Exhibit 4.2
SECOND AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
XXXXXX XXXXXX MANAGEMENT, LLC
Dated as of July 23, 2002
SECOND AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
XXXXXX XXXXXX MANAGEMENT, LLC
A DELAWARE LIMITED LIABILITY COMPANY
TABLE OF CONTENTS
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ARTICLE 1 DEFINITIONS..............................................................1
1.1 Definitions..................................................................1
1.2 Construction.................................................................7
ARTICLE 2 ORGANIZATION.............................................................7
2.1 Continuation.................................................................7
2.2 Name.........................................................................7
2.3 Registered Office; Registered Agent; Principal Office; Other Offices.........7
2.4 Purpose; Powers..............................................................8
2.5 Foreign Qualification........................................................8
2.6 Power of Attorney............................................................8
2.7 Term.........................................................................9
2.8 Taxation as Corporation; No State-Law Partnership............................9
2.9 Title to Company Assets......................................................9
ARTICLE 3 SHAREHOLDERS; CERTIFICATES; TRANSFER OF COMPANY SECURITIES...............9
3.1 Shareholders.................................................................9
3.2 No Liability to Third Parties...............................................10
3.3 No Expulsion................................................................10
3.4 Certificates................................................................10
3.5 Register, Registration of Transfer and Exchange.............................11
3.6 Mutilated, Destroyed, Lost or Stolen Certificates...........................12
ARTICLE 4 AUTHORIZATION AND ISSUANCE OF COMPANY SECURITIES........................13
4.1 Company Securities..........................................................13
4.2 Voting Shares...............................................................13
4.3 Listed Shares...............................................................15
4.4 Splits and Combinations.....................................................18
4.5 Withholding.................................................................19
TABLE OF CONTENTS
(Continued)
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ARTICLE 5 MANAGEMENT..............................................................19
5.1 Management of the Company's Affairs.........................................19
5.2 Board of Directors..........................................................20
5.3 Restrictions on the Board of Directors' Authority...........................21
5.4 Officers....................................................................22
5.5 Compensation................................................................23
5.6 Business Opportunities......................................................24
5.7 Interested Officers or Directors............................................24
5.8 Duties of Record Holders of Voting Shares and Directors.....................25
5.9 Indemnification.............................................................25
5.10 Liability of Indemnitees....................................................27
5.11 Facsimile Signatures........................................................27
ARTICLE 6 BOOKS AND RECORDS; INFORMATION AND ACCOUNTS.............................28
6.1 Maintenance of Books and Records............................................28
6.2 Information.................................................................28
6.3 Accounts....................................................................28
ARTICLE 7 DISSOLUTION, WINDING-UP AND TERMINATION.................................28
7.1 Dissolution.................................................................28
7.2 Winding-Up and Termination..................................................29
ARTICLE 8 AMENDMENT OF AGREEMENT; SHAREHOLDER MEETINGS; RECORD DATE...............29
8.1 Amendment Procedures........................................................29
8.2 Meetings....................................................................29
8.3 Notice of a Meeting.........................................................30
8.4 Record Date.................................................................30
8.5 Adjournment.................................................................30
8.6 Waiver of Notice; Approval of Meeting; Approval of Minutes..................30
8.7 Quorum; Voting..............................................................30
8.8 Special Voting Requirements.................................................31
8.9 Conduct of Meeting..........................................................31
8.10 Action Without a Meeting....................................................31
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TABLE OF CONTENTS
(Continued)
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8.11 Voting and Other Rights.....................................................32
ARTICLE 9 COVENANTS...............................................................32
ARTICLE 10 GENERAL PROVISIONS......................................................32
10.1 Fiscal Year.................................................................32
10.2 Offset......................................................................33
10.3 Notices.....................................................................33
10.4 Entire Agreement............................................................33
10.5 Waiver......................................................................33
10.6 Binding Effect..............................................................33
10.7 Governing Law; Severability.................................................33
10.8 Further Action..............................................................33
10.9 No Right to Action for Dissolution or Partition.............................33
10.10 Third-Party Beneficiaries...................................................34
10.11 Creditors...................................................................34
10.12 Counterparts................................................................34
Annex A - Exchange Provisions (Eliminated on July 23, 2002)..................................A-1
Annex B - Purchase Provisions................................................................B-1
Annex C - Delegation of Control Agreement....................................................C-1
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SECOND AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
XXXXXX XXXXXX MANAGEMENT, LLC
This Second Amended and Restated Limited Liability Company Agreement of
Xxxxxx Xxxxxx Management, LLC, a Delaware limited liability company (the
"Company"), dated as of July 23, 2002, is adopted, executed and agreed to, for
good and valuable consideration, by and among Kinder Xxxxxx X.X., Inc., a
Delaware corporation (the "Organizational Shareholder"), and any other Persons
(as defined below) who are or become Shareholders (as defined below) of the
Company or parties hereto as provided herein, and amends and restates in its
entirety the Amended and Restated Limited Liability Company Agreement of Xxxxxx
Xxxxxx Management, LLC dated as of May 14, 2001.
ARTICLE 1
Definitions
1.1 Definitions. As used in this Agreement, except as defined
otherwise in the Purchase Provisions (within which the definitions in which
shall control), the following terms shall have the following respective
meanings:
"Act" means the Delaware Limited Liability Company Act, as amended from
time to time, and any successor to such statute.
"Affiliate" means, with respect to any Person, any other Person that
directly or indirectly controls, is controlled by or is under common control
with, the Person in question. As used in this definition of "Affiliate," the
term "control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person,
whether through ownership of voting securities, by contract or otherwise.
"Agreement" means this Second Amended and Restated Limited Liability
Company Agreement, including the Purchase Provisions, as amended, supplemented
or restated from time to time.
"Assignee" means a Person to whom one or more Company Securities have
been transferred in a manner permitted under this Agreement.
"Average Market Price" means, except as otherwise provided in the
Purchase Provisions, the average Closing Price of a Listed Share during the ten
consecutive Trading Days prior to the applicable ex-dividend date, but not
including that date. For the purpose of this definition, the term "ex-dividend
date" means the date on which "ex-dividend" trading commences for a Share
Distribution on the principal National Securities Exchange on which the Listed
Shares are then listed.
"Bankruptcy" or "Bankrupt" means, with respect to any Person, that (a)
such Person (i) makes a general assignment for the benefit of creditors; (ii)
files a voluntary petition in
bankruptcy; (iii) is insolvent or has entered against such Person an order for
relief in any bankruptcy or insolvency proceeding; (iv) files a petition or
answer seeking for such Person any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any Law; (v)
files an answer or other pleading admitting or failing to contest the material
allegations of a petition filed against such Person in a proceeding of the type
described in subclauses (i) through (iv) of this clause (a); or (vi) seeks,
consents to or acquiesces in the appointment of a trustee, receiver or
liquidator of such Person or of all or any substantial part of such Person's
properties; or (b) 120 days have passed after the commencement of any proceeding
seeking reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any Law, if the proceeding has not been
dismissed, or 90 days have passed after the appointment without such Person's
consent or the acquiescence of a trustee, receiver or liquidator of such Person
or of all or any substantial part of such Person's properties, if the
appointment is not vacated or stayed, or 90 days have passed after the date of
expiration of any such stay, if the appointment has not been vacated.
"Beneficial Owner" has the meaning set forth in Rules 13d-3 and 13d-5
under the Exchange Act, as in effect on the date of this Agreement, and the
terms "Beneficial Ownership," "Beneficially Own," "Beneficially Owned" and
similar terms have correlative meanings.
"Board of Directors" has the meaning assigned to it in Subsection
5.1(a).
"Business Day" means any day other than a Saturday, a Sunday or a day
on which national banking associations in the State of New York or the State of
Texas are closed.
"Certificate" has the meaning assigned to it in Subsection 3.4(a).
"Chairman of the Board" has the meaning assigned to it in Subsection
5.2(g).
"Class B Unit" has the meaning assigned to it in the Partnership
Agreement.
"Closing Date" means the date of the sale by the Company of Listed
Shares to the Underwriters pursuant to the Underwriting Agreement.
"Closing Price" means (a) for securities that are listed on a National
Securities Exchange, the last sale price for that day, regular way, or, if there
are no sales on that day, the average of the closing bid and asked prices for
that day, regular way, in either case as reported in the principal composite
transactions reporting system for the principal National Securities Exchange on
which the securities are listed; or (b) for securities that are not listed on a
National Securities Exchange, (i) the last quoted price on that day, or if no
price is quoted, the average of the high bid and low asked prices on that day,
each as reported by the NASDAQ; (ii) if on that day the securities are not so
quoted, the average of the closing bid and asked prices on that day furnished by
a professional market maker in the securities selected by the Board of Directors
in its sole discretion; or (iii) if on that day no market maker is making a
market in the securities, the fair value of the securities as determined by the
Board of Directors in its sole discretion.
"Code" means the United States Internal Revenue Code of 1986, as
amended from time to time and as interpreted by the applicable regulations
thereunder. All references herein to a
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specific section or sections of the Code shall be deemed to include a reference
to any corresponding provision or provisions of future Law.
"Common Unit" has the meaning assigned to it in the Partnership
Agreement.
"Company" means Xxxxxx Xxxxxx Management, LLC, a Delaware limited
liability company.
"Company Securities" means the shares into which the interest in the
Company is divided and includes Voting Shares, Listed Shares and any other
shares that may be approved in accordance with Subsection 4.1(a), as the context
requires.
"Delegation of Control Agreement" means the Delegation of Control
Agreement to be dated as of May 18, 2001 among the Organizational Shareholder,
KMEP, the Operating Partnerships and the Company, attached hereto as Annex C, as
amended, supplemented or restated from time to time.
"Director" means a member of the Board of Directors elected as provided
in Section 5.2, but such term does not include any Person who has ceased to be a
member of the Board of Directors. Directors are "managers" (as such term is
defined in the Act) of the Company.
"Dissolution Event" has the meaning assigned to it in Subsection
7.1(a).
"Entity" means a corporation, limited liability company, venture,
partnership, trust, unincorporated organization, association or other entity.
"Exchange Act" means the United States Securities Exchange Act of 1934,
as amended from time to time, and any successor to such statute and all rules
and regulations promulgated thereunder.
"Group" means a "group" of Persons as defined in Section 13(d)(3) of
the Exchange Act.
"Indemnitees" means (a) the Record Holders of Voting Shares; (b) any
Person who is or was an Affiliate of the Record Holders of Voting Shares; (c)
any Person who is or was an officer, director, employee, partner, agent or
trustee of the Record Holders of Voting Shares, the Company or any of their
respective Affiliates; or (d) any Person who is or was serving at the request of
the Record Holders of Voting Shares, the Company or any of their respective
Affiliates as a director, officer, employee, partner, agent or trustee of
another Person.
"Initial Public Offering" means the consummation of the first
underwritten public offering of Listed Shares pursuant to an effective
registration statement filed under the Securities Act, as underwritten by the
Underwriters pursuant to the Underwriting Agreement.
"I-Unit" has the meaning assigned to it in the Partnership Agreement.
"KMEP" means Xxxxxx Xxxxxx Energy Partners, L.P., a Delaware limited
partnership.
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"KMI" means Xxxxxx Xxxxxx, Inc., a Kansas corporation, and its
successor by merger, consolidation or acquisition of all or substantially all of
its assets.
"Law" means any applicable constitutional provision, statute, act, code
(including the Code), law, regulation, rule, ordinance, order, decree, ruling,
proclamation, resolution, judgment, decision, declaration or interpretative or
advisory opinion or letter of a governmental authority, and includes any
applicable rule of any National Securities Exchange on which Company Securities
are traded or listed.
"Listed Share" has the meaning assigned to it in Subsection 4.1(a).
"NASDAQ" means the National Association of Securities Dealers Automatic
Quotation System.
"National Securities Exchange" means an exchange registered with the
Securities and Exchange Commission under Section 6(a) of the Exchange Act.
"Officer" means any Person elected as an officer of the Company as
provided in Section 5.4, but such term does not include any Person who has
ceased to be an officer of the Company. Officers are "managers" (as such term is
defined in the Act) of the Company.
"Operating Partnerships" has the meaning assigned to it in the
Partnership Agreement.
"Opinion of Counsel" means a written opinion of counsel (who may be
regular counsel to the Company or any Affiliate thereof) acceptable to the Board
of Directors, any committee thereof or any Officer.
"Organizational Certificate" has the meaning assigned to it in Section
2.1.
"Organizational Shareholder" means Kinder Xxxxxx X.X., Inc., a Delaware
corporation.
"Outstanding" means, with respect to any Company Securities and any
Units, all Company Securities or Units that are issued by the Company or KMEP,
respectively, and reflected as outstanding on the books and records of the
Company (including the Transfer Agent) or KMEP (including any transfer agent),
respectively, as of the date of determination, excluding Company Securities and
Units held in the treasury; provided, however, that if any Listed Shares are
Beneficially Owned:
(a) by any Person or Group, excluding the Record Holders of
Voting Shares and their Affiliates, if the sum of the number of Listed
Shares Beneficially Owned by such Person or Group plus the number of
Common Units Beneficially Owned by such Person or Group equals 20% or
more of the sum of the aggregate number of Listed Shares that are
issued by the Company and reflected as outstanding on the books and
records of the Company (including the Transfer Agent) as of the date of
determination, but not including Listed Shares held in the treasury,
plus the aggregate number of Common Units that are issued by KMEP and
reflected as outstanding on the books and records of KMEP (including
any transfer agent) as of the date of determination, but not including
Common Units held in the treasury; or
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(b) by the Record Holders of Voting Shares or their Affiliates
with respect to (i) a matter that is presented to the Record Holders of
Listed Shares pursuant to Subsection 4.3(c) in order to determine the
manner in which I-Units shall be voted with respect to (A) the proposed
removal of the general partner of KMEP, (B) any vote required to be
taken under Subsection 11.2(a) of the Partnership Agreement with
respect to the transfer of all, but not less than all, of the
Partnership Interest (as defined in the Partnership Agreement) of the
general partner of KMEP and the admission of any such transferee as a
general partner of KMEP, (C) a proposed amendment to the terms of the
I-Units pursuant to Subsection 15.2 of the Partnership Agreement that
would have a material adverse effect on the rights and preferences of
the I-Units in relation to other classes of Units, as determined in the
sole discretion of the Board of Directors, or (D) the proposed
withdrawal of the general partner of KMEP pursuant to Section 13.1(b)
of the Partnership Agreement, or (ii) a matter that the Record Holders
of Listed Shares vote upon pursuant to Subsection 4.3(d),
then such Listed Shares so Beneficially Owned pursuant to clauses (a) and (b)
above shall not be considered to be Outstanding for the purposes of Subsections
7.1(a)(ii) and 7.1(a)(iii) and Articles 8 and 9.
"Partnership Agreement" means the Third Amended and Restated Agreement
of Limited Partnership of KMEP to be dated as of May 18, 2001, as amended,
supplemented or restated from time to time.
"Partnerships" means KMEP and the Operating Partnerships.
"Person" means a natural person or an Entity.
"Purchase Provisions" means the Purchase Provisions executed and
adopted by KMI and attached hereto as Annex B, as amended, supplemented or
restated from time to time, which are an integral part of this Agreement.
"Record Date" means the date established by the Board of Directors for
determining (a) the identity of the Record Holders entitled to notice of, or to
vote at, any meeting of the Shareholders or entitled to vote by ballot or give
approval of a Company action in writing without a meeting or entitled to
exercise rights in respect of any lawful action of the Shareholders, (b) the
identity of the Record Holders entitled to notice with respect to any other
matter, or (c) the identity of the Record Holders entitled to receive any
distribution, including a Share Distribution.
"Record Holder" means the Person in whose name a Company Security is
registered on the books and records of the Company or the Transfer Agent as
contemplated in Section 3.5.
"Registration Rights Agreement" means the Registration Rights Agreement
to be dated as of May 18, 2001 among KMEP, KMI and the Company, as amended,
supplemented or restated from time to time.
"Securities Act" means the United States Securities Act of 1933, as
amended from time to time, and any successor to such statute and all rules and
regulations promulgated thereunder.
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"Securities and Exchange Commission" means the Securities and Exchange
Commission of the United States and any successor thereto.
"Share Distribution" means a distribution in respect of a Company
Security made or required to be made in an additional Company Security or a
fraction thereof to any Shareholder pursuant to the terms of the Company
Securities held by such Shareholder.
"Shareholder" means any Person admitted as a shareholder in accordance
with Subsection 3.1(a), but such term does not include any Person who has ceased
to be a Record Holder of any Company Security. Shareholders are "members" (as
such term is defined in the Act) of the Company.
"Shareholder Interest" means a limited liability company interest (as
such term is defined in the Act) of a Shareholder, including the right to
receive Share Distributions and other distributions from the Company, together
with all other rights, benefits and privileges enjoyed by the Shareholder (under
the Act, the Organizational Certificate, this Agreement or otherwise) in its
capacity as a Shareholder, including the right to vote, consent and approve, and
all obligations, duties and liabilities imposed on the Shareholder (under the
Act, the Organizational Certificate, this Agreement or otherwise) in its
capacity as a Shareholder.
"Tax Indemnification Agreement" means the Tax Indemnification Agreement
to be dated as of May 18, 2001 between KMI and the Company, as amended,
supplemented or restated from time to time.
"Trading Day" means, with respect to Listed Shares or Common Units, a
day on which the principal National Securities Exchange on which the Listed
Shares or Common Units, as the case may be, are listed is open for business or,
if the Listed Shares or Common Units, as the case may be, are not listed on any
National Securities Exchange, a day on which banking institutions in New York,
New York generally are open.
"Transfer Agent" means any bank, trust company or other Person
(including the Company or any Affiliate) appointed from time to time by the
Board of Directors to act as registrar and transfer agent for the Company
Securities. Initially, EquiServe Trust Company, N.A. shall be the Transfer Agent
for the Listed Shares.
