Exhibit 10.1
FORM
OF
LIMITED PARTNERSHIP
AGREEMENT
OF
energiUS FUND –
____, LP
a Nevada limited
partnership
This Limited partnership
Agreement (the “Agreement”) for energiUS FUND –
____, LP, a Nevada limited partnership (the “Fund” or
“partnership”), to be effective as of the ____ day of
________________, 20____ (the “Effective Date”), is by
an among energiUS Management LLC, a Nevada limited liability
company (the “Managing General Partner”), Paul N.
Nicholson, a resident of California (the “Initial Limited
Partner”) and the persons whose names are set forth on
Schedule A, attached hereto, as additional general partners (the
“Additional General Partners”) or as limited partners
(the “Limited Partners” and, collectively with the
Additional General Partners, the “investor Partners”),
pursuant to the provisions of the Nevada Uniform Limited
partnership Act, as amended (the “Act”), on the terms
and conditions set forth herein. The Managing General
Partner, the Initial Limited Partner, and the investor Partners
shall collectively be referred to as the
“Partners”.
ARTICLE
I
GENERAL
1.1.
Formation
. The Partners hereby
form the partnership as a limited partnership pursuant to the
provisions of the Act. Except as expressly provided herein,
the rights and obligations of the Partners and the administration
and termination of the partnership shall be governed by the
Act.
1.2.
Name . The name of the partnership shall
be, and the business of the partnership shall be conducted under
the name of, energiUS FUND – ____, LP.
1.3.
Purpose . The purpose and business of the
partnership shall be (i) to acquire, own, hold for investment,
explore, develop, drill, market, maintain, operate, improve, sell,
lease, farm out or plug and abandon oil and gas wells and to engage
in any and all general and incidental activities related thereto
and necessary for the operation of such activities for profits or
losses; (ii) to enter into any lawful transactions and engage in
any lawful activities in furtherance of or incidental to the
foregoing purpose, and (iii) to own or hold oil, gas, or other
mineral royalties or leases, or fractional interests therein, or
certificates of interest or participation in or investment
contracts relative to such royalties, leases, or fractional
interests.
1.4.
Term . The term of the partnership shall
commence on the Effective Date and shall continue until the close
of business on December 31, 20___, or until the earlier dissolution
and termination of the partnership in accordance with the
provisions of Section 7.1 of this Agreement.
1.5.
Registered Office
and Principal Office of partnership . The registered office of the
partnership in the State of Nevada shall be that of its registered
agent within the State of Nevada which may be changed from time to
time as the Managing General Partner may determine. The
principal office of the partnership shall be located at 2 Park
Plaza, Suite 1075, Irvine, California 92614, or such other place as
the Managing General Partner may from time to time designate. The
partnership may maintain offices at such other place or places as
the Managing General Partner deem advisable.
1.6.
Certificate of
Limited partnership . The Managing General Partner
shall cause the Certificate of Limited partnership of the
partnership to be filed with the Nevada Secretary of State (the
“Secretary”) as required by the Act and shall cause to
be filed such other certificates or documents (including, without
limitation, copies, amendments, or restatements of this Agreement)
as may be determined by the Managing General Partner to be
reasonable and necessary or appropriate for the formation,
qualification, or registration and operation of a limited
partnership (or a partnership in which the Limited Partners have
limited liability) in the State of Nevada and in any other state
where the partnership may elect to do business.
1.7.
Power of
Attorney .
