by such
Unitholder pursuant to Section 4.1 or otherwise, net of any liabilities
associated with such contributed property that the Company is considered to
assume or "take subject to" under Section 752 of the Code, which Capital
Contribution shall be reflected on SCHEDULE A hereto as amended from time to
time in accordance with the terms of this Agreement.
"CAPITAL LEASE OBLIGATIONS" of any Person shall mean the obligations of
such Person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP,
and the amount of such obligations shall be the capitalized amount thereof
determined in accordance with GAAP.
"C CORPORATION" means a corporation subject to taxation under Section 11 of
the Code.
"C CORPORATION TAX RATE" has the meaning set forth in Section 5.3 hereof.
"CERTIFICATE" means the Certificate of Formation for the Company originally
filed with the Secretary of State of the State of Delaware and as amended or
restated from time to time.
"CHANGE OF CONTROL" means the occurrence of (i) a "Change of Control" as
defined in the Credit Agreement as in effect on June 30, 1998, or (ii) a "Change
of Control" as defined in the Senior Unsecured Debt Documents as in effect on
June 30, 1998, or (iii) a Sale of the Company.
"CLASS A COMMON UNIT" means a Unit having the rights and obligations
specified with respect to Class A Common Units in this Agreement. The number of
Class A Common Units initially issued to each Member is listed on SCHEDULE A
attached hereto, subject to adjustment pursuant to this Agreement.
"CLASS B COMMON UNIT" means a Unit having the rights and obligations
specified with respect to Class B Common Units in this Agreement. The number of
Class B Common Units initially issued to each Member is listed on SCHEDULE A
attached hereto, subject to adjustment pursuant to this Agreement.
"CLOSING DATE" shall mean June 30, 1998.
"CODE" means the Internal Revenue Code of 1986, as amended from time to
time.
"COMPANY" has the meaning set forth in the recitals hereto.
"COMPANY MINIMUM GAIN" has the same meaning as "partnership minimum gain"
in Treasury Regulations Section 1.704-2(b)(2) and 1.704-2(d). A Unitholder's
share of Company Minimum Gain shall be computed in accordance with the
provisions of Treasury Regulations Section 1.704-2(g).
"CORPORATION" means a corporation organized under the Delaware General
Corporation Law.
"CREDIT AGREEMENT" means the Credit Agreement, dated as of June 30, 1998,
by and among, The Chase Manhattan Bank, N.A. as Administrative Agent, certain
other lenders party thereto, the Company and ACL, as such Credit Agreement may
be amended, supplemented, modified, restated, replaced or refinanced from time
to time, subject to the terms of this Agreement.
"CSX" means CSX ▇▇▇▇▇ Corp., a Delaware corporation.
"CSX CONTRIBUTED ASSETS" has the meaning set forth in Section 5.3 hereof.
"CSX 50% BIG TAX AMOUNT" has the meaning set forth in Section 5.3 hereof.
"CSX MEMBER" means initially CSX and shall include any Affiliate of CSX
which becomes a Unitholder and any Permitted Transferee (other than a Management
Unitholder) of a CSX Member pursuant to a Transfer made in accordance with the
terms and conditions hereof.
"CSX RESIDUAL TAX AMOUNT" has the meaning set forth in Section 5.3 hereof.
"CSX SALE-LEASEBACK" has the meaning set forth in Section 5.3 hereof.
"CSX SALE-LEASEBACK TAX AMOUNT" has the meaning set forth in Section 5.3
hereof.
"CSX TOTAL TAX ADVANCES" has the meaning set forth in Section 5.3 hereof.
"CSX TOTAL TAXES" has the meaning set forth in Section 5.3 hereof.
"CSX UNITHOLDER" means a holder of CSX Units.
"CSX UNITS" means the Senior Preferred Units, Junior Preferred Units and
Junior Common Units issued to any CSX Member as of June 30, 1998, regardless of
the ultimate holder of such Units.
"CSX UNREIMBURSED TAXES" has the meaning set forth in Section 5.3 hereof.
"DEPRECIATION" means, for each Fiscal Year, an amount equal to the
depreciation, amortization, or other cost recovery deduction allowable with
respect to an asset for such Fiscal Year, except that if the Gross Asset Value
of an asset differs from its adjusted basis for federal income tax purposes at
the beginning of such Fiscal Year, Depreciation shall be an amount which bears
the same ratio to such beginning Gross Asset Value as the federal income tax
depreciation, amortization, or other cost recovery deduction for such Fiscal
Year bears to such beginning adjusted tax basis; PROVIDED, that if the adjusted
basis for federal income tax purposes of an asset at the beginning of such
Fiscal Year is zero and the Gross Asset Value of the asset is positive,
Depreciation shall be determined with reference to such beginning Gross Asset
Value using any permitted method selected by the Board.
"DERIVATIVES" means, with respect to any Units, derivative securities
(other than securities of Vectura existing as of June 30, 1998) whose value or
other economic features is based on the value or such other economic features of
such Units.
"ECF LIMIT" means, for any period specified in the table below, the sum of
(i) the amount shown in the table opposite the period specified plus (ii) the
amount by which the ECF Limit for the prior period (as adjusted under this
clause (ii)) exceeds the amount distributed with respect to such period under
Section 5.4(b).
Applicable Period Amount
----------------- ----------
Fiscal Year 2003 $7,500,000
Fiscal Year 2004 7,500,000
Fiscal Year 2005 7,500,000
Fiscal Year 2006 7,500,000
Fiscal Year 2007 7,500,000
Fiscal Year 2008 10,000,000
Fiscal Year 2009 10,000,000
Fiscal Year 2010 10,000,000
Fiscal Year 2011 10,000,000
Fiscal Year 2012 10,000,000
"ENCUMBRANCE" means any lien, encumbrance, proxy, voting trust, or similar
arrangement, pledge, security interest, collateral security agreement,
limitations on voting rights, limitations on rights of ownership, financing
statement (and similar notices) filed with any Government Authority, claim,
charge, mortgage, pledge, option, restrictive covenant, restriction on transfer
or any comparable interest or right created by Applicable Law, of any nature
whatsoever, other than as contemplated pursuant to the terms of any Transaction
Document.
"ESTIMATED TAX AMOUNT" has the meaning set forth in Section 5.3 hereof.
"EXCESS CASH FLOW" means the amount of "Excess Cash Flow" (as defined in
the Credit Agreement as in effect on June 30, 1998) plus the amounts of any
optional prepayment of the "Term Loans" (as defined in the Credit Agreement) to
the extent such amount reduces such "Excess Cash Flow"; PROVIDED, that for
purposes of Section 7.12(a) only, any prepayment or any application of such
Excess Cash Flow as required or permitted under the terms and conditions of the
Credit Agreement and appropriate reserves for reasonably anticipated or actual
repayment obligations on Indebtedness of the Company and its Subsidiaries shall
be deducted therefrom.
"EXCHANGE NOTES" has the meaning set forth in Section 3.6.
"EXEMPT PREEMPTIVE OFFERING" means a Preemptive Offering only to (i)
Qualified Sellers, (ii) financing sources of the Company or its Subsidiaries as
so-called "equity kickers," (iii) management of the Company as reasonable and
customary incentive compensation, or (iv) the public in connection with an
underwritten public offering registered under the Securities Act.
"EXEMPT TRANSACTION" has the meaning set forth in Section 5.3.
"EXEMPT TRANSFERS" means (i) Transfers pursuant to a Public Sale, (ii)
Piggyback Transfers, (iii) Threshold Transfers, or (iv) Transfers in accordance
with Sections 8.2(c) or 8.3 hereof.
"FAIR MARKET VALUE" means, as of any date, the fair market value on such
date as determined pursuant to Section 12.14. For this purpose, securities that
are restricted by law, contract, market conditions (including trading volume
relative to the Company's holding) or otherwise as to saleability or
transferability may be valued at an appropriate discount, based on the nature
and term of such restrictions. Notwithstanding anything to the contrary
contained herein, the Fair Market Value as of the date of contribution for the
properties identified on Schedule B attached hereto and a part hereof shall be
the value of such properties as reflected on Schedule B.
"FAMILY GROUP" means, with respect to an individual Unitholder, such
Unitholder, such Unitholder's spouse, siblings, and descendants (whether
natural, by marriage or adopted) and any trust, partnership or company
solely for the benefit of such Unitholder and/or such Unitholder's spouse,
siblings, their respective ancestors and/or descendants (whether natural, by
marriage or adopted).
"FISCAL YEAR" means (i) the taxable year of the Company, which shall be the
52-53 week period ending on the last Friday of each December unless otherwise
required (or, in the Board's reasonable discretion, permitted) by Section 706(b)
of the Code, and (ii) for purposes of Article VI, the portion of any Fiscal Year
for which the Company is required to (or does) allocate Gross Income, Net
Profit, Net Loss, or other items pursuant to Article VI.
"GAAP" means United States generally accepted accounting principles as in
effect in the United States from time to time.
"GOVERNMENTAL APPROVAL" means any action, order, authorization, consent,
approval, license, ruling, permit, tariff, rate, certification, exemption,
filing or registration by or with any Governmental Authority.
"GOVERNMENTAL AUTHORITY" means any government or political subdivision
thereof, governmental department, commission, board, bureau, agency, regulatory
authority, instrumentality, judicial or administrative body having jurisdiction
over the matter or matters in question.
"GROSS ASSET VALUE" means, with respect to any Company asset, the adjusted
basis of such asset for Federal income tax purposes, except as follows:
(a) The initial Gross Asset Value of any Company asset contributed
by a Member to the Company shall be the gross Fair Market Value of such
Company asset as of the date of such contribution;
(b) The Gross Asset Value of each Company asset shall be adjusted
to equal its respective gross Fair Market Value, as of the following
times: (i) the acquisition of an additional interest in the Company by
any new or existing Member in exchange for more than a DE MINIMIS
Capital Contribution; (ii) the distribution by the Company to a
Unitholder of more than a DE MINIMIS amount of Company assets (other
than cash) as consideration for all or part of its Units unless the
Board reasonably determines that such adjustment is not necessary to
reflect the relative economic interests of the Unitholders in the
Company; and (iii) the liquidation of the Company within the meaning of
Treasury Regulations Section 1.704-1(b)(2)(ii)(g);
(c) The Gross Asset Value of a Company asset distributed to any
Unitholder shall be the Fair Market Value of such Company asset as of
the date of distribution thereof;
(d) The Gross Asset Value of each Company asset shall be increased
or decreased, as the case may be, to reflect any adjustments to the
adjusted basis of such Company asset pursuant to Section 734(b) or
Section 743(b) of the Code, but only to the extent that such adjustments
are taken into account in determining Capital Account balances pursuant
to Treasury Regulations Section Section 1.704-1(b)(2)(iv)(m); PROVIDED,
that Gross Asset Values shall not be adjusted pursuant to this
subparagraph (d) to the extent that an adjustment pursuant to
subparagraph (b) above is made in conjunction with a transaction that
would otherwise result in an adjustment pursuant to this subparagraph
(d); and
(e) If the Gross Asset Value of a Company asset has been determined
or adjusted pursuant to subparagraphs (a), (b) or (d) above, such Gross
Asset Value shall thereafter be adjusted to reflect the Depreciation
taken into account with respect to such Company asset for purposes of
computing Net Profits and Net Losses.
"GROSS INCOME" means for each Fiscal Year, all items of income and gain
recognized by the Company.
"GUARANTEE" of or by any Person shall mean any obligation, contingent, or
otherwise, of such Person guaranteeing or having the economic effect of
guaranteeing any Indebtedness of any other Person (the "PRIMARY
OBLIGOR") in any manner, whether directly or indirectly, and including any
obligation of such Person, direct or indirect, (a) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness or
to purchase (or to advance or supply funds for the purchase of) any security
for the payment of such Indebtedness, (b) to purchase or lease property,
securities, or services for the purpose of assuring the owner of such
Indebtedness of the payment of such Indebtedness, or (c) to maintain working
capital, equity capital, or any other financial statement condition or
liquidity of the primary obligor so as to enable the primary obligor to pay
such Indebtedness; PROVIDED, HOWEVER, that the term "Guarantee" shall not
include endorsements for collection or deposit in the ordinary course of
business.
"HOLD" means direct or indirect possession and/or beneficial or record
ownership.
"INCAPACITY" means, as to any natural Person, the death or the adjudication
of incompetence or insanity of such Person.
"INDEBTEDNESS" of any Person shall mean, without duplication, (a) all
obligations of such Person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such Person evidenced by bonds,
debentures, notes, or similar instruments, (c) all obligations of such Person
upon which interest charges are customarily paid (excluding trade accounts
payable and accrued obligations incurred in the ordinary course of business),
(d) all obligations of such Person under conditional sale or other title
retention agreements relating to property or assets purchased by such Person,
(e) all obligations of such Person issued or assumed as the deferred purchase
price of property or services (excluding trade accounts payable and accrued
obligations incurred in the ordinary course of business), (f) all Indebtedness
of others 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
valued at the fair market value of the assets subject to such Lien (in the case
of nonrecourse Indebtedness) owned or acquired by such Person, whether or not
the obligations secured thereby have been assumed, (g) all Guarantees by such
Person of Indebtedness of others, (h) all Capital Lease Obligations of such
Person, (i) all obligations of such Person in respect of interest rate
protection agreements, foreign currency exchange agreements, or other interest
or exchange rate hedging arrangements, and (j) all obligations of such person as
an account party in respect of letters of credit and bankers' acceptances. The
Indebtedness of any Person shall include the Indebtedness of any partnership in
which such Person is a general partner except to the extent that the terms of
such Indebtedness provide otherwise.
"INDEMNITEE" has the meaning specified in Section 11.1.
"INDEPENDENT THIRD PARTY" means any Person who, immediately prior to the
contemplated transaction, (i) does not hold in excess of 5% of the Junior Common
Units (any Person so holding in excess of 5% of the Junior Common Units being
referred to herein as a "5% OWNER"), (ii) is not an Affiliate of any 5% Owner,
and (iii) is not a member of the Family Group of any 5% Owner.
"INITIAL PUBLIC OFFERING" means the initial underwritten public offering of
the Company's common equity securities pursuant to a registration statement
filed under the Securities Act with the Securities and Exchange Commission,
which offering results in net cash proceeds to the Company of at least
$50,000,000.
"INVESTOR UNITHOLDER" means a Unitholder listed under the heading "Investor
Unitholder" on SCHEDULE A attached hereto and shall include any such Person who
acquires Units pursuant to Section 8.2(c)(iii).
"JUNIOR COMMON HOLDER" means any Person in its capacity as owner of one or
more Junior Common Units, as reflected on the Company's books and records.
"JUNIOR COMMON UNIT" means any Class A Common Unit or Class B Common Unit.
"JUNIOR PREFERRED REDEMPTION VALUE" means, as of any time, the aggregate
dollar amount that would be necessary to be distributed to the Junior Preferred
Unitholders so that (i) the accreted value (determined as of such time by using
a rate of return of 11.02%, compounded annually from the date on which the
related distribution was made) of all distributions made by the Company with
respect to the Junior Preferred Units under Sections
5.2(a)(ii), 5.5, and 9.2 as of such time, equals (ii) the accreted value of
$99,505,909 (determined as of such time by using a rate of return of 11.02%,
compounded annually from the date of issuance), subject to adjustment
pursuant to Sections 2.1(j), 2.4(c), and 10.4 of the Recapitalization
Agreement.
"JUNIOR PREFERRED UNIT" means a Unit having the rights and obligations
specified with respect to Junior Preferred Units in this Agreement. The number
of Junior Preferred Units initially issued to each Member is listed on SCHEDULE
A attached hereto, subject to adjustment pursuant to this Agreement.
"JUNIOR SECURITIES" means the Junior Preferred Units, the Senior Common
Units, and the Junior Common Units.
"LIEN" means, with respect to any asset, (a) any mortgage, deed of trust,
lien, pledge, encumbrance, charge, or security interest in or on such asset,
(b) the interest of a vendor or a lessor under any conditional sale agreement,
capital lease, or title retention agreement (or any financing lease having
substantially the same economic effect as any of the foregoing) relating to such
asset, and (c) in the case of securities, any purchase option, call, or similar
right of a third party with respect to such securities.
"LIQUIDATOR" means the Person responsible for winding up the Company
pursuant to Section 9.2 hereof.
"MAJORITY APPROVAL" of a class of Units means the approval of Members
owning a majority of the outstanding Unit of such class.
"MANAGEMENT UNITHOLDER" means an individual Unitholder who is a full-time
employee of the Company or any of its Subsidiaries, and listed under the heading
"Management Unitholder" on SCHEDULE A hereto and shall include such full-time
employees who acquire Units pursuant to Section 8.2(c)(ii).
"MEMBER" means each Person who (a) is an initial signatory to this
Agreement, or has been admitted to the Company as a Member in accordance with
the provisions of Article III of this Agreement, and (b) has not ceased to be a
Member in accordance with the provisions of this Agreement or for any other
reason. No Person who is not a Member shall be deemed a "member" under the Act.
"MEMBER MINIMUM GAIN" means an amount, with respect to each Member
Nonrecourse Debt, equal to the Company Minimum Gain that would result if such
Member Nonrecourse Debt were treated as a Nonrecourse Liability, determined in
accordance with Treasury Regulations Section 1.704-2(i)(3).
"MEMBER NONRECOURSE DEBT" has the same meaning as the term "partner
nonrecourse debt" in Treasury Regulations Section 1.704-2(b)(4).
"MEMBER NONRECOURSE DEDUCTIONS" has the same meaning as the term "partner
nonrecourse deductions" in Treasury Regulations Sections 1.704-2(i)(1) and
1.704-2(i)(2).
"MEMBERSHIP INTEREST" means a Member's entire interest in the Company,
including such Member's economic interest, the right to vote on or participate
in the Company's management, and the right to receive information concerning the
business and affairs of the Company, in each case, to the extent expressly
provided in this Agreement or required by the Act.
"NET PROFIT AND NET LOSS" 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) (including for this purpose, all items of
income, gain, loss or deduction required to be separately stated pursuant to
Code Section 703(a)(1)), with the following adjustments:
(a) Any income of the Company that is exempt from Federal income
tax and not otherwise taken into account in computing Net Profit or Net
Loss pursuant to this definition shall be added to such taxable income
or loss;
(b) Any expenditures of the Company described in Section
705(a)(2)(B) of the Code or treated as Section 705(a)(2)(B) of the Code
expenditures pursuant to Treasury Regulations Section
1.704-1(b)(2)(iv)(i) (other than expenses in respect of which an
election is properly made under Section 709 of the Code), and not
otherwise taken into account in computing Net Profit or Net Loss
pursuant to this definition shall be subtracted from such taxable income
or loss;
(c) In the event the Gross Asset Value of any Company asset is
adjusted pursuant to subparagraph (b) or (c) of the definition of Gross
Asset Value, the amount of such adjustment shall be taken into account
as gain (if the adjustment increases the Gross Asset Value of an asset)
or loss (if the adjustment decreases the Gross Asset Value of an asset)
from the disposition of such Company asset for purposes of computing Net
Profit or Net Loss;
(d) Gain or loss resulting from any disposition of any Company
asset with respect to which gain or loss is recognized for Federal
income tax purposes shall be computed by reference to the Gross Asset
Value of the Company asset disposed of, notwithstanding that the
adjusted tax basis of such Company asset may differ from its Gross Asset
Value;
(e) In lieu of the depreciation, amortization, and other cost
recovery deductions taken into account in computing such taxable income
or loss, there shall be taken into account Depreciation for such Fiscal
Year, computed in accordance with the definition of Depreciation;
(f) To the extent an adjustment to the adjusted tax basis of any
Company asset pursuant to Code Section 734(b) is required, pursuant to
Treasury Regulation Section 1.704-1(b)(2)(iv)(m)(4), to be taken into
account in determining Capital Accounts as a result of a distribution
other than in liquidation of a Member's interest in the Company, the
amount of such adjustment shall be treated as an item of gain (if the
adjustment increases the basis of the asset) or loss (if the adjustment
decreases such basis) from the disposition of such asset and shall be
taken into account for purposes of computing Net Profit or Net Loss; and
(g) Any items of income, gain, loss or deduction specially
allocated under Section 6.2(d) shall be excluded.
"NMI" means National Marine, Inc., a Delaware corporation, or its
successor, National Marine, LLC, a Delaware limited liability company, as the
case may be.
"NONRECOURSE DEDUCTIONS" shall have the meaning set forth in Treasury
Regulations Section 1.704-2(b)(1).
"NONRECOURSE LIABILITY" shall have the meaning set forth in Treasury
Regulations Section 1.752-1(a)(2).
"OFFICER" means each Person who has been designated as, and who has not
ceased to be, an officer of the Company pursuant to Section 7.11 hereof, subject
to the resolution of the Board appointing such Person as an officer of the
Company.
"OTHER UNITHOLDER" means, with respect to a Unitholder, all Unitholders
other than such Unitholder.
"OWNERSHIP RATIO" means, as to a Unitholder at the time of determination,
the percentage obtained by dividing the number of Units of the applicable class
of Units held by such Unitholder at such time by the aggregate number of Units
of the same class of Units held by all Unitholders at such time.
"PERMITTED PAYMENT" has the meaning specified in Section 5.3.
"PERMITTED TRANSFEREES" means all Transferees permitted under Section
8.2(c).
"PERSON" means an individual, a partnership, a corporation, an association,
a joint stock company, a limited liability company, a trust, a joint venture, an
unincorporated organization and a governmental entity or any department, agency
or political subdivision thereof.
