PAINEWEBBER/GEODYNE ENERGY
INCOME LIMITED PARTNERSHIP I-F
AMENDED AND RESTATED AGREEMENT AND
CERTIFICATE OF LIMITED PARTNERSHIP
Amended and Restated Agreement and Certificate of Limited Partnership,
dated as of December 17, 1986, among Geodyne Properties, Inc., a Delaware
corporation, and PW Energy Inc., a Delaware corporation, as General Partners,
▇▇▇▇▇ ▇▇▇▇▇▇ as the Initial Limited Partner, and those persons named in Schedule
A attached hereto as Additional Limited Partners.
Whereas, PaineWebber/Geodyne Energy Income Limited Partnership I-F has
heretofore been formed as a limited partnership under the Oklahoma Revised
Uniform Limited Partnership Act pursuant to an Agreement and Certificate of
Limited Partnership dated as of September 10, 1986, and filed for recordation in
the office of the Secretary of State of the State of Oklahoma on September 11,
1986; and
Whereas, the parties hereto desire to amend the Certificate and Agreement
of Limited Partnership of the Limited Partnership and to restate said Agreement
in its entirety;
Now, Therefore, in consideration of the mutual promises and agreements
made herein, the parties, intending to be legally bound, hereby agree as
follows:
ARTICLE ONE
Defined Terms
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The defined terms used in this Agreement shall, unless the context
otherwise requires, have the meanings specified in this Article One. The
singular shall include the plural and the masculine gender shall include the
feminine, the neuter and vice versa, as the context requires. Any terms used in
this Agreement which are defined in the Production Partnership Agreement and are
not otherwise defined herein shall have the respective meanings set forth in the
Production Partnership Agreement.
"Accountants" shall mean ▇▇▇▇▇▇ ▇▇▇▇▇ & Company or such other nationally
recognized firm of independent certified public accountants as shall be engaged
from time to time by the General Partners for the Limited Partnership.
"Act" shall mean the Oklahoma Revised Uniform Limited Partnership Act, as
amended from time to time.
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"Activation" or "Activated" shall mean the date on which (i) with respect
to the Limited Partnership, the subscribers for Units shall have been admitted
to the Limited Partnership as Limited Partners, and (ii) with respect to the
Production Partnership, the Limited Partnership shall have made its capital
contribution to the Production Partnership.
"Additional Limited Partner" shall mean any person admitted to the Limited
Partnership pursuant to Section 3.3A of this Agreement.
"Affiliate" shall mean, when used with reference to a specified Person:
(a) any Person directly or indirectly owning, controlling, or holding with power
to vote 10% or more of the outstanding voting securities of the specified
Person; (b) any Person 10% or more of whose outstanding voting securities are
directly or indirectly owned, controlled, or held with power to vote by the
specified Person; (c) any Person directly or indirectly controlling, controlled
by, or under common control with, the specified Person; (d) any Person who is an
officer, director, partner or trustee of, or serves in a similar capacity with
respect to, the specified Person or of which the specified Person is an officer,
director, partner or trustee, or with respect to which the specified Person
serves in a similar capacity; and (e) any relative or spouse of the specified
Person. A reference to an Affiliate of the General Partners shall include an
Affiliate of either or both of the General Partners. Notwithstanding the
foregoing, no Person shall be deemed to be an Affiliate solely by reason of its
ownership of limited partnership interests in a limited partnership.
"Affiliated Program" shall mean a drilling or income program (whether in
the form of a limited partnership, general partnership, joint venture or
otherwise) interests in which were offered to persons or entities not engaged in
a trade or business within the oil and gas industry (other than by virtue of its
participation in an Affiliated Program) and of which any General Partner or
Affiliate serves as general partner or venturer.
"Agreement" shall mean this Amended and Restated Agreement and Certificate
of Limited Partnership as originally executed and as amended from time to time.
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"Capital Account" shall mean, as to any Partner, the sum of the Capital
Contribution by such Partner, plus his share of any Profits (including, with
respect to Limited Partners, his share of any interest earned on funds held by
the escrow agent and paid to the Limited Partnership, as set forth in the
Prospectus), reduced by his share of any Losses (including such Partner's
deduction for depletion to the extent such deduction does not exceed the amount
of cost depletion such Partner would be allowed) and distributions of Limited
Partnership cash or assets to such Partner or on behalf of such Partner in
payment of any taxes or other expenses allocable to such Partner.
"Capital Contribution" of a Limited Partner shall mean the cash
contribution of a Limited Partner paid with respect to such Limited Partner's
subscription and any cash distributions from a Prior Limited Partnership
reinvested on behalf of a Limited Partner in the Limited Partnership, net of any
refunds made pursuant to Section 3.4 of this Agreement.
"Code" shall mean the Internal Revenue Code of 1954, as amended (or any
corresponding provisions of succeeding law).
"Commissions" shall mean the cash fees payable to the Dealer Manager and
the Selected Dealers upon the Activation of the Limited Partnership.
"Consent" shall mean the consent of a Person, given as provided in Section
11.1, to do the act or thing for which the consent is solicited, or the act of
granting such consent, as the context may require.
"Dealer Manager" shall mean PaineWebber Incorporated, a Delaware
corporation.
"Direct Administrative Costs" shall mean the actual and necessary direct
costs attributable to services provided to the Limited Partnership by parties
other than the General Partner or their Affiliates, whether incurred by the
Limited Partnership directly or incurred by any of the General Partners or their
Affiliates, including the annual audit fees, legal fees and expenses, the cost
of reviewing tax returns and reports, the cost of evaluations prepared by
independent petroleum engineers pursuant to Section 9.4C of this Agreement and
all other such costs directly incurred by or for the benefit of the Limited
Partnership.
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"Distributable Cash" shall mean, with respect to the Limited Partnership's
operations at any time, the amount of cash assets on hand at such time less
amounts required to be retained out of such cash assets, in the sole judgment of
the General Partners, to pay costs, expenses or other obligations whether then
accrued or anticipated to accrue in the future.
"Fiscal Year" shall mean the calendar year.
"General and Administrative Costs" shall mean all customary and routine
legal, accounting, data processing, depreciation, geological, engineering,
travel, office rent, telephone, secretarial, employee compensation and benefits,
and other items of a general and administrative nature, whether like or unlike
the foregoing, and any other incidental reasonable expenses reasonably necessary
to the conduct of the Limited Partnership's business, and generated by the
General Partners or any Affiliate other than an Affiliated Program computed on a
cost basis, determined by the General Partners in accordance with generally
accepted accounting principles and reviewed by an independent public accountant
or certified public accountant. General and Administrative Costs shall not
include any Direct Administrative Costs or costs of the Production Partnership.
"General Partners" shall mean Geodyne Properties, Inc., a Delaware
corporation, and PW Energy Inc., a Delaware corporation, acting in such
capacity, and any other Person admitted as an additional or substituted General
Partner pursuant to the provisions of Article Six of this Agreement.
"Geodyne Properties" shall mean Geodyne Properties, Inc., a Delaware
corporation.
"Hydrocarbons" shall mean crude oil, natural gas, condensate, natural gas
liquids and other liquid or gaseous hydrocarbons.
"Incapacity" or "Incapacitated" shall mean the adjudication of bankruptcy
(except that, in the case of a General Partner, the term "bankruptcy" shall mean
only being subject to Chapter 7 of the Federal Bankruptcy Reform Act of 1978),
of interdiction, of incompetence, or of insanity, or the death, dissolution or
termination (other than by merger or consolidation under which the surviving
entity agrees to assume all of the obligations and responsibilities of the
merged or consolidated Person set forth in this Agreement), as the case may be,
of any Person.
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"Income" shall mean the gross income of the Limited Partnership or the
Production Partnership (as the context may require) as determined for Federal
income tax purposes, including all capital or Code Section 1231 gains (but not
losses).
"Initial Limited Partner" shall mean ▇▇▇▇▇ ▇▇▇▇▇▇.
"Interest" shall mean the entire ownership interest (which may, either for
a Partner's Capital Account or a Partner's Profits interest, be expressed as a
percentage) of a Partner in the Limited Partnership at any particular time,
including the rights and obligations of such Partner under this Agreement and
the Act.
"Limited Partners" shall mean the limited partners of the Limited
Partnership or any substituted limited partner including the General Partners to
the extent they purchase Units.
"Limited Partnership" shall mean the limited partnership continued hereby.
"Limited Partnership Account" shall mean the bank account or accounts
established by the General Partners pursuant to Section 9.3 of this Agreement.
"Limited Partnership Property" shall mean all interest, property and right
of any type owned by the Limited Partnership.
"Managing Partners" shall mean Geodyne Production Company, a Delaware
corporation, and PW Production, Inc., a Delaware corporation, acting in such
capacity, and any successor acting in such capacity.
"Notification" shall mean a writing, containing the information required
by this Agreement to be communicated to any Person, hand delivered or sent by
registered or certified mail, return receipt requested, postage prepaid, to such
Person at the last known address of such Person, the date of the certified
receipt (or such other evidence of receipt) therefor being deemed the date of
the giving of Notification; provided, however, that any written communication
containing the information sent or delivered to the Person and actually received
by the Person shall constitute Notification for all purposes of this Agreement.
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"Organization and Offering Costs" shall mean all costs and expenses
incurred by the General Partners and their Affiliates in connection with the
organization of the Limited Partnership, including, without limitation, the
legal, printing, accounting and other costs incurred in connection with the
registration for offer and sale of the Units under applicable federal and state
securities laws (other than any organization and offering costs as defined in
the Production Partnership Agreement). Organization and Offering Costs shall not
include the Commissions paid to the Dealer Manager or reallowed to the Selected
Dealers.
"Partner" shall mean any General Partner or any Limited Partner.
"Person" shall mean any individual, partnership, corporation, trust or
other entity.
"Prior Limited Partnership" shall mean any limited partnership activated
prior to the Activation of the Limited Partnership of which units of limited
partnership interest were offered and sold pursuant to the Prospectus.
"Production Partnership" shall mean the general partnership of which the
Limited Partnership is a general partner.
"Production Partnership Agreement" shall mean the agreement of general
partnership under which the Production Partnership was formed, as amended from
time to time.
"Production Partnership Well" shall mean any well in which the Production
Partnership has an interest.
"Producing Property" shall mean any property (or interest in such
property) with a well or ▇▇▇▇▇ capable of producing Hydrocarbons in commercial
quantities or properties unitized with such properties or properties adjacent to
such properties which are acquired as an incidental part of the acquisition of
such properties. The term also includes well machinery and equipment, gathering
systems, storage facilities or processing installations or other equipment and
property associated with the production of Hydrocarbons. Interests in properties
may include Working Interests, production payments, Royalties and other
nonworking and nonoperating interests.
"Profits" and "Losses" shall mean the income or losses of the Limited
Partnership for Federal income tax purposes determined as of the close of the
Limited Partnership's Fiscal Year, as well as, when the context requires, any
tax-exempt income and nondeductible expenses.
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"Prospectus" shall mean the prospectus pursuant to which the Units were
offered, and all supplements or amendments thereto, if any.
"Proved Reserves" shall mean those quantities of Hydrocarbons, which, upon
analysis of geologic and engineering data, appear with reasonable certainty to
be recoverable in the future from known Hydrocarbon reservoirs under existing
economic and operating conditions. Proved reserves are limited to those
quantities of Hydrocarbons which can be expected, with little doubt, to be
recoverable commercially at current prices and costs, under existing regulatory
practices and with existing conventional equipment and operating methods.
Depending upon their status of development, such proved reserves shall be
subdivided into the following classifications and have the following
definitions:
(a) "Proved Developed Reserves" shall mean proved reserves which
can be expected to be recovered through existing ▇▇▇▇▇ with existing
equipment and operating methods. This classification shall include:
(1) "Proved Developed Producing Reserves" which are proved
developed reserves which are expected to be produced from existing
▇▇▇▇▇; and
(2) "Proved Developed Non-Producing Reserves" which are
proved developed reserves which exist behind the casing of
existing ▇▇▇▇▇, or at minor depths below the present bottom of
such ▇▇▇▇▇, which are expected to be produced through these ▇▇▇▇▇
in the predictable future, where the cost of making Hydrocarbons
available for production should be relatively small compared to
the cost of a new well.
Additional Hydrocarbons expected to be obtained through the
application of improved recovery techniques are included as "Proved
Developed Reserves" only after testing by a pilot project or after the
operation of an installed program has confirmed through production
responses that increased recovery will be achieved.
(b) "Proved Undeveloped Reserves" shall mean all reserves which are
expected to be recovered from new ▇▇▇▇▇ on undrilled acreage or from
existing ▇▇▇▇▇ where a relatively major expenditure is required for
recompletion. Such reserves on undrilled acreage are limited to those
drilling units offsetting productive units which are reasonably certain of
production when drilled. Proved
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reserves for other undrilled units are claimed only where it can be
demonstrated with reasonable certainty, based on accepted geological,
geophysical and engineering studies and data, that there is continuity of
production from an existing productive formation. No estimates for Proved
Undeveloped Reserves are attributable to any acreage for which improved
recovery is contemplated, unless the techniques to be employed have been
proved effective by actual tests in the same area and reservoir.
"PW Energy" shall mean PW Energy Inc., a Delaware corporation.
"Remove", "Removed" or "Removal" shall mean, with reference to the removal
of a General Partner, the termination of the management powers, duties and
responsibilities of such General Partner pursuant to Section 6.2 of this
Agreement and the removal of such General Partner as a Partner.
"Right of Presentment" shall mean the acquisition by a purchaser of a
Limited Partner's Interest pursuant to Section 7.5 of this Agreement.