"Treasury Regulations" means the regulations promulgated by the United
States Department of the Treasury pursuant to and in respect of provisions of
the Code. All references herein to sections of the Treasury Regulations shall
include any corresponding provisions of succeeding, similar, substitute,
proposed or final Treasury Regulations.
"Underwriters" means Xxxxxxx, Sachs & Co., Credit Suisse First Boston
Corporation, Xxxxxx Brothers Inc., Xxxx Xxxxxxxx Incorporated, and First Union
Securities, Inc., as representatives of the several underwriters named in
Schedule I to the Underwriting Agreement.
"Underwriting Agreement" means the Underwriting Agreement dated as of
May 14, 2001 among the Underwriters, the Company, the Organizational
Shareholder, KMI and KMEP, providing for the purchase of Listed Shares by the
Underwriters, as amended, supplemented or restated from time to time.
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"Unit" has the meaning assigned to it in the Partnership Agreement.
"Voting Share" has the meaning assigned to it in Subsection 4.1(a).
1.2 Construction. Unless the context requires otherwise:
(a) terms defined in Section 1.1 have the meanings assigned to
them in that Section for purposes of this Agreement; terms defined in
the Purchase Provisions and also in this Agreement shall in the
Purchase Provisions have the meanings ascribed to them therein;
(b) the gender (or lack of gender) of all words used in this
Agreement includes the masculine, feminine and neuter;
(c) references to Articles, Sections and Subsections (other than
in connection with the Code, the Treasury Regulations or the Act) refer
to Articles, Sections and Subsections, respectively, of this Agreement;
(d) the words "herein," "hereof," "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any
particular Article, Section or Subsection, except as otherwise provided
in the Purchase Provisions;
(e) "include," "includes" and "including" mean "include, without
limitation," "includes, without limitation" and "including, without
limitation," respectively;
(f) terms defined herein include the plural as well as the
singular; and
(g) "or" is not exclusive.
ARTICLE 2
Organization
2.1 Continuation. The Company was organized as a Delaware limited
liability company by the filing of a Certificate of Formation on February 14,
2001, as amended by a Certificate of Amendment filed on February 16, 2001 (as
amended, supplemented or restated from time to time, the "Organizational
Certificate"), pursuant to the Act. The Organizational Shareholder, as the
initial Shareholder, hereby continues the existence of the Company as a limited
liability company pursuant to the provisions of the Act.
2.2 Name. The name of the Company is "Xxxxxx Xxxxxx Management, LLC"
and all Company business must be conducted in that name or such other names that
comply with Law and as the Board of Directors may select.
2.3 Registered Office; Registered Agent; Principal Office; Other
Offices. The registered office of the required by the Act to be maintained in
the State of Delaware shall be the office of the initial registered agent for
service of process named in the Organizational Certificate or such other office
(which need not be a place of business of the Company) as the Board of Directors
may designate in the manner provided by Law. The
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registered agent for service of process of the Company in the State of Delaware
shall be the initial registered agent for service of process named in the
Organizational Certificate or such other Person or Persons as the Board of
Directors may designate in the manner provided by Law. The principal office of
the Company in the United States shall be located at One Xxxxx Center, Suite
1000, 000 Xxxxxx Xxxxxx, Xxxxxxx, Xxxxx 00000, or such other place as the Board
of Directors may from time to time designate, which need not be in the State of
Delaware, and the Company shall maintain records there and shall keep the street
address of such principal office at the registered office of the Company in the
State of Delaware. The Company may have such other offices as the Board of
Directors may designate.
2.4 Purpose; Powers. The purposes of the Company are to be a limited
partner in KMEP, to manage and control, directly or through one or more
Affiliates, the business and affairs of KMEP and the Operating Partnerships
pursuant to the Delegation of Control Agreement and to engage in any lawful
business, purpose or activity related thereto. The Company shall possess and may
exercise all the powers and privileges granted by the Act, by any other Law or
by this Agreement, together with any powers incidental thereto, including such
powers and privileges as are necessary or convenient to the conduct, promotion
or attainment of the business, purposes or activities of the Company.
2.5 Foreign Qualification. Prior to the Company's conducting business
in any jurisdiction other than Delaware, the Board of Directors shall cause the
Company to comply, to the extent procedures are available and those matters are
reasonably within the control of the Board of Directors, with all requirements
necessary to qualify the Company as a foreign limited liability company in that
jurisdiction.
2.6 Power of Attorney.
(a) Each Shareholder does hereby constitute and appoint each
Person specifically authorized by the Board of Directors to act as its
true and lawful representative and attorney-in-fact, in its name, place
and stead, to make, execute, sign, deliver and file (i) any amendment
of the Organizational Certificate; (ii) this Agreement and any
amendment to this Agreement, including any amendment to the Purchase
Provisions, made in accordance with the terms of this Agreement; and
(iii) all such other instruments, documents and certificates that may
from time to time be required by Law to effectuate, implement and
continue the valid and subsisting existence of the Company or to
dissolve the Company or for any other purpose consistent with this
Agreement and the transactions contemplated hereby.
(b) The foregoing power of attorney is hereby declared to be
irrevocable and a power coupled with an interest, and it shall survive
and not be affected by the subsequent death, incompetency, disability,
incapacity, dissolution, bankruptcy or termination of any Shareholder
and the transfer of all or any portion of such Shareholder's
Shareholder Interest, and shall extend to all Assignees. Each
Shareholder hereby agrees to be bound by any representation made by the
Board of Directors or any Person authorized by the Board of Directors
acting in good faith pursuant to such power of attorney, and each
Shareholder hereby waives any and all defenses that may be available to
contest, negate or disaffirm the action of the Board of Directors or
such authorized Person taken in good
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faith under such power of attorney. Each Shareholder shall execute and
deliver to the Board of Directors or such authorized Person, within 15
days after receipt of a request therefor from the Board of Directors or
such authorized Person, such further designation, powers of attorney
and other instruments as the Board of Directors or such authorized
Person deems necessary to effectuate this Agreement and the purposes of
the Company.
2.7 Term. The term of the Company commenced on February 14, 2001,
which was the date of the filing of the Organizational Certificate in the office
of the Secretary of State of the State of Delaware, and the Company's existence
shall be perpetual, unless and until the Company is dissolved in accordance with
Article 7.
2.8 Taxation as Corporation; No State-Law Partnership. The Company
shall elect pursuant to Sections 301.7701-2 and 301.7701-3 of the Treasury
Regulations to be treated as a corporation for all purposes under the Code. The
Shareholders intend that the Company not be a partnership (including a limited
partnership) or joint venture, that no Shareholder be a partner or joint
venturer of any other Shareholder, and that this Agreement may not be construed
to suggest otherwise.
2.9 Title to Company Assets. Title to Company assets, whether real,
personal or mixed and whether tangible or intangible, shall be deemed to be
owned by the Company as an entity, and no Shareholder, Director or Officer,
individually or collectively, shall have any ownership interest in such Company
assets or any portion thereof. Title to any or all of the Company assets may be
held in the name of the Company or one or more of its Affiliates or one or more
nominees, as the Board of Directors may determine. All Company assets shall be
recorded as the property of the Company in its books and records, irrespective
of the name in which record title to such Company assets is held.
ARTICLE 3
Shareholders; Certificates;
Transfer of Company Securities
3.1 Shareholders.
(a) A Person shall be admitted as a Shareholder, and shall become
bound by this Agreement, if such Person executes this Agreement or,
without such execution, if such Person purchases or otherwise acquires
a Company Security and becomes the Record Holder of such Company
Security in accordance with the provisions of Section 3.5. Unless
otherwise provided in this Agreement, a Person may become a Record
Holder without the consent or approval of any of the Shareholders. All
rights of Shareholders under this Agreement are owned, and may be
exercised, only by Record Holders.
(b) The name and mailing address of each Record Holder shall be
listed on the books and records of the Company or the Transfer Agent.
The Secretary of the Company shall be required to update the books and
records from time to time as necessary to reflect accurately the
information therein or to cause the Transfer Agent to
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do so, as applicable. Company Securities shall be represented by the
Certificates held by the Shareholders, except as provided in Subsection
3.4(b).
3.2 No Liability to Third Parties. No Record Holder, Shareholder or
Beneficial Owner of any Company Security shall be liable for the debts,
obligations or liabilities of the Company, whether arising in contract, tort or
otherwise, by reason of being a Record Holder, Shareholder or Beneficial Owner.
3.3 No Expulsion. A Shareholder may not be expelled or removed as a
Shareholder.
3.4 Certificates.
(a) Certificates evidencing any of the Company Securities
("Certificates") shall be in such form, not inconsistent with that
required by the Act or any other Law and this Agreement, as shall be
approved by the Board of Directors. Each Certificate shall certify the
number of Company Securities and the class of such Company Securities
which the Certificate represents and shall be signed by (i) the
Chairman of the Board, the President or any Vice President and (ii) the
Secretary, any Assistant Secretary, the Treasurer or any Assistant
Treasurer of the Company and countersigned by the Transfer Agent (in
the event that the Company is not the Transfer Agent); provided,
however, that any or all of the signatures, including the
countersignature, on the Certificate may be facsimile. In the event
that any Officer or Transfer Agent who shall have signed, or whose
facsimile signature or signatures shall have been placed upon, any such
Certificate shall have ceased to be such Officer or Transfer Agent
before such Certificate is issued by the Company, such Certificate may
nevertheless be issued by the Company with the same effect as if such
person were such Officer or Transfer Agent on the date of issue.
Certificates for each class of Company Securities shall be
consecutively numbered and shall be entered in the books and records of
the Company as they are issued and shall exhibit the holder's name and
number of Company Securities, except as provided in Subsection 3.4(b).
No Certificate shall be valid for any purpose until it has been
countersigned by the Transfer Agent (in the event that the Company is
not the Transfer Agent).
(b) The Company Securities may be represented by global
certificates issued in the name of Cede & Co. (or such other name as
the depositary may direct), as nominee for the Depositary Trust
Company, as depositary for the Company Securities, and Certificates
shall not be issued to owners of beneficial interests in global
certificates held by the depositary. Any provision herein calling for
delivery of Certificates for Company Securities may be satisfied by
delivering such Company Securities by book-entry transfer to such
owners of beneficial interests at an account maintained for that
purpose by the Transfer Agent with the depositary, in accordance with
arrangements among the depositary and its participants and subject to
the various policies and procedures that may be adopted by the
depositary from time to time.
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3.5 Register, Registration of Transfer and Exchange.
(a) The Company shall keep or cause to be kept on behalf of the
Company a register that, subject to any requirement of the Board of
Directors and subject to the provisions of Subsection 3.5(b), shall
provide for the registration and transfer of Company Securities. The
Transfer Agent is hereby appointed registrar and transfer agent for the
purpose of registering Company Securities and transfers of Company
Securities as herein provided. At any time the Transfer Agent may
resign, by notice to the Board of Directors, or may be removed, with or
without cause, by the Board of Directors. Such resignation or removal
shall be effective upon the earlier of (i) the appointment by the Board
of Directors of a successor Transfer Agent and the acceptance by such
successor of such appointment, or (ii) the 30th day after notice of
such resignation or removal was given, whereupon the Company shall act
as the Transfer Agent until a successor is appointed. The Company shall
not recognize transfers of Company Securities unless the same are
effected in the manner described in this Section 3.5. Upon surrender
for registration of transfer of any Certificate, and subject to the
provisions of Subsection 3.5(b), the appropriate Officers of the
Company shall execute, and the Transfer Agent shall countersign and
deliver, in the name of the holder or the designated transferee or
transferees, as required pursuant to the Record Holder's instructions,
one or more new Certificates evidencing the same aggregate number and
type of Company Securities as were evidenced by the Certificate so
surrendered.
(b) The Company shall not recognize any transfer of Company
Securities until (i) the Certificates evidencing such Company
Securities are surrendered to the Transfer Agent for registration of
transfer or (ii) such Company Securities are delivered by book-entry
transfer to the Shareholder in accordance with Section 3.4(b). No
charge shall be imposed by the Company for such transfer; provided,
however, that, as a condition to the issuance of any new Certificate
under this Section 3.5, the Company may require the payment of a sum
sufficient to cover any tax or other governmental charge, surety bond
premium, special charges for services requested by the transferor or
transferee, or similar fees or charges that may be imposed with respect
thereto.
(c) By transfer of Company Securities in accordance with this
Section 3.5, the transferor shall be deemed to have given the
transferee the right to be admitted to the Company as a Shareholder,
and each transferee of Company Securities (including any nominee holder
or an agent acquiring such Company Securities for the account of
another Person) shall become a Shareholder with respect to the Company
Securities so transferred to such Person when any such transfer and
admission is reflected in the books and records of the Transfer Agent,
and such Person thereby becomes a Record Holder of such Company
Securities.
(d) The Company shall be entitled to recognize the Record Holder
as the owner of Company Securities and, accordingly, shall not be bound
to recognize any equitable or other claim to or interest in such
Company Securities on the part of any other Person, whether or not the
Company shall have actual or other notice thereof, except as otherwise
provided by Law. Except as otherwise provided in this Agreement or by
Law, including the Securities Act, Company Securities shall be freely
transferable to any
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Person. The transfer of any Company Securities and the admission of any
new Shareholder shall not constitute an amendment to this Agreement.
(e) Any Share Distribution or other distribution in respect of
Company Securities shall be made by the Company, directly or through
the Transfer Agent or through any other Person or agent, only to the
Record Holders thereof as of the Record Date set by the Board of
Directors for the Share Distribution or other distribution. The making
of such Share Distribution or other distribution shall constitute full
payment and satisfaction of the Company's liability in respect of such
Share Distribution or other distribution regardless of any claim of any
Person who may have an interest in such Share Distribution or other
distribution by reason of an assignment or otherwise.
3.6 Mutilated, Destroyed, Lost or Stolen Certificates.
(a) If any mutilated Certificate is surrendered to the Transfer
Agent, then the appropriate Officers on behalf of the Company shall
execute, and upon the Company's request the Transfer Agent shall
countersign and deliver in exchange for, a new Certificate evidencing
the same aggregate number and type of Company Securities as the
Certificate so surrendered.
(b) The appropriate Officers on behalf of the Company shall
execute, and upon the Company's request the Transfer Agent shall
countersign and deliver, a new Certificate in place of any Certificate
previously issued if the Record Holder of the Certificate:
(i) makes proof by affidavit in form and substance
satisfactory to an Officer that a previously issued Certificate
has been lost, destroyed or stolen;
(ii) requests the issuance of a new Certificate before the
Company has notice that the Certificate has been acquired by a
purchaser for value in good faith and without notice of an
adverse claim;
(iii) if requested, delivers to the Company a bond, in form
and substance satisfactory to the Company, with surety or
sureties and with fixed or open penalty as the Company may
reasonably direct, in its sole discretion, to indemnify the
Company and the Transfer Agent against any claim that may be made
on account of the alleged loss, destruction or theft of the
Certificate; and
(iv) satisfies any other reasonable requirements imposed by
the Company, including the requirement to make a payment pursuant
to Subsection 3.6(c).
If a Shareholder fails to notify the Company within a reasonable time
after such Shareholder has notice of the loss, destruction or theft of a
Certificate, and a transfer of the Company Securities represented by the
Certificate is registered before the Company or the Transfer Agent receives such
notification, the Shareholder shall be precluded from making any claim against
the Company or the Transfer Agent for such transfer or for a new Certificate.
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(c) As a condition to the issuance of any new Certificate under
this Section 3.6, the Company may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be
imposed in relation thereto and any other expenses (including the fees
and expenses of the Transfer Agent) reasonably connected therewith.
ARTICLE 4
Authorization and Issuance of Company Securities
4.1 Company Securities.
(a) The Company shall have authority to issue an unlimited number
of Company Securities, including Company Securities with the rights set
forth in Section 4.2 (the "Voting Shares") and Company Securities with
the rights set forth in Section 4.3 and the Purchase Provisions (the
"Listed Shares"). Subject to the requirements of the Act and other
applicable Law, the Board of Directors shall have the power to cause
the Company to issue additional Listed Shares and Voting Shares. The
Board of Directors shall also have the power to cause the Company to
issue shares into which the interest in the Company may be further
divided other than the Voting Shares and the Listed Shares, subject to
the requisite approval by the Record Holders of Listed Shares pursuant
to Subsection 4.3(d)(ii).
(b) The total number of Company Securities that are issued by the
Company and reflected as outstanding on the books and records of the
Company (including the Transfer Agent) as of the date of determination,
excluding Company Securities held in the treasury, shall at all times
equal the number of I-Units held by the Company. If the number of
I-Units held by the Company increases or decreases, the Company shall
by the same number increase or decrease, as the case may be, the number
of Company Securities that are issued by the Company and reflected as
outstanding on the books and records of the Company (including the
Transfer Agent) as of the date of determination, excluding Company
Securities held in the treasury, (i) in the event of an increase in the
number of I-Units, by making to each Record Holder of Company
Securities a pro rata Share Distribution or by effecting a split of
Company Securities pursuant to Section 4.5, or (ii) in the event of a
decrease in the number of I-Units, by effecting a combination of
Company Securities pursuant to Section 4.5.
(c) Company Securities issued as Share Distributions or issued
for such consideration as the Board of Directors determines to be
appropriate shall be deemed to be fully paid, and except to the extent
specified in Section 18-607(b) of the Act, non-assessable if the entire
amount of such consideration has been received by the Company for such
Company Securities.
4.2 Voting Shares.
(a) Prior to the execution of this Agreement, one (1) Voting
Share was issued to the Organizational Shareholder. The Organizational
Shareholder and its Affiliates shall be the sole Record Holders of
Voting Shares. The designations, preferences and relative,
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participating, optional or other special rights, powers and duties
relating to the Voting Shares are as set forth in this Section 4.2.
