EXHIBIT 3.3
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
EV MANAGEMENT, LLC
A DELAWARE LIMITED LIABILITY COMPANY
SEPTEMBER 29, 2006
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
EV MANAGEMENT, LLC
A DELAWARE LIMITED LIABILITY COMPANY
TABLE OF CONTENTS
Page
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ARTICLE I. DEFINITIONS........................................................... 1
Section 1.1 Definitions........................................................... 1
Section 1.2 Construction.......................................................... 6
ARTICLE II. ORGANIZATION.......................................................... 6
Section 2.1 Formation............................................................. 6
Section 2.2 Name.................................................................. 6
Section 2.3 Registered Office; Registered Agent; Principal Office; Other Offices.. 6
Section 2.4 Purpose and Business.................................................. 7
Section 2.5 Powers................................................................ 7
Section 2.6 Term.................................................................. 7
Section 2.7 Title to Company Assets............................................... 7
Section 2.8 Certain Undertakings Relating to Separateness......................... 8
ARTICLE III. MATTERS RELATING TO MEMBERS........................................... 10
Section 3.1 Members............................................................... 10
Section 3.2 Liability to Third Parties............................................ 10
Section 3.3 Transfer Generally.................................................... 10
Section 3.4 Transfer of a Member's Membership Interest............................ 10
Section 3.5 Restrictions on Transfers............................................. 10
Section 3.6 Admission of Members.................................................. 10
ARTICLE IV. CAPITAL CONTRIBUTIONS................................................. 11
Section 4.1 Capital Contributions................................................. 11
Section 4.2 Loans................................................................. 11
Section 4.3 Interest; Return of Contributions..................................... 12
Section 4.4 Issuances of Additional Membership Interests.......................... 12
ARTICLE V. DISTRIBUTIONS......................................................... 12
Section 5.1 Distributions......................................................... 12
ARTICLE VI. MANAGEMENT............................................................ 13
Section 6.1 Management............................................................ 13
Section 6.2 Board of Directors.................................................... 15
Section 6.3 Officers.............................................................. 18
Section 6.4 Duties of Officers and Directors...................................... 20
Section 6.5 Compensation.......................................................... 21
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Section 6.6 Indemnification....................................................... 21
Section 6.7 Liability of Indemnitees.............................................. 22
Section 6.8 Outside Activities.................................................... 23
Section 6.9 Resolution of Conflicts of Interest; Standard of Conduct and
Modification of Duties................................................ 24
ARTICLE VII. TAX MATTERS........................................................... 25
Section 7.1 Tax Returns and Tax Characterization.................................. 25
ARTICLE VIII. BOOKS, RECORDS, ACCOUNTING AND REPORTS................................ 25
Section 8.1 Records and Accounting................................................ 25
Section 8.2 Reports............................................................... 26
Section 8.3 Fiscal Year........................................................... 26
Section 8.4 Bank Accounts......................................................... 26
ARTICLE IX. DISSOLUTION, WINDING-UP AND TERMINATION............................... 26
Section 9.1 Dissolution........................................................... 26
Section 9.2 Winding-Up and Termination............................................ 27
ARTICLE X. MERGER, CONSOLIDATION OR CONVERSION................................... 28
Section 10.1 Authority............................................................. 28
Section 10.2 Procedure for Merger, Consolidation or Conversion..................... 28
Section 10.3 Approval by Members of Merger or Consolidation........................ 29
Section 10.4 Certificate of Merger, Consolidation or Conversion.................... 29
ARTICLE XI. GENERAL PROVISIONS.................................................... 31
Section 11.1 Notices............................................................... 31
Section 11.2 Entire Agreement; Supersedure......................................... 31
Section 11.3 Effect of Waiver or Consent........................................... 31
Section 11.4 Amendment or Restatement.............................................. 31
Section 11.5 Binding Effect........................................................ 32
Section 11.6 Governing Law; Severability........................................... 32
Section 11.7 Further Assurances.................................................... 32
Section 11.8 Offset................................................................ 32
Section 11.9 Counterparts.......................................................... 32
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AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
EV MANAGEMENT, LLC
A DELAWARE LIMITED LIABILITY COMPANY
THIS AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT (this
"AGREEMENT") of EV Management, LLC, a Delaware limited liability company (the
"COMPANY"), executed on September 29, 2006 (the "EFFECTIVE DATE"), is adopted,
executed and agreed to, by EnerVest Management Partners, Ltd., a Texas limited
partnership, as the sole Member of the Company ("ENERVEST").
RECITALS
A. EnerVest formed the Company on April 10, 2006, as the sole Member.
B. The Limited Liability Company Agreement of EV Management, LLC was
executed effective April 10, 2006 (the "EXISTING AGREEMENT").
C. EnerVest, the sole Member of the Company, deems it advisable to amend
and restate the Existing Agreement in its entirety as set forth herein.
AGREEMENTS
For and in consideration of the premises, the covenants and agreements set
forth herein and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, EnerVest, as the sole Member of the
Company, hereby amends and restates the Existing Agreement in its entirety as
follows:
ARTICLE I.
DEFINITIONS
SECTION 1.1 DEFINITIONS. The following definitions shall be for all
purposes, unless otherwise clearly indicated to the contrary, applied to the
terms used in this Agreement.
"AFFILIATE" means, with respect to any Person, each Person Controlling,
Controlled by or under common Control with such first Person.
"AGREEMENT" means this Amended and Restated Limited Liability Company
Agreement of EV Management, LLC, as the same may be amended, modified,
supplemented or restated from time to time.
"AUDIT COMMITTEE" has the meaning set forth in Section 6.2(e)(iii).
"AVAILABLE CASH" means as of any Distribution Date, (a) all cash and cash
equivalents of the Company on hand on such date, less (b) the amount of any cash
reserves determined to be appropriate by the Board.
"BANKRUPTCY" or "BANKRUPT" means, with respect to any Person, that (a)
such Person (i) makes an assignment for the benefit of creditors; (ii) files a
voluntary petition in bankruptcy; (iii) is insolvent, or has entered against
such Person an order for relief in any bankruptcy or insolvency proceeding; (iv)
files a petition or answer seeking for such Person any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief under any Law; (v) files an answer or other pleading admitting or failing
to contest the material allegations of a petition filed against such Person in a
proceeding of the type described in subclauses (i) through (iv) of this clause
(a); or (vi) seeks, consents to or acquiesces in the appointment of a trustee,
receiver or liquidator of such Person or of all or any substantial part of such
Person's properties; or (b) 120 Days have passed after the commencement of any
proceeding seeking reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under any Law, if the proceeding has
not been dismissed, or 90 Days have passed after the appointment without such
Person's consent or acquiescence of a trustee, receiver or liquidator of such
Person or of all or any substantial part of such Person's properties, if the
appointment is not vacated or stayed, or 90 Days have passed after the date of
expiration of any such stay, if the appointment has not been vacated.
"BOARD" has the meaning set forth in Section 6.1.
"BUSINESS DAY" means any Day other than a Saturday, a Sunday, or a Day on
which national banking associations in the State of Texas are authorized or
required by Law to close.
"CAPITAL CONTRIBUTION" has the meaning set forth in Section 4.1(b).
"CLASS B UNITS" has the meaning ascribed to such term in the MLP
Partnership Agreement.
"COMMITMENT" means (a) options, warrants, convertible securities,
exchangeable securities, subscription rights, conversion rights, exchange
rights, or other contracts, agreements or commitments that could require a
Person to issue any of its Equity Interests or to sell any Equity Interests it
owns in another Person; (b) any other securities convertible into, exchangeable
or exercisable for, or representing the right to subscribe for any Equity
Interest of a Person or owned by a Person; (c) statutory or contractual
pre-emptive rights or pre-emptive rights granted under a Person's organizational
or constitutive documents; and (d) stock appreciation rights, phantom stock,
profit participation, or other similar rights with respect to a Person.
"COMPANY" is described in the initial paragraph of this Agreement.
"COMPENSATION COMMITTEE" has the meaning set forth in Section 6.2(e)(iv).
"CONFLICTS COMMITTEE has the meaning set forth in Section 6.2(e)(ii).
"CONTRIBUTION AGREEMENT" has the meaning ascribed to such term in the MLP
Partnership Agreement.
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"CONTROL" means the possession, directly or indirectly, of the power and
authority to direct or cause the direction of the management and policies of a
Person, whether through ownership or control of Voting Stock, by contract or
otherwise.
"DAY" means a calendar Day; provided, however, that, if any period of Days
referred to in this Agreement shall end on a Day that is not a Business Day,
then the expiration of such period shall be automatically extended until the end
of the first succeeding Business Day.
"DELAWARE ACT" means the Delaware Limited Liability Company Act and any
successor statute, as amended from time to time.
"DELAWARE GENERAL CORPORATION LAW" means Title 8 of the Delaware Code, as
amended from time to time.
"DIRECTOR" means each member of the Board of Directors elected as provided
in Section 6.2.
"DISSOLUTION EVENT" has the meaning set forth in Section 9.1(a).
"DISTRIBUTION DATE" has the meaning set forth in Section 5.1.
"EFFECTIVE DATE" is described in the initial paragraph of this Agreement.
"ENERVEST" is described in the initial paragraph of this Agreement.
"EQUITY INTEREST" means, (a) with respect to a corporation, any and all
shares of capital stock and any Commitments with respect thereto, (b) with
respect to a partnership, limited liability company, trust or similar Person,
any and all units, interests or other partnership, limited liability company,
trust or similar interests, and any Commitments with respect thereto, and (c)
any other direct or indirect equity ownership or participation in a Person.
"EXISTING AGREEMENT" is defined in the Recitals.
"EXTRAORDINARY APPROVAL" means written approval of EnerVest.
"GROUP MEMBER" means any of the MLP and its Subsidiaries.
"INCENTIVE DISTRIBUTION RIGHTS" has the meaning ascribed thereto in the
MLP Partnership Agreement.
"INDEMNITEE" means each of (a) the Company and any Person who is or was an
Affiliate of the Company, (b) any Person who is or was a member, director,
officer, fiduciary or trustee of the Company, (c) any Person who is or was an
officer, member, partner, director, employee, agent or trustee of the Directors
or any Affiliate of the Directors, or any Affiliate of any such Person, and (d)
any Person who is or was serving at the request of the Directors or any such
Affiliate as a director, officer, employee, member, partner, agent, fiduciary or
trustee of another Person; provided, that a Person shall not be an Indemnitee by
reason of providing, on a fee-for-
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services basis, trustee, fiduciary or custodial services and (e) any Person the
Company designates as an "Indemnitee" for purposes of this Agreement.
"INDEPENDENT DIRECTOR" has the meaning set forth in Section 6.2(a).
