Exhibit 3.01
SECOND AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
VALERO GP HOLDINGS, LLC
TABLE OF CONTENTS
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ARTICLE I DEFINITIONS
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1
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Section 1.1
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Definitions
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1
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Section 1.2
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Construction
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12
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ARTICLE II ORGANIZATION
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12
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Section 2.1
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Formation
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12
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Section 2.2
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Name
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13
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Section 2.3
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Registered Office; Registered Agent; Principal Office; Other Offices
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13
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Section 2.4
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Purposes and Business
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13
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Section 2.5
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Powers
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14
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Section 2.6
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Power of Attorney
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14
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Section 2.7
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Term
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15
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Section 2.8
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Title to Company Assets
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15
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Section 2.9
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Certain Undertakings Relating to the Separateness of the Company
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16
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ARTICLE III RIGHTS OF MEMBERS
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17
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Section 3.1
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Members
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17
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Section 3.2
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Management of Business
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17
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Section 3.3
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Outside Activities of the Members
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18
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Section 3.4
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Rights of Members
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18
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ARTICLE IV CERTIFICATES; RECORD HOLDERS; TRANSFER OF INTERESTS; REDEMPTION OF INTERESTS
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19
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Section 4.1
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Certificates
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19
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Section 4.2
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Mutilated, Destroyed, Lost or Stolen Certificates
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19
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Section 4.3
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Record Holders
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20
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Section 4.4
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Transfer Generally
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20
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Section 4.5
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Registration and Transfer of Interests
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20
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Section 4.6
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Restrictions on Transfers
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21
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Section 4.7
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Citizenship Certificates; Non-citizen Assignees
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22
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Section 4.8
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Redemption of Interests of Non-citizen Assignees
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23
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ARTICLE V CAPITAL CONTRIBUTIONS AND ISSUANCE OF INTERESTS
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24
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Section 5.1
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Unit Split
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24
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Section 5.2
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Contributions by Initial Members
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24
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Section 5.3
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Interest and Withdrawal
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24
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Section 5.4
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Capital Accounts
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24
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Section 5.5
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Issuances of Additional Company Securities
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27
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Section 5.6
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Limitations on Issuance of Additional Company Securities
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27
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Section 5.7
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No Preemptive Rights
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28
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Section 5.8
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Splits and Combinations
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28
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Section 5.9
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Fully Paid and Non-Assessable Nature of Interests
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28
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ARTICLE VI ALLOCATIONS AND DISTRIBUTIONS
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28
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Section 6.1
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Allocations for Capital Account Purposes
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28
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i
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Section 6.2
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Allocations for Tax Purposes
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32
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Section 6.3
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Requirement of Distributions; Distributions to Record Holders
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34
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ARTICLE VII MANAGEMENT AND OPERATION OF BUSINESS
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35
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Section 7.1
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Board of Directors
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35
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Section 7.2
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Certificate of Formation
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40
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Section 7.3
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Restrictions on the Board of Directors Authority
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41
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Section 7.4
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Officers.
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41
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Section 7.5
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Outside Activities
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43
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Section 7.6
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Loans or Contributions from the Company or Group Members
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44
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Section 7.7
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Indemnification
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44
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Section 7.8
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Exculpation of Liability of Indemnitees
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45
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Section 7.9
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Resolution of Conflicts of Interest; Standards of Conduct and Modification of Duties
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46
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Section 7.10
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Duties of Officers and Directors
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47
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Section 7.11
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Purchase or Sale of Company Securities
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47
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Section 7.12
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Registration Rights of the Initial Members and their Affiliates
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47
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Section 7.13
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Reliance by Third Parties
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51
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ARTICLE VIII BOOKS, RECORDS, ACCOUNTING AND REPORTS
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51
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Section 8.1
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Records and Accounting
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51
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Section 8.2
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Fiscal Year
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51
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Section 8.3
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Reports
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52
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ARTICLE IX TAX MATTERS
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52
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Section 9.1
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Tax Returns and Information
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52
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Section 9.2
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Tax Elections
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52
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Section 9.3
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Tax Controversies
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52
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Section 9.4
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Withholding
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53
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ARTICLE X DISSOLUTION AND LIQUIDATION
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53
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Section 10.1
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Dissolution
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53
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Section 10.2
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Liquidator
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53
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Section 10.3
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Liquidation
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54
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Section 10.4
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Cancellation of Certificate of Formation
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55
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Section 10.5
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Return of Contributions
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55
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Section 10.6
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Waiver of Partition
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55
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Section 10.7
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Capital Account Restoration
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55
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Section 10.8
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Certain Prohibited Acts
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55
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ARTICLE XI AMENDMENT OF AGREEMENT; MEETINGS OF MEMBERS; RECORD DATE
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55
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Section 11.1
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Amendment of Limited Liability Company Agreement
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55
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Section 11.2
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Amendment Requirements
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58
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Section 11.3
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Unitholder Meetings
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58
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Section 11.4
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Notice of Meetings of Members
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59
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Section 11.5
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Record Date
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60
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ii
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Section 11.6
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Adjournment
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60
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Section 11.7
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Waiver of Notice; Approval of Meeting
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60
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Section 11.8
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Quorum; Required Vote for Member Action; Voting for Directors
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60
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Section 11.9
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Conduct of a Meeting; Member Lists
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61
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Section 11.10
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Action Without a Meeting
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61
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Section 11.11
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Voting and Other Rights
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61
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Section 11.12
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Proxies and Voting
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62
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Section 11.13
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Notice of Member Business and Nominations
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62
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ARTICLE XII MERGER, CONSOLIDATION OR CONVERSION
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65
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Section 12.1
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Authority
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65
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Section 12.2
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Procedure for Merger, Consolidation or Conversion
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66
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Section 12.3
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Approval by Members of Merger, Consolidation or Conversion
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67
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Section 12.4
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Certificate of Merger or Conversion
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67
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Section 12.5
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Effect of Merger
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68
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Section 12.6
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Business Combination Limitations
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68
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ARTICLE XIII RIGHT TO ACQUIRE INTERESTS
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68
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Section 13.1
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Right to Acquire Interests
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68
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ARTICLE XIV GENERAL PROVISIONS
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70
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Section 14.1
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Addresses and Notices
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70
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Section 14.2
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Further Action
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71
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Section 14.3
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Binding Effect
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71
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Section 14.4
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Integration
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71
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Section 14.5
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Creditors
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71
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Section 14.6
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Waiver
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71
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Section 14.7
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Counterparts
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71
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Section 14.8
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Applicable Law
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71
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Section 14.9
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Invalidity of Provisions
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71
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Section 14.10
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Consent of Members
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71
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Section 14.11
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Facsimile Signatures
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71
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iii
SECOND AMENDED AND RESTATED LIMITED LIABILITY COMPANY
AGREEMENT OF VALERO GP HOLDINGS, LLC
This SECOND AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT OF VALERO GP HOLDINGS,
LLC, dated as of July 19, 2006 is entered into by Diamond Shamrock Refining and Marketing Company,
Sigmor Corporation, The Shamrock Pipe Line Corporation, Diamond Shamrock Refining Company, L.P.,
Valero RefiningNew Orleans, L.L.C., Valero Refining CompanyCalifornia , Valero RefiningTexas,
L.P. and together with any other Persons who hereafter become Members in Valero GP Holdings, LLC or
parties hereto as provided herein. In consideration of the covenants, conditions and agreements
contained herein, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1
Definitions
.
The following definitions shall be for all purposes, unless otherwise clearly indicated to the
contrary, applied to the terms used in this Agreement.
"
Additional Member
means a Member admitted as a Member of the Company pursuant to Section 5.5
and who is shown as such on the books and records of the Company.
"
Adjusted Capital Account
means the Capital Account maintained for each Member as of the end
of each fiscal year of the Company, (a) increased by any amounts that such Member is obligated to
restore under the standards set by Treasury Regulation Section 1.704-1(b)(2)(ii)(c) (or is deemed
obligated to restore under Treasury Regulation Sections 1.704-2(g) and 1.704-2(i)(5)) and (b)
decreased by (i) the amount of all losses and deductions that, as of the end of such fiscal year,
are reasonably expected to be allocated to such Member in subsequent years under Sections 704(e)(2)
and 706(d) of the Code and Treasury Regulation Section 1.751-1(b)(2)(ii), and (ii) the amount of
all distributions that, as of the end of such fiscal year, are reasonably expected to be made to
such Member in subsequent years in accordance with the terms of this Agreement or otherwise to the
extent they exceed offsetting increases to such Members Capital Account that are reasonably
expected to occur during (or prior to) the year in which such distributions are reasonably expected
to be made (other than increases as a result of a minimum gain chargeback pursuant to Section
6.1(d)(i) or Section 6.1(d)(ii)). The foregoing definition of Adjusted Capital Account is intended
to comply with the provisions of Treasury Regulation Section 1.704-1(b)(2)(ii)(d) and shall be
interpreted consistently therewith. The Adjusted Capital Account of a Member in respect of a Unit
or any other Interest shall be the amount that such Adjusted Capital Account would be if such Unit
or other Interest were the only interest in the Company held by such Member from and after the date
on which such Unit or other Interest was first issued.
"
Adjusted Property
means any property the Carrying Value of which has been adjusted pursuant
to Section 5.4(d)(i) or Section 5.4(d)(ii).
"
Administration Agreement
means the Administration Agreement between the Company and Valero
GP, LLC dated as of the Closing Date.
1
"
Affiliate
means, with respect to any Person, any other Person that directly or indirectly
through one or more intermediaries controls, is controlled by or is under common control with the
Person in question. As used herein, the term control means the possession, direct or indirect, 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.
"
Agreed Allocation
means any allocation, other than a Required Allocation, of an item of
income, gain, loss or deduction pursuant to the provisions of Section 6.1, including, without
limitation, a Curative Allocation (if appropriate to the context in which the term Agreed
Allocation is used).
"
Agreed Value
of any Contributed Property means the fair market value of such property or
other consideration at the time of contribution as determined by the Board of Directors. The Board
of Directors shall use such method as it determines to be appropriate to allocate the aggregate
Agreed Value of Contributed Properties contributed to the Company in a single or integrated
transaction among each separate property on a basis proportional to the fair market value of each
Contributed Property.
"
Agreement
means this Second Amended and Restated Limited Liability Company Agreement of
Valero GP Holdings, LLC, as it may be amended, supplemented or restated from time to time.
"
Amended and Restated Limited Liability Company Agreement
means the Amended and Restated
Limited Liability Company Agreement of UDS Logistics, LLC, dated as of April 16, 2001, as amended
through the date of this Agreement.
"
Anniversary
has the meaning assigned to such term in Section 11.13(b).
"
Associate
means, when used to indicate a relationship with any Person, (a) any corporation
or organization of which such Person is a director, officer or partner or is, directly or
indirectly, the owner of 20% or more of any class of voting stock or other voting interest; (b) any
trust or other estate in which such Person has at least a 20% beneficial interest or as to which
such Person serves as trustee or in a similar fiduciary capacity; and (c) any relative or spouse of
such Person, or any relative of such spouse, who has the same principal residence as such Person.
"
Available Cash
means, with respect to any Quarter ending prior to the Liquidation Date:
(a) the sum of all cash and cash equivalents of the Company Group on hand on the date
of determination of Available Cash with respect to such Quarter,
(b) less the amount of any cash reserves established by the Board of Directors to:
(i) permit Riverwalk Logistics, L.P. to make capital contributions to the MLP
to maintain its 2% general partner interest upon the issuance of additional
partnership securities by the MLP;
2
(ii) comply with applicable law or any loan agreement, security agreement,
mortgage, debt instrument or other agreement or obligation to which any Group Member
is a party or by which it is bound or its assets are subject;
(iii) provide funds for distributions under Section 6.3 and Section 6.4 with
respect to any one or more of the next four Quarters; and
(iv) otherwise provide for the proper conduct of the business of the Company
Group (including reserves for future capital expenditures and for anticipated future
credit needs of the Company Group);
provided that disbursements made by a Group Member or cash reserves established, increased
or reduced after the end of such Quarter but on or before the date of determination of
Available Cash with respect to such Quarter shall be deemed to have been made, established,
increased or reduced, for purposes of determining Available Cash, within such Quarter if the
Board of Directors so determines.
Notwithstanding the foregoing,
Available Cash
with respect to the Quarter in which the
Liquidation Date occurs and any subsequent Quarter shall equal zero.
"
Board of Directors
has the meaning assigned to such term in Section 7.1(a).
"
Book-Tax Disparity
means, with respect to any item of Contributed Property or Adjusted
Property, as of the date of any determination, the difference between the Carrying Value of such
Contributed Property or Adjusted Property and the adjusted basis thereof for federal income tax
purposes as of such date. A Members share of the Companys Book-Tax Disparities in all of its
Contributed Property and Adjusted Property will be reflected by the difference between such
Members Capital Account balance as maintained pursuant to Section 5.4 and the hypothetical balance
of such Members Capital Account computed as if it had been maintained strictly in accordance with
federal income tax accounting principles.
"
Business Day
means Monday through Friday of each week, except that a legal holiday
recognized as such by the government of the United States of America or the State of Texas shall
not be regarded as a Business Day.
"
Capital Account
means the capital account maintained for a Member pursuant to Section 5.4.
The Capital Account of a Member in respect of a Unit or any other Interest shall be the amount
that such Capital Account would be if such Unit or other Interest were the only
interest in the Company held by such Member from and after the date on which such Unit or
other Interest was first issued.
"
Capital Contribution
means any cash, cash equivalents or the Net Agreed Value of Contributed
Property that a Member contributes to the Company pursuant to this Agreement.
"
Carrying Value
means (a) with respect to a Contributed Property, the Agreed Value of such
property reduced (but not below zero) by all depreciation, amortization and cost recovery
deductions charged to the Members Capital Accounts in respect of such Contributed Property, and
(b) with respect to any other Company property, the adjusted basis of such property for
3
federal income tax purposes, all as of the time of determination. The Carrying Value of any property shall
be adjusted from time to time in accordance with Section 5.4(d)(i) and Section 5.4(d)(ii) and to
reflect changes, additions or other adjustments to the Carrying Value for dispositions and
acquisitions of Company properties, as deemed appropriate by the Board of Directors.
"
Certificate
means a certificate (i) substantially in the form of Exhibit A to this
Agreement, (ii) issued in global form in accordance with the rules and regulations of the
Depositary or (iii) in such other form as may be adopted by the Board of Directors, issued by the
Company evidencing ownership of one or more Units or a certificate, in such form as may be adopted
by the Board of Directors, issued by the Company evidencing ownership of one or more other Company
Securities.
"
Certificate of Formation
means the Certificate of Formation of the Company filed with the
Secretary of State of the State of Delaware as referenced in Section 7.2, as such Certificate of
Formation may be amended, supplemented or restated from time to time.
"
Chairman of the Board
has the meaning assigned to such term in Section 7.1.
"
Citizenship Certification
means a properly completed certificate in such form as may be
specified by the Board of Directors by which a Member certifies that he (and if he is a nominee
holding for the account of another Person, that to the best of his knowledge such other Person) is
an Eligible Citizen.
"
Closing Date
means the first date on which Units are sold by the Company to the Underwriters
pursuant to the provisions of the Underwriting Agreement.
"
Closing Price
has the meaning assigned to such term in Section 13.1(a).
"
Code
means the Internal Revenue Code of 1986, as amended and in effect from time to time.
Any reference herein to a specific section or sections of the Code shall be deemed to include a
reference to any corresponding provision of any successor law.
"
Commission
means the United States Securities and Exchange Commission.
"
Company
means Valero GP Holdings, LLC, a Delaware limited liability company, and any
successors thereto.
"
Company Group
means the Company and any Subsidiary of the Company, treated as a single
consolidated entity, but excluding the MLP Group.
"
Company Minimum Gain
means that amount determined in accordance with the principles of
Treasury Regulation Section 1.704-2(d).
"
Company Security
means any class or series of equity interest in the Company (but excluding
any options, rights, warrants and appreciation rights relating to an equity interest in the
Company), including without limitation, Units.
4
"
Conflicts Committee
means a committee of the Board of Directors composed entirely of two or
more Independent Directors who are not (a) officers or employees of the Company or any Subsidiary
of the Company, (b) directors, officers or employees of any Affiliate of the Company or its
Subsidiaries or (c) holders of any ownership interest in the Company Group or the MLP Group other
than Units or MLP Common Units.
"
Contributed Property
means each property or other asset, in such form as may be permitted by
the Delaware Act, but excluding cash, contributed to the Company. Once the Carrying Value of a
Contributed Property is adjusted pursuant to Section 5.4(d), such property shall no longer
constitute a Contributed Property, but shall be deemed an Adjusted Property.
"
Curative Allocation
means any allocation of an item of income, gain, deduction, loss or
credit pursuant to the provisions of Section 6.1(d)(x).
"
Current Market Pric
e has the meaning assigned to such term in Section 13.1(a).
"
Delaware Act
means the Delaware Limited Liability Company Act, 6 Del. C. Section 18-101, et
seq., as amended, supplemented or restated from time to time, and any successor to such statute.
"
Depositary
means, with respect to any Units issued in global form, The Depository Trust
Company and its successors and permitted assigns.
"
DGCL
means the General Corporation Law of the State of Delaware, 8 Del. C. Section 101, et
seq., as amended, supplemented or restated from time to time, and any successor to such statute.
"
Director
means a member of the Board of Directors of the Company.
"
Economic Risk of Loss
has the meaning set forth in Treasury Regulation Section 1.752-2(a).
"
Eligible Citizen
means a Person qualified to own interests in real property in jurisdictions
in which any Group Member does business or proposes to do business from time to time, and whose
status as a Member does not or would not subject such Group Member to a significant risk of
cancellation or forfeiture of any of its properties or any interest therein.
"
Exchange Act
means the Securities Exchange Act of 1934, as amended, supplemented or restated
from time to time and any successor to such statute.
"
Group
means a Person that with or through any of its Affiliates or Associates has any
agreement, arrangement or understanding for the purpose of acquiring, holding, voting (except
voting pursuant to a revocable proxy or consent given to such Person in response to a proxy or
consent solicitation made to ten or more Persons), exercising investment power or disposing of any
Interests with any other Person that beneficially owns, or whose Affiliates or Associates
beneficially own, directly or indirectly, Interests.
"
Group Member
means a member of the Company Group.
5
"
Group Member Agreement
means the partnership agreement of any Group Member that is a limited
or general partnership, the limited liability company agreement of any Group Member, other than the
Company, that is a limited liability company, the certificate of incorporation and bylaws or
similar organizational documents of any Group Member that is a corporation, the joint venture
agreement or similar governing document of any Group Member that is a joint venture and the
governing or organizational or similar documents of any other Group Member that is a Person other
than a limited or general partnership, limited liability company, corporation or joint venture, as
such may be amended, supplemented or restated from time to time.
"
Holder
has the meaning assigned to such term in Section 7.12(a).
"
Indemnified Persons
has the meaning assigned to such term in Section 7.12(d).
"
Indemnitee
means (a) any Person who is or was a member, partner, officer, director, tax
matters partner, fiduciary or trustee of any Group Member, (b) any Person who is or was serving at
the request of the Company as an officer, director, member, partner, tax matters partner, fiduciary
or trustee of another Person;
provided
, that a Person shall not be an Indemnitee by reason of
providing, on a fee-for-services basis, trustee, fiduciary or custodial services and (c) any Person
the Company designates as an Indemnitee for purposes of this Agreement.
"
Independent Director
means a Director who meets the then current independence and other
standards required of audit committee members established by the Exchange Act and the rules and
regulations of the Commission thereunder and by the National Securities Exchange on which the Units
are listed for trading.
"
Initial Members
means the Members listed on Exhibit B hereto.
"
Initial Offering
means the initial offering and sale of Units to the public, as described in
the Registration Statement.
"
Initial Units
means the Units sold in the Initial Offering.
"
Interest
means the ownership interest of a Member in the Company, which may be evidenced by
Units or other Company Securities or a combination thereof or interest therein, and includes any
and all benefits to which such Member is entitled as provided in this Agreement,
together with all obligations of such Member to comply with the terms and provisions of this
Agreement.
"
Interest Designation
has the meaning assigned to such term in Section 5.5(b).
"
Issue Price
means the price at which a Unit is purchased from the Company, after taking into
account any sales commission or underwriting discount charged to the Company.
"
Liquidation Date
means the date on which an event giving rise to the dissolution of the
Company occurs.
6
"
Liquidator
means one or more Persons selected by the Board of Directors to perform the
functions described in Section 10.2 as liquidating trustee of the Company within the meaning of the
Delaware Act.
"
Member
means, unless the context otherwise requires, each Initial Member, each Substituted
Member, and each Additional Member.
"
Member Nonrecourse Debt
has the meaning set forth in Treasury Regulation Section
1.704-2(b)(4).
"
Member Nonrecourse Debt Minimum Gain
has the meaning set forth in Treasury Regulation
Section 1.704-2(i)(2).
"
Member Nonrecourse Deductions
means any and all items of loss, deduction or expenditure
(including, without limitation, any expenditure described in Section 705(a)(2)(B) of the Code)
that, in accordance with the principles of Treasury Regulation Section 1.704-2(i), are attributable
to a Member Nonrecourse Debt.
"
Merger Agreement
has the meaning assigned to such term in Section 12.1.
"
MLP
means Valero L.P., a Delaware limited partnership, and any successors thereto.
"
MLP Agreement
means the Third Amended and Restated Agreement of Limited Partnership of the
MLP, dated as of March 18, 2003, as amended through the date of this Agreement.
"
MLP Common Units
has the meaning assigned to the term Common Unit in the MLP Agreement.
"
MLP Group
means the MLP and any Subsidiary of the MLP, treated as a single consolidated
entity.
"
MLP Member
means a member of the MLP Group.
"
National Securities Exchange
means an exchange registered with the Commission under Section
6(a) of the Securities Exchange Act of 1934, as amended, supplemented or
restated from time to time, and any successor to such statute, or the Nasdaq National Market
or any successor thereto.
"
Net Agreed Value
means, (a) in the case of any Contributed Property, the Agreed Value of
such property reduced by any liabilities either assumed by the Company upon such contribution or to
which such property is subject when contributed, and (b) in the case of any property distributed to
a Member by the Company, the Companys Carrying Value of such property (as adjusted pursuant to
Section 5.4(d)(ii)) at the time such property is distributed, reduced by any indebtedness either
assumed by such Member upon such distribution or to which such property is subject at the time of
distribution, in either case, as determined under Section 752 of the Code.
7
"
Net Income
means, for any taxable year, the excess, if any, of the Companys items of income
and gain (other than those items taken into account in the computation of Net Termination Gain or
Net Termination Loss) for such taxable year over the Companys items of loss and deduction (other
than those items taken into account in the computation of Net Termination Gain or Net Termination
Loss) for such taxable year. The items included in the calculation of Net Income shall be
determined in accordance with Section 5.4(b) and shall not include any items specially allocated
under Section 6.1(d).
"
Net Loss
means, for any taxable year, the excess, if any, of the Companys items of loss and
deduction (other than those items taken into account in the computation of Net Termination Gain or
Net Termination Loss) for such taxable year over the Companys items of income and gain (other than
those items taken into account in the computation of Net Termination Gain or Net Termination Loss)
for such taxable year. The items included in the calculation of Net Loss shall be determined in
accordance with Section 5.4(b) and shall not include any items specially allocated under Section
6.1(d).
"
Net Termination Gain
means, for any taxable year, the sum, if positive, of all items of
income, gain, loss or deduction recognized by the Company after the Liquidation Date. The items
included in the determination of Net Termination Gain shall be determined in accordance with
Section 5.4(b) and shall not include any items of income, gain or loss specially allocated under
Section 6.1(d).
"
Net Termination Loss
means, for any taxable year, the sum, if negative, of all items of
income, gain, loss or deduction recognized by the Company after the Liquidation Date. The items
included in the determination of Net Termination Loss shall be determined in accordance with
Section 5.4(b) and shall not include any items of income, gain or loss specially allocated under
Section 6.1(d).
"
Non-citizen Assignee
means a Person whom the Board of Directors has determined does not
constitute an Eligible Citizen pursuant to Section 4.7.
"
Non-Compete Agreement
means that certain Non-Compete Agreement, dated as of the Closing
Date, among the Company, Riverwalk Logistics, L.P., Valero GP, LLC and the MLP.
"
Nonrecourse Built-in Gain
means with respect to any Contributed Properties or Adjusted
Properties that are subject to a mortgage or pledge securing a Nonrecourse Liability,
the amount of any taxable gain that would be allocated to the Members pursuant to Section
6.2(b)(i)(A), Section 6.2(b)(ii)(A) and Section 6.2(b)(iii) if such properties were disposed of in
a taxable transaction in full satisfaction of such liabilities and for no other consideration.
"
Nonrecourse Deductions
means any and all items of loss, deduction, or expenditure
(including, without limitation, any expenditure described in Section 705(a)(2)(B) of the Code)
that, in accordance with the principles of Treasury Regulation Section 1.704-2(b), are attributable
to a Nonrecourse Liability.
"
Nonrecourse Liability
has the meaning set forth in Treasury Regulation Section
1.752-1(a)(2).
8
"
Notice of Election to Purchase
has the meaning assigned to such term in Section 13.1(b).
"
Officers
has the meaning assigned to such term in Section 7.4(a).
"
OLP
means Valero Logistics Operations, L.P., a Delaware limited partnership, and any
successors thereto.
"
Omnibus Agreement
means that Amended and Restated Omnibus Agreement, effective as of March
10, 2006, among Valero Energy Corporation, Riverwalk Logistics, L.P., Valero GP, LLC, the MLP and
the OLP.
"
Opinion of Counsel
means a written opinion of counsel (who may be regular counsel to the
Company or any of its Affiliates) acceptable to the Board of Directors.
"
Option Closing Date
means the date or dates on which any Units are sold by the Company to
the Underwriters upon exercise of the Over-Allotment Option.
"
Outstanding
means, with respect to Company Securities, all Company Securities that are
issued by the Company and reflected as outstanding on the Companys books and records as of the
date of determination;
provided, however,
that if at any time any Person or Group (other than the
Companys Affiliates) beneficially owns 20% or more of any Outstanding Company Securities of any
class then Outstanding, all Company Securities owned by such Person or Group shall not be voted on
any matter and shall not be considered Outstanding when sending notices of a meeting of Members to
vote on any matter (unless otherwise required by law), calculating required votes, determining the
presence of a quorum or for similar purposes under this Agreement;
provided, further,
that the
foregoing limitation shall not apply to:
(i) any Person or Group who acquired 20% or more of any Outstanding Company Securities of any
class then Outstanding directly from the Company or its Affiliates;
(ii) any Person or Group who acquired 20% or more of any Outstanding Company Securities of any
class then Outstanding directly or indirectly from a Person or Group described in clause (i)
provided that the Board of Directors shall have notified such Person or Group in writing that such
limitation shall not apply; or
(iii) any Person or Group who acquired 20% or more of any Company Securities issued by the
Company with the prior approval of the Board of Directors.
"
Over-Allotment Option
means the over-allotment option granted to the Underwriters by the
Company pursuant to the Underwriting Agreement.
"
Percentage Interest
means, as of any date of determination (a) as to any Unitholder holding
Units, the product obtained by multiplying (i) 100% less the percentage applicable to paragraph (b)
by (ii) the quotient obtained by dividing (A) the number of Units held by such Unitholder by (B)
the total number of all Outstanding Units, and (b) as to the holders of other Company Securities
issued by the Company in accordance with Section 5.5, the percentage established as a part of such
issuance.
9
"
Person
means an individual or a corporation, limited liability company, partnership, joint
venture, trust, unincorporated organization or other enterprise (including an employee benefit
plan), association, government agency or political subdivision thereof or other entity.
"
Plan of Conversion
has the meaning assigned to such term in Section 12.1.
"
Prime Rate
means the prime rate of interest as quoted from time to time by The Wall Street
Journal or another source reasonably selected by the Company.
"
Pro Rata
means (a) when modifying Units or any class thereof, apportioned equally among all
designated Units in accordance with their relative Percentage Interests, and (b) when modifying
Members or Record Holders, apportioned among all Members or Record Holders, as the case may be, in
accordance with their relative Percentage Interests.
"
Purchase Date
means the date determined by the Board of Directors as the date for purchase
of all Outstanding Units of a certain class pursuant to Article XIII.
"
Quarter
means, unless the context requires otherwise, a fiscal quarter, or, with respect to
the first fiscal quarter after the Closing Date, the portion of such fiscal quarter after the
Closing Date, of the Company.
"
Recapture Income
means any gain recognized by the Company (computed without regard to any
adjustment required by Section 734 or Section 743 of the Code) upon the disposition of any property
or asset of the Company, which gain is characterized as ordinary income because it represents the
recapture of deductions previously taken with respect to such property or asset.
"
Record Date
means the date established by the Company for determining (a) the identity of
the Record Holders entitled to notice of, or to vote at, any meeting of Members or entitled to
exercise rights in respect of any lawful action of Members or (b) the identity of Record Holders
entitled to receive any report or distribution or to participate in any offer.
"
Record Holder
means the Person in whose name a Unit is registered on the books of the
Transfer Agent as of the opening of business on a particular Business Day, or with respect to other
Company Securities, the Person in whose name any such other Company Security is
registered on the books that the Company has caused to be kept as of the opening of business
on such Business Day.
"
Redeemable Interests
means any Interests for which a redemption notice has been given, and
has not been withdrawn, pursuant to Section 4.8.
"
Registration Statement
means the Registration Statement on Form S-1 (Registration No.
333-132917) as it has been or as it may be amended or supplemented from time to time, filed by the
Company with the Commission under the Securities Act to register the offering and sale of the Units
in the Initial Offering.
"
Required Allocations
means (a) any limitation imposed on any allocation of Net Losses or Net
Termination Losses under Section 6.1(b) or 6.1(c)(ii) and (b) any allocation of an item of
10
income,
gain, loss or deduction pursuant to Section 6.1(d)(i), 6.1(d)(ii), 6.1(d)(iv), 6.1(d)(vii) or
6.1(d)(ix).
"
Residual Gain
or
Residual Loss
means any item of gain or loss, as the case may be, of the
Company recognized for federal income tax purposes resulting from a sale, exchange or other
disposition of a Contributed Property or Adjusted Property, to the extent such item of gain or loss
is not allocated pursuant to Section 6.2(b)(i)(A) or 6.2(b)(ii)(A), respectively, to eliminate
Book-Tax Disparities.
"
Securities Act
means the Securities Act of 1933, as amended, supplemented or restated from
time to time and any successor to such statute.
"
Solicitation Notice
has the meaning assigned to such term in Section 11.13(c).
"
Special Approval
means approval by a majority of the members of the Conflicts Committee
acting in good faith.
"
Subsidiary
means, with respect to any Person, (a) a corporation of which more than 50% of
the voting power of shares entitled (without regard to the occurrence of any contingency) to vote
in the election of directors or other governing body of such corporation is owned, directly or
indirectly, at the date of determination, by such Person, by one or more Subsidiaries of such
Person or a combination thereof, (b) a partnership (whether general or limited) in which such
Person or a Subsidiary of such Person is, at the date of determination, a general or limited
partner of such partnership, but only if more than 50% of the partnership interests of such
partnership (considering all of the partnership interests of the partnership as a single class) is
owned, directly or indirectly, at the date of determination, by such Person, by one or more
Subsidiaries of such Person, or a combination thereof, or (c) any other Person (other than a
corporation or a partnership) in which such Person, one or more Subsidiaries of such Person, or a
combination thereof, directly or indirectly, at the date of determination, has (i) at least a
majority ownership interest or (ii) the power to elect or direct the election of a majority of the
directors or other governing body of such Person.
"
Substituted Member
means a Person who is admitted as a member of the Company pursuant to
Section 4.5 in place of and with all rights of a Member and who is shown as a Member on the books
and records of the Company.
"
Surviving Business Entity
has the meaning assigned to such term in Section 12.2(b).
"
Tax Matters Partner
means the tax matters partner as defined in the Code.
"
Trading Day
has the meaning assigned to such term in Section 13.1(a).
"
Transfer
has the meaning assigned to such term in Section 4.4.
"
Transfer Agent
means such bank, trust company or other Person (including the Company or one
of its Affiliates) as shall be appointed from time to time by the Company to act as registrar and
transfer agent for the Units; provided that if no Transfer Agent is specifically designated for any
other Company Securities, the Company shall act in such capacity.
11
"
Underwriter
means each Person named as an underwriter in the Underwriting Agreement who
purchases Units pursuant thereto.
"
Underwriting Agreement
means that certain Underwriting Agreement, dated July 13, 2006, among
the Underwriters, the Company and certain other parties, providing for the purchase of Units by the
Underwriters.
"
Unit
means a Company Security representing a fractional part of the Interests of all
Members, and having the rights and obligations specified with respect to Units in this Agreement.
"
Unit Majority
means at least a majority of the Outstanding Units.
"
Unitholders
means the holders of Units.
"
Unrealized Gain
attributable to any item of Company property means, as of any date of
determination, the excess, if any, of (a) the fair market value of such property as of such date
(as determined under Section 5.4(d)) over (b) the Carrying Value of such property as of such date
(prior to any adjustment to be made pursuant to Section 5.4(d) as of such date).
"
Unrealized Loss
attributable to any item of Company property means, as of any date of
determination, the excess, if any, of (a) the Carrying Value of such property as of such date
(prior to any adjustment to be made pursuant to Section 5.4(d) as of such date) over (b) the fair
market value of such property as of such date (as determined under Section 5.4(d)).
"
U.S. GAAP
means United States generally accepted accounting principles consistently applied.
Section 1.2
Construction
.
Unless the context requires otherwise: (a) 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; (b) references to Articles and Sections refer to Articles and Sections of this Agreement; and (c) the term include or
includes means includes, without limitation, and including means including, without limitation.
ARTICLE II
ORGANIZATION
Section 2.1
Formation
. The Members have previously formed the Company as a limited
liability company pursuant to the provisions of the Delaware Act and hereby amend and restate the
Amended and Restated Limited Liability Company Agreement of the Company, dated as of April 16, 2001
as amended by Amendment No. 1 to the Amended and Restated Limited Liability Company Agreement of
the Company dated effective as of January 25, 2006, in its entirety. This amendment and restatement
shall become effective on the date of this Agreement. Except as expressly provided to the contrary
in this Agreement, the rights, duties (including fiduciary duties), liabilities and obligations of
the Members and the administration, dissolution
12
and termination of the Company shall be governed by
the Delaware Act. All Interests shall constitute personal property of the owner thereof for all
purposes and a Member has no interest in specific Company property.
Section 2.2
Name
. The name of the Company shall be Valero GP Holdings, LLC. The
Companys business may be conducted under any other name or names, as determined by the Board of
Directors. The words
Limited Liability Company,
LLC
, or similar words or letters shall be
included in the Companys name where necessary for the purpose of complying with the laws of any
jurisdiction that so requires. The Board of Directors may change the name of the Company at any
time and from time to time and shall notify the Members of such change in the next regular
communication to the Members.
Section 2.3
Registered Office; Registered Agent; Principal Office; Other Offices
.
Unless and until changed by the Board of Directors, the registered office of the Company in the
State of Delaware shall be located at 1209 Orange Street, Wilmington, Delaware 19801, and the
registered agent for service of process on the Company in the State of Delaware at such registered
office shall be The Corporation Trust Company. The principal office of the Company shall be located
at One Valero Way, San Antonio, Texas 78249 or such other place as the Board of Directors may from
time to time designate by notice to the Members. The Company may maintain offices at such other
place or places within or outside the State of Delaware as the Board of Directors determines to be
necessary or appropriate.
Section 2.4
Purposes and Business
. The purpose and nature of the business to be
conducted by the Company shall be to (a) serve as a member of, and hold limited liability company
interests in, (i) Valero GP, LLC, a Delaware limited liability company and (ii) Riverwalk Holdings,
LLC, a Delaware limited liability company, and, in connection therewith, to exercise all the rights
and powers conferred
upon the Company as a member of such entities, (b) engage directly in, or enter into or form
any corporation, partnership, joint venture, limited liability company or other arrangement to
engage indirectly in, any business activity that any Group Member or the MLP is permitted to engage
in or that their subsidiaries are permitted to engage in by their organizational documents or
agreements and, in connection therewith, to exercise all of the rights and powers conferred upon
the Company pursuant to the agreements relating to such business activity, (c) engage directly in,
or enter into or form any corporation, partnership, joint venture, limited liability company or
other arrangement to engage indirectly in, any business activity that is approved by the Board of
Directors and that lawfully may be conducted by a limited liability company organized pursuant to
the Delaware Act and, in connection therewith, to exercise all of the rights and powers conferred
upon the Company pursuant to the agreements relating to such business activity; and (d) do anything
necessary or appropriate to the foregoing, including the making of capital contributions or loans
to a Group Member;
provided
,
however
, that the Company shall not engage, directly or indirectly, in
any business activity that the Board of Directors determines would cause the Company to be treated
as an association taxable as a corporation or otherwise taxable as an entity for federal income tax
purposes. The Board of Directors has no obligation or duty to the Company or the Members to propose
or approve, and may decline to propose or approve, the conduct by the Company of any business.
13
Section 2.5
Powers
. The Company shall be empowered to do any and all acts and things
necessary and appropriate for the furtherance and accomplishment of the purposes and business
described in Section 2.4 and for the protection and benefit of the Company.
Section 2.6
Power of Attorney
. Each Member hereby constitutes and appoints each of
the Chief Executive Officer, the President and the Secretary and, if a Liquidator shall have been
selected pursuant to Section 10.2, the Liquidator (and any successor to the Liquidator by merger,
transfer, assignment, election or otherwise) and each of their authorized officers and
attorneys-in-fact, as the case may be, with full power of substitution, as his true and lawful
agent and attorney-in-fact, with full power and authority in his name, place and stead, to:
(a) execute, swear to, acknowledge, deliver, file and record in the appropriate public
offices:
(i) all certificates, documents and other instruments (including this Agreement
and the Certificate of Formation and all amendments or restatements hereof or
thereof) that the Chief Executive Officer, President or Secretary, or the
Liquidator, determines to be necessary or appropriate to form, qualify or continue
the existence or qualification of the Company as a limited liability company in the
State of Delaware and in all other jurisdictions in which the Company may conduct
business or own property;
(ii) all certificates, documents and other instruments that the Chief Executive
Officer, President or Secretary, or the Liquidator, determines to be
necessary or appropriate to reflect, in accordance with its terms, any
amendment, change, modification or restatement of this Agreement;
(iii) all certificates, documents and other instruments (including conveyances
and a certificate of cancellation) that the Board of Directors or the Liquidator
determines to be necessary or appropriate to reflect the dissolution, liquidation
and termination of the Company pursuant to the terms of this Agreement;
(iv) all certificates, documents and other instruments relating to the
admission, withdrawal, removal or substitution of any Member pursuant to, or other
events described in, Articles IV or X;
(v) all certificates, documents and other instruments relating to the
determination of the rights, preferences and privileges of any class or series of
Company Securities issued pursuant to Section 5.5; and
(vi) all certificates, documents and other instruments (including agreements
and a certificate of merger) relating to a merger, consolidation or conversion of
the Company pursuant to Article XII.
(b) execute, swear to, acknowledge, deliver, file and record all ballots, consents,
approvals, waivers, certificates, documents and other instruments that the Board of
Directors or the Liquidator determines to be necessary or appropriate to (i) make,
14
evidence, give, confirm or ratify any vote, consent, approval, agreement or other action that is made
or given by the Members hereunder or is consistent with the terms of this Agreement or (ii)
effectuate the terms or intent of this Agreement; provided, that when required by Section
11.2 or any other provision of this Agreement that establishes a percentage of the Members
or of the Members of any class or series required to take any action, the Chief Executive
Officer, President or Secretary, or the Liquidator, may exercise the power of attorney made
in this Section 2.6(b) only after the necessary vote, consent or approval of the Members or
of the Members of such class or series, as applicable.
Nothing contained in this Section 2.6 shall be construed as authorizing the Chief Executive
Officer, President or Secretary, or the Liquidator, to amend this Agreement except in accordance
with Article XI or as may be otherwise expressly provided for in this Agreement.
(c) The foregoing power of attorney is hereby declared to be irrevocable and a power
coupled with an interest, and it shall survive and, to the maximum extent permitted by law,
not be affected by the subsequent death, incompetency, disability, incapacity, dissolution,
bankruptcy or termination of any Member and the transfer of all or any portion of such
Members Interest and shall extend to such Members heirs, successors, assigns and personal
representatives. Each such Member hereby agrees to be bound by any representation made by
the Chief Executive Officer, President or Secretary, or the Liquidator, acting in good faith
pursuant to such power of attorney; and each such Member, to the maximum extent permitted by
law, hereby waives any and all defenses
that may be available to contest, negate or disaffirm the action of the Chief Executive
Officer, President or Secretary, or the Liquidator, taken in good faith under such power of
attorney. Each Member shall execute and deliver to the Chief Executive Officer, President or
Secretary, or the Liquidator, within 15 days after receipt of the request therefor, such
further designation, powers of attorney and other instruments as any of such Officers or the
Liquidator, determines to be necessary or appropriate to effectuate this Agreement and the
purposes of the Company.
Section 2.7
Term
. The Companys term shall be perpetual, unless and until it is
dissolved in accordance with the provisions of Article X. The existence of the Company as a
separate legal entity shall continue until the cancellation of the Certificate of Formation as
provided in the Delaware Act.
Section 2.8
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 Member, 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 nominees, as the Board of Directors may
determine. The Company hereby declares and warrants that any Company assets for which record title
is held in the name of one or more of its Affiliates or one or more nominees shall be held by such
Affiliates or nominees for the use and benefit of the Company in accordance with the provisions of
this Agreement;
provided
,
however
, that the Board of Directors shall use reasonable efforts to
cause record title to such assets (other than those assets in respect of which the Board of
Directors determines that the expense and difficulty of
15
conveyancing makes transfer of record title
to the Company impracticable) to be vested in the Company as soon as reasonably practicable. 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.
Section 2.9
Certain Undertakings Relating to the Separateness of the Company
.
(a) Separateness Generally.
The Company shall conduct its business and operations
separate and apart from those of any other Person in accordance with this Section 2.9.
(b) Separate Records.
The Company shall maintain (i) its books and records, (ii) its
accounts and (iii) its financial statements, separate from those of any other Person, except
its consolidated Subsidiaries.
(c) Separate Assets.
The Company shall not commingle or pool its funds or other assets
with those of any other Person, except its consolidated Subsidiaries, and shall maintain its
assets in a manner that is not costly or difficult to segregate, ascertain or otherwise
identify as separate from those of any other Person.
(d) Separate Name.
The Company shall (i) conduct its business in its own name, (ii)
use separate stationary, invoices, and checks, (iii) correct any known misunderstanding
regarding its separate identity, and (iv) generally hold itself out as a separate entity.
(e) Separate Credit.
The Company shall not (i) pay its own liabilities from a source
other than its own funds, (ii) guarantee or become obligated for the debts of any other
Person, except its Subsidiaries, (iii) hold out its credit as being available to satisfy the
obligations of any other Person, except its Subsidiaries, (iv) acquire obligations or debt
securities of its Affiliates (other than its Subsidiaries) or (v) pledge its assets for the
benefit of any Person or make loans or advances to any Person, except its Subsidiaries;
provided that the Company may engage in any transaction described in clauses (ii) (v) of
this Section 2.9(e) if prior Special Approval has been obtained for such transaction and
either (A) the Conflicts Committee has determined, or has obtained reasonable written
assurance from a nationally recognized firm of independent accountants or a nationally
recognized investment banking or valuation firm, that the borrower or recipient of the
credit extension is not then insolvent and will not be rendered insolvent as a result of
such transaction or (B) in the case of transactions described in clause (iv), such
transaction is completed through a public auction or a National Securities Exchange.
(f) Separate Formalities.
The Company shall (i) observe all corporate formalities and
other formalities required by its organizational documents, the laws of the jurisdiction of
its formation, or other laws, rules, regulations and orders of governmental authorities
exercising jurisdiction over it, (ii) engage in transactions with its Affiliates (other than
another Group Member) in conformity with the requirements of Section 7.9 and (iii) promptly
pay, from its own funds, and on a current basis, its allocable share of general and
administrative expenses, capital expenditures and costs for shared services
16
performed by its
Affiliates (other than another Group Member), unless otherwise provided by the
Administration Agreement. Each material contract between the Company or another Group
Member, on the one hand, and the Affiliates of the Company (other than a Group Member), on
the other hand, shall be in writing.
(g) No Effect.
Failure by the Company to comply with any of the obligations set forth
above shall not affect the status of the Company as a separate legal entity, with its
separate assets and separate liabilities.
ARTICLE III
RIGHTS OF MEMBERS
Section 3.1
Members
.
(a) Other than with regard to the Initial Members, a Person shall be admitted as a
Member and shall become bound by the terms of this Agreement if such Person purchases or
otherwise lawfully acquires any Interest and becomes the Record Holder of
such Interests in accordance with the provisions of Article IV hereof. A Person may
become a Record Holder without the consent or approval of any of the Members. A Person may
not become a Member without acquiring an Interest. Notwithstanding the foregoing, the rights
and obligations of a Person who is a Non-citizen Assignee shall be determined in accordance
with Section 4.7 hereof.
(b) The name and mailing address of each Member shall be listed on the books and
records of the Company maintained for such purpose by the Company or the Transfer Agent. The
Secretary of the Company shall update the books and records of the Company from time to time
as necessary to reflect accurately the information therein (or shall cause the Transfer
Agent to do so, as applicable). A Members Interest may be represented by a Certificate, as
provided in Section 4.1 hereof.
(c) As provided in Section 18-303 of the Delaware Act, the debts, obligations and
liabilities of the Company, whether arising in contract, tort or otherwise, shall be solely
the debts, obligations and liabilities of the Company. The Members shall have no liability
under this Agreement, or for any such debt, obligation or liability of the Company, in their
capacity as a Member, except as expressly provided in this Agreement or the Delaware Act.
(d) Members may not be expelled from or removed as Members of the Company other than in
accordance with Section 4.7 or 4.8. Members shall not have any right to withdraw from the
Company; provided, that when a transferee of a Members Interest becomes a Record Holder of
such Interest, such transferring Member shall cease to be a member of the Company with
respect to the Interest so transferred.
Section 3.2
Management of Business
. No Member, in its capacity as such, shall
participate in the operation or management of the Companys business, transact any business in
17
the Companys name or have the power to sign documents for or otherwise bind the Company by reason of
being a Member.
Section 3.3
Outside Activities of the Members
. Subject to the provisions of Section
7.5, the Omnibus Agreement and the Non-Compete Agreement, any Member shall be entitled to and may
have business interests and engage in business activities in addition to those relating to the
Company, including business interests and activities in direct competition with the Company Group
or the MLP Group. Neither the Company nor any of the other Members shall have any rights by virtue
of this Agreement in any business ventures of any Member.
Section 3.4
Rights of Members
.
(a) In addition to other rights provided by this Agreement or by applicable law, and
except as limited by Section 3.4(b), each Member shall have the right, for a lawful purpose
reasonably related to such Members Interest as a Member in the Company, upon
reasonable written demand containing a concise statement of such purposes and at such
Members own expense:
(i) to obtain true and full information regarding the status of the business
and financial condition of the Company;
(ii) promptly after becoming available, to obtain a copy of the Companys
federal, state and local income tax returns for each year;
(iii) to have furnished to him a current list of the name and last known
business, residence or mailing address of each Member;
(iv) to have furnished to him a copy of this Agreement and the Certificate of
Formation and all amendments thereto, together with copies of the executed copies of
all powers of attorney pursuant to which this Agreement, the Certificate of
Formation and all amendments thereto have been executed;
(v) to obtain true and full information regarding the amount of cash and a
description and statement of the Net Agreed Value of any other Capital Contribution
by each Member and that each Member has agreed to contribute in the future, and the
date on which each became a Member; and
(vi) to obtain such other information regarding the affairs of the Company as
is just and reasonable and consistent with the stated purposes of the written
demand.
(b) The Board of Directors may keep confidential from the Members, for such period of
time as the Board of Directors determines, (i) any information that the Board of Directors
determines to be in the nature of trade secrets or (ii) other information the disclosure of
which the Board of Directors determines (A) is not in the best interests of the Company
Group, (B) could damage the Company Group or (C) that any Group Member is required by law,
by the rules of any National Securities Exchange on which any Company Security is listed for
trading, or by agreement with any third party to keep
18
confidential (other than agreements
with Affiliates of the Company the primary purpose of which is to circumvent the obligations
set forth in this Section 3.4).
ARTICLE IV
CERTIFICATES; RECORD HOLDERS;
TRANSFER OF INTERESTS; REDEMPTION OF INTERESTS
Section 4.1
Certificates
. Upon the Companys issuance of Units to any Person, the
Company may issue one or more Certificates in the name of such Person evidencing the number of such
Units being so issued. In addition, upon the request of any Person owning any other Company
Securities other than Units, the Company shall issue to such Person one or more Certificates
evidencing such other Company Securities. Certificates shall be executed on behalf of the Company
by the Chairman of the Board, President or any Vice President and the Secretary or any Assistant
Secretary. No Certificate representing Units shall be valid for any purpose until it has been
countersigned by the Transfer Agent;
provided
,
however
, that if the Board of Directors elects to
issue Units in global form, the Certificates representing Units shall be valid upon receipt of a
certificate from the Transfer Agent certifying that the Units have been duly registered in
accordance with the directions of the Company. Any or all of the signatures required on the
Certificate may be by facsimile. If any Officer or Transfer Agent who shall have signed or whose
facsimile signature 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 at the date of issue. Certificates for each class of Interests shall be
consecutively numbered and shall be entered on the books and records of the Company as they are
issued and shall exhibit the holders name and number and type of Interests.
Section 4.2
Mutilated, Destroyed, Lost or Stolen Certificates
. If any mutilated
Certificate is surrendered to the Transfer Agent, the appropriate Officers on behalf of the Company
shall execute, and the Transfer Agent shall countersign and deliver in exchange therefor, a new
Certificate evidencing the same number and type of Company Securities as the Certificate so
surrendered.
(a) The appropriate Officers on behalf of the Company shall execute and deliver, and the
Transfer Agent shall countersign 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 the Company, 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 by the Company, 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 direct to indemnify the Company and the Transfer
19
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.
If a Member fails to notify the Company within a reasonable time after he has notice of the
loss, destruction or theft of a Certificate, and a transfer of the Interests represented by the
Certificate is registered before the Company or the Transfer Agent receives such notification, the
Member shall be precluded from making any claim against the Company or the Transfer Agent for such
transfer or for a new Certificate.
(b) As a condition to the issuance of any new Certificate under this Section 4.2, 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.
Section 4.3
Record Holders
. The Company shall be entitled to recognize the Record
Holder as the owner of an Interest and, accordingly, shall not be bound to recognize any equitable
or other claim to or interest in such Interest on the part of any other Person, regardless of
whether the Company shall have actual or other notice thereof, except as otherwise provided by law
or any applicable rule, regulation, guideline or requirement of any National Securities Exchange on
which such Interests are listed for trading. Without limiting the foregoing, when a Person (such as
a broker, dealer, bank, trust company or clearing corporation or an agent of any of the foregoing)
is acting as nominee, agent or in some other representative capacity for another Person in
acquiring and/or holding Interests, as between the Company on the one hand, and such other Persons
on the other, such representative Person shall be the Record Holder of such Interest.
Section 4.4
Transfer Generally
. The term transfer, when used in this Agreement with
respect to an Interest, shall be deemed to refer to a transaction by which the holder of an
Interest assigns such Interest to another Person who is or becomes a Member, and includes a sale,
assignment, gift, exchange or any other disposition by law or otherwise, including any transfer
upon foreclosure of any pledge, encumbrance, hypothecation or mortgage. No Interest shall be
transferred, in whole or in part, except in accordance with the terms and conditions set forth in
this Article IV. Any transfer or purported transfer of an Interest not made in accordance with this
Article IV shall be, to the fullest extent permitted by law, null and void.
Section 4.5
Registration and Transfer of Interests
.
(a) The Company shall keep or cause to be kept on behalf of the Company a register that,
subject to such reasonable regulations as it may prescribe and subject to the provisions of Section
4.5(b), will provide for the registration and transfer of Interests. The Transfer Agent is hereby
appointed registrar and transfer agent for the purpose of registering Units and transfers of such
Units as herein provided. The Company shall not recognize transfers of Certificates evidencing
Interests unless such transfers are effected in the manner described in this Section 4.5. Upon
surrender of a Certificate for registration of transfer of any Interests
20
evidenced by a
Certificate, and subject to the provisions of Section 4.5(b), the appropriate Officers of the
Company shall execute and deliver, and in the case of Units, 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 Holders instructions, one or more new Certificates evidencing the same
aggregate number and type of Interests as were evidenced by the Certificate so surrendered.
(b) Except as provided in Section 4.7, the Company shall not recognize any transfer of
Interests until the Certificates evidencing such Interests are surrendered for registration of
transfer. No charge shall be imposed by the Company for such transfer; provided,
that as a condition to the issuance of any new Certificate under this Section 4.5(b), the
Company may require the payment of a sum sufficient to cover any tax or other governmental charge
that may be imposed with respect thereto.
(c) By acceptance of the transfer of any Interest in accordance with this Section 4.5 and
except as provided in Section 4.7, each transferee of an Interest (including any nominee holder or
an agent or representative acquiring such Interests for the account of another Person) (i) shall be
admitted to the Company as a Substitute Member with respect to the Interests so transferred to such
Person when any such transfer or admission is reflected in the books and records of the Company,
with or without execution of this Agreement, (ii) shall be deemed to agree to be bound by the terms
of this Agreement, (iii) shall become the Record Holder of the Interests so transferred, (iv)
represents that the transferee has the capacity, power and authority to enter into this Agreement,
(v) grants powers of attorney to the Officers of the Company and any Liquidator of the Company and
(vi) makes the consents and waivers contained in this Agreement. The transfer of any Interests and
the admission of any new Member shall not constitute an amendment to this Agreement.
(d) Subject to (i) the foregoing provisions of this Section 4.5, (ii) Section 4.3, (iii)
Section 4.6, (iv) with respect to any class or series of Interests, the provisions of any statement
of designations establishing such class or series, (v) any contractual provision binding on any
Member and (vi) provisions of applicable law including the Securities Act, Interests shall be
freely transferable to any Person.
Section 4.6
Restrictions on Transfers
.
(a) The Company may impose restrictions on the transfer of Interests if it receives an Opinion
of Counsel providing that such restrictions are necessary to avoid a significant risk of any Group
Member becoming taxable as a corporation or otherwise becoming taxable as an entity for federal
income tax purposes. The Board of Directors may impose such restrictions by amending this Agreement
in accordance with Article XI;
provided
,
however
, that any amendment that would result in the
delisting or suspension of trading of any class of Interests on the principal National Securities
Exchange on which such class of Interests is then traded must be approved, prior to such amendment
being effected, by the holders of at least a majority of the Outstanding Interests of such class.
Notwithstanding Section 11.10, such approval may be obtained through a written consent of such
holders.
21
(b) Nothing contained in this Article IV, or elsewhere in this Agreement, shall preclude the
settlement of any transactions involving Interests entered into through the facilities of any
National Securities Exchange on which such Interests are listed for trading.
Section 4.7
Citizenship Certificates; Non-citizen Assignees
.
(a) If any Group Member is or becomes subject to any federal, state or local law or regulation
that the Board of Directors determines would create a substantial risk of
cancellation or forfeiture of any property in which the Group Member has an interest based on
the nationality, citizenship or other related status of a Member, the Board of Directors may
request any Member to furnish to the Company, within 30 days after receipt of such request, an
executed Citizenship Certification or such other information concerning his nationality,
citizenship or other related status (or, if the Member is a nominee holding for the account of
another Person, the nationality, citizenship or other related status of such Person) as the Company
may request. If a Member fails to furnish to the Company, within the aforementioned 30-day period,
such Citizenship Certification or other requested information or if upon receipt of such
Citizenship Certification or other requested information the Board of Directors determines that a
Member is not an Eligible Citizen, the Interests owned by such Member shall be subject to
redemption in accordance with the provisions of Section 4.8. In addition, the Board of Directors
may require that the status of any such Member be changed to that of a Non-citizen Assignee and
thereupon, such Member shall cease to be a member of the Company and shall have no voting rights,
whether arising hereunder, under the Delaware Act, at law, in equity or otherwise, in respect of
its Interests.
The voting rights in respect of Interests of Non-citizen Assignees shall be deemed to have
been exercised with the votes being distributed in the same ratios or for the same candidates for
election as Directors as the votes of Members in respect of Interests other than those of
Non-citizen Assignees are cast, either for, against or abstaining as to the matter or election.
(b) Upon dissolution of the Company, a Non-citizen Assignee shall have no right to receive a
distribution in kind pursuant to Section 10.3, but shall be entitled to the cash equivalent
thereof, and the Company shall provide cash in exchange for an assignment of the Non-citizen
Assignees share of any distribution in kind. Such payment and assignment shall be treated for
Company purposes as a purchase by the Company from the Non-citizen Assignee of his economic
interests in the Company (representing his right to receive his share of such distribution in
kind).
(c) At any time after he can and does certify that he has become an Eligible Citizen, a
Non-citizen Assignee may, upon application to the Board of Directors, request that, with respect to
any Interests of such Non-citizen Assignee not redeemed pursuant to Section 4.8, such Non-citizen
Assignee be admitted as a Member, and upon approval of the Board of Directors, such Non-citizen
Assignee shall be admitted as a Member and shall no longer constitute a Non-citizen Assignee and
shall reacquire all voting rights in respect of his Interests.
22
Section 4.8
Redemption of Interests of Non-citizen Assignees
.
(a) If at any time a Member fails to furnish a Citizenship Certification or other information
requested within the 30-day period specified in Section 4.7(a), or, if upon receipt of such
Citizenship Certification or other information the Board of Directors determines, with the advice
of counsel, that a Member is not an Eligible Citizen, the Company may, unless the Member
establishes to the satisfaction of the Board of Directors that such Member is an Eligible Citizen
or has transferred his Interests to a Person who is an Eligible Citizen and who furnishes a
Citizenship Certification to the Board of Directors prior to the date fixed for redemption as
provided below, redeem the Interest of such Member as follows:
(i) The Board of Directors shall, not later than the 30
th
day before the
date fixed for redemption, give notice of redemption to the Member, at his last address
designated on the records of the Company or the Transfer Agent, by registered or certified
mail, postage prepaid. The notice shall be deemed to have been given when so mailed. The
notice shall specify the Redeemable Interests, the date fixed for redemption, the place of
payment, that payment of the redemption price will be made upon surrender of the Certificate
evidencing the Redeemable Interests and that on and after the date fixed for redemption no
further allocations or distributions to which the Member would otherwise be entitled in
respect of the Redeemable Interests will accrue or be made.
(ii) The aggregate redemption price for Redeemable Interests shall be an amount equal
to the Current Market Price (the date of determination of which shall be the date fixed for
redemption) of Interests of the class to be so redeemed multiplied by the number of
Interests of each such class included among the Redeemable Interests. The redemption price
shall be paid, as determined by the Board of Directors, in cash or by delivery of a
promissory note of the Company in the principal amount of the redemption price, bearing
interest at the Prime Rate annually and payable in three equal annual installments of
principal together with accrued interest, commencing one year after the redemption date.
(iii) Upon surrender by or on behalf of the Member, at the place specified in the
notice of redemption, of the Certificate evidencing the Redeemable Interests, duly endorsed
in blank or accompanied by an assignment duly executed in blank, the Member or his duly
authorized representative shall be entitled to receive the payment therefor.
(iv) After the redemption date, Redeemable Interests shall no longer constitute issued
and Outstanding Interests.
(b) The provisions of this Section 4.8 shall also be applicable to Interests held by a Member
as nominee of a Person determined to be other than an Eligible Citizen.
(c) Nothing in this Section 4.8 shall prevent the recipient of a notice of redemption from
transferring his Interest before the redemption date if such transfer is otherwise permitted under
this Agreement. Upon receipt of notice of such a transfer, the Board of Directors shall withdraw
the notice of redemption, provided the transferee of such Interest certifies to the
23
satisfaction of
the Board of Directors in a Citizenship Certification that he is an Eligible Citizen. If the
transferee fails to make such certification, such redemption shall be effected from the transferee
on the original redemption date.
ARTICLE V
CAPITAL CONTRIBUTIONS AND ISSUANCE OF INTERESTS
Section 5.1
Unit Split
. Immediately prior to the Initial Offering, the Units representing Interests of the Initial
Members as set forth on Exhibit B hereto shall be subdivided at a ratio of 4.25 to 1, resulting in
the issuance of 4.25 Units for every Unit then held by the Initial Members.
Section 5.2
Contributions by Initial Members
. No Interests will be issued or issuable
as of or at the Closing Date and no Units will be issued or issuable as of or at the Closing Date
other than as set forth in Section 5.1.
Section 5.3
Interest and Withdrawal
. No interest shall be paid by the Company on
Capital Contributions. No Member shall be entitled to the withdrawal or return of its Capital
Contribution, except to the extent, if any, that distributions made pursuant to this Agreement or
upon dissolution of the Company may be considered as such by law and then only to the extent
provided for in this Agreement. Except to the extent expressly provided in this Agreement, no
Member shall have priority over any other Member either as to the return of Capital Contributions
or as to profits, losses or distributions.
Section 5.4
Capital Accounts
.