Each Voting Share shall be identical in every respect with each other
Voting Share.
(b) The Record Holders of Voting Shares shall be entitled to one
vote per Voting Share on matters submitted to a vote or consent of the
Record Holders of Voting Shares, as provided in Subsection 4.2(d) and
elsewhere in this Agreement; provided, however, that neither any Record
Holder of Voting Shares nor any of its Affiliates may vote any Voting
Shares with respect to a matter that is presented to the Record Holders
of Voting Shares pursuant to Subsection 4.2(d) in order to determine
the manner in which I-Units shall be voted with respect to (i) the
proposed removal of the general partner of KMEP under Section 13.2 of
the Partnership Agreement, (ii) any vote required to be taken under
Section 11.2(a) of the Partnership Agreement with respect to the
transfer of all, but not less than all, of the Partnership Interest (as
defined in the Partnership Agreement) of the general partner of KMEP
and the admission of any such transferee as a general partner of KMEP,
(iii) a proposed amendment to the terms of the I-Units pursuant to
Subsection 15.2 of the Partnership Agreement that would have a material
adverse effect on the rights and preferences of the I-Units in relation
to other classes of Units, as determined in the sole discretion of the
Board of Directors, or (iv) the proposed withdrawal of the general
partner of KMEP pursuant to Section 13.1(b)(i) of the Partnership
Agreement.
(c) Except as otherwise provided in Subsection 4.1(b) and Section
4.5, a Share Distribution in respect of each Voting Share shall be made
only in the event that (i) KMEP makes a cash distribution in respect of
each Common Unit and makes a corresponding distribution of an
additional I-Unit, or fraction thereof, in respect of each I-Unit, or
(ii) in a merger, consolidation, exchange, reorganization,
recapitalization or similar transaction the record holders of Common
Units and Class B Units receive a cash distribution and the record
holder of I-Units receives a corresponding distribution of additional
I-Units, or fractions thereof; and no other Share Distribution shall be
made in respect of Voting Shares. Such Share Distribution in respect of
each Voting Share shall be made on the date on which KMEP makes a cash
distribution in respect of each Common Unit. Each such Share
Distribution per Voting Share shall be an additional Voting Share, or a
fraction thereof, equal to the amount of the cash distribution made by
KMEP in respect of each Common Unit divided by the Average Market Price
per Listed Share. Except as otherwise provided in Section 7.2, no
distribution in respect of Voting Shares shall be made in cash. Each
fractional Voting Share that is created as a result of any Share
Distribution in respect of Voting Shares pursuant to this Subsection
4.2(c) shall be equal to and represented by a fraction that is
calculated to six decimal places (without rounding), and any
calculation that would result in a fractional interest in excess of
one-millionth (1/1,000,000) of a Voting Share shall be disregarded
without payment or other consideration and shall not be accumulated.
Each Voting Share or fraction thereof issued as a Share Distribution
shall bear a date of original issuance which is the same as the date on
which such Share Distribution was made and shall be duly authorized,
fully paid and nonassessable. The Company shall identify the Record
Holders entitled to receive any Share Distributions pursuant to this
Subsection 4.2(c) in accordance with Section 3.5.
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(d) The Partnership Agreement provides that, except with respect
to certain matters, including certain amendments to the Partnership
Agreement, the transfer of all, but not less than all, of the
Partnership Interest (as defined in the Partnership Agreement) of the
general partner of KMEP, the withdrawal of the general partner of KMEP
and the treatment of KMEP as an association taxable as a corporation or
other entity for federal income tax purposes, I-Units, Class B Units
and Common Units are entitled to vote together as a single class, and
each I-Unit is entitled to one vote. The Company or the Board of
Directors shall submit to the vote of the Record Holders of Voting
Shares any matter on which the Company is entitled to vote as a record
holder of I-Units in order to ascertain the manner in which such
I-Units shall be voted. For each Voting Share or fraction thereof that
has been voted "for" the matter presented to the Record Holders of
Voting Shares, the Company shall vote one I-Unit or an equivalent
fraction "for" such corresponding matter when presented to the record
holder of I-Units, such that the number of Voting Shares voted "for"
such matter presented to the Record Holders of Voting Shares, in
addition to the number of Listed Shares voted "for" such matter
presented to the Record Holders of Listed Shares pursuant to Subsection
4.3(c), shall equal the number of I-Units voting "for" such
corresponding matter when presented to the record holder of I-Units.
For each Voting Share or fraction thereof that has been voted "against"
the matter presented to the Record Holders of Voting Shares, the
Company shall vote one I-Unit or an equivalent fraction "against" such
matter when presented to the record holder of I-Units, such that the
number of Voting Shares voted "against" such matter presented to the
Record Holders of Voting Shares, in addition to the number of Listed
Shares voted "against" such matter presented to the Record Holders of
Listed Shares pursuant to Subsection 4.3(c), shall equal the number of
I-Units voting "against" such corresponding matter when presented to
the record holder of I-Units. For each Voting Share or fraction thereof
that has abstained from the vote or has not been voted, whether by
broker non-vote or otherwise, on the matter presented to the Record
Holders of Voting Shares, the Company shall abstain from voting one
I-Unit or an equivalent fraction on such matter when presented to the
record holder of I-Units, such that the number of Voting Shares that
have abstained from voting or have not been voted on such matter
presented to the Record Holders of Voting Shares, in addition to the
number of Listed Shares that have abstained from voting or have not
been voted on such matter presented to the Record Holders of Listed
Shares pursuant to Subsection 4.3(c), shall equal the number of I-Units
abstaining from voting on such corresponding matter when presented to
the record holder of I-Units.
4.3 Listed Shares.
(a) As of the Closing Date, there shall be Outstanding 14,875,000
Listed Shares, and, in the event that the Underwriters exercise their
option to purchase additional Listed Shares pursuant to the
Underwriting Agreement, there shall be Outstanding up to 17,106,250
Listed Shares. The Listed Shares shall initially be listed on a
National Securities Exchange. The designations, preferences and
relative, participating, optional or other special rights, powers and
duties relating to the Listed Shares are as set forth in this Section
4.3. Each Listed Share shall be identical in every respect with each
other Listed Share.
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(b) The Record Holders of Listed Shares, in their capacity as
such, shall not be entitled to vote except that each Record Holder of
Listed Shares shall be entitled to one vote per Listed Share on any
matter submitted by the Company to the Record Holders of Listed Shares
pursuant to Subsections 4.3(c) or (d) or Article 9 of this Agreement or
Section 8 of the Purchase Provisions, subject to Subsection 4.3(e).
(c) The Partnership Agreement provides that, except with respect
to certain matters, including certain amendments to the Partnership
Agreement, the transfer of all, but not less than all, of the
Partnership Interest (as defined in the Partnership Agreement) of the
general partner of KMEP, the withdrawal of the general partner of KMEP
and the treatment of KMEP as an association taxable as a corporation or
other entity for federal income tax purposes, the I-Units, Class B
Units and Common Units are entitled to vote together as a single class,
and each I-Unit is entitled to one vote. The Company or the Board of
Directors shall submit to the vote of the Record Holders of Listed
Shares entitled to vote any matter on which the Company is entitled to
vote as a record holder of I-Units in order to ascertain the manner in
which such I-Units shall be voted. For each Listed Share or fraction
thereof that has been voted "for" the matter presented to Record
Holders of Listed Shares entitled to vote thereon, the Company shall
vote one I-Unit or an equivalent fraction "for" such corresponding
matter when presented to the record holder of I-Units, such that the
number of Listed Shares voted "for" such matter presented to the Record
Holders of Listed Shares, in addition to the number of Voting Shares
voted "for" such matter presented to the Record Holders of Voting
Shares pursuant to Subsection 4.2(d), shall equal the number of I-Units
voting "for" such corresponding matter when presented to the record
holder of I-Units. For each Listed Share or fraction thereof that has
been voted "against" the matter presented to Record Holders of Listed
Shares entitled to vote thereon, the Company shall vote one I-Unit or
an equivalent fraction "against" such matter when presented to the
record holder of I-Units, such that the number of Listed Shares voted
"against" such matter presented to the Record Holders of Listed Shares,
in addition to the number of Voting Shares voted "against" such matter
presented to the Record Holders of Voting Shares pursuant to Subsection
4.2(d), shall equal the number of I-Units voting "against" such
corresponding matter when presented to the record holder of I-Units.
For each Listed Share or fraction thereof that has abstained from the
vote or has not been voted, whether by broker non-vote or otherwise, on
the matter presented to Record Holders of Listed Shares entitled to
vote thereon, the Company shall abstain from voting one I-Unit or an
equivalent fraction on such matter when presented to the record holder
of I-Units, such that the number of Listed Shares that have abstained
from voting or have not been voted on such matter presented to the
Record Holders of Listed Shares, in addition to the number of Voting
Shares that have abstained from voting or have not been voted on such
matter presented to the Record Holders of Voting Shares pursuant to
Subsection 4.2(d), shall equal the number of I-Units abstaining from
voting on such corresponding matter when presented to the record holder
of I-Units.
(d) The Company or the Board of Directors shall submit to the
vote of Record Holders of Listed Shares entitled to vote thereon, in
addition to the matters referred to in Subsection 4.3(c), (i) any
matter for which the approval of the Record Holders of Listed Shares is
required pursuant to Article 9, (ii) any proposed issuance of any new
shares into
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which the interest in the Company may be divided other than the Voting
Shares and the Listed Shares, and (iii) any proposed amendment to, or
alteration or repeal of, this Agreement, including the Purchase
Provisions, the Registration Rights Agreement, the Delegation of
Control Agreement, or the Tax Indemnification Agreement if such
proposed amendment, alteration or repeal would (A) reduce the time for
any notice to which Record Holders of Listed Shares would be entitled,
or (B) have a material adverse effect on the rights or preferences of
Listed Shares, as determined in the sole discretion of the Board of
Directors; provided, however, that any of the following amendments
shall not be deemed to have a material adverse effect on the rights and
preferences of Listed Shares: (1) any amendment that is necessary or
desirable to comply with applicable Law, compliance with which the
Board of Directors determines in its sole discretion to be in the best
interests of the Company and the Shareholders, and (2) any amendment
that is required to effect the intent of the provisions of this
Agreement or is otherwise contemplated by this Agreement.
(e) The following Persons or Groups, as the case may be, shall
not be entitled to vote in their capacities as Record Holders of Listed
Shares: (i) any Person or Group, excluding the Record Holders of Voting
Shares and their Affiliates, if the sum of the number of Listed Shares
Beneficially Owned by such Person or Group plus the number of Common
Units Beneficially Owned by such Person or Group equals 20% or more of
the sum of the aggregate number of Listed Shares that are Outstanding
plus the aggregate number of Common Units that are Outstanding, and
(ii) the Record Holders of Voting Shares and their Affiliates with
respect to (A) a matter that is presented to the Record Holders of
Listed Shares pursuant to Subsection 4.3(c) in order to determine the
manner in which I-Units shall be voted with respect to (1) the proposed
removal of the general partner of KMEP under Section 13.2 of the
Partnership Agreement, (2) any vote required to be taken under Section
11.2(a) of the Partnership Agreement with respect to the transfer of
all, but not less than all, of the Partnership Interest (as defined in
the Partnership Agreement) of the general partner of KMEP and the
admission of any such transferee as a general partner of KMEP, (3) a
proposed amendment to the terms of the I-Units pursuant to Subsection
15.2 of the Partnership Agreement that would have a material adverse
effect on the rights and preferences of the I-Units in relation to
other classes of Units, as determined in the sole discretion of the
Board of Directors, or (4) the proposed withdrawal of the general
partner of KMEP pursuant to Section 13.1(b)(i) of the Partnership
Agreement, and (B) a matter that is presented to the Record Holders of
Listed Shares pursuant to Subsection 4.3(d).
(f) Except as otherwise provided in Subsection 4.1(b) and Section
4.5, a Share Distribution in respect of each Listed Share shall be made
only in the event that (i) KMEP pays a cash distribution in respect of
each Common Unit and pays a corresponding distribution of additional
I-Units, or fractions thereof, in respect of the I-Units, or (ii) in a
merger, consolidation, exchange, reorganization, recapitalization or
similar transaction, the record holders of Common Units and Class B
Units receive a cash distribution and the record holder of I-Units
receives a corresponding distribution of additional I-Units, or
fractions thereof; and no other Share Distribution shall be made in
respect of each Listed Share. Except as provided in the Purchase
Provisions, such Share Distribution in respect of each Listed Share
shall be made on the date on which KMEP
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makes a cash distribution in respect of each Common Unit. Each such
Share Distribution per Listed Share shall be an additional Listed
Share, or a fraction thereof, equal to the amount of the cash
distribution made by KMEP in respect of each Common Unit divided by the
Average Market Price per Listed Share. Except as otherwise provided in
Subsection 7.2(b), no distribution in respect of Listed Shares shall be
made in cash. Each fractional Listed Share that is created as a result
of any Share Distribution in respect of Listed Shares pursuant to this
Subsection 4.3(f) shall be equal to and represented by a fraction that
is calculated to six decimal places (without rounding), and any
calculation that would result in a fractional interest in excess of
one-millionth (1/1,000,000) of a Listed Share shall be disregarded
without payment or other consideration and shall not be accumulated.
Each Listed Share or fraction thereof issued as a Share Distribution
shall bear a date of original issuance which is the same as the date on
which such Share Distribution was made and shall be duly authorized,
fully paid and nonassessable. The Company shall identify the Record
Holders entitled to receive any Share Distribution in accordance with
Section 3.5.
(g) Under certain circumstances set forth in the Purchase
Provisions, Shareholders may be required to sell their Listed Shares to
the Purchaser (as defined in the Purchase Provisions). The Purchase
Provisions also set forth the rights of the Record Holders of Listed
Shares to any distributions, including Share Distributions, on Listed
Shares that have been declared (or a record date for which has been
set) but that have not been paid or made. The Purchase Provisions are
attached as Annex B and are an integral part of this Agreement.
(h) Fractions of Listed Shares shall not be sold on a National
Securities Exchange until they equal, in the aggregate, whole Listed
Shares.
4.4 Splits and Combinations. The Board of Directors may make a pro
rata distribution of Company Securities to all Record Holders or may effect a
subdivision or combination of Company Securities; provided, however, that after
such distribution, subdivision or combination, each Shareholder shall have the
same relative Shareholder Interest as before such distribution, subdivision or
combination. In the event that (a) KMEP makes a pro rata distribution of KMEP
securities to the record holder of all I-Units, (b) KMEP effects a subdivision
or combination of the I-Units, or (c) KMEP is involved in a merger or similar
transaction which has the effect of converting, subdividing or combining the
I-Units, then the Board of Directors shall be required to make a corresponding
distribution, adjustment, conversion, subdivision or combination of the Company
Securities so that the number of outstanding I-Units and the aggregate number of
Company Securities that are issued by the Company and reflected as outstanding
on the books and records of the Company (including the Transfer Agent) as of the
date of determination, excluding Company Securities held in the treasury, shall
always be equal. Each fractional Company Security that is created as a result of
any distribution, subdivision or combination pursuant to this Section 4.5 shall
be equal to and represented by a fraction that is calculated to six decimal
places (without rounding), and any calculation that would result in a fractional
interest in excess of one-millionth (1/1,000,000) of a Company Security shall be
disregarded without payment or other consideration and shall not be accumulated.
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4.5 Withholding. Notwithstanding any other provision of this Agreement,
the Company shall comply with any withholding requirements under any Law in
connection with the payment of Share Distributions and other distributions in
respect of Company Securities and shall remit amounts withheld to and file
required forms with applicable taxing authorities. In the event of any claimed
over-withholding, Shareholders shall be limited to an action against the
applicable taxing authority. If an amount required to be withheld was not
withheld from an actual Share Distribution or other distribution, the Company
may reduce subsequent Share Distributions or other distributions by the amount
of such required withholding. Each Shareholder agrees to furnish the Company
such forms or other documentation as are necessary to assist the Company in
determining the extent of, and in fulfilling, its withholding obligations.
ARTICLE 5
Management
5.1 Management of the Company's Affairs.
(a) As provided in this Agreement, all management powers over the
business and affairs of the Company shall be vested exclusively in a
board of directors (the "Board of Directors") and, subject to the
direction of the Board of Directors, the Officers. Officers and
Directors constitute "managers" of the Company within the meaning of
the Act.
(b) No Shareholder, in its capacity as a Shareholder, shall have
any management power over the business and affairs of the Company or
actual or apparent authority to enter into contracts on behalf of, or
to otherwise bind, the Company.
(c) The Board of Directors (subject to Section 5.3 and Article 9)
and the Officers (subject to Section 5.4 and the direction of the Board
of Directors) shall have full power and authority, in addition to the
powers that now or hereafter can be granted to managers under the Act
and to all other powers granted under any other provision of this
Agreement or the Partnership Agreement to do all things on such terms
as they, in their individual sole discretion, may deem necessary or
appropriate, to conduct, or cause to be conducted, the business and
affairs of the Company, except as set forth in the Delegation of
Control Agreement.
(d) It is expected that KMEP shall pay, or shall reimburse the
Company for the payment of, all expenses incurred by the Company,
including expenses in connection with (i) audits; (ii) filings with the
Securities and Exchange Commission and any state securities agency;
(iii) meetings of the Record Holders of Company Securities; (iv) the
preparation, filing and distribution of proxy materials; (v)
compensation to, and reimbursement of expenses incurred by, Officers
and Directors, as provided under Section 5.5; (vi) winding up, as
provided under Section 7.2; and (vii) foreign, state and local taxes
not paid or reimbursed pursuant to the Tax Indemnification Agreement.
