AMENDMENT NO. 1 TO FIRST AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF ENCORE ENERGY PARTNERS LP
Exhibit 10.2
AMENDMENT NO. 1
TO
FIRST AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
OF
ENCORE ENERGY PARTNERS LP
TO
FIRST AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
OF
ENCORE ENERGY PARTNERS LP
This Amendment No. 1 (this “Amendment No. 1”) to the First Amended and Restated Agreement of
Limited Partnership (the “Partnership Agreement”) of Encore Energy Partners LP, a Delaware limited
partnership (the “Partnership”), is entered into effective as of July 3, 2007 by and among Encore
Energy Partners GP LLC, a Delaware limited liability company, as the General Partner, and the other
parties hereto, as limited partners. In consideration of the covenants, conditions and agreements
contained herein, the parties hereto hereby agree as follows:
Section 1. Amendments.
| (a) | Section 1.1 of the Partnership Agreement is hereby amended by inserting the
following in the appropriate alphabetic sequence: |
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“Anniversary Date” means the first anniversary of the Conversion Date of a
Management Incentive Unit. |
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| (b) | Section 1.1 of the Partnership Agreement is hereby amended by inserting the
following in the appropriate alphabetic sequence: |
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“Conversion Date” means the date that a Management Incentive Unit is converted
into Common Units pursuant to Section 5.10(e). |
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| (c) | Section 1.1 of the Partnership Agreement is hereby amended by inserting the
following in the appropriate alphabetic sequence: |
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“Excess Allocations” has the meaning assigned to such term in Section
6.1(c)(i)(B). |
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| (d) | Section 1.1 of the Partnership Agreement is hereby amended by inserting the
following in the appropriate alphabetic sequence: |
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“Excess Available Cash” has the meaning assigned to such term in Section 6.3(d). |
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| (e) | Section 1.1 of the Partnership Agreement is hereby amended by inserting the
following in the appropriate alphabetic sequence: |
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“Issuance Date” means any date following the Conversion Date and prior to the
Anniversary Date on which the Partnership issues additional Partnership
Securities. |
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| (f) | Section 1.1 of the Partnership Agreement is hereby amended by inserting the
following in the appropriate alphabetic sequence: |
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“MIU Allocation Limit” has the meaning assigned to such term in Section
6.1(c)(i)(B). |
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| (g) | Section 1.1 of the Partnership Agreement is hereby amended by inserting the
following in the appropriate alphabetic sequence: |
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“MIU Conversion Limit” has the meaning assigned to such term in Section 5.10(e). |
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| (h) | Section 1.1 of the Partnership Agreement is hereby amended by inserting the
following in the appropriate alphabetic sequence: |
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“MIU Distribution Limit” has the meaning assigned to such term in Section
6.3(d). |
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| (i) | Section 1.1 of the Partnership Agreement is hereby amended by inserting the
following in the appropriate alphabetic sequence: |
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“MIU Limits” has the meaning assigned to such term in Section 5.10(i). |
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| (j) | The definition of “Common Unit Equivalents” in Section 1.1 of the Partnership
Agreement is hereby amended in its entirety to read as follows: |
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“Common Unit Equivalents” means the number of Common Units which a Management
Incentive Unit is considered to represent under Section 5.10(d) or, if
applicable, under Section 6.3(d). |
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| (k) | The definition of “Percentage Interest” in Section 1.1 of the Partnership
Agreement is hereby amended in its entirety to read as follows: |
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“Percentage Interest” means as of any date of determination (a) as to the
General Partner (in its capacity as General Partner without reference to any
Limited Partner Interests held by it) with respect to General Partner Units and
as to any Unitholder or Assignee with respect to Common Units, the product
obtained by multiplying (i) 100% less the percentage applicable to clause (b)
below by (ii) the quotient obtained by dividing (A) the number of General
Partner Units held by the General Partner, the number of Common Units held by
such Unitholder or Assignee, or the number of Common Unit Equivalents held or,
if the provisions of Section 6.3(c) apply, deemed to be held by such Unitholder
or Assignee, as the case may be, by (B) the total number of Outstanding Common
Units, the total number of Outstanding Common Unit Equivalents and General
Partner Units, and (b) 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; provided, that with respect to the calculations in
Section 5.10(e)(vi) and |
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Section 5.10(e)(vii), in-the-money options, rights, warrants and appreciation rights relating to
Partnership Securities shall be deemed to be Outstanding in the form of the
associated Partnership Securities to the extent vested. |
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| (l) | Section 5.10(e) is hereby amended by deleting Section 5.10(e)(ii) in its
entirety and substituting “[Reserved]” in lieu thereof. |
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| (m) | Section 5.10(e) is hereby amended by inserting the following at the end
thereof: |
(vi) Notwithstanding anything in this Section 5.10(e) to the contrary, in
no event shall the Management Incentive Units, in the aggregate, be convertible
into Common Units having a Percentage Interest of more than 5.1% (after giving
effect to the conversion of such Management Incentive Units) (the “MIU
Conversion Limit”). If at any time the Management Incentive Units would be
convertible, except for the preceding sentence, into a number of Common Units
that would exceed the MIU Conversion Limit, then the conversion ratio with
respect to such Management Incentive Units shall be deemed to equal the
conversion ratio that would result in the Management Incentive Units, in the
aggregate, being convertible into Common Units having a Percentage Interest of
5.1% (after giving effect to the conversion of such Management Incentive Units).