(a) The Company shall maintain for each Member (or a beneficial owner of Interests held by a
nominee in any case in which the nominee has furnished the identity of such owner to the Company in
accordance with Section 6031(c) of the Code or any other method acceptable to the Company) owning
an Interest a separate Capital Account with respect to such Interest in accordance with the rules
of Treasury Regulation Section 1.704-1(b)(2)(iv). Such Capital Account shall be increased by (i)
the amount of all Capital Contributions made to the Company with respect to such Interest pursuant
to this Agreement and (ii) all items of Company income and gain (including, without limitation,
income and gain exempt from tax) computed in accordance with Section 5.4(b) and allocated with
respect to such Interest pursuant to Section 6.1, and decreased by (x) the amount of cash or Net
Agreed Value of all actual and deemed distributions of cash or property made with respect to such
Interest pursuant to this Agreement and (y) all items of Company deduction and loss computed in
accordance with Section 5.4(b) and allocated with respect to such Interest pursuant to Section 6.1.
(b) For purposes of computing the amount of any item of income, gain, loss or deduction, which
is to be allocated pursuant to Article VI and is to be reflected in the Members Capital Accounts,
the determination, recognition and classification of any such item shall be the same as its
determination, recognition and classification for federal income tax purposes (including, without
limitation, any method of depreciation, cost recovery or amortization used for that purpose),
provided, that:
(i) Solely for purposes of this Section 5.4, the Company shall be treated as owning
directly its proportionate share (as determined by the Board of
24
Directors based upon the
provisions of the applicable Group Member Agreement or governing, organizational or similar
documents) of all property owned by (x) any other Group Member that is classified as a
partnership for federal income tax purposes and (y)
any other partnership, limited liability company, unincorporated business or other
entity or arrangement that is classified as a partnership for federal income tax purposes,
of which a Group Member is, directly or indirectly, a partner.
(ii) All fees and other expenses incurred by the Company to promote the sale of (or to
sell) an Interest that can neither be deducted nor amortized under Section 709 of the Code,
if any, shall, for purposes of Capital Account maintenance, be treated as an item of
deduction at the time such fees and other expenses are incurred and shall be allocated among
the Members pursuant to Section 6.1.
(iii) Except as otherwise provided in Treasury Regulation Section 1.704-1(b)(2)(iv)(m),
the computation of all items of income, gain, loss and deduction shall be made without
regard to any election under Section 754 of the Code which may be made by the Company and,
as to those items described in Section 705(a)(1)(B) or 705(a)(2)(B) of the Code, without
regard to the fact that such items are not includable in gross income or are neither
currently deductible nor capitalized for federal income tax purposes. To the extent an
adjustment to the adjusted tax basis of any Company asset pursuant to Section 734(b) or
743(b) of the Code is required, pursuant to Treasury Regulation Section
1.704-1(b)(2)(iv)(m), to be taken into account in determining Capital Accounts, the amount
of such adjustment in the Capital Accounts shall be treated as an item of gain or loss.
(iv) Any income, gain or loss attributable to the taxable disposition of any Company
property shall be determined as if the adjusted basis of such property as of such date of
disposition were equal in amount to the Companys Carrying Value with respect to such
property as of such date.
(v) In accordance with the requirements of Section 704(b) of the Code, any deductions
for depreciation, cost recovery or amortization attributable to any Contributed Property
shall be determined as if the adjusted basis of such property on the date it was acquired by
the Company were equal to the Agreed Value of such property. Upon an adjustment pursuant to
Section 5.4(d) to the Carrying Value of any Company property subject to depreciation, cost
recovery or amortization, any further deductions for such depreciation, cost recovery or
amortization attributable to such property shall be determined (A) as if the adjusted basis
of such property were equal to the Carrying Value of such property immediately following
such adjustment and (B) using a rate of depreciation, cost recovery or amortization derived
from the same method and useful life (or, if applicable, the remaining useful life) as is
applied for federal income tax purposes;
provided
,
however
, that, if the asset has a zero
adjusted basis for federal income tax purposes, depreciation, cost recovery or amortization
deductions shall be determined using any method that the Board of Directors may adopt.
(vi) If the Companys adjusted basis in a depreciable or cost recovery property is
reduced for federal income tax purposes pursuant to Section 48(q)(1) or
25
48(q)(3) of the
Code, the amount of such reduction shall, solely for purposes hereof, be deemed to be an
additional depreciation or cost recovery deduction in the year such property is placed in
service and shall be allocated among the Members pursuant to
Section 6.1. Any restoration of such basis pursuant to Section 48(q)(2) of the Code
shall, to the extent possible, be allocated in the same manner to the Members to whom such
deemed deduction was allocated.
(c) A transferee of an Interest shall succeed to a pro rata portion of the Capital Account of
the transferor relating to the Interest so transferred.
(d) (i) In accordance with Treasury Regulation Section 1.704-1(b)(2)(iv)(f), on an issuance of
additional Interests for cash or Contributed Property and the issuance of Interests as
consideration for the provision of services, the Capital Account of all Members and the Carrying
Value of each Company property immediately prior to such issuance shall be adjusted upward or
downward to reflect any Unrealized Gain or Unrealized Loss attributable to such Company property,
as if such Unrealized Gain or Unrealized Loss had been recognized on an actual sale of each such
property immediately prior to such issuance and had been allocated to the Members at such time
pursuant to Section 6.1 in the same manner as any item of gain or loss actually recognized during
such period would have been allocated. In determining such Unrealized Gain or Unrealized Loss, the
aggregate cash amount and fair market value of all Company assets (including, without limitation,
cash or cash equivalents) immediately prior to the issuance of additional Interests shall be
determined by the Board of Directors using such method of valuation as it may adopt;
provided
,
however
, that the Board of Directors, in arriving at such valuation, must take fully into account
the fair market value of the Interests of all Members at such time. The Board of Directors shall
allocate such aggregate value among the assets of the Company (in such manner as it determines) to
arrive at a fair market value for individual properties.
(ii) In accordance with Treasury Regulation Section 1.704-1(b)(2)(iv)(f), immediately
prior to any actual or deemed distribution to a Member of any Company property (other than a
distribution of cash that is not in redemption or retirement of an Interest), the Capital
Accounts of all Members and the Carrying Value of all Company property shall be adjusted
upward or downward to reflect any Unrealized Gain or Unrealized Loss attributable to such
Company property, as if such Unrealized Gain or Unrealized Loss had been recognized in a
sale of such property immediately prior to such distribution for an amount equal to its fair
market value, and had been allocated to the Members, at such time, pursuant to Section 6.1
in the same manner as any item of gain or loss actually recognized during such period would
have been allocated. In determining such Unrealized Gain or Unrealized Loss the aggregate
cash amount and fair market value of all Company assets (including, without limitation, cash
or cash equivalents) immediately prior to a distribution shall (A) in the case of an actual
distribution that is not made pursuant to Section 10.3 or in the case of a deemed
distribution, be determined and allocated in the same manner as that provided in Section
5.4(d)(i) or (B) in the case of a liquidating distribution pursuant to Section 10.3, be
determined and allocated by the Liquidator using such method of valuation as it may adopt.
26
Section 5.5
Issuances of Additional Company Securities
.
(a) Subject to Section 5.6, the Company may issue additional Company Securities, and options,
rights, warrants and appreciation rights relating to the Company Securities for any Company purpose
at any time and from time to time to such Persons, and admit such Persons as members of the
Company, for such consideration and on such terms and conditions as the Board of Directors shall
determine, all without the approval of any Members notwithstanding any provision of Section 11.1 or
11.2.
(b) Each additional Company Security authorized to be issued by the Company pursuant to
Section 5.5(a) may be issued in one or more classes, or one or more series of any such classes,
with such designations, preferences, rights, powers and duties (which may be senior to existing
classes and series of Company Securities), as shall be fixed by the Board of Directors and
reflected in a written action or actions approved by the Board of Directors in compliance with
Section 7.1(g) (each, an Interest Designation), including, without limitation (i) the right to
share Company profits and losses or items thereof; (ii) the right to share in Company
distributions; (iii) the rights upon dissolution and liquidation of the Company; (iv) whether, and
the terms and conditions upon which, the Company may redeem the Company Security; (v) whether such
Company Security is issued with the privilege of conversion or exchange and, if so, the terms and
conditions of such conversion or exchange; (vi) the terms and conditions upon which each Company
Security will be issued, evidenced by certificates and assigned or transferred; (vii) the method
for determining the Percentage Interest as to such Company Security; and (viii) the right, if any,
of the holder of each such Company Security to vote on Company matters, including matters relating
to the relative rights, preferences and privileges of such Company Security. An Interest
Designation (or any resolution of the Board of Directors amending any Interest Designation) shall
be effective when duly executed and attested original of the same is delivered to the Secretary of
the Company for inclusion among the permanent records of the Company, and shall be annexed to, and
constitute part of, this Agreement.
(c) The Board of Directors shall take all actions that it determines to be necessary or
appropriate in connection with (i) each issuance of Company Securities and options, rights,
warrants and appreciation rights relating to Company Securities pursuant to this Section 5.5, (ii)
the admission of Additional Members and (iii) all additional issuances of Company Securities. The
Board of Directors shall determine the relative designations, preferences, rights, powers and
duties of the holders of the Units or other Company Securities being so issued. The Board of
Directors shall do all things necessary to comply with the Delaware Act and is authorized and
directed to do all things that it determines to be necessary or appropriate in connection with any
future issuance of Company Securities pursuant to the terms of this Agreement, including compliance
with any statute, rule, regulation or guideline of any federal, state or other governmental agency
or any National Securities Exchange on which the Units or other Company Securities are listed for
trading.
Section 5.6
Limitations on Issuance of Additional Company Securities
. The issuance of
Company Securities pursuant to Section 5.5 shall be subject to the following restrictions and
limitation: No fractional Units shall be issued by the Company.
27
Section 5.7
No Preemptive Rights
. No Person shall have any preemptive, preferential or other similar right with respect to
the issuance of any Company Security, whether unissued, held by the Company or hereafter created.
Section 5.8
Splits and Combinations
.(a) Subject to Section 5.8(d), the Company may
make a Pro Rata distribution of Company Securities to all Record Holders or may effect a
subdivision or combination of Company Securities so long as, after any such event, each Member
shall have the same Percentage Interest in the Company as before such event, and any amounts
calculated on a per Unit basis or stated as a number of Units are proportionately adjusted
retroactive to the date of formation of the Company.
(b) Whenever such a distribution, subdivision or combination of Company Securities is
declared, the Board of Directors shall select a Record Date as of which the distribution,
subdivision or combination shall be effective and shall send notice thereof at least 20 days prior
to such Record Date to each Record Holder as of a date not less than 10 days prior to the date of
such notice. The Board of Directors also may cause a firm of independent public accountants
selected by it to calculate the number of Company Securities to be held by each Record Holder after
giving effect to such distribution, subdivision or combination. The Board of Directors shall be
entitled to rely on any certificate provided by such firm as conclusive evidence of the accuracy of
such calculation.
(c) Promptly following any such distribution, subdivision or combination, the Company may
issue Certificates to the Record Holders of Company Securities as of the applicable Record Date
representing the new number of Company Securities held by such Record Holders, or the Board of
Directors may adopt such other procedures that it determines to be necessary or appropriate to
reflect such changes. If any such combination results in a smaller total number of Company
Securities Outstanding, the Company shall require, as a condition to the delivery to a Record
Holder of such new Certificate, the surrender of any Certificate held by such Record Holder
immediately prior to such Record Date.
(d) The Company shall not issue fractional Units upon any distribution, subdivision or
combination of Units. If a distribution, subdivision or combination of Units would result in the
issuance of fractional Units but for the provisions of Section 5.6 and this Section 5.8(d), each
fractional Unit shall be rounded to the nearest whole Unit (and a 0.5 Unit shall be rounded to the
next higher Unit).
Section 5.9
Fully Paid and Non-Assessable Nature of Interests
. All Interests issued
pursuant to, and in accordance with the requirements of, this Article V shall be validly issued,
fully paid and non-assessable Interests in the Company, except as such non-assessability may be
affected by Sections 18-607 or 18-804 of the Delaware Act and except to the extent otherwise
provided in this Agreement.
ARTICLE VI
ALLOCATIONS AND DISTRIBUTIONS
Section 6.1
Allocations for Capital Account Purposes
. For purposes of maintaining the
Capital Accounts and in determining the rights of the Members among themselves, the
28
Companys items
of income, gain, loss and deduction (computed in accordance with Section 5.4(b)) shall be allocated
among the Members in each taxable year (or portion thereof) as provided herein below.
(a)
Net
Income
. After giving effect to the special allocations set forth in Section 6.1(d),
Net Income for each taxable year and all items of income, gain, loss and deduction taken into
account in computing Net Income for such taxable year shall be allocated to the Unitholders in
accordance with their respective Percentage Interests.
(b)
Net Losses
. After giving effect to the special allocations set forth in Section 6.1(d),
Net Losses for each taxable period and all items of income, gain, loss and deduction taken into
account in computing Net Losses for such taxable period shall be allocated to the Unitholders in
accordance with their respective Percentage Interests; provided that Net Losses shall not be
allocated pursuant to this Section 6.1(b) to the extent that such allocation would cause any
Unitholder to have a deficit balance in its Adjusted Capital Account at the end of such taxable
year (or increase any existing deficit balance in its Adjusted Capital Account).
(c)
Net Termination Gains and Losses
. After giving effect to the special allocations set
forth in Section 6.1(d), all items of income, gain, loss and deduction taken into account in
computing Net Termination Gain or Net Termination Loss for such taxable period shall be allocated
in the same manner as such Net Termination Gain or Net Termination Loss is allocated hereunder. All
allocations under this Section 6.1(c) shall be made after Capital Account balances have been
adjusted by all other allocations provided under this Section 6.1 and after all distributions of
Available Cash provided under Section 6.4 have been made;
provided, however
, that solely for
purposes of this Section 6.1(c), Capital Accounts shall not be adjusted for distributions made
pursuant to Section 10.3.
(i) If a Net Termination Gain is recognized (or deemed recognized pursuant to Section
5.4(d)), such Net Termination Gain shall be allocated among the Members in the following
manner (and the Capital Accounts of the Members shall be increased by the amount so
allocated in each of the following subclauses, in the order listed, before an allocation is
made pursuant to the next succeeding subclause):
(A) First, to each Member having a deficit balance in its Capital
Account, in the proportion that such deficit balance bears to the total
deficit balances in the Capital Accounts of all Members, until each such
Member has been allocated Net Termination Gain equal to any such deficit
balance in its Capital Account; and
(B) Second, 100% to all Unitholders in accordance with their respective
Percentage Interests.
(ii) If a Net Termination Loss is recognized (or deemed recognized pursuant to Section
5.4(d)), such Net Termination Loss shall be allocated among the Members in the following
manner:
(A) First, to the Unitholders, Pro Rata, until the Capital Account in
respect of each Unit then Outstanding has been reduced to zero; and
29
(B) Second, the balance, if any, 100% to all Unitholders in accordance
with their respective Percentage Interests.
(d)
Special
Allocations
. Notwithstanding any other provision of this Section 6.1, the
following special allocations shall be made for such taxable period:
(i)
Company
Minimum Gain Chargeback
. Notwithstanding any other provision of this
Section 6.1, if there is a net decrease in Company Minimum Gain during any Company taxable
period, each Member shall be allocated items of Company income and gain for such period
(and, if necessary, subsequent periods) in the manner and amounts provided in Treasury
Regulation Sections 1.704-2(f)(6), 1.704-2(g)(2) and 1.704-2(j)(2)(i), or any successor
provision. For purposes of this Section 6.1(d), each Members Adjusted Capital Account
balance shall be determined, and the allocation of income and gain required hereunder shall
be effected, prior to the application of any other allocations pursuant to this Section
6.1(d) with respect to such taxable period (other than an allocation pursuant to Section
6.1(d)(vi) and 6.1(d)(vii)). This Section 6.1(d)(i) is intended to comply with the Company
Minimum Gain chargeback requirement in Treasury Regulation Section 1.704-2(f) and shall be
interpreted consistently therewith.
(ii)
Chargeback
of Member Nonrecourse Debt Minimum Gain
. Notwithstanding the other
provisions of this Section 6.1 (other than Section 6.1(d)(i)), except as provided in
Treasury Regulation Section 1.704-2(i)(4), if there is a net decrease in Member Nonrecourse
Debt Minimum Gain during any Company taxable period, any Member with a share of Member
Nonrecourse Debt Minimum Gain at the beginning of such taxable period shall be allocated
items of Company income and gain for such period (and, if necessary, subsequent periods) in
the manner and amounts provided in Treasury Regulation Sections 1.704-2(i)(4) and
1.704-2(j)(2)(ii), or any successor provisions. For purposes of this Section 6.1(d), each
Members Adjusted Capital Account balance shall be determined, and the allocation of income
and gain required hereunder shall be effected, prior to the application of any other
allocations pursuant to this Section 6.1(d), other than Section 6.1(d)(i) and other than an
allocation pursuant to Section 6.1(d)(vi) and 6.1(d)(vii), with respect to such taxable
period. This Section 6.1(d)(ii) is intended to comply with the chargeback of items of income
and gain requirement in Treasury Regulation Section 1.704-2(i)(4) and shall be interpreted
consistently therewith.
(iii) Intentionally left blank.
(iv)
Qualified Income Offset
. In the event any Member unexpectedly receives any
adjustments, allocations or distributions described in Treasury Regulation Sections
1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), or 1.704-1(b)(2)(ii)(d)(6), items
of Company income and gain shall be specially allocated to such Member in an amount and
manner sufficient to eliminate, to the extent required by the Treasury Regulations
promulgated under Section 704(b) of the Code, the deficit balance, if any, in its Adjusted
Capital Account created by such adjustments, allocations or distributions as quickly as
possible unless such deficit balance is otherwise eliminated pursuant to Section 6.1(d)(i)
or (ii).
30
(v)
Gross Income Allocations
. In the event any Member has a deficit balance in its
Capital Account at the end of any Company taxable period in excess of the sum of (A) the
amount such Member is required to restore pursuant to the provisions of this Agreement and
(B) the amount such Member is deemed obligated to restore pursuant to Treasury Regulation
Sections 1.704-2(g) and 1.704-2(i)(5), such Member shall be specially allocated items of
Company gross income and gain in the amount of such excess as quickly as possible; provided,
that an allocation pursuant to this Section 6.1(d)(v) shall be made only if and to the
extent that such Member would have a deficit balance in its Capital Account as adjusted
after all other allocations provided for in this Section 6.1 have been tentatively made as
if this Section 6.1(d)(v) were not in this Agreement.
(vi)
Nonrecourse Deductions
. Nonrecourse Deductions for any taxable period shall be
allocated to the Members in accordance with their respective Percentage Interests. If the
Board of Directors determines that the Companys Nonrecourse Deductions should be allocated
in a different ratio to satisfy the safe harbor requirements of the Treasury Regulations
promulgated under Section 704(b) of the Code, the Board of Directors is authorized, upon
notice to the other Members, to revise the prescribed ratio to the numerically closest ratio
that does satisfy such requirements.
(vii)
Member Nonrecourse Deductions
. Member Nonrecourse Deductions for any taxable
period shall be allocated 100% to the Member that bears the Economic Risk of Loss with
respect to the Member Nonrecourse Debt to which such Member Nonrecourse Deductions are
attributable in accordance with Treasury Regulation Section 1.704-2(i). If more than one
Member bears the Economic Risk of Loss with respect to a Member Nonrecourse Debt, such
Member Nonrecourse Deductions attributable thereto shall be allocated between or among such
Members in accordance with the ratios in which they share such Economic Risk of Loss.
(viii)
Nonrecourse Liabilities
. For purposes of Treasury Regulation Section
1.752-3(a)(3), the Members agree that Nonrecourse Liabilities of the Company in excess of
the sum of (A) the amount of Company Minimum Gain and (B) the total amount of Nonrecourse
Built-in Gain shall be allocated among the Members in accordance with their respective
Percentage Interests.
(ix)
Code Section 754 Adjustments
. To the extent an adjustment to the adjusted tax
basis of any Company asset pursuant to Section 734(b) or 743(b) of the Code is required,
pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(m), to be taken into account in
determining Capital Accounts, the amount of such adjustment to the Capital Accounts shall be
treated as an item of gain (if the adjustment increases the basis
of the asset) or loss (if the adjustment decreases such basis), and such item of gain
or loss shall be specially allocated to the Members in a manner consistent with the manner
in which their Capital Accounts are required to be adjusted pursuant to such Section of the
Treasury Regulations.
31
(x)
Curative Allocation
.
(A) Notwithstanding any other provision of this Section 6.1, other than
the Required Allocations, the Required Allocations shall be taken into
account in making the Agreed Allocations so that, to the extent possible,
the net amount of items of income, gain, loss or deduction allocated to each
Member pursuant to the Required Allocations and the Agreed Allocations,
together, shall be equal to the net amount of such items that would have
been allocated to each such Member under the Agreed Allocations had the
Required Allocations and the related Curative Allocation not otherwise been
provided in this Section 6.1. Notwithstanding the preceding sentence,
Required Allocations relating to (1) Nonrecourse Deductions shall not be
taken into account except to the extent that there has been a decrease in
Company Minimum Gain and (2) Member Nonrecourse Deductions shall not be
taken into account except to the extent that there has been a decrease in
Member Nonrecourse Debt Minimum Gain. Allocations pursuant to this Section
6.1(d)(x)(A) shall only be made with respect to Required Allocations to the
extent the Board of Directors reasonably determines that such allocations
will otherwise be inconsistent with the economic agreement among the
Members. Further, allocations pursuant to this Section 6.1(d)(x)(A) shall be
deferred with respect to allocations pursuant to clauses (1) and (2) hereof
to the extent the Board of Directors determines that such allocations are
likely to be offset by subsequent Required Allocations.
(B) The Board of Directors shall, with respect to each taxable period,
(1) apply the provisions of Section 6.1(d)(x)(A) in whatever order is most
likely to minimize the economic distortions that might otherwise result from
the Required Allocations, and (2) divide all allocations pursuant to Section
6.1(d)(x)(A) among the Members in a manner that is likely to minimize such
economic distortions.
Section 6.2
Allocations for Tax Purposes
.
(a) Except as otherwise provided herein, for federal income tax purposes, each item of income,
gain, loss and deduction shall be allocated among the Members in the same manner as its correlative
item of book income, gain, loss or deduction is allocated pursuant to Section 6.1.
(b) In an attempt to eliminate Book-Tax Disparities attributable to a Contributed Property or
an Adjusted Property, items of income, gain, loss, depreciation, amortization and cost recovery
deductions shall be allocated for federal income tax purposes among the Members as follows:
(i) (A) In the case of a Contributed Property, such items attributable thereto shall be
allocated among the Members in the manner provided under Section 704(c) of the Code that
takes into account the variation between the Agreed
32
Value of such property and its adjusted
basis at the time of contribution; and (B) any item of Residual Gain or Residual Loss
attributable to a Contributed Property shall be allocated among the Members in the same
manner as its correlative item of book gain or loss is allocated pursuant to Section 6.1.
(ii) (A) In the case of an Adjusted Property, such items shall (1) first, be allocated
among the Members in a manner consistent with the principles of Section 704(c) of the Code
to take into account the Unrealized Gain or Unrealized Loss attributable to such property
and the allocations thereof pursuant to Section 5.4(d)(i) or 5.4(d)(ii), and (2) second, in
the event such property was originally a Contributed Property, be allocated among the
Members in a manner consistent with Section 6.2(b)(i)(A); and (B) any item of Residual Gain
or Residual Loss attributable to an Adjusted Property shall be allocated among the Members
in the same manner as its correlative item of book gain or loss is allocated pursuant to
Section 6.1.
(iii) The Board of Directors shall apply the principles of Treasury Regulation Section
1.704-3(d) to eliminate Book-Tax Disparities.
(c) For the proper administration of the Company and for the preservation of uniformity of the
Units (or any class or classes thereof), the Board of Directors shall (i) adopt such conventions as
it deems appropriate in determining the amount of depreciation, amortization and cost recovery
deductions; (ii) make special allocations for federal income tax purposes of income (including,
without limitation, gross income) or deductions; and (iii) amend the provisions of this Agreement
as appropriate (x) to reflect the proposal or promulgation of Treasury Regulations under Section
704(b) or Section 704(c) of the Code or (y) otherwise to preserve or achieve uniformity of the
Units (or any class or classes thereof). The Board of Directors may adopt such conventions, make
such allocations and make such amendments to this Agreement as provided in this Section 6.2(c) only
if such conventions, allocations or amendments would not have a material adverse effect on the
Members, the holders of any class or classes of Units issued and Outstanding or the Company, and if
such allocations are consistent with the principles of Section 704 of the Code.
(d) The Board of Directors may determine to depreciate or amortize the portion of an
adjustment under Section 743(b) of the Code attributable to unrealized appreciation in any Adjusted
Property (to the extent of the unamortized Book-Tax Disparity) using a predetermined rate derived
from the depreciation or amortization method and useful life applied to the Companys common basis
of such property, despite any inconsistency of such approach with Treasury Regulation Section
1.167(c)-l(a)(6) or any successor regulations thereto. If the Board of Directors determines that
such reporting position cannot be taken, the Board of Directors may
adopt depreciation and amortization conventions under which all purchasers acquiring Units in
the same month would receive depreciation and amortization deductions, based upon the same
applicable rate as if they had purchased a direct interest in the Companys property. If the Board
of Directors chooses not to utilize such aggregate method, the Board of Directors may use any other
depreciation and amortization conventions to preserve the uniformity of the intrinsic tax
characteristics of any Interests, so long as such conventions would not have a material adverse
effect on the Members or the Record Holders of any class or classes of Units.
33
(e) Any gain allocated to the Members upon the sale or other taxable disposition of any
Company asset shall, to the extent possible, after taking into account other required allocations
of gain pursuant to this Section 6.2, be characterized as Recapture Income in the same proportions
and to the same extent as such Members (or their predecessors in interest) have been allocated any
deductions directly or indirectly giving rise to the treatment of such gains as Recapture Income.
(f) All items of income, gain, loss, deduction and credit recognized by the Company for
federal income tax purposes and allocated to the Members in accordance with the provisions hereof
shall be determined without regard to any election under Section 754 of the Code that may be made
by the Company;
provided
,
however
, that such allocations, once made, shall be adjusted (in the
manner determined by the Board of Directors) to take into account those adjustments permitted or
required by Sections 734 and 743 of the Code.
(g) Each item of Company income, gain, loss and deduction shall, for federal income tax
purposes, be determined on an annual basis and prorated on a monthly basis and shall be allocated
to the Members as of the opening of the New York Stock Exchange on the first Business Day of each
month;
provided
,
however
, such items for the period beginning on the Closing Date and ending on the
last day of the month in which the Option Closing Date or the expiration of the Over-Allotment
Option occurs shall be allocated to the Members as of the opening of the New York Stock Exchange on
the first Business Day of the next succeeding month; and
provided
,
further
, that gain or loss on a
sale or other disposition of any assets of the Company or any other extraordinary item of income or
loss realized and recognized other than in the ordinary course of business, as determined by the
Board of Directors, shall be allocated to the Members as of the opening of the New York Stock
Exchange on the first Business Day of the month in which such gain or loss is recognized for
federal income tax purposes. The Board of Directors may revise, alter or otherwise modify such
methods of allocation to the extent permitted or required by Section 706 of the Code and the
regulations or rulings promulgated thereunder.
(h) Allocations that would otherwise be made to a Member under the provisions of this Article
VI shall instead be made to the beneficial owner of Units held by a nominee in any case in which
the nominee has furnished the identity of such owner to the Company in accordance with Section
6031(c) of the Code or any other method determined by the Board of Directors.
Section 6.3
Requirement of Distributions; Distributions to Record Holders
.
(a) Except as provided in Section 6.3(b), within 50 days following the end of each Quarter
commencing with the Quarter ending on September 30, 2006, an amount equal to 100% of Available Cash
with respect to such Quarter shall, subject to Section 18-607 of the Delaware Act and except as
otherwise required by Section 5.5(b) in respect of other Company Securities issued pursuant
thereto, be distributed in accordance with this Article VI by the Company to the Record Holders in
accordance with their respective Percentage Interests as of the Record Date selected by the Board
of Directors. All distributions required to be made under this Agreement shall be made subject to
Sections 18-607 and 18-804 of the Delaware Act.
34
(b) With respect to the distribution for the Quarter ending on September 30, 2006, the amount
of Available Cash distributed to the Record Holders in accordance with Section 6.3(a) shall equal
100% of Available Cash with respect to such Quarter multiplied by a fraction of which the numerator
is the number of days in the period commencing on the Closing Date and ending on September 30, 2006
and of which the denominator is 92. Of the remaining Available Cash with respect to such Quarter,
such amount shall be distributed to the Initial Members in accordance with their respective
Percentage Interests immediately prior to the Closing.
(c) Notwithstanding Section 6.3(a), in the event of the dissolution and liquidation of the
Company, all receipts received during or after the Quarter in which the Liquidation Date occurs
shall be applied and distributed solely in accordance with, and subject to the terms and conditions
of, Section 10.3(a).
(d) The Board of Directors may treat taxes paid by the Company on behalf of, or amounts
withheld with respect to, all or less than all of the Members, as a distribution of Available Cash
to such Members.
(e) Each distribution in respect of an Interest shall be paid by the Company, directly or
through the Transfer Agent or through any other Person or agent, only to the Record Holder of such
Interest as of the Record Date set for such distribution. Such payment shall constitute full
payment and satisfaction of the Companys liability in respect of such payment, regardless of any
claim of any Person who may have an interest in such payment by reason of an assignment or
otherwise.
ARTICLE VII
MANAGEMENT AND OPERATION OF BUSINESS
Section 7.1
Board of Directors
.
(a) Except as otherwise expressly provided in this Agreement, the business and affairs of the
Company shall be managed by or under the direction of a Board of Directors (the Board of
Directors). As provided in Section 7.4, the Board of Directors shall have the power and authority
to appoint Officers of the Company. The Directors and Officers shall constitute managers within
the meaning of the Delaware Act. No Member, by virtue of its status as such, shall have any
management power over the business and affairs of the Company or actual or apparent authority to
enter into, execute or deliver contracts on behalf of, or to otherwise bind, the Company. Except as
otherwise specifically provided in this Agreement, the authority and
functions of the Board of Directors, on the one hand, and of the Officers, on the other, shall
be identical to the authority and functions of the board of directors and officers, respectively,
of a corporation organized under the DGCL. In addition to the powers that now or hereafter can be
granted to managers under the Delaware Act and to all other powers granted under any other
provision of this Agreement, subject to Section 7.3, the Board of Directors shall have full power
and authority to do, and to direct the Officers to do, all things and on such terms as it
determines to be necessary or appropriate to conduct the business of the Company, to exercise all
powers set forth in Section 2.5 and to effectuate the purposes set forth in Section 2.4, including
the following:
35
(i) the making of any expenditures, the lending or borrowing of money, the assumption
or guarantee of, or other contracting for, indebtedness and other liabilities, the issuance
of evidences of indebtedness, including indebtedness that is convertible into Company
Securities, and the incurring of any other obligations;
(ii) the making of tax, regulatory and other filings, or rendering of periodic or other
reports to governmental or other agencies having jurisdiction over the business or assets of
the Company;
(iii) the acquisition, disposition, mortgage, pledge, encumbrance, hypothecation or
exchange of any or all of the assets of the Company or the merger or other combination of
the Company with or into another Person (the matters described in this clause (iii) being
subject, however, to any prior approval that may be required by Section 7.3 and Article
XII);
(iv) the use of the assets of the Company (including cash on hand) for any purpose
consistent with the terms of this Agreement, including the financing of the conduct of the
operations of the Company, its Subsidiaries and the MLP; subject to Section 7.6(a), the
lending of funds to other Persons (including other Group Members); the repayment of
obligations of the Company, its Subsidiaries and the MLP and the making of capital
contributions to any member of the Company, its Subsidiaries and the MLP;
(v) the negotiation, execution and performance of any contracts, conveyances or other
instruments (including instruments that limit the liability of the Company under contractual
arrangements to all or particular assets of the Company);
(vi) the distribution of Company cash;
(vii) the selection and dismissal of officers, employees, agents, outside attorneys,
accountants, consultants and contractors and the determination of their compensation and
other terms of employment or hiring, the creation and operation of employee benefit plans,
employee programs and employee practices;
(viii) the maintenance of insurance for the benefit of the Company Group, the Members
and the Indemnitees;
(ix) the formation of, or acquisition of an interest in, and the contribution of
property and the making of loans to, any limited or general partnerships, joint ventures,
corporations, limited liability companies or other relationships (including the acquisition
of interests in, and the contributions of property to, any Group Member, the MLP and its
Subsidiaries from time to time) subject to the restrictions set forth in Section 2.4;
(x) the control of any matters affecting the rights and obligations of the Company,
including the bringing and defending of actions at law or in equity and otherwise engaging
in the conduct of litigation, arbitration or remediation, and the incurring of legal expense
and the settlement of claims and litigation;
36
(xi) the indemnification of any Person against liabilities and contingencies to the
extent permitted by law;
(xii) the entering into of listing agreements with any National Securities Exchange and
the delisting of some or all of the Interests from, or requesting that trading be suspended
on, any such exchange (subject to any prior approval that may be required under Section
4.6);
(xiii) unless restricted or prohibited by Section 5.6, the purchase, sale or other
acquisition or disposition of Company Securities, or the issuance of additional options,
rights, warrants and appreciation rights relating to Company Securities;
(xiv) the undertaking of any action in connection with the Companys participation in
any Group Member;
(xv) the registering for resale under the Securities Act and applicable state
securities laws, the Company Securities held by the Initial Members or any Affiliate of the
Initial Members;
provided
,
however
, that such registration for resale of any Company
Security shall be subject to certain restrictions and limitations, including but not limited
to, those under the provisions hereof or the Securities Act or applicable state securities
laws;
(xvi) the approval and authorization of any action taken by the general partner of the
MLP to limit or modify the incentive distribution rights in the MLP held by the general
partner, if the Board of Directors determines that such limitation or modification does not
adversely affect the Members (including any particular class of Interests as compared to
other classes of Interests) in any material respect; and
(xvii) the entering into of agreements with any of its Affiliates to render services to
a Group Member.
(b) The Board of Directors shall consist of not fewer than three nor more than 12 natural
persons;
provided, however,
that upon closing of the Initial Offering, there shall only be two
directors (including one Independent Director), with the Board of Directors appointing two
additional Independent Directors within 90 days of the listing of the Units on the New York Stock
Exchange, Inc. (or such other National Securities Exchange on which the Units are listed
for trading). Each Director shall be elected as provided in Section 7.1(c) (other than the
two initial Directors) and shall serve in such capacity until his successor has been duly elected
and qualified or until such Director dies, resigns or is removed. A Director may resign at any time
upon written notice to the Company. The Board of Directors may from time to time determine the
number of Directors then constituting the whole Board of Directors, but the Board of Directors
shall not decrease the number of Persons that constitute the whole Board of Directors if such
decrease would shorten the term of any Director.
(c) The Board of Directors shall be divided into two classes, Class I and Class II. The
number of Directors in each class shall be the whole number contained in the quotient arrived at by
dividing the authorized number of Directors by two, and if a fraction is also contained in such
quotient then the extra Director shall be a member of Class I. Each Director
37
shall serve for a
term ending on the date of the second annual meeting following the annual meeting at which such
Director was elected;
provided
,
however
, that the Directors initially appointed to Class I shall
serve for a term ending on the date of the first annual meeting next following December 31, 2006
and the Directors initially appointed to Class II shall serve for a term ending on the date of the
second annual meeting next following December 31, 2006. However, if the number of Directors
serving on the Board of Directors increases to five or more, the Board of Directors may be divided
into three classes, Class I, Class II and Class III, in accordance with the listing standards of
the New York Stock Exchange or such other national exchange on which the Units are then listed, by
an affirmative vote of a majority of the Board of Directors. In the event the Board of Directors is
divided into three classes, each Director shall serve for a term ending on the date of the third
annual meeting following the annual meeting at which such Director was elected. One class of the
Directors shall be elected at each annual meeting of the Members. If any such annual meeting is
not held or the Directors are not elected thereat, the Directors may be elected at any special
meeting of Members held for that purpose. The nomination of Persons to serve as Directors and the
election of the Board of Directors shall be in accordance with Article XI hereof.
(d) Subject to applicable law and the rights of the holders of any series of Interests, in the
case of any increase in the number of Directors, the newly created directorships resulting from
such increase shall be apportioned by the Board of Directors to such class or classes as shall, so
far as possible, bring the number of Directors in the respective classes into conformity with the
formula in Section 7.1(c) as applied to the new authorized number of Directors, and vacancies
existing on the Board of Directors (including a vacancy created by virtue of an increase in the
size of the Board of Directors) may be filled only by the affirmative vote of a majority of the
Directors then serving, even if less than a quorum. Any Director chosen to fill a vacancy shall
hold office for the remaining term of the directorship to which appointed and shall serve for the
unexpired term of office or until his successor has been duly elected and qualified or until such
Directors earlier resignation or removal. Subject to the rights of the holders of any series of
Interests, any Director, and the entire Board of Directors, may be removed from office at any time
by the affirmative vote of Members holding a majority of the Percentage Interests of all Members
entitled to vote.
In the event of any decrease in the authorized number of Directors, (i) each Director then
serving as such shall nevertheless continue as a Director of the class of which he is a member
until the expiration of his current term, or his prior death, resignation or removal, and (ii)
subject to clause (i) of this sentence, the newly eliminated directorships resulting from such
decrease shall be apportioned by the Board of Directors to such class or classes as shall, so far
as possible, bring the number of Directors in the respective classes into conformity with the
formula in Section 7.1(c) as applied to the new authorized number of Directors.
(e) Directors need not be Members. The Board of Directors may, from time to time and by the
adoption of resolutions, establish qualifications for Directors.
(f) Unless otherwise required by the Delaware Act, other law or the provisions hereof,
(i) each member of the Board of Directors shall have one vote;
38
(ii) the presence at a meeting of the Board of Directors 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 of the Board of Directors at which a quorum is present shall be deemed to constitute
the act of the Board of Directors.
(g) Regular meetings of the Board of Directors and any committee thereof shall be held at such
times and places as shall be designated from time to time by resolution of the Board of Directors
or such committee. 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
or the chairman of such committee, as the case may be, or on the written request of any three
Directors or a majority of the committee members, as applicable, to the Secretary, in each case on
at least twenty-four hours personal, written, facsimile, electronic, telegraphic, cable or wireless
notice to each Director or committee member, which notice may be waived by any Director. 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 Section 7.1(g)) 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 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 all 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.
(h) The Board of Directors may, by resolution of a majority of the full Board of Directors,
designate one or more committees, each committee to consist of one or more of the Directors. The
Board of Directors may designate one or more Directors as alternate members of any committee, who
may replace any absent or disqualified Director at any meeting of such
committee. Any such committee, to the extent provided in the resolution of the Board of
Directors or in this Agreement, shall have and may exercise all powers and authority of the Board
of Directors in the management of the business and affairs of the Company; but no such committee
shall have the power or authority in reference to the following matters: approving or adopting, or
recommending to the Members, any action or matter expressly required by this Agreement or the
Delaware Act to be submitted to the Members for approval or adopting, amending or repealing any
provision of this Agreement. Unless specified by resolution of the Board of Directors, any
committee designated pursuant to this Section 7.1(h) shall choose its own chairman, shall keep
regular minutes of its proceedings and report the same to the Board of Directors when requested,
and, subject to Section 7.1(g), 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. At every meeting of any such
committee, the presence of a majority of all the members thereof shall constitute a quorum and the
affirmative vote of a majority of the members present at a meeting
39
of which a quorum is present
shall be necessary for the adoption by the committee of any resolution.
(i) The Board of Directors may elect one of its members as Chairman of the Board (the
Chairman of the Board). The Chairman of the Board, if any, and if present and acting, shall
preside at all meetings of the Board of Directors and of Members, unless otherwise directed by the
Board of Directors. If the Board of Directors does not elect a Chairman or if the Chairman is
absent from the meeting, the Chief Executive Offer, if present and a Director, or any other
Director chosen by the Board of Directors, shall preside. In the absence of a Secretary, the
chairman of the meeting may appoint any Person to serve as Secretary of the meeting.
(j) Unless otherwise restricted by law, the Board of Directors shall have the authority to fix
the compensation of the Directors. The Directors may be paid their expenses, if any, of attendance
at each meeting of the Board of Directors and may be paid a fixed sum for attendance at each
meeting of the Board of Directors or paid a stated salary or paid other compensation as Director.
No such payment shall preclude any Director from serving the Company in any other capacity and
receiving compensation therefor. Members of special or standing committees may also be paid their
expenses, if any, of and allowed compensation for attending committee meetings.
(k) Notwithstanding any other provision of this Agreement, any Group Member Agreement, the
Delaware Act or any applicable law, rule or regulation, each of the Members and each other Person
who may acquire an interest in Company Securities hereby (i) approves, ratifies and confirms the
execution, delivery and performance by the parties thereto of this Agreement and the Group Member
Agreement of each other Group Member, the Underwriting Agreement and the other agreements described
in or filed as exhibits to the Registration Statement that are related to the transactions
contemplated by the Registration Statement; (ii) agrees that the Board of Directors (on its own or
through any Officer of the Company) is authorized to execute, deliver and perform the agreements
referred to in clause (i) of this sentence and the other agreements, acts, transactions and matters
described in or contemplated by the Registration Statement on behalf of the Company without any
further act, approval or vote of the Members or the other Persons who may acquire an interest in
Company Securities; and (iii) agrees that the execution, delivery or performance by the Company,
any Group Member or any Affiliate of any of them of this Agreement or any agreement authorized or
permitted under
this Agreement (including the exercise by any Affiliate of the Company of the rights accorded
pursuant to Article XIII) shall not constitute a breach by the Board of Directors or any Officer of
any duty that the Board of Directors or any Officer may owe the Company or the Members or any other
Persons under this Agreement (or any other agreements) or of any duty existing at law, in equity or
otherwise.
Section 7.2
Certificate of Formation
. The Certificate of Formation has been filed
with the Secretary of State of the State of Delaware as required by the Delaware Act, such filing
being hereby confirmed, ratified and approved in all respects. The Board of Directors shall use all
reasonable efforts to cause to be filed such other certificates or documents that it determines to
be necessary or appropriate for the formation, continuation, qualification and operation of a
limited liability company in the State of Delaware or any other state in which the Company may
elect to do business or own property. To the extent that the Board of Directors determines such
40
action to be necessary or appropriate, the Board of Directors shall direct the appropriate Officers
of the Company to file amendments to and restatements of the Certificate of Formation and do all
things to maintain the Company as a limited liability company under the laws of the State of
Delaware or of any other state in which the Company may elect to do business or own property, and
any such Officer so directed shall be an authorized person of the Company within the meaning of
the Delaware Act for purposes of filing any such certificate with the Secretary of State of the
State of Delaware. Subject to the terms of Section 3.4(a), the Company shall not be required,
before or after filing, to deliver or mail a copy of the Certificate of Formation, any
qualification document or any amendment thereto to any Member.
Section 7.3
Restrictions on the Board of Directors Authority
.
(a) Except as otherwise provided in this Agreement, the Board of Directors may not, without
written approval of the specific act by all of the Outstanding Interests or by other written
instrument executed and delivered by holders of all of the Outstanding Interests subsequent to the
date of this Agreement, take any action in contravention of this Agreement.
(b) Except as provided in Articles X and XII, the Board of Directors may not sell, exchange or
otherwise dispose of all or substantially all of the assets of the Company Group, taken as a whole,
in a single transaction or a series of related transactions (including by way of merger,
consolidation or other combination) or approve on behalf of the Company or its Subsidiaries the
sale, exchange or other disposition of all or substantially all of the assets of the MLP Group,
without the approval of a Unit Majority;
provided
,
however
, that this provision shall not preclude
or limit the Board of Directors ability to mortgage, pledge, hypothecate or grant a security
interest in all or substantially all of the assets of the Company Group and shall not apply to any
forced sale of any or all of the assets of the Company Group pursuant to the foreclosure of, or
other realization upon, any such encumbrance.
Section 7.4
Officers
.
(a) The Board of Directors shall have the power and authority to appoint such officers with
such titles, authority and duties as determined by the Board of Directors. Such Persons so
designated by the Board of Directors shall be referred to as Officers. 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 7.4.
(b) The Officers of the Company shall include a Chairman of the Board, a Chief Executive
Officer, a President, and a Secretary, and may also include a Vice Chairman, Chief Operating
Officer, Treasurer, one or more Vice Presidents (who may be further classified by such descriptions
as executive, senior, assistant or otherwise, as the Board of Directors shall determine), one
or more Assistant Secretaries and one or more Assistant Treasurers. Officers shall be elected by
the Board of Directors, which shall consider that subject at its first meeting after every annual
meeting of Members and as necessary to fill vacancies. Each Officer shall hold office until his or
her successor is elected and qualified or until his or her earlier death, resignation or removal.
Any number of offices may be held by the same Person. The compensation of Officers elected by the
Board of Directors shall be fixed from time to time by
41
the Board of Directors or by such Officers
as may be designated by resolution of the Board of Directors.
(c) Any Officer may resign at any time upon written notice to the Company. Any Officer, agent
or employee of the Company may be removed by the Board of Directors with or without cause at any
time. The Board of Directors may delegate the power of removal as to Officers, agents and employees
who have not been appointed by the Board of Directors. Such removal shall be without prejudice to a
Persons contract rights, if any, but the appointment of any Person as an Officer, agent or
employee of the Company shall not of itself create contract rights.
(d) The President shall be the Chief Executive Officer of the Company unless the Board of
Directors designates the Chairman of the Board as Chief Executive Officer. Subject to the control
of the Board of Directors and the executive committee (if any), the Chief Executive Officer shall
have general executive charge, management and control of the properties, business and operations of
the Company with all such powers as may be reasonably incident to such responsibilities; he may
employ and discharge employees and agents of the Company except such as shall be appointed by the
Board of Directors, and he may delegate these powers; he may agree upon and execute all leases,
contracts, evidences of indebtedness and other obligations in the name of the Company, and shall
have such other powers and duties as designated in accordance with this Agreement and as from time
to time may be assigned to him by the Board of Directors.
(e) If elected, the Chairman of the Board shall preside at all meetings of the Members and of
the Board of Directors; and shall have such other powers and duties as designated in this Agreement
and as from time to time may be assigned to him by the Board of Directors.
(f) Unless the Board of Directors otherwise determines, the President shall have the authority
to agree upon and execute all leases, contracts, evidences of indebtedness and other obligations in
the name of the Company; and, unless the Board of Directors otherwise determines, shall, in the
absence of the Chairman of the Board or if there be no Chairman of the Board, preside at all
meetings of the Members and (should he be a Director) of the Board of Directors; and he shall have
such other powers and duties as designated in accordance with this Agreement and as from time to
time may be assigned to him by the Board of Directors.
(g) In the absence of the President, or in the event of his inability or refusal to act, a
Vice President designated by the Board of Directors shall perform the duties of the President, and
when so acting shall have all the powers of and be subject to all the restrictions upon the
President. In the absence of a designation by the Board of Directors of a Vice President to perform
the duties of the President, or in the event of his absence or inability or refusal to act, the
Vice President who is present and who is senior in terms of uninterrupted time as a Vice President
of the Company shall so act. The Vice President shall perform such other duties and have such other
powers as the Board of Directors may from time to time prescribe. Unless otherwise provided by the
Board of Directors, each Vice President will have authority to act within his or her respective
areas and to sign contracts relating thereto.
42
(h) The Treasurer shall have responsibility for the custody and control of all the funds and
securities of the Company and shall have such other powers and duties as designated in this
Agreement and as from time to time may be assigned to the Treasurer by the Board of Directors. The
Treasurer shall perform all acts incident to the position of Treasurer, subject to the control of
the Chief Executive Officer and the Board of Directors. Each Assistant Treasurer shall have the
usual powers and duties pertaining to his office, together with such other powers and duties as
designated in this Agreement and as from time to time may be assigned to him by the Chief Executive
Officer or the Board of Directors. The Assistant Treasurers shall exercise the powers of the
Treasurer during that Officers absence or inability or refusal to act. An Assistant Treasurer
shall also perform such other duties as the Treasurer or the Board of Directors may assign to him.
(i) The Secretary shall issue all authorized notices for, and shall keep minutes of, all
meetings of the Members and the Board of Directors. The Secretary shall have charge of the
corporate books and shall perform such other duties as the Board of Directors may from time to time
prescribe. In the absence or inability to act of the Secretary, any Assistant Secretary may perform
all the duties and exercise all the powers of the Secretary. The performance of any such duty
shall, in respect of any other Person dealing with the Company, be conclusive evidence of his power
to act. An Assistant Secretary shall also perform such other duties as the Secretary or the Board
of Directors may assign to him.
(j) The Board of Directors may from time to time delegate the powers or duties of any Officer
to any other Officers or agents, notwithstanding any provision hereof.
(k) Unless otherwise directed by the Board of Directors, the Chief Executive Officer, the
President or any Officer of the Company authorized by the Chief Executive Officer shall have power
to vote and otherwise act on behalf of the Company, in person or by proxy, at any meeting of
members of or with respect to any action of equity holders of any other entity in
which the Company may hold securities and otherwise to exercise any and all rights and powers
which the Company may possess by reason of its ownership of securities in such other entities.
Section 7.5
Outside Activities
. Except as otherwise provided for in the Omnibus
Agreement or the Non-Compete Agreement, as applicable, (a) it shall be deemed not to be a breach of
any duty (including any fiduciary duty) or any other obligation of any type whatsoever of any
Director for Affiliates of such Director to engage in outside business interests and activities in
preference to or to the exclusion of the Company or in direct competition with the Company;
provided such Affiliate does not engage in such business or activity as a result of or using
confidential information provided by or on behalf of the Company to such Director and (b) Directors
shall have no obligation hereunder or as a result of any duty expressed or implied by law to
present business opportunities to the Company that may become available to Affiliates of such
Director. None of any Group Member, any Member or any other Person shall have any rights by virtue
of a Directors duties as a Director, this Agreement or any Group Member Agreement in any business
ventures of any Director.
43
Section 7.6
Loans or Contributions from the Company or Group Members
.
(a) The Company may lend or contribute to any Group Member, and any Group Member may borrow
from the Company, funds on terms and conditions determined by the Board of Directors.
(b) No borrowing by any Group Member or the approval thereof by the Board of Directors shall
be deemed to constitute a breach of any duty (including any fiduciary duty), expressed or implied,
of the Board of Directors to the Company or the Members by reason of the fact that the purpose or
effect of such borrowing is directly or indirectly to enable distributions to the Members.
Section 7.7
Indemnification
.
(a) To the fullest extent permitted by law but subject to the limitations expressly provided
in this Agreement, all Indemnitees shall be indemnified and held harmless by the Company from and
against any and all losses, claims, damages, liabilities, joint or several, expenses (including
legal fees and expenses), judgments, fines, penalties, interest, settlements or 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 an Indemnitee; provided, that the
Indemnitee shall not be indemnified and held harmless if there has been a final and non-appealable
judgment entered by a court of competent jurisdiction determining that, in respect of the matter
for which the Indemnitee is seeking indemnification pursuant to this Section 7.7, the Indemnitee
acted in bad faith or engaged in fraud, willful misconduct, or in the case of a criminal matter,
acted with knowledge that the Indemnitees conduct was unlawful;
provided
,
further
, no indemnification pursuant to this Section 7.7 shall be available to the Initial
Members or their Affiliates with respect to their obligations incurred pursuant to the Underwriting
Agreement (other than obligations incurred by the Initial Members on behalf of the Company).
(b) To the fullest extent permitted by law, expenses (including legal fees and expenses)
incurred by an Indemnitee who is indemnified pursuant to Section 7.7(a) in defending any claim,
demand, action, suit or proceeding shall, from time to time, be advanced by the Company prior to a
determination that the Indemnitee is not entitled to be indemnified upon receipt by the Company of
any 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 7.7.
(c) The indemnification, advancement of expenses and other provisions of this Section 7.7
shall be in addition to any other rights to which an Indemnitee may be entitled under any
agreement, pursuant to any vote of the holders of Outstanding Interests entitled to vote on such
matter, as a matter of law or otherwise, both as to actions in the Indemnitees capacity as an
Indemnitee 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.
44
(d) The Company may purchase and maintain insurance, on behalf of its Directors and Officers,
and such other 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 Companys
activities or such Persons activities on behalf of the Company, 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 the definition of Indemnitee in this Section 7.7, the Company shall be
deemed to have requested an Indemnitee to serve as fiduciary of an employee benefit plan whenever
the performance by such Indemnitee of his duties to the Company also imposes duties on, or
otherwise involves services by, such Indemnitee 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 within the meaning of Section 7.7(a); and action taken or
omitted by such Indemnitee with respect to any employee benefit plan in the performance of such
Indemnitees duties for a purpose reasonably believed by him to be in the interest of the
participants and beneficiaries of the plan shall be deemed to be for a purpose that is in, or not
opposed to, the best interests of the Company.
(f) Any indemnification pursuant to this Section 7.7 shall be made only out of the assets of
the Company, it being agreed that the Members shall not be personally liable for such
indemnification and shall have no obligation to contribute or loan any monies or property to the
Company to enable it to effectuate such indemnification.
(g) An Indemnitee shall not be denied indemnification in whole or in part under this Section
7.7 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 indemnification, advancement of expenses and other provisions of this Section 7.7 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.
(i) No amendment, modification or repeal of this Section 7.7 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 obligations of the Company to indemnify any such Indemnitee
under and in accordance with the provisions of this Section 7.7 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.
Section 7.8
Exculpation of 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 or the Members for losses sustained or liabilities
incurred as a result of any act or omission of an Indemnitee unless there has been a final,
non-appealable judgment entered by a court of competent jurisdiction determining that, in respect
of the matter in question, the Indemnitee acted in bad faith or
45
engaged in fraud, willful
misconduct or, in the case of a criminal matter, acted with knowledge that the Indemnitees conduct
was unlawful.
(b) Subject to its obligations and duties as Board of Directors set forth in this Article VII,
the Board of Directors 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 its agents, and the
Board of Directors shall not be responsible for any misconduct or negligence on the part of any
such agent appointed by the Board of Directors in good faith.
(c) To the extent that, at law or in equity, an Indemnitee has duties (including fiduciary
duties) and liabilities relating thereto to the Company or to the Members, the Directors and any
other Indemnitee acting in connection with the Companys business or affairs shall not be liable to
the Company or to any Member for their good faith reliance on the provisions of this Agreement. The
provisions of this Agreement, to the extent that they restrict or eliminate or otherwise modify the
duties (including fiduciary duties) and liabilities of an Indemnitee otherwise existing at law or
in equity, are agreed by the Members to replace such other duties and liabilities of such
Indemnitee.
(d) Any amendment, modification or repeal of this Section 7.8 or any provision hereof shall be
prospective only and shall not in any way affect the limitations on the liability of any Indemnitee
under this Section 7.8 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 and provided such Person became an Indemnitee hereunder prior
to such amendment, modification or repeal.
Section 7.9
Resolution of Conflicts of Interest; Standards of Conduct and Modification of
Duties
.
(a) Unless otherwise expressly provided in this Agreement, whenever a potential conflict of
interest exists or arises between any of the Initial Members, any of the MLP Group, one or more
Directors or their respective Affiliates, on the one hand, and the Company, or any Group Member or
any Member, on the other, any resolution or course of action by the Board of Directors or its
Affiliates in respect of such conflict of interest shall be permitted and deemed approved by all
Members, and shall not constitute a breach of this Agreement, of any agreement contemplated herein,
or of any duty stated or implied by law or equity, including any fiduciary duty, if the resolution
or course of action in respect of such conflict of interest is (i) approved by Special Approval,
(ii) approved by the vote of holders of a majority of the Outstanding Units held by disinterested
parties, (iii) on terms no less favorable to the Company than those generally being provided to or
available from unrelated third parties or (iv) fair and reasonable to the Company, taking into
account the totality of the relationships between the parties involved (including other
transactions that may be particularly favorable or advantageous to the Company). The Board of
Directors shall be authorized but not required in connection with its resolution of such conflict
of interest to seek Special Approval of such resolution, and the Board of Directors may also adopt
a resolution or course of action that has not received Special Approval. If Special Approval is not
sought and the Board of Directors determines that the resolution or course of action taken with
respect to a conflict of interest satisfies either of the
46
standards set forth in clauses (iii) and
(iv) above, then it shall be presumed that, in making its decision, the Board of Directors acted in
good faith, and in any proceeding brought by any Member or by or on behalf of such Member or any
other Member or the Company challenging such approval, the Person bringing or prosecuting such
proceeding shall have the burden of overcoming such presumption. Notwithstanding anything to the
contrary in this Agreement, the existence of the conflicts of interest described in the
Registration Statement are hereby approved by all Members and shall not constitute a breach of this
Agreement or of any duty otherwise existing at law, in equity or otherwise.
(b) The Members hereby authorize the Board of Directors, on behalf of the Company as a partner
or member of a Group Member, to approve of actions by the Board of Directors or managing member of
such Group Member similar to those actions permitted to be taken by the Board of Directors pursuant
to this Section 7.9.
Section 7.10
Duties of Officers and Directors
.
(a) Except as otherwise expressly provided in Sections 7.5, 7.6, 7.7, 7.8 and 7.9 or elsewhere
in this Agreement or required by the Delaware Act, the duties and obligations owed to the Company
and to the Members by the Officers and Directors, shall be the same as the
respective duties and obligations owed to a corporation organized under DGCL by its officers
and directors, respectively.
(b) A Director shall, in the performance of his duties, be fully protected in relying in good
faith upon the records of the Company and on such information, opinions, reports or statements
presented to the Company by any of the Companys Officers or employees, or committees of the Board
of Directors, or by any other Person as to matters the Director reasonably believes are within such
other Persons professional or expert competence.
(c) The Board of Directors shall have the right, in respect of any of its powers or
obligations hereunder, to act through a duly appointed attorney or attorneys-in-fact or the duly
authorized Officers of the Company.
Section 7.11
Purchase or Sale of Company Securities
. The Board of Directors may
cause the Company to purchase or otherwise acquire Company Securities.
Section 7.12
Registration Rights of the Initial Members and their Affiliates
.
(a) If (i) the Initial Members or any Affiliate of the Initial Members (including for purposes
of this Section 7.12, any Person that is an Affiliate of the Initial Members at the date hereof
notwithstanding that it may later cease to be an Affiliate of the Initial Members) holds Company
Securities (the Holder) that it desires to sell and (ii) Rule 144 of the Securities Act (or any
successor rule or regulation to Rule 144) or another exemption from registration is not available
to enable such Holder of Company Securities to dispose of the number of Company Securities it
desires to sell at the time it desires to do so without registration under the Securities Act, then
at the option and upon the request of the Holder, the Company shall file with the Commission as
promptly as practicable after receiving such request, and use all commercially reasonable efforts
to cause to become effective and remain effective for a period of not less than six months
following its effective date or such shorter period as shall terminate when all
47
Company Securities
covered by such registration statement have been sold, a registration statement under the
Securities Act registering the offering and sale of the number of Company Securities specified by
the Holder;
provided
,
however
, that the Company shall not be required to effect more than three
registrations pursuant to this Section 7.12(a) and Section 7.12(b); and
provided further
,
however
,
that if the Conflicts Committee determines in good faith that the requested registration would be
materially detrimental to the Company and its Members because such registration would (x)
materially interfere with a public offering or a significant acquisition, reorganization or other
similar transaction involving the Company or the MLP, (y) require premature disclosure of material
information that the Company has a bona fide business purpose for preserving as confidential or (z)
render the Company unable to comply with requirements under applicable securities laws, then the
Company shall have the right to postpone such requested registration for a period of not more than
three months after receipt of the Holders request, such right pursuant to this Section 7.12(a) or
Section 7.12(b) not to be utilized more than twice in any twelve-month period. Except as provided
in the preceding sentence, the Company
shall be deemed not to have used all commercially reasonable efforts to keep the registration
statement effective during the applicable period if it voluntarily takes any action that would
result in Holders of Company Securities covered thereby not being able to offer and sell such
Company Securities at any time during such period, unless such action is required by applicable
law. In connection with any registration pursuant to the first sentence of this Section 7.12(a),
the Company shall (i) promptly prepare and file (A) such documents as may be necessary to register
or qualify the securities subject to such registration under the securities laws of such states as
the Holder shall reasonably request;
provided
,
however
, that no such qualification shall be
required in any jurisdiction where, as a result thereof, the Company would become subject to
general service of process or to taxation or qualification to do business as a foreign corporation
doing business in such jurisdiction solely as a result of such registration, and (B) such documents
as may be necessary to apply for listing or to list the Company Securities subject to such
registration on such National Securities Exchange as the Holder shall reasonably request, and (ii)
do any and all other reasonable acts and things that may be necessary or appropriate to enable the
Holder to consummate a public sale of such Company Securities in such states. Except as set forth
in Section 7.12(d), all costs and expenses of any such registration and offering (other than the
underwriting discounts and commissions) shall be paid by the Company, without reimbursement by the
Holder.
