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EXHIBIT 10.18
LIMITED LIABILITY COMPANY AGREEMENT
OF
DEEPWATER HOLDINGS, L.L.C.
JUNE 1999
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TABLE OF CONTENTS
DEFINITIONS.............................................................................2
ARTICLE I FORMATION.....................................................................7
ARTICLE II NAME.........................................................................7
ARTICLE III PURPOSE.....................................................................7
ARTICLE IV NAMES AND ADDRESSES OF MEMBERS AND PRINCIPAL OFFICE OF COMPANY...............7
ARTICLE V REGISTERED AGENT; REGISTERED OFFICE; ADDITIONAL OFFICES.......................8
ARTICLE VI TERM.........................................................................8
ARTICLE VII CAPITAL CONTRIBUTIONS; SHARING RATIOS; CAPITAL ACCOUNTS.....................8
Section 7.1 Initial Capital Contributions................................8
Section 7.2 Incremental Expansion Capital Contributions..................8
Section 7.3 Subsequent Contributions.....................................9
Section 7.4 Requests For Capital Contributions...........................9
Section 7.5 Delinquent Member............................................9
Section 7.6 Return of Capital Contributions.............................10
Section 7.7 Capital Accounts............................................11
Section 7.8 Adjustment of 704(b) Capital Accounts 704(b)................11
Section 7.9 GAAP Capital Accounts and Financial Reporting...............11
ARTICLE VIII DISTRIBUTIONS.............................................................11
Section 8.1 Distributions...............................................11
ARTICLE IX ALLOCATIONS OF INCOME, GAIN, LOSS, DEDUCTION AND CREDIT FOR TAX PURPOSES....12
Section 9.1 General.....................................................12
Section 9.2 [Intentionally omitted].....................................12
Section 9.3 Income Tax Allocations......................................12
Section 9.4 Allocations on Transfers....................................13
Section 9.5 Reliance on Advisors........................................13
Section 9.6 Tax Matters Member..........................................13
ARTICLE X BOOKS OF ACCOUNT, RECORDS, REPORTS AND TAX INFORMATION.......................14
Section 10.1 Books and Records...........................................14
Section 10.2 Financial Information.......................................14
Section 10.3 Audits......................................................15
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Section 10.4 Inspection of Facilities and Records........................15
Section 10.5 Budgets.....................................................15
ARTICLE XI FISCAL YEAR.................................................................15
ARTICLE XII COMPANY FUNDS..............................................................16
ARTICLE XIII STATUS OF MEMBERS.........................................................16
ARTICLE XIV MANAGEMENT AND OPERATION OF BUSINESS.......................................16
Section 14.1 Member Management...........................................16
Section 14.2 Management Committee........................................16
Section 14.3 Exculpation.................................................20
Section 14.4 Indemnification.............................................21
Section 14.5 Officers....................................................22
Section 14.6 Management Committee Deadlocks..............................23
Section 14.7 Initiation of Proceedings...................................24
Section 14.8 Responses...................................................24
Section 14.9 Selection of Arbitrators....................................24
Section 14.10 Location....................................................25
Section 14.11 Rules.......................................................25
Section 14.12 Limitations on Arbitration..................................25
Section 14.13 Effect of Award.............................................25
Section 14.14 Company Administration......................................25
ARTICLE XV MANAGEMENT OF OPERATING SUBSIDIARIES........................................26
Section 15.1 Operating Subsidiary Management Committees..................26
ARTICLE XVI DISPOSITIONS AND ENCUMBRANCES OF MEMBERSHIP INTERESTS......................26
Section 16.1 Dispositions and Encumbrances of Membership Interests.......26
Section 16.2 Permitted Dispositions and Encumbrances.....................27
ARTICLE XVII RESIGNATION, BANKRUPTCY, ETC..............................................27
Section 17.1 Covenant Not to Withdraw....................................27
Section 17.2 Affected Member.............................................27
ARTICLE XVIII DISSOLUTION OF THE COMPANY...............................................29
ARTICLE XIX WINDING UP AND TERMINATION OF THE COMPANY..................................29
Section 19.1 Liquidator..................................................29
Section 19.2 Reserves....................................................30
Section 19.3 Liquidation Distributions...................................30
Section 19.4 Accounting..................................................30
Section 19.5 Only Recourse to Company Assets.............................30
Section 19.6 Termination.................................................30
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ARTICLE XX NOTICES.....................................................................31
ARTICLE XXI AMENDMENT OF AGREEMENT.....................................................31
ARTICLE XXII REPRESENTATIONS, WARRANTIES AND COVENANTS.................................31
ARTICLE XXIII MISCELLANEOUS............................................................31
Section 23.1 No Partition................................................31
Section 23.2 Entire Agreement............................................31
Section 23.3 Governing Law...............................................32
Section 23.4 Binding Effect..............................................32
Section 23.5 Context.....................................................32
Section 23.6 Captions....................................................32
Section 23.7 Effect of Invalid Provision.................................32
Section 23.8 Counterpart Execution.......................................32
Section 23.9 Laws and Regulatory Bodies..................................32
Section 23.10 Business Opportunity........................................33
Section 23.11 Entitlement to Certificates.................................33
EXHIBIT A: Sharing Ratios of the Members
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LIMITED LIABILITY COMPANY AGREEMENT
OF
DEEPWATER HOLDINGS, L.L.C.
THIS LIMITED LIABILITY COMPANY AGREEMENT is made as of September 30,
1999, between and among AMERICAN NATURAL OFFSHORE COMPANY, a Delaware
corporation ("American Offshore"), TEXAS OFFSHORE PIPELINE SYSTEM, INC., a
Delaware corporation ("TOPSI"), UNITEX OFFSHORE TRANSMISSION COMPANY, a Delaware
corporation ("Unitex"), ANR WESTERN GULF HOLDINGS, L.L.C., a Delaware limited
liability company ("ANR LLC" and, together with American Offshore, TOPSI, and
Unitex, the "ANR Subs") and Leviathan Deepwater, L.L.C., a Delaware limited
liability company ("Leviathan Deepwater").
WHEREAS, ANR Pipeline Company, a Delaware corporation ("ANR") is the
parent, directly or indirectly, of the ANR Subs and Leviathan Gas Pipeline
Partners, L.P., a Delaware limited partnership ("Leviathan"), is the parent of
Leviathan Deepwater;
WHEREAS, the ANR Subs, Stingray Holding, L.L.C., a Delaware limited
liability company ("SHLLC"), Green Canyon Pipe Line Company, L.L.C., a Delaware
limited liability company ("Green Canyon"), UTOS Holding, L.L.C., a Delaware
limited liability company ("UTOS Holding"), Natoco, L.L.C., a Delaware limited
liability company ("Natoco"), Transco Offshore Pipeline Company, L.L.C., a
Delaware limited liability company ("TOPC"), Transco Hydrocarbons Company,
L.L.C., a Delaware limited liability company ("THC"), Texam Offshore Gas
Transmission, L.L.C. ("TOGT," and collectively with UTOS Holding, Natoco, THC,
and TOPC, the "LEV Subs") owned, collectively, all of the membership interests
in Western Gulf Holdings, L.L.C., a Delaware limited liability company ("Western
Gulf"), Stingray Pipeline Company L.L.C., a Delaware limited liability company
("Stingray"), U-T Offshore System L.L.C., a Delaware limited liability company
("UTOS"), and West Cameron Dehydration Company L.L.C., a Delaware limited
liability company ("WCDC," and together with Western Gulf, UTOS, Stingray and
WCDC, the "Contributed Entities");
WHEREAS, the ANR Subs, the LEV Subs, Green Canyon and SHLLC contributed
all of their interests in the Contributed Entities to the Company;
WHEREAS, immediately following the contribution, the LEV Subs merged
with and into SHLLC, Green Canyon distributed its Membership Interest (herein
defined) to Leviathan and Leviathan contributed this Membership Interest to
SHLLC, and SHLLC changed its name to "Leviathan Deepwater, L.L.C.";
WHEREAS, immediately following the merger of the LEV Subs, ANR LLC
purchased a 9.66% membership interest in the Company from Leviathan Deepwater;
and
WHEREAS, the Company will own and operate the Contributed Entities and
any entities owned by the Contributed Entities.
NOW, THEREFORE, in consideration of the premises and the mutual
undertakings contained herein, the parties hereto hereby set forth the terms for
the Company's Limited Liability Company Agreement as follows:
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DEFINITIONS
The following definitions shall be Applicable to the terms set forth
below as used in this Agreement:
"704(b) Capital Account": A 704(b) Capital Account shall be established
for each Member and shall initially be equal to the agreed upon fair market
value of each Member's interest and shall be maintained in accordance with the
requirements of Treasury Regulations under Section 704(b) of the Code.
"AAA" means American Arbitration Association.
"Act" means the Delaware Limited Liability Company Act, 6 Del. Code
Sections 18-101 et seq., as it may be amended from time to time, and any
successor to said Act.
"Administrative Agreement" has the meaning given that term in Section
14.14.
"Administrator" means the Person selected by the Members, or by the
Management Committee from time to time, in accordance with Section 14.14.
"Affected Member" has the meaning given that term in Section 17.2.
"Affiliate" means, with respect to any Person, a Person that directly,
or indirectly through one or more intermediaries, Controls, is Controlled by, or
is under common Control with such first Person, where "Control" (including its
derivatives) means the power to direct management or policies, whether pursuant
to the ownership of voting interest, by contract or otherwise; provided that the
Company and its subsidiaries shall not be deemed to be an Affiliate of any
Member or any of their respective Affiliates and vice versa.
"Agreed Value" means, in the case of any contributions or distributions
of property, the fair market value of such property net of any indebtedness or
other liability either assumed or to which such property is subject, as such
fair market value is determined by the Management Committee using such
reasonable method of valuation as it may adopt.
"Agreement" means this Limited Liability Company Agreement, as the same
may be amended, modified or restated from time to time.
"Alternate Representatives" have the meaning given such term in
Section 14.2(a).
"American Offshore" has the meaning given that term in the preamble.
"ANR" has the meaning given that term in the preamble.
"ANR LLC" has the meaning given that term in the preamble.
"ANR Subs" has the meaning given that term in the preamble.
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"Bankrupt Member" means any Member with respect to which an event of
the type described in Section 18-304 of the Act has occurred, subject to the
lapsing of any period of time therein specified.
"Built-In Gain" with respect to any Company property means (i) the
excess of the Agreed Value of any Contributed Property over its adjusted basis
for federal income tax purposes as of the time of contribution and (ii) in the
case of any adjustment to the Carrying Value of any Company property subject to
depreciation, cost recovery or amortization pursuant to Section 7.8 as a result
of a contribution of cash for a Membership Interest, the Unrealized Gain with
respect to such property.
"Built-in Loss" with respect to any Company property means (i) the
excess of its adjusted basis for federal income tax purposes of any Contributed
Property over its Agreed Value as of the time of contribution and (ii) in the
case of any adjustment to the Carrying Value of any Company property subject to
depreciation, cost recovery or amortization pursuant to Section 7.8 as a result
of a contribution of cash for a Membership Interest, the Unrealized Loss with
respect to such property.