(a)
Grant of
Power . Each
investor Partner hereby constitutes and appoints the Managing
General Partner, and each of them, and their authorized
representatives (and any successors thereto by assignment or
otherwise and the authorized representatives thereof) with full
power of substitution as its true and lawful agent and
attorney-in-fact, with full power and authority in its name, place,
and stead, to execute, swear to, acknowledge, deliver, file, and
record in the appropriate public offices, as applicable or
appropriate: (i) all certificates and other instruments and all
amendments or restatements thereof that the Managing General
Partner deem reasonable and appropriate or necessary to qualify or
register, or continue the qualification or registration of, the
partnership as a limited partnership (or a partnership in which the
Limited Partners have limited liability) in all jurisdictions in
which the partnership may conduct business or own property; (ii)
all instruments, including an amendment or restatement of this
Agreement, that the Managing General Partner deem appropriate or
necessary to reflect any amendment, change, or modification of this
Agreement in accordance with its terms; (iii) all conveyances and
other instruments or documents that the Managing General Partner
deem appropriate or necessary to reflect the dissolution,
liquidation and termination of the partnership pursuant to the
terms of this Agreement; (iv) all instruments relating to the
admission or substitution of any Partner; (v) all ballots,
consents, approvals, waivers, certificates, and other instruments
appropriate or necessary, in the sole discretion of the Managing
General Partner, to make, evidence, give, confirm, or ratify any
vote, consent, approval, agreement, or other action that is made or
given by the investor Partners hereunder, is deemed to be made or
given by the investor Partners hereunder, or is consistent with the
terms of this Agreement and appropriate or necessary, in the sole
discretion of the Managing General Partner, to effectuate the terms
or intent of this Agreement; provided that, with respect to any
action that requires the vote, consent, or approval of a stated
percentage of the Partners under the terms of this Agreement, the
Managing General Partner may exercise the power of attorney granted
in this subsection (v) only after the necessary vote, consent, or
approval has been made or given. Nothing herein contained shall be
construed as authorizing the Managing General Partner to amend this
Agreement except in accordance with Article VIII of this Agreement
or as otherwise provided in this Agreement.
(b)
Irrevocability
. The foregoing power of
attorney is hereby declared to be irrevocable and a power coupled
with an interest, and it shall survive, and not be affected by, the
death, incompetency, incapacity, disability, dissolution,
bankruptcy or termination of any investor Partner, or the transfer
of all or any portion of its partnership Interest and shall extend
to such investor Partner’s heirs, successors, assigns and
legal representatives. Each investor Partner agrees to be bound by
any representations made by the Managing General Partner acting in
good faith pursuant to such power of attorney; and each investor
Partner hereby waives any and all defenses that may be available to
contest, negate or disaffirm any action of the Managing General
Partner taken in good faith under such power of attorney. Each
investor Partner shall execute and deliver to the Managing General
Partner within 15 days after receipt of the Managing General
Partner’ request therefor, such further designations, powers
of attorney, and other instruments as the Managing General Partner
deem necessary to effectuate this Agreement and the purposes of the
partnership.
ARTICLE
II
DEFINITIONS
The following
definitions shall apply to the terms used in this Agreement and in
the prospectus, unless otherwise clearly indicated to the
contrary:
“Act” means
the Nevada Uniform Limited partnership Act, as set forth in Chapter
88 of Nevada Revised Statutes, as amended.
“Additional
General Partner” means an investor Partner who purchases
Units as an additional general partner, and such Partner’s
transferees and assigns. In its plural form, it shall mean all
investor Partners who request and are admitted as additional
general partners. It shall not include an investor Partner who has
had their partnership interest converted into a Limited partnership
interest pursuant to this Agreement.
“Affiliate”
means any Person that directly or indirectly controls, is
controlled by, or is under common control with the Person in
question. As used in this definition, the term
“control” means the possession, directly or indirectly,
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, or to hold or to control the
holder of 10 percent or more of the outstanding voting securities
of such Person.
“Agreement”
means this Agreement of Limited partnership, as it may be amended,
supplemented or restated from time to time.
“Allocable or
Allocatable Funds” means the net amount of investment
actually used in the process of buying, enhancing and selling
properties or drilling wells. Does not include commissions
and fees, etc. I made this one up.
“APO” means
after payout of an investor Partner’s Capital Contribution to
the partnership.
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“BCPD” means
barrels of condensate per day.
“BOPD” means
barrels of oil per day.
“BPO” means
before payout of an investor Partner’s Capital Contribution
to the partnership.
“Capital
Account” means the capital account maintained for a Partner
pursuant to Section 3.2 of this Agreement.
“Capital
Contribution” means any asset or property of any nature
contributed by a Partner to the capital of the partnership pursuant
to the provisions of this Agreement.
“Certificate of
Limited partnership” means the Certificate of limited
partnership filed with the Secretary pursuant to Section 1.6 of
this Agreement, as such Certificate may be amended or restated from
time to time.
