As filed with the Securities and Exchange Commission on September 23, 1997
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------
Schedule 14D-1
(Amendment No. 5)
Tender Offer Statement pursuant to Section 14(d)(1) of the Securities
Exchange Act of 1934
Schedule 13D
of CSX Corporation and CSX Transportation, Inc.
(Amendment No. 9)
(Pursuant to Section 13(d) of the Securities Exchange Act of 1934)
Schedule 13D
of Norfolk Southern Corporation
(Amendment No. 7)
(Pursuant to Section 13(d) of the Securities Exchange Act of 1934)
Schedule 13D
of Walter G. Rich
(Amendment No. 8)
(Pursuant to Section 13(d) of the Securities Exchange Act of 1934)
Delaware Otsego Corporation
(Name of Issuer)
DOCP Acquisition LLC
CSX Corporation
Norfolk Southern Corporation
(Name of Persons Filing Statement)
Common Stock, Par Value $0.125 per share
(Title of Class of Securities)
246244 10 7
(CUSIP number of class of securities)
------------
Peter J. Shudtz, General Counsel
CSX Corporation
One James Center
901 East Cary Street
Richmond, Virginia 23219-4031
Telephone: (804) 782-1400
(Name, Address and Telephone Number of Person Authorized to Receive
Notices and Communications on Behalf of Persons Filing Statement)
------------
With a copy to:
<TABLE>
<S> <C> <C> <C>
Pamela S. Seymon Ronald B. Risdon J. Gary Lane Eric J. Friedman
Wachtell, Lipton, Kelley Drye & General Counsel Skadden, Arps, Slate,
Rosen & Katz Warren LLP Corporate Meagher & Flom LLP
51 West 52nd Street 101 Park Avenue Norfolk Southern 919 Third Avenue
New York, New York New York, New York Corporation New York, New York
10019 10178 Three Commercial 10022
Telephone: (212) Telephone: (212) Place Telephone: (212)
403-1000 808-7800 Norfolk, Virginia 735-3000
23510-9241
Telephone:
(757) 629-2600
</TABLE>
This Amendment No. 5 to the Tender Offer Statement on
Schedule 14D-1, and Amendment No. 9 to the Schedule 13D of CSX
Corporation, a Virginia corporation ("CSX"), and CSX
Transportation, Inc., a Virginia corporation and a wholly owned
subsidiary of CSX ("CSXT"), Amendment No. 7 to the Schedule 13D
of Norfolk Southern Corporation, a Virginia corporation ("NSC"),
and Amendment No. 8 to the Schedule 13D of Walter G. Rich
(collectively, as amended, the "Statement"), relates to the offer
by DOCP Acquisition LLC, a New York limited liability company
("Purchaser") formed by CSX, NSC and Mr. Rich to purchase all
outstanding shares of common stock, par value $0.125 per share
(the "Shares") of Delaware Otsego Corporation, a New York
corporation (the "Company"), at a price of $22.00 per Share, net
to the seller in cash, upon the terms and subject to the
conditions set forth in Purchaser's Offer to Purchase dated
August 22, 1997 (the "Offer to Purchase") and in the related
Letter of Transmittal. This Amendment amends and supplements the
amended Transaction Statement on Schedule 14D-1 and all such
Schedules 13D filed prior hereto. Unless otherwise indicated all
capitalized terms used herein shall have the same meanings as set
forth in the Offer to Purchase.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS
WITH RESPECT TO THE SUBJECT COMPANY'S SECURITIES
Item 7 of the Statement is hereby amended by the
addition of the following:
On September 23, 1997 CSXT, DOCP Holdings, Inc., a
Delaware corporation and a wholly owned subsidiary of CSXT ("CSXT
Sub"), NSC and Mr. Rich entered into a Limited Liability Company
Agreement dated as of August 21, 1997 in respect of the Purchaser
(the "LLC Agreement"). A copy of the LLC Agreement has been
filed with the Commission as an exhibit hereto and is
incorporated herein by reference and the following summary is
qualified in its entirety by reference to the LLC Agreement.
Classes of Interests
Under the terms of the LLC Agreement, Purchaser is
capitalized with four classes of Interests: Common Interests,
Series A Cumulative Preferred Interests, Series B Cumulative
Preferred Interests and Junior Preferred Interests.
The Series A and Series B Cumulative Preferred
Interests have distribution and liquidation preference over all
other Interests. Distributions on Series A and Series B
Cumulative Preferred Interests will cumulate at the rate of 10%
of the initial capital contribution in respect thereof on
December 1 of each year until the Purchaser Board determines that
sufficient cash is available to pay distributions in cash. Upon
redemption, Series A and Series B Cumulative Preferred Interests
will be redeemed at liquidation preference plus accrued and
unpaid distributions. The Series A Cumulative Preferred
Interests are mandatorily redeemable upon the Purchaser Board
determining that sufficient cash is available after payment of
accrued and unpaid distributions. The Series B Cumulative
Preferred Interests are redeemable at Mr. Rich's option at any
time at which there is to be a cash redemption of the Series A
Cumulative Preferred Interests or of Junior Preferred Interests.
Preferred Interests will be redeemed ratably when redeemed for
cash.
The Junior Preferred Interests have a distribution,
liquidation and redemption preference over Common Interests, but
are subordinate with respect to distributions and liquidation
payments to Series A and Series B Cumulative Preferred Interests
(and, with respect to all redemption payments, to the Series A
Cumulative Preferred Interests, but not to the Series B
Cumulative Preferred Interests). Distributions on Junior
Preferred Interests cumulate at the rate of 4% of the initial
capital contribution in respect thereof on December 1 of each
year until the Purchaser Board determines that sufficient cash is
available to pay distributions in cash, provided that no
distributions on Junior Preferred Interests will be paid until
all Series A and Series B Cumulative Preferred Interests, with
cumulative distributions, have been redeemed. Junior Preferred
Interests will be mandatorily redeemable following redemption of
the Series A Cumulative Preferred Interests upon the Purchaser
Board determining that sufficient cash is available after payment
of accrued and unpaid distributions at liquidation preference
plus accrued and unpaid distributions. Junior Preferred
Interests (and, if applicable, Series B Cumulative Preferred
Interests) will be redeemed ratably when redeemed for cash.
Except for certain matters specifically provided for in
the LLC Agreement, such as matters affecting rights attaching to
Series A Cumulative Preferred Interests, Series B Cumulative
Preferred Interests or Junior Preferred Interests (collectively
"Preferred Interests") or the matters requiring the approval of
two-thirds of the holders of Preferred Interests outlined below,
all management and voting rights are vested in the Common
Interests. The Common Interests have rights to distributions
(including in respect of redemptions or liquidation) only after
all Preferred Interests have been redeemed, including all accrued
and unpaid distributions thereon.
The following actions by the Company or any Subsidiary
require approval of the holders of two thirds of the Preferred
Interests: appointing outside auditors; reclassifying, combining
or exchanging equity interests; tax elections or settling or
compromising tax liabilities; or entering agreements which
restrict the ability of Purchaser to redeem Preferred Interests.
Authorized Interests and Issued Interests
There are authorized 100 Common Interests, all of which
are issued and outstanding. Mr. Rich holds 80 Common Interests,
CSX holds 10 Common Interests and NSC holds 10 Common Interests.
There are authorized 100,000 Series A Cumulative
Preferred Interests and 100,000 Junior Preferred Interests, none
of which are presently issued and outstanding. Immediately prior
to the Merger CSXT shall effect the CSX Share Contribution by
contributing its 110,250 Shares to Purchaser in return for
2,425.5 Series A Cumulative Preferred Interests with an initial
capital contribution value of $1,000 per Series A Cumulative
Preferred interest. Simultaneously therewith, CSXT Sub and NSC
shall contribute cash to Purchaser in equal amounts (after taking
into account the agreed value of the CSX Share Contribution) as
required for Purchaser to purchase in the Offer all Shares
tendered in the Offer and to pay certain transaction costs of
Purchaser and its Subsidiaries related thereto in return for
Series A Cumulative Preferred Interests at the rate of one
Interest per $1,000 contributed and each of CSXT Sub and NSC will
also receive 50,000 Junior Preferred Interests with an initial
capital account value of $1,000 per Junior Preferred Interest.
In addition, immediately prior to the consummation of the Merger,
each of CSXT Sub and NSC shall contribute cash to Purchaser in
equal amounts as required for Purchaser to purchase in the Merger
all Shares not already beneficially owned by Purchaser and to pay
certain transaction costs of Purchaser and its Subsidiaries
related thereto and, if necessary, to repay debt of the Company
and its Subsidiaries, in return for Series A Cumulative Preferred
Interests at the rate of one Interest per $1,000 contributed.
The LLC Agreement contains a statement that it is the
intention of the parties to the LLC Agreement that the Purchaser
Board shall redeem Preferred Interests as soon as practicable
following the Merger and that the Company's financial plans shall
be designed consistent with that objective.
There are authorized 100,000 Series B Cumulative
Preferred Interests, none of which are presently issued and
outstanding. Simultaneously, with the CSX Share Contribution,
Mr. Rich shall contribute 136,966 Shares to Purchaser in return
for 3,013.252 Series B Cumulative Preferred Interests with an
initial capital contribution value of $1,000 per Interest. Mr.
Rich will not contribute any DOCP Options to Purchaser and no
options will be issued by Purchaser.
Put and Call Arrangements
The LLC Agreement provides that, subject to all
necessary approvals from Governmental Entities, Purchaser may
call, in whole but, except as provided below, not in part, and
Mr. Rich may put to Purchaser, in whole or, except as provided
below, in part, Mr. Rich's Series B Cumulative Preferred
Interests and Common Interests for a price equal to the sum of
(a) in respect of Series B Cumulative Preferred Interests, the
redemption value of the Preferred Interests put or called, plus
(b) in respect of the Common Interests, the initial capital
contributions of the Common Interests put or called. The put and
call rights may be exercised at any time after the earlier of (a)
the termination by Mr. Rich or the Company of Mr. Rich's
employment as President and Chief Executive Officer of the
Company or by reason of Mr. Rich's death or disability and (b)
the third anniversary of the consummation of the Merger.
Purchaser may assign its call right or put obligation to CSX and
NSC (or to a voting trust established by them) in equal
proportions, and, in the event that Purchaser has insufficient
cash, Mr. Rich, exercising his put right, may put to CSX and NSC
(or to a voting trust established by them) in equal proportions.
In addition, CSX and NSC may, upon exercising the call rights or
responding to an exercise of Mr. Rich's put rights, provide that
the subject securities be conveyed to a third party; provided
that, in the event of any assignment of the put obligation by CSX
or NSC, the payment of the put price shall be guaranteed by CSX
and NSC in equal proportions. Notwithstanding the foregoing, in
the event of a termination of Mr. Rich's employment by the
Company for cause, until the third anniversary of the Merger, Mr.
Rich's put right will be limited to his Common Interests and will
not extend to his Series B Cumulative Preferred Interests and
Purchaser will have the right to call Mr. Rich's Common Interests
without Mr. Rich's Series B Cumulative Preferred Interests.
Management
Prior to the Merger, the Purchaser Board shall consist
of Mr. Rich, one nominee of CSXT and one nominee of NSC. At
present, the CSXT nominee is Mark G. Aron and the NSC nominee is
Nancy S. Fleischman. Mr. Rich has been appointed the Chairman
and the President and CEO. Mr. Rich has appointed CSXT and NSC
acting collectively as his attorney in fact in respect of actions
relating to the Offer and the Merger (but excluding any matters
relating to the operations of the Company or its Subsidiaries).
From and after the Merger, there shall be four classes
of directors: the CEO, four Directors designated by Mr. Rich,
one Director designated by CSXT (the "CSX Director") and one
Director designated by NSC (the "NSC Director"). Certain actions
by the Company or any of its Subsidiaries require the affirmative
vote of the majority of the Purchaser Board, including the CSX
Director and the NSC Director. Such actions include: altering
organizational documents; reincorporating in a new jurisdiction;
liquidating, dissolving, merging, consolidating or combining;
purchasing or redeeming equity; dispositions of assets or rights
below fair market value or with a cumulative value over $5
million; transactions with affiliates outside the ordinary course
of business; creating new debt in excess of $5 million over the
existing debt as of the date of the Merger; adopting the annual
financial plan and annual budgets; certain capital expenditures;
and settling certain litigation and claims. In addition
decisions regarding the employment or compensation of Mr. Rich or
the Company's rights and obligations with respect to the put and
call arrangements outlined above shall be made solely by
unanimous written decision of the CSX Director and the NSC
Director.
Termination
In the event that the Merger is not consummated, the LLC
Agreement shall terminate and all capital contributions shall be
returned to the Members and any excess shall be divided between
CSXT and NSC, after making provisions for any Company
obligations.
ITEM 10. MATERIAL TO BE FILED AS EXHIBITS
Item 11 of the Statement is hereby amended by the
addition of the following:
(c)(6) Limited Liability Company Agreement of DOCP Acquisition
LLC, dated as of August 21, 1997, by and among CSXT,
CSXT Sub, NSC and Mr. Rich.
SIGNATURES
After due inquiry, and to the best of my knowledge, I
certify that the information set forth in this statement is true,
complete and correct.
September 23, 1997 DOCP ACQUISITION LLC
By: /s/ MARK G. ARON
Name: Mark G. Aron
Title: Authorized Person
By: /s/ JAMES C. BISHOP, JR.
Name: James C. Bishop, Jr.
Title: Authorized Person
CSX CORPORATION
By: /s/ MARK G. ARON
Name: Mark G. Aron
Title: Executive Vice President
NORFOLK SOUTHERN CORPORATION
By: /s/ JAMES C. BISHOP, JR.
Name: James C. Bishop, Jr.
Title: Executive Vice President-Law
/s/ WALTER G. RICH
WALTER G. RICH
SIGNATURE
(SOLELY WITH RESPECT TO THE SCHEDULE 13D OF
CSX TRANSPORTATION, INC.)
After reasonable inquiry and to the best of my
knowledge and belief, I certify that the information set forth
in this statement is true, complete and correct.
September 23, 1997 CSX TRANSPORTATION, INC.
By: /s/ WILLIAM M. HART
Name: William M. Hart
Title: Vice President - Corridor
Development
EXHIBIT INDEX
(c)(6) Limited Liability Company Agreement of DOCP
Acquisition LLC, dated as of August 21, 1997, by and
among CSXT, CSXT Sub, NSC and Mr. Rich.
