EXHIBIT 99.1
EXECUTION
VERSION
MANAGEMENT SERVICES AGREEMENT
AMONG
MACQUARIE INFRASTRUCTURE COMPANY LLC,
MACQUARIE INFRASTRUCTURE COMPANY INC.,
MACQUARIE YORKSHIRE LLC,
SOUTH EAST WATER LLC,
COMMUNICATIONS INFRASTRUCTURE LLC
AND
MACQUARIE INFRASTRUCTURE MANAGEMENT (USA) INC.
Dated as of December 21, 2004
TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS
ARTICLE II
APPOINTMENT OF THE MANAGER
Section 2.1 Appointment.......................................................... 15
Section 2.2 Initial Investment................................................... 15
Section 2.3 Agreement to Bind Subsidiaries....................................... 15
Section 2.4 Term................................................................. 15
ARTICLE III
SERVICES TO BE PERFORMED BY THE MANAGER
Section 3.1 Duties of the Manager................................................ 15
Section 3.2 Obligations of the Company and the Managed Subsidiaries.............. 20
ARTICLE IV
POWERS OF THE MANAGER
Section 4.1 Powers of the Manager................................................ 21
Section 4.2 Delegation........................................................... 22
Section 4.3 Manager's Duties Exclusive........................................... 22
ARTICLE V
INSPECTION OF RECORDS
Section 5.1 Books and Records.................................................... 22
ARTICLE VI
AUTHORITY OF THE COMPANY,
THE MANAGED SUBSIDIARIES AND THE MANAGER
i
ARTICLE VII
MANAGEMENT FEES
Section 7.1 Structuring Fee...................................................... 23
Section 7.2 Base Management Fees................................................. 23
Section 7.3 Performance Fee...................................................... 24
Section 7.4 Registration Rights.................................................. 25
Section 7.5 Ability to Issue Trust Stock......................................... 25
ARTICLE VIII
SECONDMENT OF PERSONNEL BY THE MANAGER
Section 8.1 Secondment of CEO and CFO............................................ 25
Section 8.2 Remuneration of CEO and CFO.......................................... 25
Section 8.3 Secondment of Additional Personnel................................... 26
Section 8.4 Removal of Seconded Individuals...................................... 26
Section 8.5 Indemnification...................................................... 26
ARTICLE IX
EXPENSE REIMBURSEMENT
Section 9.1 Company Expenses..................................................... 26
ARTICLE X
RESIGNATION AND REMOVAL OF THE MANAGER
Section 10.1 Resignation by the Manager.......................................... 28
Section 10.2 Removal of the Manager.............................................. 29
Section 10.3 Withdrawal of Branding.............................................. 30
Section 10.4 Resignation of the Chairman and the Seconded Officers............... 31
Section 10.5 Directions.......................................................... 31
ARTICLE XI
INDEMNITY
Section 11.1 Indemnification of Manager.......................................... 31
Section 11.2 Indemnification of Company.......................................... 32
Section 11.3 Indemnification..................................................... 32
ARTICLE XII
LIMITATION OF LIABILITY OF THE MANAGER
ii
Section 12.1 Limitation of Liability............................................. 32
Section 12.2 Manager May Rely.................................................... 33
ARTICLE XIII
LEGAL ACTIONS
Section 13.1 Third Party Claims.................................................. 33
ARTICLE XIV
MISCELLANEOUS
Section 14.1 Obligation of Good Faith; No Fiduciary Duties....................... 34
Section 14.2 Compliance.......................................................... 34
Section 14.3 Effect of Termination............................................... 34
Section 14.4 Notices............................................................. 34
Section 14.5 Captions............................................................ 34
Section 14.6 Applicable Law...................................................... 35
Section 14.7 Amendment........................................................... 35
Section 14.8 Severability........................................................ 35
Section 14.9 Entire Agreement.................................................... 35
Schedule I - Priority Protocol
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MANAGEMENT SERVICES AGREEMENT (this "AGREEMENT"), dated as of
December 21, 2004, among Macquarie Infrastructure Company LLC, a Delaware
limited liability company (the "COMPANY"), Macquarie Infrastructure Company
Inc., a Delaware corporation, Macquarie Yorkshire LLC, a Delaware limited
liability company, South East Water LLC, a Delaware limited liability company,
Communications Infrastructure LLC, a Delaware limited liability company (each a
"MANAGED SUBSIDIARY" and, together with any directly owned Subsidiary of the
Company as from time to time may exist and that has executed a counterpart of
this Agreement in accordance with Section 2.3 herein, collectively, the "MANAGED
SUBSIDIARIES"), and Macquarie Infrastructure Management (USA) Inc., a Delaware
corporation (the "MANAGER"). Individually, each party hereto shall be referred
to as a "PARTY" and collectively as the "PARTIES."
WHEREAS, the Company and the Managed Subsidiaries have agreed to
appoint the Manager to manage their business and affairs as herein described;
and
WHEREAS, the Manager has agreed to act as Manager on the terms and
subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the Parties hereto agree as follows:
ARTICLE I
DEFINITIONS
"ADDITIONAL OFFERING" means for any Fiscal Quarter in which a
Performance Fee is being calculated any offering of shares of Trust Stock other
than shares of Trust Stock issued in connection with the Trust's initial public
offering or concurrent private placement to the Manager in which the total
number of shares of Trust Stock issued in such offering equals or exceeds 15% of
the total number of shares of Trust Stock issued and outstanding immediately
prior to such offering; provided that "Additional Offering" shall not include:
(i) any issuance of shares of Trust Stock to the Manager pursuant to
Article VII hereof;
(ii) the issuance of any shares of Trust Stock pursuant to any
present or future plan providing for the reinvestment of dividends or
interest payable on securities of the Company and the investment of
additional optional amounts in shares of Common Stock under any such plan;
or
(iii) the issuance of any shares of Common Stock or options or
rights to purchase those shares pursuant to any present or future
employee, director or consultant benefit plan or program of, or any such
plan or program assumed by the Company or any of its subsidiaries.
"ADDITIONAL OFFERING FOREIGN NET EQUITY VALUE" means the aggregate
USD amount of the total proceeds from any Additional Offering which is to be
applied to increase Foreign Net Equity Value.
"ADDITIONAL OFFERING MACQUARIE INFRASTRUCTURE COMPANY TRUST
ACCUMULATION INDEX" means, with respect to the relevant Additional Shares, the
Additional Offering Macquarie Infrastructure Company Trust Accumulation Index
calculated by Morgan Stanley Capital International Inc., in accordance with the
methodology used to calculate the indices used in the calculation of clause (ii)
of the Benchmark Return for the relevant Fiscal Quarter; provided that, in the
event that the Macquarie Infrastructure Company Trust Accumulation Index is not
calculated by Morgan Stanley Capital International Inc., the Manager shall cause
the institution then used to calculate the Macquarie Infrastructure Company
Trust Accumulation Index to calculate the Additional Offering Macquarie
Infrastructure Company Trust Accumulation Index in accordance with the
methodology used to calculate the indices used in the calculation of clause (ii)
of the Benchmark Return for the relevant Fiscal Quarter.
"ADDITIONAL OFFERING U.S. NET EQUITY VALUE" means the aggregate USD
amount of the total proceeds from any Additional Offering which is to be applied
to increase U.S. Net Equity Value.
"ADDITIONAL OFFERING WEIGHTED AVERAGE PERCENTAGE CHANGE OF THE MSCI
EUROPE UTILITIES INDEX" means the change in percentage terms for a relevant
Fiscal Quarter calculated according to the following formula:
Z2 = N2 x (Q2 - P2) / P2
where
Z2 = the Additional Offering Weighted Average Percentage Change Of
The MSCI Europe Utilities Index;
N2 = the percentage determined by dividing (i) the Additional
Offering Foreign Net Equity Value by (ii) the sum of the Additional
Offering Foreign Net Equity Value and the Additional Offering U.S.
Net Equity Value;
P2 = the average closing MSCI Europe Utilities Index over the last
15 Trading Days ending immediately prior to the first day of trading
of the relevant Additional Shares; and
Q2 = the average closing MSCI Europe Utilities Index over the last
15 Trading Days of the current Fiscal Quarter, or over such lesser
number of Trading Days from and including the first day of trading
with respect to the Additional Shares through and including the
Fiscal Quarter End Date of such Fiscal Quarter.
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"ADDITIONAL OFFERING WEIGHTED AVERAGE PERCENTAGE CHANGE OF THE MSCI
U.S. IMI/UTILITIES INDEX" means the change in percentage terms for a relevant
Fiscal Quarter calculated according to the following formula:
Y2 = J2 x (L2 - K2) / K2
where
Y2 = the Additional Offering Weighted Average Percentage Change Of
The MSCI U.S. IMI/Utilities Index;
J2 = the percentage determined by dividing (i) the Additional
Offering U.S. Net Equity Value by (ii) the sum of the Additional
Offering Foreign Net Equity Value and the Additional Offering U.S.
Net Equity Value;
K2 = the average closing MSCI U.S. IMI/Utilities Index over the last
15 Trading Days ending immediately prior to the first day of trading
of the relevant Additional Shares; and
L2 = the average closing MSCI U.S. IMI/Utilities Index over the last
15 Trading Days of the current Fiscal Quarter, or over such lesser
number of Trading Days from and including the first day of trading
with respect to the Additional Shares through and including the
Fiscal Quarter End Date of such Fiscal Quarter.
"ADDITIONAL SHARES" means the aggregate number of shares of Trust
Stock issued in an Additional Offering (including any shares issued pursuant to
the exercise of an over-allotment option).
"AFFILIATE" means, with respect to any Person, (i) any Person
directly or indirectly controlling, controlled by or under common control with
such Person or (ii) any officer, director, general member, member or trustee of
such Person. For purposes of this definition, the terms "controlling,"
"controlled by" or "under common control with" shall mean the possession, direct
or indirect, of the power to direct or cause the direction of the management and
policies of a Person or entity, whether through the ownership of voting
securities, by contract or otherwise, or the power to elect at least 50% of the
directors, managers, general members, or Persons exercising similar authority
with respect to such Person or entity.
"AGREEMENT" or "MANAGEMENT SERVICES AGREEMENT" means this Management
Services Agreement, including all Exhibits and Schedules attached hereto, as
amended from time to time. Words such as "herein," "hereinafter," "hereof,"
"hereto" and "hereunder" refer to this Agreement as a whole, unless the context
otherwise requires.
"AUD" means the lawful currency of the Commonwealth of Australia.
"BANKRUPTCY LAW" means title 11, United States Code or any similar
federal or state law for the relief of debtors.