(b) If any Holder holds Company Securities that it desires to sell and Rule 144 of the
Securities Act (or any successor rule or regulation to Rule 144) or another exemption from
registration is not available to enable such Holder to dispose of the number of Company Securities
it desires to sell at the time it desires to do so without registration under the Securities Act,
then at the option and upon the request of the Holder, the Company shall file with the Commission
as promptly as practicable after receiving such request, and use all commercially reasonable
efforts to cause to become effective and remain effective for a period of not less than six months
following its effective date or such shorter period as shall terminate when all Company Securities
covered by such shelf registration statement have been sold, a shelf registration statement
covering the Company Securities specified by the Holder on an appropriate form under Rule 415 of
the Securities Act, or any similar rule that may be adopted by the Commission;
provided
,
however
,
that the Company shall not be required to effect more than three registrations pursuant to Section
7.12(a) and this Section 7.12(b); and
provided further
,
however
, that if the Conflicts Committee
determines in good faith that any offering
48
under, or the use of any prospectus forming a part of,
the shelf registration statement would be materially detrimental to the Company and its Members
because such offering or use would (x) materially interfere with a public offering or a significant
acquisition, reorganization or other similar transaction involving the Company or the MLP, (y)
require premature disclosure of material information that the Company has a bona fide business
purpose for preserving as confidential or (z) render the Company unable to comply with requirements
under applicable securities laws, then the Company shall have the right to postpone such requested
registration for a period of not more than three months after receipt of the Holders request, such
right pursuant to Section 7.12(a) or this Section 7.12(b) not to be utilized more than twice in any
twelve-month period. Except as provided in the preceding sentence, the Company shall be deemed not
to have used all commercially reasonable efforts to keep the shelf registration statement effective
during the applicable period if it voluntarily takes any action that would result in Holders of
Company Securities covered thereby not being able to offer and sell such Company Securities at any
time during such period, unless such action is required by applicable law. In connection with any
shelf registration pursuant to this Section 7.12(b), the Company shall (i) promptly prepare
and file (A) such documents as may be necessary to register or qualify the securities subject to
such shelf registration under the securities laws of such states as the Holder shall reasonably
request;
provided
,
however
, that no such qualification shall be required in any jurisdiction where,
as a result thereof, the Company would become subject to general service of process or to taxation
or qualification to do business as a foreign corporation doing business in such jurisdiction solely
as a result of such shelf registration, and (B) such documents as may be necessary to apply for
listing or to list the Company Securities subject to such shelf registration on such National
Securities Exchange as the Holder shall reasonably request, and (ii) do any and all other
reasonable acts and things that may be necessary or appropriate to enable the Holder to consummate
a public sale of such Company Securities in such states. Except as set forth in Section 7.12(d),
all costs and expenses of any such shelf registration and offering (other than the underwriting
discounts and commissions) shall be paid by the Company, without reimbursement by the Holder.
(c) If the Company shall at any time propose to file a registration statement under the
Securities Act for an offering of equity securities of the Company for cash (other than an offering
relating solely to an employee benefit plan), the Company shall use all reasonable efforts to
include such number or amount of securities held by the Holder in such registration statement as
the Holder shall request; provided, that the Company is not required to make any effort or take any
action to so include the securities of the Holder once the registration statement is declared
effective by the Commission, including any registration statement providing for the offering from
time to time of securities pursuant to Rule 415 of the Securities Act. If the proposed offering
pursuant to this Section 7.12(c) shall be an underwritten offering, then, in the event that the
managing underwriter or managing underwriters of such offering advise the Company and the Holder in
writing that in their opinion the inclusion of all or some of the Holders Company Securities could
adversely and materially affect the success of the offering, the Company shall include in such
offering only that number or amount, if any, of securities held by the Holder that, in the opinion
of the managing underwriter or managing underwriters, will not so adversely and materially affect
the offering. Except as set forth in Section 7.12(d), all costs and expenses of any such
registration and offering (other than the underwriting discounts and commissions) shall be paid by
the Company, without reimbursement by the Holder.
49
(d) If underwriters are engaged in connection with any registration referred to in this
Section 7.12, the Company shall provide indemnification, representations, covenants, opinions and
other assurance to the underwriters in form and substance reasonably satisfactory to such
underwriters. Further, in addition to and not in limitation of the Companys obligation under
Section 7.7, the Company shall, to the fullest extent permitted by law, indemnify and hold harmless
the Holder, its officers, directors and each Person who controls the Holder (within the meaning of
the Securities Act) and any agent thereof (collectively, Indemnified Persons) against any losses,
claims, demands, actions, causes of action, assessments, damages, liabilities (joint or several),
costs and expenses (including interest, penalties and reasonable attorneys fees and
disbursements), resulting to, imposed upon, or incurred by the Indemnified Persons, directly or
indirectly, under the Securities Act or otherwise (hereinafter referred to in this Section 7.12(c)
as a claim and in the plural as claims) based upon, arising out of or resulting from any untrue
statement or alleged untrue statement of any material fact contained in any registration statement
under which any Company Securities were registered under the Securities Act or any state
securities or Blue Sky laws, in any preliminary prospectus (if used prior to the effective
date of such registration statement), or in any summary or final prospectus or in any amendment or
supplement thereto (if used during the period the Company is required to keep the registration
statement current), or arising out of, based upon or resulting from the omission or alleged
omission to state therein a material fact required to be stated therein or necessary to make the
statements made therein not misleading;
provided
,
however
, that the Company shall not be liable to
any Indemnified Person to the extent that any such claim arises out of, is based upon or results
from an untrue statement or alleged untrue statement or omission or alleged omission made in such
registration statement, such preliminary, summary or final prospectus or such amendment or
supplement, in reliance upon and in conformity with written information furnished to the Company by
or on behalf of such Indemnified Person specifically for use in the preparation thereof.
(e) The provisions of Section 7.12(a), Section 7.12(b) and Section 7.12(c) shall continue to
be applicable with respect to any of the Initial Members Affiliates after such Initial Member
ceases to be a Member of the Company, during a period of two years subsequent to the effective date
of such cessation and for so long thereafter as is required for the Holder to sell all of the
Company Securities with respect to which it has requested during such two-year period inclusion in
a registration statement otherwise filed or that a registration statement be filed;
provided
,
however
, that the Company shall not be required to file successive registration statements covering
the same Company Securities for which registration was demanded during such two-year period. The
provisions of Section 7.12(d) shall continue in effect thereafter.
(f) The rights to cause the Company to register Company Securities pursuant to this Section
7.12 may be assigned (but only with all related obligations) by a Holder to a transferee or
assignee of such Company Securities, provided (i) the Company is, within a reasonable time after
such transfer, furnished with written notice of the name and address of such transferee or assignee
and the Company Securities with respect to which such registration rights are being assigned; and
(ii) such transferee or assignee agrees in writing to be bound by and subject to the terms set
forth in this Section 7.12.
(g) Any request to register Company Securities pursuant to this Section 7.12 shall (i) specify
the Company Securities intended to be offered and sold by the Person making the
50
request, (ii)
express such Persons present intent to offer such Company Securities for distribution, (iii)
describe the nature or method of the proposed offer and sale of Company Securities, and (iv)
contain the undertaking of such Person to provide all such information and materials and take all
action as may be required in order to permit the Company to comply with all applicable requirements
in connection with the registration of such Company Securities.
Section 7.13
Reliance by Third Parties
. Notwithstanding anything to the contrary in
this Agreement, any Person dealing with the Company shall be entitled to assume that the Board of
Directors and any Officer authorized by the Board of Directors to act on behalf of and in the name
of the Company has full power and authority to encumber, sell or otherwise use in any manner any
and all assets of the Company and to enter into any authorized contracts on behalf of the Company,
and such Person shall be entitled to deal with the Board of Directors or any Officer as if it were
the Companys sole party
in interest, both legally and beneficially. Each Member hereby waives, to the fullest extent
permitted by law, any and all defenses or other remedies that may be available against such Person
to contest, negate or disaffirm any action of the Board of Directors or any Officer in connection
with any such dealing. In no event shall any Person dealing with the Board of Directors or any
Officer or its representatives be obligated to ascertain that the terms of this Agreement have been
complied with or to inquire into the necessity or expedience of any act or action of the Board of
Directors or any Officer or its representatives. Each and every certificate, document or other
instrument executed on behalf of the Company by the Board of Directors or any Officer or its
representatives shall be conclusive evidence in favor of any and every Person relying thereon or
claiming thereunder that (a) at the time of the execution and delivery of such certificate,
document or instrument, this Agreement was in full force and effect, (b) the Person executing and
delivering such certificate, document or instrument was duly authorized and empowered to do so for
and on behalf of the Company and (c) such certificate, document or instrument was duly executed and
delivered in accordance with the terms and provisions of this Agreement and is binding upon the
Company.
ARTICLE VIII
BOOKS, RECORDS, ACCOUNTING AND REPORTS
Section 8.1
Records and Accounting
. The Board of Directors shall keep or cause to
be kept at the principal office of the Company appropriate books and records with respect to the
Companys business, including all books and records necessary to provide to the Members any
information required to be provided pursuant to this Agreement. Any books and records maintained
by or on behalf of the Company in the regular course of its business, including the record of the
Record Holders of Units or other Company Securities, books of account and records of Company
proceedings, may be kept on, or be in the form of, computer disks, hard drives, punch cards,
magnetic tape, photographs, micrographics or any other information storage device; provided, that
the books and records so maintained are convertible into clearly legible written form within a
reasonable period of time. The books of the Company shall be maintained, for financial reporting
purposes, on an accrual basis in accordance with U.S. GAAP.
Section 8.2
Fiscal Yea
r
. The fiscal year of the Company shall be a fiscal year
ending December 31.
51
Section 8.3
Reports
.
(a) As soon as practicable, but in no event later than 120 days after the close of each fiscal
year of the Company, the Board of Directors shall cause to be mailed or made available to each
Record Holder of a Unit as of a date selected by the Board of Directors, an annual report
containing financial statements of the Company for such fiscal year of the Company, presented in
accordance with U.S. GAAP, including a balance sheet and statements of operations, equity and cash
flows, such statements to be audited by a registered public accounting firm selected by the Board
of Directors.
(b) As soon as practicable, but in no event later than 90 days after the close of each Quarter
except the last Quarter of each fiscal year, the Board of Directors shall cause to be mailed or
made available to each Record Holder of a Unit, as of a date selected by the Board of Directors, a
report containing unaudited financial statements of the Company and such other information as may
be required by applicable law, regulation or rule of any National Securities Exchange on which the
Units are listed for trading, or as the Board of Directors determines to be necessary or
appropriate.
ARTICLE IX
TAX MATTERS
Section 9.1
Tax Returns and Information
. The Company shall timely file all returns of
the Company that are required for federal, state and local income tax purposes on the basis of the
accrual method and a taxable year ending on December 31. The tax information reasonably required
by Record Holders for federal and state income tax reporting purposes with respect to a taxable
year shall be furnished to them within 90 days of the close of the calendar year in which the
Companys taxable year ends. The classification, realization and recognition of income, gain,
losses and deductions and other items shall be on the accrual method of accounting for federal
income tax purposes.
Section 9.2
Tax Elections
.
(a) The Company shall make the election under Section 754 of the Code in accordance with
applicable regulations thereunder, subject to the reservation of the right to seek to revoke any
such election upon the Board of Directors determination that such revocation is in the best
interests of the Members. Notwithstanding any other provision herein contained, for the purposes
of computing the adjustments under Section 743(b) of the Code, the Board of Directors shall be
authorized (but not required) to adopt a convention whereby the price paid by a transferee of a
Interest will be deemed to be the lowest quoted closing price of the Interests on any National
Securities Exchange on which such Interests are traded during the calendar month in which such
transfer is deemed to occur pursuant to Section 6.2(g) without regard to the actual price paid by
such transferee.
(b) Except as otherwise provided herein, the Board of Directors shall determine whether the
Company should make any other elections permitted by the Code.
Section 9.3
Tax Controversies
. Subject to the provisions hereof, the Board of
Directors shall designate one Member as the Tax Matters Partner (as defined in the Code). The
52
Tax
Matters Partner is authorized and required to represent the Company (at the Companys expense) in
connection with all examinations of the Companys affairs by tax authorities, including resulting
administrative and judicial proceedings, and to expend Company funds for professional services and
costs associated therewith. Each Member agrees to cooperate with the Tax Matters Partner and to do
or refrain from doing any or all things reasonably required by the Tax Matters Partner to
conduct such proceedings.
Section 9.4
Withholding
. Notwithstanding any other provision of this Agreement, the
Board of Directors is authorized to take any action that may be required to cause the Company and
other Group Members to comply with any withholding requirements established under the Code or any
other federal, state or local law including, without limitation, pursuant to Sections 1441, 1442,
1445 and 1446 of the Code. To the extent that the Company is required or elects to withhold and
pay over to any taxing authority any amount resulting from the allocation or distribution of income
to any Member (including, without limitation, by reason of Section 1446 of the Code), the Board of
Directors may treat the amount withheld as a distribution of cash pursuant to Section 6.3 or 10.3
in the amount of such withholding from such Member.
ARTICLE X
DISSOLUTION AND LIQUIDATION
Section 10.1
Dissolution
. The Company shall not be dissolved by the admission of
Substituted Members or Additional Members. The Company shall dissolve, and its affairs shall be
wound up, upon:
(a) an election to dissolve the Company by the Board of Directors that is approved by the
holders of a Unit Majority;
(b) the sale, exchange or other disposition of all or substantially all of the assets and
properties of the Company and the Companys Subsidiaries;
(c) the entry of a decree of judicial dissolution of the Company pursuant to the provisions of
the Delaware Act; or
(d) at any time that there are no members of the Company, unless the business of the Company
is continued in accordance with the Delaware Act.
Section 10.2
Liquidator
. Upon dissolution of the Company, the Board of Directors
shall select one or more Persons to act as Liquidator. The Liquidator (if other than the Board of
Directors) shall be entitled to receive such compensation for its services as may be approved by
holders of a Unit Majority. The Liquidator (if other than the Board of Directors) shall agree not
to resign at any time without 15 days prior notice and may be removed at any time, with or without
cause, by notice of removal approved by holders of a Unit Majority. Upon dissolution, death,
incapacity, removal or resignation of the Liquidator, a successor and substitute Liquidator (who
shall have and succeed to all rights, powers and duties of the original Liquidator) shall within 30
days thereafter be approved by holders of a Unit Majority. The right to approve a successor or
substitute Liquidator in the manner provided herein shall
be deemed to refer also to any such
successor or substitute Liquidator approved in the manner herein provided. Except as expressly
provided in this Article X, the Liquidator approved in the manner provided herein shall
53
have
and may exercise, without further authorization or consent of any of the parties hereto, all of the
powers conferred upon the Board of Directors under the terms of this Agreement (but subject to all
of the applicable limitations, contractual and otherwise, upon the exercise of such powers, other
than the limitation on sale set forth in Section 7.3(b)) necessary or appropriate to carry out the
duties and functions of the Liquidator hereunder for and during the period of time required to
complete the winding up and liquidation of the Company as provided for herein.
Section 10.3
Liquidation
. The Liquidator shall proceed to dispose of the assets of
the Company, discharge its liabilities, and otherwise wind up its affairs in such manner and over
such period as determined by the Liquidator, subject to Section 18-804 of the Delaware Act and the
following:
(a) The assets may be disposed of by public or private sale or by distribution in kind to one
or more Members on such terms as the Liquidator and such Member or Members may agree. If any
property is distributed in kind, the Member receiving the property shall be deemed for purposes of
Section 10.3(c) to have received cash equal to its fair market value; and contemporaneously
therewith, appropriate cash distributions must be made to the other Members. Notwithstanding
anything to the contrary contained in this Agreement, the Members understand and acknowledge that a
Member may be compelled to accept a distribution of any asset in kind from the Company despite the
fact that the percentage of the asset distributed to such Member exceeds the percentage of that
asset which is equal to the percentage in which such Member shares in distributions from the
Company. The Liquidator may defer liquidation or distribution of the Companys assets for a
reasonable time if it determines that an immediate sale or distribution of all or some of the
Companys assets would be impractical or would cause undue loss to the Members. The Liquidator may
distribute the Companys assets, in whole or in part, in kind if it determines that a sale would be
impractical or would cause undue loss to the Members.
(b) Liabilities of the Company include amounts owed to the Liquidator as compensation for
serving in such capacity (subject to the terms of Section 10.2) and amounts to Members otherwise
than in respect of their distribution rights under Article VI. With respect to any liability that
is contingent, conditional or unmatured or is otherwise not yet due and payable, the Liquidator
shall either settle such claim for such amount as it thinks appropriate or establish a reserve of
cash or other assets to provide for its payment. When paid, any unused portion of the reserve shall
be applied to other liabilities or distributed as additional liquidation proceeds.
(c) All property and all cash in excess of that required to discharge liabilities as provided
in Section 10.3(b) shall be distributed to the Members in accordance with, and to the extent of,
the positive balances in their respective Capital Accounts, as determined after taking into account
all Capital Account adjustments (other than those made by reason of distributions pursuant to this
Section 10.3(c)) for the taxable year of the Company during which the liquidation of the Company
occurs (with such date of occurrence being determined pursuant to Treasury Regulation Section
1.704-1(b)(2)(ii)(g)), and such distribution shall be made by the end of such taxable year (or, if
later, within 90 days after said date of such occurrence).
Section 10.4
Cancellation of Certificate of Formation
. Upon the completion of the
distribution of Company cash and property as provided in Section 10.3 in connection with the
54
liquidation of the Company, the Certificate of Formation and all qualifications of the Company as a
foreign limited liability company in jurisdictions other than the State of Delaware shall be
canceled and such other actions as may be necessary to terminate the Company shall be taken.
Section 10.5
Return of Contributions
. None of any member of the Board of Directors or
any Officer of the Company will be personally liable for, or have any obligation to contribute or
loan any monies or property to the Company to enable it to effectuate, the return of the Capital
Contributions of the Members or Unitholders, or any portion thereof, it being expressly understood
that any such return shall be made solely from Company assets.
Section 10.6
Waiver of Partition
. To the maximum extent permitted by law, each Member
hereby waives any right to partition of the Company property.
Section 10.7
Capital Account Restoration
. No Member shall have any obligation to
restore any negative balance in its Capital Account upon liquidation of the Company.
Section 10.8
Certain Prohibited Acts
. Without obtaining Special Approval, the Board
of Directors shall not take any action to cause the Company or MLP to (i) make or consent to a
general assignment for the benefit of the MLPs creditors; (ii) file or consent to the filing of
any bankruptcy, insolvency or reorganization petition for relief under the United States Bankruptcy
Code naming the MLP or otherwise seek, with respect to the MLP, relief from debts or protection
from creditors generally; (iii) file or consent to the filing of a petition or answer seeking for
the MLP a liquidation, dissolution, arrangement, or similar relief under any law; (iv) file an
answer or other pleading admitting or failing to contest the material allegations of a petition
filed against the MLP in a proceeding of the type described in clauses (i) (iii) of this Section
10.8; (v) seek, consent to or acquiesce in the appointment of a receiver, liquidator, conservator,
assignee, trustee, sequestrator, custodian or any similar official for the MLP or for all or any
substantial portion of its properties; (vi) sell all or substantially all of its assets, except in
accordance with Section 7.3; (vii) dissolve or liquidate, except in accordance with this Article X;
or (viii) merge or consolidate, except in accordance with Article XII.
ARTICLE XI
AMENDMENT OF AGREEMENT; MEETINGS OF MEMBERS; RECORD DATE
Section 11.1
Amendment of Limited Liability Company Agreement
.
(a)
General Amendments
. Except as provided in Section 11.1(b) and Section 11.1(c), the Board
of Directors may amend any of the terms of this Agreement but only in compliance with the terms,
conditions and procedures set forth in this Section 11.1(a). If the Board of Directors desires to
amend any provision of this Agreement other than pursuant to Section 11.1(c), then it shall first
adopt a resolution setting forth the amendment proposed, declaring its advisability, and either
calling a special meeting of the Members entitled to vote in respect thereof for the consideration
of such amendment or directing that the amendment proposed be considered at the next annual meeting
of the Members. Amendments to this Agreement may be proposed only by or with the consent of the
Board of Directors. Such special or annual meeting shall be called and held upon notice in
accordance with Section 11.2 and Section 11.3 of this Agreement. The notice shall set forth such
amendment in full or a brief
55
summary of the changes to be effected thereby, as the Board of
Directors shall deem advisable. At the meeting, a vote of Members entitled to vote thereon shall be
taken for and against the proposed amendment. A proposed amendment shall be effective upon its
approval by a Unit Majority, unless a greater percentage is required under this Agreement or by
Delaware law.
(b)
Super-Majority Amendments
. Notwithstanding Section 11.1(a) but subject to Section
11.1(c), the affirmative vote of the holders of at least 75% of all Outstanding Units, voting
together as a single class, shall be required to alter, amend, adopt any provision inconsistent
with or repeal subsection (d) of Section 7.1, this subsection (b) of Section 11.1, Section 11.2,
subsection (d) of Section 11.3, subsections (b) or (c) of Section 11.8, Section 11.10 or Section
11.13.
(c)
Amendments to be Adopted Solely by the Board of Directors
. Notwithstanding Section
11.1(a) and Section 11.1(b), the Board of Directors, without the approval of any Member or holder
of any Interest, may amend any provision of this Agreement, and execute, swear to, acknowledge,
deliver, file and record whatever documents may be required in connection therewith, to reflect:
(i) a change in the name of the Company, the location of the principal place of
business of the Company, the registered agent of the Company or the registered office of the
Company;
(ii) admission, substitution, withdrawal or removal of Members in accordance with this
Agreement;
(iii) a change that the Board of Directors determines to be necessary or appropriate to
qualify or continue the qualification of the Company as a limited liability company under
the laws of any state or to ensure that the Group Members will not be treated as
associations taxable as corporations or otherwise taxed as entities for federal income tax
purposes;
(iv) a change that the Board of Directors determines (A) does not adversely affect the
Members (including any particular class of Interests as compared to other classes of
Interests) in any material respect, (B) to be necessary or appropriate to (1) satisfy any
requirements, conditions or guidelines contained in any opinion, directive, order, ruling or
regulation of any federal or state agency or judicial authority or contained in any federal
or state statute (including the Delaware Act) or (2) facilitate the trading of the Units
(including the division of any class or classes of Outstanding Units into different classes
to facilitate uniformity of tax consequences within such classes of Units) or comply with
any rule, regulation, guideline or requirement of any National Securities Exchange on which
the Units are or will be listed for trading, compliance with any of which the Board of
Directors deems to be in the best interests of the Company and the Members, (C) to be
necessary or appropriate in connection with action taken by the Board of Directors pursuant
to Section 5.8 or (D) is required to effect the intent expressed in the Registration
Statement or the intent of the provisions of this Agreement or is otherwise contemplated by
this Agreement;
56
(v) a change in the fiscal year or taxable year of the Company and any other changes
that the Board of Directors determines to be necessary or appropriate as a result of a
change in the fiscal year or taxable year of the Company including, if the Board of
Directors shall so determine, a change in the definition of Quarter and the dates on which
distributions are to be made by the Company;
(vi) an amendment that is necessary, in the Opinion of Counsel, to prevent the Company
or its Directors, Officers, trustees or agents from in any manner being subjected to the
provisions of the Investment Company Act of 1940, as amended, the Investment Advisers Act of
1940, as amended, or plan asset regulations adopted under the Employee Retirement Income
Security Act of 1974, as amended, regardless of whether such are substantially similar to
plan asset regulations currently applied or proposed by the United States Department of
Labor;
(vii) subject to the terms of Section 5.6, an amendment that the Board of Directors
determines to be necessary or appropriate in connection with the authorization or issuance
of any class or series of Company Securities pursuant to Section 5.5 and the admission of
Additional Members pursuant thereto;
(viii) an amendment that the Board of Directors, in its sole discretion, determines to
be necessary or appropriate to implement a defensive Unitholder rights plan similar to a
shareholder rights plan, or poison pill, for corporations, including the issuance of a
distribution of rights to each Unitholder that would become exercisable if any Person or
Group acquires ownership in excess of a specified percentage of the Units or initiated a
tender offer for in excess of that specified percentage percent of the Units. Each right
will entitle Unitholders to purchase a fractional share of a new class of preferred units,
which would convert into the right for Unitholders other than such Person or Group to
purchase Units at half of the then Current Market Price of the Units. The rights issued
pursuant to any such Unitholder rights plan must be redeemable by the Company for not more
than $0.01 per right;
(ix) any amendment expressly permitted in this Agreement to be made by the Board of
Directors acting alone;
(x) an amendment effected, necessitated or contemplated by a Merger Agreement approved
in accordance with Section 12.3;
(xi) an amendment that the Board of Directors determines to be necessary or appropriate
to reflect and account for the formation by the Company of, or investment by the Company in,
any corporation, partnership, joint venture, limited liability company or other entity, in
connection with the conduct by the Company of activities permitted by the terms of Section
2.4;
(xii) a merger or conveyance pursuant to Section 12.3(d); or
(xiii) any other amendments substantially similar to the foregoing.
57
Section 11.2
Amendment Requirements
.
(a) Notwithstanding the provisions of Section 11.1, no provision of this Agreement that
establishes a percentage of Outstanding Units required to take any action shall be amended,
altered, changed, repealed or rescinded in any respect that would have the effect of reducing such
voting percentage unless such amendment is approved by the affirmative vote of holders of
Outstanding Units whose aggregate Outstanding Units constitute not less than the voting requirement
sought to be reduced.
(b) Notwithstanding the provisions of Section 11.1, no amendment to this Agreement may (i)
enlarge the obligations of any Member without its consent, unless such shall be deemed to have
occurred as a result of an amendment approved pursuant to Section 11.2(c), (ii) change Section
10.1(a), (iii) change the term of the Company or, (iv) except as set forth in Section 10.1(a), give
any Person the right to dissolve the Company.
(c) Except as provided in Section 12.3, and without limitation of the Board of Directors
authority to adopt amendments to this Agreement without the approval of any Members as contemplated
in Section 11.1, any amendment that would have a material adverse effect on the rights or
preferences of any class of Interests in relation to other classes of Interests must be approved by
the holders of not less than a majority of the Outstanding Interests of the class affected.
(d) Notwithstanding any other provision of this Agreement, except for amendments pursuant to
Section 11.1 and except as otherwise provided by Section 12.3(b), no amendments shall become
effective without the approval of the holders of at least 90% of the Outstanding Units voting as a
single class unless the Company obtains an Opinion of Counsel to the effect that such amendment
will not affect the limited liability of any Member under applicable law.
Section 11.3
Unitholder Meetings
.
(a) All acts of Members to be taken hereunder shall be taken in the manner provided in this
Article XI. An annual meeting of the Members for the election of Directors and for the transaction
of such other business as may properly come before the meeting shall be held at such time and place
as the Board of Directors shall specify, which date shall be within 13 months of the last annual
meeting of Members. If authorized by the Board of Directors, and subject to such guidelines and
procedures as the Board of Directors may adopt, Members and proxyholders not physically present at
a meeting of Members, may by means of remote communication participate in such meeting, and be
deemed present in person and vote at such meeting provided that the Company shall implement
reasonable measures to verify that each Person deemed present and permitted to vote at the meeting
by means of remote communication is a Member or proxyholder, to provide such Members or
proxyholders a reasonable opportunity to participate in the meeting and to record the votes or
other action made by such Members or proxyholders.
(b) A failure to hold the annual meeting of the Members at the designated time or to elect a
sufficient number of Directors to conduct the business of the Company shall not affect
58
otherwise
valid acts of the Company or work a forfeiture or dissolution of the Company. If the annual meeting
for election of Directors is not held on the date designated therefor, the Directors shall cause
the meeting to be held as soon as is convenient. If there is a failure to hold the annual meeting
for a period of 30 days after the date designated for the annual meeting, or if no date has been
designated, for a period of 13 months after the latest to occur of the date of this Agreement or
its last annual meeting, it is the intent of the parties that the Delaware Court of Chancery may
summarily order a meeting to be held upon the application of any Member or Director. The
Outstanding Units present at such meeting, either in person or by proxy, and entitled to vote
thereat, shall constitute a quorum for the purpose of such meeting, notwithstanding any provision
of this Agreement to the contrary. The Delaware Court of Chancery may issue such orders as may be
appropriate, including orders designating the time and place of such meeting, the record date for
determination of Unitholders entitled to vote, and the form of notice of such meeting.
(c) All elections of Directors will be by written ballots; if authorized by the Board of
Directors, such requirement of a written ballot shall be satisfied by a ballot submitted by
electronic transmission, provided that any such electronic transmission must either set forth or be
submitted with information from which it can be reasonably determined that the electronic
transmission was authorized by the Member or proxyholder.
(d) Special meetings of the Members may be called only by a majority of the Board of
Directors. No Members or group of Members, acting in its or their capacity as Members, shall have
the right to call a special meeting of the Members.
Section 11.4
Notice of Meetings of Members
.
(a) Notice, stating the place, day and hour of any annual or special meeting of the Members,
as determined by the Board of Directors, and (i) in the case of a special meeting of the Members,
the purpose or purposes for which the meeting is called, as determined by the Board of Directors or
(ii) in the case of an annual meeting, those matters that the Board of Directors, at the time of
giving the notice, intends to present for action by the Members, shall be delivered by the Company
not less than 10 calendar days nor more than 60 calendar days before the date of the meeting, in a
manner and otherwise in accordance with Section 14.1 to each Record Holder who is entitled to vote
at such meeting. Such further notice shall be given as may be required by Delaware law. The notice
of any meeting of the Members at which directors are to be elected shall include the name of any
nominee or nominees who, at the time of the notice, the Board of Directors intends to present for
election. Only such business shall be conducted at a special meeting of Members as shall have been
brought before the meeting pursuant to the Companys notice of meeting. Any previously scheduled
meeting of the Members may be postponed, and any special meeting of the Members may be canceled, by
resolution of the Board of Directors upon public notice given prior to the date previously
scheduled for such meeting of the Members.
(b) The Board of Directors shall designate the place of meeting for any annual meeting or for
any special meeting of the Members. If no designation is made, the place of meeting shall be the
principal office of the Company.
59
Section 11.5
Record Date
. For purposes of determining the Members entitled to notice
of or to vote at a meeting of the Members, the Board of Directors may set a Record Date, which
shall not be less than 10 nor more than 60 days before the date of the meeting (unless such
requirement conflicts with any rule, regulation, guideline or requirement of any National
Securities Exchange on which the Units are listed for trading, in which case the rule, regulation,
guideline or requirement of such exchange shall govern). If no Record Date is fixed by the Board of
Directors, the Record Date for determining Members entitled to notice of or to vote at a meeting of
Members shall be at the close of business on the day next preceding the day on which notice is
given. A determination of Members of record entitled to notice of or to vote at a meeting of
Members shall apply to any adjournment or postponement of the meeting;
provided
,
however
, that the
Board of Directors may fix a new Record Date for the adjourned or postponed meeting.
Section 11.6
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 30 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 30 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 XI.
Section 11.7
Waiver of Notice; Approval of Meeting
. Whenever notice to the Members is required to be given under this Agreement, a written
waiver, signed by the Person entitled to notice, whether before or after the time stated therein,
shall be deemed equivalent to notice. Attendance of a Person at any such meeting of the Members
shall constitute a waiver of notice of such meeting, except when the Person attends a meeting for
the express purpose of objecting at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the Members need be specified
in any written waiver of notice unless so required by resolution of the Board of Directors. All
waivers and approvals shall be filed with the Company records or made part of the minutes of the
meeting.
Section 11.8
Quorum; Required Vote for Member Action; Voting for Directors
.
(a) At any meeting of the Members, the holders of a majority of the Outstanding Units of the
class or classes for which a meeting has been called represented in person or by proxy shall
constitute a quorum of such class or classes unless any such action by the Members requires
approval by holders of a greater percentage of Outstanding Units, in which case the quorum shall be
such greater percentage. The submission of matters to Members for approval and the election of
Directors shall occur only at a meeting of the Members duly called and held in accordance with this
Agreement at which a quorum is present;
provided
,
however
, that the Members 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 Members to leave less than a quorum, if any
action taken (other than adjournment) is approved by the required percentage of Interests specified
in this Agreement. Any meeting of Members may be adjourned from time to time by the chairman of the
meeting to another place or time, without regard to the presence of a quorum.
60
(b) Each Outstanding Unit shall be entitled to one vote per Unit on all matters submitted to
Members for approval and in the election of Directors.
(c) All matters (other than the election of Directors) submitted to Members for approval shall
be determined by a majority of the votes cast affirmatively or negatively by Members holding
Outstanding Units unless a greater percentage is required with respect to such matter under the
Delaware Act, under the rules of any National Securities Exchange on which the Units are listed for
trading, or under the provisions of this Agreement, in which case the approval of Members holding
Outstanding Units that in the aggregate represent at least such greater percentage shall be
required.
(d) Directors will be elected by a plurality of the votes cast for a particular position.
Section 11.9
Conduct of a Meeting; Member Lists
.
(a) The Board of Directors shall have full power and authority concerning the manner of
conducting any meeting of the Members, including the determination of Persons entitled to vote, the
existence of a quorum, the satisfaction of the requirements of this Article XI, 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 maintained by
the Board of Directors. 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 Members, including regulations in regard to the appointment of proxies, the appointment and
duties of inspectors of votes, the submission and examination of proxies and other evidence of the
right to vote.
(b) A complete list of Members entitled to vote at any meeting of Members, arranged in
alphabetical order for each class of Interests and showing the address of each such Member and the
number of Outstanding Units registered in the name of such Member, shall be open to the examination
of any Member, for any purpose germane to the meeting, during ordinary business hours, for a period
of at least 10 days before the meeting, at the principal place of business of the Company. The
Member list shall also be produced and kept at the time and place of the meeting during the whole
time thereof, and may be inspected by any Member who is present.
Section 11.10
Action Without a Meeting
. No action permitted or required to be taken
at a meeting of Members may be taken by written consent or by any other means or manner than a
meeting of Members called and conducted in accordance with this Agreement.
Section 11.11
Voting and Other Rights
.
(a) Only those Record Holders of Outstanding Units on the Record Date set pursuant to Section
11.5 shall be entitled to notice of, and to vote at, a meeting of Members or to act with respect to
matters as to which the holders of the Outstanding Units 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
61
Outstanding Units
shall be deemed to be references to the votes or acts of the Record Holders of such Outstanding
Units.
(b) With respect to Outstanding Units that are held for a Persons 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 Outstanding Units are registered, such other Person shall, in
exercising the voting rights in respect of such Outstanding Units on any matter, and unless the
arrangement between such Persons provides otherwise, vote such Outstanding Units in favor of, 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. The provisions of this Section
11.11(b) (as well as all other provisions of this Agreement) are subject to the provisions of
Section 4.3.
Section 11.12
Proxies and Voting
.
(a) At any meeting of the Members, every holder of an Outstanding Unit entitled to vote may
vote in person or by proxy authorized by an instrument in writing or by a transmission permitted by
law filed in accordance with the procedure established for the meeting. Any copy, facsimile
telecommunication or other reliable reproduction of the writing or transmission created pursuant to
this paragraph may be substituted or used in lieu of the original writing or transmission for any
and all purposes for which the original writing or transmission could be used, provided that such
copy, facsimile telecommunication or other reproduction shall be a complete reproduction of the
entire original writing or transmission.
(b) The Company may, and to the extent required by law, shall, in advance of any meeting of
Members, appoint one or more inspectors to act at the meeting and make a written report thereof.
The Company may designate one or more alternate inspectors to replace any inspector who fails to
act. If no inspector or alternate is able to act at a meeting of Members, the Person presiding at
the meeting may, and to the extent required by law, shall, appoint one or more inspectors to act at
the meeting. Each inspector, before entering upon the discharge of his or her duties, shall take
and sign an oath faithfully to execute the duties of inspector with strict impartiality and
according to the best of his or her ability. Every vote taken by ballots shall be counted by a duly
appointed inspector or inspectors.
(c) With respect to the use of proxies at any meeting of Members, the Company shall be
governed by paragraphs (b), (c), (d) and (e) of Section 212 of the DGCL and other applicable
provisions of the DGCL, as though the Company were a Delaware corporation and as though the Members
were shareholders of a Delaware corporation.
Section 11.13
Notice of Member Business and Nominations
.
(a) Subject to Section 7.1(d) of this Agreement, nominations of Persons for election to the
Board of Directors of the Company and the proposal of business to be considered by the Members may
be made at an annual meeting of Members (i) pursuant to the Companys notice of meeting delivered
pursuant to Section 11.4 of this Agreement, (ii) by or at the direction of the Board of Directors,
(iii) for nominations to the Board of Directors only, by any holder of Outstanding Units who is
entitled to vote at the meeting, who complied with the notice
62
procedures set forth in paragraph (b)
or (d) of this Section 11.13 and who was a Record Holder of a sufficient number of Outstanding
Units as of the Record Date for such meeting to elect one or more members to the Board of Directors
assuming that such holder cast all of the votes it is entitled to cast in such election in favor of
a single candidate and such candidate received no other votes from any other holder of Outstanding
Units, or (iv) by any holder of Outstanding Units who is entitled to vote at the meeting, who
complied with the notice procedures set forth in
paragraphs (c) or (d) of this Section 11.13 and who is a Record Holder of Outstanding Units at
the time such notice is delivered to the Secretary of the Company.
(b) For nominations to be properly brought before an annual meeting by a Unitholder pursuant
to Section 11.13(a)(iii), the Unitholder must have given timely notice thereof in writing to the
Secretary of the Company. To be timely, a Unitholders notice shall be delivered to the Secretary
at the principal executive offices of the Company not less than 90 or more than 120 days prior to
the first anniversary (the Anniversary) of the date on which the Company first mailed its proxy
materials for the preceding years annual meeting of Members;
provided
,
however
, that if the date
of the annual meeting is advanced more than 30 days prior to or delayed by more than thirty (30)
days after the anniversary of the preceding years annual meeting, notice by the Unitholder to be
timely must be so delivered not later than the close of business on the later of (x) the ninetieth
day prior to such annual meeting or (y) the tenth day following the day on which public
announcement of the date of such meeting is first made. Such Unitholders notice shall set forth:
(A) as to each Person whom the Unitholder proposes to nominate for election or reelection as a
Director all information relating to such Person that is required to be disclosed in solicitations
of proxies for election of Directors, or is otherwise required, in each case pursuant to Regulation
14A under the Exchange Act, including such Persons written consent to being named in the proxy
statement as a nominee and to serving as a Director if elected and (B) as to the Unitholder giving
the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made the
name and address of such Unitholder, as they appear on the Companys books, and of such beneficial
owner, the class and number of Units of the Company which are owned beneficially and of record by
such Unitholder and such beneficial owner. Such holder shall be entitled to nominate as many
candidates for election to the Board of Directors as would be elected assuming such holder cast the
precise number of votes necessary to elect each candidate and no more votes were cast by such
holder or any other holder for such candidates.
(c) For nominations or other business to be properly brought before an annual meeting by a
Unitholder pursuant to Section 11.13(a)(iv), (i) the Unitholder must have given timely notice
thereof in writing to the Secretary of the Company, (ii) such business must be a proper matter for
Member action under this Agreement and the Delaware Act, (iii) if the Unitholder, or the beneficial
owner on whose behalf any such proposal or nomination is made, has provided the Company with a
Solicitation Notice, such Unitholder or beneficial owner must, in the case of a proposal, have
delivered a proxy statement and form of proxy to holders of at least the percentage of the
Companys Outstanding Units required under this Agreement or Delaware law to carry any such
proposal, or, in the case of a nomination or nominations, have delivered a proxy statement and form
of proxy to holders of a percentage of the Companys Outstanding Units reasonably believed by such
Unitholder or beneficial holder to be sufficient to elect the nominee or nominees proposed to be
nominated by such Unitholder, and must, in either case, have included in such materials the
Solicitation Notice and (iv) if no Solicitation Notice
63
relating thereto has been timely provided
pursuant to this Section 11.13, the Unitholder or beneficial owner proposing such business or
nomination must not have solicited a number of proxies sufficient to have required the delivery of
such a Solicitation Notice. To be timely, a Unitholders notice shall be delivered to the Secretary
at the principal executive offices of the Company not less than 90 or more than 120 days prior to
the first Anniversary;
provided
,
however
, that in the event that the date of the annual meeting is
advanced more than thirty (30)
days prior to or delayed by more than thirty (30) days after the anniversary of the preceding
years annual meeting, notice by the Unitholder to be timely must be so delivered not later than
the close of business on the later of (x) the ninetieth day prior to such annual meeting or (y) the
tenth day following the day on which public announcement of the date of such meeting is first made.
Such Unitholders notice shall set forth: (A) as to each Person whom the Unitholder proposes to
nominate for election or reelection as a Director all information relating to such Person that is
required to be disclosed in solicitations of proxies for election of Directors, or is otherwise
required, in each case pursuant to Regulation 14A under the Exchange Act, including such Persons
written consent to being named in the proxy statement as a nominee and to serving as a Director if
elected; (B) as to any other business that the Unitholder proposes to bring before the meeting, a
brief description of the business desired to be brought before the meeting, the reasons for
conducting such business at the meeting and any material interest in such business of such
Unitholder and the beneficial owner, if any, on whose behalf the proposal is made; and (C) as to
the Unitholder giving the notice and the beneficial owner, if any, on whose behalf the nomination
or proposal is made the name and address of such Unitholder, as they appear on the Companys books,
and of such beneficial owner, the class and number of Units of the Company which are owned
beneficially and of record by such Unitholder and such beneficial owner, and whether either such
Unitholder or beneficial owner intends to deliver a proxy statement and form of proxy to holders
of, in the case of a proposal, at least the percentage of the Companys Outstanding Units required
under this Agreement or Delaware law to carry the proposal or, in the case of a nomination or
nominations, a sufficient number of holders of the Companys Outstanding Units to elect such
nominee or nominees (an affirmative statement of such intent, a Solicitation Notice).
(d) Notwithstanding anything in the second sentence of Section 11.13(b) or the second sentence
of Section 11.13(c) to the contrary, if the number of Directors to be elected to the Board of
Directors is increased and there is no public announcement naming all of the nominees for Director
or specifying the size of the increased Board of Directors made by the Company at least 90 days
prior to the Anniversary, then a Unitholders notice required by this Section 11.13 shall also be
considered timely, but only with respect to nominees for any new positions created by such
increase, if it shall be delivered to the Secretary at the principal executive offices of the
Company not later than the close of business on the tenth day following the day on which such
public announcement is first made by the Company.
(e) Only such business shall be conducted at a special meeting of Members as shall have been
brought before the meeting pursuant to the Companys notice of meeting pursuant to Section 11.4 of
this Agreement. Subject to Section 7.1(d) of this Agreement, nominations of Persons for election to
the Board of Directors may be made at a special meeting of Members at which Directors are to be
elected pursuant to the Companys notice of meeting (i) by or at the direction of the Board of
Directors, (ii) by any holder of Outstanding Units who is entitled to vote at the meeting, who
complied with the notice procedures set forth in
64
paragraph (b) or (d) of this Section 11.13 and who
was a Record Holder of a sufficient number of Outstanding Units as of the Record Date for such
meeting to elect one or more members to the Board of Directors assuming that such holder cast all
of the votes it is entitled to cast in such election in favor of a single candidate and such
candidate received no other votes from any other holder of Outstanding Units, or (iii) by any
holder of Outstanding Units who is entitled to vote at the meeting, who complies with the notice
procedures set forth in this Section 11.13 and who is a
Record Holder of Outstanding Units at the time such notice is delivered to the Secretary of
the Company. Nominations by Unitholders of Persons for election to the Board of Directors may be
made at such a special meeting of Members if the Unitholders notice as required by Section
11.13(b) or Section 11.13(c) shall be delivered to the Secretary of the Company not earlier than
the ninetieth day prior to such special meeting and not later than the close of business on the
later of the seventieth day prior to such special meeting or the tenth day following the day on
which public announcement is first made of the date of the special meeting and of the nominees
proposed by the Board of Directors to be elected at such meeting. Holders of Outstanding Units
making nominations pursuant to Section 11.13(d)(ii) shall be entitled to nominate the number of
candidates for election at such special meeting as provided in Section 11.13(b) for an annual
meeting.
(f) Except to the extent otherwise provided in Section 7.1(d) with respect to vacancies, only
Persons who are nominated in accordance with the procedures set forth in this Section 11.13 shall
be eligible to serve as Directors and only such business shall be conducted at a meeting of Members
as shall have been brought before the meeting in accordance with the procedures set forth in this
Section 11.13. Except as otherwise provided herein or required by law, the chairman of the meeting
shall have the power and duty to determine whether a nomination or any business proposed to be
brought before the meeting was made in accordance with the procedures set forth in this Section
11.13 and, if any proposed nomination or business is not in compliance with this Section 11.13, to
declare that such defective proposal or nomination shall be disregarded.
(g) Notwithstanding the foregoing provisions of this Section 11.13, a Member shall also comply
with all applicable requirements of the Exchange Act and the rules and regulations thereunder with
respect to the matters set forth in this Section 11.13. Nothing in this Section 11.13 shall be
deemed to affect any rights of Members to request inclusion of proposals in the Companys proxy
statement pursuant to Rule 14a-8 under the Exchange Act.
ARTICLE XII
MERGER, CONSOLIDATION OR CONVERSION
Section 12.1
Authority
. The Company may merge or consolidate with one or more
limited liability companies or other business entities as defined in Section 18-209 of the
Delaware Act, or convert into any such entity, whether such entity is formed under the laws of the
State of Delaware or any other state of the United States of America, pursuant to a written
agreement of merger or consolidation (Merger Agreement) or a written plan of conversion (Plan of
Conversion), as the case may be, in accordance with this Article XII.
65
Section 12.2
Procedure for Merger, Consolidation or Conversion
. Merger,
consolidation or conversion of the Company pursuant to this Article XII requires the prior approval
of the Board of Directors.
(a) If the Board of Directors shall determine to consent to the merger or consolidation, the
Board of Directors shall approve the Merger Agreement, which shall set forth:
(i) the names and jurisdictions of formation or organization of each of the business
entities proposing to merge or consolidate;
(ii) the name and jurisdiction of formation or organization of the business entity that
is to survive the proposed merger or consolidation (the Surviving Business Entity);
(iii) the terms and conditions of the proposed merger or consolidation;
(iv) the manner and basis of exchanging or converting the rights or securities of, or
interests in, each constituent business entity for, or into, cash, property, rights, or
securities of or interests in, the Surviving Business Entity; and if any rights or
securities of, or interests in, any constituent business entity are not to be exchanged or
converted solely for, or into, cash, property, rights, or securities of or interests in, the
Surviving Business Entity, the cash, property, rights, or securities of or interests in, any
limited liability company or other business entity which the holders of such rights,
securities or interests are to receive, if any;
(v) a statement of any changes in the constituent documents or the adoption of new
constituent documents (the certificate of formation or limited liability company agreement,
articles or certificate of incorporation, articles of trust, declaration of trust,
certificate or agreement of limited partnership or other similar charter or governing
document) of the Surviving Business Entity to be effected by such merger or consolidation;
(vi) the effective time of the merger, which may be the date of the filing of the
certificate of merger pursuant to Section 12.4 or a later date specified in or determinable
in accordance with the Merger Agreement (provided, that if the effective time of the merger
is to be later than the date of the filing of the certificate of merger, the effective time
shall be fixed no later than the time of the filing of the certificate of merger or the time
stated therein); and
(vii) such other provisions with respect to the proposed merger or consolidation that
the Board of Directors determines to be necessary or appropriate.
(b) If the Board of Directors shall determine to consent to the conversion, the Board of
Directors may approve and adopt a Plan of Conversion containing such terms and conditions that the
Board of Directors determines to be necessary or appropriate.
66
Section 12.3
Approval by Members of Merger, Consolidation or Conversion
.
(a) Except as provided in Section 12.3(d), the Board of Directors, upon its approval of the
Merger Agreement or Plan of Conversion, as the case may be, shall direct that the Merger Agreement
or Plan of Conversion, as applicable, be submitted to a vote of Members, whether at an annual
meeting or a special meeting, in either case in accordance with the
requirements of Article XI. A copy or a summary of the Merger Agreement or Plan of Conversion,
as applicable, shall be included in or enclosed with the notice of meeting.
(b) Except as provided in Section 12.3(d), the Merger Agreement or Plan of Conversion, as
applicable, shall be approved upon receiving the affirmative vote or consent of the holders of a
Unit Majority unless the Merger Agreement or Plan of Conversion, as applicable, contains any
provision that, if contained in an amendment to this Agreement, the provisions of this Agreement or
the Delaware Act would require for its approval the vote or consent of a greater percentage of the
Outstanding Units or of any class of Members, in which case such greater percentage vote or consent
shall be required for approval of the Merger Agreement or Plan of Conversion, as applicable.
(c) Except as provided in Section 12.3(d), after such approval by vote or consent of the
Members, and at any time prior to the filing of the certificate of merger or a certificate of
conversion pursuant to Section 12.4, the merger, consolidation or conversion may be abandoned
pursuant to provisions therefor, if any, set forth in the Merger Agreement or the Plan of
Conversion, as the case may be.
(d) Notwithstanding anything else contained in this Article XII or in this Agreement, the
Board of Directors is permitted without Member approval, to convert the Company or any Group Member
into a new limited liability entity, to merge the Company or any Group Member into, or convey all
of the Companys assets to, another limited liability entity which shall be newly formed and shall
have no assets, liabilities or operations at the time of such conversion, merger or conveyance
other than those it receives from the Company or other Group Member if (i) the Board of Directors
has received an Opinion of Counsel that the conversion, merger or conveyance, as the case may be,
would not result in the loss of the limited liability of any Member or any Group Member or cause
the Company or any Group Member to be treated as an association taxable as a corporation or
otherwise to be taxed as an entity for federal income tax purposes (to the extent not previously
treated as such), (ii) the sole purpose of such conversion, merger or conveyance is to effect a
mere change in the legal form of the Company into another limited liability entity and (iii) the
governing instruments of the new entity provide the Members and the Board of Directors with
substantially the same rights and obligations as are herein contained.
(e) Members are not entitled to dissenters rights of appraisal in the event of a merger,
consolidation or conversion pursuant to Section 12.1, a sale of all or substantially all of the
assets of the Company or the Companys Subsidiaries, or any other transaction or event.
Section 12.4
Certificate of Merger or Conversion
. Upon the required approval by the
Board of Directors and the Unitholders of a Merger Agreement or a Plan of Conversion, as the case
may be, a certificate of merger or certificate of conversion, as applicable, shall be executed
67
and
filed with the Secretary of State of the State of Delaware in conformity with the requirements of
the Delaware Act.
Section 12.5
Effect of Merger
.
(a) At the effective time of the certificate of merger:
(i) all of the rights, privileges and powers of each of the business entities that has
merged or consolidated, and all property, real, personal and mixed, and all debts due to any
of those business entities shall be vested in the Surviving Business Entity and after the
merger or consolidation shall be the property of the Surviving Business Entity and all other
things and causes of action belonging to each of those business entities, shall be vested in
the Surviving Business Entity to the extent they were of each constituent business entity;
(ii) the title to any real property vested by deed or otherwise in any of those
constituent business entities shall not revert and is not in any way impaired because of the
merger or consolidation;
(iii) all rights of creditors and all liens on or security interests in property of any
of those constituent business entities shall be preserved unimpaired; and
(iv) all debts, liabilities and duties of those constituent business entities shall
attach to the Surviving Business Entity and may be enforced against it to the same extent as
if the debts, liabilities and duties had been incurred or contracted by it.
(b) It is the intent of the parties hereto that a merger or consolidation effected pursuant to
this Article XII shall not be deemed to result in a transfer or assignment of assets or liabilities
from one entity to another.
Section 12.6
Business Combination Limitations
. Notwithstanding any other provision
of this Agreement, with respect to any Business Combination (as such term is defined in Section
203 of the DGCL), the provisions of Section 203 of the DGCL shall be applied with respect to the
Company as though the Company were a Delaware corporation.
ARTICLE XIII
RIGHT TO ACQUIRE INTERESTS
Section 13.1
Right to Acquire Interests
.
(a) Notwithstanding any other provision of this Agreement, if at any time less than 20% of the
total Interests of any class then Outstanding is held by Persons other than Affiliates of the
Company, any Affiliate of the Company shall then have the right, which right it may assign and
transfer in whole or in part to any of its Affiliates (including the Company), exercisable at its
option, to purchase all, but not less than all, of such Interests of such class then Outstanding
held by other holders, at the greater of (x) the Current Market Price as of the date three days
prior to the date that the notice described in Section 13.1(b) is mailed and (y) the highest price
paid by Affiliates of the Company for any such Interest of such class purchased
68
during the 90-day
period preceding the date that the notice described in Section 13.1(b) is
mailed. As used in this Agreement, (i) Current Market Price as of any date of any class of
Interests listed or admitted to trading on any National Securities Exchange means the average of
the daily Closing Prices (as hereinafter defined) per Interest of such class for the 20 consecutive
Trading Days (as hereinafter defined) immediately prior to such date; (ii) Closing Price for any
day means the average of the high bid and low asked prices on such day, regular way, or in the case
no such sale takes place on such day, the average of the closing bid and asked prices on such day,
regular way, in either case as reported in the principal consolidated transaction reporting system
for securities listed or admitted for trading on the principal National Securities Exchange on
which the units of that class are listed or admitted to trading, or if the units of that class are
not listed or admitted for trading on any National Securities Exchange, the last quoted price on
that day, or if no quoted price exists, the average of the high bid low asked price on that day in
the over-the-counter market, as reported by the Nasdaq National Market or such other system then in
use, or, if on any such day such Interests of such class are not quoted by any such organization of
that type, the average of the closing bid and asked prices on such day as furnished by a
professional market maker making a market in such Interests of such class selected by the Board of
Directors, or if on any such day no market maker is making a market in such Interests of such
class, the fair value of such Interests on such day as determined by the Board of Directors; and
(iii) Trading Day means a day on which the principal National Securities Exchange on which such
Interests of any class are listed or admitted to trading is open for the transaction of business
or, if Interests of a class are not listed or admitted to trading on any National Securities
Exchange, a day on which banking institutions in New York City generally are open.
(b) If any Affiliate of the Company or the Company elects to exercise the right to purchase
Interests granted pursuant to Section 13.1(a), the Board of Directors shall deliver to the Transfer
Agent notice of such election to purchase (the Notice of Election to Purchase) and shall cause
the Transfer Agent to mail a copy of such Notice of Election to Purchase to the Record Holders of
Interests of such class (as of a Record Date selected by the Board of Directors) at least 10, but
not more than 60, days prior to the Purchase Date. Such Notice of Election to Purchase shall also
be published for a period of at least three consecutive days in at least two daily newspapers of
general circulation printed in the English language and published in the Borough of Manhattan, New
York. The Notice of Election to Purchase shall specify the Purchase Date and the price (determined
in accordance with Section 13.1(a)) at which Interests will be purchased and state that the
Affiliate of the Company or the Company, as the case may be, elects to purchase such Interests,
upon surrender of Certificates representing such Interests in exchange for payment, at such office
or offices of the Transfer Agent as the Transfer Agent may specify, or as may be required by any
National Securities Exchange on which such Interests are listed or admitted to trading. Any such
Notice of Election to Purchase mailed to a Record Holder of Interests at his address as reflected
in the records of the Transfer Agent shall be conclusively presumed to have been given regardless
of whether the owner receives such notice. On or prior to the Purchase Date, the Affiliate of the
Company or the Company, as the case may be, shall deposit with the Transfer Agent cash in an amount
sufficient to pay the aggregate purchase price of all of such Interests to be purchased in
accordance with this Section 13.1. If the Notice of Election to Purchase shall have been duly given
as aforesaid at least 10 days prior to the Purchase Date, and if on or prior to the Purchase Date
the deposit described in the preceding sentence has been made for the benefit of the holders of
Interests subject to purchase as provided
69
herein, then from and after the Purchase Date,
notwithstanding that any Certificate shall not have
been surrendered for purchase, all rights of the holders of such Interests (including any
rights pursuant to Articles IV, V, VI, and X) shall thereupon cease, except the right to receive
the purchase price (determined in accordance with Section 13.1(a)) for Interests therefor, without
interest, upon surrender to the Transfer Agent of the Certificates representing such Interests, and
such Interests shall thereupon be deemed to be transferred to the Affiliate of the Company or the
Company, as the case may be, on the record books of the Transfer Agent and the Company, and the
Affiliate of the Company or the Company, as the case may be, shall be deemed to be the owner of all
such Interests from and after the Purchase Date and shall have all rights as the owner of such
Interests (including all rights as owner of such Interests pursuant to Articles IV, V, VI and X).
(c) At any time from and after the Purchase Date, a holder of an Outstanding Interest subject
to purchase as provided in this Section 13.1 may surrender his Certificate evidencing such Interest
to the Transfer Agent in exchange for payment of the amount described in Section 13.1(a), therefor,
without interest thereon.
(d) Upon the exercise by the Affiliate of the Company or the Company, as the case may be, of
the right to purchase Interests granted pursuant to Section 13.1(a), no Member shall be entitled to
dissenters rights of appraisal.
ARTICLE XIV
GENERAL PROVISIONS
Section 14.1
Addresses and Notices
. Any notice, demand, request, report or proxy
materials required or permitted to be given or made to a Member under this Agreement shall be in
writing and shall be deemed given or made when delivered in person or when sent by first class
United States mail or by other means of written communication to the Member at the address
described below. Any notice, payment or report to be given or made to a Member hereunder shall be
deemed conclusively to have been given or made, and the obligation to give such notice or report or
to make such payment shall be deemed conclusively to have been fully satisfied, upon sending of
such notice, payment or report to the Record Holder of such Company Securities at his address as
shown on the records of the Transfer Agent or as otherwise shown on the records of the Company,
regardless of any claim of any Person who may have an interest in such Company Securities by reason
of any assignment or otherwise. An affidavit or certificate of making of any notice, payment or
report in accordance with the provisions of this Section 14.1 executed by the Company, the Transfer
Agent or the mailing organization shall be prima facie evidence of the giving or making of such
notice, payment or report. If any notice, payment or report addressed to a Record Holder at the
address of such Record Holder appearing on the books and records of the Transfer Agent or the
Company is returned by the United States Postal Service marked to indicate that the United States
Postal Service is unable to deliver it, such notice, payment or report and any subsequent notices,
payments and reports shall be deemed to have been duly given or made without further mailing (until
such time as such Record Holder or another Person notifies the Transfer Agent or the Company of a
change in his address) if they are available for the Member at the principal office of the Company
for a period of one year from the date of the giving or making of such notice, payment or report to
the other Members. Any notice to the
Company shall be deemed given if received by the Secretary at the principal office of the
70
Company designated pursuant to Section 2.3. The Board of Directors and the Officers may rely and
shall be protected in relying on any notice or other document from a Member or other Person if
believed by it to be genuine.
Section 14.2
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.
Section 14.3
Binding Effect
. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their heirs, executors, administrators, successors, legal
representatives and permitted assigns.
Section 14.4
Integration
. This Agreement constitutes the entire agreement among the
parties hereto pertaining to the subject matter hereof and supersedes all prior agreements and
understandings pertaining thereto.
Section 14.5
Creditors
. None of the provisions of this Agreement shall be for the
benefit of, or shall be enforceable by, any creditor of the Company.
Section 14.6
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 of any other covenant,
duty, agreement or condition.
Section 14.7
Counterparts
. This Agreement may be executed in counterparts, all of
which together shall constitute an agreement binding on all the 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 Unit, upon accepting the Certificate evidencing such Unit.
Section 14.8
Applicable Law
. This Agreement shall be construed in accordance with and
governed by the laws of the State of Delaware without regard to principles of conflict of laws.
Section 14.9
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.
Section 14.10
Consent of Members
. Each Member hereby expressly consents and agrees
that, whenever in this Agreement it is specified that an action may be taken upon the affirmative
vote or consent of less than all of the Members, such action may be so taken upon the concurrence
of less than all of the Members and each Member shall be bound by the results of such action.
Section 14.11
Facsimile Signatures
71
The use of facsimile signatures affixed in the name and on behalf of the transfer agent and
registrar of the Company on certificates representing Units is expressly permitted by this
Agreement.
Remainder of page intentionally left blank
.
72
IN WITNESS WHEREOF,
the parties hereto have executed this Agreement as of the date first
written above.
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DIAMOND SHAMROCK REFINING AND MARKETING COMPANY
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By:
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/s/Jay D. Browning
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Name:
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Jay D. Browning
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Title:
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Vice President and Secretary
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SIGMOR CORPORATION
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By:
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/s/Jay D. Browning
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Name:
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Jay D. Browning
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Title:
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Vice President and Secretary
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THE SHAMROCK PIPE LINE CORPORATION
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By:
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/s/Jay D. Browning
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Name:
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Jay D. Browning
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Title:
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Vice President and Secretary
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DIAMOND SHAMROCK REFINING COMPANY, L.P.
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By:
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/s/Jay D. Browning
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Name:
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Jay D. Browning
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Title:
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Vice President and Secretary
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Signature Page to Second Amended and Restated
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Limited Liability Company Agreement
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VALERO REFININGNEW ORLEANS, L.L.C.
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By:
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/s/Jay D. Browning
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Name:
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Jay D. Browning
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Title:
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Vice President and Secretary
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VALERO REFINING COMPANYCALIFORNIA
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By:
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/s/Jay D. Browning
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Name:
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Jay D. Browning
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Title:
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Vice President and Secretary
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VALERO REFININGTEXAS, L.P.
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By:
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Valero Corporate Services Company,
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its general partner
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By:
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/s/Jay D. Browning
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Name:
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Jay D. Browning
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Title:
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Vice President and Secretary
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MEMBERS:
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All Members now and hereafter admitted as Members of
the Company, pursuant to powers of attorney now and
hereafter executed in favor of, and granted and
delivered to, the Board of Directors.
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Signature Page to Second Amended and Restated
Limited Liability Company Agreement
EXHIBIT A
to the Second Amended and
Restated Agreement of Limited Liability Company of
Valero GP Holdings, LLC
Certificate Evidencing Units
Representing Interests in
Valero GP Holdings, LLC
In accordance with Section 4.1 of the Second Amended and Restated Limited Liability Company
Agreement of Valero GP Holdings, LLC, as amended, supplemented or restated from time to time (the
"
Company Agreement
), Valero GP Holdings, LLC, a Delaware limited liability company (the
"
Company
), hereby certifies that [ ] (the
Holder
) is the registered owner
of [ ]Units representing Interests in the Company (the
Units
) transferable on the
books of the Company, in person or by duly authorized attorney, upon surrender of this Certificate
properly endorsed. The rights, preferences and limitations of the Units are set forth in, and this
Certificate and the Units represented hereby are issued and shall in all respects be subject to the
terms and provisions of, the Company Agreement. Copies of the Company Agreement are on file at, and
will be furnished without charge on delivery of written request to the Company at, the principal
office of the Company located at One Valero Way, San Antonio, Texas 78249 or such other address as
may be specified by notice under the Company Agreement. Capitalized terms used herein but not
defined shall have the meanings given them in the Company Agreement.
