LIMITED LIABILITY COMPANY AGREEMENT OF ENERGY XXI ONSHORE, LLC
OF
This
Limited Liability Company Agreement (this “Agreement”)
of ENERGY XXI ONSHORE, LLC is entered into this 1st day of December, 2008 by the
sole member, Energy XXI GOM, LLC (the “Member”)
pursuant to and in accordance with the Delaware Limited Liability Company Act (6
Del.C. §
18-101, et
seq.), as
amended from time to time (the “Act”).
1. Name. The
name of the limited liability company governed hereby is ENERGY XXI ONSHORE, LLC
(the “Company”).
2. Certificate of
Conversion. The Member filed the Certificate of Conversion of
the Company converting from a Delaware limited partnership named “Energy XXI
Texas, LP” with the Secretary of State of the State of Delaware on December 1,
2008.
3. Purpose. The
Company is formed for the object and purpose of, and the nature of the business
to be conducted and promoted by the Company is, engaging in all lawful
activities for which limited liability companies may be formed under the
Act.
4. Powers. The
Company shall have the power to do any and all acts reasonably necessary,
appropriate, proper, advisable, incidental or convenient to or for the
furtherance of the purpose and business described herein and for the protection
and benefit of the Company, and shall have, without limitation, any and all of
the powers that may be exercised on behalf of the Company by the Board of
Managers pursuant to this Agreement, including Section 18. The Board
of Managers shall cause all filings as it believes necessary or as are required
by applicable law to give effect to the provisions of this Agreement to be made
and to cause the Company to be treated as a limited liability company under the
laws of State of Delaware.
5. Principal Business
Office. The principal place of business and office of the
Company shall be located at, and the Company’s business shall be conducted from,
such place or places as may hereafter be determined by the Board of
Managers.
6. Registered
Office. The address of the registered office of the Company in
the State of Delaware is:
The
Corporation Trust Company
Corporation
Trust Center
0000
Xxxxxx Xxxxxx
Xxxxxxxxxx,
Xxx Xxxxxx Xxxxxx, Xxxxxxxx 00000
7. Registered
Agent. The name and address of the registered agent of the
Company for service of process on the Company in the State of Delaware
are:
The
Corporation Trust Company
Corporation
Trust Center
0000
Xxxxxx Xxxxxx
Xxxxxxxxxx,
Xxx Xxxxxx Xxxxxx, Xxxxxxxx 00000
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8. Qualification in Other
Jurisdictions. The Board of Managers shall cause the Company
to be registered or qualified under its own name or under an assumed or
fictitious name pursuant to a foreign limited liability company statute or
similar laws in any jurisdictions in which the Company owns property or
transacts business if such registration or qualification is necessary to protect
the limited liability of the Member or to permit the Company lawfully to own
property or transact business in such jurisdiction.
9. RESERVED.
10. Term. The
term of the Company commenced on the date of filing of the Certificate of
Formation of the Company in accordance with the Act and shall continue until
dissolution of the Company in accordance with Section 24 of this
Agreement.
11. Limited
Liability. Except as otherwise provided by the Act, the debts,
obligations and liabilities of the Company, whether arising in contract, tort or
otherwise, shall be solely the debts, obligations and liabilities of the
Company, and none of the Member, Managers, Officers, employees or agents of the
Company (including a person having more than one such capacity) shall be
obligated personally for any such debt, obligation or liability of the Company
solely by reason of acting in such capacity.
12. RESERVED.
13. RESERVED.
14. Funding Capital
Requirements. In the event that the Company requires
additional funds to carry out its purposes, to conduct its business, or to meet
its obligations, the Company may borrow funds from such lender(s), including
Managers and the Member, and on such terms and conditions as are approved by a
majority of the Board of Managers. No loan made to the Company by the
Member or any Manager shall constitute a capital contribution to the Company for
any purpose.
