U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-KSB
(Mark One)
[ X ] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [Fee Required]
For the fiscal year ended December 31, 1997
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [No Fee Required]
For the transition period from _____ to _____
Commission file number 333-31681
Atlas-Energy for the Nineties-Public #6 Ltd.
(Name of small business issuer in its charter)
Pennsylvania 23-2888337
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
311 Rouser Road, Moon Township, Pennsylvania 15108
(Address of principal executive offices) (Zip Code)
Issuer's telephone number (412) 262-2830
Securities registered under Section 12(b) of the Exchange Act
Title of each class Name of each exchange on which registered
None None
Securities registered under Section 12(g) of the Exchange Act
None
(Title of Class)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or
for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the
past 90 days. Yes [ X ] No _____
Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B contained in this form, and no disclosure
will be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III
of this Form 10-KSB or any amendment to this Form 10-KSB. [ X ]
State issuer's revenues for its most recent fiscal year. -0-
State the aggregate market value of the voting stock held by non-
affiliates of the Registrant. Not Applicable.
Transitional Small Business Disclosure Format (check one):
Yes [ X ] No _____
- ------------------------------------------------------------------------
PART I
ITEM 1. DESCRIPTION OF BUSINESS
Atlas-Energy for the Nineties-Public #6 Ltd. (the "Partnership") was
formed under the Pennsylvania Revised Uniform Limited Partnership Act
on July 1, 1997, with Atlas Resources, Inc. ("Atlas") as Managing
General Partner. The Partnership offered a maximum of 1,000 Units.
The Partnership had its initial closing on December 1, 1997, and was
funded with total subscriptions of 199.52 Units $1,994,350 excluding
the dealer-manager fee, sales commissions and accountable due diligence
expenses of $208,290 paid to the Dealer-Manager and registered broker-
dealers) from 88 investors thus reaching its required minimum Capital
Contribution of $1,000,000. The Partnership had its final closing on
December 31, 1997, and was funded with total subscriptions of 991.615
Units $9,901,025 excluding the dealer-manager fee, sales commissions
and the accountable due diligence expenses of $1,024,745 paid to the
Dealer-Manager and registered broker-dealers) from 393 investors.
6 investors subscribed for 16 Units $ 160,000 as Limited Partners and
the remaining 387 investors subscribed for 975.615 Units $9,741,025 as
Investor General Partners.
At the time of the initial and final closing, the Managing General
Partner was credited with a total capital contribution of $ 1,968,637
because of certain expenditures it made on behalf of the Partnership
and certain prospects it contributed to the Partnership. The Managing
General Partner paid the organization and offering costs of the
Partnership in the amount of $1,485,154. In addition, the Managing
General Partner contributed 43.45 prospects to the Partnership at its
cost of $3,600 per prospect (proportionately reduced to the extent less
than 100% of the working interest is acquired) for a total credit of
$156,420. Finally, under the Partnership Agreement the Managing
General Partner paid 14% $327,053 of the Partnership's tangible costs.
The Partnership has not filed bankruptcy nor has the Partnership been
involved in any material reclassification, merger, consolidation,
receivership or similar proceeding or purchase or sale of a significant
amount of assets not in the ordinary course of business.
The Partnership was funded to drill natural gas development wells with
the objective being the discovery and production of natural gas in
commercially marketable quantities. The initial closing date was
December 1, 1997, and the Partnership began its drilling activities
pursuant to the drilling and operating agreement. Additionally, the
Partnership prepaid drilling costs pursuant to the drilling and
operating agreement on December 31, 1997, in an amount equal to
$7,918,110, in order to claim a 1997 deduction for intangible drilling
and development costs of wells to be drilled in 1998. The drilling and
operating agreement provided that a total of 44.45development wells
would be drilled to the Clinton/Medina geological formation in Mercer,
and Lawrence Counties, Pennsylvania. Atlas and its affiliates had
sufficient leasehold inventory to provide the prospects to be developed
by the Partnership. See "Properties".
Under the drilling and operating agreement Atlas is responsible for
drilling and completing (or plugging) the Partnership wells. All the
wells have been or will be drilled to depths sufficient to test
thoroughly the Clinton/Medina formation. The Partnership paid its
proportionate share of the cost of drilling and completing the
Partnership's wells as follows: for each well, an amount equal to the
depth of the well in feet at its deepest penetration as recorded by the
drilling contractor multiplied by $37.39 per foot. The footage price
included all ordinary costs of drilling, testing and completing the
well and installing gathering lines and other necessary facilities for
the production of natural gas, including the cost of a second
completion and Frac where Atlas considered it justified.
For the next twelve months management believes that the Partnership has
adequate capital in order to develop its wells. The Partnership had
sufficient capital resources from the closings to drill and develop
approximately 44.5 net wells. No other wells will be drilled and
therefore no additional funds will be required. The Partnership also
anticipates that the payment of operation and maintenance costs will
not begin until the Partnership wells begin to generate revenue.
Although management does not anticipate that the Partnership will have
to do so, any additional funds which may be required will be obtained
from production revenues from Partnership wells or from borrowings by
the Partnership from Atlas or its affiliates. Atlas, however, is not
contractually committed to make such a loan. The amount that may be
borrowed by the Partnership from Atlas and its affiliates, if any
amounts are borrowed, may not at any time exceed 5% of the Partnership
subscription. No borrowings will be obtained from third parties.
With respect to operating and maintenance costs, the Partnership's
commitments pursuant to the drilling and operating agreement are
expected to be fulfilled through revenues generated from the sale of
gas and oil. During producing operations Atlas, as operator, will
receive a monthly well supervision fee of $275 (proportionately reduced
to the extent less than 100% of the working interest was acquired) for
each producing well for which it has responsibility under the drilling
and operating agreement. The well supervision fee covers all normal
and regularly recurring operating expenses for the production, delivery
and sale of gas, such as well tending, routine maintenance and
adjustment, reading meters, recording production, pumping, maintaining
appropriate books and records, preparing reports to the Partnership and
to government agencies, and collecting and disbursing revenues. The
well supervision fees do not include costs and expenses related to the
production and sale of oil, purchase of equipment, materials or third
party services, brine disposal, and rebuilding of access roads, all of
which will be billed at the invoice cost of materials purchased or
third party services performed. As operator Atlas will charge the
Partnership at cost for third party services and materials provided for
each well which has been placed in operation, and a reasonable charge
for services performed directly by Atlas or its affiliates. The
drilling and operating agreement also gives the operator the right at
any time after three years from the date a Partnership well has been
placed into production to retain $200 per month to cover future
plugging and abandonment of such well.
Natural gas and any oil produced by the wells developed by the
Partnership must be marketed in order for the Partnership to realize
revenues from such production. The Partnership did not purchase and
does not anticipate selling any producing wells. In recent years
natural gas and oil prices have been volatile.
The marketing of natural gas and oil production, if any, will be
affected by numerous factors beyond the control of the Partnership and
the effect of which cannot be accurately predicted. These factors
include the availability and proximity of adequate pipeline or other
transportation facilities; the amount of domestic production and
foreign imports of oil and gas; competition from other energy sources
such as coal and nuclear energy; local, state and federal regulations
regarding production and the cost of complying with applicable
environmental regulations; and fluctuating seasonal supply and demand.
For example, the demand for natural gas is greater in the winter months
than in the summer months, which is reflected in a higher spot market
price paid for such gas. Also, increased imports of oil and natural
gas have occurred and are expected to continue. The free trade
agreement between Canada and the United States has eased restrictions
on imports of Canadian gas to the United States. Additionally, the
passage in November, 1993, of the North American Free Trade Agreement
will have some impact on the American gas industry by eliminating trade
and investment barriers in the United States, Canada and Mexico. In
the past the reduced demand for natural gas and/or an excess supply of
gas has resulted in a lower price paid for the gas. It has also
resulted in some purchasers curtailing or restricting their purchases
of natural gas; renegotiating existing contracts to reduce both take-
or-pay levels and the price paid for delivered gas; and other
difficulties in the marketing of production.
The Clean Air Act Amendments of 1990 contain incentives for the future
development of "clean alternative fuel," which includes natural gas and
liquefied petroleum gas for "clean-fuel vehicles". The Partnership
believes the amendments ultimately will have a beneficial effect on
natural gas markets and prices.
The Managing General Partner is responsible for selling the
Partnership's gas and oil production. Atlas' policy is to treat all
wells in a given geographic area equally. This reduces certain
potential conflicts of interest among the owners of the various wells,
including the Partnership, concerning to whom and at what price the gas
will be sold. Atlas calculates a weighted average selling price for
all the gas sold in the geographic area, such as the Mercer County
area. To arrive at the average weighted selling price the money
received from the sale of all the gas sold to its customers in a
geographic area is divided by the volume of all gas sold from the wells
in the area.
During 1997 Atlas received an average selling price of $2.29 per MCF
for gas sold in the Mercer County area after deducting all expenses,
including transportation expenses. On occasion, Atlas has reduced the
amount of production it normally sells on the spot market until the
spot market price increased. Atlas, however, has not voluntarily
restricted its gas production in the past two years.
In the Mercer County area, Atlas estimates that a portion of the
Partnership's gas will be transported through Atlas' own pipeline
system and sold directly to industrial end-users in the area where the
wells were drilled. This will generally result in the Partnership
receiving higher prices for the gas than if the gas were transported a
farther distance through interstate pipelines because of increased
transportation charges. The remainder of the Partnership's gas from
the Mercer County area will be transported through Atlas' and its
affiliates' pipelines to the interconnection points maintained with
Tennessee Gas Transmission Co., National Fuel Gas Supply Corporation,
National Fuel Gas Distribution Company, East Ohio Natural Gas Company
and Peoples Natural Gas Company. These delivery points are utilized by
Atlas Gas Marketing, Inc. to service its end-user markets in the
northeast United States which include in excess of 100 customers.
Atlas is currently delivering an average 27,000 MCF of natural gas per
day from the Mercer County area to all the aforementioned markets and
has the capacity of delivering 33,000 MCF per day from the Mercer
County area. Atlas anticipates that Wheatland Tube Company and Carbide
Graphite each will purchase approximately 10% to 15% of the
Partnership's gas production in 1998 pursuant to gas contracts between
them and an affiliate of Atlas, and it is possible that other
purchasers of the Partnership's gas production may account for 10% of
the Partnership's gas sales revenues in 1998. See "Financial
Statements".
In order to optimize the price it receives for the sale of natural gas,
Atlas markets portions of the gas through long term contracts, short
term contracts, and monthly spot sales. The marketing of natural gas
production has been influenced by the availability of certain financial
instruments, such as gas futures contracts, options and swaps which,
when properly utilized as hedge instruments, provide producers or
consumers of gas with the ability to lock in the price which will
ultimately be paid for the future deliveries of gas. Atlas is
utilizing financial instruments to hedge the price risk of a portion of
all of its programs' gas production which would include the
Partnership. To assure that the financial instruments will be used
solely for hedging price risks and not for speculative purposes, Atlas
has established an Energy Price Risk Committee composed of the
President, General Counsel, Chief Financial Officer (chairperson) and
Director of Marketing, whose responsibility will be to ascertain that
all financial trading is done in compliance with hedging policies and
procedures. Atlas does not intend to contract for positions that it
cannot offset with actual production.
Any crude oil produced from the wells will flow directly into storage
tanks where it will be picked up by the oil company, a common carrier
or pipeline companies acting for the oil company which is purchasing
the crude oil. Crude oil usually does not present any transportation
problem. Atlas anticipates selling any oil produced by the wells in
the Mercer County area to Quaker State Oil Refining Company ("Quaker
State") in spot sales. Atlas was receiving approximately $17.00 per
barrel in December, 1997, from Quaker State for oil produced in the
Mercer County area. Over the past eight years, the price of oil has
declined from approximately $38 to as low as $10 per barrel. There can
be no assurance as to the price of oil during the term of the
Partnership and the actions of OPEC increase the volatility of the
price of oil.
There are many companies, partnerships and individuals engaged in
natural gas exploration, development and operations in the areas
where the Partnership is conducting its activities. The industry is
highly competitive in all phases, including acquiring suitable
properties for development and the marketing of natural gas and oil.
With respect to the marketing of the Partnership's gas and oil the
Partnership should, through the use of Atlas' distribution system
and Atlas' experienced marketing staff, be able to sell the
Partnership's gas, although there can be no assurance of the price
to be received by the Partnership for the gas.
The Partnership has not and will not devote any funds to research and
development activities. There are no new products or services and the
Partnership does not have any patents, trademarks, licenses,
franchises, concessions, royalty agreements or labor contracts.
Oil and gas operations are regulated in Pennsylvania by the Department
of Environmental Resources, Division of Oil and Gas which imposes a
comprehensive statutory and regulatory scheme with respect to oil and
gas operations. Among other things, the regulations involve: (i) new
well permit and well registration requirements, procedures and fees;
(ii) minimum well spacing requirements; (iii) restrictions on well
locations and underground gas storage; (iv) certain well site
restoration, groundwater protection and safety measures; (v)
landowner notification requirements; (vi) certain bonding or other
security measures; (vii) various reporting requirements; (viii) well
plugging standards and procedures; and (ix) broad enforcement powers.
Generally, the regulatory agency in the state where a producing natural
gas well is located supervises production activities and the
transportation of natural gas sold intrastate. Atlas does not expect
that these regulations will have a material adverse impact upon the
operations of the Partnership. The Partnership believes it has
complied in all material respects with applicable state regulations and
will continue to do so.
The Federal Energy Regulatory Commission ("FERC") regulates the
interstate transportation of natural gas and the pricing of
natural gas sold for resale interstate; and under the Natural Gas
Policy Act of 1978 ("NGPA") the price of intrastate gas. Price
controls for natural gas production from new wells, however, were
deregulated on December 31, 1992. Deregulated gas production may
be sold at market prices determined by supply, demand, BTU
content, pressure, location of the wells, and other factors. The
Managing General Partner anticipates that all gas produced by the
Partnership wells will be price decontrolled gas and sold at fair
market value.
Although the transportation and sale of gas in interstate commerce
remains heavily regulated, FERC has sought to promote greater
competition in natural gas markets by encouraging open access
transportation by interstate pipelines, with the goal of expanding
opportunities for producers to contract directly with local
distribution companies and end-users. For example, FERC Order 500
requires interstate pipelines that transport gas for others to provide
transportation service to producers, distributors, and all other
shippers of natural gas on a non-discriminatory, "first-come, first-
served" basis so that producers and other shippers can sell natural gas
directly to end-users. FERC Order 636, which became effective May 18,
1992, requires gas pipeline companies to, among other things, separate
their sales services from their transportation services; and provide an
open access transportation service that is comparable in quality for
all gas suppliers. The premise behind FERC Order 636 was that the gas
pipeline companies had an unfair advantage over other gas suppliers
because they could bundle their sales and transportation services
together. FERC Order 636 is designed to create a regulatory
environment in which no gas seller has a competitive advantage over
another gas seller because it also provides transportation services.
It is difficult to assess the effect of the order on the Partnership.
The price of oil is not regulated and is subject only to supply,
demand, competitive factors, the gravity of the crude oil, sulfur
content differentials and other factors. The Partnership expects to
sell only small quantities of oil, if any.
From time to time there are a number of proposals being considered in
Congress and in the legislatures and agencies of various states that if
enacted would significantly and adversely affect the oil and natural
gas industry. Such proposals involve, among other things, the
imposition of new taxes on natural gas and limiting the disposal of
waste water from wells. At the present time, it is impossible to
accurately predict what proposals, if any, will be enacted by Congress
or the legislatures and agencies of various states and what effect any
proposals which are enacted will have on the activities of the
Partnership.
Various federal, state and local laws covering the discharge of
materials into the environment, or otherwise relating to the protection
of the environment, may affect the Partnership's operations and costs.
The Partnership may generally be liable for cleanup costs to the United
States Government under the Federal Clean Water Act for oil or
hazardous substance pollution and under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 ("CERCLA" or
Superfund) for hazardous substance contamination. The liability is
unlimited in cases of willful negligence or misconduct. There is also
no limit on liability for environmental cleanup costs or damages with
respect to claims by the state or private persons or entities. In
addition, the Environmental Protection Agency will require the
Partnership to prepare and implement spill prevention control and
countermeasure plans relating to the possible discharge of oil into
navigable waters and will further require permits to authorize the
discharge of pollutants into navigable waters. State and local permits
or approvals will also be needed with respect to wastewater discharges
and air pollutant emissions.
Violations of environment-related lease conditions or environmental
permits can result in substantial civil and criminal penalties as
well as potential court injunctions curtailing operations.
Compliance with these statutes and regulations may cause delays in
producing natural gas and oil from the wells and may increase
substantially the cost of producing such natural gas and oil.
These laws and regulations, however, are constantly being revised
and changed. The Partnership is unable to predict the ultimate
costs of complying with present and future environmental laws and
regulations, although it does not believe such costs will be
substantial. The Partnership is unable to obtain insurance to
protect against many environmental claims.
ITEM 2. PROPERTIES
The Partnership's first closing was December 1, 1997, and 35 prospects
were designated by the Managing General Partner on that date. The
final closing was December 31, 1997, and an additional 20 prospects
were designated by the Managing General Partner on that date. The
following 13 prospects which were originally designated by Atlas to be
drilled by the Partnership [ List "A" ] were deleted by the Managing
General Partner based on the drilling results of wells which were
subsequently drilled in the area of these prospects. The replacement
prospects are as follows: [ List "B" ]. The Partnership will not
acquire any additional prospects.
For purposes of the Drilling Activity table and the Productive Wells
table set forth below, a "gross well" is one in which the
Partnership has a working interest and a "net well" is a gross
well multiplied by the Partnership's working interest to which it
is entitled under its drilling agreement.
The Partnership owns 100% of the working interest in 34 wells and
expects to own approximately 50% of the working interest in 20 wells.
See "Productive Wells," below. All wells other than 2 are subject to
a 12.5% landowner's royalty and have an 87.5% net revenue interest
Drilling Activity. The following table sets forth the results from
July 1, 1997, (date of formation) to March 31, 1998, of the
Partnership's drilling activities. All wells have been spudded, and no
dry holes have been drilled.
Development Wells
Gross Net
Productive Dry Total Productive Dry Total
Period Ended
March 31, 1998 55 0 55 44.45 0 44.45
The Partnership has not participated, and will not participate, in any
exploratory wells.
Present Activities. As of March 31, 1998, 26 of the wells were in
production, 8 of the wells were capable of production but not yet on-
line, and 21 of the wells were spudded and were in the process of being
drilled and completed.
Productive Wells. The following table ( List "C") summarizes the
Partnership's total gross and net interest in productive natural gas
wells at March 31, 1998.
The name of each well is the same as the name of the Prospect. The
Partnership has begun selling production from 26 of the wells; however,
revenues are not anticipated until the summer of 1998. The remaining
wells should go on-line shortly. (See "Description of Business".)
Although there has been production as set forth above, no reserve
estimate on such wells has been obtained from an independent petroleum
engineer.
ITEM 3. DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES
Responsibilities of Atlas. The Partnership has no employees and relies
on Atlas as Managing General Partner of the Partnership. Atlas also
serves as driller/operator of the wells. Atlas has complete and
exclusive discretion and control over the operations and activities of
the Partnership and will make all of the Partnership's decisions
affecting the wells developed by the Partnership. Atlas will provide
continuing review and analysis of all wells developed by the
Partnership and will monitor all expenditures and commitments made on
behalf of the Partnership. In addition, Atlas will perform
administrative services relating to the funding and operation of the
Partnership, Participant reporting, financial budgeting and
recordkeeping.
Business of Atlas. Atlas, a Pennsylvania corporation, was incorporated
in 1979 and Atlas Energy Group, Inc. ("Atlas Energy"), an Ohio
corporation, was incorporated in 1973. Atlas and Atlas Energy are
wholly owned subsidiaries of AIC, Inc., a corporation formed in July,
1995, which is a wholly owned subsidiary of The Atlas Group, Inc.,
("Atlas Group") that was formerly known as AEG Holdings, Inc., a
corporation which was also formed in July, 1995.
As of December 31, 1997, Atlas and its affiliates operated
approximately 1240 natural gas wells located in Ohio and Pennsylvania.
Atlas and Atlas Energy have acted as operator with respect to the
drilling of a total of approximately 1,700 natural gas wells,
approximately 1650 of which were capable of production in commercial
quantities. Atlas' primary offices are located at 311 Rouser Road,
Moon Township, Pennsylvania 15108.
Atlas and its affiliates employ a total of approximately ninety-nine
persons, consisting of three geologists (one of whom is an exploration
geologist), five landmen, five engineers, thirty-three operations
staff, eight accounting, one legal, eight gas marketing, and eighteen
administrative personnel. The balance of the personnel are
engineering, pipeline and field supervisors.
The other subsidiaries of AIC, Inc. are: (i) Atlas Gas Marketing,
Inc., a gas marketing company; (ii) Mercer Gas Gathering, Inc., a
gas gathering company which gathers gas from Atlas' and its
affiliates' wells in Mercer County, Pennsylvania, and delivers the
gas directly to industrial end-users or to interstate pipelines
and local distribution companies; (iii) Pennsylvania Industrial
Energy, Inc., which sells natural gas to industrial end-users in
Pennsylvania; (iv) Transatco, Inc., which owns a 50% interest in
Topico which operates a pipeline in Ohio; (v) Atlas Energy
Corporation, which serves as managing general partner of
exploratory programs and driller and operator; and (vi) Anthem
Securities, Inc., which is a registered broker-dealer and member
firm of the NASD and serves as dealer-manager of Atlas-sponsored
programs. In addition, Atlas is the sole owner of ARD
Investments, Inc., a corporation formed in July, 1995, and Atlas
Energy is the sole owner of AED Investments, Inc., a corporation
formed in July, 1995. Prior to July, 1995, all of the Atlas
companies were wholly owned by Atlas Energy. The purpose of
forming Atlas Group, AIC, Inc., ARD Investments, Inc. and AED
Investments, Inc. was to achieve more efficient concentration of
funds of the Atlas group of companies, thereby minimizing
transaction costs and maximizing returns on investment vehicles.
Atlas and its affiliates have constructed for their use over 600 miles
of gas transmission lines and produce in excess of nine billion
cubic feet of natural gas annually from wells they operate which
they market directly to end-users or to interstate pipelines and
local distribution companies. In addition, Atlas Gas Marketing,
Inc. (an affiliate) purchases for resale an additional eight billion
cubic feet of natural gas annually from third party producers
locally and in the south/southwest United States which is marketed
as described in "Description of Business."
ORGANIZATIONAL DIAGRAM
The Atlas Group, Inc.
|
AIC, Inc.
- -----------------------------------|
|
|-Atlas Resources, Inc. (Managing General Partner of Development Drilling
| Programs, Driller and Operator in Pennsylvania)
| |
| ARD Investments, Inc.
|
|-Mercer Gas Gathering, Inc. (Gas Gathering Company)
|
|-Pennsylvania Industrial Energy, Inc. ("PIE") (Sells Gas to Pennsylvania
| Industry)
|
|-Atlas Energy Corporation (Managing General Partner of Exploratory Drilling
| Programs and Driller and Operator)
|
|-Transatco, Inc., which owns 50% of Topico (Operates Pipeline in Ohio)
|
|-Atlas Gas Marketing, Inc. (Markets Natural Gas)
|
|-Anthem Securities Inc. (Registered Broker-Dealer)
|
|-Atlas Energy Group, Inc. (Driller and Operator in Ohio)
|
AED Investments, Inc.
Directors, Executive Officers and Significant Employees of Atlas.
The executive officers, directors and significant employees of
Atlas who are also officers, directors and significant
employees of Atlas Group and Atlas Energy are as follows:
Name Age Positions or Office
Charles T. Koval 63 Chairman of the Board and a Director
James R. O'Mara 53 President, Chief Executive Officer and a
Director
Bruce M. Wolf 48 General Counsel, Secretary and a Director
James J. Kritzo 62 Vice President of the Land Department
Donald P. Wagner 55 Vice President of Operations
Frank P. Carolas 37 Vice President of Geology
Tony C. Banks 42 Vice President of Finance and Chief Financial
Officer
Barbara J. Krasnicki 52 Vice President of Administration
Jacqueline B. Poloka 46 Controller
John A. Ranieri 37 Director of Gas Marketing
Eric D. Koval 32 President of Anthem Securities, Inc.
Joseph R. Sadowski 66 Director
Charles T. Koval. Chairman of the Board and a director. He co-founded
Atlas Energy. Mr. Koval is serving and has served as a director of
Imperial Harbors since 1980.
James R. O'Mara. President, chief executive officer and a director.
Mr. O'Mara joined Atlas Energy in 1975. He is the President of Mercer
Gas Gathering, Inc.
Bruce M. Wolf. General Counsel, Secretary and a director. Mr. Wolf
joined Atlas Energy in January, 1980. Mr. Wolf is the President of
Atlas Gas Marketing, Inc., AIC, Inc., ARD Investments, Inc. and AED
Investments, Inc.
James J. Kritzo. Vice President of the Land Department. Mr. Kritzo
joined the Land Department of Atlas Energy in 1979.
Donald P. Wagner. Vice President of Operations. Mr. Wagner joined
Atlas Energy in 1979.
Frank P. Carolas. Vice President of Geology. Mr. Carolas joined Atlas
Energy in 1981.
Tony C. Banks. Vice President of Finance and Chief Financial Officer.
Mr. Banks joined Atlas Group in 1995. Prior to Mr. Banks joining Atlas
he had been with affiliates of Consolidated Natural Gas Company ("CNG")
since 1974. Mr. Banks started as an accounting clerk with CNG's parent
company in 1974 and progressed through various positions with CNG's
Appalachian producer, northeast gas marketer and southwest producer to
his last position as Treasurer of CNG's national energy marketing
subsidiary.
Barbara J. Krasnicki. Vice President of Administration, Ms. Krasnicki
has been with Atlas Energy since its inception in 1971.
Jacqueline B. Poloka. Controller. Ms. Poloka joined Atlas Energy in
1980.
John A. Ranieri. Director of Gas Marketing for Atlas Gas Marketing,
Inc. Mr. Ranieri was promoted to Gas Procurement Manager of Columbia
Gas of Pennsylvania in 1984 and remained with that organization until
joining Atlas in July, 1990.
Eric D. Koval. President of Anthem Securities, Inc. Mr. Koval joined
Atlas in 1993 as a production engineer specializing in acquisitions and
dispositions. He subsequently moved into the investor relations
department in 1994. Mr. Koval is a registered broker-dealer principal,
and is the son of Charles Koval.
Joseph R. Sadowski. A director. He co-founded Atlas Energy. Mr.
Sadowski has served as a director of Dixon Ticonderoga since 1987.
ITEM 4. REMUNERATION OF DIRECTORS AND OFFICERS
The Partnership, as previously stated, has no employees. The following
table, however, sets forth all cash compensation paid by Atlas
(which has complete and exclusive discretion and control over the
operations and activities of the Partnership) during Atlas' fiscal
year ended July 31, 1997, to the three most highly compensated
persons who are executive officers or directors and to all executive
officers and directors of Atlas as a group, for services in all
capacities while acting as executive officers or directors of Atlas:
Name of individual
or identity of Capacities in which Cash
group (3) remuneration was received(4) Compenstation(1,2)
James R. O'Mara President, Chief Executive Officer $305,300
and a Director
Charles T. Koval Chairman of the Board $296,500
and a Director
Bruce M. Wolf General Counsel, Secretary $217,150
and a Director
Executive Officers $1,383,530
as a Group (8 persons)
(1) The amounts indicated were composed of salaries and all cash
bonuses for services rendered to Atlas and its affiliates during the
last fiscal year, including compensation that would have been paid in
cash but for the fact the payment of such compensation was deferred.