"INVESTORS' RIGHTS AGREEMENT" means the Investors' Rights Agreement, dated
September 29, 2006, among EnerVest, EnerVest Operating, L.L.C., EV Investors,
L.P., CGAS Exploration, Inc., EnCap Energy Capital Fund V, L.P., EnCap V-B
Acquisitions, L.P. and the Company, as amended from time to time.
"IPO" has the meaning set forth in Section 6.2(a).
"LAW" means any applicable constitutional provision, statute, act, code,
law, regulation, rule, ordinance, order, decree, ruling, proclamation,
resolution, judgment, decision, declaration or interpretative or advisory
opinion or letter of a governmental authority.
"LIABILITY" means any liability or obligation, whether known or unknown,
asserted or unasserted, absolute or contingent, matured or unmatured,
conditional or unconditional, latent or patent, accrued or unaccrued, liquidated
or unliquidated, or due or to become due.
"LIQUIDATION DATE" means any event giving rise to the dissolution of the
Company, and the date on which such event occurs.
"MEMBER" means any Person executing this Agreement as of the date of this
Agreement as a member or hereafter admitted to the Company as a member as
provided in this Agreement, but such term does not include any Person who has
ceased to be a member in the Company.
"MEMBERSHIP INTEREST" means, with respect to any Member, (a) that Member's
status as a Member; (b) that Member's share of the income, gain, loss, deduction
and credits of, and the right to receive distributions from, the Company; (c)
all other rights, benefits and privileges enjoyed by that Member (under the
Delaware Act, this Agreement, or otherwise) in its capacity as a Member; and (d)
all obligations, duties and liabilities imposed on that Member (under the
Delaware Act, this Agreement or otherwise) in its capacity as a Member,
including any obligations to make Capital Contributions.
"MERGER AGREEMENT" has the meaning set forth in Section 10.1.
"MLP" means EV Energy Partners, L.P., a Delaware limited partnership.
"MLP GP" means EV Energy GP, L.P., as the general partner of the MLP.
"MLP GP AGREEMENT" means the First Amended and Restated Agreement of
Limited Partnership of EV Energy GP, L.P., dated effective as of September 29,
2006, as amended, supplemented, amended and restated, or otherwise modified from
time to time.
"MLP INTERESTS" means the limited partner interests of the MLP, regardless
of class or category of limited partner interests.
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"MLP PARTNERSHIP AGREEMENT" means the Amended and Restated Agreement of
Limited Partnership of the MLP, dated as of September 29, 2006, as amended or
restated from time to time.
"NATIONAL SECURITIES EXCHANGE" has the meaning ascribed to such term in
the MLP Partnership Agreement.
"OFFICERS" means any person elected as an officer of the Company as
provided in Section 6.3(a), but such term does not include any person who has
ceased to be an officer of the Company.
"OMNIBUS AGREEMENT" means Omnibus Agreement, dated September 29, 2006,
among the Company, MLP GP and EnerVest, as amended or restated from time to
time.
"OPERATING AGREEMENT" has the meaning ascribed to such term in the MLP
Partnership Agreement.
"OPINION OF COUNSEL" means a written opinion of counsel (who may be
regular counsel to the Company or any of its Affiliates) acceptable to the
Board.
"ORGANIZATIONAL CERTIFICATE" has the meaning set forth in Section 2.1.
"PARTNERSHIP SECURITIES" has the meaning ascribed to such term in the MLP
Partnership Agreement.
"PERSON" means a natural person, partnership (whether general or limited),
limited liability company, governmental entity, trust, estate, association,
corporation, venture, custodian, nominee or any other individual or entity in
its own or any representative capacity.
"PLAN OF CONVERSION" has the meaning set forth in Section 10.1.
"QUARTER" means unless the context requires otherwise, a calendar quarter.
"RECORD DATE" means the date established by the Board for determining (a)
the identity of the Record Holders entitled to notice of, or to vote at, any
meeting of Members or entitled to vote by ballot or give approval of Company
action in writing without a meeting or entitled to exercise rights in respect of
any lawful action of Members or (b) the identity of Record Holders entitled to
receive any report or distribution or to participate in any offer.
"RECORD HOLDER" means the Person in whose name a Membership Interest is
registered on the books that the Board has caused the Company to be kept as of
the close of business on any Record Date.
"SEC" means the United States Securities and Exchange Commission.
"SPECIAL APPROVAL" means approval by a majority of the members of the
Conflicts Committee.
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"SURVIVING BUSINESS ENTITY" has the meaning set forth in Section 10.1.
"TRANSFER" has the meaning set forth in Section 3.3.
"TRANSFER AGENT" means such bank, trust company or other Person (including
the Board) as shall be appointed from time to time by the Board to act as
registrar and transfer agent for any Membership Interests; provided that, if no
Transfer Agent is specifically designated for any such Membership Interests, the
Board shall act in such capacity.
"UNDERWRITING AGREEMENT" has the meaning ascribed to such term in the MLP
Partnership Agreement.
"UNITS" has the meaning ascribed to such term in the MLP Partnership
Agreement.
"VOTING STOCK" means, with respect to any Person, Equity Interests in such
Person, the holders of which are ordinarily, in the absence of contingencies,
entitled to vote for the election of, or otherwise appoint, directors (or
Persons with management authority performing similar functions) of such Person.
SECTION 1.2 CONSTRUCTION. Unless the context requires otherwise: (a) the
gender (or lack of gender) of all words used in this Agreement includes the
masculine, feminine and neuter; (b) references to Articles and Sections refer to
Articles and Sections of this Agreement; (c) references to Laws refer to such
Laws as they may be amended from time to time, and references to particular
provisions of a Law include any corresponding provisions of any succeeding Law;
(d) references to money refer to legal currency of the United States of America;
(e) "including" means "including without limitation" and is a term of
illustration and not of limitation; (f) all definitions set forth herein shall
be deemed applicable whether the words defined are used herein in the singular
or the plural; and (g) neither this Agreement nor any other agreement, document
or instrument referred to herein or executed and delivered in connection
herewith shall be construed against any Person as the principal draftsperson
hereof or thereof.
ARTICLE II.
ORGANIZATION
SECTION 2.1 FORMATION. The Company was organized as a Delaware limited
liability company by the filing of a Certificate of Formation ("ORGANIZATIONAL
CERTIFICATE") on April 10, 2006, with the Secretary of State of the State of
Delaware under and pursuant to the Delaware Act.
SECTION 2.2 NAME. The name of the Company is "EV Management, LLC" and all
Company business must be conducted in that name or such other names that comply
with Law as the Board may select.
SECTION 2.3 REGISTERED OFFICE; REGISTERED AGENT; PRINCIPAL OFFICE; OTHER
OFFICES.
(a) The registered office of the Company required by the Delaware Act to
be maintained in the State of Delaware shall be the office of the initial
registered agent for service of process named in the Organizational Certificate
or such other office (which need not be a
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place of business of the Company) as the Board may designate in the manner
provided by Law. The registered agent for service of process of the Company in
the State of Delaware shall be the initial registered agent for service of
process named in the Organizational Certificate or such other Person or Persons
as the Board may designate in the manner provided by Law.
(b) The principal office of the Company in the United States shall be at
such a place as the Board may from time to time designate, which need not be in
the State of Delaware, and the Company shall maintain records there and shall
keep the street address of such principal office at the registered office of the
Company in the State of Delaware.
(c) The Company may have such other offices as the Board may designate.
SECTION 2.4 PURPOSE AND BUSINESS. The purpose and nature of the business
to be conducted by the Company shall be (a) to act as general partner of MLP GP
and (b) to engage in any business activity that is approved by the Board and
that lawfully may be conducted by a company organized pursuant to the Delaware
Act and, in connection therewith, to exercise all of the rights and powers
conferred upon the Company pursuant to the agreements relating to such business
activity; provided, however, that the Board shall not cause the Company to
engage, directly or indirectly in any business activity that the Board
determines would cause the Company, MLP GP, or the MLP to be treated as an
association taxable as a corporation or otherwise taxable as an entity for
federal income tax purposes. To the fullest extent permitted by law, the Board
shall have no duty or obligation to propose or approve, and may decline to
propose or approve, the conduct by the Company of any business free of any
fiduciary duty or obligation whatsoever to the Company or any Member and, in
declining to so propose or approve, shall not be required to act in good faith
or pursuant to any other standard imposed by this Agreement, any other agreement
contemplated hereby or under the Delaware Act or any other law, rule or
regulation or at equity.
SECTION 2.5 POWERS. The Company shall be empowered to do any and all acts
and things necessary, appropriate, proper, advisable, incidental to or
convenient for the furtherance and accomplishment of the purposes and business
described in Section 2.4 and for the protection and benefit of the Company.
SECTION 2.6 TERM. The term of the Company commenced upon the filing of the
Certificate of Formation any in accordance with the Delaware Act and shall
continue in existence until the dissolution of the Company in accordance with
the provisions of Article IX. The existence of the Company as a separate legal
entity shall continue until the cancellation of the Certificate of Formation as
provided in the Delaware Act.
SECTION 2.7 TITLE TO COMPANY ASSETS. Title to Company assets, whether
real, personal or mixed and whether tangible or intangible, shall be deemed to
be owned by the Company as an entity, and the Member shall not have any
ownership interest in such Company assets or any portion thereof. Title to any
or all of the Company assets may be held in the name of the Company or one or
more third party nominees as the Board may determine. The Board hereby declares
and warrants that any Company assets for which record title is held in the name
of one or more third party nominees shall be held by such third party nominee
for the use and benefit of the Company in accordance with the provisions of this
Agreement; provided, however, that the
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Board shall use reasonable efforts to cause record title to such assets (other
than those assets in respect of which the Board determines that the expense and
difficulty of conveyancing makes transfer of record title to the Company
impracticable) to be vested in the Company as soon as reasonably practicable.
All Company assets shall be recorded as the property of the Company in its books
and records, irrespective of the name in which record title to such Company
assets is held.
SECTION 2.8 CERTAIN UNDERTAKINGS RELATING TO SEPARATENESS.
(a) Separateness Generally. The Company shall, and shall cause MLP GP to,
conduct their respective businesses and operations in accordance with this
Section 2.8.
(b) Separate Records. The Company shall, and shall cause MLP GP to, (i)
maintain their respective books and records and their respective accounts
separate from those of any other Person, (ii) maintain their respective
financial records, which will be used by them in their ordinary course of
business, showing their respective assets and liabilities separate and apart
from those of any other Person, except their consolidated Subsidiaries, (iii)
not have their respective assets and/or liabilities included in a consolidated
financial statement of any Affiliate of the Company unless appropriate notation
shall be made on such Affiliate's consolidated financial statements to indicate
the separateness of the Company and MLP GP and their assets and liabilities from
such Affiliate and the assets and liabilities of such Affiliate, and to indicate
that the assets and liabilities of the Company and MLP GP are not available to
satisfy the debts and other obligations of such Affiliate, and (iv) file their
respective own tax returns separate from those of any other Person, except (A)
to the extent that the Company or MLP GP (x) is treated as a "disregarded
entity" for tax purposes or (y) is not otherwise required to file tax returns
under applicable Law or (B) as may otherwise be required by applicable Law.