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"BASE MANAGEMENT FEE" means in respect of a Fiscal Quarter:
(i) where the Net Investment Value is less than or equal to USD500
million, 0.375% per Fiscal Quarter of the Net Investment Value,
(ii) where the Net Investment Value is greater than USD500 million
but less than or equal to USD1,500 million, USD1.875 million per Fiscal
Quarter plus 0.3125% per Fiscal Quarter of such Net Investment Value
exceeding USD500 million but not exceeding USD1,500 million, or
(iii) where the Net Investment Value is greater than USD1,500
million, USD5.0 million per Fiscal Quarter plus 0.25% per Fiscal Quarter
of such Net Investment Value exceeding USD1,500 million;
adjusted on a pro rata basis if the Fiscal Quarter in respect of which the
calculation is made is the Fiscal Quarter commencing on the Commencement
Date;
less
(x) the USD amount of any fees paid by the Company or any of its
Subsidiaries during the Fiscal Quarter to any individuals seconded to the
Company pursuant to Article VIII, or to any officer, director, staff
member or employee of the Manager or any Manager Affiliate, as
compensation for serving as a director on the Board of Directors of the
Company, any Subsidiary of the Company, or any company in which the
Company or its Subsidiaries have invested, excluding amounts paid as
reimbursement for expenses, in each case to the extent not subsequently
paid to the Company or a Subsidiary of the Company;
(y) the amount of any management fees other than performance-based
management fees payable to the Manager or a Manager Affiliate for that
Fiscal Quarter (adjusted, to the extent required, on a pro rata basis if
the Fiscal Quarter in respect of which the calculation is made is the
Fiscal Quarter commencing on the Commencement Date) in relation to the
management of a Macquarie Managed Investment Vehicle (calculated in USD
using the applicable exchange rate on the last Business Day of such Fiscal
Quarter) multiplied by the Company's percentage ownership in the Macquarie
Managed Investment Vehicle on the last Business Day of the Fiscal Quarter;
provided that, to the extent that such management fee accrues over a
period in excess of any Fiscal Quarter, such management fee for any Fiscal
Quarter will be estimated by the Manager and will be adjusted to actual in
the Fiscal Quarter such fee becomes payable. For the avoidance of doubt
such management fees do not include expense reimbursements or indemnities
for Costs; and
(z) all Base Management Fees previously earned in any Fiscal Quarter
in relation to any Future Investment if it was determined conclusively
during the relevant Fiscal Quarter that such Future Investment would not
be made.
"BENCHMARK RETURN" means the amount expressed in USD in respect of a
Fiscal Quarter in accordance with the following formula:
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BR = BR1 + BR2
where
BR = the Benchmark Return for the Fiscal Quarter;
and
(i) BR1 = X1 x (Y1 + Z1)
where
BR1 = the Benchmark Return for the Fiscal Quarter applicable
to all shares of Trust Stock other than those included in the
calculation of BR2;
X1 = has the same meaning as "A1" in the definition of Return;
Y1 = the Weighted Average Percentage Change of the MSCI U.S.
IMI/Utilities Index over the Fiscal Quarter; and
Z1 = the Weighted Average Percentage Change of the MSCI Europe
Utilities Index over the Fiscal Quarter.
(ii) BR2 = X2 x (Y2 + Z2)
where
BR2 = the Benchmark Return for the Fiscal Quarter applicable
solely to the Additional Shares issued in an Additional
Offering during the relevant Fiscal Quarter;
X2 = has the same meaning as "A2" in the definition of Return;
Y2 = the Additional Offering Weighted Average Percentage
Change of the MSCI U.S. IMI/Utilities Index over the period
from and including the first day of trading with respect to
any Additional Shares issued during the Fiscal Quarter for
which a Performance Fee is being calculated, through and
including the Fiscal Quarter End Date of such Fiscal Quarter;
and
Z2 = the Additional Offering Weighted Average Percentage
Change of the MSCI Europe Utilities Index over the period from
and including the first day of trading with respect to any
Additional Shares issued during the Fiscal Quarter for which a
Performance Fee is being calculated, through and including the
Fiscal Quarter End Date of such Fiscal Quarter.
"BOARD" or "BOARD OF DIRECTORS" means, with respect to the Company,
any Managed Subsidiary or any Subsidiary, as the case may be, the Board of
Directors of the Company, such Managed Subsidiary or Subsidiary, or any
committee of the Board of Directors that has been duly authorized by the Board
of Directors to make a decision on the matter in
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question or bind the Company, such Managed Subsidiary or such Subsidiary, as the
case may be, as to the matter in question.
"BUSINESS" means the business of owning and operating businesses and
making investments in the United States and elsewhere, as may be conducted or
made, directly and indirectly, by the Company from time to time.
"BUSINESS DAY" means a day of the year on which banks are not
required or authorized to close in The City of New York.
"CAD" means the lawful currency of Canada.
"CHAIRMAN" means the Chairman of the Board of Directors of the
Company.
"CHIEF EXECUTIVE OFFICER" means the Chief Executive Officer of the
Company, including any interim Chief Executive Officer.
"CHIEF FINANCIAL OFFICER" means the Chief Financial Officer of the
Company, including any interim Chief Financial Officer.
"COMMENCEMENT DATE" has the meaning set forth in Section 2.4.
"COMPANY" has the meaning set forth in the first paragraph of this
Agreement.
"COMPANY OFFICERS" means the Chief Executive Officer and the Chief
Financial Officer and any other officer of the Company hereinafter appointed by
the Board of Directors of the Company.
"COMPENSATION COMMITTEE" means the Compensation Committee of the
Board of Directors of the Company.
"CONTRACTED ASSETS" means businesses that derive a majority of their
revenues from long-term contracts with other businesses or governments.
"COSTS" includes costs, charges, fees, expenses, commissions,
liabilities, losses, damages and Taxes and all amounts payable in respect of
them or like amounts.
"CUSTODIAN" means any receiver, trustee, assignee, liquidator or
other similar official under any Bankruptcy Law.
"DELISTING EVENT" means a transaction or series of related
transactions involving the acquisition of Trust Stock by third parties in an
amount that results in the Trust Stock ceasing to be listed on a nationally
recognized U.S. exchange or on the Nasdaq National Market because the Trust
Stock ceased to meet the distribution and trading criteria of such exchange or
market.
"DEFICIT" means the aggregate amounts in USD in respect of each
Fiscal Quarter since a Performance Fee has become due and payable (or, if a
Performance Fee has not been paid, since the Commencement Date), not including
the Fiscal Quarter in respect of which a
6
calculation is being made, by which the Benchmark Return for each such Fiscal
Quarter exceeds the Return for that Fiscal Quarter (if any).
"EARNINGS RELEASE DAY" means any Business Day that the Company
releases to the public quarterly or annual historical consolidated financial
information.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"FISCAL QUARTER" means (i) the period commencing on the Commencement
Date and ending on December 31, 2004, and (ii) any subsequent three-month period
commencing on each of October 1, January 1, April 1 and July 1 and ending on the
last day before the next such date.
"FISCAL QUARTER END DATE" means the last day of a Fiscal Quarter.
"FISCAL YEAR" means (i) the period commencing on the Commencement
Date and ending on December 31, 2004 and (ii) any subsequent 12-month period
commencing on January 1 and ending on December 31.
"FOREIGN NET EQUITY VALUE" means the Net Equity Value for the
portion of the Business held outside of the United States (measured in USD based
on the then-applicable exchange rate) as determined by the Manager and approved
by the Compensation Committee of the Company (which approval shall not be
unreasonably withheld, delayed or conditioned).
"FUTURE INVESTMENT" means a contractual commitment to invest
represented by a definitive agreement.
"GAAP" means generally accepted accounting principles in effect in
the United States of America from time to time.
"INDEPENDENT DIRECTOR" means a director who (a) (i) is not an
officer or employee of the Company, or an officer, director or employee of any
of the Managed Subsidiaries or any Subsidiary, (ii) was not appointed as a
director pursuant to the terms of this Agreement and (iii) is not affiliated
with the Manager or any Manager Affiliate; and (b) complies with the
independence requirements under the Exchange Act and the NYSE Rules.
"INITIAL INVESTMENT" has the meaning set forth in Section 2.2.
"INITIAL LEVEL OF THE ADDITIONAL OFFERING MACQUARIE INFRASTRUCTURE
COMPANY TRUST ACCUMULATION INDEX" means the initial value designated at the time
of the establishment of the relevant Additional Offering Macquarie
Infrastructure Company Trust Accumulation Index, which shall be based on the
offering price of the Additional Shares issued in the relevant Additional
Offering.
"INITIAL LEVEL OF THE MACQUARIE INFRASTRUCTURE COMPANY TRUST
ACCUMULATION INDEX" means the initial value designated at the time of the
establishment of the Macquarie Infrastructure Company Trust Accumulation Index,
which shall be based on the initial public offering price of the Trust Stock.
7
"ISF" has the meaning set forth in Section 3.1(b)(iii).
"LIABILITIES" has the meaning set forth in Section 11.1.
"LLC AGREEMENT" means the Amended and Restated Operating Agreement
of Macquarie Infrastructure Company LLC dated as of December 21, 2004.
"LLC INTEREST" means a limited liability company interest in the
Company in accordance with the LLC Agreement.
"MANAGER AFFILIATE" means any Affiliate of the Manager other than
the Trust, the Company, any Subsidiary of the Company or any Person who would be
deemed a Manager Affiliate solely as a result of such Person's association with
the Trust, the Company or any Subsidiary of the Company.
"MACQUARIE INFRASTRUCTURE COMPANY TRUST ACCUMULATION INDEX" means
the Macquarie Infrastructure Company Trust Accumulation Index as calculated by
Morgan Stanley Capital International Inc., in accordance with the methodology
used to calculate the indices used in the calculation of clause (i) of the
Benchmark Return from time to time. In the event that the indices used in the
calculation of the Benchmark Return are not calculated by Morgan Stanley Capital
International Inc., the Manager may select another institution of comparable
recognized standing that is not a Manager Affiliate to calculate the Macquarie
Infrastructure Company Trust Accumulation Index in a manner consistent with the
methodology used to calculate the indices then used in the calculation of clause
(i) of the Benchmark Return.
"MACQUARIE MANAGED INVESTMENT VEHICLE" means an entity which is
managed by the Manager or a Manager Affiliate where such Person receives
remuneration, other than expense reimbursement or indemnity for Costs, for
managing the entity.
"MANAGED SUBSIDIARY" and "MANAGED SUBSIDIARIES" have the meanings
set forth in the first paragraph of this Agreement.
"MANAGER" has the meaning set forth in the first paragraph of this
Agreement.
