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EXHIBIT 10.5
Execution copy
CONTRIBUTION AGREEMENT
EnerVest Management Partners, Ltd.
EnerVest Operating, L.L.C.
CGAS Exploration, Inc.
EV Investors, L.P.
EVCG GP, L.L.C.
CGAS Properties, L.P.
EnCap Energy
Capital Fund V, L.P.
EnCap V-B Acquisitions, L.P.
EV Management, L.L.C.
EV Energy GP, L.P.
EV Energy Partners, L.P.
CGas Holdings, LLC
EVEC Holdings, LLC
September 29, 2006
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Table of Contents
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Page
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ARTICLE I. Definitions
2
Section 1.1 Defined
Terms......................................
2
Section 1.2 Other Defined
Terms................................
3
Section 1.3
Construction.......................................
3
Section 1.4
References.........................................
4
ARTICLE II. CONTRIBUTION BY OWNERS OF PROPERTIES
LP....................
4
Section 2.1 Capitalization of the
General Partner..............
4
Section 2.2 Capitalization of the
Partnership..................
4
ARTICLE III. Representations and
Warranties............................
5
Section 3.1 Representations and
Warranties of All Parties......
5
Section 3.2 Representations of
EVMP Regarding Properties LP,
Properties GP, Clinton and Clinton GP..............
6
Section 3.3 Representations of
EVMP Regarding Capitalization
and Ownership of Properties GP, Properties LP,
Clinton GP and Clinton LP..........................
7
Section 3.4 Representations and
Warranties of EVMP Regarding
Ownership and Transfer of Interests in Properties
GP and Properties LP...............................
8
Section 3.5 Representations and
Warranties of EVOC Regarding
Ownership and Transfer of Interests in
Properties LP......................................
9
Section 3.6 Representation and
Warranties of EnCap Funds
Regarding Ownership and Transfer of Interests
in Properties LP...................................
9
Section 3.7 Representations and
Warranties of CGAS Regarding
Ownership and Transfer of Interests in
Clinton LP.........................................
9
Section 3.8 Representations and
Warranties of Investors
Regarding Ownership and Transfer of Interests
in Properties LP...................................
10
Section 3.9 Representations and
Warranties of the General
Partner Regarding Interests Issued.................
10
Section 3.10
Representations and Warranties of the Partnership
Regarding Common and Subordinated Units............
10
Section 3.11
Representations and Warranties of EVMP, EVOC,
the EnCap Funds and
CGAS regarding securities
laws...............................................
10
ARTICLE IV.
COVENANTS..................................................
11
Section 4.1 Consent to Admission
as a Member or Partner........
11
Section 4.2 Further
Assurances.................................
11
Section 4.3 Conveyance of the
Clinton Properties...............
11
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ARTICLE V. THE
CLOSING.................................................
11
Section 5.1 The
Closing........................................
11
Section 5.2 Deliveries at Closing
by Sole Member of
Properties GP, Limited Partners of Properties
LP and Properties GP
and CGAS.....................
11
Section 5.3 Deliveries at Closing
by General Partner...........
12
Section 5.4 Deliveries at Closing
by the Partnership...........
12
ARTICLE VI.
MISCELLANEOUS..............................................
12
Section 6.1
Headings...........................................
12
Section 6.2
Notices............................................
13
Section 6.3
Assignment.........................................
13
Section 6.4 Entire
Agreement...................................
13
Section 6.5
Counterparts.......................................
13
Section 6.6 Governing
Law......................................
13
Section 6.7
Severability.......................................
13
Section 6.8 No Survival of
Representations and Warranties
and Covenants......................................
13
PROPERTIES LP
SUBSIDIARIES............................................
