EXHIBIT 10.5
Execution copy
CONTRIBUTION AGREEMENT
EnerVest Management Partners, Ltd.
EnerVest Operating, L.L.C.
CGAS Exploration, Inc.
EV Investors, L.P.
EVCG GP, L.L.C.
CGAS Properties, L.P.
EnCap Energy
Capital Fund V, L.P.
EnCap V-B Acquisitions, L.P.
EV Management, L.L.C.
EV Energy GP, L.P.
EV Energy Partners, L.P.
CGas Holdings, LLC
EVEC Holdings, LLC
September 29, 2006
Table of Contents
Page
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ARTICLE I. Definitions 2
Section 1.1 Defined Terms...................................... 2
Section 1.2 Other Defined Terms................................ 3
Section 1.3 Construction....................................... 3
Section 1.4 References......................................... 4
ARTICLE II. CONTRIBUTION BY OWNERS OF PROPERTIES LP.................... 4
Section 2.1 Capitalization of the General Partner.............. 4
Section 2.2 Capitalization of the Partnership.................. 4
ARTICLE III. Representations and Warranties............................ 5
Section 3.1 Representations and Warranties of All Parties...... 5
Section 3.2 Representations of EVMP Regarding Properties LP,
Properties GP, Clinton and Clinton GP.............. 6
Section 3.3 Representations of EVMP Regarding Capitalization
and Ownership of Properties GP, Properties LP,
Clinton GP and Clinton LP.......................... 7
Section 3.4 Representations and Warranties of EVMP Regarding
Ownership and Transfer of Interests in Properties
GP and Properties LP............................... 8
Section 3.5 Representations and Warranties of EVOC Regarding
Ownership and Transfer of Interests in
Properties LP...................................... 9
Section 3.6 Representation and Warranties of EnCap Funds
Regarding Ownership and Transfer of Interests
in Properties LP................................... 9
Section 3.7 Representations and Warranties of CGAS Regarding
Ownership and Transfer of Interests in
Clinton LP......................................... 9
Section 3.8 Representations and Warranties of Investors
Regarding Ownership and Transfer of Interests
in Properties LP................................... 10
Section 3.9 Representations and Warranties of the General
Partner Regarding Interests Issued................. 10
Section 3.10 Representations and Warranties of the Partnership
Regarding Common and Subordinated Units............ 10
Section 3.11 Representations and Warranties of EVMP, EVOC,
the EnCap Funds and CGAS regarding securities
laws............................................... 10
ARTICLE IV. COVENANTS.................................................. 11
Section 4.1 Consent to Admission as a Member or Partner........ 11
Section 4.2 Further Assurances................................. 11
Section 4.3 Conveyance of the Clinton Properties............... 11
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ARTICLE V. THE CLOSING................................................. 11
Section 5.1 The Closing........................................ 11
Section 5.2 Deliveries at Closing by Sole Member of
Properties GP, Limited Partners of Properties
LP and Properties GP and CGAS..................... 11
Section 5.3 Deliveries at Closing by General Partner........... 12
Section 5.4 Deliveries at Closing by the Partnership........... 12
ARTICLE VI. MISCELLANEOUS.............................................. 12
Section 6.1 Headings........................................... 12
Section 6.2 Notices............................................ 13
Section 6.3 Assignment......................................... 13
Section 6.4 Entire Agreement................................... 13
Section 6.5 Counterparts....................................... 13
Section 6.6 Governing Law...................................... 13
Section 6.7 Severability....................................... 13
Section 6.8 No Survival of Representations and Warranties
and Covenants...................................... 13
PROPERTIES LP SUBSIDIARIES............................................ Schedule 3.2
RECORD OWNERS OF PROPERTIES LP........................................ Schedule 3.3
ENCAP OWNERSHIP PERCENTS.............................................. Schedule 3.6
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CONTRIBUTION AGREEMENT
This Contribution Agreement ("AGREEMENT"), dated as of September 29, 2006,
is entered into by and among EnerVest Management Partners, Ltd., a Texas limited
partnership ("EVMP"), EVEC Holdings, LLC, a Delaware limited liability Company
("EVH"), EnerVest Operating, L.L.C., a Delaware limited liability company
("EVOC"), CGAS Exploration, Inc., an Ohio corporation ("CGAS"), EV Investors,
L.P., a Delaware limited partnership ("INVESTORS"), EVCG GP, L.L.C., a Delaware
limited liability company ("CLINTON GP"), CGAS Properties, L.P., a Delaware
limited partnership ("CLINTON LP"), CGas Holdings, LLC, a Delaware limited
liability company ("CGH") EnCap Energy Capital Fund V, L.P., a Texas limited
partnership ("ENCAP FUND V"), EnCap V-B Acquisitions, L.P., a Texas limited
partnership ("ENCAP FUND V-B" and, together with EnCap Fund V, the "ENCAP
FUNDS"), EV Management, L.L.C., a Delaware limited liability company
("MANAGEMENT"), EV Energy GP, L.P., a Delaware limited partnership (the "GENERAL
PARTNER"), and EV Energy Partners, L.P., a Delaware limited partnership (the
"PARTNERSHIP").