Exhibit (c)(6)
LIMITED LIABILITY COMPANY AGREEMENT
OF
DOCP ACQUISITION LLC
TABLE OF CONTENTS
PAGE
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ARTICLE I
DEFINED TERMS . . . . . . . . . . 1
Section 1.1 Definitions . . . . . . . . . . . . . . 1
Section 1.2 Headings . . . . . . . . . . . . . . . . 9
ARTICLE II
FORMATION AND TERM . . . . . . . . . 9
Section 2.1 Formation . . . . . . . . . . . . . . . 9
Section 2.2 Name . . . . . . . . . . . . . . . . . . 10
Section 2.3 Term . . . . . . . . . . . . . . . . . . 10
Section 2.4 Registered Agent and Office . . . . . . 10
Section 2.5 Principal Place of Business . . . . . . 10
Section 2.6 Qualification in Other Jurisdictions . . 10
ARTICLE III
PURPOSE AND POWERS OF THE COMPANY . . . . . 10
Section 3.1 Purpose . . . . . . . . . . . . . . . . 10
Section 3.2 Powers of the Company . . . . . . . . . 10
ARTICLE IV
MEMBERS . . . . . . . . . . . 11
Section 4.1 Members . . . . . . . . . . . . . . . . 11
Section 4.2 Powers of Members . . . . . . . . . . . 11
Section 4.3 Member's Interest . . . . . . . . . . . 11
Section 4.4 Classes . . . . . . . . . . . . . . . . 11
Section 4.5 Partition . . . . . . . . . . . . . . . 12
Section 4.6 Resignation . . . . . . . . . . . . . . 12
Section 4.7 Annual Meetings . . . . . . . . . . . . 12
Section 4.8 Special Meetings . . . . . . . . . . . . 12
Section 4.9 Voting . . . . . . . . . . . . . . . . . 12
Section 4.10 Actions by Members . . . . . . . . . . . 13
Section 4.11 Quorum . . . . . . . . . . . . . . . . . 13
Section 4.12 Notice of Meetings . . . . . . . . . . . 13
Section 4.13 Action Without a Meeting . . . . . . . . 13
Section 4.14 Power of Attorney . . . . . . . . . . . 13
Section 4.15 Transactions With Affiliates . . . . . . 14
ARTICLE V
MANAGEMENT . . . . . . . . . . . 14
Section 5.1 Managers . . . . . . . . . . . . . . . . 14
Section 5.2 Number, Designation and Term of
Directors . . . . . . . . . . . . . . 14
Section 5.3 Action by the Board. . . . . . . . . . . 15
Section 5.4 Member Approval . . . . . . . . . . . . 16
Section 5.5 Resignation, Removal and Vacancies . . . 17
Section 5.6 Committees of Directors . . . . . . . . 17
Section 5.7 Meetings of the Board of Directors . . . 17
Section 5.8 Quorum of a Board of Directors Meeting . 18
Section 5.9 Compensation of Directors . . . . . . . 18
Section 5.10 Action Without Board of Directors
Meeting . . . . . . . . . . . . . . . 18
Section 5.11 Officers . . . . . . . . . . . . . . . . 19
Section 5.12 Plans and Budgets . . . . . . . . . . . 20
ARTICLE VI
INTERESTS AND CAPITAL ACCOUNTS . . . . . . 20
Section 6.1 Capital Contributions . . . . . . . . . 20
Section 6.2 Status of Capital Contributions . . . . 22
Section 6.3 Redemption. . . . . . . . . . . . . . . 22
Section 6.4 Capital Accounts . . . . . . . . . . . . 24
Section 6.5 Advances . . . . . . . . . . . . . . . . 25
ARTICLE VII
ALLOCATIONS . . . . . . . . . . 25
Section 7.1 Profits and Losses . . . . . . . . . . . 25
Section 7.2 Qualified Income Offset. . . . . . . . . 26
Section 7.3 Allocation Rules . . . . . . . . . . . . 27
Section 7.4 Tax Allocations . . . . . . . . . . . . 27
ARTICLE VIII
DISTRIBUTIONS . . . . . . . . . . 28
Section 8.1 Distributions . . . . . . . . . . . . . 28
Section 8.2 Limitations on Distribution . . . . . . 28
Section 8.3 Preferences . . . . . . . . . . . . . . 29
ARTICLE IX
PUT AND CALL RIGHTS . . . . . . . . 29
Section 9.1 Triggers. . . . . . . . . . . . . . . . 29
Section 9.2 Put Rights and Call Rights . . . . . . . 30
Section 9.3 Exercise of Rights . . . . . . . . . . . 30
Section 9.4 Certain Limitations . . . . . . . . . . 31
ARTICLE X
BOOKS AND RECORDS . . . . . . . . . 31
Section 10.1 Books, Records and Financial Statements 31
Section 10.2 Accounting Method . . . . . . . . . . . 32
Section 10.3 Annual Audit . . . . . . . . . . . . . 32
ARTICLE XI
TAX MATTERS . . . . . . . . . . 33
Section 11.1 Tax Matters . . . . . . . . . . . . . . 33
Section 11.2 Right to Make Section 754 Election . . 33
Section 11.3 Taxation as Partnership . . . . . . . . 34
ARTICLE XII
LIABILITY, EXCULPATION AND INDEMNIFICATION . . . 34
Section 12.1 Liability . . . . . . . . . . . . . . . 34
Section 12.2 Exculpation . . . . . . . . . . . . . . 34
Section 12.3 Fiduciary Duty . . . . . . . . . . . . 34
Section 12.4 Outside Businesses . . . . . . . . . . 35
Section 12.5 Third-Party Beneficiaries . . . . . . . 35
ARTICLE XIII
ADDITIONAL MEMBERS; ASSIGNMENTS . . . . . 35
Section 13.1 Admission . . . . . . . . . . . . . . . 35
Section 13.2 Assignments of Interests Generally . . 35
Section 13.3 Recognition of Assignment by the
Company . . . . . . . . . . . . . . . 36
ARTICLE XIV
DISSOLUTION, LIQUIDATION AND TERMINATION . . . 36
Section 14.1 No Dissolution . . . . . . . . . . . . 36
Section 14.2 Events Causing Dissolution . . . . . . 37
Section 14.3 Liquidation . . . . . . . . . . . . . . 37
Section 14.4 Termination . . . . . . . . . . . . . . 38
Section 14.5 Claims of the Members . . . . . . . . . 38
ARTICLE XV
MISCELLANEOUS . . . . . . . . . . 38
Section 15.1 Notices . . . . . . . . . . . . . . . . 38
Section 15.2 Failure to Pursue Remedies . . . . . . 39
Section 15.3 Cumulative Remedies . . . . . . . . . . 39
Section 15.4 Binding Effect . . . . . . . . . . . . 39
Section 15.5 Interpretation . . . . . . . . . . . . 39
Section 15.6 Severability . . . . . . . . . . . . . 39
Section 15.7 Counterparts . . . . . . . . . . . . . 39
Section 15.8 Integration . . . . . . . . . . . . . . 39
Section 15.9 Governing Law . . . . . . . . . . . . . 40
Section 15.10 Confidentiality . . . . . . . . . . . . 40
Section 15.11 Amendments . . . . . . . . . . . . . . 40
LIMITED LIABILITY COMPANY AGREEMENT
OF
DOCP ACQUISITION LLC
This Limited Liability Company Agreement (this
"Agreement") of DOCP Acquisition LLC, a New York limited
liability company (the "Company"), dated and effective as of
August 21, 1997, is entered into between CSX Transportation,
Inc., a Virginia Corporation ("CSXT"), DOCP Holdings, Inc., a
Delaware corporation and a wholly owned subsidiary of CSXT
("CSXT Sub" and, collectively with CSXT, "CSX"), Norfolk
Southern Corporation, a Virginia corporation ("NSC") and Walter
G. Rich ("Rich"), as members (the "Members").
WHEREAS, CSX Corporation, NSC, Rich and Delaware
Otsego Corporation, a New York corporation ("DOCP"), have
entered into an Agreement and Plan of Merger, dated as of
August 17, 1997 (the "Merger Agreement");
WHEREAS, pursuant to the terms of the Merger
Agreement CSX, NSC and Rich have formed the Company to
consummate the acquisition of the capital stock of DOCP and to
merge (the "Merger") a corporate subsidiary of the Company with
and into DOCP. Following consummation of the Merger, DOCP will
continue as the surviving corporation and will be a wholly
owned subsidiary of the Company; and
WHEREAS, CSX, NSC and Rich intend that this Agreement
shall constitute an "operating agreement" in respect of the
Company under the LLC Law (as hereinafter defined).
NOW, THEREFORE, in consideration of the agreements
and obligations set forth herein and for other good and
valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Members hereby agree as follows:
ARTICLE I
DEFINED TERMS
Section 1.1 Definitions. Unless the context
otherwise requires, the terms defined in this Article I shall,
for the purposes of this Agreement, have the meanings herein
specified.
"Affiliate" shall mean, with respect to a specified
Person, (a) any Person that directly or indirectly controls, is
controlled by, or is under common control with, the specified
Person, (b) any trust for the benefit of such Person or any
entities controlled by such Person or (c) in the case of a
natural person, any relative or spouse of the specified Person.
As used in this definition, the term "control" means the
possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of a Person,
whether through ownership of voting securities, by contract or
otherwise.
"Agreement" shall have the meaning set forth in the
preamble.
"Articles" shall mean the Articles of Organization of
the Company and any and all amendments thereto and restatements
thereof filed on behalf of the Company with the office of the
Secretary of State of the State of New York pursuant to the LLC
Law.
"Assign" and "Assignment" shall have the meanings set
forth in Section 13.2.
"Bankruptcy" shall mean, and a Member shall be
referred to as a "Bankrupt Member" upon, (i) the entry by a
court of (A) a decree or order for relief in respect of a
Member in an involuntary case or proceeding under any
applicable Federal or state bankruptcy, insolvency,
reorganization or other similar law or (B) a decree or order
adjudging a Member a bankrupt or insolvent, or approving as
properly filed a petition seeking reorganization, arrangement,
adjustment or composition of or in respect of a Member under
any applicable Federal or state bankruptcy, insolvency,
reorganization or similar law, or appointing a custodian,
receiver, liquidator, assignee, trustee, sequestrator or other
similar official of a Member or of any substantial part of a
Member's property, or ordering the winding up or liquidation of
a Member's affairs, and the continuance of such decree or order
for relief or any such other decree or order unstayed and in
effect for a period of sixty consecutive days; or (ii) the
commencement by a Member of a voluntary case or proceeding
under any applicable Federal or state bankruptcy, insolvency,
reorganization or other similar law or of any other case or
proceeding to be adjudicated a bankrupt or insolvent, or the
consent by a Member to the entry of a decree or order for
relief in respect of such Member in an involuntary case or
proceeding under any applicable Federal or state bankruptcy,
insolvency, reorganization or other similar law or to the
commencement of any bankruptcy or insolvency case or proceeding
against it, or the filing by a Member of a petition or answer
or consent seeking reorganization or relief under any
applicable Federal or state bankruptcy, insolvency,
reorganization or similar law, or the consent by a Member to
the filing of such petition or to the appointment of or taking
possession by a custodian, receiver, liquidator, assignee,
trustee, sequestrator or similar official of a Member or of any
substantial part of any of a Member's property, or the making
by a Member of a general assignment for the benefit of
creditors, or the admission by a Member in writing of its
inability to pay its debts generally as they become due, or the
taking of action by a Member in furtherance of any of the
foregoing.
"Board" shall have the meaning set forth in Section
5.2.
"Call Right" shall have the meaning set forth in
Section 9.2.
"Capital Account" shall mean, with respect to any
Member and any Interest, the account maintained for such Member
and such Interest in accordance with the provisions of Section
6.4.
"Capital Contribution" shall mean, with respect to
any Interest, the aggregate amount of cash and the initial
Gross Asset Value of any property (other than cash) contributed
to the Company pursuant to Section 6.1 with respect to such
Interest and shall include the Initial Capital Contribution,
the Stock Capital Contribution, the Offer Capital Contribution,
the Merger Capital Contribution and any Subsequent Capital
Contribution with respect to such Interest.
"Cash Available for Distribution" shall mean, at any
time, all cash of the Company and its Subsidiaries in excess of
the amount reasonably determined by the Board as being
necessary for the cash payment of the Company's and its
Subsidiaries' next annual operating expenses (net of receipts),
debt service, contingencies, budgeted capital expenditures and
working capital requirements (all of which shall take into
account cash on hand and future expected cash surpluses and
cash requirements as of such time), which determination shall
be made by taking into account (amongst other things) the
annual financial plan and annual expense and capital budgets
adopted by the Board.
"Cash Available for Redemption" shall mean (a) Cash
Available for Distribution less (b) the amount of any
Cumulative Distribution Preference Arrearage to be paid from
Cash Available for Distribution within sixty days of the
relevant determination by the Board.
"Chairman" shall mean the Person appointed as the
Chairman of the Board pursuant to Section 5.11.
"Closing" shall have the meaning set forth in Section
9.3.
"Code" shall mean the Internal Revenue Code of 1986,
as amended from time to time, or any corresponding United
States federal tax statute enacted after the date of this
Agreement. A reference to a specific section (SECTION) of the Code
refers not only to such specific section but also to any
corresponding provision of any United States federal tax
statute enacted after the date of this Agreement, as such
specific section or corresponding provision is in effect on the
date of application of the provisions of this Agreement
containing such reference.
"Common Interest" shall mean an Interest with rights
as set forth in Section 4.4(b).
"Company" shall have the meaning set forth in the
preamble.
"Covered Person" shall mean any officer, director,
employee, manager or agent of the Company acting in such
capacity.
"CSX" shall have the meaning set forth in the
preamble.
"CSXT" shall have the meaning set forth in the
preamble, and shall include any successor to CSXT's Common
Interests or Preferred Interests in accordance with this
Agreement.
"CSXT Sub" shall have the meaning set forth in the
preamble, and shall include any successor to CSXT Sub's
Preferred Interests in accordance with this Agreement.
"CSX Directors" shall have the meaning set forth in
Section 5.2.
"Cumulative Distribution Preference Arrearage" shall
have the meaning set forth in Section 8.3.
