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EXHIBIT 3.1
APPENDIX A
First Amended and Restated
Agreement of Limited Partnership
EV Energy Partners, L.P.
September 29, 2006
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TABLE OF CONTENTS
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ARTICLE I.
Definitions............................................................................
A-1
SECTION 1.1
Definitions....................................................................
A-1
SECTION 1.2
Construction...................................................................
A-16
ARTICLE II.
Organization..........................................................................
A-17
SECTION 2.1
Formation......................................................................
A-17
SECTION 2.2
Name...........................................................................
A-17
SECTION 2.3
Registered Office; Registered Agent; Principal Office; Other
Offices........... A-17
SECTION 2.4
Purpose and
Business...........................................................
A-17
SECTION 2.5
Powers.........................................................................
A-17
SECTION 2.6
Power of
Attorney..............................................................
A-18
SECTION 2.7
Term...........................................................................
A-19
SECTION 2.8
Title to Partnership
Assets....................................................
A-19
ARTICLE III. Rights of Limited
Partners...........................................................
A-19
SECTION 3.1
Limitation of
Liability........................................................
A-19
SECTION 3.2
Management of
Business.........................................................
A-19
SECTION 3.3
Outside Activities of the Limited
Partners..................................... A-19
SECTION 3.4
Rights of Limited
Partners.....................................................
A-19
ARTICLE IV. Certificates; Record Holders; Transfer of Partnership
Interests; Redemption of
Partnership
Interests..........................................................................
A-20
SECTION 4.1
Certificates...................................................................
A-20
SECTION 4.2
Mutilated, Destroyed, Lost or Stolen
Certificates.............................. A-21
SECTION 4.3
Record
Holders.................................................................
A-21
SECTION 4.4
Transfer
Generally.............................................................
A-21
SECTION 4.5
Registration and Transfer of Limited Partner
Interests......................... A-22
SECTION 4.6
Transfer of the General Partner's General Partner
Interest..................... A-22
SECTION 4.7
Transfer of Incentive Distribution
Rights...................................... A-23
SECTION 4.8
Restrictions on
Transfers......................................................
A-23
SECTION 4.9
Citizenship Certificates; Non-citizen
Assignees................................ A-24
SECTION 4.10
Redemption
of Partnership Interests of Non-citizen
Assignees................... A-25
ARTICLE V. Capital Contributions and Issuance of Partnership
Interests............................ A-26
SECTION 5.1
Organizational
Contributions...................................................
A-26
SECTION 5.2
Contributions by the General Partner and its Affiliates and
[EnCap]............ A-26
SECTION 5.3
Contributions by Initial Limited
Partners...................................... A-26
SECTION 5.4
Interest and
Withdrawal........................................................
A-27
SECTION 5.5
Capital
Accounts...............................................................
A-27
SECTION 5.6
Issuances of Additional Partnership
Securities................................. A-29
SECTION 5.7
Conversion of Subordinated
Units............................................... A-30
SECTION 5.8
Limited Preemptive
Right.......................................................
A-31
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SECTION 5.9
Splits and
Combinations..........................................................
A-32
SECTION 5.10
Fully Paid
and Non-Assessable Nature of Limited Partner
Interests................ A-32
SECTION 5.11
Issuance
of Class B Units in Connection with Reset of Incentive
Distribution
Rights...........................................................................
A-32
ARTICLE VI. Allocations and
Distributions...........................................................
A-34
SECTION 6.1
Allocations for Capital Account
Purposes......................................... A-34
SECTION 6.2
Allocations for Tax
Purposes.....................................................
A-40
SECTION 6.3
Requirement and Characterization of Distributions; Distributions to
Record
Holders..........................................................................
A-42
SECTION 6.4
Distributions of Available Cash from Operating
Surplus........................... A-42
SECTION 6.5
Distributions of Available Cash from Capital
Surplus............................. A-44
SECTION 6.6
Adjustment of Minimum Quarterly Distribution and Target
Distribution Levels...... A-44
SECTION 6.7
Special Provisions Relating to the Holders of Subordinated Units
and Class B
Units............................................................................
A-44
SECTION 6.8
Special Provisions Relating to the Holders of Incentive
Distribution Rights...... A-45
SECTION 6.9
Entity-Level
Taxation............................................................
A-45
ARTICLE VII. Management and Operation of
Business...................................................
A-46
SECTION 7.1
Management.......................................................................
A-46
SECTION 7.2
Certificate of Limited
Partnership...............................................
A-47
SECTION 7.3
Restrictions on the General Partner's
Authority.................................. A-48
SECTION 7.4
Reimbursement of the General
Partner............................................. A-48
SECTION 7.5
Outside
Activities...............................................................
A-49
SECTION 7.6
Loans from the General Partner; Loans or Contributions from the
Partnership or
Group
Members....................................................................
A-50
SECTION 7.7
Indemnification..................................................................
A-50
SECTION 7.8
Liability of
Indemnitees.........................................................
A-51
SECTION 7.9
Resolution of Conflicts of Interest; Standards of Conduct and
Modification of
Duties...........................................................................
A-52
SECTION 7.10
Other Matters Concerning the
General Partner..................................... A-53
SECTION 7.11
Purchase
or Sale of Partnership
Securities....................................... A-53
SECTION 7.12
Registration Rights of the General Partner and its
Affiliates.................... A-54
SECTION 7.13
Reliance
by Third
Parties........................................................
A-56
ARTICLE VIII. Books, Records, Accounting and
Reports................................................
A-57
SECTION 8.1
Records and
Accounting...........................................................
A-57
SECTION 8.2
Fiscal
Year......................................................................
A-57
SECTION 8.3
Reports..........................................................................
A-57
ARTICLE IX. Tax
Matters.............................................................................
A-57
SECTION 9.1
Tax
Returns and
Information......................................................
A-57
SECTION 9.2
Tax
Elections....................................................................
A-57
SECTION 9.3
Tax
Controversies................................................................
A-58
SECTION 9.4
Withholding......................................................................
A-58
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ARTICLE X. Admission of
Partners.................................................................
A-58
SECTION 10.1
Admission
of Limited
Partners.................................................
A-58
SECTION 10.2
Admission
of Successor General
Partner........................................ A-59
SECTION 10.3
Amendment
of Agreement and Certificate of Limited
Partnership................. A-59
ARTICLE XI. Withdrawal or Removal of
Partners....................................................
A-59
SECTION 11.1
Withdrawal
of the General Partner.............................................
A-59
SECTION 11.2
Removal of
the General Partner................................................
A-60
SECTION 11.3
Interest
of Departing General Partner and Successor General
Partner........... A-61
SECTION 11.4
Termination of Subordination Period, Conversion of Subordinated
Units and
Extinguishment of Cumulative Common Unit
Arrearages........................... A-62
SECTION 11.5
Withdrawal
of Limited Partners................................................
A-62
ARTICLE XII. Dissolution and
Liquidation.........................................................
A-62
SECTION 12.1
Dissolution...................................................................
A-62
SECTION 12.2
Continuation of the Business of the Partnership After
Dissolution............. A-62
SECTION 12.3
Liquidator....................................................................
A-63
SECTION 12.4
Liquidation...................................................................
A-63
SECTION 12.5
Cancellation of Certificate of Limited
Partnership............................ A-64
SECTION 12.6
Return of
Contributions.......................................................
A-64
SECTION 12.7
Waiver of
Partition...........................................................
A-64
SECTION 12.8
Capital
Account
Restoration...................................................
A-64
ARTICLE XIII. Amendment of Partnership Agreement; Meetings; Record
Date.......................... A-64
SECTION 13.1
Amendments
to be Adopted Solely by the General Partner........................
A-64
SECTION 13.2
Amendment
Procedures..........................................................
A-65
SECTION 13.3
Amendment
Requirements........................................................
A-66
SECTION 13.4
Special
Meetings..............................................................
A-66
SECTION 13.5
Notice of
a
Meeting...........................................................
A-67
SECTION 13.6
Record
Date...................................................................
A-67
SECTION 13.7
Adjournment...................................................................
A-67
SECTION 13.8
Waiver of
Notice; Approval of Meeting; Approval of
Minutes.................... A-67
SECTION 13.9
Quorum and
Voting.............................................................
A-67
SECTION 13.10
Conduct of a
Meeting..........................................................
A-68
SECTION 13.11
Action Without a
Meeting......................................................
A-68
SECTION 13.12
Right to Vote
and Related Matters.............................................
A-68
ARTICLE XIV. Merger, Consolidation or
Conversion.................................................
A-69
SECTION 14.1
Authority.....................................................................
A-69
SECTION 14.2
Procedure
for Merger, Consolidation or
Conversion............................. A-69
SECTION 14.3
Approval
by Limited
Partners..................................................
A-70
SECTION 14.4
Certificate of
Merger.........................................................
A-71
SECTION 14.5
Effect of
Merger, Consolidation or
Conversion................................. A-71
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ARTICLE XV. Right to Acquire Limited Partner
Interests.......................................... A-72
SECTION 15.1
Right to
Acquire Limited Partner
Interests................................... A-72
ARTICLE XVI. General
Provisions.................................................................
A-73
SECTION 16.1
Addresses
and Notices........................................................
A-73
SECTION 16.2
Further
Action...............................................................
A-74
SECTION 16.3
Binding
Effect...............................................................
A-74
SECTION 16.4
Integration..................................................................
A-74
SECTION 16.5
Creditors....................................................................
A-74
SECTION 16.6
Waiver.......................................................................
A-74
SECTION 16.7
Third-Party
Beneficiaries....................................................
A-74
SECTION 16.8
Counterparts.................................................................
A-74
SECTION 16.9
Applicable
Law...............................................................
A-74
SECTION 16.10
Invalidity of
Provisions.....................................................
A-74
SECTION 16.11
Consent of
Partners..........................................................
A-74
SECTION 16.12
Facsimile
Signatures.........................................................
A-74
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A-iv
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First Amended and Restated
Agreement of Limited Partnership
of
EV Energy Partners, L.P.
This First
Amended and Restated Agreement of Limited Partnership of EV
Energy Partners, L.P., dated as of , 2006, is entered into by and
between EV
Energy GP, L.P., a Delaware limited partnership, as the General
Partner, and
EnerVest Management Partners, Ltd., a Texas limited partnership, as
the
Organizational Limited Partner, together with any other Persons who
become
Partners in the Partnership or parties hereto as provided herein.
In
consideration of the covenants, conditions and agreements contained
herein, the
parties hereto hereby agree 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.
"Acquisition" means any transaction in which any Group Member
acquires
(through an asset acquisition, merger, stock acquisition or other
form of
investment) control over all or a portion of the assets, properties
or business
of another Person for the purpose of increasing the production,
over the long
term, of the oil and gas properties owned by of the Partnership
Group or the
operating capacity of the other assets owned by the Partnership
Group from the
production, over the long term, or operating capacity of the
Partnership Group
existing immediately prior to such transaction.
"Additional Book Basis" means the portion of any remaining Carrying
Value
of an Adjusted Property that is attributable to positive
adjustments made to
such Carrying Value as a result of Book-Up Events. For purposes of
determining
the extent that Carrying Value constitutes Additional Book
Basis:
Any negative adjustment made to the Carrying Value of an
Adjusted
Property
as a result of either a Book-Down Event or a Book-Up Event
shall
first be
deemed to offset or decrease that portion of the Carrying Value
of such
Adjusted Property that is attributable to any prior positive
adjustments made thereto pursuant to a Book-Up Event or Book-Down
Event.
If Carrying Value that constitutes Additional Book Basis is
reduced
as a
result of a Book-Down Event and the Carrying Value of other
property
is
increased as a result of such Book-Down Event, an allocable portion
of
any such
increase in Carrying Value shall be treated as Additional Book
Basis;
provided, that the amount treated as Additional Book Basis
pursuant
hereto as
a result of such Book-Down Event shall not exceed the amount by
which the
Aggregate Remaining Net Positive Adjustments after such
Book-Down
Event exceeds the remaining Additional Book Basis attributable
to all of
the Partnership's Adjusted Property after such Book-Down Event
(determined without regard to the application of this clause (b) to
such
Book-Down
Event).
"Additional Book Basis Derivative Items" means any Book Basis
Derivative
Items that are computed with reference to Additional Book Basis. To
the extent
that the Additional Book Basis attributable to all of the
Partnership's Adjusted
Property as of the beginning of any taxable period exceeds the
Aggregate
Remaining Net Positive Adjustments as of the beginning of such
period (the
"EXCESS ADDITIONAL BOOK BASIS"), the Additional Book Basis
Derivative Items for
such period shall be reduced by the amount that bears the same
ratio to the
amount of Additional Book Basis Derivative Items determined without
regard to
this sentence as the Excess Additional Book Basis bears to the
Additional Book
Basis as of the beginning of such period.
"Adjusted
Capital Account" means the Capital Account maintained for each
Partner as of the end of each fiscal year of the Partnership, (a)
increased by
any amounts that such Partner is obligated to restore under the
standards set by
Treasury Regulation Section 1.704-1(b)(2)(ii)(c) (or is deemed
obligated to
restore under
A-1
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Treasury Regulation Sections 1.704-2(g) and 1.704-2(i)(5)) and (b)
decreased by
(i) the amount of all deductions in respect of depletion that, as
of the end of
such fiscal year, are reasonably expected to be made to such
Partner's Capital
Account in respect of the oil and gas properties of the
partnership, (ii) the
amount of all losses and deductions that, as of the end of such
fiscal year, are
reasonably expected to be allocated to such Partner in subsequent
years under
Sections 704(e)(2) and 706(d) of the Code and Treasury Regulation
Section
1.751-1(b)(2)(ii), and (ii) the amount of all distributions that,
as of the end
of such fiscal year, are reasonably expected to be made to such
Partner in
subsequent years in accordance with the terms of this Agreement or
otherwise to
the extent they exceed offsetting increases to such Partner's
Capital Account
that are reasonably expected to occur during (or prior to) the year
in which
such distributions are reasonably expected to be made (other than
increases as a
result of a minimum gain chargeback pursuant to Section 6.1(d)(i)
or Section
6.1(d)(ii)). The foregoing definition of Adjusted Capital Account
is intended to
comply with the provisions of Treasury Regulation Section
1.704-1(b)(2)(ii)(d)
and shall be interpreted consistently therewith. The "Adjusted
Capital Account"
of a Partner in respect of a General Partner Interest, a Common
Unit, a
Subordinated Unit, a Class B Unit or an Incentive Distribution
Right or any
other Partnership Interest shall be the amount that such Adjusted
Capital
Account would be if such General Partner Interest, Common Unit,
Subordinated
Unit, Class B Unit, Incentive Distribution Right or other
Partnership Interest
were the only interest in the Partnership held by such Partner from
and after
the date on which such General Partner Interest, Common Unit,
Subordinated Unit,
Incentive Distribution Right or other Partnership Interest was
first issued.