"Business Day" means any day other than a Saturday, Sunday or bank
holiday in Texas.
"Capital Accounts" means the 704(b) Capital Accounts, the GAAP Capital
Accounts and the Sharing Capital Accounts.
"Capital Contributions" means the Agreed Value of any property and the
amount of cash contributed to the Company.
"Carrying Value" with respect to any Capital Contribution recording in
a 704(b) Capital Account means the Agreed Value of such property reduced as of
the time of determination by all book depreciation, cost recovery and
amortization deductions charged to the 704(b) Capital Account with respect to
such property and an appropriate amount to reflect any sales, retirements or
other dispositions of assets included in such property and, with respect to any
other Company property, the adjusted basis of such property for federal income
tax purposes as of the time of determination. The Carrying Value shall be
further adjusted as provided in Section 7.8.
"Certificate" means the Certificate of Formation filed in the Office of
the Secretary of State of the State of Delaware pursuant to the Act and any
amendment or restatement thereof.
"Certified Public Accountants" means such nationally recognized firm of
independent public accountants as may be selected from time to time by the
Management Committee.
"Code" means the Internal Revenue Code of 1986, as amended and in
effect on the effective date hereof and, to the extent applicable, as
subsequently amended.
"Company" means Deepwater Holdings, L.L.C., the limited liability
company entered into and formed pursuant to this Agreement and the Act.
"Contributed Entities" has the meaning given that term in the preamble.
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"Contributed Property" means any Capital Contribution of property other
than cash.
"Contributing Member(s)" has the meaning given that term in Section
7.5(c).
"Contribution Basis" has the meaning given that term in Section 7.9.
"Control" (including its derivatives) has the meaning given such term
in the definition of "Affiliate."
"Default Interest Rate" means a floating rate per annum equal to the
lesser of (i) two percent (2%) over the interest rate publicly quoted by
Citibank N.A. from time to time as its prime commercial rate, with adjustments
in such varying rate to be made on the same day as any change in the aforesaid
rate or (ii) the maximum rate permitted under applicable law; provided that the
Default Interest Rate shall never be less than two percent (2%) over the London
Inter Bank Offer Rate.
"Delinquent Member" has the meaning given that term in Section 7.5.
"Dispose," "Disposing" or "Disposition" means, with respect to a
Membership Interest or any portion thereof, a sale, assignment, transfer,
conveyance, gift, exchange or other disposition of such Membership Interest or
portion thereof.
"Disposing Member" means a Member desiring to Dispose of its Membership
Interest.
"Distributable Cash" means, at the time of determination, all Company
cash other than (i) reserves for working capital and (ii) other amounts that the
Management Committee reasonably determines to be necessary for the proper
operation of the Company's business and its winding up and liquidation.
"East Breaks" means East Breaks Gathering Company, L.L.C., a Delaware
limited liability company.
"Encumber," "Encumbering" or "Encumbrance" means the creation of a
security interest, lien, pledge, mortgage or other encumbrance, whether such
encumbrance be voluntary, involuntary or by operation of law.
"Excess" the meaning given that term in Section 7.9.
"Formation Date" means the date the Company is formed as provided in
Article I.
"GAAP Capital Account": A GAAP Capital Account shall be established for
each Member based on the Initial Balances as determined pursuant to Section
7.1(b) hereof, and shall be maintained in accordance with generally accepted
accounting principles, but giving effect to each Member's disproportionate
depreciation, as provided in Section 7.9.
"Green Canyon" has the meaning given that term in the preamble.
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"HIOS" means High Island Offshore System, L.L.C., a Delaware limited
liability company.
"Incremental Expansion Capital Contribution" has the meaning given in
Section 7.2.
"Indemnitee" has the meaning given that term in Section 14.4.
"Initial Balances" has the meaning given that term in Section 7.1(b).
"Interest" has the meaning given that term in Section 17.2(a).
"Initial Capital Contributions" has the meaning given that term in
Section 7.1(a).
"Lending Member(s)" has the meaning given that term in Section 7.5(b).
"LEV Subs" has the meaning given that term in the preamble.
"Leviathan" has the meaning given that term in the preamble.
"Leviathan Deepwater" has the meaning given that term in the preamble.
"Liquidator" has the meaning given that term in Section 19.1.
"LOC" means Leviathan Operating Company, L.L.C., a Delaware limited
liability company.
"Majority in Interests" means, subject to Section 14.2(a)(iii), Sharing
Ratios aggregating greater than 50% of all the Sharing Ratios of the Members
whose Representatives are entitled to vote on a particular Management Committee
matter.
"Management Committee" has the meaning given that term in Section 14.1.
"Members" means ANR Subs and Leviathan Deepwater or their respective
successors and assigns and "Member" means any one of them.
"Membership Interest" as to any Member means the entire ownership
interest and rights of that Member in the Company, including, without
limitation, the rights to vote and receive a proportional amount of any
distributions.
"Natoco" has the meaning given that term in the preamble.
"Operating Subsidiary" means each of the Contributed Entities, HIOS and
East Breaks and each other Person, if any, Controlled by and owned (directly or
indirectly) more than 50% by the Company.
"Other Members" has the meaning given that term in Section 17.2(a).
"Person" means an individual, corporation, voluntary association, joint
stock company, business trust, partnership, limited liability company or other
entity.
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"Representatives" has the meaning given that term in Section 14.2(a).
"Sharing Capital Account": A Sharing Capital Account shall be
established for each Member and shall be equal to the product of (x) the sum of
the Members' Initial Balances, times (y) each Members' Sharing Ratio and shall
be maintained in accordance with generally accepted accounting principles
without regard to the provisions of this Agreement dealing with each Member's
disproportionate depreciation, as provided in Section 7.9.
"Sharing Ratio" means the percentages set forth in Exhibit A, as
adjusted from time to time as provided herein.
"SHLLC" has the meaning given that term in the preamble.
"Stingray" has the meaning given that term in the preamble.
"Subsidiary Companies" has the meaning given that term in the preamble.
"Subsidiary Management Committee" means the management committee of any
Operating Subsidiary.
"Subsidiary System" means the pipeline and related facilities owned by
an Operating Subsidiary, and any other pipelines and related facilities
constructed, purchased or otherwise acquired by an Operating Subsidiary in
accordance with the constitutive documents of such Operating Subsidiary.
"THC" has the meaning given that term in the preamble.
"TMM" has the meaning given such term in Section 9.5.
"TOGT" has the meaning given that term in the preamble.
"TOPC" has the meaning given that term in the preamble.
"TOPSI" has the meaning given that term in the preamble.
"Unitex" has the meaning given that term in the preamble.
"Unrealized Gain" attributable to Company property means, as of the
date of determination, the excess of the fair market value of such property as
of such date of determination over the Carrying Value of such property as of
such date of determination.
"Unrealized Loss" attributable to Company property means, as of the
date of such determination, the excess of the Carrying Value of such property as
of such date of determination over the fair market value of such property as of
such date of determination.
"UTOS" has the meaning given that term in the preamble.
"UTOS Holding" has the meaning given that term in the preamble.
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"WCDC" has the meaning given that term in the preamble.
"Western Gulf" has the meaning given that term in the preamble.
ARTICLE I
FORMATION
The parties hereto form the Company as a limited liability company
pursuant to the Act. The rights and liabilities of the Members shall be as
provided in the Act, except as herein otherwise expressly provided. The
Membership Interests of any Member shall be personal property for all purposes.
On the request of the Management Committee, each Member shall execute,
acknowledge, swear to and deliver all certificates and other instruments
conforming with this Agreement that are necessary to qualify, continue or
terminate the Company as a limited liability company under the laws of the State
of Delaware and to qualify the Company to do business in such other states and
jurisdictions where such qualification is necessary or desirable.
ARTICLE II
NAME
The name of the Company shall be, and the business of the Company shall
be conducted under the name of, Deepwater Holdings, L.L.C. or such other name or
names that comply with applicable law as the Management Committee may designate
from time to time. The Management Committee shall take any action that it
determines is required to comply with the Act, assumed name act, fictitious name
act or similar statute in effect in each jurisdiction or political subdivision
in which the Company proposes to do business and the Members agree to execute
any documents requested by the Management Committee in connection with any such
action.
ARTICLE III
PURPOSE
The purposes of the Company are to own and operate the Operating
Subsidiaries, which own and operate the Subsidiary Systems, and to acquire,
construct, own and operate (directly or through Operating Subsidiaries) any
other natural gas pipeline and related assets in accordance with the terms of
this Agreement. Except for activities related to such purposes, there are no
other authorized business purposes of the Company. The Company shall not engage
in any activity or conduct inconsistent with such purposes.
ARTICLE IV
NAMES AND ADDRESSES OF MEMBERS AND
PRINCIPAL OFFICE OF COMPANY
The names and mailing addresses of the Members are as set forth on the
signature pages hereof. The location of the principal office of the Company
where the books and records of the Company shall be kept shall be at such place
as the Management Committee may from time to time determine. Notice of any
change in such office shall be given to each Member.
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ARTICLE V
REGISTERED AGENT; REGISTERED OFFICE;
ADDITIONAL OFFICES
The name and address of the registered office of the Company in the
State of Delaware is c/o The Corporation Trust Company, Corporation Trust
Center, 0000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxx Xxxxxx Xxxxxx, Xxxxxxxx 00000. The
name and address of the registered agent for service of process on the Company
in the State of Delaware is The Corporation Trust Company, Corporation Trust
Center, 0000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxx Xxxxxx Xxxxxx, Xxxxxxxx 00000. The
Management Committee may change the registered agent or the registered office of
the Company and may establish such additional offices of the Company as the
Management Committee may, in its sole discretion, from time to time determine.
ARTICLE VI
TERM
The term of the Company shall be from the date of filing of its
Certificate in the Office of the Secretary of State of the State of Delaware,
and shall be perpetual unless it is dissolved by an event described in Article
XVIII.
ARTICLE VII
CAPITAL CONTRIBUTIONS; SHARING RATIOS; CAPITAL ACCOUNTS
SECTION 7.1 INITIAL CAPITAL CONTRIBUTIONS.
(a) Prior to the execution of this Agreement, the Members and
certain of their Affiliates have contributed all of their respective
rights and interest in the Contributed Entities to the Company, free
and clear of all Encumbrances (the "Initial Capital Contributions").
(b) The Members shall agree, in good faith, on their initial
balances in their GAAP Capital Accounts to be used for financial
reporting purposes as discussed in Section 7.9 (each such amount being
such Member's "Initial Balance") on or before November 30, 1999. The
respective Sharing Ratios of the Members shall be as set forth in
Exhibit A attached hereto and made a part hereof. Each Member shall
execute an amendment to Exhibit A as soon as practicable following any
change in Sharing Ratios pursuant to the provisions of this Agreement.