“Code” means
the Internal Revenue Code of 1986, as from time to time amended and
in effect.
“Consent”
means the written consent of a Person, or the affirmative vote of
such Person at a meeting called and held pursuant to Article VIII
of this Agreement, as the case may be, to do the act or thing for
which the consent is solicited, or the act of granting such
consent, as the context requires.
“Development
Well” means a well drilled within the proved area of an oil
or gas reservoir to the depth of a stratigraphic horizon determined
by a professional petroleum engineer to be productive.
“Dealer
Manager” means MacArthur Strategies, Inc., a Nevada
corporation.
“Drilling and
Completion Costs” means all costs, excluding Operating Costs,
of drilling, completing, testing, equipping, and bringing a well
into production or plugging and abandoning it, including all labor
and other construction and installation cots incident thereto,
location and surface damages, cementing, drilling mud and
chemicals, drill stem tests and core analysis, engineering and well
site geological expenses, electric logs, costs of plugging back,
deepening, rework operations, repairing or performing remedial work
of any type, costs of plugging and abandoning any well participated
in by the partnership, and reimbursements and compensation to well
operators, including charges paid to t Managing General Partner as
a operator during the drilling and completion phase of a well, plus
the cost of the gathering system and of acquiring leasehold
interests.
“Dry Hole”
means any well abandoned without having produced oil or gas in
commercial quantities.
“Event of
Withdrawal of the Managing General Partner” means an event
that causes a Managing General Partner to cease to be a general
partner as provided in the Act.
“Exploratory
well” means a well drilled to find commercially productive
hydrocarbons in an unproved area, to find a new commercially
productive horizon in a field previously found to be productive of
hydrocarbons at another horizon, or to significantly extend a known
prospect.
“Farmout”
means an agreement whereby the owner of a leasehold or working
interest agrees to assign their interest in certain specific
acreage to the assignees, retaining some interest such as an
overriding royalty interest, an oil and gas payment, offset acreage
or other type of interest, subject to the drilling of one or more
specific wells or other performance as a condition of the
assignment.
“General
Partners” means the Additional General Partners and the
Managing General Partner.
“IDC” means
intangible drilling and development costs.
“Initial Limited
Partner” means Paul N. Nicholson or any successor to his
interest.
“Investor
Partner” means any Person other than the Managing General
Partner (i) whose name is set forth on Schedule A of this
Agreement, attached hereto, as an Additional General Partner or as
a Limited Partner, or who has been admitted as an additional or
substituted investor Partner pursuant to the terms of this
Agreement, and (ii) who is the owner of a Unit. In its plural
form it means all such Persons.
“Indemnitee”
means any Managing General Partner, any Person who is or was an
Affiliate of a Managing General Partner, any Person who is or was
an officer, director, employee, agent, trustee, partner or
shareholder of a Managing General Partner or any such Affiliate, or
any Person who is or was serving at the request of a Managing
General Partner or any such Affiliate as a director, officer,
employee, partner, agent or trustee of another Person; provided
that a Person shall constitute an “Indemnitee” only
with respect to acts, omissions or matters deriving from or
relating to the business, operations or investments of the
partnership.
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“Lease”
means full or partial interests in: (i) undeveloped oil and gas
leases; (ii) oil and gas mineral rights; (iii) licenses; (iv)
concessions; (v) contracts; (vi) fee rights; or (vii) other rights
authorizing the owner thereof to drill for, reduce to possession
and produce oil and gas.
“Limited
Partner(s)” means any Person who has been admitted as a
Limited Partner in accordance with the terms of this Agreement, so
long as each such Person remains a Limited Partner.
“Liquidator”
has the meaning specified in Section 7.2 of this
Agreement.
“Majority in
Interest of the Limited Partners” means Limited Partners
whose Percentage Interests aggregate to greater than fifty percent
(50%) of the Percentage Interests of all Limited
Partners.
“Managing General
Partner” means energiUS Management LLC and any other Person
who is appointed to replace the same as the managing general
partner in accordance with the terms of this Agreement.
“MCF” means
one thousand cubic feet of natural gas.