The Holder, by accepting this Certificate, is deemed to have (i) requested admission as, and
agreed to become, a Member and to have agreed to comply with and be bound by and to have executed
the Company Agreement, (ii) represented and warranted that the Holder has all right, power and
authority and, if an individual, the capacity necessary to enter into the Company Agreement, (iii)
granted the powers of attorney provided for in the Company Agreement and (iv) made the waivers and
given the consents and approvals contained in the Company Agreement.
This Certificate shall be governed by, and construed in accordance with, the laws of the State
of Delaware, without regard to principles of conflict of laws thereof.
This Certificate shall not be valid for any purpose unless it has been countersigned and
registered by the Transfer Agent and Registrar.
A-1
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Dated:
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Countersigned and Registered by:
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Valero GP Holdings, LLC
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as Transfer Agent and Registrar
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By:
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Name:
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Title:
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Reverse of Certificate
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of this Certificate,
shall be construed as follows according to applicable laws or regulations:
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TEN COM
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as tenants in common
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UNIF GIFT/TRANSFERS MIN ACT
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TEN ENT
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as tenants by the entireties
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Custodian
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(Cust)
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(Minor)
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JT TEN
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as joint tenants with right of
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under Uniform Gifts/Transfers to CD
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survivorship and not as tenants
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Minors Act
(State)
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in common
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Additional abbreviations, though not in the above list, may also be used.
A-2
ASSIGNMENT OF UNITS
in
VALERO GP HOLDINGS, LLC
FOR VALUE RECEIVED,
hereby assigns, conveys, sells and transfers unto
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(Please print or typewrite name
and address of Assignee)
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(Please insert Social Security or other
identifying number of Assignee)
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Units representing Interests evidenced by this Certificate, subject to the
Company Agreement, and does hereby irrevocably constitute and appoint
as its attorney-in-fact with full power of substitution to transfer the same on the
books of Valero GP Holdings, LLC.
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Date:
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NOTE: The signature to any
endorsement hereon must correspond
with the name as written upon the
face of this Certificate in every
particular, without alteration,
enlargement or change.
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SIGNATURE(S) MUST BE GUARANTEED BY A
MEMBER FIRM OF THE NATIONAL
ASSOCIATION OF SECURITIES DEALERS,
INC. OR BY A COMMERCIAL BANK OR TRUST
COMPANY SIGNATURE(S) GUARANTEED
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(Signature)
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(Signature)
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No transfer of the Units evidenced hereby will be registered on the books of the Company, unless
the Certificate evidencing the Units to be transferred is surrendered for registration of transfer.
A-3
EXHIBIT B
to the Second Amended and
Restated Agreement of Limited Liability Company of
Valero GP Holdings, LLC
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Pre-Split
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Post-Split
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Initial Members
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Membership Interest
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Units
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Units
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Diamond Shamrock Refining
and Marketing Company
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0.51592085
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%
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5,159,209
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21,926,636
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Sigmor Corporation
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0.29466530
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%
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2,946,653
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12,523,275
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The Shamrock Pipe Line Corporation
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0.13529489
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%
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1,352,948
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5,750,032
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Diamond Shamrock Refining Company,
L.P.
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0.05408899
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%
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540,890
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2,298,782
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Valero RefiningNew Orleans, L.L.C.
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0.00000999
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%
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100
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425
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Valero Refining CompanyCalifornia.
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0.00000999
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%
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100
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425
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Valero RefiningTexas, L.P.
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0.00000999
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%
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100
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425
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1.00000000
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%
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10,000,000
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42,500,000
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B-1
Exhibit 4.01
VALERO GP HOLDINGS, LLC
and
COMPUTERSHARE INVESTOR SERVICES, LLC
Rights Agent
RIGHTS AGREEMENT
Dated as of July 19, 2006
TABLE OF CONTENTS
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Page
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Section 1.
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Certain Definitions
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1
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Section 2.
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Appointment of Rights Agent
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4
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Section 3.
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Issue of Right Certificates
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4
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Section 4.
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Form of Right Certificates
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5
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Section 5.
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Countersignature and Registration
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5
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Section 6.
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Transfer, Split Up, Combination and Exchange of Right Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates
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6
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Section 7.
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Exercise of Rights; Purchase Price; Expiration Date of Rights
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6
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Section 8.
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Cancellation and Destruction of Right Certificates
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8
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Section 9.
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Availability of Preferred Units
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8
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Section 10.
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Preferred Units Record Date
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9
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Section 11.
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Adjustment of Purchase Price, Number of Units or Number of Rights
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9
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Section 12.
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Certificate of Adjusted Purchase Price or Number of Units
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15
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Section 13.
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Consolidation, Merger or Sale or Transfer of Assets or Earning Power
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15
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Section 14.
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Fractional Rights and Fractional Units
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16
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Section 15.
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Rights of Action
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17
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Section 16.
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Agreement of Right Holders
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18
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Section 17.
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Right Certificate Holder Not Deemed a Unitholder
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18
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Section 18.
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Concerning the Rights Agent
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18
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Section 19.
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Merger or Consolidation or Change of Name of Rights Agent
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19
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Section 20.
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Duties of Rights Agent
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19
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Section 21.
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Change of Rights Agent
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21
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Section 22.
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Issuance of New Right Certificates
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22
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Section 23.
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Redemption
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22
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Section 24.
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Exchange
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23
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Section 25.
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Notice of Certain Events
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24
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Section 26.
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Notices
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24
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Section 27.
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Supplements and Amendments
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25
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Section 28.
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Successors
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25
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Section 29.
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Benefits of this Agreement
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25
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Section 30.
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Severability
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26
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Section 31.
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Governing Law
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26
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Section 32.
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Counterparts
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26
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Section 33.
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Descriptive Headings
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26
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Section 34.
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Force Majeure
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This Rights Agreement (the
Agreement
), dated as of July 19, 2006, between
Valero GP
Holdings, LLC
, a Delaware limited liability company (the
Company
), and
Computershare
Investor Services, LLC
(the
Rights Agent
).
The Board of Directors of the Company has authorized and declared a distribution of one
preferred unit purchase right (a
Right
) for each Unit (as hereinafter defined) of the
Company outstanding as of the close of business (as hereinafter defined) on July 19, 2006 (the
Record Date
), each Right representing the right to purchase one one-hundredth of a
Preferred Unit (as hereinafter defined) of the Company, upon the terms and subject to the
conditions herein set forth, and has further authorized and directed the issuance of one Right with
respect to each Unit that shall become outstanding between the Record Date and the earliest of the
Distribution Date, the Redemption Date and the Final Expiration Date (as such terms are hereinafter
defined).
Accordingly, in consideration of the premises and the mutual agreements herein set forth, the
parties hereby agree as follows:
Section 1.
Certain Definitions
. For purposes of this Agreement, the following terms
have the meanings indicated:
(a)
Acquiring Person
shall mean any Person (as such term is hereinafter
defined) who or which, together with all Affiliates and Associates (as such terms are
hereinafter defined) of such Person, shall be the Beneficial Owner (as such term is
hereinafter defined) of 15% or more of the Units of the Company then outstanding, but shall
not include (i) the Company, (ii) any Subsidiary (as such term is hereinafter defined) of
the Company, (iii) any Initial Member (as such term is defined in the LLC Agreement), (iv)
any Affiliate or Associate of any Initial Member, (v) any employee benefit plan of the
Company or any Subsidiary of the Company, or (vi) any entity holding Units for or pursuant
to the terms of any such plan. Notwithstanding the foregoing, no Person shall become an
Acquiring Person
as the result of an acquisition of Units by the Company which,
by reducing the number of units outstanding, increases the proportionate number of units
beneficially owned by such Person to 15% or more of the Units of the Company then
outstanding;
provided
,
however
, that if a Person shall become the Beneficial Owner of 15%
or more of the Units of the Company then outstanding by reason of unit purchases by the
Company and shall, after such unit purchases by the Company, become the Beneficial Owner of
any additional Units of the Company, then such Person shall be deemed to be an Acquiring
Person. Notwithstanding the foregoing, if the Board of Directors of the Company
determines in good faith that a Person who would otherwise be an Acquiring Person, as
defined pursuant to the foregoing provisions of this paragraph (a), has become such
inadvertently, and such Person divests as promptly as practicable a sufficient number of
Units so that such Person would no longer be an Acquiring Person, as defined pursuant to
the foregoing provisions of this paragraph (a), then such Person shall not be deemed to be
an Acquiring Person for any purposes of this Agreement.
(b)
Affiliate
and
Associate
shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the
Securities
Exchange Act of 1934, as amended (the
Exchange Act
), as in effect on the
date of this Agreement.
(c) A Person shall be deemed the
Beneficial Owner
of and shall be deemed to
beneficially own any securities:
(i) which such Person or any of such Persons Affiliates or Associates
beneficially owns, directly or indirectly, within the meaning of Rule 13d-3 of the
General Rates and Regulations under the Exchange Act as in effect on the date of
this Agreement;
(ii) which such Person or any of such Persons Affiliates or Associates has (A)
the right to acquire (whether such right is exercisable immediately or only after
the passage of time) pursuant to any agreement, arrangement or understanding (other
than customary agreements with and between underwriters and selling group members
with respect to a bona fide public offering of securities), or upon the exercise of
conversion rights, exchange rights, rights (other than these Rights), warrants or
options, or otherwise;
provided
,
however
, that a Person shall not be deemed the
Beneficial Owner of, or to beneficially own, securities tendered pursuant to a
tender or exchange offer made by or on behalf of such Person or any of such Persons
Affiliates or Associates until such tendered securities are accepted for purchase or
exchange; or (B) the right to vote pursuant to any agreement, arrangement or
understanding;
provided
,
however
, that a Person shall not be deemed the Beneficial
Owner of, or to beneficially own, any security if the agreement, arrangement or
understanding to vote such security (1) arises solely from a revocable proxy or
consent given to such Person in response to a public proxy or consent solicitation
made pursuant to, and in accordance with, the applicable rules and regulations
promulgated under the Exchange Act and (2) is not also then reportable on Schedule
13D under the Exchange Act (or any comparable or successor report); or
(iii) which are beneficially owned, directly or indirectly, by any other Person
with which such Person or any of such Persons Affiliates or Associates has any
agreement, arrangement or understanding (other than customary agreements with and
between underwriters and selling group members with respect to a bona fide public
offering of securities) for the purpose of acquiring, holding, voting (except to the
extent contemplated by the proviso to Section 1(c)(ii)(B)) or disposing of any
securities of the Company. Notwithstanding anything in this definition of
Beneficial Ownership to the contrary, the phrase then outstanding, when used with
reference to a Persons Beneficial Ownership of securities of the Company, shall
mean the number of such securities then issued and outstanding together with the
number of such securities not then actually issued and outstanding which such Person
would be deemed to own beneficially hereunder.
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(d)
Business Day
shall mean any day other than a Saturday, a Sunday, or a
day on which banking institutions in New York or Illinois are authorized or obligated by
law or executive order to close.
(e)
Close of business
on any given date shall mean 5:00 P.M., Chicago,
Illinois time, on such date;
provided
,
however
, that if such date is not a Business Day it
shall mean 5:00 P.M., Chicago, Illinois time, on the next succeeding Business Day.
(f)
Company Security
shall mean any class or series of Units, any options,
right, warrant or appreciation rights relating thereto, or any other type of equity
interest that the Company may lawfully issue pursuant to the LLC Agreement, or any debt
obligation of the Company that is convertible into any class or series of equity interests
of the Company.
(g)
Distribution Date
shall have the meaning set forth in Section 3 hereof.
(h)
Final Expiration Date
shall have the meaning set forth in Section 7
hereof.
(i)
Interest
shall mean an ownership interest of a Member in the Company,
and which includes any and all benefits to which such Member is entitled as provided in the
LLC Agreement, together with all obligations of such Member to comply with the terms and
provisions of the LLC Agreement.
(j)
LLC Agreement
shall mean the Second Amended and Restated Limited
Liability Company Agreement of Valero GP Holdings, LLC, dated as of July 19, 2006, as the
same may be amended or supplemented from time to time.
(k)
Person
shall mean any individual, firm, corporation or other entity, and
shall include any successor (by merger or otherwise) of such entity.
(l)
Preferred Units
shall mean Junior Participating Preferred Units of the
Company having the rights and preferences set forth in the Form of Certificate of
Designations attached to this Agreement as
Exhibit A
.
(m)
Redemption Date
shall have the meaning set forth in Section 7 hereof.
(n)
Subsidiary
of any Person shall mean any corporation or other entity of
which a majority of the voting power of the voting equity securities or equity interest is
owned, directly or indirectly, by such Person.
(o)
Unit
or
Units
shall mean an Interest of a Member in the
Company representing a fractional part of the Interests of all Members in the Company; provided, however, that the term Unit shall not include a Preferred Unit.
(p)
Units Acquisition Date
shall mean the first date of public announcement
(which for purposes of this definition shall include, without limitation, a report filed
pursuant to Section 13(d) of the Exchange Act) by the Company or an Acquiring Person that
an Acquiring Person has become such.
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Section 2.
Appointment of Rights Agent
. The Company hereby appoints the Rights Agent
to act as agent for the Company and the holders of the Rights (who, in accordance with Section 3
hereof, shall prior to the Distribution Date also be the holders of the Units) in accordance with
the terms and conditions hereof, and the Rights Agent hereby accepts such appointment. The Company
may from time to time appoint such co-Rights Agents as it may deem necessary or desirable, upon ten
(10) days prior written notice to the Rights Agent. The Rights Agent shall have no duty to
supervise, and in no event be liable for, the acts or omissions of any such co-Rights Agent.
Section 3.
Issue of Right Certificates
. (a) Until the earlier of (i) the tenth day
after the Units Acquisition Date or (ii) the tenth business day (or such later date as may be
determined by action of the Board of Directors prior to such time as any Person becomes an
Acquiring Person) after the date of the commencement by any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or of any Subsidiary of the
Company or any entity holding Units for or pursuant to the terms of any such plan) of, or of the
first public announcement of the intention of any Person (other than the Company, any Subsidiary of
the Company, any employee benefit plan of the Company or of any Subsidiary of the Company or any
entity holding Units for or pursuant to the terms of any such plan) to commence, a tender or
exchange offer the consummation of which would result in any Person becoming the Beneficial Owner
of Units aggregating 15% or more of the then outstanding Units (including any such date which is
after the date of this Agreement and prior to the issuance of the Rights; the earlier of such dates
being herein referred to as the
Distribution Date
), (x) the Rights will be evidenced by
the certificates for Units registered in the names of the holders thereof (which certificates shall
also be deemed to be Right Certificates), or by a current ownership statement issued with respect
to uncertificated Units in lieu of such a certificate (an
Ownership Statement
), and not
by separate Rights Certificates, and (y) the Rights will be transferable only in connection with
the transfer of Units. As soon as practicable after the Distribution Date, the Company will
prepare and execute, the Rights Agent will countersign, and the Company will send or cause to be
sent (and the Rights Agent will, if requested, send) by first-class, insured, postage-prepaid mail,
at the cost and expense of the Company to each record holder of Units as of the close of business
on the Distribution Date, at the address of such holder shown on the records of the Company, a
Right Certificate, in substantially the form of
Exhibit B
hereto (a
Right
Certificate
), evidencing one Right (subject to adjustment as provided herein) for each Unit so
held. As of the Distribution Date, the Rights will be evidenced solely by such Right Certificates.
(b) Attached hereto as
Exhibit C
is a Summary of Rights to Purchase Preferred Units (the
Summary of Rights). With respect to certificates, or Ownership Statements, for Units outstanding
as of the Record Date, until the Distribution Date, the Rights will be evidenced by such
certificates, or such Ownership Statements, registered in the names of the holders thereof together
with the Summary of Rights. Until the Distribution Date (or the earlier of the Redemption Date or
the Final Expiration Date), the surrender for transfer of any such certificate for Units, or the
transfer of any Units covered by such an Ownership Statement, outstanding on the Record Date, shall
also constitute the transfer of the Rights associated with the Units represented or covered
thereby.
(c) Certificates (or Ownership Statements) issued for Units which become outstanding
(including, without limitation, reacquired Units referred to in the last sentence of this paragraph
(c)) after the Record Date but prior to the earliest of the Distribution Date, the Redemption Date
or the Final Expiration Date shall have impressed on, printed on, written on or otherwise affixed
to them a legend substantially as follows:
This [certificate] [statement] also evidences and entitles the holder hereof
to certain rights, subject to adjustment, as set forth in a Rights Agreement
between Valero GP Holdings, LLC and Computershare Investor Services,
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LLC dated as of July 19, 2006, as may be amended from time to time (the
Rights Agreement
), the terms of which are hereby incorporated
herein by reference and a copy of which is on file at the principal
executive offices of Valero GP Holdings, LLC. Under certain circumstances,
as set forth in the Rights Agreement, such Rights will be evidenced by
separate certificates and will no longer be evidenced by this [certificate]
[statement]. Valero GP Holdings, LLC will mail to the holder of this
[certificate] [statement] a copy of the Rights Agreement without charge
after receipt of a written request therefor. Under certain circumstances,
as set forth in the Rights Agreement, Rights issued to, or held by, any
Person who becomes an Acquiring Person (as defined in the Rights Agreement)
and certain transferees thereof will become null and void.
With respect to such certificates, or Ownership Statements, containing the foregoing legend, until
the Distribution Date, the Rights associated with the Units represented by such certificates, or
covered by such Ownership Statements, shall be evidenced by such certificates, or such Ownership
Statements, alone, and the surrender for transfer of any such certificate, or the transfer of any
Units covered by such an Ownership Statement, shall also constitute the transfer of the Rights
associated with the Units represented or covered thereby. In the event that the Company purchases
or acquires any Units after the Record Date but prior to the Distribution Date, any Rights
associated with such Units shall be deemed cancelled and retired so that the Company shall not be
entitled to exercise any Rights associated with the Units which are no longer outstanding.
Section 4.
Form of Right Certificates
. The Right Certificates (and the forms of
election to purchase Preferred Units and of assignment to be printed on the reverse thereof) shall
be substantially the same as
Exhibit B
hereto and may have such marks of identification or
designation and such legends, summaries or endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this Agreement, or as may be
required to comply with any applicable law or with any rule or regulation made pursuant thereto or
with any rule or regulation of any stock exchange or automated quotation system on which the Rights
may from time to time be listed or traded, or to conform to usage. Subject to the provisions of
Sections 11, 13 and 22 hereof, the Right Certificates shall entitle the holders thereof to purchase
such number of one one-hundredths of a Preferred Unit as shall be set forth therein at the price
per one one-hundredth of a Preferred Unit set forth therein (the
Purchase Price
), but the
number of such one one-hundredths of a Preferred Unit and the Purchase Price shall be subject to
adjustment as provided herein.
Section 5.
Countersignature and Registration
. The Right Certificates shall be
executed on behalf of the Company by its Chairman of the Board, its Chief Executive Officer, its
President, any of its Vice Presidents, or its Treasurer, either manually or by facsimile signature and shall be attested by the Secretary or an
Assistant Secretary of the Company, either manually or by facsimile signature. The Right
Certificates shall be manually countersigned by the Rights Agent and shall not be valid for any
purpose unless countersigned. In case any officer of the Company who shall have signed any of the
Right Certificates shall cease to be such officer of the Company before countersignature by the
Rights Agent and issuance and delivery by the Company, such Right Certificates, nevertheless, may
be countersigned by the Rights Agent and
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issued and delivered by the Company with the same force
and effect as though the person who signed such Right Certificates had not ceased to be such
officer of the Company; and any Right Certificate may be signed on behalf of the Company by any
person who, at the actual date of the execution of such Right Certificate, shall be a proper
officer of the Company to sign such Right Certificate, although at the date of this Agreement any
such person was not such an officer.
Following the Distribution Date, the Rights Agent will keep or cause to be kept, at an office
or agency designated for such purpose, books for registration and transfer of the Right
Certificates issued hereunder. Such books shall show the names and addresses of the respective
holders of the Right Certificates, the number of Rights evidenced on its face by each of the Right
Certificates and the date of each of the Right Certificates.
Section 6.
Transfer, Split Up, Combination and Exchange of Right Certificates; Mutilated,
Destroyed, Lost or Stolen Right Certificates
. Subject to the provisions of Section 14 hereof,
at any time after the close of business on the Distribution Date, and at or prior to the close of
business on the earlier of the Redemption Date or the Final Expiration Date, any Right Certificate
or Right Certificates (other than Right Certificates representing Rights that have become void
pursuant to Section 11(a)(ii) hereof or that have been exchanged pursuant to Section 24 hereof) may
be transferred, split up, combined or exchanged for another Right Certificate or Right
Certificates, entitling the registered holder to purchase a like number of one one-hundredths of a
Preferred Unit as the Right Certificate or Right Certificates surrendered then entitled such holder
to purchase. Any registered holder desiring to transfer, split up, combine or exchange any Right
Certificate or Right Certificates shall make such request in writing delivered to the Rights Agent,
and shall surrender the Right Certificate or Right Certificates to be transferred, split up,
combined or exchanged at the office or agency of the Rights Agent designated for such purpose.
Thereupon the Rights Agent shall countersign and deliver to the Person entitled thereto a Right
Certificate or Right Certificates, as the case may be, as so requested. The Company may require
payment of a sum sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer, split up, combination or exchange of Right Certificates.
Subject to the provisions of Section 11(a)(ii) hereof, at any time after the Distribution Date
and prior to the close of business on the earlier of the Redemption Date or the Final Expiration
Date, upon receipt by the Company and the Rights Agent of evidence reasonably satisfactory to them
of the loss, theft, destruction or mutilation of a Right Certificate, and, in case of loss, theft
or destruction, of indemnity or security reasonably satisfactory to them, and, at the Companys or
Rights Agents request, reimbursement to the Company and the Rights Agent of all reasonable
expenses incidental thereto, and upon surrender to the Rights Agent and
cancellation of the Right Certificate if mutilated, the Company will make and deliver a new
Right Certificate of like tenor to the Rights Agent for delivery to the registered holder in lieu
of the Right Certificate so lost, stolen, destroyed or mutilated.
Section 7.
Exercise of Rights; Purchase Price; Expiration Date of Rights
. (a) The
registered holder of any Right Certificate may exercise the Rights evidenced thereby (except as
otherwise provided herein) in whole or in part at any time after the Distribution Date upon
surrender of the Right Certificate, with the form of election to purchase on the reverse side
thereof duly executed, to the Rights Agent at the office or agency of the Rights Agent designated
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for such purpose, together with payment of the Purchase Price for each one one-hundredth of a
Preferred Unit as to which the Rights are exercised, at or prior to the earliest of (i) the close
of business on June 30, 2016 (the
Final Expiration Date
), (ii) the time at which the
Rights are redeemed as provided in Section 23 hereof (the
Redemption Date
), or (iii) the
time at which such Rights are exchanged as provided in Section 24 hereof.
(b) The Purchase Price shall be initially $100 for each one one-hundredth of a
Preferred Unit purchasable pursuant to the exercise of a Right. The Purchase Price and the
number of one one-hundredths of a Preferred Unit or other securities or property to be
acquired upon exercise of a Right shall be subject to adjustment from time to time as
provided in Section 11 or 13 hereof and shall be payable in lawful money of the United
States of America in accordance with paragraph (c) of this Section 7.
(c) Except as otherwise provided herein, upon receipt of a Right Certificate
representing exercisable Rights, with the form of election to purchase duly executed,
accompanied by payment of the Purchase Price for the Preferred Units (or other
securities or property, as the case may be) to be purchased and an amount equal to any
applicable transfer tax required to be paid by the holder of such Right Certificate in
accordance with Section 9 hereof by certified check, cashiers check or money order payable
to the order of the Company, the Rights Agent shall thereupon promptly (i)(A) requisition
from any transfer agent of the Preferred Units certificates for the number of Preferred
Units to be purchased and the Company hereby irrevocably authorizes its transfer agent to
comply with all such requests, or (B) requisition from the depositary agent depositary
receipts representing such number of one one-hundredths of a Preferred Unit as are to be
purchased (in which case certificates for the Preferred Units represented by such receipts
shall be deposited by the transfer agent with the depositary agent) and the Company hereby
directs the depositary agent to comply with such request, (ii) when appropriate,
requisition from the Company the amount of cash to be paid in lieu of issuance of
fractional units in accordance with Section 14 hereof, (iii) after receipt of such
certificates or depositary receipts, cause the same to be delivered to or upon the order of
the registered holder of such Right Certificate, registered in such name or names as may be
designated by such holder and (iv) when appropriate, after receipt, deliver such cash to or
upon the order of the registered holder of such Right Certificate.
(d) Except as otherwise provided herein, in case the registered holder of any Right
Certificate shall exercise less than all the Rights evidenced thereby, a new Right
Certificate evidencing Rights equivalent to the Rights remaining unexercised shall be
issued by the Rights Agent to the registered holder of such Right Certificate or to his
duly authorized assigns, subject to the provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the contrary, neither the Rights
Agent nor the Company shall be obligated to undertake any action with respect to a
registered holder of Rights upon the occurrence of any purported transfer or exercise of
Rights pursuant to Section 6 hereof or this Section 7 unless such registered holder shall
have (i) completed and signed the certificate contained in the form of assignment or
election to purchase set forth on the reverse side of the Right Certificate surrendered
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for such transfer or exercise and (ii) provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) thereof as the Company shall reasonably
request.
Section 8.
Cancellation and Destruction of Right Certificates
. All Right Certificates
surrendered for the purpose of exercise, transfer, split up, combination or exchange shall, if
surrendered to the Company or to any of its agents, be delivered to the Rights Agent for
cancellation or in cancelled form, or, if surrendered to the Rights Agent, shall be cancelled by
it, and no Right Certificates shall be issued in lieu thereof except as expressly permitted by any
of the provisions of this Rights Agreement. The Company shall deliver to the Rights Agent for
cancellation and retirement, and the Rights Agent shall so cancel and retire, any other Right
Certificate purchased or acquired by the Company otherwise than upon the exercise thereof. The
Rights Agent shall deliver all cancelled Right Certificates to the Company, or shall, at the
written request of the Company, destroy such cancelled Right Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.
Section 9.
Availability of Preferred Units
. (a) The Company covenants and agrees that
it will take all such action as may be necessary to ensure that all Preferred Units (and, following
the time that a Person becomes an Acquiring Person, Units or other securities) delivered upon
exercise of Rights shall, at the time of delivery of the certificates for such Preferred Units
(subject to payment of the Purchase Price), be duly and validly authorized and issued and fully
paid and nonassessable Units.
(b) So long as the Preferred Units (and, following the time that a Person becomes an
Acquiring Person, Units and other securities) issuable upon the exercise of Rights may be
listed or admitted to trading on any securities exchange or quotation system, the Company
shall use its best efforts to cause, from and after such time as the Rights become
exercisable, all Units reserved for such issuance to be listed or admitted to trading on
such exchange or quotation system upon official notice of issuance upon such exercise.
(c) From and after such time as the Rights become exercisable, the Company shall use
its best efforts, if then necessary to permit the issuance of Preferred Units (and
following the time that a Person first becomes an Acquiring Person, Units and other
securities) upon the exercise of Rights, to register and qualify such Preferred Units
(and following the time that a Person first becomes an Acquiring Person, Units and other
securities) under the Securities Act and any applicable state securities or Blue Sky laws
(to the extent exemptions therefrom are not available) or take any other action necessary
or appropriate under any applicable securities laws, cause such registration statement and
qualifications to become effective as soon as reasonably practicable after such filing and
keep such registration and qualifications effective until the earlier of the date as of
which the Rights are no longer exercisable for such securities and the Final Expiration
Date. The Company may temporarily suspend, for a period of time not to exceed 90 days, the
exercisability of the Rights in order to prepare and file a registration statement under
the Securities Act and permit it to become effective. Upon any such suspension, the
Company shall issue a public announcement stating that the exercisability of the Rights has
been temporarily suspended, as well as a public
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announcement at such time as the suspension
is no longer in effect. Notwithstanding any provision of this Agreement to the contrary,
the Rights shall not be exercisable in any jurisdiction unless the requisite qualification
in such jurisdiction shall have been obtained, or an exemption therefrom shall be
available, and until a registration statement under the Securities Act (if required) shall
have been declared effective.
(d) The Company further covenants and agrees that it will pay when due and payable any
and all federal and state transfer taxes and charges which may be payable in respect of the
issuance or delivery of the Right Certificates or of any Preferred Units (or Units or other
securities) upon the exercise of Rights. The Company shall not, however, be required to
pay any transfer tax which may be payable in respect of any transfer or delivery of Right
Certificates to a Person other than, or the issuance or delivery of certificates or
depositary receipts for the Preferred Units in a name other than that of, the registered
holder of the Right Certificate evidencing Rights surrendered for exercise or to issue or
to deliver any certificates or depositary receipts for Preferred Units upon the exercise of
any Rights until any such tax shall have been paid (any such tax being payable by the
holder of such Right Certificate at the time of surrender) or until it has been established
to the Companys reasonable satisfaction that no such tax is due.
Section 10.
Preferred Units Record Date
. Each Person in whose name any certificate
for Preferred Units is issued upon the exercise of Rights shall for all purposes be deemed to have
become the holder of record of the Preferred Units represented thereby on, and such certificate
shall be dated, the date upon which the Right Certificate evidencing such Rights was duly
surrendered and payment of the Purchase Price (and any applicable transfer taxes) was made;
provided
,
however
, that if the date of such surrender and payment is a date upon which the
Preferred Units transfer books of the Company are closed, such person shall be deemed to have
become the record holder of such units on, and such certificate shall be dated, the next succeeding
Business Day on which the Preferred Units transfer books of the Company are open. Prior to the
exercise of the Rights evidenced thereby, the holder of a Right Certificate shall not be entitled
to any rights of a holder of Preferred Units for which the Rights shall be exercisable, including,
without limitation, the right to vote, to receive dividends or other distributions or to exercise
any preemptive rights, and shall not be entitled to receive any notice of any proceedings of the
Company, except as provided herein.
Section 11.
Adjustment of Purchase Price, Number of Units or Number of Rights
. The
Purchase Price, the number of Preferred Units or other securities or property covered by each Right
and the number of Rights outstanding are subject to adjustment from time to time as provided in
this Section 11.
(a) (i) In the event the Company shall at any time after the date of this Agreement
(A) declare a distribution on the Preferred Units payable in Preferred Units, (B) subdivide
the outstanding Preferred Units, (C) combine the outstanding Preferred Units into a smaller
number of Preferred Units or (D) issue any Company Securities in a reclassification of the
Preferred Units (including any such reclassification in connection with a consolidation or
merger in which the Company is the continuing or surviving entity), except as otherwise
provided in this Section 11(a), the Purchase Price in effect at the time of the record date
for such distribution or of the effective date of such
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subdivision, combination or
reclassification, and the number and kind of Units or other Company Securities issuable on
such date, shall be proportionately adjusted so that the holder of any Right exercised
after such time shall be entitled to receive the aggregate number and kind of Units or
other Company Securities which, if such Right had been exercised immediately prior to such
date and at a time when the Preferred Units transfer books of the Company were open, he
would have owned upon such exercise and been entitled to receive by virtue of such
distribution, subdivision, combination or reclassification.
(ii) Subject to Section 24 of this Agreement, in the event any Person becomes an
Acquiring Person, each holder of a Right, except as otherwise provided in this
Section 11(a)(ii), shall thereafter have a right to receive, upon exercise thereof
at a price equal to the Purchase Price in effect immediately prior to such Person
becoming an Acquiring Person multiplied by the number of one one-hundredths of a
Preferred Unit for which a Right was exercisable immediately prior to such Person
becoming an Acquiring Person, whether or not such Right was then exercisable, in
accordance with the terms of this Agreement and in lieu of Preferred Units, such
number of Units of the Company as shall equal the result obtained by (x) multiplying
the then current Purchase Price by the number of one one-hundredths of a Preferred
Unit for which a Right is then exercisable and dividing that product by (y) 50% of
the then current per unit market price of the Companys Units (determined pursuant
to Section 11(d) hereof) on the date of such Person became an Acquiring Person;
provided
,
however
, that the Purchase Price and the number of Units so receivable
upon exercise of a Right shall thereafter be subject to further adjustment as
appropriate in accordance with Section 11(f) hereof. In the event that any Person
shall become an Acquiring Person and the Rights shall then be outstanding, the
Company shall not take any action which would eliminate or diminish the benefits
intended to be afforded by the Rights.
Notwithstanding anything in this Agreement to the contrary, however, from and after
the time (the
invalidation time
) when any Person first becomes an
Acquiring Person, any Rights that are or were acquired or beneficially owned by
(x) any Acquiring Person (or any Associate or Affiliate of such Acquiring Person),
(y) a transferee of any Acquiring Person (or any such Affiliate or Associate) who
became a transferee prior to or concurrently with the invalidation time pursuant to
either (I) a transfer from the Acquiring Person to holders of its equity securities
or to any Person with whom it has any continuing agreement, arrangement or
understanding regarding the transferred Rights or (II) a transfer which the Board of
Directors has determined is part of a plan, arrangement or understanding which has
the purpose or effect of avoiding the provisions of this paragraph, and subsequent
transferees of such Persons, shall be void and any holder of such Rights shall
thereafter have no right to exercise such Rights under any provision of this
Agreement. The Company shall use all reasonable efforts to ensure that the
provisions of this Section 11(a)(ii) are complied with, but shall have no liability
to any holder of Right Certificates or other Person as a result of its failure to
make any determinations with respect to an Acquiring Person or its
-10-
Affiliates, Associates or transferees hereunder. From and after the invalidation time, no Right
Certificate shall be issued pursuant to Section 3 that represents Rights
beneficially owned by an Acquiring Person whose Rights would be void pursuant to the
preceding provisions of this paragraph or any Associate or Affiliate thereof; no
Right Certificate shall be issued at any time upon the transfer of any Rights to an
Acquiring Person whose Rights would be void pursuant to the preceding provisions of
this paragraph or any Associate or Affiliate thereof or to any nominee of such
Acquiring Person, Associate or Affiliate; and any Right Certificate delivered to the
Rights Agent for transfer to an Acquiring Person whose Rights would be void pursuant
to the preceding sentence shall be cancelled. From and after the occurrence of an
event specified in Section 13, any Rights that theretofore have not been exercised
pursuant to this Section 11(a)(ii) shall thereafter be exercisable only in
accordance with Section 13 and not pursuant to this Section 11(a)(ii).
(b) In case the Company shall fix a record date for the issuance of rights, options or
warrants to all holders of Preferred Units entitling them (for a period expiring within 45
calendar days after such record date) to subscribe for or purchase Preferred Units (or
units having the same rights, privileges and preferences as the Preferred Units
(
Equivalent Preferred Units
)) or securities convertible into Preferred Units or
Equivalent Preferred Units at a price per Preferred Unit or equivalent preferred unit (or
having a conversion price per unit, if a security convertible into Preferred Units or
Equivalent Preferred Units) less than the then current per unit market price of the
Preferred Units (determined in accordance with Section 11(d)) on such record date, the
Purchase Price to be in effect after such record date shall be determined by multiplying
the Purchase Price in effect immediately prior to such record date by a fraction, the
numerator of which shall be the number of Preferred Units outstanding on such record date
plus the number of Preferred Units which the aggregate offering price of the total number
of Preferred Units and/or Equivalent Preferred Units so to be offered (and/or the aggregate
initial conversion price of the convertible securities so to be offered) would purchase at
such current market price and the denominator of which shall be the number of Preferred
Units outstanding on such record date plus the number of additional Preferred Units and/or
Equivalent Preferred Units to be offered for subscription or purchase (or into which the convertible securities so to be offered are initially
convertible). In case such subscription price may be paid in a consideration part or all
of which shall be in a form other than cash, the value of such consideration shall be as
determined in good faith by the Board of Directors of the Company, whose determination
shall be described in a statement filed with the Rights Agent. Preferred Units owned by or
held for the account of the Company shall not be deemed outstanding for the purpose of any
such computation. Such adjustment shall be made successively whenever such a record date
is fixed; and in the event that such rights, options or warrants are not so issued, the
Purchase Price shall be adjusted to be the Purchase Price which would then be in effect if
such record date had not been fixed.
(c) In case the Company shall, at any time after the date of this Agreement, fix a
record date for the making of a distribution to all holders of the Preferred Units
(including any such distribution made in connection with a consolidation or merger in
-11-
which the Company is the continuing or surviving entity) of evidences of indebtedness or assets
(other than a regular quarterly cash distribution, if any, or a distribution payable in
Preferred Units) or subscription rights or warrants (excluding those referred to in Section
11(b) hereof), the Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately prior to such record
date by a fraction, the numerator of which shall be the then current per unit market price
of the Preferred Units (determined in accordance with Section 11(d)) on such record date,
less the fair market value (as determined in good faith by the Board of Directors of the
Company, whose determination shall be described in a statement filed with the Rights Agent)
of the portion of the assets or evidences of indebtedness so to be distributed or of such
subscription rights or warrants applicable to one Preferred Unit and the denominator of
which shall be such current per unit market price of the Preferred Units. Such adjustments
shall be made successively whenever such a record date is fixed; and in the event that such
distribution is not so made, the Purchase Price shall again be adjusted to be the Purchase
Price which would then be in effect if such record date had not been fixed.
(d) (i) For the purpose of any computation hereunder, the current per unit market
price of any security (a Security for the purpose of this Section 11(d)(i)) on any date
shall be deemed to be the average of the daily closing prices per unit of such Security for
the 30 consecutive Trading Days (as such term is hereinafter defined) immediately prior to
such date;
provided
,
however
, that in the event that the current per unit market price of
the Security is determined during a period following the announcement by the issuer of such
Security of (A) a distribution on such Security payable in units of such Security or
securities convertible into such units, or (B) any subdivision, combination or
reclassification of such Security and prior to the expiration of 30 Trading Days after the
ex-dividend date for such distribution, or the record date for such subdivision,
combination or reclassification, then, and in each such case, the current per unit market
price shall be appropriately adjusted to reflect the current market price per unit
equivalent of such Security. The closing price for each day shall be the last sale price,
regular way, or, in case no such sale takes place on such day, the average of the closing
bid and asked prices, regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange or, if the Security is not listed
or admitted to trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities listed on the
principal national securities exchange on which the Security is listed or admitted to
trading or, if the Security is not listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average of the high bid and low
asked prices in the over-the-counter market, as reported by the National Association of
Securities Dealers, Inc. Automated Quotations System (
NASDAQ
) or such other
system then in use, or, if on any such date the Security is not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Security selected by the Board of
Directors of the Company. The term
Trading Day
shall mean a day on which the
principal national securities exchange on which the Security is listed or admitted to
-12-
trading is open for the transaction of business or, if the Security is not listed or
admitted to trading on any national securities exchange, a Business Day.
(ii) For the purpose of any computation hereunder, the current per unit market
price of the Preferred Units shall be determined in accordance with the method set
forth in Section 11(d)(i). If the Preferred Units are not publicly traded, the
current per unit market price of the Preferred Units shall be conclusively deemed
to be the current per unit market price of the Units as determined pursuant to
Section 11(d)(i) (appropriately adjusted to reflect any unit split, unit
distribution or similar transaction occurring after the date hereof), multiplied by
one hundred. If neither the Units nor the Preferred Units are publicly held or so
listed or traded, current per unit market price shall mean the fair value per unit
as determined in good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights Agent.
(e) No adjustment in the Purchase Price shall be required unless such adjustment would
require an increase or decrease of at least 1% in the Purchase Price;
provided
,
however
,
that any adjustments which by reason of this Section 11(e) are not required to be made
shall be carried forward and taken into account in any subsequent adjustment. All
calculations under this Section 11 shall be made to the nearest cent or to the nearest one
one-millionth of a Preferred Unit or one ten-thousandth of any other unit or security as
the case may be. Notwithstanding the first sentence of this Section 11(e), any adjustment
required by this Section 11 shall be made no later than the earlier of (i) three years from
the date of the transaction which requires such adjustment or (ii) the date of the
expiration of the right to exercise any Rights.
(f) If as a result of an adjustment made pursuant to Section 11(a) hereof, the holder
of any Right thereafter exercised shall become entitled to receive any Company Securities
other than Preferred Units, thereafter the number of such other Company Securities so
receivable upon exercise of any Right shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions with respect to
the Preferred Units contained in Section 11(a) through (c),
inclusive, and the provisions of Sections 7, 9, 10, 13 and 14 with respect to the
Preferred Units shall apply on like terms to any such other units.
(g) All Rights originally issued by the Company subsequent to any adjustment made to
the Purchase Price hereunder shall evidence the right to purchase, at the adjusted Purchase
Price, the number of one one-hundredths of a Preferred Unit purchasable from time to time
hereunder upon exercise of the Rights, all subject to further adjustment as provided
herein.
(h) Unless the Company shall have exercised its election as provided in Section 11(i),
upon each adjustment of the Purchase Price as a result of the calculations made in Sections
11(b) and (c), each Right outstanding immediately prior to the making of such adjustment
shall thereafter evidence the right to purchase, at the adjusted Purchase Price, that
number of one one-hundredths of a Preferred Unit (calculated to the
-13-
nearest one one-millionth of a Preferred Unit) obtained by (i) multiplying (x) the number of one
one-hundredths of a unit covered by a Right immediately prior to this adjustment by (y) the
Purchase Price in effect immediately prior to such adjustment of the Purchase Price and
(ii) dividing the product so obtained by the Purchase Price in effect immediately after
such adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any adjustment of the Purchase Price
to adjust the number of Rights, in substitution for any adjustment in the number of one
one-hundredths of a Preferred Unit purchasable upon the exercise of a Right. Each of the
Rights outstanding after such adjustment of the number of Rights shall be exercisable for
the number of one one-hundredths of a Preferred Unit for which a Right was exercisable
immediately prior to such adjustment. Each Right held of record prior to such adjustment
of the number of Rights shall become that number of Rights (calculated to the nearest one
ten-thousandth) obtained by dividing the Purchase Price in effect immediately prior to
adjustment of the Purchase Price by the Purchase Price in effect immediately after
adjustment of the Purchase Price. The Company shall make a public announcement of its
election to adjust the number of Rights, indicating the record date for the adjustment,
and, if known at the time, the amount of the adjustment to be made. This record date may
be the date on which the Purchase Price is adjusted or any day thereafter, but, if the
Right Certificates have been issued, shall be at least 10 days later than the date of the
public announcement. If Right Certificates have been issued, upon each adjustment of the
number of Rights pursuant to this Section 11(i), the Company shall, as promptly as
practicable, cause to be distributed to holders of record of Right Certificates on such
record date Right Certificates evidencing, subject to Section 14 hereof, the additional
Rights to which such holders shall be entitled as a result of such adjustment, or, at the
option of the Company, shall cause to be distributed to such holders of record in
substitution and replacement for the Right Certificates held by such holders prior to the
date of adjustment, and upon surrender thereof, if required by the Company, new Right
Certificates evidencing all the Rights to which such holders shall be entitled after such
adjustment. Right Certificates so to be distributed shall be issued, executed and
countersigned in the manner provided for herein and shall be registered in the names of the
holders of record of Right Certificates on the record date specified in the public
announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or the number of
one one-hundredths of a Preferred Unit issuable upon the exercise of the Rights, the Right
Certificates theretofore and thereafter issued may continue to express the Purchase Price
and the number of one one-hundredths of a Preferred Unit which were expressed in the
initial Right Certificates issued hereunder.
(k) In any case in which this Section 11 shall require that an adjustment in the
Purchase Price be made effective as of a record date for a specified event, the Company may
elect to defer until the occurrence of such event the issuing to the holder of any Right
exercised after such record date of the Preferred Units or other Company Securities, if
any, issuable upon such exercise over and above the Preferred Units or securities of the
Company, if any, issuable upon such exercise on the basis of the Purchase Price in effect
prior to such adjustment;
provided
,
however
, that the Company
-14-
shall deliver to such holder a due bill or other appropriate instrument evidencing such holders right to receive such
additional units upon the occurrence of the event requiring such adjustment.
(l) Anything in this Section 11 to the contrary notwithstanding, the Company shall be
entitled to make such reductions in the Purchase Price, in addition to those adjustments
expressly required by this Section 11, as and to the extent that it in its sole discretion
shall determine to be advisable in order that any consolidation or subdivision of the
Preferred Units, issuance wholly for cash of any Preferred Units at less than the current
market price, issuance wholly for cash of Preferred Units or securities which by their
terms are convertible into or exchangeable for Preferred Units, distributions on Preferred
Units payable in Preferred Units or issuance of rights, options or warrants referred to
hereinabove in Section 11(b), hereafter made by the Company to holders of its Preferred
Units shall not be taxable to such unitholders.
(m) In the event that at any time after the date of this Agreement and prior to the
Distribution Date, the Company shall (i) declare or pay any distribution on the Units
payable in Units or (ii) effect a subdivision, combination or consolidation of the Units
(by reclassification or otherwise than by payment of distributions in Units) into a greater
or lesser number of Units, then in any such case (A) the number of one one-hundredths of a
Preferred Unit purchasable after such event upon proper exercise of each Right shall be
determined by multiplying the number of one one-hundredths of a Preferred Unit so
purchasable immediately prior to such event by a fraction, the numerator of which is the
number of Units outstanding immediately before such event and the denominator of which is
the number of Units outstanding immediately after such event, and (B) each Unit outstanding
immediately after such event shall have issued with respect to it that number of Rights
which each Unit outstanding immediately prior to such event had issued with respect to it.
The adjustments provided for in this Section 11(m) shall be made successively whenever such
a distribution is declared or paid or such a subdivision, combination or consolidation is
effected.
Section 12.
Certificate of Adjusted Purchase Price or Number of Units
. Whenever an
adjustment is made as provided in Section 11 or 13 hereof, the Company shall
promptly (a) prepare a certificate setting forth such adjustment, and a brief statement of the
facts accounting for such adjustment, (b) file with the Rights Agent and with each transfer agent
for the Units or the Preferred Units a copy of such certificate and (c) mail a brief summary
thereof to each holder of a Right Certificate in accordance with Section 25 hereof (if so required
under Section 25 hereof). The Rights Agent shall be fully protected in relying on any such
certificate and on any adjustment therein contained and shall not be obligated or responsible for
calculating any adjustment, nor shall it be deemed to have knowledge of such an adjustment unless
and until it shall have received such certificate.
Section 13.
Consolidation, Merger or Sale or Transfer of Assets or Earning Power
. In
the event, directly or indirectly, at any time after a Person has become an Acquiring Person, the
Company shall consolidate with, or merge with and into, any other Person, any Person shall
consolidate with the Company, or merge with and into the Company and the Company shall be the
continuing or surviving entity of such merger and, in connection with such merger, all or part
-15-
of the Units shall be changed into or exchanged for units or other securities of any other Person (or
of the Company) or cash or any other property, or the Company shall sell or otherwise transfer (or
one or more of its Subsidiaries shall sell or otherwise transfer), in one or more transactions,
assets or earning power aggregating 50% or more of the assets or earning power of the Company and
its Subsidiaries (taken as a whole) to any other Person (other than the Company or one or more of
its wholly-owned Subsidiaries), then, and in each such case, proper provision shall be made so that
(i) each holder of a Right (except as otherwise provided herein) shall thereafter have the right to
receive, upon the exercise thereof at a price equal to the then current Purchase Price multiplied
by the number of one one-hundredths of a Preferred Unit for which a Right was exercisable (whether
or not such Right was then exercisable) immediately prior to the time that any Person first became
an Acquiring Person (each as adjusted in accordance with the provisions herein), in accordance with
the terms of this Agreement and in lieu of Preferred Units, such number of validly authorized and
issued, fully paid and nonassessable and freely tradeable common units, common shares or equivalent securities of such
other Person (including the Company as successor thereto or as the surviving entity) not subject to
any liens, encumbrances, rights of first refusal or other adverse claims, as shall equal the result
obtained by (A) multiplying the then current Purchase Price by the number of one one-hundredths of
a Preferred Unit for which a Right was exercisable (whether or not such Right was then exercisable)
immediately prior to the time that any Person first became an Acquiring Person (each as adjusted in
accordance with the provisions herein) and dividing that product by (B) 50% of the then current per
unit market price of the common units, common shares or equivalent securities of such other Person (determined pursuant
to Section 11(d) hereof) on the date of consummation of such consolidation, merger, sale or
transfer; (ii) the issuer of such common units, common shares or equivalent securities shall thereafter be liable for,
and shall assume, by virtue of such consolidation, merger, sale or transfer, all the obligations
and duties of the Company pursuant to this Agreement; (iii) the term
Company
shall
thereafter be deemed to refer to such issuer; and (iv) such issuer shall take such steps
(including, but not limited to, the reservation of a sufficient number of its common units, common shares or equivalent
securities) in connection with such consummation as may be necessary to assure that the provisions
hereof shall thereafter be applicable, as nearly as reasonably may be, in relation to the common units, common shares or equivalent securities
thereafter deliverable upon the exercise of the Rights. The Company shall not consummate any such
consolidation, merger, sale or transfer unless prior thereto the Company
and such issuer shall have executed and delivered to the Rights Agent a supplemental agreement
so providing. The Company shall not enter into any transaction of the kind referred to in this
Section 13 if at the time of such transaction there are any rights, warrants, instruments or
securities outstanding or any agreements or arrangements which, as a result of the consummation of
such transaction, would eliminate or substantially diminish the benefits intended to be afforded by
the Rights. The provisions of this Section 13 shall similarly apply to successive mergers or
consolidations or sales or other transfers.
Section 14.
Fractional Rights and Fractional Units
. (a) The Company shall not be
required to issue fractions of Rights or to distribute Right Certificates which evidence fractional
Rights. In lieu of such fractional Rights, there shall be paid to the registered holders of the
Right Certificates with regard to which such fractional Rights would otherwise be issuable, an
amount in cash equal to the same fraction of the current market value of a whole Right. For the
purposes of this Section 14(a), the current market value of a whole Right shall be the closing
price of the Rights for the Trading Day immediately prior to the date on which such fractional
Rights would have been otherwise issuable. The closing price for any day shall be the last sale
price, regular
-16-
way, or, in case no such sale takes place on such day, the average of the closing
bid and asked prices, regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to trading on the New
York Stock Exchange or, if the Rights are not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on which the Rights are listed or
admitted to trading or, if the Rights are not listed or admitted to trading on any national
securities exchange, the last quoted price or, if not so quoted, the average of the high bid and
low asked prices in the over-the-counter market, as reported by NASDAQ or such other system then in
use or, if on any such date the Rights are not quoted by any such organization, the average of the
closing bid and asked prices as furnished by a professional market maker making a market in the
Rights selected by the Board of Directors of the Company. If on any such date no such market maker
is making a market in the Rights, the fair value of the Rights on such date as determined in good
faith by the Board of Directors of the Company shall be used.
(b) The Company shall not be required to issue fractions of Preferred Units (other than
fractions which are integral multiples of one one-hundredth of a Preferred Unit) upon exercise of
the Rights or to distribute certificates which evidence fractional Preferred Units (other than
fractions which are integral multiples of one one-hundredth of a Preferred Unit). Fractions of
Preferred Units in integral multiples of one one-hundredth of a Preferred Unit may, at the election
of the Company, be evidenced by depositary receipts, pursuant to an appropriate agreement between
the Company and a depositary selected by it;
provided
, that such agreement shall provide that the
holders of such depositary receipts shall have all the rights, privileges and preferences to which
they are entitled as beneficial owners of the Preferred Units represented by such depositary
receipts. In lieu of fractional Preferred Units that are not integral multiples of one
one-hundredth of a Preferred Unit, the Company shall pay to the registered holders of Right
Certificates at the time such Rights are exercised as herein provided an amount in cash equal to
the same fraction of the current market value of one Preferred Unit. For the purposes of this
Section 14(b), the current market value of a Preferred Unit shall be the closing price of a
Preferred Unit (as determined pursuant to the second sentence of Section 11(d)(i) hereof) for
the Trading Day immediately prior to the date of such exercise.
(c) The holder of a Right by the acceptance of the Right expressly waives his right to receive
any fractional Rights or any fractional units upon exercise of a Right (except as provided above).
Section 15.
Rights of Action
. All rights of action in respect of this Agreement,
excepting the rights of action given to the Rights Agent under Section 18 hereof, are vested in the
respective registered holders of the Right Certificates (and, prior to the Distribution Date, the
registered holders of the Units); and any registered holder of any Right Certificate (or, prior to
the Distribution Date, of the Units), without the consent of the Rights Agent or of the holder of
any other Right Certificate (or, prior to the Distribution Date, of the Units), may, in his own
behalf and for his own benefit, enforce, and may institute and maintain any suit, action or
proceeding against the Company to enforce, or otherwise act in respect of, his right to exercise
the Rights evidenced by such Right Certificate (or, prior to the Distribution Date, such Units) in
the manner provided in such Right Certificate and in this Agreement. Without limiting the
foregoing or any remedies available to the holders of Rights, it is specifically acknowledged that
-17-
the holders of Rights would not have an adequate remedy at law for any breach of this Agreement and
will be entitled to specific performance of the obligations under, and injunctive relief against
actual or threatened violations of the obligations of any Person subject to, this Agreement.
Section 16.
Agreement of Right Holders
. Every holder of a Right, by accepting the
same, consents and agrees with the Company and the Rights Agent and with every other holder of a
Right that:
(a) prior to the Distribution Date, the Rights will be transferable only in connection
with the transfer of the Units;
(b) after the Distribution Date, the Right Certificates are transferable only on the
registry books of the Rights Agent if surrendered at the office or agency of the Rights
Agent designated for such purpose, duly endorsed or accompanied by a proper instrument of
transfer; and
(c) the Company and the Rights Agent may deem and treat the person in whose name the
Right Certificate (or, prior to the Distribution Date, the associated Units) is registered
as the absolute owner thereof and of the Rights evidenced thereby (notwithstanding any
notations of ownership or writing on the Right Certificates or the associated Units
certificate or Ownership Statement made by anyone other than the Company or the Rights
Agent) for all purposes whatsoever, and neither the Company nor the Rights Agent shall be
affected by any notice to the contrary.
Section 17.
Right Certificate Holder Not Deemed a Unitholder
. No holder, as such, of any Right Certificate shall be entitled to vote, receive dividends
or be deemed for any purpose the holder of the Preferred Units or any other securities of the
Company which may at any time be issuable on the exercise of the Rights represented thereby, nor
shall anything contained herein or in any Right Certificate be construed to confer upon the holder
of any Right Certificate, as such, any of the rights of a unitholder of the Company or any right to
vote for the election of directors or upon any matter submitted to unitholders at any meeting
thereof, or to give or withhold consent to any corporate action, or to receive notice of meetings
or other actions affecting unitholders (except as provided in Section 25 hereof), or to receive
distributions or subscription rights, or otherwise, until the Right or Rights evidenced by such
Right Certificate shall have been exercised in accordance with the provisions hereof.
Section 18.
Concerning the Rights Agent
. The Company agrees to pay to the Rights
Agent reasonable compensation for all services rendered by it hereunder and, from time to time, on
demand of the Rights Agent, its reasonable expenses and counsel fees and other disbursements
incurred in the administration and execution of this Agreement and the exercise and performance of
its duties hereunder. The Company also agrees to indemnify the Rights Agent for, and to hold it
harmless against, any loss, liability, or expense, incurred without gross negligence or willful
misconduct on the part of the Rights Agent, for anything done or omitted by the Rights Agent in
connection with the acceptance and administration of this Agreement, including the costs and
expenses of defending against any claim of liability in the premises. The indemnification provided
for hereunder shall survive the expiration of the Rights and the
-18-
termination of this Agreement. The costs and expenses of enforcing this right of indemnification shall also be paid by the
Company.
The Rights Agent may conclusively rely upon and shall be protected and shall incur no
liability for, or in respect of any action taken, suffered or omitted by it in connection with, its
administration of this Agreement in reliance upon any Right Certificate or certificate for the
Preferred Units or Units or for other securities of the Company, instrument of assignment or
transfer, power of attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document believed by it to be genuine and to be signed,
executed and, where necessary, verified or acknowledged, by the proper Person or Persons, or
otherwise upon the advice of counsel as set forth in Section 20 hereof.
Section 19.
Merger or Consolidation or Change of Name of Rights Agent
. Any
corporation into which the Rights Agent or any successor Rights Agent may be merged or with which
it may be consolidated, or any corporation resulting from any merger or consolidation to which the
Rights Agent or any successor Rights Agent shall be a party, or any corporation succeeding to the
unit transfer or corporate trust powers of the Rights Agent or any successor Rights Agent, shall be
the successor to the Rights Agent under this Agreement without the execution or filing of any paper
or any further act on the part of any of the parties hereto;
provided
, that such corporation would
be eligible for appointment as a successor Rights Agent under the provisions of Section 21 hereof.
In case at the time such successor Rights Agent shall succeed to the agency created by this
Agreement, any of the Right Certificates shall have been countersigned but not delivered,
any such successor Rights Agent may adopt the countersignature of the predecessor Rights Agent
and deliver such Right Certificates so countersigned; and in case at that time any of the Right
Certificates shall not have been countersigned, any successor Rights Agent may countersign such
Right Certificates either in the name of the predecessor Rights Agent or in the name of the
successor Rights Agent; and in all such cases such Right Certificates shall have the full force
provided in the Right Certificates and in this Agreement. In case at any time the name of the
Rights Agent shall be changed and at such time any of the Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the countersignature under its prior
name and deliver Right Certificates so countersigned; and in case at that time any of the Right
Certificates shall not have been countersigned, the Rights Agent may countersign such Right
Certificates either in its prior name or in its changed name; and in all such cases such Right
Certificates shall have the full force provided in the Right Certificates and in this Agreement.
Section 20.
Duties of Rights Agent
. The Rights Agent undertakes the duties and
obligations imposed by this Agreement upon the following terms and conditions, and no implied
duties or obligations shall be read into this Agreement against the Rights Agent, by all of which
the Company and the holders of Right Certificates, by their acceptance thereof, shall be bound:
(a) Before the Rights Agent acts or refrains from acting, it may consult with legal
counsel (who may be legal counsel for the Company), and the opinion of such counsel shall
be full and complete authorization and protection to the Rights Agent as to any action
taken or omitted by it in good faith and in accordance with such opinion.
-19-
(b) Whenever in the performance of its duties under this Agreement the Rights
Agent shall deem it necessary or desirable that any fact or matter be proved or established
by the Company prior to taking or suffering any action hereunder, such fact or matter
(unless other evidence in respect thereof be herein specifically prescribed) may be deemed
to be conclusively proved and established by a certificate signed by any one of the
Chairman of the Board, the Chief Executive Officer, the President, any Vice President, the
Treasurer or the Secretary of the Company and delivered to the Rights Agent; and such
certificate shall be full authorization to the Rights Agent for any action taken or
suffered in good faith by it under the provisions of this Agreement in reliance upon such
certificate.
(c) The Rights Agent shall be liable hereunder to the Company and any other Person
only for its own gross negligence or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of the statements of
fact or recitals contained in this Agreement or in the Right Certificates (except its
countersignature thereof) or be required to verify the same, but all such statements and
recitals are and shall be deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect of the validity
of this Agreement or the execution and delivery hereof (except the due execution hereof by
the Rights Agent) or in respect of the validity or execution of any Right Certificate
(except its countersignature thereof); nor shall it be responsible for any breach by the
Company of any covenant or condition contained in this Agreement or in any Right
Certificate; nor shall it be responsible for any change in the exercisability of the Rights
(including the Rights becoming void pursuant to Section 11(a)(ii) hereof) or any adjustment
in the terms of the Rights (including the manner, method or amount thereof) provided for in
Section 3, 11, 13, 23 or 24, or the ascertaining of the existence of facts that would
require any such change or adjustment (except with respect to the exercise of Rights
evidenced by Right Certificates after actual notice that such change or adjustment is
required); nor shall it by any act hereunder be deemed to make any representation or
warranty as to the authorization or reservation of any Preferred Units to be issued
pursuant to this Agreement or any Right Certificate or as to whether any Preferred Units
will, when issued, be validly authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and deliver or cause
to be performed, executed, acknowledged and delivered all such further and other acts,
instruments and assurances as may reasonably be required by the Rights Agent for the
carrying out or performing by the Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept instructions with
respect to the performance of its duties hereunder from any one of the Chairman of the
Board, the Chief Executive Officer, the President, any Vice President, the Secretary or the
Treasurer of the Company, and to apply to such officers for advice or instructions
-20-
in connection with its duties, and it shall not be liable for any action taken or
suffered by it in good faith in accordance with instructions of any such officer or for any
delay in acting while waiting for those instructions.
(h) The Rights Agent and any unitholder, director, officer or employee of the Rights
Agent may buy, sell or deal in any of the Rights or other securities of the Company or
become pecuniarily interested in any transaction in which the Company may be interested, or
contract with or lend money to the Company or otherwise act as fully and freely as though
it were not Rights Agent under this Agreement. Nothing herein shall preclude the Rights
Agent from acting in any other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or powers hereby
vested in it or perform any duty hereunder either itself or by or through its attorneys or
agents, and the Rights Agent shall not be answerable or accountable for any act, default,
neglect or misconduct of any such attorneys or agents or for any loss to the Company
resulting from any such act, default, neglect or misconduct.
(j) No provision of this Agreement shall require the Rights Agent to expend or risk
its own funds or otherwise incur any financial liability in the performance of any of its
duties hereunder or in the exercise of its rights if there shall be reasonable grounds for
believing that repayment of such funds or adequate indemnification against such risk or
liability is not reasonably assured to it.
(k) The Rights Agent shall not be required to take notice or be deemed to have notice
of any fact, event or determination (including, without limitation, any dates or events
defined in this Agreement or the designation of any person as an Acquiring Person,
Affiliate or Associate) under this Agreement unless and until the Rights Agent shall be
specifically notified in writing by the Company of such fact, event or determination.