"MARKET VALUE OF THE TRUST STOCK" means the product of (1) the
average number of shares of Trust Stock issued and outstanding, other than
treasury shares, during the last 15 Trading Days in the relevant Fiscal Quarter
or, for the Fiscal Quarter commencing on the Commencement Date, over such lesser
number of Trading Days from and including the first day of trading for the Trust
Stock through and including the Fiscal Quarter End Date of such Fiscal Quarter,
multiplied by (2) the volume weighted average trading price per share of Trust
Stock traded on the NYSE over those 15 Trading Days or, for the Fiscal Quarter
commencing on the Commencement Date, over such lesser number of Trading Days
from and including the first day of trading for the Trust Stock through and
including the Fiscal Quarter End Date of such Fiscal Quarter.
"MEMBER" with respect to the Company means the Trust as original
Member and any successor to the original Member, in accordance with the terms of
the LLC Agreement. "MEMBERS" means all Persons that at any time are Members of
the Company.
8
"MSCI EUROPE UTILITIES INDEX" means the total return equity index
with that name calculated in USD and published by Morgan Stanley Capital
International Inc. or, if that index ceases to be calculated or ceases to be
publicly available, the nearest equivalent available index selected by the
Manager and reasonably acceptable to the Compensation Committee of the Company
that is (a) calculated by an institution of comparable recognized standing that
is not a Manager Affiliate and (b) publicly available.
"MSCI U.S. IMI/UTILITIES INDEX" means the total return equity index
with that name calculated in USD and published by Morgan Stanley Capital
International Inc. or, if that index ceases to be calculated or ceases to be
publicly available, the nearest equivalent available index selected by the
Manager and reasonably acceptable to the Compensation Committee of the Company
that is (a) calculated by an institution of comparable recognized standing that
is not a Manager Affiliate and (b) publicly available.
"NET EQUITY VALUE" means the fair value of the equity of the
Business (as measured in USD, based on the then-applicable exchange rates, if
applicable) as determined by the Manager and approved by the Compensation
Committee of the Company (which approval shall not be unreasonably withheld,
delayed or conditioned).
"NET INVESTMENT VALUE" means:
(a) the Market Value of the Trust Stock; plus
(b) the amount of any borrowings (other than intercompany
borrowings) of the Company and its Managed Subsidiaries (but not including
borrowings on behalf of any Subsidiary of the Managed Subsidiaries); plus
(c) the value of Future Investments of the Company and/or any of its
Subsidiaries other than cash or cash equivalents, as calculated by the
Manager and approved by the Compensation Committee of the Company (which
approval shall not be unreasonably withheld, delayed or conditioned);
provided that such Future Investment has not been outstanding for more
than two consecutive Fiscal Quarters; less
(d) the aggregate amount held by the Company and its Managed
Subsidiaries in cash or cash equivalents (but not including cash or cash
equivalents held specifically for the benefit of any Subsidiary of a
Managed Subsidiary).
"NEW INVESTMENT VEHICLE" has the meaning set forth in Section
3.1(b)(iii).
"NYSE" means the New York Stock Exchange, Inc.
"NYSE RULES" means the rules of the New York Stock Exchange.
"PERFORMANCE FEE" for a Fiscal Quarter means, if the Return for such
Fiscal Quarter is greater than zero, 20% of the amount (if any) by which the
Return for such Fiscal Quarter together with any Surplus exceeds the Benchmark
Return for such Fiscal Quarter together with any Deficit.
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"PERFORMANCE TEST RETURN" means the amount expressed in percentage
terms in accordance with the following formula:
(C1 - B1) / B1
where
B1 and C1 are as defined in the definition of Return.
"PERFORMANCE TEST BENCHMARK RETURN" means the amount expressed in
percentage terms in accordance with the following formula:
Y1 + Z1
where
Y1 and Z1 are as defined in the definition of Benchmark Return.
"PERSON" means any individual, company (whether general or limited),
limited liability company, corporation, trust, estate, association, nominee or
other entity.
"REGULATED ASSETS" means businesses that are the sole or predominant
providers of at least one essential service in their service areas and where the
level of revenue earned or charges imposed are regulated by government entities.
"RETURN" means the amount expressed in USD in respect of a Fiscal
Quarter in accordance with the following formula:
R = R1 + R2
where
R = the Return for the Fiscal Quarter
and
(i) R1 = A1 x (C1 - B1) / B1
where
R1 = the Return for the Fiscal Quarter applicable to all
shares of Trust Stock other than those included in the
calculation of R2;
A1 = the average number of shares of Trust Stock issued and
outstanding, other than treasury shares, during the last 15
Trading Days in the previous Fiscal Quarter (or, if the
previous Fiscal Quarter was the Fiscal Quarter commencing on
the Commencement Date, over such lesser number of Trading Days
from and including the first day of trading for the Trust
Stock through and including the Fiscal Quarter End Date of the
previous Fiscal
10
Quarter) multiplied by the volume weighted average trading
price per share of Trust Stock traded on the NYSE during such
15 Trading Days (or, if the previous Fiscal Quarter was the
Fiscal Quarter commencing on the Commencement Date, over such
lesser number of Trading Days from and including the first day
of trading for the Trust Stock through and including the
Fiscal Quarter End Date of the previous Fiscal Quarter) or,
for the Fiscal Quarter commencing on the Commencement Date,
the aggregate number of shares of Trust Stock issued and
outstanding on the last closing date of the initial public
offering (including the shares of Trust Stock issued to the
Manager pursuant to Section 2.2) multiplied by the initial
public offer price;
B1 = the average of the daily closing Macquarie Infrastructure
Company Trust Accumulation Index over the last 15 Trading Days
of the previous Fiscal Quarter (or, if the previous Fiscal
Quarter was the Fiscal Quarter commencing on the Commencement
Date, over such lesser number of Trading Days from and
including the first day of trading for the Trust Stock through
and including the Fiscal Quarter End Date of the previous
Fiscal Quarter) or, for the Fiscal Quarter Commencing on the
Commencement Date, the Initial Level of the Macquarie
Infrastructure Company Trust Accumulation Index; and
C1 = the average of the daily closing Macquarie Infrastructure
Company Trust Accumulation Index over the last 15 Trading Days
of the current Fiscal Quarter or, for the Fiscal Quarter
commencing on the Commencement Date, over such lesser number
of Trading Days from and including the first day of trading
for the Trust Stock through and including the Fiscal Quarter
End Date of such Fiscal Quarter.
(ii) R2 = A2 x (C2 - B2) / B2
where
R2 = the Return for the Fiscal Quarter applicable solely to
the Additional Shares issued during such Fiscal Quarter;
A2 = the number of such Additional Shares times the per share
offer price for those Additional Shares;
B2 = the Initial Level of the Additional Offering Macquarie
Infrastructure Company Trust Accumulation Index applicable to
such Additional Shares; and
C2 = the average of the daily closing Additional Offering
Macquarie Infrastructure Company Trust Accumulation Index
applicable to such Additional Shares over the last 15 Trading
Days of the current Fiscal Quarter, or over such lesser number
of Trading Days from and including the first day of trading
with respect to the Additional Shares through and including
the Fiscal Quarter End Date of such Fiscal Quarter.
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"RULES AND REGULATIONS" means the rules and regulations promulgated
under the Exchange Act or the Securities Act.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SERVICES" has the meaning set forth in Section 3.1(b).
"SHARE PRICE PERIOD" means the 15 Trading Days beginning on the
Trading Day immediately following a record date with respect to the payment of
cash dividends relating to the most recent Fiscal Quarter; provided, however,
that if either (i) the Company has not declared a cash dividend with respect to
such Fiscal Quarter on or prior to the relevant Earnings Release Date or (ii)
the Company has set a record date with respect to such cash dividend that is
more than 45 days after the relevant Earnings Release Date related to such
Fiscal Quarter, the Share Price Period shall begin on the third Trading Day
following the Earnings Release Date.
"STRUCTURING FEE" has the meaning set forth in Section 7.1.
"SUBSIDIARY" means, with respect to any Person, any corporation,
company, joint venture, limited liability company, association or other entity
in which such Person owns, directly or indirectly, more than 50% of the
outstanding equity securities or interests, the holders of which are generally
entitled to vote for the election of the Board of Directors or other governing
body of such entity.
"SURPLUS" means the aggregate amounts in USD in respect of each
Fiscal Quarter since a Performance Fee has become due and payable (or, if a
Performance Fee has not been paid, since the Commencement Date), not including
the Fiscal Quarter in respect of which a calculation is being made, by which the
Return for each such Fiscal Quarter exceeds the Benchmark Return for that Fiscal
Quarter.
"TAX" or "TAXES" means any and all taxes, fees, levies, duties,
tariffs, imposts, and other charges of any kind (together with any and all
interest, penalties, additions to tax and additional amounts imposed with
respect thereto) imposed by any government or taxing authority, including taxes
or other charges on or with respect to income, franchises, windfall or other
profits, gross receipts, property, sales, use, capital stock, payroll,
employment, social security, workers' compensation, unemployment compensation,
or net worth; taxes or other charges in the nature of excise, withholding, ad
valorem, stamp, transfer, value added, or gains taxes; license, registration and
documentation fees; and customs' duties, tariffs, and similar charges.
"TERMINATION DATE" means the date on which this Agreement and the
obligations of the Manager hereunder terminate.
"TERMINATION FEE" means the amount calculated as follows:
the sum of (i) all accrued and unpaid Base Management Fees and
Performance Fees for the period from the previous Fiscal Quarter End Date to the
Delisting Event, using the volume weighted average price per share of Trust
Stock paid by an acquiror in the transaction or series of transactions that led
to the Delisting Event to calculate such fees, plus (ii)(a) if the price
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per share of Trust Stock stated in (i) above multiplied by the aggregate number
of shares of Trust Stock issued and outstanding, other than treasury shares, on
the date of the Delisting Event, is less than or equal to $500 million, 10% of
such value, or (b) if the price per share of Trust Stock stated in (i) above
multiplied by the aggregate number of shares of Trust Stock issued and
outstanding, other than treasury shares, on the date of the Delisting Event is
greater than $500 million, $50 million plus 1.5% of the value in excess of $500
million.
"THE MACQUARIE GROUP" means the Macquarie Group of companies, which
comprises Macquarie Bank Limited and its subsidiaries and affiliates worldwide.
"TRADING DAY" means a day during which trading in securities
generally occurs on the NYSE or, if the Trust Stock is not listed on the NYSE,
on the principal other national or regional securities exchange or interdealer
quotation system on which the Trust Stock is then listed or quoted.
"TRUST" means Macquarie Infrastructure Company Trust, which holds
one hundred percent (100%) of the ownership interest in the Company.
"TRUST CERTIFICATE" means the certificates representing shares of
Trust Stock.