(c) Separate Assets. The Company shall not commingle or pool, and shall
cause MLP GP not to commingle or pool, their respective funds or other assets
with those of any other Person, and shall maintain their respective assets in a
manner that is not costly or difficult to segregate, ascertain or otherwise
identify as separate from those of any other Person.
(d) Separate Name. The Company shall, and shall cause MLP GP to, (i)
conduct their respective businesses in their respective own names, (ii) use
separate stationery, invoices, and checks, (iii) correct any known
misunderstanding regarding their respective separate identities from that of any
other Person (including EnerVest and its Subsidiaries other than the Company and
MLP GP), and (iv) generally hold itself out as an entity separate from any other
Person (including EnerVest and its Subsidiaries other than the Company and MLP
GP).
(e) Separate Credit. The Company shall, and shall cause MLP GP to, (i) pay
their respective obligations and liabilities from their respective own funds
(whether on hand or borrowed), (ii) maintain adequate capital in light of their
respective business operations, (iii) not guarantee or become obligated for the
debts of any other Person, other than the Company and MLP GP and except to the
extent specified in the Contribution Agreement or the Omnibus Agreement, (iv)
not hold out their respective credit as being available to satisfy the
obligations or liabilities of any other Person except to the extent specified in
the Contribution Agreement or the Omnibus Agreement, (v) not acquire debt
obligations or debt securities of EnerVest or its
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Affiliates (other than the Company and MLP GP), (vi) not pledge their assets for
the benefit of any Person or make loans, advances or capital contributions to
EnerVest or any of its Affiliates (other than the MLP and its Subsidiaries and,
with respect to the Company, other than MLP GP), or (vii) use its commercially
reasonable efforts to cause the operative documents under which MLP GP borrows
money, is an issuer of debt securities, or guarantees any such borrowing or
issuance after the Effective Date, to contain provisions to the effect that (A)
the lenders or purchasers of debt securities, respectively, acknowledge that
they have advanced funds or purchased debt securities, respectively, in reliance
upon the separateness of the Company and MLP GP from each other and from any
other Persons (including EnerVest and its Affiliates, other than the Company and
MLP GP) and (B) the Company and MLP GP have assets and liabilities that are
separate from those of other persons (including EnerVest and its Affiliates,
other than the Company and MLP GP); provided that the Company and MLP GP may
engage in any transaction described in clauses (v)-(vi) of this Section 2.8(e)
if prior Special Approval has been obtained for such transaction and either (A)
the Conflicts Committee has determined that the borrower or recipient of the
credit support is not then insolvent and will not be rendered insolvent as a
result of such transaction or (B) in the case of transactions described in
clause (v), such transaction is completed through a public sale or a National
Securities Exchange.
(f) Separate Formalities. The Company shall, and shall cause MLP GP to,
(i) observe all limited liability company or partnership formalities and other
formalities required by their respective organizational documents, the laws of
the jurisdiction of their respective formation, or other laws, rules,
regulations and orders of governmental authorities exercising jurisdiction over
it, (ii) engage in transactions with EnerVest and its Affiliates (other than the
Company or MLP GP) in conformity with the requirements of Section 7.9 of the MLP
GP Agreement, and (iii) subject to the terms of the Omnibus Agreement, promptly
pay, from their respective own funds and on a timely basis, their respective
allocable shares of general and administrative expenses, capital expenditures,
and costs for services performed by EnerVest or Affiliates of EnerVest (other
than the Company or MLP GP). Each material contract between the Company or MLP
GP, on the one hand, and EnerVest or Affiliates of EnerVest (other than the
Company or MLP GP), on the other hand, shall be subject to the requirements of
Section 7.9 of the MLP GP Agreement, and must be (x) approved by Special
Approval or (y) on terms objectively demonstrable to be no less favorable to MLP
GP than those generally being provided to or available from unrelated third
parties, and in any event must be in writing.
(g) No Effect. Failure by the Company to comply with any of the
obligations set forth above shall not affect the status of the Company as a
separate legal entity, with its separate assets and separate liabilities or
restrict or limit the Company from engaging or contracting with EnerVest and its
Affiliates for the provision of services or the purchase or sale of products,
whether under the Omnibus Agreement or otherwise.
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ARTICLE III.
MATTERS RELATING TO MEMBERS
SECTION 3.1 MEMBERS. EnerVest has previously been admitted as the sole
Member of the Company.
SECTION 3.2 LIABILITY TO THIRD PARTIES. No Member or beneficial owner of
any Membership Interest shall be liable for the Liabilities of the Company.
SECTION 3.3 TRANSFER GENERALLY.
(a) The term "transfer," when used in this Agreement with respect to a
Membership Interest, shall be deemed to refer to a transaction by which the
holder of a Membership Interest assigns such Membership Interest to another
Person who is or becomes a Member, and includes a sale, assignment, gift,
exchange or any other disposition by law or otherwise, including any transfer
upon foreclosure of any pledge, encumbrance, hypothecation or mortgage.
(b) No Membership Interest shall be transferred, in whole or in part,
except in accordance with the terms and conditions set forth in this Article
III. Any transfer or purported transfer of a Membership Interest not made in
accordance with this Article III shall be null and void.
SECTION 3.4 TRANSFER OF A MEMBER'S MEMBERSHIP INTEREST. A Member may
transfer all, or a portion, of its Membership Interest to another Person, and,
following any such transfer, such Person may become a substituted Member
pursuant to Section 3.6.
SECTION 3.5 RESTRICTIONS ON TRANSFERS.
(a) Notwithstanding the other provisions of this Article III, no transfer
of any Membership Interests shall be made if such transfer would (i) violate the
then applicable federal or state securities laws or rules and regulations of the
SEC, any state securities commission or any other governmental authority with
jurisdiction over such transfer, (ii) terminate the existence or qualification
of the Company under the laws of the jurisdiction of its formation, or (iii)
cause the Company or the MLP to be treated as an association taxable as a
corporation or otherwise to be taxed as an entity for federal income tax
purposes.
(b) The Board may impose restrictions on the transfer of Membership
Interests if it reviews an Opinion of Counsel that determines that such
restrictions are necessary to avoid a significant risk of the Company, MLP GP,
or the MLP becoming taxable as a corporation or otherwise becoming taxable as an
entity for federal income tax purposes. The Board may impose such restrictions
by amending this Agreement.
SECTION 3.6 ADMISSION OF MEMBERS.
(a) By acceptance of the transfer of any Membership Interests in
accordance with this Section 3.6 or the issuance of any Membership Interests in
a merger or consolidation pursuant to Article X, each transferee of a Membership
Interest (including any nominee holder or an agent or representative acquiring
such Membership Interests for the account of another Person) (i) shall
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be admitted to the Company as a Member with respect to the Membership Interests
so transferred to such Person when any such transfer or admission is reflected
in the books and records of the Company, with or without execution of this
Agreement, (ii) shall become bound by the terms of, and shall be deemed to have
executed, this Agreement, (iii) shall become the Record Holder of the Membership
Interests so transferred, (iv) represents that the transferee has the capacity,
power and authority to enter into this Agreement, (v) grants the powers of
attorney set forth in this Agreement and (vi) makes the consents and waivers
contained in this Agreement. The transfer of any Membership Interests and the
admission of any new Member shall not constitute and amendment to this
Agreement. A Person may become a Record Holder of a Membership Interest without
the consent or approval of any of the Members. A Person may not become a Member
without acquiring a Membership Interest and until such Person is reflected in
the books and records of the Company as the Record Holder of such Membership
Interest.
(b) The name and mailing address of each Member shall be listed on the
books and records of the Company maintained for such purpose by the Company or
the Transfer Agent. The Board shall update the books and records of the Company
from time to time as necessary to reflect accurately the information therein (or
shall cause the Transfer Agent to do so, as applicable).
(c) Any transfer of a Membership Interest shall not entitle the transferee
to share in the profits and losses, to receive distributions, to receive
allocations of income, gain, loss, deduction or credit or any similar item or to
any other rights to which the transferor was entitled until the transferee
becomes a Member pursuant to Section 3.6(a).
ARTICLE IV.
CAPITAL CONTRIBUTIONS
SECTION 4.1 CAPITAL CONTRIBUTIONS.
(a) In connection with the formation of the Company under the Delaware
Act, EnerVest made an initial capital contribution to the Company in the amount
of $1,000, and was admitted as the sole Member of the Company.
(b) The amount of money and the fair market value (as of the date of
contribution) of any property (other than money) contributed to the Company by a
Member in respect of the issuance of a Membership Interest to such Member shall
constitute a "CAPITAL CONTRIBUTION." Any reference in this Agreement to the
Capital Contribution of a Member shall include a Capital Contribution of its
predecessors in interest.
SECTION 4.2 LOANS. If the Company does not have sufficient cash to pay its
obligations, any Member that may agree to do so may, upon Special Approval,
advance all or part of the needed funds for such obligation to or on behalf of
the Company. An advance described in this Section 4.2 constitutes a loan from
the Member to the Company, may bear interest at a rate comparable to the rate
the Company could obtain from third parties, and is not a Capital Contribution.
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SECTION 4.3 INTEREST; RETURN OF CONTRIBUTIONS. A Member is not entitled to
the return of any part of its Capital Contributions or to be paid interest in
respect of its Capital Contributions. An unrepaid Capital Contribution is not a
liability of the Company or of any Member. No Member will be required to
contribute or to lend any cash or property to the Company to enable the Company
to return any Member's Capital Contributions.
SECTION 4.4 ISSUANCES OF ADDITIONAL MEMBERSHIP INTERESTS.
(a) The Company may issue additional Membership Interests and options,
rights, warrants and appreciation rights relating to the Membership Interests
for any Company purpose at any time and from time to time to such Persons for
such consideration and on such terms and conditions as EnerVest, as the sole
Member, shall determine
(b) Each additional Membership Interest authorized to be issued by the
Company pursuant to Section 4.4(a) may be issued in one or more classes, or one
or more series of any such classes, with such designations, preferences, rights,
powers and duties (which may be senior to existing classes and series of
Membership Interests), as shall be fixed by EnerVest, as the sole Member,
including (i) the right to share in Company profits and losses or items thereof;
(ii) the right to share in Company distributions; (iii) the rights upon
dissolution and liquidation of the Company; (iv) whether, and the terms and
conditions upon which, the Company may or shall be required to redeem the
Membership Interest (including sinking fund provisions); (v) whether such
Membership Interest is issued with the privilege of conversion or exchange and,
if so, the terms and conditions of such conversion or exchange; (vi) the terms
and conditions upon which each Membership Interest will be issued, evidenced by
certificates and assigned or transferred; and (vii) the right, if any, of each
such Membership Interest to vote on Company matters, including matters relating
to the relative rights, preferences and privileges of such Membership Interest.