"Depreciation" shall mean, for each Fiscal Year or
other period, an amount equal to the depreciation, amortization
or other cost recovery deduction allowable with respect to an
asset for such Fiscal Year or other period; provided, however,
that, if the Gross Asset Value of an asset differs from its
adjusted basis for United States federal income tax purposes at
the beginning of such Fiscal Year or other period, Depreciation
shall be an amount that bears the same ratio to such beginning
Gross Asset Value as the United States federal income tax
depreciation, amortization or other cost recovery deduction
with respect to such asset for such Fiscal Year or other period
bears to such beginning adjusted tax basis; and provided,
further, that if the United States federal income tax
depreciation, amortization or other cost recovery deduction for
such Fiscal Year or other period is zero, Depreciation shall be
determined with reference to such beginning Gross Asset Value
using any reasonable method selected by the Members.
"Directors" shall mean those individuals appointed as
Directors pursuant to Article V.
"Distribution Preference" shall mean, with respect to
an Interest, any amount which may cumulate with respect to such
Interest and which would, if cumulated and unpaid, give rise to
a blockage with respect to Distributions on other Interests.
"Distribution Preference Arrearage" shall have the
meaning set forth in Section 8.3.
"Distributions" shall mean distributions of cash or
other property made by the Company with respect to Interests
(including upon dissolution or liquidation of the Company), but
shall not mean payments or transfers of cash or other property
to holders of Interests (a) for reasons other than their
ownership of such Interests or (b) in connection with the
redemption of such Interests.
"DOCP" shall have the meaning set forth in the
recitals.
"DOCP Shares" shall mean shares of Common Stock, par
value $.125 per share, of DOCP.
"Employment Agreement" shall have the meaning set
forth in section 9.1.
"Fiscal Year" shall mean (a) the period commencing
upon the date of this Agreement and ending on December 31,
1997, or (b) any subsequent twelve-month period commencing on
January 1 and ending on December 31.
"GAAP" shall mean generally accepted accounting
principles consistently applied in the United States.
"Gross Asset Value" shall mean, with respect to any
asset, such asset's adjusted basis for United States federal
income tax purposes, except as follows:
(a) the initial Gross Asset Value of any asset
contributed by a Member to the Company shall be the gross fair
market value of such asset, as determined by a resolution of
the Board; provided, that the fair market value of the Stock
Capital Contribution shall be the agreed value set forth in
Schedule A;
(b) the Gross Asset Value of all Company assets
shall be adjusted to equal their respective gross fair market
values, as determined by a resolution of the Board, as of the
following times: (i) immediately prior to the acquisition of
an additional Interest in the Company by any new or existing
Member in exchange for more than a de minimis Capital
Contribution; (ii) immediately prior to the distribution by the
Company to a Member of more than a de minimis amount of Company
assets in redemption of an Interest in the Company; and (iii)
the liquidation of the Company within the meaning of Treasury
Regulation SECTION 1.704-1(b)(2)(ii)(g); and
(c) the Gross Asset Value of any Company asset
distributed to any Member shall be the gross fair market value
of such asset on the date of distribution, as determined by a
resolution of the Board.
If the Gross Asset Value of an asset has been
determined or adjusted pursuant to paragraph (a) or paragraph
(b) of this definition, such Gross Asset Value shall thereafter
be adjusted by the Depreciation taken into account with respect
to such asset for purposes of computing Profits and Losses.
"Indebtedness" shall mean, when used with reference
to a specified Person, at any date, without duplication, (a)
all obligations of such Person for borrowed money, including,
without limitation, all principal, interest, premiums, fees,
expenses, overdrafts and penalties with respect thereto, (b)
all obligations of such Person evidenced by bonds, debentures,
notes or other similar instruments, (c) all obligations of such
Person to pay the deferred purchase price of property or
services, except trade accounts payable, (d) all obligations of
such Person to reimburse any bank or other Person in respect of
amounts paid under a letter of credit or similar instrument,
(e) all payment obligations under capitalized leases and (f)
all indebtedness of any other Person of the type referred to in
clauses (a) to (e) of this definition directly or indirectly
guaranteed by such Person.
"Initial Capital Contribution" shall have the meaning
set forth in Section 6.1.
"Interest" shall mean a unit of limited liability
company interest owned by a Member in the Company, and shall
include a unit of Common Interest, Series A Cumulative
Preferred Interest, Series B Cumulative Preferred Interest and
Junior Preferred Interest.
"Junior Preferred Interest" shall mean an Interest
with rights as set forth in Section 4.4(e).
"Junior Preferred Redemption Value" shall mean, per
Junior Preferred Interest, (i) $1,000 plus (ii) any Cumulative
Distribution Preference Arrearage existing with respect to such
Interest.
"LLC Law" shall mean the New York Limited Liability
Company Law (New York Limited Liability Law SECTION 34-101, et seq.),
as amended from time to time.
"Managers" shall have the meaning set forth in
Section 5.1.
"Member" shall mean any Person named as a member of
the Company in the preamble and on Schedule A and includes any
Person who acquires an Interest pursuant to the provisions of
this Agreement.
"Merger" shall have the meaning set forth in the
recitals.
"Merger Agreement" shall have the meaning set forth
in the recitals.
"Merger Capital Contribution" shall have the meaning
set forth in Section 6.1.
"Notice" shall have the meaning set forth in Section
9.3.
"NSC" shall have the meaning set forth in the
preamble, and shall include any successor to all of NSC's
Common Interests or Preferred Interests in accordance with this
Agreement.
"NSC Director" shall have the meaning set forth in
Section 5.2.
"Offer" shall mean the Offer as defined in the Merger
Agreement.
"Offer Capital Contribution" shall have the meaning
set forth in Section 6.1.
"Officers" shall mean those Persons appointed by the
Board pursuant to Section 5.11 to manage the day-to-day affairs
of the Company to the extent permitted by this Agreement.
"Person" includes any individual, corporation,
association, partnership (general or limited), joint venture,
trust, estate, limited liability company or other legal entity
or organization.
"Preferred Interests" shall mean Series A Cumulative
Preferred Interests, Series B Cumulative Preferred Interests
and Junior Preferred Interests.
"President and CEO" shall have the meaning set forth
in Section 5.2.
"Profits" and "Losses" shall mean, for each Fiscal
Year, an amount equal to the Company's taxable income or loss
for such Fiscal Year, determined in accordance with SECTION 703(a) of
the Code (but including in taxable income or loss, for this
purpose, all items of income, gain, loss or deduction required
to be stated separately pursuant to SECTION 703(a)(1) of the Code),
with the following adjustments:
(a) any income of the Company exempt from
federal income tax and not otherwise taken into account in
computing Profits or Losses pursuant to this definition
shall be added to such taxable income or loss;
(b) any expenditures of the Company described
in SECTION 705(a)(2)(B) of the Code (or treated as expenditures
described in SECTION 705(a)(2)(B) of the Code pursuant to
Treasury Regulation SECTION 1.704-1(b)(2)(iv)(i)) and not
otherwise taken into account in computing Profits or
Losses pursuant to this definition shall be subtracted
from such taxable income or loss;
(c) in the event the Gross Asset Value of any
Company asset is adjusted in accordance with paragraph (b)
or paragraph (c) of the definition of "Gross Asset Value"
above, the amount of such adjustment shall be taken into
account as gain or loss from the disposition of such asset
for purposes of computing Profits or Losses;
(d) gain or loss resulting from any disposition
of any asset of the Company with respect to which gain or
loss is recognized for federal income tax purposes shall
be computed by reference to the Gross Asset Value of the
asset disposed of, notwithstanding that the adjusted tax
basis of such asset may differ from its Gross Asset Value;
and
(e) in lieu of the depreciation, amortization
and other cost recovery deductions taken into account in
computing such taxable income or loss, there shall be
taken into account Depreciation for such Fiscal Year or
other period, computed in accordance with the definition
of "Depreciation" above.
"Price" shall have the meaning set forth in Section
9.3.
"Put and Call Arrangements" shall mean the provisions
regarding the put and call of Rich's Interests set forth in
Article IX.
"Put Right" shall have the meaning set forth in
Section 9.2.
"Redemption Value" shall mean the Series A Cumulative
Preferred Redemption Value, the Series B Cumulative Preferred
Redemption Value and/or the Junior Preferred Redemption Value,
as applicable.
"Rich" shall have the meaning set forth in the
preamble, and shall include any successor to Rich's Common
Interests in accordance with this Agreement.
"Rich Directors" shall have the meaning set forth in
Section 5.2.
"Series A Cumulative Preferred Interest" shall mean
an Interest with rights as set forth in Section 4.4(c).
"Series A Cumulative Preferred Redemption Value"
shall mean, per Series A Cumulative Preferred Interest, (i)
$1,000 plus (ii) any Cumulative Distribution Preference
Arrearage existing with respect to such Interest.
"Series B Cumulative Preferred Interest" shall mean
an Interest with rights as set forth in Section 4.4(d).
"Series B Cumulative Preferred Redemption Value"
shall mean, per Series B Cumulative Preferred Interest, (i)
$1,000 plus (ii) any Cumulative Distribution Preference
Arrearage existing with respect to such Interest.
"Stock Capital Contribution" shall have the meaning
set forth in Section 6.1.
"Subject Interests" shall have the meaning set forth
in Section 9.3.
"Subsequent Capital Contribution" shall have the
meaning set forth in Section 6.1.
"Subsidiary" shall mean, with respect to a specified
Person, any other entity of which securities or other ownership
interests having ordinary voting power to elect a majority of
the board of directors or other persons performing similar
functions are at the time directly or indirectly owned by the
specified Person. Unless a contrary intention is indicated in
this Agreement, any reference to a Subsidiary shall mean a
Subsidiary of the Company.
"Tax Matters Partner" shall have the meaning set
forth in Section 11.1.
"Transaction Costs" shall mean the following out of
pocket costs and expenses directly incurred by the Company and
its Subsidiaries in connection with the transactions
contemplated by the Merger Agreement: reasonable fees and
disbursements of counsel, financial advisors, accountants,
printers and the costs of making payments under employee change
of control arrangements.
"Treasury Regulations" shall mean the income tax
regulations, including temporary regulations, promulgated under
the Code, as such regulations may be amended from time to time
(including corresponding provisions of succeeding regulations).
"Trigger" shall have the meaning set forth in Section
9.1.
"Value" shall mean the value at which an asset is
carried in the financial records of the Company (consolidated
to the extent practiced by the Company under GAAP) (after
giving effect to any related reserves for depreciation or
amortization) maintained in accordance with GAAP consistent
with GAAP as applied by DOCP at the Closing Date.
Section 1.2 Headings. The headings and
subheadings in this Agreement are included for convenience and
identification only and are in no way intended to describe,
interpret, define or limit the scope, extent or intent of this
Agreement or any provision of this Agreement.
ARTICLE II
FORMATION AND TERM
Section 2.1 Formation. (a) The Members have
formed the Company as a limited liability company under and
pursuant to the provisions of the LLC Law. The Members have
contributed, and shall contribute, amounts to the capital of
the Company, and have, and shall have, the number and type of
Interests, as reflected on Schedule A. The Members agree that
the rights, duties and liabilities of the Members shall be as
provided in the LLC Law, except as otherwise provided herein.
(b) The President and CEO, any Vice President,
and the Secretary of the Company each is hereby designated
pursuant to the LLC Law to execute, deliver and file, or cause
the execution, delivery and filing of, all certificates,
notices or other instruments (and any amendments and/or
restatements thereof) required or permitted by the LLC Law to
be filed in the office of the Secretary of State of New York
and any other certificates, notices or other instruments (and
any amendments and/or restatements thereof) necessary for the
Company to qualify to do business in a jurisdiction in which
the Company may wish to conduct business.
Section 2.2 Name. The name of the Company
shall be DOCP Acquisition LLC.
Section 2.3 Term. The term of the Company
commenced on August 21, 1997, the date the Articles were filed
in the office of the Secretary of State of the State of New
York, and shall continue perpetually unless the Company is
terminated as provided herein or dissolved pursuant to Section
14.2, which dissolution shall be carried out pursuant to the
LLC Law and the provisions of this Agreement.
Section 2.4 Registered Agent and Office. The
Company's registered agent and office in New York shall be CT
Corporation System, 1633 Broadway, New York, New York 10019.
Section 2.5 Principal Place of Business. The
principal place of business of the Company shall be 1 Railroad
Avenue, Cooperstown, New York 13326, or such other location as
the Board may designate from time to time and embody in a
writing to be filed with the records of the Company.
Section 2.6 Qualification in Other
Jurisdictions. The Officers shall cause the Company to be
qualified, formed or registered under assumed or fictitious
name statutes or similar laws in any jurisdiction in which the
Company transacts business and such qualification, formation or
registration is necessary or appropriate for the transaction of
such business.
ARTICLE III
PURPOSE AND POWERS OF THE COMPANY
Section 3.1 Purpose. The Company is formed
for the object and purpose of, and the nature of the business
to be conducted and promoted by the Company is, engaging in any
lawful act or activity for which limited liability companies
may be formed under the LLC Law, and to engage in any and all
lawful acts or activities in which limited liability companies
may engage under the LLC Law which the Board deems necessary,
convenient, desirable or incidental to the foregoing.
Section 3.2 Powers of the Company. (a) The
Company shall have the power and authority to take any and all
actions necessary, appropriate, proper, advisable, incidental
or convenient to or for the furtherance of the purpose set
forth in Section 3.1, including the power to commence and
consummate the transactions contemplated by the Merger
Agreement, including the Offer and the Merger, and to acquire,
hold, transfer and dispose of the capital stock of DOCP, and to
undertake all business and transactions necessary or
appropriate in connection therewith.
(b) Subject to Section 5.3 and any applicable
provisions of the LLC Law, the Company may merge with, or
consolidate into, another limited liability company or other
business entity (as defined in Section 102(v) of the LLC Law).
ARTICLE IV
MEMBERS
Section 4.1 Members. The name and mailing
address of each Member is set forth on Schedule B. The number
and class of Interests owned by each Member is set forth on
Schedule A. The Secretary or other designated Officer shall
update Schedules A and B from time to time as necessary to
accurately reflect changes in address and/or the ownership of
Interests. Any amendment or revision to Schedules A and B made
in accordance with this Agreement shall not be deemed an
amendment to this Agreement. Any reference in this Agreement
to Schedule A or Schedule B shall be deemed to be a reference
to Schedule A or Schedule B, as the case may be, as amended in
accordance with this Agreement and in effect from time to time.