Any reduction in the deemed Common Unit Equivalents pursuant to the previous
sentence shall be done on a pro rata basis, such that the Common Unit
Equivalents associated with each Management Incentive Unit is reduced by an
equal amount.
(vii) If the number of Common Units issued upon conversion of a Management
Incentive Unit is limited by the provisions of Section 5.10(e)(vi) and the
Partnership issues additional Partnership Securities prior to the Anniversary
Date, then the holder who converted such Management Incentive Unit shall be
entitled to receive as of the first distribution of available Cash after each
Issuance Date a number of additional Common Units equal to (A) the number of
Common Units which such holder would have been entitled to receive for such
Management Incentive Unit if such conversion had occurred on the date of the
first distribution of Available Cash after each Issuance Date (after taking into
consideration any limitations in Section 5.10(e)(vi)) less (B) the number of
Common Units which such holder has previously received in respect of such
Management Incentive Unit. The provisions of this Section 5.10(e)(vii) shall be
applied to each successive issuance of Partnership Securities prior to the
Anniversary Date.
| (n) | Section 5.10 is hereby amended by adding the following at the end thereto: |
(i) Adjustment of MIU Conversion Limit, MIU Distribution Limit and MIU
Allocation Limit. In the event that Management Incentive Units are converted
pursuant to Section 5.10(e) or are forfeited pursuant to Section 5.10(c), the
MIU Conversion Limit, the MIU Distribution Limit and the MIU Allocation Limit
(the “MIU Limits”) shall be adjusted by reducing each MIU
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Limit by the aggregate Percentage Interest of the forfeited or converted
Management Incentive Units immediately prior to the conversion or forfeiture;
provided, that if Management Incentive Units are subsequently reissued after
forfeiture or conversion as provided in Section 5.10(f), then the MIU Limits
shall again be adjusted by increasing each MIU Limit (up to a maximum of 5.1%)
by the aggregate Percentage Interest of the Management Incentive Units that were
reissued immediately following such reissuance.