"TRUST STOCK" means the shares of beneficial interest of the Trust;
provided that, in the event that all outstanding shares of beneficial interest
of the Trust are exchanged for LLC Interests in accordance with the terms of the
LLC Agreement, all references herein to "Trust Stock" or "shares of Trust Stock"
shall automatically be deemed to refer to LLC Interests upon such exchange.
"USD" means the lawful currency of the United States of America.
"USER PAYS ASSETS" means businesses that are transportation-related
and derive a majority of their revenues from a per use fee or charge.
"US NET EQUITY VALUE" means the Net Equity Value for the portion of
the Business held inside the United States as determined by the Manager and
approved by the Compensation Committee of the Company (which approval shall not
be unreasonably withheld, delayed or conditioned).
"WEIGHTED AVERAGE PERCENTAGE CHANGE OF THE MSCI EUROPE UTILITIES
INDEX" means the change in percentage terms for a period calculated according to
the following formula:
Z1 = N1 x (Q1 - P1) / P1
where
Z1 = the Weighted Average Percentage Change Of The MSCI Europe
Utilities Index;
N1 = the percentage of Net Equity Value attributable to the Foreign
Net Equity Value on the last Business Day of the previous Fiscal
Quarter, or where the
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current Fiscal Quarter commenced on the Commencement Date, the
Foreign Net Equity Value on the Commencement Date;
P1 = the average closing MSCI Europe Utilities Index over the last
15 Trading Days of the previous Fiscal Quarter (or if the previous
Fiscal Quarter was the Fiscal Quarter commencing on the Commencement
Date, over such lesser number of Trading Days from and including the
first day of trading for the Trust Stock through and including the
Fiscal Quarter End Date of the previous Fiscal Quarter), or where
the current Fiscal Quarter commenced on the Commencement Date, the
average closing MSCI Europe Utilities Index over the last 15 Trading
Days immediately prior to the Commencement Date; and
Q1 = the average closing MSCI Europe Utilities Index over the last
15 Trading Days of the current Fiscal Quarter or, for the Fiscal
Quarter commencing on the Commencement Date, over such lesser number
of Trading Days from and including the first day of trading for the
Trust Stock through and including the Fiscal Quarter End Date of
such Fiscal Quarter.
"WEIGHTED AVERAGE PERCENTAGE CHANGE OF THE MSCI U.S. IMI/UTILITIES
INDEX" means the change in percentage terms for a Fiscal Quarter calculated
according to the following formula:
Y1 = J1 x (L1 - K1) / K1
where
Y1 = the Weighted Average Percentage Change Of The MSCI U.S.
IMI/Utilities Index;
J1 = the percentage of Net Equity Value attributable to the U.S. Net
Equity Value on the last Business Day of the previous Fiscal
Quarter, or where the current Fiscal Quarter commenced on the
Commencement Date, the U.S. Net Equity Value on the Commencement
Date;
K1 = the average closing MSCI U.S. IMI/Utilities Index over the last
15 Trading Days of the previous Fiscal Quarter (or if the previous
Fiscal Quarter was the Fiscal Quarter commencing on the Commencement
Date, over such lesser number of Trading Days from and including the
first day of trading for the Trust Stock through and including the
Fiscal Quarter End Date of the previous Fiscal Quarter) or, where
the current Fiscal Quarter commenced on the Commencement Date, the
average closing MSCI U.S. IMI/Utilities Index over the last 15
Trading Days immediately prior to the Commencement Date; and
L1 = the average closing MSCI U.S. IMI/Utilities Index over the last
15 Trading Days of the current Fiscal Quarter or, for the Fiscal
Quarter commencing on the Commencement Date, over such lesser number
of Trading Days from and including the first day of trading for the
Trust Stock through and including the Fiscal Quarter End Date of
such Fiscal Quarter.
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ARTICLE II
APPOINTMENT OF THE MANAGER
Section 2.1 Appointment. The Company and each of the Managed
Subsidiaries hereby jointly and severally agree to appoint the Manager to manage
their business and affairs under the supervision and control of the Board of
Directors of the Company and such Managed Subsidiary and to perform the Services
in accordance with the terms of this Agreement.
Section 2.2 Initial Investment. The Manager will acquire from the
Company the number of shares of Trust Stock having an aggregate purchase price
of $50 million, concurrently with the initial public offering of the Trust Stock
(the "INITIAL INVESTMENT") and at a per share purchase price equal to the per
share initial public offering price. 30% of the Initial Investment may be
disposed of at anytime. 70% of the Initial Investment will be held for a period
of not less than 12 months from the Commencement Date. At any time from and
after the first anniversary of the Commencement Date, the Manager may dispose of
a further 35% of the Initial Investment and may dispose of the balance of the
Initial Investment at any time from and after the third anniversary of the
Commencement Date.
Section 2.3 Agreement to Bind Subsidiaries. The Company covenants
and agrees to cause any Managed Subsidiary created or acquired after the date of
this Agreement to execute a counterpart of this Agreement agreeing to be bound
by the terms hereunder.
Section 2.4 Term. The Manager shall provide Services to the Company
and its Managed Subsidiaries from the date of the closing of the initial public
offering by the Trust and the Company (the "COMMENCEMENT DATE") until the
termination of this Agreement in accordance with Article X.
ARTICLE III
SERVICES TO BE PERFORMED BY THE MANAGER
Section 3.1 Duties of the Manager. (a) Subject always to the
oversight and supervision of the Board of Directors of the Company, the Manager
will manage the Company's and the Managed Subsidiaries' business and affairs. In
the performance of its duties, the Manager will comply with the provisions of
the LLC Agreement, as amended from time to time, and the operating objectives,
policies and restrictions of the Company in existence from time to time. The
Company will promptly provide the Manager with all amendments to the LLC
Agreement and all stated operating objectives, policies and restrictions of the
Company approved by the Board of Directors of the Company and any other
available information requested by the Manager.
(b) The Manager further agrees and covenants that it will
perform the following, referred to herein as the "SERVICES:"
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(i) cause the carrying out of all day-to-day management,
secretarial, accounting, administrative, liaison, representative,
regulatory and reporting functions and obligations of the Company and the
Managed Subsidiaries, and any such obligations of the Company with respect
to the Trust;
(ii) establish and maintain books and records for the Company and
the Managed Subsidiaries consistent with industry standards and in
compliance with the Rules and Regulations and with GAAP;
(iii) identify, evaluate and recommend, through the Company
Officers, acquisitions or investment opportunities from time to time; if
the Board of Directors of the Company approves any acquisition or
investment, negotiate and manage such acquisitions or investments on
behalf of the Company; and thereafter manage those acquisitions or
investments, as a part of the Company's Business hereunder, on behalf of
the Company and any relevant Managed Subsidiary in accordance with this
Section 3.1. To the extent acquisition or investment opportunities covered
by the priority protocol set forth in Schedule I to this Agreement are
offered to the Manager or to entities that are managed by subsidiaries of
Macquarie Bank Limited within the Infrastructure and Specialized Funds
Division (or any successor thereto) of the Macquarie Group ("ISF"), the
Manager will offer any such acquisition or investment opportunities to the
Company in accordance with such priority protocol unless the Chief
Executive Officer notifies the Manager in writing that the acquisition or
investment opportunity does not meet the Company's acquisition criteria,
as determined by the Board of Directors from time to time. The Company
acknowledges and agrees that (i) no Manager Affiliate has any obligation
to offer any acquisition or investment opportunities covered by the
priority protocol set forth in Schedule I to this Agreement to the Manager
or to ISF; (ii) any Manager Affiliate is permitted to establish further
investment vehicles that will seek to invest in infrastructure businesses
in the United States (a "NEW INVESTMENT VEHICLE"); provided that the
then-existing rights of the Company and the Managed Subsidiaries pursuant
to this Agreement are preserved; and (iii) in the event that an
acquisition or investment opportunity is offered to the Company by the
Manager and the Company determines that it does not wish to pursue the
acquisition or investment opportunity in full, any portion of the
opportunity which the Company does not wish to pursue may be offered to
any other Person, including a New Investment Vehicle or any other
Macquarie Managed Investment Vehicle, in the sole discretion of the
Manager or any Manager Affiliate;
(iv) attend to all matters necessary to ensure the professional
management of any Business controlled by the Company;
(v) identify, evaluate and recommend the sale of all or any part of
the Business owned by the Company from time to time in accordance with the
Company's criteria and policies then in effect and, if such proposed sale
is approved by the Boards of Directors of the Company and any relevant
Managed Subsidiary, negotiate and manage the execution of the sale on
behalf of the Company and such relevant Managed Subsidiary;
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(vi) recommend and, if approved by the Board of Directors of the
Company, use its reasonable efforts to procure the raising of funds
whether by way of debt, equity or otherwise, including the preparation,
review, distribution and promotion of any prospectus or offering
memorandum in respect thereof, but without any obligation to provide such
funds;
(vii) recommend to the Board of Directors of the Company amendments
and modifications to the LLC Agreement and this Agreement;
(viii) recommend to the Board of Directors of the Company capital
reductions including repurchases of LLC Interests and corresponding Trust
Stock;
(ix) recommend to the Board of Directors of the Company and, as
applicable, the Board of Directors of the Managed Subsidiaries the
appointment, hiring and dismissal (including all material terms related
thereto) of officers, staff and consultants to the Company, the Managed
Subsidiaries and any of their Subsidiaries, as the case may be;
(x) cause the carrying out of maintenance to, or development of, any
part of the Business or any asset of the Company or any Managed Subsidiary
approved by the Board of Directors of the Company;
(xi) when appropriate, recommend to the Board of Directors of the
Company nominees of the Company as directors of the Managed Subsidiaries
and any of their Subsidiaries or companies in which the Company, the
Managed Subsidiaries or any of their Subsidiaries has made an investment;
(xii) recommend to the Board of Directors of the Company the payment
of dividends and interim dividends to its Members;
(xiii) prepare all necessary budgets for submission to the Board of
Directors of the Company for approval;
(xiv) make recommendations to the Board of Directors of the Company
and the Managed Subsidiaries for the appointment of auditors, accountants,
legal counsel and other accounting, financial or legal advisers and
technical, commercial, marketing or other independent experts;
(xv) make recommendations with respect to the exercise of the voting
rights to which the Company or any of the Managed Subsidiaries is entitled
in respect of its investments;
(xvi) recommend and, subject to approval of the Company's Board of
Directors, provide or procure all necessary technical, business management
and other resources for Subsidiaries of the Company, including the Managed
Subsidiaries, and any other entities in which the Company has made an
investment;
(xvii) do all things necessary on its part to enable compliance by
the Company and each Managed Subsidiary, as applicable, with:
17
(A) the requirements of applicable law, including the Rules
and Regulations or the rules, regulations or procedures of any
foreign, federal, state or local governmental, judicial, regulatory
or administrative authority, agency or commission; and
(B) any contractual obligations by which the Company or any
Managed Subsidiary is bound;
(xviii) prepare and, subject to the approval of the Company's Board
of Directors (which approval shall not be unreasonably withheld, delayed
or conditioned), arrange to be filed on behalf of the Company with the
Securities and Exchange Commission, any other applicable regulatory body,
the NYSE or any other applicable stock exchange or automated quotation
system, in a timely manner, all annual, quarterly, current and other
reports the Company is required to file with the Securities and Exchange
Commission pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange
Act;
(xix) attend to all matters necessary for any reorganization,
bankruptcy proceedings, dissolution or winding up of the Company or any
Managed Subsidiary, subject to approval by the relevant Board of Directors
of the Company or any such Managed Subsidiary;
(xx) attend to the timely calculation and payment of Taxes payable,
and the filing of all Tax returns due, by the Company and each of its
Subsidiaries;
(xxi) attend to the opening, closing, operation and management of
all the Company and Managed Subsidiary bank accounts and the Company and
Managed Subsidiary accounts held with other financial institutions,
including making any deposits and withdrawals reasonably necessary for the
management of the Company's and the Managed Subsidiaries' day-to-day
operations;
(xxii) cause the consolidated financial statements of the Company
and its Subsidiaries for each Fiscal Year to be prepared and quarterly
interim financial statements to be prepared in accordance with applicable
accounting principles for review and audit at least to such extent and
with such frequency as may be required by law or regulation;
(xxiii) recommend the arrangements for the holding and safe custody
of the Company's property including the appointment of custodians or
nominees;
(xxiv) manage litigation in which the Company or any Managed
Subsidiary is sued or commence litigation after consulting with, and
subject to the approval of, the Board of Directors of the Company or such
Managed Subsidiary;
(xxv) carry out valuations of any of the assets of the Company or
any of its Subsidiaries or arrange for such valuation to occur as and when
the Manager deems necessary or desirable in connection with the
performance of its obligations hereunder, or as otherwise approved by the
Board of Directors of the Company;
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(xxvi) make recommendations in relation to and effect the entry into
insurance of the assets of the Company, the Managed Subsidiaries and their
Subsidiaries, together with other insurances against other risks,
including directors and officers insurance, as the Manager and the Board
of Directors of the Company or any Managed Subsidiary, as applicable, may
from time to time agree; and
(xxvii) provide all such other services as may from time to time be
agreed with the Company, including any and all accounting and investor
relations services (such as the preparation and organization of
communications with shareholders and shareholder meetings) and all other
duties reasonably related to the day-to-day operations of the Company and
the Managed Subsidiaries.