Section 21.
Change of Rights Agent
. The Rights Agent or any successor Rights Agent may resign and
be discharged from its duties under this Agreement upon 30 days notice in writing mailed to the
Company by registered or certified mail and to each transfer agent of the Units or Preferred Units
by registered or certified mail, and to the holders of the Right Certificates by first-class mail
at the cost and expense of the Company. In the event the transfer agency relationship in effect
between the Company and the Rights Agent terminates, the Rights Agent will be deemed to resign
automatically on the effective date of such termination; and any required notice will be sent by
the Company. The Company may remove the Rights Agent or any successor Rights Agent upon 30 days
notice in writing, mailed to the Rights Agent or successor Rights Agent, as the case may be, and to
each transfer agent of the Units or Preferred Units by registered or certified mail, and to the
holders of the Right Certificates by first-class mail. If the Rights Agent shall resign or be
removed or shall otherwise become incapable of acting, the Company shall appoint a successor to the
Rights Agent. If the Company shall fail to make such appointment within a period of 30 days after
giving notice of such removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder of a Right Certificate
(who shall, with such notice, submit his
-21-
Right Certificate for inspection by the Company), then the registered holder of any Right Certificate may apply to
any court of competent jurisdiction for the appointment of a new Rights Agent. Any successor
Rights Agent, whether appointed by the Company or by such a court, shall be (a) a corporation,
limited liability company or trust company (or similar form of entity under the laws of any state
of the United States or a foreign jurisdiction) authorized to conduct business under the laws of
the United States or any state of the United States, which is authorized under such laws to
exercise corporate trust or unitholder services powers and is subject to supervision or examination
by federal or state authority and which has at the time of its appointment as Rights Agent a
combined capital and surplus of at least $50,000,000 or (b) an Affiliate controlled by an entity
described in clause (a) of this sentence. After appointment, the successor Rights Agent shall be
vested with the same powers, rights, duties and responsibilities as if it had been originally named
as Rights Agent without further act or deed; but the predecessor Rights Agent shall deliver and
transfer to the successor Rights Agent any property at the time held by it hereunder, and execute
and deliver any further assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment the Company shall file notice thereof in writing
with the predecessor Rights Agent and each transfer agent of the Units or Preferred Units, and mail
a notice thereof in writing to the registered holders of the Right Certificates. Failure to give
any notice provided for in this Section 21, however, or any defect therein, shall not affect the
legality or validity of the resignation or removal of the Rights Agent or the appointment of the
successor Rights Agent, as the case may be.
Section 22.
Issuance of New Right Certificates
. Notwithstanding any of the provisions of this
Agreement or of the Rights to the contrary, the Company may, at its option, issue new Right
Certificates evidencing Rights in such form as may be approved by its Board of Directors to reflect
any adjustment or change in the Purchase Price and the number or kind or class of units or other
securities or property purchasable under the Right Certificates made in accordance with the
provisions of this Agreement.
Section 23.
Redemption
. (a) The Board of Directors of the Company may, at its option, at any
time prior to such time as any Person first becomes an Acquiring Person, redeem all but not less
than all the then outstanding Rights at a redemption price of $.001 per Right, appropriately
adjusted to reflect any unit split, unit distribution or similar transaction occurring after the
date hereof (such redemption price being hereinafter referred to as the
Redemption
Price
). The redemption of the Rights by the Board of Directors may be made effective at such
time, on such basis and with such conditions as the Board of Directors in its sole discretion may
establish. The Company may, at its option, pay the Redemption Price in cash, Units (based on the
current market price of the Units at the time of redemption) or any other form of consideration
deemed appropriate by the Board of Directors.
(b) Immediately upon the action of the Board of Directors of the Company ordering the
redemption of the Rights pursuant to paragraph (a) of this Section 23, and without any
further action and without any notice, the right to exercise the Rights will terminate and
the only right thereafter of the holders of Rights shall be to receive the Redemption
Price. The Company shall promptly give public notice of any such redemption;
provided
,
however
, that the failure to give, or any defect in, any such notice shall not affect the
validity of such redemption. Within 10 days after such action of the
-22-
Board of Directors
ordering the redemption of the Rights, the Company shall mail a
notice of redemption to all the holders of the then outstanding Rights at their last
addresses as they appear upon the registry books of the Rights Agent or, prior to the
Distribution Date, on the registry books of the transfer agent for the Units. Any notice
which is mailed in the manner herein provided shall be deemed given, whether or not the
holder receives the notice. Each such notice of redemption will state the method by which
the payment of the Redemption Price will be made. Neither the Company nor any of its
Affiliates or Associates may redeem, acquire or purchase for value any Rights at any time
in any manner other than that specifically set forth in this Section 23 or in Section 24
hereof, and other than in connection with the purchase of Units prior to the Distribution
Date.
Section 24.
Exchange
. (a) The Board of Directors of the Company may, at its option, at any time
after any Person first becomes an Acquiring Person, exchange all or part of the then outstanding
and exercisable Rights (which shall not include Rights that have become void pursuant to the
provisions of Section 11(a)(ii) hereof) for Units at an exchange ratio of one Unit per Right,
appropriately adjusted to reflect any unit split, unit dividend or similar transaction occurring
after the date hereof (such exchange ratio being hereinafter referred to as the
Exchange
Ratio
). Notwithstanding the foregoing, the Board of Directors shall not be empowered to
effect such exchange at any time after any Person (other than the Company, any Subsidiary of the
Company, any employee benefit plan of the Company or any such Subsidiary, or any entity holding
Units for or pursuant to the terms of any such plan), together with all Affiliates and Associates
of such Person, becomes the Beneficial Owner of 50% or more of the Units then outstanding.
(b) Immediately upon the action of the Board of Directors of the Company ordering the exchange
of any Rights pursuant to paragraph (a) of this Section 24 and without any further action and
without any notice, the right to exercise such Rights shall terminate and the only right thereafter
of a holder of such Rights shall be to receive that number of Units equal to the number of such
Rights held by such holder multiplied by the Exchange Ratio. The Company shall promptly give public
notice of any such exchange;
provided
,
however
, that the failure to give, or any defect in, such
notice shall not affect the validity of such exchange. The Company promptly shall mail a notice of
any such exchange to all of the holders of such Rights at their last addresses as they appear upon
the registry books of the Rights Agent. Any notice which is mailed in the manner herein provided
shall be deemed given, whether or not the holder receives the notice. Each such notice of exchange
will state the method by which the exchange of the Units for Rights will be effected and, in the
event of any partial exchange, the number of Rights which will be exchanged. Any partial exchange
shall be effected pro rata based on the number of Rights (other than Rights which have become void
pursuant to the provisions of Section 11(a)(ii) hereof) held by each holder of Rights.
(c) The Company shall not be required to issue fractions of Units or to distribute
certificates which evidence fractional Units. In lieu of such fractional Units, the Company shall
pay to the registered holders of the Right Certificates with regard to which such fractional Units
would otherwise be issuable an amount in cash equal to the same fraction of the current market
value of a whole Unit. For the purposes of this paragraph (c), the current market value of a whole
Unit shall be the closing price of a Unit (as determined pursuant to the second sentence of
-23-
Section 11(d)(i) hereof) for the Trading Day immediately prior to the date of exchange pursuant to this
Section 24.
Section 25.
Notice of Certain Events
. (a) In case the Company shall propose at any time after
the earlier of the Distribution Date or the Units Acquisition Date (i) to pay any distribution
payable in Company Securities to the holders of its Preferred Units or to make any other
distribution to the holders of its Preferred Units (other than a regular quarterly cash
distribution, if any), (ii) to offer to the holders of its Preferred Units rights or warrants to
subscribe for or to purchase any additional Preferred Units or Company Securities, (iii) to effect
any reclassification of its Preferred Units (other than a reclassification involving only the
subdivision of outstanding Preferred Units), (iv) to effect any consolidation or merger into or
with, or to effect any sale or other transfer (or to permit one or more of its Subsidiaries to
effect any sale or other transfer), in one or more transactions, of 50% or more of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to, any other Person, (v) to
effect the liquidation, dissolution or winding up of the Company, or (vi) to declare or pay any
distribution on the Units payable in Units or to effect a subdivision, combination or consolidation
of the Units (by reclassification or otherwise than by payment of distributions in Units), then, in
each such case, the Company shall give to each holder of a Right Certificate, in accordance with
Section 26 hereof, a notice of such proposed action, which shall specify the record date for the
purposes of such unit distribution, or distribution of rights, warrants or other Company
Securities, or the date on which such reclassification, consolidation, merger, sale, transfer,
liquidation, dissolution, or winding up is to take place and the date of participation therein by
the holders of the Units and/or Preferred Units, if any such date is to be fixed, and such notice
shall be so given in the case of any action covered by clause (i) or (ii) above at least 10 days
prior to the record date for determining holders of the Preferred Units for purposes of such
action, and in the case of any such other action, at least 10 days prior to the date of the taking
of such proposed action or the date of participation therein by the holders of the Units and/or
Preferred Units, whichever shall be the earlier.
(b) In case any event set forth in Section 11(a)(ii) or Section 13 shall occur, then
the Company shall as soon as practicable thereafter give to each holder of a Right
Certificate (or if occurring before the Distribution Date, the holders of Units), in
accordance with Section 26 hereof, a notice of the occurrence of such event, which notice
shall describe such event and the consequences of such event to holders of Rights under
Section 11(a)(ii) and Section 13 hereof.
Section 26.
Notices
. Notices or demands authorized by this Agreement to be given or made by the
Rights Agent or by the holder of any Right Certificate to or on the Company shall be sufficiently
given or made if sent by first-class mail, postage prepaid, addressed (until another address is
filed in writing with the Rights Agent) as follows:
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Valero GP Holdings, LLC
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One Valero Way
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San Antonio, Texas 78249
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Attention:
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Bradley C. Barron
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Vice President General Counsel and Secretary
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-24-
Subject to the provisions of Section 21 hereof, any notice or demand authorized by this Agreement
to be given or made by the Company or by the holder of any Right Certificate to or on the Rights
Agent shall be sent by registered or certified mail and shall be deemed given upon receipt and
addressed (until another address is filed in writing with the Company) as follows:
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Computershare Investor Services, LLC
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Two North LaSalle Street
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Chicago, Illinois 60602
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Attention:
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Keith Bradley
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Notices or demands authorized by this Agreement to be given or made by the Company or the Rights
Agent to the holder of any Right Certificate shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to such holder at the address of such holder as shown
on the registry books of the Company.
Section 27.
Supplements and Amendments
. Except as otherwise provided in this Section 27, for so
long as the Rights are then redeemable, the Company may in its sole and absolute discretion, and
the Rights Agent shall if the Company so directs, supplement or amend any provision of this
Agreement in any respect without the approval of any holders of the Rights. At any time when the
Rights are no longer redeemable, except as otherwise provided in this Section 27, the Company may,
and the Rights Agent shall, if the Company so directs, supplement or amend this Agreement without
the approval of any holders of Rights Certificates in order to (i) cure any ambiguity, (ii) correct
or supplement any provision contained herein which may be defective or inconsistent with any other
provisions herein or as required to comply with any change in applicable law, (iii) shorten or
lengthen any time period hereunder, or (iv) change or supplement the provisions hereunder in any
manner which the Company may deem necessary or desirable;
provided
that no such supplement or
amendment shall adversely affect the interests of the holders of Rights as such (other than an
Acquiring Person or an Affiliate or Associate of an Acquiring Person), and no such amendment may
cause the rights again to become redeemable or cause the Agreement again to become amendable other
than in accordance with this sentence. Without limiting the foregoing, the Company may at any time
prior to such time as any Person becomes an Acquiring Person amend this Agreement to lower the
thresholds set forth in Sections 1(a) and 3(a) to not less than the greater of (i) the sum of .001%
and the largest percentage of the outstanding Units then known by the Company to be beneficially
owned by any Person (other than the Company, any Subsidiary of the Company, any Initial Member, any
Affiliate or Associate of any Initial Member, any employee benefit plan of the Company or any
Subsidiary of the Company, or any entity holding Units for or pursuant to the terms of any such
plan) and (ii) 10%.
Section 28.
Successors
. All the covenants and provisions of this Agreement by or for the benefit
of the Company or the Rights Agent shall bind and inure to the benefit of their respective
successors and assigns hereunder.
Section 29.
Benefits of this Agreement
. Nothing in this Agreement shall be construed to give to
any Person other than the Company, the Rights Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, the Units) any legal or equitable right, remedy
or claim under this Agreement; but this Agreement shall be for the sole and exclusive
-25-
benefit of the Company, the Rights Agent and the registered holders of the Right Certificates (and, prior to
the Distribution Date, the Units).
Section 30.
Severability
. If any term, provision, covenant or restriction of this Agreement is
held by a court of competent jurisdiction or other authority to be invalid, void or unenforceable,
the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain
in full force and effect and shall in no way be affected, impaired or invalidated.
Section 31.
Governing Law
. This Agreement and each Right Certificate issued hereunder shall be
deemed to be a contract made under the laws of the State of Delaware and for all purposes shall be
governed by and construed in accordance with the laws of such State applicable to contracts to be
made and performed entirely within such State.
Section 32.
Counterparts
. This Agreement may be executed in any number of counterparts and each
of such counterparts shall for all purposes be deemed to be an original, and all such counterparts
shall together constitute but one and the same instrument.
Section 33.
Descriptive Headings
. Descriptive headings of the several Sections of this Agreement
are inserted for convenience only and shall not control or affect the meaning or construction of
any of the provisions hereof.
Section 34.
Force Majeure
. Notwithstanding anything to the contrary contained herein, Rights
Agent shall not be liable for any delays or failures in performance resulting from acts beyond its
reasonable control including, without limitation, acts of God, terrorist acts, shortage of supply,
breakdowns or malfunctions, interruptions or malfunction of computer facilities, or loss of data
due to power failures or mechanical difficulties with information storage or retrieval systems,
labor difficulties, war, or civil unrest.
-26-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and
attested, all as of the day and year first above written.
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VALERO GP HOLDINGS, LLC
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By:
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/s/ Bradley C. Barron
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Name:
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Bradley C. Barron
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Title:
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Vice PresidentGeneral Counsel and Secretary
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COMPUTERSHARE INVESTOR SERVICES,
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LLC
, as Rights Agent
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By:
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/s/ Dennis V. Moccia
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Name:
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Dennis V. Moccia
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Title:
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Managing Director
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-27-
Exhibit A
FORM
of
INTEREST DESIGNATION
of
JUNIOR PARTICIPATING PREFERRED UNITS, SERIES I
of
VALERO GP HOLDINGS, LLC
Valero GP Holdings, LLC, a Delaware limited liability company (hereinafter called the
Company
), hereby certifies that the following resolution was adopted by the Board of
Directors of the Company by unanimous written consent dated as of July 19, 2006:
RESOLVED, that pursuant to the authority granted to and vested in the Board of Directors of
this Company (hereinafter called the
Board of Directors
or the
Board
) in
accordance with the provisions of the Second Amended and Restated Limited Liability Company
Agreement of the Company (the
LLC Agreement
), the Board of Directors hereby creates a
series of Preferred Units (the
Preferred Units
), of the Company and hereby states the
designation and fixes the relative rights, preferences, and limitations thereof as set forth below
in this Interest Designation. Unless otherwise defined herein, capitalized terms shall have the
meanings ascribed thereto in the LLC Agreement.
Junior Participating Preferred Units, Series I:
Section 1.
Designation and Amount
. The units of such series shall be designated as
Junior Participating Preferred Units, Series I (the
Series I Preferred Units
).
Section 2.
Distributions
. Subject
to the rights of the holders of any units of any series of Preferred Units (or any
similar units) ranking prior and superior to the Series I Preferred Units with respect to
distributions and pursuant to Section 6.3 of the LLC Agreement, the holders of units of Series I
Preferred Units shall be entitled to share, on a pro rata basis, with the holders of Units representing limited liability company
interests (the
Units
) of the Company in any distributions of
Available Cash made by the Company. Such distributions shall be made to the
Record Holders of such Series I Preferred Units in accordance with their respective Percentage
Interests as of the Record Date selected by the Board of Directors. With respect to the distribution
for the Quarter during which the Series I Preferred Units are first issued, the amount of Available
Cash distributable to the holders of the Series I Preferred Units shall equal the amount of the Available
Cash otherwise distributable to the holders of such Series I Preferred Units with respect to such Quarter multiplied by a fraction of which the numerator is the number of
days in the period commencing on the date the Series I Preferred Units become issuable and ending
on the last day of such Quarter and of which the denominator is the total number of days in such
Quarter.
Exhibit A - 1
Section 3.
Voting Rights
. The holders of units of Series I Preferred Units shall have
the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth, each unit of Series I
Preferred Units shall entitle the holder thereof to 100 votes on all matters submitted to a vote of
the Unitholders of the Company. In the event the Company shall at any time declare or pay any
distribution on the Units (other than the Series I Preferred Units) payable in Units, or effect a
subdivision or combination or consolidation of the outstanding Units (other than the Series I
Preferred Units) (by reclassification or otherwise than by payment of a distribution in Units) into
a greater or lesser number of Units, then in each such case the number of votes per unit to which
holders of Series I Preferred Units were entitled immediately prior to such event shall be adjusted
by multiplying such number by a fraction, the numerator of which is the number of Units (other than
the Series I Preferred Units) outstanding immediately after such event and the denominator of which
is the number of Units (other than the Series I Preferred Units) that were outstanding immediately
prior to such event.
(B) Except as otherwise provided herein, in any other Interest Designation creating a series
of Preferred Units or any similar Company Security, or by law, the holders of units of Series I
Preferred Units and the holders of Units (other than the Series I Preferred Units) of the Company
having general voting rights shall vote together as one class on all matters submitted to a vote of
Unitholders of the Company.
(C) Except as set forth herein, or as otherwise provided by law, holders of Series I
Preferred Units shall have no special voting rights and their consent shall not be required (except
to the extent they are entitled to vote with holders of Units as set forth herein) for taking any
action on behalf of the Company.
Section 4.
Certain Restrictions
.
(A) Whenever quarterly distributions or other distributions payable on the Series I Preferred
Units as provided in Section 2 are in arrears, thereafter and until all accrued and unpaid
distributions, whether or not declared, on units of Series I Preferred Units outstanding shall have
been paid in full, the Company shall not:
(i) declare or pay distributions, or make any other dividends, on any Company Securities
ranking junior (either as to distributions or upon liquidation, dissolution or winding up) to the
Series I Preferred Units;
(ii) declare or pay distributions on any Company Securities ranking on a parity (either as to
distributions or upon liquidation, dissolution or winding up) with the Series I Preferred Units,
except distributions paid ratably on the Series I Preferred Units and all such parity Company
Securities on which distributions are payable or in arrears in proportion to the total amounts to
which the holders of all such Company Securities are then entitled;
(iii) redeem or purchase or otherwise acquire for consideration Company Securities ranking
junior (either as to distributions or upon liquidation, dissolution or winding up) to the Series I
Preferred Units,
provided
that the Company may at any time redeem, purchase or otherwise acquire
Company Securities of any such junior Company Securities in exchange for
Exhibit A - 2
Company Securities ranking junior (either as to distributions or upon dissolution, liquidation
or winding up) to the Series I Preferred Units; or
(iv) redeem or purchase or otherwise acquire for consideration any units of Series I Preferred
Units, or any Company Securities ranking on a parity with the Series I Preferred Units, except in
accordance with a purchase offer made in writing or by publication (as determined by the Board of
Directors) to all holders of such Company Securities upon such terms as the Board of Directors,
after consideration of the respective annual distribution rates and other relative rights and
preferences of the respective series and classes, shall determine in good faith will result in fair
and equitable treatment among the respective series or classes.
(B) The Company shall not permit any subsidiary of the Company to purchase or otherwise
acquire for consideration any Company Securities unless the Company could, under paragraph (A) of
this Section 4, purchase or otherwise acquire such units at such time and in such manner.
Section 5.
Reacquired Units
. Any units of Series I Preferred Units purchased or
otherwise acquired by the Company in any manner whatsoever shall be retired and cancelled promptly
after the acquisition thereof.
Section 6.
Liquidation, Dissolution or Winding Up
. Upon any liquidation, dissolution
or winding up of the Company, no distribution shall be made (1) to the holders of Company
Securities ranking junior (either as to distributions or upon liquidation, dissolution or winding
up) to the Series I Preferred Units unless, prior thereto, the holders of the Series I Preferred
Units shall have received, subject to the provisions of the LLC
Agreement, $100 per unit, plus an amount equal to accrued and unpaid distributions
thereon, whether or not declared, to the date of such payment,
provided
that the holders of units
of the Series I Preferred Units shall be entitled to receive an aggregate amount per Series I
Preferred Unit, subject to the provision for adjustment hereinafter set forth, equal to 100 times
the aggregate amount to be distributed per unit to holders of other Company Securities, or (2) to
the holders of Company Securities ranking on a parity (either as to distributions or upon
liquidation, dissolution or winding up) with the Series I Preferred Units, except distributions
made ratably on the Series I Preferred Units and all such parity Company Securities in proportion
to the total amounts to which the holders of all such Company Securities are entitled upon such
liquidation, dissolution or winding up. In the event the Company shall at any time declare or pay
any distribution on the Units (other than the Series I Preferred Units) payable in Units, or effect
a subdivision or combination or consolidation of the outstanding Units (other than the Series I
Preferred Units) (by reclassification or otherwise than by payment of a dividend in Units) into a
greater or lesser number of Units, then in each such case the aggregate amount to which holders of
units of the Series I Preferred Units were entitled immediately prior to such event under the
proviso in clause (1) of the preceding sentence shall be adjusted by multiplying such amount by a
fraction the numerator of which is the number of Units (other than the Series I Preferred Units
outstanding immediately after such event and the denominator of which is the number of Units (other
than the Series I Preferred Units) that were outstanding immediately prior to such event.
Section 7.
Consolidation, Merger, etc.
In case the Company shall enter into any
consolidation, merger, combination or other transaction in which the Units (other than the Series
Exhibit A - 3
I Preferred Units) are exchanged for or changed into other units or securities, cash and/or
any other property, then in any such case each Series I Preferred Unit shall at the same time be
similarly exchanged or changed into an amount per unit, subject to the provision for adjustment
hereinafter set forth, equal to 100 times the aggregate amount of units, securities, cash and/or
any other property (payable in kind), as the case may be, into which or for which each Unit (other
than the Series I Preferred Units) is changed or exchanged. In the event the Company shall at any
time declare or pay any distribution on the Units (other than the Series I Preferred Units) payable
in Units, or effect a subdivision or combination or consolidation of the outstanding Units (other
than the Series I Preferred Units) (by reclassification or otherwise than by payment of a
distribution in Units) into a greater or lesser number of Units, then in each such case the amount
set forth in the preceding sentence with respect to the exchange or change of units of Series I
Preferred Units shall be adjusted by multiplying such amount by a fraction, the numerator of which
is the number of Units (other than the Series I Preferred Units) outstanding immediately after such
event and the denominator of which is the number of Units (other than the Series I Preferred Units)
that were outstanding immediately prior to such event.
Section 8.
No Redemption
. The units of Series I Preferred Units shall not be
redeemable.
Section 9.
Rank
. The Series I Preferred Units shall rank, with respect to the payment
of distributions and the dividends of assets, junior to all series of any other class of the
Companys Preferred Units.
Section 10.
Amendment
. The LLC Agreement of the Company shall not be amended in any
manner which would materially alter or change the powers, preferences or special rights of the
Series I Preferred Units so as to affect them adversely without the affirmative vote of the holders
of at least two-thirds of the outstanding units of Series I Preferred Units, voting together as a
single class.
IN WITNESS WHEREOF, this Interest Designation is executed on behalf of the Company by its
Chairman of the Board and attested by its Secretary this 19th day of July, 2006.
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Chairman of the Board
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Attest:
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Exhibit A - 4
Exhibit B
Form of Right Certificate
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Certificate No. R-
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Rights
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NOT EXERCISABLE AFTER JUNE 30, 2016 OR EARLIER IF REDEMPTION OR EXCHANGE OCCURS.
THE RIGHTS ARE SUBJECT TO REDEMPTION AT $.001 PER RIGHT AND TO EXCHANGE ON THE TERMS
SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE
RIGHTS AGREEMENT, RIGHTS OWNED BY OR TRANSFERRED TO ANY PERSON WHO BECOMES AN
ACQUIRING PERSON (AS DEFINED IN THE RIGHTS AGREEMENT) AND CERTAIN TRANSFEREES
THEREOF WILL BECOME NULL AND VOID AND WILL NO LONGER BE TRANSFERABLE.
Right Certificate
Valero GP Holdings, LLC
This certifies that
, or registered assigns, is the registered owner of
the number of Rights set forth above, each of which entitles the owner thereof, subject to the
terms, provisions and conditions of the Rights Agreement, dated as of July 19, 2006 as the same may
be amended from time to time (the
Rights Agreement
), between Valero GP Holdings, LLC a
Delaware limited liability company (the
Company
), and Computershare Investor Services,
LLC (the
Rights Agent
), to purchase from the Company at any time after the Distribution
Date (as such term is defined in the Rights Agreement) and prior to 5:00 P.M., Chicago, Illinois
time, on June 30, 2016 at the office or agency of the Rights Agent designated for such purpose, or
at the office of its successor as Rights Agent, one one-hundredth of a fully paid non-assessable
unit of Junior Participating Preferred Units, Series I, (the
Preferred Units
), of the
Company, at a purchase price of $
per one one-hundredth of a Preferred Unit (the
Purchase Price
), upon presentation and surrender of this Right Certificate with the Form
of Election to Purchase duly executed. The number of Rights evidenced by this Right Certificate
(and the number of one one-hundredths of a Preferred Unit which may be purchased upon exercise
hereof) set forth above, and the Purchase Price set forth above, are the number and Purchase Price
as of
, 20
, based on the Preferred Units as constituted at such date. As provided in
the Rights Agreement, the Purchase Price and the number of one one-hundredths of a Preferred Unit
which may be purchased upon the exercise of the Rights evidenced by this Right Certificate are
subject to modification and adjustment upon the happening of certain events.
This Right Certificate is subject to all of the terms, provisions and conditions of the Rights
Agreement, which terms, provisions and conditions are hereby incorporated herein by reference and
made a part hereof and to which Rights Agreement reference is hereby made for a full description of
the rights, limitations of rights, obligations, duties and immunities hereunder of the Rights
Agent, the Company and the holders of the Right Certificates. Copies of the Rights
Exhibit B - 1
Agreement are on file at the principal executive offices of the Company and the
above-mentioned office or agency of the Rights Agent.
This Right Certificate, with or without other Right Certificates, upon surrender at the office
or agency of the Rights Agent designated for such purpose, may be exchanged for another Right
Certificate or Right Certificates of like tenor and date evidencing Rights entitling the holder to
purchase a like aggregate number of Preferred Units as the Rights evidenced by the Right
Certificate or Right Certificates surrendered shall have entitled such holder to purchase. If this
Right Certificate shall be exercised in part, the holder shall be entitled to receive upon
surrender hereof another Right Certificate or Right Certificates for the number of whole Rights not
exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced by this Certificate
(i) may be redeemed by the Company at a redemption price of $.001 per Right or (ii) may be
exchanged in whole or in part for Preferred Units or Units issuable by the Company.
No fractional Preferred Units will be issued upon the exercise of any Right or Rights
evidenced hereby (other than fractions which are integral multiples of one one-hundredth of a
Preferred Unit, which may, at the election of the Company, be evidenced by depositary receipts),
but in lieu thereof a cash payment will be made, as provided in the Rights Agreement.
No holder of this Right Certificate, as such, shall be entitled to vote or receive
distributions or be deemed for any purpose the holder of the Preferred Units or of any other
securities of the Company which may at any time be issuable on the exercise hereof, nor shall
anything contained in the Rights Agreement or herein be construed to confer upon the holder hereof,
as such, any of the rights of a unitholder of the Company or any right to vote for the election of
directors or upon any matter submitted to unitholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings or other actions
affecting unitholders (except as provided in the Rights Agreement), or to receive distributions or
subscription rights, or otherwise, until the Right or Rights evidenced by this Right Certificate
shall have been exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose until it shall have
been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company. Dated as of
, 20
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ATTEST:
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VALERO GP HOLDINGS, LLC
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By:
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Countersigned:
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COMPUTERSHARE INVESTOR SERVICES, LLC
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Exhibit B - 2
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate.)
FOR VALUE RECEIVED
hereby sells, assigns and transfers unto
(Please print name and address of transferee) the Rights evidenced by
this Right Certificate, together with all right, title and interest therein, and does hereby
irrevocably constitute and appoint
Attorney, to transfer the within Rights
on the books of the within-named Company, with full power of substitution.
Dated:
, 20
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Signature Guaranteed:
Signatures must be guaranteed by an eligible guarantor institution (bank, stockbroker, savings
and loan association or credit union) with membership in an approved signature guarantee medallion
program pursuant to Rule 17Ad-15 promulgated under the Securities and Exchange Act of 1934, as
amended.
The undersigned hereby certifies that the Rights evidenced by this Right Certificate are not,
and, to the knowledge of the undersigned, never have been, beneficially owned by an Acquiring
Person or an Affiliate or Associate thereof (as defined in the Rights Agreement).
Exhibit B - 4
Form of Reverse Side of Right Certificate continued
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise
Rights represented by the Right Certificate.)
To: VALERO GP HOLDINGS, LLC
The undersigned hereby irrevocably elects to exercise Rights represented by this Right
Certificate to purchase the Preferred Units issuable upon the exercise of such Rights and requests
that certificates for such Preferred Units be issued in the name of:
Please insert social security
or other identifying number
(Please print name and address)
If such number of Rights shall not be all the Rights evidenced by this Right Certificate, a new
Right Certificate for the balance remaining of such Rights shall be registered in the name of and
delivered to:
Please insert social security
or other identifying number
(Please print name and address)
Dated:
, 20
.
Signature Guaranteed:
Signatures must be guaranteed by an eligible guarantor institution (bank, stockbroker, savings
and loan association or credit union) with membership in an approved signature guarantee medallion
program pursuant to Rule 17Ad-15 promulgated under the Securities and Exchange Act of 1934, as
amended.
Exhibit B - 5
Form of Reverse Side of Right Certificate continued
The undersigned hereby certifies that the Rights evidenced by this Right Certificate are not,
and, to the knowledge of the undersigned, never have been, beneficially owned by an Acquiring
Person or an Affiliate or Associate thereof (as defined in the Rights Agreement).
NOTICE
The signature in the Form of Assignment or Form of Election to Purchase, as the case may be,
must conform to the name as written upon the face of this Right Certificate in every particular,
without alteration or enlargement or any change whatsoever.
In the event the certification set forth above in the Form of Assignment or the Form of
Election to Purchase, as the case may be, is not completed, the Company and the Rights Agent will
deem the beneficial owner of the Rights evidenced by this Right Certificate to be an Acquiring
Person or an Affiliate or Associate thereof (as defined in the Rights Agreement) and such
Assignment or Election to Purchase will not be honored.
Exhibit B - 6
Exhibit C
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED UNITS
On July 19, 2006, the Board of Directors of Valero GP Holdings, LLC (the
Company
)
declared a distribution of one preferred unit purchase right (a
Right
) for each
outstanding unit representing limited liability company interests (the
Units
) of the
Company. The distribution is payable to unitholders of record as of the date of the close of
business on July 19, 2006. Each Right entitles the registered holder to purchase from the
Company one one-hundredth of a unit of Junior Participating Preferred Units, Series I (the
Preferred Units
), of the Company at a price of $100 per one one-hundredth of a Preferred
Unit (the
Purchase Price
), subject to adjustment. The description and terms of the Rights
are set forth in a Rights Agreement, as amended (the
Rights Agreement
), between the
Company and Computershare Investor Services, LLC, as Rights Agent (the
Rights Agent
).
Until the earlier to occur of (i) 10 days following a public announcement that a person or
group of affiliated or associated persons (with certain exceptions, an Acquiring Person) have
acquired beneficial ownership of 15% or more of the outstanding Units or (ii) 10 business days (or
such later date as may be determined by action of the Board of Directors prior to such time as any
person or group of affiliated persons becomes an Acquiring Person) following the commencement of,
or announcement of an intention to make, a tender offer or exchange offer the consummation of which
would result in the beneficial ownership by a person or group of 15% or more of the outstanding
Units (the earlier of such dates being called the
Distribution Date
), the Rights will be
evidenced by certificates for Units, or by a current ownership statement issued with respect to
uncertificated Units in lieu of such a certificate (an
Ownership Statement
), with a copy
of this Summary of Rights attached thereto.
The Rights Agreement provides that, until the Distribution Date (or earlier redemption or
expiration of the Rights), the Rights will be transferred with and only with the Units. Until the
Distribution Date (or earlier redemption or expiration of the Rights), new certificates or
Ownership Statements for Units issued after the Record Date upon transfer or new issuance of Units
will contain a notation incorporating the Rights Agreement by reference. Until the Distribution
Date (or earlier redemption or expiration of the Rights), the surrender for transfer of any
certificates for Units, or the transfer of any Units covered by an Ownership Statement, outstanding
as of the Record Date, even without such notation or a copy of this Summary of Rights being
attached thereto, will also constitute the transfer of the Rights associated with the Units
represented by such certificate or covered by such Ownership Statement. As soon as practicable
following the Distribution Date, separate certificates evidencing the Rights (
Right
Certificates
) will be mailed to holders of record of the Units as of the close of business on
the Distribution Date and such separate Right Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The Rights will expire on June 30,
2016 (the
Final Expiration Date
), unless the Final Expiration Date is extended or unless
the Rights are earlier redeemed or exchanged by the Company, in each case, as described below.
Exhibit C - 1
The Purchase Price payable, and the number of Preferred Units or other securities or property
issuable, upon exercise of the Rights are subject to adjustment from time to time to prevent
dilution (i) in the event of a distribution of Preferred Units on, or a subdivision, combination or
reclassification of, the Preferred Units, (ii) upon the grant to holders of the Preferred Units of
certain rights, options or warrants to subscribe for or purchase Preferred Units at a price, or
securities convertible into Preferred Units with a conversion price, less than the then-current
market price of the Preferred Units or (iii) upon the distribution to holders of the Preferred
Units of evidences of indebtedness or assets (excluding regular quarterly cash distributions, if
any, or distributions payable in Preferred Units) or of subscription rights or warrants (other than
those referred to above).
The number of outstanding Rights and the number of one one-hundredths of a Preferred Unit
issuable upon exercise of each Right are also subject to adjustment in the event of a split of the
Units or a distribution on the Units payable in Units or subdivisions, consolidations or
combinations of the Units occurring, in any such case, prior to the Distribution Date.
Preferred Units purchasable upon exercise of the Rights will not be redeemable. Each Preferred
Unit will be entitled to share in the distributions of available cash
made by the Company pro rata with the Units. In the event of
liquidation, the holders of the Preferred Units will be entitled,
subject to the provisions of the Second Amended and Restated Limited
Liability Company Agreement of the Company, to a minimum preferential
liquidation payment of $100 per unit but will be entitled to an aggregate payment of 100 times the
payment made per Unit. Each Preferred Unit will have 100 votes, voting together with the Units.
Finally, in the event of any merger, consolidation or other transaction in which Units are
exchanged, each Preferred Unit will be entitled to receive 100 times the amount received per Unit.
These rights are protected by customary antidilution provisions.
Because of the nature of the Preferred Units dividend, liquidation and voting rights, the
value of the one one-hundredth interest in a Preferred Unit purchasable upon exercise of each Right
should approximate the value of one Unit.
In the event that, after a person or group has become an Acquiring Person, the Company is
acquired in a merger or other business combination transaction or 50% or more of its consolidated
assets or earning power are sold after a person or group has become an Acquiring Person, proper
provision will be made so that each holder of a Right (other than Rights beneficially owned by an
Acquiring Person which will have become void) will thereafter have the right to receive, upon the
exercise thereof at the then current exercise price of the Right, that number of units or shares of
common stock, as the case may be, of the acquiring company which at the time of such transaction
will have a market value of two times the exercise price of the Right. In the event that any person
or group of affiliated or associated persons becomes an Acquiring Person, proper provision shall be
made so that each holder of a Right, other than Rights beneficially owned by the Acquiring Person
(which will thereafter be void), will thereafter have the right to receive upon exercise that
number of Units having a market value of two times the exercise price of the Right.
At any time after any person or group becomes an Acquiring Person and prior to the acquisition
by such person or group of 50% or more of the outstanding Units, the Board of Directors of the
Company may exchange the Rights (other than Rights owned by such person or group which will have
become void), in whole or in part, at an exchange ratio of one Unit, or one
Exhibit C - 2
one-hundredth of a Preferred Unit (or of a unit of a class or series of the Companys
preferred units having equivalent rights, preferences and privileges), per Right (subject to
adjustment).
With certain exceptions, no adjustment in the Purchase Price will be required until cumulative
adjustments require an adjustment of at least 1% in such Purchase Price. No fractional Preferred
Units will be issued (other than fractions which are integral multiples of one one-hundredth of a
Preferred Unit, which may, at the election of the Company, be evidenced by depositary receipts) and
in lieu thereof, an adjustment in cash will be made based on the market price of the Preferred
Units on the last trading day prior to the date of exercise.
At any time prior to the acquisition by a person or group of affiliated or associated persons
of beneficial ownership of 15% or more of the outstanding Units, the Board of Directors of the
Company may redeem the Rights in whole, but not in part, at a price of $0.01 per Right (the
Redemption Price
). The redemption of the Rights may be made effective at such time on
such basis with such conditions as the Board of Directors in its sole discretion may establish.
Immediately upon any redemption of the Rights, the right to exercise the Rights will terminate and
the only right of the holders of Rights will be to receive the Redemption Price.
The terms of the Rights may be amended by the Board of Directors of the Company without the
consent of the holders of the Rights, including an amendment to lower certain thresholds described
above to not less than the greater of (i) the sum of .001% and the largest percentage of the
outstanding Units then known to the Company to be beneficially owned by any person or group of
affiliated or associated persons and (ii) 10%, except that from and after such time as any person
or group of affiliated or associated persons becomes an Acquiring Person no such amendment may
adversely affect the interests of the holders of the Rights.
Until a Right is exercised, the holder thereof, as such, will have no rights as a unitholder
of the Company, including, without limitation, the right to vote or to receive distributions.
A copy of the Rights Agreement has been filed with the Securities and Exchange Commission as
Exhibit 4.01 to the Companys Form 8-K filed July 25, 2006. Copies of the Rights
Agreement and amendments thereto are available free of charge from the Company. This summary
description of the Rights does not purport to be complete and is qualified in its entirety by
reference to the Rights Agreement, as amended, which is hereby incorporated herein by reference.
Exhibit C - 3
Exhibit 10.01
VALERO GP HOLDINGS, LLC
LONG-TERM INCENTIVE PLAN
1. Purpose of the Plan.
The Valero GP Holdings, LLC Long-Term Incentive Plan (the
Plan
) is intended to
promote the interests of Valero GP Holdings, LLC, a Delaware limited liability company (the
Company
), by providing to employees, consultants, and directors of the Company and its
Affiliates incentive compensation awards for superior performance that are based on Units. The Plan
is also contemplated to enhance the ability of the Company and its Affiliates to attract and retain
the services of individuals who are essential for the growth and profitability of the Company and
to encourage them to devote their best efforts to advancing the business of the Company and its
subsidiaries.
2. Definitions.
As used in the Plan, the following terms shall have the meanings set forth below:
Affiliate
means, with respect to any Person, any other Person that directly or
indirectly through one or more intermediaries controls, is controlled by or is under common
control with, the Person in question. As used herein, the term control means the
possession, direct or indirect, 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. Notwithstanding the immediately preceding two sentences, to the
extent that Section 409A of the Code applies to Options or Unit Appreciation Rights granted
under the Plan, the term Affiliate means all Persons with whom the Company could be
considered a single employer under Section 414(b) or Section 414(c) of the Code substituting
50 percent in place of 80 percent in determining a controlled group of corporations
under Section 414(b) of the Code and in determining trades or businesses (whether or not
incorporated) that are under common control for purposes of Section 414(c) of the Code.
Award
means an Option, Performance Unit, Restricted Unit, Unit Grant, Phantom Unit or Unit Appreciation
Right granted under the Plan, and shall include tandem DERs granted with respect to an
Option, Phantom Unit or Unit Appreciation Right.
Award Agreement
means the written agreement by which an Award shall be evidenced.
Board
means the Board of Directors of the Company.
Change of Control
means the occurrence of any of the following events:
(i) the acquisition by any person, as such term is used in Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934, as amended (the
Exchange Act
), other than
the Company or an Affiliate of the Company, of beneficial ownership (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of securities of the Company
representing more than 35% of the combined voting power of the Companys then outstanding
securities entitled to vote generally in the election of directors; or
(ii) the consummation of a reorganization, merger, consolidation or other form of
business transaction or series of business transactions, in each case, with respect to which
more than 50% of the voting power of the outstanding equity interests in the Company cease
to be owned by the Persons who own such interests as of the effective date of the initial
offering of Units; or
(iii) the sale, lease or disposition (in one or a series of related transactions) by
the Company of all or substantially all of the Companys assets to any Person other than its
Affiliates; or
(iv) a change in the composition of the Board, as a result of which fewer than a
majority of the directors are Incumbent Directors.
Incumbent Directors
shall mean
directors who either (A) are directors of the Company as of the effective date of the
initial offering of Units, or (B) are elected, or nominated for election, thereafter to the
Board with the affirmative votes of at least a majority in interest of the members of the
Company at the time of such election or nomination, but Incumbent Director shall not
include an individual whose election or nomination is in connection with (i) an actual or
threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act) or an actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board or (ii) a plan or agreement to
replace a majority of the then Incumbent Directors; or
(v) the approval by the Board or the members of the Company of a complete or
substantially complete liquidation or dissolution of the Partnership.
Solely with respect to any Award that is subject to Section 409A of the Code and to the
extent that the definition of change of control under Section 409A applies to limited
liability companies, this definition is intended to comply with the definition of change of
control under Section 409A of the Code and, to the extent that the above definition does not
so comply, such definition shall be void and of no effect and, to the extent required to
ensure that this definition complies with the requirements of Section 409A of the Code, the
definition of such term set forth in regulations or other regulatory guidance issued under
Section 409A of the Code by the appropriate governmental authority is hereby incorporated by
reference into and shall form part of this Plan as fully as if set forth herein verbatim and
the Plan shall be operated in accordance with the above definition of Change of Control as
modified to the extent necessary to ensure that the above definition complies with the
definition prescribed in such regulations or other regulatory guidance insofar as the
definition relates to any Award that is subject to Section 409A of the Code.
Code
means the Internal Revenue Code of 1986, as amended.
Committee
means the Compensation Committee of the Board or such other committee of
the Board as may be appointed by the Board to administer the Plan.
Company Agreement
means the Amended and Restated Limited Liability Company Agreement
of Valero GP Holdings, LLC, as it may be subsequently amended or restated from time to time.
Consultant
means an individual, other than an Employee or a Director, providing bona
fide services to the Company or any of its Affiliates as a consultant or advisor, as
applicable, provided that (i) such individual is a natural person, (ii) such services are
not in connection with the offer or sale of securities in a capital-raising transaction and
do not directly or indirectly promote or maintain a market for any securities of the
Company, and (iii) the grant of an Award to such Person could not reasonably be expected to
result in adverse federal income tax consequences under Section 409A of the Code.
Covered Participants
means a Participant who is a covered employee as defined in Section
162(m)(3) of the Code, and the regulations promulgated thereunder, and any individual the Committee
determines should be treated like such a covered employee
DER
or
Distribution Equivalent Right
means a contingent right, granted in tandem
with a specific Option, Unit Appreciation Right or Phantom Unit, to receive an amount in
cash equal to the cash distributions made by the Company with respect to a Unit during the
period such tandem Award is outstanding.
Director
means a member of the Board who is not an Employee.
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Employee
means any employee of the Company or an Affiliate who performs services for
the Company and its Affiliates.
Exchange Act
means the Securities Exchange Act of 1934, as amended.
Fair Market Value
means the closing sales price of a Unit on the applicable date (or
if there is no trading in the Units on such date, on the next preceding date on which there
was trading) as reported in
The Wall Street Journal
(or other reporting service approved by
the Committee). In the event Units are not publicly traded at the time a determination of
fair market value is required to be made hereunder, the determination of fair market value
shall be made in good faith by the Committee.
Option
means an option to purchase Units granted under the Plan.
Participant
means any Employee, Consultant or Director granted an Award under the
Plan.
Performance Award
means an Award made pursuant to this Plan to a Participant which Award is
subject to the attainment of one or more Performance Goals. Performance Awards may be in the form
of either Performance Units, Performance Cash or DERs.
Performance Cash
means an Award, designated as Performance Cash and denominated in cash,
granted to a Participant pursuant to Section 6(f) hereof, the value of which is conditioned, in
whole or in part, by the attainment of Performance Goals in a manner deemed appropriate by the
Committee and described in the Award agreement.
Performance Criteria
or
Performance Goals
or
Performance Measures
mean the objectives
established by the Committee for a Performance Period, for the purpose of determining when an Award
subject to such objectives is earned.
Performance Period
means the time period designated by the Committee during which
performance goals must be met.
Performance Unit
means an Award, designated as a Performance Unit in the form of Units or
other securities of the Company, granted to a Participant pursuant to Section 6(f) hereof, the
value of which is determined, in whole or in part, by the value of Units and/or conditioned on the
attainment of Performance Goals in a manner deemed appropriate by the Committee and described in
the Award agreement.
Person
means an individual or a corporation, limited liability company, partnership,
joint venture, trust, unincorporated organization, association, government agency or
political subdivision thereof or other entity.
Phantom Unit
means a phantom (notional) Unit granted under the Plan which upon
vesting entitles the Participant to receive a Unit or an amount of cash equal to the Fair
Market Value of a Unit. Whether cash or Units are received for Phantom Units shall be
determined in the sole discretion of the Committee and shall be set forth in the Award
Agreement.
Restricted Period
means the period established by the Committee with respect to an
Award during which the Award remains subject to forfeiture or is either not exercisable by
or payable to the Participant, as the case may be.
Restricted Unit
means a Unit granted under the Plan that is subject to a Restricted
Period.
Rule 16b-3
means Rule 16b-3 promulgated by the SEC under the Exchange Act, or any
successor rule or regulation thereto as in effect from time to time.
SEC
means the Securities and Exchange Commission, or any successor thereto.
UAR
of
Unit Appreciation Right
means an Award that, upon exercise, entitles the
holder to receive the excess of the Fair Market Value of a Unit on the exercise date over
the exercise price established for such Unit Appreciation Right. Such excess may be paid in
cash and/or in Units as determined in the sole discretion of the Committee and set forth in
the Award Agreement.
UDR
or
Unit Distribution Right
means a distribution made by the Company with
respect to a Restricted Unit.
Unit
means a Unit of the Company.
Unit Grant
means an Award of an unrestricted Unit.
3. Administration.
The Plan shall be administered by the Committee. A majority of the Committee shall constitute
a quorum, and the acts of the members of the Committee who are present at any meeting thereof at
which
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a quorum is present, or acts unanimously approved by the members of the Committee in writing,
shall be the acts of the Committee. Subject to the terms of the Plan and applicable law, and in
addition to other express powers and authorizations conferred on the Committee by the Plan, the
Committee shall have full power and authority to: (i) designate Participants; (ii) determine the
type or types of Awards to be granted to a Participant; (iii) determine the number of Units to be
covered by Awards; (iv) determine the terms and conditions of
any Award (including but not limited to performance requirements for
such Award); (v) determine whether, to
what extent, and under what circumstances Awards may be settled, exercised, canceled, or forfeited;
(vi) interpret and administer the Plan and any instrument or agreement relating to an Award made
under the Plan; (vii) establish, amend, suspend, or waive such rules and regulations and appoint
such agents as it shall deem appropriate for the proper administration of the Plan; and (viii) make
any other determination and take any other action that the Committee deems necessary or desirable
for the administration of the Plan. Unless otherwise expressly provided in the Plan, all
designations, determinations, interpretations, and other decisions under or with respect to the
Plan or any Award shall be within the sole discretion of the Committee, may be made at any time and
shall be final, conclusive, and binding upon all Persons, including the Company, any Affiliate, any
Participant, and any beneficiary of any Award.
4. Units.
(a) Limits on Units Deliverable
. Subject to adjustment as provided in Section 4(c), the
maximum number of Units that may be delivered or reserved for delivery or underlying any Award with
respect to the Plan is 2,000,000. If any Award expires, is canceled, exercised, paid or otherwise
terminates without the delivery of Units, then the Units covered by such Award, to the extent of
such expiration, cancellation, exercise, payment or termination, shall again be Units with respect
to which Awards may be granted. Units that cease to be subject to an Award because of the exercise
of the Award, or the vesting of Restricted Units or similar Awards, shall no longer be subject to
or available for any further grant under this Plan. Notwithstanding the foregoing, there shall not
be any limitation on the number of Awards that may be granted under the Plan and paid in cash.
(b) Sources of Units Deliverable Under Awards
. Any Units delivered pursuant to an Award shall
consist, in whole or in part, of Units acquired in the open market, from any Affiliate, or any
other Person, or any combination of the foregoing as determined by the Committee in its sole
discretion.
(c) Adjustments
. In the event that the Committee determines that any distribution (whether in
the form of cash, Units, other securities, or other property), recapitalization, split, reverse
split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or
exchange of Units or other securities of the Company, issuance of warrants or other rights to
purchase Units or other securities of the Company, or other similar transaction or event affects
the Units such that an adjustment is determined by the Committee to be appropriate in order to
prevent dilution or enlargement of the benefits or potential benefits intended to be made available
under the Plan, then the Committee shall, in such manner as it may deem equitable, adjust any or
all of (i) the number and type of Units (or other securities or property) with respect to which
Awards may be granted, (ii) the number and type of Units (or other securities or property) subject
to outstanding Awards, and (iii) the grant or exercise price with respect to any Award or, if
deemed appropriate, make provision for a cash payment to the holder of an outstanding Award;
provided, that the number of Units subject to any Award shall always be a whole number and,
provided further, that the Committee shall not take any action otherwise authorized under this
subparagraph (c) to the extent that (i) such action would cause (A) the application of Section 409A
of the Code to the Award or (B) create adverse tax consequences under Section 409A of the Code
should that Code section apply to the Award or (ii) except as permitted in Section 7(c), materially
reduce the benefit to the Participant without the consent of the Participant.
5. Eligibility.
Any Employee, Consultant or Director shall be eligible to be designated a Participant and
receive an Award under the Plan.
-4-
6. Awards.
(a) Options
. The Committee shall have the authority to determine the Employees, Consultants
and Directors to whom Options shall be granted, the number of Units to be covered by each Option,
whether DERs are granted with respect to such Option, the purchase price therefor and the
conditions and limitations applicable to the exercise of the Option, including the following terms
and conditions and such additional terms and conditions, as the Committee shall determine, that are
not inconsistent with the provisions of the Plan.
(i)
Exercise Price
. The purchase price per Unit purchasable under an Option
shall be determined by the Committee at the time the Option is granted, provided such
purchase price may not be less than 100% of its Fair Market Value as of the date of grant.
(ii)
Time and Method of Exercise
. The Committee shall determine the time or
times at which an Option may be exercised in whole or in part, which may include, without
limitation, accelerated vesting upon the achievement of specified performance goals, and the
method or methods by which payment of the exercise price with respect thereto may be made or
deemed to have been made, which may include, without limitation, cash, check acceptable to
the Company, a cashless-broker exercise through procedures approved by the Company, with
the consent of the Committee, the withholding of Units that would otherwise be delivered to
the Participant upon the exercise of the Option, other securities or other property, or any
combination thereof, having a fair market value (as determined by the Committee) on the
exercise date equal to the relevant exercise price.
(iii)
Forfeiture
. Except as otherwise provided in the terms of the Award
Agreement, upon termination of a Participants employment with or consulting services to the
Company and its Affiliates or membership on the Board, whichever is applicable, for any
reason prior to the date an Option becomes exercisable, all Options shall be forfeited by
the Participant. The Committee may in its discretion, waive in whole or in part such
forfeiture with respect to a Participants Options.
(iv)
DERs
. To the extent provided by the Committee, in its discretion, a grant
of Options may include a tandem DER grant, which may provide that such DERs shall be
credited to a bookkeeping account (with or without interest in the discretion of the
Committee) subject to the same vesting restrictions as the tandem Award, or be subject to
such other provisions or restrictions as determined by the Committee in its discretion.
(b) Restricted Units and Unit Grants
. The Committee shall have the authority to determine the
Employees, Consultants and Directors to whom Restricted Units and Unit Grants shall be granted, the
number of Restricted Units and/or Unit Grants to be granted to each such Participant, the
Restricted Period, the conditions under which the Restricted Units may become vested or forfeited,
and such other terms and conditions as the Committee may establish with respect to such Awards.
(i)
UDRs
. To the extent provided by the Committee, in its discretion, a grant
of Restricted Units may provide that distributions made by the Company with respect to the
Restricted Units shall be subject to the same forfeiture and other restrictions as the
Restricted Unit and, if restricted, such distributions shall be held, without interest,
until the Restricted Unit vests or is forfeited with the UDR being paid or forfeited at the
same time, as the case may be. Absent such a restriction on the UDRs in the grant agreement,
UDRs shall be paid to the holder of the Restricted Unit without restriction.
(ii)
Forfeitures
. Except as otherwise provided in the terms of the Award
Agreement, upon termination of a Participants employment with or consulting services to the
Company and its Affiliates or membership on the Board, whichever is applicable, for any
reason during the applicable Restricted Period, all outstanding Restricted Units awarded the
Participant shall be
-5-
automatically forfeited on such termination. The Committee may in its discretion, waive
in whole or in part such forfeiture with respect to a Participants Restricted Units.
(iii)
Lapse of Restrictions
. Upon or as soon as reasonably practical following
the vesting of each Restricted Unit, subject to the provisions of
Section 8(b)
, the
Participant shall be entitled to have the restrictions removed from his or her Unit
certificate so that the Participant then holds an unrestricted Unit.
(c) Phantom Units
. The Committee shall have the authority to determine the Employees,
Consultants and Directors to whom Phantom Units shall be granted, the number of Phantom Units to be
granted to each such Participant, the Restricted Period, the time or conditions under which the
Phantom Units may become vested or forfeited, which may include, without limitation, the
accelerated vesting upon the achievement of specified performance goals, and such other terms and
conditions as the Committee may establish with respect to such Awards, including whether DERs are
granted with respect to such Phantom Units.
(i)
DERs
. To the extent provided by the Committee, in its discretion, a grant
of Phantom Units may include a tandem DER grant, which may provide that such DERs shall be
credited to a bookkeeping account (with or without interest in the discretion of the
Committee) subject to the same vesting restrictions as the tandem Award, or be subject to
such other provisions or restrictions as determined by the Committee in its discretion.
(ii)
Forfeitures
. Except as otherwise provided in the terms of the Award
Agreement, upon termination of a Participants employment with or consulting services to the
Company and its Affiliates or membership on the Board, whichever is applicable, for any
reason during the applicable Restricted Period, all outstanding Phantom Units awarded the
Participant shall be automatically forfeited on such termination. The Committee may, in its
discretion, waive in whole or in part such forfeiture with respect to a Participants
Phantom Units.
(iii)
Lapse of Restrictions
. Upon or as soon as reasonably practical following
the vesting of each Phantom Unit, subject to the provisions of Section 8(b), the Participant
shall be entitled to receive from the Company one Unit or cash equal to the Fair Market
Value of a Unit, as determined by the Committee in its discretion.
(d) Unit Appreciation Rights
. The Committee shall have the authority to determine the
Employees, Consultants and Directors to whom Unit Appreciation Rights shall be granted, the number
of Units to be covered by each grant and the conditions and limitations applicable to the exercise
of the Unit Appreciation Right, including the following terms and conditions and such additional
terms and conditions, as the Committee shall determine, that are not inconsistent with the
provisions of the Plan.
(i)
Exercise Price
. The exercise price per Unit Appreciation Right shall be not
less than 100% of its Fair Market Value as of the date of grant.
(ii)
Vesting/Time of Payment
. The Committee shall determine the time or times
at which a Unit Appreciation Right shall become vested and exercisable and the time or times
at which a Unit Appreciation Right shall be paid in whole or in part.
(iii)
Forfeitures
. Except as otherwise provided in the terms of the Award
Agreement, upon termination of a Participants employment with or services to the Company
and its Affiliates or membership on the Board, whichever is applicable, for any reason prior
to vesting, all unvested Unit Appreciation Rights awarded the Participant shall be
automatically forfeited on such termination. The Committee may, in its discretion, waive in
whole or in part such forfeiture with respect to a Participants Unit Appreciation Rights,
in which case, such Unit Appreciation Rights shall be deemed vested upon termination of
employment or service and paid as soon as administratively practical thereafter.
-6-
(iv)
Unit Appreciation Right DERs
. To the extent provided by the Committee, in
its discretion, a grant of Unit Appreciation Rights may include a tandem DER grant, which
may provide that such DERs shall be credited to a bookkeeping account (with or without
interest in the discretion of the Committee) subject to the same vesting restrictions as the
tandem Unit Appreciation Rights Award, or be subject to such other provisions or
restrictions as determined by the Committee in its discretion.
(e) General
.
(i)
Awards May Be Granted Separately or Together
. Awards may, in the discretion
of the Committee, be granted either alone or in addition to, in tandem with, or in
substitution for any other Award granted under the Plan or any award granted under any other
plan of the Company or any Affiliate. No Award shall be issued in tandem with another Award
if the tandem Awards would result in adverse tax consequences under Section 409A of the
Code. Awards granted in addition to or in tandem with other Awards or awards granted under
any other plan of the Company or any Affiliate may be granted either at the same time as or
at a different time from the grant of such other Awards or awards.
(ii)
Limits on Transfer of Awards
.
(A) Except as provided in
Section 6(e)(ii)(C)
below, each Award shall
be exercisable or payable only to the Participant during the Participants lifetime,
or to the person to whom the Participants rights shall pass by will or the laws of
descent and distribution.
(B) Except as provided in
Section 6(e)(ii)(C)
below, no Award and no
right under any such Award may be assigned, alienated, pledged, attached, sold or
otherwise transferred or encumbered by a Participant and any such purported
assignment, alienation, pledge, attachment, sale, transfer or encumbrance shall be
void and unenforceable against the Company or any Affiliate.
(C) To the extent specifically provided by the Committee with respect to an
Award, an Award may be transferred by a Participant without consideration to
immediate family members or related family trusts, limited partnerships or similar
entities or on such terms and conditions as the Committee may from time to time
establish.
(iii)
Term of Awards
. The term of each Award shall be for such period as may be
determined by the Committee, but shall not exceed 10 years.
(iv)
Unit Certificates
. All certificates for Units or other securities of the
Company delivered under the Plan pursuant to any Award or the exercise thereof shall be
subject to such stop transfer orders and other restrictions as the Committee may deem
advisable under the Plan or the rules, regulations, and other requirements of the SEC, any
stock exchange upon which such Units or other securities are then listed, and any applicable
federal or state laws, and the Committee may cause a legend or legends to be put on any such
certificates to make appropriate reference to such restrictions.
(v)
Consideration for Grants
. Awards may be granted for such consideration,
including services, as the Committee determines.
(vi)
Delivery of Units or other Securities and Payment by Participant of
Consideration
. Notwithstanding anything in the Plan or any grant agreement to the
contrary, delivery of Units pursuant to the exercise or vesting of an Award may be deferred
for any period during which, in the good faith determination of the Committee, the Company
is not reasonably able to obtain Units to deliver pursuant to such Award without violating
the rules or regulations of
-7-
any applicable law or securities exchange. No Units or other securities shall be
delivered pursuant to any Award until payment in full of any amount required to be paid
pursuant to the Plan or the applicable Award grant agreement (including, without limitation,
any exercise price or tax withholding) is received by the Company.
(vii)
Change of Control
. Unless specifically provided otherwise in the Award
Agreement, upon a Change of Control or such time prior thereto as established by the
Committee, all outstanding Awards shall automatically vest or become exercisable in full, as
the case may be. In this regard, all Restricted Periods shall terminate and all performance
criteria, if any, shall be deemed to have been achieved at the maximum level. To the extent
an Option or UAR is not exercised, or a Phantom Unit or Restricted Unit does not vest, upon
the Change of Control, the Committee may, in its discretion, cancel such Award or provide
for an assumption of such Award or a replacement grant on substantially the same terms;
provided, however, upon any cancellation of an Option or UAR that has a positive spread or
a Phantom Unit or Restricted Unit, the holder shall be paid an amount in cash and/or other
property, as determined by the Committee, equal to such spread if an Option or UAR or
equal to the Fair Market Value of a Unit, if a Phantom Unit or Restricted Unit.
(viii)
Section 409A of the Code
. Notwithstanding any other provision of the
Plan to the contrary, any Award granted under the Plan shall contain terms that (i) are
designed to avoid application of Section 409A of the Code to the Award or (ii) are designed
to avoid adverse tax consequences under Section 409A should that Code section apply to the
Award.
(f)
Performance Based Awards
.
(i)
Grant of Performance Awards
. The Committee may issue Performance Awards in the
form of Performance Units, Performance Cash, or DERs to Participants subject to the Performance
Goals and Performance Period as it shall determine. The terms and conditions of each Performance
Award will be set forth in the related Award agreement. The Committee shall have complete
discretion in determining the number and/or value of Performance Awards granted to each
Participant. Any Performance Units granted under the Plan shall have a minimum Restricted Period
of one year from the Date of Grant, provided that the Committee may provide for earlier vesting
following a Change in Control or upon an Employees termination of employment by reason of death,
disability or retirement. Participants receiving Performance Awards are not required to pay the
Company therefor (except for applicable tax withholding) other than the rendering of services.
(ii)
Value of Performance Awards.
