Issuance of Units in Connection with Reset of the Minimum Quarterly Distribution and Target Distributions. (a) Subject to the provisions of this Section 5.11, at any time when the Partnership (i) has made a distribution pursuant to Section 6.4(a)(iv) for four consecutive Quarters with respect to the Units for each such Quarter and (ii) the amount of all distributions during each Quarter within such period did not exceed the Adjusted Operating Surplus for such Quarter, the General Partner shall have the right to make an election (the “IDR Reset Election”) to cause the Minimum Quarterly Distribution and the Target Distributions to be reset in accordance with the provisions of Section 5.11(e) and, in connection therewith, each IDR Holder will be entitled to receive, subject to Section 5.6(d), a number of Units (the “IDR Reset Units”) derived by dividing (x) the average of the aggregate amount of cash distributions made by the Partnership for each of the two full Quarters immediately preceding the delivery by the General Partner of the Reset Notice (as defined in Section 5.11(b)) in respect of the Incentive Distribution Units held by such IDR Holder by (y) the average cash distribution per Unit made by the Partnership for each of the two full Quarters immediately preceding the giving of the Reset Notice (the total number of such Units determined by aggregating each such quotient of each such holder is referred to herein as the “Aggregate Quantity of IDR Reset Units”). The making of the IDR Reset Election in the manner specified in Section 5.11(b) shall cause the Minimum Quarterly Distribution and the Target Distributions to be reset in accordance with the provisions of Section 5.11(e) and, in connection therewith, each IDR Holder will be entitled to receive IDR Reset Units, without any further approval required by the General Partner or the Unitholders, at the time specified in Section 5.11(c) unless the IDR Reset Election is rescinded pursuant to Section 5.11(d). No fractional Units will be issued upon the conversion of Incentive Distribution Units. Instead, the Partnership shall pay the cash value of such fractional Units based on the Current Market Price (the date of determination of which shall be as of the date that is three Trading Days prior to the date IDR Reset Units are issued to such IDR Holder). (b) To exercise the right specified in Section 5.11(a), the General Partner shall deliver a written notice (the “Reset Notice”) to the holder or holders of the Incentive Distribution Units that includes a determination of the aggregate number of IDR Reset Units that each IDR Holder may receive per Incentive Distribution Unit. (c) On the fifteenth Business Day after delivery by the General Partner of the Reset Notice, each IDR Holder will be entitled to receive the Aggregate Quantity of IDR Reset Units; provided, however, that the issuance of IDR Reset Units to an IDR Holder shall not occur prior to the approval of the listing or admission for trading of such IDR Reset Units by the principal National Securities Exchange upon which the Units are then listed or admitted for trading if any such approval is required pursuant to the rules and regulations of such National Securities Exchange. (d) If the principal National Securities Exchange upon which the Units are then traded has not approved the listing or admission for trading of the Aggregate Quantity of IDR Reset Units on or before the 30th calendar day following the General Partner’s delivery of the Reset Notice and such approval is required by the rules and regulations of such National Securities Exchange, then the General Partner shall have the right to either rescind the IDR Reset Election or elect to deliver other Partnership Interests having such terms as the General Partner may approve that will provide (i) the same economic value, in the aggregate, as the Aggregate Quantity of IDR Reset Units would have had at the time of the General Partner’s delivery of the Reset Notice, as determined by the General Partner, and (ii) for the subsequent conversion (on terms acceptable to the National Securities Exchange upon which the Units are then traded) of such Partnership Interests into Units within not more than 12 months following the General Partner’s delivery of the Reset Notice upon the satisfaction of one or more conditions as determined by the General Partner. (e) The Minimum Quarterly Distribution and Target Distributions shall be adjusted at the time of the issuance of Units or other Partnership Interests pursuant to this Section 5.11 such that (i) the Minimum Quarterly Distribution shall be reset to equal the average cash distribution amount per Unit for the two Quarters immediately prior to the delivery by the General Partner of the Reset Notice (the “Reset MQD”), (ii) the First Target Distribution shall be reset to equal 115% of the Reset MQD and (iii) the Second Target Distribution shall be reset to equal 125% of the Reset MQD, in each case rounded to the nearest four decimals.