SECTION 7.2 INCREMENTAL EXPANSION CAPITAL CONTRIBUTIONS. Upon written
request to the Company by any Subsidiary Management Committee, in accordance
with such Operating Subsidiary's limited liability company agreement, for a
capital contribution to fund an incremental expansion of such Operating
Subsidiary's Subsidiary System, each Member shall contribute cash in amounts
equal to its Sharing Ratio proportion of 100% of all amounts so requested (the
"Incremental Expansion Capital Contribution"). Such contributions shall be made
as necessary to allow the applicable Operating Subsidiary to pay timely such
obligations as they become due. The Management Committee shall send notice of
such required Capital Contribution to the Members in accordance with Section
7.4.
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SECTION 7.3 SUBSEQUENT CONTRIBUTIONS. Unless unanimously agreed to by
the Management Committee, no Member shall be required to make, or cause to be
made, any Capital Contributions other than the Initial Capital Contributions as
contemplated by Section 7.1 and the Incremental Expansion Capital Contributions
as contemplated by Section 7.2.
SECTION 7.4 REQUESTS FOR CAPITAL CONTRIBUTIONS. The Management
Committee shall issue or cause to be issued a written request for payment of
each Capital Contribution to be made in accordance with Sections 7.1, 7.2 and
7.3, at such times as the Management Committee shall deem appropriate. Each
written request issued pursuant to this Section 7.4 shall contain the following
information:
(a) The amount of the Capital Contribution requested from each
Member, such amount to be in accordance with the Member's Sharing
Ratio;
(b) The purpose for which the Capital Contributions are to be
applied in such reasonable detail as the Management Committee shall
direct; and
(c) The date on which the Capital Contributions shall be made
(which date shall not be less than 30 days following the date the
request is given and shall reasonably approximate the date on which the
Company expects to make the underlying payment) and the method of
payment, such date and method to be the same for each of the Members.
Each Member agrees to make payment of its respective Capital
Contributions in accordance with the requests issued pursuant to this
Section 7.4.
SECTION 7.5 DELINQUENT MEMBER. If a Member does not contribute by the
time required all or any portion of a Capital Contribution that Member is
required to make as provided in this Agreement, the Company may exercise, on
notice to that Member (the "Delinquent Member"), one or more of the following
remedies:
(a) taking such action (including court proceedings) as the
Management Committee may deem appropriate to obtain payment by the
Delinquent Member of the portion of the Delinquent Member's Capital
Contribution that is in default, together with interest on that amount
at the Default Interest Rate from the date that the Capital
Contribution was due until the date that it is made, all at the cost
and expense of the Delinquent Member;
(b) notifying the other Members, any one or more of which (the
"Lending Member(s)") may elect to advance the portion of the Delinquent
Member's Capital Contribution that is in default, with the following
results:
(i) The sum advanced shall constitute a loan from the
Lending Member(s) to the Delinquent Member and a Capital
Contribution of that sum to the Company by the Delinquent
Member under the applicable provisions of this Agreement;
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(ii) the principal balance of the loan and all
accrued unpaid interest is due and payable on the tenth day
after written demand by the Lending Member(s) to the
Delinquent Member;
(iii) the amount loaned shall bear interest at the
Default Interest Rate from the date that the advance is deemed
made until the date that the loan, together with all interest
accrued on it, is repaid to the Lending Member(s);
(iv) all distributions from the Company that
otherwise would be made to the Delinquent Member (whether
before or after dissolution of the Company) instead shall be
paid to the Lending Member(s) until the loan and all interest
accrued on it have been paid in full to the Lending Member(s)
(with payments being applied first to accrued and unpaid
interest and then to principal), but all such payments to the
Lending Member(s) shall be treated for all purposes of this
Agreement as a distribution by the Company to the Delinquent
Member and a payment by the Delinquent Member to the Lending
Member(s); and
(v) the Lending Member(s) has the right, in addition
to the other rights and remedies granted to it under this
Agreement or at law or in equity, to take any action
(including court proceedings) that the Lending Member(s) may
deem appropriate to obtain payment by the Delinquent Member of
the loan and all accrued and unpaid interest on it, at the
cost and expense of the Delinquent Member;
(c) permitting one or more of the other Members (the
"Contributing Member(s)") to make the Delinquent Member's Capital
Contribution that is in default in proportions agreed to by those
Contributing Members, with the following results:
(i) the sum advanced shall constitute a Capital
Contribution of the Contributing Member(s);
(ii) the Delinquent Member's Membership Interest and
Sharing Ratio shall be reduced by the number of percentage
points equal to the quotient (expressed as a percentage)
derived by dividing (A) the amount of the Delinquent Member's
Capital Contribution made by the Contributing Member(s) by (B)
the sum of the Sharing Capital Accounts of all the Members
(including the Capital Contribution being made by the
Contributing Member(s)); and
(iii) any reduction in the Delinquent Member's
Membership Interest and Sharing Ratio shall be reallocated to
the Contributing Member(s); or
(d) exercising any other rights and remedies available at law
or in equity.
SECTION 7.6 RETURN OF CAPITAL CONTRIBUTIONS. No Member shall be
entitled to the return of any part of its Capital Contribution or to be paid
interest in respect of either its Sharing Capital Account or any Capital
Contribution made by such Member. No unrepaid Capital Contribution shall be
deemed or considered to be a liability of the Company or any Member. No
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Member shall be required to contribute or lend any cash or property to the
Company to enable the Company to return any Member's Capital Contributions to
the Member.
SECTION 7.7 CAPITAL ACCOUNTS. All Capital Contributions shall be
credited to the contributing Member's Capital Accounts.
SECTION 7.8 ADJUSTMENT OF 704(B) CAPITAL ACCOUNTS. If any additional
Membership Interests are to be issued in consideration for a contribution of
property or cash or if any Company property is to be distributed in liquidation
of the Company or a Membership Interest, the 704(b) Capital Accounts of the
Members (and the amounts at which all Company properties are carried on its
books and records) shall, immediately prior to such issuance or distribution, as
the case may be, be adjusted (consistent with the provisions of section 704(b)
of the Code and the Treasury Regulations promulgated thereunder) upward or
downward to reflect any Unrealized Gain or Unrealized Loss attributable to all
Company properties (as if such Unrealized Gain or Unrealized Loss had been
recognized upon actual sale of such properties upon a liquidation of the Company
immediately prior to such issuance). If the Agreed Value of any property of the
Company is properly reflected on the books of the Company at a value that
differs from the adjusted tax basis of such property, this Section 7.8 shall be
applied with reference to such value.
SECTION 7.9 GAAP CAPITAL ACCOUNTS AND FINANCIAL REPORTING. For purposes
of establishing and maintaining the GAAP Capital Accounts and for financial
reporting purposes: (i) in connection with the capitalization of the Company,
the Company will report the value of the interests of the respective Members in
the Company based on the basis such Members had in their interests in Stingray,
UTOS, WCDC and Western Gulf they contributed to the Company as of the date of
contribution (for each Member, the "Contribution Basis"); (ii) such Contribution
Basis will be (a) used to capitalize the Company and (b) the excess of the
Contribution Basis over the underlying net book value of the fixed assets of
each of Stingray, UTOS, WCDC and Western Gulf immediately prior to such
contribution of such interest to the Company (the"Excess") will be depreciated
in accordance with GAAP as determined by the Members; (iii) the depreciation of
the Excess will be allocated pro rata to each Member based on such Member's
respective Contribution Basis; (iv) if a Member Disposes of its Membership
Interest, in whole or in part, the portion of such Member's Contribution Basis
and related undepreciated Excess of the Membership Interest being Disposed of,
will be allocated to the transferee for financial reporting purposes; and (v) if
any portion of the property underlying such contributed interests is Disposed of
by an Operating Subsidiary, the portion of the Members' Contribution Basis and
the related undepreciated Excess, related to the property being Disposed of,
will be used to allocate pro rata any accounting gain or loss to each Member.
ARTICLE VIII
DISTRIBUTIONS
SECTION 8.1 DISTRIBUTIONS. Except as otherwise provided herein,
Distributable Cash shall be distributed in such amounts and at such times as
shall be determined by the Management Committee among all the Members
simultaneously pro rata in accordance with their respective Sharing Ratios.
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ARTICLE IX
ALLOCATIONS OF INCOME, GAIN,
LOSS, DEDUCTION AND CREDIT FOR TAX PURPOSES
SECTION 9.1 GENERAL. Except as otherwise provided herein or unless
another allocation is required by Treasury Regulations issued under Section
704(b) of the Code (including, but not limited to, the qualified income offset
specified in Treasury Regulation Section 1.704-1(b)(2)(ii)(d)), for purposes of
maintaining the 704(b) Capital Accounts, all items of Company income, gain,
loss, deduction and credit shall be allocated among the Members pro rata in
accordance with their Sharing Ratios in effect for the period during which such
items accrue. For purposes of computing the amount of each item of income, gain,
deduction or loss, the determination, recognition and classification of such
item shall be the same as its determination, recognition and classification for
federal income tax purposes, provided that:
(a) Any deductions for depreciation, cost recovery or
amortization attributable to any Company property shall be determined
as if the adjusted basis of such property were equal to the Carrying
Value of such property. Upon an adjustment to the Carrying Value of any
Company property subject to depreciation, cost recovery or amortization
pursuant to Section 7.8, any further deductions for such depreciation,
cost recovery or amortization attributable to such property shall be
determined as if the adjusted basis of such property were equal to the
Carrying Value of such property immediately following such adjustment.
(b) Any income, gain or loss attributable to the taxable
disposition of any Company property shall be determined by the Company
as if the adjusted basis of such property as of such date of
disposition were equal in amount to the Carrying Value of such property
as of such date.
(c) Computation of all items of income, gain, loss and
deduction shall be made without regard to any election under section
754 of the Code that may be made by the Company and, as to those items
described in the section 705(a)(1)(B) or section 705(a)(2)(B) of the
Code, without regard to the fact that such items are not includable in
gross income or are neither currently deductible nor capitalizable for
federal income tax purposes.
SECTION 9.2 [INTENTIONALLY OMITTED].
SECTION 9.3 INCOME TAX ALLOCATIONS.
(a) The Company shall, except to the extent such item is
subject to allocation pursuant to subsection (b) below, allocate each
item of income, gain, loss, deduction and credit, as determined for
federal and other income tax purposes, in the same manner as such item
was allocated for purposes of maintaining the 704(b) Capital Accounts.
(b) The Company, for federal and other income tax purposes,
shall, in the case of Contributed Properties, allocate items of income,
gain, loss, depreciation and cost recovery deductions attributable to
those properties with a Built-In Gain or Built-In Loss pursuant to
section 704(c) of the Code under a method described in Treas. Reg.
Section 1.704-3.
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Similar allocations shall be made in the event that the Carrying Value
of Company properties subject to depreciation, cost recovery or
amortization are adjusted pursuant to Section 7.8 upon the issuance of
Membership Interests for cash. If an existing Member acquires
additional Membership Interests, such allocations shall apply only to
the extent of his or its additional Interests. No allocation under
section 704(c) of the Code shall be charged or credited to a Member's
Capital Accounts.