"PIGGYBACK TRANSFER" means a Transfer pursuant to Section 3 of the
Registration Rights Agreement.
"PREEMPTIVE OFFERING" means the offer, issuance or sale by the Company or
any Subsidiary of the Company of any Preemptive Securities.
"PREEMPTIVE SECURITIES" means, collectively, (i) the Units, (ii) Membership
Interests or other economic interests in the Company, (iii) any securities
containing options or rights to acquire any Units or other economic interests in
the Company, or (iv) any other securities convertible or exchangeable for any
Units or other economic interests in the Company.
"PREFERRED UNITS" means, collectively, the Senior Preferred Units and the
Junior Preferred Units.
"PROPORTIONATE AMOUNT" means, with respect to a Junior Common Holder, the
product of (i) all Preemptive Securities to be sold or issued by the Company and
(ii) a fraction (x) the numerator of which shall be the number of Junior Common
Units owned by such Junior Common Holder, and (y) the denominator of which shall
be the aggregate number of outstanding Junior Common Units.
"PUBLIC SALE" means any sale of Units, following an Initial Public
Offering, to the public pursuant to an offering registered under the Securities
Act or to the public effected through a broker, dealer or market maker pursuant
to the provisions of Rule 144 under the Securities Act.
"QUALIFIED PUBLIC OFFERING" means an underwritten public offering of the
Company's common equity securities pursuant to a registration statement filed
under the Securities Act with the Securities and Exchange Commission, which
offering results in net cash proceeds to the Company of at least $200,000,000.
"QUALIFIED SELLERS" means, in connection with an acquisition of assets or
equity securities of any Person by the Company or any Subsidiary of the Company,
such Person or Persons with whom the Company or any Subsidiary of the Company
has contracted to acquire such assets or equity securities; PROVIDED, that any
such Person is not an Affiliate of the Company or of any Member or
Representative or of any Subsidiary of the Company, in each case immediately
prior to giving effect to such acquisition.
"QUARTERLY ESTIMATED TAX AMOUNT" has the meaning set forth in Section 5.3
hereof.
"RECAPITALIZATION" means the recapitalization of the Company and all
related transactions pursuant to the terms and conditions of the
Recapitalization Agreement.
"RECAPITALIZATION AGREEMENT" means the Recapitalization Agreement, dated as
of April 17, 1998, by and among the Company, ACL, CSX Corporation, Vectura and
NMI, as such may be amended, supplemented or restated from time to time.
"RECLASSIFIED SECURITIES" has the meaning set forth in Section 8.6.
"REGISTRATION RIGHTS AGREEMENT" means that certain Registration Rights
Agreement, dated as of June 30, 1998, by and among the Company, the Members, and
certain other Persons signatory thereto, as may be amended, supplemented or
restated from time to time.
"REGULATORY PROBLEM" means, with respect to a Member, any set of facts or
circumstances wherein it has been asserted by any Governmental Authority (or
such Member or any of its Affiliates believes in good faith that there is a
substantial risk of such assertion) that such Member is not entitled to hold, or
exercise any significant right, with respect to, the Units held by such Member
because of such Member's regulatory status.
"REPRESENTATIVE" means each then current CSX Representative, Vectura Party
Representative, Company Representative, Vectura Representative and Independent
Representative, each as defined in Section 7.2.
"SALE OF THE COMPANY" means the sale of the Company, in one transaction or
a group of related transactions, pursuant to which any Independent Third Party
or affiliated group of Independent Third Parties acquires (whether structured by
way of merger, consolidation or sale or transfer of the Company's or its
Subsidiaries' equity or assets or otherwise) (a) all or substantially all of the
equity of the Company or of all or substantially all of the Company's direct and
indirect Subsidiaries or (b) all or substantially all of the Company's and its
Subsidiaries' assets, properties, or business determined on a consolidated
basis.
"SECURITIES ACT" means the Securities Act of 1933, as amended, or any
similar Federal statute then in effect, and any reference to a particular
section thereof shall include a reference to the comparable section, if any, of
any such similar Federal statute, and the rules and regulations promulgated
thereunder.
"SENIOR COMMON CAPITAL ACCOUNT" means, as of any time, (i) $3,389,091, PLUS
(ii) cumulative Net Profits located under Section 6.2(b)(iii), MINUS (iii)
cumulative Net Losses allocated under Section 6.2(c)(ii), MINUS (iv) cumulative
distributions made by the Company with respect to the Senior Common Units under
Sections 5.2(a)(iii) and 9.2.
"SENIOR COMMON REDEMPTION VALUE" means, as of any time, the lesser of (x)
the Senior Common Capital Account as of such time, and (y) the aggregate dollar
amount that would be necessary to be distributed to the Senior Common
Unitholders so that (i) the accreted value (determined as of such time by using
a rate of return of 11.02%, compounded annually from the date on which the
related distribution was made) of all distributions made by the Company with
respect to the Senior Common Units under Sections 5.2(a)(iii) and 9.2 as of such
time, equals (ii) the accreted value of $35,889,091 (determined as of such time
by using a rate of return of 11.02%, compounded annually from June 30, 1998),
subject to adjustment pursuant to Sections 2.1(j), 2.4(c), and 10.4 of the
Recapitalization Agreement.
"SENIOR COMMON UNIT" means a Unit having the rights and obligations
specified with respect to Senior Common Units in this Agreement. The number of
Senior Common Units initially issued and assigned to each Member is listed on
SCHEDULE A attached hereto, subject to adjustment pursuant to this Agreement.
"SENIOR DEBT" means the Senior Unsecured Notes, and Indebtedness incurred
or outstanding pursuant to the Credit Agreement (including any Indebtedness
incurred in connection with one or more successive refinancings thereof).
"SENIOR PREFERRED REDEMPTION VALUE" means, as of any time, the aggregate
dollar amount that would be necessary to be distributed to the Senior Preferred
Unitholders so that (i) the accreted value (determined as of such time by using
a rate of return of 11.02%, compounded annually from the date on which the
related distribution was made) of all distributions made by the Company with
respect to the Senior Preferred Units under Sections 5.2(a)(i), 5.3(b)(i)(B),
5.4, and 9.2 as of such time, equals (ii) the accreted value of $115,000,000
(determined as of such time by using a rate of return of 11.02%, compounded
annually from June 30, 1998), subject to adjustment pursuant to Section 10.4 of
the Recapitalization Agreement.
"SENIOR PREFERRED UNIT" means a Unit having the rights and obligations
specified with respect to Senior Preferred Units in this Agreement. The number
of Senior Preferred Units initially issued and assigned to each Member is listed
on SCHEDULE A attached hereto, subject to adjustment pursuant to this Agreement.
"SENIOR UNSECURED DEBT DOCUMENTS" means the indenture under which the
Senior Unsecured Notes are issued and all other instruments, agreements, and
other documents evidencing or governing the Senior Unsecured Notes.
"SENIOR UNSECURED NOTES" means the Senior Notes due 2008 to be issued by
ACL and a special purpose co-obligor of ACL on June 30, 1998, in the aggregate
principal amount of $300,000,000, represented by global
notes designated R-1, R-2, and R-3, each in the principal amount of
$100,000,000 issued pursuant to the related indenture dated as of June 30,
1998.
"SUB BOARD" has the meaning specified in Section 7.7.
"SUBSIDIARY" of any Person (with respect to such Subsidiary, the "PARENT")
means any other Person whose (a) securities having ordinary voting power to
elect a majority of its board of directors or managing or general partners (or
other persons having similar functions) or (b) other ownership interests
(including partnership and limited liability company interests) ordinarily
constituting a majority interest in the capital, profits or cash flow of such
Person, are at the time, directly or indirectly, owned or controlled by such
parent, or by one or more other Subsidiaries of such parent, or by such parent
and one or more of its other Subsidiaries.
"TAX ADVANCE" has the meaning set forth in Section 5.3 hereof.
"TAX AMOUNT" has the meaning set forth in Section 5.3 hereof.
"TAX RATE" has the meaning set forth in Section 5.3.
"399 VENTURE" means 399 Venture Partners, Inc., a Delaware corporation.
"THRESHOLD TRANSFER" means a Transfer (other than to Permitted Transferees)
by a Unitholder of a number of Junior Common Units comprising, cumulatively with
all other Transfers (other than to Permitted Transferees) by such Unitholder
after June 30, 1998, 5% or less of the aggregate number of Junior Common Units
held by such Unitholder as of June 30, 1998.
"TRANSACTION DOCUMENTS" means, collectively, the Recapitalization
Agreement, the Credit Agreement, this Agreement, the Registration Rights
Agreement, the Senior Unsecured Debt Documents, and all other documents and
agreements executed in connection therewith.
"TRANSFER" means any sale, transfer, assignment, pledge, or other disposal
of a Unit, and the terms "Transferee," "Transferor," "Transferring," and
"Transferred" shall have correlative meanings.
"TRANSFER NOTICE" means a written notice delivered by a Unitholder making a
Transfer pursuant to the terms and conditions of Article VIII hereof, which
notice shall specify in reasonable detail the number and class of Units proposed
to be Transferred, the proposed purchase price therefor (which shall be payable
solely in cash), the proposed Transferee, and the other terms and conditions of
the Transfer.
"TRANSFERRING UNITHOLDER" means any Unitholder making a Transfer of any
Units pursuant to the provisions of Article VIII.
"TREASURY REGULATIONS" means the final or temporary regulations that have
been issued by the U.S. Department of Treasury pursuant to its authority under
the Code, and any successor regulations.
"UNALLOCATED JUNIOR PREFERRED YIELD" means the aggregate Yield on the
Junior Preferred Units from the date of issuance to the date of determination,
reduced by (i) all allocations of Net Profit previously made to the Capital
Accounts of the holders of Junior Preferred Units under Section 6.2(b)(ii) and
increased by (ii) all allocations of Net Loss previously made to the Capital
Accounts of the holders of Junior Preferred Units under Section 6.2(c)(iii).
"UNALLOCATED SENIOR COMMON YIELD" means the aggregate Yield on the Senior
Common Units from the date of issuance to the date of determination, reduced by
(i) all allocations of Net Profit previously made to the Capital Accounts of the
holders of Senior Common Units under Section 6.2(b)(iii) and increased by (ii)
all allocations of Net Loss previously made to the Capital Accounts of the
holders of Senior Common Units under Section 6.2(c)(ii).
"UNALLOCATED SENIOR PREFERRED YIELD" means the aggregate Yield on the
Senior Preferred Units from the date of issuance to the date of determination,
reduced by all allocations of Gross Income previously made to the Capital
Accounts of the holders of Senior Preferred Units under Section 6.2(a).
"UNIT" means a unit of economic interest embodied in a Membership Interest,
including without limitation, an interest in certain allocations of Gross
Income, Net Profits, Net Losses, and items of income, gain, loss, deduction, and
credit of the Company, and in certain distributions under this Agreement.
Except to the extent otherwise provided herein, each class of Unit represents
the same fractional interest in such Gross Income, Net Profit, Net Loss and
distributions as each other Unit in such class. Units may be issued in
different classes and in whole and fractional numbers. The number of each class
of Units initially assigned to each Unitholder is listed on SCHEDULE A attached
hereto, subject to adjustment pursuant to this Agreement.
"UNITHOLDER" means any Member in its capacity as owner of one or more
Units, as reflected on the Company's books and records.
"VECTURA" means Vectura Group, Inc., a Delaware corporation.
"VECTURA JUNIOR COMMON UNITS" means the Junior Common Units issued to and
held by any Vectura Member as of any date of determination.
"VECTURA MEMBERS" means, initially, any Vectura Party, and shall include
any direct or indirect stockholder of a Vectura Party which becomes a Unitholder
and any Permitted Transferee (other than a Management Unitholder) of a Vectura
Party, in any case pursuant to a Transfer made in accordance with the terms and
conditions hereof.
"VECTURA PARTIES" means, collectively, Vectura and NMI.
"VECTURA UNITS" means the Junior Preferred Units, Senior Common Units and
Junior Common Units issued to Vectura and NMI as of June 30, 1998, regardless of
the ultimate holder of such Units.
"YIELD" for any period means,
(a) in the case of the Senior Preferred Units, (i) the amount of
cash and the Fair Market Value (as of the date of distribution) of any
property distributed with respect to the Senior Preferred Units under
Sections 5.2(a)(i), 5.3(b)(i)(B), 5.4 and 9.2 during such period, (ii)
increased by any net increase in the Senior Preferred Redemption Value during
such period, and (iii) reduced (but not below zero) by any net decrease in
the Senior Preferred Redemption Value during such period;
(b) in the case of the Junior Preferred Units (i) the amount of
cash and the Fair Market Value (as of the date of distribution) of any
property distributed with respect to the Junior Preferred Units under
Sections 5.2(a)(ii), 5.5 and 9.2 during such period; (ii) increased by any
net increase in the Junior Preferred Redemption Value during such period, and
(iii) reduced (but not below zero) by any net decrease in the Junior
Preferred Redemption Value during such period; and
(c) in the case of the Senior Common Units, (i) the amount of cash
and the Fair Market Value (as of the date of distribution) of any property
distributed with respect to the Senior Common Units under Sections
5.2(a)(iii) and 9.2 during such period, (ii) increased by any net increase in
the Senior Common Redemption Value (determined without regard to clause (x)
in the definition thereof) during such period, and (iii) reduced (but not
below zero) by any net decrease in the Senior Common Redemption Value
(determined without regard to clause (x) in the definition thereof) during
such period.
1.2 TERMS GENERALLY. Throughout this Agreement:
The definitions in Article I shall apply equally to both the singular
and plural forms of the terms defined. Whenever the context may require, any
pronoun shall include the corresponding masculine, feminine and neuter forms.
The words "include," "includes" and "including" shall be deemed to be followed
by the phrase "without limitation." Each reference to a Person shall include
the successors thereto by merger, reorganization, or other similar transaction.
ARTICLE II
ORGANIZATION; PURPOSE AND POWERS
2.1 FORMATION. The Company was formed as a Delaware limited liability
company under the Act by the filing of the Certificate and the execution of
the Prior Agreement. The rights and liabilities of the Members shall be
determined pursuant to the Act and this Agreement. All rights and
obligations of the initial member under the Prior Agreement are hereby
terminated and restated in their entirety in accordance with, and upon the
effectiveness of, this Agreement. To the extent that the rights or
obligations of any Member are different by reason of any provision of this
Agreement than they would be in the absence of such provisions, this
Agreement shall, to the extent permitted by the Act, control.
2.2 CERTIFICATE. The Certificate has been prepared, executed and filed
in the Office of the Secretary of State for the State of Delaware.
2.3 NAME. The name of the Company shall be "American Commercial Lines
Holdings LLC," and the Company may conduct business under that name or any
other name hereafter approved by the Board.
2.4 TERM. The term of the Company commenced as of the date of the
filing of the Certificate. The Members shall continue the existence of the
Company until dissolution and termination of the Company in accordance with
the provisions of Article IX hereof.
2.5 OFFICE AND AGENT. The principal office of the Company shall be
located at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ or such other
location as the Board may determine. The registered agent and office in the
State of Delaware shall be Corporation Service Company, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ or as hereafter determined by the Board in
accordance with the Act.
2.6 QUALIFICATION IN OTHER JURISDICTIONS. The Officers shall cause the
Company to be qualified or registered under foreign entity or assumed or
fictitious name statutes or similar laws in any jurisdiction in which the
Company owns property or transacts business to the extent such qualification
or registration is necessary or advisable in order to protect the limited
liability of the Members or to permit the Company lawfully to own property or
transact business. In connection with the foregoing, any Officer, as an
authorized person within the meaning of the Act, shall execute, deliver and
file any certificates (and any amendments and/or restatements thereof)
necessary for the Company to qualify to do business in a jurisdiction in
which the Company may wish to conduct business. The Board may designate any
Person as an authorized person within the meaning of the Act to execute,
deliver and file, or cause the execution, delivery and filing of, all
certificates (and any amendments and/or restatements thereof) required or
permitted by the Act to be filed with the Secretary of State of the State of
Delaware.
2.7 PURPOSE AND POWERS.
(a) The nature or purpose of the business to be conducted or
promoted by the Company is to engage in any lawful act or activity for which
a limited liability company may be organized under the Act. The Company may
engage in any and all activities necessary, desirable or incidental to the
accomplishment of the foregoing. Notwithstanding anything herein to the
contrary, nothing set forth herein shall be construed as
authorizing the Company to possess any purpose or power, or to do any act or
thing, forbidden by law to a limited liability company organized under the
laws of the State of Delaware.
(b) Subject to the provisions of this Agreement, the Company shall
have the power and authority to take any and all actions necessary, appropriate,
proper, advisable, convenient or incidental to, or for the furtherance of, the
purposes set forth in Section 2.7(a).
(c) Subject to the provisions of this Agreement, (i) the Company may
enter into and perform any and all documents, agreements and instruments
contemplated thereby, all without any further act, vote or approval of any
Member, (ii) the Board may authorize any Person (including, without limitation,
any other Member or Officer) to enter into and perform any document on behalf of
the Company and (iii) the Company may merge with, or consolidate into, another
Delaware limited liability company or other business entity (as defined in the
Act).
ARTICLE III
MEMBERS
3.1 MEMBERS. The Members of the Company as of the date hereof are those
Persons whose names appear on the signature pages of this Agreement. Each
such Person shall be deemed to have been admitted as a Member of the Company
upon the date that this Agreement becomes effective without the need for any
further action or consent by any Person, whereupon each such Person shall be
deemed to hold its Membership Interest (including, without limitation, the
respective Units that correspond to and are part of such Membership Interest
as indicated on Schedule A attached hereto).
3.2 ADMISSION OF NEW MEMBERS.
(a) ADDITIONAL INTERESTS. Subject to the provisions of Articles VII
and VIII and the other provisions of this Agreement, the Board shall have the
right to cause the Company to issue or sell to any Person (including Members and
Affiliates of Members) any of the following (which for purposes of this
Agreement shall be referred to as "ADDITIONAL INTERESTS"): (i) additional
Membership Interests, Units or other economic interests in the Company
(including new classes or series thereof having different rights); (ii)
obligations, evidences of Indebtedness or other securities or economic interests
convertible into or exchangeable for Membership Interests, Units or other
interests in the Company; PROVIDED, that the terms of any such obligations,
evidences of Indebtedness or other securities or economic interests shall
provide that upon, and as a condition to, the conversion or exchange thereof the
holder of such obligations, evidences of Indebtedness or other securities or
economic interests shall execute and deliver to the Company (and the Company
shall deliver to each Member) a joinder substantially in the form attached
hereto as EXHIBIT A; and (iii) warrants, options, or other rights to purchase or
otherwise acquire Membership Interests, Units, or other economic interests in
the Company; PROVIDED, that the terms of any such warrants, options, or other
rights shall provide that upon, and as a condition to, the exercise thereof the
holder of such warrants, options, or other rights shall execute and deliver to
the Company (and the Company shall deliver to each Member) a joinder
substantially in the form attached hereto as EXHIBIT A. Subject to the
provisions of this Agreement, the Board shall determine the terms and conditions
governing the issuance of such Additional Interests, including (x) the number
and designation of such Additional Interests, (y) the preference (with respect
to distributions, in liquidation or otherwise) over any other Membership
Interests, and (z) any required contributions, and the form thereof, in
connection therewith. In connection with the issuance of Membership Interests or
Units pursuant to this Section 3.2(a), and as a condition to the consummation
thereof, the Company shall obtain and deliver to each Member a joinder executed
by the recipient of such Membership Interests or Units substantially in the form
attached hereto as EXHIBIT A.
(b) ADDITIONAL MEMBERS AND INTERESTS. In order for a Person to be
admitted as a Member of the Company with respect to an Additional Interest or
otherwise, such Person shall have delivered to the Company a written undertaking
in the form of Exhibit A attached hereto to be bound by the terms and conditions
of this Agreement and shall have delivered such documents and instruments as the
Board determines to be necessary or
appropriate in connection with the issuance of such Additional Interest to
such Person or to effect such Person's admission as a Member; thereafter, the
Secretary of the Company shall amend SCHEDULE A without the further vote, act
or consent of any other Person to reflect such new Person as a Member and
shall provide a copy of such amended SCHEDULE A to each Member. Upon the
amendment of SCHEDULE A, such Person shall be admitted as a Member and deemed
listed as such on the books and records of the Company and thereupon shall be
issued his or its Membership Interest, including any Units that correspond to
and are part of such Membership Interest. If an Additional Interest is
issued to an existing Member in accordance with the terms hereof, the
Secretary of the Company shall amend SCHEDULE A without the further vote, act
or consent of any other Person to reflect the issuance of such Additional
Interest, shall provide a copy of such amended SCHEDULE A to each Member,
and, upon the amendment of such SCHEDULE A, such Member shall be issued its
Additional Interest.
3.3 WITHDRAWALS OR RESIGNATIONS. Except as otherwise provided by this
Agreement, no Member may withdraw, retire, or resign from the Company.
3.4 VOTING RIGHTS. Except as specifically provided herein or otherwise
required by applicable law, the holders of the Class A Common Units who are
Members (the "Class A Members") shall be entitled to one vote per Class A Common
Unit held by such holders on all matters to be voted on by the Members. Except
as specifically provided herein or otherwise required by applicable law, the
holders of all Units (other than the Class A Members) shall have no right to
vote on any matters to be voted on by the Members of the Company; PROVIDED, that
the holders of Class B Common Units who are Members (the "CLASS B MEMBERS")
shall have the right to vote together with the Class A Members on any merger or
consolidation of the Company with or into another entity or entities, or any
recapitalization or reorganization on which the Class A Members would otherwise
have the right to vote.
