Exhibit 10.23
THIRD AMENDMENT TO THE LIMITED PARTNERSHIP AGREEMENT
OF
HALLWOOD ENERGY, L.P.
This Third Amendment (this
“Amendment”) to the Limited Partnership Agreement (the
“Partnership Agreement”) of Hallwood Energy, L.P. (the
“Partnership”), is executed by Hallwood Energy
Management, LLC, a Delaware limited liability company, as General
Partner of the Partnership (the “General Partner”), and
by the General Partner, on behalf of the Limited Partners on the
books and records of the Partnership, pursuant to the power of
attorney included in Section 1.8 of the Partnership
Agreement.
WITNESSETH:
WHEREAS, the Limited Partnership
Agreement of the Partnership was entered into as of August 23, 2005
under the name of Hallwood Energy 4, L.P.;
WHEREAS, the Partnership Agreement
was amended by the Agreement and Plan of Consolidation dated
December 8, 2005 among Hallwood Exploration, L.P., Hallwood
Energy II, L.P. and Hallwood Energy 4, L.P. to change the name of
the Partnership to Hallwood Energy, L.P. upon the effectiveness of
the merger contemplated by that agreement, which occurred on
December 31, 2005; and the Partnership Agreement was further
amended by that certain Amendment to Limited Partnership Agreement
dated as of December 31, 2005;
WHEREAS, the board of directors of
the General Partner deems it to be in the best interest of the
Partnership to amend the Partnership Agreement further to allow for
the creation and issuance of Class C Partnership Interests
(the “Class C Partnership Interests”) of the
Partnership; and
WHEREAS, a vote of the Limited
Partners is not required to approve the Amendment and the issuance
of the Class C Partnership Interests.
NOW, THEREFORE, in consideration of
the foregoing, the Partnership Agreement is amended as
follows:
1. Definitions. Capitalized
terms used in this Amendment that are defined in the Partnership
Agreement shall have the same meaning as assigned therein when used
in this Amendment, unless otherwise provided herein.
2. Amendments to the Partnership
Agreement.
A.
Article II is hereby amended by adding the following
definitions, to be deemed placed in the appropriate alphabetical
order:
1
" Class C Capital
Contributions ” means the sum of all
contributions to capital made by a Class C Limited Partner with
respect to such Class C Limited Partner’s Class C
Partnership Interest.
“Class C Limited
Partner” means any Person validly holding a
Class C Partnership Interest.
“Class C Conversion
Amount” means the amount of a Class C Limited
Partner’s Class C Partnership Interest designated by the
Class C Limited Partner to be converted into Class A
Partnership Interest pursuant to Section 9.7 (not to
exceed the sum of such Class C Limited Partner’s Unpaid
Class C Priority Return and Unrecovered Class C Capital
Contributions immediately prior to the conversion).
“Class C
Partnership Interest” means all rights and interests
of a Class C Limited Partner under this Agreement, including
(i) the right of a Class C Limited Partner, expressed as
its Percentage Interest, to receive distributions of revenues,
allocations of income and loss and distributions of liquidation
proceeds in accordance with the terms of this Agreement, and
(ii) all management rights, voting rights or rights to consent
held by such Limited Partner under this Agreement.
“Class C Priority
Return” means a sum with respect to each Class C
Limited Partner equal to sixteen percent (16%) per annum of the
average daily balance of such Class C Limited Partner’s
Unrecovered Class C Capital Contributions. Such amounts shall
be determined on the basis of a year of 365 or 366 days, as
the case may be, for the actual number of days in the period for
which the Class C Priority Return is being determined,
cumulative and compounded monthly, for the period beginning with
the Funding Date.
" Funding Date ”
means the date on which the Class C Limited Partner receives
its Class C Limited Partnership Interest as recorded on the
books of the Company.
" Unpaid Class C
Priority Return ” means the aggregate
cumulative amount of the Class C Priority Return with respect
to a Class C Partnership Interest for the current and all
prior years less any distributions previously made with respect to
the Class C Partnership Interest for the current and all prior
years pursuant to Sections 4.2(a) and 4.3(a) .
" Unrecovered
Class C Capital Contributions ” means the
amount, with respect to a Class C Limited Partner, of such
Class C Limited Partner’s Class C Capital
Contributions less any distributions previously made with respect
to such Class C Partnership Interest for the current and all
prior years pursuant to Sections 4.2(b) and 4.3(b)
.
B.
Section 3.1 is hereby amended by deleting paragraph
(c) thereof in its entirety and substituting the following in
lieu thereof:
(c) The General Partner may,
without any consent or approval of the Limited Partners, from time
to time admit Persons as Class B Limited Partners of the
Partnership and may issue Class B Partnership Interests in the
Partnership, as the General Partner determines to be appropriate,
provided that the Percentage Interest of all Class B
Partnership Interests shall not exceed twenty percent (20%) of the
Percentage Interests of all Class A Limited Partners and
2
Class B Limited Partners combined that may be awarded to
members of the management of the General Partner as an incentive
for the formation and operation of the Partnership, plus an
additional two percent (2%) of the Percentage Interests of all
Class A Limited Partners and Class B Limited Partners
combined that may be awarded for other purposes. If the Partnership
itself acquires any Class B Partnership Interest in the
Partnership pursuant to a purchase right under Article IX or
otherwise, (i) the Class A Partnership Interests of the
Class A Limited Partners shall be increased, in proportion to
their Percentage Interests, by the full amount of the Class B
Partnership Interest acquired, (ii) the Class B
Partnership Interests of the other Class B Limited Partners
shall remain unchanged; and (iii) the percentages attributed
to the Class A Limited Partners and the Class B Limited
Partners in Sections 4.2(b) and 4.3(b) shall be
adjusted as appropriate to reflect new aggregate percentage
interests in the Partnership owned by the Class A Limited Partners
and the Class B Limited Partners following such
acquisition.
C.
Section 3.2 is hereby amended by deleting the section in its
entirety and substituting the following in lieu thereof:
Section 3.2
. Capital Contributions. The cash
contribution, if applicable, made by each initial Partner for its
Partnership Interest as of August 23, 2005 is set forth in
Exhibit A . The Class C Capital Contributions made by
each Class C Limited Partner receiving a Class C
Partnership Interest and the Percentage Interest of each holder of
Class C Limited Partner are reflected on the books of the
Partnership.
D. Section 4.2 is hereby
amended by deleting the section in its entirety and substituting
the following in lieu thereof:
Section 4.2.
Distributions of
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