WHEREAS, EVMP previously formed Management and EVH as a wholly owned
subsidiaries;
WHEREAS, EVMP, as limited partner, and Management, as general partner,
formed the General Partner as a Delaware limited partnership;
WHEREAS, EVMP, as organizational limited partner, and the General Partner,
as general partner, formed the Partnership as a Delaware limited partnership;
WHEREAS, EVMP formed EV Properties GP, L.L.C., as a wholly-owned Delaware
limited liability company ("PROPERTIES GP");
WHEREAS, EVMP, EV Investors and the EnCap Funds, as limited partners, and
Properties GP, as general partner, formed EV Properties, L.P., as a Delaware
limited partnership ("PROPERTIES LP");
WHEREAS, EVMP, EnCap Investments GP, L.L.C., a Delaware limited liability
company ("ENCAP"), and the Partnership have entered into the Investor's
Agreement, dated May 12, 2006 ("INVESTOR'S AGREEMENT"), pursuant to which EVMP,
EnCap and the Partnership agreed to take all steps necessary to cause the
transactions described in this Agreement to occur;
WHEREAS, as contemplated by the Investor's Agreement, EVMP will contribute
its membership interest in Properties GP to the General Partner in exchange for
a limited partnership interest in the General Partner;
WHEREAS, as contemplated by the Investor's Agreement, EVMP, and the EnCap
Funds will contribute a portion of their limited partner interests in Properties
LP to the General Partner in exchange for limited partnership interests in the
General Partner;
WHEREAS, EV Investors will contribute $144,150 in cash to the General
Partner in exchange for limited partnership interests in the General Partner;
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WHEREAS, as contemplated by the Investor's Agreement, the General Partner
will contribute the membership interest in Properties GP and the limited partner
interests in Properties LP to the Partnership to maintain its 2% general partner
interest;
WHEREAS, as contemplated by the Investor's Agreement, EVMP, EVOC,
Investors and the EnCap Funds desire to contribute the remainder of their
limited partnership interests in Properties LP to the Partnership in exchange
for Common Units, Subordinated Units and cash;
WHEREAS, as contemplated by the Investor's Agreement, Properties LP has
formed Clinton GP as a wholly owned Delaware limited liability company;
WHEREAS, as contemplated by the Investor's Agreement, Clinton GP, as
general partner, and CGAS, as limited partner, have formed Clinton LP as a
Delaware limited partnership;
WHEREAS, as contemplated by the Investor's Agreement, CGAS contributed the
Clinton Properties to Clinton LP in exchange for a limited partnership interest
in Clinton LP;
WHEREAS, as contemplated by the Investor's Agreement, CGAS will contribute
the limited partnership interest in Clinton LP to the Partnership in exchange
for Common Units, Subordinated Units and cash;
WHEREAS, CGAS formed CGH as a wholly owned subsidiary; and
WHEREAS, EVMP and EVOC assigned their right to receive Subordinated Units
to EVH and CGAS assigned its right to receive Subordinated Units to CGH;
NOW THEREFORE, for good and valuable consideration, the parties agree as
follows:
ARTICLE I.
Definitions
SECTION 1.1.DEFINED TERMS. The following terms have the meanings set forth
below when used in this Agreement:
"CLINTON CONVEYANCE" means the conveyance of even date between CGAS, as
grantor, and Clinton LP, as grantee.
"CLINTON PROPERTIES" means those interests in oil and gas properties
described in Exhibit A to the Clinton Conveyance.
"COMMON UNITS" has the meaning set forth in the MLP Partnership Agreement.
"GOVERNMENTAL AUTHORITY" means the United States, any foreign country,
state, county, city or other incorporated or unincorporated political
subdivision, agency or instrumentality thereof.
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"GP PARTNERSHIP AGREEMENT" means the amended and restated agreement of
limited partnership of the General Partner.
"INCENTIVE DISTRIBUTION RIGHTS" has the meaning set forth in the MLP
Partnership Agreement.
"MLP PARTNERSHIP AGREEMENT" means the amended and restated agreement of
the limited partnership of the Partnership.
"PERSON" shall mean a corporation, an association, a partnership, an
organization, a business, an individual or a Governmental Authority.
"SUBORDINATED UNITS" has the meaning set forth in the MLP Partnership
Agreement.
SECTION 1.2.OTHER DEFINED TERMS. The following terms are defined in the
sections indicated:
Term Section
- ------------ ----------
Closing 5.1
Agreement First Paragraph
CGAS First Paragraph
CGH First Paragraph
Claim Section 3.4
Clinton GP First Paragraph
Clinton LP First Paragraph
Closing Section 5.1
EnCap Recitals
EnCap Fund V Recitals
EnCap Funds V-B Recitals
EVH First Paragraph
EVMP First Paragraph
EVOC First Paragraph
Investors First Paragraph
Investor's Agreement Recitals
General Partner First Paragraph
Management First Paragraph
Partnership First Paragraph
Properties GP Recitals
Properties LP Recitals
Securities ACT Section 3.4
SECTION 1.3.CONSTRUCTION. Whenever the context requires, the gender of all
words used herein shall include the masculine, feminine and neuter, and the
number of all words shall include the singular and plural.