The Committee shall set Performance Goals in its
discretion for each Participant who is granted a Performance Award. Such Performance Goals may be
particular to a Participant, may relate to the performance of the Affiliate which employs him or
her, may be based on the division which employs him or her, may be based on the performance of the
Partnership generally, or a combination of the foregoing. The Performance Goals may be based on
achievement of balance sheet or income statement objectives, or any other objectives established by
the Committee. The Performance Goals may be absolute in their terms or measured against or in
relationship to other companies comparably, similarly or otherwise situated. The extent to which
such Performance Goals are met will determine the number and/or value of the Performance Award to
the Participant.
(iii)
Form of Payment
. Payment of the amount to which a Participant shall be entitled
upon the settlement of a Performance Award shall be made in a lump sum or installments in cash,
Units, or a combination thereof as determined by the Committee.
7. Amendment and Termination.
Except to the extent prohibited by applicable law:
(a) Amendments to the Plan
. Except as required by the rules of the principal securities
exchange on which the Units are traded and subject to
Section 7(b)
below, the Board or the
Committee may amend, alter, suspend, discontinue, or terminate the Plan in any manner, including
increasing the number of Units available for Awards under the Plan, without the consent of any
member, Participant, other holder or beneficiary of an Award, or other Person.
(b) Amendments to Awards Subject to
Section 7(a)
. The Committee may waive any
conditions or rights under, amend any terms of, or alter any Award theretofore granted, provided no
change, other than pursuant to
Section 7(c)
, in any Award shall materially reduce the
benefit to a Participant without the consent of such Participant.
(c) Adjustment of Awards Upon the Occurrence of Certain Unusual or Nonrecurring Events
. The
Committee is hereby authorized to make adjustments in the terms and conditions of, and the criteria
included in, Awards in recognition of unusual or nonrecurring events (including, without
limitation, the events described in
Section 4(c)
of the Plan) affecting the Company or the
financial statements of the Company, or of changes in applicable laws, regulations, or accounting
principles, whenever the Committee determines that such adjustments are appropriate in order to
prevent dilution or enlargement of the benefits or potential benefits intended to be made available
to Participants under the Plan or such Award.
8. General Provisions.
(a) No Rights to Award
. No Person shall have any claim to be granted any Award under the Plan,
and there is no obligation for uniformity of treatment of Participants. The terms and conditions of
Awards need not be the same with respect to each recipient.
(b) Tax Withholding
. The Company or any Affiliate is authorized to withhold from any Award,
from any payment due or transfer made under any Award or from any compensation or other amount
-8-
owing to a Participant the amount (in cash, Units, other securities, Units that would
otherwise be issued pursuant to such Award or other property) of any applicable taxes payable in
respect of the grant of an Award, its exercise, the lapse of restrictions thereon, or any payment
or transfer under an Award or under the Plan and to take such other action as may be necessary in
the opinion of the Company to satisfy its withholding obligations for the payment of such taxes.
(c) No Right to Employment or Services
. The grant of an Award shall not be construed as giving
a Participant the right to be retained in the employ of the Company or any Affiliate, to continue
as a consultant, or to remain on the Board, as applicable. Further, the Company or an Affiliate may
at any time dismiss a Participant from employment or terminate a consulting relationship, free from
any liability or any claim under the Plan, unless otherwise expressly provided in the Plan, any
Award agreement or other agreement.
(d) Governing Law
. The validity, construction, and effect of the Plan and any rules and
regulations relating to the Plan shall be determined in accordance with the laws of the State of
Texas without regard to its conflict of laws principles.
(e) Section 409A of the Code
. Notwithstanding anything in this Plan to the contrary, any Award
granted under the Plan shall contain terms that (i) are designed to avoid application of Section
409A of the Code to the Award or (ii) are designed to avoid adverse tax consequences under Section
409A of the Code should that section apply to the Award. If any Plan provision or Award under the
Plan would result in the imposition of an applicable tax under Section 409A of the Code and related
regulations and pronouncements, that Plan provision or Award will be reformed to the extent
reformation would avoid imposition of the applicable tax and no action taken to comply with Section
409A of the Code shall be deemed to adversely affect the Participants rights to an Award or to
require the Participants consent.
(f) Severability
. If any provision of the Plan or any award is or becomes or is deemed to be
invalid, illegal, or unenforceable in any jurisdiction or as to any Person or Award, or would
disqualify the Plan or any award under any law deemed applicable by the Committee, such provision
shall be construed or deemed amended to conform to the applicable laws, or if it cannot be
construed or deemed amended without, in the determination of the Committee, materially altering the
intent of the Plan or the Award, such provision shall be stricken as to such jurisdiction, person
or award and the remainder of the Plan and any such Award shall remain in full force and effect.
(g) Other Laws
. The Committee may refuse to issue or transfer any Units or other consideration
under an Award if, in its sole discretion, it determines that the issuance or transfer of such
Units or such other consideration might violate any applicable law or regulation, the rules of the
principal securities exchange on which the Units are then traded, or entitle the Company or an
Affiliate to recover the same under Section 16(b) of the Exchange Act, and any payment tendered to
the Company by a Participant, other holder or beneficiary in connection with the exercise of such
Award shall be promptly refunded to the relevant Participant, holder or beneficiary.
(h) No Trust or Fund Created
. Neither the Plan nor any award shall create or be construed to
create a trust or separate fund of any kind or a fiduciary relationship between the Company or any
participating Affiliate and a Participant or any other Person. To the extent that any Person
acquires a right to receive payments from the Company or any participating Affiliate pursuant to an
Award, such right shall be no greater than the right of any general unsecured creditor of the
Company or any participating Affiliate.
(i) No Fractional Units
. No fractional Units shall be issued or delivered pursuant to the Plan
or any Award, and the Committee shall determine whether cash, other securities, or other property
shall be paid or transferred in lieu of any fractional Units or whether such fractional Units or
any rights thereto shall be canceled, terminated, or otherwise eliminated.
-9-
(j) Headings
. Headings are given to the Sections and subsections of the Plan solely as a
convenience to facilitate reference. Such headings shall not be deemed in any way material or
relevant to the construction or interpretation of the Plan or any provision thereof.
(k) Facility Payment
. Any amounts payable hereunder to any person under legal disability or
who, in the judgment of the Committee, is unable to properly manage his financial affairs, may be
paid to the legal representative of such person, or may be applied for the benefit of such person
in any manner which the Committee may select, and the Company and its Affiliates shall be relieved
of any further liability for payment of such amounts.
(l) Participation by Affiliates
. In making Awards to Consultants and Employees employed by an
Affiliate, the Committee shall be acting on behalf of the Affiliate, and to the extent the Company
has an obligation to reimburse the such Affiliate for compensation paid to Consultants and
Employees for services rendered for the benefit of the Company, such payments or reimbursement
payments may be made by the Company directly to the Affiliate.
(m) Gender and Number
. Words in the masculine gender shall include the feminine gender, the
plural shall include the singular and the singular shall include the plural.
(n) No Guarantee of Tax Consequences
. None of the Board, the Company, nor the Committee makes
any commitment or guarantee that any federal, state or local tax treatment will apply or be
available to any person participating or eligible to participate hereunder.
9. Term of the Plan.
The Plan shall be effective on the date of its approval by the Board and shall continue until
the date terminated by the Board. However, unless otherwise expressly provided in the Plan or in an
applicable Award Agreement, any Award granted prior to such termination, and the authority of the
Board or the Committee to amend, alter, adjust, suspend, discontinue, or terminate any such Award
or to waive any conditions or rights under such Award, shall extend beyond such termination date.
10. Special Provisions Applicable to Covered Participants.
Awards subject to Performance Criteria paid to Covered Participants under this Plan shall be
governed by the conditions of this Section 10 in addition to the requirements of Section 6(f),
above. Should conditions set forth under this Section 10 conflict with the requirements of Section
6(f), the conditions of this Section 10 shall prevail.
(a)
Establishment of Performance Measures, Goals or Criteria
. All Performance
Measures, Goals, or Criteria relating to Covered Participants for a relevant Performance Period
shall be established by the Committee in writing prior to the beginning of the Performance Period,
or by such other later date for the Performance Period as may be permitted under Section 162(m) of
the Code. The Performance Goals may be identical for all Participants or, at the discretion of the
Committee, may be different to reflect more appropriate measures of individual performance.
(b)
Performance Goals
. The Committee shall establish the Performance Goals relating
to Covered Participants for a Performance Period in writing. Performance Goals may include
alternative and multiple Performance Goals and may be based on one or more business and/or
financial criteria.
(c)
Compliance with Section 162(m)
. The Performance Goals must be objective and must
satisfy third party objectivity standards under Section 162(m) of the Code, and the regulations
promulgated thereunder. In interpreting Plan provisions relating to Awards subject to Performance
Goals paid to Covered Participants, it is the intent of the Plan to conform with the standards of
Section 162(m) of the Code and Treasury Regulation §1.162-27(e)(2)(i), and the Committee in
establishing such goals and interpreting the Plan shall be guided by such provisions.
(d)
Adjustments
. The Committee is authorized to make adjustments in the method of
calculating attainment of Performance Goals in recognition of: (i) extraordinary or non-recurring
items, (ii) changes in tax laws, (iii) changes in generally accepted accounting principles or
changes in accounting principles, (iv) charges related to restructured or discontinued operations,
(v) restatement of prior period financial results, and (vi) any other unusual, non-recurring gain
or loss that is separately identified and quantified in the Companys financial statements.
Notwithstanding the foregoing, the Committee may, at its sole discretion, reduce the performance
results upon which Awards are based under the Plan, to offset any unintended result(s) arising from
events not anticipated when the Performance Goals were established, or for any other purpose,
provided that such adjustment is permitted by Section 162(m) of the Code.
(e)
Discretionary Adjustments
. The Performance Goals shall not allow for any
discretion by the Committee as to an increase in any Award, but discretion to lower an Award is
permissible.
(f)
Certification
. The Award and payment of any Award under this Plan to a Covered
Participant with respect to a relevant Performance Period shall be contingent upon the attainment
of the Performance Goals that are applicable to such Covered Participant. The Committee shall
certify in writing prior to payment of any such Award that such applicable Performance Goals
relating to the Award are satisfied. Approved minutes of the Committee may be used for this
purpose.
(g)
Other Considerations
. All Awards to Covered Participants under this Plan shall be
further subject to such other conditions, restrictions, and requirements as the Committee may
determine to be necessary to carry out the purpose of this Section 10.
-10-
Exhibit 10.04
EXECUTION COPY
3-YEAR REVOLVING CREDIT AGREEMENT
dated as of July 19, 2006
among
VALERO GP HOLDINGS, LLC
The Lenders Party Hereto
and
JPMORGAN CHASE BANK, N.A.,
as Administrative Agent
and
SUNTRUST BANK,
as Syndication Agent
J.P. MORGAN SECURITIES INC. and SUNTRUST ROBINSON HUMPHREY, A DIVISION OF
SUNTRUST CAPITAL MARKETS, INC.,
as Co-Lead Arrangers and Joint Bookrunners
TABLE OF CONTENTS
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ARTICLE I
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Definitions
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Section 1.01
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Defined Terms
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1
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Section 1.02
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Classification of Loans and Borrowings
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18
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Section 1.03
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Terms Generally
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18
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Section 1.04
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Accounting Terms; GAAP
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18
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ARTICLE II
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The Credits
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Section 2.01
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Commitments
|
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18
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Section 2.02
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Loans and Borrowings
.
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19
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Section 2.03
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Requests for Borrowings
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19
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Section 2.04
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Letters of Credit.
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20
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Section 2.05
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Funding of Borrowings
.
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24
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Section 2.06
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Interest Elections
.
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24
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Section 2.07
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Termination and Reduction of Commitment
s.
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25
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Section 2.08
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Repayment of Loans; Evidence of Deb
t.
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26
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Section 2.09
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Prepayment of Loans
.
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27
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Section 2.10
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Fees
.
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27
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Section 2.11
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Interest
.
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28
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Section 2.12
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Alternate Rate of Interest
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29
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Section 2.13
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Increased Costs
.
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30
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Section 2.14
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Break Funding Payments
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31
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Section 2.15
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Taxes
.
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31
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Section 2.16
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Payments Generally; Pro Rata Treatment; Sharing of Set-offs
.
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32
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Section 2.17
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Mitigation Obligations; Replacement of Lenders
.
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34
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ARTICLE III
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Representations and Warranties
|
Section 3.01
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Organization; Powers
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34
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Section 3.02
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Authorization; Enforceability
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35
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Section 3.03
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Governmental Approvals; No Conflicts
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35
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Section 3.04
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Financial Condition; No Material Adverse Change
.
|
|
|
35
|
|
Section 3.05
|
|
Properties
.
|
|
|
35
|
|
Section 3.06
|
|
Litigation and Environmental Matters
.
|
|
|
36
|
|
Section 3.07
|
|
Compliance with Laws and Agreements
|
|
|
36
|
|
Section 3.08
|
|
Investment Company Status
|
|
|
36
|
|
Section 3.09
|
|
Taxes
|
|
|
36
|
|
Section 3.10
|
|
ERISA
|
|
|
37
|
|
Section 3.11
|
|
Disclosure
|
|
|
37
|
|
Section 3.12
|
|
Investments and Guarantees
|
|
|
37
|
|
Section 3.13
|
|
Casualties; Taking of Property
|
|
|
37
|
|
i
|
|
|
|
|
|
|
ARTICLE IV
|
Conditions
|
Section 4.01
|
|
Effective Date
|
|
|
37
|
|
Section 4.02
|
|
Each Credit Event
|
|
|
39
|
|
ARTICLE V
|
Affirmative Covenants
|
Section 5.01
|
|
Financial Statements and Other Information
|
|
|
40
|
|
Section 5.02
|
|
Notices of Material Events
|
|
|
41
|
|
Section 5.03
|
|
Existence; Conduct of Business
|
|
|
42
|
|
Section 5.04
|
|
Payment of Obligations
|
|
|
42
|
|
Section 5.05
|
|
Maintenance of Properties; Insurance
|
|
|
43
|
|
Section 5.06
|
|
Books and Records; Inspection Rights
|
|
|
43
|
|
Section 5.07
|
|
Compliance with Laws
|
|
|
43
|
|
Section 5.08
|
|
Use of Proceeds and Letters of Credit
|
|
|
43
|
|
Section 5.09
|
|
Environmental Laws
|
|
|
43
|
|
ARTICLE VI
|
Negative Covenants
|
Section 6.01
|
|
Indebtedness
|
|
|
44
|
|
Section 6.02
|
|
Liens
|
|
|
44
|
|
Section 6.03
|
|
Fundamental Changes
.
|
|
|
44
|
|
Section 6.04
|
|
Investments, Loans, Advances, Guarantees and Acquisitions
|
|
|
44
|
|
Section 6.05
|
|
Swap Agreements
|
|
|
45
|
|
Section 6.06
|
|
Restricted Payments
|
|
|
45
|
|
Section 6.07
|
|
Transactions with Affiliates
|
|
|
45
|
|
Section 6.08
|
|
Restrictive Agreements
|
|
|
45
|
|
Section 6.09
|
|
Limitation on Modifications of Other Agreements
|
|
|
46
|
|
Section 6.10
|
|
Creation of Subsidiaries
|
|
|
46
|
|
Section 6.11
|
|
Financial Condition Covenants
.
|
|
|
46
|
|
Section 6.12
|
|
Disposition of Assets
|
|
|
46
|
|
ARTICLE VII
|
Events of Default
|
|
|
|
|
|
|
|
ARTICLE VIII
|
The Administrative Agent
|
|
|
|
|
|
|
|
ARTICLE IX
|
Miscellaneous
|
|
|
|
|
|
|
|
Section 9.01
|
|
Notices.
|
|
|
51
|
|
Section 9.02
|
|
Waivers; Amendments
.
|
|
|
52
|
|
Section 9.03
|
|
Expenses; Indemnity; Damage Waiver
.
|
|
|
53
|
|
Section 9.04
|
|
Successors and Assigns
.
|
|
|
54
|
|
Section 9.05
|
|
Survival
|
|
|
57
|
|
Section 9.06
|
|
Counterparts; Integration; Effectiveness
|
|
|
57
|
|
Section 9.07
|
|
Severability
|
|
|
57
|
|
Section 9.08
|
|
Right of Setoff
|
|
|
58
|
|
ii
|
|
|
|
|
|
|
Section 9.09
|
|
Governing Law; Jurisdiction; Consent to Service of Process
.
|
|
|
58
|
|
Section 9.10
|
|
WAIVER OF JURY TRIAL
|
|
|
58
|
|
Section 9.11
|
|
Headings
|
|
|
59
|
|
Section 9.12
|
|
Confidentiality
|
|
|
59
|
|
Section 9.13
|
|
Interest Rate Limitation
|
|
|
59
|
|
Section 9.14
|
|
USA Patriot Act
|
|
|
60
|
|
SCHEDULES
:
Schedule 2.01 Commitments
Schedule 3.06 Disclosed Matters
Schedule 6.07 Affiliate Agreements
Schedule 6.08 Existing Restrictions
EXHIBITS
:
Exhibit A Form of Assignment and Assumption
Exhibit B Form of Opinion of the Borrowers Counsel
iii
3-YEAR REVOLVING CREDIT AGREEMENT dated as of July 19, 2006 among VALERO GP HOLDINGS, LLC, a
Delaware limited liability company, the LENDERS party hereto, JPMORGAN CHASE BANK, N.A., as
Administrative Agent, and SUNTRUST BANK, as Syndication Agent.
The parties hereto agree as follows:
ARTICLE I
Definitions
Section 1.01
Defined Terms
. As used in this Agreement, the following terms have the
meanings specified below:
ABR
, when used in reference to any Loan or Borrowing, refers to whether such Loan,
or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to
the Alternate Base Rate.
Acquisition
means the mergers of KPP and KSL into wholly owned subsidiaries of the
MLP pursuant to the terms and conditions of the Acquisition Documents.
Acquisition Documents
means (a) Agreement and Plan of Merger dated as of October 31,
2004 by and among Valero L.P., Riverwalk Logistics, L.P., Valero GP, LLC, VLI Sub A LLC and KSL and
(b) Agreement and Plan of Merger dated as of October 31, 2004 by and among Valero L.P., Riverwalk
Logistics, L.P., Valero GP, LLC, VLI Sub B LLC, KPP, and Kaneb Pipe Line Company LLC, in each case,
as amended, modified or supplemented.
Adjusted LIBO Rate
means, with respect to any Eurodollar Borrowing for any Interest
Period, an interest rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to
(a) the LIBO Rate for such Interest Period multiplied by (b) the Statutory Reserve Rate.
Administrative Agent
means JPMorgan Chase Bank, N.A., in its capacity as
administrative agent for the Lenders hereunder.
Administrative Questionnaire
means an Administrative Questionnaire in a form
supplied by the Administrative Agent.
Affiliate
means, with respect to a specified Person, another Person that directly,
or indirectly through one or more intermediaries, Controls or is Controlled by or is under common
Control with the Person specified.
Agreement
means this 3-Year Revolving Credit Agreement, as the same may be amended,
modified, supplemented or restated from time to time in accordance herewith.
Alternate Base Rate
means, for any day, a rate per annum equal to the higher of (a)
the Prime Rate in effect on such day and (b) the Federal Funds Effective Rate in effect on such
day plus
1
/
2
of 1%. Any change in the Alternate Base Rate due to a change in the Prime Rate or the
Federal Funds Effective Rate shall be effective from and including the effective date of such
change in the Prime Rate or the Federal Funds Effective Rate, respectively.
1
Applicable Percentage
means, with respect to any Lender, the percentage of the total
Commitments represented by such Lenders Commitment. If the Commitments have terminated or
expired, the Applicable Percentages shall be determined based upon the Commitments most recently in
effect, giving effect to any assignments.
Applicable Rate
means, for any day, with respect to any ABR Loan or Eurodollar Loan,
or with respect to the facility fees payable hereunder, as the case may be, the applicable rate per
annum set forth below under the caption ABR Spread, Eurodollar Spread or Facility Fee Rate,
as the case may be, based upon the ratings by Moodys and/or S&P, respectively, applicable on such
date to the Index Debt:
|
|
|
|
|
|
|
|
|
|
|
|
|
Index Debt Ratings:
|
|
ABR Spread
|
|
Eurodollar Spread
|
|
Facility Fee Rate
|
Tier 1
|
|
|
|
|
|
|
|
|
|
|
|
|
Greater than BBB or Baa2
|
|
|
0.00
|
%
|
|
|
0.270
|
%
|
|
|
0.080
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tier 2
|
|
|
|
|
|
|
|
|
|
|
|
|
BBB or Baa2
|
|
|
0.00
|
%
|
|
|
0.400
|
%
|
|
|
0.100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tier 3
|
|
|
|
|
|
|
|
|
|
|
|
|
BBB- or Baa3
|
|
|
0.000
|
%
|
|
|
0.500
|
%
|
|
|
0.125
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tier 4
|
|
|
|
|
|
|
|
|
|
|
|
|
BB+ or Ba1
|
|
|
0.000
|
%
|
|
|
0.575
|
%
|
|
|
0.175
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tier 5
|
|
|
|
|
|
|
|
|
|
|
|
|
Less than BB+ or Ba1
|
|
|
0.000
|
%
|
|
|
0.700
|
%
|
|
|
0.200
|
%
|
For purposes of the foregoing, (i) if either Moodys or S&P shall not have in effect a rating for
the Index Debt (after having established such a rating and other than by reason of the
circumstances referred to in the last sentence of this definition), then such rating agency shall
be deemed to have established a rating in Tier 5; (ii) if both Moodys and S&P have established a
rating for the Index Debt and such ratings established or deemed to have been established by
Moodys and S&P shall fall within different Tiers, then (a) so long as either or both such ratings
are Investment Grade or better, the Applicable Rate shall be based on the higher of the two
ratings, unless one of the two ratings is two or more Tiers lower than the other, in which case the
Applicable Rate shall be determined by reference to the Tier next below that of the higher of the
two ratings; and (b) so long as both such ratings are below Investment Grade, the Applicable Rate
shall be based on the lower of the two ratings, unless one of the two ratings is two or more Tiers
lower than the other, in which case the Applicable Rate shall be determined by reference to the
Tier next above that of the lower of the two ratings and (iii) if the ratings established or deemed
to have been established by Moodys and S&P for the Index Debt shall be changed (other than as a
result of a change in the rating system of Moodys or S&P), such change shall be effective as of
the date on which it is first announced by the applicable rating agency,
2
irrespective of when notice of such change shall have been furnished by the Borrower to the
Administrative Agent and the Lenders pursuant to Section 5.01 or otherwise. Each change in the
Applicable Rate shall apply during the period commencing on the effective date of such change and
ending on the date immediately preceding the effective date of the next such change. If the rating
system of Moodys or S&P shall change, or if either such rating agency shall cease to be in the
business of rating corporate debt obligations, the Borrower and the Lenders shall negotiate in good
faith to amend this definition to reflect such changed rating system or the unavailability of
ratings from such rating agency and, pending the effectiveness of any such amendment, the
Applicable Rate shall be determined by reference to the rating most recently in effect prior to
such change or cessation.
Approved Fund
has the meaning assigned to such term in Section 9.04.
Assessment Rate
means, for any day, the annual assessment rate in effect on such day
that is payable by a member of the Bank Insurance Fund classified as well-capitalized and within
supervisory subgroup B (or a comparable successor risk classification) within the meaning of 12
C.F.R. Part 327 (or any successor provision) to the Federal Deposit Insurance Corporation for
insurance by such Corporation of time deposits made in dollars at the offices of such member in the
United States;
provided
that if, as a result of any change in any law, rule or regulation,
it is no longer possible to determine the Assessment Rate as aforesaid, then the Assessment Rate
shall be such annual rate as shall be determined by the Administrative Agent to be representative
of the cost of such insurance to the Lenders.
Assignment and Assumption
means an assignment and assumption entered into by a
Lender and an assignee (with the consent of any party whose consent is required by Section 9.04),
and accepted by the Administrative Agent, in the form of Exhibit A or any other form approved by
the Administrative Agent.
Availability Period
means the period from and including the Effective Date to but
excluding the earlier of the Maturity Date and the date of termination of the Commitments.
Beneficial Owner
has the meaning assigned to such term in Rule 13d-3 and Rule 13d-5
under the Exchange Act, except that in calculating the beneficial ownership of any particular
person (as that term is used in Section 13(d)(3) of the Exchange Act), such person will be
deemed to have beneficial ownership of all securities that such person has the right to acquire
by conversion or exercise of other securities, whether such right is currently exercisable or is
exercisable only upon the occurrence of a subsequent condition.
Benefit Arrangement
means at any time an employee benefit plan within the meaning of
Section 3(3) of ERISA which is not a Plan or a Multiemployer Plan and which is maintained or
otherwise contributed to by any ERISA Affiliate.
Board
means the Board of Governors of the Federal Reserve System of the United
States of America.
Borrower
means Valero GP Holdings, LLC, a Delaware limited liability company.
3
Borrowing
means Loans of the same Type, made, converted or continued on the same
date and, in the case of Eurodollar Loans, as to which a single Interest Period is in effect.
Borrowing Request
means a request by the Borrower for a Borrowing in accordance with
Section 2.03.
Business Day
means any day that is not a Saturday, Sunday or other day on which
commercial banks in New York City are authorized or required by law to remain closed;
provided
that, when used in connection with a Eurodollar Loan, the term
Business
Day
shall also exclude any day on which banks are not open for dealings in dollar deposits in
the London interbank market.
Capital Lease Obligations
of any Person means the obligations of such Person to pay
rent or other amounts under any lease of (or other arrangement conveying the right to use) real or
personal property, or a combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP, and the amount of
such obligations shall be the capitalized amount thereof determined in accordance with GAAP.
Change in Control
means any of the following events:
(a) 100% (and not less than 100%) of the issued and outstanding Equity Interest of the general
partner(s) of the MLP shall cease to be owned, directly or indirectly, or the MLP shall cease to be
Controlled, by the Borrower; or
(b) the occurrence of any transaction that results in any person or group (as such terms
are used in Sections 13(d) and 14(d) of the Exchange Act) other than a Permitted Holder becoming
the Beneficial Owner, directly or indirectly, of Equity Interests representing more than 50% of the
aggregate ordinary voting power represented by the issued and outstanding Equity Interests of the
Borrower; or
(c) 100% (and not less than 100%) of the issued and outstanding Equity Interests in Valero GP,
LLC ceases to be directly owned by the Borrower; or
(d) 100% (and not less than 100%) of the issued and outstanding Equity Interests in Riverwalk
Holdings, LLC ceases to be directly owned by the Borrower; or
(e) 100% (and not less than 100%) of the issued and outstanding Equity Interests in Riverwalk
Logistics, L.P. ceases to be directly owned by Riverwalk Holdings, LLC and Valero GP, LLC.
Change in Law
means (a) the adoption of any law, rule or regulation after the date
of this Agreement, (b) any change in any law, rule or regulation or in the interpretation or
application thereof by any Governmental Authority after the date of this Agreement or (c)
compliance by any Lender or any Issuing Bank (or, for purposes of Section 2.13(b), by any lending
office of such Lender or by such Lenders or such Issuing Banks holding company, if any) with any
request, guideline or directive (whether or not having the force of law) of any Governmental
Authority made or issued after the date of this Agreement.
4
Code
means the Internal Revenue Code of 1986, as amended from time to time.
Commitment
means, with respect to each Lender, the commitment of such Lender to make
Loans and to acquire participations in Letters of Credit hereunder, expressed as an amount
representing the maximum aggregate amount of such Lenders Revolving Credit Exposure hereunder, as
such commitment may be (a) reduced from time to time pursuant to Section 2.07 and (b) reduced or
increased from time to time pursuant to assignments by or to such Lender pursuant to Section 9.04.
The initial amount of each Lenders Commitment is set forth on Schedule 2.01, or in the Assignment
and Assumption pursuant to which such Lender shall have assumed its Commitment, as applicable. The
initial aggregate amount of the Lenders Commitments is $20,000,000.
Common Units
means the common units of limited partner interests in the MLP.
Consolidated Debt Coverage Ratio
means, for any day, the ratio of (a) all
Indebtedness of the MLP and its subsidiaries, on a consolidated basis, as of the last day of the
then most recent Rolling Period over (b) Consolidated EBITDA of the MLP and its subsidiaries for
such Rolling Period.
Consolidated EBITDA
means, without duplication, as to the MLP and its subsidiaries,
on a consolidated basis for each Rolling Period, the amount equal to Consolidated Operating Income
for such period (a) plus the following to the extent deducted from Consolidated Operating Income in
such period: (i) depreciation, amortization and other non-cash charges for such period and (ii)
cash distributions received by the MLP and its subsidiaries from Skelly-Belvieu Pipeline Company,
and similar joint ventures, during such period; (b) minus all non-cash income added to Consolidated
Operating Income in such period; and (c) plus any Material Project EBITDA Adjustments for such
period;
provided
that (i) Consolidated EBITDA shall be adjusted from time to time as
necessary to give pro forma effect to acquisitions or Investments (other than Joint Venture
Interests) or sales of property by the MLP and its subsidiaries permitted by the Valero Logistics
Credit Agreement and (ii) Consolidated EBITDA shall be adjusted to take into account
pro forma
synergies as a result of the Acquisition in an amount equal to (A) $17,500,000 for the Rolling
Period ending on September 30, 2005, (B) $15,000,000 for the Rolling Period ending on December 31,
2005, (C) $10,000,000 for the Rolling Period ending on March 31, 2006 and (D) $5,000,000 for the
Rolling Period ending on June 30, 2006.
Consolidated Operating Income
means, as to the MLP and its subsidiaries on a
consolidated basis for each Rolling Period, the amount equal to gross income
minus
operating expenses, general and administrative expenses, depreciation and amortization, and taxes
other than income taxes, in each case for such period.
Control
means the possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of a Person, whether through the ability to
exercise voting power, by contract or otherwise.
Controlling
and
Controlled
have meanings correlative thereto.
Default
means any event or condition which constitutes an Event of Default or which
upon notice, lapse of time or both would, unless cured or waived, become an Event of Default.
5
Disclosed Matters
means the actions, suits and proceedings and the environmental
matters disclosed in Schedule 3.06.
Disqualified Capital Stock
means any Equity Interest that, by its terms (or by the
terms of any security into which it is convertible or for which it is exchangeable) or upon the
happening of any event, matures or is mandatorily redeemable for any consideration other than other
Equity Interests (which would not constitute Disqualified Capital Stock), pursuant to a sinking
fund obligation or otherwise, or is convertible or exchangeable for Indebtedness or redeemable for
any consideration other than other Equity Interests (which would not constitute Disqualified
Capital Stock) at the option of the holder thereof, in whole or in part, on or prior to the date
that is one year after the earlier of (a) the Maturity Date and (b) the date on which there are no
Loans, LC Exposure or other obligations hereunder outstanding and all of the Commitments are
terminated.
dollars
or
$
refers to lawful money of the United States of America.
Effective Date
means the date on which the conditions specified in Section 4.01 are
satisfied (or waived in accordance with Section 9.02).
Environmental Approvals
means any Governmental Approvals required under applicable
Environmental Laws.
Environmental Laws
means all laws, rules, regulations, codes, ordinances, orders,
decrees, judgments, injunctions, notices or binding agreements issued, promulgated or entered into
by any Governmental Authority, relating in any way to the environment, preservation or reclamation
of natural resources, the management, release or threatened release of any Hazardous Material or to
health and safety matters.
Environmental Liability
means any liability, contingent or otherwise (including any
liability for damages, costs of environmental remediation, fines, penalties or indemnities), of the
Borrower or any of its subsidiaries directly or indirectly resulting from or based upon (a)
violation of any Environmental Law, (b) the generation, use, handling, transportation, storage,
treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the
release or threatened release of any Hazardous Materials into the environment or (e) any contract,
agreement or other consensual arrangement pursuant to which liability is assumed or imposed with
respect to any of the foregoing.
Equity Interest
means any and all shares, interests, participations or other
equivalents (however designated) of capital stock of a corporation, any member interests in a
limited liability company, and general or limited partnership interests in a partnership, any and
all equivalent ownership interests in a Person and any and all warrants, options or other rights to
purchase any of the foregoing. In addition, Equity Interest shall include, without limitation,
with respect to the MLP, the Units and the general partner interest of the MLP.
ERISA
means the Employee Retirement Income Security Act of 1974, as amended from
time to time.
6
ERISA Affiliate
means any trade or business (whether or not incorporated) that,
together with the Borrower, is treated as a single employer under Section 414(b) or (c) of the Code
or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single
employer under Section 414 of the Code.
ERISA Event
means (a) any reportable event, as defined in Section 4043 of ERISA or
the regulations issued thereunder with respect to a Plan (other than an event for which the 30-day
notice period is waived); (b) the existence with respect to any Plan of an accumulated funding
deficiency (as defined in Section 412 of the Code or Section 302 of ERISA), whether or not waived;
(c) the filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an application
for a waiver of the minimum funding standard with respect to any Plan; (d) the incurrence by the
Borrower or any of its ERISA Affiliates of any liability under Title IV of ERISA with respect to
the termination of any Plan; (e) the receipt by the Borrower or any ERISA Affiliate from the PBGC
or a plan administrator of any notice relating to an intention to terminate any Plan or Plans or to
appoint a trustee to administer any Plan; (f) the incurrence by the Borrower or any of its ERISA
Affiliates of any liability with respect to the withdrawal or partial withdrawal from any Plan or
Multiemployer Plan; or (g) the receipt by the Borrower or any ERISA Affiliate of any notice, or the
receipt by any Multiemployer Plan from the Borrower or any ERISA Affiliate of any notice,
concerning the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is,
or is expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA.
Eurodollar
, when used in reference to any Loan or Borrowing, refers to whether such
Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by
reference to the Adjusted LIBO Rate.
Event of Default
has the meaning assigned to such term in Article VII.
Exchange Act
means the Securities Exchange Act of 1934, as amended from time to
time, and any statute successor thereto.
Excluded Taxes
means, with respect to the Administrative Agent, any Lender, any
Issuing Bank or any other recipient of any payment to be made by or on account of any obligation of
the Borrower hereunder, (a) income or franchise taxes imposed on (or measured by) its net income
by the United States of America, or by the jurisdiction under the laws of which such recipient is
organized or in which its principal office is located or, in the case of any Lender, in which its
applicable lending office is located, (b) any branch profits taxes imposed by the United States of
America or any similar tax imposed by any other jurisdiction in which the Borrower is located and
(c) in the case of a Foreign Lender (other than an assignee pursuant to a request by the Borrower
under Section 2.17(b)), any withholding tax that is imposed on amounts payable to such Foreign
Lender at the time such Foreign Lender becomes a party to this Agreement (or designates a new
lending office) or is attributable to such Foreign Lenders failure to comply with Section 2.15(e),
except to the extent that such Foreign Lender (or its assignor, if any) was entitled, at the time
of designation of a new lending office (or assignment), to receive additional amounts from the
Borrower with respect to such withholding tax pursuant to Section 2.15(a).
7
Federal Funds Effective Rate
means, for any day, the weighted average (rounded
upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal funds brokers, as
published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day that is a Business Day, the average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the quotations for such day for such transactions received
by the Administrative Agent from three Federal funds brokers of recognized standing selected by it.
Financial Officer
means with respect to any Person, the chief accounting officer,
chief financial officer, treasurer or controller of such Person.
Foreign Lender
means any Lender that is organized under the laws of a jurisdiction
other than that in which the Borrower is located. For purposes of this definition, the United
States of America, each State thereof and the District of Columbia shall be deemed to constitute a
single jurisdiction.
GAAP
means generally accepted accounting principles in the United States of America.
Governmental Authority
means the government of the United States of America, any
other nation or any political subdivision thereof, whether state or local, and any agency,
authority, instrumentality, regulatory body, court, central bank or other entity exercising
executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or
pertaining to government.
Guarantee
of or by any Person (the
guarantor
) means any obligation,
contingent or otherwise, of the guarantor guaranteeing or having the economic effect of
guaranteeing any Indebtedness or other obligation of any other Person (the
primary
obligor
) in any manner, whether directly or indirectly, and including any obligation of the
guarantor, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase
or payment of) such Indebtedness or other obligation or to purchase (or to advance or supply funds
for the purchase of) any security for the payment thereof, (b) to purchase or lease property,
securities or services for the purpose of assuring the owner of such Indebtedness or other
obligation of the payment thereof, (c) to maintain working capital, equity capital or any other
financial statement condition or liquidity of the primary obligor so as to enable the primary
obligor to pay such Indebtedness or other obligation or (d) as an account party in respect of any
letter of credit or letter of guaranty issued to support such Indebtedness or obligation;
provided
, that the term Guarantee shall not include endorsements for collection or deposit
in the ordinary course of business.
Hazardous Materials
means all explosive or radioactive substances or wastes and all
hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum
distillates, asbestos or asbestos containing materials, polychlorinated biphenyls, radon gas,
infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to
any Environmental Law.
8
Indebtedness
of any Person means, without duplication, (a) all obligations of such
Person for borrowed money or with respect to deposits or advances of any kind, (b) all obligations
of such Person evidenced by bonds, debentures, notes or similar instruments or by any other
securities providing for the mandatory payment of money (including, without limitation, preferred
stock subject to mandatory redemption or sinking fund provisions), (c) all obligations of such
Person upon which interest charges are customarily paid, (d) all obligations of such Person under
conditional sale or other title retention agreements relating to property acquired by such Person,
(e) all obligations of such Person in respect of the deferred purchase price of property or
services (excluding current accounts payable incurred in the ordinary course of business), (f) all
Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by such
Person, whether or not the Indebtedness secured thereby has been assumed, (g) all Guarantees by
such Person of Indebtedness of others, (h) all Capital Lease Obligations of such Person, (i) all
non-contingent obligations of such Person as an account party in respect of letters of credit and
letters of guaranty, (j) all obligations, contingent or otherwise, of such Person in respect of
bankers acceptances, (k) all obligations of such Person with respect to any arrangement, directly
or indirectly, whereby such Person or its subsidiaries shall sell or transfer any material asset,
and whereby such Person or any of its subsidiaries shall then or immediately thereafter rent or
lease as lessee such asset or any part thereof, and (l) all recourse and support obligations of
such Person or any of its subsidiaries with respect to the sale or discount of any of its accounts
receivable. The Indebtedness of any Person shall include the Indebtedness of any other entity
(including any partnership in which such Person is a general partner) to the extent such Person is
liable therefor as a result of such Persons ownership interest in or other relationship with such
entity, except to the extent the terms of such Indebtedness provide that such Person is not liable
therefor.
Indemnified Taxes
means Taxes other than Excluded Taxes.
Indenture
means the Indenture, dated as of July 15, 2002, between the Borrower, as
Issuer, the MLP, as Guarantor, and The Bank of New York, as Trustee, relating to the issuance of
senior debt securities, as amended, modified and supplemented from time to time in accordance
herewith.
Index Debt
means senior, unsecured, long-term indebtedness for borrowed money of the
Borrower that is not guaranteed by any other Person or subject to any other credit enhancement and
that is rated by Moodys and S&P;
provided
that if at any time the Borrower has no such
rated senior, unsecured, long-term indebtedness, then during such time the Index Debt shall mean
senior, unsecured, long-term indebtedness for borrowed money of Valero Logistics that is not
guaranteed by any other Person other than the MLP and its subsidiaries or subject to any other
credit enhancement.
Interest Election Request
means a request by the Borrower to convert or continue a
Borrowing in accordance with Section 2.06.
Interest Payment Date
means (a) with respect to any ABR Loan, the last day of each
March, June, September and December and (b) with respect to any Eurodollar Loan, the last day of
the Interest Period applicable to the Borrowing of which such Loan is a part and, in the case of
9
a Eurodollar Borrowing with an Interest Period of more than three months duration, each day
prior to the last day of such Interest Period that occurs at intervals of three months duration
after the first day of such Interest Period.
Interest Period
means with respect to any Eurodollar Borrowing, the period
commencing on the date of such Borrowing and ending on the numerically corresponding day in the
calendar month that is one, two, three or six-months thereafter (or, with the consent of each
Lender, such other period as the Lenders and the Borrower shall mutually agree upon), as the
Borrower may elect;
provided
, that (i) if any Interest Period would end on a day other than
a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless
such next succeeding Business Day would fall in the next calendar month, in which case such
Interest Period shall end on the next preceding Business Day and (ii) any Interest Period
pertaining to a Eurodollar Borrowing that commences on the last Business Day of a calendar month
(or on a day for which there is no numerically corresponding day in the last calendar month of such
Interest Period) shall end on the last Business Day of the last calendar month of such Interest
Period. For purposes hereof, the date of a Borrowing initially shall be the date on which such
Borrowing is made and thereafter shall be the effective date of the most recent conversion or
continuation of such Borrowing.
Investment
means, as applied to any Person, any direct or indirect purchase or other
acquisition by such Person of any Equity Interests in any other Person, or any direct or indirect
loan, advance or capital contribution by such Person to any other Person, including all
Indebtedness and receivables from such other Person which are not current assets or did not arise
from sales to such other Person in the ordinary course of business, and any direct or indirect
purchase or other acquisition by such Person of any assets (other than any acquisition of assets in
the ordinary course of business).
Investment Grade
means a rating for Index Debt of BBB- or higher by S&P and Baa3 or
higher by Moodys.
Investment Grade Person
means a Person that has issued unsecured senior debt that
has at least two of the following ratings on the date the transaction constituting a Change in
Control is consummated:
(a) BBB- or above, in the case of S&P (or its equivalent under any successor rating categories
of S&P);
(b) Baa3 or above, in the case of Moodys (or its equivalent under any successor rating
categories of Moodys); or
(c) the equivalent in respect of the rating categories of any rating agencies substituted for
S&P or Moodys.
IPO
means the initial public offering of 17,250,000 units representing limited
liability company interests in the Borrower.
IPO Documents
means (i) the registration statement of the Borrower on Form S-1,
including the Prospectus contained therein (File No. 333-132917), filed with the Securities and
10
Exchange Commission and relating to the IPO and (ii) the underwriting agreement dated July 1,
2006, among the Borrower, Sigmor Corporation, The Shamrock Pipe Line Corporation, Diamond Shamrock
Refining Company, L.P., Valero Refining-New Orleans, L.L.C, Valero Refining Company California,
Valero Refining Texas, L.P. and Lehman Brothers Inc., as representative of the several
underwriters named therein.
Issuing Bank
means each of JPMorgan Chase Bank, N.A. and SunTrust Bank, in each
case, in its capacity as an issuer of Letters of Credit hereunder, and its successors in such
capacity as provided in Section 2.04(i). Any Issuing Bank may, in its discretion, arrange for one
or more Letters of Credit to be issued by Affiliates of such Issuing Bank, in which case the term
Issuing Bank shall include any such Affiliate with respect to Letters of Credit issued by such
Affiliate.
Joint Venture Interest
means an acquisition of or Investment in Equity Interests in
another Person, held directly or indirectly by the MLP, that will not be a subsidiary of the MLP
after giving effect to such acquisition or Investment.
KPP
means Kaneb Pipe Line Partners, L.P., a Delaware limited partnership.
KSL
means Kaneb Services LLC, a Delaware limited liability company.
LC Disbursement
means a payment made by any Issuing Bank pursuant to a Letter of
Credit issued by such Issuing Bank.
LC Exposure
means, at any time, the sum of (a) the aggregate undrawn amount of all
outstanding Letters of Credit at such time plus (b) the aggregate amount of all LC Disbursements
that have not yet been reimbursed by or on behalf of the Borrower at such time. The LC Exposure of
any Lender at any time shall be its Applicable Percentage of the total LC Exposure at such time.
The LC Exposure of any Issuing Bank at any time shall be the sum of (a) the aggregate undrawn
amount of all outstanding Letters of Credit issued by such Issuing Bank at such time plus (b) the
aggregate amount of all LC Disbursements made by such Issuing Bank that have not yet been
reimbursed by or on behalf of the Borrower at such time.
Lenders
means the Persons listed on Schedule 2.01 and any other Person that shall
have become a party hereto pursuant to an Assignment and Assumption, other than any such Person
that ceases to be a party hereto pursuant to an Assignment and Assumption.
Letter of Credit
means any letter of credit issued pursuant to this Agreement.
LIBO Rate
means, with respect to any Eurodollar Borrowing for any Interest Period,
the rate appearing on Page 3750 of the Dow Jones Market Service (or on any successor or substitute
page of such Service, or any successor to or substitute for such Service, providing rate quotations
comparable to those currently provided on such page of such Service, as determined by the
Administrative Agent from time to time for purposes of providing quotations of interest rates
applicable to dollar deposits in the London interbank market) at approximately 11:00 a.m., London
time, two Business Days prior to the commencement of such Interest Period, as the rate for dollar
deposits with a maturity comparable to such Interest Period. In the event that such rate is not
available at such time for any reason, then the LIBO Rate with respect to such
11
Eurodollar Borrowing for such Interest Period shall be the rate at which dollar deposits of
$5,000,000 and for a maturity comparable to such Interest Period are offered by the principal
London office of the Administrative Agent in immediately available funds in the London interbank
market at approximately 11:00 a.m., London time, two Business Days prior to the commencement of
such Interest Period.
Lien
means, with respect to any asset, (a) any mortgage, deed of trust, lien,
pledge, hypothecation, encumbrance, charge or security interest in, on or of such asset, (b) the
interest of a vendor or a lessor under any conditional sale agreement, capital lease or title
retention agreement (or any financing lease having substantially the same economic effect as any of
the foregoing) relating to such asset and (c) in the case of securities, any purchase option, call
or similar right of a third party with respect to such securities.
Limited Liability Company Agreement (Borrower)
means the Second Amended and Restated
Limited Liability Company Agreement of the Borrower dated as of July 19, 2006, as amended, modified
and supplemented from time to time in accordance herewith.
Loan Documents
means this Agreement, any notes issued pursuant to Section 2.08(e),
and any Letter of Credit, as each such agreement may be amended, supplemented or otherwise modified
from time to time as permitted hereby, and any and all instruments, certificates, or other
agreements delivered in connection with the foregoing.
Loans
means the loans made by the Lenders to the Borrower pursuant to this
Agreement.
Material Adverse Effect
means a material adverse effect on (a) the business, assets,
operations or condition (financial or otherwise) of the Borrower and its subsidiaries taken as a
whole, (b) the ability of the Borrower to perform any of its obligations under this Agreement or
any other Loan Document or (c) the rights of or benefits available to the Lenders under this
Agreement or any other Loan Document.
Material Agreements
means the Limited Liability Company Agreement (Borrower), the
Partnership Agreement (MLP) and the Indenture as each such agreement may be amended, supplemented
or otherwise modified from time to time as permitted hereby.
Material Indebtedness
means Indebtedness (other than the Loans and Letters of
Credit), or obligations in respect of one or more Swap Agreements, of any one or more of the
Borrower and the Restricted Subsidiaries in an aggregate principal amount exceeding $5,000,000.
For purposes of determining Material Indebtedness, the principal amount of the obligations of the
Borrower or any Restricted Subsidiary in respect of any Swap Agreement at any time shall be the
maximum aggregate amount (giving effect to any netting agreements) that such Person would be
required to pay if such Swap Agreement were terminated at such time.
Material Project
means each new pipeline, storage facility, processing plant or
other capital expansion project wholly owned by the MLP or its subsidiaries, the construction of
which commenced after May 31, 2006 and which has a budgeted capital cost exceeding $25,000,000.
12
Material Project EBITDA Adjustments
means, with respect to each Material Project,
(a) for any Rolling Period ending on or prior to the last day of the fiscal quarter during which
the Material Project is completed, a percentage (based on the then-current completion percentage of
the Material Project) of an amount to be approved by the Required Lenders as the projected
Consolidated EBITDA attributable to such Material Project (such amount to be determined based on
contracts relating to such Material Project, the creditworthiness of the other parties to such
contracts and projected revenues from such contracts, capital costs and expenses, scheduled
completion, and other factors deemed appropriate by the Lenders) shall be added to actual
Consolidated EBITDA for the MLP and its subsidiaries for the fiscal quarter in which construction
of such Material Project commences and for each fiscal quarter thereafter until completion of the
Material Project (net of any actual Consolidated EBITDA attributable to such Material Project
following its completion),
provided
that if construction of the Material Project is not
completed by the scheduled completion date, then the foregoing amount shall be reduced by the
following percentage amounts depending on the period of delay for completion (based on the period
of actual delay or then-estimated delay, whichever is longer): (i) longer than 90 days, but not
more than 180 days, 25%, (ii) longer than 180 days but not more than 270 days, 50%, and (iii)
longer than 270 days, 100%; and (b) for each Rolling Period ending on the last day of the first,
second and third fiscal quarters, respectively, immediately following the fiscal quarter during
which the Material Project is completed, an amount equal to the projected Consolidated EBITDA
attributable to the Material Project for the period from but excluding the end of such Rolling
Period through and including the last day of the fourth fiscal quarter following the fiscal quarter
during which the Material Project is completed shall be added to Consolidated EBITDA for such
Rolling Period (net of any actual Consolidated EBITDA attributable to the Material Project for the
period from and including the date of completion through and including the last day of the fiscal
quarter during which the Material Project is completed). Notwithstanding the foregoing, (i) no
such additions shall be allowed with respect to any Material Project unless not later than 45 days
prior to commencement of construction thereof, the Borrower shall have delivered to the
Administrative Agent and the Lenders written pro forma projections of Consolidated EBITDA
attributable to such Material Project and such other information and documentation as the
Administrative Agent or any Lender may reasonably request, all in form and substance satisfactory
to the Administrative Agent and the Required Lenders, and (ii) the aggregate amount of all Material
Project EBITDA Adjustments during any period shall be limited to 20% of the total actual
Consolidated EBITDA of the MLP and its subsidiaries for such period (which total actual
Consolidated EBITDA shall be determined without including any Material Project EBITDA Adjustments
or any adjustments in respect of any acquisitions or dispositions as provided in the definition of
Consolidated EBITDA).
Maturity Date
means the third anniversary of the Effective Date.
MLP
means Valero L.P., a Delaware limited partnership.
Moodys
means Moodys Investors Service, Inc. (or any successor rating
organization).
Multiemployer Plan
means a multiemployer plan as defined in Section 4001(a)(3) of
ERISA, to which the Borrower or any ERISA Affiliate makes or is obligated to make contributions.
13
Other Taxes
means any and all present or future stamp or documentary taxes or any
other excise or property taxes, charges or similar levies arising from any payment made hereunder
or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement.
Partnership Agreement (MLP)
means the Third Amended and Restated Agreement of
Limited Partnership of the MLP dated as of March 18, 2003, as amended, modified and supplemented
from time to time in accordance herewith.
PBGC
means the Pension Benefit Guaranty Corporation referred to and defined in ERISA
and any successor entity performing similar functions.
Permitted Encumbrances
means:
(a) Liens imposed by law for Taxes that are not yet due or are being contested in compliance
with Section 5.04;
(b) carriers, warehousemens, mechanics, materialmens, repairmens and other like Liens
imposed by law, arising in the ordinary course of business and securing obligations that are not
overdue by more than 30 days or are being contested in compliance with Section 5.04;
(c) pledges and deposits made in the ordinary course of business in compliance with workers
compensation, unemployment insurance and other social security laws or regulations;
(d) deposits to secure the performance of bids, trade contracts, leases, statutory
obligations, surety and appeal bonds, performance bonds and other obligations of a like nature, in
each case in the ordinary course of business;
(e) judgment liens in respect of judgments that do not constitute an Event of Default under
clause (j) of Article VII;
(f) easements, zoning restrictions, rights-of-way, minor irregularities in title, boundaries,
or other survey defects, servitudes, permits, reservations, exceptions, zoning regulations,
conditions, covenants, mineral or royalty rights or reservations or oil, gas and mineral leases and
rights of others in any property of the Borrower or any Restricted Subsidiary for streets, roads,
bridges, pipes, pipe lines, railroads, electric transmission and distribution lines, telegraph and
telephone lines, the removal of oil, gas or other minerals or other similar purposes, flood
control, water rights, rights of others with respect to navigable waters, sewage and drainage
rights and similar encumbrances on real property imposed by law or arising in the ordinary course
of business that do not secure any monetary obligations and do not materially detract from the
value of the affected property or interfere with the ordinary conduct of business of the MLP or any
Restricted Subsidiary; provided that the term Permitted Encumbrances shall not include any Lien
securing Indebtedness; and
(g) Liens securing an obligation of a third party neither created, assumed nor Guaranteed by
the Borrower or any Restricted Subsidiary upon lands over which easements or
14
similar rights are acquired by the Borrower or any Restricted Subsidiary in the ordinary
course of business of the Borrower or any Restricted Subsidiary.
Permitted Holder
means Valero Energy or any Investment Grade Person.
Permitted Investments
means:
(a) direct obligations of, or obligations the principal of and interest on which are
unconditionally guaranteed by, the United States of America (or by any agency thereof to the extent
such obligations are backed by the full faith and credit of the United States of America), in each
case maturing within one year from the date of acquisition thereof;
(b) investments in commercial paper maturing within 270 days from the date of acquisition
thereof and having, at such date of acquisition, a short term deposit rating of no lower than A2 or
P2, as such rating is set forth by S&P or Moodys, respectively;
(c) investments in certificates of deposit, bankers acceptances and time deposits maturing
within 180 days from the date of acquisition thereof issued or guaranteed by or placed with, and
money market deposit accounts issued or offered by, any domestic office of any commercial bank
organized under the laws of the United States of America or any State thereof which has a combined
capital and surplus and undivided profits of not less than $500,000,000;
(d) fully collateralized repurchase agreements with a term of not more than 30 days for
securities described in clause (a) above and entered into with a financial institution satisfying
the criteria described in clause (c) above; and
(e) investments in short term debt obligations of an issuer rated at least BBB by S&Ps or
Baa2 by Moodys, and maturing within 30 days from the date of acquisition, in an aggregate amount
not to exceed $50,000,000 at any time.
Person
means any natural person, corporation, limited liability company, trust,
joint venture, association, company, partnership, Governmental Authority or other entity.
Plan
means any employee pension benefit plan (other than a Multiemployer Plan)
subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA,
and in respect of which the Borrower or any ERISA Affiliate contributes or has an obligation to
contribute and is (or, if such plan were terminated, would under Section 4069 of ERISA be deemed to
be) an employer as defined in Section 3(5) of ERISA.
Prime Rate
means the rate of interest per annum publicly announced from time to time
by JPMorgan Chase Bank, N.A. as its prime rate in effect at its principal office in New York City;
each change in the Prime Rate shall be effective from and including the date such change is
publicly announced as being effective.
Register
has the meaning set forth in Section 9.04.
15
Related Parties
means, with respect to any specified Person, such Persons
Affiliates and the respective directors, officers, employees, agents and advisors of such Person
and such Persons Affiliates.
Required Lenders
means, at any time, Lenders having Revolving Credit Exposures and
unused Commitments representing greater than 50% of the sum of the total Revolving Credit Exposures
and unused Commitments at such time.
Restricted Payment
means any dividend or other distribution (whether in cash,
securities or other property, with the exception of additional shares of its Equity Interests
(other than Disqualified Capital Stock)) with respect to any Equity Interest of the Borrower or any
Restricted Subsidiary, or any payment (whether in cash, securities or other property, with the
exception of additional shares of its Equity Interests (other than Disqualified Capital Stock)),
including any sinking fund or similar deposit, on account of the purchase, redemption, retirement,
acquisition, cancellation or termination of any such Equity Interest of the Borrower or any option,
warrant or other right to acquire any such Equity Interest of the Borrower.
Restricted Subsidiary
means, collectively, Valero GP, LLC, Riverwalk Holdings, LLC,
and Riverwalk Logistics, L.P..
Revolving Credit Exposure
means, with respect to any Lender at any time, the sum of
the outstanding principal amount of such Lenders Loans and its LC Exposure at such time.
Riverwalk Holdings, LLC
means Riverwalk Holdings, LLC, a Delaware limited liability
company.
Riverwalk Logistics, L.P
. means Riverwalk Logistics, L.P., a Delaware limited
partnership
Rolling Period
means any period of four consecutive fiscal quarters.
SEC
means the Securities and Exchange Commission or any successor Governmental
Authority.
S&P
means Standard & Poors Ratings Group, a division of McGraw-Hill Companies, Inc.
(or any successor rating organization).
Statutory Reserve Rate
means a fraction (expressed as a decimal), the numerator of
which is the number one and the denominator of which is the number one minus the aggregate of the
maximum reserve percentages (including any marginal, special, emergency or supplemental reserves)
expressed as a decimal established by the Board to which the Administrative Agent is subject with
respect to the Adjusted LIBO Rate, for eurocurrency funding (currently referred to as Eurocurrency
Liabilities in Regulation D of the Board). Such reserve percentages shall include those imposed
pursuant to such Regulation D. Eurodollar Loans shall be deemed to constitute eurocurrency funding
and to be subject to such reserve requirements without benefit of or credit for proration,
exemptions or offsets that may be available from time to time to any Lender under such Regulation D
or any comparable regulation. The Statutory Reserve Rate shall
16
be adjusted automatically on and as of the effective date of any change in any reserve
percentage.
subsidiary
means, with respect to any Person (the
parent
) at any date, any
corporation, limited liability company, partnership, association or other entity the accounts of
which would be consolidated with those of the parent in the parents consolidated financial
statements if such financial statements were prepared in accordance with GAAP as of such date, as
well as any other corporation, limited liability company, partnership, association or other entity
(a) of which securities or other ownership interests representing more than 50% of the equity or
more than 50% of the ordinary voting power or, in the case of a partnership, more than 50% of the
general partnership interests are, as of such date, owned, controlled or held, or (b) that is, as
of such date, otherwise Controlled, by the parent or one or more subsidiaries of the parent or by
the parent and one or more subsidiaries of the parent.
Swap Agreement
means any agreement with respect to any swap, forward, future or
derivative transaction or option or similar agreement involving, or settled by reference to, one or
more rates, currencies, commodities, equity or debt instruments or securities, or economic,
financial or pricing indices or measures of economic, financial or pricing risk or value or any
similar transaction or any combination of these transactions;
provided
that no phantom
stock or similar plan providing for payments only on account of services provided by current or
former directors, officers, employees or consultants of the Borrower or its subsidiaries shall be a
Swap Agreement.
Taxes
means any and all present or future taxes, levies, imposts, duties,
deductions, charges or withholdings imposed by any Governmental Authority.
Transactions
means the execution, delivery and performance by the Borrower of this
Agreement, the borrowing of Loans, the use of the proceeds thereof and the issuance of Letters of
Credit hereunder.
Type
, when used in reference to any Loan or Borrowing, refers to whether the rate of
interest on such Loan, or on the Loans comprising such Borrowing, is determined by reference to the
Adjusted LIBO Rate or the Alternate Base Rate.
Units
means the collective reference to the Common Units.
Valero Energy
means Valero Energy Corporation, a Delaware corporation.
Valero GP, LLC
means Valero GP, LLC, a Delaware limited liability company.
Valero Logistics
means Valero Logistics Operations, L.P., a Delaware limited
partnership.
Valero Logistics Credit Agreement
means that certain 5-Year Revolving Credit
Agreement dated as of December 20, 2004 among Valero Logistics, the MLP, JPMorgan Chase Bank, N.A.,
as administrative agent, and the lenders and other agents party thereto, as heretofore amended, and
as the same may from time to time be amended, modified, supplemented or restated.
17
Withdrawal Liability
means liability to a Multiemployer Plan as a result of a
complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of
Subtitle E of Title IV of ERISA.
Section 1.02
Classification of Loans and Borrowings
. For purposes of this Agreement,
Loans and Borrowings may be classified and referred to by Type (e.g., a
Eurodollar Loan
or a
Eurodollar Borrowing
).
Section 1.03
Terms Generally
. The definitions of terms herein shall apply equally to
the singular and plural forms of the terms defined. Whenever the context may require, any pronoun
shall include the corresponding masculine, feminine and neuter forms. The words include,
includes and including shall be deemed to be followed by the phrase without limitation. The
word will shall be construed to have the same meaning and effect as the word shall. Unless the
context requires otherwise (a) any definition of or reference to any agreement, instrument or other
document herein shall be construed as referring to such agreement, instrument or other document as
from time to time amended, supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference herein to any Person
shall be construed to include such Persons successors and assigns, (c) the words herein,
hereof and hereunder, and words of similar import, shall be construed to refer to this
Agreement in its entirety and not to any particular provision hereof, (d) all references herein to
Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of,
and Exhibits and Schedules to, this Agreement and (e) the words asset and property shall be
construed to have the same meaning and effect and to refer to any and all tangible and intangible
assets and properties, including cash, securities, accounts and contract rights.
Section 1.04
Accounting Terms; GAAP
. Except as otherwise expressly provided herein,
all terms of an accounting or financial nature shall be construed in accordance with GAAP, as in
effect from time to time;
provided
that, if the Borrower notifies the Administrative Agent
that the Borrower requests an amendment to any provision hereof to eliminate the effect of any
change occurring after the date hereof in GAAP or in the application thereof on the operation of
such provision (or if the Administrative Agent notifies the Borrower that the Required Lenders
request an amendment to any provision hereof for such purpose), regardless of whether any such
notice is given before or after such change in GAAP or in the application thereof, then such
provision shall be interpreted on the basis of GAAP as in effect and applied immediately before
such change shall have become effective until such notice shall have been withdrawn or such
provision amended in accordance herewith.
ARTICLE II
The Credits
Section 2.01
Commitments
. Subject to the terms and conditions set forth herein, each
Lender agrees to make Loans to the Borrower from time to time during the Availability Period in an
aggregate principal amount that will not result in (a) such Lenders Revolving Credit Exposure
exceeding such Lenders Commitment or (b) the sum of the total Revolving Credit Exposures exceeding
the total Commitments. Within the foregoing limits and subject to the terms and conditions set
forth herein, the Borrower may borrow, prepay and reborrow Loans.