“Prospectus”
means the document utilized by the partnership to disclose risks,
describe our proposed activities, and explain the terms of the
offering of Units to prospective investor Partners.
“Partners”
means the Managing General Partner, the Initial Limited Partner and
the Investor Partners. In its singular form it means any one
of the Partners.
“Partnership” means the
limited partnership formed pursuant to this Agreement.
“Partnership
Interest” means the interest acquired by a Partner in the
partnership including, without limitation, such Partner’s
right: (i) to a distributive share of the income, gain, loss,
deduction, and credit of the partnership; (ii) to a distributive
share of the assets of the partnership; (iii) if an investor
Partner, to Consent on those matters described in this Agreement;
and (iv) if a Managing General Partner, to participate in the
management and operation of the partnership.
“Percentage
Interest” means a Partner’s share of the profits and
losses of the partnership and the Partner’s percentage right
to receive distributions of partnership assets according to the
number of Units purchased in the partnership. The Percentage
Interest of each partner shall be the percentage or number of Units
set forth opposite such Partner’s name on Schedule A to this
Agreement, as such schedule may be amended from time to time in
accordance with this Agreement.
“Person”
means an individual or a corporation, limited liability company,
partnership, trust, estate, unincorporated organization,
association or other business enterprise.
“Prospect”
means a contiguous oil and gas leasehold estate, or lesser interest
therein, upon which drilling operations may be conducted. In
general, a Prospect is an area in which the partnership owns or
intends to own one or more oil and gas interests, which is
geographically defined on the basis of geological data and which is
reasonably anticipated to contain at least one reservoir of
hydrocarbons. An area covering lands which are believed to contain
subsurface structural or stratigraphic conditions making it
susceptible to the accumulations of hydrocarbons in commercially
productive quantities at one or more horizons.
“Record
Date” means the date established by the Managing General
Partner for determining the identity of investor Partners entitled
to give Consent to partnership action or entitled to exercise
rights in respect of any other lawful action of investor
Partners.
“Regulations” means the
income tax regulations promulgated under the Code, as from time to
time amended and in effect (including corresponding provisions of
succeeding regulations).
“Reservoir”
means a separate structural or stratigraphic trap containing an
accumulation of oil or gas.
“Roll-Up”
means a transaction involving the acquisition, merger, conversion,
or consolidation, either directly or indirectly, of the partnership
and the issuance of securities of a roll-up entity.
“Roll-Up
Entity” means a partnership, trust, corporation or other
entity that would be created or survive after the successful
completion of a proposed roll-up transaction.
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“Sponsor”
means any Person directly or indirectly instrumental in organizing,
wholly or in part, a partnership or program to facilitate
investment or who will manage or is entitled to manage or
participate in the management or control of such partnership or
program. “Sponsor” includes the Managing General
Partner. “Sponsor” does not include third parties
such as attorneys, accountants, petroleum engineering consultants,
geologists, and underwriters whose only compensation is for
professional services rendered in connection with the offering of
Units.
“Subscription” means the
amount indicated on the Subscription Agreement that an investor
Partner has agreed to pay to the partnership as their Capital
Contribution.
“Subscription
Agreement” means the agreement attached to the prospectus by
way of exhibit whereby prospective investor Partners subscribe for
Units.
“Transfer”
has the meaning set forth in Section 6.1(a) of this
Agreement.
“Unit” means
an undivided interest of the investor Partners in the aggregate
interest in the capital and profits of the partnership. Each
Unit represents a Capital Contribution of $10,000 to the
partnership.
“Working
Interest” means an interest in an oil and gas leasehold which
is subject to some portion of the costs of development, operation
and maintenance.
“90% Vote of
investor Partners” means the affirmative vote of Investor
Partners whose Percentage Interests aggregate to ninety percent
(90%) of the Percentage Interests of all investor
Partners.
ARTICLE
III
FINANCIAL
MATTERS
3.1. Capital
Contributions .