"Royalty" shall mean an interest, including an overriding royalty and a
net profits interest, in gross production or the proceeds therefrom which does
not require the owner thereof to bear any of the cost of production,
development, operation or maintenance.
"Sale" shall mean any event or transaction that is, for Federal income tax
purposes, considered a sale, exchange or abandonment by the Limited Partnership
of any Limited Partnership Property.
"Selected Dealer" shall mean a member in good standing of the National
Association of Securities Dealers, Inc. which has been selected by the Dealer
Manager to offer and sell the Units.
"State" shall mean the State of Oklahoma.
"Subscription Agreement and Power of Attorney" shall mean the Subscription
Agreement and Power of Attorney in the form attached to the Prospectus.
"Subsequent Limited Partnership" shall mean any limited partnership
activated after the Activation of the Limited Partnership of which units of
limited partnership interest are offered and sold pursuant to the Prospectus.
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"Substituted Partner" shall mean any Person admitted to the Limited
Partnership as a Partner pursuant to Section 7.3 and 10.2 of this Agreement.
"Unit" shall mean a $1,000 investment in the Limited Partnership by a
Limited Partner pursuant to the terms of a Subscription Agreement and Power of
Attorney; provided, however, that fractional Units may be acquired to the extent
provided under Section ▇.▇▇ in whole increments of $100.
"Working Interest" shall mean the interest (whether held directly or
indirectly) in a lease (as defined in the Production Partnership Agreement)
which is subject to some portion of the expense of production, development,
operation or maintenance.
ARTICLE TWO
Continuation; Name, Place of Business and Office; Term
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Section 2.1. Continuation
--------------------------
The parties hereto hereby continue the limited partnership heretofore
formed pursuant to the provisions of the Oklahoma Revised Uniform Limited
Partnership Act, and the rights and liabilities of the Partners shall be as
provided in the Act, except as otherwise expressly provided in this Agreement.
Section 2.2. Name, Place of Business and Office, Agent
-------------------------------------------------------
The Limited Partnership shall be conducted under the name
PaineWebber/Geodyne Energy Income Limited Partnership I-F. The business of the
Limited Partnership may, however, be conducted under any other name deemed
necessary or desirable by the General Partners in order to comply with
applicable laws. The office and principal place of business of the Limited
Partnership shall be c/o Geodyne Properties, Inc., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇. The agent for service of process on the
Limited Partnership shall be Geodyne Properties, Inc., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇. The General Partners may change the
principal place of business and the location of such office and may establish
such additional offices as they deem advisable from time to time; provided,
however, that in the event the principal place of business of the Limited
Partnership shall be changed, the General Partners shall provide Notification
thereof to the Limited Partners.
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Section 2.3. Purpose
---------------------
The business and purpose of the Limited Partnership shall be to become a
general partner in the Production Partnership. Such business and purpose shall
include the doing of any and all things incident thereto or connected therewith,
including the carrying on of the business of the Production Partnership in the
event of its termination if it is determined by the General Partners to be in
the best interests of the Limited Partners. The Limited Partnership shall not
engage in any other business or activity.
Section 2.4. Term
------------------
The Limited Partnership shall continue in force and effect until December
31, 1999, provided that the General Partners shall extend the term of the
Limited Partnership for up to five periods of two years each in the event that
the Production Partnership's term has been so extended, or until dissolution
prior thereto pursuant to the provisions hereof.
ARTICLE THREE
Partners and Capital
--------------------
Section 3.1. General Partners
------------------------------
A. The names, addresses and Capital Contributions of the General Partners
are set forth in Schedule A attached hereto and are incorporated herein.
B. Each General Partner represents to each Additional Limited Partner,
severally, that: (i) neither it nor any of its Affiliates is a "party in
interest," as defined in Section 3(14) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or a "disqualified person," as
defined in Section 4975(e) (2) of the Code, with respect to any Additional
Limited Partner, the assets of which are being used, in whole or in part, to
acquire an Interest in the Limited Partnership; and (ii) neither the acquisition
by such Limited Partners of their Interests nor any transactions contemplated by
the Prospectus involving the use of amounts constituting such Limited Partners'
Capital Contributions will constitute or result in a prohibited transaction
within the meaning of Section 406 of ERISA or Section 4975 of the Code. In
making such representations, the General
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Partners have each received and relied upon information from Additional Limited
Partners pursuant to subscription agreements, in the form attached as Exhibit C
to the Prospectus, executed by such Limited Partners.
Section 3.2. Initial Limited Partner
-------------------------------------
Upon admission of the Additional Limited Partners to the Limited
Partnership pursuant to Section 3.3A of this Agreement, the Initial Limited
Partner shall withdraw from the Limited Partnership and shall be entitled to
receive an amount of money equal to her Capital Contribution.
Section 3.3. Additional Limited Partners
-----------------------------------------
A. The General Partners are authorized to admit Additional Limited
Partners to the Limited Partnership if, after the admission of such Additional
Limited Partners, the Capital Contributions of all Additional Limited Partners
would be not less than $5,000,000 and not more than $90,000,00 less the
aggregate subscription amount of units of limited partnership interest
subscribed to any Prior Limited Partnership. The Capital Contributions of the
Additional Limited Partners shall be made in cash.
The manner of the offering of the Units, the terms and conditions under
which subscriptions for such Units will be accepted (including the minimum
subscription amounts applicable to various categories of subscribers), the
manner of and conditions to the sale of Units to subscribers therefor, the terms
of the reinvestment in the Limited Partnership of cash distributions from a
Prior Limited Partnership and the admission of subscribers for Units and Persons
who reinvest in the Limited Partnership cash distributions from a Prior Limited
Partnership as Additional Limited Partners will be as provided in the Prospectus
and subject to any provisions thereof.
B. The names, addresses and Capital Contributions of the Additional
Limited Partners are set forth in Schedule A hereto, as amended from time to
time.
C. No Limited Partner shall be required to make any additional capital
contribution to the Limited Partnership.
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Section 3.4. Certain Returns of Capital
----------------------------------------
Any portion of the capital contribution of the Limited Partnership to the
Production Partnership which is distributed to the Limited Partnership pursuant
to Section 3.4 of the Production Partnership Agreement shall be distributed
promptly to the Limited Partners in proportion to their Capital Contributions as
a return of part of their Capital Contributions. In addition, the General
Partners shall contribute cash to the Limited Partnership (with respect to which
their Capital Accounts will be credited) in an amount equal to the amounts paid
to the General Partners or their Affiliates from the Limited Partners' Capital
Contributions in respect of Commissions and Organization and Offering Costs
attributable (on a proportionate basis) to the amount of the unexpended Capital
Contributions so refunded, which cash shall be refunded pro rata to the Limited
Partners (except that cash representing refunded Commissions shall be
distributed to Limited Partners in proportion to the manner in which Commissions
attributable to their subscriptions were payable) together with the unexpended
Capital Contributions. Geodyne Properties and PW Energy shall be responsible for
40% and 60%, respectively, of the obligation of the General Partners to
contribute cash to the Limited Partnership in connection with a return of the
Limited Partners' Capital Contributions pursuant to this Section 3.4.
Section 3.5. Limited Partnership Capital
-----------------------------------------
A. No Partner shall be paid interest on any Capital Contribution to the
Limited Partnership or on such Partner's Capital Account, notwithstanding any
disproportion therein as between Partners.
B. Except as provided in Sections 3.2, 3.4, 6.2 and 8.2 of this Agreement,
no Partner shall have the right to withdraw or receive any return of the Capital
Contribution. Under circumstances involving a return of any Capital
Contribution, no Limited Partner shall have priority over any other Limited
Partner nor shall any Partner have the right to receive any property other than
cash, except as may otherwise be provided in Sections 6.2 and 8.2A of this
Agreement.
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Section 3.6. Application of Capital Contributions
--------------------------------------------------
A. The General Partners shall deposit in the Limited Partnership Account
the Capital Contributions of the Additional Limited Partners and shall apply
such Capital Contributions to (i) pay to the General Partners an amount equal to
3% of the Limited Partners' Capital Contributions in consideration of the
General Partners' payment of Organization and Offering Costs, (ii) pay
Commissions, (iii) establish a reasonable reserve for working capital, and (iv)
contribute the balance of the Partners' Capital Contributions to the Production
Partnership in exchange for the Limited Partnership's interest therein.
B. PW Energy and Geodyne Properties shall be responsible for the payment
of 60% and 40%, respectively, of Organization and Offering Costs. The General
Partners shall allocate between themselves the payment received in Section
3.6A(i) (hereinafter referred to in this Section 3.6B as the "Fee") as follows:
(i) to the extent of the amount of actual Organization and Offering Costs
incurred by the General Partners plus Unreimbursed Prior Organization and
Offering Costs (as defined below), the Fee shall be paid 60% to PW Energy and
40% to Geodyne Properties; (ii) to the extent the Fee is in excess of the actual
Organization and Offering Costs plus Unreimbursed Prior Organization and
Offering Costs (as defined below) but such excess amount does not exceed 2% of
the Limited Partners' Capital Contributions, 75% shall be paid to PW Energy and
25% shall be paid to Geodyne Properties; and (ii) any excess of the Fee over the
amounts of such Fee paid to the General Partners pursuant to (i) and (ii) of
this Section 3.6B shall be paid 50% each to PW Energy and Geodyne Properties.
"Unreimbursed Prior Organization and Offering Costs" shall mean the actual
organization and offering costs of any Prior Limited Partnerships and any Prior
Production Partnerships (as defined in the Production Partnership Agreement) for
which the General Partners and Managing Partners are not reimbursed by the
payment to them of the fee referred to in Section 3.6A(i) of the limited
partnership agreements of the respective Prior Limited Partnerships and by the
payment to them of the management fee of the Prior Production Partnerships.
C. The Limited Partnership shall not incur any borrowings; provided,
however, that borrowings may be incurred on its behalf by the Production
Partnership to pay costs of the Production Partnership allocable to the Limited
Partnership.
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Section 3.7. Liability of Partners
-----------------------------------
A. No Limited Partner shall be liable for the debts, liabilities,
contracts or other obligations of the Limited Partnership (except to the extent
of (i) the Limited Partner's Capital Contribution, (ii) money or property
wrongfully paid or conveyed to the Limited Partner on account of the Limited
Partner's Capital Contribution, and (iii) amounts, together with interest
thereon, properly distributed to the Limited Partner which represent a return of
capital and which are necessary to discharge the Limited Partnership's liability
to creditors which arose prior to such distribution) or for the debts and
liabilities of any other Partner.
B. Geodyne Properties, PW Energy and any General Partner subsequently
admitted to the Limited Partnership each agrees that it shall remain generally
liable for any obligation or recourse liability of the Limited Partnership
incurred during the period in which it is a General Partner. However, all
present and future General Partners hereby agree among themselves to contribute
to each other the amount of funds necessary to effectuate a sharing of Limited
Partnership obligations and recourse liabilities in proportion to each General
Partner's share of such obligations and liabilities.
Section 3.8. General Partner as Limited Partner
------------------------------------------------
A. General Partner shall also be a Limited Partner to the extent that it
purchases or becomes a transferee of all or any part of the Interest of a
Limited Partner, provided that a General Partner shall not thereby (i) acquire
any power to vote, as a Limited Partner, with respect to any action requiring
the Consent of any specified percentage of Limited Partners, and (ii) be deemed
to have limited its liability for any obligation or recourse liability of the
Limited Partnership as set forth under Section 3.7B.
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ARTICLE FOUR
Management
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Section 4.1. Management and Control of the Limited Partnership
---------------------------------------------------------------
A. The General Partners, within the authority granted to them under and in
accordance with the provisions of this Agreement, shall have the full and
exclusive right to manage and control the business and affairs of the Limited
Partnership and to make all decisions regarding the business of the Limited
Partnership and shall have all of the rights, powers and obligations of general
partners of a limited partnership under the laws of the State.
B. No Limited Partner, as such, shall participate in the management of or
have any control over the Limited Partnership's business nor shall any Limited
Partner, as such, have the power to represent, act for, sign for or bind the
General Partners or the Limited Partnership. The Limited Partners hereby consent
to the exercise by the General Partners of the powers conferred on them by this
Agreement.
C. The General Partners' management authority with respect to significant
Limited Partnership actions shall be exercised jointly by both General Partners,
including without limitation such actions as the determination of the amount of
Distributable Cash to distribute to the Partners. The General Partners'
management authority respecting all other actions which are in the ordinary
course of the Limited Partnership's operations (and any "significant" Limited
Partnership action delegated to a General Partner under Section ▇.▇▇(iii)) may
be exercised by either General Partner without the concurrence of the other
General Partner, provided that the General Partner exercising such management
authority shall, upon inquiry by the other General Partner, notify the inquiring
General Partner of the nature of such actions undertaken without the concurrence
of the inquiring General Partner. The General Partners shall have the authority
to (i) determine that the "significant" action specified herein shall no longer
be a "significant" action for purposes of this Section ▇.▇▇ and to amend this
Agreement pursuant to Section ▇▇.▇▇ of this Agreement to reflect such
determination, (ii) to determine which other Limited Partnership actions, other
than that specified herein, are "significant" actions for purposes of this
Section 4.1C, and (iii) delegate their management authority to a single General
Partner with
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respect to "significant" Limited Partnership actions at such times and under
such conditions as they may mutually agree upon.