3.5 CONVERSION OF CLASS B COMMON UNITS.
(a) LIMITED RIGHT TO CONVERT. The Class B Members representing a
majority of the outstanding Class B Common Units held by all Class B Members
shall be entitled at any time to convert any or all of the outstanding Class B
Common Units into an equal number of Class A Common Units. The Class B Members
that convert their Class B Common Units as provided in this Section 3.5(a) shall
continue as Class A Members. Any such conversion of Class B Common Units into
Class A Common Units will be effected among all Class B Holders on a PRO RATA
basis according to the number of Class B Common Units held by each such holder
at the time of any such conversion (PROVIDED that if Vectura or NMI holds
directly the Vectura Junior Common Units at the time of such conversion, such
conversion may only be made if such conversion does not cause the stockholders
of Vectura a Regulatory Problem, assuming that (i) such stockholders of Vectura
hold, beneficially and of record, such Vectura Junior Common Units directly and
(ii) all such stockholders are subject to the same rules and regulations
applicable to 399 Venture).
(b) NOTICE. Each conversion of Class B Common Units shall be
effected by written notice by the Class B Members representing a majority of the
outstanding Class B Units held by all Class B Members to the Company at its
principal office stating that such Class B Members desire to convert the Class B
Common Units into Class A Common Units. Each conversion of Class B Common Units
shall be deemed to have been effected as of the close of business on the date on
which such notice has been received by the Company, and at such time such Class
B Common Units shall be deemed to have been canceled and converted into Class A
Common Units, and at such time the Class A Common Units, issuable upon such
conversion shall be deemed to be issued. At such time, the Company shall
promptly provide written notice to all Class A Members and all Class B Members
of such conversion.
(c) TAXES. The conversion of Class B Common Units into Class A
Common Units will be made without charge to the Class B Members of any stamp tax
in respect thereof, which stamp tax shall be borne by the Company.
(d) NO CHARGES OR VIOLATIONS. All Class A Common Units issuable upon
any conversion of Class B Common Units shall, when issued, be duly and validly
issued, fully paid and non-assessable. The
Company shall take all such actions as may be necessary to assure that all
such Class A Common Units may be so issued without violation of any
applicable law or governmental regulation or any requirements of any domestic
securities exchange upon which Class A Common Units may be listed (except for
official notice of issuance which shall be immediately transmitted by the
Company upon issuance);
(e) COMPANY BOOKS. The Company shall not close its books against the
Transfer of Class B Common Units or Class A Common Units in any manner that
would interfere with the timely conversion of Class B Common Units. The Company
shall assist and cooperate in good faith with any Class B Members required to
make any governmental filings or obtain any governmental approval prior to or in
connection with any conversion of Class B Common Units hereunder (including,
without limitation, making any filings required to be made by the Company).
(f) SUBDIVISION. If the Company in any manner subdivides or combines
the outstanding units of one class of Junior Common Units, the outstanding units
of the other class of Junior Common Units shall be proportionately subdivided or
combined in a similar manner.
3.6 CONVERSION OF SENIOR PREFERRED UNITS.
(a) CONVERSION EVENTS. Contemporaneously with or following any
Initial Public Offering or any other conversion of the Company into a C
Corporation, the Company may, at the option of the Board, cause all (but not
less than all) outstanding Senior Preferred Units (or Reclassified Securities
with respect thereto) to be converted into current-pay subordinated promissory
notes (the "EXCHANGE NOTES") with an initial aggregate principal amount equal to
the Senior Preferred Redemption Value outstanding at the time of such
conversion, which shall accrue interest at a rate of 11.02%, compounded
annually, and have terms that are customary for subordinated notes and otherwise
equivalent (including as to covenants and priority of distribution over the
Junior Securities and other equity securities of the Company) to the Senior
Preferred Units and otherwise in form reasonably satisfactory to the holders of
such Senior Preferred Units (or Reclassified Securities).
(b) NOTICE. Each conversion of Senior Preferred Units shall be
effected by written notice by the Company to the holders of the Senior Preferred
Units stating that the Company desires to convert the Senior Preferred Units to
Exchange Notes. Each conversion of Senior Preferred Units shall be deemed to
have been effected as of the close of business on the date on which such notice
has been received by the holders of the Senior Preferred Units, and at such time
such Senior Preferred Units shall be deemed to have been canceled and converted
into Exchange Notes, and at such time the Exchange Notes issuable upon such
conversion shall be deemed to be issued.
(c) TAXES. The conversion of Senior Preferred Units into Exchange
Notes will be made without charge to the Senior Preferred Units of any stamp tax
in respect thereof, which stamp tax shall be borne by the Company.
(d) NO CHARGES OR VIOLATIONS. All Exchange Notes issuable upon any
conversion of Senior Preferred Units shall, when issued, be duly and validly
issued, fully paid and non-assessable. The Company shall take all such actions
as may be necessary to assure that all such Exchange Notes may be so issued
without violation of any applicable law or governmental regulation or any
requirements of any domestic securities exchange upon which Exchange Notes may
be listed (except for official notice of issuance which shall be immediately
transmitted by the Company upon issuance).
3.7 REPRESENTATIONS AND WARRANTIES OF MEMBERS. In connection with the
acquisition by the Members of Units pursuant to the terms and conditions of this
Agreement, each Member represents and warrants to the Company that:
(a) The Units will be acquired for the Member's own account and not
with a view to, or intention of, distribution thereof in violation of the
Securities Act, or any applicable state securities laws, and the Units will not
be disposed of in contravention of the Securities Act or any applicable state
securities laws;
(b) No commission, fee or other remuneration is to be paid or given
directly or indirectly, to any Person for soliciting the Member to acquire the
Units;
(c) The Member is sophisticated in financial matters and is able to
evaluate the risks and benefits of making the capital contribution contemplated
hereunder with respect to the Units and has determined that such investment is
suitable for the Member, based upon the Member's financial situation and needs,
as well as the Member's other securities holdings;
(d) The Member is not subject to any state's administrative
enforcement order or judgment which prohibits, denies or revokes the use of any
exemption from registration in connection with the offer, purchase or sale of
securities;
(e) The Member is able to bear the economic risk of its investment in
the Units for an indefinite period of time and the Member understands that the
Units have not been registered under the Securities Act and cannot be sold
unless subsequently registered under the Securities Act or unless an exemption
therefrom is available;
(f) The Member has had an opportunity to ask questions and receive
answers concerning the terms and conditions of its investment in the Units and
has had full access to such other information concerning the Company as the
Member has requested; and
(g) This Agreement constitutes the legal, valid and binding
obligation of the Member, enforceable in accordance with its terms (subject to
principles of equity, the effect of bankruptcy, insolvency, reorganization,
receivership, moratorium, and other similar laws), and the execution, delivery
and performance of this Agreement by the Member does not and will not, in any
material respect, conflict with, violate or cause a breach of any Applicable
Law, material agreement, contract or instrument to which the Member is a party
or any judgment, order or decree to which the Member is subject.
3.8 SUCCESSORS AND SUBSTITUTE MEMBERS. Upon (x) the Bankruptcy,
termination, liquidation or dissolution of a Member which is a partnership,
trust, corporation, limited liability company or other entity or the Bankruptcy,
death or Incapacity of a Member who is an individual (each such event, an
AINVOLUNTARY TRANSFER") or (y) the Transfer by a Member of any Units to a
Transferee pursuant to the foreclosure of a pledge or of a security interest in
such Units (a AFORECLOSURE TRANSFER"), the estate or successor in interest of
such Member (in the case of an Involuntary Transfer) or the Transferee of such
Member (in the case of a Foreclosure Transfer) shall (i) execute and deliver to
the Company (and the Company shall deliver to each Member) a joinder
substantially in the form attached hereto as EXHIBIT A, and (ii) thereupon,
except to the extent otherwise required by Applicable Law, only succeed to the
rights of such Member as a Unitholder to receive allocations and distributions
hereunder (E.G. shall have no rights under Article VII hereof) and may become a
substitute Member with respect to such Units only upon the terms and conditions
set forth in Section 3.2(b); PROVIDED that, in the case of an Involuntary
Transfer or a Foreclosure Transfer of Senior Preferred Units, such estate,
successor in interest or Transferee, as the case may be, shall, upon the
execution and delivery to the Company of a joinder substantially in the form
attached hereto as EXHIBIT A, succeed to all rights of such Member with respect
to such Senior Preferred Units hereunder.
3.9 CONVERSION OF THE COMPANY. The Members acknowledge that for purposes
of Rule 144(d) of the Securities Act, upon an Initial Public Offering or any
other conversion of the Company into a C Corporation (any such resulting C
Corporation, the "RESULTING CORPORATION"), securities of the Resulting
Corporation issued to any Member in exchange for such Member's Membership
Interest shall be deemed to have been issued to such Member on the date on which
such Member acquired its Membership Interest.
ARTICLE IV
CAPITAL CONTRIBUTIONS
4.1 INITIAL CAPITAL CONTRIBUTIONS. Upon consummation of the transactions
contemplated by the Recapitalization Agreement, (i) the CSX Member shall be
deemed to have made to the Company (and the Company shall be deemed to have
received) a Capital Contribution in the amount of $851,352,000, (ii) Vectura
shall be deemed to have made to the Company (and the Company shall be deemed to
have received) a Capital Contribution in the amount of $60,000,000, (iii) NMI
shall be deemed to have made to the Company (and the Company shall be deemed to
have received) a Capital Contribution in the amount of $3,895,000, (iv) the
Management Unitholders shall make a cash Capital Contribution in the amount of
$17,000 in the aggregate, and (v) the Investor Unitholders shall make a cash
Capital Contribution in the amount of $30,000 in the aggregate. Immediately
following such Capital Contributions, the CSX Member shall receive a cash
distribution from the Company in the amount of $696,352,000, of which
$200,000,000 shall represent proceeds of the Senior Unsecured Notes,
$435,000,000 shall represent proceeds of the borrowings incurred as of June 30,
1998, pursuant to the Credit Agreement and $61,352,000 shall reimburse the CSX
Member for a portion of its capital expenditures incurred during the two-year
period immediately prior to June 30, 1998, with respect to property contributed
(or deemed to be contributed) to the Company as of June 30, 1998. In exchange
for their respective Capital Contributions, the CSX Member (in addition to
receiving the cash distribution described in the preceding sentence), Vectura,
NMI, the Management Unitholders, and the Investor Unitholders shall receive and
shall be deemed to own the number of Senior Preferred Units, Junior Preferred
Units, Senior Common Units and Junior Common Units set forth opposite such
Member's name on SCHEDULE A, attached to the Prior Agreement dated as of June
30, 1998. The Company may in its discretion issue certificates to the Members
representing the Membership Interest held by each Member. The initial Capital
Account of each Member described above shall equal the amount of such Member's
initial aggregate Capital Contributions (reduced, in the case of the CSX Member
by the cash distribution described above), as shown on SCHEDULE A, attached to
the Prior Agreement dated as of June 30, 1998. Except for the Capital
Contributions of the Members required to be made pursuant to this Section 4.1,
the Members shall not be required to make any additional Capital Contributions.
The Capital Contributions described in this Section 4.1 and shown on SCHEDULE A,
attached to the Prior Agreement dated as of June 30, 1998, shall be adjusted to
the extent required by Sections 2.1(j) and 2.4(c) of the Recapitalization
Agreement.
ARTICLE V
DISTRIBUTIONS
5.1 IN GENERAL. Subject to Section 9.2, any distributions of cash or
other assets by the Company to Unitholders shall be made in accordance with this
Article V. Except to the extent otherwise provided herein, any distributions
required to be made PRO RATA to a class of Unitholders shall be made based on
their proportionate ownership of the outstanding Units within the class.
Notwithstanding any other provision hereof, the Company shall cause its
Subsidiaries to distribute to the Company, to the full extent possible within
the limits imposed by Applicable Law, the Credit Agreement and Senior Unsecured
Debt Documents, the cash or cash equivalents necessary for the Company to make
the distributions required hereunder.
5.2 DISCRETIONARY DISTRIBUTIONS.
(a) Subject to Sections 5.2(b), 5.3, 5.4, 5.5 and 9.2, available cash
shall be distributed, at such times and in such amounts as the Board determines
in its discretion, in the following order and priority;
(i) first, PRO RATA to the Senior Preferred Unitholders to the
extent of the Senior Preferred Redemption Value;
(ii) second, PRO RATA to the Junior Preferred Unitholders to the
extent of the Junior Preferred Redemption Value;
(iii) third, PRO RATA to the Senior Common Unitholders to the
extent of the Senior Common Redemption Value; and
(iv) fourth, PRO RATA to the holders of Junior Common Units.
(b) Notwithstanding the foregoing, the Company will not, without the
consent of CSX, make payments or distributions on, redeem or purchase the Senior
Preferred Units under Section 5.2(a)(i) to the extent that, immediately
following such distributions, the aggregate Senior Preferred Redemption Value
would be less than $100 million; PROVIDED, that (i) such consent will not be
required (A) for distributions made on the Senior Preferred Units in connection
with, or after, an Initial Public Offering, a Sale of the Company that results
in taxation of the holders of Senior Preferred Units for Federal income tax
purposes, or any transaction or transactions causing the Company not to be
treated as a partnership for federal income tax purposes or (B) after the CSX
Members cease to hold any Senior Preferred Units, and (ii) if CSX does not so
consent, (A) the Company may distribute under Section 5.2(a) (applied without
regard to clause (i) thereof) any amounts as to which a required consent was not
given and which, but for this sentence, would otherwise be distributable to the
Senior Preferred Unitholders under Section 5.2(a)(i), and (B) upon the request
of the holders of a majority of the Vectura Junior Common Units, the Vectura
Members and the CSX Members will cooperate in good faith to create a mutually
satisfactory (in their respective sole discretions) mechanism comparable to a
defeasance of the Senior Preferred Units.
5.3 TAX ADVANCES.
(a) GENERAL. At least ten days before each date prescribed by the
Code for a calendar year corporation to pay quarterly installments of estimated
tax, the Company shall distribute to each Unitholder cash in proportion to and
to the extent of such Unitholder's Quarterly Estimated Tax Amount for the
applicable calendar quarter. If, at any time after the final Quarterly
Estimated Tax Amount has been distributed pursuant to the previous sentence with
respect to any Fiscal Year, the aggregate Tax Advances to any Unitholder with
respect to such Fiscal Year are less than such Unitholder's Tax Amount for such
Fiscal Year (a "SHORTFALL AMOUNT"), the Company shall distribute cash in
proportion to and to the extent of each Unitholder's Shortfall Amount. The
Company shall use reasonable efforts to distribute Shortfall Amounts with
respect to a Fiscal Year before the 75th day of the next succeeding Fiscal Year.
If the aggregate Tax Advances to any Unitholder with respect to a Fiscal Year
exceed such Unitholder's Tax Amount for such Fiscal Year, such excess shall be
treated as an advance against and shall be deducted from the next succeeding
distribution (whether pursuant to this Section 5.3 or otherwise) made to such
Unitholder (and, if necessary, from any succeeding distributions thereafter)
until such excess has been fully deducted from such distribution(s). Any such
excess applied as an advance against one or more succeeding distributions
pursuant to the preceding sentence shall be treated for purposes of this
Agreement as having been distributed under those provisions of this Agreement
under which distributions would have been made but for the preceding sentence.
Rights to distributions under this Section 5.3 shall rank senior to any rights
to distributions under Sections 5.2, 5.4 (other than Section 5.4(c) which shall
rank on a parity with distributions under Section 5.3) and 5.5.
(b) BUILT-IN GAIN.
(i) BIG REGIME. Subject to clauses (b)(ii) and (iii) below, if
CSX Unitholders recognize Built-in Gain (other than Built-in Gain recognized as
a result of a CSX Sale-Leaseback) in any Fiscal Year, the Board shall elect (in
its sole discretion) to do one of the following (collectively, the "BIG
REGIME"):
(A) reduce by the amount of the resulting BIG Tax the
unused Aggregate Amount for subsequent Fiscal Years (or, if applicable, the
current Fiscal Year) in inverse chronological order (i.e., by applying the
first $3,000,000 of BIG Tax to reduce to zero the Aggregate Amount for the
period January 1 through June 30, 2007, the next $6,000,000 of BIG Tax to
reduce to zero the Aggregate Amount for Fiscal Year 2006, etc.);
(B) distribute PRO RATA to the Senior Preferred
Unitholders, on or before June 30, 2006, cash in an amount equal to the
lesser of (x) the resulting BIG Tax and (y) the product of (I) the C
Corporation Tax Rate and (II) the aggregate Yield on the Senior Preferred
Units for the period July 1, 2005 through June 30, 2006; PROVIDED that if
such BIG Tax exceeds the amount described in the preceding clause (y), the
Company will make additional annual distributions to the Senior Preferred
Unitholders for the immediately preceding year (or years) in inverse
chronological order, in each case limited to an annual amount equal to the
product of the C Corporation Tax Rate for the year of payment and the
aggregate Yield on the Senior Preferred Units for the applicable 12-month
period, until such excess has been applied; PROVIDED FURTHER, that such
election shall not be available to the extent that the BIG Tax exceeds the
product of the C Corporation Tax Rate and the aggregate Yield payable (with
respect to any period) on the Senior Preferred Units from the date of the
election through and including June 30, 2006;
(C) distribute to each CSX Unitholder, pursuant to Section
5.3(a), this clause (b)(i)(C), and clause (ii)(B) of the definition of "Tax
Amount" (without duplication), a Tax Advance equal to 50% of the resulting
BIG Tax to such Unitholder (the "CSX 50% BIG TAX AMOUNT"); or
(D) elect any combination of the foregoing.
(ii) MONETARY DEFAULT. If (A) Built-in Gain is recognized during
any Fiscal Year when the Company is in monetary default on any Senior Debt
either currently or on a PRO FORMA GAAP basis (absent the asset sale generating
the Built-in Gain) with respect to a monetary payment due within 120 days
following the transaction giving rise to the Built-in Gain, and (B) no
distributions (other than Permitted Payments) are made in such Fiscal Year with
respect to any Units other than CSX Units, then (x) the BIG Regime shall not
apply with respect to such Built-in Gain unless and until the Company is no
longer in monetary default, and (y) if and when the Company is no longer in
monetary default, the BIG Regime shall then apply and, to the extent at such
time an election under neither clause (i)(A) nor (i)(B) above may be made with
respect to the BIG Tax on such Built-in Gain, any remaining BIG Tax shall be
paid in part or in full pursuant to clause (C) above when and to the extent
amounts may be distributed pursuant to the terms of the Senior Debt then in
effect, PROVIDED FURTHER that any such payment shall not be treated as a Tax
Advance until the time it is paid.
(iii) EXEMPT TRANSACTIONS. Except to the extent provided in
this clause (iii), the preceding clause (i) shall not apply to any Built-in Gain
incurred as a result of any Exempt Transaction. In the case of a transaction
described in clause (c) of the definition of Exempt Transaction in which the
consideration received in respect of such transaction by the Company is cash,
marketable securities, a note or the transaction is the distribution of any
asset in kind, the BIG Regime shall apply only with respect to that portion of
the BIG Tax triggered by such transaction equal to such BIG Tax multiplied by a
fraction, (A) the numerator of which is the sum (without duplication) of (i) the
amount of cash received, (ii) the value of the marketable securities received,
(iii) in the case of a note (other than a marketable security), the amount of
cash payments of principal made from time to time on the note (which payments
shall not be taken into account for purposes of this clause (iii) until the time
such payments are made), and (iv) in the case of any other asset distributed in
kind, the Fair Market Value of the asset at the time of distribution, and (B)
the denominator of which is the amount of total consideration received in the
underlying disposition. If the Company disposes of any property (other than
cash, marketable securities or a note) received in a transaction described in
clause (c) of the definition of Exempt Transaction in a transaction in which the
Company receives cash, marketable securities or a note, the later transaction
shall trigger the BIG Regime as if the cash, marketable securities or note were
received in the original transaction.
(iv) In all events, CSX Unreimbursed Taxes shall not exceed $85
million and the Company shall make additional Tax Advances (in the year that the
gain that would otherwise cause the CSX Unreimbursed Taxes to be in excess of
$85 million is recognized) to the CSX Unitholders as necessary (but not in
duplication of amounts distributed with respect to clause (ii)(D) of the
definition of Tax Amount) to satisfy such limitation. Notwithstanding any other
provision hereunder, in the event of any CSX Sale-Leaseback, the Company shall
make additional Tax Advances (in the year that the Built-in Gain from such CSX
Sale-Leaseback is
recognized) to the CSX Unitholders (but not in duplication of amounts
distributed with respect to clause (ii)(C) of the definition of Tax Amount)
equal to the product of the C Corporation Tax Rate and the amount of any
taxable Built-in Gain allocated to the CSX Unitholders with respect to such
CSX Sale-Leaseback.