SECTION 9.4 ALLOCATIONS ON TRANSFERS. Unless otherwise agreed in
writing by a transferor and transferee of a Membership Interest herein, income,
gain, loss, deduction or credit attributable to any Membership Interest that has
been transferred shall be allocated between the transferor and the transferee
using an acceptable method as provided under section 706 of the Code and related
Treasury Regulations.
SECTION 9.5 RELIANCE ON ADVISORS. The Management Committee may rely
upon, and shall have no liability to the Members or the Company if they do rely
upon, the written opinion of tax counsel or accountants retained by the Company
from time to time with respect to all matters (including disputes with respect
thereto) relating to computations and determinations required to be made under
this Article IX or other provisions of this Agreement.
SECTION 9.6 TAX MATTERS MEMBER.
(a) Leviathan Deepwater, as a Member Manager (as defined in
Treasury Regulation Section 301.6231(a)(7)-1) is designated as the tax
matters member ("TMM"), which shall have the same meaning as "tax
matters partner" (as defined in section 6231(a)(7) of the Code). The
TMM and the Members shall use their best efforts to comply with
responsibilities outlined in this Section 9.6 and in sections 6222
through 6232 of the Code (including any Treasury Regulations
promulgated thereunder) and in doing so shall incur no liability to any
other Member, except in the case of a failure by the TMM for any reason
to make and include in the appropriate tax return a timely and
effective election under Internal Revenue Code Section 754.
(b) The TMM shall not make any material federal income tax
elections or material tax policy decisions affecting the Company,
unless it has received the prior unanimous consent of the Management
Committee.
(c) All tax returns and reports of the Company shall be
prepared or caused to be prepared under the direction of the TMM. As
early as reasonably possible prior to its filing of the Company's
federal and state income tax returns, but in no event less than ten
(10) business days prior to the filing, the TMM will provide the other
Members with a pro forma copy of such returns and will provide the
other Members with reasonable opportunity to consult with and/or advise
the TMM with respect to all positions intended to be reflected. Such
returns must be reviewed and approved unanimously by the Management
Committee.
(d) If any Member intends to file a notice of inconsistent
treatment under section 6222(b) of the Code, such Member shall, prior
to the filing of such notice, notify the TMM of such intent and the
manner in which the Member's intended treatment of a
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Company item is (or may be) inconsistent with the treatment of that
item by the Company.
(e) No Member other than the TMM shall file a request pursuant
to section 6227 of the Code for an administrative adjustment of Company
items for any Company taxable year.
(f) No Member other than the TMM shall file a petition under
Code sections 6226, 6228 or other Code sections with respect to any
Company item or other tax matters involving the Company. In the case
where the TMM files such petition, it shall determine the forum in
which such petition will be filed.
ARTICLE X
BOOKS OF ACCOUNT, RECORDS, REPORTS AND TAX INFORMATION
SECTION 10.1 BOOKS AND RECORDS. Proper and complete records and books
of account (including those required by the Act) shall be kept by the Company in
which shall be entered all transactions and other matters relative to the
Company's business as are usually entered into records and books of account
maintained by persons engaged in businesses of like character. The Company books
and records shall be maintained in accordance with generally accepted accounting
principles, and, to the extent applicable, the Uniform System of Accounts of the
FERC as from time to time applicable to a Class A "natural gas company" under
the Natural Gas Act, and shall be kept on the accrual basis. The Company books
and records shall be audited by the Certified Public Accountants at the end of
each fiscal year. The Company shall, and shall cause each of the Operating
Subsidiaries to, at all times make its books and records available at the
principal office of the Company or the Operating Subsidiary and shall be open to
the reasonable inspection and examination by the Members or their duly
authorized representatives during the business hours of the Company or the
Operating Subsidiary for any purpose reasonably related to the interest of such
Member as owner of the Company.
SECTION 10.2 FINANCIAL INFORMATION.
(a) Annual Financial Statements. The Management Committee
shall cause to be prepared and delivered to the Members:
(1) No later than ninety (90) days following the end
of each of the Company's fiscal years, a profit and loss
statement and a statement of cash flows for such fiscal year
and a balance sheet and a statement of the GAAP Capital
Accounts as of the end of such fiscal year, together with a
report thereon of the Certified Public Accountants;
(2) No later than ninety (90) days following the end
of each of the Company's fiscal years, such federal, state and
local income tax information and such other accounting and tax
information as shall be necessary for the preparation by the
Members of their respective income tax returns for such fiscal
year;
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(3) When such returns become available, copies of all
federal, state and local income tax returns or information
returns, if any, which the Company is required to file; and
(4) As soon as practicable following receipt by the
Company thereof, financial statements or reports from an
Operating Subsidiary.
(b) Interim Financial Statements. No later than thirty (30)
days after the end of each calendar month, the Management Committee
shall cause to be prepared and delivered to the Members, together with
an appropriate certificate of the person authorized to prepare the
same:
(1) A profit and loss statement and statement of cash
flows for such month (including sufficient information to
permit each Member to calculate its tax accruals), for the
portion of the fiscal year then ended, and for the 12-month
period then ended;
(2) A balance sheet and a statement of the GAAP
Capital Accounts as of the end of such month; and
(3) A statement comparing the actual financial status
and results of the Company as of the end of or for such month
and the portion of the fiscal year then ended with the
budgeted or forecasted status and results as of the end of or
for such respective periods.
SECTION 10.3 AUDITS. The Company shall have the Company's financial
statements and books of account audited at the end of each fiscal year by the
Certified Public Accountants.
SECTION 10.4 INSPECTION OF FACILITIES AND RECORDS. Each Member shall
have the right at all reasonable times during usual business hours to inspect
the facilities of the Company and of the Operating Subsidiaries and to examine
and make copies of the books of account and other records of the Company and the
Operating Subsidiaries. Such right may be exercised through any agent or
employee of the Member designated in writing by it or by an independent public
accountant or attorney so designated. The Member making the request shall bear
all expenses incurred in any inspection or examination made at such Member's
behest.
SECTION 10.5 BUDGETS. The Company shall cause to be prepared and
delivered to each Member such budgets, cash flow projections and other financial
reports and forecasts with respect to the Company and the Operating Subsidiaries
as from time to time may be reasonably requested by any Member.
ARTICLE XI
FISCAL YEAR
The fiscal year of the Company shall end on the thirty-first (31st) day
of December in each year.
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ARTICLE XII
COMPANY FUNDS
The funds of the Company shall be deposited in such bank account or
accounts, or invested in such interest-bearing or non-interest-bearing accounts,
as shall be designated by the Management Committee. All withdrawals from any
such bank accounts shall be made by the Management Committee or the
Administrator or as otherwise duly authorized by the Management Committee.
Without the prior unanimous consent of the Management Committee, Company funds
shall not be commingled with those of any other Person.
ARTICLE XIII
STATUS OF MEMBERS
Except as provided in the Act or as expressly provided in a separate
written agreement signed by the relevant Member, the debts, obligations and
liabilities of the Company, whether arising in contract, tort or otherwise,
shall be solely the debts, obligations and liabilities of the Company, and no
Member shall be obligated personally for any such debt, obligation or liability
of the Company solely by reason of being a Member or acting as a member of the
Management Committee or as a member of the management committee of an Operating
Subsidiary.
ARTICLE XIV
MANAGEMENT AND OPERATION OF BUSINESS
SECTION 14.1 MEMBER MANAGEMENT. The management of the Company is fully
vested in the Members, acting exclusively in their membership capacities. To
facilitate the orderly and efficient management of the Company, the Members
shall act collectively as a "committee of the whole" (named the Management
Committee) pursuant to Section 14.2. The Company will not have "managers," as
that term is used in the Act, it being understood that the Representatives and
Alternate Representatives do not constitute "managers."
SECTION 14.2 MANAGEMENT COMMITTEE. The Members shall act collectively
through meetings as a "committee of the whole," which is hereby named the
"Management Committee." Decisions or actions taken by the Management Committee
in accordance with the provisions of this Agreement shall constitute decisions
or actions by the Company and shall be binding on each Member of the Company.
The Management Committee shall conduct its affairs in accordance with the
following provisions and the other provisions of this Agreement:
(a) Organization of Management Committee:
(i) The Management Committee shall be composed of one
representative for each Member.
(ii) Each Member shall appoint one individual to
represent it on the Management Committee (individually, such
Member's "Representative" and collectively, such Members'
"Representatives"). Any individual may serve as the
Representative of more than one Member. Each Member shall also
appoint one
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or more individuals ("Alternate Representatives") with the
power of substitution and authority to act in place of its
Representatives in case of the unavailability thereof. Each
Representative and Alternate Representative shall be an
officer or agent of the Member appointing him or her and shall
be duly authorized to act on behalf of and to bind the
appointing Member. Each Member reserves the right to remove
any one or more of its Representatives or Alternate
Representatives, as the case may be, and to appoint successors
and substitutes therefor, from time to time, and any such
change shall be effective upon such Member's delivering a
written notice of such change to the Company.
(iii) Notwithstanding the number of Representatives
and Alternate Representatives, each Member shall have the
right to vote its Sharing Ratio on all matters to be decided
by the Management Committee. If any Member becomes a
Delinquent Member and the Delinquent Member's delinquent
Capital Contribution has not otherwise been paid pursuant to
Section 7.5(c), then for voting purposes, unless and until the
Capital Contribution as to which the Delinquent Member is
delinquent is paid by such Member, (i) the Sharing Ratio of
such Member shall be deemed to be reduced in the same manner
as provided in Section 7.5(c)(iii) as if the other Members
shall have made the delinquent Capital Contribution of the
Delinquent Member and (ii) such reduction in the Sharing Ratio
of the Delinquent Member shall be apportioned among the other
Members in proportion to their respective Sharing Ratios.
Voting may occur by voice vote at a meeting of the Management
Committee or by written consent.
(iv) Unanimous approval, vote or consent of the
Management Committee shall mean the approval, vote or consent
of all of the Sharing Ratios.
(v) If any Member shall have breached or violated any
material covenant, condition, representation or warranty
contained in this Agreement, other than a breach or violation
to which the provisions of Section 7.5 apply, then the
Management Committee shall send, or cause to be sent, notice
to such Member describing the alleged breach or violation,
referring in such notice to the relevant Section of this
Agreement and stating the consequences of continued breach or
violation of such Section. If such Member does not remedy the
breach or violation within the earlier of (A) a reasonable
time or (B) 30 days of receipt of the Notice, the Majority in
Interest (based on Sharing Ratios) of the remaining Members
may vote (A) to exclude such breaching or violating Member and
its Representative and Alternate Representative(s) from
participation in the Management Committee and (B) to apportion
such breaching Member's Sharing Ratio for voting purposes to
the other Members; in the case of (A) and (B), only so long as
such breach or violation continues.
(b) Management Committee Consents: Except as otherwise
expressly required in this Agreement, any action of the Management
Committee shall require the affirmative vote of a Majority in Interest.