(c) EnerVest, as the sole Member, is hereby authorized and directed to
take all actions that it determines to be necessary or appropriate in connection
with (i) each issuance of Membership Interests and options, rights, warrants and
appreciation rights relating to Membership Interests pursuant to this Section
4.4, (ii) the admission of additional Members and (iii) all additional issuances
of Membership Interests. EnerVest, as the sole Member, shall determine the
relative rights, powers and duties of the holders of the Membership Interests or
other Membership Interests being so issued. EnerVest, as the sole Member, shall
do all things necessary to comply with the Delaware Act and is authorized and
directed to do all things that it determines to be necessary or appropriate in
connection with any future issuance of Membership Interests, including
compliance with any statute, rule, regulation or guideline of any federal, state
or other governmental agency.
ARTICLE V.
DISTRIBUTIONS
SECTION 5.1 DISTRIBUTIONS. Subject to Section 9.2, within 50 days
following each Quarter other than any Quarter in which the dissolution of the
Company has commenced (the "DISTRIBUTION DATE"), the Company shall distribute to
the Member the Company's Available Cash on such Distribution Date.
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ARTICLE VI.
MANAGEMENT
SECTION 6.1 MANAGEMENT.
(a) All management powers over the business and affairs of the Company
shall be exclusively vested in a Board of Directors ("BOARD") and, subject to
the direction of the Board and the Officers. The Officers and the Board shall
each constitute a "manager" of the Company within the meaning of the Delaware
Act. Except as otherwise specifically provided in this Agreement, no Member, by
virtue of having the status of a Member, shall have or attempt to exercise or
assert any management power over the business and affairs of the Company or
shall have or attempt to exercise or assert actual or apparent authority to
enter into contracts on behalf of, or to otherwise bind, the Company. Except as
otherwise specifically provided in this Agreement, the authority and functions
of the Board on the one hand and of the Officers on the other shall be identical
to the authority and functions of the board of directors and officers,
respectively, of a corporation organized under the Delaware General Corporation
Law. Except as otherwise specifically provided in this Agreement, the business
and affairs of the Company shall be managed under the direction of the Board,
and the day-to-day activities of the Company shall be conducted on the Company's
behalf by the Officers, who shall be agents of the Company.
(b) In addition to the powers that now or hereafter can be granted to
managers under the Delaware Act and to all other powers granted under any other
provision of this Agreement, except as otherwise provided in this Agreement, the
Board and the Officers shall have full power and authority to do all things as
are not restricted by this Agreement, the MLP GP Agreement, the Delaware Act or
applicable Law, on such terms as they may deem necessary or appropriate to
conduct, or cause to be conducted, the business and affairs of the Company.
(c) Notwithstanding anything herein to the contrary, without obtaining
Extraordinary Approval, the Company shall not, and shall not take any action to
cause either MLP GP or the MLP to, (i) make or consent to a general assignment
for the benefit of its respective creditors; (ii) file or consent to the filing
of any bankruptcy, insolvency or reorganization petition for relief under the
United States Bankruptcy Code naming the Company, MLP GP or the MLP, as
applicable, or otherwise seek, with respect to the Company, MLP GP or the MLP,
relief from debts or protection from creditors generally; (iii) file or consent
to the filing of a petition or answer seeking for the Company, MLP GP or the
MLP, as applicable, a liquidation, dissolution, arrangement, or similar relief
under any law; (iv) file an answer or other pleading admitting or failing to
contest the material allegations of a petition filed against the Company, MLP GP
or the MLP, as applicable, in a proceeding of the type described in any of
clauses (i) - (iii) of this Section 6.1(c); (v) seek, consent to or acquiesce in
the appointment of a receiver, liquidator, conservator, assignee, trustee,
sequestrator, custodian or any similar official for the Company, MLP GP or the
MLP, as applicable, or for all or any substantial portion of either entity's
properties; (vi) sell all or substantially all of the assets of the Company, MLP
GP or the MLP; (vii) dissolve or liquidate, except in the case of MLP GP, in
accordance with Article XII of the MLP GP Agreement; (viii) merge or
consolidate; (ix) amend the MLP Partnership Agreement; or (x) make a material
change in the amount of the quarterly distributions made on the MLP Interests or
the payment of any material extraordinary distribution on the MLP Interests.
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(d) Notwithstanding anything herein to the contrary, EnerVest, as the sole
Member of the Company, shall have exclusive authority over the business and
affairs of the Company that do not relate to management and control of the MLP.
The type of matter referred to in the prior sentence where the Members of the
Company shall have exclusive authority shall include, but not be limited to, (i)
the amount and timing of distributions paid by the Company or MLP GP, (ii) the
issuance or repurchase of any equity interests in the Company or MLP GP, (iii)
the prosecution, settlement or management of any claim made directly against the
Company or MLP GP, (iv) whether to sell, convey, transfer or pledge any asset of
the Company or MLP GP, (v) whether to amend, modify or waive any rights relating
to the assets of the Company or MLP GP (including the decision to amend or
forego distributions in respect of the Incentive Distribution Rights), and (vi)
whether to enter into any agreement to incur an obligation of the Company or MLP
GP other than an agreement entered into for and on behalf of the MLP for which
the Company or MLP GP are liable exclusively by virtue of MLP GP's capacity as
general partner of the MLP or of any of its affiliates. Further, EnerVest, as
the sole Member of the Company, shall have exclusive authority to cause the
Company to exercise the rights of the Company and those of MLP GP, as general
partner of the MLP (or those exercisable after MLP GP ceases to be the general
partner of the MLP), pursuant to the following provisions of the MLP Partnership
Agreement:
(A) Section 2.4 ("PURPOSE AND BUSINESS"), with respect to
decisions to propose or approve the conduct by the MLP of any
business;
(B) Sections 4.6(a) and (b) ("TRANSFER OF THE GENERAL
PARTNER'S GENERAL PARTNER INTEREST") and Section 4.7 ("TRANSFER OF
INCENTIVE DISTRIBUTION RIGHTS"), solely with respect to the decision
by MLP GP to transfer its general partner interest in the MLP or its
Incentive Distribution Rights (as defined in the MLP Partnership
Agreement);
(C) Section 5.2(b) ("CONTRIBUTIONS BY THE GENERAL PARTNER AND
ITS AFFILIATES"), solely with respect to the decision to make
additional Capital Contributions to the MLP;
(D) Section 5.8 ("LIMITED PREEMPTIVE RIGHT");
(E) Section 5.11 ("ISSUANCE OF CLASS B UNITS IN CONNECTION
WITH RESET OF INCENTIVE DISTRIBUTION RIGHTS"), with respect to any
decision by the Partnership or MLP GP thereunder as a holder of
Incentive Distribution Rights or Class B Units (as defined in the
MLP Partnership Agreement);
(F) Section 7.5(d) (relating to the right of MLP GP and its
Affiliates to purchase Units (as defined in the MLP Partnership
Agreement) or other Partnership Securities (as defined in the MLP
Partnership Agreement) and exercise rights related thereto) and
Section 7.11 ("PURCHASE AND SALE OF PARTNERSHIP SECURITIES"), solely
with respect to decisions by the Company or MLP GP to purchase or
otherwise acquire and sell Partnership Securities for their own
account;
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(G) Section 7.6(a) ("LOANS FROM THE GENERAL PARTNER; LOANS OR
CONTRIBUTIONS FROM THE PARTNERSHIP OR GROUP MEMBERS"), solely with
respect to the decision by the Company or MLP GP to lend funds to a
Group Member, subject to the provisions of Section 7.9 of the MLP
Partnership Agreement;
(H) Section 7.7 ("INDEMNIFICATION"), solely with respect to
any decision by the Company or MLP GP to exercise their respective
rights as "Indemnitees";
(I) Section 7.12 ("REGISTRATION RIGHTS OF THE GENERAL PARTNER
AND ITS AFFILIATES"), solely with respect to any decision to
exercise registration rights and to take actions in connection
therewith;
(J) Section 11.1 ("WITHDRAWAL OF THE GENERAL PARTNER"), solely
with respect to the decision by MLP GP to withdraw as general
partner of the MLP and to giving notices required thereunder;
(K) Section 11.3(a) and (b) ("INTEREST OF DEPARTING GENERAL
PARTNER AND SUCCESSOR GENERAL PARTNER"); and (L) Section 15.1
("RIGHT TO ACQUIRE LIMITED PARTNER INTERESTS").
(e) Without the approval of the Conflicts Committee of the Board, the
Company shall not take any action that would result in either the Company or MLP
GP engaging in any business or activity or incurring any debts or liabilities
except in connection with or incidental to (i) its performance as Directors of
MLP GP or (ii) the acquiring, owning or disposing of debt or equity securities
of MLP GP.
(f) EnerVest, as sole member of the Company, shall comply with the
Investors' Rights Agreement in exercising its exclusive authority under Section
6.1(c) or Section 6.1(d) hereof.
SECTION 6.2 BOARD OF DIRECTORS.
(a) Generally. The Board shall initially consist of from one up to 10
natural persons. The members of the Board shall be appointed by EnerVest,
provided that (i) at least one member of the Board appointed by EnerVest at the
time of the closing of the initial public offering of common units representing
limited partner interest of the MLP (the "IPO") shall be a natural person who
meets the independence, qualification and experience requirements of the NASDAQ,
the independence, qualification and experience requirements of Section 10A-(3)
of the Securities Exchange Act of 1934 (or any successor Law), the rules and
regulations of the SEC and other applicable Law (an "INDEPENDENT DIRECTOR"),
(ii) at least two (2) members of the Board appointed by EnerVest shall be
natural persons who are Independent Directors at all times from and after the
90th day following the effective date of the registration statement related to
the IPO and (iii) at least three (3) members of the Board appointed by EnerVest
shall be natural persons who are Independent Directors at all times from and
after the first anniversary of the effective date of the registration statement
relating to the IPO; provided, however, that if at any time the Board does not
include the requisite number of Independent Directors as specified above, the
15
Board shall still have all powers and authority granted to it hereunder, but
EnerVest shall endeavor to appoint one or more additional Independent Directors
as necessary to come into compliance with this Section 6.2(a).
(b) Term; Resignation; Vacancies; Removal. Each Director, other than any
Independent Director, shall hold office until December 31 of the year in which
such Director is appointed, provided, however, that in the event a Director,
other than an Independent Director, is appointed during the month of December in
any particular year, such Director shall hold office until December 31 of the
year following the year in which such Director is appointed. Each Independent
Director shall hold office until his successor is appointed and qualified or
until his earlier resignation or removal. Any Director may resign at any time
upon written notice to the Board, the Chairman of the Board, to the Chief
Executive Officer or to any other Officer. Such resignation shall take effect at
the time specified therein, and unless otherwise specified therein no acceptance
of such resignation shall be necessary to make it effective. Vacancies and newly
created directorships resulting from any increase in the authorized number of
Directors or from any other cause shall be filled by EnerVest. Any Director may
be removed, with or without cause, by EnerVest at any time, and the vacancy in
the Board caused by any such removal shall be filled by EnerVest.