(c) CERTAIN DEFINITIONS. For purposes of this Agreement, the
following terms shall have the meanings set forth below:
"ADJUSTED TAXABLE INCOME" of a Unitholder for a Fiscal Year (or portion
thereof) with respect to Units held by such Unitholder means the federal taxable
income allocated by the Company to the Unitholder with respect to such Units (as
adjusted by any final determination in connection with any tax audit or other
proceeding) for such Fiscal Year (or portion thereof); PROVIDED, that such
taxable income shall be computed (i) in the case of any holder of Senior
Preferred Units, by excluding allocations of Gross Income under Section 6.2(a)
(and corresponding taxable income under Section 6.3) with respect to the Senior
Preferred Units, (ii) in the case of any CSX Unitholder, by excluding Built-in
Gain, (iii) as if all excess taxable losses and excess taxable credits
(determined, in the case of Senior Preferred Units, without regard to any
allocations of Gross Income under Section 6.2(a) (or corresponding taxable
income under Section 6.3)) allocated with respect to such Units were carried
forward (taking into account the character of any such loss carryforward as
capital or ordinary), and (iv) taking into account any special basis adjustment
with respect to such Unitholder resulting from an election by the Company under
Code Section 754; PROVIDED FURTHER, that in the case of any Vectura Units that
are Transferred to the direct or indirect shareholders of Vectura pursuant to
Article VIII for purposes of determining the Adjusted Taxable Income with
respect to such Vectura Units for periods following the Transfer, the preceding
clause (iii) shall not apply to any excess losses and excess credits allocable
with respect to such Units for periods preceding the Transfer ending on or
before December 31, 1998.
"AGGREGATE AMOUNT" means, for any period specified in the table below (the
"CURRENT PERIOD"), (i) the amount shown in the table opposite the current
period, (ii) increased by the amount by which the Aggregate Amount for the
immediately preceding period (as adjusted under this clause (ii) and the
following clause (iii)) exceeds the aggregate amount described in clause
(ii)(A)(x) of the definition of "Tax Amount" for such immediately preceding
period for all CSX Units, and (iii) reduced as provided under Section
5.3(b)(i)(A); PROVIDED, that the Aggregate Amount shall in all events be zero
for any period beginning on or after July 1, 2007.
Applicable Period Amount
----------------- ------
July 1 - December 31, 1998 $2,000,000
Fiscal Year 1999 4,000,000
Fiscal Year 2000 4,000,000
Fiscal Year 2001 4,000,000
Fiscal Year 2002 4,000,000
Fiscal Year 2003 5,000,000
Fiscal Year 2004 6,000,000
Fiscal Year 2005 6,000,000
Fiscal Year 2006 6,000,000
January 1 - June 30, 2007 3,000,000
-----------
TOTAL $44,000,000
"BIG TAX" of a CSX Unitholder means the product of the C Corporation Tax
Rate and the Built-in Gain giving rise to such tax.
"BUILT-IN GAIN" for any period means the aggregate amount of taxable gain
recognized by all CSX Unitholders to the extent allocated to them pursuant to
Code Section 704(c) (as distinguished from "reverse section 704(c) allocations"
within the meaning of the Treasury Regulations) during such period (taking into
account the effect of any special basis adjustments resulting from an election
by the Company under Code Section 754), resulting from (i) any sale, disposition
or other transfer of CSX Contributed Assets, (ii) the conversion of the
Company to an entity taxed as a C Corporation, or (iii) a refinancing,
paydown, or payoff of debt; PROVIDED, that for purposes of this definition,
the aggregate amount of such taxable gain shall not exceed (x) $851,352,000,
(y) reduced by the aggregate tax basis of the CSX Contributed Assets as of
June 30, 1998 (estimated by CSX to be approximately $394 million as of
December 31, 1997), (z) increased by the amount of liabilities of the CSX
Members assumed by the Company as of June 30, 1998, in connection with the
contribution of the CSX Contributed Assets (estimated by CSX to be
approximately $88 million as of December 31, 1997).
"C CORPORATION TAX RATE" means the Tax Rate applicable to a Unitholder that
is a C Corporation.
"CSX CONTRIBUTED ASSETS" means the assets contributed (or deemed to be
contributed) by CSX to the Company as of June 30, 1998.
"CSX 50% BIG TAX AMOUNT" has the meaning specified in Section 5.3(b)(i)(C).
"CSX RESIDUAL TAX AMOUNT" means the excess, if any, of (i) the aggregate
CSX Unreimbursed Taxes for all CSX Unitholders over (ii) $85,000,000.
"CSX SALE-LEASEBACK" means a sale-leaseback or other structured finance
transaction by the Company with respect to any CSX Contributed Assets in which
the Company or a Subsidiary of the Company retains use of such assets, but only
to the extent that such transaction is treated as a taxable disposition of such
assets for purposes of the Code.
"CSX SALE-LEASEBACK TAX AMOUNT" for any CSX Unitholder for a Fiscal Year
means the product of (i) the C Corporation Tax Rate for such Fiscal Year and
(ii) the amount of Built-in Gain recognized by such Unitholder for such Fiscal
Year as a result of a CSX Sale-Leaseback.
"CSX TOTAL TAX ADVANCES" means the aggregate Tax Advances made with respect
to all CSX Units over the life of the Company.
"CSX TOTAL TAXES" means the product of (x) the aggregate Adjusted Taxable
Income allocated to all CSX Units over the life of the Company and (y) the C
Corporation Tax Rate applicable to the period in respect of which the allocation
of Adjusted Taxable Income was made; PROVIDED, that for purposes of this
definition, "Adjusted Taxable Income" with respect to such Units shall be
computed by making the adjustments described in clauses (i), (iii), and (iv) of
the definition thereof, but by excluding pursuant to clause (ii) of the
definition thereof only Built-in Gain recognized as a result of any Exempt
Transaction (rather than all Built-in Gain).
"CSX UNREIMBURSED TAXES" means the excess, if any, of CSX Total Taxes over
CSX Total Tax Advances.
"ESTIMATED TAX AMOUNT" of a Unitholder for a Fiscal Year means the
Unitholder's Tax Amount for such Fiscal Year as estimated in good faith from
time to time by the Board. In making such estimate, the Board shall take into
account amounts shown on Internal Revenue Service Form 1065 filed by the Company
and similar state or local forms filed by the Company for the preceding taxable
year and such other adjustments as in the reasonable business judgment of the
Board are necessary or appropriate to reflect the estimated operations of the
Company for the Fiscal Year.
"EXEMPT TRANSACTION" means any of the following transactions:
(a) an Initial Public Offering consistent with the terms hereof;
(b) subject to Section 7.14(b), taxation of the Company as a C
corporation except by reason of (i) a breach by the Vectura Members of the
covenant described in Section 7.12(b)(ii) or (ii) treatment of the Company as
a "publicly traded partnership" for purposes of Section 7704 of the Code as a
result of transfers of interests in the Company by the Vectura Members;
(c) a direct or indirect sale, disposition or other transfer (other
than a CSX Sale-Leaseback, an initial public offering that is not an Initial
Public Offering consistent with the terms hereof, and a transaction giving
rise to taxation of the Company as a C corporation by reason of clauses
(b)(i) or (b)(ii) above) of any assets of the Company other than (i) for
cash, (ii) for marketable securities, (iii) for a note (other than a
marketable security) to the extent provided in Section 5.3(b)(iii), or (iv)
any distribution of any CSX Contributed Asset in kind to any of the Vectura
Members; and
(d) a refinancing, paydown or payoff of debt (unless proceeds of
such refinancing are distributed, loaned or otherwise made available to the
Vectura Members (other than as Permitted Payments)) other than (i) a CSX
Sale-Leaseback and (ii) a substitution of debt that is recourse (within the
meaning of Code Section 752) for debt that is nonrecourse (within the meaning
of Code Section 752) to the extent such substitution is within the control of
the Vectura Parties or 399 Venture.
"PERMITTED PAYMENT" means (i) any Tax Advance, (ii) any payment to redeem
Units held by a Management Unitholder upon such Unitholder's ceasing to be
employed full-time by the Company or any of its Subsidiaries for any reason,
(iii) any distribution with respect to the Senior Preferred Units, or (iv) any
other distribution of a nominal amount.
"QUARTERLY ESTIMATED TAX AMOUNT" of a Unitholder for any calendar quarter
of a Fiscal Year means the excess, if any of (i) the product of (A) 1/4 in the
case of the first calendar quarter of the Fiscal Year, 1/2 in the case of the
second calendar quarter of the Fiscal Year, 3/4 in the case of the third
calendar quarter of the Fiscal Year, and 1 in the case of the fourth calendar
quarter of the Fiscal Year and (B) the Unitholder's Estimated Tax Amount for
such Fiscal Year over (ii) all Tax Advances previously made to such Unitholder
with respect to such Fiscal Year.
"TAX ADVANCE" means any distribution pursuant to Section 5.3(a).
"TAX AMOUNT" of a Unitholder for a Fiscal Year means:
(i) with respect to a holder of Units other than CSX Units, the
product of (A) the Unitholder's Tax Rate for such Fiscal Year and (B) the
Unitholder's Adjusted Taxable Income for such Fiscal Year with respect to such
Units; and
(ii) with respect to a holder of CSX Units, the sum (without
duplication) of the following amounts:
(A) the excess, if any, of (x) the product of (I) the C
Corporation Tax Rate for such Fiscal Year and (II) the Unitholder's Adjusted
Taxable Income for such Fiscal Year with respect to such Units, over (y) the
Unitholder's PRO RATA share of the Aggregate Amount for such Fiscal Year (such
PRO RATA share to be determined by dividing the amount of Tax Advances that
would be payable to such Unitholder for such Fiscal Year by the aggregate Tax
Advances that would be payable to all holders of CSX Units for such Fiscal Year,
determining such Tax Advances in each case without regard to this clause (y));
PROVIDED, that for purposes of computing the Quarterly Estimated Tax Amounts for
a CSX Unitholder for (1) Fiscal Year 2003, the Aggregate Amount of $5,000,000
reflected in the chart in the definition of "Aggregate Amount" for such year
shall be allocated $2,000,000 PRO RATA to the first six months and $3,000,000
PRO RATA to the last six months and (2) Fiscal Year 2007, the entire Aggregate
Amount for the period January 1 through June 30, 2007 shall be allocated PRO
RATA over the first six months of such Fiscal Year rather than applied PRO RATA
over the entire year;
(B) the Unitholder's CSX 50% BIG Tax Amount with respect to any
Built-in Gain recognized by the Unitholder in such Fiscal Year to the extent the
Board elected to apply Section 5.3(b)(i)(C) with respect to such Built-in Gain;
(C) the Unitholder's CSX Sale-Leaseback Tax Amount; and
(D) the Unitholder's PRO RATA share (based, unless otherwise
agreed by the CSX Members and the Vectura Members, on the ratio of (x) the "CSX
Unreimbursed Tax Amount" determined for purposes of this clause (x) by taking
into account CSX Total Taxes and CSX Total Tax Advances only to the extent
attributable to the CSX Units held by such Unitholder to (y) the aggregate CSX
Unreimbursed Tax Amount) of the CSX Residual Tax Amount; PROVIDED, that the sum
of the PRO RATA shares of all holders of CSX Units of the CSX Residual Tax
Amount equals 100% of the CSX Residual Tax Amount.
To the extent the amount distributed to a holder of CSX Units pursuant to
Section 5.3(a) with respect to a Fiscal Year is less than the amount specified
under the preceding clause (ii) with respect to such Units for the Fiscal Year,
the amount so distributed shall be treated as first distributed pursuant to
clause (A) above (to the extent of the distribution required thereunder) and
then pursuant to clauses (B) through (D).
"TAX RATE" of a Unitholder for any period means (i) for a Unitholder that
is a C Corporation, the highest marginal federal income tax rate (expressed as a
percentage) applicable for such period to a C Corporation under the Code, PLUS
2.3 percentage points; (ii) for an individual Unitholder other than a Management
Unitholder, the highest marginal blended federal, state, and local income tax
rate applicable for such period to an individual residing in New York City; and
(iii) for a Management Unitholder, the highest marginal blended federal, state,
and local income tax rate applicable for such period to an individual residing
in the state and local jurisdiction of residence of such individual, taking into
account for federal income tax purposes, in the case of the preceding clauses
(ii) and (iii), the deductibility of state and local taxes. If higher, federal
Tax Advances will be based on federal alternative minimum taxable income (taking
into account solely Company items) and rates (using the highest marginal federal
alternative minimum tax rate applicable to a corporation or an individual, as
the case may be).
5.4 MANDATORY DISTRIBUTIONS ON SENIOR PREFERRED UNITS.
(a) IN GENERAL. In compliance with the last sentence of Section
5.3(a), the Company shall make cash distributions to the Senior Preferred
Unitholders to the extent required by paragraphs (b), (c), (d) and (e) below.
(b) DISTRIBUTIONS OUT OF EXCESS CASH FLOW. Subject to the terms of
the Credit Agreement, the Company shall distribute PRO RATA to the Senior
Preferred Unitholders on or before June 30 following the close of each of the
Fiscal Years 2003 through 2012, cash in an amount equal to the lesser of (A)
Excess Cash Flow for such Fiscal Year and (B) the ECF Limit for such Fiscal
Year.
(c) MANDATORY PARTIAL YIELD DISTRIBUTIONS. The Company shall
distribute PRO RATA to the Senior Preferred Unitholders:
(i) on or before June 30, 2007, cash in an amount equal to the
product of (i) the C Corporation Tax Rate and (ii) the aggregate Yield on
the Senior Preferred Units for the period July 1, 2006 through June 30,
2007;
(ii) on or before the close of each six-month period commencing
on a January 1 or July 1 within the period July 1, 2007 through June 30,
2013, cash in an amount equal to the product of (i) the C Corporation Tax
Rate and (ii) the aggregate Yield on the Senior Preferred Units for such
six-month period; and
(iii) any amounts required to be distributed under Section
5.3(b)(i)(B).
(d) MANDATORY REDEMPTION. On or before June 30, 2013, the Company
shall distribute cash to the Senior Preferred Unitholders in an amount equal to
the Senior Preferred Redemption Value.
(e) ELECTIVE REDEMPTION. Upon a Change of Control, each holder of
Senior Preferred Units shall have the right to cause the Company to redeem all
(but not less than all) of such holder's Senior Preferred Units for cash in the
amount of the Senior Preferred Redemption Value of such Units.
5.5 REDEMPTION OF JUNIOR PREFERRED UNITS.
(a) MANDATORY REDEMPTION OF JUNIOR PREFERRED UNITS. Subject to
Sections 5.3 and 5.4, on or before June 30, 2013, the Company shall distribute
cash to the Junior Preferred Unitholders in an amount equal to the Junior
Preferred Redemption Value; PROVIDED that, without Majority Approval of the
Senior Preferred Unitholders, no distributions shall be made pursuant to this
Section 5.5 until all Senior Preferred Units have been completely redeemed.
(b) ELECTIVE REDEMPTION. Subject to Section 5.4, upon a Change of
Control, each holder of Junior Preferred Units shall have the right to cause the
Company to redeem all (but not less than all) of such holder's Junior Preferred
Units for cash in the amount of the Junior Preferred Redemption Value of such
Units.
5.6 APPLICATION OF TAX ADVANCES; NO ECONOMIC WINDFALL. Tax Advances shall
be applied against a Unitholder's Junior Common Units, then against its Senior
Common Units, then against its Junior Preferred Units, and then against its
Senior Preferred Units (including in connection with a conversion of Senior
Preferred Units to Exchange Notes pursuant to Section 3.6, tag-along rights
pursuant to Section 8.2(a), an Approved Sale pursuant to Section 8.3, an Initial
Public Offering pursuant to Section 8.6 and a Liquidation pursuant to Section
9.2); PROVIDED, HOWEVER, that, notwithstanding any other provision of this
Agreement, neither the holders of the CSX Units in the aggregate nor the holders
of the Vectura Units in the aggregate shall receive an economic windfall in
connection with any repayment of Senior Preferred Units, Junior Preferred Units,
Senior Common Units or Junior Common Units (including in connection with a
conversion of Senior Preferred Units to Exchange Notes pursuant to Section 3.6,
tag-along rights pursuant to Section 8.2(a), an Approved Sale pursuant to
Section 8.3, an Initial Public Offering pursuant to Section 8.6 and a
Liquidation pursuant to Section 9.2), and, to the extent necessary to prevent
such windfall:
(a) amounts otherwise distributable or payable by any Person in
connection therewith will be adjusted;
(b) conforming allocations of income, gain, deduction and loss will
be made;
(c) prior thereto, the Company will analyze (such analysis to be
without prejudice to any Unitholder's rights under this Section 5.6) whether the
holders of the CSX Units in the aggregate or the holders of the Vectura Units in
the aggregate would receive an economic windfall in the absence of such an
adjustment; and such analysis will take into account all relevant factors; and
(d) if the Company determines that any such economic windfall would
occur, the Company shall provide its analysis to the then-holders of the CSX
Units and the then-holders of the Vectura Units, and the parties shall in good
faith seek to resolve any disputes with respect thereto.
5.7 RESTRICTED DISTRIBUTIONS. Notwithstanding anything to the contrary
contained herein, none of the Members, the Representatives, the Board or any
other Person on behalf of the Company, shall make a distribution to a Member or
any other Person holding Membership Interests on account of such Member's or
Person's interest in the Company if such distribution would violate the Act or
other Applicable Law.
ARTICLE VI
ALLOCATIONS AND CAPITAL ACCOUNTS
6.1 CAPITAL ACCOUNTS. A "CAPITAL ACCOUNT" shall be established for each
Unitholder on the books of the Company and shall be maintained as provided in
the definition of Capital Account.
6.2 ALLOCATIONS.
(a) GROSS INCOME ALLOCATION. An amount of Gross Income equal to the
Unallocated Senior Preferred Yield shall be credited quarterly (and at such
other times that such allocation would make a difference in connection with
another allocation, distribution or other event under this Agreement) PRO RATA
to the holders of Senior Preferred Units.
(b) NET PROFIT ALLOCATION. Subject to subsections (d) and (e) below,
the Company's Net Profit (taking into account the amount of any Gross Income
allocated under subsection (a) above as an item of deduction) shall be allocated
annually (and at such other times that such allocation would make a difference
in connection with another allocation, distribution or other event under this
Agreement) to the Unitholders in the following order:
(i) first, PRO RATA to the holders of the Senior Preferred Units
until they have been allocated Net Profit equal to the
amount of Net Loss previously allocated under subsection
(c)(iv) below not previously offset by an allocation of Net
Profit under this subsection (b)(i);
(ii) second, PRO RATA to the holders of Junior Preferred Units in
an amount equal to the Unallocated Junior Preferred Yield;
(iii) third, PRO RATA to the holders of Senior Common Units
in an amount equal to the Unallocated Senior Common Yield;
and
(iv) fourth, PRO RATA to the holders of Junior Common Units.
(c) NET LOSS ALLOCATION. Subject to subsections (d) and (e) below,
the Company's Net Loss (taking into account the amount of Gross Income allocated
under subsection (a) above as an item of deduction) shall be allocated annually
(and at such other times that such allocation would make a difference in
connection with another allocation, distribution or other event under this
Agreement) to the Unitholders in the following order:
(i) first, PRO RATA to the holders of Junior Common Units until
such holders have been allocated an amount of Net Loss equal
to the sum of (A) the amount of Net Income previously
allocated to the holders of Junior Common Units under clause
(b)(iv) above not previously offset by an allocation of Net
Loss under this clause (c)(i) and (B) $1,047,000;
(ii) second, PRO RATA to the holders of Senior Common Units until
such holders have been allocated an amount of Net Loss equal
to the sum of (A) the amount of Net Income previously
allocated to the holders of Senior Common Units under clause
(b)(iii) above not previously offset by an allocation of Net
Loss under this clause (c)(ii) and (B) $3,389,091 (subject
to adjustment consistent with Sections 2.1(j), 2.4(c) and
10.4 of the Recapitalization Agreement);
(iii) third, PRO RATA to the holders of Junior Preferred
Units until such holders have been allocated an amount of
Net Loss equal to the sum of (A) the amount of Net Income
previously allocated to the holders of Junior Preferred
Units under
clause (b)(ii) above not previously offset by an allocation
of Net Loss under this clause (c)(iii) and (B) $99,505,909
(subject to adjustment consistent with Sections 2.1(j),
2.4(c) and 10.4 of the Recapitalization Agreement); and
(iv) fourth, PRO RATA to the holders of Senior Preferred Units
until such holders have been allocated an amount of Net Loss
equal to the sum of (A) the amount of Gross Income or Net
Income previously allocated to the holders of Senior
Preferred Units under clause (a) or (b)(i), respectively,
not previously offset by an allocation of Net Loss under
this clause (c)(iv) and (B) $115,000,000 (subject to
adjustment consistent with Section 10.4 of the
Recapitalization Agreement).
(d) MISCELLANEOUS AND REGULATORY TAX ALLOCATIONS. Notwithstanding
anything to the contrary set forth in this Agreement, the following special
allocations, if applicable, shall be made in the following order:
(i) COMPANY MINIMUM GAIN CHARGEBACK. Except as otherwise
provided in Treasury Regulations Section 1.704-2(f), notwithstanding any other
provision of this Article VI, if there is a net decrease in Company Minimum Gain
during any Fiscal Year, each Unitholder shall be specially allocated items of
Company income and gain for such Fiscal Year (and, if necessary, subsequent
Fiscal Years) in an amount equal to such Unitholder's share of the net decrease
in Company Minimum Gain, determined in accordance with Treasury Regulations
Section 1.704-2(g). Allocations pursuant to the previous sentence shall be made
in proportion to the respective amounts required to be allocated to each
Unitholder pursuant thereto. The items to be so allocated shall be determined
in accordance with Treasury Regulations Sections 1.704-2(f)(6) and
1.704-2(j)(2). This Section 6.2(d)(i) is intended to comply with the minimum
gain chargeback requirements set forth in Treasury Regulations Section
1.704-2(f) and shall be interpreted consistently therewith.