(c) In addition, the Manager must:
(i) obtain professional indemnity insurance and fraud and other
insurance and maintain such coverage as is reasonable having regard to the
nature and extent of the Manager's obligations under this Agreement;
(ii) exercise all due care, loyalty, skill and diligence in carrying
out its duties under this Agreement as required by applicable law;
(iii) provide the Board of Directors of the Company and/or the
Compensation Committee with all information in relation to the performance
of the Manager's obligations under this Agreement as the Board of
Directors and/or the Compensation Committee may reasonably request;
(iv) promptly deposit all amounts payable to the Company or the
Managed Subsidiaries, as the case may be, to a bank account held in the
name of the Company or the Managed Subsidiaries, as applicable;
(v) ensure that all property of the Company and the Managed
Subsidiaries is clearly identified as such, held separately from property
of the Manager and, where applicable, in safe custody;
(vi) ensure that all property of the Company and the Managed
Subsidiaries (other than money to be deposited to any bank account of the
Company or the Managed Subsidiaries, as the case may be) is transferred to
or otherwise held in the name of the Company or the Managed Subsidiaries,
as the case may be, or any nominee or custodian appointed by the Company
or the Managed Subsidiaries, as the case may be;
(vii) prepare detailed papers and agendas for scheduled meetings of
the Boards of Directors (and all committees thereof) of the Company and
the Managed Subsidiaries that, where applicable, contain such information
as is reasonably available to the Manager to enable the Boards of
Directors (and any such committees) to base their opinion; and
(viii) in conjunction with the papers referred to in paragraph (vii)
above, prepare or cause to be prepared reports to be considered by the
Boards of Directors of the
19
Company or the Managed Subsidiaries (or any applicable committee thereof)
in accordance with the Company's internal policies and procedures (1) on
any acquisition, investment or sale of any part of the Business proposed
for consideration by any such Board of Directors (or any applicable
committee thereof), (2) on the management of the Business and (3)
otherwise in respect of the performance of the Manager's obligations under
this Agreement, in each case that the Company may require and in such form
that the Company and the Manager agree or as otherwise reasonably
requested by any such Board of Directors (or any applicable committee
thereof).
(d) In connection with the performance of its obligations under this
Agreement, the Manager shall obtain approval of the Company's and any relevant
Managed Subsidiary's Board of Directors, in each case in accordance with the
Company's internal policy regarding action requiring Board approval or as
otherwise determined by any such Board of Directors (or any applicable committee
thereof) or the Company Officers.
Section 3.2 Obligations of the Company and the Managed Subsidiaries.
(a) The Company and the Managed Subsidiaries will do all things reasonably
necessary on their part as requested by the Manager consistent with the terms of
this Agreement to enable the Company, the Managed Subsidiaries and the Manager,
as the case may be, to fulfill their obligations under this Agreement.
(b) The Company and the Managed Subsidiaries must ensure that:
(i) each of their officers and employees, each of their Subsidiaries
and each of their Subsidiaries' officers and employees act in accordance
with the terms of this Agreement and the reasonable directions of the
Manager in fulfilling its obligations and exercising its powers under this
Agreement; and
(ii) the Company, the Managed Subsidiaries and each of their
Subsidiaries provide to the Manager all reports (including monthly
management reports and all other relevant reports) which the Manager may
reasonably require and on such dates as the Manager may reasonably
require.
(c) During the term of this Agreement, the Company must not (i)
issue LLC Interests or cause the Trust to issue or sell Trust Stock, (ii) amend
the LLC Agreement, (iii) make a decision to or effect a purchase or sale of any
assets of the Company or any Managed Subsidiary, or (iv) effect any capital
reduction, including a repurchase of Trust Stock or LLC Interests, in each case
without requesting and considering a recommendation from the Manager in relation
to the same. Notwithstanding the foregoing, without the prior written consent of
the Manager, the Company will not (x) make a decision to acquire or purchase, or
effect the acquisition or purchase of, any assets or businesses unless in the
reasonable opinion of the Board of Directors of the Company the acquisition or
purchase could not be expected to negatively affect the ability of the Trust to
maintain its dividend per share of Trust Stock in accordance with the then
existing dividend policy of the Company, or (y) amend any provision of the LLC
Agreement that affects the rights of the Manager thereunder or hereunder.
20
(d) The Company agrees that it will, and will cause each of its
wholly owned Subsidiaries to, give Manager Affiliates preferred provider status
in respect of any financial advisory services to be contracted for by the
Company or any of its wholly owned Subsidiaries, including, but not limited to,
asset acquisitions, refinancings, advice on mergers and acquisitions, debt and
equity raising, hedging activities and the like. Such services will be
contracted for on an arm's-length basis on market terms and will be subject to
approval by the Independent Directors (or a committee thereof, comprised of at
least three independent directors) in accordance with the Company's internal
policies related to conflicts of interest and related party transactions. The
Independent Directors (or a committee thereof, comprised of at least three
independent directors) may take whatever measures they deem prudent to confirm
the arm's length basis of any fees to be paid to any Manager Affiliate. Any fees
payable to any Manager Affiliate in respect of such financial advisory services
will be in addition to all amounts owing under Article VII.
(e) The Company agrees that, in connection with the performance of
its obligations hereunder, the Manager may recommend to the Company, and on
behalf of the Company may engage, in transactions with Manager Affiliates,
provided that any such transactions will be subject to the Company's internal
policies regarding conflicts of interest and related party transactions.
(f) The Company will ensure that it maintains at least three
Independent Directors.
(g) The Company will take any and all actions necessary to ensure
that it does not become an "investment company" as defined in Section 3(a)(1) of
the Investment Company Act of 1940, as amended, as such Section may be amended
from time to time, or any successor provision thereto.
(h) The Company shall grant rights to indemnification, and rights to
be paid by the Company the expenses incurred in defending any proceeding in
advance of its final disposition, to each person seconded to the Company by the
Manager, in their respective capacities at the Company, in each case to the
fullest extent of the provisions of the LLC Agreement with respect to the
indemnification and advancement of expenses of directors and officers of the
Company, and shall maintain adequate directors and officers insurance customary
for publicly traded companies with comparable market capitalization, at its
expense.
ARTICLE IV
POWERS OF THE MANAGER
Section 4.1 Powers of the Manager. (a) The Manager shall have no
power to enter into any contract or subject the Company or the Managed
Subsidiaries to any obligation, such power to be the sole right and obligation
of the Company, acting through its Board of Directors and/or Company Officers,
or of the applicable Managed Subsidiary, acting through its Board of Directors
and/or officers.
21
(b) In accordance with the terms of the LLC Agreement, for so long
as the Manager or any Manager Affiliate holds shares of Trust Stock with an
aggregate value of no less than $5.0 million, based on the per share price of
the shares sold in the initial public offering (as adjusted to reflect any
subsequent stock splits or similar recapitalizations), the Manager shall have
the right to appoint one suitably qualified person as a director of the
Company's Board of Directors and an alternate for such appointee, and such
director, or alternate if applicable, shall serve as the Chairman. The Company
shall cause such appointees to be appointed as Chairman of the Board of
Directors and as alternate therefor, as soon as reasonably practicable after
notice of such appointment has been given to the Company by the Manager.
(c) The Manager shall have the power to engage any agents (including
real estate agents and managing agents), valuers, contractors and advisers
(including accounting, financial, tax and legal advisers) that it deems
necessary or desirable in connection with the performance of its obligations
hereunder, which costs therefor will be subject to reimbursement under Section
9.1(k), subject to applicable law.
Section 4.2 Delegation. The Manager may delegate or appoint (a) any
Manager Affiliate as an agent, at its expense, in respect of all or any of its
duties and powers to manage the Business and affairs of the Company or (b) any
other Person as agent, at its expense, in respect of any of its duties and
powers to manage the Business and affairs of the Company which, in its sole
discretion, are not critical to the ability of the Manager to perform its
obligations hereunder; provided, however, that in either case the Manager shall
not be relieved of any of its responsibilities or obligations to the Company as
a result of such delegation. The Manager shall be permitted to share Company
information with its appointed agents subject to appropriate confidentiality
arrangements.