18
Section 2.02
Loans and Borrowings
.
(a) Each Loan shall be made as part of a Borrowing consisting of Loans made by the Lenders
ratably in accordance with their respective Commitments. The failure of any Lender to make any
Loan required to be made by it shall not relieve any other Lender of its obligations hereunder;
provided
that the Commitments of the Lenders are several and no Lender shall be responsible
for any other Lenders failure to make Loans as required.
(b) Subject to Section 2.12, each Borrowing shall be comprised entirely of ABR Loans or
Eurodollar Loans as the Borrower may request in accordance herewith. Each Lender at its option may
make any Eurodollar Loan by causing any domestic or foreign branch or Affiliate of such Lender to
make such Loan;
provided
that any exercise of such option shall not affect the obligation
of the Borrower to repay such Loan in accordance with the terms of this Agreement.
(c) At the commencement of each Interest Period for any Eurodollar Borrowing, such Borrowing
shall be in an aggregate amount that is an integral multiple of $500,000 and not less than
$1,000,000. At the time that each ABR Borrowing is made, such Borrowing shall be in an aggregate
amount that is an integral multiple of $500,000 and not less than $1,000,000;
provided
that
an ABR Borrowing may be in an aggregate amount that is equal to the entire unused balance of the
total Commitments or that is required to finance the reimbursement of an LC Disbursement as
contemplated by Section 2.04(e). Borrowings of more than one Type may be outstanding at the same
time; provided that there shall not at any time be more than a total of five Eurodollar Borrowings
outstanding.
(d) Notwithstanding any other provision of this Agreement, the Borrower shall not be entitled
to request, or to elect to convert or continue, any Borrowing if the Interest Period requested with
respect thereto would end after the Maturity Date.
Section 2.03
Requests for Borrowings
. To request a Borrowing, the Borrower shall
notify the Administrative Agent of such request by telephone (a) in the case of a Eurodollar
Borrowing, not later than 12:00 noon, New York City time, three Business Days before the date of
the proposed Borrowing or (b) in the case of an ABR Borrowing, not later than 12:00 noon, New York
City time, on date of the proposed Borrowing;
provided
that any such notice of an ABR
Borrowing to finance the reimbursement of an LC Disbursement as contemplated by Section 2.04(e) may
be given not later than 10:00 a.m., New York City time, on the date of the proposed Borrowing.
Each such telephonic Borrowing Request shall be irrevocable and shall be confirmed promptly by hand
delivery or telecopy to the Administrative Agent of a written Borrowing Request in a form approved
by the Administrative Agent and signed by the Borrower. Each such telephonic and written Borrowing
Request shall specify the following information in compliance with Section 2.02:
(i) the aggregate amount of the requested Borrowing;
(ii) the date of such Borrowing, which shall be a Business Day;
(iii) whether such Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing;
19
(iv) in the case of a Eurodollar Borrowing, the initial Interest Period to be applicable
thereto, which shall be a period contemplated by the definition of the term Interest Period; and
(v) the location and number of the Borrowers account to which funds are to be disbursed,
which shall comply with the requirements of Section 2.05.
If no election as to the Type of Borrowing is specified, then the requested Borrowing shall be an
ABR Borrowing. If no Interest Period is specified with respect to any requested Eurodollar
Borrowing, then the Borrower shall be deemed to have selected an Interest Period of one months
duration. Promptly following receipt of a Borrowing Request in accordance with this Section, the
Administrative Agent shall advise each Lender of the details thereof and of the amount of such
Lenders Loan to be made as part of the requested Borrowing.
Section 2.04 Letters of Credit.
(a)
General
. Subject to the terms and conditions set forth herein, the Borrower may
request the issuance of Letters of Credit for its own account from any Issuing Bank, in a form
reasonably acceptable to the Administrative Agent and such Issuing Bank, at any time and from time
to time during the Availability Period. In the event of any inconsistency between the terms and
conditions of this Agreement and the terms and conditions of any form of letter of credit
application or other agreement submitted by the Borrower to, or entered into by the Borrower with,
an Issuing Bank relating to any Letter of Credit, the terms and conditions of this Agreement shall
control.
(b)
Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions
. To request
the issuance of a Letter of Credit (or the amendment, renewal or extension of an outstanding Letter
of Credit), the Borrower shall hand deliver or telecopy (or transmit by electronic communication,
if arrangements for doing so have been approved by the Issuing Bank) to any Issuing Bank and the
Administrative Agent (reasonably in advance of the requested date of issuance, amendment, renewal
or extension) a notice requesting the issuance of a Letter of Credit, or identifying the Letter of
Credit to be amended, renewed or extended, and specifying the date of issuance, amendment, renewal
or extension (which shall be a Business Day), the date on which such Letter of Credit is to expire
(which shall comply with paragraph (c) of this Section), the amount of such Letter of Credit, the
name and address of the beneficiary thereof and such other information as shall be necessary to
prepare, amend, renew or extend such Letter of Credit. If requested by an Issuing Bank, the
Borrower also shall submit a letter of credit application on such Issuing Banks standard form in
connection with any request for a Letter of Credit. Following receipt of a notice requesting the
issuance of a Letter of Credit (or the amendment, renewal or extension of an outstanding Letter of
Credit) in accordance with this Section, the Administrative Agent shall advise each Lender of the
details thereof. A Letter of Credit shall be issued, amended, renewed or extended only if (and
upon issuance, amendment, renewal or extension of each Letter of Credit the Borrower shall be
deemed to represent and warrant that), after giving effect to such issuance, amendment, renewal or
extension (i) the total LC Exposure shall not exceed $10,000,000 and (ii) the sum of the total
Revolving Credit Exposures shall not exceed the total Commitments.
20
(c)
Expiration Date
. Each Letter of Credit shall expire at or prior to the close of
business on the date that is five Business Days prior to the Maturity Date.
(d)
Participations
. By the issuance of a Letter of Credit (or an amendment to a
Letter of Credit increasing the amount thereof) and without any further action on the part of the
Issuing Bank that issues such Letter of Credit or the Lenders, each Issuing Bank that issues a
Letter of Credit hereunder hereby grants to each Lender, and each Lender hereby acquires from such
Issuing Bank, a participation in such Letter of Credit equal to such Lenders Applicable Percentage
of the aggregate amount available to be drawn under such Letter of Credit. In consideration and in
furtherance of the foregoing, each Lender hereby absolutely and unconditionally agrees to pay to
the Administrative Agent, for the account of each Issuing Bank that issues a Letter of Credit
hereunder, such Lenders Applicable Percentage of each LC Disbursement made by such Issuing Bank
and not reimbursed by the Borrower on the date due as provided in paragraph (e) of this Section, or
of any reimbursement payment required to be refunded to the Borrower for any reason. Each Lender
acknowledges and agrees that its obligation to acquire participations pursuant to this paragraph in
respect of Letters of Credit is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including any amendment, renewal or extension of any Letter of Credit or
the occurrence and continuance of a Default or reduction or termination of the Commitments, and
that each such payment shall be made without any offset, abatement, withholding or reduction
whatsoever.
(e)
Reimbursement
. If any Issuing Bank shall make any LC Disbursement in respect of a
Letter of Credit issued by such Issuing Bank, the Borrower shall reimburse such LC Disbursement by
paying to the Administrative Agent an amount equal to such LC Disbursement not later than 12:00
noon, New York City time, on the date that such LC Disbursement is made, if the Borrower shall have
received notice of such LC Disbursement prior to 10:00 a.m., New York City time, on such date, or,
if such notice has not been received by the Borrower prior to such time on such date, then not
later than 12:00 noon, New York City time, on (i) the Business Day that the Borrower receives such
notice, if such notice is received prior to 10:00 a.m., New York City time, on the day of receipt,
or (ii) the Business Day immediately following the day that the Borrower receives such notice, if
such notice is not received prior to such time on the day of receipt;
provided
that the
Borrower may, subject to the conditions to borrowing set forth herein, request in accordance with
Section 2.03 that such payment be financed with an ABR Borrowing in an equivalent amount and, to
the extent so financed, the Borrowers obligation to make such payment shall be discharged and
replaced by the resulting ABR Borrowing. If the Borrower fails to make such payment when due, the
Administrative Agent shall notify each Lender of the applicable LC Disbursement, the payment then
due from the Borrower in respect thereof and such Lenders Applicable Percentage thereof. Promptly
following receipt of such notice, each Lender shall pay to the Administrative Agent its Applicable
Percentage of the payment then due from the Borrower, in the same manner as provided in Section
2.05 with respect to Loans made by such Lender (and Section 2.05 shall apply,
mutatis
mutandis
, to the payment obligations of the Lenders), and the Administrative Agent shall
promptly pay to the Issuing Bank that issued such Letter of Credit the amounts so received by it
from the Lenders. Promptly following receipt by the Administrative Agent of any payment from the
Borrower pursuant to this paragraph, the Administrative Agent shall distribute such payment to the
Issuing Bank that issued such Letter of Credit or, to the extent that Lenders have made payments
pursuant to this paragraph to reimburse such Issuing Bank, then to such Lenders and such Issuing
21
Bank as their interests may appear. Any payment made by a Lender pursuant to this paragraph
to reimburse an Issuing Bank for any LC Disbursement (other than the funding of ABR Loans as
contemplated above) shall not constitute a Loan and shall not relieve the Borrower of its
obligation to reimburse such LC Disbursement.
(f)
Obligations Absolute
. The Borrowers obligation to reimburse LC Disbursements as
provided in paragraph (e) of this Section shall be absolute, unconditional and irrevocable, and
shall be performed strictly in accordance with the terms of this Agreement under any and all
circumstances whatsoever and irrespective of (i) any lack of validity or enforceability of any
Letter of Credit or this Agreement, or any term or provision therein, (ii) any draft or other
document presented under a Letter of Credit proving to be forged, fraudulent or invalid in any
respect or any statement therein being untrue or inaccurate in any respect, (iii) payment by any
Issuing Bank under a Letter of Credit against presentation of a draft or other document that does
not comply with the terms of such Letter of Credit, or (iv) any other event or circumstance
whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of
this Section, constitute a legal or equitable discharge of, or provide a right of setoff against,
the Borrowers obligations hereunder. Neither the Administrative Agent, the Lenders nor any
Issuing Bank, nor any of their Related Parties, shall have any liability or responsibility by
reason of or in connection with the issuance or transfer of any Letter of Credit or any payment or
failure to make any payment thereunder (irrespective of any of the circumstances referred to in the
preceding sentence), or any error, omission, interruption, loss or delay in transmission or
delivery of any draft, notice or other communication under or relating to any Letter of Credit
(including any document required to make a drawing thereunder), any error in interpretation of
technical terms or any consequence arising from causes beyond the control of any Issuing Bank;
provided
that the foregoing shall not be construed to excuse any Issuing Bank from
liability to the Borrower to the extent of any direct damages (as opposed to consequential damages,
claims in respect of which are hereby waived by the Borrower to the extent permitted by applicable
law) suffered by the Borrower that are caused by such Issuing Banks failure to exercise care when
determining whether drafts and other documents presented under a Letter of Credit comply with the
terms thereof. The parties hereto expressly agree that, in the absence of gross negligence or
wilful misconduct on the part of an Issuing Bank (as finally determined by a court of competent
jurisdiction), each Issuing Bank shall be deemed to have exercised care in each such determination.
In furtherance of the foregoing and without limiting the generality thereof, the parties agree
that, with respect to documents presented which appear on their face to be in substantial
compliance with the terms of a Letter of Credit, the Issuing Bank that issued such Letter of Credit
may, in its sole discretion, either accept and make payment upon such documents without
responsibility for further investigation, regardless of any notice or information to the contrary,
or refuse to accept and make payment upon such documents if such documents are not in strict
compliance with the terms of such Letter of Credit.
(g)
Disbursement Procedures
. Each Issuing Bank shall, promptly following its receipt
thereof, examine all documents purporting to represent a demand for payment under a Letter of
Credit. Such Issuing Bank shall promptly notify the Administrative Agent and the Borrower by
telephone (confirmed by telecopy) of such demand for payment and whether such Issuing Bank has made
or will make an LC Disbursement thereunder;
provided
that any failure to give or delay in
giving such notice shall not relieve the Borrower of its obligation to reimburse such Issuing Bank
and the Lenders with respect to any such LC Disbursement.
22
(h)
Interim Interest
. If any Issuing Bank shall make any LC Disbursement, then,
unless the Borrower shall reimburse such LC Disbursement in full on the date such LC Disbursement
is made, the unpaid amount thereof shall bear interest, for each day from and including the date
such LC Disbursement is made to but excluding the date that the Borrower reimburses such LC
Disbursement, at the rate per annum then applicable to ABR Loans;
provided
that, if the
Borrower fails to reimburse such LC Disbursement when due pursuant to paragraph (e) of this
Section, then Section 2.11(c) shall apply. Interest accrued pursuant to this paragraph shall be
for the account of such Issuing Bank, except that interest accrued on and after the date of payment
by any Lender pursuant to paragraph (e) of this Section to reimburse such Issuing Bank shall be for
the account of such Lender to the extent of such payment.
(i)
Replacement of an Issuing Bank
. Any Issuing Bank may be replaced at any time by
written agreement among the Borrower, the Administrative Agent, the replaced Issuing Bank and the
successor Issuing Bank. The Administrative Agent shall notify the Lenders of any such replacement
of an Issuing Bank. At the time any such replacement shall become effective, the Borrower shall
pay all unpaid fees accrued for the account of the replaced Issuing Bank pursuant to Section
2.10(b). From and after the effective date of any such replacement, (i) the successor Issuing Bank
shall have all the rights and obligations of the replaced Issuing Bank under this Agreement with
respect to Letters of Credit to be issued thereafter and (ii) references herein to the term
Issuing Bank shall be deemed to refer to such successor or to any previous Issuing Bank, or to
such successor and all previous Issuing Banks, as the context shall require. After the replacement
of an Issuing Bank hereunder, the replaced Issuing Bank shall remain a party hereto and shall
continue to have all the rights and obligations of an Issuing Bank under this Agreement with
respect to Letters of Credit issued by it prior to such replacement, but shall not be required to
issue additional Letters of Credit.
(j)
Cash Collateralization
. If any Event of Default shall occur and be continuing, on
the Business Day that the Borrower receives notice from the Administrative Agent or the Required
Lenders (or, if the maturity of the Loans has been accelerated, Lenders with LC Exposure
representing greater than 50% of the total LC Exposure) demanding the deposit of cash collateral
pursuant to this paragraph, the Borrower shall deposit in an account with the Administrative Agent,
in the name of the Administrative Agent and for the benefit of the Lenders, an amount in cash equal
to the LC Exposure as of such date plus any accrued and unpaid interest thereon;
provided
that the obligation to deposit such cash collateral shall become effective immediately, and such
deposit shall become immediately due and payable, without demand or other notice of any kind, upon
the occurrence of any Event of Default with respect to the Borrower described in clause (g) or (h)
of Article VII. Such deposit shall be held by the Administrative Agent as collateral for the
payment and performance of the obligations of the Borrower under this Agreement. The
Administrative Agent shall have exclusive dominion and control, including the exclusive right of
withdrawal, over such account. Other than any interest earned on the investment of such deposits,
which investments shall be made at the option and sole discretion of the Administrative Agent and
at the Borrowers risk and expense, such deposits shall not bear interest. Interest or profits, if
any, on such investments shall accumulate in such account. Moneys in such account shall be applied
by the Administrative Agent to reimburse each Issuing Bank for LC Disbursements for which it has
not been reimbursed and, to the extent not so applied, shall be held for the satisfaction of the
reimbursement obligations of the Borrower for the LC Exposure at such time or, if the maturity of
the Loans has been
23
accelerated (but subject to the consent of Lenders with LC Exposure representing greater than
50% of the total LC Exposure), be applied to satisfy other obligations of the Borrower under this
Agreement. If the Borrower is required to provide an amount of cash collateral hereunder as a
result of the occurrence of an Event of Default, such amount (to the extent not applied as
aforesaid) shall be returned to the Borrower within three Business Days after all Events of Default
have been cured or waived.
Section 2.05
Funding of Borrowings
.
(a) Each Lender shall make each Loan to be made by it hereunder on the proposed date thereof
by wire transfer of immediately available funds by 1:00 p.m., New York City time, to the account of
the Administrative Agent most recently designated by it for such purpose by notice to the Lenders.
The Administrative Agent will make such Loans available to the Borrower by promptly crediting the
amounts so received, in like funds, to an account of the Borrower maintained with the
Administrative Agent in New York City and designated by the Borrower in the applicable Borrowing
Request;
provided
that ABR Loans made to finance the reimbursement of an LC Disbursement as
provided in Section 2.04(e) shall be remitted by the Administrative Agent to the Issuing Bank that
made such LC Disbursement.
(b) Unless the Administrative Agent shall have received notice from a Lender prior to the
proposed time of any Borrowing that such Lender will not make available to the Administrative Agent
such Lenders share of such Borrowing, the Administrative Agent may assume that such Lender has
made such share available on such date in accordance with paragraph (a) of this Section and may, in
reliance upon such assumption, make available to the Borrower a corresponding amount. In such
event, if a Lender has not in fact made its share of the applicable Borrowing available to the
Administrative Agent, then the applicable Lender and the Borrower severally agree to pay to the
Administrative Agent forthwith on demand such corresponding amount with interest thereon, for each
day from and including the date such amount is made available to the Borrower to but excluding the
date of payment to the Administrative Agent, at (i) in the case of such Lender, the greater of the
Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with
banking industry rules on interbank compensation or (ii) in the case of the Borrower, the interest
rate applicable to ABR Loans. If such Lender pays such amount to the Administrative Agent, then
such amount shall constitute such Lenders Loan included in such Borrowing.
Section 2.06
Interest Elections
.
(a) Each Borrowing initially shall be of the Type specified in the applicable Borrowing
Request and, in the case of a Eurodollar Borrowing, shall have an initial Interest Period as
specified in such Borrowing Request. Thereafter, the Borrower may elect to convert such Borrowing
to a different Type or to continue such Borrowing and, in the case of a Eurodollar Borrowing, may
elect Interest Periods therefor, all as provided in this Section. The Borrower may elect different
options with respect to different portions of the affected Borrowing, in which case each such
portion shall be allocated ratably among the Lenders holding the Loans comprising such Borrowing,
and the Loans comprising each such portion shall be considered a separate Borrowing.
24
(b) To make an election pursuant to this Section, the Borrower shall notify the Administrative
Agent of such election by telephone by the time that a Borrowing Request would be required under
Section 2.03 if the Borrower were requesting a Borrowing of the Type resulting from such election
to be made on the effective date of such election. Each such telephonic Interest Election Request
shall be irrevocable and shall be confirmed promptly by hand delivery or telecopy to the
Administrative Agent of a written Interest Election Request in a form approved by the
Administrative Agent and signed by the Borrower.
(c) Each telephonic and written Interest Election Request shall specify the following
information in compliance with Section 2.02:
(i) the Borrowing to which such Interest Election Request applies and, if different options
are being elected with respect to different portions thereof, the portions thereof to be allocated
to each resulting Borrowing (in which case the information to be specified pursuant to clauses
(iii) and (iv) below shall be specified for each resulting Borrowing);
(ii) the effective date of the election made pursuant to such Interest Election Request, which
shall be a Business Day;
(iii) whether the resulting Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing; and
(iv) if the resulting Borrowing is a Eurodollar Borrowing, the Interest Period to be
applicable thereto after giving effect to such election, which shall be a period contemplated by
the definition of the term Interest Period.
If any such Interest Election Request requests a Eurodollar Borrowing but does not specify an
Interest Period, then the Borrower shall be deemed to have selected an Interest Period of one
months duration.
(d) Promptly following receipt of an Interest Election Request, the Administrative Agent shall
advise each Lender of the details thereof and of such Lenders portion of each resulting Borrowing.
(e) If the Borrower fails to deliver a timely Interest Election Request with respect to a
Eurodollar Borrowing prior to the end of the Interest Period applicable thereto, then, unless such
Borrowing is repaid as provided herein, at the end of such Interest Period such Borrowing shall be
converted to an ABR Borrowing. Notwithstanding any contrary provision hereof, if an Event of
Default has occurred and is continuing and the Administrative Agent, at the request of the Required
Lenders, so notifies the Borrower, then, so long as an Event of Default is continuing (i) no
outstanding Borrowing may be converted to or continued as a Eurodollar Borrowing and (ii) unless
repaid, each Eurodollar Borrowing shall be converted to an ABR Borrowing at the end of the Interest
Period applicable thereto.
Section 2.07
Termination and Reduction of Commitments
.
(a) Unless previously terminated, the Commitments shall terminate on the Maturity Date.
25
(b) The Borrower may at any time terminate, or from time to time reduce, the Commitments;
provided
that (i) each reduction of the Commitments shall be in an amount that is an
integral multiple of $1,000,000 and not less than $1,000,000 and (ii) the Borrower shall not
terminate or reduce the Commitments if, after giving effect to any concurrent prepayment of the
Loans in accordance with Section 2.09, the sum of the Revolving Credit Exposures would exceed the
total Commitments.
(c) The Borrower shall notify the Administrative Agent of any election to terminate or reduce
the Commitments under paragraph (b) of this Section at least three Business Days prior to the
effective date of such termination or reduction, specifying such election and the effective date
thereof. Promptly following receipt of any notice, the Administrative Agent shall advise the
Lenders of the contents thereof. Each notice delivered by the Borrower pursuant to this Section
shall be irrevocable;
provided
that a notice of termination of the Commitments delivered by
the Borrower may state that such notice is conditioned upon the effectiveness of other credit
facilities, in which case such notice may be revoked by the Borrower (by notice to the
Administrative Agent on or prior to the specified effective date) if such condition is not
satisfied. Any termination or reduction of the Commitments shall be permanent. Each reduction of
the Commitments shall be made ratably among the Lenders in accordance with their respective
Commitments.
Section 2.08
Repayment of Loans; Evidence of Debt
.
(a) The Borrower hereby unconditionally promises to pay to the Administrative Agent for the
account of each Lender the then unpaid principal amount of each Loan on the Maturity Date.
(b) Each Lender shall maintain in accordance with its usual practice an account or accounts
evidencing the indebtedness of the Borrower to such Lender resulting from each Loan made by such
Lender, including the amounts of principal and interest payable and paid to such Lender from time
to time hereunder.
(c) The Administrative Agent shall maintain accounts in which it shall record (i) the amount
of each Loan made hereunder, the Type thereof and the Interest Period applicable thereto, (ii) the
amount of any principal or interest due and payable or to become due and payable from the Borrower
to each Lender hereunder and (iii) the amount of any sum received by the Administrative Agent
hereunder for the account of the Lenders and each Lenders share thereof.
(d) The entries made in the accounts maintained pursuant to paragraph (b) or (c) of this
Section shall be
prima
facie
evidence of the existence and amounts of the
obligations recorded therein;
provided
that the failure of any Lender or the Administrative
Agent to maintain such accounts or any error therein shall not in any manner affect the obligation
of the Borrower to repay the Loans in accordance with the terms of this Agreement.
(e) Any Lender may request that Loans made by it be evidenced by a promissory note. In such
event, the Borrower shall prepare, execute and deliver to such Lender a promissory note payable to
the order of such Lender (or, if requested by such Lender, to such
26
Lender and its registered assigns) and in a form approved by the Administrative Agent.
Thereafter, the Loans evidenced by such promissory note and interest thereon shall at all times
(including after an increase or reduction in such Lenders Commitment pursuant to an assignment
pursuant to Section 9.04) be represented by one or more promissory notes in such form payable to
the order of the payee named therein (or, if such promissory note is a registered note, to such
payee and its registered assigns).
Section 2.09
Prepayment of Loans
.
(a) The Borrower shall have the right at any time and from time to time to prepay any
Borrowing in whole or in part, subject to prior notice in accordance with paragraph (b) of this
Section.
(b) The Borrower shall notify the Administrative Agent by telephone (confirmed by telecopy) of
any prepayment hereunder (i) in the case of prepayment of a Eurodollar Borrowing, not later than
11:00 a.m., New York City time, three Business Days before the date of prepayment or (ii) in the
case of prepayment of an ABR Borrowing, not later than 11:00 a.m., New York City time, one Business
Day before the date of prepayment. Each such notice shall be irrevocable and shall specify the
prepayment date and the principal amount of each Borrowing or portion thereof to be prepaid;
provided
that, if a notice of prepayment is given in connection with a conditional notice
of termination of the Commitments as contemplated by Section 2.07, then such notice of prepayment
may be revoked if such notice of termination is revoked in accordance with Section 2.07. Promptly
following receipt of any such notice relating to a Borrowing, the Administrative Agent shall advise
the Lenders of the contents thereof. Each partial prepayment of any Borrowing shall be in an
amount that would be permitted in the case of an advance of a Borrowing of the same Type as
provided in Section 2.02. Each prepayment of a Borrowing shall be applied ratably to the Loans
included in the prepaid Borrowing. Prepayments shall be accompanied by accrued interest to the
extent required by Section 2.11 and any break funding payments required by Section 2.14.
Section 2.10
Fees
.
(a) The Borrower agrees to pay to the Administrative Agent for the account of each Lender a
facility fee, which shall accrue at the Applicable Rate on the daily amount of the Commitment of
such Lender (whether used or unused) during the period from and including the Effective Date to but
excluding the date on which such Commitment terminates;
provided
that, if such Lender
continues to have any Revolving Credit Exposure after its Commitment terminates, then such facility
fee shall continue to accrue on the daily amount of such Lenders Revolving Credit Exposure from
and including the date on which its Commitment terminates to but excluding the date on which such
Lender ceases to have any Revolving Credit Exposure. Accrued facility fees shall be payable in
arrears on the last day of March, June, September and December of each year and on the date on
which the Commitments terminate, commencing on the first such date to occur after the Effective
Date;
provided
that any facility fees accruing after the date on which the Commitments
terminate shall be payable on demand. All facility fees shall be computed on the basis of a year
of 360 days and shall be payable for the actual number of days elapsed (including the first day but
excluding the last).
27
(b) The Borrower agrees to pay (i) to the Administrative Agent for the account of each Lender
a participation fee with respect to its participations in Letters of Credit, which shall accrue at
the same Applicable Rate used to determine the interest rate applicable to Eurodollar Loans on the
average daily amount of such Lenders LC Exposure (excluding any portion thereof attributable to
unreimbursed LC Disbursements) during the period from and including the Effective Date to but
excluding the later of the date on which such Lenders Commitment terminates and the date on which
such Lender ceases to have any LC Exposure, and (ii) to each Issuing Bank a fronting fee, which
shall accrue at the rate of 0.125% per annum on the average daily amount of that portion of the LC
Exposure attributable to such Issuing Bank (excluding any portion thereof attributable to
unreimbursed LC Disbursements) during the period from and including the Effective Date to but
excluding the later of the date of termination of the Commitments and the date on which there
ceases to be any LC Exposure attributable to such Issuing Bank, as well as such Issuing Banks
standard fees with respect to the issuance, amendment, renewal or extension of any Letter of Credit
or processing of drawings thereunder. Participation fees and fronting fees accrued through and
including the last day of March, June, September and December of each year shall be payable on such
last day, commencing on the first such date to occur after the Effective Date;
provided
that all such fees shall be payable on the date on which the Commitments terminate and any such
fees accruing after the date on which the Commitments terminate shall be payable on demand. Any
other fees payable to an Issuing Bank pursuant to this paragraph shall be payable within 10 days
after demand. All participation fees and fronting fees shall be computed on the basis of a year of
360 days and shall be payable for the actual number of days elapsed (including the first day but
excluding the last).
(c) The Borrower agrees to pay to the Administrative Agent for the account of each Lender a
utilization fee which shall accrue at a per annum rate equal to 0.100% on the daily amount of such
Lenders Revolving Credit Exposure during the time the sum of the total Revolving Credit Exposures
equals or exceeds 50% of the total Commitments. Utilization fees shall be computed on the basis of
a year of 360 days and shall be payable in arrears on the last day of March, June, September and
December of each year.
(d) The Borrower agrees to pay to the Administrative Agent, for its own account, fees payable
in the amounts and at the times separately agreed upon between the Borrower and the Administrative
Agent.
(e) All fees payable hereunder shall be paid on the dates due, in immediately available funds,
to the Administrative Agent (or to an Issuing Bank, in the case of fees payable to it) for
distribution, in the case of facility fees and participation fees, to the Lenders. Fees paid shall
not be refundable under any circumstances.
Section 2.11
Interest
.
(a) The Loans comprising each ABR Borrowing shall bear interest at the Alternate Base Rate
plus the Applicable Rate.
(b) The Loans comprising each Eurodollar Borrowing shall bear interest at the Adjusted LIBO
Rate for the Interest Period in effect for such Borrowing plus the Applicable Rate.
28
(c) Notwithstanding the foregoing, if any principal of or interest on any Loan or any fee or
other amount payable by the Borrower hereunder is not paid when due, whether at stated maturity,
upon acceleration or otherwise, such overdue amount shall bear interest, after as well as before
judgment, at a rate per annum equal to (i) in the case of overdue principal of any Loan, 2% plus
the rate otherwise applicable to such Loan as provided in the preceding paragraphs of this Section
or (ii) in the case of any other amount, 2% plus the rate applicable to ABR Loans as provided in
paragraph (a) of this Section.
(d) Accrued interest on each Loan shall be payable in arrears on each Interest Payment Date
for such Loan and upon termination of the Commitments;
provided
that (i) interest accrued
pursuant to paragraph (c) of this Section shall be payable on demand, (ii) in the event of any
repayment or prepayment of any Loan (other than a prepayment of an ABR Loan prior to the end of the
Availability Period), accrued interest on the principal amount repaid or prepaid shall be payable
on the date of such repayment or prepayment and (iii) in the event of any conversion of any
Eurodollar Loan prior to the end of the current Interest Period therefor, accrued interest on such
Loan shall be payable on the effective date of such conversion.
(e) All interest hereunder shall be computed on the basis of a year of 360 days, except that
interest computed by reference to the Alternate Base Rate at times when the Alternate Base Rate is
based on the Prime Rate shall be computed on the basis of a year of 365 days (or 366 days in a leap
year), and in each case shall be payable for the actual number of days elapsed (including the first
day but excluding the last day). The applicable Alternate Base Rate, Adjusted LIBO Rate or LIBO
Rate shall be determined by the Administrative Agent, and such determination shall be conclusive
absent manifest error.
Section 2.12
Alternate Rate of Interest
. If prior to the commencement of any Interest
Period for a Eurodollar Borrowing:
(a) the Administrative Agent determines (which determination shall be conclusive absent
manifest error) that adequate and reasonable means do not exist for ascertaining the Adjusted LIBO
Rate or the LIBO Rate, as applicable, for such Interest Period; or
(b) the Administrative Agent is advised by the Required Lenders that the Adjusted LIBO Rate or
the LIBO Rate, as applicable, for such Interest Period will not adequately and fairly reflect the
cost to such Lenders (or Lender) of making or maintaining their Loans (or its Loan) included in
such Borrowing for such Interest Period;
then the Administrative Agent shall give notice thereof to the Borrower and the Lenders by
telephone or telecopy as promptly as practicable thereafter and, until the Administrative Agent
notifies the Borrower and the Lenders that the circumstances giving rise to such notice no longer
exist, (i) any Interest Election Request that requests the conversion of any Borrowing to, or
continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective and (ii) if any
Borrowing Request requests a Eurodollar Borrowing, such Borrowing shall be made as an ABR
Borrowing.
29
Section 2.13
Increased Costs
.
(a) If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special deposit or similar requirement
against assets of, deposits with or for the account of, or credit extended by, any Lender (except
any such reserve requirement reflected in the Adjusted LIBO Rate) or any Issuing Bank; or
(ii) impose on any Lender or any Issuing Bank or the London interbank market any other
condition affecting this Agreement or Eurodollar Loans made by such Lender or any Letter of Credit
or participation therein;
and the result of any of the foregoing shall be to increase the cost to such Lender of making or
maintaining any Eurodollar Loan (or of maintaining its obligation to make any such Loan) or to
increase the cost to such Lender or such Issuing Bank of participating in, issuing or maintaining
any Letter of Credit or to reduce the amount of any sum received or receivable by such Lender or
such Issuing Bank hereunder (whether of principal, interest or otherwise), then the Borrower will
pay to such Lender or such Issuing Bank, as the case may be, such additional amount or amounts as
will compensate such Lender or such Issuing Bank, as the case may be, for such additional costs
incurred or reduction suffered.
(b) If any Lender or any Issuing Bank determines that any Change in Law regarding capital
requirements has or would have the effect of reducing the rate of return on such Lenders or such
Issuing Banks capital or on the capital of such Lenders or such Issuing Banks holding company,
if any, as a consequence of this Agreement or the Loans made by, or participations in Letters of
Credit held by, such Lender, or the Letters of Credit issued by such Issuing Bank, to a level below
that which such Lender or such Issuing Bank or such Lenders or such Issuing Banks holding company
could have achieved but for such Change in Law (taking into consideration such Lenders or such
Issuing Banks policies and the policies of such Lenders or such Issuing Banks holding company
with respect to capital adequacy), then from time to time the Borrower will pay to such Lender or
such Issuing Bank, as the case may be, such additional amount or amounts as will compensate such
Lender or such Issuing Bank or such Lenders or such Issuing Banks holding company for any such
reduction suffered.
(c) A certificate of a Lender or an Issuing Bank setting forth the amount or amounts necessary
to compensate such Lender or such Issuing Bank or its holding company, as the case may be, as
specified in paragraph (a) or (b) of this Section shall be delivered to the Borrower and shall be
conclusive absent manifest error. The Borrower shall pay such Lender or such Issuing Bank, as the
case may be, the amount shown as due on any such certificate within 10 days after receipt thereof.
(d) Failure or delay on the part of any Lender or any Issuing Bank to demand compensation
pursuant to this Section shall not constitute a waiver of such Lenders or such Issuing Banks
right to demand such compensation;
provided
that the Borrower shall not be required to
compensate a Lender or an Issuing Bank pursuant to this Section for any increased costs or
reductions incurred more than 270 days prior to the date that such Lender or such
30
Issuing Bank, as the case may be, notifies the Borrower of the Change in Law giving rise to
such increased costs or reductions and of such Lenders or such Issuing Banks intention to claim
compensation therefor;
provided
further
that, if the Change in Law giving rise to
such increased costs or reductions is retroactive, then the 270-day period referred to above shall
be extended to include the period of retroactive effect thereof.
Section 2.14
Break Funding Payments
. In the event of (a) the payment of any principal
of any Eurodollar Loan other than on the last day of an Interest Period applicable thereto
(including as a result of an Event of Default), (b) the conversion of any Eurodollar Loan other
than on the last day of the Interest Period applicable thereto, (c) the failure to borrow, convert,
continue or prepay any Eurodollar Loan on the date specified in any notice delivered pursuant
hereto (regardless of whether such notice may be revoked under Section 2.09(b) and is revoked in
accordance therewith) or (d) the assignment of any Eurodollar Loan other than on the last day of
the Interest Period applicable thereto as a result of a request by the Borrower pursuant to Section
2.17, then, in any such event, the Borrower shall compensate each Lender for the loss, cost and
expense attributable to such event. In the case of a Eurodollar Loan, such loss, cost or expense
to any Lender shall be deemed to include an amount determined by such Lender to be the excess, if
any, of (i) the amount of interest which would have accrued on the principal amount of such Loan
had such event not occurred, at the Adjusted LIBO Rate that would have been applicable to such
Loan, for the period from the date of such event to the last day of the then current Interest
Period therefor (or, in the case of a failure to borrow, convert or continue, for the period that
would have been the Interest Period for such Loan), over (ii) the amount of interest which would
accrue on such principal amount for such period at the interest rate which such Lender would bid
were it to bid, at the commencement of such period, for dollar deposits of a comparable amount and
period from other banks in the Eurodollar market. A certificate of any Lender setting forth any
amount or amounts that such Lender is entitled to receive pursuant to this Section shall be
delivered to the Borrower and shall be conclusive absent manifest error. The Borrower shall pay
such Lender the amount shown as due on any such certificate within 10 days after receipt thereof.
Section 2.15
Taxes
.
(a) Any and all payments by or on account of any obligation of the Borrower hereunder shall be
made free and clear of and without deduction for any Indemnified Taxes or Other Taxes;
provided
that if the Borrower shall be required to deduct any Indemnified Taxes or Other
Taxes from such payments, then (i) the sum payable shall be increased as necessary so that after
making all required deductions (including deductions applicable to additional sums payable under
this Section) the Administrative Agent, Lender or Issuing Bank (as the case may be) receives an
amount equal to the sum it would have received had no such deductions been made, (ii) the Borrower
shall make such deductions and (iii) the Borrower shall pay the full amount deducted to the
relevant Governmental Authority in accordance with applicable law.
(b) In addition, the Borrower shall pay any Other Taxes to the relevant Governmental Authority
in accordance with applicable law.
(c) The Borrower shall indemnify the Administrative Agent, each Lender and each Issuing Bank,
within 10 days after written demand therefor, for the full amount of any
31
Indemnified Taxes or Other Taxes paid by the Administrative Agent, such Lender or such Issuing
Bank, as the case may be, on or with respect to any payment by or on account of any obligation of
the Borrower hereunder (including Indemnified Taxes or Other Taxes imposed or asserted on or
attributable to amounts payable under this Section) and any penalties, interest and reasonable
expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other
Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A
certificate as to the amount of such payment or liability delivered to the Borrower by a Lender or
an Issuing Bank, or by the Administrative Agent on its own behalf or on behalf of a Lender or an
Issuing Bank, shall be conclusive absent manifest error.
(d) As soon as practicable after any payment of Indemnified Taxes or Other Taxes by the
Borrower to a Governmental Authority, the Borrower shall deliver to the Administrative Agent the
original or a certified copy of a receipt issued by such Governmental Authority evidencing such
payment, a copy of the return reporting such payment or other evidence of such payment reasonably
satisfactory to the Administrative Agent.
(e) Any Foreign Lender that is entitled to an exemption from or reduction of withholding tax
under the law of the jurisdiction in which the Borrower is located, or any treaty to which such
jurisdiction is a party, with respect to payments under this Agreement shall deliver to the
Borrower (with a copy to the Administrative Agent), at the time or times prescribed by applicable
law, such properly completed and executed documentation prescribed by applicable law or reasonably
requested by the Borrower as will permit such payments to be made without withholding or at a
reduced rate.
Section 2.16
Payments Generally; Pro Rata Treatment; Sharing of Set-offs
.
(a) The Borrower shall make each payment required to be made by it hereunder (whether of
principal, interest, fees or reimbursement of LC Disbursements, or of amounts payable under Section
2.13, 2.14 or 2.15, or otherwise) prior to 12:00 noon, New York City time, on the date when due, in
immediately available funds, without set-off or counterclaim. Any amounts received after such time
on any date may, in the discretion of the Administrative Agent, be deemed to have been received on
the next succeeding Business Day for purposes of calculating interest thereon. All such payments
shall be made to the Administrative Agent at its offices at 270 Park Avenue, New York, New York,
except payments to be made directly to an Issuing Bank as expressly provided herein and except that
payments pursuant to Sections 2.13, 2.14, 2.15 and 9.03 shall be made directly to the Persons
entitled thereto. The Administrative Agent shall distribute any such payments received by it for
the account of any other Person to the appropriate recipient promptly following receipt thereof.
If any payment hereunder shall be due on a day that is not a Business Day, the date for payment
shall be extended to the next succeeding Business Day, and, in the case of any payment accruing
interest, interest thereon shall be payable for the period of such extension. All payments
hereunder shall be made in dollars.
(b) If at any time insufficient funds are received by and available to the Administrative
Agent to pay fully all amounts of principal, unreimbursed LC Disbursements, interest and fees then
due hereunder, such funds shall be applied (i) first, towards payment of interest and fees then due
hereunder, ratably among the parties entitled thereto in accordance
32
with the amounts of interest and fees then due to such parties, and (ii) second, towards
payment of principal and unreimbursed LC Disbursements then due hereunder, ratably among the
parties entitled thereto in accordance with the amounts of principal and unreimbursed LC
Disbursements then due to such parties.
(c) If any Lender shall, by exercising any right of set-off or counterclaim or otherwise,
obtain payment in respect of any principal of or interest on any of its Loans or participations in
LC Disbursements resulting in such Lender receiving payment of a greater proportion of the
aggregate amount of its Loans and participations in LC Disbursements and accrued interest thereon
than the proportion received by any other Lender, then the Lender receiving such greater proportion
shall purchase (for cash at face value) participations in the Loans and participations in LC
Disbursements of other Lenders to the extent necessary so that the benefit of all such payments
shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and
accrued interest on their respective Loans and participations in LC Disbursements;
provided
that (i) if any such participations are purchased and all or any portion of the payment giving rise
thereto is recovered, such participations shall be rescinded and the purchase price restored to the
extent of such recovery, without interest, and (ii) the provisions of this paragraph shall not be
construed to apply to any payment made by the Borrower pursuant to and in accordance with the
express terms of this Agreement or any payment obtained by a Lender as consideration for the
assignment of or sale of a participation in any of its Loans or participations in LC Disbursements
to any assignee or participant, other than to the Borrower or any subsidiary or Affiliate thereof
(as to which the provisions of this paragraph shall apply). The Borrower consents to the foregoing
and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring
a participation pursuant to the foregoing arrangements may exercise against the Borrower rights of
set-off and counterclaim with respect to such participation as fully as if such Lender were a
direct creditor of the Borrower in the amount of such participation.
(d) Unless the Administrative Agent shall have received notice from the Borrower prior to the
date on which any payment is due to the Administrative Agent for the account of the Lenders or any
Issuing Bank hereunder that the Borrower will not make such payment, the Administrative Agent may
assume that the Borrower has made such payment on such date in accordance herewith and may, in
reliance upon such assumption, distribute to the Lenders or such Issuing Bank, as the case may be,
the amount due. In such event, if the Borrower has not in fact made such payment, then each of the
Lenders or such Issuing Bank, as the case may be, severally agrees to repay to the Administrative
Agent forthwith on demand the amount so distributed to such Lender or such Issuing Bank with
interest thereon, for each day from and including the date such amount is distributed to it to but
excluding the date of payment to the Administrative Agent, at the greater of the Federal Funds
Effective Rate and a rate determined by the Administrative Agent in accordance with banking
industry rules on interbank compensation.
(e) If any Lender shall fail to make any payment required to be made by it pursuant to
Sections 2.04 (d) or (e), 2.05(b) or 2.16(d), then the Administrative Agent may, in its discretion
(notwithstanding any contrary provision hereof), apply any amounts thereafter received by the
Administrative Agent for the account of such Lender to satisfy such Lenders obligations under such
Sections until all such unsatisfied obligations are fully paid.
33
Section 2.17
Mitigation Obligations; Replacement of Lenders
.
(a) If any Lender requests compensation under Section 2.13, or if the Borrower is required to
pay any additional amount to any Lender or any Governmental Authority for the account of any Lender
pursuant to Section 2.15, then such Lender shall use reasonable efforts to designate a different
lending office for funding or booking its Loans hereunder or to assign its rights and obligations
hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender,
such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section
2.13 or 2.15, as the case may be, in the future and (ii) would not subject such Lender to any
unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender. The
Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in
connection with any such designation or assignment.
(b) If any Lender requests compensation under Section 2.13, or if the Borrower is required to
pay any additional amount to any Lender or any Governmental Authority for the account of any Lender
pursuant to Section 2.15, or if any Lender defaults in its obligation to fund Loans hereunder, then
the Borrower may, at its sole expense and effort, upon notice to such Lender and the Administrative
Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject
to the restrictions contained in Section 9.04), all its interests, rights and obligations under
this Agreement to an assignee that shall assume such obligations (which assignee may be another
Lender, if a Lender accepts such assignment);
provided
that (i) the Borrower shall have
received the prior written consent of the Administrative Agent (and, if a Commitment is being
assigned, each Issuing Bank), which consent shall not unreasonably be withheld, (ii) such Lender
shall have received payment of an amount equal to the outstanding principal of its Loans and
participations in LC Disbursements, accrued interest thereon, accrued fees and all other amounts
payable to it hereunder, from the assignee (to the extent of such outstanding principal and accrued
interest and fees) or the Borrower (in the case of all other amounts) and (iii) in the case of any
such assignment resulting from a claim for compensation under Section 2.13 or payments required to
be made pursuant to Section 2.15, such assignment will result in a reduction in such compensation
or payments. A Lender shall not be required to make any such assignment and delegation if, prior
thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the
Borrower to require such assignment and delegation cease to apply.
ARTICLE III
Representations and Warranties
The Borrower represents and warrants to the Lenders that:
Section 3.01
Organization; Powers
. The Borrower and each of its subsidiaries is duly
organized, validly existing and in good standing under the laws of the jurisdiction of its
organization, has all requisite power and authority to carry on its business as now conducted and,
except where the failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, is qualified to do business in, and is in good
standing in, every jurisdiction where such qualification is required.
34
Section 3.02
Authorization; Enforceability
. The Transactions are within the
Borrowers and its subsidiaries corporate, limited liability company or partnership powers and
have been duly authorized by all necessary corporate, limited liability company or partnership and,
if required, stockholder, member or limited partner action. This Agreement has been duly executed
and delivered by the Borrower and constitutes a legal, valid and binding obligation of it,
enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors rights generally and subject to
general principles of equity, regardless of whether considered in a proceeding in equity or at law.
Section 3.03
Governmental Approvals; No Conflicts
. The Transactions (a) do not
require any material consent or approval of, registration or filing with, or any other action by,
any Governmental Authority, except such as have been obtained or made and are in full force and
effect, (b) will not violate any applicable material law or regulation or the charter, by-laws or
other organizational documents of it or any of its subsidiaries or any order of any Governmental
Authority, (c) will not violate or result in a default under any indenture, agreement or other
instrument relating to Material Indebtedness binding upon the Borrower or any of its subsidiaries
or their assets, or give rise to a right thereunder to require any payment to be made by it or any
of its subsidiaries, and (d) will not result in the creation or imposition of any Lien on any asset
of the Borrower or any of its subsidiaries.
Section 3.04
Financial Condition; No Material Adverse Change
.
(a) The Borrower has heretofore furnished to the Lenders (i) the consolidated balance sheet
and statements of income, partners equity and cash flows of the MLP (A) as of and for the fiscal
year ended December 31, 2005, reported on by KPMG LLP, and (B) as of and for the fiscal quarter and
the portion of the fiscal year ended March 31, 2006, certified by its chief financial officer; and
(ii) the selected unaudited pro forma condensed financial data set forth in the prospectus included
in the Registration Statement on Form S-1 filed with the SEC on March 31, 2006 (as amended) in
connection with the IPO. Such financial statements present fairly, in all material respects, the
financial position and results of operations and cash flows of the MLP and its consolidated
subsidiaries and the Borrower and its consolidated subsidiaries, as of such dates and for such
periods in accordance with GAAP, subject to year-end audit adjustments and the absence of footnotes
in the case of the statements referred to in clause (B) above.
(b) Since December 31, 2005, there has been no material adverse change in the business,
assets, operations or condition (financial or otherwise) of the Borrower and its subsidiaries,
taken as a whole.
Section 3.05
Properties
.
(a) The Borrower and the Restricted Subsidiaries each has good title to, or valid leasehold
interests in, all its real and personal property material to its business, free and clear of all
Liens except Permitted Encumbrances and Liens otherwise permitted or contemplated by this
Agreement, except where the failure to have such title or leasehold interest could not reasonably
be expected to result in a Material Adverse Effect.
35
(b) The Borrower and the Restricted Subsidiaries each owns, or is licensed to use, or has made
all required federal filings (and has not been notified of any contest) with respect to, all
trademarks, tradenames, copyrights, patents and other intellectual property material to its
business, and the use thereof by it and its subsidiaries does not infringe upon the rights of any
other Person, except for any such infringements that, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.
Section 3.06
Litigation and Environmental Matters
.
(a) There are no actions, suits or proceedings by or before any arbitrator or Governmental
Authority pending against or, to the knowledge of it, threatened against or affecting the Borrower
or any of its subsidiaries (i) as to which there is a reasonable possibility of an adverse
determination and that, if adversely determined, could reasonably be expected, individually or in
the aggregate, to result in a Material Adverse Effect (other than the Disclosed Matters) or (ii)
that involve this Agreement or the Transactions.
(b) Except for the Disclosed Matters and except with respect to any other matters that,
individually or in the aggregate, could not reasonably be expected to result in a Material Adverse
Effect, neither the Borrower nor any of its subsidiaries (i) has failed to comply with any
Environmental Law or to obtain, maintain or comply with any permit, license or other approval
required under any Environmental Law, (ii) has become subject to any Environmental Liability, (iii)
has received notice of any claim with respect to any Environmental Liability or (iv) knows of any
basis for any Environmental Liability.
(c) Since the Effective Date, there has been no change in the status of the Disclosed Matters
that, individually or in the aggregate, has resulted in, or materially increased the likelihood of,
a Material Adverse Effect.
Section 3.07
Compliance with Laws and Agreements
. The Borrower and its subsidiaries
are in compliance with all laws, regulations and orders of any Governmental Authority applicable to
it or its property and all indentures, agreements and other instruments binding upon it or its
property, except where the failure to do so, individually or in the aggregate, could not reasonably
be expected to result in a Material Adverse Effect. No Default has occurred and is continuing.
Section 3.08
Investment Company Status
. Neither the Borrower nor any of its
subsidiaries is an investment company as defined in, or subject to regulation under, the
Investment Company Act of 1940. The Borrower is not subject to regulation under any Federal or
State statute or regulation which limits its ability to incur Indebtedness.
Section 3.09
Taxes
. The Borrower and its subsidiaries have each timely filed or
caused to be filed all Tax returns and reports required to have been filed and has paid or caused
to be paid all Taxes required to have been paid by it, except (a) Taxes that are being contested in
good faith by appropriate proceedings and for which it or such subsidiary, as applicable, has set
aside on its books adequate reserves or (b) to the extent that the failure to do so could not
reasonably be expected to result in a Material Adverse Effect.
36
Section 3.10
ERISA
. Except as could not reasonably be expected to result in a
Material Adverse Effect, each ERISA Affiliate has fulfilled its obligations under the minimum
funding standards of ERISA and the Code with respect to each Plan and is in compliance in all
material respects with the presently applicable provisions of ERISA and the Code with respect to
each Plan. Except as could not reasonably be expected to result in a Material Adverse Effect, no
ERISA Affiliate has (i) sought a waiver of the minimum funding standard under Section 412 of the
Code in respect of any Plan, (ii) failed to make any contribution or payment to any Plan or
Multiemployer Plan or in respect of any Benefit Arrangement or made any amendment to any Plan or
Benefit Arrangement, which has resulted or could reasonably be expected to result in the imposition
of a Lien or the posting of a bond or other security under ERISA or the Code or (iii) incurred any
liability under Title IV of ERISA other than a liability to the PBGC for premiums under Section
4007 of ERISA.
Section 3.11
Disclosure
. The Borrower has disclosed to the Lenders all agreements,
instruments and corporate or other restrictions to which it or any of its subsidiaries is subject,
and all other matters known to it, that, individually or in the aggregate, could reasonably be
expected to result in a Material Adverse Effect. No reports, financial statements, certificates or
other information furnished by or on behalf of it to the Administrative Agent or any Lender in
connection with the negotiation of this Agreement or delivered hereunder (as modified or
supplemented by other information so furnished) contains any material misstatement of fact or omits
to state any material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
provided
that, with respect to
projected financial information, it represents only that such information was prepared in good
faith based upon assumptions believed to be reasonable at the time.
Section 3.12
Investments and Guarantees
. Neither the Borrower nor any of the
Restricted Subsidiaries has any Investments or has outstanding any Guarantees, except as permitted
by this Agreement or reflected in the financial statements described in Section 3.04(a).
Section 3.13
Casualties; Taking of Property
. Neither the business nor the assets
taken as a whole of the Borrower or any of its subsidiaries (after giving effect to the payment or
anticipated payment of any proceeds of insurance) have been materially and adversely affected as a
result of any fire, explosion, earthquake, flood, drought, windstorm, accident, strike or other
labor disturbance, embargo, requisition or taking of any assets or cancellation of contracts,
permits or concessions by any domestic or foreign government or any agency thereof, riot,
activities of armed forces or acts of God or of any public enemy.
ARTICLE IV
Conditions
Section 4.01
Effective Date
. The obligations of the Lenders to make Loans and of the
Issuing Banks to issue Letters of Credit hereunder shall not become effective until the date on
which each of the following conditions is satisfied (or waived in accordance with Section 9.02):
(a) The Administrative Agent (or its counsel) shall have received this Agreement, executed and
delivered by a duly authorized officer of the Borrower, and by the Lenders and the Administrative
Agent.
37
(b) The Administrative Agent shall have received a favorable written opinion (addressed to the
Administrative Agent and the Lenders and dated the Effective Date) of (i) Andrews Kurth LLP,
counsel for the Borrower and (ii) Bradley C. Barron, in-house counsel of the Borrower, collectively
providing the opinions set forth in Exhibit B, and each such opinion covering such other matters
relating to the Borrower, this Agreement or the Transactions as the Lenders shall reasonably
request. The Borrower hereby requests each such counsel to deliver its applicable opinion to the
Administrative Agent and the Lenders.
(c) The Administrative Agent shall have received such documents and certificates as the
Administrative Agent or its counsel may reasonably request relating to the organization, existence
and good standing of the Borrower, the authorization of the Transactions, and any other legal
matters relating to the Borrower, the Agreement or the Transactions, all in form and substance
satisfactory to the Administrative Agent and its counsel.
(d) The Administrative Agent shall have received a certificate, dated the Effective Date and
signed by the President, Vice President or a Financial Officer of the Borrower, confirming
compliance with the conditions set forth in paragraphs (a) and (b) of Section 4.02.
(e) The Administrative Agent shall have received (i) counterpart originals of the Partnership
Agreement (MLP) substantially in the form listed as Exhibit 3.4 to the MLPs annual report on Form
10-K for the fiscal year ended December 31, 2005, the Indenture and the Limited Liability Company
Agreement (Borrower) in form and substance acceptable to the Lenders, in each case duly executed by
each of the parties thereto and (ii) evidence satisfactory to the Lenders that the Limited
Liability Company Agreement (Borrower), the Indenture and the Partnership Agreement (MLP) are in
full force and effect and have not been amended or modified except to the extent such amendments or
modifications have been delivered to the Administrative Agent, which evidence may be in the form of
a certificate of the President or a Vice President (or equivalent officer) of each of the Borrower.
(f) The Administrative Agent shall have received the financial statements referred to in
Section 3.04(a).
(g) The Administrative Agent shall have received evidence satisfactory to it that the IPO has
been or is being concurrently consummated substantially in accordance with the IPO Documents (with
all of the material conditions precedent thereto having been satisfied in all material respects by
the parties thereto other than as consented to by the Lenders).
(h) The Administrative Agent shall have received (i) a certificate of the President or a Vice
President (or equivalent officer) of the Borrower certifying: (A) that the IPO has been or is
concurrently being consummated substantially in accordance with the terms of the IPO Documents
(with all of the material conditions precedent thereto having been satisfied in all material
respects by the parties thereto other than as consented to by the Lenders); and (B) that attached
thereto is a true and complete executed copy of each of the IPO Documents (including all exhibits,
schedules and supplements); and (ii) such other related documents and information as the
Administrative Agent shall have reasonably requested.
38
(i) The Administrative Agent shall have received evidence satisfactory to it of any necessary
shareholder, corporate, limited liability company, and partnership approvals as to authority,
enforceability and compliance with law in connection with the Transactions and the consummation of
the IPO.
(j) The Administrative Agent shall have received all fees and other amounts due and payable on
or prior to the Effective Date (including amounts payable in respect of the ticking fee, if any),
including, to the extent invoiced, reimbursement or payment of all out-of-pocket expenses required
to be reimbursed or paid by the Borrower hereunder.
(k) The Administrative Agent shall have received satisfactory evidence regarding the scope and
materiality of any environmental risks affecting the properties of the Borrower and its
subsidiaries.
The Administrative Agent shall notify the Borrower and the Lenders of the Effective Date, and such
notice shall be conclusive and binding. Notwithstanding the foregoing, the obligations of the
Lenders to make Loans and of the Issuing Banks to issue Letters of Credit under this Agreement
shall not become effective unless each of the foregoing conditions is satisfied (or waived pursuant
to Section 9.02) at or prior to 3:00 p.m., New York City time, on July 31, 2006 (and, in the event
such conditions are not so satisfied or waived, the Commitments shall terminate at such time).
Section 4.02
Each Credit Event
. The obligation of each Lender to make a Loan on the
occasion of any Borrowing, and of the Issuing Banks to issue, amend, renew or extend any Letter of
Credit, is subject to the satisfaction of the following conditions:
(a) The representations and warranties of the Borrower set forth in this Agreement shall be
true and correct on and as of the date of such Borrowing or the date of issuance, amendment,
renewal or extension of such Letter of Credit, as applicable (unless such representations and
warranties are stated to relate to a specific earlier date, in which case such representations and
warranties shall be true and correct as of such earlier date).
(b) At the time of and immediately after giving effect to such Borrowing or the issuance,
amendment, renewal or extension of such Letter of Credit, as applicable, no Default shall have
occurred and be continuing.
(c) The Administrative Agent shall have received each additional document, instrument, legal
opinion or item of information reasonably requested by the Administrative Agent, including, without
limitation, a copy of any debt instrument, security agreement or other material contract to which
the Borrower or any of its subsidiaries may be a party.
Each Borrowing and each issuance, amendment, renewal or extension of a Letter of Credit shall be
deemed to constitute a representation and warranty by the Borrower on the date thereof as to the
matters specified in paragraphs (a) and (b) of this Section 4.02.
39
ARTICLE V
Affirmative Covenants
Commencing on the Effective Date, until the Commitments have expired or been terminated and
the principal of and interest on each Loan and all fees payable hereunder shall have been paid in
full and all Letters of Credit shall have expired or terminated and all LC Disbursements shall have
been reimbursed, the Borrower covenants and agrees with the Lenders that:
Section 5.01
Financial Statements and Other Information
. The Borrower will furnish to
the Administrative Agent and each Lender:
(a) no later than 15 days following the date required by applicable SEC rules (without giving
effect to any extensions available thereunder) for the filing of such financial statements after
the end of each fiscal year of the MLP:
(i) the audited consolidated balance sheet and related statements of income, partners equity
and cash flows of the MLP as of the end of and for such year, setting forth in each case in
comparative form the figures for the previous fiscal year, all reported on by KPMG LLP or other
independent public accountants of recognized national standing (without a going concern or like
qualification or exception and without any qualification or exception as to the scope of such
audit) to the effect that such consolidated financial statements present fairly in all material
respects the financial condition, results of operations and cash flows of the MLP and its
consolidated subsidiaries on a consolidated basis in accordance with GAAP consistently applied; and
(ii) the consolidated balance sheet and related statements of income, members equity and cash
flows of the Borrower as of the end of and for such year, setting forth in each case in comparative
form the figures from the previous fiscal year, all certified by one of its Financial Officers as
presenting fairly in all material respects the financial condition and results of operations of the
Borrower and its consolidated subsidiaries on a consolidated basis in accordance with GAAP
consistently applied, subject to the absence of footnotes.
(b) no later than 15 days following the date required by applicable SEC rules (without giving
effect to any extensions available thereunder) for the filing of such financial statements after
the end of each of the first three fiscal quarters of each fiscal year of the MLP:
(i) the consolidated balance sheet and related statements of income, partners equity and cash
flows of the MLP as of the end of and for such fiscal quarter and the then elapsed portion of the
fiscal year, setting forth in each case in comparative form the figures for the corresponding
period or periods of (or, in the case of the balance sheet, as of the end of) the previous fiscal
year, all certified by one of its Financial Officers as presenting fairly in all material respects
the financial condition and results of operations of the MLP and its consolidated subsidiaries on a
consolidated basis in accordance with GAAP consistently applied, subject to normal year-end audit
adjustments and the absence of footnotes; and
(ii) the consolidated balance sheet and related statements of income, members equity and cash
flows of the Borrower as of the end of and for such fiscal quarter and
40
the then elapsed portion of the fiscal year, setting forth in each case in comparative form
the figures for the corresponding period or periods of (or, in the case of the balance sheet, as of
the end of) the previous fiscal year, all certified by one of its Financial Officers as presenting
fairly in all material respects the financial condition and results of operations of the Borrower
and its consolidated subsidiaries on a consolidated basis in accordance with GAAP consistently
applied, subject to normal year-end audit adjustments and the absence of footnotes.
(c) concurrently with any delivery of financial statements under clause (a) or (b) above, a
certificate of a Financial Officer of the Borrower (i) certifying as to whether a Default has
occurred and, if a Default has occurred, specifying the details thereof and any action taken or
proposed to be taken with respect thereto, (ii) setting forth reasonably detailed calculations
demonstrating compliance with Section 6.11 and (iii) stating whether any change in GAAP or in the
application thereof has occurred since the date of the audited financial statements referred to in
Section 3.04 and, if any such change has occurred, specifying the effect of such change on the
financial statements accompanying such certificate;
(d) promptly after Moodys or S&P shall have announced a change in the rating established or
deemed to have been established for the Index Debt, written notice of such rating change; and
(e) promptly following any request therefor, such other information regarding the operations,
business affairs and financial condition of the Borrower or any of its subsidiaries, or compliance
with the terms of this Agreement, as the Administrative Agent or any Lender may reasonably request.