"Adjusted
Operating Surplus" means, with respect to any period, Operating
Surplus generated with respect to such period (a) less (i) any net
increase in
Working Capital Borrowings with respect to such period and (ii) any
net decrease
in cash reserves for Operating Expenditures with respect to such
period not
relating to an Operating Expenditure made with respect to such
period, and (b)
plus (i) any net decrease in Working Capital Borrowings with
respect to such
period, (ii) any net increase made in subsequent periods in cash
reserves for
Operating Expenditures initially established with respect to such
period and
(iii) any net increase in cash reserves for Operating Expenditures
with respect
to such period required by any debt instrument for the repayment of
principal,
interest or premium. Adjusted Operating Surplus does not include
that portion of
Operating Surplus included in clause (a)(i) of the definition of
Operating
Surplus.
"Adjusted
Property" means any property the Carrying Value of which has
been adjusted pursuant to Section 5.5(d)(i) or Section
5.5(d)(ii).
"Affiliate" means, with respect to any Person, any other Person
that
directly or indirectly through one or more intermediaries controls,
is
controlled by or is under common control with, the Person in
question. As used
herein, the term "control" means the possession, direct or
indirect, of the
power to direct or cause the direction of the management and
policies of a
Person, whether through ownership of voting securities, by contract
or
otherwise.
"Aggregate
Remaining Net Positive Adjustments" means, as of the end of any
taxable period, the sum of the Remaining Net Positive Adjustments
of all the
Partners.
"Agreed
Allocation" means any allocation, other than a Required
Allocation, of an item of income, gain, loss or deduction pursuant
to the
provisions of Section 6.1, including a Curative Allocation (if
appropriate to
the context in which the term "Agreed Allocation" is used).
"Agreed
Value" of any Contributed Property means the fair market value
of
such property or other consideration at the time of contribution as
determined
by the General Partner. The General Partner shall use such method
as it
determines to be appropriate to allocate the aggregate Agreed Value
of
Contributed Properties contributed to the Partnership in a single
or integrated
transaction among each separate property on a basis proportional to
the fair
market value of each Contributed Property.
"Agreement" means this First Amended and Restated Agreement of
Limited
Partnership of EV Energy Partners, L.P., as it may be amended,
supplemented or
restated from time to time.
"Associate" means,
when used to indicate a relationship with any Person,
(a) any corporation or organization of which such Person is a
director, officer
or partner or is, directly or indirectly, the owner of
A-2
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20% or more of any class of voting stock or other voting interest;
(b) any trust
or other estate in which such Person has at least a 20% beneficial
interest or
as to which such Person serves as trustee or in a similar fiduciary
capacity;
and (c) any relative or spouse of such Person, or any relative of
such spouse,
who has the same principal residence as such Person.
"Available
Cash" means, with respect to any Quarter ending prior to the
Liquidation Date:
(a) the sum of (i) all cash and cash equivalents of the
Partnership
Group on
hand at the end of such Quarter, and (ii) if the General
Partner
so
determines, all or any portion of any additional cash and cash
equivalents of the Partnership Group on hand on the date of
determination
of
Available Cash with respect to such Quarter, including cash
from
Working
Capital Borrowings, less
(b) the amount of any cash reserves established by the General
Partner to
(i) provide for the proper conduct of the business of the
Partnership Group (including reserves for future capital
expenditures and
for
anticipated future credit needs of the Partnership Group)
subsequent
to such
Quarter, (ii) comply with applicable law or any loan agreement,
security
agreement, mortgage, debt instrument or other agreement or
obligation
to which any Group Member is a party or by which it is bound or
its assets
are subject or (iii) provide funds for distributions under
Section
6.4 or Section 6.5 in respect of any one or more of the next
four
Quarters;
provided, however, that the General Partner may not establish
cash
reserves pursuant to (iii) above if the effect of such reserves
would
be that
the Partnership is unable to distribute the Minimum Quarterly
Distribution on all Common Units, plus any Cumulative Common
Unit
Arrearage
on all Common Units, with respect to such Quarter; and,
provided
further,
that disbursements made by a Group Member or cash reserves
established, increased or reduced after the end of such Quarter but
on or
before the
date of determination of Available Cash with respect to such
Quarter
shall be deemed to have been made, established, increased or
reduced,
for purposes of determining Available Cash, within such Quarter
if the
General Partner so determines.
Notwithstanding the foregoing, "Available Cash" with respect to
the
Quarter in which the Liquidation Date occurs and any subsequent
Quarter shall
equal zero.
"Board of
Directors" means, with respect to the Board of Directors of the
General Partner, its board of directors or managers, as applicable,
if a
corporation or limited liability company, or if a limited
partnership, the board
of directors or board of managers of the general partner of the
General Partner.
"Book
Basis Derivative Items" means any item of income, deduction,
gain,
loss, Simulated Depletion, Simulated Gain or Simulated Loss
included in the
determination of Net Income or Net Loss that is computed with
reference to the
Carrying Value of an Adjusted Property (e.g., depreciation,
Simulated Depletion,
gain, loss, Simulated Gain or Simulated Loss with respect to an
Adjusted
Property).
"Book-Down
Event" means an event that triggers a negative adjustment to
the Capital Accounts of the Partners pursuant to Section
5.5(d).
"Book-Tax
Disparity" means with respect to any item of Contributed
Property or Adjusted Property, as of the date of any determination,
the
difference between the Carrying Value of such Contributed Property
or Adjusted
Property and the adjusted basis thereof for federal income tax
purposes as of
such date. A Partner's share of the Partnership's Book-Tax
Disparities in all of
its Contributed Property and Adjusted Property will be reflected by
the
difference between such Partner's Capital Account balance as
maintained pursuant
to Section 5.5 and the hypothetical balance of such Partner's
Capital Account
computed as if it had been maintained strictly in accordance with
federal income
tax accounting principles.
"Book-Up
Event" means an event that triggers a positive adjustment to
the
Capital Accounts of the Partners pursuant to Section 5.5(d).
"Business
Day" means Monday through Friday of each week, except that a
legal holiday recognized as such by the government of the United
States of
America or the State of Texas shall not be regarded as a Business
Day.
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"Capital
Account" means the capital account maintained for a Partner
pursuant to Section 5.5. The "Capital Account" of a Partner in
respect of a
General Partner Interest, a Common Unit, a Subordinated Unit, a
Class B Unit, an
Incentive Distribution Right or any Partnership Interest shall be
the amount
that such Capital Account would be if such General Partner
Interest, Common
Unit, Subordinated Unit, Class B Unit, Incentive Distribution Right
or other
Partnership Interest were the only interest in the Partnership held
by such
Partner from and after the date on which such General Partner
Interest, Common
Unit, Subordinated Unit, Incentive Distribution Right or other
Partnership
Interest was first issued.
"Capital
Contribution" means any cash, cash equivalents or the Net
Agreed
Value of Contributed Property that a Partner contributes to the
Partnership.
"Capital
Improvement" means any (a) addition or improvement to the
capital
assets owned by any Group Member, (b) acquisition of existing, or
the
construction of new, capital assets (including, without limitation,
oil and gas
leases, mineral interests, drilling rigs, gathering lines, treating
facilities,
processing plants, pipelines and related or similar upstream
assets) or (c)
capital contributions by a Group Member to a Person in which a
Group Member has
an equity interest to fund such Group Member's pro rata share of
the cost of the
acquisition of existing, or the construction of new, capital assets
(including,
without limitation, oil and gas leases, mineral interests, drilling
rigs,
gathering lines, treating facilities, processing plants, pipelines
and related
or similar upstream assets) by such Person, in each case if such
addition,
improvement, acquisition or construction is made to increase the
production,
over the long term, from oil and gas properties or the operating
capacity of
other assets of the Partnership Group, in the case of clauses (a)
and (b), or
such Person, in the case of clause (c), from the production, over
the long term,
or operating capacity of the Partnership Group or such Person, as
the case may
be, existing immediately prior to such addition, improvement,
acquisition or
construction.
"Capital
Surplus" has the meaning assigned to such term in Section
6.3(a).
"Carrying
Value" means (a) with respect to a Contributed Property, the
Agreed Value of such property reduced (but not below zero) by all
depreciation,
depletion (including Simulated Depletion), amortization and cost
recovery
deductions charged to the Partners' Capital Accounts in respect of
such
Contributed Property, and (b) with respect to any other Partnership
property,
the adjusted basis of such property for federal income tax
purposes, all as of
the time of determination. The Carrying Value of any property shall
be adjusted
from time to time in accordance with Section 5.5(d)(i) and Section
5.5(d)(ii)
and to reflect changes, additions or other adjustments to the
Carrying Value for
dispositions and acquisitions of Partnership properties, as deemed
appropriate
by the General Partner.
"Cause"
means a court of competent jurisdiction has entered a final,
non-appealable judgment finding the General Partner liable for
actual fraud or
willful misconduct in its capacity as a general partner of the
Partnership.
"Certificate" means (a) a certificate (i) substantially in the form
of
Exhibit A to this Agreement, (ii) issued in global form in
accordance with the
rules and regulations of the Depository or (iii) in such other form
as may be
adopted by the General Partner, issued by the Partnership
evidencing ownership
of one or more Common Units or (b) a certificate, in such form as
may be adopted
by the General Partner, issued by the Partnership evidencing
ownership of one or
more other Partnership Securities.
"Certificate of Limited Partnership" means the Certificate of
Limited
Partnership of the Partnership filed with the Secretary of State of
the State of
Delaware as referenced in Section 7.2, as such Certificate of
Limited
Partnership may be amended, supplemented or restated from time to
time.
"CGas"
means CGas Exploration, Inc., an Ohio corporation.
"Citizenship Certification" means a properly completed certificate
in such
form as may be specified by the General Partner by which a Limited
Partner
certifies that he (and if he is a nominee holding for the account
of another
Person, that to the best of his knowledge such other Person) is an
Eligible
Citizen.
"claim"
(as used in Section 7.12(d)) has the meaning assigned to such
term
in Section 7.12(d).
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"Class B
Units" means a Partnership Security representing a factional
part
of the Partnership Interests of all Limited Partners, and having
the rights and
obligations specified with respect to Class B Units in this
Agreement.
"Closing
Date" means the first date on which Common Units are sold by
the
Partnership to the Underwriters pursuant to the provisions of the
Underwriting
Agreement.
"Closing
Price" has the meaning assigned to such term in Section
15.1(a).
"Code"
means the Internal Revenue Code of 1986, as amended and in
effect
from time to time. Any reference herein to a specific section or
sections of the
Code shall be deemed to include a reference to any corresponding
provision of
any successor law.
"Combined
Interest" has the meaning assigned to such term in Section
11.3(a).
"Commission" means the United States Securities and Exchange
Commission.
"Common
Unit" means a Partnership Security representing a fractional
part
of the Partnership Interests of all Limited Partners and Assignees,
and having
the rights and obligations specified with respect to Common Units
in this
Agreement. The term "Common Unit" does not include a Subordinated
Unit or Class
B Unit prior to its conversion into a Common Unit pursuant to the
terms hereof
except to the extent specified in Section 5.11.
"Common
Unit Arrearage" means, with respect to any Common Unit,
whenever
issued, as to any Quarter within the Subordination Period, the
excess, if any,
of (a) the Minimum Quarterly Distribution with respect to a Common
Unit in
respect of such Quarter over (b) the sum of all Available Cash
distributed with
respect to a Common Unit in respect of such Quarter pursuant to
Section
6.4(a)(i).
"Conflicts
Committee" means a committee of the Board of Directors of the
General Partner composed entirely of two or more directors, each of
whom (a) is
not a security holder, officer or employee of the General Partner,
(b) is not an
officer, director or employee of any Affiliate of the General
Partner (c) is not
a holder of any ownership interest in the Partnership Group other
than Common
Units and (d) meets the independence standards required of
directors who serve
on an audit committee of a board of directors established by the
Securities
Exchange Act and the rules and regulations of the Commission
thereunder and by
the National Securities Exchange on which the Common Units are
listed or
admitted to trading.
"Contributed Property" means each property or other asset, in such
form as
may be permitted by the Delaware Act, but excluding cash,
contributed to the
Partnership. Once the Carrying Value of a Contributed Property is
adjusted
pursuant to Section 5.5(d), such property shall no longer
constitute a
Contributed Property, but shall be deemed an Adjusted Property.
"Converted
Common Units" has the meaning assigned to such term in Section
6.1(d)(x)(B).
"Credit
Agreement" means the Credit Agreement, dated as of , 2006,
among
the Partnership, the Operating Partnership, the subsidiaries of the
Operating
Partnership, and JPMorgan Chase Bank, N.A., as administrative agent
for the
lenders named therein and any amendment, modification, renewal or
replacement of
such Credit Agreement.
"Cumulative Common
Unit Arrearage" means, with respect to any Common Unit,
whenever issued, and as of the end of any Quarter, the excess, if
any, of (a)
the sum resulting from adding together the Common Unit Arrearage as
to an
Initial Common Unit for each of the Quarters within the
Subordination Period
ending on or before the last day of such Quarter over (b) the sum
of any
distributions theretofore made pursuant to Section 6.4(a)(ii) and
the second
sentence of Section 6.5 with respect to an Initial Common Unit
(including any
distributions to be made in respect of the last of such
Quarters).
"Curative
Allocation" means any allocation of an item of income, gain,
deduction, loss or credit pursuant to the provisions of Section
6.1(d)(xi).
"Current
Market Price" has the meaning assigned to such term in Section
15.1(a).
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"Delaware
Act" means the Delaware Revised Uniform Limited Partnership
Act,
6 Del C. Section 17-101, et seq., as amended, supplemented or
restated from time
to time, and any successor to such statute.
"Departing
General Partner" means a former General Partner from and after
the effective date of any withdrawal or removal of such former
General Partner
pursuant to Section 11.1 or Section 11.2.
"Depository" means, with respect to any Units issued in global
form, The
Depository Trust Company and its successors and permitted
assigns.
"Economic
Risk of Loss" has the meaning set forth in Treasury Regulation
Section 1.752-2(a).
"Eligible
Citizen" means a Person qualified to own interests in real
property in jurisdictions in which any Group Member does business
or proposes to
do business from time to time, and whose status as a Limited
Partner the General
Partner determines does not or would not subject such Group Member
to a
significant risk of cancellation or forfeiture of any of its
properties or any
interest therein.
"EnCap
Partnerships" means EnCap Energy Capital Fund V, L.P. a Texas
limited partnership, and EnCap V-B Acquisitions, L.P., a Texas
limited
partnership.
"EnerVest"
means EnerVest Management Partners, Ltd., a Texas limited
partnership.
"Estimated
Incremental Quarterly Tax Amount" has the meaning assigned to
such term in Section 6.9.