(c) Voting; Quorum. Unless otherwise required by the Delaware Act, other
Law or the provisions hereof,
(i) each member of the Board shall have one vote;
(ii) except for matters requiring Special Approval, the presence at
a meeting of a majority of the members of the Board shall constitute a
quorum at any such meeting for the transaction of business; and
(iii) except for matters requiring Special Approval, the act of a
majority of the members of the Board present at a meeting duly called in
accordance with Section 6.2(d) at which a quorum is present shall be
deemed to constitute the act of the Board.
(d) Meetings. Regular meetings of the Board shall be held at such times
and places as shall be designated from time to time by resolution of the Board.
Special meetings of the Board or meetings of any committee thereof may be called
by written request authorized by any member of the Board or a committee thereof
on at least 48 hours prior written notice to the other members of such Board or
committee. Any such notice, or waiver thereof, need not state the purpose of
such meeting, except as may otherwise be required by law. Attendance of a
Director at a meeting (including pursuant to the last sentence of this Section
6.2(d)) shall constitute a waiver of notice of such meeting, except where such
Director attends the meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened. Any action required or permitted to be taken at a meeting of
the Board or any committee thereof may be taken without a meeting, without prior
notice and without a vote if a consent or consents in writing, setting forth the
action so taken, are signed by at least as many members of the Board or
committee thereof as would have been required to take such action at a meeting
of the Board or such committee. Members of the Board or any committee thereof
may participate in and hold a meeting by means of conference telephone,
16
video conference or similar communications equipment by means of which all
Persons participating in the meeting can hear each other, and participation in
such meetings shall constitute presence in person at the meeting.
(e) Committees.
(i) Subject to compliance with this Article VI, committees of the
Board shall have and may exercise such of the powers and authority of the
Board with respect to the management of the business and affairs of the
Company as may be provided in a resolution of the Board. Any committee
designated pursuant to this Section 6.2(e) shall choose its own chairman,
shall keep regular minutes of its proceedings and report the same to the
Board when requested, and, subject to Section 6.2(d), shall fix its own
rules or procedures and shall meet at such times and at such place or
places as may be provided by such rules or by resolution of such committee
or resolution of the Board. At every meeting of any such committee, the
presence of a majority of all the members thereof shall constitute a
quorum and the affirmative vote of a majority of the members present shall
be necessary for the adoption by it of any resolution (except for
obtaining Special Approval at meetings of the Conflicts Committee, which
requires the affirmative vote of a majority of the members of such
committee). The Board may designate one or more Directors as alternate
members of any committee who may replace any absent or disqualified member
at any meeting of such committee; provided, however, that any such
designated alternate of the Audit Committee or the Conflicts Committee
must meet the standards for an Independent Director. In the absence or
disqualification of a member of a committee, the member or members present
at any meeting and not disqualified from voting, whether or not
constituting a quorum, may unanimously appoint another member of the Board
to act at the meeting in the place of the absent or disqualified member;
provided, however, that any such replacement member of the Audit Committee
or the Conflicts Committee must meet the standards for an Independent
Director.
(ii) In addition to any other committees established by the Board
pursuant to Section 6.2(e)(i), the Board shall maintain a "CONFLICTS
COMMITTEE," which shall be composed of at least two Independent Directors.
The Conflicts Committee shall be responsible for (A) approving or
disapproving, as the case may be, any matters regarding the business and
affairs of the Company, MLP GP or the MLP considered by, or submitted to,
such Conflicts Committee at the request of the Board pursuant to the terms
of this Agreement or the MLP GP Agreement or the MLP Partnership
Agreement, (B) approving any material amendments to the Omnibus Agreement
or Operating Agreement, (C) approving or disapproving, as the case may be,
the entering into of any material transaction with a Member or any
Affiliate of a Member, other than transactions in the ordinary course of
business to the extent that the Board requests the Conflicts Committee to
make such determination, (D) amending (1) Section 2.8, (2) the definitions
of "Independent Director" in Section 6.2(a) or (3) this Section
6.2(e)(ii), and (E) performing such other functions as the Board may
assign from time to time or as may be specified in a written charter of
the Conflicts Committee. In acting or otherwise voting on the matters
referred to in this Section 6.2(e)(ii), to the fullest extent permitted by
law, including Section 18-1101(c) of the Delaware Act and Section
17-1101(c) of the Delaware Revised Uniform Limited Partnership Act, as
amended from time to time, the
17
Directors constituting the Conflicts Committee shall consider only the
interest of the MLP, including its respective creditors.
(iii) In addition to any other committees established by the Board
pursuant to Section 6.2(e)(i), the Board shall maintain an "AUDIT
COMMITTEE," which shall be composed of (A) at least one Independent
Director at the time of the closing of the IPO, (B) at least two
Independent Directors at all times from and after the 90th day following
the effective date of the registration statement related to the IPO and
(C) at least three Independent Directors at all times from and after the
first anniversary of the effective date of the registration statement
related to the IPO. The Audit Committee shall be responsible for (A)
assisting the Board in monitoring (1) the integrity of the MLP's financial
statements, (2) the qualifications and independence of the MLP's
independent accountants, (3) the performance the internal audit function
and independent accountants of the Company, MLP GP and the MLP, and (4)
the MLP's compliance with legal and regulatory requirements and (B)
preparing the report required by the rules of the SEC to be included in
the MLP's annual report on Form 10-K. The Audit Committee shall perform
such other functions as the Board may assign from time to time or as may
be specified in a written charter for the Audit Committee adopted by the
Board.
(iv) In addition to any other committees established by the Board
pursuant to Section 6.2(e)(i), the Board shall maintain an "COMPENSATION
COMMITTEE," which shall be composed of at least one Independent Director.
The Compensation Committee shall be responsible for setting the
compensation for officers of the Company as well as administering any
incentive plans adopted by the Company. The Compensation Committee shall
perform such other functions as the Board may assign from time to time or
as may be specified in a written charter for the Compensation Committee
adopted by the Board.
(f) Investors' Rights Agreement. EnerVest shall appoint and cause the
Company to appoint such persons to the Board in accordance with Section 3.6 of
the Investors' Rights Agreement.
SECTION 6.3 OFFICERS.
(a) Generally. The Board, as set forth below, shall appoint officers of
the Company ("OFFICERS"), who shall (together with the Directors) constitute
"managers" of the Company for the purposes of the Delaware Act. Unless provided
otherwise by resolution of the Board, the Officers shall have the titles, power,
authority and duties described below in this Section 6.3.
(b) Titles and Number. The Company may appoint one or more officers
including a Chairman of the Board (unless the Board provides otherwise), a Chief
Executive Officer, a President, one or more Vice Presidents, a Secretary, the
Chief Financial Officer, any Treasurer and one or more Assistant Secretaries and
Assistant Treasurers and a General Counsel. Any person may hold more then one
office.
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(c) Appointment and Term of Office. The Officers shall be appointed by the
Board at such time and for such term as the Board shall determine. Any Officer
may be removed, with or without cause, only by the Board. Vacancies in any
office may be filled only by the Board.
(d) Chairman of the Board. The Chairman of the Board shall preside at all
meetings of the Board and of the unitholders of the MLP; and he shall have such
other powers and duties as from time to time may be assigned to him by the
Board.
(e) Chief Executive Officer. Subject to the limitations imposed by this
Agreement, any employment agreement, any employee plan or any determination of
the Board, the Chief Executive Officer, subject to the direction of the Board,
shall be the chief executive officer of the Company and shall be responsible for
the management and direction of the day-to-day business and affairs of the
Company, its other Officers, employees and agents, shall supervise generally the
affairs of the Company and shall have full authority to execute all documents
and take all actions that the Company may legally take. In the absence of the
Chairman of the Board, the Chief Executive Officer shall preside at all meetings
of the unitholders of the MLP and at all meetings of the Board provided that he
is a director of the Company. The Chief Executive Officer shall exercise such
other powers and perform such other duties as may be assigned to him by this
Agreement or the Board, including any duties and powers provided for in any
employment agreement approved by the Board.
(f) President. Subject to the limitations imposed by this Agreement, any
employment agreement, any employee plan or any determination of the Board, the
President, subject to the direction of the Board, shall be the chief executive
officer of the Company in the absence of a Chief Executive Officer and shall be
responsible for the management and direction of the day-to-day business and
affairs of the Company, its other Officers, employees and agents, shall
supervise generally the affairs of the Company and shall have full authority to
execute all documents and take all actions that the Company may legally take. In
the absence of the Chairman of the Board and Chief Executive Officer, the
President shall preside at all meetings of the unitholders of the MLP and at all
meetings of the Board provided that he is a director of the Company. The
President shall exercise such other powers and perform such other duties as may
be assigned to him by this Agreement or the Board, including any duties and
powers provided for in any employment agreement approved by the Board.
(g) Vice Presidents. In the absence of a Chief Executive Officer and the
President, each Vice President appointed by the Board shall have all of the
powers and duties conferred upon the President, including the same power as the
President to execute documents on behalf of the Company. Each such Vice
President shall perform such other duties and may exercise such other powers as
may from time to time be assigned to him by the Board or the President.
(h) Secretary and Assistant Secretaries. The Secretary shall record or
cause to be recorded in books provided for that purpose the minutes of the
meetings or actions of the Board, shall see that all notices are duly given in
accordance with the provisions of this Agreement and as required by law, shall
be custodian of all records (other than financial), shall see that the books,
reports, statements, certificates and all other documents and records required
by law are properly kept and filed, and, in general, shall perform all duties
incident to the office of Secretary and such other duties as may, from time to
time, be assigned to him by this Agreement, the
19
Board or the President. The Assistant Secretaries shall exercise the powers of
the Secretary during that Officer's absence or inability or refusal to act.
(i) Chief Financial Officer. The Chief Financial Officer shall keep and
maintain, or cause to be kept and maintained, adequate and correct books and
records of account of the Company and MLP GP. He shall receive and deposit all
moneys and other valuables belonging to the Company in the name and to the
credit of the Company and shall disburse the same and only in such manner as the
Board or the appropriate Officer of the Company may from time to time determine.
He shall receive and deposit all moneys and other valuables belonging to MLP GP
in the name and to the credit of MLP GP and shall disburse the same and only in
such manner as the Board or the Chief Executive Officer may require. He shall
render to the Board and the Chief Executive Officer, whenever any of them
request it, an account of all his transactions as Chief Financial Officer and of
the financial condition of the Company, and shall perform such further duties as
the Board or the Chief Executive Officer may require. The Chief Financial
Officer shall have the same power as the Chief Executive Officer to execute
documents on behalf of the Company.