Section 4.2 Powers of Members. Except as
provided in Section 4.10, Members shall not have the authority
to bind the Company by virtue of their status as Members.
Section 4.3 Member's Interest. A Member's
Interests shall for all purposes be personal property. A
Member shall have no interest in specific Company assets or
property, including any assets or property contributed to the
Company by such Member as part of any Capital Contribution.
Section 4.4 Classes. (a) The Interests shall
be divided between Common Interests, Series A Cumulative
Preferred Interests, Series B Cumulative Preferred Interests
and Junior Preferred Interests.
(b) There shall be authorized 100 Common
Interests which may not be subdivided. Each of such Interests
shall have identical rights and terms in all respects except as
specifically set forth in Article V of this Agreement. The
Common Interests shall have rights to an allocation of Profits
and Losses and to any distributions as may be authorized under
this Agreement and under the LLC Law. Except as specifically
provided herein, the Common Interests collectively shall have
all management and voting rights, as set forth in this
Agreement and provided for under the LLC Law.
(c) There shall be authorized 100,000 Series A
Cumulative Preferred Interests. Each of such Interests shall
have identical rights and terms in all respects. The Series A
Cumulative Preferred Interests shall have rights to an
allocation of Profits and Losses and to any distributions as
may be authorized under this Agreement and under the LLC Law.
Except as specifically provided herein (including, without
limitation, under Section 5.4), the Series A Cumulative
Preferred Interests shall not have management or voting rights
under the LLC Law or otherwise.
(d) There shall be authorized 100,000 Series B
Cumulative Preferred Interests. Each of such Interests shall
have identical rights and terms in all respects. The Series B
Cumulative Preferred Interests shall have rights to allocation
of Profits and Losses and to any distributions as may be
authorized under this Agreement and under the LLC Law. Except
as specifically provided herein (including, without limitation,
under Section 5.4), the Series B Cumulative Preferred Interests
shall not have management or voting rights under the LLC Law or
otherwise.
(e) There shall be authorized 100,000 Junior
Preferred Interests which may not be subdivided. Each of such
Interests shall have identical rights and terms in all
respects. The Junior Preferred Interests shall have rights to
allocations of Profits and Losses and to any distributions as
may be authorized under this Agreement and under the LLC Law.
Except as specifically provided herein (including, without
limitation, under Section 5.4), the Junior Preferred Interests
shall not have management or voting rights under the LLC Law or
otherwise.
Section 4.5 Partition. Each Member waives any
and all rights that it may have to maintain an action for
partition of the Company's property.
Section 4.6 Resignation. A Member shall cease
to be a Member at the time such Member ceases to own any
Interests.
Section 4.7 Annual Meetings. Annual meetings
of Members for the designation of Directors, and for such other
business as may be stated in the notice of the meeting, shall
be held at such place, either within or without of the State of
New York, and at such time and date as the Board, by
resolution, shall determine. At each annual meeting of the
Members, the Members shall designate Directors in accordance
with Section 5.2(b) and may transact such other business as
shall be stated in the notice of the meeting.
Section 4.8 Special Meetings. Special
meetings of the Members for any purpose or purposes may be
called by the Chairman, by a resolution of the Board or by any
Member.
Section 4.9 Voting. Each Member entitled to
vote in accordance with the terms of this Agreement may vote in
person or by proxy. Except in the case of designation of
Directors and except as otherwise provided for by this
Agreement, all matters to be decided by the Members shall be
decided by a vote of the holders of not less than two-thirds of
the then outstanding Common Interests. Minutes of each meeting
shall be prepared by the Secretary and a copy provided to each
Member. Notwithstanding anything to the contrary in this
Agreement or in the LLC Law, the holders of Series A Cumulative
Preferred Interests, Series B Cumulative Preferred Interests
and Junior Preferred Interests shall have no management or
voting rights; provided that the rights of the Series A
Cumulative Preferred Interests, the Series B Cumulative
Preferred Interests and Junior Preferred Interests to
distributions, allocations or any payment pursuant to this
Agreement, the LLC Law or otherwise may not be diminished or
otherwise adversely affected without the consent of all holders
of such affected Interests.
Section 4.10 Actions by Members. Other than
as expressly provided herein, a Member may take actions on
behalf of the Company only pursuant to an explicit grant of
authority to do so by the Board, which grant has been approved
by a resolution of the Board.
Section 4.11 Quorum. Except as otherwise
required by law, the presence, in person or by proxy, of all of
the holders of the Common Interests shall constitute a quorum
at all meetings of the Members; provided that if a holder of
Common Interests is absent from any three consecutive meetings
of the Members or adjournments thereof for which actual written
notice of the new place, date and time of the meeting or
adjourned meeting is given to such Member, then the Common
Interests of such holder shall not be considered in determining
the presence of a quorum. In case a quorum shall not be
present at any meeting, Members holding a majority of the
Common Interests held by Members represented thereat, in person
or by proxy, shall have the power to adjourn the meeting from
time to time, without notice other than announcement at the
meeting, until the requisite amount of Common Interests shall
be present. At any such adjourned meeting at which the
requisite amount of Common Interests shall be represented, any
business may be transacted that might have been transacted at
the meeting as originally noticed.
Section 4.12 Notice of Meetings. Written
notice, stating the place, date and time of the meeting, and
the general nature of the business to be considered, shall be
given to each Member, at such Member's address as it appears on
the records of the Company, not less than ten nor more than
sixty days before the date of the meeting. No business other
than that stated in the notice shall be transacted at any
meeting without the unanimous consent of all the holders of
Common Interests entitled to vote thereat.
Section 4.13 Action Without a Meeting. Any
action required or permitted to be taken at any annual or
special meeting of Members may be taken without a meeting,
without prior notice and without a vote, if a consent in
writing, setting forth the action so taken, shall be signed by
the number of holders of a number of Common Interests as would
be required to approve such action at a meeting of the Members
and a copy of such consent in writing is provided to each
Member who did not sign such consent.
Section 4.14 Power of Attorney. Rich hereby
irrevocably constitutes and appoints CSX and NSC acting
collectively, and the officers of each of them and any
successor of it or them, with full power of substitution, the
true and lawful agent and attorney-in-fact of Rich and any
successor of Rich in respect of all Common Interests owned
beneficially or of record by him, with full power and authority
in his name, place and stead, to consent to any action, vote
with respect to such Interests and to execute, acknowledge,
swear to, deliver, record and file any consent, vote or
amendment hereto and all other documents, certificates or
instruments that may be considered necessary or desirable by
CSX and NSC acting collectively in connection with the Offer,
the Merger and any matters or transactions related to the
effectuation and consummation thereof, but excluding any
matters or transactions relating to the operations of DOCP and
its Subsidiaries. The foregoing powers of attorney granted
herein shall be deemed to be coupled with an interest and shall
be irrevocable and survive the death, incompetency or
bankruptcy of Rich or any transfer or assignment of all or any
portion of Rich's Interests in the Company.
Section 4.15 Transactions With Affiliates.
Without the consent of the other Members, no Member or any
Affiliate of any Member shall enter into, directly or
indirectly, any transaction, agreement, joint enterprise or
arrangements, guarantee, loan, advance or investment with the
Company or any Subsidiary other than on an arms length basis
and at fair market value.
ARTICLE V
MANAGEMENT
Section 5.1 Managers. (a) In accordance with
Section 408 of the LLC Law, management of the Company shall be
vested in the managers of the Company (the "Managers"), who
shall be the Directors and, to the extent specifically provided
in Section 5.11, the Officers. Managers may be Members. A
person designated as a Director or appointed as an Officer is
by such designation or appointment designated a manager of the
Company by the Members for purposes of the LLC Law. Except as
expressly provided herein or as delegated by the Board,
Officers shall not have authority to bind the Company by virtue
of their status as Managers of the Company or otherwise.
(b) The parties agree to take all necessary
action such that each Member shall have rights identical to
those set forth under this Article V with respect to the Boards
of Directors (or comparable bodies) and management of DOCP and
each of its Subsidiaries.
Section 5.2 Number, Designation and Term of
Directors. (a) The business and affairs of the Company shall
be managed under the direction of a Board of Directors of the
Company consisting of seven persons as provided below (the
"Board").
(b) Prior to the Merger there shall be three
Directors as follows: one Director shall be Rich, one Director
shall be designated by CSXT (the "CSX Director") and one
Director shall be designated by NSC (the "NSC Director"). Such
Directors shall serve until the Merger.
(c) On and after the Merger, the Directors shall
be divided into four classes of Directors as follows: one
Director shall be the president and chief executive officer of
the Company (the "President and CEO"); four Directors shall be
employees or officers of the Company designated by Rich (the
"Rich Directors"); one Director shall be the CSX Director; and
one Director shall be the NSC Director. Such Directors shall
serve until the earlier of (i) the designation and
qualification of his or her successor in accordance with
Section 5.5 or (ii) the resignation or removal of such Director
in accordance with Section 5.5.
Section 5.3 Action by the Board. (a) Subject
to Sections 5.3(b) and (c) and 5.4, the vote of a majority of
the Directors present at a meeting of the Board at which a
quorum is present shall be the act of the Board unless this
Agreement or the LLC Law shall require the vote of a greater
number.
(b) Notwithstanding any other provision of this
Agreement, any of the following actions by the Company or any
Subsidiary shall require the affirmative vote of a majority of
the Board, including the affirmative vote of the CSX Director
and the NSC Director:
(i) any alteration or amendment to its Articles of
Organization, Articles of Incorporation, By-laws or
comparable organizational documents;
(ii) any reorganization or reincorporation in a new
jurisdiction;
(iii) the initiation or consummation of any
liquidation or dissolution, or (other than the Merger) any
merger or consolidation or other combination (other than
with wholly owned Subsidiaries) with any Person;
(iv) any recapitalization, purchase, retirement or
redemption or other acquisition of any capital stock or
other equity interests, or securities convertible into, or
exercisable or exchangeable for, capital stock or other
equity interests, in the Company or any Subsidiary;
(v) any disposition (including by sale, exchange,
lease or alteration of the Company's or any Subsidiary's
right to use, whether or not in the form of a lease), in
one or more transactions, of assets or rights of the
Company or any Subsidiary for less than fair market value
consideration or having a cumulative net present value in
excess of $5,000,000; provided however that if the
consideration for any disposition in any transaction or
related transactions is less than $1,000,000 and is not
less than fair market value, approval under this Section
5.3(b) shall not be required and the net present value of
such assets or rights shall not be included in the
foregoing specified amount;
(vi) except in the ordinary course of business,
entering into, directly or indirectly, any transaction,
agreement, joint enterprise or arrangements, guarantee,
loan, advance or investment with any holder or beneficial
owner of five percent or more of any class of the
outstanding capital stock or other equity interests in the
Company or any Subsidiary, or with any Affiliate of such
holder or beneficial owner;
(vii) issuing any capital stock or other equity
interests, or securities convertible into, or exercisable
or exchangeable for capital stock or other equity
interests to any holder or beneficial owner of five
percent or more of any class of the outstanding capital
stock or other equity interest in the Company or the
Subsidiary, except as contemplated under Section 6.1;
(viii) creating, incurring, assuming, guaranteeing
or otherwise becoming liable for any Indebtedness if,
after giving effect thereto, the aggregate principal
amount of outstanding Indebtedness of the Company and its
Subsidiaries is in excess of the sum of outstanding
Indebtedness of DOCP and its Subsidiaries at the close of
business on the date of the Merger plus $5,000,000;
(ix) adopting the annual financial plan (pertaining
to financial objectives but not to day to day operating
matters) and adopting the annual expense and capital
budgets;
(x) except for expenditures made under the annual
expense and capital budgets as approved in accordance with
Section 5.3(b)(ix) or capital expenditures in the ordinary
course of business directly relating to railroad
operations, making or agreeing to make any new capital
expenditure or new capital expenditures which individually
is in excess of $25,000 or in the aggregate in any twelve
month period is in excess of $200,000;
(xi) paying, discharging, settling or satisfying
any material claims, liabilities or obligations (whether
absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge, settlement
or satisfaction of such claims, liabilities or obligations
in the ordinary course of business consistent with past
practice or in accordance with their terms; or
(xii) authorizing or committing to take any of the
foregoing actions.
(c) Notwithstanding any other provision of this
Agreement, decisions regarding the employment or compensation
of Rich by the Company or any other Subsidiary (including under
the Employment Agreement or in respect of any benefit plan or
other arrangement that Rich may be eligible to participate in)
or the Company's rights and obligations with respect to the Put
and Call Arrangements shall be made solely by unanimous written
decision of the CSX Director and the NSC Director.
Section 5.4 Member Approval. Notwithstanding
any other provision of this Agreement, any of the following
actions by the Company or any Subsidiary shall require the
written approval of the holders of two thirds of the
outstanding Preferred Interests:
(a) appointing outside auditors;
(b) reclassifying, combining or exchanging any
capital stock or other equity interest;
(c) making any material tax election or settling or
compromising any material income tax liability;
(d) entering into, or subjecting the Company or its
assets to, any agreement or instrument, which prohibits or
restricts the ability of the Company to use Cash Available
for Redemption to effect redemptions pursuant to Section
6.3; or
(e) authorizing or committing to take any of the
foregoing actions.
Section 5.5 Resignation, Removal and
Vacancies. (a) Any Director may resign at any time. Such
resignation shall be made in writing, and shall take effect at
the time specified therein, and, if no time is specified, at
the time of its receipt by the Chairman or the Secretary. The
acceptance of a resignation shall not be necessary to make it
effective.
(b) A Director may be removed at any time with
or without cause (i) by Rich, if such Director is a Rich
Director, (ii) by CSXT, if such Director is the CSX Director,
(iii) by NSC, if such Director is the NSC Director and (iv)
automatically, if such Director was prior thereto the President
and CEO and has ceased to be, for any reason, the President and
CEO.
(c) Any vacancy on the Board, regardless of how
caused, shall be filled by the appointment of a successor
Director. Such successor Director shall be (i) designated by
Rich, if such successor Director's predecessor was a Rich
Director, (ii) designated by CSXT if such successor Director's
predecessor was the CSX Director, (iii) designated by NSC, if
such successor Director's predecessor was the NSC Director, and
(iv) the new President and CEO, if such successor Director's
predecessor was the President and CEO.