"Estimated
Average Maintenance Capital Expenditures" means an estimate,
made in good faith, by the Board of Directors with the concurrence
of the
Conflicts Committee of the average quarterly Maintenance Capital
Expenditures
that the Partnership Group will incur over the long term. The Board
of Directors
will be permitted to make such estimate in any manner it deems
reasonable in its
sole discretion. The estimate will be made annually and whenever an
event occurs
that is likely to result in a material adjustment to the amount of
quarterly
Maintenance Capital Expenditures. The Partnership shall disclose to
the Partners
the amount of Estimated Average Maintenance Capital Expenditures.
Except as
provided in the definition of Subordination Period, any adjustments
to Estimated
Average Maintenance Capital Expenditures shall be prospective
only.
"EVCG"
means CGAS Properties, L.P., the Delaware limited partnership
formed to hold certain assets contributed by CGAS.
"Event of
Withdrawal" has the meaning assigned to such term in Section
11.1(a).
"EVOC"
means EnerVest Operating, L.L.C. a Texas limited liability
company.
"EV
Investors" means EV Investors, L.P., a Delaware limited
partnership.
"Expansion
Capital Expenditures" means cash expenditures for Acquisitions
or Capital Improvements, and shall not include Maintenance Capital
Expenditures.
"Final
Subordinated Units" has the meaning assigned to such term in
Section 6.1(d)(x).
"First
Liquidation Target Amount" has the meaning assigned to such term
in
Section 6.1(c)(i)(E).
"First
Target Distribution" means $0.40 per Unit per Quarter
commencing
the Quarter ending December 31, 2006, subject to adjustment in
accordance with
Section 5.11, Section 6.6 and Section 6.9.
"Fully
Diluted Basis" means, when calculating the number of
Outstanding
Units for any period, a basis that includes, in addition to the
Outstanding
Units, all Partnership Securities and options, rights, warrants and
appreciation
rights relating to an equity interest in the Partnership (a) that
are
convertible into or exercisable or exchangeable for Units that are
senior to or
pari passu with the Subordinated Units, (b) whose conversion,
exercise or
exchange price is less than the Current Market Price on the date of
such
calculation, (c) that may be converted into or exercised or
exchanged for such
Units prior to or during the Quarter immediately following the end
of the period
for which the calculation is being made without the satisfaction of
any
contingency beyond the control of the holder other than the payment
of
consideration and the compliance with administrative mechanics
applicable to
such conversion, exercise or exchange and (d) that were not
converted into or
exercised or exchanged for such Units during the period for which
the
calculation is being made;
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provided, however, that for purposes of determining the number of
Outstanding
Units on a Fully Diluted Basis when calculating whether the
Subordination Period
has ended or Subordinated Units are entitled to convert into Common
Units
pursuant to Section 5.7, such Partnership Securities, options,
rights, warrants
and appreciation rights shall be deemed to have been Outstanding
Units only for
the four Quarters that comprise the last four Quarters of the
measurement
period; provided, further, that if consideration will be paid to
any Group
Member in connection with such conversion, exercise or exchange,
the number of
Units to be included in such calculation shall be that number equal
to the
difference between (i) the number of Units issuable upon such
conversion,
exercise or exchange and (ii) the number of Units that such
consideration would
purchase at the Current Market Price.
"General
Partner" means EV Energy GP, L.P., a Delaware limited
partnership, and its successors and permitted assigns that are
admitted to the
Partnership as general partner of the Partnership, in its capacity
as general
partner of the Partnership (except as the context otherwise
requires).
"General
Partner Interest" means the ownership interest of the General
Partner in the Partnership (in its capacity as a general partner
without
reference to any Limited Partner Interest held by it), and includes
any and all
benefits to which the General Partner is entitled as provided in
this Agreement,
together with all obligations of the General Partner to comply with
the terms
and provisions of this Agreement.
"Group"
means a Person that with or through any of its Affiliates or
Associates has any contract, arrangement, understanding or
relationship for the
purpose of acquiring, holding, voting (except voting pursuant to a
revocable
proxy or consent given to such Person in response to a proxy or
consent
solicitation made to 10 or more Persons), exercising investment
power or
disposing of any Partnership Interests with any other Person that
beneficially
owns, or whose Affiliates or Associates beneficially own, directly
or
indirectly, Partnership Interests.
"Group Member"
means a member of the Partnership Group.
"Group
Member Agreement" means the partnership agreement of any Group
Member, other than the Partnership, that is a limited or general
partnership,
the limited liability company agreement of any Group Member that is
a limited
liability company, the certificate of incorporation and bylaws or
similar
organizational documents of any Group Member that is a corporation,
the joint
venture agreement or similar governing document of any Group Member
that is a
joint venture and the governing or organizational or similar
documents of any
other Group Member that is a Person other than a limited or general
partnership,
limited liability company, corporation or joint venture, as such
may be amended,
supplemented or restated from time to time.
"Hedge
Contract" means any agreement with respect to any swap,
forward,
future or derivative transaction or option or similar agreement,
whether
exchange traded, "over-the-counter" or otherwise, involving, or
settled by
reference to, one or more rates, currencies, commodities, equity or
debt
instruments or securities, or economic, financial or pricing
indices or measures
of economic, financial or pricing risk or value or any similar
transaction or
any combination of these transactions; provided that no phantom
stock or similar
plan providing for payments only on account of services provided by
current or
former directors, officers, employees or consultants of a member of
the
Partnership Group shall be a Hedge Contract. If a Hedge Contract
provides for
settlement payments less frequently than quarterly, in calculating
Operating
Surplus and Operating Expenses, the General Partner may allocate
the settlement
payments over Quarterly periods in a manner approved by the
Conflicts Committee.
"Hedge
Payment" means any payment made or received by a member of the
Partnership Group in connection with or pursuant to a Hedge
Contract, including
periodic settlement payments, and payments made or received in
connection with
the entering into, termination or modification of a Hedge
Contract.
"Holder"
as used in Section 7.12, has the meaning assigned to such term
in
Section 7.12(a).
"Incentive
Distribution Right" means a non-voting Limited Partner Interest
issued to the General Partner in connection with the transfer of
all of its
interests in the general partner of the Interim Partnership to the
Partnership,
which Limited Partner Interest will confer upon the holder thereof
only the
rights and obligations
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<PAGE>
specifically provided in this Agreement with respect to Incentive
Distribution
Rights (and no other rights otherwise available to or other
obligations of a
holder of a Partnership Interest). Notwithstanding anything in this
Agreement to
the contrary, the holder of an Incentive Distribution Right shall
not be
entitled to vote such Incentive Distribution Right on any
Partnership matter
except as may otherwise be required by law.
"Incentive
Distributions" means any amount of cash distributed to the
holders of the Incentive Distribution Rights pursuant to Section
6.4(a)(v)(B),
Section 6.4(a)(vi)(B), Section 6.4(b)(iii)(B), and Section
6.4(b)(iv)(B).
"Indemnified Persons" has the meaning assigned to such term in
Section
7.12(d).
"Indemnitee" means (a) the General Partner, (b) any Departing
General
Partner, (c) any Person who is or was an Affiliate of the General
Partner or any
Departing General Partner, (d) the EnCap Partnerships and any
Person who is or
was an Affiliate of the EnCap Partnerships (e) any Person who is or
was a
member, partner, director, officer, fiduciary or trustee of any
Group Member,
the General Partner or any Departing General Partner or any
Affiliate of any
Group Member, the General Partner or any Departing General Partner,
(f) any
Person who is or was serving at the request of the General Partner
or any
Departing General Partner or any Affiliate of the General Partner
or any
Departing General Partner as an officer, director, member, partner,
fiduciary or
trustee of another Person; provided that a Person shall not be an
Indemnitee by
reason of providing, on a fee-for-services basis, trustee,
fiduciary or
custodial services, and (g) any Person the General Partner
designates as an
"Indemnitee" for purposes of this Agreement.
"Initial
Common Units" means the Common Units sold in the Initial
Offering.
"Initial
Limited Partners" means the General Partner, EVOC, EnerVest,
EVCG, EV Investors and the EnCap Partnerships (with respect to the
Common Units,
Subordinated Units and Incentive Distribution Rights received by
them pursuant
to Section 5.2) and the Underwriters upon the issuance by the
Partnership of
Common Units as described in Section 5.3 in connection with the
Initial
Offering.
"Initial
Offering" means the initial offering and sale of Common Units
to
the public, as described in the Registration Statement.
"Initial
Unit Price" means (a) with respect to the Common Units, the
initial public offering price per Common Unit at which the
Underwriters offered
the Common Units to the public for sale as set forth on the cover
page of the
prospectus included as part of the Registration Statement and first
issued at or
after the time the Registration Statement first became effective or
(b) with
respect to any other class or series of Units, the price per Unit
at which such
class or series of Units is initially sold by the Partnership, as
determined by
the General Partner, in each case adjusted as the General Partner
determines to
be appropriate to give effect to any distribution, subdivision or
combination of
Units.
"Interim
Capital Transactions" means the following transactions if they
occur prior to the Liquidation Date: (a) borrowings, refinancings
or refundings
of indebtedness (other than Working Capital Borrowings and other
than for items
purchased on open account in the ordinary course of business) by
any Group
Member and sales of debt securities of any Group Member; (b) sales
of equity
interests of any Group Member (including the Common Units sold to
the
Underwriters pursuant to the exercise of the Over-Allotment
Option); (c) sales
or other voluntary or involuntary dispositions of any assets of any
Group Member
other than (i) sales or other dispositions of production,
inventory, accounts
receivable and other assets in the ordinary course of business, and
(ii) sales
or other dispositions of assets as part of normal retirements or
replacements;
(d) the termination of commodity and interest rate swap agreements;
(e) capital
contributions; (f) corporate reorganizations or restructurings; or
(g) sales in
connection with plugging and abandoning and other reclamation
activities for a
well in which a Group Member owns an interest.
"Issue
Price" means the price at which a Unit is purchased from the
Partnership, net of any sales commission or underwriting discount
charged to the
Partnership.
"Limited
Partner" means, unless the context otherwise requires, the
Organizational Limited Partner prior to its withdrawal from the
Partnership,
each Initial Limited Partner, each additional Person that becomes a
Limited
Partner pursuant to the terms of this Agreement and any Departing
General
Partner upon the change
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of its status from General Partner to Limited Partner pursuant to
Section 11.3,
in each case, in such Person's capacity as limited partner of the
Partnership;
provided, however, that when the term "Limited Partner" is used
herein in the
context of any vote or other approval, including Articles XIII and
XIV, such
term shall not, solely for such purpose, include any holder of an
Incentive
Distribution Right (solely with respect to its Incentive
Distribution Rights and
not with respect to any other Limited Partner Interest held by such
Person)
except as may otherwise be required by law.
"Limited
Partner Interest" means the ownership interest of a Limited
Partner or Assignee in the Partnership, which may be evidenced by
Common Units,
Class B Units, Subordinated Units, Incentive Distribution Rights or
other
Partnership Securities or a combination thereof or interest
therein, and
includes any and all benefits to which such Limited Partner is
entitled as
provided in this Agreement, together with all obligations of such
Limited
Partner to comply with the terms and provisions of this Agreement;
provided,
however, that when the term "Limited Partner Interest" is used
herein in the
context of any vote or other approval, including Article XIII and
Article XIV,
such term shall not, solely for such purpose, include any Incentive
Distribution
Right except as may otherwise be required by law.
"Liquidation Date" means (a) in the case of an event giving rise to
the
dissolution of the Partnership of the type described in clauses (a)
and (b) of
the first sentence of Section 12.2, the date on which the
applicable time period
during which the holders of Outstanding Units have the right to
elect to
continue the business of the Partnership has expired without such
an election
being made, and (b) in the case of any other event giving rise to
the
dissolution of the Partnership, the date on which such event
occurs.
"Liquidator" means one or more Persons selected by the General
Partner to
perform the functions described in Section 12.4 as liquidating
trustee of the
Partnership within the meaning of the Delaware Act.
"Maintenance Capital Expenditures" means cash expenditures
(including
expenditures for the addition or improvement to the capital assets
owned by any
Group Member or for the acquisition of existing, or the
construction of new,
capital assets) if such expenditures are made to maintain
production levels of
the oil and gas properties of the Partnership Group over the long
term or the
operating capacity of the other assets of the Partnership Group
over the long
term.
"Merger
Agreement" has the meaning assigned to such term in Section
14.1.
"Minimum
Quarterly Distribution" means $0.40 per Unit per Quarter
commencing for the Quarter ending December 31, 2006, subject to
adjustment in
accordance with Section 6.6 and Section 6.9.
"National
Securities Exchange" means an exchange registered with the
Commission under Section 6(a) of the Securities Exchange Act, and
any successor
to such statute, or the Nasdaq Global Market, Nasdaq Global Select
Market, or
any successor thereto.
"Net
Agreed Value" means, (a) in the case of any Contributed Property,
the
Agreed Value of such property reduced by any liabilities either
assumed by the
Partnership upon such contribution or to which such property is
subject when
contributed, (b) in the case of any property distributed to a
Partner by the
Partnership, the Partnership's Carrying Value of such property (as
adjusted
pursuant to Section 5.5(d)(ii)) at the time such property is
distributed,
reduced by any indebtedness either assumed by such Partner or
Assignee upon such
distribution or to which such property is subject at the time of
distribution,
in either case, as determined under Section 752 of the Code.
"Net Income"
means, for any taxable year, the excess, if any, of the
Partnership's items of income and gain (other than those items
taken into
account in the computation of Net Termination Gain or Net
Termination Loss) for
such taxable year over the Partnership's items of loss and
deduction (other than
those items taken into account in the computation of Net
Termination Gain or Net
Termination Loss) for such taxable year. The items included in the
calculation
of Net Income 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 specially allocated under Section 6.1(d);
provided, that the
determination of the items that have been specially allocated under
Section
6.1(d) shall be made as if Section 6.1(d)(xii) were not in this
Agreement.
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"Net Loss"
means, for any taxable year, the excess, if any, of the
Partnership's items of loss and deduction (other than those items
taken into
account in the computation of Net Termination Gain or Net
Termination Loss) for
such taxable year over the Partnership's items of income and gain
(other than
those items taken into account in the computation of Net
Termination Gain or Net
Termination Loss) for such taxable year. The items included in the
calculation
of Net 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 specially allocated under Section 6.1(d);
provided, that the
determination of the items that have been specially allocated under
Section
6.1(d) shall be made as if Section 6.1(d)(xii) were not in this
Agreement.
"Net
Positive Adjustments" means, with respect to any Partner, the
excess,
if any, of the total positive adjustments over the total negative
adjustments
made to the Capital Account of such Partner pursuant to Book-Up
Events and
Book-Down Events.
"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
after the Liquidation Date. 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).
"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
after the Liquidation Date. 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).
"Non-citizen Assignee" means a Person whom the General Partner
has
determined does not constitute an Eligible Citizen and as to whose
Partnership
Interest the General Partner has become the Substituted Limited
Partner,
pursuant to Section 4.9.
