GIS » Topics » 11.8 Class A Limited Membership Interest Purchase Option.

This excerpt taken from the GIS 10-Q filed Jan 6, 2005.

        11.8     Class A Limited Membership Interest Purchase Option.

        (a)    Class A Purchase Option.   The Managing Member or, in the sole discretion of the Managing Member, its designee (for purposes of this Section 11.8, references to the Managing Member shall, as the context requires, include such designee) may, by delivery of a written notice to the Class A Limited Members (a “Class A Purchase Notice”), elect to purchase (the “Class A Purchase Option”) (x) with respect to subparagraph (i) below, all of the Class A Limited Membership Interests of any Class A Limited Member and (y) with respect to subparagraphs (ii) below, all the Class A Limited Membership Interests then outstanding at the following times:

                (i)    At any time prior to the delivery of a Liquidation Notice to the Managing Member pursuant to Section 14.2; provided that, prior to the initial Class A Reset Date, the Capital Account of such Class A Limited Member on the Class A Purchase Valuation Date as determined pursuant to Section 9.2(f) is not less than such Class A Limited Member’s Preferred Return Capital; or

                (ii)    Within the ten (10) day period prior to the effectiveness of any Liquidation Notice delivered to the Managing Member pursuant to Section 14.2; provided that the Required Class A Limited Members have not rescinded such Liquidation Notice during such ten (10) day period; and provided, further, that no GMI Event shall have occurred and be continuing.

        Upon consummation of the Class A Purchase Option, the Managing Member shall be admitted as a Class A Limited Member with respect to the Class A Limited Membership Interests purchased pursuant to the Class A Purchase Option, and the Class A Limited Members from whom such Class A Limited Membership Interests were purchased shall be deemed withdrawn with respect to such Class A Limited Membership Interests.



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        (b)    Class A Purchase Election Date.   The “Class A Purchase Election Date” shall be the day on which the Managing Member delivers the Class A Purchase Notice; provided that, if the Managing Member elects to purchase all of the Class A Limited Membership Interests then outstanding during the ten (10) day period following the delivery of a Liquidation Notice, the Class A Purchase Election Date shall be the day on which such Liquidation Notice is delivered to the Managing Member. Except as provided in Section 14.2 with respect to a rescinded Liquidation Notice, a Class A Purchase Notice given pursuant to this Section 11.8 shall be irrevocable and binding on the Managing Member.

        (c)    Class A Purchase Price.   The purchase price (the “Class A Purchase Price”) for each Class A Limited Member’s Limited Membership Interest shall be equal to the excess, if any, of (i) the sum of (x) the balance in such Class A Limited Member’s Capital Account determined pursuant to Section 9.2(f) as of the last day of the Fiscal Quarter preceding the Fiscal Quarter in which the Class A Purchase Election Date occurs (the “Class A Purchase Valuation Date”), plus (y) an amount equal to such Class A Limited Member’s accrued but undistributed Class A Limited Member Preferred Return for the period from and including the Class A Purchase Valuation Date to but excluding the Class A Purchase Date, plus (z) the Class A Purchase Premium or Class A Optional Make Whole Amount, if any, over (ii) any amounts distributed to such Class A Limited Member from and including the Class A Purchase Valuation Date to but excluding the Class A Purchase Date

        (d)    Purchase.

                (i)    Single Payment.   In the case of a Class A Purchase Option exercised in any case not described in Section 11.8(a)(ii), the Class A Purchase Price shall be paid in Dollars and immediately available funds on the last Business Day of the Fiscal Quarter during which the Class A Purchase Election Date occurs or, if such last Business Day of such Fiscal Quarter is less than five Business Days after the Election Date, the last Business Day of the following Fiscal Quarter (the “11.8(a)(i) Purchase Date”) in accordance with Section 11.8(e).

                (ii)    Installments.   In the case of a Class A Purchase Option exercised in any case described in Section 11.8(a)(ii), the Class A Purchase Price shall be payable in two (2) installments, each in Dollars and immediately available funds:

                        (A)    The first installment shall be made on the date specified in the Purchase Notice, which date shall be a Business Day that is on or before the fortieth (40th) day following the Class A Purchase Election Date (such date of payment being the “11.8(a)(ii) Purchase Date, together with the 11.8(a)(i) Purchase Date, each a “Class A Purchase Date”) and shall be equal to applicable Class A Limited Member’s Preferred Return Capital as of the Class A Purchase Valuation Date. In the event that, on the Class A Purchase Date, the rating assigned to the senior unsecured and unsupported long-term debt obligations of a Class A Limited Member is below A- by S&P or A3 by Moody’s, then such Class A Limited Member will be required, unless its repayment obligation under clause (b) below is guaranteed by a Person whose debt obligations are so rated, to hold in escrow any amount of the first installment remaining after payment of its obligations to its creditors; and



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                        (B)    If the Class A Purchase Price is greater than the first installment, to the extent that the first installment was required to be held in an escrow account pursuant to clause (A) above, the balance in the escrow account shall be released to the applicable Class A Limited Member and the second installment shall be made as soon as practicable after the Capital Account statements described in Section 9.2(f) are received by the Class A Limited Members, but in no event later than sixty (60) days following the Class A Purchase Election Date. The second installment shall be equal to the excess, if any, of the Class A Purchase Price over the amount of the first installment. If the first installment exceeds the Class A Purchase Price, an amount equal to the lesser of (1) such excess or (2) the balance in the escrow account shall be returned to the Managing Member.

        (e)    Closing.   The closing of the purchase contemplated by this Section 11.8 shall occur on the Class A Purchase Date at such place as is mutually agreeable to the Members, or upon the failure to agree, at the principal place of business of the Company. At the closing, the Class A Limited Members shall deliver to the Managing Member good title, free and clear of any Liens, claims, encumbrances, security interests, or options, to its Class A Limited Membership Interests thus purchased other than such Liens, claims, encumbrances, security interest or options permitted hereunder. The reasonable costs of such Transfer and closing, including, without limitation, attorneys’ fees and filing expenses, shall be paid by the Managing Member. At the closing, the Class A Limited Members shall execute such documents and instruments of conveyance as may be reasonably necessary to effectuate the transaction contemplated hereby, including the Transfer of the Class A Limited Membership Interests.

        (f)    Treatment as Purchase Under Section 741.   The Class A Limited Members agree to treat the Transfer of the Class A Limited Membership Interests to the Managing Member pursuant to this Section 11.8 as a purchase and sale under Code Section 741 and not as a retirement under Code Section 736.

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