Schedule 3.2
RECORD OWNERS OF PROPERTIES
LP........................................ Schedule 3.3
ENCAP OWNERSHIP
PERCENTS.............................................. Schedule 3.6
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CONTRIBUTION AGREEMENT
This
Contribution Agreement ("AGREEMENT"), dated as of September 29,
2006,
is entered into by and among EnerVest Management Partners, Ltd., a
Texas limited
partnership ("EVMP"), EVEC Holdings, LLC, a Delaware limited
liability Company
("EVH"), EnerVest Operating, L.L.C., a Delaware limited liability
company
("EVOC"), CGAS Exploration, Inc., an Ohio corporation ("CGAS"), EV
Investors,
L.P., a Delaware limited partnership ("INVESTORS"), EVCG GP,
L.L.C., a Delaware
limited liability company ("CLINTON GP"), CGAS Properties, L.P., a
Delaware
limited partnership ("CLINTON LP"), CGas Holdings, LLC, a Delaware
limited
liability company ("CGH") EnCap Energy Capital Fund V, L.P., a
Texas limited
partnership ("ENCAP FUND V"), EnCap V-B Acquisitions, L.P., a Texas
limited
partnership ("ENCAP FUND V-B" and, together with EnCap Fund V, the
"ENCAP
FUNDS"), EV Management, L.L.C., a Delaware limited liability
company
("MANAGEMENT"), EV Energy GP, L.P., a Delaware limited partnership
(the "GENERAL
PARTNER"), and EV Energy Partners, L.P., a Delaware limited
partnership (the
"PARTNERSHIP").
WHEREAS,
EVMP previously formed Management and EVH as a wholly owned
subsidiaries;
WHEREAS,
EVMP, as limited partner, and Management, as general partner,
formed the General Partner as a Delaware limited partnership;
WHEREAS,
EVMP, as organizational limited partner, and the General
Partner,
as general partner, formed the Partnership as a Delaware limited
partnership;
WHEREAS,
EVMP formed EV Properties GP, L.L.C., as a wholly-owned
Delaware
limited liability company ("PROPERTIES GP");
WHEREAS,
EVMP, EV Investors and the EnCap Funds, as limited partners,
and
Properties GP, as general partner, formed EV Properties, L.P., as a
Delaware
limited partnership ("PROPERTIES LP");
WHEREAS,
EVMP, EnCap Investments GP, L.L.C., a Delaware limited
liability
company ("ENCAP"), and the Partnership have entered into the
Investor's
Agreement, dated May 12, 2006 ("INVESTOR'S AGREEMENT"), pursuant to
which EVMP,
EnCap and the Partnership agreed to take all steps necessary to
cause the
transactions described in this Agreement to occur;
WHEREAS, as
contemplated by the Investor's Agreement, EVMP will contribute
its membership interest in Properties GP to the General Partner in
exchange for
a limited partnership interest in the General Partner;
WHEREAS,
as contemplated by the Investor's Agreement, EVMP, and the
EnCap
Funds will contribute a portion of their limited partner interests
in Properties
LP to the General Partner in exchange for limited partnership
interests in the
General Partner;
WHEREAS,
EV Investors will contribute $144,150 in cash to the General
Partner in exchange for limited partnership interests in the
General Partner;
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WHEREAS,
as contemplated by the Investor's Agreement, the General
Partner
will contribute the membership interest in Properties GP and the
limited partner
interests in Properties LP to the Partnership to maintain its 2%
general partner
interest;
WHEREAS,
as contemplated by the Investor's Agreement, EVMP, EVOC,
Investors and the EnCap Funds desire to contribute the remainder of
their
limited partnership interests in Properties LP to the Partnership
in exchange
for Common Units, Subordinated Units and cash;
WHEREAS,
as contemplated by the Investor's Agreement, Properties LP has
formed Clinton GP as a wholly owned Delaware limited liability
company;
WHEREAS,
as contemplated by the Investor's Agreement, Clinton GP, as
general partner, and CGAS, as limited partner, have formed Clinton
LP as a
Delaware limited partnership;
WHEREAS, as
contemplated by the Investor's Agreement, CGAS contributed the
Clinton Properties to Clinton LP in exchange for a limited
partnership interest
in Clinton LP;
WHEREAS,
as contemplated by the Investor's Agreement, CGAS will
contribute
the limited partnership interest in Clinton LP to the Partnership
in exchange
for Common Units, Subordinated Units and cash;
WHEREAS,
CGAS formed CGH as a wholly owned subsidiary; and
WHEREAS,
EVMP and EVOC assigned their right to receive Subordinated
Units
to EVH and CGAS assigned its right to receive Subordinated Units to
CGH;
NOW
THEREFORE, for good and valuable consideration, the parties agree
as
follows:
ARTICLE I.
Definitions
SECTION
1.1.DEFINED TERMS. The following terms have the meanings set
forth
below when used in this Agreement:
"CLINTON
CONVEYANCE" means the conveyance of even date between CGAS, as
grantor, and Clinton LP, as grantee.