(ii) MEMBER MINIMUM GAIN CHARGEBACK. Except as otherwise
provided in Treasury Regulations Section 1.704-2(i)(4), notwithstanding any
other provision of this Article VI, if there is a net decrease in Member Minimum
Gain attributable to a Member Nonrecourse Debt during any Fiscal Year, each
Unitholder who has a share of the Member Minimum Gain attributable to such
Member Nonrecourse Debt, determined in accordance with Treasury Regulations
Section 1.704-2(i)(5), shall be specially allocated items of Company income and
gain for such Fiscal Year (and, if necessary, subsequent Fiscal Years) in an
amount equal to the portion of such Unitholder's share of the net decrease in
Member Minimum Gain attributable to such Member Nonrecourse Debt, determined in
accordance with Treasury Regulations Section 1.704-2(i)(4). Allocations
pursuant to the previous sentence shall be made in proportion to the respective
amounts required to be allocated to each Unitholder pursuant thereto. The items
to be so allocated shall be determined in accordance with Treasury Regulations
Sections 1.704-2(i)(4) and 1.704-2(j)(2). This Section 6.2(d)(ii) is intended
to comply with Treasury Regulations Section 1.704-2(i)(4) and shall be
interpreted consistently therewith.
(iii) QUALIFIED INCOME OFFSET. In the event any Unitholder
unexpectedly receives any adjustments, allocations or distributions described in
subparagraphs (4), (5) or (6) of Treasury Regulations Section
1.704-1(b)(2)(ii)(D), such Unitholder shall be allocated items of Company income
or gain in an amount and manner sufficient to eliminate such Unitholder's
Adjusted Capital Account Deficit as quickly as possible to the extent required
by the Treasury Regulations; PROVIDED, that an allocation pursuant to this
Section 6.2(d)(iii) shall be made only if and to the extent that such Unitholder
would have an Adjusted Capital Account Deficit after tentatively making all
other allocations provided in this Article VI as if this Section 6.2(d)(iii)
were not in this Agreement.
(iv) NONRECOURSE DEDUCTIONS. Nonrecourse Deductions for any
Fiscal Year shall be specially allocated among the Unitholders in proportion to
the allocations for such Fiscal Year of Net Profit under Section 6.2(b) or Net
Loss under Section 6.2(c), as applicable. Any Member Nonrecourse Deduction for
any Fiscal Year shall be specially allocated to the Unitholder who bears the
economic risk of loss with respect to the Member
Nonrecourse Debt to which such Member Nonrecourse Deductions are attributable
in accordance with Treasury Regulations Section 1.704-2(i)(1).
(v) ADJUSTMENTS OCCASIONED BY CODE SECTION 754 ELECTION. To the
extent an adjustment to the adjusted tax basis of any Company asset pursuant to
Code Section 734(b) or Code Section 743(b) is required pursuant to an election
under Code Section 754 to be taken into account in determining Capital Accounts
as the result of a distribution to a Unitholder in complete liquidation of its
interest, the amount of such adjustment to Capital Accounts shall be treated as
an item of gain (if the adjustment increases the basis of the asset) or loss (if
the adjustment decreases such basis) and such gain or loss shall be specially
allocated to the Unitholders in accordance with their interests in the event
Treasury Regulations Section 1.704-1(b)(2)(iv)(M)(2) applies, or to the Member
to whom such distribution was made in the event Treasury Regulations Section
1.704-1(b)(2)(iv)(M)(4) applies.
(vi) TREATMENT OF REGULATORY ALLOCATIONS. The allocations set
forth in this Section 6.2(d) (the "REGULATORY ALLOCATIONS") are intended to
comply with and shall be interpreted consistently with certain requirements of
Treasury Regulations Sections 1.704-1 and 1.704-2. Notwithstanding any other
provisions of this Article VI (other than the Regulatory Allocations), the
Regulatory Allocations shall be taken into account in allocating other Net
Profits and Net Losses and items of income, gain, loss and deduction among
Unitholders so that, to the extent possible, the net amount of such allocations
of other Net Profits and Net Losses and other items and the Regulatory
Allocations to each Unitholder shall be equal to the net amount that would have
been allocated to such Unitholder if the Regulatory Allocations had not
occurred.
(e) LOSS LIMITATION. Net Loss allocated pursuant to Section 6.2(c)
shall not exceed the maximum amount of Net Loss that can be allocated without
causing any Unitholder to have an Excess Loss. For this purpose, "EXCESS LOSS"
means any Net Loss the allocation of which to a Unitholder would cause such
Unitholder to have an Adjusted Capital Account Deficit (or increase the amount
of such deficit) at the end of any Fiscal Year. If some but not all Unitholders
would be allocated an Excess Loss as a consequence of an allocation of Net Loss
pursuant to Section 6.2(c), the foregoing limitation shall be applied on a
Unitholder by Unitholder basis so as to allocate the maximum permissible Net
Loss to each Unitholder under Treasury Regulations Section 1.704-1(b)(2)(ii)(D).
Any Net Loss in excess of the limitation contained in this Section 6.2(e) shall
be allocated PRO RATA to the holders of Junior Common Units. Prior to any
allocation of Net Profit under Section 6.2(b), after an Excess Loss has been
allocated to one or more Unitholders, an equal amount of Net Income shall be
allocated to such Unitholders in proportion to and to the extent of the Excess
Losses previously allocated to them.
6.3 ALLOCATIONS FOR TAX PURPOSES.
(a) In accordance with Section 704(c) of the Code and the Treasury
Regulations thereunder, income, gain, loss, and deduction with respect to any
property contributed to the capital of the Company shall, solely for tax
purposes, be allocated among the Unitholders so as to take account of any
variation between the adjusted basis of such property to the Company for Federal
income tax purposes and its initial Gross Asset Value using the traditional
method described in Treasury Regulations Section 1.704-3(b) (without curative or
remedial allocations).
(b) In the event the Gross Asset Value of any Company asset is
adjusted pursuant to subparagraph (b) of the definition of Gross Asset Value,
subsequent allocations of income, gain, loss, and deduction with respect to such
asset shall take account of any variation between the adjusted basis of such
asset for Federal income tax purposes and its Gross Asset Value in the same
manner as under Section 704(c) of the Code and the Treasury Regulations
thereunder.
(c) Subject to the preceding paragraphs (a) and (b), for United
States Federal, state and local income tax purposes, the income, gains, losses
and deductions of the Company shall, for each taxable period, be allocated among
the Unitholders in the same manner and in the same proportion that such items
have been allocated among the Unitholders' respective Capital Accounts.
6.4 DISTRIBUTION IN KIND. If any property is distributed in kind to the
Unitholders, it shall first be written up or down to its Fair Market Value as of
the date of such distribution), thus creating book gain or loss for the Company,
and the Fair Market Value of the property received by each Unitholder as so
determined shall be debited against such Unitholder's Capital Account at the
time of distribution.
6.5 DEBT ALLOCATIONS. Solely for purposes of determining a Unitholder's
proportionate share of the "excess nonrecourse liabilities" of the Company
within the meaning of Treasury Regulations Section 1.752-3(a)(3), the
Unitholders' interests in Company profits are: (a) with respect to a
$200,000,000 tranche of the Senior Unsecured Notes and the borrowings incurred
pursuant to the Credit Agreement as in effect on June 30, 1998, in proportion to
the Gross Income allocations with respect to the Senior Preferred Units and (b)
with respect to a $100,000,000 tranche of the Senior Unsecured Notes, in
proportion to the Net Income allocations with respect to the Senior Common
Units.
ARTICLE VII
MANAGEMENT
7.1 THE BOARD; DELEGATION OF AUTHORITY AND DUTIES.
(a) MEMBERS AND BOARD. The Board shall manage and control the
business and affairs of the Company, and shall possess all rights and powers as
provided in the Act and otherwise by law. Each Representative shall constitute
a "manager" of the Company within the meaning of the Act. Except as otherwise
expressly provided for herein, the Members hereby consent to the exercise by the
Board of all such powers and rights conferred on them by the Act or otherwise by
law with respect to the management and control of the Company. No Member, no
manager and no Representative, in its capacity as such, shall have any power to
act for, sign for, or do any act that would bind the Company. The Members,
acting through the Board, shall devote such time and effort to the affairs of
the Company as they may deem appropriate for the oversight of the management and
affairs of the Company. Each Member acknowledges and agrees that no Member
shall, in its capacity as a Member, be bound to devote all of such Member's
business time to the affairs of the Company, and that each Member and such
Member's Affiliates do and will continue to engage for such Member's own account
and for the account of others in other business ventures. To the fullest extent
permitted by Applicable Law, except as otherwise expressly provided in Section
7.5, each Representative shall have such rights and duties as are applicable to
directors of a Corporation.
(b) DELEGATION BY BOARD. The Board shall have the power and
authority to delegate to one or more other Persons the Board's rights and powers
to manage and control the business and affairs of the Company, including
delegating such rights and powers of the Board to agents and employees of the
Company (including Officers). The Board may authorize any Person (including,
without limitation, any Member, Officer or Representative) to enter into any
document on behalf of the Company and perform the obligations of the Company
thereunder. Notwithstanding the foregoing, the Board shall not have the power
and authority to delegate any rights or powers customarily requiring the
approval of the directors of a Corporation and no Officer or other Person shall
be authorized or empowered to act on behalf of the Company in any way beyond the
customary rights and powers of an officer of a Corporation.
(c) COMMITTEES. The Board may, from time to time, designate one or
more committees, and hereby establishes a compensation committee (the
"COMPENSATION COMMITTEE"). Each committee established by the Board shall
consist of one CSX Representative, two Vectura Party Representatives, and the
Company Representative (each as defined in Section 7.2). Any such committee
shall have such powers and authority to make recommendations as provided in the
enabling resolution of the Company with respect thereto; PROVIDED, that (i) all
decisions of any such committee shall be merely recommendations to the Board
with respect to the taking of actions, the taking of which shall require the
approval of the Board, and (ii) if the Board rejects any such recommendation,
such matter shall be returned to such committee for its consideration (other
than with respect to the Compensation Committee's recommendations regarding the
compensation of the Company's then duly elected chief executive officer). At
every meeting of any such committee, the presence of all members thereof shall
constitute a quorum and the affirmative vote of a majority of all members shall
be necessary for the adoption of any resolution. The Board may dissolve any
committee at any time, unless otherwise provided in this Agreement. The
Compensation Committee shall have, among other things, the authority to select
any Officer to the extent any such position is vacant, and shall be responsible
for making recommendations with respect to the compensation of all Officers,
which recommendation shall be presented to the Board for its approval; PROVIDED,
that the Company Representative shall be recused from all proceedings of the
Compensation Committee relating to the compensation of the Company
Representative in its capacity as an Officer.
7.2 ESTABLISHMENT OF BOARD.
(a) NUMBER OF REPRESENTATIVES. The authorized number of
Representatives shall initially be eleven (11). The Board shall initially be
composed of the ten (10) Representatives designated in the manner described in
this Section 7.2.
(b) CSX REPRESENTATIVES. Until the earlier of (i) such time as CSX
or any direct or indirect Affiliate of CSX which becomes a Unitholder ceases to
hold at least 25% of the Junior Common Units issued to the CSX Members on June
30, 1998, and (ii) a Qualified Public Offering, the CSX Members shall have the
right to designate (and to remove and designate successive replacements for)
four (4) Representatives (the "CSX REPRESENTATIVES"); PROVIDED, that following
such earlier to occur of (i) or (ii), the CSX Members shall have the right to
designate (and to remove and designate successive replacements for) one CSX
Representative. Each CSX Representative shall have one (1) vote with respect to
any matter to be voted on by the Board; PROVIDED, that (i) no CSX
Representatives may vote on (but may be present at the meetings of the Board or
committees thereof with respect to) any matter presented for vote to the Board
or committee thereof involving transactions or contractual obligations set forth
in the Recapitalization Agreement between the Company and its Subsidiaries, on
the one hand, and CSX Corporation and its Subsidiaries, on the other hand and
(ii) each CSX Representative shall have one-half (1/2) of a vote (rounded up)
with respect to any matter presented for vote to the Board or committee thereof
relating to any transaction or series of related transactions the principal
effect of which would be to trigger Built-in Gain in excess of $5,000,000
(including Exempt Transactions, transactions including dispositions of assets,
and CSX Sale-Leasebacks). The initial CSX Representatives designated pursuant
to this Section 7.2(b) shall be ▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇
and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇. The Members signatory hereto acknowledge that to the
fullest extent permitted by Applicable Law, the CSX Representatives shall act in
the best interests of the CSX Members.
(c) VECTURA PARTY REPRESENTATIVES. The Vectura Members shall have
the right to designate (and to remove and designate successive replacements for)
two (2) Representatives (the "VECTURA PARTY REPRESENTATIVES"). Each Vectura
Party Representative shall have one (1) vote with respect to any matter to be
voted on by the Board; PROVIDED, that no Vectura Party Representative may vote
on (but may be present at the meetings of the Board or committee thereof with
respect to) any matter presented for vote to the Board or committee thereof
involving transactions or contractual obligations set forth in the
Recapitalization Agreement between the Company and its Affiliates, on the one
hand, and any Vectura Member and its Affiliates, on the other hand. The initial
Vectura Party Representatives designated pursuant to this Section 7.2(c) shall
be ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇. The Members signatory hereto
acknowledge that to the fullest extent permitted by Applicable Law, the Vectura
Party Representatives shall act in the best interests of the Vectura Members.
(d) COMPANY REPRESENTATIVE. The then duly elected and acting chief
executive officer of the Company shall serve as a Representative (the "COMPANY
REPRESENTATIVE"). The Company Representative shall have one (1) vote with
respect to any matter to be voted on by the Board; PROVIDED, that the Company
Representative may not vote on any matter presented to the Board or committee
thereof, which relates to the capacity, authority, or powers of the Company
Representative as an Officer or Member (other than such matters relating to the
compensation of the Company Representative as an Officer). The initial Company
Representative designated pursuant to this Section 7.2(d) shall be ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇.
(e) VECTURA REPRESENTATIVE. The then duly elected and acting chief
executive officer of Vectura as of June 30, 1998, shall be designated as a
Representative (the "VECTURA REPRESENTATIVE"). The Vectura Representative shall
have one (1) vote with respect to any matter to be voted on by the Board;
PROVIDED, that no Vectura Representative may vote on (but may be present at the
meetings of the Board or committee thereof with respect to) any matter presented
for vote to the Board or committee thereof involving transactions or contractual
obligations set forth in the Recapitalization Agreement between the Company and
its Affiliates, on the one hand, and any Vectura Member and its Affiliates, on
the other hand. The initial Vectura Representative designated pursuant to this
Section 7.2(e) shall be ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, III. The Vectura Members shall have the
right to remove and designate successive replacements for the Vectura
Representative. The Members signatory hereto acknowledge that to the fullest
extent permitted by Applicable Law, the Vectura Representative shall act in the
best interests of the Vectura Members.
(f) INDEPENDENT REPRESENTATIVES. The Class A Members holding a
majority of the Class A Common Units shall have the right to designate (and to
remove and designate successive replacements for) two (2) Representatives, which
Representatives shall be independent of CSX, the Vectura Members, and their
respective Affiliates (the "INDEPENDENT REPRESENTATIVES"); PROVIDED, that the
Vectura Members shall have, at all times, the right to (i) approve one
Independent Representative and (ii) consent to the designation of the other
Independent Representative, which consent shall not be unreasonably withheld.
The Independent Representatives shall each have one (1) vote with respect to any
matter to be voted on by the Board. The Independent Representatives, in their
capacity as members of the Board, shall not act at the direction of the holders
of any class of Units. The initial Independent Representatives designated
pursuant to this Section 7.2(f) shall be ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇.
In the event that, at two consecutive meetings of the Board, the Representatives
vote on a matter presented to the Board and the Board reaches a deadlock so that
five (5) Representatives vote in favor of such matter and five (5)
Representatives vote against such matter, another Independent Representative
(thereby increasing the number of Representatives to eleven (11)) shall be
selected by the Class A Members holding a majority of the Class A Common Units
then outstanding.
7.3 TERM OF OFFICE. Once designated pursuant to Section 7.2, a
Representative shall continue in office until the removal of such Representative
in accordance with the provisions of this Agreement or until the earlier death
or resignation of such Representative. Any Representative may resign at any
time by giving written notice of such Representative's resignation to the Board.
Any such resignation shall take effect at the time the Board receives such
notice or at any later effective time specified in such notice. Unless
otherwise specified in such notice, the acceptance by the Board of such
Representative's resignation shall not be necessary to make such resignation
effective. Notwithstanding anything herein or at law to the contrary, any
Representative may be removed at any time with or without cause by the party
entitled to designate such Representative.
7.4 MEETING OF THE BOARD.
(a) MEETINGS. The Board shall meet at least annually, at such time
and at such place as the Board may designate. Special meetings of the Board
shall be held at the request of any three (3) Representatives upon at least five
(5) days (if the meeting is to be held in person) or two (2) days (if the
meeting is to be held telephonically) oral or written notice to the
Representatives or upon such shorter notice as may be approved by the
Representatives. Any Representative may waive the requirement of such notice as
to itself.
(b) CONDUCT OF MEETINGS. Any meeting of the Board may be held in
person or telephonically.
(c) QUORUM. Subject to the provisions of Sections 7.2 and 7.5, all
of the votes of the Representatives which have been designated pursuant to the
provisions of this Agreement and who are then in office shall be necessary to
constitute a quorum of the Board for purposes of conducting business.
7.5 VOTING. Except as otherwise provided in this Agreement, (including a
transaction effectuated pursuant to Section 7.13(a)) the effectiveness of any
vote, consent or other action of the Board or the Representatives in respect of
any matter shall require either (i) the presence of a quorum and the affirmative
vote of greater than 50% of the votes of the Representatives or (ii) the
unanimous written consent (in lieu of meeting) of
the Representatives who have been designated and who are then in office. Any
Representative may vote in person or by proxy (pursuant to a power of
attorney) on any matter that is to be voted on by the Board at a meeting
thereof.
7.6 RESPONSIBILITY AND AUTHORITY OF THE BOARD. It shall be the
responsibility of the Board to provide advice to Officers regarding the overall
operation and direction of the Company. The function of the Board shall be
similar to the oversight typically provided to a Corporation by its board of
directors. The Officers shall, at all times, retain final responsibility for
the day-to-day management, operation, and control of the Company, subject to the
supervision and direction of the Board.
7.7 SUBSIDIARY BOARDS. The Company shall be designated as the "manager"
or "managing member" of each of its Subsidiaries which is a limited liability
company and may act through wholly owned Subsidiaries as the general partner of
any Subsidiary which is a limited partnership. Unless otherwise approved by the
Board, the Company shall cause each of its Subsidiaries (whether a limited
liability company, a corporation, a partnership or otherwise) to establish
governing boards (each, a "SUB BOARD"), which Sub Boards will be entrusted with
similar responsibilities and functions as typically provided to a Corporation by
its board of directors; PROVIDED, that each such Sub Board shall be subject to
the rights and powers of the Board and the Members set forth in this Agreement
or otherwise set forth in policies established by the Board consistent with the
terms hereof. The Board shall establish the membership and composition of each
Sub Board in its reasonable discretion and PROVIDED FURTHER, that the Company
shall take action to assure that none of its Subsidiaries, Sub Boards or
Officers may take any action which would require the consent of any Member or
Representative hereunder without first obtaining such consent.
7.8 COMPANY FUNDS. Except as specifically provided in this Agreement or
with the approval of the Board, the Company shall not, and shall not permit any
Subsidiary to, pay to or use for, the benefit of any Unitholder (except in any
Unitholder's capacity as an employee or independent contractor of the Company or
any Subsidiary), funds, assets, credit, or other resources of any kind or
description of the Company or any Subsidiary. Funds of the Company or any
Subsidiary shall (i) be deposited only in the accounts of the Company in the
Company's name or in accounts of such Subsidiary in such Subsidiary's name, (ii)
not be commingled with funds of any Unitholder, and (iii) be withdrawn only upon
such signature or signatures as may be designated in writing from time to time
by the Board, or the Sub Board, as the case may be.
7.9 DEVOTION OF TIME. Other than any Representative who may be an
Officer, the Representatives shall not be obligated and shall not be expected to
devote all of their time or business efforts to the affairs of the Company.
7.10 PAYMENTS TO REPRESENTATIVES; REIMBURSEMENTS. Except for the Vectura
Representative (the compensation of whom shall be determined in accordance with
Section 7.1(c)) or as otherwise determined by the Board (by the vote or written
consent of a majority of the votes of the disinterested Representatives then in
office), no Representative shall be entitled to remuneration by the Company for
services rendered in its capacity as a Representative (other than for
reimbursement of reasonable out-of-pocket expenses of such Representative). All
Representatives will be entitled to reimbursement of their reasonable
out-of-pocket expenses incurred in connection with their attendance at Board
meetings.
7.11 OFFICERS.
(a) DESIGNATION AND APPOINTMENT. The Board may, from time to time,
employ and retain Persons as may be necessary or appropriate for the conduct of
the Company's business (subject to the supervision and control of the Board),
including employees, agents and other Persons (any of whom may be a Member or
Representative) who may be designated as Officers of the Company, with titles
including but not limited to "chief executive officer," "president," vice
president," "treasurer," "secretary," "general counsel," "director" and "chief
financial officer," as and to the extent authorized by the Board. Any number of
offices may be held by the same Person. In the Board's discretion, the Board
may choose not to fill any office for any period as it may deem advisable.