(a)
Initial
Contribution . The Initial Limited Partner
shall contribute $5,000 to the capital of the partnership on or in
close proximity to the Effective Date. Subsequently, each
investor Partner (whose names and addresses and number of Units
subscribed for are set forth on Schedule A attached hereto) shall
contribute to the capital of the partnership the sum of $10,000 for
each Unit purchased. Such funds shall immediately be available for
use by the Managing General Partner to expend as necessary on
behalf of the partnership to cover costs, fees, and other expenses
to seek out and acquire Prospects for our oil and gas investment
activities. Except as otherwise agreed by all Partners, no
Partner shall have the right or obligation to make any further
Capital Contributions to the partnership. Persons or entities
hereafter admitted as Partners shall make such contributions of
cash (or promissory obligations), property or services to the
partnership as shall be determined by the Managing General Partner
(subject to the approval of the investor Partners as provided in
Section 5.6(a) hereof) at the time of each such admission. Schedule
A hereto reflects the Percentage Interest of each Partner based on
the original Capital Contributions being made by the Partners.
Schedule A shall be amended from time to time by the Managing
General Partner to reflect changes in Percentage Interests
resulting from the admission of additional or substitute Partners,
the withdrawal of Partners or transfers of partnership Interests,
in each case accomplished in accordance with the terms of this
Agreement. The combined Percentage Interests of all Partners shall
at all times equal 100%.
(b)
Cash calls; Penalty
for Default .
In the event the Managing General Partner deems it to be in
the partnership’s best interest to rework, re-drill, pump,
frac, or service an oil and gas well or to otherwise expend funds
to further the partnership’s purpose after a well has been
completed, and we lacks immediate liquidity to do so, the Managing
General Partner may require additional contributions from the
investor Partners in order to facilitate such purpose. In the
event a investor Partner’s obligation is not met in
connection with such a requirement, and if it is fulfilled by a
third party, such third party shall be entitled to a 5:1 return on
their cash call contribution prior to the defaulting investor
Partner receiving any net revenue from such well.
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3.2. Capital
Accounts .
(a)
A Capital Account shall
be maintained for each Partner. Each Partner’s Capital
Account shall be credited with the amount of money and the fair
market value of property (net of any liabilities secured by such
contributed property that the partnership assumes or takes subject
to) contributed by that Partner to the partnership; the amount of
any partnership liabilities assumed by such Partner (other than in
connection with a distribution of partnership property), and such
Partner’s distributive share of partnership profits
(including tax exempt income). Each Partner’s Capital Account
shall be debited with the amount of money and the fair market value
of property (net of any liabilities that such Partner assumes or
takes subject to) distributed to such Partner; the amount of any
liabilities of such Partner assumed by the partnership (other than
in connection with a contribution); and such Partner’s
distributive share of partnership losses (including items that may
be neither deducted nor capitalized for federal income tax
purposes).
(b)
Notwithstanding any
provision of this Agreement to the contrary, each Partner’s
Capital Account shall be maintained and adjusted in accordance with
the Code and Regulations, including, without limitation, (i) the
adjustments permitted or required by Internal Revenue Code Section
704(b) and, to the extent applicable, the principles expressed in
Internal Revenue Code Section 704(c); and (ii) adjustments required
to maintain Capital Accounts in accordance with the
“substantial economic effect test” set forth in the
Regulations under Internal Revenue Code Section 704(b).
(c)
Any Partner, including
any substitute Partner, who shall receive a partnership Interest
(or whose partnership Interest shall be increased) by means of a
transfer to it of all or a part of the partnership Interest of
another Partner, shall have a Capital Account that reflects the
Capital Account associated with the transferred partnership
Interest (or the applicable percentage thereof in case of a
transfer of a part of an interest).
3.3. Allocations
and Distributions .
(a)
All items of partnership
income, gain, loss, deduction, credit or the like for each taxable
year shall be allocated among the Partners in accordance with their
respective Percentage Interests.
(b)
Not less often than
quarterly, the Managing General Partner shall distribute to the
Partners, in proportion to the Partners’ respective
Percentage Interests, so much of the partnership’s profits as
the Managing General Partner in their discretion may determine are
not required for the operation for the partnership’s
business, in accordance with the following sharing
arrangement:
(i)
BPO (before payout): 90%
to the investor Partners, 10% to the Managing General Partner;
and
(ii)
APO (after payout): 75%
to the investor Partners, 25% to the Managing General
Partner.