Section 4.2. Powers of the General Partners
--------------------------------------------
A. In addition to any other rights and powers which the General Partners
may possess under this Agreement and the Act, the General Partners shall have
the power, except and subject to the extent otherwise provided or limited in
this Agreement:
(i) to contribute the balance (after payment and retention of the
amounts set forth in Section 3.6) of the Capital Contributions of the
Limited Partners to the Production Partnership as required by the Limited
Partnership's interest therein, and to execute the Production Partnership
Agreement (including any amendment and restatement thereof) on behalf of
the Limited Partnership;
(ii) if the Production Partnership is dissolved, to enter into all
transactions contemplated by the Production Partnership Agreement, subject
to the limitations and provisions contained therein, notwithstanding
anything to the contrary contained herein;
(iii) to maintain the books and records of the Limited Partnership
in accordance with the provisions of Section 9.1; and
(iv) subject to Sections 4.5E, 4.5F and 4.5G, to consent to
certain actions on behalf of the Limited Partnership pursuant to the
Production Partnership Agreement.
B. Reliance by Third Parties on General Partners' Authority. No person,
firm or corporation dealing with the Limited Partnership shall be required to
inquire into the authority of any General Partner to take or refrain from taking
any action or make or refrain from making any decision, but any person so
inquiring shall be entitled to rely upon a certificate of a General Partner as
to its due authorization.
Section 4.3. Prohibited Transactions
-------------------------------------
A. Notwithstanding any other provision of this Agreement to the contrary,
the following transactions are expressly prohibited:
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(i) the Limited Partnership shall not make any loans to a General
Partner or any Affiliate;
(ii) except as expressly contemplated hereby, no agent, attorney,
accountant or other independent consultant or contractor who is also
employed on a full-time basis by any General Partner or any Affiliate
shall be compensated by the Limited Partnership for his services;
(iii) there shall be no commingling of Limited Partnership funds
with funds of any other entity; and
(iv) the Limited Partnership shall not make any advance payment to
the General Partners or their Affiliates, except where necessary to secure
tax benefits of prepaid drilling costs.
Section 4.4. Other Agreements of the General Partners
------------------------------------------------------
A. Anything in this Agreement to the contrary notwithstanding, it is
agreed that:
(i) the General Partners and their Affiliates shall not take any
action with respect to the assets or property of the Limited Partnership
which does not benefit primarily the Limited Partnership, including the
utilization of Limited Partnership funds as compensating balances for the
benefit of any General Partner or Affiliate;
(ii) neither the General Partners nor any Affiliate shall render
to the Limited Partnership any services nor sell or lease to the Limited
Partnership any equipment or supplies unless:
(a) such General Partner or Affiliate is engaged,
independently of the Limited Partnership and as an ordinary and
ongoing business, in the business of rendering such services or
selling or leasing such equipment and supplies to a substantial
extent to other Persons in the oil and gas industry in addition to
programs in which such General Partner or Affiliate has an
interest;
-17-
(b) the compensation, price or rental therefor is
competitive with the compensation, price or rental of other
Persons in the area engaged in the business of rendering
comparable services or selling or leasing comparable equipment and
supplies which could reasonably be made available to the Limited
Partnership; and
(c) provided that, if such General Partner or Affiliate is
not engaged in a business within the meaning of subdivision (a),
then such compensation, price or rental shall be the cost of such
services, equipment or supplies to such General Partner or
Affiliate or the competitive rate which could be obtained in the
area, whichever is less.
Section 4.5. Restrictions on the Authority of the General Partners
-------------------------------------------------------------------
A. The General Partners shall not have the authority to:
(i) do any act in contravention of this Agreement or which would
make it impossible to carry on the ordinary business of the Limited
Partnership;
(ii) confess a judgment against the Limited Partnership;
(iii) possess Limited Partnership Property or assign, pledge or
hypothecate rights in specific Limited Partnership Property for other than
a Limited Partnership purpose;
(iv) admit a Person as a General Partner or a Limited Partner
except as otherwise provided herein; or
(v) perform any act which would result in loss of any Limited
Partner's status as a limited partner under the laws of the State or of
limited liability under the laws of any other jurisdiction in which the
Limited Partnership is doing business, including use of any Limited
Partner's name in conducting the business of the Limited Partnership.
-18-
B. The General Partners shall not lease, sell, abandon or otherwise
dispose of any assets of the Limited Partnership to the General Partners or to
any of their Affiliates; provided, however, that if the Limited Partnership
should own any inventory or other materials, such inventory or materials may be
transferred to the General Partners or any of their Affiliates at the applicable
rates set forth in the standard form of accounting procedure then recommended by
the Council of Petroleum Accountants Societies of North America.
C. The General Partners shall not perform any act that would subject any
Limited Partner to liability as a general partner in any jurisdiction.
D. Without the consent of more than 50% in Interest of the Limited
Partners, the General Partners shall not have the authority to:
(i) lease, sell, or otherwise dispose of at any one time all or
substantially all of the assets of the Limited Partnership other than in
the ordinary course of business;
(ii) elect to dissolve and wind up the Limited Partnership; or
(iii) except as set forth in Article 10, adopt any amendment to
this Agreement.
E. The General Partners shall not cause the Limited Partnership to consent
to, or join in, any amendment, or modification of, or supplement to, or waiver
of the terms of, the Production Partnership Agreement unless: (i) in the
judgment of the General Partners such amendment, modification, supplement or
waiver would not materially adversely affect the Limited Partnership's rights
under the then existing Production Partnership Agreement or such amendment,
modification, supplement, or waiver is in the best interests of the Limited
Partners; or (ii) if the conditions of Section 11.3 are satisfied, the consent
of more than 50% in Interest of the Limited Partners is obtained. If the
conditions of Section 11.3 are satisfied, the General Partners shall propose any
amendment to the Production Partnership Agreement on behalf of the Limited
Partnership which is proposed by at least 10% in Interest (as to capital and
Profits and Losses) of the Limited Partners.
F. Unless the conditions of Section 11.3 are satisfied and the consent of
more than 50% in Interest of the Limited Partners is obtained, the General
Partners shall not have the authority to consent on behalf of the Limited
Partnership to the:
-19-
(i) lease, sale or other disposition at any one time of all or
substantially all of the assets of the Production Partnership; or
(ii) dissolution and winding up of the Production Partnership.
G. Unless the conditions of Section 11.3 are satisfied and the consent of
more than 50% in Interest of the Limited Partners is obtained, the General
Partners shall not have the authority to cause the Limited Partnership to (i)
remove a Managing Partner, or (ii) appoint a successor Managing Partner pursuant
to Section 6.2 of the Production Partnership Agreement.
H. No creditor who makes a nonrecourse loan to the Limited Partnership may
have or acquire, at any time as a result of making the loan, any direct or
indirect interest in the profits, capital or property of the Limited Partnership
other than as a secured creditor.
Section 4.6. Duties and Obligations of the General Partners
------------------------------------------------------------
The General Partners shall:
(i) use their best efforts to take all actions that may be necessary
or appropriate for the continuation of the Limited Partnership's valid
existence as a limited partnership or partnership in commendam under the
laws of the State and the laws of any other jurisdiction in which the
Limited Partnership is doing business, and for the acquisition and
holding, in accordance with the provisions of this Agreement and
applicable laws and regulations, of the interest of the Limited
Partnership in the Production Partnership;
(ii) devote to the Limited Partnership the time that they shall deem
to be necessary to conduct the Limited Partnership's business and affairs
in the best interests of the Limited Partnership;
(iii) be under a fiduciary duty and obligation to conduct the
affairs of the Limited Partnership in the best interests of the Limited
Partnership, including the safekeeping and use of all Limited Partnership
funds and assets (whether or not in the immediate possession or
-20-
control of the General Partners) and the use thereof for the benefit of
the Limited Partnership;
(iv) at all times act with integrity and good faith and exercise due
diligence in all activities relating to the conduct of the business of the
Limited Partnership and in resolving conflicts of interest;
(v) use their best efforts at all times to maintain their aggregate
net worth at a level that is sufficient to meet all present and future
requirements set by statute, Treasury Regulations, the Internal Revenue
Service or the courts to ensure that the Limited Partnership will not fail
to be classified for Federal income tax purposes as a partnership, rather
than as an association taxable as a corporation, on account of the net
worth of the General Partners;
(vi) prepare or cause to be prepared and shall file on or before the
due date (or any extension thereof) any Federal, state or local tax
returns required to be filed by the Limited Partnership;
(vii) cause the Limited Partnership to pay any taxes payable by the
Limited Partnership;
(viii) use their best efforts to cause the Limited Partnership (or a
new limited partnership having the same provisions as the Limited
Partnership) to be formed, reformed, qualified to do business, or
registered under any applicable assumed or fictitious name statute or
similar law in any state in which the Limited Partnership then owns
property or transacts business, if such formation, reformation,
qualification or registration is necessary or advisable in its counsel's
opinion to protect the limited liability of the Limited Partners or to
permit the Limited Partnership lawfully to own property or transact
business;
(ix) from time to time, prepare and file all amendments to this
Agreement and other similar documents that are required by law to be filed
and recorded for any reason, in the office or offices that are required
under the laws of the State or any other state in which the Limited
Partnership is then formed or qualified;
-21-
(x) do all other acts and things (including making publications or
periodic filings of this Agreement or amendments hereto or other similar
documents without the necessity of mailing or delivering copies of them to
each Limited Partner) that may now or hereafter be deemed by the General
Partners to be necessary,
(a) for the perfection and continued maintenance of the
Limited Partnership as a limited partnership under the laws of the
State,
(b) to protect the limited liability of the Limited Partners
under the laws of the State and other jurisdictions in which the
Limited Partnership is doing business, and
(c) subject to Section 7.3G of this Agreement, to cause this
Agreement, certificates or other documents to reflect accurately the
agreement of the Partners, the identity of the Limited Partners and
the General Partners and the amounts of their respective Capital
Contributions;
(xi) monitor the activities of the Production Partnership and keep
the Limited Partners informed of them in the manner provided in this
Agreement;
(xii) from time to time submit to any appropriate state securities
administrator all documents, papers, statistics and reports required to be
filed with or submitted to such state securities administrator; and
(xiii) inform each Limited Partner of all administrative and
judicial proceedings for an adjustment at the Limited Partnership or
Production Partnership level for partnership tax items and forward to each
Limited Partner within 30 days of receipt all notices received from the
Internal Revenue Service regarding the commencement of a partnership level
audit or a final partnership administrative adjustment, and to perform all
other duties imposed by Sections 6221 through 6232 of the Code on Geodyne
Properties as "tax matters partner" of the Limited Partnership, including
(but not limited to) the following: (a) the power to conduct all audits
and other administrative proceedings (including windfall profit tax
audits) with respect to Limited Partnership tax items; (b) the power to
extend the statute of limitations for all Partners with respect to Limited
Partnership tax items; and (c) the power to file a petition with an
appropriate federal court for
-22-
review of a final partnership administrative adjustment. Geodyne
Properties, as "tax matters partner," shall consult with PW Energy with
respect to the performance of all its duties in such capacity.
Section 4.7. Compensation of the General Partners
--------------------------------------------------
A. Except as provided in Articles Four and Five, the General Partners
shall not, either in their capacity as General Partners or in their individual
capacity, receive any salary, fees or profits from the Limited Partnership.
B. In consideration of their payment of Organization and Offering Costs,
the General Partners shall be paid by the Limited Partnership an amount equal to
3% of the Limited Partners' Capital Contributions which the General Partners
shall allocate between them as provided in Section 3.6. The General Partners
shall be reimbursed by the Limited Partnership for General and Administrative
Costs and Direct Administrative Costs incurred by them on behalf of the Limited
Partnership, and such costs shall be allocated among the Partners as set forth
in Section 5.2 of this Agreement. The General Partners shall be paid any excess
of interest income over the costs incurred in connection with the maintenance of
the reinvestment account referred to in Section 5.1(B)(i).
Section 4.8. Contracts with the General Partners and Affiliates
----------------------------------------------------------------
All services provided to the Limited Partnership by a General Partner or
any Affiliate for which it is compensated shall be embodied in a written
contract precisely setting forth the services to be rendered and the
compensation to be paid. Each contract relating to a transaction between the
Limited Partnership and any General Partner or any Affiliate shall contain a
provision which shall permit termination of the contract by the Limited
Partnership without penalty on 30 days' prior written notice.
Section 4.9. Other Operations
------------------------------
The General Partners and their Affiliates shall at all times be free to
engage in all aspects of the oil, gas and natural resources business for their
own accounts and for the accounts of others. Without limiting the generality of
the foregoing, the General Partners and their Affiliates shall have the right to
-23-
organize and operate other partnerships, joint ventures or other oil and gas
investment programs similar to the Limited Partnership or the Production
Partnership.
Section 4.10. Prosecution, Defense and Settlement of Claims;
Indemnification
------------------------------------------------------------
A. The General Partners shall arrange to prosecute, defend, settle or
compromise actions at law or in equity at the expense of the Limited Partnership
as may be necessary to enforce or protect the interests of the Limited
Partnership. The General Partners shall satisfy any judgment, decree, decision
or settlement, first, out of any insurance proceeds available therefor, next,
out of the Limited Partnership assets and income, and, finally, out of the
assets of the General Partners.
B. In any threatened, pending or completed action, suit or proceeding to
which the General Partners are a party or are threatened to be made a party by
reason of the fact that they are the General Partners of the Limited Partnership
(other than an action by or in the right of the Limited Partnership) involving
an alleged cause of action for damages arising from the performance of their
duties under this Agreement or other activities relative to the management of
the Limited Partnership, the Limited Partnership shall indemnify the General
Partners against expenses, including attorneys' fees, judgments and amounts paid
in settlement, actually and reasonably incurred by them in connection with such
action, suit or proceeding if they acted in good faith and in a manner they
reasonably believed to be in the best interests of the Limited Partnership, and
provided that their conduct does not constitute negligence or misconduct. The
termination of any action, suit or proceeding by judgment, order or settlement
shall not of itself create a presumption that the General Partners did not act
in good faith and in a manner which they reasonably believed to be in the best
interests of the Limited Partnership.