However, to the extent that KMEP does not pay, or reimburse the Company
for the payment of, the aforementioned expenses, Organizational
Shareholder shall pay, or shall reimburse the Company for the payment
of, all such expenses.
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5.2 Board of Directors.
(a) Number. The number of Directors of the Company shall be
established from time to time by the Record Holders of Voting Shares.
Each Director shall be elected as provided in Subsection 5.2(b) and
shall serve in such capacity until his successor has been elected and
qualified or until such Director dies, resigns or is removed. The
initial Board of Directors shall consist of six Directors.
(b) Election of Directors; Term. The Record Holders of Voting
Shares shall elect annually, whether at a meeting of the Record Holders
of Voting Shares or by consent in accordance with Section 8.10, new
Directors or shall re-elect existing Directors, each to serve a
one-year term.
(c) Vacancies and Removal. Subject to applicable Law, vacancies
existing on the Board of Directors (including a vacancy created by
virtue of an increase in the size of the Board of Directors) shall be
filled by the Record Holders of Voting Shares or by the affirmative
vote of a majority of the Directors then serving, even if less than a
quorum. Each Director elected to fill any vacancy shall serve in such
capacity until his successor has been elected and qualified or until
such Director dies, resigns or is removed. Any Director, or the entire
Board of Directors, may be removed from office at any time, with or
without cause, but only by the approval of the Record Holders of Voting
Shares.
(d) Voting; Quorum; Required Vote for Action. Unless otherwise
required by the Act, other Law, or the provisions hereof:
(i) each member of the Board of Directors shall have one
vote;
(ii) the presence at a meeting of a majority of the members
of the Board of Directors shall constitute a quorum at any such
meeting for the transaction of business; and
(iii) the act of a majority of the members of the Board of
Directors present at a meeting at which a quorum is present shall
be deemed to constitute the act of the Board of Directors.
(e) Meetings. Regular meetings of the Board of Directors shall be
held at such times and places as shall be designated from time to time
by resolution of the Board of Directors. Notice of such regular
meetings shall not be required. Special meetings of the Board of
Directors or meetings of any committee thereof may be called by the
Chairman of the Board, the President (should the President be a
Director) or on the written request of any two Directors or committee
members, as applicable, by the Secretary, in each case on at least 24
hours personal, written, telegraphic, cable or wireless notice to each
Director or committee member, as applicable. Any such notice, or waiver
thereof, need not state the purpose of such meeting except as may
otherwise be required by Law. Attendance of a Director at a meeting
(including pursuant to the last sentence of this Subsection 5.2(e))
shall constitute a waiver of notice of such meeting, except where such
Director attends the meeting for the express purpose of objecting to
the transaction of any business on the ground that the meeting is not
lawfully called or
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convened. Any action required or permitted to be taken at a meeting of
the Board of Directors or any committee thereof may be taken without a
meeting, without prior notice and without a vote if a consent or
consents in writing, setting forth the action so taken, are signed by a
majority of the members of the Board of Directors or committee. Members
of the Board of Directors or any committee thereof may participate in
and hold a meeting by means of conference telephone, video conference
or similar communications equipment by means of which all Persons
participating in the meeting can hear each other, and participation in
such meetings shall constitute presence in person at the meeting.
(f) Committees. The Board of Directors, by a majority of the
whole Board of Directors, may appoint one or more other committees of
the Board of Directors to consist of two or more Directors, which
committee(s) shall have and may exercise such of the powers and
authority of the Board of Directors with respect to the management of
the business and affairs of the Company as may be provided in a
resolution of the Board of Directors. Any committee designated pursuant
to this Subsection 5.2(f) shall choose its own chairman, shall keep
regular minutes of its proceedings and report the same to the Board of
Directors when requested, shall fix its own rules or procedures and
shall meet at such times and at such place or places as may be provided
by such rules or by resolution of such committee or resolution of the
Board of Directors. At every meeting of any such committee, the
presence of a majority of all the members thereof shall constitute a
quorum and the act of a majority of such members present shall be
deemed to constitute the act of such committee. The Board of Directors
may designate one or more Directors as alternate members of any
committee who may replace any absent or disqualified member at any
meeting of such committee. In the absence or disqualification of a
member of a committee, the member or members present at any meeting and
not disqualified from voting, whether or not constituting a quorum, may
unanimously appoint another member of the Board of Directors to act at
the meeting in the place of the absent or disqualified member.
(g) Chairman. The Board of Directors shall elect a chairman of
the Board of Directors (the "Chairman of the Board"). The Chairman of
the Board, if present and acting, shall preside at all meetings of the
Board of Directors and of the Shareholders. Otherwise, the President,
if present, and a Director, or any other Director chosen by the Board
of Directors, shall preside. Unless the Board of Directors provides
otherwise, the Chairman of the Board shall be an Officer of the Company
and shall have the same power and authority as the President.
5.3 Restrictions on the Board of Directors' Authority. Except as
otherwise specifically provided in this Agreement or by resolution of the Board
of Directors, (1) no Director or group of Directors shall have any actual or
apparent authority to enter into contracts on behalf of, or to otherwise bind,
the Company, nor to take any action in the name of or on behalf of the Company
or conduct any business of the Company other than by action of the Board of
Directors taken in accordance with the provisions of this Agreement, and (2) no
Director shall have the power or authority to delegate to any Person such
Director's rights and powers as a Director to manage the business and affairs of
the Company.
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5.4 Officers.
(a) Generally. The Board of Directors shall appoint agents of the
Company, referred to as "Officers" of the Company, to serve in the
offices set forth in this Section 5.4. Unless provided otherwise by
resolution of the Board of Directors, the Officers shall have the
titles, power, authority and duties described below in this Section
5.4.
(b) Titles and Number. The Officers of the Company shall be the
Chairman of the Board, the President, any and all Vice Presidents, the
Secretary, the Treasurer, any and all Assistant Secretaries, and any
and all Assistant Treasurers and any other officer position or title as
the Board of Directors may desire. Any person may hold two or more
offices simultaneously.
(c) Appointment and Term of Office. The Officers shall be
appointed by the Board of Directors at such time and for such term as
the Board of Directors shall determine. Any Officer may be removed,
with or without cause, only by the Board of Directors. Vacancies in any
office may be filled only by the Board of Directors.
(d) Chairman of the Board. Subject to the limitations imposed by
this Agreement, any employment agreement, any employee plan or any
determination of the Board of Directors, the Chairman of the Board,
subject to the direction of the Board of Directors, shall preside at
all meetings of the Shareholders and the Board of Directors, shall
supervise generally the President and shall have full authority to
execute all documents and take all actions that the Company may legally
take. The Chairman of the Board shall exercise such other powers and
perform such other duties as may be assigned to him by this Agreement
or the Board of Directors, including any duties and powers stated in
any employment agreement approved by the Board of Directors.
(e) President. The President shall be the Chief Executive Officer
of the Company unless the Chairman of the Board is so designated, in
which event the President shall be the Chief Operating Officer of the
Company. In the absence of the Chairman of the Board, or if there be no
Chairman of the Board, he shall preside at all meetings of the
Shareholders and Directors. The Chief Executive Officer, whether the
Chairman of the Board or the President, shall be ex officio a member of
all standing committees, shall have general and active management and
control of the business and affairs of the Company subject to the
control of the Board of Directors, and shall see that all orders and
resolutions of the Board of Directors are carried into effect.
(f) Vice Presidents. In the absence of the President and the
Chairman of the Board, each Vice President appointed by the Board of
Directors shall have all of the powers and duties conferred upon the
President, including the same power as the President to execute
documents on behalf of the Company. Each such Vice President shall
perform such other duties and may exercise such other powers as may
from time to time be assigned to him by the Board of Directors, the
Chairman of the Board or the President.
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(g) Secretary and Assistant Secretaries. The Secretary shall
record or cause to be recorded in books provided for that purpose the
minutes of the meetings or actions of the Board of Directors and
Shareholders, shall see that all notices are duly given in accordance
with the provisions of this Agreement and as required by Law, shall be
custodian of all records (other than financial), shall see that the
books, reports, statements, certificates and all other documents and
records required by Law are properly kept and filed, and, in general,
shall perform all duties incident to the office of Secretary and such
other duties as may, from time to time, be assigned to him by this
Agreement, the Board of Directors, the Chairman of the Board or the
President. The Assistant Secretaries shall exercise the powers of the
Secretary during that Officer's absence or inability or refusal to act.
(h) Treasurer and Assistant Treasurers. The Treasurer shall keep
or cause to be kept the books of account of the Company and shall
render statements of the financial affairs of the Company in such form
and as often as required by this Agreement, the Board of Directors, the
Chairman of the Board or the President. The Treasurer, subject to the
order of the Board of Directors, shall have the custody of all funds
and securities of the Company. The Treasurer shall perform all other
duties commonly incident to his office and shall perform such other
duties and have such other powers as this Agreement, the Board of
Directors, the Chairman of the Board or the President shall designate
from time to time. The Assistant Treasurers shall exercise the power of
the Treasurer during that Officer's absence or inability or refusal to
act. Each of the Assistant Treasurers shall possess the same power as
the Treasurer to sign all certificates, contracts, obligations and
other instruments of the Company. If no Treasurer or Assistant
Treasurer is appointed and serving or in the absence of the appointed
Treasurer and Assistant Treasurer, such other Officer as the Board of
Directors shall select shall have the powers and duties conferred upon
the Treasurer.
(i) Powers of Attorney. The Company may xxxxx xxxxxx of attorney
or other authority as appropriate to establish and evidence the
authority of the Officers and other Persons.
(j) Delegation of Authority. Unless otherwise provided by
resolution of the Board of Directors, no Officer shall have the power
or authority to delegate to any Person such Officer's rights and powers
as an Officer to manage the business and affairs of the Company.
5.5 Compensation. The Officers shall receive such compensation for
their services as may be designated by the Board of Directors. In addition, the
Officers shall be entitled to be reimbursed for out-of-pocket costs and expenses
incurred in the course of their service hereunder. The members of the Board of
Directors who are not employees of the Company or any Affiliate thereof shall
receive such compensation for their services as Directors or committee members
as the Board of Directors shall determine. The members of the Board of Directors
who are employees of the Company or any Affiliate thereof shall receive no
compensation for their services as Directors or committee members. All the
members of the Board of Directors shall be entitled to be reimbursed for
out-of-pocket costs and expenses incurred in the course of their service
hereunder.
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5.6 Business Opportunities.
(a) No Indemnitee shall be expressly or implicitly restricted or
proscribed pursuant to this Agreement, by Law or otherwise from
engaging in other activities for profit, whether in the businesses
engaged in by the Company or any Shareholder or anticipated to be
engaged in by the Company or any Shareholder. Without limitation of and
subject to the foregoing, each Indemnitee shall have the right to
engage in businesses of every type and description and to engage in and
possess an interest in other business ventures of any and every type or
description, independently or with others, including, without
limitation, business interests and activities in direct competition
with the Company or any Shareholder, and none of the same shall breach
any duty to the Company or any Shareholder. Neither the Company, the
Shareholder nor any other Person shall have any rights by virtue of
this Agreement, by Law or otherwise in any business ventures of any
Indemnitee and such Indemnitees shall have no obligation to offer any
interest in any such business ventures to the Company, any Shareholder
or any other Person.
(b) Without limitation of Subsection 5.6(a), and notwithstanding
anything to the contrary in this Agreement, the competitive activities
of Indemnitees and the restrictions on the Company's activities
described in Section 2.4 are hereby approved by the Company and all
Shareholders, and it shall not be deemed to be a breach of the
fiduciary duty (if any such duty is owed) of the Board of Directors or
the Record Holders of Voting Shares for the Board of Directors or the
Record Holders of Voting Shares to permit an Indemnitee to engage in a
business opportunity in preference to or to the exclusion of the
Company or any other Shareholder, if such activities are permitted by
this Agreement.
5.7 Interested Officers or Directors. No contract or transaction
between the Company, on one hand, and the Record Holders of Voting Shares, any
Affiliate thereof or any other Entity, on the other, in which an Officer or
Director Beneficially Owns an interest or of which such Officer or Director is
an Affiliate, or between the Company, on one hand, and any of its Officers or
Directors, on the other, shall be void or voidable for this reason or because
the Officer or Director is present at or participates in the meeting of the
Board of Directors or committee thereof that authorizes the contract or
transaction, or because his vote is counted for such purpose, if such contract
or transaction is:
(a) approved by a committee of the Board composed solely of
members who have no interest in the contract or transaction;
(b) on terms no less favorable than those generally being
provided to or available from unrelated third parties, as determined in
the sole discretion of the Board of Directors; or
(c) fair, taking into account the totality of the relationships
between the parties involved, including other transactions between the
parties, as determined in the sole discretion of the Board of
Directors.
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5.8 Duties of Record Holders of Voting Shares and Directors.
(a) Except as otherwise provided in this Agreement, the Record
Holders of Voting Shares, the Directors and any of their Affiliates
shall have no obligations whatsoever, by virtue of the relationships
established pursuant to this Agreement, to take or refrain from taking
any action that may impact the Company, the Shareholders or any
Affiliate of the Company or a Shareholder.
(b) The provisions of this Agreement, including Sections 5.6, 5.7
and 5.8, constitute an agreement to restrict or eliminate fiduciary and
other duties pursuant to the provisions of Section 18-1101 of the Act.
5.9 Indemnification.
(a) The Indemnitees shall be entitled to mandatory
indemnification and shall be entitled to be held harmless by KMEP and
the Operating Partnerships to the extent and subject to the conditions
provided in Section 6 of the Delegation of Control Agreement with the
Organizational Shareholder, in its capacity as general partner of KMEP
and the Operating Partnerships, hereby deeming it advisable that such
indemnification and holding harmless shall (rather than may) be done
and provided by KMEP and the Operating Partnerships to the fullest
extent and subject to the conditions provided therein.
(b) To the extent that the indemnification provisions of Section
6 of the Delegation of Control Agreement do not fully hold harmless any
of the Indemnitees, then to the fullest extent permitted by Law but
subject to the limitations expressly provided in this Agreement, such
Indemnitees shall be indemnified and held harmless by the Company, to
the extent deemed advisable by the Board of Directors, from and against
any and all losses, claims, damages, liabilities, joint or several,
expenses (including legal fees and expenses), judgments, fines,
penalties, interest, settlements and other amounts arising from any and
all claims, demands, actions, suits or proceedings, whether civil,
criminal, administrative or investigative, in which any Indemnitee may
be involved, or is threatened to be involved, as a party or otherwise,
by reason of its status as (i) a Record Holder of Voting Shares or any
Affiliate thereof; (ii) an officer, director, employee, partner, agent
or trustee of a Record Holder of Voting Shares, the Company or any of
their Affiliates; or (iii) a Person serving at the request of the
Company in another Entity in a similar capacity, provided, that in each
case the Indemnitee acted or failed to act in good faith and in the
manner which such Indemnitee reasonably believed to be in, or not
opposed to, the best interests of the Company, and, with respect to any
criminal proceeding, had no reasonable cause to believe such conduct
was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction or upon a plea of nolo
contendere, or its equivalent, shall not create a presumption that the
Indemnitee acted in a manner contrary to that specified above. Any
indemnification pursuant to this Subsection 5.9(b) shall be made only
out of the assets of the Company, it being agreed that no Shareholder,
in its capacity as such, shall be personally liable for such
indemnification nor shall it have any obligation to contribute or loan
any monies or property to the Company to enable the Company to
effectuate such indemnification. The indemnification provided by this
Subsection 5.9(b) shall be secondary to any other rights
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to which an Indemnitee may be entitled as contemplated under the
Delegation of Control Agreement or any other agreement, pursuant to any
vote of the Record Holders of Voting Shares, as a matter of Law or
otherwise, both as to actions in the Indemnitee's capacity as (A) a
Record Holder of Voting Shares or an Affiliate thereof; (B) an officer,
director, employee, partner, agent or trustee of a Record Holder of
Voting Shares, the Company or any of their Affiliates; or (C) a Person
serving at the request of the Company in another Entity in a similar
capacity, and as to actions in any other capacity (including any
capacity under the Underwriting Agreement), and shall continue as to an
Indemnitee who has ceased to serve in such capacity and shall inure to
the benefit of the heirs, successors, assigns and administrators of the
Indemnitee.
(c) To the fullest extent permitted by Law, expenses (including
legal fees and expenses) incurred by an Indemnitee who is indemnified
pursuant to Subsections 5.9(a) or 5.9(b) in defending any claim,
demand, action, suit or proceeding shall, from time to time, be
advanced by the Company prior to the final disposition of such claim,
demand, action, suit or proceeding upon receipt by the Company of a
written undertaking by or on behalf of the Indemnitee to repay such
amount if it shall be determined that the Indemnitee is not entitled to
be indemnified as authorized in this Section 5.9.
(d) The Organizational Shareholder may purchase and maintain
insurance, on behalf of the Persons as the Board of Directors shall
determine, against any liability that may be asserted against, or
expense that may be incurred by, such Person in connection with the
Company's activities, regardless of whether the Company would have the
power to indemnify such Person against such liability under the
provisions of this Agreement.
(e) For purposes of this Section 5.9, the Company shall be deemed
to have requested an Indemnitee to serve as fiduciary of an employee
benefit plan whenever the performance by it of its duties to the
Company also imposes duties on, or otherwise involves services by, it
to the plan or participants or beneficiaries of the plan; excise taxes
assessed on an Indemnitee with respect to an employee benefit plan
pursuant to applicable law shall constitute "fines" for purposes of
indemnities contemplated by Subsections 5.9(a) and 5.9(b); and action
taken or omitted by it with respect to an employee benefit plan in the
performance of its duties for a purpose reasonably believed by it to be
in the interest of the participants and beneficiaries of the plan shall
be deemed to be for a purpose which is in, or not opposed to, the best
interests of the Company.