"CLINTON
PROPERTIES" means those interests in oil and gas properties
described in Exhibit A to the Clinton Conveyance.
"COMMON
UNITS" has the meaning set forth in the MLP Partnership
Agreement.
"GOVERNMENTAL AUTHORITY" means the United States, any foreign
country,
state, county, city or other incorporated or unincorporated
political
subdivision, agency or instrumentality thereof.
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"GP
PARTNERSHIP AGREEMENT" means the amended and restated agreement
of
limited partnership of the General Partner.
"INCENTIVE
DISTRIBUTION RIGHTS" has the meaning set forth in the MLP
Partnership Agreement.
"MLP
PARTNERSHIP AGREEMENT" means the amended and restated agreement
of
the limited partnership of the Partnership.
"PERSON"
shall mean a corporation, an association, a partnership, an
organization, a business, an individual or a Governmental
Authority.
"SUBORDINATED UNITS" has the meaning set forth in the MLP
Partnership
Agreement.
SECTION 1.2.OTHER
DEFINED TERMS. The following terms are defined in the
sections indicated:
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Term
Section
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Closing
5.1
Agreement
First
Paragraph
CGAS
First Paragraph
CGH
First Paragraph
Claim
Section 3.4
Clinton GP
First Paragraph
Clinton LP
First Paragraph
Closing
Section 5.1
EnCap
Recitals
EnCap Fund V
Recitals
EnCap Funds V-B
Recitals
EVH
First Paragraph
EVMP
First Paragraph
EVOC
First Paragraph
Investors
First Paragraph
Investor's Agreement Recitals
General Partner
First Paragraph
Management
First Paragraph
Partnership
First Paragraph
Properties GP
Recitals
Properties LP
Recitals
Securities ACT
Section 3.4
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SECTION
1.3.CONSTRUCTION. Whenever the context requires, the gender of
all
words used herein shall include the masculine, feminine and neuter,
and the
number of all words shall include the singular and plural.
3
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SECTION
1.4.REFERENCES. Unless specified, references in this Agreement
to
"Sections", "Subsections", "Paragraphs" or "Articles" refer to the
sections,
subsections, paragraphs or articles in this Agreement.
ARTICLE II.
CONTRIBUTION BY OWNERS OF PROPERTIES LP
SECTION 2.1.CAPITALIZATION OF THE GENERAL PARTNER.
(a)At the
Closing, pursuant to the Investor's Agreement, Management will
contribute $288.30 to the General Partner to retain its 0.01%
interest in the
General Partner as general partner.
(b) At the
Closing, pursuant to the Investor's Agreement,
(i) EVMP will contribute the entire membership interest in
Properties
GP and a 3.44% limited partnership interest in Properties LP to
the
General Partner, in exchange for a 71.24% interest as a limited
partner in
the General Partner;
(ii) Investors will contribute $144,150 to the General Partner
in
exchange
for a 5.00% interest as a limited partner in the General
Partner;
(iii) EnCap Fund V will contribute a 0.66% interest in Properties
LP
to the
General Partner in exchange for a 13.26% interest as a limited
partner in
the General Partner; and
(iv) EnCap Fund V-B will contribute a 0.52% interest in
Properties
LP to the
General Partner in exchange for a 10.49% interest as a limited
partner in
the General Partner.
SECTION
2.2 CAPITALIZATION OF THE PARTNERSHIP.
(a) At the
Closing, pursuant to the Investor's Agreement, the General
Partner will contribute the entire membership interest in
Properties GP, a 4.63%
limited partnership interest in Properties LP and $144,150 in cash
to the
Partnership. In exchange for the contribution contemplated by this
Section
2.2(a), the General Partner will retain its 2.00% general
partnership interest
in the Partnership and will be issued the Incentive Distribution
Rights by the
Partnership and be admitted as a limited partner with respect to
such Incentive
Distribution Rights.
(b) At the
Closing, pursuant to the Investor's Agreement,
(i) EVMP will contribute a 4.27% limited partnership interest
in Properties LP to the Partnership in exchange for 25,244
Common
Units and a cash payment of $2,072,327.22, less its share of
expenses, if any, in excess of $2.0 million.
4
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(ii) EVOC will contribute a 54.03% limited partnership
interest in Properties LP to the Partnership in exchange for
138,381
Common Units, 810,030 Subordinated Units (which will be issued
to
and held by EVH) and a cash payment of $14,519,564.03, less its
share of expenses, if any, in excess of $2.0 million.