15. Capital
Accounts. A capital account shall be maintained for the Member
on the books of the Company. The capital account shall be adjusted in
accordance with the Internal Revenue Code of 1986, as amended (the “Code”) and
any other applicable provision of the Code and related Regulations (as defined
below). Such capital account maintenance provisions, together with
the other provisions of this Agreement are intended to and shall further be
interpreted and adjusted to comply with the Regulations under Section 704(b) of
the Code, and in particular with Regulations 1.704-1(b), as determined in good
faith by the Board of Managers. The Member will have no obligation to
restore any negative balance in their respective capital account.
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Except as
otherwise provided in the Regulations, a transferee of all of a portion of the
Member’s Units shall succeed to the capital account of the transferor to the
extent allocable to the transferred Units.
16. Allocations: Tax Allocations
and Elections.
a. Allocations. For
each fiscal year of the Company, after adjusting the Member’s capital account
for all capital contributions and distributions during such fiscal year, Net
Income and Net Loss (as each term is defined below) shall be allocated to the
Member’s capital account in a manner such that, as of the end of such fiscal
year, the capital account of the Member (which may be a positive or negative
amount) shall be equal to (i) the amount which would be distributed to the
Member if the Company were dissolved, its affairs wound up and its assets sold
for cash equal to their Gross Asset Values, all Company liabilities were
satisfied (limited with respect to each nonrecourse liability to the Gross Asset
Value of the assets securing such liability), and the net assets of the Company
were distributed to the Member immediately after making such allocation, minus
(ii) the sum of (A) the Member’s share of minimum gain (as determined according
to Treasury Regulation Sections 1.704-2(d), (g) (1) and (g)(3)) and Member
nonrecourse debt minimum gain (as determined according to Treasury Regulation
Section 1.704-2(i) with respect to “partner nonrecourse debt minimum gain”), and
(B) the amount, if any, for which the Member would be liable to the Company
under this Agreement determined as if the Company were to liquidate its assets
for their Gross Asset Values and distribute the proceeds.
b. Tax
Allocations. Except as otherwise provided herein or required
by the Code or applicable Regulations or applicable state law, items of income,
gain, loss and deduction shall be allocated to the Member for federal and state
income tax purposes.
c. Tax Classification of the
Company. It is intended that the Company be classified as a
disregarded entity for purposes of United States federal income tax
purposes.
d. Other Tax
Elections. Except as provided in Section 16.c hereof, relating
to the tax classification of the Company, the Board of Managers may make, or not
make, in its sole and absolute discretion, any tax election provided under the
Code, or any provision of state, local or foreign tax law. Any
determination made pursuant to this Section 16.d by the Board of Managers shall
be conclusive and binding on the Member
17. RESERVED.
18. Management.
a. In
accordance with Section 18-402 of the Act, management of the Company shall be
vested in the board of managers of the Company (the “Board of
Managers” and each separately a “Manager”). Managers
do not have to hold Units in the Company as Members of the Company in order to
serve as a Manager. The Board of Managers shall have the power to do
any and all acts necessary, convenient or incidental to or for the furtherance
of the purposes described herein, including all powers, statutory or otherwise,
possessed by managers of a limited liability company under the laws of the State
of Delaware and including all things necessary to carry out the terms and
provisions of this Agreement. The Board of Managers has the authority
to bind the Company. Unless otherwise consented to by at least a
majority of the Board of Managers, the Board of Managers shall hold regular
meetings not less frequently than once every fiscal quarter at a time and place
fixed by the Board of Managers. Direct travel expenses in connection
with Board functions will be paid by the Company.
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b. The
Board of Managers shall consist of three (3) Managers, to be appointed by the
Member.
c. Managers
may withdraw at any time. Managers may be removed at any time for any
reason or no reason and shall promptly be replaced by the consent of a majority
of the remaining Managers.
d. Unless
otherwise expressly provided herein, consent of the Board of Managers for
purposes of this Agreement may be obtained by the unanimous written consent of
the Managers.
e. Unless
otherwise expressly provided herein, consent of the Member for purposes of this
Agreement may be obtained by written consent of the Member.