Section 4.3 Manager's Duties Exclusive. The Company and the Managed
Subsidiaries agree that during the term of this Agreement the duties and
obligations imposed on the Manager under Article III are to be performed
exclusively by the Manager or its delegates or agents and the Company and the
Managed Subsidiaries will not, through the exercise of the powers of their
employees, Boards of Directors or their shareholders or members, as the case may
be, perform the duties and obligations to be performed by the Manager except in
circumstances where it is necessary to do so to comply with applicable law or as
otherwise agreed by the Manager in writing.
ARTICLE V
INSPECTION OF RECORDS
Section 5.1 Books and Records. At all reasonable times and on
reasonable notice, any person authorized by the Company or by any of the Managed
Subsidiaries may inspect and audit the records and books of the Manager kept
pursuant to this Agreement.
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ARTICLE VI
AUTHORITY OF THE COMPANY,
THE MANAGED SUBSIDIARIES AND THE MANAGER
Each Party represents to the others that it is duly authorized with
full power and authority to execute, deliver and perform this Agreement. The
Company and each Managed Subsidiary represents that the engagement of the
Manager has been duly authorized by the Company and each Managed Subsidiary and
is in accordance with all governing documents of the Company and each Managed
Subsidiary.
ARTICLE VII
MANAGEMENT FEES
For the services provided and the expenses assumed pursuant to this
Agreement, the Company and the Managed Subsidiaries will pay the Manager, and
the Manager agrees to accept as full compensation therefor, the fees set forth
in this Article VII.
Section 7.1 Structuring Fee. Within five Business Days of the
Commencement Date, the Company and the Managed Subsidiaries will pay the Manager
in cash a fee (the "STRUCTURING FEE") in the total amount of USD8,000,000. The
Structuring Fee will be allocated between the Company and the Managed
Subsidiaries in accordance with the Company's corporate allocation policy and
otherwise in accordance with GAAP.
Section 7.2 Base Management Fees. (a) The Manager is entitled to
receive a Base Management Fee in respect of each Fiscal Quarter.
(b) The Base Management Fee for a Fiscal Quarter is to be calculated
by the Manager as of the Fiscal Quarter End Date for the relevant Fiscal Quarter
and notice of such Base Management Fee calculation shall be provided to the
Company and the Compensation Committee within 20 Business Days after that Fiscal
Quarter End Date.
(c) The Base Management Fee calculated pursuant to Section 7.2(b)
above will be allocated between the Company and the Managed Subsidiaries in
accordance with the Company's corporate allocation policy and otherwise in
accordance with GAAP.
(d) The Base Management Fee to which the Manager is entitled under
this Section 7.2 is due at the Fiscal Quarter End Date of the relevant Fiscal
Quarter and is payable in cash by the Company and the Managed Subsidiaries (in
accordance with the allocation pursuant to Section 7.2(c) above) to the Manager
within 10 Business Days of receipt by the Company of notification pursuant to
Section 7.2(b), subject to Section 7.2(e).
(e) The Manager has the right but not the obligation to invest all
or a portion of the Base Management Fee to which the Manager is entitled under
this Section 7.2 in Trust Stock.
23
(i) If the Manager determines to invest all or any portion of its
Base Management Fee with respect to a Fiscal Quarter in Trust Stock, the
Manager shall be entitled to purchase, upon payment, that number of shares
of Trust Stock equal to such amount of the Base Management Fee divided by
the volume weighted average trading price of a share of Trust Stock during
the Share Price Period beginning after the relevant Fiscal Quarter.
(ii) In the event the Manager determines to invest all or any
portion of its Base Management Fee in Trust Stock, it shall notify the
Company and the Compensation Committee at the time of the notification
pursuant to Section 7.2(b) and the Trust Stock shall be issued to the
Manager on the Business Day immediately following the last day of the
relevant Share Price Period. The Manager may apply amounts owing to it
pursuant to this Section 7.2 against amounts payable by the Manager in
relation to the subscription for Trust Stock.
Section 7.3 Performance Fee. (a) The Manager shall be entitled to
receive the applicable Performance Fee, if any, in respect of each Fiscal
Quarter.
(b) The Performance Fee, Performance Test Return and Performance
Test Benchmark Return for a Fiscal Quarter is to be calculated by the Manager as
of the Fiscal Quarter End Date for the relevant Fiscal Quarter and notice of
such Performance Fee, Performance Test Return and Performance Test Benchmark
Return, including the calculation thereof, shall be provided to the Company and
the Compensation Committee within 20 Business Days after that Fiscal Quarter End
Date.
(c) The Performance Fee calculated pursuant to Section 7.3(b) above
will be allocated between the Company and the Managed Subsidiaries in accordance
with the Company's corporate allocation policy and otherwise in accordance with
GAAP.
(d) The Performance Fee, if any, to which the Manager is entitled
under this clause is due at the Fiscal Quarter End Date of the relevant Fiscal
Quarter and is payable in cash by the Company and the Managed Subsidiaries (in
accordance with the allocation pursuant to Section 7.3(c) above) to the Manager
within 10 Business Days of receipt by the Company of notification pursuant to
Section 7.3(b), subject to Section 7.3(e).
(e) The Manager has the right but not the obligation to invest all
or a portion of the Performance Fee to which the Manager is entitled under this
Section 7.3 in Trust Stock.
(i) If the Manager determines to invest all or any portion of its
Performance Fee with respect to a Fiscal Quarter in Trust Stock, the
Manager shall be entitled to purchase, upon payment, that number of shares
of Trust Stock equal to such amount of the Performance Fee divided by the
volume weighted average trading price of a share of Trust Stock during the
Share Price Period beginning after the relevant Fiscal Quarter End Date.
(ii) In the event the Manager determines to invest all or any
portion of its Performance Fee in Trust Stock, it shall notify the Company
and the Compensation Committee at the time of the notification pursuant to
Section 7.3(b) and the Trust Stock
24
shall be issued to the Manager on the Business Day immediately following
the last day of the relevant Share Price Period. The Manager may apply
amounts owing pursuant to this Section 7.3 against amounts payable by the
Manager in relation to the subscription for Trust Stock.
(f) The Manager will notify the Company and the Compensation
Committee of the Net Equity Value, Foreign Net Equity Value and U.S. Net Equity
Value, and the calculations thereof, to be applied in the calculation of the
Performance Fees payable in the then current Fiscal Quarter within 30 Business
Days of the Fiscal Quarter End Date for the immediately prior Fiscal Quarter or,
in the case of the initial Fiscal Quarter, within 30 Business Days of the
Commencement Date.
(g) The Manager will notify the Company and the Compensation
Committee of the Additional Offering Foreign Net Equity Value and Additional
Offering U.S. Net Equity Value, and the calculations thereof, to be applied in
the calculation of the Performance Fees payable in the then current Fiscal
Quarter within 30 Business Days of the first day of trading of the relevant
Additional Offering.
Section 7.4 Registration Rights. On the Commencement Date, the
Company and the Manager will enter into a registration rights agreement whereby
the Company shall undertake to register with the Securities and Exchange
Commission the offer and resale of any shares of Trust Stock purchased by the
Manager, including but not limited to shares of Trust Stock purchased as the
Initial Investment pursuant to Section 2.2 and shares of Trust Stock purchased
pursuant to this Article VII.
Section 7.5 Ability to Issue Trust Stock. The Company will, and will
cause the Trust to, at all times have reserved a sufficient number of LLC
Interests and shares of Trust Stock, respectively, to enable the Manager to
invest all reasonably foreseeable fees received in shares of Trust Stock.
ARTICLE VIII
SECONDMENT OF PERSONNEL BY THE MANAGER
Section 8.1 Secondment of CEO and CFO. The Manager will arrange for
the secondment to the Company on a wholly dedicated basis of individuals
acceptable to the Company's Board of Directors to serve as Chief Executive
Officer and Chief Financial Officer. The Company's Board of Directors will elect
the seconded Chief Executive Officer and Chief Financial Officer as Officers of
the Company in accordance with the terms of the LLC Agreement.
Section 8.2 Remuneration of CEO and CFO. (a) The Chief Executive
Officer and Chief Financial Officer seconded to the Company pursuant to this
Article VIII will, at all times, remain employees of, and be remunerated by, the
Manager or a Manager Affiliate. The services performed by the Chief Executive
Officer and the Chief Financial Officer will be provided at the cost of the
Manager or a Manager Affiliate.
25
(b) In establishing the level of remuneration for each of the Chief
Executive Officer and the Chief Financial Officer, the Manager or a Manager
Affiliate will reflect the following considerations:
(i) the standard remuneration guidelines as adopted by the Manager
or a Manager Affiliate from time to time;
(ii) assessment by the Manager or a Manager Affiliate of the
respective individual's performance, the Manager's performance and the
performance, financial or otherwise, of the Company and its Subsidiaries;
and
(iii) assessment by the Board of Directors of the Company of the
respective individual's performance and the performance of the Manager.
(c) The Manager will disclose the amount of remuneration of the
Chief Executive Officer and Chief Financial Officer to the Board of Directors of
the Company to the extent required for the Company to comply with the
requirements of applicable law, including the Rules and Regulations.
Section 8.3 Secondment of Additional Personnel. The Manager and the
Board of Directors of the Company may agree from time to time that the Manager
will second to the Company one or more additional individuals to serve as
officers or otherwise of the Company, upon such terms as the Manager and the
Board of Directors of the Company may mutually agree. Any such individuals will
have such titles and fulfill such functions as the Manager and the Company may
mutually agree.
Section 8.4 Removal of Seconded Individuals. The Board of Directors
of the Company, after due consultation with the Manager, may at any time request
that the Manager replace any individual seconded to the Company as provided in
this Article VIII and the Manager shall, as promptly as practicable, replace any
individual with respect to whom the Board of Directors shall have made its
request.
Section 8.5 Indemnification. The Company shall grant rights to
indemnification, and rights to be paid by the Company the expenses incurred in
defending any proceeding in advance of its final disposition, to any individuals
seconded to the Company as provided in this Article VIII in their respective
capacities and in each case to the fullest extent of the provisions of the LLC
Agreement.
ARTICLE IX
EXPENSE REIMBURSEMENT
Section 9.1 Company Expenses. The Company and the Managed
Subsidiaries agree, jointly and severally, to indemnify and reimburse the
Manager for, or pay on demand, all Costs incurred in relation to the proper
performance of its powers and duties under this Agreement or in relation to the
administration or management of the Company. All Costs
26
incurred by the Manager to be reimbursed hereunder shall be included in the
annual budget for the Company to be approved by the Company's Board of Directors
and shall be subject to review and approval by the Audit Committee of the Board
of Directors of the Company. This includes, but is not limited to, Costs
incurred by the Manager with respect to:
(a) the performance by the Manager of its obligations under this
Agreement;
(b) all fees required to be paid to the Securities and Exchange
Commission;
(c) the acquisition, disposition, insurance, custody and any other
transaction in connection with assets of the Company or any Managed
Subsidiary, provided that no reimbursement will be made except for Costs
that have been authorized by the Company and the relevant Managed
Subsidiary;
(d) any proposed acquisition, disposition or other transaction in
connection with an investment provided that no reimbursement will be made
except for Costs that have been authorized by the Company and the relevant
Managed Subsidiary;
(e) the administration or management of the Company, the Managed
Subsidiaries and the Business, including travel and accommodation expenses
and all expenses of the relevant Boards of Directors and committees
thereof, including Director compensation and out of pocket reimbursement.
