Common use of Composition; Initial Managers Clause in Contracts

Composition; Initial Managers. The Board shall consist of not less than five and not more than eight Managers, with the specific number of Managers at any given time, determined as provided in this Section 8.2. (i) During the Interim Period, the Board shall be composed of the five individuals listed on Schedule V, three of whom shall be Series A-1 Managers designated by the Series A-1 Majority and two of whom shall be designated by the Series A-2 Majority (as set forth on Schedule V). The size of the Board shall be increased or decreased in accordance with Sections 8.2(a)(ii), (iii) and (iv). (ii) The Series A-1 Majority shall be entitled to designate (w) four Managers for so long as the Series A-1 Members hold at least 60% of the issued and outstanding Class A Common Units, (x) three Managers for so long as the Series A-1 Members hold less than 60% and not less than 45% of the issued and outstanding Class A Common Units, (y) two Managers for so long as the Series A-1 Members hold less than 45% and not less than 35% of the issued and outstanding Class A Common Units and (z) one Manager for so long as the Series A-1 Members hold less than 35% and not less than 20% of the issued and outstanding Class A Common Units; provided, that, notwithstanding the foregoing, so long as the MHR Affiliated Members hold not less than 20% of the Class A Common Units, the Series A-1 Majority shall be entitled to designate a minimum of three Managers. (iii) The Series A-2 Majority shall be entitled to designate (w) four Managers for so long as the Series A-2 Members hold at least 60% of the issued and outstanding Class A Common Units, (x) three Managers for so long as the Series A-2 Members hold less than 60% and not less than 45% of the issued and outstanding Class A Common Units, (y) two Managers for so long as the Series A-2 Members hold less than 45% and not less than 35% of the issued and outstanding Class A Common Units and (z) one Manager for so long as the Series A-2 Members hold less than 35% and not less than 20% of the issued and outstanding Class A Common Units; provided, that notwithstanding the foregoing, (A) without in any way limiting the number of Managers that the Series A-2 Majority is entitled to designate under this Section 8.2(a)(iii), so long as the Initial MSI Member and its Affiliated Members hold not less than 20% of the Class A Common Units, the Series A-2 Majority shall be entitled to designate a minimum of (x) two Managers at all times after the Effective Date and prior to the Second Closing and (y) three Managers at all times after the Second Closing (provided, that, if the Second Closing does not occur for any reason other than due to a breach of the Transaction Agreement by the Initial MSI Member, the Series A-2 Majority shall be entitled to designate a minimum of three (3) Managers); and (B) if, on December 31, 2018 or as of the end of any quarter thereafter ending on March 31, June 30, September 30 or December 31 (each, a “Performance Measurement Date”), the 4-Year Trailing EBITDA is less than or equal to 80% of the projected 4-Year Trailing EBITDA with respect to such period (a “Performance Period”) and set forth on Schedule VI (a “Performance Failure”), then the Series A-2 Majority shall be entitled to designate one additional Manager (and the size of the Board shall be automatically increased by one Manager). For the avoidance of doubt, (1) if a Performance Failure occurs, then the Series A-2 Majority shall be entitled to designate one additional Manager for the duration of this Agreement and shall not lose such right to designate such additional Manager regardless of whether the Company subsequently achieves projected 4-Year Trailing EBITDA and (2) the Series A-2 Majority shall only be entitled to designate one additional Manager for the duration of this Agreement as a result of any one or more Performance Failures, regardless of whether there is a Performance Failure on multiple Performance Measurement Dates; provided, that, for the avoidance of doubt, in the event that the Series A-2 Majority loses its right to designate an additional Manager due to a Performance Failure Certificate Cure, (x) any action taken by the Board after the Performance Failure and prior to the Performance Failure Certificate Cure shall remain binding on the Company and the Members and (y) the Series A-2 Majority shall not lose the right to designate an additional Manager in the event of a Performance Failure in respect of a subsequent Performance Period. (iv) To the extent that the Series A-1 Majority or Series A-2 Majority is no longer entitled to designate one or more Managers pursuant to Section 8.2(a)(ii) or (iii) (the “Subject Series”), (w) the size of the Board shall be reduced automatically by the number of Managers the Subject Series is no longer entitled to designate, (y) the aggregate number of votes that may be cast by the Managers designated by the Subject Series shall be reduced to reflect the reduced size of the Board and (z) if the number of Managers of the Subject Series is so reduced, the Subject Series shall immediately designate which of its Managers have been removed as a Manager and, if the Subject Series fails to remove the applicable number of Managers, the Series A-2 Majority or Series A-1 Majority (as applicable) shall have the right to designate which Manager or Managers previously designated by the Subject Series have been removed. (v) Each Manager shall serve in such capacity until such Manager’s successor has been elected and qualified or until such individual’s death, resignation or removal.