(j) Treasurer and Assistant Treasurers. The Treasurer shall have such
duties as may be specified by the Chief Financial Officer in the performance of
his duties. The Assistant Treasurers shall exercise the power of the Treasurer
during that Officer's absence or inability or refusal to act. Each of the
Assistant Treasurers shall possess the same power as the Treasurer to sign all
certificates, contracts, obligations and other instruments of the Company. If no
Treasurer or Assistant Treasurer is appointed and serving or in the absence of
the appointed Treasurer and Assistant Treasurer, any Vice President, or such
other Officer as the Board shall select, shall have the powers and duties
conferred upon the Treasurer.
(k) General Counsel. The General Counsel, subject to the discretion of the
Board, shall be responsible for the management and direction of the day-to-day
legal affairs of the Company. The General Counsel shall perform such other
duties and may exercise such other powers as may from time to time be assigned
to him by the Board or the President.
(l) Powers of Attorney. The Company may ▇▇▇▇▇ ▇▇▇▇▇▇ of attorney or other
authority as appropriate to establish and evidence the authority of the Officers
and other persons.
(m) Delegation of Authority. Unless otherwise provided by resolution of
the Board, no Officer shall have the power or authority to delegate to any
person such Officer's rights and powers as an Officer to manage the business and
affairs of the Company.
(n) Tenure. The Board shall appoint Officers of the Company to serve from
the date hereof until the death, resignation or removal by the Board with or
without cause of such Officer.
SECTION 6.4 DUTIES OF OFFICERS AND DIRECTORS. Except as otherwise
specifically provided in this Agreement or in the MLP Partnership Agreement, the
duties and obligations owed to the Company and to the Board by the Officers of
the Company and by members of the Board of the Company shall be the same as the
respective duties and obligations owed to a corporation organized under the
Delaware General Corporation Law by its officers and directors, respectively.
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SECTION 6.5 COMPENSATION. The members of the Board who are neither
Officers nor employees of the Company shall be entitled to compensation as
directors and committee members as approved by the Board and shall be reimbursed
for out-of-pocket expenses incurred in connection with attending meetings of the
Board or committees thereof.
SECTION 6.6 INDEMNIFICATION.
(a) To the fullest extent permitted by Law but subject to the limitations
expressly provided in this Agreement, each Indemnitee shall be indemnified and
held harmless by the Company from and against any and all losses, claims,
damages, liabilities, joint or several, expenses (including reasonable legal
fees and expenses), judgments, fines, penalties, interest, settlements and other
amounts arising from any and all claims, demands, actions, suits or proceedings,
whether civil, criminal, administrative or investigative, in which any such
Indemnitee may be involved, or is threatened to be involved, as a party or
otherwise, by reason of such person's status as an Indemnitee; provided,
however, that the Indemnitee shall not be indemnified and held harmless if there
has been a final and non-appealable judgment entered by a court of competent
jurisdiction determining that, in respect of the matter for which the Indemnitee
is seeking indemnification pursuant to this Section 6.6, the Indemnitee acted in
bad faith or engaged in fraud, willful misconduct, or in the case of a criminal
matter, acted with knowledge that the Indemnitee's conduct was unlawful;
provided, further, no indemnification pursuant to this Section 6.6 shall be
available to the Members or their Affiliates (other than the MLP and any Group
Member) with respect to its or their obligations incurred pursuant to the
Underwriting Agreement, the Omnibus Agreement or the Contribution Agreement. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction or upon a plea of nolo contendere, or its equivalent, shall not
create a presumption that the Indemnitee acted in a manner contrary to that
specified above. Any indemnification pursuant to this Section 6.6 shall be made
only out of the assets of the Company, it being agreed that the Members shall
not be personally liable for such indemnification and shall have no obligation
to contribute or loan any monies or property to the Company to enable it to
effectuate such indemnification.
(b) To the fullest extent permitted by law, expenses (including reasonable
legal fees and expenses) incurred by an Indemnitee who is indemnified pursuant
to Section 6.6(a) in defending any claim, demand, action, suit or proceeding
shall, from time to time, be advanced by the Company prior to the final
disposition of such claim, demand, action, suit or proceeding upon receipt by
the Company of an undertaking by or on behalf of the Indemnitee to repay such
amount if it shall be determined that the Indemnitee is not entitled to be
indemnified as authorized in this Section 6.6.
(c) The indemnification provided by this Section 6.6 shall be in addition
to any other rights to which an Indemnitee may be entitled under any agreement,
as a matter of law or otherwise, both as to actions in the Indemnitee's capacity
as an Indemnitee and as to actions in any other capacity, and shall continue as
to an Indemnitee who has ceased to serve in such capacity and shall inure to the
benefit of the heirs, successors, assigns and administrators of the Indemnitee.
(d) The Company may purchase and maintain insurance, on behalf of the
members of the Board, the Officers and such other persons as the Board shall
determine, against any liability
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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.
(e) For purposes of this Section 6.6, the Company shall be deemed to have
requested an Indemnitee to serve as fiduciary of an employee benefit plan
whenever the performance by the Indemnitee of such Indemnitee's duties to the
Company also imposes duties on, or otherwise involves services by, the
Indemnitee to the plan or participants or beneficiaries of the plan; excise
taxes assessed on an Indemnitee with respect to an employee benefit plan
pursuant to applicable law shall constitute "fines" within the meaning of
Section 6.6(a); and action taken or omitted by the Indemnitee with respect to an
employee benefit plan in the performance of such Indemnitee's duties for a
purpose reasonably believed by such Indemnitee to be in the interest of the
participants and beneficiaries of the plan shall be deemed to be for a purpose
which is in, or not opposed to, the best interests of the Company.
(f) An Indemnitee shall not be denied indemnification in whole or in part
under this Section 6.6 because the Indemnitee had an interest in the transaction
with respect to which the indemnification applies if the transaction was
otherwise permitted by the terms of this Agreement.
(g) The provisions of this Section 6.6 are for the benefit of the
Indemnitees, their heirs, successors, assigns and administrators and shall not
be deemed to create any rights for the benefit of any other Persons.
(h) No amendment, modification or repeal of this Section 6.6 or any
provision hereof shall in any manner terminate, reduce or impair either the
right of any past, present or future Indemnitee to be indemnified by the Company
or the obligation of the Company to indemnify any such Indemnitee under and in
accordance with the provisions of this Section 6.6 as in effect immediately
prior to such amendment, modification or repeal with respect to claims arising
from or relating to matters occurring, in whole or in part, prior to such
amendment, modification or repeal, regardless of when such claims may arise or
be asserted, provided such Person became an Indemnitee hereunder prior to such
amendment, modification or repeal.
(i) THE PROVISIONS OF THE INDEMNIFICATION PROVIDED IN THIS Section 6.6 ARE
INTENDED BY THE PARTIES TO APPLY EVEN IF SUCH PROVISIONS HAVE THE EFFECT OF
EXCULPATING THE INDEMNITEE FROM LEGAL RESPONSIBILITY FOR THE CONSEQUENCES OF
SUCH PERSON'S NEGLIGENCE, FAULT OR OTHER CONDUCT.
SECTION 6.7 LIABILITY OF INDEMNITEES.
(a) Notwithstanding anything to the contrary set forth in this Agreement,
no Indemnitee shall be liable for monetary damages to the Company, the Members
or any other Person for losses sustained or liabilities incurred as a result of
any act or omission of an Indemnitee unless there has been a final and
non-appealable judgment entered by a court of competent jurisdiction determining
that, in respect of the matter in question, the Indemnitee
22
acted in bad faith or engaged in fraud, willful misconduct or, in the case of a
criminal matter, acted with knowledge that the Indemnitee's conduct was
criminal.
(b) Subject to its obligations and duties as set forth in this Article VI,
the Board and any committee thereof may exercise any of the powers granted to it
by this Agreement and perform any of the duties imposed upon it hereunder either
directly or by or through the Company's Officers or agents, and neither the
Board nor any committee thereof shall be responsible for any misconduct or
negligence on the part of any such Officer or agent appointed by the Board or
any committee thereof in good faith.
(c) To the extent that, at law or in equity, an Indemnitee has duties
(including fiduciary duties) and liabilities relating thereto to the Company or
to the Members, the Directors and any other Indemnitee acting in connection with
the Company's business or affairs shall not be liable to the Company or to any
Member for any acts or omissions taken in good faith reliance on the provisions
of this Agreement.
(d) Any amendment, modification or repeal of this Section 6.7 or any
provision hereof shall be prospective only and shall not in any way affect the
limitations on liability under this Section 6.7 as in effect immediately prior
to such amendment, modification or repeal with respect to claims arising from or
relating to matters occurring, in whole or in part, prior to such amendment,
modification or repeal, regardless of when such claims may be asserted.
SECTION 6.8 OUTSIDE ACTIVITIES.
(a) Except as specifically restricted by the provisions of the MLP GP
Agreement or the MLP Partnership Agreement, each Indemnitee, other than
employees of the Company, shall have the right to engage in businesses of every
type and description and other activities for profit and to engage in and
possess an interest in other business ventures of any and every type or
description, whether in businesses engaged in or anticipated to be engaged in by
the Company or its Subsidiaries, independently or with others, including
business interests and activities in direct competition with the business and
activities of the Company or its Subsidiaries, and none of the same shall
constitute a breach of this Agreement or any duty expressed or implied by Law to
the Company or its Subsidiaries or any Member. Neither the Company or its
Subsidiaries, any Member nor any other Person shall have any rights by virtue of
this Agreement, the MLP GP Agreement or the MLP Partnership Agreement or the
partnership relationship established hereby or thereby in any business ventures
of any Indemnitee.
(b) Notwithstanding anything to the contrary in this Agreement, (i) the
engaging in competitive activities by any Indemnitees, other than employees of
the Company, in accordance with the provisions of this Section 6.8 is hereby
approved by the Company and all Members, (ii) it shall be deemed not to be a
breach of any fiduciary duty or any other obligation of any type whatsoever of
any Indemnitee, other than officers or employees of the Company, for such
Indemnitees to engage in such business interests and activities in preference to
or to the exclusion of the Company and (iii) the Indemnitees, other than
Officers or employees of the Company, shall have no obligation hereunder or as a
result of any duty expressed or implied by Law to present business opportunities
to the Company, MLP GP or the MLP.
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(c) Each Member and each of its Affiliates may acquire additional
Membership Interests and, except as otherwise provided in this Agreement, shall
be entitled to exercise, at their option, all rights relating to such Membership
Interests.
SECTION 6.9 RESOLUTION OF CONFLICTS OF INTEREST; STANDARD OF CONDUCT AND
MODIFICATION OF DUTIES.