"Nonrecourse Built-in Gain" means with respect to any
Contributed
Properties or Adjusted Properties that are subject to a mortgage or
pledge
securing a Nonrecourse Liability, the amount of any taxable gain
that would be
allocated to the Partners pursuant to Section 6.2(d)(i)(A),
Section
6.2(d)(ii)(A), and Section 6.2(d)(iii) if such properties were
disposed of in a
taxable transaction in full satisfaction of such liabilities and
for no other
consideration.
"Nonrecourse Deductions" means any and all items of loss,
deduction,
expenditure (including any expenditure described in Section
705(a)(2)(B) of the
Code), Simulated Depletion or Simulated Loss that, in accordance
with the
principles of Treasury Regulation Section 1.704-2(b), are
attributable to a
Nonrecourse Liability.
"Nonrecourse Liability" has the meaning set forth in Treasury
Regulation
Section 1.752-1(a)(2).
"Notice of
Election to Purchase" has the meaning assigned to such term in
Section 15.1(b).
"Omnibus
Agreement" means that certain Omnibus Agreement, dated as of
the
Closing Date, among the General Partner, the Partnership, the
Operating
Partnership, EVOC, EnerVest, EV Investors, the EnCap Partnerships
and certain
other parties thereto, as such may be amended, supplemented or
restated from
time to time.
"Operating
Agreement" means the Joint Operating Agreement between the
Partnership, the Operating Partnership, EVOC and current and future
subsidiaries
of the Operating Partnership pursuant to which EVOC will act as
operator of
wells owned by members of the Partnership Group, as amended from
time to time.
"Operating
Expenditures" means all Partnership Group cash expenditures,
including, but not limited to, taxes, reimbursements of the General
Partner, in
accordance with this Agreement, interest payments,
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<PAGE>
repayment of Working Capital Borrowings, and non-Pro Rata
repurchases of Units
(other than those made with the proceeds of an Interim Capital
Transaction), but
excluding, subject to the following:
(a) payments (including prepayments and prepayment penalties)
of
principal
of and premium on indebtedness other than Working Capital
Borrowings
shall not constitute Operating Expenditures;
(b) Operating Expenditures shall not include Expansion Capital
Expenditures or actual Maintenance Capital Expenditures, but shall
include
Estimated
Average Maintenance Capital Expenditures;
(c) Operating Expenditures shall not include (i) payment of
transaction expenses (including taxes) relating to Interim
Capital
Transactions or (ii) distributions to Partners;
(d) Operating Expenditures shall not include interest on
borrowings
used to
construct capital assets from the period commencing when the
borrowings
are made until the construction of the capital assets is
completed
or abandoned; and
(e) Operating Expenditures in any Quarter shall include all
Hedge
Payments
made by a member of the Partnership Group during such Quarter,
provided,
however, that the General Partner may treat all or any portion
of any
Hedge Payment as a Maintenance Capital Expenditure or Expansion
Capital
Expenditure, or may allocate a Hedge Payment among one or more
Quarters,
in either case with the approval of the Conflicts Committee.
(f) Cash expenditures made solely for investment purposes
pending
use of the
amounts invested shall not be deemed Operating Expenditures.
"Operating
Partnership" means EV Properties, L.P., a Delaware limited
partnership, the limited partner interest of which was acquired by
the
Partnership and any successors thereto.
"Operating
Surplus" means, with respect to any period ending prior to the
Liquidation Date, on a cumulative basis and without
duplication,
(a) the sum of (i) an amount equal to two times the amount
needed
for any
one Quarter for the Partnership to pay the Minimum Quarterly
Distribution on all Units and the related distribution on the
General
Partner
Interest, (ii) all cash receipts of the Partnership Group for
the
period
beginning on the Closing Date and ending on the last day of
such
period,
but excluding cash receipts from Interim Capital Transactions
(except to
the extent specified in Section 6.5), (iii) any decrease made
during the
period in cash reserves for Operating Expenditures, and (iv)
all cash
receipts of the Partnership Group after the end of such period
but on or
before the date of determination of Operating Surplus with
respect to
such period resulting from Working Capital Borrowings, less
(b) the sum of (i) Operating Expenditures for the period
beginning
on the
Closing Date and ending on the last day of such period (other
than
Operating
Expenditures funded with cash reserves established by the
General
Partner pursuant to clause (iii) of this Paragraph (b)) and
(ii)
the amount
of cash reserves established by the General Partner to provide
funds for
future Operating Expenditures; provided, however, that
disbursements made (including contributions to a Group Member
or
disbursements on behalf of a Group Member) or cash reserves
established,
increased
or reduced after the end of such period but on or before the
date of
determination of Available Cash with respect to such period
shall
be deemed
to have been made, established, increased or reduced, for
purposes
of determining Operating Surplus, within such period if the
General
Partner so determines.
Notwithstanding the foregoing, (i) the General Partner may treat
all or
any portion of any Hedge Payment received by a member of the
Partnership Group
as an Interim Capital Transaction or may allocate such payment
received over one
or more Quarters, in either case with the approval of the Conflicts
Committee
and (ii) "Operating Surplus" with respect to the Quarter in which
the
Liquidation Date occurs and any subsequent Quarter shall equal
zero.
"Opinion
of Counsel" means a written opinion of counsel (who may be
regular counsel to the Partnership or the General Partner or any of
its
Affiliates) acceptable to the General Partner.
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"Option
Closing Date" means the date or dates on which any Common Units
are sold by the Partnership to the Underwriters upon exercise of
the
Over-Allotment Option.
"Organizational Limited Partner" means EnerVest in its capacity as
the
organizational limited partner of the Partnership pursuant to this
Agreement.
"Outstanding" means, with respect to Partnership Securities,
all
Partnership Securities that are issued by the Partnership and
reflected as
outstanding on the Partnership's books and records as of the date
of
determination; provided, however, that if at any time any Person or
Group (other
than the General Partner or its Affiliates or the EnCap
Partnerships)
beneficially owns 20% or more of the Outstanding Partnership
Securities of any
class then Outstanding, all Partnership Securities owned by such
Person or Group
shall not be voted on any matter and shall not be considered to be
Outstanding
when sending notices of a meeting of Limited Partners to vote on
any matter
(unless otherwise required by law), calculating required votes,
determining the
presence of a quorum or for other similar purposes under this
Agreement, except
that Units so owned shall be considered to be Outstanding for
purposes of
Section 11.1(b)(iv) (such Units shall not, however, be treated as a
separate
class of Partnership Securities for purposes of this Agreement);
provided,
further, that the foregoing limitation shall not apply to (i) any
Person or
Group who acquired 20% or more of the Outstanding Partnership
Securities of any
class then Outstanding directly from the General Partner or its
Affiliates, (ii)
any Person or Group who acquired 20% or more of the Outstanding
Partnership
Securities of any class then Outstanding directly or indirectly
from a Person or
Group described in clause (i) provided that the General Partner
shall have
notified such Person or Group in writing that such limitation shall
not apply,
or (iii) any Person or Group who acquired 20% or more of any
Partnership
Securities issued by the Partnership with the prior approval of the
Board of
Directors.
"Over-Allotment Option" means the over-allotment option granted to
the
Underwriters by the Partnership pursuant to the Underwriting
Agreement.
"Partner
Nonrecourse Debt" has the meaning set forth in Treasury
Regulation Section 1.704-2(b)(4).
"Partner
Nonrecourse Debt Minimum Gain" has the meaning set forth in
Treasury Regulation Section 1.704-2(i)(2).
"Partner
Nonrecourse Deductions" means any and all items of loss,
deduction, expenditure (including any expenditure described in
Section
705(a)(2)(B) of the Code), Simulated Depletion or Simulated Loss
that, in
accordance with the principles of Treasury Regulation Section
1.704-2(i), are
attributable to a Partner Nonrecourse Debt.
"Partners"
means the General Partner and the Limited Partners.
"Partnership" means EV Energy Partners, L.P., a Delaware
limited
partnership.
"Partnership Group" means the Partnership and its Subsidiaries
treated as
a single consolidated entity.
"Partnership Interest" means an interest in the Partnership, which
shall
include the General Partner Interest and Limited Partner
Interests.
"Partnership Minimum Gain" means that amount determined in
accordance with
the principles of Treasury Regulation Section 1.704-2(d).
"Partnership
Security" means any class or series of equity interest in the
Partnership (but excluding any options, rights, warrants and
appreciation rights
relating to an equity interest in the Partnership), including
Common Units,
Class B Units, Subordinated Units, General Partner Interest and
Incentive
Distribution Rights.
"Per Unit
Capital Amount" means, as of any date of determination, the
Capital Account, stated on a per Unit basis, underlying any Unit
held by a
Person other than the General Partner or any Affiliate of the
General Partner
who holds Units.
"Percentage Interest" means as of any date of determination (a) as
to the
General Partner with respect to the General Partner Interest, the
aggregate
Capital Contributions made by the General Partner with respect to
the General
Partner divided by the aggregate Capital Contributions made by all
the Partners,
(b) as to any
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Unitholder with respect to Units, the product obtained by
multiplying (i) 100%
less the percentage applicable to clause (a) above and (c) below by
(ii) the
quotient obtained by dividing the number of Units held by such
Unitholder by the
total number of Outstanding Units and (c) as to the holders of
other Partnership
Securities issued by the Partnership in accordance with Section
5.6, the
percentage established as a part of such issuance. The Percentage
Interest with
respect to an Incentive Distribution Right shall at all times be
zero.
"Person"
means an individual or a corporation, firm, limited liability
company, partnership, joint venture, trust, unincorporated
organization,
association, government agency or political subdivision thereof or
other entity.
"Pro Rata"
means (a) when used with respect to Units or any class thereof,
apportioned equally among all designated Units in accordance with
their relative
Percentage Interests, (b) when used with respect to Partners and
Assignees or
Record Holders, apportioned among all Partners and Assignees or
Record Holders
in accordance with their relative Percentage Interests and (c) when
used with
respect to holders of Incentive Distribution Rights, apportioned
equally among
all holders of Incentive Distribution Rights in accordance with the
relative
number or percentage of Incentive Distribution Rights held by each
such holder.
"Properties Partnership" means EV Acquisition Partners, L.P., a
Delaware
limited partnership.
"Purchase
Date" means the date determined by the General Partner as the
date for purchase of all Outstanding Limited Partner Interests of a
certain
class (other than Limited Partner Interests owned by the General
Partner and its
Affiliates) pursuant to Article XV.
"Quarter"
means, unless the context requires otherwise, a fiscal quarter
of the Partnership, or, with respect to the first fiscal quarter of
the
Partnership after the Closing Date, the portion of such fiscal
quarter after the
Closing Date.
"Recapture
Income" means any gain recognized by the Partnership (computed
without regard to any adjustment required by Section 734 or Section
743 of the
Code) upon the disposition of any property or asset of the
Partnership, which
gain is characterized as ordinary income because it represents the
recapture of
deductions previously taken with respect to such property or
asset.
"Record
Date" means the date established by the General Partner or
otherwise in accordance with this Agreement for determining (a) the
identity of
the Record Holders entitled to notice of, or to vote at, any
meeting of Limited
Partners or entitled to vote by ballot or give approval of
Partnership action in
writing without a meeting or entitled to exercise rights in respect
of any
lawful action of Limited Partners 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 Common Unit is
registered
on the books of the Transfer Agent as of the opening of business on
a particular
Business Day, or with respect to other Partnership Interests, the
Person in
whose name any such other Partnership Interest is registered on the
books that
the General Partner has caused to be kept as of the opening of
business on such
Business Day.
"Redeemable Interests" means any Partnership Interests for which
a
redemption notice has been given, and has not been withdrawn,
pursuant to
Section 4.10.
"Registration Statement" means the Registration Statement on Form
S-1 as
it has been or as it may be amended or supplemented from time to
time, filed by
the Partnership with the Commission under the Securities Act to
register the
offering and sale of the Common Units in the Initial Offering.
"Remaining
Net Positive Adjustments" means as of the end of any taxable
period, (i) with respect to the Unitholders holding Common Units,
Class B Units
or Subordinated Units, the excess of (a) the Net Positive
Adjustments of the
Unitholders holding Common Units, Class B Units or Subordinated
Units as of the
end of such period over (b) the sum of those Partners' Share of
Additional Book
Basis Derivative Items for each prior taxable period, (ii) with
respect to the
General Partner (as holder of the General Partner Interest), the
excess of (a)
the Net Positive Adjustments of the General Partner as of the end
of such period
over (b) the sum of the General Partner's Share of Additional Book
Basis
Derivative Items with respect to the General Partner Interest for
each prior
taxable period, and (iii) with respect to the holders of Incentive
Distribution
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Rights, the excess of (a) the Net Positive Adjustments of the
holders of
Incentive Distribution Rights as of the end of such period over (b)
the sum of
the Share of Additional Book Basis Derivative Items of the holders
of the
Incentive Distribution Rights for each prior taxable period.
"Required
Allocations" means (a) any limitation imposed on any allocation
of Net Losses or Net Termination Losses under Section 6.1(b) or
Section
6.1(c)(ii) and (b) any allocation of an item of income, gain, loss,
deduction,
Simulated Depletion or Simulated Loss pursuant to Section
6.1(d)(i), Section
6.1(d)(ii), Section 6.1(d)(iv), Section 6.1(d)(v), Section
6.1(d)(vii) or
Section 6.1(d)(ix).
"Residual Gain"
or "Residual Loss" means any item of gain or loss, as the
case may be, of the Partnership recognized for federal income tax
purposes
resulting from a sale, exchange or other disposition of a
Contributed Property
or Adjusted Property, to the extent such item of gain or loss or
Simulated Gain
or Simulated Loss is not allocated pursuant to Section 6.2(d)(i)(A)
or Section
6.2(d)(ii)(A), respectively, to eliminate Book-Tax Disparities.
"Retained
Converted Subordinated Unit" has the meaning assigned to such
term in Section 5.5(c)(ii).
"Second
Liquidation Target Amount" has the meaning assigned to such
term
in Section 6.1(c)(i)(F).
"Second
Target Distribution" means $0.46 per Unit per Quarter, subject
to
adjustment in accordance with Section 5.11, Section 6.6 and Section
6.9.
"Securities Act" means the Securities Act of 1933, as amended,
supplemented or restated from time to time and any successor to
such statute.
"Securities Exchange Act" means the Securities Exchange Act of
1934, as
amended, supplemented or restated from time to time and any
successor to such
statute.
"Share of
Additional Book Basis Derivative Items" means in connection
with
any allocation of Additional Book Basis Derivative Items for any
taxable period,
(i) with respect to the Unitholders holding Common Units, Class B
Units or
Subordinated Units, the amount that bears the same ratio to such
Additional Book
Basis Derivative Items as the Unitholders' Remaining Net Positive
Adjustments as
of the end of such period bears to the Aggregate Remaining Net
Positive
Adjustments as of that time, (ii) with respect to the General
Partner (as holder
of the General Partner Interest), the amount that bears the same
ratio to such
Additional Book Basis Derivative Items as the General Partner's
Remaining Net
Positive Adjustments as of the end of such period bears to the
Aggregate
Remaining Net Positive Adjustment as of that time, and (iii) with
respect to the
Partners holding Incentive Distribution Rights, the amount that
bears the same
ratio to such Additional Book Basis Derivative Items as the
Remaining Net
Positive Adjustments of the Partners holding the Incentive
Distribution Rights
as of the end of such period bears to the Aggregate Remaining Net
Positive
Adjustments as of that time.