The Manager appointed member of the Company's Board of Directors shall
only receive out of pocket reimbursement for Board participation;
(f) financing arrangements on behalf of the Company or any Managed
Subsidiary or guarantees in connection with the Company or any Managed
Subsidiary, including hedging Costs;
(g) stock exchange listing fees;
(h) underwriting of any offer and sale of Trust Stock, including
underwriting fees, handling fees, costs and expenses, amounts payable
under indemnification or reimbursement provisions in the underwriting
agreement and any amounts becoming payable in respect of any breach (other
than for negligence, fraud or breach of duty) by the Manager of its
obligations, representations or warranties (if any) under any such
underwriting agreement;
(i) convening and holding meetings of holders of Trust Stock,
Members or shareholders, as the case may be, the implementation of any
resolutions and communications with holders of Trust Stock or Members or
shareholders, as the case may be, and attending any meetings of
shareholders, Members, Boards of Directors or committees of the Company or
the Managed Subsidiaries;
(j) Taxes incurred by the Manager on behalf of the Company or any
Subsidiary (including any amount charged by a supplier of goods or
services or both to the Manager by way of or as a reimbursement for value
added taxes) and financial institution fees;
27
(k) the engagement of agents (including real estate agents and
managing agents), valuers, contractors and advisers (including accounting,
financial, tax and legal advisers) whether or not the agents, valuers,
contractors or advisers are associates of the Manager;
(l) engagement of accountants for the preparation and/or audit of
financial information, financial statements and tax returns of the Company
and the Managed Subsidiaries;
(m) termination of this Agreement and the retirement or removal of
the Manager and the appointment of a replacement;
(n) any court proceedings, arbitration or other dispute concerning
the Company or any of the Managed Subsidiaries, including proceedings
against the Manager, except to the extent that the Manager is found by a
court to have acted with gross negligence, willful misconduct, bad faith
or reckless disregard of its duties in carrying out its obligations under
this Agreement, or engaged in fraudulent or dishonest acts, in which case
any expenses paid or reimbursed under this Section 9.1(n) must be repaid;
(o) advertising Costs of the Company or any of the Managed
Subsidiaries generally;
(p) any Costs related to promoting the Company, including Costs
associated with investor relations activities; and
(q) complying with any other applicable law or regulation.
ARTICLE X
RESIGNATION AND REMOVAL OF THE MANAGER
Section 10.1 Resignation by the Manager. (a) The Manager may resign
from its appointment as Manager and terminate this Agreement upon 90 days'
written notice to the Company. If the Manager resigns pursuant to this Section
10.1(a), until the date on which the resignation becomes effective, the Manager
will, upon request of the Board of Directors of the Company, use reasonable
efforts to assist the Board of Directors of the Company to find replacement
management.
(b) If there is a Delisting Event, then
(i) unless otherwise approved in writing by the Manager: (A) any
proceeds from the sale, lease or exchange of the assets of the Company or
any of its Subsidiaries, subsequent to the Delisting Event, in one or more
transactions, which in aggregate exceeded 15% of the value of the Trust
(as calculated by multiplying the price per share of Trust Stock stated in
clause (i) of the definition of Termination Fee by the aggregate
28
number of shares of Trust Stock issued and outstanding, other than
treasury shares, on the date of the Delisting Event) shall be reinvested
in new assets of the Company (other than cash or cash equivalents) within
six months of the date on which the aggregate proceeds from such
transaction or transactions exceeded 15% of the value of the Trust;
(B) neither the Company nor any of its Subsidiaries shall
incur any new indebtedness or engage in any transactions with the
shareholders of the Trust, the Company or Affiliates of shareholders
of the Trust or the Company; and
(C) the Macquarie Group shall no longer have any obligation to
provide investment opportunities to the Company pursuant to the
Priority Protocol on Schedule 1 hereto, which Priority Protocol
shall terminate immediately; and
(ii) the Manager shall, as soon as practicable, provide a proposal
for an alternate method to calculate fees to act as Manager on
substantially similar terms as set forth in this Agreement to the Board of
Directors for approval, which approval shall not be unreasonably withheld
or delayed; or
(iii) the Manager may elect to resign from its appointment as
Manager and terminate this Agreement upon 30 days' written notice to the
Company and be paid the Termination Fee within 45 days of such notice.
Section 10.2 Removal of the Manager. (a) The Manager's appointment
and this Agreement may be terminated upon notice of the Board of Directors of
the Company only if:
(i) the Performance Test Return (as calculated by the Manager and
approved by the Compensation Committee as of a Fiscal Quarter End Date
(which approval shall not be unreasonably withheld, delayed or
conditioned)) is both:
(A) less than the number calculated by:
i) multiplying the Performance Test Benchmark Return
(as calculated by the Manager and approved by the
Compensation Committee as of such Fiscal Quarter
End Date (which approval shall not be unreasonably
withheld, delayed or conditioned) by 0.7 if such
Performance Test Benchmark Return is greater than
0 or
ii) multiplying the Performance Test Benchmark Return
(as calculated by the Manager and approved by the
Compensation Committee as of such Fiscal Quarter
End Date) by 1.3 if such Performance Test
Benchmark Return is less than 0; and
(B) less than the number calculated by subtracting 0.025
(2.5 percent) from the Performance Test Benchmark Return
(as calculated by the Manager and approved by the
Compensation Committee as of such Fiscal Quarter End
Date (which approval shall not be unreasonably withheld,
delayed or conditioned))
29
in 16 out of 20 consecutive Fiscal Quarters prior to and including the
most recent full Fiscal Quarter and the holders of a minimum of 66 2/3% of
Trust Stock, excluding from such calculation any Trust Stock owned by the
Manager or any Manager Affiliate, vote to remove the Manager;
(ii) the Manager pursuant to or within the meaning of any Bankruptcy
Law:
(A) commences a voluntary case;
(B) consents to the entry of an order for relief against it
in an involuntary case;
(C) consents to the appointment of a Custodian of it or for
all or substantially all of its property; or
(D) makes a general assignment for the benefit of its
creditors;
(iii) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(A) is for relief against the Manager in an involuntary
case;
(B) appoints a Custodian of the Manager or for all or
substantially all of its property; or
(C) orders the liquidation of the Manager;
and the order or decree remains unstayed and in effect for 90 days;
(iv) the Manager is in material breach of its obligations under this
Agreement and such breach continues for a period of 60 days after notice
thereof is given; or
(v) the Manager shall have (A) acted with gross negligence, willful
misconduct, bad faith or reckless disregard of its duties in carrying out
its obligations under this Agreement or (B) engaged in fraudulent or
dishonest acts.
(b) If the Manager's appointment is terminated pursuant to this
Section 10.2, all directors, executives, employees, representatives, secondees,
assignees and delegates of the Manager and Manager Affiliates within ISF who are
performing the services that are the subject of this Agreement will cease work
at the date of the Manager's termination or at any other time as determined by
the Manager.
Section 10.3 Withdrawal of Branding. Upon termination of this
Agreement pursuant to Section 10.1(a), within 30 days of notice of resignation
of the Manager pursuant to Section 10.1(b)(iii) or within 30 days of termination
pursuant to Section 10.2, the Company and the Managed Subsidiaries will cease to
use, and will cause their Subsidiaries to cease to use, the Macquarie brand
entirely including (without limitation) changing their respective names, and
causing the Trust to change its name, to remove any reference to "Macquarie",
provided that, to
30
the extent the Board of Directors of the Company deems it necessary or
advisable, the Trust, the Company and the Managed Subsidiaries may use
"Macquarie" when referencing their previous names.
Section 10.4 Resignation of the Chairman and the Seconded Officers.
Upon the termination of this Agreement, each of the Chairman, his or her
alternate, the Chief Executive Officer, the Chief Financial Officer and any
other individuals seconded to the Company pursuant to Article VIII shall resign
his or her respective position with the Company.
Section 10.5 Directions. After a written notice of termination has
been given under this Article X, the Company may direct the Manager to undertake
any actions necessary to transfer any aspect of the ownership or control of the
assets of the Company to the Company or to any nominee of the Company and to do
all other things necessary to bring the appointment of the Manager to an end,
and the Manager will comply with all such reasonable directions. In addition,
the Manager must at the Company's expense deliver to new management or the
Company any books or records held by the Manager under this Agreement and must
execute and deliver such instruments and do such things as may reasonably be
required to permit new management of the Company to effectively assume its
responsibilities.
ARTICLE XI
INDEMNITY
Section 11.1 Indemnification of Manager. The Company and each
Managed Subsidiary, jointly and severally, agrees to indemnify the Manager, any
controlling person of the Manager, and each of their respective directors,
officers, employees, agents, Affiliates and representatives (each, an
"INDEMNIFIED PARTY") and hold each of them harmless against any and all losses,
(including lost profits) claims, damages, expenses or liabilities, joint or
several (collectively, "LIABILITIES"), to which the Indemnified Parties may
become liable, directly or indirectly, arising out of, or relating to, this
Agreement, unless it is finally judicially determined that the Liabilities
resulted from the gross negligence, willful misconduct, bad faith or reckless
disregard of duty of any Indemnified Party or fraudulent or dishonest acts of
such Indemnified Party. The Company and the Managed Subsidiaries further agree
to reimburse each Indemnified Party immediately upon request for all expenses
(including reasonable attorneys' fees and expenses) as they are incurred in
connection with the investigation of, preparation for, defense of, or providing
evidence in any action, claim, suit, proceeding or investigation, directly or
indirectly, arising out of, or relating to, this Agreement or the Manager's
services hereunder, whether or not pending or threatened and whether or not any
Indemnified Party is a party to such proceeding. The Company and the Managed
Subsidiaries also agree that no Indemnified Party shall have any liability
(whether direct or indirect, in contract or tort or otherwise) to the Company,
the Managed Subsidiaries, or any person asserting claims on behalf of or in
right of the Company or the Managed Subsidiaries, directly or indirectly,
arising out of, or relating to, this Agreement or the Manager's services
thereunder, unless it is finally judicially determined that such Liability
resulted from the gross negligence, willful misconduct, bad faith or reckless
disregard of duty of such Indemnified Party or fraudulent or dishonest acts of
such Indemnified
31
Party. Moreover, in no event, regardless of the legal theory advanced, shall any
Indemnified Party be liable to the Company, the Managed Subsidiaries, or any
person asserting claims on behalf of or in the right of the Company or the
Managed Subsidiaries for any consequential, indirect, incidental or special
damages of any nature. In the event that an Indemnified Party is requested or
required to appear as a witness in any action brought by or on behalf of or
against the Company or the Managed Subsidiaries or any Affiliate of the Company
or the Managed Subsidiaries in which such Indemnified Party is not named as a
defendant, the Company and the Managed Subsidiaries agree to reimburse the
Manager for all expenses incurred by it in connection with such Indemnified
Party's appearing and preparing to appear as such a witness, including, without
limitation, the reasonable fees and disbursements of its legal counsel.
