Exhibit 3.1
AMENDMENT NO. 1
TO
SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED
PARTNERSHIP
OF
ENCORE ENERGY PARTNERS LP
This Amendment No. 1 (this
“Amendment No. 1”) to the Second Amended and
Restated Agreement of Limited Partnership (the “Partnership
Agreement”) of Encore Energy Partners LP (the
“Partnership”) is hereby adopted effective as of
May 10, 2007, by Encore Energy Partners GP LLC, a Delaware
limited liability company (the “General Partner”), as
general partner of the Partnership. Capitalized terms used but not
defined herein are used as defined in the Partnership
Agreement.
WHEREAS , the General Partner
has determined that it is in the best interests of the Partnership
and the Limited Partners to amend the Partnership Agreement to,
among other things, modify the income and loss allocations made
among the General Partner, the holders of Management Incentive
Units and Unitholders after an offering of Units by the Partnership
in order to simplify the preparation of annual federal income tax
information reports by the Partnership to Unitholders; and
WHEREAS , acting pursuant to
the power and authority granted to it under Section 13.1(d) of
the Partnership Agreement, the General Partner has determined, in
its discretion, that the following amendment to the Partnership
Agreement does not require the approval of any Partner or
Assignee.
NOW THEREFORE , the General
Partner does hereby amend the Partnership Agreement as
follows:
Section 1. Amendment
.
(a) Section 1.1 is hereby
amended to add or amend and restate the following
definitions:
(i) “ Disposed of Adjusted
Property ” has the meaning assigned to such term in
Section 6.1(d)(xii)(B).
(ii) “ Net Termination
Gain ” means, for any taxable year, the sum, if positive,
of all items of income, gain, loss or deduction recognized by the
Partnership (a) after the Liquidation Date or (b) upon the
sale, exchange or other disposition of all or substantially all of
the assets of the Partnership Group, taken as a whole, in a single
transaction or a series of related transactions (excluding any
disposition to a member of the Partnership Group). The items
included in the determination of Net Termination Gain shall be
determined in accordance with Section 5.5(b) and shall include
Simulated Gains, Simulated Losses and
Simulated
Depletion, but shall not include any items of income, gain or loss
specially allocated under Section 6.1(d).
(iii) “ Net Termination
Loss ” means, for any taxable year, the sum, if negative,
of all items of income, gain, loss or deduction recognized by the
Partnership (a) after the Liquidation Date or (b) upon the
sale, exchange or other disposition of all or substantially all of
the assets of the Partnership Group, taken as a whole, in a single
transaction or a series of related transactions (excluding any
disposition to a member of the Partnership Group). The items
included in the determination of Net Termination Loss shall be
determined in accordance with Section 5.5(b) and shall include
Simulated Gains, Simulated Losses and Simulated Depletion, but
shall not include any items of income, gain or loss specially
allocated under Section 6.1(d).
(b) Section 5.5(d) is
hereby amended and restated in its entirety as follows:
(i) In accordance with Treasury
Regulation Section 1.704-1(b)(2)(iv)(f), on an issuance
of additional Partnership Interests for cash or Contributed
Property, the issuance of Partnership Interests as consideration
for the provision of services or the conversion of the General
Partner’s Combined Interest to Common Units pursuant to
Section 11.3(b), the Capital Accounts of all Partners and the
Carrying Value of each Partnership property immediately prior to
such issuance shall be adjusted upward or downward to reflect any
Unrealized Gain or Unrealized Loss attributable to such Partnership
property, as if such Unrealized Gain or Unrealized Loss had been
recognized on an actual sale of each such property for an amount
equal to its fair market value immediately prior to such issuance
and had been allocated to the Partners at such time pursuant to
Section 6.1(c) in the same manner as any item of gain, loss,
Simulated Gain or Simulated Loss actually recognized followi