(c)
The Managing General
Partner shall have the right to establish such reasonable reserves
as they may from time to time determine are necessary or
appropriate in connection with the conduct of the
partnership’s business (including reserves for anticipated
capital expenses and contingency reserves to handle unanticipated
cost overruns). Amounts paid to the Managing General Partner under
Article IV of this Agreement shall not be deemed to be
distributions for purposes of this Section 3.3(c). All amounts
withheld pursuant to the Code or any applicable provision of state,
local or foreign tax law with respect to any distribution to a
Partner shall be treated as amounts distributed to such Partner
pursuant to this Section 3.3(c) for all purposes of this
Agreement.
3.4. Tax Matters
Partner . The Managing General Partner is hereby designated
as the “Tax Matters Partner” for purposes of Sections
6231 of the Code and the Regulations promulgated thereunder. The
Tax Matters Partner is authorized and required to represent the
partnership, at the partnership’s expense, in connection with
all examinations of the partnership’s affairs by tax
authorities, including resulting administrative and judicial
proceedings and, in the reasonable discretion of the Tax Matters
Partner, to expend partnership funds for professional services and
costs associated therewith. The Tax Matters Partner shall promptly
advise each Partner of any audit proceedings proposed to be
conducted with respect to the partnership. In the event the
Managing General Partner ceases to be a Partner of the partnership,
a successor Tax Matters Partner shall be appointed by the remaining
Partners.
3.5. Taxation as a
partnership . It is the intention of the Partners that the
partnership shall be taxed as a “partnership” for
federal, state, local and foreign income tax purposes. The Partners
agree to take all reasonable actions, including the execution of
documents, as may reasonably be requested by the Managing General
Partner in order for the partnership to qualify for and receive
“partnership” treatment for federal, state, local and
foreign income tax purposes. No election shall be made by the
partnership or any Partner for the partnership to be excluded from
the application of any of the provisions of Subchapter K, Chapter 1
of Subtitle A of the Code or from any similar provisions of any
state tax laws.
3.6. Fiscal
Year . The fiscal year of the partnership shall be the
calendar year unless otherwise determined by the Managing General
Partner in their sole discretion.
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3.7.
Interest . No interest shall be paid by the
partnership on Capital Contributions or on balances in
Partners’ Capital Accounts.
3.8. No
Withdrawal . No Partner shall be entitled to withdraw any
part of its Capital Contribution or its Capital Account, or to
receive any distributions from the partnership, except as provided
in Section 3.3, Section 6.4 and Article VII hereof.
3.9. Loans from
Partners . Loans by a Partner to the partnership shall not
be considered Capital Contributions. If any Partner shall advance
funds to the partnership in excess of the amounts required
hereunder to be contributed by it to the capital of the
partnership, the making of such excess advances shall not result in
any increase in the amount of the Capital Account of such Partner.
The amount of any such excess advances shall be a debt of the
partnership to such Partner and shall be payable or collectible
only out of the partnership assets in accordance with the terms and
conditions upon which such advances are made.
3.10. Compensation
and reimbursement of Managing General Partner .
(a)
Compensation . The Managing General Partner and
their respective Affiliates may receive compensation from the
partnership for services rendered pursuant to agreements with the
partnership, including agreements pursuant to which the Managing
General Partner or their Affiliates may provide management services
or conduct operations of the partnership, provided that any such
agreements shall be on terms which are fair and reasonable to the
partnership.
(b)
Reimbursement for
Organizational Expenses . In addition to amounts paid
under other Sections of this Agreement, the Managing General
Partner and their respective Affiliates shall be reimbursed for all
expenses, disbursements, and advances incurred or made, and all
fees, deposits, and other sums paid in connection with the
organization of the partnership, the qualification of the
partnership to do business and all related matters.