(2) Atlas has an "ESOP" retirement plan, described below, and has a
401(K) plan which allowed employees to contribute the lesser of 15% of
their compensation or $9,500 for the calendar year 1997 or $9,500 for
the calendar year 1996. Atlas contributed an amount equal to 50% and
50% of each employee's contribution for the calendar years July 31,
1997 and 1996, respectively.
(3) There were no stock options granted or exercised during the
fiscal year ended July 31, 1997, to the above individuals.
(4) During the fiscal year ended July 31, 1997, each director was
paid a director's fee of $12,000 for the year. There are no other
arrangements for remuneration of directors.
ITEM 5. SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN SECURITYHOLDERS
As of December 31, 1997, the Partnership had issued and outstanding
991.615 Units. No officer or director of Atlas owns any Units, and no
partner beneficially owns more than 10% of the outstanding Units of the
Partnership.
Atlas Group owns 100% of the common stock of AIC, Inc. which owns 100%
of the common stock of Atlas and Atlas Energy. The following table
sets forth, as of December 31, 1997, information as to the beneficial
ownership of common stock of Atlas Group by each person known to Atlas
Group to own beneficially 5% or more of the outstanding common stock of
Atlas Group, by directors and nominees, naming them individually, and
by all directors and officers of Atlas Group as a group:
Shares of Common Percent of Class
Charles T. Koval 109,391 26.445%
Joseph R. Sadowski 109,142 26.384%
James R. O'Mara 95,164 (1) 23.005%
Bruce M. Wolf 44,710 (2) 10.808%
Directors and Officers
as Group (9 persons) 377,654 (1)(2) 91.344%
Includes 22,164 shares of Atlas Group issuable upon the exercise of
stock options held by Mr. O'Mara.
Includes 14,210 shares of Atlas Group issuable upon the exercise of
stock options held by Mr. Wolf.
Atlas Group has adopted Atlas Energy's existing Employee Stock
Ownership Plan ("ESOP") for the benefit of its employees, other than
Messrs. Koval and Sadowski, to which it will contribute annually
approximately 6% of annual compensation in the form of shares of Atlas
Group. Atlas Group anticipates that it will contribute approximately
3,000 shares of its stock to the ESOP each year.
Pursuant to agreements entered into between Atlas Group and its
shareholders to accommodate the desire of Messrs. Sadowski and Koval to
gradually liquidate a majority of their stock ownership in Atlas Group
in preparation for their respective retirement from Atlas Group (see
below regarding the retirement of Mr. Sadowski) it is anticipated that
by the year 2003 the stock ownership of Atlas Group by Messrs. Koval
and Sadowski will be reduced through a series of stock redemptions to
approximately 15% each. The stock ownership of certain of the
remaining officers will be increased to approximately 60%, in the
aggregate; and the stock ownership of the ESOP will be approximately 10%.
The stock redemptions require Atlas Group to execute promissory notes,
from time to time, in favor of Messrs. Koval and Sadowski, the first
of which, in the original principal amount of $4,974,340 each, plus
interest at 13.5% were executed by Atlas Energy and were assumed by
Atlas Group. These promissory notes are totally subordinated to
Atlas Group's obligations to banks, the ESOP and any and all other
debts or obligations of Atlas Group, including its indemnification
obligations and Atlas' drilling obligation to the Partnership. If
Atlas Group defaults on a promissory note, Messrs. Koval and
Sadowski are entitled to purchase up to approximately an additional
1,500,000 shares of Atlas Group to regain management control.
In 1990, Messrs. Koval and Sadowski entered into five year employment
agreements with Atlas Energy which agreements have been transferred to
Atlas Group, renewable for an additional five year term and on an
annual basis after the first ten years. Mr. Sadowski, however, retired
other than as a director in 1996. The terms and provisions of the
employment agreements with Mr. Koval are subject to negotiation at the
time of each renewal and currently do not provide for any severance
payments. Also, during the terms of the promissory notes Messrs. Koval
and Sadowski have the right to serve as directors of Atlas Group and as
one of the two trustees of the ESOP.
On November 8, 1990, Atlas Energy entered into a Stock Option Agreement
which established a management employee stock option plan to provide
incentive compensation for certain of its key employees to acquire
up to 47,578 shares of common stock of Atlas Energy. Pursuant to
the plan, Messrs. O'Mara and Wolf were granted stock options for
22,164 and 14,210 shares, respectively. The options are 100% vested
with an option price of $1.00 per share and may be exercised when
the promissory notes to Messrs. Koval and Sadowski have been
satisfied and will terminate on August 15, 2012. The issuance of
future options will be determined at a later date. The shareholders
are also subject to a Shareholders Agreement which provides, among
other things, that such shareholders may not transfer their shares
in Atlas Group unless the shares have first been offered to Atlas
Group and the other shareholders.
ITEM 6. INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS
Oil and Gas Revenues. The Managing General Partner will be allocated
25% of the oil and gas revenues of the Partnership in return for paying
organization and offering costs equal to 15% of the Partnership
Subscription, 14% of tangible costs and contributing all leases to the
Partnership.
Leases. The Managing General Partner contributed (at the lower of fair
market value or the Managing General Partner's cost of such prospects)
53 undeveloped prospects to the Partnership to drill approximately
44.45 net wells. Atlas received a credit in the amount of $156,420 for
these prospects.
Administrative Costs. The Managing General Partner and its affiliates
will receive an unaccountable, fixed payment reimbursement for their
administrative costs determined by the Managing General Partner to be
an amount equal to $75 per well per month, which will be
proportionately reduced if less than 100% of the working interest in a
well is acquired. With respect to the net wells Atlas will receive
$40,005 for the Partnership's first twelve months of operations.
Direct Costs. The Managing General Partner and its affiliates will be
reimbursed for all direct costs expended on behalf of the Partnership.
Drilling Contracts. On December 31, 1997, the Partnership entered into
a drilling contract with Atlas to drill and complete 44.45 net wells.
The Partnership paid Atlas for drilling and completing the Partnership
wells an amount equal to $37.39 per foot to the depth of the well at
its deepest penetration, which was proportionately reduced if less than
100% of the working interest in a well is acquired. With respect to
the net wells the total amount received by Atlas was $10,540,928_.
Per Well Charges. As the wells commence production Atlas, as operator,
will be reimbursed at actual cost for all direct expenses incurred on
behalf of the Partnership and will receive well supervision fees for
operating and maintaining the wells during producing operations in the
amount of $275 per well per month subject to an annual adjustment for
inflation. With respect to the net wells Atlas will receive $146,685
for the Partnership's first twelve months of operations. The well
supervision fees are proportionately reduced to the extent the
Partnership acquires less than 100% of the Working Interest in a well.
As operator Atlas charges the Partnership at cost for third party
services and materials provided for each well which has been placed in
operation.
Transportation and Marketing Fees. The Partnership will pay a combined
transportation and marketing charge at a competitive rate, which is
currently 29 cents per MCF, to affiliates of Atlas, with respect to
natural gas produced by the Partnership.
Dealer-Manager Fees. The Dealer Manager, Anthem Securities, received a
2.5% dealer-manager fee, a 7.5% sales commission and a .5% reimbursment
of the Selling Agent's accountable due diligence fees in the amount of
$1,024,745. Of this amount the Dealer-Manager reallowed $776,842 to
the Selling Agents. The Dealer-Manager will receive no further
compensation.
Other Compensation. Atlas or an affiliate will be reimbursed by the
Partnership for any loan Atlas or an affiliate may make to or on behalf
of the Partnership, and Atlas or the affiliate will have the right to
charge a competitive rate of interest on any such loan. If Atlas
provides equipment, supplies and other services to the Partnership it
may do so at competitive industry rates.
The following discussion relates solely to certain relationships and
related transactions with respect to Atlas and does not relate to
the Partnership. The following discussion has been included because
Atlas has been granted by the Partnership Agreement and the drilling
and operating agreement the exclusive right, power and authority to
control the operations and activities of the Partnership.
Atlas, its officers, directors and affiliates have in the past
invested, and may in the future invest, as participants in oil and
gas programs sponsored by Atlas on the same terms as unrelated
investors. Atlas, its officers, directors and affiliates have
also participated in the past, and may in the future participate,
as working interest owners in wells in which Atlas or its oil and
gas programs have an interest. Frequently, such participation has
been on more favorable terms than the terms which were available
to unrelated investors and Atlas Group has loaned to its officers
and directors amounts in excess of $60,000 from time to time as
necessary for participation in such wells or programs. Prior to
1996, such loans were either non-interest bearing or accrued
interest at variable rates, but since 1995 all new loans for such
purpose are required to bear interest. Currently no such loans
are outstanding.
PART II
ITEM 7. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
Market Information. There is no established public trading market
for the Investor General Partner interests or the Limited Partner
interests and it is not anticipated that such a market will develop.
The Partnership interests may be transferred only in accordance with
the provisions of Article 6 of the Partnership Agreement. The
principal restrictions on transferability are as follows: (i) the
consent of the Managing General Partner is required; and (ii) no
transfer may be made which would result in materially adverse tax
consequences to the Partnership or the violation of federal or state
securities laws.
An assignee may become a substituted Limited Partner or Investor
General Partner only upon meeting certain further conditions, which
include: (i) the assignor gives the assignee such right; (ii) the
Managing General Partner consents to such substitution, which consent
shall be in the Managing General Partner's absolute discretion; (iii)
the assignee pays to the Partnership all costs and expenses incurred in
connection with such substitution; and (iv) the assignee executes and
delivers such instruments, in form and substance satisfactory to the
Managing General Partner, necessary or desirable to effect such
substitution and to confirm the agreement of the assignee to be bound
by all terms and provisions of the Partnership Agreement.
A substitute Limited Partner or Investor General Partner is entitled
to all rights attributable to full ownership of the assigned Units,
including the right to vote.
Holders. As of December 31, 1997, there were 393 interestholders.
Dividends. It is not anticipated that the Managing General Partner
will distribute revenues from the sale of production until the summer
of 1998. Thereafter, the Managing General Partner will review the
accounts of the Partnership at least quarterly to determine whether
cash distributions are appropriate and the amount to be distributed, if
any. The Partnership will distribute funds to the Managing General
Partner and the Participants allocated to their accounts which the
Managing General Partner deems unnecessary to be retained by the
Partnership. In no event, however, will funds be advanced or borrowed
for purposes of distributions, if the amount of such distributions
would exceed the Partnership's accrued and received revenues for the
previous four quarters, less paid and accrued operating costs with
respect to such revenues. The determination of the revenues and costs
will be made in accordance with generally accepted accounting
principles, consistently applied. Cash distributions from the
Partnership to the Managing General Partner may only be made in
conjunction with distributions to Participants and only out of funds
properly allocated to the Managing General Partner's account.
ITEM 8. LEGAL PROCEEDINGS
None.
ITEM 9. CHANGES IN AND DISAGREEMENTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
None.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
None.
ITEM 11. COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
There are no equity securities registered pursuant to Section 12 of the
Exchange Act.
ITEM 12. REPORTS ON FORM 8-K
The registrant filed no reports on Form 8-K during the last quarter of
the period covered by this report.
======================================================================
PART F/S
ITEM 13. FINANCIAL STATEMENTS
The Partnership's Financial Statements for the last fiscal year,
together with the opinion of the accountants thereon, are Below
PART III
ITEM 14. EXHIBITS
(a) Exhibits
EXHIBIT INDEX
Description
4(a) Certificate of Limited Partnership for
Atlas-Energy for the Nineties-Public #6 Ltd.
4(b)
Amended and Restated Certificate and Agreement
of Limited Partnership for Atlas-Energy for the
Nineties-Public #6 Ltd. dated December 31, 1997
10(a)
Drilling and Operating Agreement with exhibits
23(a)
Consent of McLaughlin & Courson
- ---------------------------------------------------------------
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Atlas-Energy for the Nineties-Public #6 Ltd.
By: (Signature and Title): Atlas Resources, Inc., Managing
General Partner
By (Signature and Title):
/s/James R. O'Mara, President, Chief Executive Officer and a Director
Date: March 31, 1998
In accordance with the Exchange Act, this report has been signed by the
following persons on behalf of the registrant and in the capacities and
on the dates indicated.
By (Signature and Title):
/s/Charles T. Koval, Chairman of the Board and a Director
Date: March 31, 1998
By (Signature and Title):
/s/James R. O'Mara, President, Chief Executive Officer and
a Director
Date: March 31, 1998
By (Signature and Title):
/s/Bruce M. Wolf, General Counsel, Secretary and a Director
Date: March 31, 1998
By (Signature and Title):
/s/Tony C. Banks, Vice President of Finance and Chief Financial Officer
Date: March 31, 1998
Supplemental information to be Furnished
With Reports Filed Pursuant to Section 15(d)
of the Exchange Act by Non-reporting Issuers
An annual report will be furnished to security holders subsequent to
the filing of this report.
==================================================================
==================================================================
AUDITED FINANCIAL STATEMENTS
ATLAS-ENERGY FOR THE NINETIES-PUBLIC #6 LTD.
A PENNSYLVANIA LIMITED PARTNERSHIP
JULY 1, 1997 (DATE OF FORMATION) TO DECEMBER 31, 1997
SEE BELOW
==================================================================
EXHIBIT 4(a)
CERTIFICATE OF LIMITED PARTNERSHIP
ATLAS-ENERGY FOR THE NINETIES-PUBLIC #6 LTD.
Filed with the Department July 1, 1997
Microfilm Number 9749-1712
Entity Number 2763464
Filed with the Department of State on July 1, 1997
Secretary of the COMMONWEALTH
CERTIFICATE OF LIMITED PARTNERSHIP
DSC8: 1 5-8511 (Rev 90)
In compliance with the requirements of 15 Pa.C.S. 8511 (relating
to certificate of limited partnership), the undersigned desiring to
form a limited partnership, hereby certifies that:
1. The name of the limited partnership is:
Atlas-Energy for the Nineties-Public #6 Ltd.
2. The (a) address of this
limited partnership's initial registered office in this Commonwealth
or (b) name of its commercial registered office
provider and the county of venue is:
(a) 311 Rouser Road Moon Township, Pennsylvania 15108
Alleghney
Number and Street city State Zip County
(b) c/o-' N/A
Name of Commercial Registered Office Provider County
For a limited partnership represented by a commercial registered
office provider, the county in (b) shall be deemed the county in
whichthe limited partnership is located for venue and official publication
purposes.
3. The name and business address of each general partner of the
partnership is:
Name Address
Atlas Resources, Inc. 311Rouser Road, Moon Township Pennsylvania 15108
4. (Check, and if appropriate complete, one of the following):
X-The formation of the limited partnership shall be effective upon
filing this Cerii~ficate of Limited Partnership in to I Department of
State.
- -The formation of the limited partnership shall be effective on- at
Date July 1, 1997 Hour:
DSCB:15-8511 (Rev 90)-2
IN TESTIMONY WHEREOF, the undersigned general partner(s) of the
limited partnership has (have) executed this Certificate of
Limited Partnership day of (Signature) /s/J. R. 0 'Mara, President
==========================================================================
EXHIBIT 4(b)
AMENDED AND RESTATED CERTIFICATE
AND
AGREEMENT OF LIMITED PARTNERSHIP
TABLE OF CONTENTS
Section No. Description Page
I. FORMATION
1.01 Formation 1
1.02 Certificate of Limited Partnership 1
1.03 Name, Principal Office and Residence 1
1.04 Purpose 1
II. DEFINITION OF TERMS
2.01 Definitions 1
III. SUBSCRIPTIONS AND FURTHER CAPITAL CONTRIBUTIONS
3.01 Designation of Managing General Partner and Participants
3.02 Participants 7
3.03 Subscriptions to the Partnership 7
3.04 Capital Contributions 8
3.05 Payment of Subscriptions 9
3.06 Partnership Funds 9
IV. CONDUCT OF OPERATIONS
4.01 Acquisition of Leases 10
4.02 Conduct of Operations 11
4.03 General Rights and Obligations of the Participants and
Restricted and Prohibited Transactions 14
4.04 Designation, Compensation and Removal of Managing General
Partner and Removal of Operator 20
4.05 Indemnification and Exoneration 21
4.06 Other Activities 22
V. PARTICIPATION IN COSTS AND REVENUES, CAPITAL ACCOUNTS, ELECTIONS
AND DISTRIBUTIONS
5.01 Participation in Costs and Revenues 23
5.02 Capital Accounts and Allocations Thereto 25
5.03 Allocation of Income, Deductions and Credits 25
5.04 Elections 27
5.05 Distributions 27
VI. TRANSFER OF INTERESTS
6.01 Transferability 28
6.02 Special Restrictions on Transfers 28
6.03 Right of Managing General Partner to Hypothecate and/or
Withdraw Its Interests 29
6.04 Repurchase Obligation 29
VII. DURATION, DISSOLUTION, AND WINDING UP
7.01 Duration 30
7.02 Dissolution and Winding Up 31
VIII. MISCELLANEOUS PROVISIONS
8.01 Notices 31
8.02 Time 31
8.03 Applicable Law 31
8.04 Agreement in Counterparts 32
8.05 Amendment 32
8.06 Additional Partners 32
8.07 Legal Effect 32
- --------------------------------------------------------------------------
AMENDED AND RESTATED CERTIFICATE AND
AGREEMENT OF LIMITED PARTNERSHIP
ATLAS-ENERGY FOR THE NINETIES-PUBLIC #6 LTD.
THIS AMENDED AND RESTATED CERTIFICATE AND AGREEMENT OF LIMITED
PARTNERSHIP ("AGREEMENT"), amending and restating the original
Certificate of Limited Partnership, is made and entered into as of
December 31 , 1997, by and among Atlas Resources, Inc., hereinafter
referred to as "Atlas" or the "Managing General Partner", and the
remaining parties from time to time signing a Subscription Agreement
for Limited Partner Units, such parties hereinafter sometimes referred
to as "Limited Partners," or for Investor General Partner Units, such
parties hereinafter sometimes referred to as "Investor General
Partners".
ARTICLE I
FORMATION
1.01. Formation. The parties hereto form a limited partnership
pursuant to the Pennsylvania Revised Uniform Limited Partnership Act,
upon the terms and conditions set forth herein.
1.02. Certificate of Limited Partnership. This document shall
constitute not only the agreement among the parties hereto, but also
shall constitute the Amended and Restated Certificate and Agreement of
Limited Partnership of the Partnership and shall be filed or recorded
in such public offices as is required under applicable law or deemed
advisable in the discretion of the Managing General Partner. Amendments
to the certificate of limited partnership shall be filed or recorded in
such public offices as required under applicable law or deemed
advisable in the discretion of the Managing General Partner.
1.03. Name, Principal Office and Residence. The name of the
Partnership is Atlas-Energy for the Nineties-Public #6 Ltd. The
residence of Atlas shall be its principal place of business at 311
Rouser Road, Moon Township, Pennsylvania 15108, which shall also serve
as the principal place of business of the Partnership. The residence of
each Participant shall be as set forth on the Subscription Agreement
executed by each such party. All such addresses shall be subject to
change upon notice to the parties. The name and address of the agent
for service of process shall be Mr. J.R. O'Mara at Atlas Resources,
Inc., 311 Rouser Road, Moon Township, Pennsylvania 15108.
1.04. Purpose. The Partnership shall engage in all phases of the oil
and gas business, including, without limitation, exploration for,
development and production of oil and gas upon the terms and conditions
hereinafter set forth and any other proper purpose under the
Pennsylvania Revised Uniform Limited Partnership Act. The Managing
General Partner may not, without the affirmative vote of Participants
whose Agreed Subscriptions equal a majority of the Partnership
Subscription, change the investment and business purpose of the
Partnership or cause the Partnership to engage in activities outside
the stated business purposes of the Partnership through joint ventures
with other entities.
ARTICLE II
DEFINITION OF TERMS
2.01. Definitions. As used in this Agreement, the following terms
shall have the meanings hereinafter set forth:
1. "Administrative Costs" shall mean all customary and routine
expenses incurred by the Sponsor for the conduct of Partnership
administration, including: legal, finance, accounting,
secretarial, travel, office rent, telephone, data processing
and other items of a similar nature. No Administrative Costs
charged shall be duplicated under any other category of expense
or cost. No portion of the salaries, benefits, compensation or
remuneration of controlling persons of Atlas will be reimbursed
by the Partnership as Administrative Costs. Controlling persons
include directors, executive officers and those holding five
percent or more equity interest in the Managing General Partner
or a person having power to direct or cause the direction of
the Managing General Partner, whether through the ownership of
voting securities, by contract, or otherwise.
2. "Administrator" shall mean the official or agency administering
the securities laws of a state.
3. "Affiliate" shall mean with respect to a specific person (a)
any person directly or indirectly owning, controlling, or
holding with power to vote 10 per cent or more of the
outstanding voting securities of such specified person; (b) any
person 10 per cent or more of whose outstanding voting
securities are directly or indirectly owned, controlled, or
held with power to vote, by such specified person; (c) any
person directly or indirectly controlling, controlled by, or
under common control with such specified person; (d) any
officer, director, trustee or partner of such specified person;
and (e) if such specified person is an officer, director,
trustee or partner, any person for which such person acts in
any such capacity.
4. "Agreed Subscription" shall mean that amount so designated on
the Subscription Agreement executed by the Participant, or, in
the case of the Managing General Partner, its subscription
under 3.03(b) and its subsections.
5. "Agreement" shall mean this Amended and Restated Certificate
and Agreement of Limited Partnership, including all exhibits
hereto.
6. "Assessments" shall mean additional amounts of capital which
may be mandatorily required of or paid voluntarily by a
Participant beyond his subscription commitment.
7. "Atlas" shall mean Atlas Resources, Inc., a Pennsylvania
corporation, whose principal executive offices are located at
311 Rouser Road, Moon Township, Pennsylvania 15108.
8. "Atlas Energy" shall mean Atlas Energy Group, Inc., an Ohio
corporation, whose principal executive offices are located at
311 Rouser Road, Moon Township, Pennsylvania 15108.
9. "Atlas Group" shall mean The Atlas Group, Inc., a Pennsylvania
corporation, whose principal executive offices are located at
311 Rouser Road, Moon Township, Pennsylvania 15108. Atlas
Group was formerly known as AEGH or AEG Holdings, Inc.
10. "Capital Account" or "account" shall mean the account
established for each party hereto, maintained as provided in
5.02 and its subsections.
11. "Capital Contribution" shall mean the amount agreed to be
contributed to the Partnership by a party pursuant to 3.04
and 3.05 and their subsections.
12. "Carried Interest" shall mean an equity interest in the
Partnership issued to a Person without consideration, in the
form of cash or tangible property, in an amount proportionately
equivalent to that received from the Participants.
13. "Code" shall mean the Internal Revenue Code of 1986, as
amended.
14. "Cost", when used with respect to the sale of property to the
Partnership, shall mean (a) the sum of the prices paid by the
seller to an unaffiliated person for such property, including
bonuses; (b) title insurance or examination costs, brokers'
commissions, filing fees, recording costs, transfer taxes, if
any, and like charges in connection with the acquisition of
such property; (c) a pro rata portion of the seller's actual
necessary and reasonable expenses for seismic and geophysical
services; and (d) rentals and ad valorem taxes paid by the
seller with respect to such property to the date of its
transfer to the buyer, interest and points actually incurred on
funds used to acquire or maintain such property, and such
portion of the seller's reasonable, necessary and actual
expenses for geological, engineering, drafting, accounting,
legal and other like services allocated to the property cost in
conformity with generally accepted accounting principles and
industry standards, except for expenses in connection with the
past drilling of wells which are not producers of sufficient
quantities of oil or gas to make commercially reasonable their
continued operations, and provided that the expenses enumerated
in this subsection (d) hereof shall have been incurred not more
than 36 months prior to the purchase by the Partnership. When
used with respect to services, "cost" shall mean the
reasonable, necessary and actual expense incurred by the seller
on behalf of the Partnership in providing such services,
determined in accordance with generally accepted accounting
principles. As used elsewhere, "cost" shall mean the price paid
by the seller in an arm's-length transaction.
15. "Dealer-Manager" shall mean Anthem Securities, Inc., a wholly
owned subsidiary of AIC, Inc. and the broker-dealer which will
manage the offering and sale of the Units in all states except
Minnesota and New Hampshire, and Bryan Funding, Inc., the
broker-dealer which will manage the offering and sale of Units
in Minnesota and New Hampshire.
16. "Development Well" shall mean a well drilled within the proved
area of an oil or gas reservoir to the depth of a stratigraphic
Horizon known to be productive.
17. "Direct Costs" shall mean all actual and necessary costs
directly incurred for the benefit of the Partnership and
generally attributable to the goods and services provided to
the Partnership by parties other than the Sponsor or its
Affiliates. Direct Costs shall not include any cost otherwise
classified as Organization and Offering Costs, Administrative
Costs, Intangible Drilling Costs, Tangible Costs, Operating
Costs or costs related to the Leases. Direct Costs may include
the cost of services provided by the Sponsor or its Affiliates
if such services are provided pursuant to written contracts and
in compliance with 4.03(d)(7).
18. "Distribution Interest" shall mean an undivided interest in the
assets of the Partnership after payments to creditors of the
Partnership or the creation of a reasonable reserve therefor,
in the ratio the positive balance of a party's Capital Account
bears to the aggregate positive balance of the Capital Accounts
of all of the parties determined after taking into account all
Capital Account adjustments for the taxable year during which
liquidation occurs (other than those made pursuant to
liquidating distributions or restoration of deficit Capital
Account balances); provided, however, after the Capital
Accounts of all of the parties have been reduced to zero, such
interest in the remaining assets of the Partnership shall equal
a party's interest in the related revenues of the Partnership
as set forth in 5.01 and its subsections of this Agreement.
19. "Drilling and Operating Agreement" shall mean the proposed
Drilling and Operating Agreement between Atlas, Atlas Energy or
an Affiliate as Operator, and the Partnership as Developer, a
copy of the proposed form of which is attached hereto as
Exhibit (II).
20. "Exploratory Well" shall mean a well drilled to find
commercially productive hydrocarbons in an unproved area, to
find a new commercially productive Horizon in a field
previously found to be productive of hydrocarbons at another
Horizon, or to significantly extend a known prospect.
21. "Farmout" shall mean an agreement whereby the owner of the
leasehold or Working Interest agrees to assign his interest in
certain specific acreage to the assignees, retaining some
interest such as an Overriding Royalty Interest, an oil and gas
payment, offset acreage or other type of interest, subject to
the drilling of one or more specific wells or other performance
as a condition of the assignment.
22. "Final Terminating Event" shall mean any one of the following:
(i) the expiration of the fixed term of the Partnership; (ii)
the giving of notice to the Participants by the Managing
General Partner of its election to terminate the affairs of the
Partnership; (iii) the giving of notice by the Participants to
the Managing General Partner of their similar election through
the affirmative vote of Participants whose Agreed Subscriptions
equal a majority of the Partnership Subscription; or (iv) the
termination of the Partnership under 708(b)(1)(A) of the Code
or the Partnership ceases to be a going concern.
23. "Horizon" shall mean a zone of a particular formation; that
part of a formation of sufficient porosity and permeability to
form a petroleum reservoir.
24. "Independent Expert" shall mean a person with no material
relationship to the Sponsor or its Affiliates who is qualified
and who is in the business of rendering opinions regarding the
value of oil and gas properties based upon the evaluation of
all pertinent economic, financial, geologic and engineering
information available to the Sponsor or its Affiliates.
25. "Initial Closing Date" shall mean the date, on or before the
Offering Termination Date, but after the minimum Partnership
Subscription has been received, that the Managing General
Partner, in its sole discretion, elects for the Partnership to
begin business activities, including the drilling of wells. It
is anticipated that this date will be December 1, 1997.