Officers need not be residents of the State of Delaware or Members. Any
Officers so designated shall have such authority and perform such duties as the
Board may, from time to time, delegate to them. The Board
may assign titles to particular Officers. Each Officer shall hold office
until his successor shall be duly designated and shall have qualified as an
Officer or until his death or until he shall resign or shall have been
removed in the manner hereinafter provided. The salaries or other
compensation, if any, of the Officers of the Company shall be fixed from time
to time by the Compensation Committee (and approved by the Board).
(b) RESIGNATION AND REMOVAL. Any Officer may resign as such at any
time. Such resignation shall be made in writing and shall take effect at the
time specified therein, or if no time be specified, at the time of its receipt
by the Board. The acceptance by the Board of a resignation of any Officer shall
not be necessary to make such resignation effective, unless otherwise specified
in such resignation. Any Officer may be removed as such, either with or without
cause, at any time by the Board. Designation of any Person as an Officer by the
Board pursuant to the provisions of Section 7.11(a) shall not in and of itself
vest in such Person any contractual or employment rights with respect to the
Company.
(c) DUTIES OF OFFICERS GENERALLY. The Officers, in the performance
of their duties as such, shall (i) owe to the Company duties of loyalty and due
care of the type owed by the officers of a Corporation to such Corporation and
its stockholders under the laws of the State of Delaware, (ii) keep the Board
reasonably apprised of material developments in the business of the Company, and
(iii) present to the Board, at least annually, a review of the Company's
performance, an operating budget for the Company, and a capital budget for the
Company.
(d) CHIEF EXECUTIVE OFFICER. Subject to the powers of the Board, the
chief executive officer of the Company shall be in general and active charge of
the entire business and affairs of the Company, and shall be its chief policy
making Officer. The initial chief executive officer of the Company shall be
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇.
(e) PRESIDENT. The president of the Company shall, subject to the
powers of the Board and the chief executive officer of the Company, have general
and active management of the business of the Company, and shall see that all
orders and resolutions of the Board are effectuated. The president of the
Company shall have such other powers and perform such other duties as may be
prescribed by the chief executive officer of the Company or by the Board.
(f) CHIEF FINANCIAL OFFICER. The chief financial officer of the
Company shall keep and maintain, or cause to be kept and maintained, adequate
and correct books and records of accounts of the properties and business
transactions of the Company, including accounts of the Company's assets,
liabilities, receipts, disbursements, gains, losses, capital and Units. The
chief financial officer of the Company shall have custody of the funds and
securities of the Company, keep full and accurate accounts of receipts and
disbursements in books belonging to the Company, and deposit all moneys and
other valuable effects in the name and to the credit of the Company in such
depositories as may be designated by the Board. The chief financial officer of
the Company shall have such other powers and perform such other duties as may
from time to time be prescribed by the chief executive officer of the Company or
the Board.
(g) GENERAL COUNSEL. The general counsel of the Company shall have
general charge of the legal affairs of the Company, and shall cause to be kept
adequate records of all suits or actions, of every nature, to which the Company
may be a party, or in which it has an interest, with sufficient data to show the
nature of the case and the proceedings therein. The general counsel of the
Company shall prepare, or cause to be prepared, legal opinions on any subject
necessary for the affairs of the Company, and shall have such other powers and
perform such other duties as may from time to time be prescribed by the chief
executive officer of the Company or the Board.
(h) VICE PRESIDENT(S). The vice president(s) of the Company shall
perform such duties and have such other powers as the chief executive officer of
the Company or the Board may from time to time prescribe. A vice president may
be designated as an Executive Vice President, a Senior Vice President, an
Assistant Vice President, or a vice president with a functional title.
(i) SECRETARY.
(i) The secretary of the Company shall attend all meetings of
the Board, record all the proceedings of the meetings and perform similar duties
for the committees of the Board when required.
(ii) The secretary of the Company shall keep all documents as may
be required under the Act. The secretary shall perform such other duties and
have such other authority as may be prescribed elsewhere in this Agreement or
from time to time by the chief executive officer of the Company or the Board.
The secretary of the Company shall have the general duties, powers and
responsibilities of a secretary of a Corporation.
(iii) If the Board chooses to appoint an assistant secretary
or assistant secretaries, the assistant secretaries, in the order of seniority,
shall in the Company secretary's absence, disability or inability to act,
perform the duties and exercise the powers of the secretary of the Company, and
shall perform such other duties as the chief executive officer of the Company or
the Board may from time to time prescribe.
(j) TREASURER. The treasurer of the Company shall receive, keep, and
disburse all moneys belonging to or coming to the Company. The treasurer of the
Company shall prepare, or cause to be prepared, detailed reports and records of
all expenses, losses, gains, assets, and liabilities of the Company as directed
by the chief financial officer of the Company and shall perform such other
duties in connection with the administration of the financial affairs of the
Company as may from time to time be prescribed by the chief financial officer or
the chief executive officer of the Company or by the Board.
7.12 NEGATIVE COVENANTS.
(a) VECTURA MEMBERS. Notwithstanding anything to the contrary
herein, the Company and its Subsidiaries shall not take, authorize, facilitate
or permit any of the following actions without the prior approval of the holders
of a majority of the Units then held by the Vectura Parties and their Permitted
Transferees pursuant to Section 8.2(c)(i)(C).
(i) the determination of the equity investments in the Company
by the senior management of the Company and its Subsidiaries;
(ii) the making of any capital expenditures exceeding, on an
annual basis, 120% of either (x) the amount of projected capital expenditures
for each Fiscal Year set forth in the projections delivered pursuant to Section
4.02(t)(i) of the Credit Agreement on the Closing Date or (y) Excess Cash Flow;
(iii) any transaction by the Company or any of its
Subsidiaries (including acquisitions of third parties, divestitures of
Subsidiaries or divisions, and incurrence of, or modifications to the terms of,
any Indebtedness) that would constitute a breach of the Credit Agreement and the
Senior Unsecured Debt Documents;
(iv) the Sale of the Company or an Initial Public Offering;
(v) the selection of the Accountants;
(vi) (A) the liquidation, dissolution, commencement of
proceedings (in bankruptcy or otherwise) for a voluntary winding up,
reorganization, adjustment, relief, or recapitalization of the Company or any of
its Subsidiaries (including, without limitation, any reorganization into a
partnership, or a corporate entity), (B) the consent to the entry of an order
for relief in an involuntary case under bankruptcy law or other similar
proceeding under Applicable Law, or (C) the application for or consent to the
appointment of a receiver, Liquidator, assignee, custodian or trustee (or
similar official) of the Company or any of its Subsidiaries; and
(vii) the approval of or entering into, directly or
indirectly, any (A) transaction or group of related transactions, (B) amendment,
supplement, waiver or modification of any agreement, or (C)
commitment or arrangement with any Person in which any of the Members or
their Affiliates, any officer or member of the Board of the Company or any
Subsidiary, or any member of the Family Group of any such Persons owns any
significant beneficial interest; PROVIDED, that the Vectura Members shall
control the enforcement of the Company's rights under the Recapitalization
Agreement vis-a-vis the CSX Members.
(b) CSX MEMBERS. Notwithstanding anything to the contrary herein
(but subject to Section 7.13), the Company and its Subsidiaries shall not take,
authorize, facilitate or permit any of the following actions without the prior
approval of the holders of a majority of the Units then held by the CSX Members.
(i) the merger or consolidation of the Company or any
transaction by the Company or its Subsidiaries involving the acquisition of
assets (other than the acquisition of new capital assets as part of the
Company's regular capital budgeting process) or equity securities (including,
without limitation, warrants, options, and other rights to acquire equity
securities) of any Person, in each case involving consideration of $250,000,000
or more (which, in each case, does not constitute a Sale of the Company to which
Section 8.3 applies);
(ii) any transaction that would directly or indirectly cause the
Company or ACL (or any material domestic Subsidiaries for so long as Holdings is
a partnership for Federal income tax purposes) to become a C Corporation;
PROVIDED, that such restriction shall not apply to (A) an Initial Public
Offering consistent with the terms hereof, (B) any Transfer pursuant to which
CSX is entitled to the rights set forth under Sections 8.2(a) or pursuant to a
transaction consummated under Section 8.3, and (C) any transaction pursuant to
which the Company or ACL would become a C Corporation (x) solely as a result of
actions, omissions, or elections of the CSX Members or (y) as a result of any
changes in Applicable Law that adversely and significantly affect the tax or
limited liability benefits of the Company's status and/or operations;
(iii) any modification, supplement, amendment, or waiver of
this Agreement or the organizational documents of the Company or any Subsidiary
of the Company that would, in any respect, adversely affect, or be prejudicial
to, the CSX Members;
(iv) any modification, supplement, amendment, or waiver of (A)
clauses (iv) and (vi) of Section 6.06(a) of the Credit Agreement as in effect on
June 30, 1998, or the correlative provisions of any successor or replacement
financing or refinancing or the definitions of "Excess Cash Flow" and "Change of
Control" (and all related definitions to the extent they affect the treatment of
the Senior Preferred Units) set forth in the Credit Agreement as in effect on
June 30, 1998 or the correlative provisions of any successor or replacement
financing or refinancing or (B) the definitions of "Restricted Payments" and
"Change of Control" (and all related definitions to the extent they affect the
treatment of the Senior Preferred Units including the ability to make
distributions thereon) set forth in the Senior Unsecured Debt Documents as in
effect on June 30, 1998, or the correlative provisions of any successor or
replacement financing or refinancing; and
(v) the approval of or entering into, directly or indirectly,
any (A) transaction or group of related transactions, (B) amendment, supplement,
waiver or modification of any agreement, or (C) commitment or arrangement, in
each case with any Person in which any of the Members or their Affiliates or
Permitted Transferees, any Officer or Representative of the Company or any
member of any Sub Board, or any member of the Family Group of any such Persons
owns a beneficial interest, other than such transactions, agreements,
commitments, or arrangements expressly contemplated by the Recapitalization
Agreement, the Registration Rights Agreement or this Agreement (provided that
the CSX Members shall control the enforcement of the Company's rights under the
Recapitalization Agreement vis-a-vis the Vectura Parties).
Notwithstanding anything to the contrary contained herein, the rights accorded
to the CSX Members pursuant to clauses (i), (ii), and (iii) of this Section
7.12(b) shall immediately terminate upon the latest to occur of CSX or any
direct or indirect Affiliate of CSX which becomes a Unitholder holding (i) less
than 25% of the Junior Common Units issued to CSX on June 30, 1998, or (ii) less
than 5% of the Senior Preferred Units issued to CSX on June 30, 1998; including
as a result of any refusal by CSX or such Affiliate of CSX to consent to an
optional redemption by the Company of Senior Preferred Units, which optional
redemption would have resulted in CSX or such Affiliate of CSX holding less than
5% of the amount of Senior Preferred Units issued to CSX or such Affiliate of
CSX on
June 30, 1998 (it being understood and agreed that any Senior Preferred Units
subject to an implemented and funded mechanism comparable to a defeasance
established pursuant to Section 5.2(b) shall not be deemed to be held for
purposes of this clause (ii)). Notwithstanding anything to the contrary
contained herein, the rights accorded to CSX or any direct or indirect
Affiliate of CSX which becomes a Unitholder pursuant to clause (iv) above of
this Section 7.12(b) shall immediately terminate once CSX or such Affiliate
of CSX ceases to hold any Senior Preferred Units (or Reclassified Securities
with respect thereto) or Exchange Notes.
(c) SENIOR PREFERRED UNITS. Notwithstanding anything to the contrary
contained herein, so long as any Senior Preferred Units are outstanding (it
being understood and agreed that any Senior Preferred Units subject to an
implemented and funded mechanism comparable to a defeasance pursuant to Section
5.2(b) shall not be deemed to be held for purposes of this Section 7.12(c)), the
Company and its Subsidiaries shall not take, authorize, facilitate or permit any
of the following actions without the prior Majority Approval of the Senior
Preferred Units:
(i) directly or indirectly declaring or making any distributions
with respect to, paying any dividends on, or redeeming or reacquiring or
purchasing or making any other payment with respect to, any Junior Security;
PROVIDED, that such restrictions shall not apply to (i) redemptions by the
Company of Units held by Management Unitholders upon the termination of their
employment with the Company or its Subsidiaries, or (ii) distributions pursuant
to Section 5.3 or permitted under Section 5.2(b);
(ii) authorizing, creating, issuing, or entering into any
agreement providing for the sale or issuance (contingent or otherwise) of any
Units, Membership Interests or other economic interests senior, or PARI PASSU,
in priority in any respect to the Senior Preferred Units; or
(iii) the approval of or entering into, directly or
indirectly, any (A) transaction or group of related transactions, (B) amendment,
supplement, waiver or modification of any agreement, or (C) commitment or
arrangement, in each case with any Person in which any of the Members,
Representatives or their Affiliates, any officer or member of the Board of the
Company or any Subsidiary, or any member of the Family Group of any such Persons
owns a beneficial interest, other than such transactions, agreements,
commitments, or arrangements expressly contemplated by the Recapitalization
Agreement, the Registration Rights Agreement or this Agreement.
7.13 AFFIRMATIVE COVENANTS.
(a) The Company shall take the following actions (and all actions
reasonably required to effect the same requested or approved by Majority
Approval of the Junior Common Units) upon the Majority Approval of the Vectura
Junior Common Units: (i) an Initial Public Offering (PROVIDED, that in
connection with an Initial Public Offering the Company shall abide by the
registration procedures set forth in Section 5 of the Registration Rights
Agreement); (ii) a Sale of the Company; or (iii) selection of the Accountants.
(b) The Company shall deliver to (i) the CSX Members and (ii) the
Vectura Members the financial statements of ACL and other notices and reports
described in, and simultaneously with the deliveries made pursuant to, Sections
5.04(a) and (b) of the Credit Agreement, as in effect on June 30, 1998, or the
correlative provisions of any successor or replacement financing or refinancing,
and similar financial statements for the Company.
7.14 CERTAIN TAX MATTERS.
(a) DISPOSITIONS OF CSX CONTRIBUTED ASSETS.
(i) The Board shall consult with CSX prior to any proposed
taxable disposition (either in a single disposition or series of related
dispositions) of any CSX Contributed Assets for consideration in excess of
$3,000,000.
(ii) The Company shall elect out of installment sale treatment
(to the extent installment sale treatment would otherwise apply) for federal
income tax purposes with respect to sales of CSX Contributed Assets unless CSX
otherwise consents in writing.
(b) CHANGE IN LAW. In the event that a change in law could result in
taxation of the Company as a C Corporation, the Vectura Members and CSX shall
cooperate in good faith to restructure the Company to avoid such treatment.
(c) SECTION 754 ELECTION. The Company shall make an election under
Section 754 of the Code in connection with any Transfer of Units permitted under
Section 8.2(c) and, if requested by the Transferring party, in connection with
any other permitted Transfer of Units.
(d) CERTAIN ARRANGEMENTS. Without the prior approval of the holders
of a majority of the Units then held by the CSX Members, the Company and its
Subsidiaries shall not enter into any loan or other agreement or arrangement
that would restrict the Company's ability to make any distributions or payments
that are required to be made under this Agreement in a manner that would be more
restrictive than any such agreement or arrangement of the Company and its
Subsidiaries existing and in effect as of June 30, 1998 in the Credit Agreement
and the Senior Unsecured Debt Documents.
ARTICLE VIII
TRANSFERS OF UNITS
8.1 GENERAL.
(a) RESTRICTIONS ON TRANSFER. No Unitholder shall Transfer any Units
other than in accordance with the terms and conditions of this Article VIII and
the other provisions of this Agreement. Notwithstanding anything to the
contrary contained herein, no Unitholder shall Transfer any Units or any
Derivatives (or create any Derivatives) if such Transfer or creation would cause
(i) the Company to be taxed as a C Corporation, (ii) a termination of the
Company for purposes of Section 708 of the Code (a "708 TERMINATION"), unless
the Transferring Unitholder indemnifies and reimburses the Other Unitholders for
any taxes (including interest and penalties) incurred by the Other Unitholders
that would not have been incurred but for such 708 Termination, or (iii) the
Company to be treated as a publicly-traded partnership for purposes of Section
7704 of the Code, unless, in the case of each of clauses (i), (ii), and (iii),
such Transfer or creation (A) is pursuant to an Approved Sale or Initial Public
Offering, or (B) receives the approval of the holders of a majority of the Units
then held by the CSX Members and Majority Approval of the Vectura Junior Common
Units.
(b) VOID TRANSFERS. Any Transfer or attempted Transfer of any Units
or Derivatives in violation of any provision of this Agreement shall be null and
void, and the Company shall not record such Transfer on its books or treat any
purported Transferee of such Units as the owner thereof for any purpose.
(c) TRANSFER MECHANICS. In connection with any proposed Transfer of
Units, the holder of the Units proposed to be Transferred shall deliver to the
Company at least twenty (20) days (and no more than sixty (60) days) prior to
any such Transfer an opinion of counsel reasonably acceptable to the Company to
the effect that such proposed Transfer may be effected in compliance with the
Securities Act; PROVIDED, that any such proposed Transfer permitted under
Section 8.2(c) shall not require an opinion of counsel, but must otherwise be
consummated in compliance with the Securities Act. In addition, if the holder of
the Units proposed to be Transferred delivers to the Company an opinion of
counsel reasonably acceptable to the Company to the effect that no subsequent
Transfer of such Units shall require registration under the Securities Act, the
Company shall promptly upon consummation of such Transfer deliver to such holder
new certificates for such Units that do not bear the legend set forth in Section
8.4. If the Company is not required to deliver new certificates for such Units
(if certificates were previously issued for such Units) not bearing such legend,
the holder thereof shall not consummate a Transfer of the same until the
prospective Transferee has confirmed to the Company in writing its agreement to
be bound by the conditions contained herein, as provided in Section 8.1(g). In
connection with any
Transfer (other than a pledge or grant of a security interest in the Senior
Preferred Units), and as a condition to the consummation thereof, the
Transferor shall obtain and deliver to the Company and each other Member a
joinder executed by the Transferee substantially in the form attached hereto
as EXHIBIT A.
(d) INFORMATION REQUESTS. Upon the request of a Unitholder, the
Company shall promptly supply to such Person or its prospective Transferees all
information regarding the Company required to be delivered in connection with a
Transfer pursuant to Rule 144A under the Securities Act (or any similar rule or
rules then in effect).
(e) SPECIAL DELIVERIES. At least fourteen (14) days (and no more
than sixty (60) days) prior to the intended date of any proposed Transfer, the
proposed Transferor shall deliver a Transfer Notice to the Company, and the
Company shall within two business days forward such Transfer Notice to each of
the CSX Members and the Vectura Members and such other information as is
reasonably required for the CSX Members and the Vectura Members to evaluate the
consequences of the proposed Transfer under Code Sections 708 and 7704. The
Company shall also, promptly following receipt of notice of the consummation of
such transfer, give written notice to each CSX Member and Vectura Member setting
forth the number of Units so Transferred, the purchase price therefor and the
identity of such Transferees.
(f) REMOVAL OF LEGEND. Upon the request of any Unitholder, the
Company shall remove the legend set forth in Section 8.4 below from the
certificates for such Unitholder's Units; PROVIDED, that such Units are eligible
for sale pursuant to Rule 144(k) under the Securities Act (or any similar rule
or rules then in effect) and such Unitholder delivers to the Company an opinion
of counsel reasonably acceptable to the Company to the effect that such Units
are so eligible.
(g) SURVIVAL OF RESTRICTIONS. Until the earlier of the Transfer of
Units in an Approved Sale or Public Sale, all Transferees of Units under this
Article VIII who are not parties to this Agreement (other than any pledgee or
grantee of a security interest in the Senior Preferred Units which has not
acquired such Senior Preferred Units pursuant to such pledge or grant) shall
have agreed in writing to be bound by the provisions of this Agreement by
executing a joinder substantially in the form attached hereto as EXHIBIT A and
each such Transferee shall not be deemed to be a Unitholder until such
Transferee has been admitted as a Member pursuant to the provisions of Section
3.2(b).
8.2 TAG-ALONG RIGHTS; FIRST OFFER RIGHTS; PERMITTED TRANSFERS.
(a) TAG-ALONG RIGHTS.
(i) Subject to Section 8.2(b) and other than in connection with
an Exempt Transfer (provided that it is hereby acknowledged and agreed that
the CSX Members shall have the rights set forth in this Section 8.2(a) in
connection with a Permitted Transfer by a Vectura Member pursuant to
Section 8.2(c)(i)(E) hereof), in the event that (x) any Unitholder (other
than an Investor Unitholder or a Management Unitholder) proposes to
Transfer Junior Common Units or (y) a Vectura Member proposes to Transfer
Junior Preferred Units, or (z) in any control transaction however
structured, the Transferring Unitholder shall deliver a Transfer Notice to
the Company and the Other Unitholders at least 30 days prior to any such
Transfer. The Other Unitholders holding the applicable class of Units to
be so Transferred may elect to participate in the contemplated Transfer by
delivering written notice to the Transferring Unitholder within 15 days
after delivery by the Transferring Unitholder of such Transfer Notice. If
any Other Unitholders have elected to participate in such Transfer (such
other Unitholders so electing, the "ELECTING UNITHOLDERS"), the
Transferring Unitholder and such Electing Unitholders shall be entitled to
Transfer in the contemplated Transfer, on the same contract terms, the
number of Junior Common Units at the price determined under (ii) below and
the number of Junior Preferred Units at the price determined under (iii)
below; PROVIDED, that if the applicable Transfer Notice includes a Transfer
of both Junior Common Units and Junior Preferred Units, and any Other
Unitholder elects to participate in such Transfer, such Electing Unitholder
must sell the number of Junior Preferred Units calculated in accordance
with paragraph (i) below. The restrictions on Transfer contained in this
Section 8.2(a) shall
apply MUTATIS MUTANDIS to transfers (other than Exempt Transfers) of
the equity securities of Vectura or any other direct or indirect
holding company of Vectura (but not including 399 Venture or its
direct or indirect parents and wholly-owned Subsidiaries of such parents
(but not 399 Venture or its Subsidiaries)) holding Units by the holders of
such equity securities. This Section 8.2(a) shall survive any Initial
Public Offering and terminate upon the consummation of an Approved Sale.