Section 5.6 Committees of Directors. The
Board may, by resolution or resolutions of the Board, designate
one or more committees, each committee to consist of two or
more Directors. Any such committee, to the extent provided in
the resolution of the Board establishing such committee, shall
have and may exercise all the powers and authority of the Board
in the management of the business and affairs of the Company.
Matters requiring the approval of the Board or of the CSX
Director and the NSC Director under Sections 5.3 (b) or (c) may
not be delegated to such a committee. Copies of the agendas
and minutes of any meetings of such committees shall be
maintained by the Secretary and distributed to all Directors.
Section 5.7 Meetings of the Board of
Directors. Regular meetings of the Board may be held without
notice at such places and times as shall be determined from
time to time by resolution of the Board. Special meetings of
the Board may be called by the Chairman, and shall be called by
the Secretary (or person performing a similar function) on the
written request of a majority of the Directors (or, in respect
of matters requiring action by the CSX Director and the NSC
Director under Section 5.3(c), on the written request of either
the CSX Director or the NSC Director), upon at least one day's
notice to each Director (except that notice to any Director may
be waived in writing by such Director), and shall be held at
such place or places as may be determined by the Board, or as
shall be stated in the notice of the meeting. Copies of
agendas and minutes of all meetings of the Board shall be
distributed to all Directors. Members of the Board, or any
committee designated by the Board, may participate in any
meeting of the Board or any committee thereof by means of a
conference telephone or similar communications equipment by
means of which all persons participating in the meeting can
hear each other, and such participation in a meeting shall
constitute presence in person at the meeting.
Section 5.8 Quorum of a Board of Directors
Meeting. The presence in person of a majority of the
Directors, provided that such majority includes both the CSX
Director and the NSC Director (unless waived in writing by the
CSX Director or the NSC Director, as the case may be), shall
constitute a quorum for the transaction of business, provided,
however, that if the CSX Director or the NSC Director shall be
absent from any three consecutive meetings of the Board or
adjournments thereof for which actual written notice of the new
place, date and time of the meeting or adjourned meeting is
given to such Director, then the presence of such Director
shall not be required to constitute a quorum, other than in
respect of meetings where actions set forth in Sections 5.3(b)
or (c) are taken. If at any meeting of the Board there shall
be less than a quorum present, a majority of those present may
adjourn the meeting from time to time until a quorum is
obtained, and no further notice thereof need be given other
than by announcement at the meeting which shall be so
adjourned.
Section 5.9 Compensation of Directors.
Directors shall not receive any stated salary for their
services as Directors or as members of committees of the Board.
Nothing herein contained shall be construed to preclude any
Director from serving the Company or any Subsidiary in any
other capacity as an Officer, agent or otherwise, and receiving
compensation therefor or from serving a Member in the capacity
of officer, agent or otherwise and receiving compensation
therefor.
Section 5.10 Action Without Board of Directors
Meeting. Any action required or permitted to be taken at any
meeting of the Board or of any committee thereof may be taken
without a meeting if a written consent thereto is signed by the
number and class of Directors as would be required to take such
action at a meeting, and such written consent is filed with the
minutes of proceedings of the Board or such committee. The
Secretary of the Company shall send a copy of such written
consent promptly to each Director who did not sign such
consent.
Section 5.11 Officers. (a) The Officers of
the Company shall be the Chairman, the President and CEO, one
or more Vice Presidents, a Treasurer and a Secretary, as may be
established by the Board, all of whom shall be elected by the
Board and shall hold office until their successors are duly
elected and qualified. In addition, the Board may elect such
Assistant Secretaries and Assistant Treasurers as it deems
proper. The Board may also establish additional or alternate
offices of the Company as it deems advisable, and such offices
shall be filled with such Officers, who shall perform such
duties and serve such terms, as the Board shall determine from
time to time.
(i) The Chairman. The Directors shall appoint by
majority vote the Chairman of the Board. The Chairman
shall preside at all meetings of the Board and shall have
and perform such other duties as may be assigned to him or
her by the Board.
(ii) The President and CEO. The Directors shall
appoint a President and CEO. The first President and CEO
shall be Rich. The President and CEO of the Company shall
be the senior executive officer of the Company and shall
have the general powers and duties of supervision and
management usually vested in the office of the president
of a business corporation organized under the Business
Corporation Law of the State of New York and shall report
to the Board. The President and CEO shall have the power
to execute bonds, mortgages, instruments and other
contracts on behalf of the Company.
(iii) Vice Presidents. Each Vice President shall
have such powers and shall perform such duties as shall be
assigned to him or her by the Board.
(iv) Treasurer. The Treasurer shall be the chief
financial officer of the Company. The Treasurer shall
have the custody of the funds and securities of the
Company and shall keep full and accurate account of
receipts and disbursements in books belonging to the
Company. The Treasurer shall deposit all cash and other
valuables in the name and to the credit of the Company in
such depositaries as may be designated by the Board. The
Treasurer shall disburse the funds of the Company as may
be ordered by the Board, the Chairman, or the President
and CEO, taking proper vouchers for such disbursements.
The Treasurer shall render to the Chairman, the President
and CEO and the Board at the regular meetings of the
Board, or whenever they may request it, an account of all
his or her transactions as Treasurer and of the financial
condition of the Company.
(v) Secretary. The Secretary shall give, or cause
to be given, notice of all meetings of Members and of the
Board and all other notices required by law or by this
Agreement, and in case of his or her absence or refusal or
neglect so to do, any such notice may be given by any
person thereunto directed by the Chairman, the President
and CEO, the Board, or by the Person upon whose request
the meeting is called as provided in this Agreement. The
Secretary shall record all the proceedings of the meetings
of the Board, any committees thereof and the Members in a
book to be kept for that purpose, and shall perform such
other duties as may be assigned to him or her by the
Board, the Chairman or the President and CEO.
(vi) Assistant Treasurers and Assistant Secretaries.
Assistant Treasurers and Assistant Secretaries, if any,
shall be elected and shall have such powers and shall
perform such duties as shall be assigned to them,
respectively, by the Board.
(b) Officers shall have the exclusive authority
to conduct the day-to-day affairs of the Company, subject to
Sections 5.3 and 5.4 and to customary requirements for Board
approval of actions. In no event may an Officer take any
action for which Board approval, approval of the CSX Director
and the NSC Director or approval of holders of two-thirds of
the Preferred Interests, is required under Sections 5.3(b) or
(c) or 5.4 in the absence of such approval.
Section 5.12 Plans and Budgets. Within 60
days after the consummation of the Merger, and annually
thereafter, the Board shall adopt an annual financial plan
(pertaining to financial objectives but not to day to day
operating matters) and annual expense and capital budgets.
ARTICLE VI
INTERESTS AND CAPITAL ACCOUNTS
Section 6.1 Capital Contributions. (a) Upon
formation of the Company, each Member contributed to the
capital of the Company (each, an "Initial Capital
Contribution") the consideration set forth opposite the
Member's name in Section 1 of Schedule A in the form indicated
thereon in exchange for the Interest indicated thereon.
(b) Immediately prior to the consummation of the
Offer and simultaneously with making the Offer Capital
Contributions, Rich and CSXT, in exchange for the Series B
Cumulative Preferred Interests and Series A Cumulative
Preferred Interests, respectively, set forth opposite such
Member's name in Section 2 of Schedule A, shall contribute to
the capital of the Company the DOCP Shares in the amounts set
forth opposite such Member's name in Section 2 of Schedule A
(each, a "Stock Capital Contribution"). The agreed value of
the Stock Capital Contributions shall be as set forth on
Schedule A.
(c) Immediately prior to the consummation of the
Offer and simultaneously with making the Stock Capital
Contributions, each of CSXT Sub and NSC, in respect of Series A
Cumulative Preferred Interests and Junior Preferred Interests,
shall contribute cash to the capital of the Company (each, an
"Offer Capital Contribution") as necessary for the Company to
purchase in the Offer all DOCP Shares properly tendered and
accepted for payment thereunder and to pay any Transaction
Costs related thereto. The parties acknowledge that the Offer
Capital Contributions relating to Transaction Costs may be
delayed by CSX or NSC, as the case may be, for up to four weeks
after the date of the Merger. The Offer Capital Contributions
of CSXT Sub and NSC shall be in amounts such that the aggregate
value of the Stock Capital Contributions and Offer Capital
Contributions of each of CSX and NSC shall be equal. In
exchange for the Offer Capital Contributions, the Company shall
issue to each of CSXT Sub and NSC (i) such number of Series A
Cumulative Preferred Interests as reflects the Offer Capital
Contributions made by CSXT Sub and NSC, respectively, at the
rate of $1,000 per Series A Cumulative Preferred Interest, and
(ii) 50,000 Junior Preferred Interests with an aggregate Junior
Preferred Redemption Value for each of CSXT Sub and NSC as of
the date of issuance of $50 million. At the time the Offer
Capital Contributions are made, Schedule A shall be revised to
reflect such contributions.
(d) Immediately prior to the consummation of the
Merger, each of CSXT Sub and NSC, in respect of Series A
Cumulative Preferred Interests, shall contribute cash to the
capital of the Company (each, a "Merger Capital Contribution")
as necessary for the Company to purchase in the Merger all
outstanding DOCP Shares not already beneficially owned by the
Company, and to pay any Transaction Costs related thereto, and
to repay debt of the Company or its Subsidiaries, if necessary.
The parties acknowledge that the Merger Capital Contributions
relating to Transaction Costs may be delayed by CSX or NSC, as
the case may be for up to four weeks after the date of the
Merger. The Merger Capital Contributions shall be made in
equal amounts by CSXT Sub and NSC. In exchange for the Merger
Capital Contributions, the Company shall issue to each of CSXT
Sub and NSC such number of Series A Cumulative Preferred
Interests as reflects the relative Merger Capital Contributions
made by CSXT Sub and NSC, respectively, at the rate of $1,000
per Preferred Interest. At the time the Merger Capital
Contributions are made, Schedule A shall be revised to reflect
such contributions.
(e) Notwithstanding anything to the contrary in
this Section 6.1, CSX shall not be required to make any Capital
Contribution to the Company other than the Initial Capital
Contribution and the Stock Capital Contribution until NSC shall
have made at least $2,425,500 in Capital Contributions to the
Company.
(f) The Members shall be required to make cash
Capital Contributions to the Company in addition to the Initial
Capital Contributions, the Stock Capital Contributions, the
Offer Capital Contributions and the Merger Capital
Contributions (any such additional Capital Contribution, a
"Subsequent Capital Contribution") as may be agreed by all
Members, in exchange for such number and type of Interests as
may be agreed by the holders of all outstanding Common
Interests. Unanimous consent of the holders of Common
Interests to Subsequent Capital Contributions shall be a
condition to each Member's obligations to make Subsequent
Capital Contributions. At the time any Subsequent Capital
Contributions are made, Schedule A shall be revised to reflect
such contributions.
(g) The provisions of this Section 6.1 are
intended solely to benefit the Members and, to the fullest
extent permitted by applicable law, shall not be construed as
conferring any benefit upon any creditor of the Company (and no
such creditor shall be a third-party beneficiary of this
Agreement), and no Member shall have any duty or obligation to
any creditor of the Company to make any Subsequent Capital
Contributions or to cause the Board to adopt a resolution
calling for Subsequent Capital Contributions.
Section 6.2 Status of Capital Contributions.
(a) Except as otherwise provided in this Agreement, the
Capital Contributions of a Member holding Series A Cumulative
Preferred Interests, Series B Cumulative Preferred Interests or
Junior Preferred Interests may be returned to it, in whole or
in part, at any time pursuant to the provisions of Section 6.3;
provided that the Stock Capital Contributions and the Offer
Capital Contributions, on the one hand, and the Merger Capital
Contributions, on the other hand, shall be returned to the
applicable contributing Member if, within two business days of
such Capital Contributions, the Offer, on the one hand, and the
Merger, on the other hand, are not consummated. Notwithstanding
the foregoing, no return of Capital Contributions shall be made
if such distribution would violate applicable state law. Under
circumstances requiring a return of any Capital Contribution, no
Member shall have the right to demand or receive property other
than cash or, in respect of a return of Capital Contributions
upon the failure to consummate the Offer or the Merger, the DOCP
Shares contributed by them, except as may be specifically
provided in this Agreement.
(b) No Member shall receive any interest, salary
or drawing with respect to its Capital Contributions or its
Capital Account or for services rendered on behalf of the
Company or otherwise in its capacity as a Member, except as
otherwise specifically provided in this Agreement with respect
to allocations and distributions. Nothing in this Section
6.2(b) shall be deemed to limit compensation payable to Rich
under the Employment Agreement.
(c) Except as otherwise provided in this
Agreement or by the LLC Law, the Members shall be liable only
to make their Capital Contributions pursuant to Section 6.1,
and no Member shall be required to lend any funds to the
Company or, after a Member's Capital Contributions have been
fully paid pursuant to Section 6.1, to make any additional
capital contributions to the Company. Other than as
specifically provided in this Agreement or under the LLC Law,
no Member shall have any personal liability for the payment of
any Capital Contribution of any other Member.
Section 6.3 Redemption. (a) Notwithstanding
anything to the contrary in this Agreement, no Common Interests
shall be redeemed until all Series A Cumulative Preferred
Interests, Series B Cumulative Preferred Interests and Junior
Preferred Interests have been redeemed in accordance with the
provisions of this Section 6.3, and no Junior Preferred
Interests shall be redeemed until all Series A Cumulative
Preferred Interests are redeemed.
(b) Notwithstanding anything to the contrary in
this Agreement, but provided that redemption pursuant to this
Section 6.3 does not cause a breach or default under any
agreement or instrument to which the Company is a party or by
which the Company or any of its assets is bound, the Company
shall, from time to time when it has any Cash Available for
Redemption, redeem in accordance with the provisions of this
Section 6.3(b) the Series A Cumulative Preferred Interests, the
Series B Cumulative Preferred Interests and/or the Junior
Preferred Interests in whole or in part as follows:
(i) The Company shall first use Cash Available for
Redemption to redeem the Series A Cumulative Preferred
Interests and, if elected by the holder of the Series B
Cumulative Preferred Interests in accordance with Section
6.3(c), the Series B Cumulative Preferred Interests. Any
redemption of the Series A Cumulative Preferred Interests
or Series B Cumulative Preferred Interests shall require
payment per Interest of an amount in cash equal to
Redemption Value of such Interests. Series A Cumulative
Preferred Interests shall be redeemed ratably (subject to
Section 6.3(d)) from all holders of Series A Cumulative
Preferred Interests and, at such time (subject to Section
6.3(d)), if elected by the holder of the Series B
Cumulative Preferred Interests in accordance with Section
6.3(c), the Series B Cumulative Preferred Interests may
participate ratably in such redemption with the Series A
Cumulative Preferred Interests. In such event, the holder
of the Series B Cumulative Preferred Interests shall
receive payment per Interest of an amount in cash equal to
the Redemption Value of such Interests which participate
in the redemption.