26. "Intangible Drilling Costs"or "Non-Capital Expenditures" shall
mean those expenditures associated with property acquisition
and the drilling and completion of oil and gas wells that under
present law are generally accepted as fully deductible
currently for federal income tax purposes; and includes all
expenditures made with respect to any well prior to the
establishment of production in commercial quantities for wages,
fuel, repairs, hauling, supplies and other costs and expenses
incident to and necessary for the drilling of such well and the
preparation thereof for the production of oil or gas, that are
currently deductible pursuant to Section 263(c) of the Code and
Treasury Reg. Section 1.612-4, which are generally termed
"intangible drilling and development costs," including the
expense of plugging and abandoning any well prior to a
completion attempt.
27. "Interim Closing Date" shall mean such date(s) after the
Initial Closing Date of the Partnership, but prior to the
Offering Termination Date, that the Managing General Partner,
in its sole discretion, applies additional Agreed Subscriptions
to additional Partnership activities, including drilling
activities.
28. "Investor General Partners" shall mean the persons signing the
Subscription Agreement as Investor General Partners and the
Managing General Partner to the extent of any optional
subscription under 3.03(b)(2). All Investor General Partners
shall be of the same class and have the same rights.
29. "Landowner's Royalty Interest" shall mean an interest in
production, or the proceeds therefrom, to be received free and
clear of all costs of development, operation, or maintenance,
reserved by a landowner upon the creation of an oil and gas
Lease.
30. "Leases" shall mean full or partial interests in oil and gas
leases, oil and gas mineral rights, fee rights, licenses,
concessions, or other rights under which the holder is entitled
to explore for and produce oil and/or gas, and further includes
any contractual rights to acquire any such interest.
31. "Limited Partners" shall mean the persons signing the
Subscription Agreement as Limited Partners, the Managing
General Partner to the extent of any optional subscription
under 3.03(b)(2), the Investor General Partners upon the
conversion of their Investor General Partner Units to Limited
Partner interests pursuant to 6.01(c), and any other persons
who are admitted to the Partnership as additional or
substituted Limited Partners. Except as provided in 3.05(b),
with respect to the required additional Capital Contributions
of Investor General Partners, all Limited Partners shall be of
the same class and have the same rights.
32. "Managing General Partner" shall mean Atlas Resources, Inc. or
any Person admitted to the Partnership as a general partner
other than as an Investor General Partner pursuant to this
Agreement who is designated to exclusively supervise and manage
the operations of the Partnership.
33. "Managing General Partner Signature Page" shall mean an
execution and subscription instrument in the form attached as
Exhibit (I-A) to this Agreement, which is incorporated herein
by reference.
34. "Offering Termination Date" shall mean the date after the
minimum Partnership Subscription has been received on which the
Managing General Partner determines, in its sole discretion,
the Partnership's subscription period is closed and the
acceptance of subscriptions ceases, which shall not be later
than December 31, 1997.
35. "Operating Costs" shall mean expenditures made and costs
incurred in producing and marketing oil or gas from completed
wells, including, in addition to labor, fuel, repairs, hauling,
materials, supplies, utility charges and other costs incident
to or therefrom, ad valorem and severance taxes, insurance and
casualty loss expense, and compensation to well operators or
others for services rendered in conducting such operations.
Subject to the foregoing, Operating Costs also include
reworking, workover, subsequent equipping and similar expenses
relating to any well.
36. "Operator" shall mean Atlas, as operator of Partnership Wells
in Pennsylvania, Atlas Energy as operator of Partnership Wells
in Ohio and Atlas or an Affiliate as Operator of Partnership
Wells in other areas of the United States.
37. "Organization and Offering Costs" shall mean all costs of
organizing and selling the offering including, but not limited
to, total underwriting and brokerage discounts and commissions
(including fees of the underwriters' attorneys), expenses for
printing, engraving, mailing, salaries of employees while
engaged in sales activities, charges of transfer agents,
registrars, trustees, escrow holders, depositaries, engineers
and other experts, expenses of qualification of the sale of the
securities under federal and state law, including taxes and
fees, accountants' and attorneys' fees and other front-end
fees.
38. "Overriding Royalty Interest" shall mean an interest in the oil
and gas produced pursuant to a specified oil and gas lease or
leases, or the proceeds from the sale thereof, carved out of
the working interest, to be received free and clear of all
costs of development, operation, or maintenance.
39. "Participants" shall mean the Managing General Partner to the
extent of its optional subscription under 3.03(b)(2); the
Limited Partners, and the Investor General Partners.
40. "Partners" shall mean the Managing General Partner, the
Investor General Partners and the Limited Partners.
41. "Partnership" shall mean Atlas-Energy for the Nineties-Public
#6 Ltd., the Pennsylvania limited partnership formed pursuant
to this Agreement.
42. "Partnership Net Production Revenues" shall mean gross revenues
after deduction of the related Operating Costs, Direct Costs,
Administrative Costs and all other Partnership costs not
specifically allocated.
43. "Partnership Subscription" shall mean the aggregate Agreed
Subscriptions of the parties to this Agreement; provided,
however, with respect to Participant voting rights under this
Agreement, the term "Partnership Subscription" shall be deemed
not to include the Managing General Partner's required
subscription under 3.03(b)(1).
44. "Partnership Well" shall mean a well, some portion of the
revenues from which is received by the Partnership.
45. "Person" shall mean a natural person, partnership, corporation,
association, trust or other legal entity.
46. "Program" shall mean one or more limited or general
partnerships or other investment vehicles formed, or to be
formed, for the primary purpose of exploring for oil, gas and
other hydrocarbon substances or investing in or holding any
property interests which permit the exploration for or
production of hydrocarbons or the receipt of such production or
the proceeds thereof.
47. "Prospect" shall mean an area covering lands which are believed
by the Managing General Partner to contain subsurface
structural or stratigraphic conditions making it susceptible to
the accumulations of hydrocarbons in commercially productive
quantities at one or more Horizons. The area, which may be
different for different Horizons, shall be designated by the
Managing General Partner in writing prior to the conduct of
Partnership operations and shall be enlarged or contracted from
time to time on the basis of subsequently acquired information
to define the anticipated limits of the associated hydrocarbon
reserves and to include all acreage encompassed therein. A
"Prospect" with respect to a particular Horizon may be limited
to the minimum area permitted by state law or local practice,
whichever is applicable, to protect against drainage from
adjacent wells if the well to be drilled by the Partnership is
to a Horizon containing Proved Reserves. Subject to the
foregoing sentence, with respect to the Clinton/Medina
geological formation in Ohio and Pennsylvania "Prospect" shall
be deemed the drilling or spacing unit.
48. "Proved Reserves" shall mean the estimated quantities of crude
oil, natural gas, and natural gas liquids which geological and
engineering data demonstrate with reasonable certainty to be
recoverable in future years from known reservoirs under
existing economic and operating conditions, i.e., prices and
costs as of the date the estimate is made. Prices include
consideration of changes in existing prices provided only by
contractual arrangements, but not on escalations based upon
future conditions.
(i) Reservoirs are considered proved if economic
producibility is supported by either actual production or
conclusive formation test. The area of a reservoir
considered proved includes (a) that portion delineated by
drilling and defined by gas-oil and/or oil-water contacts,
if any; and (b) the immediately adjoining portions not yet
drilled, but which can be reasonably judged as economically
productive on the basis of available geological and
engineering data. In the absence of information on fluid
contacts, the lowest known structural occurrence of
hydrocarbons controls the lower proved limit of the
reservoir.
(ii) Reserves which can be produced economically through
application of improved recovery techniques (such as fluid
injection) are included in the "proved" classification when
successful testing by a pilot project, or the operation of
an installed program in the reservoir, provides support for
the engineering analysis on which the project or program
was based.
(iii) Estimates of proved reserves do not include the
following: (a) oil that may become available from known
reservoirs but is classified separately as "indicated
additional reserves"; (b) crude oil, natural gas, and
natural gas liquids, the recovery of which is subject to
reasonable doubt because of uncertainty as to geology,
reservoir characteristics, or economic factors; (c) crude
oil, natural gas, and natural gas liquids, that may occur
in undrilled prospects; and (d) crude oil, natural gas, and
natural gas liquids, that may be recovered from oil shales,
coal, gilsonite and other such sources.
49. "Proved Developed Oil and Gas Reserves" shall mean reserves
that can be expected to be recovered through existing wells
with existing equipment and operating methods. Additional oil
and gas expected to be obtained through the application of
fluid injection or other improved recovery techniques for
supplementing the natural forces and mechanisms of primary
recovery should be included as "proved developed reserves" only
after testing by a pilot project or after the operation of an
installed program has confirmed through production response
that increased recovery will be achieved.
50. "Proved Undeveloped Reserves" shall mean reserves that are
expected to be recovered from new wells on undrilled acreage,
or from existing wells where a relatively major expenditure is
required for recompletion. Reserves on undrilled acreage shall
be limited to those drilling units offsetting productive units
that are reasonably certain of production when drilled. Proved
reserves for other undrilled units can be claimed only where it
can be demonstrated with certainty that there is continuity of
production from the existing productive formation. Under no
circumstances should estimates for proved undeveloped reserves
be attributable to any acreage for which an application of
fluid injection or other improved recovery technique is
contemplated, unless such techniques have been proved effective
by actual tests in the area and in the same reservoir.
51. "Roll-Up" shall mean a transaction involving the acquisition,
merger, conversion or consolidation, either directly or
indirectly, of the Partnership and the issuance of securities
of a Roll-Up Entity. Such term does not include: (a) a
transaction involving securities of the Partnership that have
been listed for at least twelve months on a national exchange
or traded through the National Association of Securities
Dealers Automated Quotation National Market System; or (b) a
transaction involving the conversion to corporate, trust or
association form of only the Partnership if, as a consequence
of the transaction, there will be no significant adverse change
in any of the following: voting rights; the term of existence
of the Partnership; the Managing General Partner's
compensation; and the Partnership's investment objectives.
52. "Roll-Up Entity" shall mean a partnership, trust, corporation
or other entity that would be created or survive after the
successful completion of a proposed roll-up transaction.
53. "Sales Commissions" shall mean all underwriting and brokerage
discounts and commissions incurred in the sale of Units in the
Partnership payable to registered broker-dealers, excluding the
Dealer-Manager fee, the reimbursement for bona fide accountable
due diligence expenses and wholesaling fees.
54. "Selling Agents" shall mean those broker-dealers selected by
the Dealer-Manager which will participate in the offer and sale
of the Units.
55. "Sponsor" shall mean any person directly or indirectly
instrumental in organizing, wholly or in part, a program or any
person who will manage or is entitled to manage or participate
in the management or control of a program. "Sponsor" includes
the managing and controlling general partner(s) and any other
person who actually controls or selects the person who controls
25% or more of the exploratory, development or producing
activities of the program, or any segment thereof, even if that
person has not entered into a contract at the time of formation
of the program. "Sponsor" does not include wholly independent
third parties such as attorneys, accountants, and underwriters
whose only compensation is for professional services rendered
in connection with the offering of units. Whenever the context
so requires, the term "sponsor" shall be deemed to include its
affiliates.
56. "Subscription Agreement" shall mean an execution and
subscription instrument in the form attached as Exhibit (I-B)
to this Agreement, which is incorporated herein by reference.
57. "Tangible Costs"or "Capital Expenditures" shall mean those
costs associated with the drilling and completion of oil and
gas wells which are generally accepted as capital expenditures
pursuant to the provisions of the Internal Revenue Code; and
includes all costs of equipment, parts and items of hardware
used in drilling and completing a well, and those items
necessary to deliver acceptable oil and gas production to
purchasers to the extent installed downstream from the wellhead
of any well and which are required to be capitalized pursuant
to applicable provisions of the Code and regulations
promulgated thereunder.
58. "Tax Matters Partner" shall mean the Managing General Partner.
59. "Units" or "Units of Participation" shall mean the Limited
Partner interests and the Investor General Partner interests
purchased by Participants in the Partnership under the
provisions of 3.03 and its subsections.
60. "Working Interest" shall mean an interest in an oil and gas
leasehold which is subject to some portion of the Cost of
development, operation, or maintenance.
ARTICLE III
SUBSCRIPTIONS AND FURTHER CAPITAL CONTRIBUTIONS
3.01. Designation of Managing General Partner and Participants. Atlas
shall serve as Managing General Partner of the Partnership. Atlas shall
further serve as a Participant to the extent of any subscription made
by it pursuant to 3.03(b)(2). Limited Partners and Investor General
Partners, including Affiliates of the Managing General Partner, shall
serve as Participants; and except as provided under the Pennsylvania
Revised Uniform Limited Partnership Act, the Limited Partners shall not
be bound by the obligations of the Partnership.
3.02. Participants.
3.02(a). Limited Partner at Formation. Atlas Energy Group, Inc., as
Original Limited Partner, has acquired one Unit and has made a Capital
Contribution of $100. Upon the admission of Limited Partners and
Investor General Partners pursuant to 3.02(c) below, the Partnership
shall return to such Original Limited Partner its Capital Contribution
and shall reacquire its Unit and such Original Limited Partner shall
cease to be a Limited Partner in the Partnership with respect to such
Unit.
3.02(b). Offering of Interests. The Partnership is authorized to admit
to the Partnership after the receipt of the minimum Partnership
Subscription and at or prior to the Offering Termination Date
additional Limited Partners and Investor General Partners whose Agreed
Subscriptions for Units are accepted by the Managing General Partner
if, after the admission of such additional Limited Partners and
Investor General Partners, the Agreed Subscriptions of all Limited
Partners and Investor General Partners do not exceed the number of
Units set forth in 3.03(c)(1). The Managing General Partner may refuse
to admit any person as a Limited Partner or Investor General Partner
for any reason whatsoever pursuant to 3.03(d).
3.02(c). Admission of Limited Partners and/or Investor General
Partners. No action or consent by the Participants shall be required
for the admission of additional Limited Partners and Investor General
Partners pursuant to 3.02(b). All subscribers' funds shall be held by
an independent interest bearing escrow holder and shall not be released
to the Partnership until the receipt of the minimum Partnership
Subscription in 3.03(c)(2). Thereafter, subscriptions may be paid
directly to the Partnership Account.
3.02(d). Minimum Capitalization and Duration of Offering. The offering
of Units shall be terminated not later than the earlier of (i) December
31, 1997; or (ii) at such time as Agreed Subscriptions for the maximum
Partnership Subscription set forth in 3.03(c)(1) shall have been
received and accepted by the Managing General Partner. The offering may
be terminated earlier at the option of the Managing General Partner. If
at the time of termination Agreed Subscriptions for fewer than 100
Units have been received and accepted, all monies deposited by
subscribers shall be promptly returned to them with the interest earned
thereon from the date such monies were deposited in escrow through the
date of refund.
3.03. Subscriptions to the Partnership.
3.03(a). Subscriptions by Participants.
3.03(a)(1). Agreed Subscription. A Participant's Agreed Subscription
to the Partnership shall be the amount so designated on his
Subscription Agreement.
3.03(a)(2). Subscription Price and Minimum Agreed Subscription. The
subscription price of a Unit in the Partnership shall be $10,000,
payable as set forth herein. The minimum Agreed Subscription per
Participant shall be one Unit ($10,000); however, the Managing General
Partner, in its discretion, may accept one-half Unit ($5,000)
subscriptions. Larger Agreed Subscriptions shall be accepted in $1,000
increments.
3.03(a)(3). Effect of Subscription. Execution of a Subscription
Agreement shall serve as an agreement by such Limited Partner or
Investor General Partner to be bound by each and every term of this
Agreement.
3.03(b). Subscriptions by Managing General Partner.
3.03(b)(1). Managing General Partner's Required Subscription. The
Managing General Partner, as a general partner and not as a Limited
Partner or Investor General Partner, shall contribute to the
Partnership the Leases which will be drilled by the Partnership on the
terms set forth in 4.01(a)(3) and shall pay the costs charged to it
pursuant to 5.01(a). Such amounts shall be paid as set forth in
3.05(a).
3.03(b)(2). Managing General Partner's Optional Additional
Subscription. In addition to the Managing General Partner's required
subscription under 3.03(b)(1), the Managing General Partner may
subscribe to up to 10% of the Units on the same basis as a Participant
may subscribe to Units under the provisions of 3.03(a) and its
subsections, and, subject to the limitations on voting rights set forth
in 4.03(c)(1), to that extent shall be deemed a Participant in the
Partnership for all purposes under this Agreement. Notwithstanding the
foregoing, broker-dealers and the Managing General Partner and its
officers and directors and Affiliates shall not be required to pay the
Dealer-Manager fee, any Sales Commission or any reimbursement of
accountable due diligence expenses.
3.03(b)(3). Effect of and Evidencing Subscription. The Managing
General Partner has executed a Managing General Partner Signature Page
which evidences the Managing General Partner's required subscription
under 3.03(b)(1) and which may be amended to reflect the amount of any
optional subscription under 3.03(b)(2). Execution of the Managing
General Partner Signature Page serves as an agreement by the Managing
General Partner to be bound by each and every term of this Agreement.
3.03(c). Maximum and Minimum Partnership Subscription.
3.03(c)(1). Maximum Partnership Subscription. The maximum Partnership
Subscription excluding the Managing General Partner's required
subscription under 3.03(b)(1) may not exceed $8,000,000 (800 Units).
However, if subscriptions for all 800 Units being offered are obtained,
the Managing General Partner, in its sole discretion, may offer not
more than 200 additional Units and increase the maximum aggregate
subscriptions with which the Partnership may be funded to not more than
1,000 Units ($10,000,000).
3.03(c)(2). Minimum Partnership Subscription. The minimum Partnership
Subscription shall equal at least $1,000,000 (100 Units). The Managing
General Partner and its Affiliates may purchase up to 10% of the
Partnership Subscription, none of which shall be applied to satisfy the
$1,000,000 minimum.
3.03(d). Acceptance of Subscriptions. Acceptance of subscriptions
shall be discretionary with Atlas and Atlas may reject any subscription
for any reason it deems appropriate. A Participant's subscription to
the Partnership and Atlas' acceptance thereof shall be evidenced by the
execution of a Subscription Agreement by the Limited Partner or the
Investor General Partner and by Atlas. Agreed Subscriptions shall be
accepted or rejected by the Partnership within thirty days of their
receipt; if rejected, all funds shall be returned to the subscriber
immediately. Upon the original sale of Units, the Participants shall
be admitted as Partners not later than fifteen days after the release
from escrow of Participants' funds to the Partnership, and thereafter
Participants shall be admitted into the Partnership not later than the
last day of the calendar month in which their Agreed Subscriptions were
accepted by the Partnership.
3.04. Capital Contributions.
3.04(a). Capital Contributions. Each Participant shall make a Capital
Contribution to the Partnership equal to the sum of: (i) the Agreed
Subscription of such Participant; and (ii) in the case of Investor
General Partners, but not the Limited Partners, the additional Capital
Contributions required in 3.05(b). Participants shall not be required
to restore any deficit balances in their Capital Accounts except as set
forth in 5.03(h).
3.04(b). Additional Managing General Partner Capital Contributions.
3.04(b)(1). Additional Capital Contributions of the Managing General
Partner. In addition to any Capital Contribution required of the
Managing General Partner as provided in 3.03(b)(1) and any optional
Capital Contribution as a Participant as provided in 3.03(b)(2), the
Managing General Partner shall further contribute cash sufficient to
pay all costs charged to it under this Agreement to the extent such
costs exceed: (i) its Capital Contribution pursuant to 3.03(b); and
(ii) its share of undistributed revenues. In any event, the Managing
General Partner's aggregate Capital Contributions to the Partnership
(including Leases contributed pursuant to 3.03(b)(1)) shall not be
less than 16.5% of all Capital Contributions to the Partnership. Any
payments by the Managing General Partner in excess of the costs set
forth in 3.03(b)(1) shall be used to pay Partnership costs which would
otherwise be charged to the Participants. Such Capital Contributions
shall be paid by the Managing General Partner at the time such costs
are required to be paid by the Partnership, but, in no event, later
than December 31, 1998.
Upon liquidation of the Partnership or its interest in the Partnership,
the Managing General Partner shall contribute to the Partnership any
deficit balance in its Capital Account, determined after taking into
account all adjustments for the Partnership's taxable year during which
such liquidation occurs (other than adjustments made pursuant to this
requirement), by the end of the taxable year in which its interest in
the Partnership is liquidated (or, if later, within 90 days after the
date of such liquidation), to be paid to creditors of the Partnership
or distributed to the other parties hereto in accordance with 7.02
upon liquidation of the Partnership. The Managing General Partner shall
maintain a minimum Capital Account balance equal to 1% of total
positive Capital Account balances for the Partnership.
3.04(b)(2). Interest for Contributions. The interest of the Managing
General Partner in the capital and revenues of the Partnership is in
consideration for, and is the only consideration for, its Capital
Contribution to the Partnership.
3.04(c). Limitation on Amount of Required Capital Contributions of
Limited Partners. In no event shall a Limited Partner be required to
make contributions to the Partnership greater than his required Capital
Contribution under 3.04(a).
3.05. Payment of Subscriptions.
3.05(a). Managing General Partner's Subscriptions. The Managing
General Partner shall contribute to the Partnership the Leases pursuant
to 3.03(b)(1) and pay the costs charged to it when incurred by the
Partnership, subject to 3.04(b)(1). Any optional subscription under
3.03(b)(2) shall be paid by the Managing General Partner in the same
manner as provided for the payment of Participant subscriptions under
3.05(b).
3.05(b). Participant Subscriptions and Additional Capital
Contributions of the Investor General Partners. A Participant shall pay
his Agreed Subscription 100% in cash at the time of subscribing. A
Participant shall receive interest on his Agreed Subscription up until
the Offering Termination Date.
Investor General Partners are obligated to make Capital Contributions
to the Partnership when called by the Managing General Partner, in
addition to their Agreed Subscriptions, for their pro rata share of any
Partnership obligations and liabilities which are recourse to the
Investor General Partners and are represented by their ownership of
Units prior to the conversion of Investor General Units to Limited
Partner interests pursuant to 6.01(c). The failure of an Investor
General Partner to timely make a required additional Capital
Contribution pursuant to this section results in his personal liability
to the other Investor General Partners for the amount in default. The
remaining Investor General Partners, pro rata, must pay such defaulting
Investor General Partner's share of Partnership liabilities and
obligations. In that event, the remaining Investor General Partners
shall have a first and preferred lien on the defaulting Investor
General Partner's interest in the Partnership to secure payment of the
amount in default plus interest at the legal rate; shall be entitled to
receive 100% of the defaulting Investor General Partner's cash
distributions directly from the Partnership until the amount in default
is recovered in full plus interest at the legal rate; and may commence
legal action to collect the amount due plus interest at the legal rate.
3.06. Partnership Funds.
3.06(a). Fiduciary Duty. The Managing General Partner shall have a
fiduciary responsibility for the safekeeping and use of all funds and
assets of the Partnership, whether or not in the Managing General
Partner's possession or control, and the Managing General Partner shall
not employ, or permit another to employ, such funds and assets in any
manner except for the exclusive benefit of the Partnership. Neither
this Agreement nor any other agreement between the Sponsor and the
Partnership shall contractually limit any fiduciary duty owed to the
Participants by the Sponsor under applicable law, except as provided in4.01,
4.02, 4.04, 4.05 and 4.06 of this Agreement.
3.06(b). Special Account After the Receipt of the Minimum Partnership
Subscription. Following the receipt of the minimum Partnership
Subscription, the funds of the Partnership shall be held in a separate
interest-bearing account maintained for the Partnership and shall not
be commingled with funds of any other entity.
3.06(c). Investment. Partnership funds may not be invested in the
securities of another person except in the following instances: (1)
investments in Working Interests or undivided Lease interests made in
the ordinary course of the Partnership's business; (2) temporary
investments made as set forth below; (3) multi-tier arrangements
meeting the requirements of 4.03(d)(15); (4) investments involving
less than 5% of the Partnership Subscription which are a necessary and
incidental part of a property acquisition transaction; and (5)
investments in entities established solely to limit the Partnership's
liabilities associated with the ownership or operation of property or
equipment, provided, in such instances duplicative fees and expenses
shall be prohibited.
After the Offering Termination Date and until proceeds from the public
offering are invested in the Partnership's operations, such proceeds
may be temporarily invested in income producing short-term, highly
liquid investments, where there is appropriate safety of principal,
such as U.S. Treasury Bills.
ARTICLE IV
CONDUCT OF OPERATIONS
4.01. Acquisition of Leases.
4.01(a). Assignment to Partnership.
4.01(a)(1). General. The Managing General Partner shall select,
acquire and assign or cause to have assigned to the Partnership full or
partial interests in Leases, by any method customary in the oil and gas
industry, subject to the terms and conditions set forth below. The
Partnership shall acquire only Leases reasonably expected to meet the
stated purposes of the Partnership. No Leases shall be acquired for the
purpose of a subsequent sale unless the acquisition is made after a
well has been drilled to a depth sufficient to indicate that such an
acquisition would be in the Partnership's best interest.
4.01(a)(2). Federal and State Leases. The Partnership is authorized to
acquire Leases on federal and state lands.
4.01(a)(3). Terms and Obligations. Subject to the provisions of
4.03(d) and its subsections, such acquisitions of Leases or other
property may be made under any terms and obligations, including any
limitations as to the Horizons to be assigned to the Partnership, and
subject to any burdens, as the Managing General Partner deems necessary
in its sole discretion. Provided, however, that any Lease acquired from
the Managing General Partner, the Operator or their Affiliates shall be
credited towards the Managing General Partner's required Capital
Contribution set forth in 3.03(b)(1) at the Cost of such Lease, unless
the Managing General Partner shall have cause to believe that Cost is
materially more than the fair market value of such property, in which
case the credit for such contribution will be made at a price not in
excess of the fair market value. A determination of fair market value
must be supported by an appraisal from an Independent Expert. Such
opinion and any associated supporting information must be maintained in
the Partnership's records for six years.
To the extent the Partnership does not acquire a full interest in a
Lease from the Managing General Partner, the remainder of the interest
in such Lease may be held by the Managing General Partner which may
either retain and exploit it for its own account or sell or otherwise
dispose of all or a part of such remaining interest. Profits from such
exploitation and/or disposition shall be for the benefit of the
Managing General Partner to the exclusion of the Partnership.
4.01(a)(4). No Breach of Duty. Subject to the provisions of 4.03 and
its subsections, acquisition of Leases from the Managing General
Partner, the Operator or their Affiliates shall not be considered a
breach of any obligation owed by the Managing General Partner, the
Operator, or their Affiliates to the Partnership or the Participants.
4.01(b). Overriding Royalty Interests. Neither the Managing General
Partner nor any Affiliate shall acquire or retain any Overriding
Royalty Interest on the Lease interests acquired by the Partnership.
4.01(c). Title and Nominee Arrangements.
4.01(c)(1). Legal Title. Legal title to all Leases acquired by the
Partnership shall be held on a permanent basis in the name of the
Partnership. However, Partnership properties may be held temporarily in
the name of the Managing General Partner, the Operator or their
Affiliates or in the name of any nominee designated by the Managing
General Partner to facilitate the acquisition of the properties.
4.01(c)(2). Title. The Managing General Partner shall take such steps
as are necessary in its best judgment to render title to the Leases to
be acquired by the Partnership acceptable for the purposes of the
Partnership. No operation shall be commenced on Leases acquired by the
Partnership unless the Managing General Partner is satisfied that
necessary title requirements have been satisfied. The Managing General
Partner shall be free, however, to use its own best judgment in waiving
title requirements and shall not be liable to the Partnership or to the
other parties for any mistakes of judgment; nor shall the Managing
General Partner be deemed to be making any warranties or
representations, express or implied, as to the validity or
merchantability of the title to the Leases assigned to the Partnership
or the extent of the interest covered thereby except as otherwise may
be provided in the Drilling and Operating Agreement.