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SECTION 1.4.REFERENCES. Unless specified, references in this Agreement to
"Sections", "Subsections", "Paragraphs" or "Articles" refer to the sections,
subsections, paragraphs or articles in this Agreement.
ARTICLE II.
CONTRIBUTION BY OWNERS OF PROPERTIES LP
SECTION 2.1.CAPITALIZATION OF THE GENERAL PARTNER.
(a)At the Closing, pursuant to the Investor's Agreement, Management will
contribute $288.30 to the General Partner to retain its 0.01% interest in the
General Partner as general partner.
(b) At the Closing, pursuant to the Investor's Agreement,
(i) EVMP will contribute the entire membership interest in
Properties GP and a 3.44% limited partnership interest in Properties LP to
the General Partner, in exchange for a 71.24% interest as a limited
partner in the General Partner;
(ii) Investors will contribute $144,150 to the General Partner in
exchange for a 5.00% interest as a limited partner in the General Partner;
(iii) EnCap Fund V will contribute a 0.66% interest in Properties LP
to the General Partner in exchange for a 13.26% interest as a limited
partner in the General Partner; and
(iv) EnCap Fund V-B will contribute a 0.52% interest in Properties
LP to the General Partner in exchange for a 10.49% interest as a limited
partner in the General Partner.
SECTION 2.2 CAPITALIZATION OF THE PARTNERSHIP.
(a) At the Closing, pursuant to the Investor's Agreement, the General
Partner will contribute the entire membership interest in Properties GP, a 4.63%
limited partnership interest in Properties LP and $144,150 in cash to the
Partnership. In exchange for the contribution contemplated by this Section
2.2(a), the General Partner will retain its 2.00% general partnership interest
in the Partnership and will be issued the Incentive Distribution Rights by the
Partnership and be admitted as a limited partner with respect to such Incentive
Distribution Rights.
(b) At the Closing, pursuant to the Investor's Agreement,
(i) EVMP will contribute a 4.27% limited partnership interest
in Properties LP to the Partnership in exchange for 25,244 Common
Units and a cash payment of $2,072,327.22, less its share of
expenses, if any, in excess of $2.0 million.
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(ii) EVOC will contribute a 54.03% limited partnership
interest in Properties LP to the Partnership in exchange for 138,381
Common Units, 810,030 Subordinated Units (which will be issued to
and held by EVH) and a cash payment of $14,519,564.03, less its
share of expenses, if any, in excess of $2.0 million.
(iii) Investors will contribute a 5.00 % limited partnership
interest in Properties LP to the Partnership in exchange for 155,000
Subordinated Units.
(iv) EnCap Fund V will contribute a 17.95% limited partnership
in interest Properties LP to the Partnership in exchange for 49,207
Common Units, 243,350 Subordinated Units and a cash payment of
$4,989,634.21, less its share of expenses, if any, in excess of $2.0
million.
(v) EnCap Fund V-B will contribute a 14.21% limited
partnership in interest in Properties LP to the Partnership in
exchange for 38,913 Common Units, 192,820 Subordinated Units and a
cash payment of $3,945,853.41, less its share of expenses, if any,
in excess of $2.0 million.
(vi) CGAS will contribute a 99.99% limited partnership
interest in Clinton LP to the Partnership in exchange for 343,255
Common Units, 1,698,800 Subordinated Units (which will be issued to
and held by CGH) and a cash payment of $34,806,771.14, less its
share of expenses, if any, in excess of $2.0 million.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
SECTION 3.1 REPRESENTATIONS AND WARRANTIES OF ALL PARTIES.
Each of the parties to this Agreement hereby represents and warrants
severally as to itself to each other party as follows:
(a) Formation and Good Standing. That it is a corporation, limited
partnership or limited liability company legally incorporated or formed,
duly organized, validly existing and, if applicable, in good standing
under the laws of the state of its formation and that it is duly qualified
to do business and is in good standing as a foreign corporation,
partnership or other entity in each jurisdiction where the character of
the properties owned or leased by it or the nature of the businesses
transacted by it requires it to be so qualified.
(b) Authority, Execution and Enforceability. That it has full
corporate, partnership or other power and authority to enter into this
Agreement and to perform its obligations hereunder. That its execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized and approved by
it. That it has duly executed and delivered this Agreement, and that this
Agreement constitutes its legal, valid and binding obligation, enforceable
against it in accordance with its terms (except as enforceability may be
limited by
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applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting creditors' rights generally or by the principles governing
the availability of equitable remedies).
(c) No Conflicts. Neither its execution, delivery nor performance of
this Agreement will:
(i) require the approval or consent of any Governmental
Authority;
(ii) conflict with or result in the breach or violation of any
term or provision of, or will constitute a default under, or will
otherwise impair the good standing, validity or effectiveness of,
any provision of its certificate or articles of incorporation,
by-laws, partnership agreement or other formation documents;
(iii) result in the breach or violation by it of any material
term or provision of, or constitute a default or give rise to any
right of termination, cancellation or acceleration under any of the
terms, conditions or provisions of any material agreement to which
it is bound or by which its property or business is affected, except
for such defaults (or rights of termination, cancellation or
acceleration) as to which requisite waivers or consents are intended
to be obtained by it prior to the Closing; or
(iv) violate any federal, state or local or other governmental
law ordinance, or any order, writ, injunction, decree, rule or
regulation of any Governmental Authority applicable to it.