Notwithstanding any other provision of this Agreement, the following
actions require the unanimous consent, subject to the provisions of
Section 14.2(a)(v), of the Management Committee:
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(i) Adoption of any rules and procedures of the
Management Committee in addition to those set forth in this
Agreement and amendments or supplements thereto concerning the
conduct of the affairs of the Management Committee of the
Company;
(ii) The sale, transfer or other disposition of an
Operating Subsidiary or of all or substantially all of the
assets, whether in one transaction or a series of
transactions, of an Operating Subsidiary;
(iii) Engaging in any business other than the
ownership of the Operating Subsidiaries or authorizing an
Operating Subsidiary to engage in any business other than the
acquisition, construction, ownership, operation, repair,
maintenance, alteration and/or expansion of any Subsidiary
System;
(iv) The formation of any Operating Subsidiary other
than those Operating Subsidiaries formed on or prior to the
Formation Date, including, but not limited to, the terms and
provisions of the formation documents for such entity and any
amendments thereto;
(v) Any expansion or extension of any Subsidiary
System other than as permitted pursuant to Section 7.2;
(vi) Except for purposes of winding up the affairs of
the Company following a dissolution, the sale, lease,
mortgage, pledge or other transfer of all or substantially all
of the Company's assets;
(vii) Approval of the form and content of any
short-term or long-term financing commitment and any fee
arrangement related thereto;
(viii) Approval of all tax policy matters, tax
elections, and all federal and state income and franchise tax
returns of the Company; and
(ix) Any other act described in this Agreement or the
Act as requiring the unanimous consent of the Management
Committee or the Members, including, without limitation, those
acts set forth in Sections 7.3 and Articles XVIII and XXI.
(c) Meetings of the Management Committee:
(i) Regular meetings of the Management Committee
shall be held (at least every four months) on such dates, at
such times and at such locations as the members of such
committee shall from time to time determine, taking into
account the convenience of all parties. Notice of any special
meeting shall include a statement of the matters proposed to
be considered at such meeting and shall be given to all
participants by the Person calling the meeting, under normal
circumstances at least 10 Business Days prior to the meeting,
although shorter notice of a meeting (but not less than 24
hours) may be given if the circumstances
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of urgency so require. All notices of Management Committee
meetings shall be given either in writing, or by telephone if
immediately followed by written confirmation. Each Member
agrees to use reasonable efforts to cause at least one of its
Representatives or an Alternate Representative to participate,
in the manner provided for herein, in all Management Committee
meetings. No Management Committee meeting shall be held unless
a Representative or Alternate Representative of each Member
participates in such meeting; provided, that if a duly
scheduled meeting is rescheduled due to the refusal or failure
of the Representative or any Alternate Representatives of one
or more Members to attend the meeting, then at the rescheduled
meeting, if there is a recurrence of the absence of the
Representative or any of the Alternate Representatives of any
such Member, the voting rights of such Member with respect to
matters addressed at such meeting(s) shall be apportioned
(based on Sharing Ratios) for voting purposes to, and all
decisions shall be made by, the Representatives or Alternate
Representatives of the other Members attending the meeting.
(ii) Representatives and Alternate Representatives
may participate in any Management Committee meeting by means
of telephone conference call or similar communications
equipment so long as all Persons participating in the meeting
can hear each other simultaneously. Except as otherwise
provided by applicable laws, any action required or permitted
to be taken at any meeting of the Management Committee may be
taken without a meeting, and without a vote, if a consent or
consents in writing, setting forth the action so taken, shall
be signed by the Representatives of not less than the minimum
of the Membership interests or Sharing Ratios that would be
necessary to take such action at a meeting at which the
Representatives of all the Members were present and voted.
(iii) The Management Committee shall appoint a
Chairman who shall preside at all Management Committee
meetings. The office of Chairman shall be alternated each
Calendar Year between (A) a Representative appointed by one of
the ANR Subs and (B) a Representative appointed by Leviathan
Deepwater, and vice versa.
(d) Sub-Committees:
(i) The Management Committee shall establish the
following Sub-Committees namely, the Finance Sub-Committee,
the Legal Sub-Committee and the Insurance Sub-Committee; and
each of such Sub-Committees shall continue until the
Management Committee unanimously approves the discontinuance
of such Sub-Committee. The Management Committee may also
establish such additional Sub-Committees from time to time as
it may determine, with such duties as the Management Committee
may prescribe.
(ii) Each Sub-Committee shall have one representative
representing each Member, provided that a representative on
the Sub-Committee may represent more than one Member. Each
representative so appointed shall serve
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until his successor shall be duly appointed or until his
death, ineligibility to serve, resignation or removal by the
Member which appointed him.
(iii) The Finance Sub-Committee shall in addition to
any other duties designated by the Management Committee submit
to the Management Committee its recommendations as to (A) all
proposed Company financings, (B) the depositing and investment
of Company funds, (C) accounting, auditing, budgets, financial
forecasting and reporting and related matters and (D)
selection of the Certified Public Accountants.
(iv) The Legal Sub-Committee shall in addition to any
other duties designated by the Management Committee submit to
the Management Committee its recommendations as to (A) legal,
regulatory and related matters and (B) selection of outside
counsel.
(v) The Insurance Sub-Committee shall in addition to
any other duties designated by the Management Committee submit
to the Management Committee its recommendations as to
insurance and other risk management matters.
(vi) The recommendations of Sub-Committees shall not
be considered as an act or authorization of the Management
Committee or the Company and, unless expressly authorized by
the Management Committee, Sub-Committees shall only have the
authority to make recommendations to the Management Committee
for its consideration and shall have no authority to deal with
any Person other than the Company, the Members and the
Administrator. The failure on the part of any Sub-Committee to
make a recommendation with respect to any matters shall not
limit the power and authority of the Management Committee or
the officials of the Company (acting within the scope of their
authority) to take action with respect to such matters nor
shall any such failure limit the authority of the
Administrator to take action with respect to such matter in
the name and on behalf of the Company in accordance with the
service agreement between the Administrator and the Company
and any appropriate directions of the Management Committee.
(e) No Individual Actions: A Member may not bind the Company
without the prior written authorization of the Management Committee.
(f) Business Development and Marketing. During the fourth
calendar quarter of each calendar year, the Management Committee will
develop and agree upon a marketing and business development plan for
the Company and each of the Operating Subsidiaries for the upcoming
calendar year.
SECTION 14.3 EXCULPATION. NEITHER THE MANAGEMENT COMMITTEE, THE
MEMBERS, THEIR RESPECTIVE AFFILIATES, NOR ANY OWNER, OFFICER, DIRECTOR,
SHAREHOLDER, PARTNER, EMPLOYEE OR AGENT OR OTHER REPRESENTATIVE OF THE MEMBERS
OR THEIR RESPECTIVE AFFILIATES, SHALL BE LIABLE, RESPONSIBLE OR ACCOUNTABLE IN
DAMAGES OR OTHERWISE TO
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THE COMPANY OR ANY MEMBER FOR ANY ACTION TAKEN OR FAILURE TO ACT (EVEN IF SUCH
ACTION OR FAILURE TO ACT CONSTITUTED THE NEGLIGENCE OF A PERSON) ON BEHALF OF
THE COMPANY WITHIN THE SCOPE OF THE AUTHORITY CONFERRED ON THE PERSON DESCRIBED
IN THIS AGREEMENT OR BY LAW UNLESS SUCH ACT OR OMISSION WAS PERFORMED OR OMITTED
FRAUDULENTLY OR CONSTITUTED GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. TO THE
EXTENT THAT, AT LAW OR IN EQUITY, THE MANAGEMENT COMMITTEE, THE MEMBERS, THEIR
RESPECTIVE AFFILIATES, OR ANY OWNER, OFFICER, DIRECTOR, SHAREHOLDER, PARTNER,
EMPLOYEE OR AGENT OR OTHER REPRESENTATIVE THEREOF HAVE DUTIES (INCLUDING
FIDUCIARY DUTIES) AND LIABILTIES RELATING TO THE COMPANY OR TO ANOTHER MEMBER,
THE MANAGEMENT COMMITTEE, THE MEMBERS, THEIR RESPECTIVE AFFILIATES, OR ANY
OWNER, OFFICER, DIRECTOR, SHAREHOLDER, PARTNER, EMPLOYEE OR AGENT OR OTHER
REPRESENTATIVE THEREOF ACTING UNDER THIS AGREEMENT SHALL NOT BE LIABLE TO THE
COMPANY OR TO ANY OTHER MEMBER OR ITS AFFILIATES FOR THEIR RELIANCE ON THE
PROVISIONS OF THIS AGREEMENT. THE PROVISIONS OF THIS AGREEMENT, TO THE EXTENT
THAT THEY EXPAND OR RESTRICT THE DUTIES AND LIABILITIES OF THE MANAGEMENT
COMMITTEE, THE MEMBERS, THEIR RESPECTIVE AFFILIATES, OR ANY OWNER, OFFICER,
DIRECTOR, SHAREHOLDER, PARTNER, EMPLOYEE OR AGENT OR OTHER REPRESENTATIVE
THEREOF OTHERWISE EXISTING AT LAW OR IN EQUIT), ARE AGREED BY THE MEMBERS TO
REPLACE SUCH OTHER DUTIES AND LIABILITIES OF THE MANAGEMENT COMMITTEE, THE
MEMBERS, THEIR RESPECTIVE AFFILIATES, OR ANY OWNER, OFFICER, DIRECTOR,
SHAREHOLDER, PARTNER, EMPLOYEE OR AGENT OR OTHER REPRESENTATIVE THEREOF.
SECTION 14.4 INDEMNIFICATION.
(a) TO THE FULLEST EXTENT PERMITTED BY LAW, THE MANAGEMENT
COMMITTEE, THE MEMBERS, THEIR RESPECTIVE AFFILIATES AND THEIR
RESPECTIVE OWNERS, OFFICERS, DIRECTORS, SHAREHOLDERS, PARTNERS,
EMPLOYEES AND AGENTS OR ANY PERSON PERFORMING A SIMILAR FUNCTION
(INDIVIDUALLY, AN "INDEMNITEE") SHALL BE RELEASED, INDEMNIFIED AND HELD
HARMLESS BY THE COMPANY FROM AND AGAINST ANY AND ALL LOSSES, CLAIMS,
DAMAGES, JUDGMENTS, LIABILITIES, OBLIGATION, PENALTIES, SETTLEMENTS AND
REASONABLE EXPENSES (INCLUDING REASONABLE LEGAL FEES) ARISING FROM ANY
AND ALL CLAIMS, DEMANDS, ACTIONS, SUITS OR PROCEEDINGS, CIVIL,
CRIMINAL, ADMINISTRATIVE OR INVESTIGATIVE, IN WHICH THE INDEMNITEE MAY
BE INVOLVED, OR THREATENED TO BE INVOLVED, AS A PARTY OR OTHERWISE, BY
REASON OF ITS STATUS AS (X) A MEMBER OF THE MANAGEMENT COMMITTEE, A
MEMBER OR AN AFFILIATE THEREOF, OR (Y) AN OWNER, OFFICER, DIRECTOR,
SHAREHOLDER, PARTNER, EMPLOYEE OR AGENT OR OTHER REPRESENTATIVE OF A
MEMBER OR AN AFFILIATE THEREOF, REGARDLESS OF WHETHER THE INDEMNITEE
CONTINUES TO BE A MEMBER OF THE MANAGEMENT COMMITTEE, A MEMBER OR AN
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AFFILIATE THEREOF OR AN OWNER, OFFICER, DIRECTOR, SHAREHOLDER, PARTNER,
EMPLOYEE OR AGENT OR OTHER REPRESENTATIVE OF A MEMBER OR AN AFFILIATE
THEREOF AT THE TIME ANY SUCH LIABILITY OR EXPENSE IS PAID OR INCURRED,
UNLESS THE ACT OR FAILURE TO ACT GIVING RISE TO INDEMNITY HEREUNDER WAS
PERFORMED OR OMITTED FRAUDULENTLY OR CONSTITUTED GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT.