(ii) Following the redemption of all outstanding
Series A Cumulative Preferred Interests pursuant to
Section 6.3(b)(i), the Company shall use Cash Available
for Redemption to redeem the Junior Preferred Interests
and, if elected by the holder of the Series B Cumulative
Preferred Interests in accordance with Section 6.3(c) and
if still then outstanding, the Series B Cumulative
Preferred Interests. Any redemption of the Junior
Preferred Interests shall require payment per Interest of
an amount in cash equal to the Redemption Value of such
Interest. Junior Preferred Interests shall be redeemed
ratably from all holders of Junior Preferred Interests
and, at such time, if elected by the holder of the Series
B Cumulative Preferred Interests in accordance with
Section 6.3(c), the Series B Cumulative Preferred
Interests may participate ratably in such redemption with
the Junior Preferred Interests. In such event, the holder
of the Series B Cumulative Preferred Interests shall
receive payment per Interest of an amount in cash equal to
the Redemption Value of such Interests which participate
in the Redemption.
(c) At least five days prior to any redemption of
Series A Cumulative Preferred Interests or Junior Preferred
Interests pursuant to Section 6.3(b)(i) and (ii), respectively,
the Company shall give written notice to the holders of the
Series B Cumulative Preferred Interests, stating the date of
such redemption and the amount of cash to be distributed in
connection with such redemption. Rich shall have five days
from receipt of such notice to elect by written notice to the
Company to participate ratably in such redemption with the
other Interests being redeemed. If Rich so elects to
participate, the number of Interests of CSX and NSC
participating in the redemption shall be reduced ratably to
accommodate the ratable redemption of Rich's Series B
Cumulative Preferred Interests. For purposes of this Section
6.3, "ratably" and "ratable" shall be calculated such that CSX,
NSC and Rich shall each have an equal percentage of their
aggregate Series A Cumulative Preferred Interests and Junior
Preferred Interests, in the case of CSX and NSC, or Series B
Cumulative Preferred Interests, in the case of Rich, redeemed.
(d) The Series A Cumulative Preferred Interests
may be used, subject to approval of the Board, including the
affirmative vote of the CSX Director and the NSC Director as
provided in Section 5.3(b), as consideration from CSX and/or
NSC, as the case may be, for the acquisition of assets or
rights of the Company or its Subsidiaries. In such event, any
subsequent redemption of Series A Cumulative Preferred
Interests pursuant to Section 6.3(b)(i) shall involve the
redemption of only Series A Cumulative Preferred Interests held
by either CSX or NSC, as the case may be, until CSX and NSC
hold the same number of Series A Cumulative Preferred
Interests, unless this requirement is waived by CSX or NSC,
whichever has the benefit of the foregoing.
(e) It is the intention of the parties that the
Board shall redeem Preferred Interests as soon as practicable
following the Merger and that the Company's financial plans
shall be designed consistent with that objective.
Section 6.4 Capital Accounts. (a) An
individual Capital Account shall be established and maintained
for each Member.
(b) The Capital Account of each Member shall be
maintained in accordance with the following provisions:
(i) to such Member's Capital Account there shall be
credited such Member's Capital Contributions, Profits
allocated to such Member under Section 7.1 and items of
income and gain allocated to such Member under Section 7.2
and the amount of any Company liabilities that are assumed
by such Member or that are secured by any Company assets
transferred to such Member in a Distribution pursuant to
any provision of this Agreement;
(ii) to such Member's Capital Account there shall be
debited the amount of cash and the Gross Asset Value of
any Company assets transferred to such Member in a
Distribution pursuant to any provision of this Agreement,
Losses allocated to such Member under Section 7.1 and
items of loss and deduction allocated to such Member under
Section 7.2 and the amount of any liabilities of such
Member that are assumed by the Company or that are secured
by any property contributed by such Member to the Company;
and
(iii) in determining the amount of any liability
for purposes of this Section 6.4 (b), there shall be taken
into account SECTION 752(c) of the Code and any other applicable
provisions of the Code and the Treasury Regulations.
Section 6.5 Advances. If any Member shall
advance any funds to the Company in excess of its Capital
Contributions, the amount of such advance shall neither
increase its Capital Account nor entitle it to any increase in
its share of the Distributions of the Company. Subject to the
limitations set forth in Section 5.3, the amount of any such
advance shall be a debt obligation of the Company to such
Member and shall be repaid to it by the Company with such
interest rate, conditions and terms as mutually agreed upon by
such Member and the Board. Any such advance shall be payable
and collectible only out of Company assets, and the other
Members shall not be personally obligated to repay any part
thereof. No Person who makes any nonrecourse loan to the
Company shall have or acquire, as a result of making such loan,
any direct or indirect interest in the profits, capital or
property of the Company, other than as a creditor.
ARTICLE VII
ALLOCATIONS
Section 7.1 Profits and Losses. (a) Subject
to the allocation rules of Section 7.2 and Section 7.3, Profits
for any Fiscal Year or portion thereof shall be allocated (i)
first, to the Members to reverse any Losses allocated to such
Members pursuant to Section 7.1(b) with the lowest tier
allocations of such Losses being reversed first (in proportion
to the Losses allocated to each Member within such tier), but
only to the extent any such Losses have not been previously
reversed under the Section 7.1(a)(i), (ii) second, among the
Members holding Series A Cumulative Preferred Interests, Series
B Cumulative Preferred Interests and Junior Preferred Interests
in proportion to and to the extent of Distributions made with
respect to such Interests during such Fiscal Year (or during a
prior Fiscal Year to the extent no prior allocation of Profits
under this Section 7.1(a)(ii) was made with respect to such
Distributions), (iii) then among the Members holding Series A
Cumulative Preferred Interests and Series B Cumulative
Preferred Interests in proportion to and to the extent of the
Cumulative Distribution Preference Arrearage of such Interests
through the date such Interests are redeemed, (iv) then among
the Members holding Junior Preferred Interests to the extent of
the Cumulative Distribution Preference Arrearage of such
Interests through the date such Interests are redeemed and (v)
finally to the Members holding Common Interests in proportion
to the number of Common Interests held.
(b) Subject to the allocation rules of Section
7.2 and Section 7.3, Losses for any Fiscal Year or portion
thereof shall be allocated:
(i) first, to the Members holding Common Interests
in proportion to the amounts of Profits allocated to each such
Member pursuant to Section 7.1(a)(v) until each such Member
shall have been allocated an amount of Losses equal to the
excess, if any, of (A) Profits allocated to such Member
pursuant to Section 7.1(a)(v) for all prior Fiscal Years over
(B) Losses previously allocated to such Member pursuant to this
Section 7.1(b)(i);
(ii) second, to the Members holding Junior Preferred
Interests in proportion to the amount of Profits allocated to
each such Member pursuant to Section 7.1(a)(iv) until each such
Member shall have been allocated Losses equal to the excess of
(A) Profits previously allocated to such Member pursuant to
Section 7.1(a)(iv) for all prior Fiscal Years over (B) Losses
previously allocated to such Member pursuant to this Section
7.1(b)(ii);
(iii) third, to the Members holding Series A
Cumulative Preferred Interests and Series B Cumulative
Preferred Interests in proportion to the amount of Profits
allocated to each such Member pursuant to Section 7.1(a)(iii)
until each such Member shall have been allocated Losses equal
to the excess of (A) Profits allocated to such Member pursuant
to Section 7.1(a)(iii) for all prior Fiscal Years over (B)
Losses allocated to such Member pursuant to this Section
7.1(b)(iii);
(iv) fourth, to the Members holding Preferred
Interests in proportion to the amount of Profits allocated to
each such Member pursuant to Section 7.1(a)(ii) until each such
Member shall have been allocated Losses equal to the excess of
(A) Profits allocated to such Member pursuant to Section
7.1(a)(ii) for all prior Fiscal Years over (B) Losses allocated
to such Member pursuant to this Section 7.1(b)(iv);
(v) fifth, to the Members holding Common Interests
in proportion to and to the extent of any positive balance in
such Member' Capital Accounts;
(vi) sixth, Losses allocated pursuant to any of the
foregoing provisions of this Section 7.1(b) shall not exceed
the maximum amount of Losses that can be so allocated without
causing any Member to have a deficit in its Capital Account at
the end of any Fiscal Year. All Losses in excess of the
limitation set forth in this Section 7.1(b)(vi) shall be
allocated to the Members with positive Capital Account balances
in proportion to such positive Capital Account balances; and
(vii) finally, to the Members holding Common
Interests in proportion to the number of Common Interests held
by each Member.
Section 7.2 Qualified Income Offset. In the
event any Member unexpectedly receives any adjustments,
allocations or distributions described in SECTION 1.704-
1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) or 1.704-
1(b)(2)(ii)(d)(6) of the Treasury Regulations, items of Company
income and gain (consisting of a pro rata portion of each item
of Company income, and gain for such Fiscal Year) shall be
specially allocated to each such Member in an amount and manner
sufficient to eliminate, to the extent required by the Treasury
Regulations, the deficit balance in such Member's Capital
Account as quickly as possible, provided that an allocation
pursuant to this Section 7.2 shall be made only if and to the
extent that such Member would have a deficit balance in its
Capital Account after all other allocations provided for in
this Article VII have been tentatively made as if this Section
7.2 were not in the Agreement.
Section 7.3 Allocation Rules. (a) The
Profits (or Losses) allocated to the Members for each Fiscal
Year or portion thereof during which there is a change in the
respective Interests of Members shall be allocated among the
Members in proportion to the Interests during such Fiscal Year
or portion thereof in accordance with SECTION 706 of the Code,
using any convention permitted by law and selected by the Board
pursuant to Section 5.3(b).
(b) For purposes of determining the Profits,
Losses or any other items allocable to any period, Profits,
Losses and any such other items shall be determined on a daily,
monthly or other basis, as determined by the Board using any
method that is permissible under SECTION 706 of the Code and the
Treasury Regulations thereunder.
(c) All items of Company income, gain, loss,
deduction, credit and any other allocations not otherwise
provided for in this Agreement shall be allocated among the
Members in the same proportions as they share Profits and
Losses for the Fiscal Year (or portion thereof) in question.
(d) Any Company deductions attributable to
Commissions (as defined in the Employment Agreement) paid by
the Company pursuant to the Employment Agreement will be
allocated fifty percent to CSX and fifty percent to NSC.
(e) Any Company dividend income arising from a
distribution by DOCP to the Company of an asset to be acquired
by NSC or CSX pursuant to the arrangements set forth in Section
6.3(d) shall be specially allocated 100 percent to the Member
in respect of which the Series A Cumulative Preferred Interests
are redeemed in connection therewith.
(f) In the event the Company incurs nonrecourse
debt, whether advanced by a third party or by a Member, that is
subject to the provisions of Treasury Regulation SECTION 1.704-2,
Profits, Losses and items of Company income, gain, loss and
deduction shall be allocated among the Members in such manner
as is required by Treasury Regulations SECTION 1.704-2 (including
implementation of a minimum gain chargeback or "partner minimum
gain chargeback," as defined in such Treasury Regulations).
(g) The Members are aware of the income tax
consequences of the allocations made by this Article VII and
agree to be bound by the provisions of this Article VII in
reporting their shares of Company income, gain, loss, deduction
and credit for income tax purposes.
Section 7.4 Tax Allocations. (a) Except as
provided in Section 7.4(b), Company income, gain, loss,
deduction and credit, as calculated for tax purposes, shall be
allocated among the Members, to the extent possible, in
accordance with the allocations of the corresponding Profits,
Losses or items of income, gain, loss, deduction or credit
among the Members pursuant to Sections 7.1 through 7.3.
(b) In accordance with SECTION 704(c) of the Code
and the Treasury Regulations thereunder, income, gain, loss and
deduction with respect to any property contributed to the
capital of the Company shall, solely for income tax purposes,
be allocated among the Members so as to take account of any
variation between the adjusted basis of such property to the
Company for United States federal income tax purposes and its
initial Gross Asset Value (computed in accordance with
paragraph (a) of the definition of "Gross Asset Value"
contained in Section 1.1).
(c) In the event the Gross Asset Value of any
Company asset is adjusted pursuant to paragraph (b) of the
definition of "Gross Asset Value" contained in Section 1.1,
subsequent allocations of income, gain, loss and deduction with
respect to such asset shall, solely for income tax purposes,
take account of any variation between the adjusted basis of
such asset for United States federal income tax purposes and
its Gross Asset Value in the same manner as under SECTION 704(c)
of the Code and the Treasury Regulations thereunder.
(d) Any elections or other decisions relating to
allocations under this Section 7.4 shall be made by the Members
in any manner that reasonably reflects the purpose and
intention of this Agreement consistent with existing Treasury
Regulations or subsequently adopted Treasury Regulations.
Allocations pursuant to this Section 7.4 are solely for United
States federal, state and local tax purposes, and shall not
affect, or in any way be taken into account in computing, any
Member's Capital Account or share of Profits, Losses, other
items or distributions pursuant to any provision of this
Agreement.
ARTICLE VIII
DISTRIBUTIONS
Section 8.1 Distributions. The Board, by
resolution, at any regular or special meeting, shall declare
and make Distributions of cash from Cash Available for
Distributions on December 1 of each year in accordance with the
preferences set forth in Section 8.3. In addition, subject to
provisions of this Agreement, the Board shall, by resolution at
any regular or special meeting, from time to time when
sufficient Cash Available for Distribution is available,
declare and make Distributions in respect of Cumulative
Distribution Preference Arrearages on any Interests in
accordance with the preferences set forth in Section 8.3.
Section 8.2 Limitations on Distribution.
Notwithstanding any provision to the contrary contained in this
Agreement, the Company shall not make any Distribution if such
Distribution would violate the LLC Law or other applicable law,
but shall instead make such Distribution as soon as practicable
after the making of such Distribution would not cause such
violation.