SECTION 3.2 REPRESENTATIONS OF EVMP REGARDING PROPERTIES LP, PROPERTIES
GP, CLINTON AND CLINTON GP. EVMP hereby represents and warrants to the
Partnership and General Partner at and as of the Closing Date as follows:
(a) Organization and Good Standing of Properties GP and Clinton GP.
Each of Properties GP and Clinton GP is a limited liability company
legally formed, duly organized, validly existing and in good standing
under the laws of the state of Delaware, and has full corporate power and
authority and all necessary licenses and permits to own, lease and operate
the properties used in its business and to act as the general partner of
Properties LP or Clinton LP (as the case may be). Each of Properties GP
and Clinton GP is duly qualified to do business and is in good standing as
a foreign limited liability company in each jurisdiction where the
character of the properties owned or leased by it or the nature of the
businesses transacted by it requires it to be so qualified.
(b) Organization and Good Standing of Properties LP and Clinton LP.
Properties LP and Clinton LP each is a limited partnership legally formed,
duly organized, validly existing and in good standing under the laws of
the state of Delaware, with full corporate power and authority and all
necessary licenses and permits to own, lease and operate the properties
used in its business and to engage in the businesses it is currently
engaged in. Properties LP and Clinton LP each is duly qualified to do
business and is in good standing as a foreign limited partnership in each
jurisdiction where the
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character of the properties owned or leased by it or the nature of the
businesses transacted by it requires it to be so qualified.
(c) Organization and Good Standing of Subsidiaries of Properties LP.
Schedule 3.2 sets forth the name and state of incorporation or formation
of each subsidiary of Properties LP (each a "SUBSIDIARY"). Each Subsidiary
is a limited liability company, a limited partnership or other entity
legally formed, duly organized, validly existing and, if applicable, in
good standing under the laws of the state of its formation, with full
power and authority and all necessary licenses and permits to own, lease
and operate the properties used in its business and to engage in the
businesses it is currently engaged in. Each Subsidiary is duly qualified
to do business and is in good standing as a foreign limited partnership in
each jurisdiction where the character of the properties owned or leased by
it or the nature of the businesses transacted by it requires it to be so
qualified. All of the equity interests in each Subsidiary are owned,
directly or indirectly, by Properties LP.
SECTION 3.3 REPRESENTATIONS OF EVMP REGARDING CAPITALIZATION AND OWNERSHIP
OF PROPERTIES GP, PROPERTIES LP, CLINTON GP AND CLINTON LP. EVMP represents to
the Partnership as follows:
(a) Capitalization of Properties GP and Clinton GP. The authorized
capitalization of Properties GP and Clinton GP consist of an unlimited
number of membership interests. All of the outstanding membership
interests of Properties GP and Clinton GP are be validly issued, fully
paid and nonassessable, and will be owned beneficially and of record, in
the case of Properties GP, by EVMP, and in the case of Clinton GP, by a
Subsidiary. Other than as contemplated by this Agreement, there are not
any outstanding agreements, warrants, options, calls, preemptive or other
rights, or other commitments of any nature which obligate Properties GP or
Clinton GP to issue any additional membership interests. Other than as
provided in the limited liability company agreement for Properties GP or
Clinton GP, and under applicable law, there are no obligations on the part
of the owners of membership interests of Properties GP or Clinton GP to
make any capital contributions to Properties GP or Clinton GP or to loan
funds to Properties GP or Clinton GP.
(b) Capitalization of Properties LP. The authorized capitalization
of Properties LP consists of a 0.01% general partnership interest and a
99.99% limited partnership interest, each of which were validly issued.
The entire general partnership interest of Properties LP is owned
beneficially and of record by Properties GP, and the record owners of
Properties LP are set forth on Schedule 3.3. There are not any outstanding
agreements, warrants, options, calls, preemptive or other rights, or other
commitments of any nature which obligate Properties LP to issue additional
general or limited partnership interests. Other than as provided in the
partnership agreement for Properties LP, and under applicable law, there
are no obligations on the part of the general or limited partner of
Properties LP to make any capital contributions to Properties LP or to
loan funds to Properties LP.
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(c) Capitalization of Clinton. The authorized capitalization of
Clinton LP consists of a 0.01% general partnership interest and a 99.99%
limited partnership interest, each of which were validly issued. The
entire general partnership interest in Clinton LP is owned beneficially
and of record by Clinton GP, and the record owner of the entire limited
partnership interest is CGAS. There are not any outstanding agreements,
warrants, options, calls, preemptive or other rights, or other commitments
of any nature which obligate Clinton LP to issue additional general or
limited partnership interests. Other than as provided in the partnership
agreement for Clinton LP and under applicable law, there are no
obligations on the part of the general or limited partner of Clinton LP to
make any capital contributions to Clinton LP or to loan funds to Clinton
LP.
SECTION 3.4 REPRESENTATIONS AND WARRANTIES OF EVMP REGARDING OWNERSHIP AND
TRANSFER OF INTERESTS IN PROPERTIES GP AND PROPERTIES LP. EVMP hereby represents
and warrants to the General Partner and Partnership as follows:
(a) Properties GP is the sole general partner of Properties LP.