(b) The Company may purchase and maintain insurance on behalf
of the Management Committee and such other Persons as the Management
Committee shall determine against any liability that may be asserted
against or expense that may be incurred by such Person in connection
with the Company's activities, regardless of whether the Company would
have the power to indemnify such Person against such liability under
the provisions of this Agreement.
(c) Expenses incurred by any Indemnitee in defending any claim
with respect to which such Indemnitee may be entitled to
indemnification by the Company hereunder (including without limitation
reasonable attorneys' fees and disbursements) shall, to the maximum
extent permitted by law, be advanced by the Company prior to the final
disposition of such claim, upon receipt of a written undertaking by or
on behalf of such Indemnitee to repay the advanced amount of such
expenses unless it is determined ultimately that the Indemnitee is
entitled to indemnification by the Company under Section 14.4(a).
(d) The indemnification provided in this Section 14.4 is for
the benefit of the Indemnitees and shall not be deemed to create any
right to indemnification for any other Persons.
SECTION 14.5 OFFICERS.
(a) Appointment and Tenure.
(i) The Management Committee may, from time to time,
designate officers of the Company to carry out the day-to-day
business of the Company.
(ii) The officers of the Company shall be comprised
of one or more individuals designated from time to time by the
Management Committee. No officer need be a resident of the
State of Delaware. Each officer shall hold his office(s) for
such terms and shall have such authority, exercise such powers
and perform such duties as shall be determined from time to
time by the Management Committee. Any number of offices may be
held by the same individual.
(iii) The officers of the Company may include a
chairman, vice chairman, a secretary, a treasurer and a
controller. The Management Committee may also designate one or
more assistant secretaries and assistant treasurers. The
Management Committee may designate such other officers and
assistant officers and agents as the Management Committee
shall deem necessary.
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(b) REMOVAL. Any officer or agent may be removed as such at
any time by the Management Committee, either with or without cause, in
the discretion of the Management Committee.
(c) CHAIRMAN. The Chairman shall preside at all meetings of
the Management Committee and shall have such power and authority as may
be from time to time conferred upon him by the Management Committee. He
may sign on behalf of the Company any contacts, agreements, bonds and
mortgages and any applications or other documents to be filed with
governmental authorities which the Management Committee has authorized
to be signed on behalf of the Company and shall endeavor to see that
all orders, directives and policies of the Management Committee are
carried out.
(d) VICE CHAIRMAN. In the absence of the Chairman or in the
event of his inability or refusal to act, the Vice Chairman shall
perform the duties of the Chairman, and when so acting shall have the
powers of and be subject to all restrictions imposed upon the Chairman.
The Vice Chairman shall also perform such other duties as the
Management Committee may from time to time prescribe. If the Chairman
is a Representative of one of the ANR Subs, then the Vice Chairman
shall be a representative of Leviathan Deepwater, and vice versa.
(e) SECRETARY. The Secretary shall attend all meetings of the
Management Committee and record, or cause to be recorded, all
proceedings of the meetings in a book to be kept for that purpose. If
requested by a Representative, he shall give, or cause to be given,
notice of all special meetings of the management Committee. The
Secretary shall also perform such other duties as the Management
Committee may from time to time prescribe.
(f) TREASURER. The Treasurer shall be responsible for advising
the Management Committee concerning the custody and utilization of the
Company's funds and securities and records with respect thereto. The
Treasurer shall also perform such other duties as the Management
Committee may from time to time prescribe.
(g) CONTROLLER. The Controller shall be responsible for
advising the Management Committee concerning the maintenance of
adequate accounting records and concerning internal auditing
procedures. The Controller shall also perform such other duties as the
Management Committee may from time to time prescribe.
SECTION 14.6 MANAGEMENT COMMITTEE DEADLOCKS. If any matter or proposal
is brought before the Management Committee which is to be decided by a Majority
in Interest and a Majority in Interest does not vote for or against such matter
or proposal, any Member, by written notice to all the other Members given within
10 days after the initial vote on such matter or proposal, may call a meeting of
the Management Committee to reconsider such matter or proposal, such meeting to
be held when, where and as reasonably specified in said notice, but not less
than 15 days nor more than 25 days after the date of such Management Committee
vote. If such meeting is called and held as herein provided and a Majority in
Interest does not vote for or against such matter or proposal, then any Member
may within 10 days thereafter submit the matter to arbitration in accordance
with Sections 14.7 through 14.14. If no Member calls such a
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meeting within the first 10 day period after the second meeting, no Member shall
thereafter have any right to request arbitration regarding such matter or
proposal.
SECTION 14.7 INITIATION OF PROCEEDINGS. Any Member wishing to submit a
matter or proposal to arbitration as permitted by this Article XIV shall do so
by giving written notice of arbitration to the other Members and the Company.
The Member initiating arbitration shall also simultaneously file duplicate
copies of its notice of arbitration with any regional office of the AAA,
together with the appropriate fee as provided in the AAA's administrative fee
schedule. The initiating Member shall state in its notice of arbitration the
regional office of the AAA it has selected and thereafter all communications
with the AAA regarding the arbitration proceedings shall be directed to such
office unless the AAA directs otherwise. The notice of arbitration shall contain
a brief description of the nature of the dispute to be arbitrated and the remedy
or resolution sought by the Member initiating arbitration. Such notice may also
contain a request that the dispute be arbitrated by a panel of three
arbitrators. If no such request is contained in the notice, it shall be presumed
that the Member seeking arbitration desires the dispute to be determined by a
single arbitrator.
SECTION 14.8 RESPONSES. Each of the other Members shall, within 20 days
from the date of mailing of the notice of arbitration, file with each of the
other Members, the Company and the AAA a response in which it states its view
regarding the dispute to be arbitrated and the remedy or resolution it desires.
Such response may also include a request that the dispute be determined by a
panel of three arbitrators. If any of the Members indicate their desire to have
the dispute determined by a panel of three arbitrators, it shall be so
determined. Otherwise, the dispute shall be determined by a single arbitrator.
SECTION 14.9 SELECTION OF ARBITRATORS. As soon as practical after the
expiration of the 20 day period beginning upon the date of mailing of the
initiating Member's notice of arbitration, the AAA shall compile a list of
available arbitrators competent and qualified to determine the dispute as
described in the notice of arbitration and the responses thereto. If the Members
have elected, in accordance with Section 14.8, to have the dispute determined by
a panel of three arbitrators, the list shall be composed of seven (7) names and
if the Members have elected to have the dispute determined by a single
arbitrator, the list shall be composed of five (5) names. The AAA shall also, at
the same time, by lot, rank the Members in numerical order, and shall thereupon
forthwith transmit the list simultaneously to the Members and inform them of the
order in which it has ranked them. Unless all of the Members shall beforehand
agree to a different time or place, or both, they shall meet at the principal
office of the Company at 10:00 A.M. prevailing time on the seventh Business Day
after the date of mailing of the AAA's list of arbitrators and notice of
ranking. At such time, they shall each, one by one, in accordance with the
ranking determined by the AAA, strike a name from the list submitted by the AAA
until each Member has struck two (2) names. The three (3) or the one (1)
remaining, as the case may be, when such process of striking has been completed,
shall be the arbitrators or arbitrator to arbitrate and determine the dispute.
If any of the arbitrators so selected declines or for any reason fails to serve,
the AAA shall forthwith furnish the Members a second list of additional
available arbitrators competent and qualified to determine the dispute, such
list to contain five (5) names plus the names of as many individuals as there
are vacancies to fill because of the failure to serve of previously selected
arbitrators. The parties shall thereupon again, in accordance with the ranking
determined by the AAA, one by one, in turn, strike names from the
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list. The individuals or individual whose names or name remain on the list upon
the completion of such striking shall, together with any arbitrators previously
chosen in the case of a dispute to be determined by a panel of three (3)
arbitrators, be the arbitrators to arbitrate and determine the dispute. This
procedure shall be repeated until one (1) or three (3) arbitrators, as the case
may be, who are willing and able to serve have been selected. If any of the
Members at any point fails to participate in the procedure hereinabove
established to select arbitrators, the AAA shall forthwith eliminate the
appropriate number of names from the list of arbitrators for each Member not so
participating.
SECTION 14.10 LOCATION. Within 10 days of the mailing to the Members by
the AAA of notification that the one or all three of the arbitrators, as the
case may be, selected as above provided is or are willing and able to serve, the
Members may mutually agree upon the locale where the arbitration is to be held.
If the locale is not designated within such period, the AAA shall have the power
to determine the locale and its decision shall be final and binding; provided,
however, that if within the 10 days, one Member files a written request with the
AAA and each of the other Members that the hearing be held in a specific locale
and no other Member so files an alternate request, the arbitration proceedings
shall be conducted at the locale requested
SECTION 14.11 RULES. Except as specifically herein provided for, all
arbitration proceedings under this Article XIV shall be conducted in accordance
with the Commercial Arbitration Rules of the AAA, as then amended and in effect;
and such rules shall be interpreted and applied and questions retarding the
arbitration process not resolved under such rules shall be determined in
accordance with the Uniform Arbitration Act, as enacted in the State of
Delaware.
SECTION 14.12 LIMITATIONS ON ARBITRATION. Except with respect to the
matters specified in Section 14.6, no Member shall have the right to demand
arbitration with respect to any dispute, difference or question arising between
any of the Members themselves or any Member and the Company as to the meaning or
interpretation of any provision of this Agreement or as to the performance by
any Member or the Company of its obligation hereunder, whether before or after
the termination of this Agreement, or as to any matter whatsoever.
SECTION 14.13 EFFECT OF AWARD. Upon any decision with respect to any
matter referred to arbitration pursuant to the provisions of this Article XIV,
each Member and the Company shall use its best efforts and take all such steps
as may be within its power to ensure that the matter determined by arbitration
is carried out as if it had received the appropriate approval of the Management
Committee. The Members agree that judgment on the arbitration award may be
entered by any court of competent jurisdiction.
SECTION 14.14 COMPANY ADMINISTRATION. The Members select LOC as
Administrator of the Company. Contemporaneously with the execution of this
Agreement, the Company has executed and delivered an administrative service
agreement (the "Administrative Agreement") to LOC. The Administrator may not be
removed, and the Administrative Agreement may not be terminated or amended,
except pursuant to the terms of the Administrative Agreement. If the
Administrative Agreement is terminated or if LOC is removed as Administrator,
the Management Committee shall (i) select ANR as the new Administrator, subject
to ANR's written consent, and (ii) enter into a new Administrative Agreement
with ANR with terms and conditions agreeable to both ANR and the Management
Committee.