(ii) In furtherance of Section 5.6, it is the intent of the
parties that, in a transaction in which tag-along rights apply, the
aggregate sale proceeds shall be divided proportionately with respect to
all Electing Unitholders and the Transferring Unitholder based on each
Electing Unitholder's and the Transferring Unitholder's respective shares
of the liquidation proceeds that all such Electing Unitholders and the
Transferring Unitholder would receive, respectively, in the event of a
hypothetical liquidation of the Company at the enterprise value implied by
the proposed sales price; and appropriate adjustments will be made to take
account of whether Junior Preferred Units or Junior Common Units are
subject to such tag-along.
(b) FIRST OFFER RIGHTS. Other than an Exempt Transfer or a Transfer
made pursuant to Section 8.2(a), prior to any Transfer of Units by any
Unitholder, the Unitholder proposing to make such Transfer (the "OFFERING
UNITHOLDER"), shall deliver a written notice to the Company and to the Other
Unitholders holding Units of the same class proposed to be Transferred by the
Offering Unitholder (such Other Unitholders, the "UNITHOLDER OFFEREES"), such
written notice to specify in reasonable detail the number and class of Units to
be so Transferred, the proposed purchase price therefor and the other terms and
conditions of such proposed Transfer (a "FIRST OFFER NOTICE"). Subject to
Section 7.12(c)(i) hereof, the Company may elect to purchase all (but not less
than all) of the Units to be Transferred, upon the terms and conditions as those
set forth in the First Offer Notice and other reasonable and customary terms and
conditions, by delivering a written notice of such election to the Offering
Unitholder within 15 days after the First Offer Notice has been delivered to the
Company. If the Company has not elected to purchase all of the Units to be
Transferred, the Unitholder Offerees may elect to purchase all (but not less
than all) of the Units to be Transferred, on a PRO RATA basis (based on the
Ownership Ratio of each Unitholder Offeree calculated solely with respect to the
class of Units contemplated to be Transferred) upon the same terms and
conditions as those set forth in the First Offer Notice, by giving written
notice of such election to the Offering Unitholder within 15 days after the
First Offer Notice has been delivered to the Company; PROVIDED, that if any
Unitholder Offeree elects not to purchase its PRO RATA share the Units to be
Transferred, the remaining Unitholder Offerees that have so elected may purchase
their PRO RATA share of such unpurchased Units (based on the Ownership Ratio of
each remaining Unitholder Offeree calculated solely with respect to the class of
Units contemplated to be Transferred). If neither the Company nor the
Unitholder Offerees elect to purchase all of the Units specified in the First
Offer Notice, then the Offering Unitholder may Transfer to any Person the Units
contemplated to be Transferred at a price and on terms and conditions in the
aggregate no more favorable to the Transferee than those specified in the First
Offer Notice during the 150-day period immediately following the date on which
the First Offer Notice has been delivered to the Company and the Unitholder
Offerees. In connection with any such Transfer, the Company shall make any
filings with Governmental Authorities necessary to consummate such Transfer.
Any Units not Transferred within such 150-day period will be subject to the
provisions of this Section 8.2(b) upon subsequent Transfer. This Section 8.2(b)
shall terminate upon the consummation of an Initial Public Offering.
(c) PERMITTED TRANSFERS.
(i) Subject to Section 8.1, the restrictions on Transfer
contained in Sections 8.2(a) and (b) shall not apply with respect to any
Transfer (A) in the case of a Member which is a natural Person, of Units
pursuant to applicable laws of descent and distribution or to any member of
such Member's Family Group, (B) in the case of a CSX Member, (x) of Senior
Preferred Units or Derivatives thereof or (y) of any Units among its
Affiliates at any time after December 31, 1998, (C)(x) in the case of a
Vectura Party, among its Affiliates, (y) in the case of each of Vectura and
NMI, its stockholders as of June 30, 1998, so long as such Transfer occurs
prior to June 30, 2000, (z) in the case of the majority stockholder of
Vectura (on a fully diluted, as if converted basis), (1) its co-investment
partnerships, and (2) in connection with a co-investment, its employees,
directors, and internal, full-time consultants and any trust or
partnership of which its employees, directors, and internal, full-time
consultants are the sole beneficiaries in connection with a
co-investment (any such trust or partnership, a "CO-INVESTMENT
VEHICLE"), (D) in the case of a Co-Investment Vehicle, of Units in-kind
to the partners and beneficiaries of such Co-Investment Vehicle as a
distribution in-kind, and (E) in the case of a Vectura Member, to any
Person in order to resolve a Regulatory Problem if, (x) such Vectura
Member, after taking commercially reasonable actions with the
cooperation of the Company, is unable to restructure its ownership of
such Units in a manner that avoids a Regulatory Problem and in a manner
which is not adverse to such Vectura Member, and (y) giving notice to
the Company and the CSX Members, such Vectura Member has determined that
such Regulatory Problem may not be avoided.
(ii) TRANSFERS TO MANAGEMENT UNITHOLDERS. Subject to Section
8.1, it is hereby acknowledged and agreed that the Company may issue and
permit the Transfer of new Units to management (in the proportions and
using the methodology and other terms and conditions set forth on SCHEDULE
C attached hereto). In connection with any such issuance of Units, and as
a condition to the consummation thereof, the Company shall obtain and
deliver to each Member a joinder executed by the recipient of such Units
substantially in the form attached hereto as EXHIBIT A.
(iii) TRANSFERS AMONG INVESTOR UNITHOLDERS. Subject to
Section 8.1, each Independent Representative shall Transfer to any
subsequent replacement Independent Representative appointed in accordance
with Section 7.2(f) up to the full amount of the Units held by such
Independent Representative, at a per-Unit price equal to the Fair Market
Value (as of the date of Transfer) of such Units payable to the
Transferring Person.
8.3 APPROVED SALE.
(a) In the event of any Approved Sale, each Unitholder will (i)
consent to the Approved Sale and (ii) waive any dissenter's rights and other
similar rights available to such Unitholder. If the Approved Sale is structured
as a sale of Units that include Junior Common Units, each Unitholder will agree
to sell all of its Units on the terms and conditions of the Approved Sale;
PROVIDED that, if the Approved Sale consists of a sale of Units, the portion of
the aggregate selling price (net of expenses of the Approved Sale) (the "SELLING
PRICE") to be delivered to each Unitholder that is selling Units in the Approved
Sale shall be equal to the amount such Unitholder would receive in respect of
their Units sold in the Approved Sale if (i) in the case of an Approved Sale of
all outstanding Units, (A) all of the Company's assets were sold for an amount
(net of all Company liabilities and expenses of the Approved Sale not described
in Section 8.3(c)) equal to the Selling Price and (B) such Selling Price were
distributed to the Unitholders in liquidation of the Company pursuant to Section
9.2(b)(iii), and (ii) in the case of an Approved Sale of less than all
outstanding Units, (A) all of the Company's assets were sold for an amount (net
of all Company liabilities and expenses of the Approved Sale not described in
Section 8.3(c)) equal to the Fair Market Value of such assets (determined
consistent with the pricing for the Approved Sale and net of all Company
liabilities and expenses of the Approved Sale not described in Section 8.3(c))
and (B) such amount were distributed to the Unitholders in liquidation of the
Company pursuant to Section 9.2(b)(iii). Each Unitholder will take all
necessary and desirable actions as reasonably requested in connection with the
consummation of any Approved Sale, but shall not be required to execute any
purchase agreement, undertake any obligation except as provided herein or grant
indemnification other than identical indemnification rights (whether directly to
the buyer of the Units or pursuant to the provisions of a contribution
agreement) PRO RATA based on the number of Junior Common Units to be sold by
such Unitholders pursuant to the Approved Sale capped at an amount not greater
than the proceeds thereof.
(b) If the Company or any Unitholder or group of Unitholders enter
into any negotiation or transaction for which Rule 506 (or any similar rule then
in effect) under the Securities Act may be available with respect to such
negotiation or transaction (including a merger, consolidation, or other
reorganization), the Other Unitholders will, at the request of the Company,
appoint a purchaser representative (as such term is defined in Rule 501)
reasonably acceptable to the Company.
(c) Costs incurred by any Unitholder on its own behalf will not be
considered costs of the transaction hereunder.
8.4 LEGEND. The Units have not been registered under the Securities Act
and, therefore, in addition to the other restrictions on Transfer contained in
this Agreement, cannot be sold unless subsequently registered under the
Securities Act or an exemption from such registration is then available. To the
extent such Units have been certificated, each certificate evidencing Units and
each certificate issued in exchange for or upon the Transfer of any Units shall
be stamped or otherwise imprinted with a legend in substantially the following
form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED
ON JUNE 30, 1998 AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT"), AND THE ISSUER (THE "COMPANY") HAS
NOT BEEN REGISTERED UNDER THE U.S. INVESTMENT COMPANY ACT OF 1940, AS
AMENDED (THE "INVESTMENT COMPANY ACT"). THE SECURITIES REPRESENTED BY
THIS CERTIFICATE MAY NOT BE SOLD OR TRANSFERRED (X) IN THE ABSENCE OF
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR IN THE ABSENCE OF
AN EXEMPTION FROM REGISTRATION THEREUNDER, OR (Y) IF SUCH SALE OR
TRANSFER CANNOT BE EFFECTED WITHOUT THE LOSS BY THE COMPANY OF ANY
APPLICABLE INVESTMENT COMPANY ACT EXEMPTION. THE SECURITIES
REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT TO ADDITIONAL
RESTRICTIONS ON TRANSFER SPECIFIED IN THE AMENDED AND RESTATED LIMITED
LIABILITY COMPANY AGREEMENT, DATED AS OF JUNE 30, 1998, AS AMENDED AND
MODIFIED FROM TIME TO TIME. THE COMPANY RESERVES THE RIGHT TO REFUSE
THE TRANSFER OF SUCH SECURITIES UNTIL SUCH CONDITIONS HAVE BEEN
FULFILLED WITH RESPECT TO SUCH TRANSFER. A COPY OF SUCH CONDITIONS
SHALL BE FURNISHED BY THE COMPANY TO THE HOLDER HEREOF UPON WRITTEN
REQUEST AND WITHOUT CHARGE."
The Company shall imprint such legend on certificates (if any) evidencing Units.
The legend set forth above shall be removed from the certificates (if any)
evidencing any Units which cease to be Units in accordance with the definition
thereof. Notwithstanding the foregoing, to the extent the Units are not
certificated, this Agreement will contain a legend in substantially the form
stated above.
8.5 PRE-EMPTIVE RIGHTS. The Company shall not engage in a Preemptive
Offering (other than Exempt Preemptive Offerings) unless the Company shall first
offer in writing to sell to each Junior Common Holder, on the same terms and
conditions and at the same equivalent price, a number of Preemptive Securities
equal to the Proportionate Amount; PROVIDED, that in the case a Junior Common
Holder elects not to exercise its rights pursuant to this Section 8.5, whether
in full or in part, each other Junior Common Holder shall have the right to
subscribe for such non-electing Junior Common Holder's Proportionate Amount.
Such offer of the Company shall remain outstanding for at least 30 days from the
date of such written notice and shall be exercised by a Junior Common Holder by
serving written notice to the Company within such 30 day period. The foregoing
preemptive rights shall apply MUTATIS MUTANDIS to Preemptive Offerings made by
any Subsidiary of the Company. This Section 8.5 shall terminate upon the
consummation of a Qualified Public Offering.
8.6 INITIAL PUBLIC OFFERING. Immediately prior to the consummation of an
Initial Public Offering, the Members and Board will take all necessary and
desirable actions in consummation of any such Initial Public Offering, and vote
for a recapitalization and/or exchange of the Units into securities (the
"RECLASSIFIED SECURITIES") the Board finds acceptable; PROVIDED, that (i) the
Reclassified Securities provide each Unitholder with the same relative economic
interest, governance, priority and other rights and privileges as such
Unitholder had prior to such recapitalization and/or exchange and are consistent
with the rights and preferences attendant to such Units as set forth in the
Agreement or Applicable Law as in effect immediately prior to such Initial
Public Offering and (ii) except as otherwise provided herein, the provisions of
this Agreement apply to the Reclassified Securities and the issuer thereof as
such provisions apply to the Units and the Company, MUTATIS MUTANDIS.
8.7 TRANSFER BY VECTURA MEMBERS. Notwithstanding any other provision of
this Agreement to the contrary but subject to Section 8.1(a) and the penultimate
sentence of Section 8.2(a), in any transaction that would require or permit any
Vectura Member to Transfer or exchange (including, without limitation, in
connection with an Initial Public Offering or any Transfer pursuant to Section
8.2 or 8.3) all or a portion of the Vectura Units, the Vectura Members may elect
to Transfer, in lieu of such Vectura Units, stock of Vectura corresponding to
the percentage of Vectura Units to be Transferred.
8.8 PLEDGES. A Member shall not pledge any Membership Interest except in
accordance with the provisions in this Agreement applicable to Transfers,
including Transfers permitted under the terms and conditions of Section 8.2(c).
Except to the extent provided in Section 3.8 in connection with the foreclosure
of a pledge or of a security interest, the pledgee or grantee of a security
interest in any Units shall not be a Member or have any economic, voting or
other rights under this Agreement. Any foreclosure of a pledge or of a security
interest shall be subject to the terms and conditions of Section 8.1.
ARTICLE IX
DISSOLUTION AND LIQUIDATION
9.1 DURATION. The Company shall terminate and dissolve (and shall only
terminate and dissolve) upon (i) the sale or other disposition by the Company of
all or substantially all of the assets, properties or businesses the Company
then owns, (ii) the dissolution of the Company by action of the Board, (iii) at
any time there are no Members of the Company, unless the Company is continued
pursuant to the Act, or (iv) upon entry of a judicial decree pursuant to the Act
(each of the foregoing events, a "DISSOLUTION EVENT").
9.2 LIQUIDATION OF COMPANY INTERESTS.
(a) Upon dissolution of the Company, the Board shall appoint one
Member (or any other Person) to serve as the "Liquidator" who shall act at the
direction of the Board, unless and until a successor Liquidator is appointed as
provided herein. The Liquidator shall agree not to resign at any time without
30 days' prior written notice. The Liquidator may be removed at any time, with
or without cause, by notice of removal and appointment of a successor Liquidator
approved by the Board. Within 30 days following the occurrence of any such
removal, a successor Liquidator may be elected by the Board. The successor
Liquidator shall succeed to all rights, powers and duties of the former
Liquidator. The right to appoint a successor or substitute Liquidator in the
manner provided herein shall be recurring and continuing for so long as the
functions and services of the Liquidator are authorized to continue under the
provisions hereof, and every reference herein to the Liquidator shall be deemed
to refer also to any such successor or substitute Liquidator appointed in the
manner herein provided. Except as expressly provided in this Article IX, the
Liquidator appointed in the manner provided herein shall have and may exercise,
without further authorization or consent of any of the parties hereto, all of
the powers conferred upon the Board under the terms of this Agreement (but
subject to all of the applicable limitations, contractual and otherwise, upon
the exercise of such powers to the extent necessary or desirable in the good
faith judgment of the Liquidator to carry out the duties and functions of the
Liquidator hereunder for and during such period of time as shall be reasonably
required in the good faith judgment of the Liquidator to complete the winding up
and liquidation of the Company as provided for herein). The Liquidator shall
receive as compensation for its services (i) no additional compensation, if the
Liquidator is an employee of the Company or any of its Subsidiaries, or (ii) if
the Liquidator is not such an employee, a reasonable fee plus out-of-pocket
costs and expenses or such other compensation as the Board may otherwise
approve.
(b) The Liquidator shall liquidate the assets of the Company, and
apply and distribute the proceeds of such liquidation, in the following order of
priority, unless otherwise required by mandatory provisions of Applicable Law;
(i) First, to creditors, including Members and Representatives
that are creditors, to the extent otherwise permitted by Applicable Law, in
satisfaction of the Company's debts and obligations, including sales
commissions and other expenses incident to any sale of the assets of the
Company
(including a Sale of the Company) (whether by payment or the making
of reasonable provisions for payment thereof, including the setting up of
any reserves that the Liquidator shall determine are reasonably necessary
or appropriate for any liabilities or obligations of the Company).
(ii) Second, to the Unitholders, in accordance with the
provisions of Section 5.2(a); PROVIDED, that in the event that
distributions pursuant to this subparagraph (ii) would not otherwise be
identical to distributions in accordance with the positive balances in the
Unitholders' Capital Accounts, then in accordance with such positive
balances.
The reserves established pursuant to subparagraph (i) of this Section 9.2(b)
shall be paid over by the Liquidator to a bank or other financial institution,
to be held in escrow for the purpose of paying any such liabilities or
obligations and, at the expiration of such period as the Liquidator deems
advisable, such reserves shall be distributed to the Unitholders in the
priorities set forth in this Section 9.2(b). The allocations and distributions
provided for in this Agreement are intended to result in the Capital Account of
each Unitholder immediately prior to the distribution of the Company's assets
pursuant to this Section 9.2(b) being equal to the amount that would be
distributable to such Unitholder pursuant to this Section 9.2(b) without regard
to the proviso in subparagraph (ii). The Company is authorized to make
appropriate adjustments in the allocation of items of income, gain, loss and
deduction as necessary to cause the amount of each Unitholder's Capital Account
immediately prior to the distribution of the Company's assets pursuant to this
Section 9.2(b) to equal the amount that would be distributable to such
Unitholder pursuant to this Section 9.2(b) without regard to the proviso in
subparagraph (ii).
(c) Notwithstanding the provisions of Section 9.2(b) which require
the liquidation of the assets of the Company, but subject to the order of
priorities set forth in Section 9.2(b), if upon dissolution of the Company the
Board determines that an immediate sale of part or all of the Company's assets
would be impractical or could cause undue harm to the Unitholders, then the
Board may, in its discretion, defer the liquidation of any assets except those
necessary to satisfy Company liabilities and reserves, and may, in its
discretion, distribute to the Unitholders, in lieu of cash, as tenants in common
and in accordance with the provisions of Section 9.2(b), undivided interests in
such Company assets as the Liquidator deems reasonable and equitable and subject
to any agreements governing the operating of such properties at such time. For
purposes of any such distribution, the Board will determine the Fair Market
Value of any property to be distributed.
(d) A reasonable time will be allowed for the orderly winding up of
the business and affairs of the Company and the liquidation of its assets
pursuant to Section 9.2(b) in order to minimize any losses otherwise attendant
upon such winding up. Distributions upon liquidation of the Company (or any
Unitholder's interest in the Company) and related adjustments will be made by
the end of the Fiscal Year of the liquidation (or, if later, within 90 days
after the date of such liquidation) or as otherwise permitted by Treasury
Regulation Section 1.704-1(b)(2)(ii)(b).
ARTICLE X
BOOKS AND RECORDS
10.1 BOOKS. The Company shall maintain complete and accurate books of
account of the Company's affairs at the Company's principal office, which books
shall be open to inspection by any Member (or its authorized representative) to
the extent required by the Act. CSX and the Vectura Parties acknowledge that
they have reviewed certain illustrations of the application of Articles V and VI
hereof (assuming that the only Members are CSX, Vectura and NMI).
10.2 TAX ALLOCATIONS AND REPORTS. Subject to the provisions of Article
VII of the Recapitalization Agreement:
(a) Not later than seven calendar months after the end of each Fiscal
Year (but subject to the review procedures described in Section 7.10 of the
Recapitalization Agreement), the Board shall cause the Company to furnish each
Unitholder an Internal Revenue Service Form K-1 and any similar form required
for the
filing of state or local income tax returns for such Unitholder for such
Fiscal Year. Upon the written request of any such Unitholder and at the
expense of such Unitholder, the Company will use reasonable efforts to
deliver or cause to be delivered any additional information necessary for the
preparation of any state, local and foreign income tax return which must be
filed by such Unitholder.
(b) The Tax Matters Partner will determine whether to make or revoke
any available election pursuant to the Code. Each Unitholder will, upon
request, supply the information necessary to give proper effect to any such
election.