C. In any threatened, pending or completed action or suit by or in the
right of the Limited Partnership, to which the General Partners are a party or
are threatened to be made a party, involving an alleged cause of action by a
Limited Partner or Limited Partners for damages arising from the activities of
the General Partners in the performance of management of the internal affairs of
the Limited Partnership as prescribed in this Agreement or by law, or both, the
Limited Partnership shall indemnify the General Partners against expenses,
including attorneys' fees, actually and reasonably incurred by them in
connection with the defense or settlement of such action or suit
-24-
if they acted in good faith and in a manner they reasonably believed to be in
the best interests of the Limited Partnership as specified in this subsection,
except that no indemnification shall be made in respect of any claim, issue or
matter as to which the General Partners' course of conduct constituted
negligence or misconduct.
D. To the extent that the General Partners have been successful on the
merits or otherwise in defense of any action, suit or proceeding referred to in
Sections 4.1OB or 4.1OC of this Agreement, or in defense of any claim, issue or
matter therein, the Limited Partnership shall indemnify them against the
expenses, including attorneys' fees, actually and reasonably incurred by them in
connection therewith.
E. Any indemnification under Section 4.1OB and 4.1OC of this Agreement,
unless ordered by a court, shall be made by the Limited Partnership only as
authorized in the specific case and only upon a determination by independent
legal counsel in a written opinion that indemnification of the General Partners
is proper in the circumstances because they have met the applicable standard of
conduct set forth in Sections 4.1OB or 4.1OC of this Agreement.
F. The Limited Partnership shall not incur the costs of that portion of
insurance which insures the General Partners for any liability as to which the
General Partners are prohibited from being indemnified under Section 4.10.
Section 4.11. Dealer Manager
-----------------------------
The Dealer Manager shall have no duties, responsibilities or obligations
to the Limited Partnership, the General Partners or any Limited Partner as a
consequence of its right to receive Commissions, except to the extent provided
under the Securities Act of 1933, as amended. The Dealer Manager has not
assumed, and will not assume, any responsibility with respect to the Limited
Partnership nor will it be permitted by the General Partners to assume any
duties, responsibilities or obligations regarding the management, operations or
any of the business affairs of the Limited Partnership subsequent to the date on
which the Limited Partnership is Activated.
-25-
ARTICLE FIVE
Distributions, Fees and Allocations
-----------------------------------
Section 5.1. Distributions of Limited Partnership Funds
--------------------------------------------------------
A. The Distributable Cash of the Limited Partnership shall be distributed
simultaneously to the Limited Partners (either directly to such Limited Partners
or as they shall direct by their notice to the General Partners pursuant to the
reinvestment option set forth in Section ▇.▇▇ of this Agreement) and the General
Partners promptly upon receipt of cash distributions from the Production
Partnership. Each Partner's share of each such distribution shall be determined
after giving effect to the allocations set forth in Sections 5.2 and 5.3 of this
Agreement, except that (i) any Distributable Cash attributable to the receipt by
the Production Partnership of investment income (as defined in the Production
Partnership Agreement) shall be distributed 100% to the Limited Partners and,
(ii) any Distributable Cash which is attributable to a return pursuant to
Section 3.4 shall be distributed entirely to those Limited Partners (other than
corporate affiliates of Geodyne Resources, Inc. or the Dealer Manager or any
purchasers of Units therefrom with respect to the distribution of cash
contributed by the Managing Partners to the Production Partnership pursuant to
Section 3.4 of the Production Partnership Agreement or to the Limited
Partnership by the General Partners pursuant to Section 3.4) who are, at the
time of the distribution, Limited Partners. All distributions of Distributable
Cash shall reduce dollar-for-dollar the balances of the Partners' Capital
Accounts.
B.
(i) Except in North Carolina and Texas, prior to the first cash
distribution by the Limited Partnership, each Limited Partner will be
given an opportunity to elect to have all or a portion of such Limited
Partner's cash distributions (1) paid directly to the Limited Partner in
cash, or (2) held in a reinvestment account established for Limited
Partners of the Limited Partnership, any Prior Limited Partnerships and
any Subsequent Limited Partnership, any Prior Limited Partnerships and any
Subsequent Limited Partnerships pending the reinvestment of such cash
distributions in a minimum amount of $100 (with reinvestment in excess of
such minimum being permitted in whole increments of $100) in any
Subsequent Limited Partnership. After receipt of the Prospectus with
respect to any Subsequent Limited Partnership, each Limited Partner
-26-
may revoke such Limited Partner's prior election to have such Limited
Partner's cash distributions held in the reinvestment account invested in
the Subsequent Limited Partnership. Such revocation shall be made by the
Limited Partner's delivery to the Limited Partnership of a written notice
of revocation. On or before 30 days prior to the reinvestment of a Limited
Partner's cash distributions in a Subsequent Limited Partnership, the
General Partners shall provide each Limited Partner who has previously
elected to have cash distributions from the Limited Partnership reinvested
in a Subsequent Limited Partnership, and who has $100 or more held in the
reinvestment account on such Limited Partner's behalf, a form for the
Limited Partner to provide the Limited Partnership such written notice of
revocation. The cash distributions of a Limited Partner held in the
reinvestment account shall at all times be the property of the Limited
Partner, and the Limited Partner may withdraw such cash distributions held
in the reinvestment account on such Limited Partner's behalf upon thirty
days' prior written notice to the Limited Partnership. No interest shall
be payable to Limited Partners on the amount of their cash distributions
held in such reinvestment account; provided, however, that the General
Partners shall hold the Limited Partners harmless against any losses
sustained therein and the General Partners shall deposit into the
reinvestment account an amount equal to any loss suffered by a Limited
Partner prior to the earlier of the time the Limited Partner withdraws the
Limited Partner's share or an investment in a Subsequent Limited
Partnership is made on behalf of the Limited Partner. Prior to investment
in a Subsequent Limited Partnership or distribution of such funds, monies
held in the reinvestment account may be invested in investments permitted
under Section 9.3 of this Agreement. Any costs and interest income
attributable to the maintenance of the reinvestment account shall be
charged or paid, as the case may be, 50% to PW Energy and 50% to Geodyne
Properties.
(ii) Cash distributions held in the reinvestment account on behalf
of a Limited Partner will be delivered to such Limited Partner, and no
investment in a Subsequent Limited Partnership will be made on such
Limited Partner's behalf, upon (1) a decision by the General Partners not
to offer, or continue the offering of, a Subsequent Limited Partnership or
(2) a decision by such Limited Partner not to invest in a Subsequent
Limited Partnership. Subject to the Limited Partnership's receipt of a
Limited Partner's written notice of revocation or withdrawal referred to
in Section 5.1B(i), amounts held in the reinvestment account
-27-
on behalf of a Limited Partner which are not reinvested in a Subsequent
Limited Partnership (either because such amount is less than $100 or is in
excess of a whole increment of $100) shall remain in such reinvestment
account.
(iii) A Limited Partner's cash distribution will be reinvested in a
Subsequent Limited Partnership only if a registration statement covering
interests in the Subsequent Limited Partnership is in effect under the
Securities act of 1933, the offering of interests is qualified for sale
under the applicable state securities laws and the Limited Partner meets
the appropriate suitability standards. The General Partners may terminate
their offering of interests in a Subsequent Limited Partnership at any
time and will have no obligation to continue to offer interests or to
permit reinvestment of Distributable Cash therein. In the event the
General Partners or their Affiliates offer limited partnership interests
in limited partnerships other than the Subsequent Limited Partnerships and
provide Limited Partners the opportunity to reinvest cash distributions
from the Limited Partnership in such limited partnerships, the terms and
conditions of such reinvestment shall be determined by the General
Partners or their Affiliates in their discretion (which may differ from
the terms and conditions of reinvestment in Subsequent Limited
Partnerships provided herein).
Section 5.2. Allocation of Profits and Losses
----------------------------------------------
A. The Profits and Losses and each item of Income, gain, loss, cost,
deduction and credit of the Limited Partnership shall be determined and
allocated with respect to each Fiscal Year of the Limited Partnership as of, and
within 75 days after, the end of such Fiscal Year.
B. Direct Administrative Costs and General and Administrative Costs shall
be allocated to, and borne by, the Partners as follows: 90% to the Limited
Partners and 10% to the General Partners prior to, and 85% to the Limited
Partners and 15% to the General Partners after, Payout (as defined in the
Production Partnership Agreement).
C. Except as set forth in Section 5.2B, Profits and Losses and each item
of Income, gain, loss, cost, deduction and credit of the Limited Partnership
shall be allocated between the Partners and credited to or charged against their
Capital Accounts in the following ratio:
-28-
Limited Partners
(including the General
Partners to the extent
they purchase Units) 99%
Geodyne Properties and
PW Energy (in the aggregate) 1%
The General Partners shall allocate between themselves their aggregate
Interest in a manner such that PW Energy shall be allocated a percentage equal
to PW Production's percentage sharing ratio in the Production Partnership
determined under Section 5.3B(i) of the Production Partnership Agreement, and
the remaining amount shall be allocated to Geodyne Properties. The General
Partners may amend this Agreement to provide for any different allocation
between themselves at their discretion.
D. The General Partners may not be required to contribute funds to the
Limited Partnership to pay for Limited Partnership costs allocated to them
except to the extent necessary to pay costs referred to in Section 5.2B.
E. Notwithstanding anything to the contrary that may be expressed or
implied in this Agreement, the interest of the General Partners in each material
item of Partnership Income, gain, loss, deduction or credit shall be equal to at
least one percent of each such item at all times during the existence of the
Partnership. In determining the General Partners' interest in such items for the
purpose of this Section 5.2E, units of limited partnership interest owned by the
General Partners shall not be taken into account.
Section 5.3. Determinations of Allocations and Distributions Among
Partners
-------------------------------------------------------------------
A. Except as set forth in Section ▇.▇▇, all Distributable Cash distributed
to the Limited Partners, as a class, and all Profits and Losses and each item of
Income, gain, loss, cost, deduction or credit allocated to the Limited Partners,
as a class, shall be distributed or allocated, as the case may be, to each
Limited Partner in the ratio that the Capital Contribution of such Limited
Partner bears to the total Capital Contributions of all Limited Partners.
-29-
B. Distributable Cash, Profits and Losses and each item of Income, gain,
loss, cost, deduction or credit distributed or allocated to the Partners shall
be distributed or allocated, as the case may be, to the Persons who were
Partners, subject to the provisions of Section 10.2 of this Agreement, as of the
last day of the fiscal period for which the distribution or allocation is to be
made, except that in any fiscal period in which a Partner sells, assigns or
transfers all or any part of such Partner's Interest to any Person who during
the fiscal period is admitted as a Substituted Partner, the Distributable Cash,
Profits and Losses and each item of Income, gain, loss, cost, deduction or
credit attributable to the Interest so sold, assigned or transferred shall be
allocated between the transferor and the transferee on the basis of the number
of days in the fiscal period before the admission, and on and after the
admission, of the transferee as a Substituted Partner; provided, however, that
the Distributable Cash attributable to a Sale of a Producing Property by the
Production Partnership shall be distributed to those Partners who are Partners
on the day the distribution of such Distributable Cash occurs. The General
Partners shall inform the Limited Partners of the occurrence and terms of any
such Sale by the Production Partnership as soon as practicable after such Sale
has been consummated.
C. The Limited Partnership's share of the Production Partnership's
adjusted basis in each of its Producing Properties (allocated pursuant to the
Managing Partners' and the Limited Partnership's interests in Production
Partnership capital at the date of acquisition of the respective Producing
Properties) shall be allocated pursuant to Section 613A(c) (7) (D) of the Code
among the Partners in proportion to the interest of each in the Limited
Partnership capital ultimately used to acquire that property.
D. All items of Income, gain, loss, deduction and credit allowable for
Federal income tax purposes and all recapture of such deductions and credits
shall be allocated and charged or credited to the Partners in the same manner
that the revenues, costs or expenses giving rise to such items of Income, gain,
loss, deduction and credit are allocated and charged. Federal income tax
deductions for cost or percentage depletion with respect to any Producing
Property shall be determined at the Partner level and shall be determined in the
case of percentage depletion on the same basis that Income from the Producing
Property is allocated.
-30-
E. The Capital Account of each Partner shall be credited or debited with
its Capital Contribution and distributions of Distributable Cash, by the
adjusted basis of partnership property distributed in kind and with its share of
Income, gain, loss, and deductions of the Limited Partnership. Solely for
purposes of making adjustments to Capital Accounts, the Limited Partnership
shall compute a simulated depletion allowance on each oil and gas property using
that method, as between the cost depletion method or the percentage depletion
method (without regard to limitations which could apply to less than all the
Partners such as the quantity limitations of Code Section 613A(c)(3)) which
results in the greatest simulated depletion allowance. The Limited Partnership's
simulated depletion allowance shall reduce each Partner's Capital Account in the
same proportion as such Partner's share of the adjusted basis of such property
as determined in Section 5.3C above. In no event shall the Limited Partnership's
aggregate simulated depletion allowances with respect to a property exceed the
Limited Partnership's adjusted basis in such property (maintained solely for
Capital Account purposes). Upon the taxable disposition of all oil or gas
property by the Limited Partnership, the Limited Partnership's gain or loss
shall be determined (solely for Capital Account purposes) by subtracting its
adjusted basis in such property (maintained solely for Capita1 Account purposes)
from the amount realized from such disposition. Any resultant simulated gain
shall be allocated to the Partners in the same manner as that portion of the
amount realized from such disposition which exceeds the Limited Partnership's
adjusted basis in such property (maintained solely for Capital Account purposes)
is allocated to the Partners and shall increase such Partners' Capital Accounts
accordingly. Any resultant simulated loss shall be allocated to the Partners in
the same proportion as such Partners (or their predecessors in interest) were
allocated adjusted basis under Section 5.3C with respect to such property and
shall reduce such Partners' Capital Accounts accordingly.
