<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, DC. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 or 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended JUNE 30, 1995 Commission file number 0-10697
DORCHESTER HUGOTON, LTD.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
Texas 75-1829064
(State or other jurisdiction of Incorporation or organization) (I.R.S. Employer Identification No.)
</TABLE>
9696 Skillman Street, Suite 320-LB 42, Dallas, Texas 75243-8200
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (214) 340-3443
None
Former name, former address and former fiscal
year, if changed since last report
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 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
--- ---
As of July 31, 1995, 10,744,380 Depositary Receipts for Units of Limited
Partnership Interest were outstanding.
Page 1 of 11
<PAGE> 2
DORCHESTER HUGOTON, LTD.
(A Texas Limited Partnership)
QUARTERLY REPORT ON FORM 10-Q
JUNE 30, 1995
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Condensed Balance Sheets as of June 30, 1995 and December 31,
1994 (Unaudited)
Condensed Statements of Earnings for the Three and Six Months
Ended June 30, 1995 and 1994 (Unaudited)
Condensed Statements of Cash Flows for the Six Months Ended
June 30, 1995 and 1994 (Unaudited)
Notes to Condensed Financial Statements (Unaudited)
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
Item 5. Other Information.
Item 6. Exhibits and Reports on Form 8-K.
SIGNATURES
Page 2 of 11
<PAGE> 3
DORCHESTER HUGOTON, LTD.
(A Texas Limited Partnership)
PART I
ITEM 1
CONDENSED BALANCE SHEETS
(Unaudited)
JUNE 30, 1995 AND DECEMBER 31, 1994
(In Thousands of Dollars)
<TABLE>
<CAPTION>
JUNE 30, 1995 DECEMBER 31, 1994
------------- -----------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and temporary cash investments $ -0- $ -0-
Investments - available for sale 1,907 1,640
Accounts receivable 1,556 3,128
Prepaid expenses and other current assets 199 88
---------- ----------
TOTAL CURRENT ASSETS 3,662 4,856
NET PROPERTY AND EQUIPMENT 13,725 13,993
---------- ----------
TOTAL ASSETS $ 17,387 $ 18,849
========== ==========
LIABILITIES AND PARTNERSHIP CAPITAL
CURRENT LIABILITIES:
Accounts payable and other current liabilities $ 787 $ 839
Production and property taxes payable 193 254
Royalties payable 188 272
Distributions payable to Unitholders 1,846 1,865
---------- ----------
TOTAL CURRENT LIABILITIES 3,014 3,230
Long term debt 525 1,850
---------- ----------
TOTAL LIABILITIES 3,539 5,080
PARTNERSHIP CAPITAL 13,848 13,769
---------- ----------
TOTAL LIABILITIES AND PARTNERSHIP CAPITAL $ 17,387 $ 18,849
========== ==========
</TABLE>
The accompanying condensed notes are an
integral part of these financial statements.
Page 3 of 11
<PAGE> 4
DORCHESTER HUGOTON, LTD.
(A Texas Limited Partnership)
CONDENSED STATEMENTS OF EARNINGS
(Unaudited)
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1995 AND 1994
(In Thousands of Dollars)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
--------------------- ---------------------
1995 1994 1995 1994
------ ------ ------ ------
<S> <C> <C> <C> <C>
NET OPERATING REVENUES $2,974 $2,601 $6,285 $6,266
------ ------ ------ ------
COSTS AND EXPENSES:
Operating, including production taxes 825 561 1,597 1,262
Depletion, depreciation and amortization 296 148 695 333
General and administrative 143 123 276 248
Management fees 92 64 188 138
Interest 27 1 70 1
Other income, net (22) (42) (44) (89)
------ ------ ------ ------
TOTAL COSTS AND EXPENSES 1,361 855 2,782 1,893
------ ------ ------ ------
NET EARNINGS $1,613 $1,746 $3,503 $4,373
====== ====== ====== ======
NET EARNINGS PER UNIT (IN DOLLARS) $ 0.15 $ 0.16 $ 0.32 $ 0.40
====== ====== ====== ======
</TABLE>
The accompanying condensed notes are an
integral part of these financial statements.
Page 4 of 11
<PAGE> 5
DORCHESTER HUGOTON, LTD.