(a) Unless otherwise expressly provided in this Agreement, whenever a
potential conflict of interest exists or arises between the Members or any of
their Affiliates (other than the MLP or any Group Member), on the one hand, and
the MLP or any Group Member, on the other hand, any resolution or course of
action by the Board in respect of such conflict of interest shall be permitted
and deemed approved by all Members, and shall not constitute a breach of this
Agreement or of any agreement contemplated herein or therein, or of any duty
stated or implied by law or equity, if the resolution or course of action in
respect of such conflict of interest is (i) approved by Special Approval, (ii)
approved by the vote of a majority of the Units excluding Units owned by the
Members and their Affiliates, (iii) on terms no less favorable to the MLP or
Group Member, as the case may be, than those generally being provided to or
available from unrelated third parties or (iv) fair and reasonable to the MLP or
Group Member, as the case may be, taking into account the totality of the
relationships between the parties involved (including other transactions that
may be particularly favorable or advantageous to the MLP or Group Member, as the
case may be). The Board shall be authorized but not required in connection with
its resolution of such conflict of interest to seek Special Approval of such
resolution, and the Board may also adopt a resolution or course of action that
has not received Special Approval. If Special Approval is not sought and the
Board determines that the resolution or course of action taken with respect to a
conflict of interest satisfies either of the standards set forth in clauses
(iii) or (iv), then it shall be presumed that, in making its decision, the Board
acted in good faith, and in any proceeding brought by any Member or by or on
behalf of such Member or the MLP or Group Member, as the case may be,
challenging such approval, the Person bringing or prosecuting such proceeding
shall have the burden of overcoming such presumption.
(b) Whenever the Company makes a determination or takes or declines to
take any other action, or any of its Affiliates causes it to do so, in its
capacity as the general partner of the General Partner of the MLP as opposed to
in its individual capacity, whether under this Agreement, or any other agreement
contemplated hereby or otherwise, then unless another express standard is
provided for in this Agreement, the Company, or such Affiliates causing it to do
so, shall make such determination or take or decline to take such other action
in good faith and shall not be subject to any other or different standards
imposed by this Agreement, any other agreement contemplated hereby or under the
Delaware Act or any other law, rule or regulation or at equity. In order for a
determination or other action to be in "good faith" for purposes of any action
taken or delivered to be taken by the Company in its capacity as the general
partner of the General Partner of the MLP, the Person or Persons making such
determination or taking or declining to take such other action must believe that
the determination or other action is in the best interests of the MLP.
(c) Whenever the Company makes a determination or takes or declines to
take any other action, or any of its Affiliates causes it to do so, in its
individual capacity as opposed to in its capacity as a general partner of the
General Partner of the MLP, whether under this
24
Agreement or any other agreement contemplated hereby or otherwise, then the
Company, or such Affiliates causing it to do so, are entitled to make such
determination or to take or decline to take such other action free of any
fiduciary duty or obligation whatsoever to the MLP or any partner thereof, and
the Company, or such Affiliates causing it to do so, shall not be required to
act in good faith or pursuant to any other standard imposed by this Agreement,
any other agreement contemplated hereby or under the Delaware Act or any other
law, rule or regulation. By way of illustration and not of limitation, whenever
the phrase, "at the option of the Company," or some variation of that phrase, is
used in this Agreement, it indicates that the Company is acting in its
individual capacity. For the avoidance of doubt, whenever the Company votes or
transfers its MLP Interests, or refrains from voting or transferring its MLP
Interests, it shall be acting in its individual capacity.
(d) Notwithstanding anything to the contrary in this Agreement, the
Company and its Affiliates shall have no duty or obligation, express or implied,
to (i) sell or otherwise dispose of any asset of the MLP or any Group Member or
(ii) permit the MLP or any Group Member to use any facilities or assets of the
Company and its Affiliates, except as may be provided in contracts entered into
from time to time specifically dealing with such use. Any determination by the
Company or any of its Affiliates to enter into such contracts shall be at its
option.
(e) Whenever a particular transaction, arrangement or resolution of a
conflict of interest is required under this Agreement to be "fair and
reasonable" to any Person, the fair and reasonable nature of such transaction,
arrangement or resolution shall be considered in the context of all similar or
related transactions.
ARTICLE VII.
TAX MATTERS
SECTION 7.1 TAX RETURNS AND TAX CHARACTERIZATION.
(a) The Board shall cause to be prepared and timely filed (on behalf of
the Company) all federal, state and local tax returns required to be filed by
the Company, including making all elections on such tax returns. The Company
shall bear the costs of the preparation and filing of its returns.
(b) The Company and the sole Member acknowledge that for federal income
tax purposes, the Company will be disregarded as an entity separate from the
Member pursuant to Treasury Regulation ss. 301.7701-3 as long as all of the
Membership Interests in the Company are owned by EnerVest.
ARTICLE VIII.
BOOKS, RECORDS, ACCOUNTING AND REPORTS
SECTION 8.1 RECORDS AND ACCOUNTING.
(a) The Board shall keep or cause to be kept at the principal office of
the Company or at such other location approved by the Board, appropriate books
and records of the Company, supporting documentation of the transactions with
respect to the conduct of the Company's business and minutes of the proceedings
of the Board. Any books and records maintained by or
25
on behalf of the Company in the regular course of its business, including the
record of the Record Holders of Membership Interests, books of account and
records of Company proceedings, may be kept on, or be in the form of, computer
disks, hard drives, punch cards, magnetic tape, photographs, micrographics or
any other information storage device; provided, that the books and records so
maintained are convertible into clearly legible written form within a reasonable
period of time. The books of the Company shall be maintained, for financial
reporting purposes, on an accrual basis in accordance with United States
generally accepted accounting principles.
(b) The books of account of the Company shall be maintained on the basis
of a fiscal year that is the calendar year and on an accrual basis in accordance
with United States generally accepted accounting principles, consistently
applied.
SECTION 8.2 REPORTS. The Board shall cause to be prepared and delivered to
the Member such reports, forecasts, studies, budgets and other information as
the Member may reasonably request from time to time.
SECTION 8.3 FISCAL YEAR. The fiscal year of the Company shall be a fiscal
year ending December 31.
SECTION 8.4 BANK ACCOUNTS. Funds of the Company shall be deposited in such
banks or other depositories as shall be designated from time to time by the
Board. All withdrawals from any such depository shall be made only as authorized
by the Board and shall be made only by check, wire transfer, debit memorandum or
other written instruction.
ARTICLE IX.
DISSOLUTION, WINDING-UP AND TERMINATION
SECTION 9.1 DISSOLUTION.
(a) Subject to compliance with Section 6.1(c), the Company shall dissolve
and its affairs shall be wound up on the first to occur of the following events
(each a "DISSOLUTION EVENT"):
(i) the unanimous consent of the Board;
(ii) the entry of a decree of judicial dissolution of the Company
under Section 18-802 of the Delaware Act; and
(iii) at any time there are no Members of the Company, unless the
Company is continued in accordance with the Delaware Act or this
Agreement.
(b) No other event shall cause a dissolution of the Company.
(c) Upon the occurrence of any event that causes there to be no Members of
the Company, to the fullest extent permitted by law, the personal representative
of the last remaining Member is hereby authorized to, and shall, within 90 days
after the occurrence of the event that terminated the continued membership of
such Member in the Company, agree in writing (i) to
26
continue the Company and (ii) to the admission of the personal representative or
its nominee or designee, as the case may be, as a substitute Member of the
Company, effective as of the occurrence of the event that terminated the
continued membership of such Member in the Company.
(d) Notwithstanding any other provision of this Agreement, the Bankruptcy
of a Member shall not cause such Member to cease to be a member of the Company,
and, upon the occurrence of such an event, the Company shall continue without
dissolution.
SECTION 9.2 WINDING-UP AND TERMINATION.
(a) On the occurrence of a Dissolution Event, the Board shall select one
or more Persons to act as liquidator. The liquidator shall proceed diligently to
wind up the affairs of the Company and make final distributions as provided
herein and in the Delaware Act. The costs of winding up shall be borne as a
Company expense. Until final distribution, the liquidator shall continue to
operate the Company properties with all of the power and authority of the Board.
The steps to be accomplished by the liquidator are as follows:
(i) as promptly as possible after dissolution and again after final
winding up, the liquidator shall cause a proper accounting to be made by a
recognized firm of certified public accountants of the Company's assets,
liabilities, and operations through the last calendar day of the month in
which the dissolution occurs or the final winding up is completed, as
applicable;
(ii) the liquidator shall discharge from Company funds all of the
debts, liabilities and obligations of the Company or otherwise make
adequate provision for payment and discharge thereof (including the
establishment of a cash escrow fund for contingent liabilities in such
amount and for such term as the liquidator may reasonably determine); and
(iii) all remaining assets of the Company shall be distributed to
the sole Member.
(b) The distribution of cash or property to a Member in accordance with
the provisions of this Section 9.2 constitutes a complete return to the Member
of its Capital Contributions and a complete distribution to the Member of its
share of all the Company's property and constitutes a compromise to which all
Members have consented within the meaning of Section 18-502(b) of the Delaware
Act. No Member shall be required to make any Capital Contribution to the Company
to enable the Company to make the distributions described in this Section 9.2.
(c) On completion of such final distribution, the liquidator shall file a
certificate of cancellation with the Secretary of State of the State of Delaware
and take such other actions as may be necessary to terminate the existence of
the Company.
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ARTICLE X.
MERGER, CONSOLIDATION OR CONVERSION
SECTION 10.1 AUTHORITY. Subject to compliance with Section 6.1(c), the
Company may merge or consolidate with one or more corporations, limited
liability companies, statutory trusts or associations, real estate investment
trusts, common law trusts or unincorporated businesses, including a partnership
(whether general or limited (including a limited liability partnership)) or
convert into any such entity, whether such entity is formed under the laws of
the State of Delaware or any other state of the United States of America,
pursuant to a written agreement of merger or consolidation ("MERGER AGREEMENT")
or a written plan of conversion ("PLAN OF CONVERSION"), as the case may be, in
accordance with this Article X. The surviving entity to any such merger,
consolidation or conversion is referred to herein as the "Surviving Business
Entity."
SECTION 10.2 PROCEDURE FOR MERGER, CONSOLIDATION OR CONVERSION.
(a) The merger, consolidation or conversion of the Company pursuant to
this Article X requires the prior approval of a majority of the Board and
compliance with Section 10.3.