F. The Capital Accounts of those Partners which are charged with an
expense shall be credited with any portion of that expense which is finally
determined, judicially or administratively, to be nondeductible for Federal
income tax purposes, less any amortization or depreciation thereof incurred
prior to the date that the credit is made.
-31-
ARTICLE SIX
Non-Transferability of General Partner Interest
-----------------------------------------------
Section 6.1. Non-Transferability of General Partner Interest
-------------------------------------------------------------
Except as provided in Section 6.2B, a General Partner (including by
definition any successor General Partner) shall not have the right to retire,
withdraw, transfer or assign its General Partner Interest, except that there may
be substituted in its stead as General Partner any entity that has, by merger,
consolidation or otherwise, acquired substantially all of its assets or capital
stock and continued its business.
Section 6.2. Removal of General Partners
-----------------------------------------
A. Subject to Section 11.3 of this Agreement, upon the Consent of more
than 50% in Interest (as to capital and Profits and Losses) of the Limited
Partners
(i) the power shall be vested in the Limited Partners to (a) remove
any or all General Partners and (b) cause the General Partners, on behalf
of the Limited Partnership, to Remove any Managing Partner.
(ii) (a) The power shall be vested in each General Partner to Remove
the other General Partner, and pursuant to Section l0.1A of this
Agreement admit a successor general partner, for "Cause" as defined
in Section 6.2A(ii)(b), but for no other reason.
(b) "Cause" for purposes of Section 6.2A(ii)(a) shall be
deemed to exist only (i) when a court of competent jurisdiction
shall have made a final determination (which determination is not
successfully appealed) that a General Partner has been guilty of
gross negligence, fraud, intentional misconduct or similar breach of
fiduciary responsibility in carrying out its duties as a General
Partner, or (ii) a General Partner is dissolved or liquidated on
account of insolvency or any other event occurs resulting in the
appointment of a trustee or receiver who acquires control of the
affairs of such General Partner for the purpose of dissolution or
liquidation on account of
-32-
insolvency, and such trustee or receiver is not dismissed within 90
days after appointment of such trustee or receiver, or (iii) (a) a
report on the audited financial statements of a General Partner and
its consolidated corporate affiliates is issued by the independent
accountants for such General Partner that is qualified on a going
concern basis, or (b) either General Partner requests an audit to be
performed of the other General Partner and its consolidated
corporate affiliates by the independent accountants for the other
General Partner (the expense of such audit being paid by the General
Partner requesting the audit), and such audit results in the
issuance of an opinion with respect to the financial statements of
the other General Partner and its consolidated corporate affiliates
for the period ending, and as of, the most recent date feasible,
that is qualified on a going concern basis.
B. (i) In the event that a General Partner is Removed by the Limited
Partners or the other General Partner, the Removed General Partner's
Interest in the Limited Partnership shall be transferred to the other
General Partner, and the other General Partner shall assign to the Removed
General Partner a portion of Limited Partnership Income, costs and
Distributable Cash as and when such items are allocated or distributed, as
the case may be, by the Limited Partnership equal to the percentage
interest of the Removed General Partner in the Limited Partnership prior
to its Removal.
(ii) If the Limited Partners elect to Remove a sole General Partner
as permitted under this Section, and further elect to continue the
business of the Limited Partnership with one or more successor General
Partners, the removed General Partner shall not be Removed until a
successor General Partner has been selected by the Limited Partners and
admitted to the Limited Partnership pursuant to Section 10.2 of this
Agreement.
(iii) In the event the sole General Partner is Removed by the
Limited Partners and a successor General Partner selected, the incoming
General Partner and the Removed General Partner shall, by mutual
agreement, select an independent petroleum consultant to value the Removed
General Partner's Interest in the Limited Partnership. In determining the
value of the General Partner's Interest, the independent consultant will
take into account appropriate discount factors in light of the risk of
recovery of oil and gas reserves, and, in any event, will utilize a "risk
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factor" discount no less than that utilized in the most recent offer
extended pursuant to Section 7.5 of the Agreement, if any. The incoming
General Partner, or the Limited Partnership, shall have the option to
purchase at least 20% of the interests of the Removed General Partner for
the value determined by the independent appraisal. The Removed General
Partner's Interest in the Limited Partnership shall be transferred to the
successor General Partner, and the successor General Partner shall assign
to the Removed General Partner a portion of Limited Partnership Income,
costs and Distributable Cash as and when such items are allocated or
distributed, as the case may be, by the Limited Partnership equal to the
percentage interest of the Removed General Partner in the Limited
Partnership prior to Removal, less the portion purchased by the successor
General Partner or the Limited Partnership.
(iv) If the Limited Partners have Removed a General Partner, the
power shall be vested in the Limited Partners to Consent to the admission
of a successor General Partner meeting the requirements of Section 6.2B(v)
of this Agreement to take the place of a Removed General Partner upon the
consent of more than 50% in Interest (as to capital and Profits and
Losses) of the Limited Partners.
(v) If there is admitted to the Limited Partnership a successor
General Partner, such admission shall not become effective unless the
Limited Partnership shall have received a certificate, duly executed by or
on behalf of such proposed successor General Partner, to the effect that:
(a) it is experienced in performing (or employs sufficient personnel who
are experienced in performing) functions of the type then being performed
by the Removed General Partner and (b) it has a net worth, together with
the net worth of any remaining General Partner, sufficient to satisfy the
net worth requirements of the Code, Treasury Regulations, the Internal
Revenue Service or the courts applicable to a general partner in a limited
partnership in order to ensure that the Limited Partnership will not fail
to be classified for Federal income tax purposes as a partnership.
(vi) Notwithstanding Section 3.7B, any General Partner who shall be
Removed from the Limited Partnership shall be released by the remaining
General Partner and any successor General Partner from all liability for
Limited Partnership debts and obligations incurred by the Limited
Partnership prior to the time of such Removal.
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Section 6.3. Incapacity of a General Partner
---------------------------------------------
A. In the event of the Incapacity of a sole General Partner, the Limited
Partnership shall be dissolved. However, within 90 days thereafter the remaining
Partners may elect to reconstitute the Limited Partnership prior to application
of the liquidation provisions of Section 8.2.
B. Upon the Incapacity of a General Partner, the Person who is its legal
representative shall have all the rights of a General Partner for the purpose of
settling or managing its estate and such power as the Incapacitated General
Partner possessed to assign all or any part of its Interest and to join with
such assignee in satisfying conditions precedent to such assignee becoming a
Substituted Partner.
Section 6.4. Termination of Contracts with General Partners or
Managing Partners
---------------------------------------------------------------
Subject to and upon fulfilling the conditions of Section 11.3, the power
shall be vested in the Limited Partners to terminate any or all contracts
between the General Partners or any Affiliate and the Limited Partnership, or to
cause the General Partners, on behalf of the Limited Partnership, to terminate
any contracts between the Managing Partners or any Affiliate and the Production
Partnership, and select, or cause the General Partners, on behalf of the Limited
Partnership, to select, as the case may be, a replacement Person therefor upon
the Consent of more than 50% in Interest of the Limited Partners.
ARTICLE SEVEN
Transferability of Limited Partner's Interest
---------------------------------------------
Section 7.1. Transferability of Limited Partner's Interest
-----------------------------------------------------------
A. A Limited Partner shall not have the right to retire or withdraw from
the Limited Partnership. Except as provided in this Section 7.1, a Limited
Partner's Interest shall be transferable so long as the transfer is made in
accordance with all applicable laws.
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B. In no event shall all or any part of a Limited Partner's Interest be
assigned or transferred to a minor or an incompetent except in trust or by will
or intestate succession or to any Person not qualified to hold interests in
federal leases.
C. No purported sale, assignment or transfer by a transferor after which
the transferor would continue to hold an Interest representing a Capital
Contribution of less than $1,000 will be permitted or recognized for any purpose
without the Consent of the General Partners, which Consent shall be granted only
for good cause shown.
D. No sale, exchange, transfer or assignment of a Limited Partner's
Interest shall be made if in the opinion of counsel to the Limited Partnership,
such sale, exchange, transfer or assignment, would (i) cause the Limited
Partnership to lose its status as a partnership for Federal income tax purposes,
or (ii) violate the Securities Act of 1933, as amended, or any state securities
or "blue sky" laws (including any investor suitability standard applicable to
the Limited Partnership or the Interest to be sold, exchanged, transferred or
assigned).
Section 7.2. Incapacity of Limited Partners
--------------------------------------------
If a Limited Partner becomes Incapacitated, the Person who is its legal
representative shall have all the rights of a Limited Partner for the purpose of
settling or managing its estate and such power as the Incapacitated Limited
Partner possessed to assign all or any part of its Interest and to join with
such assignee in satisfying conditions precedent to such assignee becoming a
Substituted Limited Partner. The Incapacity of a Limited Partner shall not
dissolve the Limited Partnership.
Section 7.3. Assignees and Substituted Limited Partners
--------------------------------------------------------
A. The Limited Partnership shall not recognize for any purpose any
purported sale, assignment or transfer of all or any fraction of the Interest of
a Limited Partner unless the provisions of Section 7.1 shall have been complied
with and there shall have been filed with the Limited Partnership a dated
Notification of such sale, assignment or transfer, executed and acknowledged by
both the seller, assignor or transferor and the purchaser, assignee or
transferee and such Notification (i) contains the acceptance by the purchaser,
assignee or transferee of all of the terms and provisions of this Agreement and
(ii) represents that such sale, assignment or transfer was made in accordance
with all applicable laws and regulations. Any sale,
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assignment or transfer shall be recognized by the Limited Partnership as
effective on the date of such Notification if the date of such Notification is
within 30 days of the date on which such Notification is filed with the Limited
Partnership, and otherwise shall be recognized as effective on the date such
Notification is filed with the Limited Partnership.
B. Any Limited Partner which shall assign all of its Interest shall cease
to be a Limited Partner, except that, unless and until a Substituted Limited
Partner is admitted in its stead, such assigning Limited Partner shall retain
the statutory rights and obligations of a Limited Partner under the Act.
C. A Person who is the assignee of all or any fraction of the Interest of
a Limited Partner shall be subject to all the provisions of this Article Seven
to the same extent and in the same manner as any Limited Partner desiring to
make an assignment of its Interest.
D. Any purchaser, assignee, transferee, donee, heir, legatee or other
recipient of an Interest shall be admitted to the Limited Partnership as a
Substituted Limited Partner only with the Consent of the General Partners, which
Consent may be granted or withheld by the General Partners at their sole and
absolute discretion.
The admission of such Person as a substituted Partner shall be evidenced
by the execution by a General Partner of a certificate evidencing the admission
of such Person as a Limited Partner and an amendment to this Agreement executed
by a General Partner on its own behalf, as well as on behalf of each other
Limited Partner, pursuant to the power of attorney granted pursuant to Section
12.5 of this Agreement and recorded or filed in the proper records of the State.
E. No Person shall become a Substituted Limited Partner until such Person
shall have satisfied the requirements of Section 10.2; provided, however, that
for the purpose of allocating Profits, Losses, and items of income, gain, loss,
cost, deductions, credits and Distributable Cash, a Person shall be treated as
having become, and as appearing in the records of the Limited Partnership as, a
Limited Partner on such date as the sale, assignment or transfer to such Person
was recognized by the Limited Partnership pursuant to Section 7.3A.
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F. Each Limited Partner shall indemnify and hold harmless the Limited
Partnership, the General Partners and their Affiliates and every Limited Partner
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of or arising from any actual or
alleged misrepresentation or misstatement of facts or omission to state facts
made (or omitted to be made) by such Limited Partner in connection with any
assignment, transfer, encumbrance or other disposition of all or any part of an
Interest, or the admission of a Substituted Limited Partner to the Limited
Partnership, against expenses for which the Limited Partnership or such other
Person has not otherwise been reimbursed (including attorneys' fees, judgments,
fines and amounts paid in settlement) actually and reasonably incurred by it in
connection with such action, suit or proceeding.
G. At the end of each calendar quarter in which (i) a Substituted Limited
Partner has been approved for admission by the General Partners or (ii) there
has been any return of the Capital Contributions of the Limited Partners, the
General Partners shall file an amended certificate of limited partnership with
the appropriate authorities of each state in which the Limited Partnership
transacts business for the purpose of adding as Substituted Limited Partners all
assignees of Interests previously approved by the General Partners for admission
as Substituted Limited Partners and for reflecting accurately the Capital
Contributions of the Limited Partners.
H. (i) Each Limited Partner represents and warrants that such person
does not own, directly or indirectly, more than 20% of the outstanding
stock of the General Partners or any of their Affiliates as defined in
Section 1504(a) of the Code.