(A Texas Limited Partnership)
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1994
(In Thousands of Dollars)
<TABLE>
<CAPTION>
1995 1994
------------ -----------
<S> <C> <C>
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES $ 5,540 $ 7,657
------------ -----------
CASH FLOWS USED IN INVESTING ACTIVITIES:
Purchases of property and equipment, net of retirements (452) (3,682)
Cash received on sale of other property and equipment 18 -0-
------------ -----------
CASH FLOWS USED IN INVESTING ACTIVITIES (434) (3,682)
CASH FLOWS USED IN FINANCING ACTIVITIES:
Distributions paid to Unitholders' (3,708) (3,708)
Additions to long term debt -0- 100
Reductions of long term debt (1,325) (25)
Other (73) -0-
------------ -----------
CASH FLOWS USED IN FINANCING ACTIVITIES (5,106) (3,633)
------------ -----------
INCREASE IN CASH AND TEMPORARY CASH INVESTMENTS -0- 342
CASH AND TEMPORARY CASH INVESTMENTS AT JANUARY 1, -0- 2,966
------------ -----------
CASH AND TEMPORARY CASH INVESTMENTS AT JUNE 30, $ -0- $ 3,308
============ ===========
</TABLE>
The accompanying condensed notes are an
integral part of these financial statements.
Page 5 of 11
<PAGE> 6
DORCHESTER HUGOTON, LTD.
(A Texas Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
1. The condensed financial statements reflect all adjustments (consisting
only of normal and recurring adjustments) which are, in the opinion of
management, necessary for a fair presentation of Dorchester Hugoton,
Ltd.'s (the "Partnership's") financial position and operating results
for the interim periods. Interim period results are not necessarily
indicative of the results for the calendar year. Please refer to
Management's Discussion and Analysis of Financial Condition and
Results of Operations for additional information. The weighted
average number of Units outstanding for each of the periods was
10,744,380.
2. The Partnership's Oklahoma natural gas production sold under the 1946
Gas Purchase Contract, as amended, (the "Contract") to Natural Gas
Pipeline Company of America or its assigns (collectively referred to
as "NGPL") was also subject to a June 16, 1982 Gas Processing
Agreement (the "Agreement") between the Partnership and Parker &
Parsley Petroleum Company entities (successor to Damson Oil
Corporation and Dorchester Master Limited Partnership) (collectively
referred to as "P&P"). As a result, the Partnership's Oklahoma gas
production was processed in P&P's Hooker, Oklahoma gas processing
plant where natural gas liquids were extracted and the remaining gas
("residue gas") was delivered and sold to NGPL at the plant outlet.
The extraction of natural gas liquids requires the consumption of some
gas as fuel and the extraction itself shrinks the gas production in
both volume and heating value (referred to as "fuel and shrinkage").
The Agreement provided, among other things, that P&P operate the
Partnership's gas gathering pipelines, that P&P retain the natural gas
liquids extracted, and that the Partnership would receive for fuel and
shrinkage incurred the value of the gas produced at the wellhead
(including severance taxes) less amounts received for residue gas
sales to NGPL. The Agreement terminated upon termination of the
Partnership's Contract with NGPL on May 1, 1994.
On May 1, 1990, the Partnership instituted legal action in Wharton
County, Texas District Court against NGPL seeking cancellation of the
Contract and damages. In early December, 1992, the Partnership
settled its litigation against NGPL and amended the Contract. The
amended Contract provided that NGPL would pay for the residue gas from
the Partnership's Oklahoma properties at an indexed market price. The
Contract was subsequently terminated by NGPL effective May 1, 1994.
The processor of the Partnership's Oklahoma gas, P&P, previously
intervened in the litigation in Wharton County, Texas claiming certain
rights under the Contract, the Agreement and to the Partnership's gas
gathering system in Oklahoma.
In 1986, pursuant to a preferential right to purchase in an August 23,
1982 Operating Agreement between the Partnership and a predecessor to
P&P, the Partnership acquired additional interests in Texas County,
Oklahoma (the "1986 Transaction"). On November 2, 1993, the Oklahoma
Court of Appeals affirmed the decision of the Texas County, Oklahoma
District Court granting the Partnership quiet title to all personal
and real property interests acquired by the Partnership in the 1986
Transaction, including a 20% interest in the Texas County, Oklahoma
leases and all of the gas pipeline gathering system. P&P continues to
attempt to dispute the impact of that decision. Additionally, on
April 20, 1994 the Partnership was granted an injunction by the Texas
County, Oklahoma District Court to enjoin P&P from interfering
with the Partnership's May 1, 1994 operation of low pressure gas
pipeline gathering facilities. At present, P&P has filed an appeal
seeking reversal of the District Court's injunction rulings. Also on
November 2, 1993, the Court of Appeals remanded, for a new trial, a
1990 jury finding of fraud which had awarded the Partnership
$4,715,326 related to the 1986 Transaction. The Oklahoma Supreme
Court granted certiorari on March 21, 1994. On June 19, 1995, the
Oklahoma Supreme Court withdrew and denied certiorari. Consequently,
the sole issue of fraud by P&P will be retried in Texas County,
Oklahoma. No retrial date has been set. Additionally, on January 10,
1994 the Oklahoma Court of Appeals decision became final which had
reversed a judgment awarding the Partnership $724,082 based on P&P's
underpayment for fuel and shrinkage at the Hooker gas processing plant
during the period of November 1988 through March 1991. Subsequently,
P&P was awarded and received $91,402 in attorney's fees from the
Partnership. None of the Court of Appeals' decisions are expected to
have any material adverse affect on the Partnership's financial
position or operating results. The Partnership has not recognized any
of the prior judgment amounts in its favor in it's financial
statements.
Page 6 of 11
<PAGE> 7
DORCHESTER HUGOTON, LTD.
(A Texas Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
(Continued)
On December 22, 1993 the Texas County, Oklahoma District Court issued
a partial summary judgment with respect to disputed matters between
the Partnership and P&P regarding gathering and processing the
Partnership's Oklahoma gas and the Agreement. The partial summary
judgment ruled that (1) the Partnership owns the Oklahoma gas
pipeline gathering system, (2) there are no processing rights other
than the Agreement, whereby P&P gathers and processes the
Partnership's Oklahoma gas, (3) the Agreement was still in effect, and
(4) payments for fuel and shrinkage under the Agreement are to be
based upon the same price per MMBTU as paid the Partnership for its
Oklahoma gas sales plus applicable taxes. The Partnership anticipates
P&P will appeal the Court's summary judgment decisions regarding these
matters.
On May 1, 1994 the Agreement terminated concurrently with the
termination of the Partnership's 1946 Gas Purchase Contract with NGPL.
On August 26, 1994, P&P and the Partnership stipulated by agreement
that (among other issues) the amount of underpayment due the
Partnership for fuel and shrinkage during the period January 1993
through April 1994 to be either $4,837,046 or $6,558,036 depending
upon the Court's determination of proper severance tax applicability.
P&P continues to dispute any underpayment. A hearing including these
issues was conducted October 18, 1994 and a decision by the Court is
pending.
Through January 25, 1994, the Wharton County, Texas District Court
ruled that (1) P&P is not liable to the Partnership for excess
extraction of natural gas liquids prior to January 1, 1993 (2) the
1982 Gas Processing Agreement expired on January 1, 1993, and (3) P&P
is not a party to the Partnership's contract covering Oklahoma gas
sales. Issues of ownership of the gas gathering system and any
non-contractual gas processing rights in Oklahoma were dismissed for
various reasons including lack of subject matter jurisdiction. All
other remaining issues were dismissed and attorney's fees in the
amount of $208,000 were awarded to P&P. Both the Partnership and P&P
are in the process of appealing portions of the Court's decisions and
the Partnership has provided a supersedeas bond in the amount of
$242,000 related to attorneys fees with prospective interest.
On May 11, 1994 the Partnership instituted legal action in Texas
County, Oklahoma District Court against P&P for breach of the
preferential right to purchase clause in an August 23, 1982 Operating
Agreement between the Partnership and a predecessor to P&P. A
production payment and a right to participate in new wells were
reserved by P&P predecessors in their June, 1986 sale of interests in
Texas County, Oklahoma properties to the Partnership. The Partnership
is contesting conveyances made between P&P's predecessors (Damson and
Dorchester Master Limited Partnership) and P&P with respect to the
production payment and participation right. The Partnership is
requesting such production payment and participation right be subject
to specific performance enabling exercise of the Partnership's rights
under the preferential right to purchase. Generally the right to
participate in new wells is limited to a maximum working interest of
5%. At present, the Partnership believes no wells have been drilled
which would be subject to such participation. A production payment
may be owed to P&P if the Partnership is unsuccessful. However, the
exact amount of any such payment that might be due is not currently
known. As of March 1, 1994, the amount that could be owed might range
between $600,000 to $1,000,000. Although not calculable, an estimated
additional range of $700,000 to $900,000 could be owed for the period
from March 1, 1994 through July 31, 1995. Future projections of any
production payment amount utilize annual calculations through February
based on a table of declining volumes and the amount that unknown
future gas prices exceed a table of rising prices. P&P has asserted
the production payment amount owed to be $1,394,505 through February
28, 1994. Should the Partnership successfully maintain the right to
purchase, the determination of whether to purchase would depend on the
purchase price which is unknown.