(c) The Company hereby designates NMI to act as the "TAX MATTERS
PARTNER" (as defined in Section 6231(a)(7) of the Code) in accordance with
Sections 6221 through 6233 of the Code. The Tax Matters Partner is authorized
and required to represent the Company (at the Company's expense) in connection
with all examinations of the Company's affairs by tax authorities, including
resulting administrative and judicial proceedings, and to expend Company funds
for professional services and costs associated therewith; PROVIDED, that the Tax
Matters Partner may be removed and replaced by, and shall act in such capacity
at the direction of, the Board. Each Unitholder agrees to cooperate with the
Tax Matters Partner and to do or refrain from doing any or all things reasonably
requested by the Tax Matters Partner with respect to the conduct of such
proceedings. Subject to the foregoing proviso, the Tax Matters Partner will have
reasonable discretion to determine whether the Company (either on its own behalf
or on behalf of the Unitholders) will contest or continue to contest any tax
deficiencies assessed or proposed to be assessed by any taxing authority. Any
deficiency for taxes imposed on any Unitholder (including penalties, additions
to tax or interest imposed with respect to such taxes) will be paid by such
Unitholder, and if paid by the Company, will be recoverable from such Unitholder
(including by offset against distributions otherwise payable to such
Unitholder).
10.3 TAX PROCEEDINGS. Any tax audit or other proceeding with respect to
the Company or any of its Subsidiaries for a taxable period that includes but
does not end on June 30, 1998 and any taxable period that begins after June 30,
1998 that might have an adverse effect on CSX shall be treated as referred to in
Section 7.8 of the Recapitalization Agreement; PROVIDED, HOWEVER, that the right
of CSX to consent to a proposed settlement, compromise or abandonment of such an
audit or proceeding pursuant to Section 7.8(b)(v) of the Recapitalization
Agreement shall apply to matters respecting the allocation of debt pursuant to
Section 6.5 of this Agreement and matters respecting any transactions that could
result in the realization of Built-in Gain of at least $1,500,000 (but such
right to consent shall otherwise not apply to such an audit or proceeding); and
PROVIDED FURTHER, HOWEVER, that, in the event that CSX reasonably withholds
consent pursuant to Section 7.8(b)(v) of the Recapitalization Agreement, then
CSX shall have the right to assume control of the defense of such audit or
proceeding (at CSX's expense) and CSX shall indemnify the Company and its
Members (other than CSX) for any liability of the Company and its Members (other
than CSX) in excess of the liability that the Company and its Members (other
than CSX) would have had under the proposed settlement, compromise or
abandonment as to which CSX reasonably withheld consent.
ARTICLE XI
EXCULPATION AND INDEMNIFICATION
11.1 EXCULPATION AND INDEMNIFICATION.
(a) No Member, Representative, Officer or any direct or indirect
officer, director, stockholder or partner of a Member (each, an "INDEMNITEE"),
shall be liable, responsible or accountable in damages or otherwise to the
Company, any Member, or to any Unitholder, for any act or failure to act by such
Indemnitee in connection with the conduct of the business of the Company, or by
any other such Indemnitee in performing or participating in the performance of
the obligations of the Company, so long as such Indemnitee acted in the good
faith belief that such action or failure to act was in the best interests, or
not opposed to the best interests, of the Company and/or its Subsidiaries and
such action or failure to act was not in violation of this Agreement and did not
involve intentional misconduct or a knowing violation of Applicable Law. No
Person who is a Member, Representative, an Officer, or any combination of the
foregoing, shall be personally liable under any judgment of a
court, or in any other manner, for any debt, obligation, or liability of the
Company, whether that liability or obligation arises in contract, tort, or
otherwise, solely by reason of being a Member, Representative, an Officer, or
any combination of the foregoing. Nothing contained in this Agreement shall
affect the rights of the Company against any Member pursuant to the terms and
conditions of the Recapitalization Agreement.
(b) The Company shall indemnify and hold harmless each Indemnitee to
the fullest extent permitted by law against losses, damages, liabilities, costs
or expenses (including reasonable attorney's fees and expenses and amounts paid
in settlement) incurred by any such Indemnitee in connection with any action,
suit or proceeding to which such Indemnitee may be made a party or otherwise
involved or with which it shall be threatened by reason of its being a Member,
Representative or any direct or indirect officer, director, stockholder or
partner of a Member, or while acting as (or on behalf of) a Member on behalf of
the Company or in the Company's interest. Such attorney's fees and expenses
shall be paid by the Company as they are incurred upon receipt, in each case, of
an undertaking by or on behalf of the Indemnitee to repay such amounts if it is
ultimately determined that such Indemnitee is not entitled to indemnification
with respect thereto.
(c) The right of an Indemnitee to indemnification hereunder shall not
be exclusive of any other right or remedy that a Member, Representative or
Officer may have pursuant to Applicable Law or this Agreement.
11.2 INSURANCE. The Company shall have the power to purchase and maintain
insurance on behalf of any Indemnitee or any Person who is or was an agent of
the Company against any liability asserted against such Person and incurred by
such Person in any such capacity, or arising out of such Person's status as an
agent, whether or not the Company would have the power to indemnify such Person
against such liability under the provisions of Section 11.1 or under Applicable
Law.
11.3 INDEMNIFICATION AND REIMBURSEMENT FOR PAYMENTS ON BEHALF OF A
UNITHOLDER.
(a) If the Company is obligated to pay any amount to a Governmental
Authority or to any other Person (and makes such payment or will make such a
payment within 30 days of charging the Capital Account of the Member pursuant to
the following sentences and either providing notification of an obligation to
indemnify under (i) below or offsetting a distribution pursuant to (ii) below)
on behalf of (or in respect of an obligation of) a Unitholder (including,
without limitation, federal, state and local withholding taxes imposed with
respect to foreign Members, and state unincorporated business taxes, etc.), then
such Unitholder (the "CHARGED MEMBER") shall indemnify the Company in full for
the entire amount paid (including, without limitation, any interest, penalties
and expenses associated with such payment). The amount to be indemnified shall
be charged against the Capital Account of the Charged Member, and, at the option
of the Board, either:
(i) promptly upon notification of an obligation to indemnify the
Company, the Charged Member shall make a cash payment to the Company equal to
the full amount to be indemnified (and the amount paid shall be added to the
Charged Member's Capital Account but shall not be deemed to be a Capital
Contribution hereunder); or
(ii) the Company shall reduce current or subsequent distributions
that would otherwise be made to the Charged Member until the Company has
recovered the amount to be indemnified (PROVIDED that the amount of such
reduction shall be deemed to have been distributed for all purposes of this
Agreement, but such deemed distribution shall not further reduce the Charged
Member's Capital Account).
(b) A Charged Member's obligation to make contributions to the
Company under this Section 11.3 shall survive the termination, dissolution,
liquidation and winding up of the Company, and for purposes of this Section
11.3, the Company shall be treated as continuing in existence. The Company may
pursue and enforce all rights and remedies it may have against each Charged
Member under this Section 11.3, including instituting a lawsuit to collect such
contribution with interest calculated at a rate equal to the Base Rate plus six
percentage points per annum (but not in excess of the highest rate per annum
permitted by law).
ARTICLE XII
MISCELLANEOUS
12.1 CONFIDENTIALITY. By executing this Agreement, each Member expressly
agrees, at all times during the term of the Company and thereafter and whether
or not at that time it is a Member of the Company, (unless the prior written
consent of the Company is obtained, which prior consent shall not be
unreasonably withheld) to maintain the confidentiality of, and not to disclose
to any Person other than the Company, another Member or a person designated by
the Company, any information obtained from the Company or its representatives
that is not generally available or known to the public and which has not been
previously disclosed by any Member without a confidentiality agreement relating
to the identity of any Member, the business, financial structure, financial
position or financial results, clients or affairs of the Company; PROVIDED, that
each Member may deliver or disclose confidential information to (i) its
directors, officers, employees, agents, attorneys and affiliates (to the extent
such disclosure reasonably relates to the administration of the investment
represented by its interest in the Company and such Persons agree to comply with
the terms of this Section), (ii) its financial advisors and other professional
advisors who agree to comply with the terms of this Section, (iii) any Person to
which it sells or offers to sell its interest in the Company or any part thereof
or any participation therein in accordance with the transfer restrictions
contained in this Agreement (if such Person has agreed in writing prior to its
receipt of such confidential information to be bound by the provisions of this
Section), (iv) any Governmental Authority or other regulatory or self regulatory
authority having jurisdiction over a Member or any nationally recognized rating
agency that requires access to information about a Member's investment
portfolio, or (v) any other Person to which such delivery or disclosure may be
necessary or advisable (a) to effect compliance with any law, rule, regulation
or order applicable to a Member, including the requirements of any stock
exchange, (b) in response to any subpoena or other legal process, or (c) in
connection with any litigation to which a Member is a party.
12.2 WAIVER OF JURY TRIAL. Each of the parties hereto waives to the
fullest extent permitted by law any right it may have to trial by jury in
respect of any claim, demand, action or cause of action based on, or arising out
of, under or in connection with this Agreement, or any course of conduct, course
of dealing, verbal or written statement or action of any party hereto, in each
case whether now existing or hereafter arising, and whether in contract, tort,
equity or otherwise. The parties to this Agreement each hereby agrees that any
such claim, demand, action or cause of action shall be decided by court trial
without a jury and that the parties to this Agreement may file an original
counterpart or a copy of this Agreement with any court as evidence of the
consent of the parties hereto to the waiver of their right to trial by jury.
12.3 GOVERNING LAW. ALL ISSUES AND QUESTIONS CONCERNING THE APPLICATION,
CONSTRUCTION, VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS AGREEMENT SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
DELAWARE AND THE DELAWARE LIMITED LIABILITY COMPANY ACT, DELAWARE CODE, TITLE 6,
SECTIONS 18-101, ET SEQ., AS IN EFFECT FROM TIME TO TIME, WITHOUT GIVING EFFECT
TO ANY CHOICE OF LAW OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE STATE
OF DELAWARE OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE
LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF DELAWARE.
12.4 DESCRIPTIVE HEADINGS. The descriptive headings of this Agreement are
inserted for convenience only and do not constitute a part of this Agreement.
12.5 SEVERABILITY. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any other jurisdiction, but this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein. The Members
shall negotiate in good faith to replace any provision so held to be invalid or
unenforceable so as to implement most effectively the transactions contemplated
by such provision in accordance with the original intent of the Members
signatory hereto.
12.6 AMENDMENTS. Subject to Section 7.12(b)(iii), the parties hereto may
at any time amend this Agreement through action of the Board and Majority
Approval of the Junior Common Units; PROVIDED, that the
provisions of Articles V or VI may not be amended without the consent of a
majority of the holders of each class of Units affected by any such proposed
amendment; PROVIDED FURTHER, that no amendment or waiver to any provision of
this Agreement which adversely affects, and is prejudicial to, any CSX Member
shall be effective against such CSX Member without the written consent of
such CSX Member.
12.7 GENDER AND NUMBER. Whenever required by the context, the singular
number shall include the plural number, the plural number shall include the
singular number, the masculine gender shall include the neuter and feminine
genders and vice versa.
12.8 NOTICE. Any Notice or Notices required or permitted under the
provisions of this Agreement shall be sent to the addresses set forth below, or
as otherwise notified to the other party in writing:
if to the Vectura Parties:
c/o 399 Venture Partners, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to (which shall not constitute constructive notice to the
Vectura Parties):
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
Citicorp Center
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
if to CSX:
CSX ▇▇▇▇▇ Corp.
c/o CSX Corporation
One ▇▇▇▇▇ Center
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to (which shall not constitute constructive notice to CSX):
Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
if to any other Member, to such Member's address as set forth in the records of
the Company. Any Notice sent as set forth above shall be deemed to have been
given only upon actual delivery to the intended recipient thereof or upon the
date of rejection of such notice, as evidenced by the return receipt therefor.
12.9 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which when executed and delivered shall be an original,
and all of which when executed shall constitute one and the same instrument.
12.10 ENTIRE AGREEMENT. Except as otherwise expressly set forth herein,
this document and the other Transaction Documents embody the complete agreement
and understanding among the parties hereto with respect to the subject matter
hereof and supersede and preempt any prior understandings, agreements or
representations by or among the parties, written or oral, which may have related
to the subject matter hereof in any way.
12.11 NO WAIVER OF REMEDIES. The failure of a Member to insist on the
strict performance of any covenant or duty required by the Agreement, or to
pursue any remedy under the Agreement, shall not constitute a waiver of the
breach or the remedy.
12.12 REMEDIES CUMULATIVE. The remedies of the Members under the
Agreement are cumulative and shall not exclude any other remedies to which the
Member may be lawfully entitled. Each of the parties confirms that damages at
law may be an inadequate remedy for a breach or threatened breach of any
provision hereof. The respective rights and obligations hereunder shall be
enforceable by specific performance, injunction or other suitable remedy, but
nothing herein contained is intended to or shall limit or affect any rights at
law or by statute or otherwise of any party aggrieved as against the other
parties for a breach or threatened breach of any provision hereof, it being the
intention by this Section to make clear the agreement of the parties that the
respective rights and obligations of the parties hereunder shall be enforceable
in equity as well as at law or otherwise.
12.13 BINDING EFFECT. This Agreement shall be binding upon and inure to
the benefit of all of the Members and their permitted successors, legal
representatives, and assigns.
12.14 DETERMINATIONS OF FAIR MARKET VALUE. Except in the case of the Fair
Market Values reflected on Schedule B, the Board shall reasonably determine Fair
Market Values hereunder; PROVIDED, that in the event the holders of 10% of any
class of Units affected by such determination (the "REQUESTING HOLDERS") dispute
such determination, Fair Market Value shall be determined by an independent
appraiser mutually reasonably satisfactory to the Company and the Requesting
Holders, whose fees and expenses shall be borne by the Company if the Board's
determination differs from the appraiser's determination by at least 15% of the
appraiser's determination and shall otherwise be borne by the Requesting
Holders.
* * * * *
IN WITNESS WHEREOF, all of the Members of American Commercial Lines
Holdings LLC, a Delaware limited liability company, have executed this
Agreement, effective as of the date first written above.
CSX ▇▇▇▇▇ CORP.
By:
------------------------------------------
Name:
Title:
399 VENTURE PARTNERS, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title:
NATIONAL MARINE, LLC
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ III
------------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ III
Title: President
AMERICAN COMMERCIAL LINES HOLDINGS LLC
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President and Chief Executive Officer
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
SCHEDULE A
-------------------------------------------------------------------------------------------------
Senior
Preferred Units Junior Preferred Units
-------------------------------------------------------------------------------------------------
Aggregate Aggregate
Aggregate Initial Initial
Capital Redemption Number of Redemption Number of
Member Contributions Value Units Value Units
-------------------------------------------------------------------------------------------------
CSX Member* $155,000,000 $115,000,000 11,500,000 $39,656,364 3,965,636
-------------------------------------------------------------------------------------------------
399 Venture Partners, $60,000,000 0 0 $59,454,545 5,945,455
Inc.
-------------------------------------------------------------------------------------------------
NMI $3,895,000 0 0 $1,500,000 150,000
-------------------------------------------------------------------------------------------------
Independent
Investors
---------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ $15,000
-------------------------------------------------------------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ $15,000
-------------------------------------------------------------------------------------------------
Management
Unitholders
-----------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ $17,000
-------------------------------------------------------------------------------------------------
TOTAL $218,942,000 $115,000,000 11,500,000 $100,610,909 10,061,091
-------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
Senior
Common Units Junior Common Units
--------------------------------------------------------------------------------------------------
Aggregate Class A Class B Total
Aggregate Number of Initial Junior Junior Junior
Initial Units Capital Common Common Common
Member Capital Account Units Units Units
Account
--------------------------------------------------------------------------------------------------
CSX Member* 0 0 $343,636 3,400.0 30,963.0 34,363.0
--------------------------------------------------------------------------------------------------
399 Venture Partners, 0 0 $545,455 1,579.0 52,967.0 54,545.0
Inc.
--------------------------------------------------------------------------------------------------
NMI $3,389,091 338,909 $110,909 321.0 10,770.0 11,091.0
--------------------------------------------------------------------------------------------------
Independent
Investors
---------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ $15,000 1,500.0 1,500.0
--------------------------------------------------------------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ $15,000 1,500.0 1,500.0
--------------------------------------------------------------------------------------------------
Management
Unitholders
-----------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ $17,000 1,700.0 1,700.0
--------------------------------------------------------------------------------------------------
TOTAL $3,389,091 338,909 $1,047,000 10,000.0 94,700.0 104,700.0
--------------------------------------------------------------------------------------------------
----------------------
* The CSX Member made a Capital Contribution of $851,352,000 and received a
distribution of $696,352,000.
SCHEDULE B
ALLOCATION OF INITIAL VALUE AMONG GROSS ASSETS CONTRIBUTED BY CSX ▇▇▇▇▇
1. Domestic fleet: $450 million (estimated tax basis $140 - $150 million
as of December 31, 1997).
2. Nondepreciable, nonamortizable goodwill associated with domestic fleet:
$112.5 million, including $2 million associated with Liquids line.
3. Foreign stock: $125 million.
4. Jeffboat, Waterway Communications, Terminals, Headquarters: $112.5
million. Suballocations within this category:
A. Jeffboat: $40 million
B. Waterway Communications: $20 million
C. Terminals: $37.5 million
D. Headquarters: $15 million
Total:
$112.5 million
5. Domestic current assets and other domestic nondepreciable assets:
allocate initial value equal to tax basis (estimated at $138 million as
of December 31, 1997).
SCHEDULE C
PERMITTED TRANSFERS TO MANAGEMENT UNITHOLDERS
A. The Company shall issue to new Management Unitholders within 36 months
following the Closing Date, upon 10 days prior written notice from Vectura
to CSX, Units in amounts which results in dilution to CSX and Vectura (x)
not in excess of the amounts described below and (y) in the relative
proportions as follows (each at $10 per Unit):
(i) CSX will Transfer to Management Unitholders selected by the
Compensation Committee up to an aggregate of the following Units:
NO. OF UNITS DOLLARS
----------- -------
Junior Preferred Units: 116,881.9 $1,168,819
Junior Common Units: 1012.8 $10,128
(ii) Vectura or 399 Venture will Transfer to Management Unitholders
selected by the Compensation Committee up to an aggregate of the
following Units.
NO. OF UNITS DOLLARS
----------- -------
Junior Preferred Units: 175,234.4 $1,752,344
Junior Common Units: 1,607.7 $16,077
All such Transfers of Common Preferred Units and Junior Common Units shall
be made by CSX and Vectura/399 Venture on a PRO RATA basis in accordance
with the number of Junior Preferred Units and Junior Common Units to be
sold by CSX and Vectura/399 Venture.
B. In addition, the Company may issue, as incentive compensation, up to
5,236.2 Junior Common Units (which includes any Junior Common Units based
on the Closing Date) to Management Unitholders selected by the Compensation
Committee at $10/Unit on customary terms.
C. The terms and conditions of such issuance and sale to management shall be
first consistent with the foregoing and second as reasonably specified by
the Compensation Committee and in accordance with customary terms and
conditions for management equity investment in leveraged acquisitions.
Exhibit A
FORM OF JOINDER
TO
AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT
THIS JOINDER to the Amended and Restated Limited Liability Company
Agreement, dated as of June 30, 1998 by and among AMERICAN COMMERCIAL LINES
HOLDINGS LLC, a Delaware limited liability corporation (the "COMPANY"), and
certain other Persons (the "AGREEMENT"), is made and entered into as of
_________ by and between the Company and __________________ ("HOLDER").
Capitalized terms used herein but not otherwise defined shall have the meanings
set forth in the Agreement.
WHEREAS, Holder has acquired certain Units and the Agreement and the
Company requires Holder, as a Unitholder, to become bound by and/or a party to
the Agreement, and Holder agrees to do so in accordance with the terms hereof.
NOW, THEREFORE, in consideration of the mutual covenants contained herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties to this Joinder hereby agree as follows:
1. AGREEMENT TO BE BOUND. Holder hereby agrees that upon execution
of this Joinder, it shall become bound by and/or a party to the Agreement and
shall be fully bound by, and subject to, all of the covenants, terms and
conditions of the Agreement as though an original party thereto and shall be
deemed a Unitholder for the purposes of being bound thereby. In addition,
Holder hereby agrees that each class of Units held by Holder shall be deemed
Units for the purposes of being bound thereby and shall have the rights only
as provided in the Agreement.
2. SUCCESSORS AND ASSIGNS. Except as otherwise provided herein,
this Joinder shall bind and inure to the benefit of and be enforceable by the
Members, the Company and their successors and assigns and Holder (only as
provided in the Agreement) and any subsequent holders of Units and the
respective successors and assigns of each of them, so long as they hold any
Units.
3. COUNTERPARTS. This Joinder may be executed in separate
counterparts each of which shall be an original and all of which taken
together shall constitute one and the same agreement.
4. NOTICES. For purposes of Section 12.8 of the Agreement, all
notices, demands or other communications to the Holder shall be directed to:
[Name]
[Address]
[Facsimile Number]
5. GOVERNING LAW. ALL ISSUES AND QUESTIONS CONCERNING THE
APPLICATION, CONSTRUCTION, VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS
JOINDER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF DELAWARE AND THE DELAWARE LIMITED LIABILITY COMPANY ACT, DELAWARE
CODE, TITLE 6, SECTIONS 18-101, ET SEQ., AS IN EFFECT FROM TIME TO TIME,
WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAW PROVISION OR
RULE (WHETHER OF THE STATE OF DELAWARE OR ANY OTHER JURISDICTION) THAT WOULD
CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF
DELAWARE.
6. DESCRIPTIVE HEADINGS. The descriptive headings of this Joinder
are inserted for convenience only and do not constitute a part of this
Joinder.
IN WITNESS WHEREOF, the parties hereto have executed this Joinder as of
the date first above written.
AMERICAN COMMERCIAL LINES HOLDINGS LLC
By:
------------------------------------
Name:
Title:
[HOLDER]
By:
------------------------------------
Name:
Title: