1. (a) In appropriate cases there may be a provision for assessment; provided, however, that the maximum amount which may be assessed for a voluntary assessment shall not exceed 100% of the initial subscription and for a mandatory assessment shall not exceed 25% of the initial subscription, and provided further, that in no case shall the total of all assessments exceed 100% of the initial subscription. All such assessments shall be solely for the purpose of drilling or completing a development well or wells or for acquiring additional interests or leases in a prospect which has proven production. In such cases, the aggregate offering price of the units as set forth in the application for qualification shall include and show separately the basic unit offering price and the maximum amount of the assessment.

2. (b) In the event of a default in all or a portion of the payment of assessments, the participant's percentage interest in the program represented by his unit should not be subject to forfeiture, but may be subject to a reasonable penalty for the failure of the participant to meet his commitment. Provisions which conform to the following will be considered reasonable:

   1. (1) For voluntary assessments,

      1. (A) A proportionate reduction of the participant's percentage interest in revenues derived from future development based on the ratio of his unpaid assessment to all capital contributions and assessments used for such future development, or
      2. (B) A subordination of the defaulting participant's right to receive revenues from future development until those nondefaulting participants who have paid the defaulting participant's assessment have received an amount of revenues from revenues of the program from future development equal to 300% of the proportionate amount of the defaulted assessment which they paid.

   2. (2) For mandatory assessments,

      1. (A) A proportionate reduction of the participant's percentage interest in program revenues based on the ratio of his unpaid assessment to all capital contributions and assessments, or
      2. (B) A subordination of the defaulting participant's right to receive revenues from the program until those nondefaulting participants who have paid the defaulting participant's assessment have received an amount of revenues from all revenues of the program equal to 300% of the proportionate amount of the defaulted assessment which they paid.
      3. (C) In order to make any assessment, the sponsor shall include with the call for such assessment a statement of the purpose and intended use of the proceeds from such assessment, a statement of the penalty to be imposed for failure of the participant to meet the assessment, and to the extent practicable, a summary of pertinent geological data on the relevant properties to which the assessments relate.

Note: Authority cited: Section 25610, Corporations Code. Reference: Section 25140, Corporations Code.

History

1. Editorial correction adding Note filed 11-8-82 (Register 82, No. 46).

2. Change without regulatory effect amending subsection (a) filed 9-25-2002 pursuant to section 100, title 1, California Code of Regulations (Register 2002, No. 39).