Properties GP is the record and beneficial owner of a 0.01% general
partner interest in Properties LP, free and clear of any restrictions on
transfer (other than any restrictions under applicable organizational or
formation documents, the Securities Act of 1933, as amended ("SECURITIES
ACT") and state securities laws), security interests, options, warrants,
purchase rights, contracts, commitments, equities, liens, claims,
encumbrances and demands (collectively, "CLAIMS").
(b) EVMP is the record and beneficial owner of the entire membership
interest in Properties GP free and clear of any Claims. EVMP is not a
party to any option, warrant, purchase right, or other contract or
commitment that could require EVMP to sell, transfer, or otherwise dispose
of any ownership interest in Properties GP (other than this Agreement and
the Investor's Agreement). EVMP is not a party to any voting trust, proxy,
or other agreement or understanding with respect to the voting of any
ownership interest in Properties GP. Upon transfer by EVMP of the
membership interests in Properties GP to the General Partner as
contemplated by this Agreement, the General Partner will acquire the
membership interests in Properties GP, free and clear of any Claims
created by EVMP.
(c) EVMP is the record and beneficial owner of a 7.71% limited
partnership interest in Properties LP, free and clear of any Claims. EVMP
is not a party to any option, warrant, purchase right, or other contract
or commitment that could require EVMP to sell, transfer, or otherwise
dispose of any ownership interest in Properties LP (other than this
Agreement and the Investor's Agreement). EVMP is not a party to any voting
trust, proxy, or other agreement or understanding with respect to the
voting of any ownership interest in Properties LP. Upon transfer by EVMP
of the limited partnership interests in Properties LP to the General
Partner and the Partnership as contemplated by this Agreement, the General
Partner or the Partnership (as the case may be) will acquire the limited
partnership interests in Properties LP, free and clear of any Claims
created by EVMP.
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SECTION 3.5 REPRESENTATIONS AND WARRANTIES OF EVOC REGARDING OWNERSHIP AND
TRANSFER OF INTERESTS IN PROPERTIES LP. EVOC represents and warrants to the
Partnership as follows:
(a) EVOC is the record and beneficial owner of a 54.03% limited
partnership interest in Properties LP, free and clear of any Claims. EVOC
is not a party to any option, warrant, purchase right, or other contract
or commitment that could require EVOC to sell, transfer, or otherwise
dispose of any ownership interest in Properties LP (other than this
Agreement and the Investor's Agreement). EVOC is not a party to any voting
trust, proxy, or other agreement or understanding with respect to the
voting of any ownership interest in Properties LP. Upon transfer by EVOC
of the limited partnership interests in Properties LP to the General
Partner and the Partnership as contemplated by this Agreement, the General
Partner or the Partnership (as the case may be) will acquire the limited
partnership interests in Properties LP, free and clear of any Claims
created by EVMP.
SECTION 3.6 REPRESENTATION AND WARRANTIES OF ENCAP FUNDS REGARDING
OWNERSHIP AND TRANSFER OF INTERESTS IN PROPERTIES LP. The EnCap Funds represent
and warrant to the General Partner and the Partnership as follows:
(a) Each EnCap Fund is the record and beneficial owner of a the
limited partnership interest in Properties LP set forth opposite its name
on Schedule 3.6, free and clear of any Claims. An EnCap Fund is not a
party to any option, warrant, purchase right, or other contract or
commitment that could require the EnCap Fund to sell, transfer, or
otherwise dispose of any ownership interest in Properties LP (other than
this Agreement and the Investor's Agreement). An EnCap Fund is not a party
to any voting trust, proxy, or other agreement or understanding with
respect to the voting of any ownership interest in Properties LP. Upon
transfer by the EnCap Fund of the limited partnership interests in
Properties LP to the General Partner and the Partnership as contemplated
by this Agreement, the General Partner or the Partnership (as the case may
be) will acquire the limited partnership interests in Properties LP, free
and clear of any Claims created by EVMP.
SECTION 3.7 REPRESENTATIONS AND WARRANTIES OF CGAS REGARDING OWNERSHIP AND
TRANSFER OF INTERESTS IN CLINTON LP. CGAS hereby represents and warrants to the
Partnership as follows:
(a) CGAS is the record and beneficial owner of a 99.99% limited
partnership interest in Clinton LP, free and clear of any Claims. CGAS is
not a party to any option, warrant, purchase right, or other contract or
commitment that could require CGAS to sell, transfer, or otherwise dispose
of any ownership interest in Clinton LP (other than this Agreement and the
Investor's Agreement). CGAS is not a party to any voting trust, proxy, or
other agreement or understanding with respect to the voting of any
ownership interest in Clinton LP. Upon transfer by CGAS of the limited
partnership interests in Clinton LP to the Partnership as contemplated by
this Agreement, the Partnership will acquire the limited partnership
interests in Clinton LP, free and clear of any Claims created by CGAS.