"Simulated
Basis" means the Carrying Value of any oil and gas property (as
defined in Section 614 of the Code).
"Simulated
Depletion" means, with respect to an oil and gas property (as
defined in Section 614 of the Code), a depletion allowance computed
in
accordance with federal income tax principles (as if the Simulated
Basis of the
property was its adjusted tax basis) and in the manner specified in
Treasury
Regulation Section 1.704-1(b)(2)(iv)(k)(2). For purposes of
computing Simulated
Depletion with respect to any property, the Simulated Basis of such
property
shall be deemed to be the Carrying Value of such property, and in
no event shall
such allowance for Simulated Depletion, in the aggregate, exceed
such Simulated
Basis.
"Simulated
Gain" means the excess of the amount realized from the sale or
other disposition of an oil or gas property over the Carrying Value
of such
property.
"Simulated
Loss" means the excess of the Carrying Value of an oil or gas
property over the amount realized from the sale or other
disposition of such
property.
"Special
Approval" means approval by a majority of the members of the
Conflicts Committee.
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<PAGE>
"Subordinated Unit" means a Partnership Security representing a
fractional
part of the Partnership Interests of all Limited Partners and
Assignees and
having the rights and obligations specified with respect to
Subordinated Units
in this Agreement. The term "Subordinated Unit" does not include a
Common Unit
or Class B Unit. A Subordinated Unit that is convertible into a
Common Unit
shall not constitute a Common Unit until such conversion
occurs.
"Subordination Period" means the period commencing on the Closing
Date and
ending on the first to occur of the following dates:
(a) the first day of any Quarter beginning after September 30,
2011
in respect
of which (i) (A) distributions of Available Cash from Operating
Surplus on
each of the Outstanding Common Units and Subordinated Units and
any other
Outstanding Units that are senior or equal in right of
distribution to the Subordinated Units with respect to each of the
three
consecutive, non-overlapping four-Quarter periods immediately
preceding
such date
equaled or exceeded the sum of (x) the Minimum Quarterly
Distribution on all Outstanding Common Units and Subordinated Units
and
any other
Outstanding Units that are senior or equal in right of
distribution to the Subordinated Units plus (y) the General
Partner
Interest
during such periods and (B) the Adjusted Operating Surplus for
each of
the three consecutive, non-overlapping four-Quarter periods
immediately preceding such date equaled or exceeded the sum of (x)
the
Minimum
Quarterly Distribution on all of the Common Units, Subordinated
Units and
any other Units that are senior or equal in right of
distribution to the Subordinated Units that were Outstanding during
such
periods on
a Fully Diluted Basis, plus (y) the related distribution on the
General
Partner Interest, with respect to each such period and (ii)
there
are no
Cumulative Common Unit Arrearages;
(b) the first date on which there are no longer outstanding any
Subordinated Units due to the conversion of Subordinated Units into
Common
Units
pursuant to Section 5.7 or otherwise; and
(c) the date on which the General Partner is removed as general
partner of
the Partnership upon the requisite vote by holders of
Outstanding Units under circumstances where Cause does not exist
and Units
held by
the General Partner and its Affiliates are not voted in favor
of
such
removal.
For
purposes of determining whether the test in subclause (a)(i)(B)
above
has been satisfied, Adjusted Operating Surplus will be adjusted
upwards or
downwards if the Conflicts Committee determines in good faith that
the amount of
Estimated Average Maintenance Capital Expenditures used in the
determination of
Adjusted Operating Surplus in subclause (a)(i)(B) was materially
incorrect,
based on circumstances prevailing at the time of original
determination of
Estimated Average Maintenance Capital Expenditures, for any one or
more of the
preceding four quarter periods.
"Subsidiary" means, with respect to any Person, (a) a corporation
of which
more than 50% of the voting power of shares entitled (without
regard to the
occurrence of any contingency) to vote in the election of directors
or other
governing body of such corporation is owned, directly or
indirectly, at the date
of determination, by such Person, by one or more Subsidiaries of
such Person or
a combination thereof, (b) a partnership (whether general or
limited) in which
such Person or a Subsidiary of such Person is, at the date of
determination, a
general or limited partner of such partnership, but only if more
than 50% of the
partnership interests of such partnership (considering all of the
partnership
interests of the partnership as a single class) is owned, directly
or
indirectly, at the date of determination, by such Person, by one or
more
Subsidiaries of such Person, or a combination thereof, or (c) any
other Person
(other than a corporation or a partnership) in which such Person,
one or more
Subsidiaries of such Person, or a combination thereof, directly or
indirectly,
at the date of determination, has (i) at least a majority ownership
interest or
(ii) the power to elect or direct the election of a majority of the
directors or
other governing body of such Person.
"Surviving
Business Entity" has the meaning assigned to such term in
Section 14.2(b).
"Target
Distribution" means, collectively, the First Target
Distribution
and Second Target Distribution.
"Trading
Day" has the meaning assigned to such term in Section 15.1(a).
"transfer"
has the meaning assigned to such term in Section 4.4(a).
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<PAGE>
"Transfer
Agent" means such bank, trust company or other Person
(including
the General Partner or one of its Affiliates) as shall be appointed
from time to
time by the General Partner to act as registrar and transfer agent
for the
Common Units; provided, that if no Transfer Agent is specifically
designated for
any other Partnership Securities, the General Partner shall act in
such
capacity.
"Underwriter" means each Person named as an underwriter in Schedule
I to
the Underwriting Agreement who purchases Common Units pursuant
thereto.
"Underwriting Agreement" means that certain Underwriting Agreement
dated
as of , 2006, among the Underwriters, the Partnership, the General
Partner, the
Operating Partnership and other parties thereto, providing for the
purchase of
Common Units by the Underwriters.
"Unit"
means a Partnership Security that is designated as a "Unit" and
shall include Common Units, Class B Units and Subordinated Units,
each a
separate class, but shall not include (i) the General Partner
Interest or (ii)
Incentive Distribution Rights.
"Unit
Majority" means (i) during the Subordination Period, at least a
majority of the Outstanding Common Units (excluding Common Units
owned by the
General Partner and its Affiliates), voting as a class and at least
a majority
of the Outstanding Subordinated Units, voting as a class, and (ii)
after the end
of the Subordination Period, at least a majority of the Outstanding
Common Units
and Class B Units, if any, voting as a single class.
"Unitholders" means the holders of Units.
"Unpaid
MQD" has the meaning assigned to such term in Section
6.1(c)(i)(B).
"Unrealized Gain" attributable to any item of Partnership property
means,
as of any date of determination, the excess, if any, of (a) the
fair market
value of such property as of such date (as determined under Section
5.5(d)) over
(b) the Carrying Value of such property as of such date (prior to
any adjustment
to be made pursuant to Section 5.5(d) as of such date).
"Unrealized Loss" attributable to any item of Partnership property
means,
as of any date of determination, the excess, if any, of (a) the
Carrying Value
of such property as of such date (prior to any adjustment to be
made pursuant to
Section 5.5(d) as of such date) over (b) the fair market value of
such property
as of such date (as determined under Section 5.5(d)).
"Unrecovered Initial Unit Price" means at any time, with respect to
a
Unit, the Initial Unit Price less the sum of all distributions
constituting
Capital Surplus theretofore made in respect of an Initial Common
Unit and any
distributions of cash (or the Net Agreed Value of any distributions
in kind) in
connection with the dissolution and liquidation of the Partnership
theretofore
made in respect of an Initial Common Unit, adjusted as the General
Partner
determines to be appropriate to give effect to any distribution,
subdivision or
combination of such Units.
"U.S.
GAAP" means United States generally accepted accounting
principles
consistently applied.
"Withdrawal Opinion of Counsel" has the meaning assigned to such
term in
Section 11.1(b).
"Working
Capital Borrowings" means borrowings used solely for working
capital purposes or to pay distributions to Partners made pursuant
to a credit
facility or other arrangement requiring all such borrowings
thereunder to be
reduced to a relatively small amount each year (or for the year in
which the
Initial Offering is consummated, the 12-month period beginning on
the Closing
Date) for an economically meaningful period of time.
SECTION
1.2 Construction. Unless the context requires otherwise: (a)
any
pronoun used in this Agreement shall include the corresponding
masculine,
feminine or neuter forms, and the singular form of nouns, pronouns
and verbs
shall include the plural and vice versa; (b) references to Articles
and Sections
refer to Articles and Sections of this Agreement; (c) the terms
"include",
"includes", "including" or words of like import shall be deemed to
be followed
by the words "without limitation"; and (d) the terms "hereof",
"herein" or
"hereunder" refer to this Agreement as a whole and not to any
particular
provision of this Agreement. The
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table of contents and headings contained in this Agreement are for
reference
purposes only, and shall not affect in any way the meaning or
interpretation of
this Agreement.
ARTICLE II.
Organization
SECTION
2.1 Formation. The General Partner and the Organizational
Limited
Partner have previously formed the Partnership as a limited
partnership pursuant
to the provisions of the Delaware Act and hereby amend and restate
the original
Agreement of Limited Partnership of EV Energy Partners, L.P. in its
entirety.
This amendment and restatement shall become effective on the date
of this
Agreement. Except as expressly provided to the contrary in this
Agreement, the
rights, duties (including fiduciary duties), liabilities and
obligations of the
Partners and the administration, dissolution and termination of the
Partnership
shall be governed by the Delaware Act. All Partnership Interests
shall
constitute personal property of the owner thereof for all
purposes.
SECTION
2.2 Name. The name of the Partnership shall be "EV Energy
Partners, L.P." The Partnership's business may be conducted under
any other name
or names as determined by the General Partner, including the name
of the General
Partner. The words "Limited Partnership," "L.P.," "Ltd." or similar
words or
letters shall be included in the Partnership's name where necessary
for the
purpose of complying with the laws of any jurisdiction that so
requires. The
General Partner may change the name of the Partnership at any time
and from time
to time and shall notify the Limited Partners of such change in the
next regular
communication to the Limited Partners.
SECTION
2.3 Registered Office; Registered Agent; Principal Office;
Other
Offices. Unless and until changed by the General Partner, the
registered office
of the Partnership in the State of Delaware shall be located at
1209 Orange
Street, Wilmington, Delaware 19801, and the registered agent for
service of
process on the Partnership in the State of Delaware at such
registered office
shall be The Corporation Trust Company. The principal office of the
Partnership
shall be located at 1001 Fannin Street, Suite 800, Houston, Texas
77002-6708, or
such other place as the General Partner may from time to time
designate by
notice to the Limited Partners. The Partnership may maintain
offices at such
other place or places within or outside the State of Delaware as
the General
Partner shall determine necessary or appropriate. The address of
the General
Partner shall be 1001 Fannin Street, Suite 800, Houston, Texas
77002-6708, or
such other place as the General Partner may from time to time
designate by
notice to the Limited Partners.
SECTION
2.4 Purpose and Business. The purpose and nature of the
business
to be conducted by the Partnership shall be to (a) engage directly
in, or enter
into or form, hold and dispose of any corporation, partnership,
joint venture,
limited liability company or other arrangement to engage indirectly
in, any
business activity that is approved by the General Partner and that
lawfully may
be conducted by a limited partnership organized pursuant to the
Delaware Act
and, in connection therewith, to exercise all of the rights and
powers conferred
upon the Partnership pursuant to the agreements relating to such
business
activity, and (b) do anything necessary or appropriate to the
foregoing,
including the making of capital contributions or loans to a Group
Member;
provided, however, that the General Partner shall not cause the
Partnership to
engage, directly or indirectly, in any business activity that the
General
Partner determines would cause the Partnership 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 General
Partner shall
have no duty or obligation to propose or approve, and may decline
to propose or
approve, the conduct by the Partnership of any business free of any
fiduciary
duty or obligation whatsoever to the Partnership or any Limited
Partner 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
Group Member
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 Partnership shall be empowered to do any and
all
acts and things necessary or appropriate for the furtherance and
accomplishment
of the purposes and business described in Section 2.4 and for the
protection and
benefit of the Partnership.
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<PAGE>
SECTION
2.6 Power of Attorney.
(a) Each
Limited Partner hereby constitutes and appoints the General
Partner and, if a Liquidator shall have been selected pursuant to
Section 12.3,
the Liquidator (and any successor to the Liquidator by merger,
transfer,
assignment, election or otherwise) and each of their authorized
officers and
attorneys-in-fact, as the case may be, with full power of
substitution, as his
true and lawful agent and attorney-in-fact, with full power and
authority in his
name, place and stead, to:
(i) execute, swear to, acknowledge, deliver, file and record in
the
appropriate public offices (A) all certificates, documents and
other
instruments (including this Agreement and the Certificate of
Limited
Partnership and all amendments or restatements hereof or thereof)
that the
General
Partner or the Liquidator determines to be necessary or
appropriate to form, qualify or continue the existence or
qualification of
the
Partnership as a limited partnership (or a partnership in which
the
limited
partners have limited liability) in the State of Delaware and
in
all other
jurisdictions in which the Partnership may conduct business or
own
property; (B) all certificates, documents and other instruments
that
the
General Partner or the Liquidator determines to be necessary or
appropriate to reflect, in accordance with its terms, any
amendment,
change,
modification or restatement of this Agreement; (C) all
certificates, documents and other instruments (including
conveyances and a
certificate of cancellation) that the General Partner or the
Liquidator
determines
to be necessary or appropriate to reflect the dissolution and
liquidation of the Partnership pursuant to the terms of this
Agreement;
(D) all
certificates, documents and other instruments relating to the
admission,
withdrawal, removal or substitution of any Partner pursuant to,
or other
events described in, Article IV, Article X, Article XI or
Article
XII; (E)
all certificates, documents and other instruments relating to
the
determination of the rights, preferences and privileges of any
class or
series of
Partnership Securities issued pursuant to Section 5.6; and (F)
all
certificates, documents and other instruments (including
agreements
and a
certificate of merger) relating to a merger, consolidation or
conversion
of the Partnership pursuant to Article XIV; and
(ii) execute, swear to, acknowledge, deliver, file and record
all
ballots,
consents, approvals, waivers, certificates, documents and other
instruments that the General Partner or the Liquidator determines
to be
necessary
or appropriate to make, evidence, give, confirm or ratify any
vote,
consent, approval, agreement or other action that is made or
given
by the
Partners hereunder or is consistent with the terms of this
Agreement
or effectuate the terms or intent of this Agreement; provided,
that when
required by Section 13.3 or any other provision of this
Agreement
that establishes a percentage of the Limited Partners or of the
Limited
Partners of any class or series required to take any action,
the
General
Partner and the Liquidator may exercise the power of attorney
made
in this
Section 2.6(a)(ii) only after the necessary vote, consent or
approval
of the Limited Partners or of the Limited Partners of such
class
or series,
as applicable.