4.02. Conduct of Operations.
4.02(a). In General. The Managing General Partner shall establish a
program of operations for the Partnership. Subject to the limitations
contained in Article III of this Agreement concerning the maximum
Capital Contribution which can be required of a Limited Partner, the
Managing General Partner, the Limited Partners and the Investor General
Partners agree to participate in the program so established by the
Managing General Partner.
4.02(b). Management. Subject to any restrictions contained in this
Agreement, the Managing General Partner shall exercise full control
over all operations of the Partnership.
4.02(c). General Powers of the Managing General Partner.
4.02(c)(1). In General. Subject to the provisions of 4.03 and its
subsections, and to any authority which may be granted the Operator
under 4.02(c)(3)(b), the Managing General Partner shall have full
authority to do all things deemed necessary or desirable by it in the
conduct of the business of the Partnership. Without limiting the
generality of the foregoing, the Managing General Partner is expressly
authorized to engage in:
(i) the making of all determinations of which Leases, wells and
operations will be participated in by the Partnership, which
Leases are developed and which Leases are abandoned, or at its
sole discretion, sold or assigned to other parties, including
other investor ventures organized by the Managing General
Partner, the Operator or any of their Affiliates;
(ii) the negotiation and execution on any terms deemed
desirable in its sole discretion of any contracts, conveyances,
or other instruments, considered useful to the conduct of such
operations or the implementation of the powers granted it under
this Agreement, including, without limitation, the making of
agreements for the conduct of operations or the furnishing of
equipment, facilities, supplies and material, services, and
personnel and the exercise of any options, elections, or
decisions under any such agreements;
(iii) the exercise, on behalf of the Partnership or the
parties, in such manner as the Managing General Partner in its
sole judgment deems best, of all rights, elections and options
granted or imposed by any agreement, statute, rule, regulation,
or order;
(iv) the making of all decisions concerning the desirability of
payment, and the payment or supervision of the payment, of all
delay rentals and shut-in and minimum or advance royalty
payments;
(v) the selection of full or part-time employees and outside
consultants and contractors and the determination of their
compensation and other terms of employment or hiring;
(vi) the maintenance of such insurance for the benefit of the
Partnership and the parties as it deems necessary, but, subject
to 6.01(c), in no event less in amount or type than the
following: (a) worker's compensation insurance in full
compliance with the laws of the Commonwealth of Pennsylvania and
any other applicable state laws; (b) liability insurance
(including automobile) which has a $1,000,000 combined single
limit for bodily injury and property damage in any one accident
or occurrence and in the aggregate; and (c) such excess
liability insurance as to bodily injury and property damage with
combined limits of $50,000,000, per occurrence or accident and
in the aggregate, which includes $250,000 of seepage, pollution
and contamination insurance which protects and defends the
insured against property damage or bodily injury claims from
third parties (other than a co-owner of the Working Interest)
alleging seepage, pollution or contamination damage resulting
from an accident. Such excess liability insurance shall be in
place and effective no later than the Initial Closing Date and
shall continue until the Investor General Partners are converted
to Limited Partners, at which time the Partnership shall
continue to enjoy the benefit of Atlas' $11,000,000 liability
insurance on the same basis as Atlas and its Affiliates,
including other Programs in which Atlas serves as Managing
General Partner;
(vii) the use of the funds and revenues of the Partnership, and
the borrowing on behalf of, and the loan of money to, the
Partnership, on any terms it sees fit, for any purpose,
including without limitation the conduct or financing, in whole
or in part, of the drilling and other activities of the
Partnership or the conduct of additional operations, and the
repayment of any such borrowings or loans used initially to
finance such operations or activities;
(viii) the disposition, hypothecation, sale, exchange, release,
surrender, reassignment or abandonment of any or all assets of
the Partnership (including, without limitation, the Leases,
wells, equipment and production therefrom) provided that the
sale of all or substantially all of the assets of the
Partnership shall only be made as provided in 4.03(d)(6);
(ix) the formation of any further limited or general
partnership, tax partnership, joint venture, or other
relationship which it deems desirable with any parties who it,
in its sole and absolute discretion, selects, including any of
its Affiliates;
(x) the control of any matters affecting the rights and
obligations of the Partnership, including the employment of
attorneys to advise and otherwise represent the Partnership, the
conduct of litigation and other incurring of legal expense, and
the settlement of claims and litigation;
(xi) the operation of producing wells drilled on the Leases
owned by the Partnership, or on a Prospect which includes any
part of the Leases;
(xii) the exercise of the rights granted to it under the power
of attorney created pursuant to this Agreement; and
(xiii) the incurring of all costs and the making of all
expenditures in any way related to any of the foregoing.
4.02(c)(2). Scope of Powers. The Managing General Partner's powers
shall extend to any operation participated in by the Partnership or
affecting its Leases, or other property or assets, irrespective of
whether or not the Managing General Partner is designated operator of
such operation by any outside persons participating therein.
4.02(c)(3). Delegation of Authority.
4.02(c)(3)(a). In General. The Managing General Partner may
subcontract and delegate all or any part of its duties hereunder to any
entity chosen by it, including an entity related to it, and such party
shall have the same powers in the conduct of such duties as would the
Managing General Partner; but such delegation shall not relieve the
Managing General Partner of its responsibilities hereunder.
4.02(c)(3)(b). Delegation to Operator. The Managing General Partner is
specifically authorized to delegate any or all of its duties to the
Operator by executing the Drilling and Operating Agreement, but such
delegation shall not relieve the Managing General Partner of its
responsibilities hereunder. In no event shall any consideration
received for operator services be in excess of the competitive rates or
duplicative of any consideration or reimbursements received pursuant to
this Agreement. The Managing General Partner may not benefit by
interpositioning itself between the Partnership and the actual provider
of operator services.
4.02(c)(4). Related Party Transactions. Subject to the provisions of
4.03 and its subsections, any transaction which the Managing General
Partner is authorized to enter into on behalf of the Partnership under
the authority granted in this section and its subsections, may be
entered into by the Managing General Partner with itself or with any
other general partner, the Operator or any of their Affiliates.
4.02(d). Additional Powers. In addition to the powers granted the
Managing General Partner under 4.02(c) and its subsections or
elsewhere in this Agreement, the Managing General Partner, where
specified, shall have the following additional express powers.
4.02(d)(1). Drilling Contracts. Partnership Wells drilled in
Pennsylvania and other areas of the Appalachian Basin may be drilled
pursuant to the Drilling and Operating Agreement on a per-foot basis
with Atlas or its Affiliates based on $37.39 per foot or, with respect
to a well which the Partnership elects not to complete, $20.60 per
foot. Partnership Wells in other areas of the United States shall be
drilled at competitive rates and in no event shall Atlas or its
Affiliates, as drilling contractor, receive a per foot rate which is
not competitive with the rates charged by unaffiliated contractors in
the same geographic region. No turnkey drilling contracts shall be made
between the Managing General Partner or its Affiliates and the
Partnership. Neither the Managing General Partner nor its Affiliates
shall profit by drilling in contravention of its fiduciary obligations
to the Partnership. The Managing General Partner may not benefit by
interpositioning itself between the Partnership and the actual provider
of drilling contractor services.
4.02(d)(2). Power of Attorney.
4.02(d)(2)(a). In General. Each party hereto hereby makes, constitutes
and appoints the Managing General Partner his true and lawful
attorney-in-fact for him and in his name, place and stead and for his
use and benefit, from time to time:
1. to create, prepare, complete, execute, file, swear to,
deliver, endorse and record any and all documents, certificates
or other instruments required or necessary to amend this
Agreement as authorized under the terms of this Agreement, or to
qualify the Partnership as a limited partnership or partnership
in commendam and to conduct business under the laws of any
jurisdiction in which the Managing General Partner elects to
qualify the Partnership or conduct business; and
2. to create, prepare, complete, execute, file, swear to,
deliver, endorse and record any and all instruments,
assignments, security agreements, financing statements,
certificates and other documents as may be necessary from time
to time to implement the borrowing powers granted under this
Agreement.
4.02(d)(2)(b). Further Action. Each party hereto hereby authorizes
such attorney-in-fact to take any further action which such
attorney-in-fact shall consider necessary or advisable in connection
with any of the foregoing and acknowledges that the power of attorney
granted under this section is a special power of attorney coupled with
an interest and is irrevocable and shall survive the assignment by a
party of the whole or a portion of his interest in the Partnership;
except that where such assignment is of such party's entire interest in
the Partnership and the purchaser, transferee or assignee thereof, with
the consent of the Managing General Partner, is admitted as a successor
Limited Partner or Investor General Partner, the power of attorney
shall survive the delivery of such assignment for the sole purpose of
enabling such attorney-in-fact to execute, acknowledge and file any
such agreement, certificate, instrument or document necessary to effect
such substitution.
4.02(d)(2)(c). Power of Attorney to Operator. The Managing General
Partner is hereby authorized to grant a Power of Attorney to the
Operator on behalf of the Partnership.
4.02(e). Borrowings and Use of Partnership Revenues.
4.02(e)(1). Power to Borrow or Use Partnership Revenues. If additional
funds over the Partners' Capital Contributions are needed for
Partnership operations, the Managing General Partner may: (i) use
Partnership revenues allocable to the accounts of the Partners on whose
behalf such Partnership revenues are expended for such purposes; or
(ii) the Managing General Partner and its Affiliates may advance to the
Partnership the funds necessary pursuant to 4.03(d)(8)(b) which
borrowings (other than credit transactions on open account customary in
the industry to obtain goods and services) shall be without recourse to
the Investor General Partners and the Limited Partners except as
otherwise provided herein. Also, the amount that may be borrowed at any
one time (other than credit transactions on open account customary in
the industry to obtain goods and services) shall not exceed an amount
equal to 5% of the Partnership Subscription. Notwithstanding, the
Managing General Partner and it Affiliates shall not be obligated to
advance the funds to the Partnership.
4.02(e)(2). Implementation of Borrowing Provisions.
4.02(e)(2)(a). Indemnification and Hold Harmless. Each party hereto
for whose account an interest in Partnership assets is mortgaged,
pledged or otherwise encumbered hereby indemnifies and agrees to hold
harmless every other party from any loss resulting from such mortgage,
pledge or encumbrance, limited to the amount of his agreed Capital
Contribution.
4.02(e)(2)(b). Foreclosure. Should a foreclosure of a mortgage, pledge
or security interest permitted hereunder occur, any revenues, proceeds
and all taxable gain or loss resulting from such foreclosure shall be
allocated entirely to the party for whose account such interest was
pledged; and such party's interest in the remaining revenues of the
Partnership shall be reduced to take into account the foreclosure of
the interests foreclosed.
4.02(f). Designation of Tax Matters Partner. Atlas is hereby
designated the Tax Matters Partner of the Partnership pursuant to
6231(a)(7) of the Code and is authorized to act in such capacity on
behalf of the Partnership and the Participants and to take such action,
including settlement or litigation, as it in its sole discretion deems
to be in the best interest of the Partnership. Costs incurred by the
Tax Matters Partner shall be considered a Direct Cost of the
Partnership. The Tax Matters Partner shall notify all Participants of
any partnership administrative proceedings commenced by the Internal
Revenue Service, and thereafter shall furnish all Participants periodic
reports at least quarterly on the status of such proceedings. Each
Partner agrees as follows: (1) he will not file the statement described
in Section 6224(c)(3)(B) of the Code prohibiting the Managing General
Partner as the Tax Matters Partner for the Partnership from entering
into a settlement on his behalf with respect to partnership items (as
such term is defined in Section 6231(a)(3) of Code) of the Partnership;
(2) he will not form or become and exercise any rights as a member of a
group of Partners having a 5% or greater interest in the profits of the
Partnership under Section 6223(b)(2) of the Code; and (3) the Managing
General Partner is authorized to file a copy of this Agreement (or
pertinent portions hereof) with the Internal Revenue Service pursuant
to Section 6224(b) of the Code if necessary to perfect the waiver of
rights under this Subsection 4.02(f).
4.03. General Rights and Obligations of the Participants and
Restricted and Prohibited Transactions.
4.03(a)(1). Limited Liability of Limited Partners. Limited Partners
shall not be bound by the obligations of the Partnership and shall not
be personally liable for any debts of the Partnership or any of the
obligations or losses thereof beyond the amount of their agreed Capital
Contributions, except to the extent such parties also subscribe to the
Partnership as Investor General Partners, or, in the case of Atlas, as
Managing General Partner.
4.03(a)(2). No Management Authority of Participants. Participants, as
such, shall have no power over the conduct of the affairs of the
Partnership; and no Participant, as such, shall take part in the
management of the business of the Partnership, or have the power to
sign for or to bind the Partnership.
4.03(b). Reports and Disclosures.
(1) Commencing with the 1997 calendar year, the Partnership
shall provide each Participant an annual report within 120 days
after the close of the calendar year, and commencing with the
1998 calendar year, a report within 75 days after the end of the
first six months of its calendar year, containing, except as
otherwise indicated, at least the information set forth below:
(a) Audited financial statements of the Partnership,
including a balance sheet and statements of income, cash
flow and Partners' equity, all of which shall be prepared in
accordance with generally accepted accounting principles and
accompanied by an auditor's report containing an opinion of
an independent public accountant selected by the Managing
General Partner stating that his audit was made in
accordance with generally accepted auditing standards and
that in his opinion such financial statements present fairly
the financial position, results of operations, partners'
equity and cash flows in accordance with generally accepted
accounting principles. Semiannual reports need not be
audited.
(b) A summary itemization, by type and/or classification
of the total fees and compensation including any
unaccountable, fixed payment reimbursements for
Administrative Costs and Operating Costs, paid by the
Partnership, or indirectly on behalf of the Partnership, to
the Managing General Partner, the Operator and their
Affiliates. In addition, Participants shall be provided the
percentage that the annual unaccountable, fixed fee
reimbursement for Administrative Costs bears to annual
Partnership revenues.
(c) A description of each Prospect in which the
Partnership owns an interest, including the cost, location,
number of acres under lease and the Working Interest owned
therein by the Partnership, except succeeding reports need
contain only material changes, if any, regarding such
Prospects.
(d) A list of the wells drilled or abandoned by the
Partnership during the period of the report (indicating
whether each of such wells has or has not been completed),
and a statement of the cost of each well completed or
abandoned. Justification shall be included for wells
abandoned after production has commenced.
(e) A description of all farmins and joint ventures, made
during the period of the report, including the Managing
General Partner's justification for the arrangement and a
description of the material terms.
(f) A schedule reflecting the total Partnership costs, the
costs paid by the Managing General Partner and the costs
paid by the Participants, the total Partnership revenues,
the revenues received or credited to the Managing General
Partner and the revenues received and credited to the
Participants and a reconciliation of such expenses and
revenues in accordance with the provisions of Article V.
(2) The Partnership shall, by March 15 of each year, prepare,
or supervise the preparation of, and transmit to each Partner
such information as may be needed to enable such Partner to file
his federal income tax return, any required state income tax
return and any other reporting or filing requirements imposed by
any governmental agency or authority.
(3) Annually, beginning January 1, 1999, a computation of the
total oil and gas Proved Reserves of the Partnership and the
present worth of such reserves determined using a discount rate
of 10%, a constant price for the oil and basing the price of gas
upon the existing gas contracts shall be provided to each
Participant along with each Participant's interest therein. The
reserve computations shall be based upon engineering reports
prepared by the Managing General Partner and reviewed by an
Independent Expert. There shall also be included an estimate of
the time required for the extraction of such reserves and 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. In addition
to the foregoing computation and required estimate, as soon as
possible, and in no event more than ninety days after the
occurrence of an event leading to reduction of such reserves of
the Partnership of 10% or more, excluding reduction as a result
of normal production, sales of reserves or product price
changes, a computation and estimate shall be sent to each
Participant.
(4) The cost of all such reports described in this 4.03(b)
shall be paid by the Partnership as Direct Costs.
(5) The Participants and/or their representatives shall be
permitted access to all records of the Partnership, after
adequate notice, at any reasonable time and may inspect and copy
any of them. The Managing General Partner will provide a copy of
this Agreement or other documents to the Participants after the
Partnership's documents have been filed with the Commonwealth of
Pennsylvania upon request. The Managing General Partner shall
maintain and preserve during the term of the Partnership and for
six years thereafter all accounts, books and other relevant
documents, including a record that a Participant meets the
suitability standards established in connection with an
investment in the Partnership and of fair market value as set
forth in 4.01(a)(3). Notwithstanding the foregoing, the
Managing General Partner may keep logs, well reports and other
drilling and operating data confidential for reasonable periods
of time. The Managing General Partner may release information
concerning the operations of the Partnership to such sources as
are customary in the industry or required by rule, regulation,
or order of any regulatory body.
(6) The following provisions apply regarding access to the list
of Participants: (a) an alphabetical list of the names,
addresses and business telephone numbers of the Participants
along with the number of Units held by each of them (the
"Participant List") shall be maintained as a part of the books
and records of the Partnership and shall be available for
inspection by any Participant or its designated agent at the
home office of the Partnership upon the request of the
Participant; (b) the Participant List shall be updated at least
quarterly to reflect changes in the information contained
therein; (c) a copy of the Participant List shall be mailed to
any Participant requesting the Participant List within ten days
of the written request. The copy of the Participant List shall
be printed in alphabetical order, on white paper, and in a
readily readable type size (in no event smaller than 10-point
type). A reasonable charge for copy work shall be charged by the
Partnership; (d) the purposes for which a Participant may
request a copy of the Participant List include, without
limitation, matters relating to Participant's voting rights
under this Agreement and the exercise of Participant's rights
under the federal proxy laws; and (e) if the Managing General
Partner neglects or refuses to exhibit, produce, or mail a copy
of the Participant List as requested, the Managing General
Partner shall be liable to any Participant requesting the list
for the costs, including attorneys fees, incurred by that
Participant for compelling the production of the Participant
List, and for actual damages suffered by any Participant by
reason of such refusal or neglect. It shall be a defense that
the actual purpose and reason for the requests for inspection or
for a copy of the Participant List is to secure the list of
Participants or other information for the purpose of selling
such list or information or copies thereof, or of using the same
for a commercial purpose other than in the interest of the
applicant as a Participant relative to the affairs of the
Partnership. The Managing General Partner shall require the
Participant requesting the Participant List to represent in
writing that the list was not requested for a commercial purpose
unrelated to the Participant's interest in the Partnership. The
remedies provided hereunder to Participants requesting copies of
the Participant List are in addition to, and shall not in any
way limit, other remedies available to Participants under
federal law, or the laws of any state.
(7) Concurrently with their transmittal to Participants, and as
required, the Managing General Partner shall file a copy of each
report provided for in this 4.03(b) with the Arkansas
Securities Department, the California Commissioner of
Corporations, the Kentucky Department of Financial Institutions,
the Virginia State Corporation Commission and with the
securities commissions of other states which request the report.
4.03(c). Meetings of Participants. Meetings of the Participants may be
called by the Managing General Partner or by Participants whose Agreed
Subscriptions equal 10% or more of the Partnership Subscription for any
matters for which Participants may vote. Such call for a meeting shall
be deemed to have been made upon receipt by the Managing General
Partner of a written request from holders of the requisite percentage
of Agreed Subscriptions stating the purpose(s) of the meeting. The
Managing General Partner shall deposit in the United States mail within
fifteen days after the receipt of said request, written notice to all
Participants of the meeting and the purpose of such meeting, which
shall be held on a date not less than thirty days nor more than sixty
days after the date of the mailing of said notice, at a reasonable time
and place. Provided, however, that the date for notice of such a
meeting may be extended for a period of up to sixty days, if in the
opinion of the Managing General Partner such additional time is
necessary to permit preparation of proxy or information statements or
other documents required to be delivered in connection with such
meeting by the Securities and Exchange Commission or other regulatory
authorities. Participants shall have the right to vote in person or by
proxy at any meetings of the Participants.
4.03(c)(1). Special Voting Rights. At the request of Participants
whose Agreed Subscriptions equal 10% or more of the Partnership
Subscription, the Managing General Partner shall call for a vote by
Participants. Each Unit is entitled to one vote on all matters; each
fractional Unit is entitled to that fraction of one vote equal to the
fractional interest in the Unit. Participants whose Agreed
Subscriptions equal a majority of the Partnership Subscription may,
without the concurrence of the Managing General Partner or its
Affiliates, vote to:
(a) amend this Agreement; provided however, any such amendment
may not increase the duties or liabilities of any Participant or
the Managing General Partner or increase or decrease the profit
or loss sharing or required Capital Contribution of any
Participant or the Managing General Partner without the approval
of such Participant or the Managing General Partner.
Furthermore, any such amendment may not affect the
classification of Partnership income and loss for federal income
tax purposes without the unanimous approval of all Participants;
(b) dissolve the Partnership;
(c) remove the Managing General Partner and elect a new
Managing General Partner;
(d) elect a new Managing General Partner if the Managing
General Partner elects to withdraw from the Partnership;
(e) remove the Operator and elect a new Operator;
(f) approve or disapprove the sale of all or substantially all
of the assets of the Partnership; and
(g) cancel any contract for services with the Managing General
Partner, or the Operator or their Affiliates, without penalty
upon sixty days notice.
With respect to Units owned by the Managing General Partner or its
Affiliates, the Managing General Partner and its Affiliates may not
vote or consent on the matters set forth in (c) or (e) above, or
regarding any transaction between the Partnership and the Managing
General Partner or its Affiliates. In determining the requisite
percentage in interest of Units necessary to approve any Partnership
matter on which the Managing General Partner and its Affiliates may not
vote or consent, any Units owned by the Managing General Partner and
its Affiliates shall not be included.
4.03(c)(2). Restrictions on Limited Partner Voting Rights. The
exercise by the Limited Partners of the rights granted Participants
under 4.03(c), except for the special voting rights granted
Participants under 4.03(c)(1), shall be subject to the prior legal
determination that the grant or exercise of such powers will not
adversely affect the limited liability of Limited Partners, unless in
the opinion of counsel to the Partnership, such legal determination is
not necessary under Pennsylvania law to maintain the limited liability
of the Limited Partners. A legal determination under this paragraph may
be made either pursuant to an opinion of counsel, such counsel being
independent of the Partnership and selected upon the vote of Limited
Partners whose Agreed Subscriptions equal a majority of the Agreed
Subscriptions held by Limited Partners, or a declaratory judgment
issued by a court of competent jurisdiction. The Investor General
Partners may exercise the rights granted to the Participants whether or
not the Limited Partners can participate in such vote if the Investor
General Partners represent the requisite percentage of the Participants
necessary to take such action.
4.03(d). Restricted and Prohibited Transactions.
4.03(d)(1). Equal Proportionate Interest. When the Managing General
Partner or an Affiliate, excluding another Program in which the
interest of the Managing General Partner or its Affiliates is
substantially similar to or less than their interest in the
Partnership, sells, transfers or conveys any oil, gas or other mineral
interests or property to the Partnership, it must, at the same time,
sell to the Partnership an equal proportionate interest in all its
other property in the same Prospect. Notwithstanding, a Prospect shall
be deemed to consist of the drilling or spacing unit on which such well
will be drilled by the Partnership if the geological feature to which
such well will be drilled contains Proved Reserves and the drilling or
spacing unit protects against drainage. With respect to an oil and gas
Prospect located in Ohio and Pennsylvania on which a well will be
drilled by the Partnership to test the Clinton/Medina geologic
formation a Prospect shall be deemed to consist of the drilling and
spacing unit if it meets the test in the preceding sentence. Neither
the Managing General Partner nor its Affiliates may drill any well
within 1,650 feet of an existing Partnership Well in the Clinton/Medina
formation in Pennsylvania or within 1,100 feet of an existing
Partnership Well in Ohio within five years of the drilling of the
Partnership Well. In the event the Partnership abandons its interest in
a well, this restriction will continue for one year following the
abandonment.
If the area constituting the Partnership's Prospect is subsequently
enlarged to encompass any area wherein the Managing General Partner or
an Affiliate, excluding another Program in which the interest of the
Managing General Partner or its Affiliates is substantially similar to
or less than their interest in the Partnership, owns a separate
property interest, such separate property interest or a portion thereof
shall be sold, transferred or conveyed to the Partnership as set forth
in4.01(a)(3), 4.03(d)(1) and 4.03(d)(2) if the activities of the
Partnership were material in establishing the existence of Proved
Undeveloped Reserves which are attributable to such separate property
interest. Notwithstanding, Prospects in the Clinton/Medina geological
formation shall not be enlarged or contracted if the Prospect was
limited to the drilling or spacing unit because the well was being
drilled to Proved Reserves in the Clinton/Medina geological formation
and the drilling or spacing unit protected against drainage.
4.03(d)(2). Transfer of Less than the Managing General Partner's and
its Affiliates' Entire Interest. A sale, transfer or a conveyance to
the Partnership of less than all of the ownership of the Managing
General Partner or an Affiliate, excluding another Program in which the
interest of the Managing General Partner or its Affiliates is
substantially similar to or less than their interest in the
Partnership, in any Prospect shall not be made unless the interest
retained by the Managing General Partner or the Affiliate is a
proportionate Working Interest, the respective obligations of the
Managing General Partner or its Affiliates and the Partnership are
substantially the same after the sale of the interest by the Managing
General Partner or its Affiliates, and the Managing General Partner's
interest in revenues does not exceed the amount proportionate to its
retained Working Interest. Neither the Managing General Partner nor any
Affiliate will retain any Overriding Royalty Interests or other burdens
on an interest sold by it to the Partnership. With respect to its
retained interest the Managing General Partner shall not Farmout a
Lease for the primary purpose of avoiding payment of its costs relating
to drilling the Lease. This section does not prevent the Managing
General Partner or its Affiliates from subsequently dealing with their
retained interest as they may choose with unaffiliated parties or
Affiliated partnerships.
4.03(d)(3). Transfer of Leases to the Managing General Partner. The
Managing General Partner and its Affiliates shall not purchase any
producing or non-producing oil and gas properties from the Partnership.
4.03(d)(4). Limitations on Activities of the Managing General Partner
and its Affiliates on Leases Acquired by the Partnership. During a
period of five years from the Offering Termination Date of the
Partnership, if the Managing General Partner or any of its Affiliates,
excluding another Program in which the interest of the Managing General
Partner or its Affiliates is substantially similar to or less than
their interest in the Partnership, proposes to acquire an interest,
from an unaffiliated person, in a Prospect in which the Partnership
possesses an interest or in a Prospect in which the Partnership's
interest has been terminated without compensation within one year
preceding such proposed acquisition, the following conditions shall
apply:
(a) if the Managing General Partner or the Affiliate, excluding
another Program in which the interest of the Managing General
Partner or its Affiliates is substantially similar to or less
than their interest in the Partnership, does not currently own
property in the Prospect separately from the Partnership, then
neither the Managing General Partner nor the Affiliate shall be
permitted to purchase an interest in the Prospect; and
(b) if the Managing General Partner or the Affiliate, excluding
another Program in which the interest of the Managing General
Partner or its Affiliates is substantially similar to or less
than their interest in the Partnership, currently own a
proportionate interest in the Prospect separately from the
Partnership, then the interest to be acquired shall be divided
between the Partnership and the Managing General Partner or the
Affiliate in the same proportion as is the other property in the
Prospect; provided, however, if cash or financing is not
available to the Partnership to enable it to consummate a
purchase of the additional interest to which it is entitled,
then neither the Managing General Partner nor the Affiliate
shall be permitted to purchase any additional interest in the
Prospect.
4.03(d)(5). Transfer of Leases Between Affiliated Limited
Partnerships. The Partnership shall not purchase properties from or
sell properties to any other Affiliated partnership. This prohibition,
however, shall not apply to joint ventures among such Affiliated
partnerships, provided that the respective obligations and revenue
sharing of all parties to the transaction are substantially the same
and the compensation arrangement or any other interest or right of
either the Managing General Partner or its Affiliates is the same in
each Affiliated partnership, or, if different, the aggregate
compensation of the Managing General Partner or the Affiliate is
reduced to reflect the lower compensation arrangement.