19. Officers. The
Board of Managers shall designate in writing from time to time the following
officers of the Company: President, Secretary and Treasurer and may, as it deems
advisable, appoint other officers of the Company and assign in writing titles to
any such person (collectively the “Officers”). Each Officer will have
the authority to execute agreements on behalf of the Company with respect to
those documents which are commonly signed by such officers of a business
corporation formed under the Delaware General Law.
Unless
the Board of Managers decides otherwise, if the title assigned to an Officer is
one commonly used for officers of a business corporation formed under the
Delaware General Company Law, the assignment of such title shall constitute the
delegation to such person of the authorities and duties that are normally
associated with that office. Any delegation pursuant to this Section
19 may be revoked at any time by the Board of Managers.
20. RESERVED.
21. Exculpation and
Indemnification. Neither the Member, Managers nor Officers
(each an “Indemnified Party”) shall be liable to the Company or any other person
or entity who has an interest in the Company for any loss, damage or claim (a
“Loss”) (or any expenses or costs associated therewith (“Costs”)) incurred by
reason of any act or omission performed or omitted by such Indemnified Party in
good faith on behalf of the Company and in a manner reasonably believed to be
within the scope of the authority conferred on such Indemnified Party by this
Agreement, except that an Indemnified Party shall be liable for any such Loss
and Costs, incurred by reason of such Indemnified Party’s gross negligence or
willful misconduct. To the full extent permitted by applicable law,
an Indemnified Party shall be entitled to indemnification from the Company for
any Loss or Costs incurred by such Indemnified Party by reason of any act or
omission performed or omitted by such Indemnified Party in good faith on behalf
of the Company and in a manner reasonably believed to be within the scope of the
authority conferred on such Indemnified Party by this Agreement, except that no
Indemnified Party shall be entitled to be indemnified in respect of any Loss or
Costs incurred by such Indemnified Party by reason of such Indemnified Party’s
gross negligence or willful misconduct with respect to such acts or omissions;
provided, however, that any indemnity under this Section 21 shall be provided
out of and to the extent of Company assets only, and no Member, Manager or
Officer shall have personal liability on account thereof. The Company
shall advance Costs incurred by or on behalf of an Indemnified Party in
connection with any Loss within twenty (20) days after receipt by the Company
from the Indemnified Party of a statement requesting such advances from time to
time; provided such statement provides reasonable documentary evidence of such
Costs and provides a written undertaking by the Indemnified Party to repay any
and all advanced Costs in the event such Indemnified Party is ultimately
determined to not be entitled to indemnification by the Company.
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22. Admission of Additional
Members. One (1) or more additional members of the Company may
be admitted to the Company with the written consent of the Board of
Managers.
23. RESERVED.
24. Dissolution and Winding
Up.
a. Dissolution. The
Company shall dissolve, and its affairs shall be wound up, upon the first to
occur of the following: (i) the written consent of a majority of the Board of
Managers, (ii) the sale of all of the assets of the Company; and (iii) the entry
of a decree of judicial dissolution under Section 18-802 of the
Act.
b. Liquidation.
(i) Upon
dissolution of the Company, the Board of Managers or, if one is appointed, an
authorized liquidating trustee shall wind up the Company’s
affairs. Upon termination and dissolution of the Company and
liquidation of its assets, the Board of Managers or liquidating trustee, as the
case may be, shall apply the Company’s assets to the payment of all liabilities
owing to creditors in accordance with the applicable law. The Board
of Managers or liquidating trustee, as the case may be, shall set up such
reserves as it deems reasonably necessary for any contingent or unforeseen
liabilities or obligations of the Company. Said reserves may be paid
by the Board of Managers or liquidating trustee, as the case may be, upon
dissolution to a bank or trust company to be held in escrow for the purpose of
paying any such contingent or unforeseen liabilities or obligations and, at the
expiration of such period or occurrence of such events as the Board of Managers
or liquidating trustee, as the case may be, may in establishing such reserves
deem advisable, such reserves shall be distributed to the Member or its assigns
in the manner set forth in this Section 24.b.