Nothing contained in this Section 2.6(a) shall be construed as
authorizing the
General Partner to amend this Agreement except in accordance with
Article XIII
or as may be otherwise expressly provided for in this
Agreement.
(b) The
foregoing power of attorney is hereby declared to be
irrevocable
and a power coupled with an interest, and it shall survive and, to
the maximum
extent permitted by law, not be affected by the subsequent death,
incompetency,
disability, incapacity, dissolution, bankruptcy or termination of
any Limited
Partner and the transfer of all or any portion of such Limited
Partner's
Partnership Interest and shall extend to such Limited Partner's
heirs,
successors, assigns and personal representatives. Each such Limited
Partner
hereby agrees to be bound by any representation made by the General
Partner or
the Liquidator acting in good faith pursuant to such power of
attorney; and each
such Limited Partner, to the maximum extent permitted by law,
hereby waives any
and all defenses that may be available to contest, negate or
disaffirm the
action of the General Partner or the Liquidator taken in good faith
under such
power of attorney. Each Limited Partner shall execute and deliver
to the General
Partner or the Liquidator, within 15 days after receipt of the
request therefor,
such further designation, powers of attorney and other instruments
as the
General Partner or the Liquidator may request in order to
effectuate this
Agreement and the purposes of the Partnership.
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<PAGE>
SECTION
2.7 Term. The term of the Partnership commenced upon the filing
of
the Certificate of Limited Partnership in accordance with the
Delaware Act and
shall continue in existence until the dissolution of the
Partnership in
accordance with the provisions of Article XII. The existence of the
Partnership
as a separate legal entity shall continue until the cancellation of
the
Certificate of Limited Partnership as provided in the Delaware
Act.
SECTION
2.8 Title to Partnership Assets. Title to Partnership assets,
whether real, personal or mixed and whether tangible or intangible,
shall be
deemed to be owned by the Partnership as an entity, and no Partner,
individually
or collectively, shall have any ownership interest in such
Partnership assets or
any portion thereof. Title to any or all of the Partnership assets
may be held
in the name of the Partnership, the General Partner, one or more of
its
Affiliates or one or more nominees, as the General Partner may
determine. The
General Partner hereby declares and warrants that any Partnership
assets for
which record title is held in the name of the General Partner or
one or more of
its Affiliates or one or more nominees shall be held by the General
Partner or
such Affiliate or nominee for the use and benefit of the
Partnership in
accordance with the provisions of this Agreement; provided,
however, that the
General Partner shall use reasonable efforts to cause record title
to such
assets (other than those assets in respect of which the General
Partner
determines that the expense and difficulty of conveyancing makes
transfer of
record title to the Partnership impracticable) to be vested in the
Partnership
as soon as reasonably practicable; provided, further, that, prior
to the
withdrawal or removal of the General Partner or as soon thereafter
as
practicable, the General Partner shall use reasonable efforts to
effect the
transfer of record title to the Partnership and, prior to any such
transfer,
will provide for the use of such assets in a manner satisfactory to
the General
Partner. All Partnership assets shall be recorded as the property
of the
Partnership in its books and records, irrespective of the name in
which record
title to such Partnership assets is held.
ARTICLE III.
Rights of Limited Partners
SECTION
3.1 Limitation of Liability. The Limited Partners shall have no
liability under this Agreement except as expressly provided in this
Agreement or
the Delaware Act.
SECTION
3.2 Management of Business. No Limited Partner, in its capacity
as
such, shall participate in the operation, management or control
(within the
meaning of the Delaware Act) of the Partnership's business,
transact any
business in the Partnership's name or have the power to sign
documents for or
otherwise bind the Partnership. Any action taken by any Affiliate
of the General
Partner or any officer, director, employee, manager, member,
general partner,
agent or trustee of the General Partner or any of its Affiliates,
or any
officer, director, employee, manager, member, general partner,
agent or trustee
of a Group Member, in its capacity as such, shall not be deemed to
be
participation in the control of the business of the Partnership by
a limited
partner of the Partnership (within the meaning of Section 17-303(a)
of the
Delaware Act) and shall not affect, impair or eliminate the
limitations on the
liability of the Limited Partners under this Agreement.
SECTION
3.3 Outside Activities of the Limited Partners. Subject to the
provisions of Section 7.5, which shall continue to be applicable to
the Persons
referred to therein, regardless of whether such Persons shall also
be Limited
Partners, any Limited Partner shall be entitled to and may have
business
interests and engage in business activities in addition to those
relating to the
Partnership, including business interests and activities in direct
competition
with the Partnership Group. Neither the Partnership nor any of the
other
Partners shall have any rights by virtue of this Agreement in any
business
ventures of any Limited Partner.
SECTION
3.4 Rights of Limited Partners.
(a) In
addition to other rights provided by this Agreement or by
applicable law, and except as limited by Section 3.4(b), each
Limited Partner
shall have the right, for a purpose reasonably related to such
Limited
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<PAGE>
Partner's interest as a Limited Partner in the Partnership, upon
reasonable
written demand stating the purpose of such demand, and at such
Limited Partner's
own expense:
(i) to obtain true and full information regarding the status of
the
business
and financial condition of the Partnership;
(ii) promptly after its becoming available, to obtain a copy of
the
Partnership's federal, state and local income tax returns for each
year;
(iii) to obtain a current list of the name and last known
business,
residence
or mailing address of each Partner;
(iv) to obtain a copy of this Agreement and the Certificate of
Limited
Partnership and all amendments thereto, together with copies of
the
executed copies of all powers of attorney pursuant to which
this
Agreement,
the Certificate of Limited Partnership and all amendments
thereto
have been executed;
(v) to obtain true and full information regarding the amount of
cash
and a
description and statement of the Net Agreed Value of any other
Capital
Contribution by each Partner and that each Partner has agreed
to
contribute
in the future, and the date on which each became a Partner; and
(vi) to obtain such other information regarding the affairs of
the
Partnership as is just and reasonable.
(b) The
General Partner may keep confidential from the Limited
Partners,
for such period of time as the General Partner deems reasonable,
(i) any
information that the General Partner reasonably believes to be in
the nature of
trade secrets or (ii) other information the disclosure of which the
General
Partner in good faith believes (A) is not in the best interests of
the
Partnership Group, (B) could damage the Partnership Group or its
business or (C)
that any Group Member is required by law or by agreement with any
third party to
keep confidential (other than agreements with Affiliates of the
Partnership the
primary purpose of which is to circumvent the obligations set forth
in this
Section 3.4).
ARTICLE IV.
Certificates; Record Holders;
Transfer of Partnership Interests;
Redemption of Partnership Interests
SECTION
4.1 Certificates. Upon the Partnership's issuance of Common
Units,
Subordinated Units or Class B Units to any Person, the Partnership
shall issue,
upon the request of such Person, one or more Certificates in the
name of such
Person evidencing the number of such Units being so issued. In
addition, (a)
upon the General Partner's request, the Partnership shall issue to
it one or
more Certificates in the name of the General Partner evidencing its
General
Partner Interest and (b) upon the request of any Person owning
Incentive
Distribution Rights or any other Partnership Securities other than
Common Units,
Subordinated Units or Class B Units, the Partnership shall issue to
such Person
one or more certificates evidencing such Incentive Distribution
Rights or other
Partnership Securities other than Common Units, Subordinated Units
or Class B
Units. Certificates shall be executed on behalf of the Partnership
by the
Chairman of the Board, President or any Executive Vice President,
Senior Vice
President or Vice President and the Secretary or any Assistant
Secretary of the
General Partner. No Common Unit Certificate shall be valid for any
purpose until
it has been countersigned by the Transfer Agent; provided, however,
that if the
General Partner elects to issue Common Units in global form, the
Common Unit
Certificates shall be valid upon receipt of a certificate from the
Transfer
Agent certifying that the Common Units have been duly registered in
accordance
with the directions of the Partnership. Subject to the requirements
of Section
6.7(c) and Section 6.7(e), the Partners holding Certificates
evidencing
Subordinated Units may exchange such Certificates for Certificates
evidencing
Common Units on or after the date on which such Subordinated Units
are converted
into Common Units pursuant to the terms of Section 5.7. Subject to
the
requirements of Section 6.7(e), the Partners holding
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<PAGE>
Certificates evidencing Class B Units may exchange such
Certificates for
Certificates evidencing Common Units on or after the period set
forth in Section
5.11(f) pursuant to the terms of Section 5.11.
SECTION
4.2 Mutilated, Destroyed, Lost or Stolen Certificates.
(a) If any
mutilated Certificate is surrendered to the Transfer Agent (for
Common Units) or the General Partner (for Partnership Securities
other than
Common Units), the appropriate officers of the General Partner on
behalf of the
Partnership shall execute, and the Transfer Agent (for Common
Units) or the
General Partner (for Partnership Securities other than Common
Units) shall
countersign and deliver in exchange therefor, a new Certificate
evidencing the
same number and type of Partnership Securities as the Certificate
so
surrendered.
(b) The
appropriate officers of the General Partner on behalf of the
Partnership shall execute and deliver, and the Transfer Agent (for
Common Units)
shall countersign, a new Certificate in place of any Certificate
previously
issued if the Record Holder of the Certificate:
(i) makes proof by affidavit, in form and substance satisfactory
to
the
General Partner, that a previously issued Certificate has been
lost,
destroyed
or stolen;
(ii) requests the issuance of a new Certificate before the
General
Partner
has notice that the Certificate has been acquired by a
purchaser
for value
in good faith and without notice of an adverse claim;
(iii) if requested by the General Partner, delivers to the
General
Partner a
bond, in form and substance satisfactory to the General
Partner,
with
surety or sureties and with fixed or open penalty as the
General
Partner
may direct to indemnify the Partnership, the Partners, the
General
Partner
and the Transfer Agent against any claim that may be made on
account of
the alleged loss, destruction or theft of the Certificate; and
(iv) satisfies any other reasonable requirements imposed by the
General
Partner.
If a
Limited Partner fails to notify the General Partner within a
reasonable period of time after he has notice of the loss,
destruction or theft
of a Certificate, and a transfer of the Limited Partner Interests
represented by
the Certificate is registered before the Partnership, the General
Partner or the
Transfer Agent receives such notification, the Limited Partner
shall be
precluded from making any claim against the Partnership, the
General Partner or
the Transfer Agent for such transfer or for a new Certificate.
(c) As a
condition to the issuance of any new Certificate under this
Section 4.2, the General Partner may require the payment of a sum
sufficient to
cover any tax or other governmental charge that may be imposed in
relation
thereto and any other expenses (including the fees and expenses of
the Transfer
Agent) reasonably connected therewith.
SECTION
4.3 Record Holders. The Partnership shall be entitled to
recognize
the Record Holder as the Partner with respect to any Partnership
Interest and,
accordingly, shall not be bound to recognize any equitable or other
claim to, or
interest in, such Partnership Interest on the part of any other
Person,
regardless of whether the Partnership shall have actual or other
notice thereof,
except as otherwise provided by law or any applicable rule,
regulation,
guideline or requirement of any National Securities Exchange on
which such
Partnership Interests are listed or admitted to trading. Without
limiting the
foregoing, when a Person (such as a broker, dealer, bank, trust
company or
clearing corporation or an agent of any of the foregoing) is acting
as nominee,
agent or in some other representative capacity for another Person
in acquiring
and/or holding Partnership Interests, as between the Partnership on
the one
hand, and such other Persons on the other, such representative
Person shall be
the Record Holder of such Partnership Interest.
SECTION
4.4 Transfer Generally.
(a) The
term "transfer," when used in this Agreement with respect to a
Partnership Interest, shall be deemed to refer to a transaction (i)
by which the
General Partner assigns its General Partner Interest to another
Person or by
which a holder of Incentive Distribution Rights assigns its
Incentive
Distribution Rights to another Person, and includes a sale,
assignment, gift,
pledge, encumbrance, hypothecation, mortgage, exchange
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<PAGE>
or any other disposition by law or otherwise or (ii) by which the
holder of a
Limited Partner Interest (other than an Incentive Distribution
Right) assigns
such Limited Partner Interest to another Person who is or becomes a
Limited
Partner, 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
Partnership Interest shall be transferred, in whole or in part,
except in accordance with the terms and conditions set forth in
this Article IV.
Any transfer or purported transfer of a Partnership Interest not
made in
accordance with this Article IV shall be null and void.
(c)
Nothing contained in this Agreement shall be construed to prevent
a
disposition by any stockholder, member, partner or other owner of
the General
Partner of any or all of the shares of stock, membership interests,
partnership
interests or other ownership interests in the General Partner.
SECTION
4.5 Registration and Transfer of Limited Partner Interests.
(a) The
General Partner shall keep or cause to be kept on behalf of the
Partnership a register in which, subject to such reasonable
regulations as it
may prescribe and subject to the provisions of Section 4.5(b), the
Partnership
will provide for the registration and transfer of Limited Partner
Interests. The
Transfer Agent is hereby appointed registrar and transfer agent for
the purpose
of registering Common Units and transfers of such Common Units as
herein
provided. The Partnership shall not recognize transfers of
Certificates
evidencing Limited Partner Interests unless such transfers are
effected in the
manner described in this Section 4.5. Upon surrender of a
Certificate for
registration of transfer of any Limited Partner Interests evidenced
by a
Certificate, and subject to the provisions of Section 4.5(b), the
appropriate
officers of the General Partner on behalf of the Partnership shall
execute and
deliver, and in the case of Common Units, the Transfer Agent shall
countersign
and deliver, in the name of the holder or the designated transferee
or
transferees, as required pursuant to the holder's instructions, one
or more new
Certificates evidencing the same aggregate number and type of
Limited Partner
Interests as was evidenced by the Certificate so surrendered.
(b) Except
as otherwise provided in Section 4.9, the General Partner shall
not recognize any transfer of Limited Partner Interests until the
Certificates
evidencing such Limited Partner Interests are surrendered for
registration of
transfer. No charge shall be imposed by the General Partner for
such transfer;
provided, that as a condition to the issuance of any new
Certificate under this
Section 4.5, the General Partner may require the payment of a sum
sufficient to
cover any tax or other governmental charge that may be imposed with
respect
thereto.
(c)
Subject to (i) the foregoing provisions of this Section 4.5,
(ii)
Section 4.3, (iii) Section 4.8, (iv) with respect to any class or
series of
Limited Partner Interests, the provisions of any statement of
designations or an
amendment to this Agreement establishing such class or series, (v)
any
contractual provisions binding on any Limited Partner and (vi)
provisions of
applicable law including the Securities Act, Limited Partner
Interests (other
than the Incentive Distribution Rights) shall be freely
transferable.
(d) The
General Partner and its Affiliates and the EnCap Partnerships
shall have the right at any time to transfer their Subordinated
Units, Class B
Units and Common Units (whether issued upon conversion of the
Subordinated Units
or otherwise) to one or more Persons.
