Exhibit 10.40
CONSENT AND AMENDMENT NO.
1
TO
AGREEMENT OF LIMITED
PARTNERSHIP
SBE Partners
LP
THIS CONSENT AND AMENDMENT NO. 1
TO AGREEMENT OF LIMITED PARTNERSHIP (this “ Agreement ”) is made
and entered into this 29 th day of May, 2009, by and between Catena
Oil & Gas LLC, a Texas limited liability company, and EFS
O&G, LLC, a Delaware limited liability company.
RECITALS
:
A. Reference is herein made to that certain
Agreement of Limited Partnership dated January 15, 2007, by
and between the parties hereto, governing SBE Partners LP, a Texas
limited partnership (the “ Partnership Agreement
”). Capitalized terms used herein but not defined herein
shall have the respective meanings assigned to them in the
Partnership Agreement.
B. Subject to the terms hereof, the Partners deem
it in their best business judgment and mutual best interests to
execute and deliver this Agreement in order to (i) approve the
sale by the Partnership of a portion of its oil and gas assets to
the General Partner, (ii) amend and modify the Partnership
Agreement in certain respects and (iii) make the other
covenants, agreements, representations and warranties contained
herein.
AGREEMENT
:
NOW, THEREFORE,
in consideration of the foregoing
Recitals and the mutual covenants and agreements contained herein
and in the Partnership Agreement, the Partners do hereby agree as
follows:
Section 1. Approval of
Sale . The Partners
hereby consent and approve the resolutions stated below:
WHEREAS , the Partnership and the Partners have reviewed
and considered the terms and conditions of the proposed sale of an
undivided interest in the Oil and Gas Properties of the Partnership
to the General Partner, and based on that review, have determined
that the terms and conditions thereof, expressly including the
price, are fair to the Partnership;
RESOLVED , that the Partnership enter into that certain
Purchase and Sale Agreement (the “ PSA ”) dated
as of even date herewith, with the General Partner in order to
convey to it an undivided interest in all of the Oil and Gas
Properties of the Partnership, with the PSA to be in the form
attached hereto as Exhibit A to this Agreement;
RESOLVED FURTHER
, that the form of and all the terms
and provisions of the PSA, expressly including the price to be paid
and the valuation of the Oil and Gas Properties to be conveyed, and
all other documents and instruments to be executed and delivered by
the Partnership in connection therewith (including the Assignment
in the form attached as an exhibit to the PSA), are hereby approved
in all respects;
RESOLVED FURTHER
, that the General Partner is hereby
authorized and directed, in the name and on behalf of the
Partnership, to execute and deliver the PSA and all other documents
and instruments to be executed in connection therewith;
and
RESOLVED FURTHER
, that the General Partner is hereby
authorized and directed, in the name and on behalf of the
Partnership, to take or cause to be taken all such actions as in
its reasonable judgment shall be necessary to cause the Partnership
to perform its covenants and obligations under the PSA and to take
or cause to be taken all such further action, in the name and on
behalf of the Partnership, as in its reasonable judgment shall be
necessary in order to carry out the intent, and accomplish the
purposes, of the PSA and all other documents and instruments to be
executed and delivered by the Partnership in connection therewith;
provided , that any material election, consent, waiver or
other determination accorded the Partnership under the PSA or such
other documents or instruments (including agreement by the
Partnership to any post-closing settlement under Section 6.2
of the PSA) shall require the prior written consent of the Limited
Partner.
Without limiting the foregoing but
for purposes of clarity, the Partners agree that the foregoing
approval by them of the foregoing resolutions shall constitute full
and complete authorization under the Partnership Agreement
(including Section 6.2 thereof) of the PSA and the
transactions contemplated thereunder.
Section 2. Distribution
of Purchase Price . Notwithstanding anything to the contrary
contained in the Partnership Agreement:
(a) immediately after receipt by the
Partnership of the Purchase Price (as such term is defined in the
PSA) pursuant to Section 5.2 of the PSA, the General Partner
shall cause the Partnership to distribute in cash (i) 98% of
the Purchase Price to the Limited Partner and (ii) 2% of the
Purchase Price to the General Partner;
(b) if the post-closing adjustment
to the Purchase Price under Section 6.2 of the PSA results in
a payment due the Partnership, then immediately after receipt by
the Partnership of such payment, the General Partner shall cause
the Partnership to distribute in cash (i) 98% of such payment
to the Limited Partner and (ii) 2% of such payment to the
General Partner; and
2
(c) if the post-closing adjustment
to the Purchase Price under Section 6.2 of the PSA results in
a payment due Buyer (as defined in the PSA), the General Partner,
in the name and on behalf of the Partnership, is authorized and
directed to make such payment to Buyer, and the cost of such
payment to the Partnership shall be allocated and borne
(i) 98% to the Limited Partner and (ii) 2% to the General
Partner.
Section 3. GP Sharing
Percentage and LP Sharing Percentage .
(a) With respect to the business and
operations of the Partnership conducted on and after the date
hereof, the definition of GP Sharing Percentage, as set forth in
Section 2.1 of the Partnership Agreement, shall be amended to
read as follows:
“‘ GP Sharing
Percentage ’ means 30%.”
(b) With respect to the business and
operations of the Partnership conducted on and after the date
hereof, the definition of LP Sharing Percentage, as set forth in
Section 2.1 of the Partnership Agreement, shall be amended to
read as follows:
“‘ LP Sharing
Percentage ’ means 70%.”
(c) For purposes of clarity,
(i) the phrase “business and operations of the
Partnership conducted on and after the date hereof,” as used
in Sections 3(a) and (b) , is not meant to include
consummation of the transactions contemplated under the PSA and
(ii) this Section 3 is not meant to, nor shall,
override the provisions of Section 2 with respect to
the distribution by the Partnership of the Purchase Price to the
Partners. In addition, for purposes of clarity, it is acknowledged
and agreed that neither Section 2 nor Section 3 is meant
to, nor shall, override the allocation of 100% of any Hedge Costs
to the Limited Partner under Section 4.1(c) of the Partnership
Agreement or the allocation of 100% of any revenues attributable to
any Hedging Transaction to the Limited Partner under
Section 4.2(a)(iv) of the Partnership Agreement.
(d) Except as otherwise provided in
subsections (i) and (ii) below, with
respect to the business and operations of the Partnership conducted
prior to the date hereof, expressly including all costs of the
Partnership with respect to the transactions contemplated hereby,
the GP Sharing Percentages and LP Sharing Percentages in effect
prior hereto shall apply:
(i) All allocations of Capital Costs
with respect to the Longstreet Well in Montgomery County, Texas,
and related income, gain, loss, deduction and