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SECTION 3.8 REPRESENTATIONS AND WARRANTIES OF INVESTORS REGARDING
OWNERSHIP AND TRANSFER OF INTERESTS IN PROPERTIES LP. Investors is the record
and beneficial owner of a 5.00% limited partnership interest in Properties LP,
free and clear of any Claims. Investors is not a party to any option, warrant,
purchase right, or other contract or commitment that could require Investors to
sell, transfer, or otherwise dispose of any ownership interest in Properties LP
(other than this Agreement and the Investor's Agreement). Investors is not a
party to any voting trust, proxy, or other agreement or understanding with
respect to the voting of any ownership interest in Properties LP. Upon transfer
by Investors of the limited partnership interests in Properties LP to the
General Partner and the Partnership as contemplated by this Agreement, the
General Partner or the Partnership (as the case may be) will acquire the limited
partnership interests in Properties LP, free and clear of any Claims created by
Investors.
SECTION 3.9 REPRESENTATIONS AND WARRANTIES OF THE GENERAL PARTNER
REGARDING INTERESTS ISSUED. The General Partner hereby represents and warrants
to each person acquiring a limited partnership interest in the General Partner
pursuant to this Agreement, as follows:
(a) When issued and paid for as contemplated by this Agreement, the
limited partnership interests in the General Partner will have been duly
and validly when issued in compliance with the provisions of this
Agreement and the GP Partnership Agreement, will be validly issued, fully
paid and non-assessable. Such limited partnership interests are not
subject to any preemptive rights or rights of first refusal.
SECTION 3.10 REPRESENTATIONS AND WARRANTIES OF THE PARTNERSHIP REGARDING
COMMON AND SUBORDINATED UNITS. The Partnership hereby represents and warrants to
each person acquiring Common Units or Subordinated Units pursuant this
Agreement, as follows:
(a) When issued and paid for as contemplated by this Agreement, the
Common Units and Subordinated Units representing limited partnership
interests in the Partnership will have been duly and validly when issued
in compliance with the provisions of this Agreement and the GP Partnership
Agreement, will be validly issued, fully paid and non-assessable. Such
Common Units and Subordinated Units are not subject to any preemptive
rights or rights of first refusal.
SECTION 3.11 REPRESENTATIONS AND WARRANTIES OF EVMP, EVOC, THE ENCAP FUNDS
AND CGAS REGARDING SECURITIES LAWS. Each of EVMP, EVOC, the EnCap Funds,
Investors and CGAS, severally as to itself, hereby represents to the General
Partner and the Partnership, as follows:
(a) It is acquiring its interest in the General Partner or
Partnership under this Agreement for its own account for investment and
not with a view towards the resale, transfer or distribution thereof, nor
with any present intention of distributing the interest. Investor
understands that the interest in the General Partner, the Common Units,
the Subordinated Units and the Incentive Distribution Rights are
"restricted securities" as defined in Rule 144 under the Securities Act.
(b) It has such knowledge and experience in financial and business
matters that it is capable of evaluating the merits and risks of its
investment in the General partner
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and the Partnership as contemplated by this Agreement, and is able to bear
the economic risk of such investment for an indefinite period of time. It
has been furnished access to such information and documents as it has
requested and has been afforded an opportunity to ask questions of and
receive answers from representatives of the General Partner and the
Partnership concerning the terms and conditions of this Agreement and an
investment in the General Partner and the Partnership.
(c) It is an "accredited investor" as defined in Rule 501(a)
promulgated under the Securities Act and has such knowledge and experience
in financial and business matters that it is fully capable of evaluating
the risks and merits of its investment under this Agreement in the General
Partner and the Partnership.
ARTICLE IV.
COVENANTS
SECTION 4.1 CONSENT TO ADMISSION AS A MEMBER OR PARTNER. Each of EVMP,
EVOC, CGAS, Investors, EnCap Fund V and EnCap Fund V-B, with respect to the
limited partner interest in Properties LP and Clinton LP transferred by it, and
the membership interests in Properties GP transferred by it, hereby grants to
the assignee of such interest the right to be admitted to Properties LP or
Clinton LP as a substitute limited partner, or to Properties GP as a substitute
member. Each limited partner of Properties LP and Clinton LP, and each member of
Properties GP, hereby consents to such admission as a substitute limited partner
or member, as the case may be. The General Partner, with respect to the
membership interest in Properties GP and the limited partnership interest in
Properties LP transferred by it, hereby grants to the Partnership the right to
be admitted to Properties GP as a substitute member and to Properties GP as a
substitute limited partner. Each member of Properties GP and each partner of
Properties LP hereby consent to such admission as a substitute limited partner
or member, as the case may be.
SECTION 4.2 FURTHER ASSURANCES. Subject to the terms and conditions of
this Agreement, each of the parties hereto will use all reasonable efforts to
take, or cause to be taken, all action, and to do, or cause to be done, all
things necessary, proper or advisable, under applicable laws and regulations to
fulfill its obligations under this Agreement and to consummate and make
effective the transactions contemplated by this Agreement.
SECTION 4.3 CONVEYANCE OF THE CLINTON PROPERTIES. CGAS agrees that prior
to the Closing, it will convey the Clinton Properties to Clinton LP pursuant to
the Clinton Conveyance.
ARTICLE V.
THE CLOSING
SECTION 5.1 THE CLOSING. The closing of the transactions herein
contemplated ("CLOSING") shall be held at the offices of Haynes and Boone,
L.L.P., One Houston Center, Suite 2100, Houston, Texas 77002 contemporaneously
with the execution of this Agreement.