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ARTICLE XV
MANAGEMENT OF OPERATING SUBSIDIARIES
SECTION 15.1 OPERATING SUBSIDIARY MANAGEMENT COMMITTEES. Each Operating
Subsidiary shall be managed, in accordance with the constitutive documents of
such Operating Subsidiary, by a management committee, each such management
committee to be composed of one (1) representative from each Member, which
representative shall have the right to vote such Member's Sharing Ratio on all
matters to be decided by such management committee. The same representative may
represent more than one Member.
ARTICLE XVI
DISPOSITIONS AND ENCUMBRANCES OF MEMBERSHIP INTERESTS
SECTION 16.1 DISPOSITIONS AND ENCUMBRANCES OF MEMBERSHIP INTERESTS.
(a) A Disposition or Encumbrance of all or any portion of a
Membership Interest may be effected only in strict accordance with the
provisions of this Section 16.1. Any attempted Disposition or
Encumbrance by a Member of a Membership Interest other than in strict
accordance with this Section 16.1 is void, and the Company shall not
recognize it. The Members agree that a breach of the provisions of this
Section 16.1 may cause irreparable injury to the Company and to the
other Members for which monetary damages (or other remedy at law) are
inadequate in view of (i) the complexities and uncertainties in
measuring the actual damages that would be sustained by reason of the
failure of a Member to comply with such provision and (ii) the
uniqueness of the Company business and the relationship among the
Members. Accordingly, the Members agree that the provisions of this
Section 16.1 may be enforced by specific performance.
(b) Except as permitted by Section 16.2, a Member may Dispose
of its Membership Interest only if:
(i) the Disposition would not allow any creditor of
the Company or an operating Subsidiary to call, accelerate or
otherwise alter the terms or conditions of any indebtedness of
the Company or an Operating Subsidiary;
(ii) the Disposing Member's assignee enters into an
amendment to this Agreement or other Document acceptable in
form and substance to the Management Committee whereby the
assignee agrees to be bound by the terms of this Agreement;
(iii) the Disposition is pursuant to an applicable
exemption from registration under the Securities Act of 1933,
as amended, and other applicable securities laws;
(iv) unless unanimously consented to by the
Management Committee, such disposition does not result in a
termination of the Company for federal income tax purposes
under section 708(b)(1)(B) of the Code, or cause the Company
to be treated as a corporation under the Code; and
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(v) the Disposition consists of equal percentages of
the Disposing Member's Capital Accounts and Sharing Ratio.
(c) If a filing under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended, is required in connection with
the Disposition by a Member of any of its Membership Interest, which
filing would not be required if the transfer of such Membership
Interest were instead accomplished by a change in control of the
Disposing Member, then the Disposing Member may not effect such
Disposition of its Membership Interest except with the unanimous
consent of the Management Committee.
(d) Notwithstanding any contrary provision contained in this
Agreement, no Member shall dispose of such Member's rights or
obligations arising from or related to this Agreement, the Company or
any interest therein if such disposition would result in the violation
of the Act or any other laws. Any such attempted Dispositions are void
ab initio.
SECTION 16.2 PERMITTED DISPOSITIONS AND ENCUMBRANCES. Nothing contained
in this Agreement other than Section 16.1 (b)(iv) shall prevent:
(a) The Disposition by any Member of any of its right, title
and interest in the Company (including indebtedness thereof) if such
right, title and interest is transferred to another Person which is an
Affiliate of the transferor pursuant to (a) a statutory merger or
consolidation or (b) a sale of all or substantially all of the assets
of the transferor provided that such Affiliate assumes by operation of
law or express agreement with the Company (in form and substance
satisfactory to the Management Committee) all of the obligations of the
transferor under this Agreement and that no such transfer (other than
pursuant to a statutory merger or consolidation wherein all obligations
and liabilities of the Member are assumed by the successor Person by
operation of law) shall relieve the transferor of its obligations under
this Agreement without the unanimous approval of the Management
Committee. Upon such transfer such Affiliate shall be admitted as a
Member in substitution of the Member which was the transferor.
(b) An Encumbrance (and any transfer made in foreclosure or
other enforcement of such Encumbrance) in all or any portion of a
Member's right, title or interest in the profits and surplus of the
Company or in any indebtedness of the Company or an Operating
Subsidiary under any Encumbrance executed by or binding upon such
Member, provided that such assignee, pledgee, trustee or other
transferee shall not have any voice in the management of the Company as
a result of any such transfer.
ARTICLE XVII
RESIGNATION, BANKRUPTCY, ETC.
SECTION 17.1 COVENANT NOT TO WITHDRAW. No Member has the right to, and
each Member agrees that it will not, resign, retire or withdraw from the Company
as a Member without the prior unanimous consent of the Management Committee.
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SECTION 17.2 AFFECTED MEMBER.
(a) If any Member ceases to be a Member other than in
connection with the transfer of all that Member's Membership Interest
and the admission of the transferee as a Member as permitted by Article
XVI, or remains a Member after becoming a Bankrupt Member (the
"Affected Member"), the Company shall have the option, exercisable by
notice from the other Members who are not Affiliates of the Affected
Member (the "Other Members") to the Affected Member at any time prior
to the 90th day after receipt of notice of the occurrence of the event
causing it to become an Affected Member, to buy (or to designate
another Person to buy), and on the exercise of this option the Affected
Member shall sell, its interests in the Company (the "Interest").
(b) The purchase price shall be an amount equal to the fair
market value of the Interest determined by agreement by the Affected
Member and the Other Members, taking into account any sums owed to the
Affected Member by the Company or by the Affected Member to the
Company; however, if those persons do not agree on the fair market
value on or before the 30th day following the exercise of the option,
then the Other Members shall, by notice to the Affected Member on or
before the fifth day after the expiration of such 30-day period,
initiate the determination of fair market value by an independent
appraiser. Such notice shall designate five appraisal firms recognized
in the United States. The Affected Member shall select one of such
appraisal firms within 20 days after receipt of such notice. Each of
the Affected Member and the Other Members shall submit a proposed fair
market value to the appraisal firm, together with any supporting
documentation it deems appropriate, within 30 days after selection of
the appraisal firm. The appraisal firm shall determine the fair market
value by selection of one of the proposed fair market values submitted
(and shall have no authority beyond selection of one of such proposals)
as promptly as possible (and in any event on or before the 30th day
after submittal of the competing proposals). The Affected Member and
the Company each shall pay one-half of the costs of the appraisal. The
closing of the acquisition of the Interest contemplated hereunder shall
be consummated at a closing held at the principal offices of the
Company on or before the 60th day after the determination of the fair
market value of the Interest but effective at the end of the calendar
month occurring on or immediately prior to such closing. The purchaser
shall pay the fair market value as so determined in cash at the
closing. At the closing, the Affected Member shall deliver to the
Company or its designee such transfer documentation reasonably
acceptable to the Company or such designee as shall be required to
evidence the transfer of such Interest, free and clear of all liens and
encumbrances, except those created under this Agreement.
(c) The payment to be made to the Affected Member under this
Section 17.2 is in complete liquidation and satisfaction of all
the rights and interest of the Affected Member (and of all persons
claiming by, through, or under the Affected Member) in and in respect
of the Company and any rights against the Company and (insofar as the
affairs of the Company are concerned) against the Members, and
constitutes a compromise to which all Members have agreed pursuant to
Section 18-502(b) of the Act.
(d) If an event requiring a winding up of the Company occurs
before the purchase price for the Interest is determined under Section
17.2(b), then the purchase and sale shall not occur. Instead, the
Affected Member or its successors shall be entitled to
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receive in the liquidation of the Company the same amount that person
would have received had the Affected Member continued to be a Member or
not become a Bankrupt Member.
ARTICLE XVIII
DISSOLUTION OF THE COMPANY
The happening of any one of the following events shall work an
immediate dissolution of the Company:
(a) the unanimous written consent of the Members; or
(b) any other event causing dissolution as described in
section 18-801 (a)(4) or (5) of the Act.
ARTICLE XIX
WINDING UP AND TERMINATION OF THE COMPANY
SECTION 19.1 LIQUIDATOR. If the Company is dissolved and wound up for
any reason, a liquidator (the "Liquidator") shall commence to wind up the
affairs of the Company and to liquidate and sell its assets. The Management
Committee shall serve as the Liquidator. The Liquidator shall have full right
and discretion to determine the time, manner and terms of sale or sales of
Company property pursuant to such liquidation having due regard to the activity
and condition of the relevant market and general financial and economic
conditions. The Liquidator appointed in the manner provided herein shall have
and may exercise, without further authorization or consent of any of the parties
hereto or their legal representatives or successors in interest, all of the
powers conferred upon the Management Committee under the terms of this Agreement
(but subject to all of the applicable limitations, contractual and otherwise,
upon the exercise of such powers) to the extent necessary or desirable in the
good faith judgment of the Liquidator to carry out the duties and functions of
the Liquidator hereunder, for and during such period of time, not to exceed two
years after the date of dissolution of the Company, as shall be reasonably
required in the good faith judgment of the Liquidator to complete the
liquidation and dissolution of the Company as provided for herein, including,
without limitation, the following specific powers:
(a) The power to continue to manage and operate any business
of the Company during the period of such liquidation or dissolution
proceedings, excluding, however, the power to make and enter into
contracts that may extend beyond the period of liquidation.
(b) The power to make sales and incident thereto to make
deeds, bills of sale, assignments and transfers of assets and
properties of the Company; provided, that the Liquidator may not impose
personal liability upon any of the Members under any such instrument.
(c) The power to borrow funds as may, in the good faith
judgment of the Liquidator, be reasonably required to pay debts and
obligations of the Company or operating expenses, and to execute and/or
grant deeds of trust, mortgages, security
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agreements, pledges and collateral assignments upon and encumbering any
of the Company properties as security for repayment of such loans or as
security for payment of any other indebtedness, of the Company;
provided, that the Liquidator shall not have the power to create any
personal obligation on any of the Members to repay such loans or
indebtedness other than out of available proceeds of foreclosure or
sale of the properties or assets as to which a lien or liens are
granted as security for payment thereof.
(d) The power to settle, release, compromise or adjust any
claims asserted to be owing by or to the Company, and the right to
file, prosecute or defend lawsuits and legal proceedings in connection
with any such matters.
SECTION 19.2 RESERVES. After making payment or provision for payment of
all debts and liabilities of the Company and all expenses of liquidation, the
Liquidator may set up, for a period not to exceed the two (2) year period set
forth in Section 19.1, such cash reserves as the Liquidator may deem reasonably
necessary for any contingent liabilities or obligations of the Company. Upon the
satisfaction or other discharge of such contingency, the amount of the reserves
not retired, if any, will be distributed in accordance with this Article.