4.03(d)(6). Sale of All Assets. The sale of all or substantially all
of the assets of the Partnership (including, without limitation,
Leases, wells, equipment and production therefrom) shall be made only
with the consent of Participants whose Agreed Subscriptions equal a
majority of the Partnership Subscription.
4.03(d)(7). Services. The Managing General Partner and any Affiliate
shall not render to the Partnership any oil field, equipage or other
services nor sell or lease to the Partnership any equipment or related
supplies unless such person is engaged, independently of the
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 the partnerships in which the Managing General
Partner or an Affiliate has an interest; and 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 Partnership.
If such person is not engaged in such a business then such
compensation, price or rental will be the Cost of such services,
equipment or supplies to such person or the competitive rate which
could be obtained in the area, whichever is less. Any such services for
which the Managing General Partner or an Affiliate is to receive
compensation other than those described in this Prospectus shall be
embodied in a written contract which precisely describes the services
to be rendered and all compensation to be paid. Such contracts are
cancellable without penalty upon sixty days written notice by
Participants whose Agreed Subscriptions equal a majority of the
Partnership Subscription.
4.03(d)(8). Loans.
4.03(d)(8)(a). Loans from the Partnership. No loans or advances shall
be made by the Partnership to the Managing General Partner or any
Affiliate.
4.03(d)(8)(b). Loans to the Partnership. Neither the Managing General
Partner nor any Affiliate shall loan money to the Partnership where the
interest to be charged exceeds the Managing General Partner's or the
Affiliate's interest cost or where the interest to be charged exceeds
that which would be charged to the Partnership (without reference to
the Managing General Partner's or the Affiliate's financial abilities
or guarantees) by unrelated lenders, on comparable loans for the same
purpose, and neither the Managing General Partner nor any Affiliate
shall receive points or other financing charges or fees, regardless of
the amount, although the actual amount of such charges incurred from
third-party lenders may be reimbursed to the Managing General Partner
or the Affiliate.
4.03(d)(9). Farmouts. The Partnership shall not Farmout its Leases.
4.03(d)(10). Compensating Balances. Neither the Managing General
Partner nor any Affiliate shall use the Partnership's funds as
compensating balances for its own benefit.
4.03(d)(11). Future Production. Neither the Managing General Partner
nor any Affiliate shall commit the future production of a well
developed by the Partnership exclusively for its own benefit.
4.03(d)(12). Marketing Arrangements. All benefits from marketing
arrangements or other relationships affecting property of the Managing
General Partner or its Affiliates and the Partnership shall be fairly
and equitably apportioned according to the respective interests of each
in such property. The Managing General Partner shall treat all wells
in a geographic area equally concerning to whom and at what price the
Partnership's gas will be sold and to whom and at what price the gas of
other oil and gas Programs which the Managing General Partner has
sponsored or will sponsor will be sold. The Managing General Partner
calculates a weighted average selling price for all of the gas sold in
a geographic area by taking all money received from the sale of all of
the gas sold to its customers in a geographic area and dividing by the
volume of all gas sold from the wells in that geographic area.
Notwithstanding, the Managing General Partner and its Affiliates are
parties to, and contract for, the sale of natural gas with industrial
end-users and will continue to enter into such contracts on their own
behalf, and the Partnership will not be a party to such contracts. The
Managing General Partner and its Affiliates also have a substantial
interest in certain pipeline facilities and compression facilities
which access interstate pipeline systems, which it is anticipated will
be used to transport the Partnership's gas production as well as
Affiliated partnership and third-party gas production, and the
Partnership will not receive any interest in the Managing General
Partner's and its Affiliates' pipeline or gathering system or
compression facilities.
4.03(d)(13). Advance Payments. Advance payments by the Partnership to
the Managing General Partner and its Affiliates are prohibited, except
where advance payments are required to secure the tax benefits of
prepaid drilling costs and for a business purpose. These advance
payments, if any, shall not include nonrefundable payments for
completion costs prior to the time that a decision was made that the
well or wells warrant a completion attempt.
4.03(d)(14). No Rebates. No rebates or give-ups may be received by the
Managing General Partner or any Affiliate nor may the Managing General
Partner or any Affiliate participate in any reciprocal business
arrangements which would circumvent these guidelines.
4.03(d)(15). Participation in Other Partnerships. If the Partnership
participates in other partnerships or joint ventures (multi-tier
arrangements), the terms of any such arrangements shall not result in
the circumvention of any of the requirements or prohibitions contained
in this Agreement, including the following: (i) there shall be no
duplication or increase in organization and offering expenses, the
Managing General Partner's compensation, Partnership expenses or other
fees and costs; (ii) there shall be no substantive alteration in the
fiduciary and contractual relationship between the Managing General
Partner and the Participants; and (iii) there shall be no diminishment
in the voting rights of the Participants.
4.03(d)(16). Roll-Up Limitations. In connection with a proposed
Roll-Up, the following shall apply:
(a) An appraisal of all Partnership assets shall be obtained
from a competent Independent Expert. If the appraisal will be
included in a prospectus used to offer securities of a Roll-Up
Entity, the appraisal shall be filed with the Securities and
Exchange Commission and the Administrator as an exhibit to the
registration statement for the offering. Accordingly, an issuer
using the appraisal shall be subject to liability for violation
of Section 11 of the Securities Act of 1933 and comparable
provisions under state law for any material misrepresentations
or material omissions in the appraisal. Partnership assets shall
be appraised on a consistent basis. The appraisal shall be based
on all relevant information, including current reserve estimates
prepared by an independent petroleum consultant, and shall
indicate the value of the Partnership's assets as of a date
immediately prior to the announcement of the proposed Roll-Up
transaction. The appraisal shall assume an orderly liquidation
of the Partnership's assets over a twelve month period. The
terms of the engagement of the Independent Expert shall clearly
state that the engagement is for the benefit of the Partnership
and the Participants. A summary of the independent appraisal,
indicating all material assumptions underlying the appraisal,
shall be included in a report to the Participants in connection
with a proposed Roll-Up.
(b) In connection with a proposed Roll-Up, Participants who
vote "no" on the proposal shall be offered the choice of:
(1) accepting the securities of the Roll-Up Entity offered
in the proposed Roll-Up;
(2) remaining as Participants in the Partnership and
preserving their interests therein on the same terms and
conditions as existed previously; or
(3) receiving cash in an amount equal to the Participants'
pro rata share of the appraised value of the net assets of
the Partnership.
(c) The Partnership shall not participate in any proposed
Roll-Up which, if approved, would result in the diminishment of
any Participant's voting rights under the Roll-Up Entity's
chartering agreement. In no event shall the democracy rights of
Participants in the Roll-Up Entity be less than those provided
for under 4.03(c) and 4.03(c)(1) of this Agreement. If the
Roll-Up Entity is a corporation, the democracy rights of
Participants shall correspond to the democracy rights provided
for in this Agreement to the greatest extent possible.
(d) The Partnership shall not participate in any proposed
Roll-Up transaction which includes provisions which would
operate to materially impede or frustrate the accumulation of
shares by any purchaser of the securities of the Roll-Up Entity
(except to the minimum extent necessary to preserve the tax
status of the Roll-Up Entity); nor shall the Partnership
participate in any proposed Roll-Up transaction which would
limit the ability of a Participant to exercise the voting rights
of its securities of the Roll-Up Entity on the basis of the
number of Units held by that Participant.
(e) The Partnership shall not participate in a Roll-Up in which
Participants' rights of access to the records of the Roll-Up
Entity will be less than those provided for under 4.03(b)(5)
and 4.03(b)(6) of this Agreement.
(f) The Partnership shall not participate in any proposed
Roll-Up transaction in which any of the costs of the transaction
would be borne by the Partnership if less than 75% in interest
of the Participants vote to approve the proposed Roll-Up.
(g) The Partnership shall not participate in a Roll-Up
transaction unless the Roll-Up transaction is approved by
Participants whose Agreed Subscriptions equal 75% of the
Partnership Subscription.
4.03(d)(17). Disclosure of Binding Agreements. Any agreement or
arrangement which binds the Partnership must be disclosed in the
Prospectus.
4.03(d)(18) Fair and Reasonable. Neither the Managing General Partner
nor any Affiliate will sell, transfer, or convey any property to or
purchase any property from the Partnership, directly or indirectly,
except pursuant to transactions that are fair and reasonable, nor take
any action with respect to the assets or property of the Partnership
which does not primarily benefit the Partnership.
4.04. Designation, Compensation and Removal of Managing General
Partner and Removal of Operator.
4.04(a). Managing General Partner.
4.04(a)(1). Term of Service. Atlas shall serve as the Managing General
Partner of the Partnership until it is removed pursuant to 4.04(a)(3).
4.04(a)(2). Compensation of Managing General Partner. Charges by the
Managing General Partner for goods and services must be fully
supportable as to the necessity thereof and the reasonableness of the
amount charged. All actual and necessary expenses incurred by the
Partnership may be paid out of the Partnership Subscription and out of
Partnership revenues.
In addition to the compensation set forth in 4.01(a)(3) and
4.02(d)(1) Atlas, as Managing General Partner, and its Affiliates shall
be reimbursed for all Direct Costs and credited pursuant to 5.01(a)
for Organization and Offering Costs not exceeding 15% of the
Partnership Subscription; provided, however, Direct Costs shall be
billed directly to and paid by the Partnership to the extent
practicable. In addition, subject to the above paragraph, Atlas shall
receive an unaccountable, fixed payment reimbursement for its
Administrative Costs of $75 per well per month, which shall be
proportionately reduced to the extent the Partnership acquires less
than 100% of the Working Interest in the well. The unaccountable, fixed
payment reimbursement of $75 per well per month shall not be increased
in amount during the term of the Partnership. Further, Atlas, as
Managing General Partner, shall not be reimbursed for any additional
Partnership Administrative Costs and the unaccountable, fixed payment
reimbursement of $75 per well per month shall be the entire payment to
reimburse Atlas for the Partnership's Administrative Costs. Finally,
Atlas, as Managing General Partner, shall not receive the
unaccountable, fixed payment reimbursement of $75 per well per month
for plugged or abandoned wells.
Atlas and its Affiliates shall also receive a combined transportation
and marketing fee at a competitive rate for transporting and marketing
the Partnership's gas.
The Dealer-Manager will receive from the Partnership on each Unit sold
to investors, a 2.5% Dealer-Manager fee, a 7.5% Sales Commission and a
.5% reimbursement of the Selling Agents' bona fide accountable due
diligence expenses.
The Managing General Partner and its Affiliates may enter into
transactions pursuant to 4.03(d)(7) and shall be entitled to
compensation pursuant to such section. In addition, the Managing
General Partner and its Affiliates shall receive compensation as set
forth in the Drilling and Operating Agreement.
4.04(a)(3). Removal of Managing General Partner. The Managing General
Partner may be removed and a new Managing General Partner or Managing
General Partners may be substituted at any time upon sixty days advance
written notice to the outgoing Managing General Partner, by the
affirmative vote of Participants whose Agreed Subscriptions equal a
majority of the Partnership Subscription. Should Participants vote to
remove the Managing General Partner from the Partnership, Participants
must elect by an affirmative vote of Participants whose Agreed
Subscriptions equal a majority of the Partnership Subscription either
to terminate, dissolve and wind up the Partnership or to continue as a
successor limited partnership under all the terms of this Partnership
Agreement, as provided in 7.01(c). If the Participants elect to
continue as a successor limited partnership, the Managing General
Partner shall not be removed until a substituted Managing General
Partner has been selected by an affirmative vote of Participants whose
Agreed Subscriptions equal a majority of the Partnership Subscription
and installed as such.
In the event the Managing General Partner is removed, the Managing
General Partner's interest in the Partnership shall be determined by
appraisal by a qualified Independent Expert selected by mutual
agreement between the removed Managing General Partner and the incoming
Managing General Partner, such appraisal to take into account an
appropriate discount, to reflect the risk of recovery of oil and gas
reserves, but not less than that utilized in the most recent repurchase
offer, if any. The cost of such appraisal shall be borne equally by the
removed Managing General Partner and the Partnership. The incoming
Managing General Partner shall have the option to purchase 20% of the
removed Managing General Partner's interest for the value determined by
the Independent Expert.
The method of payment for such interest must be fair and must protect
the solvency and liquidity of the Partnership. Where the termination is
voluntary, the method of payment shall be a non-interest bearing
unsecured promissory note with principal payable, if at all, from
distributions which the Managing General Partner otherwise would have
received under the Partnership Agreement had the Managing General
Partner not been terminated. Where the termination is involuntary, the
method of payment shall be an interest bearing promissory note coming
due in no less than five years with equal installments each year. The
interest rate shall be that charged on comparable loans. The removed
Managing General Partner, at the time of its removal shall cause, to
the extent it is legally possible, its successor to be transferred or
assigned all its rights, obligations and interests as Managing General
Partner of the Partnership in contracts entered into by it on behalf of
the Partnership. In any event, the removed Managing General Partner
shall cause its rights, obligations and interests as Managing General
Partner of the Partnership in any such contract to terminate at the
time of its removal. Notwithstanding any other provision in this
Agreement, the Partnership or the successor Managing General Partner
shall not be a party to any gas purchase agreement that Atlas or its
Affiliates enters into with a third party and shall not have any rights
pursuant to such gas purchase agreement. Further, the Partnership or
the successor Managing General Partner shall not receive any interest
in Atlas' and its Affiliates' pipeline or gathering system or
compression facilities.
At any time commencing ten years after the Offering Termination Date of
the Partnership and the Partnership's primary drilling activities, the
Managing General Partner may voluntarily withdraw as Managing General
Partner upon giving 120 days' written notice of withdrawal to the
Participants and its interest in the Partnership shall be determined as
provided above with respect to removal. Such interest shall be
distributed to the Managing General Partner as described above with
respect to voluntary removal, subject to the option of any successor
Managing General Partner to purchase 20% of such interest at the value
determined as described above with respect to removal.
The Managing General Partner has the right at any time to withdraw a
property interest held by the Partnership in the form of a Working
Interest in the Partnership Wells equal to or less than its respective
interest in the revenues of the Partnership pursuant to the conditions
set forth in 6.03. The Managing General Partner shall fully indemnify
the Partnership against any additional expenses which may result from a
partial withdrawal of its interests and such withdrawal may not result
in a greater amount of Direct Costs or Administrative Costs being
allocated to the Participants. The expenses of withdrawing shall be
borne by the withdrawing Managing General Partner.
4.04(a)(4). Removal of Operator. The Operator may be removed and a new
Operator may be substituted at any time upon 60 days advance written
notice to the outgoing Operator by the Managing General Partner acting
on behalf of the Partnership upon the affirmative vote of Participants
whose Agreed Subscriptions equal a majority of the Partnership
Subscription. The Operator shall not be removed until a substituted
Operator has been selected by an affirmative vote of Participants whose
Agreed Subscriptions equal a majority of the Partnership Subscription
and installed as such.
4.05. Indemnification and Exoneration.
4.05(a). General Standards. The Managing General Partner, the Operator
and their Affiliates shall have no liability whatsoever to the
Partnership or to any Participant for any loss suffered by the
Partnership or Participants which arises out of any action or inaction
of the Managing General Partner, the Operator or their Affiliates if
the Managing General Partner, the Operator and their Affiliates,
determined in good faith that such course of conduct was in the best
interest of the Partnership, the Managing General Partner, the Operator
and their Affiliates were acting on behalf of or performing services
for the Partnership and such course of conduct did not constitute
negligence or misconduct of the Managing General Partner, the Operator
or their Affiliates.
The Managing General Partner, the Operator and their Affiliates shall
be indemnified by the Partnership against any losses, judgments,
liabilities, expenses and amounts paid in settlement of any claims
sustained by them in connection with the Partnership, provided that the
Managing General Partner, the Operator and their Affiliates determined
in good faith that the course of conduct which caused the loss or
liability was in the best interest of the Partnership, the Managing
General Partner, the Operator and their Affiliates were acting on
behalf of or performing services for the Partnership and such course of
conduct was not the result of negligence or misconduct of the Managing
General Partner, the Operator or their Affiliates.
Provided, however, payments arising from such indemnification or
agreement to hold harmless are recoverable only out of the tangible net
assets of the Partnership, including any insurance proceeds.
Notwithstanding anything to the contrary contained in the above, the
Managing General Partner, the Operator and their Affiliates and any
person acting as a broker-dealer shall not be indemnified for any
losses, liabilities or expenses arising from or out of an alleged
violation of federal or state securities laws by such party unless (1)
there has been a successful adjudication on the merits of each count
involving alleged securities law violations as to the particular
indemnitee; (2) such claims have been dismissed with prejudice on the
merits by a court of competent jurisdiction as to the particular
indemnitee, or (3) a court of competent jurisdiction approves a
settlement of the claims against a particular indemnitee and finds that
indemnification of the settlement and the related costs should be made,
and the court considering the request for indemnification has been
advised of the position of the Securities and Exchange Commission, the
Massachusetts Securities Division, and the position of any state
securities regulatory authority in which plaintiffs claim they were
offered or sold Partnership Units, with respect to the issue of
indemnification for violation of securities laws.
The advancement of Partnership funds to the Managing General Partner or
its Affiliates for legal expenses and other costs incurred as a result
of any legal action for which indemnification is being sought is
permissible only if the Partnership has adequate funds available and
the following conditions are satisfied: (1) the legal action relates to
acts or omissions with respect to the performance of duties or services
on behalf of the Partnership; (2) the legal action is initiated by a
third party who is not a Participant, or the legal action is initiated
by a Participant and a court of competent jurisdiction specifically
approves such advancement; and (3) the Managing General Partner or its
Affiliates undertake to repay the advanced funds to the Partnership,
together with the applicable legal rate of interest thereon, in cases
in which such party is found not to be entitled to indemnification.
The Partnership shall not bear the cost of that portion of insurance
which insures the Managing General Partner, the Operator or their
Affiliates for any liability for which the Managing General Partner,
the Operator or their Affiliates could not be indemnified pursuant to
the first two paragraphs of this .05(a).
4.05(b). Liability of Partners. Pursuant to the Pennsylvania Revised
Uniform Limited Partnership Act the Investor General Partners are
liable jointly and severally for all liabilities and obligations of the
Partnership. Notwithstanding the foregoing, as among themselves, the
Investor General Partners hereby agree that each shall be solely and
individually responsible only for his pro rata share of the liabilities
and obligations of the Partnership. In addition, Atlas and Atlas Group
agree to use their corporate assets and not the assets of the
Partnership to indemnify each of the Investor General Partners against
all Partnership related liabilities which exceed such Investor General
Partner's interest in the undistributed net assets of the Partnership
and insurance proceeds, if any. Further, Atlas and Atlas Group agree to
indemnify each Investor General Partner against any personal liability
as a result of the unauthorized acts of another Investor General
Partner. Upon such indemnification by Atlas and Atlas Group, each
Investor General Partner who has been indemnified shall and does hereby
transfer and subrogate his rights for contribution from or against any
other Investor General Partner to Atlas and/or Atlas Group.
4.05(c). Order of Payment. Claims shall be paid first out of any
insurance proceeds, next out of the assets and revenues of the
Partnership, and finally by the Managing General Partner as provided in
3.05(b) and 4.05(b). No Limited Partner shall be required to
reimburse the Managing General Partner, the Operator or their
Affiliates or the Investor General Partners for any liability in excess
of his agreed Capital Contribution, except for a liability resulting
from such Limited Partner's unauthorized participation in Partnership
management, or from some other breach by such Limited Partner of this
Agreement.
4.05(d). Authorized Transactions. No transaction entered into or
action taken by the Partnership or the Managing General Partner, the
Operator or their Affiliates, which is authorized by this Agreement to
be entered into or taken with such party shall be deemed a breach of
any obligation owed by the Managing General Partner, the Operator or
their Affiliates to the Partnership or the Participants.
4.06. Other Activities. The Managing General Partner, the Operator and
their Affiliates are now engaged, and will engage in the future, for
their own account and for the account of others, including other
investors, in all aspects of the oil and gas business, including,
without limitation, the evaluation, acquisition and sale of producing
and nonproducing Leases, and the exploration for and production of
oil, gas, and other minerals. The Managing General Partner is required
to devote only so much of its time as is necessary to manage the
affairs of the Partnership. Except as expressly provided to the
contrary in this Agreement, and subject to fiduciary duties, such
parties may continue such activities, or initiate further such
activities, individually, jointly with others, or as a part of any
other limited or general partnership, tax partnership, joint venture,
or other entity or activity to which they are or may become a party, in
any locale and in the same fields, areas of operation or prospects in
which the Partnership may likewise be active; may reserve partial
interests in Leases being assigned to the Partnership or any other
interests not expressly prohibited by this Agreement; may deal with the
Partnership as independent parties or through any other entity in which
they may be interested; may conduct business with the Partnership as
set forth herein; may participate in such other investor operations, as
investors or otherwise; and shall not be required to permit the
Partnership or the Participants to participate in any such operations
in which they may be interested or share in any profits or other
benefits therefrom. However, except as otherwise provided herein, the
Managing General Partner and any of its Affiliates may pursue business
opportunities that are consistent with the Partnership's investment
objectives for their own account only after they have determined that
such opportunity either cannot be pursued by the Partnership because of
insufficient funds or because it is not appropriate for the Partnership
under the existing circumstances. Atlas or its Affiliates may manage
multiple programs simultaneously. Notwithstanding any other provision
in this Agreement, the Partnership shall not be a party to any gas
supply agreement that Atlas or its Affiliates enters into with a third
party and shall not have any rights pursuant to such gas supply
agreement. Further, the Partnership shall not receive any interest in
Atlas' and its Affiliates' pipeline or gathering system or compression
facilities.
ARTICLE V
PARTICIPATION IN COSTS AND REVENUES,
CAPITAL ACCOUNTS, ELECTIONS AND DISTRIBUTIONS
5.01. Participation in Costs and Revenues. Except as otherwise
provided in this Agreement, costs and revenues shall be charged and
credited to the Managing General Partner and the Participants as set
forth in this 5.01 and its subsections.
5.01(a). Costs. Costs shall be charged as follows:
(1) Organization and Offering Costs shall be charged 100% to
the Managing General Partner. For purposes of sharing in
revenues, pursuant to 5.01(b)(4), the Managing General Partner
shall be credited with Organization and Offering Costs up to and
including 15% of the Partnership Subscription which were paid by
the Managing General Partner. Notwithstanding, Organization and
Offering Costs in excess of 15% of the Partnership Subscription
shall be charged 100% to the Managing General Partner without
recourse to the Partnership and the Managing General Partner
shall not be credited with such amounts towards its required
Capital Contribution.
(2) Intangible Drilling Costs shall be charged 100% to the
Participants.
(3) Tangible Costs shall be charged 14% to the Managing General
Partner and 86% to the Participants.
(4) Operating Costs, Direct Costs, Administrative Costs and all
other Partnership costs not specifically allocated shall be
charged 75% to the Participants and 25% to the Managing General
Partner. Provided, however, in the event a portion of the
Managing General Partner's Partnership Net Production Revenues
are subordinated pursuant to 5.01(b)(4), all such Operating
Costs, Direct Costs, Administrative Costs and all other
Partnership costs not specifically allocated shall be charged
between the Managing General Partner and the Participants in the
same ratio as the related production revenues are being
credited.
Intangible Drilling Costs and the Participants' share of Tangible Costs
of a well or wells to be drilled and completed with the proceeds of a
Partnership closing shall be charged 100% to the Participants who are
admitted to the Partnership in such closing and shall not be
reallocated to take into account other Partnership closings. Although
the proceeds of each Partnership closing will be used to pay the costs
of drilling different wells, each Participant will pay the same amount
of such costs regardless of when he subscribes.
5.01(b). Revenues. Revenues of the Partnership from all sources and
wells shall be commingled and credited as follows:
(1) If the Partners' Capital Accounts are adjusted to reflect
the simulated depletion of an oil or gas property of the
Partnership, the portion of the total amount realized by the
Partnership upon the taxable disposition of such property that
represents recovery of its simulated tax basis therein shall be
allocated to the Partners in the same proportion as the
aggregate adjusted tax basis of such property was allocated to
such Partners (or their predecessors in interest). If the
Partners' Capital Accounts are adjusted to reflect the actual
depletion of an oil or gas property of the Partnership, the
portion of the total amount realized by the Partnership upon the
taxable disposition of such property that equals the Partners'
aggregate remaining adjusted tax basis therein shall be
allocated to the Partners in proportion to their respective
remaining adjusted tax bases in such property. Thereafter, any
excess shall be allocated to Atlas in an amount equal to the
difference between the fair market value of the Lease at the
time it was contributed to the Partnership and its simulated or
actual adjusted tax basis at such time. Finally, any excess
shall be credited to the parties in accordance with the sharing
ratios provided in (4), below. In the event of a sale of
developed oil and gas properties with equipment thereon, the
Managing General Partner may make any reasonable allocation of
proceeds between the equipment and the Leases.
(2) Interest earned on Agreed Subscriptions before the Offering
Termination Date pursuant to 3.05(b) shall be credited to the
accounts of the respective subscribers who paid such
subscriptions to the Partnership and paid approximately eight
weeks after the Offering Termination Date. After the Offering
Termination Date and until proceeds from the offering are
invested in the Partnership's oil and gas operations, any
interest income from temporary investments shall be allocated
pro rata to the Participants providing such Agreed
Subscriptions. All other interest income, including interest
earned on the deposit of production revenues, shall be credited
as provided in (4), below.
(3) Proceeds from the sale or disposition of equipment shall be
credited to the parties charged with the costs of such equipment
in the ratio in which such costs were charged.
(4) All other revenues of the Partnership shall be credited 75%
to the Participants and 25% to the Managing General Partner.
Notwithstanding, the Managing General Partner shall subordinate
a part of its Partnership production revenues in an amount up to
10% of the Partnership's Net Production Revenues (which are net
of the related costs as provided in 5.01(a)(4)), to the receipt
by Participants of cash distributions from the Partnership equal
to 10% of their Agreed Subscriptions in each of the first five
twelve-month periods of Partnership operations commencing with
the first distribution of revenues to the Participants. In this
regard, however, the Managing General Partner shall not
subordinate an amount greater than 10% of the Partnership's
production revenues net of the related costs as provided in
5.01(a)(4) in any such distribution period. The subordination
shall be determined by:
(i) carrying forward to subsequent twelve-month periods the
amount, if any, by which cumulative cash distributions to
Participants (including any subordination payments) are less
than 10% of Participants' Agreed Subscriptions in the first
twelve-month period, 20% of Participants' Agreed
Subscriptions in the second twelve-month period, 30% of
Participants' Agreed Subscriptions in the third twelve-
month period, or 40% of Participants' Agreed Subscriptions
in the fourth twelve-month period (no carry forward is
required if such distributions are less than 50% of
Participants' Agreed Subscriptions in the fifth twelve-month
period because the Managing General Partner's subordination
obligation terminates upon the expiration of the fifth
twelve-month period) ; and
(ii) reimbursing the Managing General Partner for any
previous subordination payments to the extent cumulative
cash distributions to Participants (including any
subordination payments) would exceed 10% of Participants'
Agreed Subscriptions in the first twelve-month period, 20%
of Participants' Agreed Subscriptions in the second twelve-
month period, 30% of Participants' Agreed Subscriptions in
the third twelve-month period, 40% of Participants' Agreed
Subscriptions in the fourth twelve-month period, or 50% of
Participants' Agreed Subscriptions in the fifth twelve-month
period.