SECTION 5.2 DELIVERIES AT CLOSING BY SOLE MEMBER OF PROPERTIES GP, LIMITED
PARTNERS OF PROPERTIES LP AND PROPERTIES GP AND CGAS. At the Closing,
11
(a) EVMP, as the sole member of Properties GP, shall deliver to the
General Partner an assignment of the entire membership interest in
Properties GP;
(b) Each of EVMP, Investors, EnCap Fund V and EnCap Fund V-B shall
deliver to the General Partner (i) an assignment of the limited
partnership interest in Properties LP being assigned to the General
Partner by such party as contemplated by this Agreement (ii) a duly
executed counterpart of the GP Partnership Agreement; and
(c) Each of EVMP, EVOC, Investors, CGAS, EnCap Fund V and EnCap Fund
V-B shall deliver to the Partnership an assignment of the limited
partnership interest in Properties LP being assigned to the Partnership by
such party as contemplated by this Agreement.
SECTION 5.3 DELIVERIES AT CLOSING BY GENERAL PARTNER. At the Closing,
(a) The General Partner shall deliver to the Partnership an
assignment of the entire membership interests in Properties GP and the
portion of the limited partnership interest in Properties LP assigned to
it pursuant to this Agreement; and
(b) The General Partner shall deliver to each of EVMP, Investors,
EnCap Fund V and EnCap Fund V-B a counterpart, duly executed by it, of the
GP Partnership Agreement.
SECTION 5.4 DELIVERIES AT CLOSING BY THE PARTNERSHIP. At the Closing,
(a) The Partnership shall deliver to each of EVMP, EVOC, Investors,
CGAS, EnCap Fund V and EnCap Fund V-B a duly executed copy of the MLP
Partnership Agreement;
(b) The Partnership shall deliver to each of EVH, Investors, CGH,
EnCap Fund V and EnCap Fund V-B certificates representing the Common Units
and Subordinated Units to which such party is entitled under this
Agreement;
(c) The Partnership will wire transfer to each of EVMP, EVOC, CGAS,
EnCap Fund V and EnCap Fund V-B to the accounts specified by such party
the cash payment to which such party is entitled under this Agreement in
immediately available funds, less their proportionate share of $2.0
million to pay expenses, if any, in excess of $2.0 million.
(d) Within 30 days after the Closing Date, the Partnership will wire
transfer to each of EVMP, EVOC, CGAS, EnCap Fund V and EnCap Fund V-B,
their proportionate share of the $2.0 million retained pursuant to Section
5.4(c) to the extent not used to pay expenses in excess of $2.0 million.
ARTICLE VI.
MISCELLANEOUS
SECTION 6.1 HEADINGS. The section headings herein are for convenience of
reference only, do not constitute part of this Agreement and shall not be deemed
to limit or otherwise affect any of the provisions hereof.
12
SECTION 6.2 NOTICES. Unless otherwise provided herein, all notices or
other communications required or permitted hereunder shall be given in writing
and shall be hand delivered or sent by registered or certified mail, postage
prepaid, at the address opposite such party's name on the signature page hereof
or such other address as shall be furnished in writing by such party in
accordance with this Section 6.2, and any such notice or communication shall be
effective and be deemed to have been given as of the date so delivered or
received.
SECTION 6.3 ASSIGNMENT. This Agreement and all of the provisions hereof
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns, provided, however, that neither
this Agreement nor any of the rights, interests or obligations hereunder may be
assigned by a party hereto without the prior written consent of all other
parties.
SECTION 6.4 ENTIRE AGREEMENT. This Agreement (including Schedules hereto)
embody the entire agreement and understanding of the parties with respect to the
transactions contemplated hereby and supersede all prior written or oral
commitments, arrangements or understandings with respect thereto. There are no
restrictions, agreements, promises, warranties, covenants or undertakings with
respect to the transactions contemplated hereby other than those expressly set
forth herein or therein.
SECTION 6.5 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
each of which shall be deemed an original.
SECTION 6.6 GOVERNING LAW. This Agreement shall be governed by the laws of
the State of Texas (regardless of the laws that might be applicable under
principles of conflicts of law) as to all matters including, but not limited to
matters of validity, construction, effect and performance.
SECTION 6.7 SEVERABILITY. If any one or more of the provisions of this
Agreement shall be held to be invalid, illegal or unenforceable, the validity,
legality or enforceability of the remaining provisions of this Agreement shall
not be affected thereby. To the extent permitted by applicable law, each party
waives any provision of law which renders any provision of this Agreement
invalid, illegal or unenforceable in any respect.
SECTION 6.8 NO SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND COVENANTS.
All representations, warranties, covenants, agreements and obligations contained
in this Agreement, or in any Schedule, certificate, document or statement
delivered pursuant hereto, shall terminate at the Closing and shall not survive
the Closing. No party hereto shall have any liability to any other party or any
other person by reason of this Agreement following the Closing, except for
intentional and knowing breach of a representation or warranty.
13
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
ENERVEST MANAGEMENT PARTNERS, LTD.