(ii) Each Limited Partner further represents and warrants that the
following statements are true: (a) if such Limited Partner is an
individual, such Limited Partner is a U.S. citizen, and is 21 years of age
or older; if such Limited Partner is a partnership or an association, all
of its members are of such citizenship; if such Limited Partner is a
corporation, it is authorized and otherwise duly qualified to hold an
Interest in the Limited Partnership; (b) such Limited Partner has
thoroughly read the Prospectus and this Agreement and understands the
nature of the risks involved in the proposed investment; (c) such Limited
Partner is experienced in investment and business matters; (d) such
Limited Partner, or in the case of an ▇▇▇ or Employee Benefit Plan (as
those terms are defined in the
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Prospectus), each beneficiary of such Limited Partner has (x) a net worth,
exclusive of home, furnishings and automobiles of at least $25,000 and had
during the last tax year, or estimates that such Limited Partner will have
during the current year, "taxable income" as defined in Section 63 of the
Code, of $25,000 or more (income of $20,000 in California), or (y) a net
worth, exclusive of home, furnishings and automobiles of at least $90,000
($75,000 in California) or (z) satisfies any more restrictive suitability
requirements imposed by applicable Blue Sky laws; (e) such Limited Partner
recognizes that the Limited Partnership will be newly organized and will
have no history of operations or earnings and is a speculative venture;
(f) such Limited Partner understands that the transferability of such
Limited Partner's Interest(s) in the Limited Partnership is restricted
pursuant to the provisions of the Agreement and that such Limited Partner
cannot expect to be able to liquidate such Limited Partner's investment
readily in case of emergency; and (g) unless otherwise indicated in such
Limited Partner's Subscription Agreement and Power of Attorney, such
Limited Partner is the sole party in interest in such Limited Partner's
Interest and, as such, is vested with all legal and equitable rights in
such Interest.
(iii) In the event that the General Partners believe any of the
representations made by a Limited Partner in Section 7.3H were untrue at
the time of such Limited Partner's acquisition of an Interest or if the
General Partners believe any of the representations made in Section
7.3H(i) and (ii)(a) become untrue at any time during the time that such
Limited Partner is a Limited Partner, the General Partners shall have the
right, exercisable at their sole discretion, within 60 days after the
receipt of knowledge of such untruth or the recognition of such belief, to
buy such Limited Partner's Interest in the Limited Partnership at a
purchase price calculated in a manner identical to the manner set forth in
Section 7.5 of this Agreement. In the event that the General Partners
believe the representation contained in Section 7.3H(ii) (g) has become
untrue at any time with respect to a Limited Partner, such Limited Partner
shall immediately file with the General Partners (i) a statement signed by
the Limited Partner and the other interested parties setting forth the
nature and the extent of the interest of each, and the nature of the
agreement between them, and (ii) such other information, statements, and
grants of powers of attorney as may be requested by the General Partners.
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The effective date of any purchase made pursuant to this Section shall be
the first day of the calendar month during which the General Partners give
notice to the Limited Partner of their desire to exercise their rights of
purchase hereunder.
Section 7.4. Incapacity of a Limited Partner
---------------------------------------------
Upon the Incapacity of a Limited Partner or upon the seizure of a Limited
Partner's Interest in the Limited Partnership, the successor to such Limited
Partner's Interest ("Successor") shall be deemed an assignee of such Limited
Partner's Interest in the Limited Partnership and neither the Limited Partner
nor the Successor shall have the right to demand immediate valuation and payment
of such Limited Partner's Interest.
Section 7.5. Right of Presentment
----------------------------------
A. Each Limited Partner who has subscribed for Units will have the option
subject to the terms and conditions set forth in this Section 7.5 to require the
General Partners to purchase all of such Limited Partner's Interest in the
Limited Partnership, provided that the option may not be exercised after the
date of any notice that will effect a dissolution and termination of the Limited
Partnership pursuant to Section 8.1 of this Agreement. The obligation of each of
PW Energy and Geodyne Properties to purchase Units shall be joint and several
and shall be limited to an aggregate amount during any four consecutive fiscal
quarters equal to 1% of the Limited Partners' Capital Contributions (exclusive
of Capital Contributions made by either General Partner or an Affiliate in its
capacity as a Limited Partner). The obligations of the General Partners
hereunder shall be satisfied to the extent an Affiliate of a General Partner or
an partnership sponsored by the General Partners or their Affiliates acquires
tendered Units. A Limited Partner may exercise the Limited Partner's option only
with respect to all of the Limited Partner's Interest. Any such exercise shall
be effected by a Notification thereof to the General Partners. Prior to the
expiration of twelve months after the date on which 90% of the Limited Partners'
Capital Contributions have been expended by the Production Partnership, such
latter date being the "Valuation Date," such Limited Partner may, subject to the
terms and conditions of this Section 7.5, sell such Limited Partner's Interest
to the General Partners at a purchase price equal to 75% of the Subscription
amount therefor, less the amount of any distributions of Distributable Cash to
such Limited Partner. Thereafter, each such Limited Partner may, subject to the
terms and conditions of this Section 7.5, tender such Limited Partner's Interest
to the General Partners for purchase at a price determined in accordance with
Section 7.5C of this Agreement.
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B. Each Limited Partner tendering an Interest who does not revoke such
Limited Partner's election pursuant to Section 7.5D shall assign such Interest
to the purchaser thereof pursuant to the power of attorney granted the General
Partners in the Subscription Agreement and Power of Attorney executed by such
Limited Partner. The purchase price for such Interests will be determined, as of
the close of business of the last day of the calendar quarter (the "Effective
Date"), with respect to all Interests tendered to the General Partners during
each such calendar quarter after the Valuation Date.
C. The purchase price to be paid for the Interest of any Limited Partner
who tenders an Interest pursuant to this Section 7.5 after the Valuation Date
will be determined by assuming the sale of all Production Partnership Property
and the subsequent liquidation of the Production Partnership pursuant to Section
8.2 of the Production Partnership Agreement and the liquidation of the Limited
Partnership pursuant to Section 8.2 of this Agreement. The hypothetical credit
balance in a Limited Partner's Capital Account shall be the purchase price for
such Limited Partner's Interest; provided, however, that such purchase price
shall be reduced by an amount equal to 70% of the distributions of Distributable
Cash received by such Limited Partner on or before the date the Limited Partner
receives a check in payment for the Limited Partner's tendered Interest which is
attributable to sales of Production Partnership Hydrocarbon production
attributable to Proved Reserves since the date as of which the Production
Partnership's Proved Reserves are calculated for purposes of this Section 7.5C.
In order to value the sale proceeds to be received upon such assumed sale, the
General Partners shall employ the petroleum engineering reports and other
petroleum reserve information referred to in Section 9.4C of this Agreement for
the end of the Fiscal Year preceding the applicable Effective Date. First,
future gross revenues expected to be derived from the production and sale of the
Proved Reserves attributable to the Production Partnership Producing Properties
will be estimated using either (i) escalations of future sales prices of
Hydrocarbons supplied by the General Partners (the "Escalated Case") or (ii)
only escalations of such future sales prices of Hydrocarbons permitted by
Regulation S-X adopted by the Securities and Exchange Commission (the "SEC
Case"), as the General Partners may determine in their discretion. Next, future
net revenues will be calculated by deducting anticipated expenses (including
operating expenses and other costs that will be incurred in producing and
marketing such reserves and any gross production, excise, windfall profit or
other taxes, other than Federal income taxes, based on the Hydrocarbon
production of the Production Partnership or sales thereof) (using either (i)
escalations of future costs supplied
-41-
by the General Partners in the event the General Partners adopted the Escalated
Case with respect to future sales prices of Hydrocarbons or (ii) constant future
costs in the event the General Partners adopted the SEC Case with respect to
future sales prices of Hydrocarbons) from estimated future gross revenues. Then
the present worth of the future net revenues will be calculated by discounting
the estimated future net revenues at either 10% (in the event the General
Partners employed pricing criteria in accordance with the SEC case) or that rate
per annum which is one (1) percentage point higher than the prime rate of
interest of The Chase Manhattan Bank, N.A. or any successor bank, as such prime
rate of interest is announced by said bank from time to time (in the event the
General Partners employed pricing criteria in accordance with the Escalated
Case). If the latter interest rate is used and exceeds 11% per annum, the
General Partners will provide, for comparative purposes only, the repurchase
price if computed based upon a 10% per annum discount rate. This amount will be
reduced by an additional 30% to take into account the uncertainties attendant to
the production and sale of Hydrocarbon reserves and other unforeseen
contingencies. This reduced amount is subject to upward or downward adjustment
by the General Partners, in the event that during the period between the end of
the Fiscal Year preceding the applicable Effective Date and such Effective Date,
there has occurred any material increase or decrease in the current price of oil
or gas or in the estimated amount of Production Partnership Proved Reserves
thereof from the current oil and gas prices or the estimated Proved Reserves
used in the above calculation of the present worth of the future net revenues.
Salvage value of tangible equipment installed on the Production Partnership
▇▇▇▇▇ and costs of plugging and abandoning the productive Production Partnership
▇▇▇▇▇, both discounted at the applicable aforementioned rate from the expected
date of abandonment, will be estimated, and the Production Partnership's
Producing Properties which do not have Proved Reserves attributable to them but
which have not been condemned will have such reserves valued at their then fair
value as determined by an independent petroleum engineering firm. The Production
Partnership's cash on hand, prepaid expenses, accounts receivable (less a
reasonable reserve for doubtful accounts) and the market value of its other
assets as determined by a qualified independent appraiser will be added to the
value of the Production Partnership's Producing Properties thus determined, to
arrive at the Production Partnership's hypothetical sale proceeds for purposes
of this Section 7.5C.
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D. Within sixty (60) days after the applicable Effective Date, the General
Partners will deliver to each Limited Partner who has tendered such Limited
Partner's Interest to the General Partners during the calendar quarter ending on
such Effective Date a check in the amount of the purchase price for such
Interest together with a statement evidencing that such price has been
determined in accordance with the provisions of Section 7.5C. The statement will
show which portion of the purchase price is represented by the value of the
Proved Reserves and by each of the other classes of Production Partnership
assets and liabilities attributable to the account of the Limited Partnership
and, by virtue of a Limited Partner's Interest in the Limited Partnership,
attributable to the account of the Limited Partner. The Limited Partner will
then have thirty (30) days after receipt of payment for such Interest from a
General Partner to revoke, by notice to the General Partners and return of such
check, the sale of such Limited Partner's Interest. If the Limited Partner does
not timely revoke such Limited Partner's intention to sell, the assignment of
such Limited Partner's Interest to the purchaser of such Interest will be
executed on such Limited Partner's behalf by a General Partner as attorney in
fact; provided, however, that the obligation of the General Partners to purchase
the Interests tendered by the Limited Partners shall be limited during any four
consecutive fiscal quarters to an amount not in excess of 1% of the Limited
Partners' Capital Contributions (exclusive of Capital Contributions made by the
General Partners or their Affiliates as Limited Partners). Moreover, the General
Partners will not be obligated to buy any Units pursuant to such right if such
purchase, when added to the total of all other Sales or other dispositions of
Interest within the preceding 12 months, would result in the Limited Partnership
being considered to have terminated within the meaning of Section 708 of the
Internal Revenue Code of 1954, as amended, or would cause the Limited
Partnership to lose its status as a partnership for Federal income tax purposes.
If less than all of the Interests tendered are purchased, the Interests
purchased will be selected by lot. The Limited Partners whose tendered Interests
were rejected by reason of the foregoing limitations shall not be entitled to
priority in the following quarter. Contemporaneously with the closing of any
such sale, which shall not be earlier than 30 days after tender of the purchase
price for an Interest to a Limited Partner, a General Partner, as attorney in
fact for such Limited Partner, will execute such certificates or other documents
and perform such acts as the General Partners deem necessary to effect the sale
and transfer of the liquidating Limited Partner's Interest to the purchaser and
to preserve the limited liability status of the Limited Partnership under the
laws of the jurisdictions in which it is doing business.
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ARTICLE EIGHT
Dissolution, Liquidation and Termination
----------------------------------------
of the Limited Partnership
--------------------------
Section 8.1. Events Causing Dissolution
----------------------------------------
A. The Limited Partnership shall be dissolved upon the happening of any of
the following events:
(i) the expiration of its term, without any continuation thereof as
set forth in Section 2.4 of this Agreement;
(ii) the Incapacity of the sole General Partner. However, within
ninety days thereafter the remaining Partners may elect to reconstitute
the Limited Partnership prior to application of the liquidation provisions
of Section 8.2;
(iii) the Sale or other disposition at one time of all or
substantially all of the assets of the Limited Partnership existing at the
time of such Sale (including the liquidation or redemption other than in
kind of its interest in the Production Partnership);
(iv) the election to dissolve the Limited Partnership (a) by the
General Partners (which election shall be Consented to by more than 50% in
Interest of the Limited Partners), or (b) by the Consent of more than 50%
in Interest of the Limited Partners;
(v) ninety days after the Removal of the sole General Partner
(unless a successor is elected pursuant to Section 6.2 of this Agreement);
(vi) the dissolution and liquidation of the Production Partnership
without the continuance of its business by the Limited Partnership
pursuant to Section 4.2A(ii) of this Agreement; or
(vii) the happening of any other event causing the dissolution of
the Limited Partnership under the laws of the State, except that the
Incapacity of any Limited Partner shall not dissolve the Limited
Partnership and the seizure of the Interest of any Partner shall not
dissolve the Limited Partnership.
-44-
B. Dissolution of the Limited Partnership shall be effective on the day on
which the event occurs giving rise to the dissolution, but the Limited
Partnership shall not terminate until the General Partners have recorded a
notice of dissolution of the Limited Partnership with the office of the
Secretary of State of the State and shall have complied with the laws of the
other states in which its does business and the assets of the Limited
Partnership have been distributed as provided in Section 8.2.
C. Nothing contained in this Agreement shall impair, restrict or limit the
rights and powers of the Partners under the laws of the State or any other
jurisdiction in which the Limited Partnership is doing business to reform and
reconstitute themselves as a limited partnership following dissolution of the
Limited Partnership either under provisions identical to those set forth herein
or under any other provisions.
Section 8.2. Liquidation
-------------------------
A. Upon dissolution of the Limited Partnership, its liabilities shall be
paid in the order provided herein. The General Partners shall either distribute
in kind or sell the Limited Partnership's property so that such disposition is
in the best interests of the Limited Partners, and shall execute all amendments
terminating the Limited Partnership. In connection with any such Sale, the
General Partners shall attempt to obtain the best prices for such property.