The Managing General Partner's subordination obligation shall be
determined and paid at the time of each Partnership distribution during
the subordination period, and may be prorated in the Managing General
Partner's discretion (e.g. in the case of a quarterly distribution, the
Managing General Partner will not have any subordination obligation if
the distributions to Participants equal 2.5% or more of their Agreed
Subscriptions assuming there is no subordination owed for any preceding
periods). The Managing General Partner shall not be required to return
Partnership distributions previously received by it, even though a
subordination obligation arises subsequent to such distributions, and
no subordination payments to Participants or reimbursements to the
Managing General Partner shall be made after the expiration of the
fifth twelve-month subordination period. Subject to the foregoing
provisions of this 5.01(b)(4), only Partnership revenues in the
current distribution period shall be debited or credited to the
Managing General Partner as may be necessary to provide, to the extent
possible, such distributions to the Participants and reimbursements to
the Managing General Partner.
The revenues from all Partnership wells will be commingled, so
regardless of when a Participant subscribes he will share in the
revenues from all wells on the same basis as the other Participants.
5.01(c). Allocations.
5.01(c)(1). Allocations among Participants. Except as provided
otherwise in this Agreement, costs and revenues shared or credited to
the Participants as a group shall be allocated among the Participants
(including the Managing General Partner to the extent of any optional
subscription pursuant to 3.03(b)(2)) in the ratio of their respective
Agreed Subscriptions.
5.01(c)(2). Costs and Revenues Not Directly Allocable to a Partnership
Well. Costs and revenues not directly allocable to a particular
Partnership Well or additional operation shall be allocated among the
Partnership Wells or additional operations in any manner the Managing
General Partner in its reasonable discretion, shall select, and shall
then be charged or credited in the same manner as costs or revenues
directly applicable to such Partnership Well or additional operation
are being charged or credited.
5.01(c)(3). Discretion in Making Allocations. In determining the
proper method of allocating charges or credits among the parties, or in
making any other allocations hereunder, the Managing General Partner
may adopt any method of allocation which it, in its reasonable
discretion, selects, if, in its sole discretion based on advice from
its legal counsel or accountants, a revision to such allocations is
required for such allocations to be recognized for federal income tax
purposes either because of the promulgation of Treasury Regulations or
other developments in the tax law. Any new allocation provisions shall
be provided by an amendment to this Agreement and shall be made in a
manner that would result in the most favorable aggregate consequences
to the Participants as nearly as possible consistent with the original
allocations described herein.
5.02. Capital Accounts and Allocations Thereto.
5.02(a). Capital Accounts. A single, separate Capital Account shall be
established for each party to this Agreement, regardless of the number
of interests owned by such party, the class of the interests and the
time or manner in which such interests were acquired.
5.02(b). Charges and Credits. Except as otherwise provided in this
Agreement, the Capital Account of each party shall be determined and
maintained in accordance with Treas. Reg. 1.704-l(b)(2)(iv) and shall
be increased by: (i) the amount of money contributed by him to the
Partnership; (ii) the fair market value of property contributed by him
(without regard to7701(g) of the Code) to the Partnership (net of
liabilities secured by the contributed property that the Partnership is
considered to assume or take subject to under 752 of the Code); and
(iii) allocations to him of Partnership income and gain (or items
thereof), including income and gain exempt from tax and income and gain
described in Treas. Reg. 1.704-l(b)(2)(iv)(g), but excluding income
and gain described in Treas. Reg. 1.704-l(b)(4)(i); and shall be
decreased by (iv) the amount of money distributed to him by the
Partnership; (v) the fair market value of property distributed to him
(without regard to 7701(g) of the Code) by the Partnership (net of
liabilities secured by the distributed property that he is considered
to assume or take subject to under 752 of the Code); (vi) allocations
to him of Partnership expenditures described in 705(a)(2)(B) of the
Code; and (vii) allocations to him of Partnership loss and deduction
(or items thereof), including loss and deduction described in Treas.
Reg. 1.704-l(b)(2)(iv)(g), but excluding items described in (vi)
above, and loss or deduction described in Treas. Reg. 1.704-l(b)(4)(i)
or (iii). If Treas. Reg. 1.704-l(b)(2)(iv)fails to provide guidance,
Capital Account adjustments shall be made in a manner that: (i)
maintains equality between the aggregate governing Capital Accounts of
the Partners and the amount of Partnership capital reflected on the
Partnership's balance sheet, as computed for book purposes; (ii) is
consistent with the underlying economic arrangement of the Partners;
and (iii) is based, wherever practicable, on federal tax accounting
principles.
5.02(c). Payments to the Managing General Partner. The Capital Account
of the Managing General Partner shall be reduced by payments to it
pursuant to 4.04(a)(2) only to the extent of the Managing General
Partner's distributive share of any Partnership deduction, loss, or
other downward Capital Account adjustment resulting from such payments.
5.02(d). Discretion of Managing General Partner. Notwithstanding any
other provisions of this Agreement, the method of maintaining Capital
Accounts may be changed from time to time, in the discretion of the
Managing General Partner, to take into consideration 704 and other
provisions of the Code and such rules, regulations and interpretations
relating thereto as may exist from time to time.
5.02(e). Revaluations of Property. In the discretion of the Managing
General Partner the Capital Accounts of the Partners may be increased
or decreased to reflect a revaluation of Partnership property,
including intangible assets such as goodwill, (on a
property-by-property basis except as otherwise permitted under 704(c)
of the Code and the regulations thereunder) on the Partnership's books,
in accordance with Treas. Reg. 1.704-l(b)(2)(iv)(f).
5.02(f). Amount of Book Items. In cases where 704(c) of the Code or
5.02(e) applies, Capital Accounts shall be adjusted in accordance with
Treas. Reg. 1.704-l(b)(2)(iv)(g) for allocations of depreciation,
depletion, amortization and gain and loss, as computed for book
purposes, with respect to such property.
5.03. Allocation of Income, Deductions and Credits.
5.03(a). In General. To the extent permitted by law and except as
otherwise provided in this Agreement, all deductions and credits,
including, but not limited to, intangible drilling and development
costs and depreciation, shall be allocated to the party who has been
charged with the expenditure giving rise to such deductions and
credits; and to the extent permitted by law, such parties shall be
entitled to such deductions and credits in computing taxable income or
tax liabilities to the exclusion of any other party. Except as
otherwise provided in this Agreement, all items of income and gain,
including gain on disposition of assets, shall be allocated in
accordance with the related revenue allocations set forth in 5.01(b)
and its subsections.
5.03(b). Tax Basis. Subject to 704(c) of the Code, the tax basis of
each oil and gas property for computation of cost depletion and gain or
loss on disposition shall be allocated and reallocated when necessary
based upon the capital interest in the Partnership as to such property
and the capital interest in the Partnership for such purpose as to each
property shall be considered to be owned by the parties hereto in the
ratio in which the expenditure giving rise to the tax basis of such
property has been charged as of the end of the year.
5.03(c). Gain or Loss on Oil and Gas Properties. Each party shall
separately compute its gain or loss on the disposition of each oil and
gas property in accordance with the provisions of 613A(c)(7)D) of the
Code, and the calculation of such gain or loss shall consider the
party's adjusted basis in his property interest computed as provided in
5.03(b) and the party's allocable share of the amount realized from
the disposition of the property.
5.03(d). Gain on Depreciable Property. Gain from each sale or other
disposition of depreciable property shall be allocated to each party
whose share of the proceeds from such sale or other disposition exceeds
its contribution to the adjusted basis of the property in the ratio
that such excess bears to the sum of the excesses of all parties having
such an excess.
5.03(e). Loss on Depreciable Property. Loss from each sale,
abandonment or other disposition of depreciable property shall be
allocated to each party whose contribution to the adjusted basis of the
property exceeds its share of the proceeds from such sale, abandonment
or other disposition in the proportion that such excess bears to the
sum of the excesses of all parties having such an excess.
5.03(f). Recapture. Any recapture treated as an increase in ordinary
income by reason of 1245, 1250, or 1254 of the Code shall be
allocated to the parties in the amounts in which such recaptured items
were previously allocated to them; provided that to the extent
recapture allocated to any party is in excess of such party's gain from
the disposition of the property, such excess shall be allocated to the
other parties but only to the extent of such other parties' gain from
the disposition of the property.
5.03(g). Tax Credits. If a Partnership expenditure (whether or not
deductible) that gives rise to a tax credit in a Partnership taxable
year also gives rise to valid allocations of Partnership loss or
deduction (or other downward Capital Account adjustments) for such
year, then the Partners' interests in the Partnership with respect to
such credit (or the cost giving rise thereto) shall be in the same
proportion as such Partners' respective distributive shares of such
loss or deduction (and adjustments). Identical principles shall apply
in determining the Partners' interests in the Partnership with respect
to tax credits that arise from receipts of the Partnership (whether or
not taxable).
5.03(h). Deficit Capital Accounts and Qualified Income Offset.
Notwithstanding any provisions of this Agreement to the contrary, an
allocation of loss or deduction which would result in a Partner having
a deficit Capital Account balance as of the end of the taxable year to
which such allocation relates, if charged to such Partner, (to the
extent such Partner is not required to restore such deficit to the
Partnership), taking into account: (i) adjustments that, as of the end
of such year, reasonably are expected to be made to such Partner's
Capital Account for depletion allowances with respect to the
Partnership's oil and gas properties; (ii) allocations of loss and
deduction that, as of the end of such year, reasonably are expected to
be made to such Partner pursuant to 704(e)(2) and 706(d) of the Code
and Treas. Reg. 1.751-1(b)(2)(ii); and (iii) distributions that, as of
the end of such year, reasonably are expected to be made to such
Partner to the extent they exceed offsetting increases to such
Partner's Capital Account (assuming for this purpose that the fair
market value of Partnership property equals its adjusted tax basis)
that reasonably are expected to occur during (or prior to) the
Partnership taxable years in which such distributions reasonably are
expected to be made, shall be charged to the Managing General Partner;
provided further, the Managing General Partner shall be credited with
an additional amount of Partnership income or gain equal to the amount
of such loss or deduction as quickly as possible (to the extent such
chargeback does not cause or increase deficit balances in the Partners'
Capital Accounts which are not required to be restored to the
Partnership). Notwithstanding any provisions of this Agreement to the
contrary, if such Partner unexpectedly receives an adjustment,
allocation, or distribution described in (i), (ii), or (iii) above, or
any other distribution, which causes or increases a deficit balance in
such Partner's Capital Account which is not required to be restored to
the Partnership, such Partner shall be allocated items of income and
gain (consisting of a pro rata portion of each item of Partnership
income, including gross income, and gain for such year) in an amount
and manner sufficient to eliminate such deficit balance as quickly as
possible.
5.03(i). Partners' Allocable Shares. Except as otherwise provided in
this Agreement, each Partner's allocable share of Partnership income,
gain, loss, deductions and credits shall be determined by the use of
any method prescribed or permitted by the Secretary of the Treasury by
regulations or other guidelines and selected by the Managing General
Partner which takes into account the varying interests of the Partners
in the Partnership during the taxable year. In the absence of such
regulations or guidelines, except as otherwise provided in this
Agreement, such allocable share shall be based on actual income, gain,
loss, deductions and credits economically accrued each day during the
taxable year in proportion to each Partner's varying interest in the
Partnership on each day during the taxable year.
5.04. Elections.
5.04(a). Intangibles Election. The Partnership's federal income tax
return shall be made in accordance with an election under the option
granted by the Code to deduct intangible drilling and development
costs.
5.04(b). No Election Out of Subchapter K. No election shall be made by
the Partnership, any Partner, or the Operator for the Partnership to be
excluded from the application of the provisions of Subchapter K of the
Code.
5.04(c). Contingent Income. If it is determined that any taxable
income results to any party by reason of its entitlement to a share of
profits or revenues of the Partnership before such profit or revenue
has been realized by the Partnership, the resulting deduction as well
as any resulting gain, shall not enter into Partnership net income or
loss but shall be separately allocated to such party.
5.04(d). 754 Election. In the event of the transfer of an interest in
the Partnership, or upon the death of an individual party hereto, or in
the event of the distribution of property to any party hereto, the
Managing General Partner may choose for the Partnership to file an
election in accordance with the applicable Treasury Regulations to
cause the basis of the Partnership's assets to be adjusted for federal
income tax purposes as provided by 734 and 743 of the Code.
5.05. Distributions.
5.05(a). In General. The Managing General Partner shall review the
accounts of the Partnership at least quarterly to determine whether
cash distributions are appropriate and the amount to be distributed, if
any. The Partnership shall distribute funds to the Managing General
Partner and the Participants allocated to their accounts which the
Managing General Partner deems unnecessary to retain by the
Partnership. In no event, however, shall funds be advanced or borrowed
for purposes of distributions, if the amount of such distributions
would exceed the Partnership's accrued and received revenues for the
previous four quarters, less paid and accrued Operating Costs with
respect to such revenues. The determination of such revenues and costs
shall be made in accordance with generally accepted accounting
principles, consistently applied. Cash distributions from the
Partnership to the Managing General Partner shall only be made in
conjunction with distributions to Participants and only out of funds
properly allocated to the Managing General Partner's account.
At any time after three years from the date each Partnership Well is
placed into production, the Managing General Partner shall have the
right to deduct each month from the Partnership's proceeds of the sale
of the production from the well up to $200 for the purpose of
establishing a fund to cover the estimated costs of plugging and
abandoning said well. All such funds shall be deposited in a separate
interest bearing account for the benefit of the Partnership, and the
total amount so retained and deposited shall not exceed the Managing
General Partner's reasonable estimate of such costs.
5.05(b). Distribution of Uncommitted Subscription Proceeds. Any net
subscription proceeds not expended or committed for expenditure, as
evidenced by a written agreement, by the Partnership within twelve
months of the Offering Termination Date of the Partnership, except
necessary operating capital, shall be distributed pro rata to the
Participants in the ratio of their Agreed Subscriptions to the
Partnership, as a return of capital and the Managing General Partner
shall reimburse the Participants for the selling or other offering
expenses allocable to the return of capital. For purposes of this
subsection, "committed for expenditure" shall mean contracted for,
actually earmarked for or allocated by the Managing General Partner to
the Partnership's drilling operations, and "necessary operating
capital" shall mean those funds which, in the opinion of the Managing
General Partner, should remain on hand to assure continuing operation
of the Partnership.
5.05(c). Distributions on Winding Up. Upon the winding up of the
Partnership distributions shall be made as provided in 7.02.
5.05(d). Interest and Return of Capital. It is agreed among the
parties hereto that no party shall under any circumstances be entitled
to any interest on amounts retained by the Partnership, and that each
Participant shall look only to his share of distributions, if any, from
the Partnership for a return of his Capital Contribution.
ARTICLE VI
TRANSFER OF INTERESTS
6.01. Transferability.
6.01(a). In General. In addition to other restrictions on
transferability provided in this Agreement, interests in the
Partnership (and any rights to income or other attributes of Units in
the Partnership) shall be nontransferable except transfers to or with
the consent of the Managing General Partner where the transfer of a
Participant's interest is involved, and, except as otherwise provided
in this Agreement, the consent of Participants whose Agreed
Subscriptions equal a majority of the Partnership Subscription where a
transfer by the Managing General Partner is involved. Unless an
assignee becomes a substituted Partner in accordance with the
provisions set forth below, he shall not be entitled to any of the
rights granted to a Partner hereunder, other than the right to receive
all or part of the share of the profits, losses, income, gain, credits
and cash distributions or returns of capital to which his assignor
would otherwise be entitled.
6.01(b). Objections to Transfer. Failure to notify the transferring
party of an objection to any proposed or completed transfer of the
transferor's interest hereunder within thirty days following the
receipt of notice thereof shall conclusively serve as a consent to such
transfer.
6.01(c). Conversion of Investor General Partner Units to Limited
Partner Interests. After substantially all of the Partnership Wells
have been drilled and completed the Managing General Partner shall file
an amended certificate of limited partnership with the Secretary of
State of the Commonwealth of Pennsylvania for the purpose of converting
the Investor General Partner Units to Limited Partner interests. Upon
such conversion the Investor General Partners shall be Limited Partners
entitled to limited liability; however, they shall remain liable to the
Partnership for any additional Capital Contribution required for their
proportionate share of any Partnership obligation or liability arising
prior to the conversion of their Units as provided in 3.05(b). Such
conversion shall not affect the allocation to any Partner of any item
of Partnership income, gain, loss, deduction or credit or other item of
special tax significance (other than Partnership liabilities, if any)
and shall not affect any Partner's interest in the Partnership's oil
and gas properties and unrealized receivables.
Notwithstanding the foregoing, the Managing General Partner shall
notify all Participants at least thirty days prior to the effective
date of any adverse material change in the Partnership's insurance
coverage. If the insurance coverage is to be materially reduced, the
Investor General Partners shall have the right to convert their Units
into Limited Partner interests prior to such reduction by giving
written notice to the Managing General Partner.
6.02. Special Restrictions on Transfers.
6.02(a). In General. Only whole Units may be assigned unless the
Participant owns less than a whole Unit, in which case his entire
fractional interest must be assigned. The costs and expenses associated
with the assignment must be paid by the assignor Partner and the
assignment must be in a form satisfactory to the Managing General
Partner. The terms of the assignment must not contravene those of this
Agreement. Transfers of interest in the Partnership are subject to the
following additional restrictions.
6.02(a)(1). Securities Laws Restriction. Subject to transfers
permitted by 6.04 and transfers by operation of law, no interest in
the Partnership shall be sold, assigned, pledged, hypothecated or
transferred in the absence of an effective registration of the Units
under the Securities Act of 1933, as amended and qualification under
applicable state securities laws or an opinion of counsel acceptable to
the Managing General Partner that such registration and qualification
are not required. Transfers are also subject to any conditions
contained in the Subscription Agreement and Exhibit (B) to the
Prospectus.
6.02(a)(2). Tax Law Restrictions. No sale, exchange, transfer or
assignment shall be made which, in the opinion of counsel to the
Partnership, would result in the Partnership being considered to have
been terminated for purposes of Section 708 of the Code or would result
in materially adverse tax consequences to the Partnership or the
Partners.
6.02(a)(3). Substitute Partner. An assignee of a Limited Partner's or
Investor General Partner's interest in the Partnership shall become a
substituted Limited Partner or Investor General Partner entitled to all
the rights of a Limited Partner or Investor General Partner, as the
case may be, if, and only if: (i) the assignor gives the assignee such
right; (ii) the Managing General Partner consents to such substitution,
which consent shall be in the Managing General Partner's absolute
discretion; (iii) the assignee pays to the Partnership all costs and
expenses incurred in connection with such substitution; and (iv) the
assignee executes and delivers such instruments, in form and substance
satisfactory to the Managing General Partner, necessary or desirable to
effect such substitution and to confirm the agreement of the assignee
to be bound by all of the terms and provisions of this Agreement. A
substitute Limited Partner or Investor General Partner is entitled to
all of the rights attributable to full ownership of the assigned Units
including the right to vote.
6.02(b). Effect of Transfer. The Partnership shall amend its records
at least once each calendar quarter to effect the substitution of
substituted Participants. Any transfer permitted hereunder where the
assignee does not become a substituted Limited Partner or Investor
General Partner shall be effective as of midnight of the last day of
the calendar month in which it is made, or, at the Managing General
Partner's election, 7:00 A.M. of the following day. No such transfer,
including a transfer of less than all of a party's rights hereunder or
the transfer of rights hereunder to more than one party, shall relieve
the transferor of its responsibility for its proportionate part of any
expenses, obligations and liabilities hereunder related to the interest
so transferred, whether arising prior or subsequent to such transfer,
nor shall any such transfer require an accounting by the Managing
General Partner, or the granting of rights hereunder as between such
parties and the remaining parties hereto, including the exercise of any
elections hereunder, to more than one party unanimously designated by
the transferees and, if he should have retained an interest hereunder,
the transferor.
Until a proper designation acceptable to it is received by the Managing
General Partner, it shall continue to account only to the person to
whom it was furnishing notices prior to such time pursuant to 8.01 and
its subsections; and such party shall continue to exercise all rights
applicable to the entire interest previously owned by the transferor.
6.03. Right of Managing General Partner to Hypothecate and/or Withdraw
Its Interests. The Managing General Partner shall have the authority
(without the consent of the Participants and without affecting the
allocation of costs and revenues received or incurred hereunder), to
hypothecate, pledge, or otherwise encumber, on any terms it sees fit,
its Partnership interest (or an undivided interest in the assets of the
Partnership equal to or less than its respective interest in the
revenues of the Partnership) to obtain funds for use by it for its own
general purposes. All repayments of such borrowings and costs and
interest or other charges related thereto shall be borne and paid
separately by the Managing General Partner; and in no event shall such
repayments, costs, interest, or other charges be charged to the account
of the Participants. In addition, subject to a required participation
of not less than 1% of the Partnership Subscription, the Managing
General Partner may withdraw a property interest held by the
Partnership in the form of a Working Interest in the Partnership Wells
equal to or less than its respective interest in the revenues of the
Partnership if such withdrawal is necessary to satisfy the bona fide
request of its creditors or approved by Participants whose Agreed
Subscriptions equal a majority of the Partnership Subscription.
6.04. Repurchase Obligation.
6.04(a). In General. Participants shall have the right to present
their interests to the Managing General Partner subject to the
conditions and limitations set forth in this section. The Managing
General Partner shall not purchase more than 5% of the Units in any
calendar year and shall not purchase less than one Unit of a
Participant's interests in the Partnership unless such lesser amount
represents the entire amount of the Participant's interest. The
Managing General Partner may waive these limitations in its sole
discretion other than the limitation that it shall not purchase more
than 5% of the Units in any calendar year. The Participant is not
obligated to accept such repurchase offer.
The Managing General Partner shall offer to repurchase a Participant's
interest in cash in every year beginning in 2001. The commencement of
the offer must be made within 120 days of the reserve report set forth
in 4.03(b)(3). A Participant may accept the repurchase offer by a
written acceptance. No repurchase shall be considered effective until
after the payment has been made to the Participant in cash. In
addition, in accordance with Treas. Reg. 1.7704-1(f), no repurchase
shall occur until at least 60 calendar days after the Participant
notifies the Partnership in writing of the Participant's intention to
exercise the repurchase right.
6.04(b). Independent Petroleum Consultant. The amount attributable to
Partnership reserves shall be determined based upon the last reserve
report of the Partnership prepared by the Managing General Partner and
reviewed by the Independent Expert. The Managing General Partner shall
estimate the present worth of future net revenues attributable to the
Partnership's interest in the Proved Reserves, and in making this
estimate, it shall employ a discount rate equal to 10%, use a constant
price for the oil and base the price of gas upon the existing gas
contracts at the time of the repurchase. The calculation of the
repurchase price shall be as set forth in 6.04(c).
6.04(c). Calculation of Repurchase Price. The purchase price shall be
based upon the Participant's share of the net assets and liabilities of
the Partnership and allocated pro rata to each Participant based upon
his Agreed Subscription. The repurchase price shall include the sum of
the following items:
(i) an amount based on 70% of the present worth of future net
revenues from the Partnership's Proved Reserves determined as
described in 6.04(b);
(ii) Partnership cash on hand;
(iii) prepaid expenses and accounts receivable of the
Partnership, less a reasonable amount for doubtful accounts; and
(iv) the estimated market value of all assets of the
Partnership, not separately specified above, determined in
accordance with standard industry valuation procedures.
There shall be deducted from the foregoing sum the following items:
(i) an amount equal to all Partnership debts, obligations, and
other liabilities, including accrued expenses; and
(ii) any distributions made to the Participants between the
date of the request and the actual payment; provided, however,
that if any cash distributed was derived from the sale,
subsequent to the request, of oil, gas or other mineral
production, or of a producing property owned by the Partnership,
for purposes of determining the reduction of the purchase price,
such distributions shall be discounted at the same rate used to
take into account the risk factors employed to determine the
present worth of the Partnership's Proved Reserves.
The purchase price may be further adjusted by the Managing General
Partner for estimated changes therein from the date of such report to
the date of payment of the purchase price to the Participants: (i) by
reason of production or sales of, or additions to, reserves and lease
and well equipment, sale or abandonment of Leases, and similar matters
occurring prior to the request for repurchase, and (ii) by reason of
any of the following occurring prior to payment of the purchase price
to the selling Participants: changes in well performance, increases or
decreases in the market price of oil, gas, or other minerals, revision
of regulations relating to the importing of hydrocarbons, changes in
income, ad valorem, and other tax laws (e.g. material variations in the
provisions for depletion) and similar matters.
6.04(d). Selection by Lot. If less than all interests presented at any
time are to be purchased, the Participants whose interests are to be
purchased will be selected by lot. The Managing General Partner's
obligation to purchase such interests may be discharged for the benefit
of the Managing General Partner by a third party or an Affiliate. The
interests of the selling Participant will be transferred to the party
who pays for it. A selling Participant will be required to deliver an
executed assignment of his interest, together with such other
documentation as the Managing General Partner may reasonably request.
6.04(e). No Obligation of the Managing General Partner to Establish a
Reserve. The Managing General Partner shall have no obligation to
establish any reserve to satisfy the repurchase obligations under this
section.
6.04(f). Suspension of Repurchase Obligation. The Managing General
Partner may suspend its repurchase obligation at any time if it does
not have sufficient cash flow or is unable to borrow funds for such
purpose on terms it deems reasonable, by so notifying the Participants.
In addition, the Managing General Partner's repurchase obligation may
be conditioned, in the Managing General Partner's sole discretion, on
the Managing General Partner's receipt of an opinion of counsel that
such transfers will not cause the Partnership to be treated as a
"publicly traded partnership" under the Code. The Managing General
Partner shall hold such repurchased Units for its own account and not
for resale.
ARTICLE VII
DURATION, DISSOLUTION, AND WINDING UP
7.01. Duration.
7.01(a). Fifty Year Term. The Partnership shall continue in existence
for a term of fifty years from the effective date of this Agreement
unless sooner terminated as hereinafter set forth.
7.01(b). Termination. The Partnership shall terminate following the
occurrence of a Final Terminating Event, or upon the occurrence of any
event which under the Pennsylvania Revised Uniform Limited Partnership
Act causes the dissolution of a limited partnership.
7.01(c). Continuance of Partnership. Except upon the occurrence of a
Final Terminating Event, the Partnership or any successor limited
partnership shall not be wound up, but shall be continued by the
parties and their respective successors as a successor limited
partnership under all the terms of this Agreement. Such successor
limited partnership shall succeed to all of the assets of the
Partnership. As used throughout this Agreement, the term "Partnership"
shall include such successor limited partnerships and the parties
thereto.
7.02. Dissolution and Winding Up. Upon the occurrence of a Final
Terminating Event, the affairs of the Partnership shall be wound up and
there shall be distributed to each of the parties its Distribution
Interest in the remaining assets of the Partnership. To the extent
practicable and in accordance with sound business practices in the
judgment of the Managing General Partner, liquidating distributions
shall be made by the end of the taxable year in which liquidation
occurs (determined without regard to 706(c)(2)(A) of the Code) or, if
later, within ninety days after the date of such liquidation. Provided,
however, amounts withheld for reserves reasonably required for
liabilities of the Partnership and installment obligations owed to the
Partnership need not be distributed within the foregoing time period so
long as such withheld amounts are distributed as soon as practicable.
Any in kind property distributions to the Participants shall be made to
a liquidating trust or similar entity for the benefit of the
Participants, unless at the time of the distribution:
(1) the Managing General Partner shall offer the individual
Participants the election of receiving in kind property
distributions and the Participants accept such offer after being
advised of the risks associated with such direct ownership; or
(2) there are alternative arrangements in place which assure
the Participants that they will not, at any time, be responsible
for the operation or disposition of Partnership properties.
It shall be presumed that a Participant has refused such consent if the
Managing General Partner has not received such consent within thirty
days after the Managing General Partner mailed the request for such
consent. Any Partnership asset which would otherwise be distributed in
kind to a Participant, but for the failure or refusal of such
Participant to give his written consent to such distribution, may
instead be sold by the Managing General Partner at the best price
reasonably obtainable from an independent third party who is not an
Affiliate of the Managing General Partner.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
8.01. Notices.
8.01(a). Method. Any notice required hereunder shall be in writing,
and given by mail or wire addressed to the party to receive such notice
at the address designated in 1.03.