The Company and the Managed Subsidiaries agree that, without the
Manager's prior written consent, they will not settle, compromise or consent to
the entry of any judgment in or otherwise seek to terminate any claim, action,
suit, proceeding or investigation in respect of which indemnification could be
sought hereunder (whether or not the Manager or any other Indemnified Party is
an actual or potential party to such claim, action, suit, proceeding or
investigation), unless (a) such settlement, compromise, consent or termination
includes an unconditional release of each Indemnified Party from any liabilities
arising out of such claim action, suit, proceeding or investigation and (b) the
parties agree that the terms of such settlement shall remain confidential.
Section 11.2 Indemnification of Company. The Manager agrees to
indemnify the Company and the Trust and hold each of them harmless against any
Liabilities to the same extent as the foregoing indemnity from the Company and
the Managed Subsidiaries to the Manager, but only insofar as it is finally
judicially determined that the Liabilities arose out of or were based on the
gross negligence, willful misconduct, bad faith or reckless disregard of duty of
the Manager in the performance of its duties under this Agreement or its
fraudulent or dishonest acts.
Section 11.3 Indemnification. The rights of the Indemnified Parties
referred to above shall be in addition to any rights that any Indemnified Party
may otherwise have. The indemnities referred to in this Article XI survive the
termination of this Agreement.
ARTICLE XII
LIMITATION OF LIABILITY OF THE MANAGER
Section 12.1 Limitation of Liability. The Manager shall not be
liable for, and the Company and the Managed Subsidiaries will not take any
action against the Manager to hold the Manager liable for, any error of judgment
or mistake of law or for any loss suffered by the Company and the Managed
Subsidiaries (including, without limitation, by reason of the purchase, sale or
retention of any security) in connection with the performance of the Manager's
duties under this Agreement, except for a loss resulting from gross negligence,
willful misconduct or bad faith on the part of the Manager in the performance of
its duties under this Agreement, or by reason of its reckless disregard of its
obligations and duties under this Agreement or its fraudulent or dishonest acts.
32
Section 12.2 Manager May Rely. The Manager may take and may act
upon:
(a) the opinion or advice of legal counsel, which may be in-house
counsel to the Company or the Manager, any U.S.-based law firm of
recognized standing, or other legal counsel reasonably acceptable to the
Board of Directors of the Company, in relation to the interpretation of
this Agreement or any other document (whether statutory or otherwise) or
generally in connection with the Company;
(b) advice, opinions, statements or information from bankers,
accountants, auditors, valuation consultants and other persons consulted
by the Manager who are in each case believed by the Manager in good faith
to be expert in relation to the matters upon which they are consulted;
(c) a document which the Manager believes in good faith to be the
original or a copy of an appointment by a Member in respect of an LLC
Interest or holder of a Trust Certificate in respect of a share of Trust
Stock of a person to act as their agent for any purpose connected with the
Company; and
(d) any other document provided to the Manager in connection with
the Company upon which it is reasonable for the Manager to rely;
and the Manager will not be liable for anything done, suffered or omitted by it
in good faith in reliance upon such opinion, advice, statement, information or
document.
ARTICLE XIII
LEGAL ACTIONS
Section 13.1 Third Party Claims. (a) The Manager will notify the
Company promptly of any claim made by any third Party in relation to the assets
of the Company and will send to the Company any notice, claim, summons or writ
served on the Manager concerning the Company.
(b) The Manager will not without the express written consent of the
Board of Directors of the Company purport to accept any claims or liabilities of
which it receives notification pursuant to Section 13.1(a) above on behalf of
the Company or any Managed Subsidiaries or make any settlement or compromise
with any third Party in respect of the Company.
33
ARTICLE XIV
MISCELLANEOUS
Section 14.1 Obligation of Good Faith; No Fiduciary Duties. The
Manager must perform its duties under this Agreement in good faith and for the
benefit of the Company. The relationship of the Manager to the Company and the
Managed Subsidiaries is as an independent contractor and nothing in this
Agreement shall be construed to impose on the Manager an express or implied
fiduciary duty.
Section 14.2 Compliance. (a) The Manager must (and must ensure that
each of its officers and agents) comply with any law, including the Rules and
Regulations and the NYSE Rules, to the extent that it concerns the functions of
the Manager under this Agreement.
(b) The Manager must maintain management systems, policies,
procedures and internal contracts that reasonably ensure that the Manager
observes its duties and obligations under this Agreement.
Section 14.3 Effect of Termination. Termination of this Agreement
shall not affect (i) the right of the Manager to receive payments on any unpaid
balance of the compensation described in Article VII hereof earned prior to such
termination and for any additional period during which the Manager serves as
such for the Company or the Managed Subsidiaries or to receive reimbursement of
expenses pursuant to Article IX hereof, in each case subject to applicable law
or (ii) the obligations of the parties hereto under Sections 10.3 and 10.5.
Section 14.4 Notices. Any notice under this Agreement shall be
sufficient in all respects if given in writing and delivered by commercial
courier providing proof of delivery or sent by facsimile and addressed as
follows or addressed to such other person or address as such Party may designate
in writing for receipt of such notice.
If to the Company or the Managed Subsidiaries:
600 Fifth Avenue, 21st Floor
New York, New York, 10020
Facsimile: (212) 581-8037
Attention: David Mitchell
If to the Manager:
Macquarie Infrastructure Management (USA) Inc.
600 Fifth Avenue, 21st Floor
New York, New York, 10020
Facsimile: (212) 581-8037
Attention: David Mitchell
Section 14.5 Captions. The captions in this Agreement are included
for convenience of reference only and in no way define or delimit any of the
provisions hereof or
34
otherwise affect their construction or effect. This Agreement will be binding
upon and shall inure to the benefit of the Parties hereto and their respective
successors.
Section 14.6 Applicable Law. This Agreement shall be construed in
accordance with the laws of the State of New York.
Section 14.7 Amendment. This Agreement may only be amended, or its
provisions modified or waived, in a writing signed by the Party against which
such amendment, modification or waiver is sought to be enforced.
Section 14.8 Severability. Each provision of this Agreement is
intended to be severable from the others so that if, any provision or term
hereof is illegal or invalid for any reason whatsoever, such illegality or
invalidity shall not affect the validity of the remaining provisions and terms
hereof, provided, however, that the provisions governing payment of the
Management Fee described in Article VII hereof are not severable.
Section 14.9 Entire Agreement. This Agreement constitutes the sole
and entire agreement of the Parties with regards to the subject matter of this
Agreement. Any written or oral agreements, statements, promises, negotiations or
representations not expressly set forth in this Agreement are of no force and
effect.
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]
35
IN WITNESS WHEREOF, the Company, the Managed Subsidiaries and the
Manager have caused this Agreement to be executed as of the day and year first
above written.
MACQUARIE INFRASTRUCTURE MACQUARIE INFRASTRUCTURE
COMPANY LLC MANAGEMENT (USA) INC.
/s/ Peter Stokes /s/ John B. Mullin
By: ----------------------------------- By: --------------------------------
Name: Peter Stokes Name: John B. Mullin
Title: Chief Executive Officer Title: Secretary/Treasurer
MACQUARIE INFRASTRUCTURE
COMPANY INC
By: /s/ Peter Stokes
-----------------------------------
Name: Peter Stokes
Title: Chief Executive Officer
MACQUARIE YORKSHIRE LLC
By: Macquarie Infrastructure Company LLC, as
Managing Member of Macquarie Yorkshire LLC
By: /s/ Peter Stokes
-----------------------------------
Name: Peter Stokes
Title: Chief Executive Officer
SOUTH EAST WATER LLC
By: Macquarie Infrastructure Company LLC, as
Managing Member of South East Water LLC
By: /s/ Peter Stokes
-----------------------------------
Name: Peter Stokes
Title: Chief Executive Officer
COMMUNICATIONS INFRASTRUCTURE LLC
By: Macquarie Infrastructure Company LLC, as
Managing Member of Communications Infrastructure LLC
By: /s/ Peter Stokes
-----------------------------------
Name: Peter Stokes
Title: Chief Executive Officer
Acknowledged: for purposes of Article VII.
MACQUARIE INFRASTRUCTURE COMPANY TRUST
By: MACQUARIE INFRASTRUCTURE
COMPANY LLC, as Sponsor
By: /s/ Peter Stokes
-----------------------------------
Name: Peter Stokes
Title: Chief Executive Officer
SCHEDULE I
PRIORITY PROTOCOL
The Company has first priority ahead of all current and future entities managed
by the Manager or by members of the Macquarie Group within the ISF in each of
the following infrastructure acquisition opportunities that are within the
United States:
- airport fixed base operations,
- district energy,
- airport parking and
- User Pays Assets, Contracted Assets and Regulated Assets that
represent an investment of greater than AUD 40 million, subject to
the Existing Qualifications set forth below.
The above priority of the Company in User Pays Assets, Contracted Assets and
Regulated Assets is subject to the following (collectively, the "EXISTING
QUALIFICATIONS"):
Roads: The Company has second
priority after Macquarie
Infrastructure Group.
Airport Ownership: The Company has second
priority after Macquarie
Airports (consisting of
Macquarie Airports Group
(MAG) and Macquarie Airports
(MAp)).
Communications: The Company has second
priority after Macquarie
Communications
Infrastructure Group.
Regulated Assets (including, but not limited to, The Company has second
electricity and gas transmission and distribution priority after Macquarie
and water services): Essential Assets
Partnership (MEAP) until
such time as MEAP has
invested a further CAD 45
million in the United
States. Thereafter, the
Company will have first
priority.
The Company has first priority ahead of all current and future entities managed
by the Manager or any Manager Affiliate in all investment opportunities
originated by a party other than the Manager or any Manager Affiliate where such
party offers the opportunity exclusively to the Company and not to any other
entity under the management of the Manager or any Manager Affiliate within ISF.
38