Pending such Sales, the General Partners shall have the right to continue to
operate and otherwise to deal with Limited Partnership property. In the event
the Limited Partnership is dissolved on account of the Incapacity or Removal of
the sole General Partner, the Limited Partnership shall elect, in accordance
with the provisions of Article Eleven, a person (the "Liquidating Agent") to
perform the function of a General Partner in liquidating the assets of the
Limited Partnership and winding up its affairs, and shall pay to such
Liquidating Agent its reasonable fees and expenses incurred in connection
therewith. Gain or loss realized on the Sale or other disposition of the Limited
Partnership's assets will be credited to (in the case of gain) or charged
against (in the case of loss) each Partner's Capital Account to the extent
allocable to such Partner under Sections 5.2 and 5.3 of this Agreement. In the
event of a distribution in kind of (a) any property other than an interest in a
Producing Property, each Partner's Capital Account shall be debited with the
portion of the Limited Partnership's adjusted basis thereof attributable to the
interest therein distributed to it and (b) any Producing Property or an interest
in any Producing Property, each Partner's Capital
-45-
Account shall first be credited or debited with its share of the
unrealized appreciation or depreciation in the fair market value of said
Producing Property or interest in said Producing Property. Each Partner's share
of said unrealized appreciation or depreciation shall be equivalent to its share
(allocated pursuant to Sections 5.2 and 5.3 of this Agreement) of the gain or
loss on an actual Sale of such Producing Property or interest therein. The
Capital Account of each Partner to whom a Producing Property or an interest in a
Producing Property is distributed shall be debited with the fair market value of
the Producing Property distributed to it. No Partner shall be distributed an
interest in any asset if the distribution would result in a deficit balance or
increase the deficit balance in its Capital Account (after making the
adjustments referred to in this Section 8.2A relating to distribution in kind).
Any liquidation of the Limited Partnership shall take place out of court and
without application being made therefor to the Secretary of State of the State.
B. In settling accounts after dissolution, the assets of the Limited
Partnership shall be paid out in the following order: (i) to third party
creditors, in the order or priority as provided by law; (ii) to the General
Partners and any Liquidating Agent for any expenses of the Limited Partnership
paid by or payable to them to the extent they are entitled to reimbursement
therefor pursuant to this Agreement; (iii) to all of the Limited Partners in the
amount equivalent to the amount of their positive Capital Account balances (as
adjusted pursuant to Section 8.2A of this Agreement) on the date of
distribution; (iv) to the General Partners in the amount equivalent to the
amount of their positive Capital Account balances (as adjusted pursuant to
Section 8.2A of this Agreement) on the date of distribution; and (v) the balance
shall be paid to the Partners in the manner provided for by Sections 5.2 and 5.3
of this Agreement with respect to Distributable Cash.
C. In the event that following the final distribution under Section 8.2B
the General Partners have a deficit balance in their Capital Account balances,
they shall contribute cash to the Limited Partnership necessary to eliminate
said deficit balance, which amount shall be distributed to the other Partners to
the extent of their remaining positive Capital Account balances.
D. Notwithstanding anything to the contrary in this Agreement, upon the
dissolution and termination of the Partnership, the General Partners will
contribute to the Partnership the lesser of: (a) the deficit balances in their
capital accounts; or (b) the excess of 1.01 percent of the total Capital
Contributions of the Limited Partners over the capital previously contributed by
the General Partners.
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ARTICLE NINE
Books and Records; Accounting; Tax Elections; etc.
--------------------------------------------------
Section 9.1. Books and Records
-------------------------------
The books and records of the Limited Partnership, including information
relating to the sale by the General Partners or any Affiliates of goods or
services to the Limited Partnership, and a list of the names and addresses and
Interests of all Limited Partners, shall be maintained by the General Partners
at the principal office of the Limited Partnership for a period of five years
following the close of the Fiscal Year to which they relate and shall be
available for examination there by any Partner or its duly authorized
representatives at any and all reasonable times. Any Partner, or its duly
authorized representatives, upon paying the costs of collection, duplication and
mailing, shall be entitled for any proper purpose to a copy of the list of names
and addresses and Interests of the Limited Partners. The Limited Partnership may
maintain such other books and records and may provide such financial or other
statements as the General Partners in their discretion deem advisable.
Section 9.2. Accounting Basis for Tax and Reporting Purposes;
Fiscal Year
--------------------------------------------------------------
The books and records of the Limited Partnership for tax purposes, for
purposes of this Agreement and for the purpose of reports to the Partners, shall
be kept on the cash or accrual basis, as the General Partners shall determine.
The Fiscal Year of the Limited Partnership shall be the calendar year to the
extent permissible and the General Partners shall use their best efforts to
obtain any necessary approvals therefor.
Section 9.3. Bank Accounts
---------------------------
The General Partners shall maintain a bank account or accounts to be
maintained by the General Partners on behalf of the Limited Partnership with any
bank in the United States having total assets in excess of $100,000,000. The
General Partners shall not deposit Limited Partnership funds in an account with
any bank in an aggregate amount in excess of 5% of such bank's total assets.
Withdrawals shall be made only in the regular course of the Limited
Partnership's business on such signature or
-47-
signatures as the General Partners may determine. All deposits and other funds
not needed in the operation of the business may be deposited in interest-bearing
accounts, certificates of deposit, money market funds (including those managed
or marketed by the Dealer Manager or its Affiliates) or invested in short-term
United States Government obligations maturing within one year, commercial paper
of United States corporations having the highest credit rating granted by
▇▇▇▇▇'▇ Investors Services, Inc. or Standard & Poors Corporation, or other
similar highly liquid investments.
Section 9.4. Reports
---------------------
A. The General Partners shall close the Limited Partnership's books of
account promptly at the close of each Fiscal Year and an annual examination of
the Limited Partnership's financial statements shall be performed at the expense
of the Limited Partnership by the Accountants. The General Partners shall
furnish to the Limited Partners an annual report within 90 days after the close
of each Fiscal Year of the Limited Partnership commencing with the Fiscal Year
in which the Limited Partnership was Activated. If requested by a Limited
Partner, the General Partners shall also furnish such Partner with a report
within 60 days after the end of the first six months of the Fiscal Year in which
such request was made, or within 60 days after the request is made, whichever is
later. Such report will contain at least the following information:
(i) Financial statements for the Limited Partner-ship's and the
Production Partnership's accounts, including a balance sheet, statement of
income, statement of changes in partners' capital and statement of changes
in financial position prepared on an accrual basis in accordance with
generally accepted accounting principles and accompanied by a report of
the Accountants together with their opinion thereon, except that the
semiannual financial statements need not be audited;
(ii) A summary itemization, by type and/or classification, of the
total fees and compensation, including any overhead reimbursement, paid by
the Limited Partnership or Production Partnership or indirectly on their
behalf, to any General Partner or Managing Partner and any Affiliate;
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(iii) A description of each Producing Property acquisition,
including the costs therefor, in which the Production Partnership owns an
interest, except succeeding reports need contain only material changes
(including all farmouts, development drilling, improved recovery
operations and abandonments), if any, regarding Producing Properties
already reported upon. In the case of ▇▇▇▇▇ that have been abandoned after
production has commenced, a statement justifying such abandonment shall be
included if a General Partner or an Affiliate is the operator. In the case
of farmouts, the statement shall include a justification of the farmout,
location, time, to whom made, and a general description of terms;
(iv) A schedule reflecting a list of the ▇▇▇▇▇ drilled by the
Production Partnership on behalf of the Limited Partnership and the costs
thereof;
B. Within 60 days after the end of each fiscal quarter each Limited
Partner will receive a "participant statement" which summarizes his interest in
the Limited Partnership. The participant statement will detail the Limited
Partner's cash receipts and disbursements for the Limited Partner's Interest in
the Limited Partnership.
C. Within 90 days after the end of the Fiscal Year following the Fiscal
Year in which Activation of the Limited Partnership occurs, and annually
thereafter, the General Partners shall furnish to the Limited Partners a
computation as of the end of the immediately preceding Fiscal Year, based upon
engineering reports prepared by one or more qualified independent petroleum
engineering firms with respect to Producing Properties containing Proved
Reserves equal to at least 80% of the Proved Reserves of the Production
Partnership (with the computation as to any balance of the Production
Partnership's Proved Reserves being based upon petroleum engineering reports
prepared by a General Partner or an Affiliate), of the total estimated Proved
Developed Producing Reserves, Proved Developed Non-Producing Reserves and Proved
Undeveloped Reserves owned by the Production Partnership, the estimated dollar
value thereof stated in then existing prices and escalated prices (as provided
by the General Partners). In addition, the computation shall include an estimate
of the time required for the extraction of such reserves and the present worth
of such reserves and the estimate shall contain a statement that because of the
time period required to extract such reserves the present value of revenues to
be obtained in the future is less than if immediately receivable.
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D. In addition to the report described in Section 9.4C of this Agreement,
if an event occurs to the knowledge of the General Partners or their Affiliates
leading to a reduction or an increase of such Reserves of more than 10 percent,
excluding reduction as a result of normal production, an additional computation
and estimate similar to that described in Section 9.4C shall be sent to each
Limited Partner as soon as possible.
E. By March 15 of each year, the General Partners will furnish a report to
each Limited Partner containing such information as is pertinent for completion
of its respective Federal, state, and other income tax returns.
F. The General Partners shall file on a timely basis with the Securities
and Exchange Commission all filings required to be made by the Limited
Partnership and Production Partnership pursuant to the Securities Act of 1933,
the Securities Exchange Act of 1934, and the rules and regulations promulgated
thereunder. The General Partners shall make available to any Limited Partner
upon the Limited Partner's request, copies of any report filed by or on behalf
of the Limited Partnership or the Production Partnership with the Securities and
Exchange Commission. The General Partners shall cause a copy of the report sent
to the Limited Partners under paragraphs A, C, D and E hereof to be sent to the
California Commissioner of Corporations.
G. The General Partners agree to make all relevant financial and
engineering reports available for review by a Limited Partner on request at the
offices of the Limited Partnership.
Section 9.5. Elections
-----------------------
The General Partners shall cause the Limited Partnership to make all
elections required or permitted to be made by the Limited Partnership under the
Code and not otherwise expressly provided for in this Agreement, in the manner
that the General Partners believe will be most advantageous to Limited Partners,
except that (i) the General Partners shall not be required to make an election
under Section 754 of the Code or corresponding provisions of applicable state
income tax laws, and (ii) the General Partners shall make the election under
Section 263(c) of the Code to expense all intangible drilling and development
costs in the initial Limited Partnership Federal income tax return filed for the
Fiscal Year in which such costs are incurred.
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ARTICLE TEN
Amendments
----------
Section 10.1. Proposal and Adoption of Amendments Generally
------------------------------------------------------------
A. Notwithstanding anything to the contrary contained herein, the General
Partners may, without prior notice or consent of any Limited Partner, amend any
provision of this Agreement (including an amendment to admit an additional
General Partner or a successor General Partner in the event of the Removal of a
General Partner by the other General Partner) if, in their opinion, such
amendment does not have a material adverse effect upon the Limited Partners.
Each Limited Partner hereby consents in advance to the admittance of such
additional or successor General Partner for purposes of Section 10 of the Act.
Such amendment shall thereafter be disclosed to the Limited Partners within a
reasonable time thereafter. Amendments to this Agreement to reflect the addition
or substitution of a Limited Partner or the admission of a successor General
Partner shall be made at the time and in the manner referred to in Section 10.2.
Any other amendment to this Agreement may be proposed by the General Partners or
at least 10% in interest (as to capital and Profits and Losses) of the Limited
Partners. The Partner or Partners proposing such amendment shall submit a
Notification containing (a) the text of such amendment, (b) a statement of the
purpose of such amendment, and (c) an opinion of counsel obtained by the Partner
or Partners proposing such amendment to the effect that such amendment is
permitted by the Act, will not impair the limited liability of the Limited
Partners, and will not adversely affect the classification of the Limited
Partnership as a partnership for Federal income tax purposes. The General
Partners shall, within 15 days after receipt of any proposal under this Section
▇▇.▇▇, give Notification to all Partners of such proposed amendment, of such
statement of purpose and of such opinion of counsel, together, in the case of an
amendment proposed by other Partners, with the views, if any, of the General
Partners with respect to such proposed amendment.
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B. Amendments to this Agreement shall be adopted if: (i) in the case of
amendments referred to in Section l0.2A, the conditions specified in Section 7.3
shall have been satisfactorily completed and the Limited Partnership shall not
have been furnished with an opinion of counsel to the Limited Partnership to the
effect that such amendment will adversely affect the classification of the
Limited Partnership as a partnership for Federal income tax purposes; (ii) in
the case of amendments referred to in Section l0.2B, the conditions specified in
Section 6.2 shall have been satisfactorily completed; or (iii) in the case of
all other amendments, such amendment shall have been Consented to by more than
50% in Interest (as to capital and Profits and Losses) of the Limited Partners
(unless such Consent is not required pursuant to Section ▇▇.▇▇ of this
Agreement); provided, however, that no such amendment may: (a) enlarge the
obligations of any Partner under this Agreement or convert the Interest of any
Limited Partner into the Interest of a General Partner or modify the limited
liability of any Limited Partner without the Consent of such Partner; (b) modify
the method provided in Article Five of determining and allocating or
distributing, as the case may be, Profits, Losses, Distributable Cash and each
item of Income, gain, loss, cost, deduction or credit without the Consent of
each Partner adversely affected by such modification; (c) amend Sections 4.9,
4.10, 6.1 or 6.2 without the Consent of the General Partners; or (d) amend
Sections 2.3, 4.3, 4.4, 4.5, 4.6, this Article Ten or Section 11.3 without the
Consent of at least 66% in Interest of the Limited Partners.