(f) In no event may an Indemnitee subject the Shareholders to
personal liability by reason of the indemnification provisions set
forth in this Agreement.
(g) An Indemnitee shall not be denied indemnification in whole or
in part contemplated under this Section 5.9 because the Indemnitee had
an interest in the transaction with respect to which the
indemnification applies if the transaction was otherwise permitted by
the terms of this Agreement.
(h) The provisions of this Section 5.9 are for the benefit of the
Indemnitees, their heirs, successors, assigns and administrators and
shall not be deemed to create any rights for the benefit of any other
Persons.
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(i) No amendment, modification or repeal of this Section 5.9 or
any provision hereof shall in any manner terminate, reduce or impair
the right of any past, present or future Indemnitee to be indemnified
by the Company, nor the obligation of the Company to indemnify any such
Indemnitee under and in accordance with the provisions of this Section
5.9 as in effect immediately prior to such amendment, modification or
repeal with respect to claims arising from or relating to matters
occurring, in whole or in part, prior to such amendment, modification
or repeal, regardless of when such claims may arise or be asserted.
Notwithstanding the foregoing, nothing herein shall limit the power or
authority of the Partnership or any Operating Partnership to amend any
provisions of the Partnership Agreement regarding indemnification and
reimbursement or similar provisions.
5.10 Liability of Indemnitees.
(a) Notwithstanding anything to the contrary set forth in this
Agreement, no Indemnitee shall be liable for monetary damages to the
Company, the Shareholders or any other Person for losses sustained or
liabilities incurred as a result of any act or omission constituting a
breach of such Indemnitee's fiduciary duty, in the event that such a
duty is found to exist, if such Indemnitee acted in good faith and in
the manner which such Indemnitee reasonably believed to be in, or not
opposed to, the best interests of the Company, and, with respect to any
criminal proceeding, had no reasonable cause to believe such conduct
was unlawful.
(b) Subject to its obligations and duties as set forth in this
Article 5, the Board of Directors and any committee thereof may
exercise any of the powers granted to it by this Agreement and perform
any of the duties imposed upon it hereunder either directly or by or
through the Company's agents, and neither the Board of Directors nor
any committee thereof shall be responsible for any misconduct or
negligence on the part of any such agent appointed by the Board of
Directors or any committee thereof in good faith.
(c) Any amendment, modification or repeal of this Section 5.10
or any provision hereof shall be prospective only and shall not in any
way affect the limitations on liability under this Section 5.10 as in
effect immediately prior to such amendment, modification or repeal with
respect to claims arising from or relating to matters occurring, in
whole or in part, prior to such amendment, modification or repeal,
regardless of when such claims may arise or be asserted.
5.11 Facsimile Signatures. In addition to the provisions for the use
of facsimile signatures elsewhere specifically authorized in this Agreement,
facsimile signatures of any Officer of the Company may be used whenever and as
authorized by the Board of Directors.
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ARTICLE 6
Books and Records;
Information and Accounts
6.1 Maintenance of Books and Records. The Company shall keep at its
principal office complete and accurate books and records of the Company,
supporting documentation of the transactions with respect to the conduct of the
Company's business and affairs and minutes of the proceedings of the Board of
Directors, the Shareholders and each committee of the Board of Directors. The
records shall include: (a) complete and accurate information regarding the state
of the business and financial condition of the Company; (b) a copy of this
Agreement and the Organizational Certificate; (c) a current list of the names
and last known business, residence, or mailing addresses of all Directors and
Officers; and (d) the Company's federal, state and local tax returns for the
Company's six most recent tax years.
6.2 Information. In addition to the other rights specifically set
forth in this Agreement and subject to such reasonable standards (including
standards governing what information and documents are to be furnished and at
what time and location and at whose expense) as may be established by the Board
of Directors or any Officer, each Shareholder is entitled to all information to
which a member of a Delaware limited liability company is entitled to have
access pursuant to the Act under the circumstances and subject to the conditions
therein stated.
6.3 Accounts. The Board of Directors may establish, or direct or
authorize any Officer to establish, one or more separate bank and investment
accounts and arrangements for the Company, which shall be maintained in the
Company's name with financial institutions and firms that the Board of
Directors, or any Officer so directed or authorized, determines.
ARTICLE 7
Dissolution, Winding-Up and Termination
7.1 Dissolution.
(a) The Company shall dissolve and its affairs shall be wound up
on the first to occur of the following events (each a "Dissolution
Event"):
(i) entry of a decree of judicial dissolution of the Company
under Section 18-802 of the Act;
(ii) the approval of the Record Holders of Voting Shares and
the Record Holders of a majority of the Listed Shares then
Outstanding; or
(iii) the approval of Record Holders of Listed Shares owning
at least 66 2/3% of the Listed Shares then Outstanding.
(b) Neither the death, dissolution or Bankruptcy of any
Shareholder nor the occurrence of any other event that causes a
Shareholder to cease to be a member of the Company shall constitute a
Dissolution Event, and the business of the Company shall be continued
after such event.
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7.2 Winding-Up and Termination.
(a) On the occurrence of a Dissolution Event, the Board of
Directors shall select one or more Persons to act as liquidator. The
liquidator shall proceed diligently to wind up the affairs of the
Company and make final distributions as provided herein and in the Act.
The costs of winding up shall be borne as a Company expense. Until
final distribution, the liquidator shall continue to operate the
Company's properties with all of the power and authority of the Board
of Directors.
(b) Any assets of the Company remaining after satisfaction of the
liabilities of the Company (whether by payment or by reasonable
provisions for payment) shall be distributed on a share-for-share basis
on all Outstanding Company Securities.
(c) On completion of such final distribution, the liquidator
shall file a Certificate of Cancellation with the Secretary of State of
the State of Delaware, cancel any other filings made pursuant to
Section 2.5, and take such other actions as may be necessary to
terminate the existence of the Company.
ARTICLE 8
Amendment of Agreement;
Shareholder Meetings; Record Date
8.1 Amendment Procedures.
(a) Any provision of this Agreement, including the Purchase
Provisions, may be amended by the Record Holders of Voting Shares
without the approval of any other Shareholder; provided, however, that
with respect to any matter for which the approval of the Record Holders
of Listed Shares entitled to vote thereon is required pursuant to
Subsection 4.3(d), then such amendment shall be not be effective until
such Record Holders of Listed Shares have so approved.
(b) Any proposed amendment that requires the approval of the
Record Holders of any Company Securities shall be explained in a
writing that contains the text of the proposed amendment. If such an
amendment is proposed, the Board of Directors shall seek the written
approval of the Record Holders of the requisite percentage of Company
Securities or call a meeting of the Shareholders entitled to vote
thereon to consider and vote on such proposed amendment.
(c) The Board of Directors shall notify all Record Holders of
Company Securities upon final adoption of any such proposed amendment.
8.2 Meetings. Except as otherwise provided in this Agreement, all
acts of the Shareholders to be taken hereunder shall be taken in the manner
provided in this Article 8. A meeting of the Record Holders of Company
Securities for the transaction of such business as may properly come before the
meeting shall be held at such time and place as the Board of Directors, the
Chairman of the Board or a Record Holder of Voting Shares shall specify in the
notice of the meeting; provided, however, that a meeting of the Record Holders
of Voting Shares and Listed Shares at which such Record Holders shall vote
pursuant to Subsections 4.2(d) and
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4.3(c), respectively, shall be held at the same time and place as a meeting of
the record holder of I-Units at which the Company shall be entitled to vote as
the record holder of I-Units.
8.3 Notice of a Meeting. Notice of a meeting called pursuant to
Section 8.2 shall be given in writing by mail or other means of written
communication in accordance with Section 10.3 to the Record Holders of Company
Securities for whom the meeting is called. The notice shall be deemed to have
been given at the time when deposited in the mail or sent by other means of
written communication.
8.4 Record Date. For purposes of determining the Shareholders
entitled to notice of, or to vote at, any meeting of the Shareholders or
entitled to vote by ballot or give approval of Company action in writing without
a meeting or entitled to exercise rights in respect of any lawful action of the
Shareholders, the Record Date shall not be less than 10 nor more than 60 days
before (a) the date of the meeting (unless such requirement conflicts with any
Law, in which case the Law shall govern), or (b) in the event that approvals are
sought without a meeting, the date by which the Shareholders are requested in
writing by the Board of Directors to give such approvals.
8.5 Adjournment. When a meeting is adjourned to another time or
place, notice need not be given of the adjourned meeting and a new Record Date
need not be fixed if the time and place thereof are announced at the meeting at
which the adjournment is taken, unless such adjournment shall be for more than
45 days. At the adjourned meeting, the Company may transact any business which
might have been transacted at the original meeting. If the adjournment is for
more than 45 days or if a new Record Date is fixed for the adjourned meeting, a
notice of the adjourned meeting shall be given in accordance with this
Article 8.
8.6 Waiver of Notice; Approval of Meeting; Approval of Minutes. The
transactions of any meeting of the Shareholders, however called and noticed, and
whenever held, shall be as valid as if they had been authorized at a meeting
duly held after regular call and notice, if a quorum is present either in person
or by proxy, and if, either before or after the meeting, Shareholders
representing such quorum who were present in person or by proxy and entitled to
vote, sign a written waiver of notice or an approval of the holding of the
meeting or an approval of the minutes thereof. All waivers and approvals shall
be filed with the Company records or made a part of the minutes of the meeting.
Attendance of a Shareholder at a meeting shall constitute a waiver of notice of
the meeting, except (a) when the Shareholder does not approve, at the beginning
of the meeting, of the transaction of any business because the meeting is not
lawfully called or convened; and (b) that attendance at a meeting is not a
waiver of any right to disapprove the consideration of matters required to be
included in the notice of the meeting, but not so included, if the disapproval
is expressly made at the meeting.
8.7 Quorum; Voting. The Record Holders of a majority of those
Outstanding Company Securities for which a meeting has been called who are
entitled to vote and be present in person or by proxy shall constitute a quorum
at a meeting of the Shareholders of such class or classes. At any meeting of the
Shareholders duly called and held in accordance with this Agreement at which a
quorum is present, the act of the Record Holders of a majority of all
Outstanding Company Securities present and entitled to vote thereon shall be
deemed to constitute the act of the Record Holders of such Company Securities,
except as approval by
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holders of a different amount of Company Securities is required by any other
provision of this Agreement, including Section 8.8, or by the Act, in which case
the act of the Shareholders holding a number of Outstanding Company Securities
representing at least such different amount shall be required. The Shareholders
present at a duly called or held meeting at which a quorum is present may
continue to transact business until adjournment, notwithstanding the withdrawal
of enough Shareholders to leave less than a quorum, if any action taken (other
than adjournment) is approved by the required percentage of Company Securities
specified in this Agreement. In the absence of a quorum, any meeting of the
Shareholders may be adjourned from time to time by the affirmative vote of the
Record Holders of a majority of the Company Securities represented either in
person or by proxy.
8.8 Special Voting Requirements. Without regard to any provision to
the contrary in Section 8.7, with respect to any matter that shall be submitted
to the Record Holders of Listed Shares entitled to vote thereon pursuant to
Subsection 4.3(d), the act of the Record Holders of a majority of the Listed
Shares then Outstanding shall be deemed to constitute the act of the Record
Holders of Listed Shares.
8.9 Conduct of Meeting. The Board of Directors shall have full power
and authority concerning the manner of conducting any meeting of the
Shareholders or the solicitation of approvals in writing, including the
determination of Persons entitled to vote, the existence of a quorum, the
satisfaction of the requirements of this Article 8, the conduct of voting, the
validity and effect of any proxies and the determination of any controversies,
votes or challenges arising in connection with or during the meeting or voting.
The Board of Directors shall designate a Person to serve as chairman of any
meeting and shall further designate a Person to take the minutes of any meeting.
All minutes shall be kept with the records of the Company. The Board of
Directors may make such other regulations consistent with applicable Law and
this Agreement as it may deem advisable concerning the conduct of any meeting of
the Shareholders or the solicitation of approvals in writing, including
regulations in regard to the appointment of proxies, the appointment and duties
of inspectors of votes and approvals, the submission and examination of proxies
and other evidence of the right to vote and the revocation of approvals in
writing.
8.10 Action Without a Meeting. Any action that may be taken at a
meeting of Shareholders may be taken without a meeting if consents in writing
setting forth such action are signed by the Record Holders holding not less than
the minimum percentage of the Company Securities that would be necessary to
authorize or take such action at a meeting at which all the Company Securities
entitled to vote on such matter were present and voted. Prompt notice of the
taking of action without a meeting shall be given to the Record Holders who were
entitled to, but did not, authorize the action taken. The Board of Directors may
specify that any written consent submitted to Record Holders for the purpose of
taking any action without a meeting shall be returned to the Company within the
time period, which shall be not less than 20 days, specified by the Board of
Directors. If a ballot returned to the Company does not vote all of the Company
Securities held by the Shareholder, the Company shall be deemed to have failed
to receive a ballot for the Company Securities that were not voted. If approval
of the taking of any action by the Shareholders is solicited by any Person other
than by or on behalf of the Board of Directors, the written approvals shall have
no force and effect unless and until (a) they are deposited with the Company in
care of the Board of Directors, (b) approvals sufficient to take the action
-31-
proposed are dated as of a date not more than 90 days prior to the date
sufficient approvals are deposited with the Company and (c) an Opinion of
Counsel is delivered to the Board of Directors to the effect that the exercise
of such right and the action proposed to be taken with respect to any particular
matter is otherwise permissible under applicable Law, including any statutes
then governing the rights, duties and liabilities of the Company and the
Shareholders.
8.11 Voting and Other Rights.
(a) Only those Record Holders of Company Securities on the Record
Date set pursuant to Section 8.4 (and also subject to Subsection
4.3(e)) shall be entitled to notice of, and to vote at, a meeting of
the Shareholders or to act with respect to matters as to which the
holders of the Company Securities have the right to vote or to act. All
references in this Agreement to votes of, or other acts that may be
taken by, the Company Securities shall be deemed to be references to
the votes or acts of the Record Holders of such Company Securities.
(b) With respect to Company Securities that are held for a
Person's account by another Person (such as a broker, dealer, bank,
trust company or clearing corporation, or an agent of any of the
foregoing), in whose name such Company Securities are registered, such
broker, dealer or other agent shall, in exercising the voting rights in
respect of such Company Securities on any matter, and unless the
arrangement between such Persons provides otherwise, vote such Company
Securities on the behalf, and at the direction, of the Person who is
the Beneficial Owner, and the Company shall be entitled to assume it is
so acting without further inquiry.
(c) With respect to any Shareholder action, broker non-votes and
other non-votes shall not be counted as votes "for" or "against" any
matter unless otherwise required by Law.
ARTICLE 9
Covenants
The Company (a) shall use the net proceeds from the Initial Public
Offering for the purchase of I-Units and other rights as contemplated by this
Agreement; (b) shall not sell, pledge or otherwise transfer any I-Units or such
other rights except as contemplated by this Agreement; (c) shall not issue
options, warrants or other securities entitling the holder thereof to subscribe
for or purchase Company Securities; (d) shall not borrow money or issue debt;
(e) shall not effect a liquidation, merger, recapitalization or similar
transaction involving the Company; and (f) shall not purchase Company
Securities; provided, however, that the Company may take or abstain from taking
any of the actions prohibited or required, as applicable, in this Article 9 upon
obtaining the approval of the Record Holders who (i) are entitled to vote
thereon and (ii) are the Record Holders of a majority of the Listed Shares then
Outstanding.
ARTICLE 10
General Provisions
10.1 Fiscal Year. The fiscal year of the Company shall be the
calendar year.
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10.2 Offset. Whenever the Company is to pay any sum to any
Shareholder, any amounts that Shareholder owes the Company may be deducted from
that sum before payment.
10.3 Notices. Except as expressly set forth to the contrary in this
Agreement, all notices, requests or consents provided for or permitted to be
given under this Agreement must be in writing and must be delivered to the
recipient in person, by courier or mail or by facsimile, telegram, telex,
cablegram or similar transmission, and a notice, request or consent given under
this Agreement is effective on receipt by the Person to receive it. Whenever any
notice is required to be given by Law, the Organizational Certificate or this
Agreement, a written waiver thereof, signed by the Person entitled to notice,
whether before or after the time stated therein, shall be deemed equivalent to
the giving of such notice.
10.4 Entire Agreement. This Agreement, including the Purchase
Provisions, constitutes the entire agreement of the Shareholders pertaining to
the subject matter hereof and supersedes all prior agreements and understandings
pertaining thereto.
10.5 Waiver. No failure by any party to insist upon the strict
performance of any covenant, duty, agreement or condition of this Agreement or
to exercise any right or remedy consequent upon a breach thereof shall
constitute waiver of any such breach or any other covenant, duty, agreement or
condition.
10.6 Binding Effect. This Agreement is binding upon and shall inure
to the benefit of the Shareholders, the Assignees and their respective
executors, administrators, successors and legal representatives.
10.7 Governing Law; Severability. This Agreement shall be construed
in accordance with, and governed by, the laws of the State of Delaware without
regard to the principles of conflicts of law. In the event of a direct conflict
between the provisions of this Agreement and (a) any provision of the
Organizational Certificate, or (b) any mandatory, non-waivable provision of the
Act, such provision of the Organizational Certificate or the Act shall control.
If any provision of the Act provides that it may be varied or superseded in the
limited liability company agreement (or otherwise by agreement of the members or
managers of a limited liability company), such provision shall be deemed
superseded and waived in its entirety if this Agreement contains a provision
addressing the same issue or subject matter. If any provision of this Agreement
or the application thereof to any Person or circumstance is held invalid or
unenforceable to any extent, the remainder of this Agreement and the application
of that provision to other Persons or circumstances is not affected thereby and
that provision shall be enforced to the greatest extent permitted by Law.