(ii)
After paying liabilities and providing for reserves in accordance with
subparagraph (i) of this Section 24.b, the Board of Managers or liquidating
trustee, as the case may be, shall make a final allocation of all items
comprising Net Income and Net Loss to the Member’s Capital Account in accordance
with Section 15. The remaining assets of the Company shall then be
distributed to the Member.
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25. RESERVED.
26. Certain
Definitions.
“Gross
Asset Value” means, with respect to any asset, the asset’s adjusted basis
for federal income tax purposes, except as follows:
(i) the
Gross Asset Value of any asset contributed by the Member to the Company is the
gross fair market value of such asset as determined at the time of
contribution;
(ii) the
Gross Asset Value of all Company assets shall be adjusted to equal their
respective gross fair market values, as determined by a majority of the Board of
Managers; and
(iii) The
Gross Asset Value of any Company asset distributed to the Member shall be
adjusted to equal the gross fair market value of such asset on the date of
distribution as determined by a majority of the Board of Managers.
“Net
Income” and “Net
Loss” means, for each fiscal year or other period, an amount equal to the
Company’s taxable income or loss for such fiscal year or period, determined in
accordance with Code Section 703(a) (for this purpose, all items of income,
gain, loss or deduction required to be stated separately pursuant to Code
Section 703(a)(1) shall be included in taxable income or loss) with the
following adjustments:
(i)
Any income of the Company that is exempt from federal income tax and not
otherwise taken into account in computing Net Income or Net Loss pursuant to
this paragraph shall be added to such income or loss;
(ii)
Any expenditures of the Company described in Code Section 705(a)(2)(B) or
treated as Code Section 705(a)(2)(B) expenditures pursuant to Regulations
Section 1.704-(l)(b)(2)(iv)(i), and not otherwise taken into account in
computing Net Income or Net Loss pursuant to this paragraph, shall be subtracted
from such taxable income or loss;
(iii) In
the event the Gross Asset Value of any Company asset is adjusted pursuant to
subdivisions (ii) or (iii) of the definition of “Gross Asset Value” herein, the
amount of such adjustment shall be taken into account as gain or loss from the
disposition of such asset for purposes of computing Net Income or Net
Loss;
(iv) Gain
or loss resulting from any disposition of Company property with respect to which
gain or loss is recognized for federal income tax purposes shall be computed by
reference to the Gross Asset Value of the property disposed of, notwithstanding
that the adjusted tax basis of such property differs from its Gross Asset
Value;
(v)
In lieu of depreciation, amortization, and other cost recovery deductions taken
into account in computing such taxable income or loss, there shall be taken into
account Depreciation for such fiscal year, computed in accordance with the
definition of “Depreciation”; and
“Units”
means the Units of the Company.
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“Regulations”
means the Income Tax Regulations promulgated under the Code, as amended from
time to time.
27. Separability of
Provisions. Each provision of this Agreement shall be
considered separable and if for any reason any provision or provisions herein
are determined to be invalid, unenforceable or illegal under any existing or
future law, such invalidity, unenforceability or illegality shall not impair the
operation of or affect those portions of this Agreement which are valid,
enforceable and legal.
28. Counterparts. This
Agreement may be executed in any number of counterparts, each of which shall be
deemed an original of this Agreement.
29. Entire
Agreement. This Agreement constitutes the entire agreement of
the Member with respect to the subject matter hereof.
30. Governing
Law. This Agreement shall be governed by, and construed under,
the laws of the State of Delaware (without regard to conflict of laws principles
thereof), and all rights and remedies shall be governed by such
laws.
31. Amendments. This
Agreement may not be modified, altered, supplemented or amended except pursuant
to a written consent of the Member.
32. RESERVED.
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IN
WITNESS WHEREOF, the undersigned, intending to be legally bound hereby, have
duly executed this Agreement as of the date first written above.
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MEMBER:
ENERGY
XXI GOM, LLC
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By:
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/s/ Xxx Xxxxxxxx | |
| Xxx Xxxxxxxx, President | |||