C. Upon the adoption of any amendment to this Agreement, the amendment
shall be executed by the General Partners, on their own behalf and as
attorney-in-fact for all of the Limited Partners pursuant to the power of
attorney granted in Section 12.5 of this Agreement, and shall be recorded in the
proper records of the State and any other state in which the Limited Partnership
is then doing business.
Section 10.2. Amendments on Admission or Removal of Partners
-------------------------------------------------------------
A. If this Agreement shall be amended to reflect the admission or
substitution of a Limited Partner, the amendment to this Agreement may be
adopted by either of the General Partners, the Person to be substituted or
added, and the assigning Limited Partner. Any such amendment shall be executed
on behalf of all Partners but may be executed by the substituted or added
Partner,
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the assigning Partner, and either of the General Partners, individually and on
behalf of all of the other Partners pursuant to the power of attorney granted in
Section 12.5 of this Agreement.
B. If this Agreement shall be amended to reflect the Removal of a General
Partner and the continuation of the business of the Limited Partnership, such
amendment shall be signed by the remaining or successor General Partner and by
the Removed General Partner. Any such amendment which reflects the admission of
a successor General Partner shall be executed on behalf of all other Partners
pursuant to the power of attorney granted in Section 12.5 of this Agreement.
C. No Person shall become a Partner, except the Initial Limited Partner
and an Additional Limited Partner, unless such Person shall have: (i) become a
party to, and adopted all of the terms and conditions of, this Agreement; (ii)
if such Person is other than an individual, provided upon request the General
Partners with evidence satisfactory to counsel for the Limited Partnership of
such Person's authority to become a Partner under the terms and provisions of
this Agreement; and (iii) if requested, paid all reasonable legal fees of the
Limited Partnership and the General Partners and filing and publication costs in
connection with such Person's becoming a Partner.
ARTICLE ELEVEN
Consents, Voting and Meetings
-----------------------------
Section 11.1. Method of Giving Consent
---------------------------------------
Any Consent required by this Agreement may be given by a Limited Partner
as follows: (i) at a meeting, in person, by a written proxy or signed writing
directing the manner in which it desires that its vote be cast, which writing
must be received by the General Partners prior to such meeting, or (ii) without
a meeting, by a signed writing directing the manner in which it desires that its
vote be cast, which writing must be received by the General Partners prior to
the date upon which the vote of Limited Partners are to be counted. Any Partner
may waive notice of or attendance at any meeting of the Partners and may execute
a signed written consent. Only the votes of Limited Partners of record on the
date of Notification, whether at a meeting or otherwise, shall be counted. The
laws of the State pertaining to the validity and use of corporate proxies shall
govern the validity and use of proxies given by Limited Partners.
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Section 11.2. Meetings of Partners
-----------------------------------
The General Partners may at any time call a meeting of the Limited
Partners or for a vote, without a meeting, of the Limited Partners on matters
upon which the Limited Partners are entitled to provide their Consent, and shall
call for such a meeting or vote upon receipt by the General Partners of a
request therefor made by at least 10% in Interest (as to capital, Profits and
Losses) of the Limited Partners as of the date of receipt of such Notification.
Within 15 days of the receipt of the Notification, the General Partners shall
notify all Limited Partners of record as of the date of the Notification as to
the time and place of the meeting, if called, and the general nature of the
business to be transacted thereat, or if no such meeting has been called, of the
matter or matters to be voted upon and the date upon which the votes will be
counted. Any Limited Partnership meeting or the date upon which such votes,
without a meeting, will be counted (regardless of whether the General Partners
have called for such meeting or vote upon the request of Limited Partners or
have initiated such event without such request) shall be not less than 30 or
more than 60 days following mailing of the Notification thereof by the General
Partners. All expenses of the meetings, voting and such Notification shall be
borne by the Limited Partnership.
Section 11.3. Limitations on Requirements for Consents
-------------------------------------------------------
Notwithstanding anything to the contrary contained in this Agreement, the
powers of the Limited Partners set forth in Sections 4.5E, 4.5F, 4.5G, 6.2A, 6.4
and 11.5 shall not be deemed to be granted to the Limited Partners or
exercisable by them unless and until counsel for the Limited Partnership or
counsel designated by at least 10% in Interest (as to capital and Profits and
Losses) of the Limited Partners shall have delivered to the Limited Partnership
an opinion to the effect that neither the grant nor the exercise of those powers
is prohibited by the Act, will impair the limited liability of the Limited
Partners or will affect the classification of the Limited Partnership as a
partnership for Federal income tax purposes.
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Section 11.4. Submissions to Limited Partners
----------------------------------------------
The General Partners shall give all the Limited Partners Notification of
any proposal or other matter required by any provisions of this Agreement or by
law to be submitted for the consideration and approval of the Limited Partners.
Such Notification shall include any information required by the relevant
provision of the Agreement or by law.
Section 11.5. Acting without Concurrence of General Partners
-------------------------------------------------------------
Except as limited by Section 11.3 and 10.1(B), more than 50% in Interest
(as to capital and Profits and Losses) of the Limited Partners, without the
necessity for concurrence by the General Partners, may vote to:
(a) amend the Agreement or cause the Production Partnership Agreement to
be amended;
(b) dissolve the Limited Partnership or cause the Production Partnership
to be dissolved;
(c) remove either of the General Partners or both or cause the Managing
Partners of the Production Partnership to be removed and elect new General
Partners or cause the Production Partnership to elect new Managing Partners;
(d) approve or disapprove the sale of all or substantially all of the
assets of the Limited Partnership or cause the Production Partnership to sell or
not to sell all or substantially all of its assets; or
(e) cancel or amend the terms of any contract for services with the
General Partners or any Affiliate or cause the Production Partnership to do so,
which shall be without penalty, provided 30 days written notice is given.
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ARTICLE TWELVE
Miscellaneous Provisions
------------------------
Section 12.1. Notification to the Limited Partnership or the General
Partners
---------------------------------------------------------------------
Any Notification to the Limited Partnership or the General Partners shall
be sent to the principal office of the Limited Partnership, as set forth in this
Agreement. Except as provided herein, any Notification to a Limited Partner
shall be sent to its last known address.
Section 12.2. Binding Provisions
---------------------------------
The covenants and agreements contained herein shall be binding upon and
inure to the benefit of the heirs, executors, administrators, successors and
assigns of the respective parties hereto.
Section 12.3. Applicable Law
-----------------------------
This Agreement shall be construed and enforced in accordance with the laws
of the State.
Section 12.4. Separability of Provisions
-----------------------------------------
If for any reason any provision or provisions hereof which are not
material to the purposes or business of the Limited Partnership or of the
Limited Partners' Interests are determined to be invalid and contrary to any
existing or future law, such invalidity shall not impair the operation of or
affect those portions of this Agreement that are valid.
Section 12.5. Appointment of the General Partners as Attorney-in-Fact
----------------------------------------------------------------------
-56-
A. Each Limited Partner, by the execution of this Agreement by a General
Partner on such Limited Partner's behalf pursuant to a power of attorney granted
by such Limited Partner by means of such Limited Partner's execution of a
Subscription Agreement and Power of Attorney, irrevocably constitutes and
appoints each of the General Partners, its true and lawful agent and
attorney-in-fact with full power and authority in its name, place and stead to
execute, acknowledge, deliver, swear to, file and record at the appropriate
public offices such documents, instruments and conveyances that may be necessary
or appropriate to carry out the provisions or purposes of this Agreement,
including without limitation: (i) all certificates and other instruments
(including counterparts of this Agreement), and any amendment thereof, including
any amendment substituting a Limited Partner pursuant to Section 7.3, that the
General Partners deem appropriate to form, reform, qualify or continue the
Limited Partnership (or a new partnership with substantially the same provisions
as the Limited Partnership) as a limited partnership (or a partnership in which
the Partners will have limited liability comparable to that provided by the Act)
in the jurisdiction in which the Limited Partnership may conduct business; (ii)
all amendments and other instruments necessary to admit into the Limited
Partnership additional or substituted Partners pursuant to Section 10.2; (iii)
all instruments that the General Partners deem appropriate to reflect a change
or modification of the Limited Partnership in accordance with the terms of this
Agreement (including those necessary to reflect additional Capital
Contributions); and (iv) all conveyances and other instruments that the General
Partners deem appropriate to reflect the dissolution and termination of the
Limited Partnership.
B. The appointment by all Limited Partners of each of the General
Partners, as agent and attorney-in-fact, shall be deemed irrevocable and to be a
power coupled with an interest, in recognition of the fact that each of the
Partners under this Agreement will be relying upon the power of the General
Partners to act as contemplated by this Agreement in any filing and other action
by it on behalf of the Limited Partnership, and shall survive the Incapacity of
any Person hereby giving such power and the transfer or assignment of all or any
part of the Interest of such person; provided, however, that in the event of the
transfer by a Limited Partner of all of its Interest, the foregoing powers of
attorney of the transferor Partner shall survive such transfer only until such
time as the transferee shall have been admitted to the Limited Partnership as a
Substituted Limited Partner and all required documents and instruments shall
have been duly executed, filed and recorded to effect such substitution.
-57-
Section 12.6. Entire Agreement
-------------------------------
This Agreement constitutes the entire agreement among the parties. This
Agreement supersedes any prior agreement or understanding among the parties and
may not be modified or amended in any manner other than as set forth herein.
Section 12.7. Paragraph Titles
-------------------------------
Article and section titles are for descriptive purposes only and shall not
control or alter the meaning of this Agreement as set forth in the text.
Section 12.8. Counterparts
---------------------------
This Agreement may be executed in several counterparts, all of which
together shall constitute one agreement binding on all parties hereto,
notwithstanding that all the parties have not signed the same counterpart except
that no counterpart shall be binding unless signed by the General Partners.
GEODYNE PROPERTIES, INC.
By: // ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ //
-----------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President
PW ENERGY INC.
By: // ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇ //
---------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
WITHDRAWING AND INITIAL LIMITED
PARTNER
// ▇▇▇▇▇ ▇▇▇▇▇▇ //
------------------
▇▇▇▇▇ ▇▇▇▇▇▇
-58-
ADDITIONAL LIMITED PARTNERS.
All those Additional Limited Partners whose
names, places of residence and Capital
Contributions appear on Schedule A, which is
attached hereto and incorporated herein by
reference, by Geodyne Properties, Inc. and
PW Energy Inc. pursuant to a duly granted
power of attorney.
GEODYNE PROPERTIES, INC.
By: // ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ //
-----------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
PW ENERGY INC.
By: // ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇ //
----------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇, President
ACKNOWLEDGEMENTS
STATE OF OKLAHOMA )
)
COUNTY OF TULSA )
BEFORE ME, the undersigned Notary Public, duly commissioned and qualified
in and for the County and State aforesaid, personally came and appeared ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇ who, after being duly sworn by me, did declare that he is the
identical person who executed the foregoing Amended and Restated Agreement and
Certificate of Limited Partnership of PaineWebber/Geodyne Energy Income Limited
Partnership I-F, that he is the President of Geodyne Properties, Inc. and that
by and with the authority of the Board of Directors of Geodyne Properties, Inc.
and as attorney-in-fact for each Limited Partner he executed such Amended and
Restated Agreement and Certificate as the free and voluntary act and deed of
Geodyne Properties, Inc. and as attorney-in-fact for each Limited Partner for
the purposes therein set forth and that he is familiar with statements contained
therein and such statements are true.
-59-
Subscribed, sworn to and acknowledged by said ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ on this
10th day of September, 1986.
// ▇▇▇▇▇▇ ▇▇▇▇▇▇ //
----------------------------
Notary Public
My Commission Expires: 7/16/90
STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
BEFORE ME, the undersigned Notary Public, duly commissioned and qualified
in and for the County and State aforesaid, personally came and appeared ▇▇▇▇▇▇▇▇
▇. ▇▇▇▇ who, after being duly sworn by me, did declare that he is the identical
person who executed the foregoing Amended and Restated Agreement and Certificate
of Limited Partnership of PaineWebber/Geodyne Energy Income Limited Partnership
I-F, that he is the President of PW Energy Inc. and that by and with the
authority of the Board of Directors of PW Energy Inc. and as attorney-in-fact
for each Limited Partner he executed such Amended and Restated Agreement and
Certificate as the free and voluntary act and deed of PW Energy Inc. and as
attorney-in-fact for each Limited Partner he executed such Amended and Restated
Agreement and Certificate as the free and voluntary act and deed of PW Energy
Inc. and as attorney-in-fact for each Limited Partner for the purposes therein
set forth and that he is familiar with statements contained therein and such
statements are true.
Subscribed, sworn to and acknowledged by said ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇ on this 9th
day of September, 1986.
// ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ //
-----------------------
Notary Public
My Commission expires:
August 31, ▇▇▇▇
-▇▇-
▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇ )
) ss.
COUNTY OF TULSA )
BEFORE ME, the undersigned Notary Public, duly commissioned and qualified
in and for the County and State aforesaid, personally came and appeared ▇▇▇▇▇
▇▇▇▇▇▇ who, after being duly sworn by me, did declare that she is the identical
person who executed the foregoing Amended and Restated Agreement and Certificate
of Limited Partnership of PaineWebber/Geodyne Energy Income Limited Partnership
I-F, that she executed such Agreement and Certificate as her free and voluntary
act and deed for the purposes therein set forth and that she is familiar with
the statements contained therein and such statements are true.
Subscribed, sworn to and acknowledged by said ▇▇▇▇▇ ▇▇▇▇▇▇ on this 10th
day of September, 1986.
// ▇▇▇▇▇▇ ▇▇▇▇▇▇ //
---------------------
Notary Public
My Commission Expires:
7/16/90
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