(b) If the Board shall determine to consent to a merger or consolidation,
the Board shall approve the Merger Agreement, which shall set forth:
(i) the names and jurisdictions of formation or organization of each
of the business entities proposing to merge or consolidate;
(ii) the name and jurisdiction of formation or organization of the
Surviving Business Entity that is to survive the proposed merger or
consolidation;
(iii) the terms and conditions of the proposed merger or
consolidation;
(iv) the manner and basis of exchanging or converting the equity
securities of each constituent business entity for, or into, cash,
property or interests, rights, securities or obligations of the Surviving
Business Entity; and (A) if any general or limited partner interests,
securities or rights of any constituent business entity are not to be
exchanged or converted solely for, or into, cash, property or general or
limited partner interests, rights, securities or obligations of the
Surviving Business Entity, the cash, property or interests, rights,
securities or obligations of any general or limited partnership,
corporation, trust, limited liability company, unincorporated business or
other entity (other than the Surviving Business Entity) which the holders
of such general or limited partner interests, securities or rights are to
receive in exchange for, or upon conversion of their interests, securities
or rights, and (B) in the case of securities represented by certificates,
upon the surrender of such certificates, which cash, property or general
or limited partner interests, rights, securities or obligations of the
Surviving Business Entity or any general or limited partnership,
corporation, trust, limited liability company, unincorporated business or
other entity (other than the Surviving Business Entity), or evidences
thereof, are to be delivered;
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(v) a statement of any changes in the constituent documents or the
adoption of new constituent documents (the articles or certificate of
incorporation, articles of trust, declaration of trust, certificate or
agreement of limited partnership, operating agreement or other similar
charter or governing document) of the Surviving Business Entity to be
effected by such merger or consolidation;
(vi) the effective time of the merger, which may be the date of the
filing of the certificate of merger pursuant to Section 10.4 or a later
date specified in or determinable in accordance with the Merger Agreement
(provided, that if the effective time of the merger is to be later than
the date of the filing of such certificate of merger, the effective time
shall be fixed at a date or time certain at or prior to the time of the
filing of such certificate of merger and stated therein); and
(vii) such other provisions with respect to the proposed merger or
consolidation as are deemed necessary or appropriate by the Board.
(c) If the Board shall determine to consent to the conversion, the Board
shall approve and adopt a Plan of Conversion containing such terms and
conditions that the Board determines to be necessary or appropriate.
SECTION 10.3 APPROVAL BY MEMBERS OF MERGER OR CONSOLIDATION.
(a) The Board, upon its approval of the Merger Agreement or Plan of
Conversion, as the case may be, shall direct that the Merger Agreement or the
Plan of Conversion, as applicable, be submitted to a vote of the Members,
whether at a meeting or by written consent. A copy or a summary of the Merger
Agreement or the Plan of Conversion, as applicable, shall be included in or
enclosed with the notice of a special meeting or the written consent.
(b) The Merger Agreement or the Plan of Conversion, as applicable, shall
be approved upon receiving the affirmative vote or consent of the holders of a
majority of the Members.
(c) After such approval by vote or consent of the Members, and at any time
prior to the filing of the certificate of merger, consolidation or conversion
pursuant to Section 10.4, the merger, consolidation or conversion may be
abandoned pursuant to provisions therefor, if any, set forth in the Merger
Agreement or the Plan of Conversion, as the case may be.
SECTION 10.4 CERTIFICATE OF MERGER, CONSOLIDATION OR CONVERSION.
(a) Upon the required approval, if any, by the Board and the Members of a
Merger Agreement or a Plan of Conversion, as the case may be, a certificate of
merger, consolidation or conversion, as applicable, shall be executed and filed
with the Secretary of State of the State of Delaware in conformity with the
requirements of the Delaware Act.
(b) At the effective time of the certificate of merger or consolidation:
(i) all of the rights, privileges and powers of each of the business
entities that has merged or consolidated, and all property, real, personal
and mixed, and all debts due
29
to any of those business entities and all other things and causes of
action belonging to each of those business entities shall be vested in the
Surviving Business Entity and after the merger or consolidation shall be
the property of the Surviving Business Entity to the extent they were
property of each constituent business entity;
(ii) the title to any real property vested by deed or otherwise in
any of those constituent business entities shall not revert and is not in
any way impaired because of the merger or consolidation;
(iii) all rights of creditors and all liens on or security interest
in property of any of those constituent business entities shall be
preserved unimpaired; and
(iv) all debts, liabilities and duties of those constituent business
entities shall attach to the Surviving Business Entity, and may be
enforced against it to the same extent as if the debts, liabilities and
duties had been incurred or contracted by it.
(c) At the effective time of the certificate of conversion:
(i) the Company shall continue to exist, without interruption, but
in the organizational form of the converted entity rather than in its
prior organizational form;
(ii) all rights, title, and interests to all real estate and other
property owned by the Company shall continue to be owned by the converted
entity in its new organizational form without reversion or impairment,
without further act or deed, and without any transfer or assignment having
occurred, but subject to any existing liens or other encumbrances thereon;
(iii) all liabilities and obligations of the Company shall continue
to be liabilities and obligations of the converted entity in its new
organizational form without impairment or diminution by reason of the
conversion;
(iv) all rights of creditors or other parties with respect to or
against the prior interest holders or other owners of the Company in their
capacities as such in existence as of the effective time of the conversion
will continue in existence as to those liabilities and obligations and may
be pursued by such creditors and obligees as if the conversion did not
occur;
(v) a proceeding pending by or against the Company or by or against
any of the Members in their capacities as such may be continued by or
against the converted entity in its new organizational form and by or
against the prior members without any need for substitution of parties;
and
(vi) the Company securities that are to be converted into
partnership interests, shares, evidences of ownership, or other securities
in the converted entity as provided in the Plan of Conversion or
certificate of conversion shall be so converted, and the Members shall be
entitled only to the rights provided in the Plan of Conversion or
certificate of conversion.
30
(d) A merger, consolidation or conversion effected pursuant to this
Article X shall not (i) be deemed to result in a transfer or assignment of
assets or liabilities from one entity to another having occurred or (ii) require
the Company (if it is not the Surviving Business Entity) to wind up its affairs,
pay its liabilities or distribute its assets as required under Article IX of
this Agreement or under the applicable provisions of the Delaware Act.
ARTICLE XI.
GENERAL PROVISIONS
SECTION 11.1 NOTICES. Except as expressly set forth to the contrary in
this Agreement, all notices, requests or consents provided for or permitted to
be given under this Agreement must be in writing and must be delivered to the
recipient in person, by courier or mail or by facsimile or other electronic
transmission and a notice, request or consent given under this Agreement is
effective on receipt by the Person to receive it; provided, however, that a
facsimile or other electronic transmission that is transmitted after the normal
business hours of the recipient shall be deemed effective on the next Business
Day. All notices, requests and consents to be sent to a Member must be sent to
or made at the addresses given for that Member as that Member may specify by
notice to the other Members. Any notice, request or consent to the Company must
be given to all of the Members. Whenever any notice is required to be given by
applicable Law, the Organizational Certificate or this Agreement, a written
waiver thereof, signed by the Person entitled to notice, whether before or after
the time stated therein, shall be deemed equivalent to the giving of such
notice. Whenever any notice is required to be given by Law, the Organizational
Certificate or this Agreement, a written waiver thereof, signed by the Person
entitled to notice, whether before or after the time stated therein, shall be
deemed equivalent to the giving of such notice.
SECTION 11.2 ENTIRE AGREEMENT; SUPERSEDURE. This Agreement constitutes the
entire agreement of the Members and their respective Affiliates relating to the
subject matter hereof and supersedes all prior contracts or agreements with
respect to such subject matter, whether oral or written.
SECTION 11.3 EFFECT OF WAIVER OR CONSENT. Except as provided in this
Agreement, a waiver or consent, express or implied, to or of any breach or
default by any Person in the performance by that Person of its obligations with
respect to the Company is not a consent or waiver to or of any other breach or
default in the performance by that Person of the same or any other obligations
of that Person with respect to the Company. Except as provided in this
Agreement, failure on the part of a Person to complain of any act of any Person
or to declare any Person in default with respect to the Company, irrespective of
how long that failure continues, does not constitute a waiver by that Person of
its rights with respect to that default until the applicable
statute-of-limitations period has run.
SECTION 11.4 AMENDMENT OR RESTATEMENT. This Agreement may be amended or
restated only by a written instrument executed by all Members; provided,
however, that notwithstanding anything to the contrary contained in this
Agreement, each Member agrees that the Board, without the approval of any
Member, may amend any provision of the Organizational Certificate and this
Agreement, and may authorize any Officer to execute, swear to, acknowledge,
deliver, file and record any such amendment and whatever documents may be
31
required in connection therewith, to reflect any change that does not require
consent or approval (or for which such consent or approval has been obtained)
under this Agreement or does not materially adversely affect the rights of the
Members.
SECTION 11.5 BINDING EFFECT. This Agreement is binding on and shall inure
to the benefit of the Members and their respective heirs, legal representatives,
successors and assigns.
SECTION 11.6 GOVERNING LAW; SEVERABILITY.
THIS AGREEMENT IS GOVERNED BY AND SHALL BE CONSTRUED IN ACCORDANCE WITH
THE LAW OF THE STATE OF DELAWARE, EXCLUDING ANY CONFLICT-OF-LAWS RULE OR
PRINCIPLE THAT MIGHT REFER THE GOVERNANCE OR THE CONSTRUCTION OF THIS AGREEMENT
TO THE LAW OF ANOTHER JURISDICTION. In the event of a direct conflict between
the provisions of this Agreement and (a) any provision of the Organizational
Certificate, or (b) any mandatory, non-waivable provision of the Delaware Act,
such provision of the Organizational Certificate or the Delaware Act shall
control. If any provision of the Delaware Act provides that it may be varied or
superseded in the limited liability company agreement (or otherwise by agreement
of the members or managers of a limited liability company), such provision shall
be deemed superseded and waived in its entirety if this Agreement contains a
provision addressing the same issue or subject matter. If any provision of this
Agreement or the application thereof to any Person or circumstance is held
invalid or unenforceable to any extent, (a) the remainder of this Agreement and
the application of that provision to other Persons or circumstances is not
affected thereby and that provision shall be enforced to the greatest extent
permitted by Law, and (b) the Members or Board (as the case may be) shall
negotiate in good faith to replace that provision with a new provision that is
valid and enforceable and that puts the Members in substantially the same
economic, business and legal position as they would have been in if the original
provision had been valid and enforceable.
SECTION 11.7 FURTHER ASSURANCES. In connection with this Agreement and the
transactions contemplated hereby, each Member shall execute and deliver any
additional documents and instruments and perform any additional acts that may be
necessary or appropriate to effectuate and perform the provisions of this
Agreement and those transactions.
SECTION 11.8 OFFSET. Whenever the Company is to pay any sum to any Member,
any amounts that a Member owes the Company may be deducted from that sum before
payment.
SECTION 11.9 COUNTERPARTS. This Agreement may be executed in any number of
counterparts with the same effect as if all signing parties had signed the same
document. All counterparts shall be construed together and constitute the same
instrument.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, EnerVest has executed this Agreement as the sole
member as of the date first set forth above.
MEMBER:
ENERVEST MANAGEMENT PARTNERS, LTD.,
a Texas limited partnership
By: EnerVest Management GP, L.C.,
a Texas limited liability company,
its General Partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇,
Executive Vice President and
Chief Financial Officer