Page 7 of 11
<PAGE> 8
DORCHESTER HUGOTON, LTD.
(A Texas Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
(Continued)
On May 19, 1994 P&P instituted legal action in the 116th Judicial
District of Dallas County, Texas asserting that Dorchester Hugoton
owed and had not paid a production payment, had improperly failed to
allow P&P to participate in the 1993 drilling of a replacement well in
Texas County, Oklahoma and asserting other claims of tortious
interference and unfair competition, apparently by virtue of the
Partnership's operation of its low pressure gas pipeline. On July 11,
1994 the Dallas County District Court denied the Partnership's motion
to stay or abate due to identical claims in Oklahoma. On March 28,
1995, a motion by P&P for partial summary judgment was denied by the
Dallas court. By agreement with P&P all litigation in the Dallas
County, Texas suit has been deferred until completion of all identical
litigation in Texas County, Oklahoma. In Oklahoma, the trial
regarding the Partnership's right to exercise the preferential right
to purchase both the production payment and right to participate in
new wells awaits rescheduling by the Court. All other matters, such
as the amount to be paid in exercising the preferential right or the
amount of a production payment, if any, are delayed until issuance of
a ruling following the pending Oklahoma trial.
3. As a result of publicity by others regarding recent acquisitions and
proposed sales of Kansas and Oklahoma Hugoton gas reserves, during
July 1995 the Partnership requested Calhoun Engineering, Inc., its
independent petroleum engineering consulting firm, to study the proved
natural gas reserves in order to determine if the Partnership's
reserves were being stated on a basis comparable to other producers in
the Kansas/Oklahoma Hugoton fields. The study yielded a January 1,
1995 increase from 83,989 MMCF (millions of cubic feet) to 102,525
MMCF in the Partnership's proved developed natural gas reserves. The
increase is primarily the result of the use of a lower abandonment
pressure.
Proved natural gas reserves are estimated quantities which geological
and engineering data demonstrate with reasonable certainty to be
recoverable in future years from known reservoirs under existing
economic and operating conditions. Proved developed natural gas
reserves are reserves that can be expected to be recovered through
existing wells with existing equipment and operating methods. In a
gas reservoir, the pressure at each well declines as the well produces
gas. A lower abandonment pressure means the well is projected to
produce gas over a longer period of time and thus not be abandoned
until the lower pressure occurs. As a result of the study, the
Partnership's abandonment pressures are now believed to be similar to
pressures used by other producers in the Kansas/Oklahoma Hugoton
fields, and the revised reserves are therefore comparable to reserve
statements of others in the same fields.
4. On July 19, 1994 the Partnership entered into a $15,000,000 unsecured
revolving credit facility (the "Agreement") with Bank One, Texas,
N.A. The Agreement currently has a borrowing base of $4,250,000,
which will be re-evaluated by Bank One at least semi-annually. If, on
any such date, the aggregate amount of outstanding loans and letters
of credit exceed the current borrowing base as most recently
determined by Bank One, the Partnership is required to pay the excess.
This credit facility covers both cash advances and any letter of
credit that the Partnership may need, with interest being charged at
the base rate for Bank One, which was 8- 3/4% on August 7, 1995. All
amounts borrowed under this facility will become due and payable on
July 31, 1997. As of August 8, 1995, a letter of credit totaling
$242,000 was issued under the credit facility and the amount borrowed
was $1,800,000.
Page 8 of 11
<PAGE> 9
DORCHESTER HUGOTON, LTD.
(A Texas Limited Partnership)
PART I
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Net cash flows from operating activities during the three and six months ended
June 30, 1995 were $1,687,000 and $5,540,000, respectively, compared to
$4,593,000 and $7,657,000 for the same periods of 1994. Net cash flows for the
three months ended June 30, 1994 were sharply higher because of increased
accounts payable associated with the the construction of the Oklahoma
compression facility, which became operational in late 1994. The facility,
which cost just under $6,000,000 was completed in late 1994. Most of the
construction costs were funded out of cash flows, but some bank borrowings have
been utilized by the Partnership.
Remaining changes in three and six month cash flows from operating activities
between 1994 and 1995 are a result of timeliness of accounts receivable. The
Partnership has implemented improved payment terms under certain gas sales
agreements during the six months ended June 30, 1995 compared to the same
period of 1994. Additionally, cash flows are influenced by natural gas spot
market prices which are only slightly higher than the previous quarter and down
compared to the second quarter of 1994. Operating expenses continue to be
adversely impacted by costs of litigation.