SECTION
4.6 Transfer of the General Partner's General Partner Interest.
(a)
Subject to Section 4.6(c), prior to December 31, 2016, the
General
Partner shall not transfer all or any part of its General Partner
Interest to a
Person unless such transfer (i) has been approved by the prior
written consent
or vote of the holders of at least a majority of the Outstanding
Common Units
(excluding Common Units held by the General Partner and its
Affiliates) or (ii)
is of all, but not less than all, of its General Partner Interest
to (A) an
Affiliate of the General Partner (other than an individual) or (B)
another
Person (other than an individual) in connection with the merger or
consolidation
of the General Partner with or into such other Person or the
transfer by the
General Partner of all or substantially all of its assets to such
other Person.
(b)
Subject to Section 4.6(c), on or after December 31, 2016, the
General
Partner may transfer all or any of its General Partner Interest
without
Unitholder approval.
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<PAGE>
(c)
Notwithstanding anything herein to the contrary, no transfer by
the
General Partner of all or any part of its General Partner Interest
to another
Person shall be permitted unless (i) the transferee agrees to
assume the rights
and duties of the General Partner under this Agreement and to be
bound by the
provisions of this Agreement, (ii) the Partnership receives an
Opinion of
Counsel that such transfer would not result in the loss of limited
liability of
any Limited Partner under the Delaware Act or cause the Partnership
to be
treated as an association taxable as a corporation or otherwise to
be taxed as
an entity for federal income tax purposes (to the extent not
already so treated
or taxed) and (iii) such transferee also agrees to purchase all (or
the
appropriate portion thereof, if applicable) of the partnership or
membership
interest of the General Partner as the general partner or managing
member, if
any, of each other Group Member. In the case of a transfer pursuant
to and in
compliance with this Section 4.6, the transferee or successor (as
the case may
be) shall, subject to compliance with the terms of Section 10.3, be
admitted to
the Partnership as the General Partner immediately prior to the
transfer of the
General Partner Interest, and the business of the Partnership shall
continue
without dissolution.
SECTION
4.7 Transfer of Incentive Distribution Rights. Prior to
December
31, 2016, a holder of Incentive Distribution Rights may transfer
any or all of
the Incentive Distribution Rights held by such holder without any
consent of the
Unitholders to (a) an Affiliate of such holder (other than an
individual) or (b)
another Person (other than an individual) in connection with (i)
the merger or
consolidation of such holder of Incentive Distribution Rights with
or into such
other Person, (ii) the transfer by such holder of all or
substantially all of
its assets to such other Person or (iii) the sale of all the
ownership interests
in such holder. Any other transfer of the Incentive Distribution
Rights prior to
December 31, 2016 shall require the prior approval of holders of at
least a
majority of the Outstanding Common Units (excluding Common Units
held by the
General Partner and its Affiliates). On or after December 31, 2016,
the General
Partner or any other holder of Incentive Distribution Rights may
transfer any or
all of its Incentive Distribution Rights without Unitholder
approval.
Notwithstanding anything herein to the contrary, (i) the transfer
of Class B
Units issued pursuant to Section 5.11, or the transfer of Common
Units issued
upon conversion of the Class B Units, shall not be treated as a
transfer of all
or any part of the Incentive Distribution Rights and (ii) no
transfer of
Incentive Distribution Rights to another Person shall be permitted
unless the
transferee agrees to be bound by the provisions of this
Agreement.
SECTION
4.8 Restrictions on Transfers.
(a) Except
as provided in Section 4.8(d), but notwithstanding the other
provisions of this Article IV, no transfer of any Partnership
Interests shall be
made if such transfer would (i) violate the then applicable federal
or state
securities laws or rules and regulations of the Commission, any
state securities
commission or any other governmental authority with jurisdiction
over such
transfer, (ii) terminate the existence or qualification of the
Partnership under
the laws of the jurisdiction of its formation, or (iii) cause the
Partnership to
be treated as an association taxable as a corporation or otherwise
to be taxed
as an entity for federal income tax purposes (to the extent not
already so
treated or taxed).
(b) The
General Partner may impose restrictions on the transfer of
Partnership Interests if it receives an Opinion of Counsel that
such
restrictions are necessary to avoid a significant risk of the
Partnership
becoming taxable as a corporation or otherwise becoming taxable as
an entity for
federal income tax purposes. The General Partner may impose such
restrictions by
amending this Agreement; provided, however, that any amendment that
would result
in the delisting or suspension of trading of any class of Limited
Partner
Interests on the principal National Securities Exchange on which
such class of
Limited Partner Interests is then listed or admitted to trading
must be
approved, prior to such amendment being effected, by the holders of
at least a
majority of the Outstanding Limited Partner Interests of such
class.
(c) The
transfer of a Subordinated Unit that has converted into a
Common
Unit shall be subject to the restrictions imposed by Section
6.7(c).
(d) The
transfer of a Class B Unit that has converted into a Common
Unit
shall be subject to the restrictions imposed by Section 6.7(e).
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<PAGE>
(e)
Nothing contained in this Article IV, or elsewhere in this
Agreement,
shall preclude the settlement of any transactions involving
Partnership
Interests entered into through the facilities of any National
Securities
Exchange on which such Partnership Interests are listed or admitted
to trading.
(f) Each
certificate evidencing Partnership Interests shall bear a
conspicuous legend in substantially the following form:
THE HOLDER
OF THIS SECURITY ACKNOWLEDGES FOR THE BENEFIT OF EV ENERGY
PARTNERS,
L.P. THAT THIS SECURITY MAY NOT BE SOLD, OFFERED, RESOLD,
PLEDGED OR
OTHERWISE TRANSFERRED IF SUCH TRANSFER WOULD (A) VIOLATE THE
THEN APPLICABLE
FEDERAL OR STATE SECURITIES LAWS OR RULES AND REGULATIONS
OF THE
SECURITIES AND EXCHANGE COMMISSION, ANY STATE SECURITIES
COMMISSION
OR ANY
OTHER GOVERNMENTAL AUTHORITY WITH JURISDICTION OVER SUCH
TRANSFER,
(B)
TERMINATE THE EXISTENCE OR QUALIFICATION OF EV ENERGY PARTNERS,
L.P.
UNDER THE
LAWS OF THE STATE OF DELAWARE, OR (C) CAUSE EV ENERGY PARTNERS,
L.P. TO BE
TREATED AS AN ASSOCIATION TAXABLE AS A CORPORATION OR OTHERWISE
TO BE
TAXED AS AN ENTITY FOR FEDERAL INCOME TAX PURPOSES (TO THE
EXTENT
NOT
ALREADY SO TREATED OR TAXED). EV ENERGY GP, L.P., THE GENERAL
PARTNER
OF EV
ENERGY PARTNERS, L.P., MAY IMPOSE ADDITIONAL RESTRICTIONS ON
THE
TRANSFER
OF THIS SECURITY IF IT RECEIVES AN OPINION OF COUNSEL THAT SUCH
RESTRICTIONS ARE NECESSARY TO AVOID A SIGNIFICANT RISK OF EV
ENERGY
PARTNERS,
L.P. BECOMING TAXABLE AS A CORPORATION OR OTHERWISE BECOMING
TAXABLE AS
AN ENTITY FOR FEDERAL INCOME TAX PURPOSES. THE RESTRICTIONS SET
FORTH
ABOVE SHALL NOT PRECLUDE THE SETTLEMENT OF ANY TRANSACTIONS
INVOLVING
THIS SECURITY ENTERED INTO THROUGH THE FACILITIES OF ANY
NATIONAL
SECURITIES EXCHANGE ON WHICH THIS SECURITY IS LISTED OR
ADMITTED
TO
TRADING.
SECTION
4.9 Citizenship Certificates; Non-citizen Assignees.
(a) If any
Group Member is or becomes subject to any federal, state or
local law or regulation that the General Partner determines would
create a
substantial risk of cancellation or forfeiture of any property in
which the
Group Member has an interest based on the nationality, citizenship
or other
related status of a Limited Partner, the General Partner may
request any Limited
Partner to furnish to the General Partner, within 30 days after
receipt of such
request, an executed Citizenship Certification or such other
information
concerning his nationality, citizenship or other related status
(or, if the
Limited Partner is a nominee holding for the account of another
Person, the
nationality, citizenship or other related status of such Person) as
the General
Partner may request. If a Limited Partner fails to furnish to the
General
Partner within the aforementioned 30-day period such Citizenship
Certification
or other requested information or if upon receipt of such
Citizenship
Certification or other requested information the General Partner
determines that
a Limited Partner is not an Eligible Citizen, the Limited Partner
Interests
owned by such Limited Partner shall be subject to redemption in
accordance with
the provisions of Section 4.10. In addition, the General Partner
may require
that the status of any such Limited Partner be changed to that of a
Non-citizen
Assignee and, thereupon, the General Partner shall be substituted
for such
Non-citizen Assignee as the Limited Partner in respect of the
Non-citizen
Assignee's Limited Partner Interests and shall have all voting and
consent
rights attributable to the Non-citizen Assignee's Limited Partner
Interests.
(b) The
General Partner shall, in exercising voting rights in respect
of
Limited Partner Interests held by it on behalf of Non-citizen
Assignees,
distribute the votes in the same ratios as the votes of Partners
(including the
General Partner) in respect of Limited Partner Interests other than
those of
Non-citizen Assignees are cast, either for, against or abstaining
as to the
matter.
(c) Upon
dissolution of the Partnership, a Non-citizen Assignee shall
have
no right to receive a distribution in kind pursuant to Section 12.4
but shall be
entitled to the cash equivalent thereof, and the Partnership shall
provide cash
in exchange for an assignment of the Non-citizen Assignee's share
of any
distribution in kind. Such payment and assignment shall be treated
for
Partnership purposes as a purchase by
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<PAGE>
the Partnership from the Non-citizen Assignee of his Limited
Partner Interest
(representing his right to receive his share of such distribution
in kind).
(d) At any
time after he can and does certify that he has become an
Eligible Citizen, a Non-citizen Assignee may, upon application to
the General
Partner, request that with respect to any Limited Partner Interests
of such
Non-citizen Assignee not redeemed pursuant to Section 4.10, such
Non-citizen
Assignee be admitted as a Limited Partner, and upon approval of the
General
Partner, such Non-citizen Assignee shall be admitted as a Limited
Partner and
shall no longer constitute a Non-citizen Assignee and the General
Partner shall
cease to be deemed to be the Limited Partner in respect of the
Non-citizen
Assignee's Limited Partner Interests.
SECTION
4.10 Redemption of Partnership Interests of Non-citizen
Assignees.
(a) If at
any time a Limited Partner fails to furnish a Citizenship
Certification or other information requested within the 30-day
period specified
in Section 4.9(a), or if upon receipt of such Citizenship
Certification or other
information the General Partner determines, with the advice of
counsel, that a
Limited Partner is not an Eligible Citizen, the Partnership may,
unless the
Limited Partner establishes to the satisfaction of the General
Partner that such
Limited Partner is an Eligible Citizen or has transferred his
Partnership
Interests to a Person who is an Eligible Citizen and who furnishes
a Citizenship
Certification to the General Partner prior to the date fixed for
redemption as
provided below, redeem the Limited Partner Interest of such Limited
Partner as
follows:
(i) The General Partner shall, not later than the 30th day
before
the date
fixed for redemption, give notice of redemption to the Limited
Partner,
at his last address designated on the records of the
Partnership
or the
Transfer Agent, by registered or certified mail, postage
prepaid.
The notice
shall be deemed to have been given when so mailed. The notice
shall
specify the Redeemable Interests, the date fixed for redemption,
the
place of
payment, that payment of the redemption price will be made upon
surrender
of the Certificate evidencing the Redeemable Interests and that
on and
after the date fixed for redemption no further allocations or
distributions to which the Limited Partner would otherwise be
entitled in
respect of
the Redeemable Interests will accrue or be made.
(ii) The aggregate redemption price for Redeemable Interests
shall
be an
amount equal to the Current Market Price (the date of
determination
of which
shall be the date fixed for redemption) of Limited Partner
Interests
of the class to be so redeemed multiplied by the number of
Limited
Partner Interests of each such class included among the
Redeemable
Interests.
The redemption price shall be paid, as determined by the
General
Partner, in cash or by delivery of a promissory note of the
Partnership in the principal amount of the redemption price,
bearing
interest
at the rate of 5% annually and payable in three equal annual
installments of principal together with accrued interest,
commencing one
year after
the redemption date.
(iii) Upon surrender by or on behalf of the Limited Partner, at
the
place
specified in the notice of redemption, of the Certificate
evidencing
the
Redeemable Interests, duly endorsed in blank or accompanied by
an
assignment
duly executed in blank, the Limited Partner or his duly
authorized
representative shall be entitled to receive the payment
therefor.
(iv) After the redemption date, Redeemable Interests shall no
longer
constitute
issued and Outstanding Limited Partner Interests.
(b) The
provisions of this Section 4.10 shall also be applicable to
Limited Partner Interests held by a Limited Partner as nominee of a
Person
determined to be other than an Eligible Citizen.
(c)
Nothing in this Section 4.10 shall prevent the recipient of a
notice
of redemption from transferring his Limited Partner Interest before
the
redemption date if such transfer is otherwise permitted under this
Agreement.
Upon receipt of notice of such a transfer, the General Partner
shall withdraw
the notice of redemption, provided the transferee of such Limited
Partner
Interest certifies to the satisfaction of the General Partner that
he is an
Eligible Citizen. If the transferee fails to make such
certification, such
redemption shall be effected from the transferee on the original
redemption
date.
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ARTICLE V.
Capital Contributions and
Issuance of Partnership Interests
SECTION
5.1 Organizational Contributions. In connection with the
formation
of the Partnership under the Delaware Act, the General Partner made
an initial
Capital Contribution to the Partnership in the amount of $10.00,
for a 1%
General Partner Interest in the Partnership and has been admitted
as the General
Partner of the Partnership, and the Organizational Limited Partner
made an
initial Capital Contribution to the Partnership in the amount of
$990.00 for a
99% Limited Partner Interest in the Partnership and has been
admitted as a
Limited Partner of the Partnership. As of the Closing Date, the
interest of the
Organizational Limited Partner shall be redeemed and the initial
Capital
Contribution of the Organizational Limited Partner shall thereupon
be refunded.
Ninety-nine percent of any interest or other profit that may have
resulted from
the investment or other use of such initial Capital Contributions
shall be
allocated and distributed to the Organizational Limited Partner,
and the balance
thereof shall be allocated and distributed to the General
Partner.
SECTION
5.2 Contributions by the General Partner and its Affiliates and
the EnCap Partnerships.