8.01(b). Change in Address. The address of any party hereto may be
changed by written notice to the other parties hereto in the event of a
change of address by the Managing General Partner or to the Managing
General Partner in the event of a change of address by a Participant.
However, in the event of a transfer of rights hereunder, no notice to
any such transferee shall be required, nor shall such transferee have
any rights hereunder, until notice thereof shall have been given to the
Managing General Partner. Any transfer of rights hereunder shall not
increase the duty to give notice, and in the event of a transfer of
rights hereunder to more than one party, notice to any owner of any
interest in such rights shall be notice to all owners thereof.
8.01(c). Time Notice Deemed Given. Any notice shall be considered
given, and any applicable time shall run, from the date such notice is
placed in the mails or delivered to the telegraph company as to any
notice given by the Managing General Partner and when received as to
any notice given by any Participant.
8.01(d). Effectiveness of Notice. Any notice to a party other than the
Managing General Partner, including a notice requiring concurrence or
nonconcurrence, shall be effective, and any failure to respond binding,
irrespective of whether or not such notice is actually received, and
irrespective of any disability or death on the part of the noticee,
whether or not known to the party giving such notice.
8.01(e). Failure to Respond. Except where this Agreement expressly
requires affirmative approval of a Participant, any Participant who
fails to respond in writing within the time specified for such response
(which time shall be not less than fifteen business days from the date
of mailing of such request) to a request by the Managing General
Partner for approval of or concurrence in a proposed action shall be
conclusively deemed to have approved such action.
8.02. Time. Time is of the essence of each part of this Agreement.
8.03. Applicable Law. The terms and provisions hereof shall be
construed under the laws of the Commonwealth of Pennsylvania, provided,
however, this 8.03 shall not be deemed to limit causes of action for
violations of federal or state securities law to the laws of the
Commonwealth of Pennsylvania. Neither this Agreement nor the
Subscription Agreement shall require mandatory venue or mandatory
arbitration of any or all claims by Participants against the Sponsor.
8.04. Agreement in Counterparts. This Agreement may be executed in
counterpart and shall be binding upon all parties executing this or
similar agreements from and after the date of execution by each party.
8.05. Amendment. No changes herein shall be binding unless proposed in
writing by the Managing General Partner, and adopted with the consent
of Participants whose Agreed Subscriptions equal a majority of the
Partnership Subscription; or unless proposed in writing by Participants
whose Agreed Subscriptions equal 10% or more of the Partnership
Subscription and approved by an affirmative vote of Participants whose
Agreed Subscriptions equal a majority of the Partnership Subscription.
However, the Managing General Partner is authorized to amend this
Agreement and its exhibits without such consent in any way deemed
necessary or desirable by it: (i) to add or substitute (in the case of
an assigning party) additional Limited Partners or Investor General
Partners; (ii) to enhance the tax benefits of the Partnership to the
parties; and (iii) to satisfy any requirements, conditions, guidelines,
options, or elections contained in any opinion, directive, order,
ruling, or regulation of the Securities and Exchange Commission, the
Internal Revenue Service, or any other federal or state agency, or in
any federal or state statute, compliance with which it deems to be in
the best interest of the Partnership. Notwithstanding the foregoing, no
amendment materially and adversely affecting the interests or rights of
Participants shall be made without the consent of the Participants
whose interests will be so affected.
8.06. Additional Partners. Each Participant hereby consents to the
admission to the Partnership of such additional Limited Partners or
Investor General Partners as the Managing General Partner, in its
discretion, chooses to admit.
8.07. Legal Effect. This Agreement shall be binding upon and inure to
the benefit of the parties, their heirs, devisees, personal
representatives, successors and assigns, and shall run with the
interests subject hereto. The terms "Partnership," "Limited Partner,"
"Investor General Partner," "Participant," "Partner," "Managing General
Partner," "Operator," or "parties" shall equally apply to any successor
limited partnership, and any heir, devisee, personal representative,
successor or assign of a party.
IN WITNESS WHEREOF, the parties hereto set their hands and seal as of
the day and year hereinabove shown.
ATLAS: ATLAS RESOURCES, INC.
Managing General Partner
By: /s/ J.R. O'Mara, President
=============================================================================
EXHIBIT 10(a)
DRILLING AND OPERATING AGREEMENT WITH EXHIBITS
DRILLING AND OPERATING AGREEMENT
ATLAS-ENERGY FOR THE NINETIES-PUBLIC #6 LTD.
INDEX
Section Page
1. Assignment of Well Locations; Representations;
Designation of Additional Well Locations;
Outside Activities 1
2. Drilling of Wells; Interest of Developer; Right of
Substitution 2
3. Operator - Responsibilities in General; Term 3
4. Operator's Charges for Drilling and Completing Wells;
Completion Determination 3
5. Title Examination of Well Locations; Liability for
Title Defects 4
6. Operations Subsequent to Completion of the Wells; Price
Determinations; Plugging and Abandonment 5
7. Billing and Payment Procedure with Respect to Operation
of Wells; Records, Reports and Information 6
8. Operator's Lien 6
9. Successors and Assigns; Transfers; Appointment of Agent 7
10. Insurance; Operator's Liability 7
11. Internal Revenue Code Election, Relationship of
Parties; Right to Take Production in Kind 8
12. Force Majeure 8
13. Term 9
14. Governing Law and Invalidity 9
15. Integration 9
16. Waiver of Default or Breach 9
17. Notices 9
18. Interpretation 10
19. Counterparts 10
Signature Page 10
- ------------------------------------------------------------------------
DRILLING AND OPERATING AGREEMENT
THIS AGREEMENT made this 31 day of December, 1997, by and between
ATLAS RESOURCES, INC., a Pennsylvania corporation (hereinafter referred
to as "Atlas" or "Operator"),
and
ATLAS-ENERGY FOR THE NINETIES-PUBLIC #6 LTD., a Pennsylvania limited
partnership, (hereinafter referred to as the "Developer").
WITNESSETH THAT:
WHEREAS, Atlas, by virtue of the Oil and Gas Leases (the "Leases")
described on Exhibit A attached hereto and made a part hereof, has
certain rights to develop the 55 initial well locations identified on
the maps attached hereto as Exhibits A-l through A-55 (the "Initial
Well Locations");
WHEREAS, the Developer, subject to the terms and conditions hereof,
desires to acquire certain of Atlas' rights to develop the aforesaid 55
Initial Well Locations and to provide for the development upon the
terms and conditions herein set forth of additional well locations
("Additional Well Locations") which the parties may from time to time
designate; and
WHEREAS, Operator is in the oil and gas exploration and development
business, and the Developer desires that Operator, as its independent
contractor, perform certain services in connection with its efforts to
develop the aforesaid Initial and Additional Well Locations
(hereinafter collectively referred to as the "Well Locations") and to
operate the wells completed thereon, on the terms and conditions herein
set forth;
NOW THEREFORE, in consideration of the mutual covenants herein
contained and subject to the terms and conditions hereinafter set
forth, the parties hereto, intending to be legally bound, hereby agree
as follows:
1. Assignment of Well Locations; Representations; Designation of
Additional Well Locations; Outside Activities.
(a) Atlas shall execute an assignment of an undivided
percentage of Working Interest in the Well Location acreage for each
well to the Developer as shown on Exhibit A attached hereto, which
assignment shall be limited to a depth from the surface to the top of
the Queenston formation in Mercer County, Pennsylvania and Ohio. The
assignment shall be substantially in the form of Exhibit B attached
hereto and made a part hereof. The amount of acreage included in each
Initial Well Location and the configuration thereof are indicated on
the maps attached hereto as Exhibits A-l through A-55. The amount of
acreage included in each Additional Well Location and the configuration
thereof shall be indicated on the maps to be attached as exhibits to
the applicable addendum as provided in sub-section (c) below.
(b) As of the date hereof, Atlas represents and warrants to
the Developer that Atlas is the lawful owner of said Lease and rights
and interest thereunder and of the personal property thereon or used in
connection therewith; that Atlas has good right and authority to sell
and convey the same, and that said rights, interest and property are
free and clear from all liens and encumbrances, and that all rentals
and royalties due and payable thereunder have been duly paid. The
foregoing representations and warranties shall also be made by Atlas at
the time of each recorded assignment of the acreage included in each
Initial Well Location and at the time of each recorded assignment of
the acreage included in each Additional Well Location designated
pursuant to sub-section (c) below, such representations and warranties
to be included in each recorded assignment substantially in the manner
set forth in the form of assignment attached hereto and made a part
hereof as Exhibit B. Atlas agrees to indemnify, protect and hold the
Developer and its successors and assigns harmless from and against all
costs (including but not limited to reasonable attorneys' fees),
liabilities, claims, penalties, losses, suits, actions, causes of
action, judgments or decrees resulting from the breach of any of the
aforesaid representations and warranties. It is understood and agreed
that, except as specifically set forth above, Atlas makes no warranty
or representation, express or implied, as to its title or the title of
the lessors in and to the lands or oil and gas interests covered by
said Leases.
(c) In the event that the parties hereto desire to designate
Additional Well Locations to be developed in accordance with the terms
and conditions of this Agreement, each of said parties shall execute an
addendum substantially in the form of Exhibit C attached hereto and
made a part hereof specifying the undivided percentage of Working
Interest and the Oil and Gas Leases to be included as Leases hereunder,
specifying the amount and configuration of acreage included in each
such Additional Well Location on maps attached as exhibits to such
addendum and setting forth their agreement that such Additional Well
Locations shall be developed in accordance with the terms and
conditions of this Agreement.
(d) It is understood and agreed that the assignment of rights
under the Leases and the oil and gas development activities
contemplated by this Agreement relate only to the Initial Well
Locations described herein and to the Additional Well Locations
designated pursuant to sub-section (c) above. Nothing contained in this
Agreement shall be interpreted to restrict in any manner the right of
each of the parties hereto to conduct without the participation of any
other party hereto any additional activities relating to exploration,
development, drilling, production or delivery of oil and gas on lands
adjacent to or in the immediate vicinity of the aforesaid Initial and
Additional Well Locations or elsewhere.
2. Drilling of Wells; Interest of Developer; Right of
Substitution.
(a) Operator, as Developer's independent contractor, agrees to
drill, complete (or plug) and operate 55 natural gas wells on the 55
Initial Well Locations in accordance with the terms and conditions of
this Agreement, and Developer, as a minimum commitment, agrees to
participate in and pay the Operator's charges for drilling and
completing the wells and any extra costs pursuant to Section 4 hereof
in proportion to the share of the Working Interest owned by the
Developer in the wells with respect to all 55 initial wells, it being
expressly understood and agreed that, subject to sub-section (e) below,
Developer does not reserve the right to decline participation in the
drilling of any of the 55 initial wells to be drilled hereunder.
(b) Operator will use its best efforts to commence drilling
the first well within thirty (30) days after the date of this Agreement
and to commence the drilling of each of said 55 initial wells for which
payment is made pursuant to Section 4(b) of this Agreement, on or
before March 31, 1998. Subject to the foregoing time limits, Operator
shall determine the timing of and the order of the drilling of said 55
Initial Well Locations.
(c) The 55 initial wells to be drilled on the Initial Well
Locations designated pursuant to this Agreement and any additional
wells drilled hereunder on any Additional Well Locations designated
pursuant to Section l(c) above shall be drilled and completed (or
plugged) in accordance with the generally accepted and customary oil
and gas field practices and techniques then prevailing in the
geographical area of the Well Locations and shall be drilled to a depth
sufficient to test thoroughly the objective formation or the deepest
assigned depth, whichever is less.
(d) Except as otherwise provided herein, all costs, expenses
and liabilities incurred in connection with the drilling and other
operations and activities contemplated by this Agreement shall be borne
and paid, and all wells, gathering lines of up to approximately 1,500
feet on the Prospect, equipment, materials, and facilities acquired,
constructed or installed hereunder shall be owned, by the Developer in
proportion to the share of the Working Interest owned by the Developer
in the wells. Subject to the payment of lessor's royalties and other
royalties and overriding royalties, if any, production of oil and gas
from the wells to be drilled hereunder shall be owned by the Developer
in proportion to the share of the Working Interest owned by the
Developer in the wells.
(e) Notwithstanding the provisions of sub-section (a) above,
in the event the Operator or Developer determines in good faith, with
respect to any Well Location, before operations commence hereunder with
respect to such Well Location, based upon the production (or failure of
production) of any other wells which may have been recently drilled in
the immediate area of such Well Location, or upon newly discovered
title defects, or upon such other evidence with respect to the Well
Location as may be obtained, that it would not be in the best interest
of the parties hereto to drill a well on such Well Location, then the
party making the determination shall notify the other party hereto of
such determination and the basis therefor and, unless otherwise
instructed by Developer, such well shall not be drilled. If such well
is not drilled, Operator shall promptly propose a new well location
(including such information with respect thereto as Developer may
reasonably request) within Pennsylvania or Ohio to be substituted for
such original Well Location and Developer shall thereafter have the
option for a period of seven (7) business days to either reject or
accept the proposed new well location. If the new well location is
rejected, Operator shall promptly propose another substitute well
location pursuant to the provisions hereof. Once the Developer accepts
a substitute well location or does not reject it within said seven (7)
day period, this Agreement shall terminate as to the original Well
Location and the substitute well location shall become subject to the
terms and conditions hereof.
3. Operator - Responsibilities in General; Term.
(a) Atlas shall be the Operator of the wells and Well
Locations subject to this Agreement and, as the Developer's independent
contractor, shall, in addition to its other obligations hereunder, (i)
make the necessary arrangements for the drilling and completion of
wells and the installation of the necessary gas gathering line systems
and connection facilities; (ii) make the technical decisions required
in drilling, testing, completing and operating such wells; (iii) manage
and conduct all field operations in connection with the drilling,
testing, completing, equipping, operating and producing of the wells;
(iv) maintain all wells, equipment, gathering lines and facilities in
good working order during the useful life thereof; and (v) perform the
necessary administrative and accounting functions. In the performance
of work contemplated by this Agreement, Operator is an independent
contractor with authority to control and direct the performance of the
details of the work.
(b) Operator covenants and agrees that (i) it shall perform
and carry on (or cause to be performed and carried on) its duties and
obligations hereunder in a good, prudent, diligent and workmanlike
manner using technically sound, acceptable oil and gas field practices
then prevailing in the geographical area of the aforesaid Well
Locations; (ii) all drilling and other operations conducted by, for and
under the control of Operator hereunder shall conform in all respects
to federal, state and local laws, statutes, ordinances, regulations,
and requirements; (iii) unless otherwise agreed in writing by the
Developer, all work performed hereunder pursuant to a written estimate
shall conform to the technical specifications set forth in such written
estimate and all equipment and materials installed or incorporated in
the wells and facilities hereunder shall be new or used and of good
quality; (iv) in the course of conducting operations hereunder, it
shall comply with all terms and conditions of the Leases (and any
related assignments, amendments, subleases, modifications and
supplements) other than any minimum drilling commitments contained
therein; (v) it shall keep the Well Locations subject to this Agreement
and all wells, equipment and facilities located thereon, free and clear
of all labor, materials and other liens or encumbrances arising out of
operations hereunder; (vi) it shall file all reports and obtain all
permits and bonds required to be filed with or obtained from any
governmental authority or agency in connection with the drilling or
other operations and activities which are the subject of this
Agreement; and (vii) it will provide competent and experienced
personnel to supervise the drilling, completing (or plugging), and
operating of the wells and use the services of competent and
experienced service companies to provide any third party services
necessary or appropriate in order to perform its duties hereunder.
(c) Atlas shall serve as Operator hereunder until the earliest
of (i) the termination of this Agreement pursuant to Section 13 hereof;
(ii) the termination of Atlas as Operator by the Developer which may be
effected by the Developer at any time in its discretion, with or
without cause; upon sixty (60) days advance written notice to the
Operator; or (iii) the resignation of Atlas as Operator hereunder which
may occur upon ninety (90) days' written notice to the Developer at any
time after five (5) years from the date hereof, it being expressly
understood and agreed that Atlas shall have no right to resign as
Operator hereunder prior to the expiration of the aforesaid five-year
period. Any successor Operator hereunder shall be selected by the
Developer. Nothing contained in this sub-section (c) shall relieve or
release Atlas or the Developer from any liability or obligation
hereunder which accrued or occurred prior to Atlas' removal or
resignation as Operator hereunder. Upon any change in Operator pursuant
to this provision, the then present Operator shall deliver to the
successor Operator possession of all records, equipment, materials and
appurtenances used or obtained for use in connection with operations
hereunder and owned by the Developer.
4. Operator's Charges for Drilling and Completing Wells;
Completion Determination
(a) All natural gas wells which are drilled and completed
hereunder shall be drilled and completed on a footage basis for a price
of $37.39 per foot to the depth of the well at its deepest penetration
as recorded by Operator. The aforesaid footage price for each of said
natural gas wells shall be set forth in an AFE which shall be attached
to this Agreement as an Exhibit, and shall cover all ordinary costs
which may be incurred in drilling and completing each such well for
production of natural gas, including without limitation, site
preparation, permits and bonds, roadways, surface damages, power at the
site, water, Operator's overhead and profit, rights-of-way, drilling
rigs, equipment and materials, costs of title examination, logging,
cementing, fracturing, casing, meters (other than utility purchase
meters), connection facilities, salt water collection tanks,
separators, siphon string, rabbit, tubing, an average of 1,500 feet of
gathering line per well, geological and engineering services and
completing two (2) zones; provided, that such footage price shall not
include the cost of (i) completing more than two (2) zones; (ii)
completion procedures, equipment, or any facilities necessary or
appropriate for the production and sale of oil and/or natural gas
liquids; and (iii) equipment or materials necessary or appropriate to
collect, lift or dispose of liquids for efficient gas production,
except that the cost of saltwater collection tanks, separators, siphon
string and tubing shall be included in the aforesaid footage price. Any
such extra costs shall be billed to Developer in proportion to the
share of the Working Interest owned by the Developer in the wells on a
direct cost basis equal to the sum of (i) Operator's invoice costs of
third party services performed and materials and equipment purchased
plus ten percent (10%) to cover supervisory services and overhead; and
(ii) Operator's standard charges for services performed directly by it.
(b) In order to enable Operator to commence site preparation
for 55 initial wells, to obtain suitable subcontractors for the
drilling and completion of such wells at currently prevailing prices,
and to insure the availability of equipment and materials, the
Developer shall pay to Operator, in proportion to the share of the
Working Interest owned by the Developer in the wells, one hundred
percent (100%) of the estimated price for all 55 initial wells upon
execution of this Agreement, such payment to be nonrefundable in all
events, except that Developer shall not be required to pay completion
costs prior to the time that a decision is made that the well warrants
a completion attempt and Atlas' share of such payments as Managing
General Partner of the Developer shall be paid within five (5) business
days of notice from Operator that such costs have been incurred. With
respect to each additional well drilled on the Additional Well
Locations, if any, in order to enable Operator to commence site
preparation, to obtain suitable subcontractors for the drilling and
completion of such wells at currently prevailing prices, and to insure
the availability of equipment and materials, Developer shall pay
Operator, in proportion to the share of the Working Interest owned by
the Developer in the wells, one hundred percent (100%) of the estimated
price for such well upon execution of the applicable addendum pursuant
to Section l(c) above, except that Developer shall not be required to
pay completion costs prior to the time that a decision is made that the
well warrants a completion attempt and Atlas' share of such payments as
Managing General Partner of the Developer shall be paid within five (5)
business days of notice from Operator that such costs have been
incurred. With respect to each well, Developer shall pay to Operator,
in proportion to the share of the Working Interest owned by the
Developer in the wells, all other costs for such well within five (5)
business days of receipt of notice from Operator that such well has
been drilled to the objective depth and logged and is to be completed.
Developer shall pay, in proportion to the share of the Working Interest
owned by the Developer in the wells, any extra costs incurred with
respect to each well pursuant to sub-section (a) above within ten (10)
business days of its receipt of Operator's statement therefor.
(c) Operator shall determine whether or not to run the
production casing for an attempted completion or to plug and abandon
any well drilled hereunder; provided, however, that a well shall be
completed only if Operator has made a good faith determination that
there is a reasonable possibility of obtaining commercial quantities of
oil and/or gas.
(d) If Operator determines at any time during the drilling or
attempted completion of any well hereunder, in accordance with the
generally accepted and customary oil and gas field practices and
techniques then prevailing in the geographic area of the well location,
that such well should not be completed, it shall promptly and properly
plug and abandon the same. In such event, such well shall be deemed a
dry hole and the dry hole footage price for each well drilled hereunder
shall be $20.60 per foot multiplied by the depth of the well, as
specified in sub-section (a) above, and shall be charged to the
Developer in proportion to the share of the Working Interest owned by
the Developer in the well. Any amounts paid by the Developer with
respect to such dry hole which exceed the aforesaid dry hole footage
price shall be retained by Operator and shall be applied to the costs
for an additional well or wells to be drilled on the Additional Well
Locations.
5. Title Examination of Well Locations; Liability for Title
Defects.
(a) The Developer hereby acknowledges that Operator has
furnished Developer with the title opinions identified on Exhibit A,
and other documents and information which Developer or its counsel has
requested in order to determine the adequacy of the title to the
Initial Well Locations and leased premises subject to this Agreement.
The Developer hereby accepts the title to said Initial Well Locations
and leased premises and acknowledges and agrees that, except for any
loss, expense, cost or liability caused by the breach of any of the
warranties and representations made by Atlas in Section l(b) hereof,
any loss, expense, cost or liability whatsoever caused by or related to
any defect or failure of such title shall be the sole responsibility of
and shall be borne entirely by the Developer.
(b) Prior to commencing the drilling of any well on any
Additional Well Location designated pursuant to this Agreement,
Operator shall conduct, or cause to be conducted, a title examination
of such Additional Well Location, in order to obtain appropriate
abstracts, opinions and certificates and other information necessary to
determine the adequacy of title to both the applicable Lease and the
fee title of the lessor to the premises covered by such Lease. The
results of such title examination and such other information as is
necessary to determine the adequacy of title for drilling purposes
shall be submitted to the Developer for its review and acceptance, and
no drilling shall be commenced until such title has been accepted in
writing by the Developer. After any title has been accepted by the
Developer, any loss, expense, cost or liability whatsoever, caused by
or related to any defect or failure of such title shall be the sole
responsibility of and shall be borne entirely by the Developer, unless
such loss, expense, cost or liability was caused by the breach of any
of the warranties and representations made by Atlas in Section l(b) of
this Agreement.
6. Operations Subsequent to Completion of the Wells; Price
Determinations; Plugging and Abandonment.
(a) Commencing with the month in which a well drilled
hereunder begins to produce, Operator shall be entitled to an operating
fee of $275 per month for each well being operated under this
Agreement, proportionately reduced to the extent the Developer owns
less than 100% of the Working Interest in the wells, in lieu of any
direct charges by Operator for its services or the provision by
Operator of its equipment for normal superintendence and maintenance of
such wells and related pipelines and facilities. Such operating fees
shall cover all normal, regularly recurring operating expenses for the
production, delivery and sale of natural gas, including without
limitation well tending, routine maintenance and adjustment, reading
meters, recording production, pumping, maintaining appropriate books
and records, preparing reports to the Developer and government
agencies, and collecting and disbursing revenues, but shall not cover
costs and expenses related to the (i) production and sale of oil, (ii)
collection and disposal of salt water or other liquids produced by the
wells, (iii) rebuilding of access roads, and (iv) purchase of
equipment, materials or third party services, which, subject to the
provisions of sub-section (c) of this Section 6, shall be paid by the
Developer in proportion to the share of the Working Interest owned by
the Developer in the wells. Any well which is temporarily abandoned or
shut-in continuously for the entire month shall not be considered a
producing well for purposes of determining the number of wells in such
month subject to the aforesaid operating fee.
(b) The monthly operating fee set forth in sub-section (a)
above may in the following manner be adjusted annually as of the first
day of January (the "Adjustment Date") each year beginning January l,
1999. Such adjustment, if any, shall not exceed the percentage
increase in the average weekly earnings of "Crude Petroleum, Natural
Gas, and Natural Gas Liquids" workers, as published by the U.S.
Department of Labor, Bureau of Labor Statistics, and shown in
Employment and Earnings Publication, Monthly Establishment Data, Hours
and Earning Statistical Table C-2, Index Average Weekly Earnings of
"Crude Petroleum, Natural Gas, and Natural Gas Liquids" workers, SIC
Code #131-2, or any successor index thereto, since January l, 1996, in
the case of the first adjustment, and since the previous Adjustment
Date, in the case of each subsequent adjustment.
(c) Without the prior written consent of the Developer,
pursuant to a written estimate submitted by Operator, Operator shall
not undertake any single project or incur any extraordinary cost with
respect to any well being produced hereunder reasonably estimated to
result in an expenditure of more than $5,000, unless such project or
extraordinary cost is necessary to safeguard persons or property or to
protect the well or related facilities in the event of a sudden
emergency. In no event, however, shall the Developer be required to pay
for any project or extraordinary cost arising from the negligence or
misconduct of Operator, its agents, servants, employees, contractors,
licensees or invitees. All extraordinary costs incurred and the cost of
projects undertaken with respect to a well being produced hereunder
shall be billed at the invoice cost of third party services performed
or materials purchased together with a reasonable charge by Operator
for services performed directly by it, in proportion to the share of
the Working Interest owned by the Developer in the wells. Operator
shall have the right to require the Developer to pay in advance of
undertaking any such project all or a portion of the estimated costs
thereof in proportion to the share of the Working Interest owned by the
Developer in the wells.
(d) Developer shall have no interest in the pipeline gathering
system, which gathering system shall remain the sole property of
Operator and shall be maintained at Operator's sole cost and expense.
(e) Notwithstanding anything herein to the contrary, the
Developer shall have full responsibility for and bear all costs in
proportion to the share of the Working Interest owned by the Developer
in the wells with respect to obtaining price determinations under and
otherwise complying with the Natural Gas Policy Act of 1978 and the
implementing state regulations. Such responsibility shall include,
without limitation, preparing, filing, and executing all applications,
affidavits, interim collection notices, reports and other documents
necessary or appropriate to obtain price certification, to effect sales
of natural gas, or otherwise to comply with said Act and the
implementing state regulations. Operator agrees to furnish such
information and render such assistance as the Developer may reasonably
request in order to comply with said Act and the implementing state
regulations without charge for services performed by its employees.
(f) The Developer shall have the right to direct Operator to
plug and abandon any well which has been completed hereunder as a
producer, and Operator shall not plug and abandon any such well prior
to obtaining the written consent of the Developer; provided, however,
that if Operator in accordance with the generally accepted and
customary oil and gas field practices and techniques then prevailing in
the geographic area of the well location, determines that any such well
should be plugged and abandoned and makes a written request to the
Developer for authority to plug and abandon any such well and the
Developer fails to respond in writing to such request within forty-five
(45) days following the date of such request, then the Developer shall
be deemed to have consented to the plugging and abandonment of such
well(s). All costs and expenses related to plugging and abandoning the
wells which have been drilled and completed as producing wells
hereunder shall be borne and paid by the Developer in proportion to the
share of the Working Interest owned by the Developer in the wells. At
any time after three (3) years from the date each well drilled and
completed hereunder is placed into production, Operator shall have the
right to deduct each month from the proceeds of the sale of the
production from the well operated hereunder up to $200, in proportion
to the share of the Working Interest owned by the Developer in the
wells, for the purpose of establishing a fund to cover the estimated
costs of plugging and abandoning said well. All such funds shall be
deposited in a separate interest bearing escrow account for the account
of the Developer, and the total amount so retained and deposited shall
not exceed Operator's reasonable estimate of such costs.