(j) Fractional Common Units. The Partnership shall not issue fractional
Common Units to a holder of Management Incentive Units upon any conversion of
Management Incentive Units or upon the issuance of additional Common Units as
contemplated by Section 5.10(e)(vii). If the conversion of Management Incentive
Units or the issuance of additional Common Units as contemplated by Section
5.10(e)(vii), in the aggregate, would result in the issuance of fractional
Common Units to such holder but for the provisions of this Section 5.10(j), each
fractional Common Unit shall be rounded to the nearest whole Common Unit (and a
0.5 Common Unit shall be rounded to the next higher Common Unit).
| (o) | Section 6.1(c)(i)(B) is hereby amended by adding at the end thereof: |
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; provided, however, that in no event shall the holders of Management Incentive
Units be allocated, in the aggregate, Net Termination Gain in an amount in
excess of the amount that, when all such Net Termination Gain is allocated to
all Partners, would cause the Capital Accounts of the holders of the Management
Incentive Units, in the aggregate, to exceed 5.1% of the Capital Accounts of all
Partners immediately following the allocation of Net Termination Gain (the “MIU
Allocation Limit”). If the holders of Management Incentive Units would be
entitled, except for the preceding sentence, to be allocated Net Termination
Gain in an amount in excess of the MIU Allocation Limit (“Excess Allocations”),
then the holders of Management Incentive Units shall be deemed to hold, in the
aggregate, such number of Common Unit Equivalents as would entitle such holders
to an allocation of an amount of Net Termination Gain such that, when all such
Net Termination Gain is allocated to all Partners, the Capital Accounts of the
holders of the Management Incentive Units, in the aggregate, would equal 5.1% of
the Capital Accounts of all Partners immediately following the allocation of Net
Termination Gain, and all Excess Allocations shall instead be allocated to the
Partners in accordance with their respective Percentage Interests (but ignoring
the Percentage Interests of the holders of the Common Unit Equivalents). Any
reduction in the Common Unit Equivalents pursuant to the previous sentence shall
be done on a pro rata basis, such that the Common Unit Equivalents associated
with each Management Incentive Unit is reduced by an equal amount. |
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| (p) | Section 6.3 is hereby amended by deleting “Except as described in Section
6.3(b)” in the first sentence of subparagraph (a) and inserting “Except as described in
Section 6.3(b) or Section 6.3(d)” in lieu thereof. |
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| (q) | Section 6.3 is hereby amended by inserting the following at the end thereof: |
(d) Notwithstanding anything in this Agreement to the contrary, in no event
shall the holders of Management Incentive Units receive, in the aggregate,
distributions of Available Cash with respect to a Quarter in an amount in excess
of 5.1% of all distributions of Available Cash with respect to such Quarter (the
“MIU Distribution Limit”). If the holders of Management Incentive Units would
be entitled, except for the preceding sentence, to receive distributions of
Available Cash with respect to a Quarter in an amount in excess of the MIU
Distribution Limit (“Excess Available Cash”), then with respect to such Quarter
the holders of Management Incentive Units shall be deemed to hold, in the
aggregate, such number of Common Unit Equivalents as would entitle such holders
to 5.1% of all distributions of Available Cash with respect to such Quarter and
all Excess Available Cash shall be distributed by the Partnership to the
Partners in accordance with their respective Percentage Interests (but ignoring
the Percentage Interests of the holders of the Common Unit Equivalents). Any
reduction in the deemed Common Unit Equivalents pursuant to the previous
sentence shall be done on a pro rata basis, such that the Common Unit
Equivalents associated with each Management Incentive Unit is reduced by an
equal amount.
Section 2. General Authority. The appropriate officers of the General Partner are
hereby authorized to make such further clarifying and conforming changes they deem necessary or
appropriate, and to interpret the Partnership Agreement, to give effect to the intent and purpose
of this Amendment No. 1.
Section 3. Ratification of Partnership Agreement. Except as expressly modified and
amended herein, all of the terms and conditions of the Partnership Agreement shall remain in full
force and effect.
Section 4. Governing Law. This Amendment No. 1 will be governed by and construed in
accordance with the laws of the State of Delaware.
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IN WITNESS WHEREOF, the parties hereto have executed this Amendment No. 1 as of the date first
written above.
| GENERAL PARTNER: ENCORE ENERGY PARTNERS GP LLC |
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| By: | /s/ Xxx X. Xxxxxxx | |||
| Xxx X. Xxxxxxx | ||||
| Chief Executive Officer and President | ||||
| LIMITED PARTNERS: ENCORE PARTNERS LP HOLDINGS LLC |
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| By: | /s/ Xxx X. Xxxxxxx | |||
| Xxx X. Xxxxxxx | ||||
| President | ||||
| /s/ I. Xxx Xxxxxxx | ||||
| I. Xxx Xxxxxxx | ||||
| /s/ Xxx X. Xxxxxxx | ||||
| Xxx X. Xxxxxxx | ||||
| /s/ Xxxxxx X. Xxxxxx | ||||
| Xxxxxx X. Xxxxxx | ||||
| /s/ L Xxx Xxxxxx | ||||
| L. Xxx Xxxxxx | ||||
| /s/ Xxxx X. Arms | ||||
| Xxxx X. Arms | ||||
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