(a) On the
Closing Date (i) the General Partner shall contribute to the
Partnership, as a Capital Contribution, $144,500 in cash, all of
the limited
liability company membership interests in the general partner of
the Properties
Partnership and a limited partnership interest in the Properties
Partnership, in
exchange for (A) a 2% General Partner Interest, subject to all of
the rights,
privileges and duties of the General Partner under this Agreement
and (B) the
Incentive Distribution Rights, (ii) EVOC, EnerVest, EV Investors
and the EnCap
Partnerships shall contribute to the Partnership, as a Capital
Contribution, a
limited partner interest in the Properties Partnership, in exchange
for an
aggregate of 251,745 Common Units, 1,401,200 Subordinated Units and
the right to
receive a cash payment of $25.52 million and (iii) CGas shall
contribute to the
Partnership, as a Capital Contribution, all of the limited partner
interests in
EVCG, in exchange for 343,256 Common Units, 1,698,800 Subordinated
Units and the
right to receive a cash payment of $34.81 million (a portion of
which shall
reimburse CGas for certain capital expenditures made by CGas).
(b) Upon
the issuance of any additional Limited Partner Interests by the
Partnership (other than the Common Units issued in the Initial
Offering, the
Common Units issued pursuant to the Over-Allotment Option, the
Common Units and
Subordinated Units issued pursuant to Section 5.2(a), any Class B
Units issued
pursuant to Section 5.11 and any Common Units issued upon
conversion of
Subordinated Units or Class B Units), the General Partner may make
additional
Capital Contributions in an amount equal to the product obtained by
multiplying
(i) the quotient determined by dividing (A) the General Partner's
Percentage
Interest by (B) 100 less the General Partner's Percentage Interest
times (ii)
the amount contributed to the Partnership by the Limited Partners
in exchange
for such additional Limited Partner Interests. Except as set forth
in Article
XII, the General Partner shall not be obligated to make any
additional Capital
Contributions to the Partnership.
SECTION
5.3 Contributions by Initial Limited Partners.
(a) On the
Closing Date and pursuant to the Underwriting Agreement, each
Underwriter shall contribute to the Partnership cash in an amount
equal to the
Issue Price per Initial Common Unit, multiplied by the number of
Common Units
specified in the Underwriting Agreement to be purchased by such
Underwriter at
the Closing Date. In exchange for such Capital Contributions by
the
Underwriters, the Partnership shall issue Common Units to each
Underwriter on
whose behalf such Capital Contribution is made in an amount equal
to the
quotient obtained by dividing (i) the cash contribution to the
Partnership by or
on behalf of such Underwriter by (ii) the Issue Price per Initial
Common Unit.
(b) Upon
the exercise of the Over-Allotment Option, each Underwriter
shall
contribute to the Partnership cash in an amount equal to the Issue
Price per
Initial Common Unit, multiplied by the number of Common Units to be
purchased by
such Underwriter at the Option Closing Date. In exchange for such
Capital
Contributions by the Underwriters, the Partnership shall issue
Common Units to
each Underwriter on whose behalf such Capital Contribution is made
in an amount
equal to the quotient obtained by dividing (i) the cash
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<PAGE>
contributions to the Partnership by or on behalf of such
Underwriter by (ii) the
Issue Price per Initial Common Unit.
(c) No
Limited Partner Interests will be issued or issuable as of or
at
the Closing Date other than (i) the Common Units issuable pursuant
to
subparagraph (a) hereof in aggregate number equal to 3,900,000,
(ii) the "Option
Units" as such term is used in the Underwriting Agreement in an
aggregate number
up to 585,000 issuable upon exercise of the Over-Allotment Option
pursuant to
subparagraph (b) hereof, (iii) the 3,100,000 Subordinated Units
issuable to
pursuant to Section 5.2 hereof, (iv) the 595,000 Common Units
issuable pursuant
to Section 5.2, and (v) the Incentive Distribution Rights.
SECTION
5.4 Interest and Withdrawal. No interest shall be paid by the
Partnership on Capital Contributions. No Partner or Assignee shall
be entitled
to the withdrawal or return of its Capital Contribution, except to
the extent,
if any, that distributions made pursuant to this Agreement or upon
termination
of the Partnership may be considered as such by law and then only
to the extent
provided for in this Agreement. Except to the extent expressly
provided in this
Agreement, no Partner shall have priority over any other Partner or
Assignee
either as to the return of Capital Contributions or as to profits,
losses or
distributions. Any such return shall be a compromise to which all
Partners agree
within the meaning of Section 17-502(b) of the Delaware Act.
SECTION
5.5 Capital Accounts.
(a) The
Partnership shall maintain for each Partner (or a beneficial
owner
of Partnership Interests held by a nominee in any case in which the
nominee has
furnished the identity of such owner to the Partnership in
accordance with
Section 6031(c) of the Code or any other method acceptable to the
General
Partner) owning a Partnership Interest a separate Capital Account
with respect
to such Partnership Interest in accordance with the rules of
Treasury Regulation
Section 1.704-1(b)(2)(iv). Such Capital Account shall be increased
by (i) the
amount of all Capital Contributions made to the Partnership with
respect to such
Partnership Interest and (ii) all items of Partnership income and
gain
(including Simulated Gain and income and gain exempt from tax)
computed in
accordance with Section 5.5(b) and allocated with respect to such
Partnership
Interest pursuant to Section 6.1, and decreased by (x) the amount
of cash or Net
Agreed Value of all actual and deemed distributions of cash or
property made
with respect to such Partnership Interest and (y) all items of
Partnership
deduction and loss (including Simulated Depletion and Simulated
Loss) computed
in accordance with Section 5.5(b) and allocated with respect to
such Partnership
Interest pursuant to Section 6.1.
(b) For
purposes of computing the amount of any item of income, gain,
loss, deduction, Simulated Depletion, Simulated Gain or Simulated
Loss which is
to be allocated pursuant to Article VI and is to be reflected in
the Partners'
Capital Accounts, the determination, recognition and classification
of any such
item shall be the same as its determination, recognition and
classification for
federal income tax purposes (including any method of depreciation,
cost recovery
or amortization used for that purpose), provided, that:
(i) Solely for purposes of this Section 5.5, the Partnership
shall
be treated
as owning directly its proportionate share (as determined by
the
General Partner based upon the provisions of the applicable
Group
Member
Agreement or governing, organizational or similar documents) of
all
property
owned by any other Group Member that is classified as a
partnership for federal income tax purposes and (y) any other
partnership,
limited
liability company, unincorporated business or other entity
classified
as a partnership for federal income tax purposes of which a
Group
Member is, directly or indirectly, a partner.
(ii) All fees and other expenses incurred by the Partnership to
promote
the sale of (or to sell) a Partnership Interest that can be
neither
deducted nor amortized under Section 709 of the Code, if any,
shall, for
purposes of Capital Account maintenance, be treated as an item
of
deduction at the time such fees and other expenses are incurred
and
shall be
allocated among the Partners pursuant to Section 6.1.
(iii) Except as otherwise provided in Treasury Regulation
Section
1.704-1(b)(2)(iv)(m), the computation of all items of income, gain,
loss,
deduction,
Simulated Depletion, Simulated Gain or Simulated Loss shall be
made
without regard to any election under Section 754 of the Code
which
may be
made by the Partnership and, as to those items described in
Section
705(a)(1)(B) or 705(a)(2)(B) of the Code, without regard to the
fact that
such items
are not includable in gross income or are neither
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<PAGE>
currently
deductible nor capitalized for federal income tax purposes. To
the extent
an adjustment to the adjusted tax basis of any Partnership
asset
pursuant to Section 734(b) or 743(b) of the Code is required,
pursuant
to Treasury Regulation Section 1.704-1(b)(2)(iv)(m), to be
taken
into
account in determining Capital Accounts, the amount of such
adjustment
in the Capital Accounts shall be treated as an item of gain or
loss.
(iv) Any income, gain, loss, Simulated Gain or Simulated Loss
attributable to the taxable disposition of any Partnership property
shall
be
determined as if the adjusted basis of such property as of such
date of
disposition were equal in amount to the Partnership's Carrying
Value with
respect to
such property as of such date.
(v) In accordance with the requirements of Section 704(b) of
the
Code, any
deductions for depreciation, cost recovery, amortization or
Simulated
Depletion attributable to any Contributed Property shall be
determined
as if the adjusted basis of such property on the date it was
acquired
by the Partnership were equal to the Agreed Value of such
property.
Upon an adjustment pursuant to Section 5.5(d) to the Carrying
Value of
any Partnership property subject to depreciation, cost
recovery,
amortization or Simulated Depletion, any further deductions for
such
depreciation, cost recovery, amortization or Simulated
Depletion
attributable to such property shall be determined (A) as if the
adjusted
basis of
such property were equal to the Carrying Value of such property
immediately following
such adjustment and (B) using a rate of
depreciation, cost recovery, amortization or Simulated Depletion
derived
from the
same method and useful life (or, if applicable, the remaining
useful
life) as is applied for federal income tax purposes; provided,
however,
that, if the asset has a zero adjusted basis for federal income
tax
purposes, depreciation, cost recovery, amortization or
Simulated
Depletion
deductions shall be determined using any method that the
General
Partner
may adopt.
(vi) If the Partnership's adjusted basis in a depreciable or
cost
recovery
property is reduced for federal income tax purposes pursuant to
Section
48(q)(1) or 48(q)(3) of the Code, the amount of such reduction
shall,
solely for purposes hereof, be deemed to be an additional
depreciation or cost recovery deduction in the year such property
is
placed in
service and shall be allocated among the Partners pursuant to
Section
6.1. Any restoration of such basis pursuant to Section 48(q)(2)
of
the Code
shall, to the extent possible, be allocated in the same manner
to
the
Partners to whom such deemed deduction was allocated.
(c) (i) A
transferee of a Partnership Interest shall succeed to a pro
rata
portion of the Capital Account of the transferor relating to the
Partnership
Interest so transferred.
(ii) Subject to Section 6.7(c), immediately prior to the transfer
of
a
Subordinated Unit or of a Subordinated Unit that has converted into
a
Common
Unit pursuant to Section 5.7 by a holder thereof (other than a
transfer
to an Affiliate unless the General Partner elects to have this
Section
5.5(c)(ii) apply), the Capital Account maintained for such
Person
with
respect to its Subordinated Units or converted Subordinated
Units
will (A)
first, be allocated to the Subordinated Units or converted
Subordinated Units to be transferred in an amount equal to the
product of
(x) the
number of such Subordinated Units or converted Subordinated
Units
to be
transferred and (y) the Per Unit Capital Amount for a Common
Unit,
and (B)
second, any remaining balance in such Capital Account will be
retained
by the transferor, regardless of whether it has retained any
Subordinated Units or converted Subordinated Units ("RETAINED
CONVERTED
SUBORDINATED UNITS"). Following any such allocation, the
transferor's
Capital
Account, if any, maintained with respect to the retained
Subordinated Units or Retained Converted Subordinated Units, if
any, will
have a
balance equal to the amount allocated under clause (B)
hereinabove,
and the
transferee's Capital Account established with respect to the
transferred Subordinated Units or converted Subordinated Units will
have a
balance
equal to the amount allocated under clause (A) hereinabove.
(d) (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 Incentive
Distribution Rights or the General Partner's Combined Interest, as
the case may
be, to Class B Units or Common Units pursuant to Sections 5.11(a)
or
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<PAGE>
11.3(b), the Capital Account 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 immediately
prior to
such issuance for an amount equal to its fair market value, 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 during such period would have been allocated. In
determining such
Unrealized Gain or Unrealized Loss, the aggregate cash amount and
fair market
value of all Partnership assets (including cash or cash
equivalents) immediately
prior to the issuance of additional Partnership Interests shall be
determined by
the General Partner using such method of valuation as it may adopt;
provided,
however, that the General Partner, in arriving at such valuation,
will rely
largely upon a methodology for determining the Partnerhip's equity
value that
takes into account in a consistent manner both the Current Market
Price of the
Common Units and the formula provided in Section 5.11(a) (as if an
IDR Reset
Election had been made at such time). The General Partner shall
allocate such
aggregate value among the assets of the Partnership (in such manner
as it
determines) to arrive at a fair market value for individual
properties.
(ii) In accordance with Treasury Regulation Section
1.704-1(b)(2)(iv)(f), immediately prior to any actual or deemed
distribution to a Partner of any Partnership property (other than
a
distribution of cash that is not in redemption or retirement of
a
Partnership Interest), the Capital Accounts of all Partners and
the
Carrying
Value of each Partnership property 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 immediately
prior to
such distribution for an amount equal to its fair market value,
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 during such period would have been
allocated.
In determining such Unrealized Gain or Unrealized Loss the
aggregate
cash amount and fair market value of all Partnership assets
(including
cash or cash equivalents) immediately prior to a distribution
shall (A)
in the case of an actual distribution that is not made pursuant
to Section
12.4 or in the case of a deemed distribution, be determined and
allocated
in the same manner as that provided in Section 5.5(d)(i) or (B)
in the
case of a liquidating distribution pursuant to Section 12.4, be
determined
and allocated by the Liquidator using such method of valuation
as it may
adopt.
SECTION
5.6 Issuances of Additional Partnership Securities.
(a) The
Partnership may issue additional Partnership Securities and
options, rights, warrants and appreciation rights relating to the
Partnership
Securities for any Partnership purpose at any time and from time to
time to such
Persons for such consideration and on such terms and conditions as
the General
Partner shall determine, all without the approval of any Limited
Partners.
(b) Each
additional Partnership Security authorized to be issued by the
Partnership pursuant to Section 5.6(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
Partnership Securities), as shall be fixed by the General Partner,
including (i)
the right to share in Partnership profits and losses or items
thereof; (ii) the
right to share in Partnership distributions; (iii) the rights upon
dissolution
and liquidation of the Partnership; (iv) whether, and the terms and
conditions
upon which, the Partnership may redeem the Partnership Security;
(v) whether
such Partnership Security 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 Partnership Security will be
issued,
evidenced by certificates and assigned or transferred; (vii) the
method for
determining the Percentage Interest as to such Partnership
Security; and (viii)
the right, if any, of each such Partnership Security to vote on
Partnership
matters, including matters relating to the relative rights,
preferences and
privileges of such Partnership Security.
(c) The
General Partner shall take all actions that it determines to be
necessary or appropriate in connection with (i) each issuance of
Partnership
Securities and options, rights, warrants and appreciation rights
relating to
Partnership Securities pursuant to this Section 5.6, (ii) the
conversion of the
General Partner Interest or any Incentive Distribution Rights into
Units
pursuant to the terms of this Agreement, (iii) the
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<PAGE>
issuance of Class B Units pursuant to Section 5.11 and the
conversion of Class B
Units into Common Units pursuant to the terms of this Agreement,
(iv) the
issuance of Common Units upon the conversion of Subordinated Units
pursuant to
Section 5.7, (v) reflecting admission of such additional Limited
Partners in the
books and records of the Partnership as the Record Holder of such
Limited
Partner Interest and (vi) all additional issuances of Partnership
Securities.
The General Partner shall determine the relative rights, powers and
duties of
the holders of the Units or other Partnership Se