7. Billing and Payment Procedure with Respect to Operation of
Wells; Records, Reports and Information.
(a) Operator shall promptly and timely pay and discharge on
behalf of the Developer, in proportion to the share of the Working
Interest owned by the Developer in the wells, all severance taxes,
royalties, overriding royalties, operating fees, pipeline gathering
charges and other expenses and liabilities payable and incurred by
reason of its operation of the wells in accordance with this Agreement
and shall pay, in proportion to the share of the Working Interest owned
by the Developer in the wells, on or before the due date any third
party invoices rendered to Operator with respect to such costs and
expenses; provided, however, that Operator shall not be required to pay
and discharge as aforesaid any such costs and expenses which are being
contested in good faith by Operator. Operator shall deduct the
foregoing costs and expenses from the Developer's share of the proceeds
of the oil and/or gas sold from the wells operated hereunder and shall
keep an accurate record of the Developer's account hereunder, showing
expenses incurred and charges and credits made and received with
respect to each well. In the event that such proceeds are insufficient
to pay said costs and expenses, Operator shall promptly and timely pay
and discharge the same, in proportion to the share of the Working
Interest owned by the Developer in the wells, and prepare and submit an
invoice to the Developer each month for said costs and expenses, such
invoice to be accompanied by the form of statement specified in
sub-section (b) below. Any such invoice shall be paid by the Developer
within ten (10) business days of its receipt.
(b) Operator shall disburse to the Developer, on a monthly
basis, the Developer's share of the proceeds received from the sale of
oil and/or gas sold from the wells operated hereunder, less (i) the
amounts charged to the Developer under sub-section (a) hereof, and (ii)
such amount, if any, withheld by Operator for future plugging costs
pursuant to sub-section (f) of Section 6. Each such disbursement made
and/or invoice submitted pursuant to sub-section (a) above shall be
accompanied by a statement itemizing with respect to each well (i) the
total production of oil and/or gas since the date of the last
disbursement or invoice billing period, as the case may be, and the
Developer's share thereof, (ii) the total proceeds received from any
sale thereof, and the Developer's share thereof, (iii) the costs and
expenses deducted from said proceeds and/or being billed to the
Developer pursuant to sub-section (a) above, (iv) the amount withheld
for future plugging costs, and (v) such other information as Developer
may reasonably request, including without limitation copies of all
third party invoices listed thereon for such period. Operator agrees to
deposit all proceeds from the sale of oil and/or gas sold from the
wells operated hereunder in a separate checking account maintained by
Operator, which account shall be used solely for the purpose of
collecting and disbursing funds constituting proceeds from the sale of
production hereunder.
(c) In addition to the statements required under sub-section
(b) above, Operator, within seventy-five (75) days after the completion
of each well drilled hereunder, shall furnish the Developer with a
detailed statement itemizing with respect to such well the total costs
and charges under Section 4(a) hereof and the Developer's share
thereof, and such information as is necessary to enable the Developer
(i) to allocate any extra costs incurred with respect to such well
between tangible and intangible and (ii) to determine the amount of
investment tax credit, if applicable.
(d) Upon request, Operator shall promptly furnish the
Developer with such additional information as it may reasonably
request, including without limitation geological, technical and
financial information, in such form as may reasonably be requested,
pertaining to any phase of the operations and activities governed by
this Agreement. The Developer and its authorized employees, agents and
consultants, including independent accountants shall, at Developer's
sole cost and expense, (i) upon at least ten (10) days' written notice
have access during normal business hours to all of Operator's records
pertaining to operations hereunder, including without limitation, the
right to audit the books of account of Operator relating to all
receipts, costs, charges and expenses under this Agreement, and (ii)
have access, at its sole risk, to any wells drilled by Operator
hereunder at all times to inspect and observe any machinery, equipment
and operations.
8. Operator's Lien.
(a) The Developer hereby grants Operator a first and preferred
lien on and security interest in the interest of the Developer covered
by this Agreement, and in the Developer's interest in oil and gas
produced and the proceeds thereof, and upon the Developer's interest in
materials and equipment, to secure the payment of all sums due from
Developer to Operator under the provisions of this Agreement.
(b) In the event that the Developer fails to pay any amount
owing hereunder by it to the Operator within the time limit for payment
thereof, Operator, without prejudice to other existing remedies, is
authorized at its election to collect from any purchaser or purchasers
of oil or gas and retain the proceeds from the sale of the Developer's
share thereof until the amount owed by the Developer, plus twelve
percent (12%) interest on a per annum basis and any additional costs
(including without limitation actual attorneys' fees and costs)
resulting from such delinquency, has been paid. Each purchaser of oil
or gas shall be entitled to rely upon Operator's written statement
concerning the amount of any default.
9. Successors and Assigns; Transfers; Appointment of Agent.
(a) This Agreement shall be binding upon and shall inure to
the benefit of the undersigned parties and their respective successors
and permitted assigns; provided, however, that Operator may not assign,
transfer, pledge, mortgage, hypothecate, sell or otherwise dispose of
any of its interest in this Agreement, or any of the rights or
obligations hereunder, without the prior written consent of the
Developer, except that such consent shall not be required in connection
with (i) the assignment of work to be performed for Operator by
subcontractors, it being understood and agreed, however, that any such
assignment to Operator's subcontractors shall not in any manner relieve
or release Operator from any of its obligations and responsibilities
under this Agreement, or (ii) any lien, assignment, security interest,
pledge or mortgage arising under or pursuant to Operator's present or
future financing arrangements, or (iii) the liquidation, merger,
consolidation or sale of substantially all of the assets of Operator or
other corporate reorganization; and provided, further, that in order to
maintain uniformity of ownership in the wells, production, equipment,
and leasehold interests covered by this Agreement, and notwithstanding
any other provisions to the contrary, the Developer shall not, without
the prior written consent of Operator, sell, assign, transfer,
encumber, mortgage or otherwise dispose of any of its interest in the
wells, production, equipment or leasehold interests covered hereby
unless such disposition encompasses either (i) the entire interest of
the Developer in all wells, production, equipment and leasehold
interests subject hereto or (ii) an equal undivided interest in all
such wells, production, equipment, and leasehold interests.
(b) Subject to the provisions of sub-section (a) above, any
sale, encumbrance, transfer or other disposition made by the Developer
of its interests in the wells, production, equipment, and/or leasehold
interests covered hereby shall be made (i) expressly subject to this
Agreement, (ii) without prejudice to the rights of the other party, and
(iii) in accordance with and subject to the provisions of the Lease.
(c) If at any time the interest of the Developer is divided
among or owned by co-owners, Operator may, at its discretion, require
such co-owners to appoint a single trustee or agent with full authority
to receive notices, reports and distributions of the proceeds from
production, to approve expenditures, to receive billings for and
approve and pay all costs, expenses and liabilities incurred hereunder,
to exercise any rights granted to such co-owners under this Agreement,
to grant any approvals or authorizations required or contemplated by
this Agreement, to sign, execute, certify, acknowledge, file and/or
record any agreements, contracts, instruments, reports, or documents
whatsoever in connection with this Agreement or the activities
contemplated hereby, and to deal generally with, and with power to
bind, such co-owners with respect to all activities and operations
contemplated by this Agreement; provided, however, that all such
co-owners shall continue to have the right to enter into and execute
all contracts or agreements for their respective shares of the oil and
gas produced from the wells drilled hereunder in accordance with
sub-section (c) of Section 11 hereof.
10. Insurance; Operator's Liability.
(a) Operator shall obtain and maintain at its own expense so
long as it is Operator hereunder all required Workmen's Compensation
Insurance and comprehensive general public liability insurance in
amounts and coverage not less than $1,000,000 per person per occurrence
for personal injury or death and $1,000,000 for property damage per
occurrence, which insurance shall include coverage for blow-outs and
total liability coverage of not less than $10,000,000. Subject to the
aforesaid limits, the Operator's general public liability insurance
shall be in all respects comparable to that generally maintained in the
industry with respect to services of the type to be rendered and
activities of the type to be conducted under this Agreement; Operator's
general public liability insurance shall, if permitted by Operator's
insurance carrier, (i) name the Developer and all of Developer's
Investor General Partners as additional insured parties, and (ii)
provide that at least thirty (30) days' prior notice of cancellation
and any other adverse material change in the policy shall be given to
the Developer and its Investor General Partners; provided, that the
Developer shall reimburse Operator for the additional cost, if any, of
including it and its Investor General Partners as additional insured
parties under the Operator's insurance. Current copies of all policies
or certificates thereof shall be delivered to the Developer upon
request. It is understood and agreed that Operator's insurance coverage
may not adequately protect the interests of the Developer hereunder and
that the Developer shall carry at its expense such excess or additional
general public liability, property damage, and other insurance, if any,
as the Developer deems appropriate.
(b) Operator shall require all of its subcontractors to carry
all required Workmen's Compensation Insurance and to maintain such
other insurance, if any, as Operator in its discretion may require.
(c) Operator's liability to the Developer as Operator
hereunder shall be limited to, and Operator shall indemnify the
Developer and hold it harmless from, claims, penalties, liabilities,
obligations, charges, losses, costs, damages or expenses (including but
not limited to reasonable attorneys' fees) relating to, caused by or
arising out of (i) the noncompliance with or violation by Operator, its
employees, agents, or subcontractors of any local, state or federal
law, statute, regulation, or ordinance; (ii) the negligence or
misconduct of Operator, its employees, agents or subcontractors; or
(iii) the breach of or failure to comply with any provisions of this
Agreement.
11. Internal Revenue Code Election; Relationship of Parties;
Right to Take Production in Kind.
(a) With respect to this Agreement, each of the parties hereto
elects, under the authority of Section 761 (a) of the Internal Revenue
Code of 1986, as amended, to be excluded from the application of all of
the provisions of Subchapter K of Chapter 1 of Sub Title A of the
Internal Revenue Code of 1986, as amended. If the income tax laws of
the state or states in which the property covered hereby is located
contain, or may hereafter contain, provisions similar to those
contained in the Subchapter of the Internal Revenue Code of 1986, as
amended, referred to under which a similar election is permitted, each
of the parties agrees that such election shall be exercised. Beginning
with the first taxable year of operations hereunder, each party agrees
that the deemed election provided by Section 1.761-2(b)(2)(ii) of the
Regulations under the Internal Revenue Code of 1986, as amended, will
apply; and no party will file an application under Section 1.761-2
(b)(3)(i) and (ii) of said Regulations to revoke such election. Each
party hereby agrees to execute such documents and make such filings
with the appropriate governmental authorities as may be necessary to
effect such election.
(b) It is not the intention of the parties hereto to create,
nor shall this Agreement be construed as creating, a mining or other
partnership or association or to render the parties liable as partners
or joint venturers for any purpose. Operator shall be deemed to be an
independent contractor and shall perform its obligations as set forth
herein or as otherwise directed by the Developer.
(c) Subject to the provisions of Section 8 hereof, the
Developer shall have the exclusive right to sell or dispose of its
proportionate share of all oil and gas produced from the wells to be
drilled hereunder, exclusive of production which may be used in
development and producing operations, production unavoidably lost, and
production used to fulfill any free gas obligations under the terms of
the applicable Lease or Leases; and Operator shall not have any right
to sell or otherwise dispose of such oil and gas. The Developer shall
have the exclusive right to execute all contracts relating to the sale
or disposition of its proportionate share of the production from the
wells drilled hereunder. Developer shall have no interest in any gas
purchase agreements of Operator, except the right to receive
Developer's share of the proceeds received from the sale of any gas or
oil from wells developed hereunder. The Developer agrees to designate
Operator or Operator's designated bank agent as the Developer's
collection agent in any such contract. Upon request, Operator shall
render assistance in arranging such sale or disposition and shall
promptly provide the Developer with all relevant information which
comes to Operator's attention regarding opportunities for sale of
production. In the event Developer shall fail to make the arrangements
necessary to take in kind or separately dispose of its proportionate
share of the oil and gas produced hereunder, Operator shall have the
right, subject to the revocation at will by the Developer, but not the
obligation, to purchase such oil and gas or sell it to others at any
time and from time to time, for the account of the Developer at the
best price obtainable in the area for such production, however,
Operator shall have no liability to Developer should Operator fail to
market such production. Any such purchase or sale by Operator shall be
subject always to the right of the Developer to exercise at any time
its right to take in kind, or separately dispose of, its share of oil
and gas not previously delivered to a purchaser. Any purchase or sale
by Operator of any other party's share of oil and gas shall be only for
such reasonable periods of time as are consistent with the minimum
needs of the Industry under the particular circumstance, but in no
event for a period in excess of one (1) year.
12. Force Majeure.
(a) If Operator is rendered unable, wholly or in part, by
force majeure (as hereinafter defined) to carry out its obligations
under this Agreement, the Operator shall give to the Developer prompt
written notice of the force majeure with reasonably full particulars
concerning it; thereupon, the obligations of the Operator, so far as it
is affected by the force majeure, shall be suspended during but no
longer than, the continuance of the force majeure. Operator shall use
all reasonable diligence to remove the force majeure as quickly as
possible to the extent the same is within reasonable control.
(b) The term "force majeure" shall mean an act of God, strike,
lockout, or other industrial disturbance, act of the public enemy, war,
blockade, public riot, lightning, fire, storm, flood, explosion,
governmental restraint, unavailability of equipment or materials, plant
shut-downs, curtailments by purchasers and any other causes whether of
the kind specifically enumerated above or otherwise, which directly
precludes Operator's performance hereunder and is not reasonably within
the control of the Operator.
(c) The requirement that any force majeure shall be remedied
with all reasonable dispatch shall not require the settlement of
strikes, lockouts, or other labor difficulty affecting the Operator,
contrary to its wishes; the method of handling all such difficulties
shall be entirely within the discretion of the Operator.
13. Term.
This Agreement shall become effective when executed by Operator and the
Developer and, except as provided in sub-section (c) of Section 3,
shall continue and remain in full force and effect for the productive
lives of the wells being operated hereunder.
14. Governing Law and Invalidity.
This Agreement shall be governed by, construed and interpreted in
accordance with the laws of the Commonwealth of Pennsylvania. The
invalidity or unenforceability of any particular provision of this
Agreement shall not affect the other provisions hereof, and this
Agreement shall be construed in all respects as if such invalid or
unenforceable provision were omitted.
15. Integration.
This Agreement, including the Exhibits hereto, constitutes and
represents the entire understanding and agreement of the parties with
respect to the subject matter hereof and supersedes all prior
negotiations, understandings, agreements, and representations relating
to the subject matter hereof. No change, waiver, modification, or
amendment of this Agreement shall be binding or of any effect unless in
writing duly signed by the party against which such change, waiver,
modification, or amendment is sought to be enforced.
16. Waiver of Default or Breach.
No waiver by any party hereto to any default of or breach by any other
party under this Agreement shall operate as a waiver of any future
default or breach, whether of like or different character or nature.
17. Notices.
Unless otherwise provided herein, all notices, statements, requests, or
demands which are required or contemplated by this Agreement shall be
in writing and shall be hand-delivered or sent by registered or
certified mail, postage prepaid, to the following addresses until
changed by certified or registered letter so addressed to the other
party:
(i) If to Atlas, to:
Atlas Resources, Inc.
311 Rouser Road
Moon Township, Pennsylvania 15108
Attention: President
(ii) If to Developer, to:
Atlas-Energy for the Nineties-Public #6 Ltd.
c/o Atlas Resources, Inc.
311 Rouser Road
Moon Township, Pennsylvania 15108
Notices which are served by registered or certified mail upon the
parties hereto in the manner provided in this Section shall be deemed
sufficiently served or given for all purposes under this Agreement at
the time such notice shall be mailed as provided herein in any post
office or branch post office regularly maintained by the United States
Postal Service or any successor to the functions thereof. All payments
hereunder shall be hand-delivered or sent by United States mail,
postage prepaid to the addresses set forth above until changed by
certified or registered letter so addressed to the other party.
18. Interpretation.
Whenever this Agreement makes reference to "this Agreement" or to any
provision "hereof," or words to similar effect, such reference shall be
construed to refer to the within instrument unless the context clearly
requires otherwise. The titles of the Sections herein have been
inserted as a matter of convenience of reference only and shall not
control or affect the meaning or construction of any of the terms and
provisions hereof. As used in this Agreement, the plural shall include
the singular and the singular shall include the plural whenever
appropriate.
19. Counterparts.
The parties hereto may execute this Agreement in any number of separate
counterparts, each of which, when executed and delivered by the parties
hereto, shall have the force and effect of an original; but all such
counterparts shall be deemed to constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement under their respective seals as of the day and year first
above written.
Attest
/s/ Bruce M. Wolf, Secretary
[Corporate Seal]
Attest
Secretary
[Corporate Seal]
ATLAS RESOURCES, INC.
By: /s/J.R. O'Mara, President
ATLAS-ENERGY FOR NINETIES-PUBLIC #6 LTD.
By its Managing General Partner:
ATLAS RESOURCES, INC.
By: /s/J. R. O; Mara, President
===========================================================
EXHIBIT 23(a)
Consent of McLaughlin & Courson
McLaughlin & Courson
Certified Public Accountants
2002 Law & Finance Building
Pittsburgh, PA 15219
Phone 412-261-0630
CONSENT OF INDEPENDENT AUDITOR
ATLAS-ENERGY FOR THE NINETIES-PUBLIC #6 LTD.
The firm, as Independent Certified Public Accountants, hereby consents
to the use of the audit report dated February 10, 1998, on the balance
sheet of Atlas-Energy for the Nineties-Public #6 Ltd., a Pennsylvania
Limited Partnership as of December 31, 1997, and the related statements
of income, changes in partners' capital accounts and cash flows for the
year then ended, in the U.S. Securities and Exchange Commission Form
10-KSB and any amendments thereto for Atlas-Energy for the Nineties-
Public #6 Ltd.
McLaughlin & Courson
Certified Public Accountants
/s/McLaughlin & Courson
March 30, 1998
Pittsburgh, Pennsylvania
======================================================================
PART F/S
ITEM 13 FINANCIAL STATEMENTS.
INDEPENDENT AUDITORS' REPORT
McLaughlin & Courson
2002 Law & Finance Building
Pittsburgh, PA 15219
To the Partners
Atlas-Energy for the Nineties-Public #6 Ltd.
A Pennsylvania Limited Partnership
We have audited the accompanying balance sheet of Atlas-Energy
for the Nineties-Public #6 Ltd., A Pennsylvania Limited Partnership
as of December 31, 1997 and the related statements of income and
changes in partners' capital accounts and cash flows for the period
July 1, 1997 (date of formation) to December 31, 1997. These
financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position of
Atlas-Energy for the Nineties-Public #6 Ltd., A Pennsylvania
Limited Partnership as of December 31, 1997 and the results of its
operations, changes in partners' capital accounts and cash flows
for the period July 1, 1997 (date of formation) to December 31,
1997 in conformity with generally accepted accounting principles.
/s/ McLaughlin & Courson
Pittsburgh, Pennsylvania
February 10, 1998
- ------------------------------------------------------------------
BALANCE SHEET
ATLAS-ENERGY FOR THE NINETIES-PUBLIC #6 LTD.
A PENNSYLVANIA LIMITED PARTNERSHIP
DECEMBER 31, 1997
ASSETS
Cash $ 19,459
Interest receivable 18,076
Oil and gas well drilling contracts and leases 10,384,508
Organizational and syndication costs 1,485,154
--------------
$11,907,197
==============
LIABILITIES AND PARTNERS' CAPITAL
Advance from Managing General Partner $ 15,000
Partners' capital 11,892,197
-------------
$11,907,197
=============
STATEMENT OF INCOME AND CHANGES IN PARTNERS' CAPITAL ACCOUNTS
FROM JULY 1, 1997 (Date of Formation) TO DECEMBER 31, 1997
MANAGING
GENERAL OTHER
PARTNER PARTNERS TOTALS
REVENUE
Interest income $ -0- $ 22,535 $ 22,535
PARTNERS' CAPITAL CONTRIBUTIONS
Cash -0- 9,901,025 9,901,025
Organizational and syndications costs 1,485,154 -0- 1,485,154
Tangible costs 327,063 -0- 327,063
Leasehold costs 156,420 -0- 156,420
---------- --------- -----------
PARTNERS' CAPITAL AT END OF YEAR $1,968,637 $9,923,560 $11,892,197
========== =========== ===========
See notes to financial statements
STATEMENT OF CASH FLOWS
ATLAS-ENERGY FOR THE NINETIES-PUBLIC #6 LTD.
A PENNSYLVANIA LIMITED PARTNERSHIP
FROM JULY 1, 1997 (Date of Formation) TO DECEMBER 31, 1997
Increase ( Decrease ) in Cash
Cash flows from operating activities:
Interest income $ 22,535
Adjustments to reconcile net income to net cash
provided by operating activities:
Increase in interest receivable (18,076)
Increase in advance from Managing General Partner 15,000
--------
Net cash provided by operating activities 19,459
Cash flows used in investing activities:
Oil and gas well drilling contracts (9,901,025)
Cash flows from financing activities:
Partners' capital contributions 9,901,025
------------
Cash at December 31, 1997 $ 19,459
=============
Supplemental cash flow information:
Assets contributed by Managing General Partner:
Tangible costs $ 327,063
Organizational and syndication costs 1,485,154
Lease costs 156,420
-----------
$1,968,637
===========
See notes to financial statements
NOTES TO FINANCIAL STATEMENTS
1.ORGANIZATION AND DESCRIPTION OF BUSINESS
Atlas-Energy for the Nineties-Public #6 Ltd. (the "Partnership"), is a
Pennsylvania limited partnership which includes Atlas Resources, Inc.
("Atlas"), of Pittsburgh, Pennsylvania, as Managing General Partner and
Operator, and 393 investors as either Limited Partners or Investor General
Partners. The Partnership was funded to drill gas wells located primarily in
Mercer County, Pennsylvania.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Financial statements are prepared in accordance with generally accepted
accounting principles.
The Partnership uses the successful efforts method of accounting for oil
and gas producing activities. Costs to acquire mineral interests in oil and
gas properties and to drill and equip wells are capitalized.
Capitalized costs are expensed at unit cost rates calculated annually
based on the estimated volume of recoverable gas and the related costs.
Oil and gas properties are periodically assessed for impairment of value,
and losses recognized at the time of impairment.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
3. FEDERAL INCOME TAXES
The Partnership is not treated as a taxable entity for federal income tax
purposes. Any item of income, gain, loss, deduction or credit flows through
to the partners as though each partner had incurred such item directly. As a
result, each partner must take into account his pro rata share of all items
of partnership income and deductions in computing his federal income tax
liability. Many provisions of the federal income tax laws are complex and
subject to various interpretations.
4. PARTICIPATION IN REVENUES AND COSTS
Atlas and the other partners will generally participate in revenues and
costs in the following manner:
OTHER
ATLAS PARTNERS
Organization and offering costs 100 % 0 %
Lease costs 100 % 0 %
Revenues 25 % 75 %
Direct operating costs 25 % 75 %
Intangible drilling costs 0 % 100 %
Tangible costs 14 % 86 %
Tax deductions:
Intangible drilling and development costs 0 % 100 %
Depreciation 14 % 86 %
Depletion allowances 25 % 75 %
5. TRANSACTIONS WITH ATLAS AND ITS AFFILIATES
The Partnership has entered into the following significant transactions
with Atlas and its affiliates for wells in the Mercer County Area.
Drilling contracts to drill and complete Partnership wells at a cost
of $37.39 per foot on completed wells.
Administrative costs at $75 per well per month
Well supervision fees initially of $275 per well per month plus the
cost of third party materials and services
Reimbursement of gas transportation and marketing charges
Anthem Securities, an affiliated company, participated in the sale of
the subscriptions to investors.
6. PURCHASE COMMITMENT
Subject to certain conditions, investor partners may present their
interests beginning in 2001 for purchase by Atlas. Atlas is not obligated to
purchase more than 5% of the units in any calendar year.
7. SUBORDINATION OF MANAGING GENERAL PARTNER'S REVENUE SHARE
Atlas will subordinate a part of its partnership revenues in an amount up
to 10% of production revenues of the Partnership net of related operating
costs, administrative costs and well supervision fees to the receipt by
participants of cash distributions from the Partnership equal to at least 10%
of their agreed subscriptions, determined on a cumulative basis, in each of
the first five years of Partnership operations, commencing with the first
distribution of revenues to the Participants.
8. INDEMNIFICATION
In order to limit the potential liability of the investor general
partners, Atlas and The Atlas Group, Inc. (parent company of Atlas) have
agreed to indemnify each investor general partner from any liability incurred
which exceeds such partner's share of Partnership assets.
================================================================
List "A"
Prospects deleted by Managing Genaral Partner
Well Name
George #2
Kaltenbaugh #2
Kingery #2
McCartney #1
Oakes #3
Plants #1
Rick #1
Roman #1
Tenney U. #1
Wiese #1
Whyte #4
Williams #4
=======================================================
LIST "B"
Replacement Prospects added by Managing General Partner
Well Name
Wilson #5
Malaniak Unit #1
Tait #6
Byler Unit #20
Reed #3
R. McKean #3
R. McKean #1-122
Troples #1
Lehman #1
King #3
Lapinski Unit #3
Byler #21
Lang Unit #1
Martin #2
S.V. Beagle Club #1
Minteer #1
Byler #29
Byler #24
Jordon #4
Gibson #2
Byler #31
Seamans #3
Hostetler #5
W. Resv Spt Club
Wengerf Unit #2A
Byler Unit #26
Byler #25
Byers #2
North #3
Vandervort #1
Brocklehurst #3
Oakes Unit #2
Seamans #2
==========================================================
LIST "C"
Partnership's NWI in Prospects as of March 31, 1998
WELL
NO. WELL NAME NWI
8106 Wilson #5 100.00%
8101 Byler #18 50.00%
8087 McDowell #16 100.00%
8112 Kempf #1 100.00%
8139 Byler #19 50.00%
8088 McDowell #17 100.00%
8146 Malaniak Unit #1 100.00%
8151 Tait #6 100.00%
8148 Piepenhagen #3 50.00%
8140 Byler Unit #20 50.00%
8115 Piepenhagen #2 100.00%
8172 Reed #3 100.00%
8144 Ferris #1 100.00%
8143 Detweiler #4 100.00%
8114 Palmer #2 100.00%
8128 Stallsmith #1 100.00%
8135 R. McKean #3 50.00%
8116 Bentley #1 100.00%
8113 R. McKean #1-122 50.00%
8201 Troples #1 100.00%
8169 Lehman #1 100.00%
8103 King #3 50.00%
8061 Hissom #2 50.00%
8192 Lapinski Unit #3 100.00%
8098 Burk #1 100.00%
8137 Byler #21 50.00%
8211 Lang Unit #1 100.00%
8194 Martin #2 100.00%
8138 Bentley Unit #2 100.00%
7985 Plummer Unit #1 100.00%
8174 S. V. Beagle Club # 100.00%
8205 Root #2 100.00%
8090 Minteer #1 50.00%
8182 Byler #29 100.00%
8141 McKean #2 100.00%
8210 Jenkins Unit #2 100.00%
8158 Byler #24 50.00%
8150 Jordan #4 50.00%
8104 Gibson #2 50.00%
8203 Kennedy #2 100.00%
8137 Byler #31 100.00%
8206 Winder #3 100.00%
8197 Seamans #3 100.00%
8168 Hostetler #5 50.00%
8152 W Resv Spt Clb 50.00%
8142 McKean #3 100.00%
8177 Wengerd Unit #2A 100.00%
8179 Byler Unit #26 50.00%
8204 Byler #25 100.00%
8215 Byers #2 50.00%
8147 North #3 50.00%
8129 Vandervort #1 100.00%
8200 Brocklehurst #3 50.00%
Oakes Unit #2 50.00%
Seamans #2 45.00%
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