Within our Corporate Governance Guidelines there is no specific requirement that the nominating and corporate governance committee or the board of managers consider diversity in identifying candidates for nomination to the board of managers.
A unitholder who wishes to recommend to the nominating and corporate governance committee a nominee for manager for the 2014 annual meeting of unitholders should submit the recommendation in writing to the Secretary, Constellation Energy Partners LLC, 1801 Main Street, Suite 1300, Houston, Texas 77002 so it is received by
September 10
, 2014 but not earlier than
August 11
, 2014.
Unitholder Communications
The board of managers has adopted a policy whereby any communications from our unitholders to the board of managers must be directed to our Secretary, who will (i) determine whether any of such communications are significant, and promptly forward significant communications to the board of managers, and (ii) keep a record of all unitholder communications that the Secretary deems not to be significant and report such communications to the board of managers on a periodic basis, but not less frequently than quarterly.
Any unitholder who wishes to communicate to the board of managers may submit such communication in writing to the Secretary, Constellation Energy Partners LLC, 1801 Main Street, Suite 1300, Houston, Texas 77002 and follow the procedures detailed below under “Submission of Unitholder Proposals and Manager Nominations for Next Year.”
Related Person Transactions
As discussed above under “Committees of the Board of Managers — Conflicts Committee,” either our
board of managers or the board’s conflicts committee reviews all related person transactions for an amount
that exceeds $120,000. Since January 1, 2011 through the date of this proxy statement, there were no related
person transactions that were reviewed or required to be reviewed except as set forth below, with each such
transaction reviewed and approved by the conflicts committee and the board of managers.
Settlement of PostRock Litigation
On March 31, 2014, the parties to a lawsuit that was filed in the Chancery Court of the State of
Delaware by CEPM, Gary M. Pittman and John R. Collins against the Company, certain of its officers and
managers, SOG and SEPI in connection with the Company’s closing on August 9, 2013 of the purchase of
oil and natural gas properties from SEPI and the issuance of units in connection therewith reached a
settlement agreement, and the lawsuit was subsequently dismissed. As a result of the settlement, the Class A
units acquired by SEPI in the August 2013 transaction were returned to the Company and cancelled;
CEPM transferred 100% of its Class A units to SEPI and 414,938 of the Company’s Class B units to SEPI
in exchange for an aggregate payment of $1.0 million and paid $6.5 million to CEPM. In addition,
pursuant to the terms of the settlement, CEPM agreed to sell its remaining Class B units over the next nine
months, with SEPI providing up to a $5.0 million backstop payment to CEPM to the extent proceeds
received by CEPM from such sale do not meet or exceed a specified amount. The settlement also included
mutual releases between the plaintiffs and defendants.
Shared Services Agreement
On May 8, 2014, the Company and SP Holdings, LLC (the “Manager”), an affiliate of SOG, entered
into a Shared Services Agreement (the “Services Agreement”) pursuant to which Manager will provide all
services that the Company requires to operate its business, including overhead, technical, administrative,
marketing, accounting, operational, information systems, financial, compliance, insurance, professionals
and acquisition, disposition and financing services. In connection with providing the services under the
Services Agreement, Manager will receive compensation consisting of: (i) a quarterly fee equal to 0.375% of
the value of the Company’s properties other than its assets located in the Mid-Continent region, (ii) a
$1,000,000 administrative fee, with $500,000 paid on May 8, 2014 and $500,000 to be paid on the date that
Manager provides notice of its commitment to provide services under the Shared Services Agreement, (iii)
reimbursement for all allocated overhead costs as well as any direct third-party costs incurred and
(iv)
for
each asset acquisition, asset disposition and financing, a fee not to exceed 2% of the value of such
transaction. Each of these fees, not including the reimbursement of costs, will be paid in cash unless
Manager elects for such fee to be paid in equity by the Company. In addition, upon the first acquisition of
assets from an affiliate of Manager, the Company is required to amend its operating agreement and issue a
new class of incentive distribution rights to Manager. Except for the $500,000 payment mentioned above,
no amounts have been paid under the Services Agreement.