Section 8.3 Preferences. (a) A Distribution
Preference shall cumulate per Interest in respect of the Series
A Cumulative Preferred Interests and the Series B Cumulative
Preferred Interests in an amount equal to ten percent of the
initial Redemption Value of such Series A Cumulative Preferred
Interests and the Series B Cumulative Preferred Interests,
respectively, on December 1 of each year that such Interests
are outstanding on December 1 of such year.
(b) A Distribution Preference shall cumulate per
Interest in respect of the Junior Preferred Interests in an
amount equal to four percent of the initial Redemption Value of
such Junior Preferred Interests, on December 1 of each year
that such Interests are outstanding on December 1 of such year.
(c) If the Board does not declare and make a
Distribution cumulated pursuant to Section 8.3(a) or 8.3(b) and
the Distribution Preference provided therein shall be cumulated
and unpaid to any extent, the Distribution Preference provided
therein shall become a "Distribution Preference Arrearage" with
respect to the relevant Interests and, together with all
existing Distribution Preference Arrearage with respect to such
Interests which remain cumulated and unpaid to any extent,
shall be the "Cumulative Distribution Preference Arrearage"
with respect to such Interests.
(d) The Board shall not declare and make any
Distribution with respect to the Junior Preferred Interests
until all of the Series A Cumulative Preferred Interests and
all of the Series B Cumulative Preferred Interests have been
redeemed by the Company pursuant to Section 6.3. The Board
shall not declare and make any Distribution with respect to any
Common Interests until all of the Preferred Interests have been
redeemed by the Company pursuant to Section 6.3.
(e) No Distribution shall be made other than
pursuant to Section 8.1 until all Preferred Shares have been
redeemed, after which Distributions on the Common Interests
shall be ratable.
ARTICLE IX
PUT AND CALL RIGHTS
Section 9.1 Triggers. Upon and at any time
following the occurrence of any of the following events (each,
a "Trigger"), the Put Rights and the Call Rights shall be
exercisable:
(a) the termination of Rich's employment as
President and CEO pursuant to the employment agreement between
Rich and DOCP (the "Employment Agreement") by any party thereto
for any reason or as a result of Rich's death or disability as
provided in the Employment Agreement; or
(b) the third anniversary of the Merger.
Section 9.2 Put Rights and Call Rights. Upon
and at any time following a Trigger, (a) at the Company's
election exercised pursuant to a vote solely by the CSX
Director and the NSC Director from time to time in accordance
with Section 5.3(c), the Company shall have the right to
purchase from Rich (a "Call Right") and Rich shall sell to the
Company, at such time Rich's Interests in whole but not in part
(except as provided in Section 9.4), on the terms and
conditions set forth in Section 9.3, and (b) at Rich's election
from time to time, Rich shall have the right to sell to the
Company (a "Put Right") and the Company shall purchase those of
Rich's Interests in whole or in part as are permitted to be
sold at such time as provided in Section 9.4, on the terms and
conditions set forth in Section 9.3.
Section 9.3 Exercise of Rights. (a) To
exercise a Put Right, Rich shall deliver a written notice (the
"Notice") to the Company and the other Members. To exercise a
Call Right, the Company shall deliver a Notice to Rich and the
other Members. In each case the Notice shall specify the
number and type of Interests to be put or called consistent
with the provisions of Sections 9.2 and 9.4 (the "Subject
Interests"), the applicable aggregate Price and the applicable
date for the consummation of the put or call. The "Price" of
any Subject Interests shall be (i) with respect to Series B
Cumulative Preferred Interests, the Redemption Value of such
Series B Cumulative Preferred Interests, and (ii) with respect
to Common Interests, the Initial Capital Contribution in
respect of such Common Interests. The Notice shall contain an
irrevocable offer to sell or purchase (as the case may be) the
Subject Interests in the manner set forth below at the
applicable aggregate Price. The closing of the purchase of the
Subject Interests (the "Closing") shall take place at the
principal office of the Company on the tenth business day after
the date of the Notice. At such Closing, the purchasing party
shall deliver to Rich a wire transfer in the amount of the
applicable aggregate Price.
(b) Notwithstanding anything to the contrary
contained in this Article IX, to the extent that the payment
for the Subject Interests by the Company with its cash would,
at the time of payment or issuance thereof, constitute or cause
a breach or default (immediately or with notice or the lapse of
time or both) under any agreement or instrument to which the
Company is a party or by which the Company or any of its assets
is bound, or violate any law, statute, order, writ, injunction,
decree, judgment, rule, regulation, policy or guideline
promulgated, or judgment entered by any United States federal,
state or local, or foreign court or governmental authority
applicable to the Company, or to the extent that the Company
does not have sufficient cash to pay the applicable aggregate
Price, then all of the Company's rights and obligations in
respect of a validly exercised Put Right shall be assumed by
CSX and NSC (or, at CSX's and NSC's respective election, their
voting trusts or successors or permitted assignees) in equal
proportions.
(c) Notwithstanding anything to the contrary
contained in this Section 9.3, but subject to the terms of this
Agreement, the Company may at its election (exercised pursuant
to a vote solely by the CSX Director and the NSC Director in
accordance with Section 5.3(c)) assign all or a portion of its
Call Right to CSX and NSC (or their voting trusts or successors
or permitted assignees) in equal proportions.
(d) If the Company assigns all or a portion of
its Call Right or designates all or a portion of its Put Right
obligation pursuant to this Section 9.3, it shall provide
written notice to Rich to such effect. CSX and/or NSC may, in
connection with any such assignment or delegation by the
Company, provide that the Subject Interests be conveyed to a
third party, including a voting trust established by such
party. In such event, the payment of the aggregate Price at
the Closing by such third party shall be guaranteed by CSX and
NSC in equal proportions.
Section 9.4 Certain Limitations.
Notwithstanding the foregoing, in the event of a termination of
Rich's employment pursuant to the Employment Agreement for
"cause" (as defined in the Employment Agreement), until the
third anniversary of the Merger, (a) Rich's Put Right shall be
limited to Rich's Common Interests and shall not extend to his
Series B Cumulative Preferred Interests and (b) the Company's
Call Right shall, at the Company's election (exercised pursuant
to a vote solely by the CSX Director and the NSC Director in
accordance with Section 5.3(c)), be exercisable for Rich's
Common Interests without Rich's Series B Cumulative Preferred
Interests.
ARTICLE X
BOOKS AND RECORDS
Section 10.1 Books, Records and Financial
Statements. (a) The Company shall at all times maintain, at
its principal place of business, separate books of account for
the Company and its Subsidiaries that shall show a true and
accurate record of all costs and expenses incurred, all charges
made, all credits made and received and all income derived in
connection with the operation of the Company and its
Subsidiaries in accordance with GAAP consistently applied, and,
to the extent inconsistent therewith, in accordance with this
Agreement. Such books of account, together with a copy of this
Agreement and the Articles, shall at all times be maintained at
the principal place of business of the Company and shall be
open to inspection and examination at reasonable times by each
Member and its duly authorized representatives for any purpose
reasonably related to such Member's interest in the Company.
(b) The Officers shall prepare and maintain, or
cause to be prepared and maintained, the books of account of
the Company and its Subsidiaries. The following financial
information, prepared in accordance with GAAP and applied on a
basis consistent with prior periods, which shall be audited and
certified to by an independent certified public accountant,
shall be transmitted by the Company to each Member as soon as
reasonably practicable and in no event later than sixty days
after the close of each Fiscal Year:
(i) the consolidated balance sheet of the Company
as of the beginning and close of such Fiscal Year;
(ii) the consolidated statement of Profits and
Losses for such Fiscal Year;
(iii) a statement of each Member's Capital Account
as of the close of such Fiscal Year, and changes therein
during such Fiscal Year;
(iv) a consolidated statement of the Company's
cash flows during such Fiscal Year; and
(v) a statement indicating such Member's share of
each item of Company income, gain, loss, deduction or
credit for such Fiscal Year for income tax purposes, which
statement shall include or consist of a Schedule K-1 to
the Company's Internal Revenue Service Form 1065 (or any
corresponding schedule to any successor form) for such
Fiscal Year.
(c) Within thirty days after the end of each
fiscal quarter, the Company shall prepare and provide to each
Member an unaudited consolidated balance sheet of the Company
with respect to such quarter, a consolidated statement of the
profits and losses of the Company for such quarter and a
consolidated statement of cash flows during such quarter, each
of which shall be prepared in accordance with GAAP, applied on
a basis consistent with prior periods, and certified by the
chief financial officer of the Company.
(d) During the term of this Agreement (subject to
applicable law and Section 15.10), the Company shall, and shall
cause its Subsidiaries and officers, directors, employees,
auditors and agents to, afford the officers, employees and
agents of each of the other parties hereto and their respective
Affiliates reasonable access at all reasonable times to its
officers, employees, agents, properties, offices, plans and
other facilities, books and records, and shall furnish such
Persons with all financial, operating and other data and
information as may be reasonably requested.
Section 10.2 Accounting Method. For both
financial and tax reporting purposes and for purposes of
determining Profits and Losses, the books and records of the
Company shall be kept on the accrual method of accounting
prepared in accordance with GAAP and the Code, respectively,
applied on a basis consistent with prior periods, and shall
reflect all Company transactions and be appropriate and
adequate for the Company's business.
Section 10.3 Annual Audit. The financial
statements of the Company shall be audited by an independent
certified public accountant, selected by the Board, with such
audit to be accompanied by a report of such accountant
containing its opinion. The cost of such audit shall be an
expense of the Company.
ARTICLE XI
TAX MATTERS
Section 11.1 Tax Matters. (a) The "Tax
Matters Partner" of the Company for purposes of SECTION 6231(a)(7)
of the Code shall have the power to manage and control, on behalf
of the Company, any administrative proceeding at the Company
level with the Internal Revenue Service or any other taxing
authority relating to the determination of any item of Company
income, gain, loss, deduction or credit for United States
federal, state, local or foreign income or franchise tax
purposes. The Tax Matters Partner shall take such action as
may be reasonably necessary to constitute each other Member a
"notice partner" within the meaning of SECTION 6231(a)(8) of the
Code. The Tax Matters Partner shall cause to be prepared for
each taxable year of the Company the federal, state and local
tax returns and information returns, if any, which the Company
is required to file, copies of which returns shall be available
for inspection, examination, and approval by any Member or any
of its representatives during reasonable business hours, and
all of such persons shall be entitled to make copies or
extracts thereof. Where the Members are required to file
federal, state or local income tax returns by reason of their
interest in the Company, the Tax Matters Partner shall cause
them to be furnished with the relevant returns filed by the
Company. The Tax Matters Partner shall notify each other
Member of all material matters that come to its attention in
its capacity as Tax Matters Partner. The Tax Matters Partner
shall not (i) sign or file an Internal Revenue Service Form
1065 (or any successor form or corresponding state, local or
foreign form) on behalf of the Company, (ii) grant any Person a
power of attorney relating to any tax matter and/or declare any
Person as a representative of the Company with respect to any
tax matter (whether on Internal Revenue Service Form 2848 or
otherwise), (iii) take any action to enter into any agreement
with the Internal Revenue Service or any other taxing authority
to extend the limitation period for assessment of any tax
pursuant to SECTION 6229 of the Code or any state, local or foreign
income or franchise tax law, (iv) settle any dispute with the
Internal Revenue Service or any other taxing authority
regarding a disallowance of deductions or an increase in income
or (v) take any other action relating to tax audit or contested
matters, in each case without prior consultation with and
approval by CSX, if NSC is the Tax Matters Partner, or NSC, if
CSX is the Tax Matters Partner. The position of Tax Matters
Partner shall alternate between CSX and NSC in two tax-year
intervals. The initial Tax Matters Partner shall be NSC.
(b) The Company or the Tax Matters Partner, as
the case may be, shall, within ten days of the receipt of any
written notice from the Internal Revenue Service or any state,
local or foreign tax authority in any administrative proceeding
at the Company level relating to the determination of any
Company item of income, gain, loss, deduction or credit, mail a
copy of such notice to each Member.
Section 11.2 Right to Make Section 754
Election. Subject to Section 5.3(b), the Board may, in its
sole discretion, make or apply for permission with the
Commissioner of the Internal Revenue Service to revoke, on
behalf of the Company, an election in accordance with SECTION 754
of the Code, so as to adjust the basis of Company property in the
case of a distribution of property within the meaning of SECTION
734 of the Code, and in the case of a transfer of a Company
interest within the meaning of SECTION 743 of the Code. Each Member
shall, upon request of the Company, supply the information
necessary to give effect to such an election.
Section 11.3 Taxation as Partnership. The
Company shall be treated as a partnership for United States
federal, state, local and foreign tax purposes and will make
any necessary elections to achieve such status.
Section 11.4 Amortization Election. The
Company shall make an election to amortize organizational
expenses under Section 709(b) of the Code, and the Members
shall take all action necessary to give effect to such
election.
ARTICLE XII
LIABILITY, EXCULPATION AND INDEMNIFICATION
Section 12.1 Liability. Except as otherwise
provided by the LLC Law, the debts, obligations and liabilities
of the Company, whether arising in contract, tort or otherwise,
shall be solely the debts, obligations and liabilities of the
Company, and no Covered Person or Member shall be obligated
personally for any such debt, obligation or liability of the
Company solely by reason of being a Covered Person or Member.
Section 12.2 Exculpation. (a) No Covered
Person shall be liable to the Company or any other Covered
Person for any loss, damage or claim incurred by reason of any
act or omission performed or omitted by such Covered Person in
good faith on behalf of the Company and in a manner reasonably
believed to be within the scope of authority conferred on such
Covered Person by this Agreement, the Board or an appropriate
Officer or employee of the Company, except that a Covered
Person shall be liable for any such loss, damage or claim
incurred by reason of such Covered Person's gross negligence,
fraud or willful misconduct.
(b) A Covered Person shall be fully protected in
relying in good faith upon the records of the Company and upon
such information, opinions, reports or statements presented to
the Company by any Person as to matters the Covered Person
reasonably believes are within such other Person's professional
or expert competence, including information, opinions, reports
or statements as to the value and amount of the assets,
liabilities, Profits or Losses or any other facts pertinent to
the existence and amount of assets from which distributions to
Members might properly be paid.
(c) The parties acknowledge that this Section
12.2 is not intended to confer an indemnity on any Person.