10.8 Further Action. The parties shall execute and deliver all
documents, provide all information and take or refrain from taking action as may
be necessary or appropriate to achieve the purposes of this Agreement.
10.9 No Right to Action for Dissolution or Partition. No Shareholder
has any right to maintain any action for dissolution of the Company or for
partition of the property of the Company.
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10.10 Third-Party Beneficiaries. The Shareholders, the Assignees, the
Indemnitees and their respective executors, administrators, successors and legal
representatives shall be considered to be third-party beneficiaries of this
Agreement, including the Purchase Provisions.
10.11 Creditors. None of the provisions of this Agreement shall be
for the benefit of, or shall be enforceable by, any creditor of the Company in
its capacity as such.
10.12 Counterparts. This Agreement may be executed in counterparts,
all of which together shall constitute an agreement binding on all parties
hereto, notwithstanding that all such parties are not signatories to the
original or the same counterpart. Each party shall become bound by this
Agreement immediately upon affixing its signature hereto or, in the case of a
Person acquiring a Company Security, upon (a) the acquisition by such Person of
the Certificate evidencing such Company Security, or (b) the transfer of such
Company Security to such Person by book-entry transfer in accordance with
Subsection 3.4(b).
*****
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first set forth above.
Organizational Shareholder:
KINDER XXXXXX X.X., INC.
By: /s/ C. PARK SHAPER
------------------------------------
C. Park Shaper
Vice President, Treasurer and Chief
Financial Officer
ALL HOLDERS OF LISTED SHARES
By: /s/ XXXXXX XXXXXXXXXX
------------------------------------
Attorney-in-fact authorized by the
Board of Directors
-35-
EXCHANGE PROVISIONS
ANNEX A TO THE
SECOND AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
XXXXXX XXXXXX MANAGEMENT, LLC
The Exchange Provisions previously contained in this Annex A were eliminated on
July 23, 2002 pursuant to the requisite approval of shareholders at a special
meeting.
X-0
XXXXX X
XXXXXXXX XXXXXXXXXX
X-0
PURCHASE PROVISIONS
ANNEX B TO THE
SECOND AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
XXXXXX XXXXXX MANAGEMENT, LLC
These Purchase Provisions, dated as of May 14, 2001 and amended as of
July 23, 2002, are an integral part of the Second Amended and Restated Limited
Liability Company Agreement of Xxxxxx Xxxxxx Management, LLC, dated as of July
23, 2002.
SECTION 1
Definitions
1.1 Definitions. In these Purchase Provisions, the following terms
shall have the following respective meanings:
"Affiliate" means, with respect to any Person, any other Person that
directly or indirectly controls, is controlled by or is under common control
with, the Person in question. As used herein, the term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through ownership
of voting securities, by contract or otherwise.
"Average Market Price" for any security means the average of the
Closing Prices for such security for the consecutive Trading Days in the period
specified in the relevant Section of these Purchase Provisions ending on the
Trading Day specified in the relevant Section of these Purchase Provisions.
"Beneficial Owner" has the meaning set forth in Rules 13d-3 and 13d-5
under the Securities Exchange Act, as in effect on the date of these Purchase
Provisions, and the terms "Beneficial Ownership," "Beneficially Own,"
"Beneficially Owned" and similar terms have correlative meanings.
"Board of Directors of the Company" means the board of directors of the
Company established pursuant to the LLC Agreement, and any committee of such
board duly authorized to act in respect thereof.
"Board of Directors of the Purchaser" means (a) if the Purchaser is
KMI, the board of directors of KMI; (b) if the Purchaser is a limited
partnership with a corporate general partner or any other corporation, the board
of directors of such corporate general partner or corporation; (c) if the
Purchaser is any other form of entity, the board of directors or other
comparable governing body of such entity; and (d) in each case, any committee of
such board or body duly authorized to act in respect thereof.
"Business Day" means any day other than a Saturday or Sunday or a day
on which banking institutions in the State of New York or the State of Texas are
authorized or required by law to close.
"Closing Price" for a security on any day means:
(a) for securities listed on a National Securities Exchange, the last
sale price for that day, regular way, or if there are no sales on that day, the
average of the closing bid and asked prices for that day, regular way, in either
case as reported in the principal composite transactions reporting system for
the principal National Securities Exchange on which such securities are listed;
or
(b) if such securities are not listed on a National Securities Exchange
on that day, the last quoted price on that day, or if no price is quoted, the
average of the high bid and low asked prices on that day, each as reported by
the National Association of Securities Dealers Automated Quotation system; or
(c) if such securities are not so quoted on that day, the average of
the closing bid and asked prices on that day furnished by a professional market
maker in such securities selected by the Board of Directors of the Purchaser; or
(d) if on that day no market maker is making a market in such
securities, the fair value of such securities on such day as determined by the
Board of Directors of the Purchaser.
"Common Units" has the meaning assigned to it in the Partnership
Agreement.
"Company" means Xxxxxx Xxxxxx Management, LLC, a Delaware limited
liability company.
"Controlling Entity" has the meaning set forth in clause (b)(i) of the
definition of Mandatory Purchase Event in this Section 1.1.
"Entity" means a corporation, limited liability company, venture,
partnership, trust, unincorporated organization, association or other entity.
"Exchange Provisions" means the exchange provisions formerly attached
to the LLC Agreement as Annex A, and thereby made a part of the LLC Agreement.
"General Partner" means the general partner of the Partnership. On the
date of these Purchase Provisions, the General Partner is Kinder Xxxxxx X.X.,
Inc.
"I-Units" has the meaning assigned to it in the Partnership Agreement.
"KMI" means Xxxxxx Xxxxxx, Inc., a Kansas corporation, its successors
by merger and any Person who succeeds to its obligations under these Purchase
Provisions, the Registration
-2-
Rights Agreement and the Tax Indemnification Agreement in connection with an
acquisition of all or substantially all of its assets by such Person.
"LLC Agreement" means the Second Amended and Restated Limited Liability
Company Agreement of the Company dated as of July 23, 2002, including these
Purchase Provisions.
"Listed Shares" means the limited liability company interests in the
Company designated in the LLC Agreement as "Listed Shares."
"Mandatory Purchase" means the purchase of Listed Shares pursuant to
Section 2.
"Mandatory Purchase Date" has the meaning set forth in Section 2.3(d).
"Mandatory Purchase Event" means any one of the following:
(a) the occurrence of the first day on which the aggregate amount of
distributions or other payments by the Partnership on the Common Units (other
than distributions or payments made in Common Units or Similar Common Unit
Securities, but including distributions and other payments pursuant to an issuer
tender offer by the Partnership) during the immediately preceding 360-day period
exceeds 50% of the Average Market Price of a Common Unit during the ten
consecutive Trading Day period ending on the last Trading Day prior to the first
day of such 360-day period;
(b) the occurrence of an event resulting in KMI and its Affiliates
ceasing to be the Beneficial Owners of more than 50% of the total voting power
of all shares of capital stock of the General Partner, unless:
(i) the event results in another Person becoming the
Beneficial Owner of more than 50% of the total voting power of all shares of
capital stock of the General Partner (such other Person being referred to herein
as the "Controlling Entity");
(ii) the Controlling Entity is organized under the laws of a
state in the United States;
(iii) the Controlling Entity has long term unsecured debt with
an investment grade credit rating, as determined by Xxxxx'x Investor Services,
Inc. and Standard & Poor's Rating Service, immediately prior to the event that
results in the Controlling Entity becoming the Beneficial Owner of more than 50%
of the total voting power of all shares of capital stock of the General Partner;
and
(iv) the Controlling Entity assumes all obligations of KMI and
the Purchaser to the Company and to the holders of the Listed Shares under these
Purchase Provisions, the Registration Rights Agreement and the Tax
Indemnification Agreement.
-3-
(c) the merger of the Partnership with or into another Person in any
case where the Partnership is not the surviving entity, or the sale of all or
substantially all of the assets of the Partnership and its subsidiaries, taken
as a whole, to another Person, unless:
(i) in the transaction the holders of Common Units receive in
exchange for their Common Units a Similar Common Unit Security of the Person
that is the surviving Entity or that purchased the assets;
(ii) in the transaction the Company receives in exchange for
all of its I-Units a Similar I-Unit Security of the Person that is the surviving
Entity or that purchased the assets;
(iii) no consideration is received in the transaction in
respect of Common Units other than Similar Common Unit Securities and/or cash
and the amount of cash received per Common Unit does not exceed 33-1/3% of the
Average Market Price of a Common Unit for the ten consecutive Trading Day period
ending on the Trading Day immediately preceding the date of the execution of the
definitive agreement for the transaction; and
(iv) no consideration is received in the transaction in
respect of I-Units other than Similar I-Unit Securities of the Person that is
the surviving Entity or that purchased the assets.
"Mandatory Purchase Notice" has the meaning set forth in Section 2.3.
"Mandatory Purchase Price" means the higher of the Average Market Price
for the Listed Shares and the Average Market Price for the Common Units, in each
case for the ten consecutive Trading Day period ending on the Trading Day
immediately prior to the date of the Mandatory Purchase Event.
"National Securities Exchange" means an exchange registered with the
Securities and Exchange Commission under Section 6(a) of the Securities Exchange
Act.
"Notice Date" means the date on which the Purchaser either mails the
relevant Purchase Notice to the holders of Listed Shares or delivers copies of
the relevant Purchase Notice to the Transfer Agent for mailing to the holders of
Listed Shares.
"Optional Purchase" means the purchase of Listed Shares at the election
of the Purchaser pursuant to Section 3 or Section 4.
"Optional Purchase Condition for Common Units and Listed Shares" means
any time at which the sum of the number of Common Units held by the Purchaser
and its Affiliates plus the number of Listed Shares held by the Purchaser and
its Affiliates equals 80% or more of the sum of the aggregate number of Common
Units then outstanding plus the aggregate number of Listed Shares then
outstanding.
"Optional Purchase Condition for Listed Shares" means any time at which
the Purchaser and its Affiliates hold 80% or more of the then outstanding Listed
Shares.
-4-
"Optional Purchase Date" means the date selected by the Purchaser for
the Optional Purchase of Listed Shares pursuant to Section 3.2 or Section 4.2.
"Optional Purchase Notice" has the meaning set forth in Section 3.2.
"Optional Purchase Notice for Common Units and Listed Shares" has the
meaning set forth in Section 4.2.
"Optional Purchase Price for Common Units and Listed Shares" means a
price which is equal to the greatest of: (a) the Average Market Price for the
Common Units for the 20 consecutive Trading Day period ending on the fifth
Trading Day prior to the Notice Date, (b) the highest price the Purchaser or its
Affiliates paid for Common Units during the 90 calendar day period ending on the
day prior to the Notice Date, (c) the Average Market Price for the Listed Shares
for the 20 consecutive Trading Day period ending on the fifth Trading Day prior
to the Notice Date, and (d) the highest price the Purchaser or its Affiliates
paid for Listed Shares (other than pursuant to the Exchange Provisions) during
the 90 calendar day period ending on the day prior to the Notice Date. To the
extent that the price paid for Listed Shares or Common Units in clauses (b) or
(d) is paid in securities, the value of such securities shall be the Closing
Price for such securities on the day the purchase of the Listed Shares or Common
Units is effected. To the extent that the price paid for Listed Shares or Common
Units in clauses (b) or (d) is paid other than in cash or securities, the value
of such the other consideration (and therefore the price paid for such Listed
Shares or Common Units) shall be as determined by the Board of Directors of the
Purchaser.
"Optional Purchase Price for Listed Shares" means a price which is
equal to 110% of the greater of: (a) the Average Market Price for the Listed
Shares for the ten consecutive Trading Day period ending on the fifth Trading
Day prior to the Notice Date, and (b) the highest price Purchaser or its
Affiliates paid for Listed Shares (other than pursuant to the Exchange
Provisions) during the 90 calendar day period ending on the day prior to the
Notice Date. To the extent that the price paid for Listed Shares in clause (b)
is paid in securities, the value of such securities shall be the Closing Price
for such securities on the day the purchase of the Listed Shares is effected. To
the extent that the price paid for Listed Shares in clause (b) is paid other
than in cash or securities, the value of such the other consideration (and
therefore the price paid for such Listed Shares) shall be as determined by the
Board of Directors of the Purchaser.
"Partnership" means Xxxxxx Xxxxxx Energy Partners, L.P., a Delaware
limited partnership.
"Partnership Agreement" means the Third Amended and Restated Agreement
of Limited Partnership of the Partnership, dated as of May 18, 2001.
"Partnership Notice" has the meaning set forth in Section 4.2.
"Person" means a natural person or an Entity.
"Purchase Date" means either a Mandatory Purchase Date or an Optional
Purchase Date.
-5-
"Purchase Notice" means a Mandatory Purchase Notice, an Optional
Purchase Notice, or an Optional Purchase Notice for Common Units and Listed
Shares.
"Purchase Price" means the Mandatory Purchase Price, the Optional
Purchase Price for Listed Shares or the Optional Purchase Price for Common Units
and Listed Shares.
"Purchase Provisions" means these Purchase Provisions, which are
attached to the LLC Agreement as Annex B and hereby made a part of the LLC
Agreement.
"Purchaser" means the Person with the obligation to make the Mandatory
Purchase and the right to make an Optional Purchase pursuant to these Purchase
Provisions. The Purchaser initially is KMI.
"Registration Rights Agreement" means the Registration Rights Agreement
between KMI and the Partnership, dated as of May 18, 2001.
"Section" means a section of these Purchase Provisions.
"Securities Act" means the United States Securities Act of 1933, as
amended from time to time and any successor to such statute and all rules and
regulations promulgated thereunder.
"Securities Exchange Act" means the United States Securities Exchange
Act of 1934, as amended from time to time and any successor to such statute and
all rules and regulations promulgated thereunder.
"Similar Common Unit Security" means a security that has in all
material respects the same rights and privileges as the Common Units.
"Similar I-Unit Security" means a security that has in all material
respects the same rights and privileges as the I-Units.
"Subsidiary," when used in connection with the Partnership, means any
Affiliate of the Partnership which the Partnership controls, and of which the
Partnership owns, directly or indirectly, a majority of the aggregate shares,
partnership interests or other equity interests.
"Tax Indemnification Agreement" means the Tax Indemnification Agreement
dated as of May 18, 2001, between KMI and the Company.
"Trading Day" for any security means a day on which:
(a) the principal National Securities Exchange on which such security
is listed is open for business, or
(b) if such security is not listed on any National Securities Exchange,
a day on which banking institutions in The City of New York generally are open.
-6-
"Transfer Agent" means any bank, trust company or other Person
(including the Company or any Affiliate of the Company) appointed from time to
time by the Board of Directors of the Company to act as registrar and transfer
agent for the Listed Shares. On the date of these Purchase Provisions, EquiServe
Trust Company, N.A. is the Transfer Agent.
1.2 Rules of Construction. Unless the context otherwise clearly
requires:
(a) the terms defined in Section 1.1 have the meanings
assigned to them in that Section for purposes of these Purchase Provisions;
terms defined elsewhere in the LLC Agreement and also in these Purchase
Provisions shall in such other portions of the LLC Agreement have the meanings
ascribed to them therein;
(b) terms defined include the plural as well as the singular
and vice versa;
(c) references to any document, agreement, instrument or
provision thereof mean such document, agreement, instrument or provisions
thereof as the same may be duly amended, supplemented or restated from time to
time;
(d) "including" means including without limitation;
(e) "or" is not exclusive; and
(f) the words "herein," "hereof," "hereunder" and other words
of similar import refer to these Purchase Provisions as a whole and not to any
particular Section or other subdivision.
SECTION 2
Mandatory Purchase
2.1 Mandatory Purchase Event. Upon the occurrence of a Mandatory
Purchase Event, the Purchaser shall purchase all, but not less than all, of the
outstanding Listed Shares that are not held by the Purchaser or its Affiliates
at the Mandatory Purchase Price, pursuant to the provisions of this Section 2.
The Mandatory Purchase Price for any fractional Listed Share shall be the
Mandatory Purchase Price for a whole Listed Share times the fraction of the
Listed Share to be purchased. In determining whether any fractional Listed
Shares are outstanding, all certificates registered in the name of the same
holder of Listed Shares shall be aggregated.
2.2 Notice to Transfer Agent. Promptly, but in no case later than three
Business Days, following the occurrence of a Mandatory Purchase Event, the
Purchaser shall give notice to the Transfer Agent that a Mandatory Purchase
Event has occurred, and request that the Transfer Agent mail the Mandatory
Purchase Notice to the record holders of the Listed Shares as of earlier of the
date of the Mandatory Purchase Event or the most recent practicable date. If the
Purchaser so requests, the Transfer Agent shall, and the Company shall use its
reasonable efforts to cause the Transfer Agent to, mail the Mandatory Purchase
Notice to such record holders of Listed Shares.
-7-
2.3 Purchase Notice. Within three Business Days following the
occurrence of a Mandatory Purchase Event, the Purchaser shall mail, or deliver
to the Transfer Agent for mailing and cause the Transfer Agent to mail, to the
record holders of the Listed Shares described in Section 2.2(a), a notice (the
"Mandatory Purchase Notice") which shall state:
(a) That a Mandatory Purchase Event has occurred and that
pursuant to the provisions of the LLC Agreement and these Purchase Provisions
the Purchaser will purchase all of the outstanding Listed Shares that are not
held by the Purchaser or its Affiliates at the Mandatory Purchase Price;
(b) A brief description of the circumstances and relevant
facts regarding the Mandatory Purchase Event;
(c) The dollar amount per Listed Share of the Mandatory
Purchase Price;
(d) The date on which the Listed Shares will be purchased (the
"Purchase Date"), which shall be no later than five Business Days from the date
the Mandatory Purchase Notice is mailed by the Purchaser or the Transfer Agent;
and
(e) The instructions a holder of Listed Shares must follow,
including any other documents such holder must deliver, in order to receive the
Mandatory Purchase Price.