(c)
Reimbursement for
Operational Expenses . In addition to amounts paid
under other Sections of this Agreement, the Managing General
Partner shall be reimbursed at any reasonable times and from time
to time for all costs and expenses that the Managing General
Partner and their respective Affiliates incur on behalf of, or in
the management and operation of the business of, the partnership,
including, but not limited to, that portion of the Managing General
Partner’s and their respective Affiliates’ legal and
accounting costs and expenses, telephone, secretarial, travel, and
entertainment expenses, brokerage and professional consultant
costs, office rent and other office expenses, salaries and other
compensation expenses of employees, agents, and representatives,
and other general, administrative, and additional expenses that are
necessary or appropriate to the conduct of the partnership’s
business and allocable to the partnership. The Managing General
Partner shall determine the expenses that are allocable to the
partnership in a manner that is fair and reasonable. Such
reimbursements shall be in addition to any reimbursement to the
Managing General Partner or their Affiliates as a result of the
indemnification provided under Section 4.7 of this
Agreement.
3.11. Records and
Accounting . The Managing General Partner shall keep or
cause to be kept appropriate books and records with respect to the
partnership’s business which shall at all times be kept at
the principal office of the partnership or such other office or
offices as the Managing General Partner may designate for such
purpose. The books of the partnership shall be maintained for
financial reporting purposes on the accrual basis or on a cash
basis, as the Managing General Partner shall determine in their
sole discretion. The Managing General Partner, on its own
initiative or upon request by an investor Partner, may cause to be
prepared and furnish financial statements of the partnership on a
quarterly, annual, or other regular interval basis to the investor
Partners. The Managing General Partner shall also be
responsible for causing the preparation and distribution to all
Partners of all reasonably required tax reporting
information.
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ARTICLE
IV
MANAGEMENT AND
OPERATION OF THE BUSINESS
4.1.
Management . The Managing General Partner shall
conduct, direct and exercise full control over all activities of
the partnership. Except as otherwise expressly provided in this
Agreement, all management powers over the business and affairs of
the partnership shall be exclusively vested in the Managing General
Partner, and the investor Partners shall have no right of control
over the business and affairs of the partnership. In addition to
the powers now or hereafter granted to a general partner of a
limited partnership under applicable law or that are granted to the
Managing General Partner under any other provision of this
Agreement (but subject to any required Consents of investor
Partners as herein provided), the Managing General Partner shall
have full power and authority to do all things deemed necessary or
desirable by them to conduct the business of the partnership,
including, without limitation: (i) the determination of the
activities in which the partnership will participate; (ii) the
making of any expenditures, the borrowing of money, the
guaranteeing of indebtedness and other liabilities, the issuance of
evidences of indebtedness, and the incurrence of any obligations
they deem necessary or advisable for the conduct of the activities
of the partnership, including the payment of compensation and
reimbursement to the Managing General Partner and their respective
Affiliates under Section 3.10 of this Agreement; (iii) the
acquisition, disposition, mortgage, pledge, encumbrance,
hypothecation or exchange of any or all of the assets of the
partnership; (iv) the use of the assets of the partnership
(including, without limitation, cash on hand) for any partnership
purpose on any terms they consider appropriate, including, without
limitation, the financing of operations of the partnership, the
lending of funds to other Persons, and the repayment of obligations
of the partnership; (v) the admission of additional or substitute
investor Partners; (vi) the negotiation, execution, and performance
of any contracts that they consider desirable, useful, or necessary
to the conduct of the business or operations of the partnership or
the implementation of the Managing General Partner’s powers
under this Agreement; (vii) the distribution of partnership cash or
other assets; (viii) the selection, hiring, and dismissal of
employees (who may be designated as officers of the partnership),
attorneys, accountants, engineers, geologists, geophysicists,
brokers, consultants, contractors, agents, and representatives and
the determination of their compensation and other terms of
employment or hiring (including the adoption of pension or welfare
plans); (ix) the maintenance of such insurance for the benefit of
the partnership as they deem necessary or desirable; (x) the
repurchase of the partnership Interest of an investor Partner; (xi)
the formation of any further limited or general partnerships, joint
ventures, or other relationships that they deem desirable and the
contribution to such partnerships or ventures of assets and
properties of the partnership; (xii) the control of any matters
affecting the rights and obligations of the partnership, including
the conduct of any litigation, the incurring of legal expenses, and
the settlement or confession of claims, suits or judgments; (xiii)
the selection of Prospects to be acquired, drilled or developed by
the partnership; and (xiv) the acquisition, owning, holding for
investment, exploration,