Section 12.3 Fiduciary Duty. To the extent
that, at law or in equity, a Covered Person has duties
(including fiduciary duties) and liabilities relating thereto
to the Company or to any Member, then, to the fullest extent
permitted by applicable law, a Covered Person acting under this
Agreement shall not be liable to the Company or to any Member
for its good faith acts or omissions in reliance on the
provisions of this Agreement provided that a Covered Person who
is a member of the Board and who shall also be an employee of a
Member shall have a fiduciary duty to such Member and not to
the Company and provided further that a Covered Person who is
acting other than as a member of the Board shall act in
accordance with the direction of the Board and, to the extent
it has a fiduciary duty in such capacity to the Company, it
shall not incur any liability by acting in accordance with the
direction of the Board. The provisions of this Agreement, to
the extent that they restrict the duties and liabilities of a
Covered Person otherwise existing at law or in equity, are
agreed by the parties hereto to replace such other duties and
liabilities of such Covered Person.
Section 12.4 Outside Businesses. Subject to
the Employment Agreement, any Member or Affiliate thereof may
engage in or possess an interest in other business ventures of
any nature or description, independently or with others,
similar or dissimilar to the business of the Company, and the
Company and the Members shall have no rights by virtue of this
Agreement in and to such independent ventures or the income or
profits derived therefrom, and the pursuit of any such venture,
even if competitive with the business of the Company, shall not
be deemed wrongful or improper. No Member or Affiliate thereof
shall be obligated to present any particular investment
opportunity (including in respect of the Put and Call
Arrangements) to the Company even if such opportunity is of a
character that, if presented to the Company, could be taken by
the Company, and any Member or Affiliate thereof shall have the
right to take for its own account (individually or as a partner
or fiduciary) or to recommend to others any such particular
investment opportunity. The provisions of this Section 12.4
shall not in any way limit, modify or amend the terms of any
noncompetition, license or employment agreement that may be
entered into between the Company and any Member, which terms
shall be binding on the parties thereto.
Section 12.5 Third-Party Beneficiaries. There
shall be no third-party beneficiaries of this Agreement other
than Covered Persons to the extent expressly provided in this
Agreement.
ARTICLE XIII
ADDITIONAL MEMBERS; ASSIGNMENTS
Section 13.1 Admission. Except as
specifically provided in Articles IV, VI and IX and Section
13.2, the Company may not admit any new Members and may issue
no new Interests.
Section 13.2 Assignments of Interests
Generally. Except as specifically provided in Article IX, a
Member may not, directly or indirectly, sell, assign, transfer,
pledge, hypothecate, mortgage or dispose of, by gift or
otherwise, or in any way encumber ("Assign," and such act, an
"Assignment") all or any part of the Interests owned by such
Member without the unanimous consent of the Members and any
attempt to do so shall be void ab initio to the maximum extent
permitted by law; provided that (i) any Member, without the
consent of the other Members, may assign all or any part of its
Interests under this Agreement to any of its directly or
indirectly wholly-owned Subsidiaries, (ii) each of CSX and NSC
may assign all or any part of its Interests under this
Agreement to any successor to CSXT or CSX Corporation, on the
one hand, or to NSC or Norfolk Southern Railway Company, on the
other hand, respectively, in the event of a merger,
consolidation, sale of all or substantially all its assets,
liquidation or dissolution, and (iii) each of CSX and NSC may
pledge all or any part of its Interests under this Agreement in
connection with a financing transaction, but only so long as,
in each of the foregoing cases, such assignee executes and
delivers to the other Members a signature page as a party
hereto, and in any such case, any such assignment shall not
relieve the assigning Member from the performance and discharge
of such obligations and liabilities. Any assignment of an
Interest permitted under this Section 13.2 shall not be
effective until the assignee has been admitted as a Member of
the Company which shall be when the assignee has executed a
counterpart to this Agreement. For purposes of this Section
13.2, the outstanding preferred stock of Norfolk Southern
Railway Company shall not prevent such corporation from being
considered a wholly owned Subsidiary of NSC.
Section 13.3 Recognition of Assignment by the
Company. No Assignment of Interests in violation of this
Article XIII shall be valid or effective, and neither the
Company nor the Members shall recognize the same for the
purpose of making allocations or Distributions. Neither the
Company nor the Members shall incur any liability as a result
of refusing to make any such allocations or Distributions with
respect to Interests Assigned in violation of this Article
XIII.
ARTICLE XIV
DISSOLUTION, LIQUIDATION AND TERMINATION
Section 14.1 No Dissolution. (a) The death,
retirement, resignation, expulsion, Bankruptcy or dissolution
of any Member or the occurrence of any other event that
terminates the continued membership of a Member in the Company
shall not, in and of itself, cause the dissolution of the
Company. In such event, the business of the Company shall be
continued by the remaining Members.
(b) After the death of a Member, the deceased
Member shall cease to be a Member and the personal
representative of the deceased Member and, after the
distribution of the deceased Member's estate, the deceased
Member's heirs or legatees, shall have no right to participate
in the management of the business and affairs of the Company,
but shall be entitled to receive Distributions, payments on
redemption of Interests, and any other share of profits or
other compensation by way of income and the return of
contributions or pursuant to the Put and Call Arrangements to
which the deceased Member would have been entitled under this
Agreement and the LLC Law but for the death of such Member and
shall be entitled to exercise the rights, and required to
perform the obligations, in respect of the Put and Call
Arrangements that such Member would have had but for the death
of such Member; provided however that the parties acknowledge
that in such event CSX and NSC will take all necessary action
to comply with all applicable regulatory requirements.
(c) If any Member shall become Bankrupt and any
of such Member's designee Directors have not participated at
two or more consecutive meetings of the Board, the Bankrupt
Member shall cease to be a Member and shall have no right to
participate in the management of the business and affairs of
the Company, but shall be entitled to receive Distributions,
payments on redemption of Interests, and any other share of
profits or other compensation by way of income and the return
of contributions to which the Bankrupt Member would have been
entitled under this Agreement and the LLC Law but for the
Bankruptcy of such Bankrupt Member.
Section 14.2 Events Causing Dissolution. The
Company shall be dissolved and its affairs shall be wound up
upon the occurrence of any of the following events:
(a) the written consent of all Members; or
(b) the entry of a decree of judicial dissolution
under Section 702 of the LLC Law; or
(c) upon a termination of the Company pursuant to
Section 14.4.
Section 14.3 Liquidation. Upon dissolution of
the Company, the Person or Persons approved by the Members to
carry out the winding up of the Company shall immediately
commence to wind up the Company's affairs; provided, however,
that a reasonable time shall be allowed for the orderly
liquidation of the assets of the Company and the satisfaction
of liabilities to creditors so as to enable the Members to
minimize the normal losses attendant upon a liquidation. The
Members shall continue to share Profits and Losses during
liquidation as specified in Article VII hereof. The proceeds
of liquidation shall be distributed in the following order and
priority:
(a) to secured creditors of the Company whether
or not they are Members and to unsecured creditors that are not
Members, to the extent otherwise permitted by law, in
satisfaction of the liabilities of the Company (whether by
payment or the making of reasonable provision for payment
thereof);
(b) to unsecured creditors of the Company that
are Members, to the extent otherwise permitted by law, in
satisfaction of the liabilities of the Company (whether by
payment or the making of reasonable provision for payment
thereof);
(c) to the holders of the Series A Cumulative
Preferred Interests and the Series B Cumulative Preferred
Interests to the extent of their pro rata share of such
Interests' Redemption Values;
(d) to the holders of the Junior Preferred
Interests to the extent of their pro rata share of the Junior
Preferred Redemption Value of such Interests;
(e) the remainder, to the holders of the Common
Interests in proportion to the positive Capital Account
balances of such Members after giving effect to all
contributions, Distributions and allocations for all periods.
Section 14.4 Termination. (a) The Company
shall terminate upon any termination of the Merger Agreement
prior to the Merger, in which case each Member shall have the
right to a return of any Capital Contributions made by such
Member and any additional cash or other assets shall be
distributed to CSX and NSC in equal proportions after making
provisions for any Company obligations.
(b) In addition, unless previously terminated,
the Company shall terminate, in connection with a dissolution
or a liquidation, when all of the assets of the Company, after
payment, or due provision for all debts, liabilities and
obligations, of the Company shall have been distributed to the
Members in the manner provided for in this Article XIV and the
Articles shall have been canceled in the manner required by the
LLC Law.
Section 14.5 Claims of the Members. The
Members and former Members shall look solely to the Company's
assets for the return of their Capital Contributions in
connection with a dissolution or a liquidation, and if the
assets of the Company remaining after payment of or due
provision for all debts, liabilities and obligations of the
Company are insufficient to return such Capital Contributions,
the Members and former Members shall have no recourse against
the Company or any other Member.
ARTICLE XV
MISCELLANEOUS
Section 15.1 Notices. All notices provided
for in this Agreement shall be in writing, duly signed by the
party giving such notice, and shall be hand delivered, faxed or
mailed by registered or certified mail or overnight courier
service, as follows:
(a) if given to the Company, to the address
(and, if applicable, fax number) specified in Section 2.5
hereof to the attention of the President and CEO; or
(b) if given to any Member, to the person and
at the address (and, if applicable, fax number) set forth
opposite its name on Schedule B, or at such other address
(and, if applicable, fax number) as such Member may
hereafter designate by written notice to the Company.
All such notices shall be deemed to have been given
when received.
Section 15.2 Failure to Pursue Remedies. The
failure of any party to seek redress for violation of, or to
insist upon the strict performance of, any provision of this
Agreement shall not prevent a subsequent act, which would have
originally constituted a violation, from having the effect of
an original violation.
Section 15.3 Cumulative Remedies. The rights
and remedies provided by this Agreement are cumulative and the
use of any one right or remedy by any party shall not preclude
or waive its right to use any or all other remedies. Said
rights and remedies are given in addition to any other rights
the parties may have by law, statute, ordinance or otherwise.
Section 15.4 Binding Effect. This Agreement
shall be binding upon and inure to the benefit of all of the
parties and, to the extent permitted by this Agreement, their
successors, legal representatives and assigns
Section 15.5 Interpretation. All references
herein to "Articles", "Sections" and "Paragraphs" shall refer
to corresponding provisions of this Agreement. Whenever the
words "include", "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words
"without limitation." The words "hereof", "herein" and
"hereunder" and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to
any particular provision of this Agreement. All terms defined
in this Agreement shall have the defined meanings when used in
any certificate or other document made or delivered pursuant
hereto unless otherwise defined therein. The definitions
contained in this Agreement are applicable to the singular as
well as the plural forms of such terms and to the masculine as
well as to the feminine and neuter genders of such term. Any
agreement, instrument or statute defined or referred to herein
or in any agreement or instrument that is referred to herein
means such agreement, instrument and references to all
attachments thereto and instruments incorporated therein or
such statute as from time to time amended, modified or
supplemented, including (in the case of agreements or
instruments) by waiver or consent in writing and (in the case
of statutes) by succession of comparable successor statutes.
References to a Person are also to its permitted successors and
assigns.
Section 15.6 Severability. The invalidity or
unenforceability of any particular provision of this Agreement
shall not affect the other provisions hereof, and this
Agreement shall be construed in all respects as if such invalid
or unenforceable provision were omitted.
Section 15.7 Counterparts. This Agreement may
be executed in any number of counterparts with the same effect
as if all parties hereto had signed the same document. All
counterparts shall be construed together and shall constitute
one instrument.
Section 15.8 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 other
than the Merger Agreement.
Section 15.9 Governing Law. This Agreement
and the rights of the parties hereunder shall be interpreted in
accordance with the laws of the State of New York, and all
rights and remedies shall be governed by such laws without
regard to principles of conflict of laws.
Section 15.10 Confidentiality. Each Member
expressly acknowledges that such Member may receive
confidential and proprietary information relating to the
Company, including, without limitation, information relating to
the Company's financial condition and business plans, and that
the disclosure of such confidential information to a third
party would cause irreparable injury to the Company. Except
with the prior written consent of the Company or as required by
law, no Member shall disclose any such information to a third
party (other than on a "need to know" basis to any Affiliate or
any employee, agent or representative of such Member or its
Affiliates (each of whom shall agree to maintain the
confidentiality of such information)), and each Member shall
use reasonable efforts to preserve the confidentiality of such
information.
Section 15.11 Amendments. Any amendment to
this Agreement shall be adopted and be effective as an
amendment hereto if unanimously approved by the Members.
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement as of the date first above stated.
MEMBERS:
CSX TRANSPORTATION, INC.
By: ____________________________
Name:
Title:
DOCP HOLDINGS, INC.
By: ____________________________
Name:
Title:
NORFOLK SOUTHERN CORPORATION
By: ____________________________
Name:
Title:
________________________________
WALTER G. RICH
SCHEDULE A
CAPITAL CONTRIBUTIONS
1. Initial Capital Contributions
Capital Aggregate
Member Contribution Value Interests
------ ------------ ---------- ---------
Rich $800 $800 80 Common Interests
CSXT $100 $100 10 Common Interests
NSC $100 $100 10 Common Interests
2. Stock Capital Contributions
Capital Aggregate
Member Contribution Value Interests
------ ------------ ---------- ---------
Rich 136,966 DOCP Shares $3,013,252 3,013.252 Series B
Cumulative Preferred
Interests
CSXT 110,250 DOCP Shares $2,425,500 2,425.5 Series A
Cumulative Preferred
Interests
SCHEDULE B
NOTICE INFORMATION
Walter G. Rich: c/o Delaware Otsego Corporation
1 Railroad Avenue
Cooperstown, NY 13326
Telecopier No.: (607) 547-9834
with a copy to:
Kelley Drye & Warren LLP
101 Park Avenue
New York, NY 10178
Attention: Ronald B. Risdon
Telecopier No.: (212) 808-7897
CSX: CSX Corporation
One James Center
901 East Cary Street
Richmond, VA 23219
Attention: Peter J. Shudtz
Telecopier No.: (804) 783-1353
with a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, NY 10019
Attention: Pamela S. Seymon
Telecopier No.: (212) 403-2000
NSC: Norfolk Southern Corporation
Three Commercial Plaza
Norfolk, VA 23510
Attention: William C. Wooldridge
Telecopier No.: (757) 533-4872
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, NY 10022
Attention: Eric J. Friedman
Telecopier No.: (212) 735-2000