(iii) Investors will contribute a 5.00 % limited partnership
interest in Properties LP to the Partnership in exchange for
155,000
Subordinated Units.
(iv) EnCap Fund V will contribute a 17.95% limited partnership
in interest Properties LP to the Partnership in exchange for
49,207
Common Units, 243,350 Subordinated Units and a cash payment of
$4,989,634.21, less its share of expenses, if any, in excess of
$2.0
million.
(v) EnCap Fund V-B will contribute a 14.21% limited
partnership in interest in Properties LP to the Partnership in
exchange for 38,913 Common Units, 192,820 Subordinated Units and
a
cash payment of $3,945,853.41, less its share of expenses, if
any,
in excess of $2.0 million.
(vi) CGAS will contribute a 99.99% limited partnership
interest in Clinton LP to the Partnership in exchange for
343,255
Common Units, 1,698,800 Subordinated Units (which will be issued
to
and held by CGH) and a cash payment of $34,806,771.14, less its
share of expenses, if any, in excess of $2.0 million.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
SECTION
3.1 REPRESENTATIONS AND WARRANTIES OF ALL PARTIES.
Each of
the parties to this Agreement hereby represents and warrants
severally as to itself to each other party as follows:
(a) Formation and Good Standing. That it is a corporation,
limited
partnership or limited liability company legally incorporated or
formed,
duly
organized, validly existing and, if applicable, in good
standing
under the
laws of the state of its formation and that it is duly
qualified
to do
business and is in good standing as a foreign corporation,
partnership or other entity in each jurisdiction where the
character of
the
properties owned or leased by it or the nature of the
businesses
transacted
by it requires it to be so qualified.
(b) Authority, Execution and Enforceability. That it has full
corporate,
partnership or other power and authority to enter into this
Agreement
and to perform its obligations hereunder. That its execution,
delivery
and performance of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized and
approved by
it. That
it has duly executed and delivered this Agreement, and that
this
Agreement
constitutes its legal, valid and binding obligation,
enforceable
against it
in accordance with its terms (except as enforceability may be
limited
by
5
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applicable
bankruptcy, insolvency, reorganization, moratorium or similar
laws
affecting creditors' rights generally or by the principles
governing
the
availability of equitable remedies).
(c) No Conflicts. Neither its execution, delivery nor performance
of
this
Agreement will:
(i) require the approval or consent of any Governmental
Authority;
(ii) conflict with or result in the breach or violation of any
term or provision of, or will constitute a default under, or
will
otherwise impair the good standing, validity or effectiveness
of,
any provision of its certificate or articles of incorporation,
by-laws, partnership agreement or other formation documents;
(iii) result in the breach or violation by it of any material
term or provision of, or constitute a default or give rise to
any
right of termination, cancellation or acceleration under any of
the
terms, conditions or provisions of any material agreement to
which
it is bound or by which its property or business is affected,
except
for such defaults (or rights of termination, cancellation or
acceleration) as to which requisite waivers or consents are
intended
to be obtained by it prior to the Closing; or
(iv) violate any federal, state or local or other governmental
law ordinance, or any order, writ, injunction, decree, rule or
regulation of any Governmental Authority applicable to it.
SECTION
3.2 REPRESENTATIONS OF EVMP REGARDING PROPERTIES LP, PROPERTIES
GP, CLINTON AND CLINTON GP. EVMP hereby represents and warrants to
the
Partnership and General Partner at and as of the Closing Date as
follows:
(a) Organization and Good Standing of Properties GP and Clinton
GP.
Each of
Properties GP and Clinton GP is a limited liability company
legally
formed, duly organized, validly existing and in good standing
under the
laws of the state of Delaware, and has full corporate power and
authority
and all necessary licenses and permits to own, lease and
operate
the
properties used in its business and to act as the general partner
of
Properties
LP or Clinton LP (as the case may be). Each of Properties GP
and
Clinton GP is duly qualified to do business and is in good standing
as
a foreign
limited liability company in each jurisdiction where the
character
of the properties owned or leased by it or the nature of the
businesses
transacted by it requires it to be so qualified.
(b) Organization and Good Standing of Properties LP and Clinton
LP.
Properties
LP and Clinton LP each is a limited partnership legally formed,
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