Any such Mandatory Purchase Notice mailed to a record holder of Listed
Shares at such holder's address as reflected in the records of the Transfer
Agent as of the time set forth in Section 2.2, or delivered by the Purchaser to
the Transfer Agent for mailing to such holders, shall be conclusively presumed
to have been given, whether or not such holder receives such notice. Failure to
give any such notice to any particular holder or holders shall not affect the
validity of the Mandatory Purchase pursuant to these Purchase Provisions.
2.4 Deposit of Funds; Effect of Purchase. On or prior to the Mandatory
Purchase Date, the Purchaser shall irrevocably deposit with the Transfer Agent
funds sufficient to pay the Mandatory Purchase Price for all outstanding Listed
Shares that on the date of such deposit are not held by the Purchaser or its
Affiliates. After the date of such deposit and prior to the Mandatory Purchase
Date, neither the Purchaser nor any of its Affiliates shall dispose of any
Listed Shares held by them, other than to the Purchaser or any of its
Affiliates. The Transfer Agent shall return to the Purchaser any funds not so
required for the purchase of Listed Shares that on the Mandatory Purchase Date
are not held by the Purchaser or its Affiliates. If the Purchaser so deposits
such funds with the Transfer Agent, and if the Purchaser has delivered the
Mandatory Purchase Notice to the Transfer Agent for mailing to the record
holders of the Listed Shares, then from and after the Mandatory Purchase Date,
notwithstanding that any certificate representing Listed Shares shall not have
been surrendered for purchase, all rights of the holders of such Listed Shares
as such, including any other rights under the LLC Agreement and the rights to
receive any distributions on Listed Shares that have been declared (or a record
date for which has been set) but that have not been paid or made, shall
thereupon cease, except the right to receive the Mandatory Purchase Price,
without interest, upon surrender to the Transfer Agent
-8-
of the certificates representing such Listed Shares, with such other documents
as may be required by the Mandatory Purchase Notice, in compliance with the
instructions in the Mandatory Purchase Notice, and such Listed Shares shall from
and after the Mandatory Purchase Date be deemed to be purchased by the Purchaser
and shall be transferred to the Purchaser on the record books of the Transfer
Agent, and the Purchaser shall be deemed to be the owner of such Listed Shares
from and after the Mandatory Purchase Date and shall have all rights as the
owner and record holder of such Listed Shares.
SECTION 3
Optional Purchase
3.1 Optional Purchase Condition for Listed Shares. At any time when the
Optional Purchase Condition for Listed Shares exists, the Purchaser may elect,
but shall not be obligated, to purchase all, but not less than all, of the
outstanding Listed Shares that are not held by the Purchaser or its Affiliates
at the Optional Purchase Price for Listed Shares pursuant to the provisions of
this Section 3. The Purchase Price for any fractional Listed Share purchased
pursuant to this Section 3 shall be the Optional Purchase Price for Listed
Shares times the fraction of the Listed Share to be purchased. In determining
whether any fractional Listed Shares are outstanding, all certificates
registered in the name of the same holder of Listed Shares shall be aggregated.
3.2 Optional Purchase Notice. The Purchaser may exercise its election
to make an Optional Purchase by delivering copies of a notice (the "Optional
Purchase Notice") to the Transfer Agent not less than ten days and not more than
60 days prior to the date the Purchaser selects for the Optional Purchase (the
"Optional Purchase Date"). The Transfer Agent shall, and the Company will use
its reasonable efforts to cause the Transfer Agent to, mail the Optional
Purchase Notice to the record holders of Listed Shares as of the most recent
practicable date. Any such Optional Purchase Notice mailed to a record holder of
Listed Shares at his address as reflected in the records of the Transfer Agent,
or delivered by the Purchaser to the Transfer Agent for mailing to such holders,
shall be conclusively presumed to have been given, whether or not such holder
receives such notice. Failure to give such notice to any particular holder or
holders shall not affect the validity of the Optional Purchase pursuant to these
Purchase Provisions. So long as the Optional Purchase Condition for Listed
Shares exists on the date of the Optional Purchase Notice, the Purchaser may
purchase such Listed Shares pursuant to these Optional Purchase provisions,
whether or not the Optional Purchase Condition for Listed Shares continues to
exist on the Optional Purchase Date. The Optional Purchase Notice shall state:
(a) that as of the date of such Optional Purchase Notice, the
Optional Purchase Condition for Listed Shares exists, and that the Purchaser has
elected to make the Optional Purchase pursuant to the terms of the LLC Agreement
and these Purchase Provisions;
(b) the Optional Purchase Price;
(c) the Optional Purchase Date; and
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(d) the instructions a holder of Listed Shares must follow,
including any other documents a holder of Listed Shares must deliver, in order
to receive the Optional Purchase Price.
3.3 Deposit of Funds; Effect of Purchase. On or prior to the Optional
Purchase Date, the Purchaser shall irrevocably deposit with the Transfer Agent
funds sufficient to pay the Optional Purchase Price for Listed Shares for all
outstanding Listed Shares that on the date of such deposit are not held by the
Purchaser or its Affiliates. After the date of such deposit and prior to the
Optional Purchase Date, neither the Purchaser nor any of its Affiliates shall
dispose of any Listed Shares held by them, other than to the Purchaser or any of
its Affiliates. The Transfer Agent shall return to the Purchaser any funds not
so required for the purchase of Listed Shares that on the Optional Purchase Date
are not held by the Purchaser or its Affiliates. If the Purchaser so deposits
such funds with the Transfer Agent, and if the Purchaser has delivered the
Optional Purchase Notice to the Transfer Agent for mailing to the record holders
of the Listed Shares, then from and after the Optional Purchase Date,
notwithstanding that any certificate representing Listed Shares shall not have
been surrendered for purchase, all rights of the holders of such Listed Shares
as such, including any other rights under the LLC Agreement and the rights to
receive any distributions on Listed Shares that have been declared (or a record
date for which has been set) but that have not been paid or made, shall
thereupon cease, except the right to receive the Optional Purchase Price for
Listed Shares, without interest, upon surrender to the Transfer Agent of the
certificates representing such Listed Shares, with such other documents as may
be required by the Optional Purchase Notice, in compliance with the instructions
in the Optional Purchase Notice, and such Listed Shares shall from and after the
Optional Purchase Date be deemed to be purchased by the Purchaser and shall be
transferred to the Purchaser on the record books of the Transfer Agent, and the
Purchaser shall be deemed to be the owner of such Listed Shares from and after
the Optional Purchase Date and shall have all rights as the owner of such Listed
Shares.
SECTION 4
Optional Purchase of Common Units and Listed Shares
4.1 Optional Purchase Condition for Common Units and Listed Shares. If
at any time when the Optional Purchase Condition for Common Units and Listed
Shares exists, the Purchaser may elect, but shall not be obligated, to purchase
all, but not less than all, of the outstanding Listed Shares that are not held
by the Purchaser or its Affiliates at the Optional Purchase Price for Common
Units and Listed Shares pursuant to the provisions of this Section 4, but only
if the General Partner or its assignee elects to purchase all, but not less than
all, of the outstanding Common Units that are not held by the Purchaser or its
Affiliates pursuant to the provisions of the Partnership Agreement. The Purchase
Price for any fractional Listed Share purchased pursuant to this Section 4 shall
be the Optional Purchase Price for Common Units and Listed Shares times the
fraction of the Listed Share to be purchased. In determining whether any
fractional Listed Shares are outstanding, all certificates registered in the
name of the same holder of Listed Shares shall be aggregated.
4.2 Optional Purchase Notice for Common Units and Listed Shares. The
Purchaser may exercise its election to make an Optional Purchase of Common Units
and Listed Shares by delivering copies of a notice (the "Optional Purchase
Notice for Common Units and Listed
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Shares") to the Transfer Agent not less than ten days and not more than 60 days
prior to the date the Purchaser selects for the Optional Purchase (the "Optional
Purchase Date"). The Optional Purchase Notice for Common Units and Listed Shares
shall not be effective, however, unless and until the later to occur of (i)
delivery of the Optional Purchase Notice for Common Units and Listed Shares to
the Transfer Agent and (ii) delivery to the transfer agent for the Common Units
of a similar notice with respect to the purchase of all outstanding Common Units
not owned by the Purchaser and its Affiliates (the "Partnership Notice")
pursuant to the provisions of the Partnership Agreement. After both the
Partnership Notice has been given to the transfer agent for the Common Units and
the Optional Purchase Notice for Common Units and Listed Shares has been given
to the Transfer Agent, the Transfer Agent shall, and the Company will use its
reasonable efforts to cause the Transfer Agent to, mail the Optional Purchase
Notice for Common Units and Listed Shares to the record holders of Listed Shares
as of the most recent practicable date. Any such Optional Purchase Notice for
Common Units and Listed Shares mailed to a record holder of Listed Shares at his
address as reflected in the records of the Transfer Agent, or delivered by the
Purchaser to the Transfer Agent for mailing to such holders, shall be
conclusively presumed to have been given, whether or not such holder receives
such notice. Failure to give such notice to any particular holder or holders
shall not affect the validity of the purchase pursuant to these Purchase
Provisions. So long as the Optional Purchase Condition for Common Units and
Listed Shares exists on the date of the Optional Purchase Notice for Common
Units and Listed Shares, the Purchaser may purchase such Listed Shares pursuant
to these Optional Purchase provisions, whether or not the Optional Purchase
Condition for Common Units and Listed Shares continues to exist on the Optional
Purchase Date. The Optional Purchase Notice for Common Units and Listed Shares
shall state:
(a) that with respect to Listed Shares that on the Optional
Purchase Date are not held by the Purchaser or its Affiliates, the Purchaser has
elected to make the Optional Purchase for Common Units and Listed Shares
pursuant to the terms of the LLC Agreement and these Purchase Provisions and
that the General Partner or its assignee has elected to make the purchase of
Common Units pursuant to the similar provisions of the Partnership Agreement;
(b) the Optional Purchase Price for Common Units and Listed
Shares;
(c) the Optional Purchase Date; and
(d) the instructions a holder of Listed Shares must follow,
including any other documents such holder must deliver, in order to receive the
Optional Purchase Price for Common Units and Listed Shares.
4.3 Deposit of Funds; Effect of Purchase. On or prior to the Optional
Purchase Date, the Purchaser shall irrevocably deposit with the Transfer Agent
funds sufficient to pay the Optional Purchase Price for Common Units and Listed
Shares for all outstanding Listed Shares that on the date of such deposit are
not held by the Purchaser or its Affiliates. After the date of such deposit and
prior to the Optional Purchase Date, neither the Purchaser nor any of its
Affiliates shall dispose of any Listed Shares held by them, other than to the
Purchaser or any of its Affiliates. The Transfer Agent shall return to the
Purchaser any funds not so required for such purchase. If the Purchaser so
deposits funds with the Transfer Agent, and if the Purchaser has
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delivered the Optional Purchase Notice for Common Units and Listed Shares to the
Transfer Agent for mailing to the record holders of the Listed Shares, then from
and after the Optional Purchase Date, notwithstanding that any certificate
representing Listed Shares shall not have been surrendered for purchase, all
rights of the holders of such Listed Shares as such, including any other rights
under the LLC Agreement and the right to receive any distributions on Listed
Shares that have been declared (or a record date for which has been set) but
that have not been paid or made, shall thereupon cease, except the right to
receive the Optional Purchase Price for Common Units and Listed Shares, without
interest, upon surrender to the Transfer Agent of the certificates representing
such Listed Shares, with such other documents as may be required by the Optional
Purchase Notice for Common Units and Listed Shares, in compliance with the
instructions in the Optional Purchase Notice for Common Units and Listed Shares,
and such Listed Shares shall from and after the Optional Purchase Date be deemed
to be purchased by the Purchaser and shall be transferred to the Purchaser on
the record books of the Transfer Agent, and the Purchaser shall be deemed to be
the owner of such Listed Shares from and after the Optional Purchase Date and
shall have all rights as the owner of such Listed Shares.
SECTION 5
Responsibility of Transfer Agent
5.1 Responsibility of Transfer Agent for Purchase Provisions. The
Transfer Agent, in such capacity, shall not at any time be under any duty or
responsibility to any holder of Listed Shares to determine whether any Mandatory
Purchase Event has occurred, or with respect to the amount of the Purchase Price
to be paid, or with respect to the method employed, or herein provided to be
employed, in calculating the same. The Transfer Agent, in such capacity, shall
not be responsible for any failure of the Purchaser to make or calculate any
cash payment or for any failure of the Purchaser to comply with any of the
Purchase Provisions.
5.2 Deliveries to Holders and Former Holders. Whenever the Purchaser or
the Company may deliver to the Transfer Agent for mailing or delivery to the
record holders or former record holders of Listed Shares any notice,
communication, Purchase Price or other payment or other matter deliverable to
record holders or former record holders of Listed Shares under these Purchase
Provisions, the Transfer Agent shall promptly mail or deliver such notice,
communication or payment or matter to the relevant record holder or former
record holder, and the Company shall use its reasonable efforts to cause the
Transfer Agent to do so.
SECTION 6
Binding Effect on the Purchaser
6.1 Adoption of Purchase Provisions by Purchaser. KMI, as the initial
Purchaser pursuant to these Purchase Provisions, has executed in the place
provided below and delivered to the Company a copy of these Purchase Provisions,
pursuant to which KMI has, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, adopted and agreed to be subject
to and bound by these Purchase Provisions as the Purchaser hereunder. KMI
further acknowledges and agrees that these Purchase Provisions and its
obligations hereunder are for the benefit of and shall be enforceable by any
record holder of Listed Shares.
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SECTION 7
Certain Covenants
7.1 Filings and Consents. The Purchaser and the Company will use their
reasonable best efforts to make or cause to be made any registrations and
filings with governmental authorities required of such party or any of its
subsidiaries or Affiliates, and to obtain any consents, authorizations,
approvals or failures to object of governmental authorities required with
respect to such party or any of its subsidiaries or Affiliates, that are
necessary for the consummation of a Mandatory Purchase or an Optional Purchase
hereunder, (i) in the case of a Mandatory Purchase, prior to the occurrence of a
Mandatory Purchase Event, and (ii) in the case of an Optional Purchase, prior to
the Optional Purchase Date.
7.2 Rule 13e-3. KMI agrees that it will comply with Rule 13e-3 under
the Securities Exchange Act in connection with a Mandatory Purchase Event or if
it makes an Optional Purchase.
SECTION 8
Amendments
8.1 Amendment. These Purchase Provisions may be amended by an agreement
in writing signed by the Company and the Purchaser without the vote, approval or
consent of the holders of any of the Listed Shares, unless such amendment would
(a) reduce the time for any notice to which the holders of the Listed Shares
would be entitled under these Purchase Provisions, or (b) have a material
adverse effect on the powers, preferences or rights of the Listed Shares, as
determined in the sole discretion of the Board of Directors of the Company, in
which case such amendment must be approved by such vote or consent of the
holders of Listed Shares, if any, as may be required by the LLC Agreement.
8.2 Certain Amendments Without Vote. Notwithstanding the foregoing
provisions and the other provisions of the LLC Agreement with respect to
amendments, the Board of Directors of the Company has reserved the right to
make, with the written consent of the Purchaser, and may make, with the written
consent of the Purchaser, changes in the Listed Shares and these Purchase
Provisions to meet the requirements of applicable securities and other laws and
regulations and stock exchange rules and to effect the intent of the LLC
Agreement, and also may make other changes which the Board of Directors of the
Company determines in its sole discretion will not have a material adverse
effect on the rights and privileges of the Listed Shares, in each case without
the vote, consent or approval of the holders of any Listed Shares. In addition,
notwithstanding the foregoing provisions with respect to amendments, (a) in the
case of (i) any merger of the Partnership, whether or not the Partnership is the
survivor, that is the subject of a unitholder vote and does not constitute a
Mandatory Purchase Event, and (ii) any recapitalization, reorganization or
similar transaction of the Partnership, in each case that is the subject of a
unitholder vote and does not constitute a Mandatory Purchase Event, or (b) if
any Person becomes a Controlling Entity in a transaction complying with the
requirements of clauses (b)(i) through (b)(iv) of the definition of "Mandatory
Purchase Event" in these Purchase Provisions, such amendments as the Board of
Directors of the Company deems appropriate in its good faith discretion and are
agreed to by the Purchaser may be made in these Purchase
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Provisions to accommodate, in the case of clause (a), such merger,
recapitalization, reorganization, or similar transaction, or, in the case of
clause (b), the assumption by such Person of the obligations of the Purchaser
under these Purchase Provisions, and any such amendment shall be deemed not to
have such a material adverse effect or reduce the time for any notice, and
therefore may be made without the vote, consent or approval of the Holders of
any of the Listed Shares.
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ADOPTION BY XXXXXX XXXXXX, INC.
KMI, as the Purchaser pursuant to these Purchase Provisions, has
executed in the place provided below and delivered to the Company a copy of
these Purchase Provisions, pursuant to which KMI has, for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
adopted and agreed to be subject to and bound by these Purchase Provisions as
the Purchaser hereunder. KMI further acknowledges and agrees that these Purchase
Provisions and its obligations hereunder are for the benefit of and shall be
enforceable by any record holder of Listed Shares.
Dated as of July 23, 2002
XXXXXX XXXXXX, INC.
By: /s/ XXXXXX XXXXXXXXXX
-------------------------------------
Xxxxxx Xxxxxxxxxx
Vice President and General Counsel
ANNEX C
DELEGATION OF CONTROL AGREEMENT
C-1
DELEGATION OF CONTROL AGREEMENT
AMONG
KINDER XXXXXX X.X., INC.
XXXXXX XXXXXX MANAGEMENT, LLC
XXXXXX XXXXXX ENERGY PARTNERS, X.X.