Appears in 3 contracts
Samples: Limited Partnership Agreement (Legacy Reserves Lp), Limited Partnership Agreement (Legacy Reserves Lp), Agreement of Limited Partnership (Legacy Reserves Lp)
Issuance of Units in Connection with Reset of the Minimum Quarterly Distribution and Target Distributions. (a) Subject to the provisions of this Section 5.11, at any time when the Partnership (i) has made a distribution pursuant to Section 6.4(a)(iv) for four consecutive Quarters with respect to the Units for each such Quarter and (ii) the amount of all distributions during each Quarter within such period did not exceed the Adjusted Operating Surplus for such Quarter, the General Partner shall have the right to make an election (the “IDR Reset Election”) to cause the Minimum Quarterly Distribution and the Target Distributions to be reset in accordance with the provisions of Section 5.11(e) and, in connection therewith, each IDR Holder will be entitled to receive, subject to Section 5.6(d), a number of Units (the “IDR Reset Units”) derived by dividing (x) the average of the aggregate amount of cash distributions made by the Partnership for each of the two full Quarters immediately preceding the delivery by the General Partner of the Reset Notice (as defined in Section 5.11(b)) in respect of the Incentive Distribution Units held by such IDR Holder by (y) the average cash distribution per Unit made by the Partnership for each of the two full Quarters immediately preceding the giving of the Reset Notice (the total number of such Units determined by aggregating each such quotient of each such holder is referred to herein as the “Aggregate Quantity of IDR Reset Units”). The making of the IDR Reset Election in the manner specified in Section 5.11(b) shall cause the Minimum Quarterly Distribution and the Target Distributions to be reset in accordance with the provisions of Section 5.11(e) and, in connection therewith, each IDR Holder will be entitled to receive IDR Reset Units, without any further approval required by the General Partner or the Unitholders, at the time specified in Section 5.11(c) unless the IDR Reset Election is rescinded pursuant to Section 5.11(d). No fractional Units will be issued upon the conversion of Incentive Distribution Units. Instead, the Partnership shall pay the cash value of such fractional Units based on the Current Market Price (the date of determination of which shall be as of the date that is three Trading Days prior to the date IDR Reset Units are issued to such IDR Holder).
(b) To exercise the right specified in Section 5.11(a), the General Partner shall deliver a written notice (the “Reset Notice”) to the holder or holders of the Incentive Distribution Units that includes a determination of the aggregate number of IDR Reset Units that each IDR Holder may receive per Incentive Distribution Unit.
(c) On the fifteenth Business Day after delivery by the General Partner of the Reset Notice, each IDR Holder will be entitled to receive the Aggregate Quantity of IDR Reset Units; provided, however, that the issuance of IDR Reset Units to an IDR Holder shall not occur prior to the approval of the listing or admission for trading of such IDR Reset Units by the principal National Securities Exchange upon which the Units are then listed or admitted for trading if any such approval is required pursuant to the rules and regulations of such National Securities Exchange.
(d) If the principal National Securities Exchange upon which the Units are then traded has not approved the listing or admission for trading of the Aggregate Quantity of IDR Reset Units on or before the 30th calendar day following the General Partner’s delivery of the Reset Notice and such approval is required by the rules and regulations of such National Securities Exchange, then the General Partner shall have the right to either rescind the IDR Reset Election or elect to deliver other Partnership Interests having such terms as the General Partner may approve that will provide (i) the same economic value, in the aggregate, as the Aggregate Quantity of IDR Reset Units would have had at the time of the General Partner’s delivery of the Reset Notice, as determined by the General Partner, and (ii) for the subsequent conversion (on terms acceptable to the National Securities Exchange upon which the Units are then traded) of such Partnership Interests into Units within not more than 12 months following the General Partner’s delivery of the Reset Notice upon the satisfaction of one or more conditions as determined by the General Partner.
(e) The Minimum Quarterly Distribution and Target Distributions shall be adjusted at the time of the issuance of Units or other Partnership Interests pursuant to this Section 5.11 such that (i) the Minimum Quarterly Distribution shall be reset to equal the average cash distribution amount per Unit for the two Quarters immediately prior to the delivery by the General Partner of the Reset Notice (the “Reset MQD”), (ii) the First Target Distribution shall be reset to equal 115% of the Reset MQD and (iii) the Second Target Distribution shall be reset to equal 125% of the Reset MQD, in each case rounded to the nearest four decimals.in
Appears in 1 contract