Section 5.02
Notices of Material Events
. The Borrower will furnish to the
Administrative Agent and each Lender prompt written notice of the following:
(a) the occurrence of any Default;
(b) the filing or commencement of any action, suit or proceeding by or before any arbitrator
or Governmental Authority against or affecting the Borrower or any Affiliate (other than Valero
Energy) thereof that, if adversely determined, could reasonably be expected to result in a Material
Adverse Effect;
(c) if and when any ERISA Affiliate (i) gives or is required to give notice to the PBGC of any
reportable event (as defined in Section 4043 of ERISA) with respect to any Plan which could
reasonably be expected to constitute grounds for a termination of such Plan under Title IV of
ERISA, or knows that the plan administrator of any Plan has given or is required to give notice of
any such reportable event, a copy of the notice of such reportable event given or required to be
given to the PBGC; (ii) receives notice of complete or partial withdrawal liability under Title IV
of ERISA or notice that any Multiemployer Plan is in reorganization, is insolvent or has been
terminated, a copy of such notice; (iii) receives notice from the PBGC under Title IV of ERISA of
an intent to terminate, impose liability (other than for premiums under Section 4007 of ERISA) in
respect of, or appoint a trustee to administer any Plan, a copy of such notice; (iv) applies for a
waiver of the minimum funding standard under Section 412 of the Code, a copy of such application;
(v) gives notice of intent to terminate any Plan under
41
Section 4041(c) of ERISA, a copy of such notice and other information filed with the PBGC;
(vi) gives notice of withdrawal from any Plan pursuant to Section 4063 of ERISA, a copy of such
notice; or (vii) fails to make any payment or contribution to any Plan or Multi-Employer Plan or in
respect of any Benefit Arrangement or makes any amendment to any Plan or Benefit Arrangement which
has resulted or could reasonably be expected to result in the imposition of a Lien or the posting
of a bond or other security, a certificate of a Financial Officer of the Borrower setting forth
details as to such occurrence and action, if any, which the Borrower or applicable ERISA Affiliate
is required or proposes to take, but only to the extent that any occurrence described in the
preceding clauses (i) through (vii) could reasonably be expected to result in a Material Adverse
Effect;
(d) any other development that results in, or could reasonably be expected to result in, a
Material Adverse Effect;
(e) any material amendment to any Material Agreement, together with a certified copy of such
amendment; and
(f) any of the following events, in each case if the occurrence of such event could reasonably
be expected to have a Material Adverse Effect:
(i) the receipt by the Borrower of any notice of any claim with respect to any Environmental
Liability;
(ii) if the President or a Vice President (or equivalent officer) of the Borrower, or the
officer of the Borrower primarily responsible for monitoring compliance by the Borrower and its
subsidiaries with Environmental Laws, shall obtain actual knowledge that there exists any
Environmental Liability pending or threatened against the Borrower or any of its subsidiaries; or
(iii) any release, emission, discharge or disposal of any Hazardous Materials that could
reasonably be expected to form the basis of any Environmental Liability with respect to the
Borrower or any of its subsidiaries.
Each notice delivered under this Section shall be accompanied by a statement of a Financial Officer
or President or any Vice President (or equivalent officer) of the Borrower setting forth a
description of the event or development requiring such notice and any action taken or proposed to
be taken with respect thereto.
Section 5.03
Existence; Conduct of Business
. The Borrower will, and will cause each
of its subsidiaries to, do or cause to be done all things necessary to preserve, renew and keep in
full force and effect its legal existence and the rights, licenses, permits, privileges and
franchises material to the conduct of its business; provided that the foregoing shall not prohibit
any merger, consolidation, liquidation or dissolution permitted under Section 6.03.
Section 5.04
Payment of Obligations
. The Borrower will, and will cause each of its
subsidiaries to, pay its obligations, including Tax liabilities, that, if not paid, could result in
a Material Adverse Effect before the same shall become delinquent or in default, except where (a)
the validity or amount thereof is being contested in good faith by appropriate proceedings, (b)
42
the Borrower or such subsidiary has set aside on its books adequate reserves with respect thereto
in accordance with GAAP and (c) the failure to make payment pending such contest could not
reasonably be expected to result in a Material Adverse Effect.
Section 5.05
Maintenance of Properties; Insurance
. The Borrower will, and will cause
each of its subsidiaries to, (a) keep and maintain all property material to the conduct of its
business in good working order and condition, ordinary wear and tear excepted, and (b) maintain,
with financially sound and reputable insurance companies, insurance in such amounts and against
such risks as are customarily maintained by companies engaged in the same or similar businesses
operating in the same or similar locations.
Section 5.06
Books and Records; Inspection Rights
. The Borrower will, and will cause
each of its subsidiaries to, keep proper books of record and account in which full, true and
correct entries are made of all dealings and transactions in relation to its business and
activities. The Borrower will, and will cause each of its subsidiaries to, permit any
representatives designated by the Administrative Agent or any Lender, upon reasonable prior notice,
to visit and inspect its properties, to examine and make extracts from its books and records, and
to discuss its affairs, finances and condition with its officers and independent accountants, all
at such reasonable times and as often as reasonably requested.
Section 5.07
Compliance with Laws
. The Borrower will, and will cause each of its
subsidiaries to, comply with all laws, rules, regulations and orders of any Governmental Authority
applicable to it or its property and the terms and provisions of the Material Agreements, except
where the failure to do so, individually or in the aggregate, could not reasonably be expected to
result in a Material Adverse Effect.
Section 5.08
Use of Proceeds and Letters of Credit
. The proceeds of the Loans will be
used for working capital and general corporate purposes of the Borrower and its Restricted
Subsidiaries. The Letters of Credit shall be used for general business purposes in the ordinary
course of business or for such other purposes as may be approved by the Administrative Agent. No
part of the proceeds of any Loan will be used, whether directly or indirectly, for any purpose that
entails a violation of any of the Regulations of the Board, including Regulations T, U and X.
Section 5.09
Environmental Laws
. The Borrower will, and will cause each of its
subsidiaries to:
(a) comply with all applicable Environmental Laws and obtain and comply with and maintain any
and all licenses, approvals, notifications, registrations or permits required by applicable
Environmental Laws except to the extent that failure to do so could not reasonably be expected to
have a Material Adverse Effect; and
(b) conduct and complete all investigations, studies, sampling and testing, and all remedial,
removal and other actions required under Environmental Laws and promptly comply with all lawful
orders and directives of all Governmental Authorities regarding Environmental Laws except to the
extent that the same are being contested in good faith by appropriate proceedings and the pendency
of such proceedings could not reasonably be expected to have a Material Adverse Effect.
43
ARTICLE VI
Negative Covenants
Commencing on the Effective Date, until the Commitments have expired or terminated and the
principal of and interest on each Loan and all fees payable hereunder have been paid in full and
all Letters of Credit have expired or terminated and all LC Disbursements shall have been
reimbursed, the Borrower covenants and agrees with the Lenders that:
Section 6.01
Indebtedness
. The Borrower will not, and will not permit any Restricted
Subsidiary to, create, incur, assume or permit to exist any Indebtedness, except:
(a) Indebtedness created under this Agreement (including intercompany Indebtedness permitted
by Section 6.04(c));
(b) other Indebtedness not to exceed $5,000,000 in the aggregate at any one time outstanding.
Section 6.02
Liens
. The Borrower will not, and will not permit any Restricted
Subsidiary to, create, incur, assume or permit to exist any Lien on any property or asset now owned
or hereafter acquired by it, or assign or sell any income or revenues (including accounts
receivable) or rights in respect of any thereof, except Permitted Encumbrances.
Section 6.03
Fundamental Changes
.
(a) The Borrower will not, and will not permit any Restricted Subsidiary to, merge into or
consolidate with any other Person, or permit any other Person to merge into or consolidate with it,
or sell, transfer, lease or otherwise dispose of (in one transaction or in a series of
transactions) all or substantially all of its assets, or all or substantially all of the Equity
Interests of any of the Restricted Subsidiaries (in each case whether now owned or hereafter
acquired), or liquidate or dissolve, except that, if at the time thereof and immediately after
giving effect thereto no Default shall have occurred and be continuing (i) any subsidiary of the
Borrower may merge into the Borrower in a transaction in which the Borrower is the surviving
entity, (ii) any subsidiary of the Borrower may merge into any Restricted Subsidiary in a
transaction in which the surviving entity is a Restricted Subsidiary, and (iii) any Restricted
Subsidiary may liquidate or dissolve if the Borrower determines in good faith that such liquidation
or dissolution is in the best interests of the Borrower and is not materially disadvantageous to
the Lenders;
provided
that any such merger involving a Person that is not a wholly owned
subsidiary immediately prior to such merger shall not be permitted.
(b) The Borrower will not, and will not permit any Restricted Subsidiary to, conduct, transact
or otherwise engage in, or commit to conduct, transact or otherwise engage in, any business or
operations other than those incidental to its ownership of the Equity Interests in the MLP or any
Restricted Subsidiary, as applicable.
Section 6.04
Investments, Loans, Advances, Guarantees and Acquisitions
. The Borrower
will not, and will not permit any Restricted Subsidiary to, purchase, hold or acquire any
Investment in or Guarantee any obligations of, any other Person, or purchase or otherwise
44
acquire (in one transaction or a series of transactions) any assets of any other Person
constituting a business unit, except:
(a) Permitted Investments;
(b) Investments by the Borrower or any Restricted Subsidiary in the Equity Interests of the
MLP, so long as at the time thereof and immediately after giving effect thereto, no Default shall
occur and be continuing;
(c) loans or advances made (i) by the Borrower to any Restricted Subsidiary, (ii) by any
Restricted Subsidiary to the Borrower or (iii) by any Restricted Subsidiary to any other Restricted
Subsidiary, so long as at the time thereof and immediately after giving effect thereto, no Default
shall occur and be continuing; and
(d) Guarantees constituting Indebtedness permitted by Section 6.01(b).
Section 6.05
Swap Agreements
. The Borrower will not, and will not permit any
Restricted Subsidiary to, enter into any Swap Agreement.
Section 6.06
Restricted Payments
. The Borrower will not, and will not permit any
Restricted Subsidiary to, declare or make, or agree to pay or make, directly or indirectly, any
Restricted Payment, except (a) any Restricted Subsidiary may declare and pay Restricted Payments to
its parent, (b) the Borrower may make Restricted Payments pursuant to and in accordance with equity
incentive plans or other benefit plans for management or employees of the Borrower, (c) Valero GP,
LLC may make Restricted Payments pursuant to and in accordance with equity incentive plans or other
benefit plans for management or employees of Valero GP, LLC and (d) as long as no Default has
occurred and is continuing or would result therefrom, the Borrower may make Restricted Payments in
accordance with the terms of the Limited Liability Company Agreement (Borrower).
Section 6.07
Transactions with Affiliates
. The Borrower will not, and will not permit
any Restricted Subsidiary to, sell, lease or otherwise transfer any property or assets to, or
purchase, lease or otherwise acquire any property or assets from, or otherwise engage in any other
transactions with, any of its Affiliates, except (a) at prices and on terms and conditions not less
favorable to the Borrower or such Restricted Subsidiary than could be obtained on an arms-length
basis from unrelated third parties, (b) transactions between or among the Borrower and the
Restricted Subsidiaries not involving any other Affiliate, (c) any Restricted Payment permitted by
Section 6.06 and (d) pursuant to the agreements listed on Schedule 6.07, which agreements are at
prices and on terms and conditions not less favorable to it than could be obtained on an
arms-length basis from unrelated third parties.
Section 6.08
Restrictive Agreements
. The Borrower will not, and will not permit any
Restricted Subsidiary to, directly or indirectly, enter into, incur or permit to exist any
agreement or other arrangement that prohibits, restricts or imposes any condition upon (a) the
ability of the Borrower or any Restricted Subsidiary to create, incur or permit to exist any Lien
upon any of its property or assets, or (b) the ability of any Restricted Subsidiary to pay
dividends or other distributions with respect to any shares of its capital stock or to make or
repay loans or advances to the Borrower or any other Restricted Subsidiary or to Guarantee
Indebtedness of the Borrower
45
or any Restricted Subsidiary;
provided
that (i) the foregoing shall not apply to
restrictions and conditions imposed by law or by this Agreement, (ii) the foregoing shall not apply
to restrictions and conditions (x) existing on the date of this Agreement identified on Schedule
6.08 (but shall apply to any extension or renewal of, or any amendment or modification expanding
the scope of, any such restriction or condition so as to cause such restriction or condition to be
more restrictive than the restriction or condition in existence on the date of this Agreement) or
(y) arising or agreed to after the date of this Agreement;
provided
that such restrictions
or conditions are not more restrictive than the restrictions and conditions existing on the date of
this Agreement and (iii) clause (a) of the foregoing shall not apply to customary provisions in
leases and other contracts restricting the assignment thereof.
Section 6.09
Limitation on Modifications of Other Agreements
. The Borrower will not,
and will not permit any of its subsidiaries to, amend, modify or change, or consent to any
amendment, modification or change to, any of the terms of, the Material Agreements, except to the
extent the same could not reasonably be expected to have a Material Adverse Effect.
Section 6.10
Creation of Subsidiaries
. The Borrower will not, and will not permit any
Restricted Subsidiary to, at any time create or acquire any subsidiary.
Section 6.11
Financial Condition Covenants
.
(a) The Borrower will not permit at any time the Consolidated Debt Coverage Ratio to be in
excess of 4.75 to 1.00 for any Rolling Period ending on or subsequent to September 30, 2006;
provided
that if at any time the MLP or any of its subsidiaries consummates an acquisition
(including the Acquisition) for which the MLP or any of its subsidiaries has paid aggregate net
consideration of at least $100,000,000, then, for the two Rolling Periods the last day of which
immediately follow the date on which such acquisition is consummated, the numerator of the maximum
Consolidated Debt Coverage Ratio otherwise permitted above shall be increased by 0.5; thereafter,
compliance shall be determined by reverting back to a ratio of 4.75 to 1.00.
(b) The Borrower will not, as of the last day of any fiscal quarter, permit the aggregate cash
distributions paid by the MLP to the Restricted Subsidiaries and by the Restricted Subsidiaries to
the Borrower in respect of the Borrowers indirectly owned Equity Interests in the MLP during the
Rolling Period ending on such day to be less than $25,000,000.
Section 6.12
Disposition of Assets
. The Borrower will not, and will not permit any
Restricted Subsidiary to, sell, assign, convey or otherwise transfer any property except (i) sales,
conveyances, transfers or other dispositions of assets no longer used or useful in the Borrowers
or such Restricted Subsidiarys business, (ii) sales, conveyances, transfers or other dispositions
of Permitted Investments, (iii) Restricted Payments made in accordance with this Agreement, (iv)
sales, conveyances, transfers or other dispositions of property in the ordinary course of the
Borrowers or such Restricted Subsidiarys business, and (v) sales, conveyances, transfers or other
dispositions of property related to or necessary to permit the Borrower or any Restricted
Subsidiary to administer any Unit incentive plans (including the purchase and sale of Units on the
open market to account for the exercise of Unit options and vesting of restricted Units).
46
ARTICLE VII
Events of Default
From (and including) the Effective Date, if any of the following events (
Events of
Default
) shall occur:
(a) the Borrower shall fail to pay any principal of any Loan or any reimbursement obligation
in respect of any LC Disbursement when and as the same shall become due and payable, whether at the
due date thereof or at a date fixed for prepayment thereof or otherwise;
(b) the Borrower shall fail to pay any interest on any Loan or any fee or any other amount
(other than an amount referred to in clause (a) of this Article) payable under this Agreement, when
and as the same shall become due and payable, and such failure shall continue unremedied for a
period of five Business Days;
(c) any representation or warranty made or deemed made by or on behalf of the Borrower or any
of its subsidiaries in or in connection with any Loan Document or any amendment or modification
thereof or waiver thereunder, or in any report, certificate, financial statement or other document
furnished pursuant to or in connection with the Loan Documents or any amendment or modification
hereof or waiver hereunder, shall prove to have been incorrect in any material respect when made or
deemed made;
(d) the Borrower shall fail to observe or perform any covenant, condition or agreement
contained in Section 5.02(a), (c) or (e), Section 5.03 (with respect to the Borrowers existence),
Section 5.08 or in Article VI;
(e) the Borrower shall fail to observe or perform any covenant, condition or agreement
contained in the Loan Documents (other than those specified in clause (a), (b) or (d) of this
Article), and such failure shall continue unremedied for a period of 30 days after notice thereof
from the Administrative Agent to the Borrower (which notice will be given at the request of any
Lender);
(f) the Borrower or any Restricted Subsidiary shall fail to make any payment (whether of
principal or interest and regardless of amount) in respect of any Material Indebtedness, when and
as the same shall become due and payable (subject to any applicable grace period), whether by
acceleration or otherwise, of any Material Indebtedness; or a default shall occur in the
performance or observance of any obligation or condition with respect to any Material Indebtedness
if the effect of such default is to accelerate the maturity of any such Indebtedness or such
default shall continue unremedied for any applicable period of time sufficient to permit the holder
or holders of such Indebtedness, or any trustee or agent for such holders, to cause such
Indebtedness to become due and payable prior to its expressed maturity;
(g) an involuntary proceeding shall be commenced or an involuntary petition shall be filed
seeking (i) liquidation, reorganization or other relief in respect of the Borrower or any
Restricted Subsidiary or its debts, or of a substantial part of its assets, under any Federal,
state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect or
(ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar
official
47
for the Borrower or any Restricted Subsidiary or for a substantial part of its assets, and, in
any such case, such proceeding or petition shall continue undismissed for 60 days or an order or
decree approving or ordering any of the foregoing shall be entered;
(h) the Borrower or any Restricted Subsidiary shall (i) voluntarily commence any proceeding or
file any petition seeking liquidation, reorganization or other relief under any Federal, state or
foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect, (ii)
consent to the institution of, or fail to contest in a timely and appropriate manner, any
proceeding or petition described in clause (g) of this Article, (iii) apply for or consent to the
appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for
the Borrower or any Restricted Subsidiary or for a substantial part of its assets, (iv) file an
answer admitting the material allegations of a petition filed against it in any such proceeding,
(v) make a general assignment for the benefit of creditors or (vi) take any action for the purpose
of effecting any of the foregoing;
(i) the Borrower or any Restricted Subsidiary shall become unable, admit in writing its
inability or fail generally to pay its debts as they become due;
(j) one or more judgments for the payment of money in an aggregate amount in excess of
$5,000,000 and that are not covered by insurance shall be rendered against the Borrower or any
Restricted Subsidiary, or any combination thereof and the same shall remain undischarged for a
period of 30 consecutive days during which execution shall not be effectively stayed, or any action
shall be legally taken by a judgment creditor to attach or levy upon any assets of the Borrower or
any Restricted Subsidiary to enforce any such judgment;
(k) an ERISA Event shall have occurred that, in the opinion of the Required Lenders, when
taken together with all other ERISA Events that have occurred, could reasonably be expected to
result in liability of the Borrower and its subsidiaries in an aggregate amount exceeding
$5,000,000;
(l) the Borrower or any Restricted Subsidiary shall incur an Environmental Liability requiring
payment in any Rolling Period in excess of $5,000,0000 that is not covered by insurance or that
remains undischarged for a period of 30 days;
(m) this Agreement after delivery thereof shall for any reason, except to the extent permitted
by the terms hereof (or as waived by the Lenders in accordance with Section 9.02), cease to be
valid, binding and enforceable in accordance with its terms against the Borrower or shall be
repudiated by the Borrower, or the Borrower shall so state in writing;
(n) a Change in Control shall occur; or
(o) one or more Events of Default under (and as defined in) the Valero Logistics Credit
Agreement shall occur and be continuing;
then, and in every such event (other than an event with respect to the Borrower described in clause
(g) or (h) of this Article), and at any time thereafter during the continuance of such event, the
Administrative Agent may, and at the request of the Required Lenders shall, by notice to the
Borrower, take either or both of the following actions, at the same or different times: (i)
48
terminate the Commitments, and thereupon the Commitments shall terminate immediately, and (ii)
declare the Loans then outstanding to be due and payable in whole (or in part, in which case any
principal not so declared to be due and payable may thereafter be declared to be due and payable),
and thereupon the principal of the Loans so declared to be due and payable, together with accrued
interest thereon and all fees and other obligations of the Borrower accrued hereunder, shall become
due and payable immediately, without presentment, demand, protest or other notice of any kind, all
of which are hereby waived by the Borrower; and in case of any event with respect to the Borrower
described in clause (g) or (h) of this Article, the Commitments shall automatically terminate and
the principal of the Loans then outstanding, together with accrued interest thereon and all fees
and other obligations of the Borrower accrued hereunder, shall automatically become due and
payable, without presentment, demand, protest or other notice of any kind, all of which are hereby
waived by the Borrower.
ARTICLE VIII
The Administrative Agent
Each of the Lenders and the Issuing Banks hereby irrevocably appoints the Administrative Agent
as its agent and authorizes the Administrative Agent to take such actions on its behalf and to
exercise such powers as are delegated to the Administrative Agent by the terms hereof, together
with such actions and powers as are reasonably incidental thereto.
The bank serving as the Administrative Agent hereunder shall have the same rights and powers
in its capacity as a Lender as any other Lender and may exercise the same as though it were not the
Administrative Agent, and such bank and its Affiliates may accept deposits from, lend money to and
generally engage in any kind of business with the Borrower or any of its subsidiaries or other
Affiliate thereof as if it were not the Administrative Agent hereunder.
The Administrative Agent shall not have any duties or obligations except those expressly set
forth herein. Without limiting the generality of the foregoing, (a) the Administrative Agent shall
not be subject to any fiduciary or other implied duties, regardless of whether a Default has
occurred and is continuing, (b) the Administrative Agent shall not have any duty to take any
discretionary action or exercise any discretionary powers, except discretionary rights and powers
expressly contemplated hereby that the Administrative Agent is required to exercise in writing as
directed by the Required Lenders (or such other number or percentage of the Lenders as shall be
necessary under the circumstances as provided in Section 9.02), and (c) except as expressly set
forth herein, the Administrative Agent shall not have any duty to disclose, and shall not be liable
for the failure to disclose, any information relating to the Borrower or any of its subsidiaries
that is communicated to or obtained by the bank serving as Administrative Agent or any of its
Affiliates in any capacity. The Administrative Agent shall not be liable for any action taken or
not taken by it with the consent or at the request of the Required Lenders (or such other number or
percentage of the Lenders as shall be necessary under the circumstances as provided in Section
9.02) or in the absence of its own gross negligence or wilful misconduct. The Administrative Agent
shall be deemed not to have knowledge of any Default unless and until written notice thereof is
given to the Administrative Agent by the Borrower or a Lender, and the Administrative Agent shall
not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or
representation made in or in connection with this Agreement, (ii) the contents of any certificate,
report or other document delivered hereunder or in connection
49
herewith, (iii) the performance or observance of any of the covenants, agreements or other
terms or conditions set forth herein, (iv) the validity, enforceability, effectiveness or
genuineness of this Agreement or any other agreement, instrument or document, or (v) the
satisfaction of any condition set forth in Article IV or elsewhere herein, other than to confirm
receipt of items expressly required to be delivered to the Administrative Agent.
The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for
relying upon, any notice, request, certificate, consent, statement, instrument, document or other
writing believed by it to be genuine and to have been signed or sent by the proper Person. The
Administrative Agent also may rely upon any statement made to it orally or by telephone and
believed by it to be made by the proper Person, and shall not incur any liability for relying
thereon. The Administrative Agent may consult with legal counsel (who may be counsel for the
Borrower), independent accountants and other experts selected by it, and shall not be liable for
any action taken or not taken by it in accordance with the advice of any such counsel, accountants
or experts.
The Administrative Agent may perform any and all its duties and exercise its rights and powers
by or through any one or more sub-agents appointed by the Administrative Agent. The Administrative
Agent and any such sub-agent may perform any and all its duties and exercise its rights and powers
through their respective Related Parties. The exculpatory provisions of the preceding paragraphs
shall apply to any such sub-agent and to the Related Parties of the Administrative Agent and any
such sub-agent, and shall apply to their respective activities in connection with the syndication
of the credit facilities provided for herein as well as activities as Administrative Agent.
Subject to the appointment and acceptance of a successor Administrative Agent as provided in
this paragraph, the Administrative Agent may resign at any time by notifying the Lenders, the
Issuing Banks and the Borrower. Upon any such resignation, the Required Lenders shall have the
right, in consultation with the Borrower, to appoint a successor. If no successor shall have been
so appointed by the Required Lenders and shall have accepted such appointment within 30 days after
the retiring Administrative Agent gives notice of its resignation, then the retiring Administrative
Agent may, on behalf of the Lenders and the Issuing Banks, appoint a successor Administrative Agent
which shall be a Lender and a commercial bank with an office in New York, New York and having a
combined capital and surplus of at least $500,000,000, or an Affiliate of any such bank. Upon the
acceptance of its appointment as Administrative Agent hereunder by a successor, such successor
shall succeed to and become vested with all the rights, powers, privileges and duties of the
retiring Administrative Agent, and the retiring Administrative Agent shall be discharged from its
duties and obligations hereunder. The fees payable by the Borrower to a successor Administrative
Agent shall be the same as those payable to its predecessor unless otherwise agreed between the
Borrower and such successor. After the Administrative Agents resignation hereunder, the
provisions of this Article and Section 9.03 shall continue in effect for the benefit of such
retiring Administrative Agent, its sub-agents and their respective Related Parties in respect of
any actions taken or omitted to be taken by any of them while it was acting as Administrative
Agent.
Each Lender acknowledges that it has, independently and without reliance upon the
Administrative Agent or any other Lender and based on such documents and information as it
50
has deemed appropriate, made its own credit analysis and decision to enter into this
Agreement. Each Lender also acknowledges that it will, independently and without reliance upon the
Administrative Agent or any other Lender and based on such documents and information as it shall
from time to time deem appropriate, continue to make its own decisions in taking or not taking
action under or based upon this Agreement, any related agreement or any document furnished
hereunder or thereunder.
The Syndication Agent shall not have any duties, responsibilities or liabilities under this
Agreement or the other Loan Documents other than its duties, responsibilities and liabilities in
its capacity as a Lender hereunder.
ARTICLE IX
Miscellaneous
Section 9.01 Notices.
(a) Except in the case of notices and other communications expressly permitted to be given by
telephone (and subject to paragraph (b) below), all notices and other communications provided for
herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by
certified or registered mail or sent by telecopy, as follows:
(i) if to the Borrower, to it at One Valero Way, San Antonio, Texas 78249-1112, Attention of
Senior Vice President and Chief Financial Officer (Telecopy No. (210) 345-3629);
(ii) if to the Administrative Agent, to JPMorgan Chase Bank, N.A., Loan and Agency Services
Group, 1111 Fannin, 8th Floor, Houston, Texas 77002, Attention of Maria Arreola (Telecopy No. (713)
750-2228);
(iii) if to JPMorgan Chase Bank, N.A., in its capacity as Issuing Bank, to it at JPMorgan
Chase Bank, N.A., Letter of Credit Group, Global Trade Services, 10420 Highland Manor Dr., Tampa,
Florida 33610, Attention of James Alonzo (Telecopy No. (813) 432-5161);
(iv) if to SunTrust Bank, in its capacity as Issuing Bank, to it at SunTrust Bank, 25 Park
Place, 16th Floor, Standby Letter of Credit Dept., MC-3706, Atlanta, Georgia 30303, Attention of
Nivetta Freeman (Telecopy No. (404) 588-8129)), with a copy to it at the same address and telecopy
number, Attention of Aimee Maier;
(v) if to any other Lender, to it at its address (or telecopy number) set forth in its
Administrative Questionnaire.
(b) Notices and other communications to the Lenders hereunder may be delivered or furnished by
electronic communications pursuant to procedures approved by the Administrative Agent; provided
that the foregoing shall not apply to notices pursuant to Article II unless otherwise agreed by the
Administrative Agent and the applicable Lender. The Administrative Agent or the Borrower may, in
its discretion, agree to accept notices and other communications to it hereunder by electronic
communications pursuant to procedures approved
51
by it; provided that approval of such procedures may be limited to particular notices or
communications.
(c) Any party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto. All notices and other
communications given to any party hereto in accordance with the provisions of this Agreement shall
be deemed to have been given on the date of receipt.
Section 9.02
Waivers; Amendments
.
(a) No failure or delay by the Administrative Agent, any Issuing Bank or any Lender in
exercising any right or power hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right or power, or any abandonment or discontinuance of steps to
enforce such a right or power, preclude any other or further exercise thereof or the exercise of
any other right or power. The rights and remedies of the Administrative Agent, the Issuing Banks
and the Lenders hereunder are cumulative and are not exclusive of any rights or remedies that they
would otherwise have. No waiver of any provision of this Agreement or consent to any departure by
the Borrower therefrom shall in any event be effective unless the same shall be permitted by
paragraph (b) of this Section, and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given. Without limiting the generality of the
foregoing, the making of a Loan or issuance of a Letter of Credit shall not be construed as a
waiver of any Default, regardless of whether the Administrative Agent, any Lender or any Issuing
Bank may have had notice or knowledge of such Default at the time.
(b) Neither this Agreement nor any provision hereof may be waived, amended or modified (except
as expressly set forth herein or therein) except pursuant to an agreement or agreements in writing
entered into by the Borrower and the Required Lenders or by the Borrower and the Administrative
Agent with the consent of the Required Lenders;
provided
that no such agreement shall (i)
increase the Commitment of any Lender without the written consent of such Lender, (ii) reduce the
principal amount of any Loan or LC Disbursement or reduce the rate of interest thereon, or reduce
any fees payable hereunder, without the written consent of each Lender affected thereby, (iii)
postpone the scheduled date of payment of the principal amount of any Loan or LC Disbursement, or
any interest thereon, or any fees payable hereunder, or reduce the amount of, waive or excuse any
such payment, or postpone the scheduled date of expiration of any Commitment, without the written
consent of each Lender affected thereby, (iv) change Section 2.16(b) or (c) in a manner that would
alter the pro rata sharing of payments required thereby, without the written consent of each
Lender, (v) waive or amend Section 4.01, without the written consent of each Lender or (vi) change
any of the provisions of this Section or the definition of Required Lenders or any other
provision hereof specifying the number or percentage of Lenders required to waive, amend or modify
any rights hereunder or make any determination or grant any consent hereunder, without the written
consent of each Lender;
provided further
that no such agreement shall amend, modify or
otherwise affect the rights or duties of the Administrative Agent or any Issuing Bank hereunder
without the prior written consent of the Administrative Agent or such Issuing Bank, as the case may
be.
52
Section 9.03
Expenses; Indemnity; Damage Waiver
.
(a) The Borrower shall pay (i) all reasonable out-of-pocket expenses incurred by the
Administrative Agent and its Affiliates, including the reasonable fees, charges and disbursements
of counsel for the Administrative Agent, in connection with the syndication of the credit
facilities provided for herein, the preparation and administration of this Agreement or any
amendments, modifications or waivers of the provisions hereof (whether or not the transactions
contemplated hereby or thereby shall be consummated), (ii) all reasonable out-of-pocket expenses
incurred by any Issuing Bank in connection with the issuance, amendment, renewal or extension of
any Letter of Credit or any demand for payment thereunder and (iii) all out-of-pocket expenses
incurred by the Administrative Agent, any Issuing Bank or any Lender, including the fees, charges
and disbursements of any counsel for the Administrative Agent, any Issuing Bank or any Lender, in
connection with the enforcement or protection of its rights in connection with this Agreement,
including its rights under this Section, or in connection with the Loans made or Letters of Credit
issued hereunder, including all such out-of-pocket expenses incurred during any workout,
restructuring or negotiations in respect of such Loans or Letters of Credit.
(b) The Borrower shall indemnify the Administrative Agent, each Issuing Bank and each Lender,
and each Related Party of any of the foregoing Persons (each such Person being called an
Indemnitee
) against, and hold each Indemnitee harmless from, any and all losses, claims,
damages, liabilities and related expenses, including the fees, charges and disbursements of any
counsel for any Indemnitee, incurred by or asserted against any Indemnitee arising out of, in
connection with, or as a result of (i) the execution or delivery of this Agreement, any other Loan
Document or any agreement or instrument contemplated hereby or thereby, the performance by the
parties hereto of their respective obligations hereunder or the consummation of the Transactions or
any other transactions contemplated hereby, (ii) any Loan or Letter of Credit or the use of the
proceeds therefrom (including any refusal by any Issuing Bank to honor a demand for payment under a
Letter of Credit issued by it if the documents presented in connection with such demand do not
strictly comply with the terms of such Letter of Credit), (iii) any actual or alleged presence or
release of Hazardous Materials on or from any property owned or operated by the Borrower or any of
its subsidiaries, or any Environmental Liability related in any way to the Borrower or any of its
subsidiaries, or (iv) any actual or prospective claim, litigation, investigation or proceeding
relating to any of the foregoing, whether based on contract, tort or any other theory and
regardless of whether any Indemnitee is a party thereto;
provided
that such indemnity shall
not, as to any Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses are determined by a court of competent jurisdiction by final and
nonappealable judgment to have resulted from the gross negligence or wilful misconduct of such
Indemnitee.
(c) To the extent that the Borrower fails to pay any amount required to be paid by it to the
Administrative Agent or any Issuing Bank under paragraph (a) or (b) of this Section, each Lender
severally agrees to pay to the Administrative Agent or such Issuing Bank, as the case may be, such
Lenders Applicable Percentage (determined as of the time that the applicable unreimbursed expense
or indemnity payment is sought) of such unpaid amount;
provided
that the unreimbursed
expense or indemnified loss, claim, damage, liability or related expense, as the
53
case may be, was incurred by or asserted against the Administrative Agent or such Issuing Bank
in its capacity as such.
(d) To the extent permitted by applicable law, the Borrower shall not assert, and hereby
waives, any claim against any Indemnitee, on any theory of liability, for special, indirect,
consequential or punitive damages (as opposed to direct or actual damages) arising out of, in
connection with, or as a result of, this Agreement or any agreement or instrument contemplated
hereby, the Transactions, any Loan or Letter of Credit or the use of the proceeds thereof.
(e) All amounts due under this Section shall be payable not later than 5 Business Days after
written demand therefor.
Section 9.04
Successors and Assigns
.
(a) The provisions of this Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns permitted hereby (including any
Affiliate of any Issuing Bank that issues any Letter of Credit), except that (i) the Borrower may
not assign or otherwise transfer any of its rights or obligations hereunder without the prior
written consent of each Lender (and any attempted assignment or transfer by the Borrower without
such consent shall be null and void) and (ii) no Lender may assign or otherwise transfer its rights
or obligations hereunder except in accordance with this Section. Nothing in this Agreement,
expressed or implied, shall be construed to confer upon any Person (other than the parties hereto,
their respective successors and assigns permitted hereby (including any Affiliate of any Issuing
Bank that issues any Letter of Credit), Participants (to the extent provided in paragraph (c) of
this Section) and, to the extent expressly contemplated hereby, the Related Parties of each of the
Administrative Agent, the Issuing Banks and the Lenders) any legal or equitable right, remedy or
claim under or by reason of this Agreement.
(b)
(i) Subject to the conditions set forth in paragraph (b)(ii) below, any Lender may assign to
one or more assignees all or a portion of its rights and obligations under this Agreement
(including all or a portion of its Commitment and the Loans at the time owing to it) with the prior
written consent (such consent not to be unreasonably withheld) of:
(A) the Borrower, provided that no consent of the Borrower shall be required for an assignment
to a Lender, an Affiliate of a Lender, an Approved Fund or, if an Event of Default has occurred and
is continuing, any other assignee;
(B) the Administrative Agent, provided that no consent of the Administrative Agent shall be
required for an assignment of any Commitment to an assignee that is a Lender with a Commitment
immediately prior to giving effect to such assignment; and
(C) each Issuing Bank.
(ii) Assignments shall be subject to the following additional conditions:
54
(A) except in the case of an assignment to a Lender or an Affiliate of a Lender or an
assignment of the entire remaining amount of the assigning Lenders Commitment or Loans of any
Class, the amount of the Commitment or Loans of the assigning Lender subject to each such
assignment (determined as of the date the Assignment and Assumption with respect to such assignment
is delivered to the Administrative Agent) shall not be less than $5,000,000 unless each of the
Borrower and the Administrative Agent otherwise consent, provided that no such consent of the
Borrower shall be required if an Event of Default has occurred and is continuing;
(B) each partial assignment shall be made as an assignment of a proportionate part of all the
assigning Lenders rights and obligations under this Agreement;
(C) the parties to each assignment shall execute and deliver to the Administrative Agent an
Assignment and Assumption, together with a processing and recordation fee of $3,500; and
(D) the assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an
Administrative Questionnaire.
For the purposes of this Section 9.04(b), the term Approved Fund has the following meaning:
Approved Fund means any Person (other than a natural person) that is engaged in making,
purchasing, holding or investing in bank loans and similar extensions of credit in the ordinary
course of its business and that is administered or managed by (a) a Lender, (b) an Affiliate of a
Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.
(iii) Subject to acceptance and recording thereof pursuant to paragraph (b)(iv) of this
Section, from and after the effective date specified in each Assignment and Assumption the assignee
thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment
and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning
Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption,
be released from its obligations under this Agreement (and, in the case of an Assignment and
Assumption covering all of the assigning Lenders rights and obligations under this Agreement, such
Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of
Sections 2.13, 2.14, 2.15 and 9.03). Any assignment or transfer by a Lender of rights or
obligations under this Agreement that does not comply with this Section 9.04 shall be treated for
purposes of this Agreement as a sale by such Lender of a participation in such rights and
obligations in accordance with paragraph (c) of this Section.
(iv) The Administrative Agent, acting for this purpose as an agent of the Borrower, shall
maintain at one of its offices a copy of each Assignment and Assumption delivered to it and a
register for the recordation of the names and addresses of the Lenders, and the Commitment of, and
principal amount of the Loans and LC Disbursements owing to, each Lender pursuant to the terms
hereof from time to time (the Register). The entries in the Register shall be conclusive, and
the Borrower, the Administrative Agent, the Issuing Banks and
55
the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms
hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the
contrary. The Register shall be available for inspection by the Borrower, the Issuing Banks and
any Lender, at any reasonable time and from time to time upon reasonable prior notice.
(v) Upon its receipt of a duly completed Assignment and Assumption executed by an assigning
Lender and an assignee, the assignees completed Administrative Questionnaire (unless the assignee
shall already be a Lender hereunder), the processing and recordation fee referred to in paragraph
(b) of this Section and any written consent to such assignment required by paragraph (b) of this
Section, the Administrative Agent shall accept such Assignment and Assumption and record the
information contained therein in the Register; provided that if either the assigning Lender or the
assignee shall have failed to make any payment required to be made by it pursuant to Section
2.04(d) or (e), 2.05(b), 2.16(d) or 9.03(b), the Administrative Agent shall have no obligation to
accept such Assignment and Assumption and record the information therein in the Register unless and
until such payment shall have been made in full, together with all accrued interest thereon. No
assignment shall be effective for purposes of this Agreement unless it has been recorded in the
Register as provided in this paragraph.
(c)
(i) Any Lender may, without the consent of the Borrower, the Administrative Agent or any
Issuing Bank, sell participations to one or more banks or other entities (a Participant) in all
or a portion of such Lenders rights and obligations under this Agreement (including all or a
portion of its Commitment and the Loans owing to it); provided that (A) such Lenders obligations
under this Agreement shall remain unchanged, (B) such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations and (C) the Borrower, the
Administrative Agent, the Issuing Banks and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lenders rights and obligations under this
Agreement. Any agreement or instrument pursuant to which a Lender sells such a participation shall
provide that such Lender shall retain the sole right to enforce this Agreement and to approve any
amendment, modification or waiver of any provision of this Agreement; provided that such agreement
or instrument may provide that such Lender will not, without the consent of the Participant, agree
to any amendment, modification or waiver described in the first proviso to Section 9.02(b) that
affects such Participant. Subject to paragraph (c)(ii) of this Section, the Borrower agrees that
each Participant shall be entitled to the benefits of Sections 2.13, 2.14 and 2.15 to the same
extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b)
of this Section. To the extent permitted by law, each Participant also shall be entitled to the
benefits of Section 9.08 as though it were a Lender, provided such Participant agrees to be subject
to Section 2.16(c) as though it were a Lender.
(ii) A Participant shall not be entitled to receive any greater payment under Section 2.13 or
Section 2.15 than the applicable Lender would have been entitled to receive with respect to the
participation sold to such Participant, unless the sale of the participation to such Participant is
made with the Borrowers prior written consent. A Participant that would be a Foreign Lender if it
were a Lender shall not be entitled to the benefits
56
of Section 2.15 unless the Borrower is notified of the participation sold to such Participant
and such Participant agrees, for the benefit of the Borrower, to comply with Section 2.15(e) as
though it were a Lender.
(d) Any Lender may at any time pledge or assign a security interest in all or any portion of
its rights under this Agreement to secure obligations of such Lender, including without limitation
any pledge or assignment to secure obligations to a Federal Reserve Bank, and this Section shall
not apply to any such pledge or assignment of a security interest; provided that no such pledge or
assignment of a security interest shall release a Lender from any of its obligations hereunder or
substitute any such pledgee or assignee for such Lender as a party hereto.
Section 9.05
Survival
. All covenants, agreements, representations and warranties made
by the Borrower herein and in the certificates or other instruments delivered in connection with
or pursuant to this Agreement shall be considered to have been relied upon by the other parties
hereto and shall survive the execution and delivery of this Agreement and the making of any Loans
and issuance of any Letters of Credit, regardless of any investigation made by any such other party
or on its behalf and notwithstanding that the Administrative Agent, any Issuing Bank or any Lender
may have had notice or knowledge of any Default or incorrect representation or warranty at the time
any credit is extended hereunder, and shall continue in full force and effect as long as the
principal of or any accrued interest on any Loan or any fee or any other amount payable under this
Agreement is outstanding and unpaid or any Letter of Credit is outstanding and so long as the
Commitments have not expired or terminated. The provisions of Sections 2.13, 2.14, 2.15 and 9.03
and Article VIII shall survive and remain in full force and effect regardless of the consummation
of the transactions contemplated hereby, the repayment of the Loans, the expiration or termination
of the Letters of Credit and the Commitments or the termination of this Agreement or any provision
hereof.
Section 9.06
Counterparts; Integration; Effectiveness
. This Agreement may be executed
in counterparts (and by different parties hereto on different counterparts), each of which shall
constitute an original, but all of which when taken together shall constitute a single contract.
This Agreement and any separate letter agreements with respect to fees payable to the
Administrative Agent constitute the entire contract among the parties relating to the subject
matter hereof and supersede any and all previous agreements and understandings, oral or written,
relating to the subject matter hereof. Except as provided in Section 4.01, this Agreement shall
become effective when it shall have been executed by the Administrative Agent and when the
Administrative Agent shall have received counterparts hereof which, when taken together, bear the
signatures of each of the other required parties hereto, and thereafter shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and assigns. Delivery
of an executed counterpart of a signature page of this Agreement by telecopy shall be effective as
delivery of a manually executed counterpart of this Agreement.
Section 9.07
Severability
. Any provision of this Agreement held to be invalid,
illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the
extent of such invalidity, illegality or unenforceability without affecting the validity, legality
and enforceability of the remaining provisions hereof; and the invalidity of a particular provision
in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.
57
Section 9.08
Right of Setoff
. If an Event of Default shall have occurred and be
continuing, each Lender and each of its Affiliates is hereby authorized at any time and from time
to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general
or special, time or demand, provisional or final) at any time held and other obligations at any
time owing by such Lender or Affiliate to or for the credit or the account of the Borrower against
any of and all the obligations of the Borrower now or hereafter existing under this Agreement held
by such Lender, irrespective of whether or not such Lender shall have made any demand under this
Agreement and although such obligations may be unmatured. The rights of each Lender under this
Section are in addition to other rights and remedies (including other rights of setoff) which such
Lender may have.
Section 9.09
Governing Law; Jurisdiction; Consent to Service of Process
.
(a) This Agreement shall be construed in accordance with and governed by the law of the State
of New York.
(b) The Borrower hereby irrevocably and unconditionally submits, for itself and its property,
to the nonexclusive jurisdiction of the Supreme Court of the State of New York sitting in New York
County and of the United States District Court of the Southern District of New York, and any
appellate court from any thereof, in any action or proceeding arising out of or relating to this
Agreement, or for recognition or enforcement of any judgment, and each of the parties hereto hereby
irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding
may be heard and determined in such New York State or, to the extent permitted by law, in such
Federal court. Each of the parties hereto agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment
or in any other manner provided by law. Nothing in this Agreement shall affect any right that the
Administrative Agent, any Issuing Bank or any Lender may otherwise have to bring any action or
proceeding relating to this Agreement against the Borrower or its properties in the courts of any
jurisdiction.
(c) The Borrower hereby irrevocably and unconditionally waives, to the fullest extent it may
legally and effectively do so, any objection which it may now or hereafter have to the laying of
venue of any suit, action or proceeding arising out of or relating to this Agreement in any court
referred to in paragraph (b) of this Section. Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.
(d) Each party to this Agreement irrevocably consents to service of process in the manner
provided for notices in Section 9.01. Nothing in this Agreement will affect the right of any party
to this Agreement to serve process in any other manner permitted by law.
Section 9.10
WAIVER OF JURY TRIAL
. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL
PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (a)
CERTIFIES THAT NO
58
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER
AND (b) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
Section 9.11
Headings
. Article and Section headings and the Table of Contents used
herein are for convenience of reference only, are not part of this Agreement and shall not affect
the construction of, or be taken into consideration in interpreting, this Agreement.
Section 9.12
Confidentiality
. Each of the Administrative Agent, the Issuing Banks and
the Lenders agrees to maintain the confidentiality of the Information (as defined below), except
that Information may be disclosed (a) to its and its Affiliates directors, officers, employees and
agents, including accountants, legal counsel and other advisors (it being understood that the
Persons to whom such disclosure is made will be informed of the confidential nature of such
Information and instructed to keep such Information confidential), (b) to the extent requested by
any regulatory authority, (c) to the extent required by applicable laws or regulations or by any
subpoena or similar legal process, (d) to any other party to this Agreement, (e) in connection with
the exercise of any remedies hereunder or any suit, action or proceeding relating to this Agreement
or the enforcement of rights hereunder, (f) subject to an agreement containing provisions
substantially the same as those of this Section, to (i) any assignee of or Participant in, or any
prospective assignee of or Participant in, any of its rights or obligations under this Agreement or
(ii) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction
relating to the Borrower and its obligations, (g) with the consent of the Borrower or (h) to the
extent such Information (i) becomes publicly available other than as a result of a breach of this
Section or (ii) becomes available to the Administrative Agent, any Issuing Bank or any Lender on a
nonconfidential basis from a source other than the Borrower. For the purposes of this Section,
Information means all information received from the Borrower relating to the Borrower or its
business, other than any such information that is available to the Administrative Agent, any
Issuing Bank or any Lender on a nonconfidential basis prior to disclosure by the Borrower;
provided
that, in the case of information received from the Borrower after the date hereof,
such information is clearly identified at the time of delivery as confidential. Any Person
required to maintain the confidentiality of Information as provided in this Section shall be
considered to have complied with its obligation to do so if such Person has exercised the same
degree of care to maintain the confidentiality of such Information as such Person would accord to
its own confidential information.
Section 9.13
Interest Rate Limitation
. Notwithstanding anything herein to the
contrary, if at any time the interest rate applicable to any Loan, together with all fees, charges
and other amounts which are treated as interest on such Loan under applicable law (collectively the
Charges
), shall exceed the maximum lawful rate (the
Maximum Rate
) which may be
contracted for, charged, taken, received or reserved by the Lender holding such Loan in accordance
with applicable law, the rate of interest payable in respect of such Loan hereunder, together with
all Charges payable in respect thereof, shall be limited to the Maximum Rate and, to the extent
lawful, the interest and Charges that would have been payable in respect of such Loan but were not
payable as a result of the operation of this Section shall be cumulated and the
59
interest and Charges payable to such Lender in respect of other Loans or periods shall be
increased (but not above the Maximum Rate therefor) until such cumulated amount, together with
interest thereon at the Federal Funds Effective Rate to the date of repayment, shall have been
received by such Lender.
Section 9.14
USA Patriot Act
. Each Lender that is subject to the requirements of the
USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the Act) hereby
notifies the Borrower that pursuant to the requirements of the Act, it is required to obtain,
verify and record information that identifies the Borrower, which information includes the name and
address of the Borrower and other information that will allow such Lender to identify the Borrower
in accordance with the Act.
60
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their
respective authorized officers as of the day and year first above written.
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VALERO GP HOLDINGS, LLC
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By
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/s/
Steven A. Blank
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Steven A. Blank
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Senior Vice President, Chief Financial Officer
and Treasurer
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Signature Page to
3-Year Revolving Credit Agreement
S-1
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JPMORGAN CHASE BANK, N.A., individually and as
Administrative Agent
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By
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/s/
Robert W. Traband
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Name:
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Robert W. Traband
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Title:
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Vice President
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Signature Page to
3-Year Revolving Credit Agreement
S-2
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SUNTRUST BANK, individually and as Syndication Agent
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By
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/s/
David Edge
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Name:
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David Edge
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Title:
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Managing Director
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Signature Page to
3-Year Revolving Credit Agreement
S-3
EXHIBIT A
Form of Assignment and Assumption
This Assignment and Assumption (the
Assignment and Assumption
) is dated as of the
Effective Date set forth below and is entered into by and between [
Insert name of Assignor
] (the
Assignor
) and [
Insert name of Assignee
] (the
Assignee
). Capitalized terms used
but not defined herein shall have the meanings given to them in the Credit Agreement identified
below (as amended, the
Credit Agreement
), receipt of a copy of which is hereby
acknowledged by the Assignee. The Standard Terms and Conditions set forth in Annex 1 attached
hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment
and Assumption as if set forth herein in full.
For an agreed consideration, the Assignor hereby irrevocably sells and assigns to the
Assignee, and the Assignee hereby irrevocably purchases and assumes from the Assignor, subject to
and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the
Effective Date inserted by the Administrative Agent as contemplated below (i) all of the Assignors
rights and obligations in its capacity as a Lender under the Credit Agreement and any other
documents or instruments delivered pursuant thereto to the extent related to the amount and
percentage interest identified below of all of such outstanding rights and obligations of the
Assignor under the respective facilities identified below (including any letters of credit and
guarantees included in such facilities) and (ii) to the extent permitted to be assigned under
applicable law, all claims, suits, causes of action and any other right of the Assignor (in its
capacity as a Lender) against any Person, whether known or unknown, arising under or in connection
with the Credit Agreement, any other documents or instruments delivered pursuant thereto or the
loan transactions governed thereby or in any way based on or related to any of the foregoing,
including contract claims, tort claims, malpractice claims, statutory claims and all other claims
at law or in equity related to the rights and obligations sold and assigned pursuant to clause (i)
above (the rights and obligations sold and assigned pursuant to clauses (i) and (ii) above being
referred to herein collectively as the
Assigned Interest
). Such sale and assignment is
without recourse to the Assignor and, except as expressly provided in this Assignment and
Assumption, without representation or warranty by the Assignor.
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1.
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Assignor:
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2.
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Assignee:
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[and is an Affiliate/Approved Fund of [
identify Lender
]
1
]
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3.
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Borrower(s):
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4.
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Administrative Agent: JPMorgan Chase Bank, N.A., as the administrative agent under the Credit Agreement
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Exhibit A-1
5.
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Credit Agreement: The 3-Year Revolving Credit Agreement dated as of July 19, 2006 among Valero GP Holdings, LLC, the
Lenders parties thereto, and JPMorgan Chase Bank, N.A., as Administrative Agent.
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6.
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Assigned Interest:
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Aggregate
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Amount of
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Amount of
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Percentage Assigned
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Commitment/Loans
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Commitment/Loans
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of
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Facility Assigned
2
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for all Lenders
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Assigned
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Commitment/Loans
3
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$
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$
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%
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$
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$
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%
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$
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$
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%
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Effective Date:
, 20
[TO BE INSERTED BY ADMINISTRATIVE AGENT AND WHICH
SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]
The terms set forth in this Assignment and Assumption are hereby agreed to:
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ASSIGNOR
[NAME OF ASSIGNOR]
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By:
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Title:
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ASSIGNEE
[NAME OF ASSIGNEE]
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By:
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Title:
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2
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Fill in the appropriate terminology for the
types of facilities under the Credit Agreement that are being assigned under
this Assignment (e.g. Revolving Commitment, Tranche A
Commitment, Tranche B Commitment, etc.)
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3
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Set forth, to at least 9 decimals, as a
percentage of the Commitment/Loans of all Lenders thereunder.
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Exhibit A-2
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[Consented to and]
4
Accepted:
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[NAME OF ADMINISTRATIVE AGENT], as
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Administrative Agent
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By
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Title:
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[Consented to:]
5
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[NAME OF RELEVANT PARTY]
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By
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Title:
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4
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To be added only if the consent of the
Administrative Agent is required by the terms of the Credit Agreement.
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5
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To be added only if the consent of the
Borrower and/or other parties (e.g. Swingline Lender, Issuing Bank) is required
by the terms of the Credit Agreement.
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Exhibit A-3
ANNEX 1
[__________________]
6
STANDARD TERMS AND CONDITIONS FOR
ASSIGNMENT AND ASSUMPTION
1.
Representations and Warranties
.
1.1
Assignor
. The Assignor (a) represents and warrants that (i) it is the legal and
beneficial owner of the Assigned Interest, (ii) the Assigned Interest is free and clear of any
lien, encumbrance or other adverse claim and (iii) it has full power and authority, and has taken
all action necessary, to execute and deliver this Assignment and Assumption and to consummate the
transactions contemplated hereby; and (b) assumes no responsibility with respect to (i) any
statements, warranties or representations made in or in connection with the Credit Agreement or any
other Loan Document
7
, (ii) the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Loan Documents or any collateral thereunder, (iii) the
financial condition of the Borrower, any of its subsidiaries or Affiliates or any other Person
obligated in respect of any Loan Document or (iv) the performance or observance by the Borrower,
any of its subsidiaries or Affiliates or any other Person of any of their respective obligations
under any Loan Document.
1.2.
Assignee
. The Assignee (a) represents and warrants that (i) it has full power
and authority, and has taken all action necessary, to execute and deliver this Assignment and
Assumption and to consummate the transactions contemplated hereby and to become a Lender under the
Credit Agreement, (ii) it satisfies the requirements, if any, specified in the Credit Agreement
that are required to be satisfied by it in order to acquire the Assigned Interest and become a
Lender, (iii) from and after the Effective Date, it shall be bound by the provisions of the Credit
Agreement as a Lender thereunder and, to the extent of the Assigned Interest, shall have the
obligations of a Lender thereunder, (iv) it has received a copy of the Credit Agreement, together
with copies of the most recent financial statements delivered pursuant to Section ___thereof, as
applicable, and such other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into this Assignment and Assumption and to purchase the
Assigned Interest on the basis of which it has made such analysis and decision independently and
without reliance on the Administrative Agent or any other Lender, and (v) if it is a Foreign
Lender
8
, attached to the Assignment and Assumption is any documentation
required to be delivered by it pursuant to the terms of the Credit Agreement, duly completed and
executed by the Assignee; and (b) agrees that (i) it will, independently and without reliance on
the Administrative Agent, the Assignor or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under the Loan Documents, and (ii) it will perform in accordance with
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6
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Describe Credit Agreement at option of
Administrative Agent.
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7
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The term Loan Document should
be conformed to that used in the Credit Agreement.
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8
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The concept of Foreign Lender
should be conformed to the section in the Credit Agreement governing
withholding taxes and gross-up.
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Exhibit A-4
their terms all of the obligations which by the terms of the Loan Documents are required to be
performed by it as a Lender.
2.
Payments
. From and after the Effective Date, the Administrative Agent shall make
all payments in respect of the Assigned Interest (including payments of principal, interest, fees
and other amounts) to the Assignor for amounts which have accrued to but excluding the Effective
Date and to the Assignee for amounts which have accrued from and after the Effective Date.
3.
General Provisions
. This Assignment and Assumption shall be binding upon, and inure
to the benefit of, the parties hereto and their respective successors and assigns. This Assignment
and Assumption may be executed in any number of counterparts, which together shall constitute one
instrument. Delivery of an executed counterpart of a signature page of this Assignment and
Assumption by telecopy shall be effective as delivery of a manually executed counterpart of this
Assignment and Assumption. This Assignment and Assumption shall be governed by, and construed in
accordance with, the law of the State of New York.
Exhibit A-5
EXHIBIT B
OPINION OF COUNSEL FOR THE BORROWER
[ ], 2006
To the Lenders and the Administrative
Agent
Referred to Below
c/o JPMorgan Chase Bank, N.A., as
Administrative
Agent
270 Park Avenue
New York, New York 10017
Dear Sirs:
[I/We] have acted as counsel for Valero GP Holdings, LLC (the
Borrower
), in
connection with the Credit Agreement dated as July [ ], 2006 (the
Credit Agreement
),
among the Borrower, the banks and other financial institutions identified therein as Lenders, and
JPMorgan Chase Bank, N.A., as Administrative Agent, and the other Loan Documents identified below.
This opinion is being furnished to you pursuant to Section 4.01(b) of the Credit Agreement. Unless
otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the
meanings given to them in the Credit Agreement.
In that connection, we have examined executed copies of the Credit Agreement and the notes
executed and delivered on the date hereof pursuant to Section 2.08(e) of the Credit Agreement (the
Loan Documents
).
In addition, [I, or individuals under my direction,/We] have examined originals or copies,
certified or otherwise identified to [my/our] satisfaction, of such documents, corporate records,
certificates of public officials and other instruments and have conducted such other investigations
of fact and law as [I/we] have deemed necessary or advisable for purposes of this opinion.
Upon the basis of the foregoing, [I am/we are] of the opinion that:
1. The Loan Documents constitute the legal, valid and binding obligations of the Borrower,
enforceable against the Borrower under the law of the State of New York in accordance with their
respective terms.
2. In a case properly argued and presented, a Texas court or a Federal court sitting in Texas
and applying Texas conflict of law principles, as set out in Section 35.51 of the Texas Business
and Commerce Code, would give effect to the provisions of the Loan Documents selecting New York law
as governing, and would apply the substantive laws of the State of New York in construing the Loan
Documents.
3. Under the circumstances contemplated by the Credit Agreement, the making of the Loans will
not violate Section 7 of the Securities Exchange Act of 1934, as amended, or any
Exhibit B-1
regulation issued pursuant thereto, including without limitation, the provisions of Regulation
T, U or X of the Board of Governors of the Federal Reserve System.
4. The Borrower is not an investment company within the meaning of the Investment Company
Act of 1940, as amended.
5. The Borrower (a) is a limited liability company duly formed and validly existing under the
laws of the State of Delaware and (b) has the limited liability company power and authority to (i)
own property and conduct the business in which it is currently engaged and in which it proposes, as
of the date hereof, to be engaged after the date hereof, (ii) make, deliver and perform the Loan
Documents to which it is a party in accordance with the terms and provisions thereof and (iii)
borrow under the Credit Agreement.
6. The execution, delivery and performance of the Credit Agreement by the Borrower, and the
borrowings by the Borrower under the Credit Agreement, have been duly authorized by all necessary
actions on behalf of the Borrower and each other Person whose authorization is relevant to, or
constitutes, authorization on behalf of the Borrower.
7. The Loan Documents have been duly executed and delivered on behalf of the Borrower.
8. No approvals or consents of any governmental authority of the State of Texas or the United
States of America or other consents or approvals by any other Person which have not been obtained
on or prior to the date hereof are required (a) in connection with the participation by the
Borrower in connection with the transactions under the Loan Documents or the execution, delivery
and performance by the Borrower of the Loan Documents to which it is a party, or (b) for the
validity and enforceability of the Loan Documents and the exercise by the Lenders of their rights
and remedies thereunder.
9. The execution, delivery and performance by the Borrower of the Loan Documents will not (a)
violate any provision of the Limited Liability Company Agreement (Borrower), (b) result in the
breach of, or constitute a default under, any indenture or loan or credit agreement or any other
material agreement, lease or instrument, known to me after due inquiry, to which the Borrower is a
party or by which its properties may be bound, (c) result in, or require, the creation or
imposition of any Lien on any of its properties or revenues pursuant to any requirement of law,
rule regulation or order of any governmental authority of the State of Texas or the United States
of America or material contractual obligation binding upon the Borrower, or (d) result in any
violation by the Borrower of any applicable law of the State of Texas or the United States of
America.
10. The Borrower is not subject to regulation under any statute or regulation of the State of
Texas or the United States of America that limits its ability to incur indebtedness.
11. To my knowledge (having made due inquiry with respect thereto), except as disclosed in the
Credit Agreement, no litigation, investigation or proceeding of or before any arbitrator or
governmental authority is pending or threatened by or against the Borrower or against any of the
properties or revenues of either (a) with respect to the Loan Documents or any
Exhibit B-2
of the transactions contemplated thereby or (b) which, if adversely determined, could
reasonably be expected to have a Material Adverse Effect.
Exhibit B-3
SCHEDULE 2.01
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LENDER
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COMMITMENT
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JPMorgan Chase Bank, N.A.
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$
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10,000,000
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SunTrust Bank
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$
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10,000,000
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Total
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$
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20,000,000
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Schedule 2.01
SCHEDULE 3.06
Disclosed Matters
Grace Litigation. All actions, suits, proceedings, claims and Environmental Liabilities arising
out of or relating to the Otis pipeline as described in the Borrowers Registration Statement on
Form S-1, as amended.
Port of Vancouver. All actions, suits, proceedings, claims and Environmental Liabilities arising
out of or relating to Valero L.P.s (and its subsidiaries) Port of Vancouver property as described
in the Borrowers Registration Statement on Form S-1, as amended.
Schedule 3.06
SCHEDULE 6.07
Affiliate Agreements
Administration Agreement, dated July 19, 2006, between Valero GP Holdings, LLC and Valero GP, LLC
Non-Compete Agreement, dated July 19, 2006, between Valero GP Holdings, LLC, Valero L.P., Riverwalk
Logistics, L.P. and Valero GP, LLC
Schedule 6.07
SCHEDULE 6.08
Existing Restrictions
None.
Schedule 6.07