SECTION 19.3 LIQUIDATION DISTRIBUTIONS. Upon the winding up and
termination of the business and affairs of the Company, its assets (other than
cash) shall be sold and its liabilities and obligations to creditors and all
expenses incurred in its liquidation shall be paid (either by payment or the
making of reasonable provision for payment). Thereafter, the net proceeds from
such sales (after deducting all selling costs and expenses in connection
therewith), together with (at the expiration of the two-year period set forth in
Section 19.1) the balance and reserve account referred to in Section 19.2 above,
shall be distributed among the Members in accordance with their respective
positive balances in their 704(b) Capital Accounts.
SECTION 19.4 ACCOUNTING. Within a reasonable time following the
completion of the liquidation of the Company's properties, the Liquidator shall
supply to each of the Members a statement prepared by the Certified Public
Accountants that shall set forth the assets and the liabilities of the Company
as of the date of complete liquidation, each Member's pro rata portion of
distributions pursuant to Section 19.3 and the amount retained as reserves by
the Liquidator pursuant to Section 19.2.
SECTION 19.5 ONLY RECOURSE TO COMPANY ASSETS. Each holder of an
interest in the Company shall look solely to the assets of the Company for all
distributions with respect to the Company and its Capital Contribution thereto
(including the return thereof) and share of profits or losses thereof, and shall
have no other recourse therefor (upon dissolution or otherwise) against the
Company, the Management Committee or the Liquidator. No holder of an interest in
the Company shall have any right to demand or receive property other than cash
upon dissolution and termination of the Company.
SECTION 19.6 TERMINATION. Upon the completion of the liquidation of the
Company and the distribution of all Company funds, the Company shall terminate
and the Liquidator shall (and is hereby given the power and authority to)
execute, acknowledge, swear to and record all documents required to effectuate
the dissolution and termination of the Company. No Member shall be required to
restore any deficit balance existing in any of its Capital Accounts upon the
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liquidation and termination of the Company provided that such Member has made
all Capital Contributions that it has agreed to make as contemplated by this
Agreement.
ARTICLE XX
NOTICES
To be effective, all notices and demands under this Agreement must be
in writing (including telex, facsimile, telecopier or similar writing) and sent
to the addresses of the Members or their respective assigns set forth on the
signature pages hereof. Notices delivered in accordance with the foregoing shall
be deemed to have been given made and effective upon receipt. Any Member or his
assignee may designate a different address to which notices or demands shall
thereafter be directed by written notice given in the manner hereinabove
required and delivered to the Company at its principal office as hereinabove,
set forth. Notice to all the Members shall be deemed to be notice to the
Company.
ARTICLE XXI
AMENDMENT OF AGREEMENT
This Agreement may be modified or amended from time to time solely by
the written agreement of the Members holding Membership Interests representing
100% of the Sharing Ratios.
ARTICLE XXII
REPRESENTATIONS, WARRANTIES AND COVENANTS
Each Member hereby represents and warrants to the other Members that
(i) it is duly organized and validly existing in the jurisdiction of its
organization, with full power and authority to enter into and perform its
obligations under this Agreement; (ii) it has validly executed this Agreement,
and upon delivery this Agreement shall be a binding obligation of such party,
enforceable against such party in accordance with its terms; and (iii) its entry
into this Agreement and the performance of its obligations hereunder will not
require the approval of any governmental body or regulatory authority and will
not violate, conflict with or cause a default under any of its organizational
documents, any contractual covenant or restriction by which such party is bound,
or any applicable law, regulation, rule, ordinance, order, judgment or decree.
ARTICLE XXIII
MISCELLANEOUS
SECTION 23.1 NO PARTITION. The Members agree that the Company
properties are not and will not be subject to or otherwise suitable for
partition. Accordingly, each Member hereby irrevocably waives any and all rights
that it may have to maintain any action for partition of any Company property.
SECTION 23.2 ENTIRE AGREEMENT. This Agreement, and the additional
documents and agreements executed in connection herewith or referred to herein
and therein, constitute the entire agreement among the parties hereto with
respect to the subject matter hereof. They supersede any prior agreement or
understandings among them, and this Agreement may not be modified or amended in
any manner other than as set forth herein.
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SECTION 23.3 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY AND INTERPRETED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF DELAWARE.
SECTION 23.4 BINDING EFFECT. Except as herein otherwise specifically
provided, this Agreement shall be binding upon and inure to the benefit of the
parties and their legal representatives, heirs, administrators, executors,
successors and assigns.
SECTION 23.5 CONTEXT. Wherever from the context it appears appropriate,
each term stated in either the singular or the plural shall include the singular
and the plural, and pronouns stated in the masculine, the feminine or the neuter
gender shall include the masculine, feminine and neuter.
SECTION 23.6 CAPTIONS. Captions contained in this Agreement are
inserted only as a matter of convenience and in no way define, limit or extend
the scope or intent of this Agreement or any provision hereof.
SECTION 23.7 EFFECT OF INVALID PROVISION. If any provision of this
Agreement, or the application of such provision to any person or circumstance,
shall be held invalid, the remainder of this Agreement, or the application of
such provision to persons or circumstances other than those to which it is held
invalid, shall not be affected thereby.
SECTION 23.8 COUNTERPART EXECUTION. This Agreement may be executed in
several counterparts, each of which shall be deemed an original but all of which
shall constitute one and the same instrument. It shall not be necessary for all
Members to execute the same counterpart hereof.
SECTION 23.9 LAWS AND REGULATORY BODIES. This Agreement and the
obligations of the Partners hereunder are subject to all applicable laws, rules,
orders and regulations of governmental authorities having jurisdiction and in
the event of conflict, said laws, rules, orders and regulations of governmental
authorities having jurisdiction shall control. If, as a result of any
transaction (including but not limited to any acquisition) entered into in
connection with the formation of the Company, any regulatory agency (including
but not limited to FERC or FTC) or court of competent jurisdiction seeks or
orders divestiture or sale of any pipeline assets or interests, the Members
agree that any such divestiture or sale will be satisfied solely through (i)
divestiture or sale of the pipeline assets held at such time by one or more
Operating Subsidiaries or (ii) divestiture or sale of a portion of the
Membership Interest held by the Members; provided, that in the case of (ii)
above, the portion of Membership Interest sold or divested by Leviathan
Deepwater will equal the total amount of Membership Interests sold or divested
by the ANR Subs in the aggregate, and vice versa. In no event shall the Company,
any Member or any Affiliate of any Member be required to litigate with any
regulatory agency to oppose such divestiture or sale. In no event shall any
Member or any Affiliate of any Member be required by any other Member to divest
or sell any ownership interest in any pipeline other than those owned by the
Operating Subsidiaries to resolve any investigation, litigation or regulatory
proceeding arising out of the formation of the Company. The Members agree to
work cooperatively to resolve any agency investigation or other regulatory
proceeding and agree to share the reasonable costs of any third party experts or
consultants retained to assist in resolving
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such investigation or proceeding. The Members will equally share any gain or
loss arising from any divestiture or sale of assets of the Company or the
Operating Subsidiaries undertaken to resolve or prevent any agency
investigation, litigation or regulatory proceeding.
SECTION 23.10 BUSINESS OPPORTUNITY. Participation in the Company shall
not in any way restrain any Member or its Affiliates or any officers, directors,
shareholders, members, employees, agents or other representatives of any of them
in other present or future business activities, opportunities, transactions,
Ventures or other arrangements of any nature or description, whether or not any
such activity is competitive with the business of the Company or any of the
Company's Affiliates, or in any way preclude or restrict any of them from
entering into a joint venture, partnership or other business arrangement with
the Company. None of any Member or any Member's Affiliates or any officers,
directors, shareholders, members, employees, agents or other representatives of
any of them shall under any circumstances be obligated or bound to offer or
present to the Company any business opportunity offered to such Person as a
prerequisite to the acquisition of or investment in such business opportunity by
any of them. Other than for tax purposes, nothing herein is intended to create a
partnership, joint venture, agency or other relationship creating fiduciary or
quasi-fiduciary duties or similar duties and obligations or subject the Members
to joint and several or vicarious liability or to impose any duty, obligation or
liability that would arise therefrom with respect to any or all of the Members.
SECTION 23.11 ENTITLEMENT TO CERTIFICATES. Every owner of a Membership
Interest in the Company, unless and to the extent the Company elects otherwise,
shall be entitled to have a certificate, in such form as is approved by the
Company and conforms with applicable law, certifying the Membership Interest
owned by it. Further, subject to the other provisions of this Agreement, for
purposes of providing for transfer of, perfecting a security interest in, and
other relevant matters related to, a Membership Interest, the Membership
Interest shall be deemed to be a "security" subject to the rules set forth in
Chapters 8 and 9 of the Texas Uniform Commercial Code and any similar Uniform
Commercial Code provision adopted by the States of New York or Delaware or any
other relevant jurisdiction.
[The remainder of this page is intentionally left blank.]
33
38
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and in the year first above written.
Address: American Natural Offshore Company
000 Xxxxxxxxxxx Xxxxxx By: /s/ XXXXXXX X. XXXXXXX
Xxxxxxx, Xxxxxxxx 00000 ----------------------------------
Telephone: (000) 000-0000 Name: Xxxxxxx X. Xxxxxxx
FAX: (000) 000-0000 Title: Senior Vice President
Address: Texas Offshore Pipeline System, Inc.
000 Xxxxxxxxxxx Xxxxxx By: /s/ XXXXXXX X. XXXXXXX
Xxxxxxx, Xxxxxxxx 00000 ----------------------------------
Telephone: (000) 000-0000 Name: Xxxxxxx X. Xxxxxxx
FAX: (000) 000-0000 Title: Senior Vice President
Address: Unitex Offshore Transmission Company
000 Xxxxxxxxxxx Xxxxxx By: /s/ XXXXXXX X. XXXXXXX
Xxxxxxx, Xxxxxxxx 00000 ----------------------------------
Telephone: (000) 000-0000 Name: Xxxxxxx X. Xxxxxxx
FAX: (000) 000-0000 Title: Senior Vice President
Address: ANR Western Gulf Holdings, L.L.C.
500 Renaissance Center By: /s/ XXXXXXX X. XXXXXXX
Xxxxxxx, Xxxxxxxx 00000 ----------------------------------
Telephone: (000) 000-0000 Name: Xxxxxxx X. Xxxxxxx
FAX: (000) 000-0000 Title: Senior Vice President
Address: Leviathan Deepwater, L.L.C.
1001 Louisiana-Suite 2600 By: /s/ T. XXXXX XXXXX
Xxxxxxx, Xxxxx 00000 ----------------------------------
Telephone: (000) 000-0000 Name: T. Xxxxx Xxxxx
FAX: (000) 000-0000 Title: Vice President
39
Exhibit A
To
Limited Liability Company Agreement
Of
Deepwater Holdings, L.L.C.
The Sharing Ratios of the Members of Deepwater Holdings, L.L.C. are as
follows:
Member Sharing Ratio
------ -------------
Leviathan Deepwater, L.L.C................................50.000%
American Natural Offshore Company.........................14.819%
Texas Offshore Pipeline System, Inc.......................14.819%
Unitex Offshore Transmission Company.......................2.717%
ANR Western Gulf Holdings, L.L.C..........................17.645%
Total....................................................100.000%