XXXXXX XXXXXX OPERATING L.P. "A"
XXXXXX XXXXXX OPERATING L.P. "B"
XXXXXX XXXXXX OPERATING L.P. "C"
XXXXXX XXXXXX OPERATING L.P. "D"
AND
XXXXXX XXXXXX CO(2) COMPANY, L.P.
This Delegation of Control Agreement (the "Agreement") dated May 18, 2001
(the "Effective Date"), is among Kinder Xxxxxx X.X., Inc., a Delaware
corporation (the "General Partner"), Xxxxxx Xxxxxx Management, LLC, a Delaware
limited liability company ("Management"), Xxxxxx Xxxxxx Energy Partners, L.P., a
Delaware limited partnership (the "Master Partnership"), Xxxxxx Xxxxxx Operating
L.P. "A", a Delaware limited partnership ("OLP "A""), Xxxxxx Xxxxxx Operating
L.P. "B", a Delaware limited partnership ("OLP "B""), Xxxxxx Xxxxxx Operating
L.P. "C", a Delaware limited partnership ("OLP "C""), Xxxxxx Xxxxxx Operating
L.P. "D", a Delaware limited partnership ("OLP "D""), and Xxxxxx Xxxxxx CO2
Company, L.P., a Texas limited partnership ("CO2" and together with XXX "X," XXX
"X," OLP "C," and OLP "D," the "Operating Partnerships," and, together with the
Master Partnership, the "Partnerships"). The General Partner is the sole general
partner of the Partnerships.
Capitalized terms used but not defined in this Agreement shall have the
meanings given to them in the Master Partnership's Third Amended and Restated
Agreement of Limited Partnership (the "Master Partnership Agreement").
References herein to the Master Partnership Agreement or any limited partnership
agreement of an Operating Partnership (an "Operating Partnership Agreement") in
a context that contemplates a future time shall mean the Master Partnership
Agreement or an Operating Partnership Agreement (collectively, the "Partnership
Agreements") as amended or restated at the applicable time. Management is an
"Indemnitee" and an "Affiliate" of the Partnerships and the General Partner, as
each of those terms is defined in Article II of the Master Partnership Agreement
and in each of the Operating Partnership Agreements.
RECITALS:
The Partnerships and the General Partner wish to delegate to Management all
the General Partner's power and authority to manage and control the business and
affairs of the Partnerships to the fullest extent permitted under the
Partnership Agreements and Delaware law, subject to the terms and conditions of
this Agreement, and Management wishes to accept such delegation.
Section 6.6(c) of the Master Partnership Agreement and Section 6.6(b) of
each of the Operating Partnership Agreements permit the General Partner to enter
into an agreement with Management to render services to the Partnerships and the
General Partner in the discharge of the General Partner's duties as general
partner to the Partnerships.
Concurrently with the execution of this Agreement, Management is issuing
and selling in an initial public offering (the "Offering") its shares
representing limited liability company interests in Management (the "Listed
Shares"), and the Master Partnership is issuing to Management its i-units
representing limited partner interests in the Master Partnership.
Each of the Partnerships wishes to confirm hereby its agreement with the
terms of this Agreement relating to the management and control of the
Partnership's and the Operating Partnerships' business and affairs and certain
other agreements for the benefit of the General Partner, Management, their
Affiliates and certain Indemnitees and Indemnified Parties.
NOW, THEREFORE, the parties hereto agree as follows:
1. Delegation and Related Matters.
1.1. Delegation by General Partner to Management. The General Partner
hereby irrevocably delegates to Management, to the fullest extent permitted
under the Partnership Agreements and Delaware law, all of the General Partner's
power and authority to manage and control the business and affairs of the
Partnerships (the "Maximum Permitted Delegation"), subject to termination only
in accordance with Section 9 hereof; and all provisions in this Agreement are
qualified to the extent required in order for all such provisions to be
consistent, now and in the future, with the Maximum Permitted Delegation. The
power and authority of the General Partner are set forth in the Partnership
Agreements (in particular, in Section 6.1 of each of the Partnership Agreements)
and are provided by Delaware law. If the General Partner's power and authority
as general partner of any Partnership(s) are modified pursuant to a subsequent
amendment or restatement of any of the Partnership Agreements or changes in
Delaware law, then the power and authority delegated to Management with respect
to such Partnership(s) shall be modified on the same basis.
Notwithstanding the foregoing, the General Partner is not hereby
withdrawing from the Partnerships as a general partner or otherwise; and the
General Partner is retaining all of its Partnership Interests, its Percentage
Interests and its rights to profits, losses and distributions from the
Partnerships, and none of these are hereby being assigned or transferred by the
General Partner to Management.
1.2. Continued Responsibility of General Partner. Notwithstanding the
General Partner's making the Maximum Permitted Delegation to Management, the
General Partner shall remain responsible to the Partnerships for actions taken
or omitted by Management within the scope of such delegation as if the General
Partner had itself taken or omitted to take any such actions. The General
Partner's responsibility to each of the Partnerships is not expanded or limited
by this Agreement and shall be in effect to the same extent and on the same
terms and conditions as specified in the applicable Partnership Agreement or
under Delaware law. Pursuant to Section 6.8(b) of each of the Partnership
Agreements, in each case as amended as of the Effective Date, the General
Partner is responsible for the misconduct or negligence of Management in
performing the Maximum Permitted Delegation but is not responsible for any
misconduct or negligence of other agents appointed by the General Partner in
good faith. The General Partner shall be entitled to monitor Management's
performance under this Agreement. The General Partner shall have the right and
power to direct Management to take, or to cease from taking, any action that
would constitute a breach of any Partnership Agreement. The General Partner
shall have access to the books, records and documents of the Partnerships and
Management and to their officers, directors and employees to monitor
Management's performance under this Agreement.
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The General Partner shall have the right and power to direct Management to take,
or to cease from taking, any action that would constitute a breach of any
Partnership Agreement. The General Partner shall have access to the books,
records and documents of the Partnerships and Management and to their
officers, directors and employees to monitor Management's performance under
this Agreement.
1.3. Acceptance of Delegation by Management. Management hereby accepts
the Maximum Permitted Delegation and agrees to perform the Maximum Permitted
Delegation according to the standards specified in Section 2 hereto.
1.4. Approval by General Partner. Without expanding or limiting the
definition of Maximum Permitted Delegation, the taking by Management of the
actions specified in Schedule 1.4 hereto shall be subject to the approval of the
General Partner.
1.5. Use of Affiliates by Management. The Partnerships and the General
Partner agree that Management may perform the Maximum Permitted Delegation
either directly or through one or more Affiliates. If Management performs
through any Affiliate, (i) Management shall remain fully responsible for actions
taken or omitted by the Affiliate and (ii) for purposes of Sections 1, 2, 3, 4,
5, 6, 7 and 8 hereof, Management and all such Affiliates shall be taken together
and treated as Management.
2. Standards of Performance. In performing the Maximum Permitted Delegation,
Management shall be responsible to the Partnerships and the General Partner to
the same extent and according to the same standards as would have been
applicable to the General Partner in favor of the Partnerships had the General
Partner continued to exercise the delegated power and authority directly. Among
other provisions of the Partnership Agreements that are applicable to the duties
and standards of performance assumed by Management, but without limiting the
generality of other provisions in this Agreement, the following Sections of each
of the Partnership Agreements, in each case as amended, shall be applicable to
Management's performance of the Maximum Permitted Delegation: Sections 6.8, 6.9
and 6.10.
3. Conflicts of Interest. All potential and actual conflicts of interest that
exist or arise between the General Partner, Management and each of their
Affiliates, on the one hand, and the Partnerships, any subsidiary of the
Partnerships, any Partner or any Assignee, on the other hand, shall be subject
to Section 6.9 of each of the Partnership Agreements, in each case as amended as
of the Effective Date. Among other possible courses of action under these
Sections that are available to resolve conflicts of interest, the General
Partner and Management have reserved the right granted under these Sections to
seek Special Approval of the General Partner's Conflicts and Audit Committee
with respect to any such conflict.
4. Reliance on Counsel, etc. Pursuant to Section 6.10 of each of the
Partnership Agreements, in each case as amended, Management shall have the
benefit of all of the provisions of these Sections to the same extent as the
General Partner.
5. Reliance by Third Parties. Pursuant to Section 6.14 of the Master
Partnership Agreement and Section 6.12 of each of the Operating Partnership
Agreements, in each case as amended, third parties dealing with the Partnerships
shall be entitled to assume that Management has the
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full power and authority of the General Partner in acting for the Partnerships.
6. Indemnity. Management and its officers and directors and all other persons
covered within the definition of Indemnitee shall be entitled to mandatory
indemnity and shall be entitled to be held harmless by the Partnerships to the
extent and subject to the conditions provided in Section 6.7 of each of the
Partnership Agreements, in each case as amended, with the General Partner hereby
deeming it advisable that such indemnification and holding harmless shall
(rather than may) be done and provided by the Partnerships to the fullest extent
and subject to the conditions provided therein.
The General Partner and the other parties specified in Section 6.7 of each
of the Partnership Agreements, in each case as amended, shall continue to be
entitled to the benefits of said Sections.
7. Damage Limitations. Since each of Management and certain other parties
specified in the Partnership Agreements who are associated with Management are
Indemnitees, the provisions of Section 6.8 in the Master Partnership Agreement
and Section 6.4(b) of each of the Operating Partnership Agreements, in each case
as amended, regarding the limitation on an Indemnitee's liability for monetary
damages shall be applicable to all such Indemnitees.
The General Partner and other Indemnitees shall continue to be entitled to
the limitation on liability for monetary damages set forth in Section 6.8 of
each of the Partnership Agreements, in each case as amended as of the Effective
Date.
8. Reimbursement. Management shall be entitled to be reimbursed by the
Partnerships for direct, indirect, necessary or appropriate expenses it incurs
or payments it makes on behalf of the Partnerships, or which are allocable to or
otherwise reasonably incurred by the General Partner or Management, to the
fullest extent contemplated in both Section 6.4(b) and Section 6.6(c) of the
Master Partnership Agreement and in both Section 6.4(b) and Section 6.6(b) of
each of the Operating Partnership Agreements, in each case as amended. It is
understood and agreed that Management shall be entitled to reimbursement under
such Sections for all fees and expenses incurred in connection with the
performance of its obligations under the Securities Act of 1933, as amended, the
Securities Act of 1934, as amended, and any other federal and state laws
applicable to Management, including, without limitation, fees and expenses of
legal counsel, accountants and financial advisors.
The General Partner shall continue to be entitled to be reimbursed as
provided in these Sections of the Partnership Agreements.
9. Termination of Delegation. The Maximum Permitted Delegation under this
Agreement commences on the Effective Date and shall continue in effect until the
occurrence of the earliest of any of the following, at which time the delegation
of power and authority by the General Partner to Management shall cease and
terminate as provided below:
9.1. All outstanding Listed Shares shall become owned by the General
Partner or its Affiliates (including, without limitation, Xxxxxx Xxxxxx, Inc.
("KMI") or its Affiliates) and such
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termination of delegated power and authority shall have been approved by the
General Partner and Management at which time the delegation shall cease as to
all Partnerships; or
9.2. The General Partner shall withdraw or shall be removed as general
partner of any of the Partnerships, at which time the delegation shall cease as
to those Partnerships from which the General Partner shall have withdrawn or
shall have been removed; or
9.3. Such termination of delegated power and authority shall have been
approved by (i) the General Partner, (ii) Management and (iii) holders (other
than the General Partner and its Affiliates, including KMI and its Affiliates)
of a majority of the outstanding Listed Shares (excluding any Listed Shares
owned by the General Partner and its Affiliates, including KMI).
The General Partner hereby covenants and agrees that it shall not withdraw
as general partner of any of the Partnerships so long as any of the Listed
Shares are owned by any persons other than KMI or its Affiliates.
10. Miscellaneous.
10.1. References. Except as specifically provided otherwise, references
to "Articles" and "Sections" are to Articles and Sections of this Agreement.
10.2. Pronouns and Plurals. Whenever the context may require, any pronoun
used in this Agreement shall include the corresponding masculine, feminine or
neuter forms, and the singular form of nouns, pronouns and verbs shall include
the plural and vice versa.
10.3. Further Action. The parties shall execute and deliver all
documents, provide all information and take or refrain from taking actions as
may be necessary or appropriate to achieve the purposes of this Agreement.
10.4. Binding Effect; Assignment. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their successors and
permitted assigns. This Agreement may not be assigned, in whole or in part, by
any party to this Agreement without the written consent of the other parties to
this Agreement.
10.5. Integration. This Agreement and the other instruments and
agreements specifically referenced herein constitute the entire agreement among
parties hereto.
10.6. Creditors. None of the provisions of this Agreement shall be for
the benefit of, or shall be enforceable by, any creditor of the Partnerships,
the General Partner or Management.
10.7. Waiver. No failure by any party to insist upon the strict
performance of any covenant, duty, agreement or condition of this Agreement or
to exercise any right or remedy consequent upon a breach thereof shall
constitute waiver of any such breach or any other covenant, duty, agreement or
condition.
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10.8. Counterparts. This Agreement may be executed in counterparts, all
of which together shall constitute an agreement binding on all parties hereto,
notwithstanding that all such parties are not signatories to the original or the
same counterpart.
10.9. Applicable Law. This Agreement shall be construed in accordance
with and governed by the laws of the State of Delaware, without regard to the
principles of conflicts of law.
10.10. Invalidity of Provisions. If any provision of this Agreement is or
becomes invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein shall not be
affected thereby.
10.11. Amendments. This Agreement may be amended by an agreement in
writing signed by Management, the General Partner and the Partnerships without
the vote, approval or consent of the holders of Listed Shares (as such term is
defined in the Amended and Restated Limited Liability Company Agreement of
Management, as amended, restated or supplemented (the "LLC Agreement")), unless
such amendment would, as determined in the sole discretion of the board of
directors of Management, materially adversely affect the rights or preferences
of such holders of Listed Shares or would reduce the time for any notice to
which such holders of Listed Shares may be entitled, in which case such
amendment shall require the affirmative vote or consent of the holders of at
least a majority of the Listed Shares then Outstanding (as that term is defined
under the LLC Agreement).
IN WITNESS WHEREOF, the parties hereto have executed this Agreement to
be effective as of the Effective Date.
"General Partner"
KINDER XXXXXX X.X., INC.
By: /s/ C. PARK SHAPER
------------------------------------
C. Park Shaper
Vice President, Treasurer and Chief
Financial Officer
"Management"
XXXXXX XXXXXX MANAGEMENT, LLC
By: /s/ XXXXXX XXXXXXXXXX
------------------------------------
Xxxxxx Xxxxxxxxxx
Vice President, General Counsel and
Secretary
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"Master Partnership"
XXXXXX XXXXXX ENERGY PARTNERS, L.P.
By: Kinder Xxxxxx X.X., Inc.
By: /s/ C. PARK SHAPER
------------------------------------
C. Park Shaper
Vice President, Treasurer and Chief
Financial Officer
OLP "A"
XXXXXX XXXXXX OPERATING L.P. "A"
By: Kinder Xxxxxx X.X., Inc.
By: /s/ C. PARK SHAPER
------------------------------------
C. Park Shaper
Vice President, Treasurer and Chief
Financial Officer
OLP "B"
XXXXXX XXXXXX OPERATING L.P. "B"
By: Kinder Xxxxxx X.X., Inc.
By: /s/ C. PARK SHAPER
------------------------------------
C. Park Shaper
Vice President, Treasurer and Chief
Financial Officer
OLP "C"
XXXXXX XXXXXX OPERATING L.P. "C"
By: Kinder Xxxxxx X.X., Inc.
By: /s/ C. PARK SHAPER
------------------------------------
C. Park Shaper
Vice President, Treasurer and Chief
Financial Officer
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OLP "D"
XXXXXX XXXXXX OPERATING L.P. "D"
By: Kinder Xxxxxx X.X., Inc.
By: /s/ C. PARK SHAPER
------------------------------------
C. Park Shaper
Vice President, Treasurer and Chief
Financial Officer
CO2
XXXXXX XXXXXX CO2 COMPANY, L.P.
By: Kinder Xxxxxx X.X., Inc.
By: /s/ C. PARK SHAPER
------------------------------------
C. Park Shaper
Vice President, Treasurer and Chief
Financial Officer
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SCHEDULE 1.4
Actions Subject to Approval by General Partner
o amend or propose an amendment to the Master Partnership Agreement, or
o change the amount of the distribution made on the Master Partnership common
units, or
o allow a merger or consolidation involving the Master Partnership, or
o allow a sale or exchange of all or substantially all of the assets of the
Master Partnership, or
o dissolve or liquidate the Master Partnership, or
o take any action requiring approval of any class of units of the Master
Partnership, or
o call any meetings of the common unitholders of the Master Partnership, or
o take any action that, under the terms of the Master Partnership Agreement,
must or should receive a special approval of the Conflicts and Audit
Committee of the General Partner, or
o take any action that, under the terms of the Master Partnership Agreement,
cannot be taken by the General Partner without the approval of all
outstanding units of the Master Partnership, or
o settle or compromise any claim, dispute or litigation directly against or
otherwise relating to indemnification of Management, the General Partner,
Affiliates of the General Partner or Management, or any of their officers,
directors, managers or members, or
o settle or compromise any claim, dispute or litigation relating to the
i-units, the Listed Shares or the Offering, or
o settle or compromise any claim, dispute or litigation involving tax
matters, or
o allow the Master Partnership to incur indebtedness exceeding 50% of the
market value of all of the then outstanding units of the Master
Partnership, or
o allow the Master Partnership to issue units in one transaction, or in a
series of related transactions, having a market value in excess of 20% of
the market value of then outstanding units of the Master Partnership.
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