By: EnerVest Management GP, L.C.,
a Texas limited liability company,
its General Partner
By: /s/ Mark A. Houser
----------------------------------------
Mark A. Houser
Executive Vice President and
Chief Operating Officer
ENERVEST OPERATING, L.L.C.
By: /s/ Mark A. Houser
----------------------------------------
Mark A. Houser
President
EV INVESTORS, L.P.
By: EnerVest Management Partners, Ltd.
its General Partner
By: EnerVest Management GP, L.C.,
a Texas limited liability company,
its General Partner
By: /s/ Mark A. Houser
----------------------------------------
Mark A. Houser
Executive Vice President and
Chief Operating Officer
CGAS EXPLORATION, INC.
By: /s/ Mark A. Houser
----------------------------------------
Mark A. Houser
President and Chief Operating Officer
14
CGAS PROPERTIES, L.P.
By: EVCG, L.L.C.
A Delaware limited liability company,
its General Partner
By: EV Properties L.P.
a Delaware limited partnership,
its Sole Member
By: EV Properties GP, LLC
a Delaware limited liability company,
its General Partner
By: EnerVest Management Partners, Ltd.,
a Texas limited partnership,
its sole Member
By: EnerVest Management GP, L.C.,
a Texas limited liability company,
its General Partner
By: /s/ Mark A. Houser
----------------------------------------
Mark A. Houser
Executive Vice President and
Chief Operating Officer
EVCG GP, LLC
By: EV Properties L.P.
a Delaware limited partnership,
its Sole Member
By: EV Properties GP, LLC
a Delaware limited liability company,
its General Partner
By: EnerVest Management Partners, Ltd.,
a Texas limited partnership,
its sole Member
By: EnerVest Management GP, L.C.,
a Texas limited liability company,
its General Partner
By: /s/ Mark A. Houser
----------------------------------------
Mark A. Houser
Executive Vice President and
Chief Operating Officer
15
ENCAP ENERGY CAPITAL FUND V, L.P.,
a Texas limited partnership
By: EnCap Equity Fund V GP, L.P.,
a Texas limited partnership,
its General Partner
By: EnCap Investments L.P.,
a Delaware limited partnership,
its General Partner
By: EnCap Investments GP, L.L.C.,
a Delaware limited liability company,
its General Partner
By: /s/ Gary R. Petersen
-----------------------------------------
Name: Gary R. Petersen
Title: Senior Managing Director
ENCAP V-B ACQUISITIONS, L.P.,
a Texas limited partnership
By: EnCap V-B Acquisitions GP, LLC,
a Texas limited liability company,
its General Partner
By: EnCap Energy Capital Fund V-B, L.P.,
a Texas limited partnership,
its Sole Member
By: EnCap Equity Fund V GP, L.P.,
a Texas limited partnership,
its General Partner
By: EnCap Investments L.P.,
a Delaware limited partnership,
its General Partner
By: EnCap Investments GP, L.L.C.,
a Delaware limited liability company,
its General Partner
By: /s/ Gary R. Petersen
-----------------------------------------
Name: Gary R. Petersen
Title: Senior Managing Director
16
EV ENERGY PARTNERS, L.P.
By: EV Energy GP, L.P.,
A Delaware limited partnership,
its General Partner
By: EV Management, L.L.C.,
A Delaware limited liability company,
its General Partner
By: /s/ Michael E. Mercer
--------------------------------------------
Michael E. Mercer
Senior Vice President and
Chief Financial Officer
EV ENERGY GP, L.P.
By: EV Management, L.L.C.,
a Delaware limited liability company
its General Partner
By: /s/ Michael E. Mercer
--------------------------------------------
Michael E. Mercer
Senior Vice President and
Chief Financial Officer
EV MANAGEMENT, L.L.C.
By: /s/ Michael E. Mercer
--------------------------------------------
Michael E. Mercer
Senior Vice President and
Chief Financial Officer
EVEC HOLDINGS, LLC
By: EnerVest Management Partners, Ltd.,
a Texas limited partnership,
its Sole Member
By: EnerVest Management GP, L.C.,
a Texas limited liability company,
its General Partner
By: /s/ Mark A. Houser
----------------------------------------
Mark A. Houser
Executive Vice President and
Chief Operating Officer
17
CGAS HOLDINGS LLC
By: CGAS Exploration, Inc.,
an Ohio corporation,
its Sole Member
By: /s/ Mark A. Houser
----------------------------------------
Mark A. Houser
President and Chief Operating Officer
18
SCHEDULE 3.2
SUBSIDIARIES OF PROPERTIES LP
Name State of Formation
- ---- ------------------
EnerVest WV, L.P. Delaware
EnerVest Production Partners, L.P. Delaware
EVWV GP, LLC Delaware
EVPP GP, LLC Delaware
Lower Cargas Operating Company Louisiana
EnerVest Cargas, Ltd. Texas
1
SCHEDULE 3.3
RECORD OWNERS OF PROPERTIES LP
EV Investors, L.P. 5.00%
EnCap Fund V 18.56%
EnCap Fund V-B 14.69%
EnerVest 7.71%
EVOC 54.03%
1
SCHEDULE 3.6
ENCAP OWNERSHIP PERCENTS
EnCap Fund V 18.56
EnCap Fund V-B 14.69
1