The Partnership has available a $15,000,000 unsecured revolving credit facility
with a current borrowing base of $4,250,000. Please see Note 4 to the
financial statements for additional information. As of August 8, 1995, a
letter of credit totaling $242,000 was issued under the credit facility and the
amount borrowed was $1,800,000. The Partnership's cash position was zero on
December 31, 1994 and June 30, 1995 as a result of cash management practices
which minimize borrowings.
Working interest wellhead sales volumes (in MMCF) and weighted average BTU
adjusted sales prices per MCF were as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
------------------------------------- ---------------------
JUNE 30, MAR. 31 JUNE 30,
-------------------- ------ ---------------------
1995 1994 1995 1995 1994
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
SALES VOLUMES:
Oklahoma 1,397 1,055 1,728 3,125 2,599
Kansas 556 512 525 1,081 974
------ ------ ------ ------ ------
TOTAL 1,953 1,567 2,253 4,206 3,573
====== ====== ====== ====== ======
WEIGHTED AVERAGE BTU
ADJUSTED SALES PRICES:
Oklahoma $1.53 $1.56 $1.47 $ 1.50 $1.66
Kansas 1.47 1.86 1.40 1.44 2.00
OVERALL WEIGHTED AVERAGE $1.51 $1.65 $1.45 $ 1.48 $1.75
</TABLE>
Oklahoma natural gas production volumes were down during the second quarter
compared to the first quarter of 1995 due to state well tests but higher during
the second quarter compared to the same quarter of 1994. During May through
October of 1994, Oklahoma production was reduced while the new compression
facility was being constructed. The facility became operational on November 1,
1994. Kansas natural gas production volumes were up only slightly compared to
the previous quarter as well as the second quarter of 1994.
The Partnership has begun ordering equipment necessary to enable the existing
Kansas compression facility to handle greater gas volumes at lower pressures.
Additionally, the Partnership will install approximately 4 1/2 miles of
pipeline to receive gas from two of its wells that previously delivered gas
through pipelines of others. The total anticipated cost to the Partnership is
$800,000. The projects are scheduled for completion in October, 1995. The
Partnership recently drilled and completed one additional infill well in
Kansas. No significant increases in Kansas volumes are expected and there are
no current plans to drill any additional infill wells.
Page 9 of 11
<PAGE> 10
DORCHESTER HUGOTON, LTD.
(A Texas Limited Partnership)
PART I
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
Operating costs have increased compared to the second quarter of 1994 as a
result of additional costs related to the gathering and compressing of the
Oklahoma natural gas production. Such additional costs were previously borne
by others under a gas purchase contract (terminated by the gas purchaser
effective May 1, 1994) and by the processor who underpaid for fuel and
shrinkage, which reduced the Partnership's overall natural gas sales price.
Depreciation, depletion and amortization costs (collectively, "DD&A") have
increased significantly compared to the same quarter last year primarily as a
result of the addition of the Oklahoma compression facility. However, DD&A is
down this quarter compared to the first quarter of 1995 as a result of
increased natural gas reserves. As discussed in the Notes to Condensed
Financial Statements, the Partnership's natural gas reserves have been revised
so as to be on a basis comparable to other producers in Oklahoma/Kansas Hugoton
fields. The resulting increase in recoverable reserves, from 84 BCF (billion
cubic feet) to 103 BCF is the first such revision of this type by the
Partnership since 1982. The Partnership does not anticipate any further
material revisions in the foreseeable future. Although not presently
calculable, the Partnership anticipates that generally the Unitholder's DD&A
may decrease from 1994 which might increase taxable income in 1995.
The Partnership anticipates delivery of gas from its Oklahoma compression
facilities to Williams Gas Processing - Mid Continent Region Co., a subsidiary
of the Williams Companies, Inc. beginning in November, 1995. Williams Field
Services Company will subsequently process the gas at its newly constructed
plant near Baker, Oklahoma and return the gas as directed by the Partnership to
the available transmission pipelines at the plant outlet which include Williams
Natural Gas Company, Panhandle Eastern Pipe Line Company, and Natural Gas
Pipeline Company of America. The gas returned to the Partnership will be of
improved quality, including having the contaminant nitrogen removed.
As discussed in the Partnership's 1994 Form 10-K and in the Notes to Condensed
Financial Statements within this Form 10- Q, the litigation with various
entities of Parker & Parsley Petroleum Company is continuing. These litigation
issues must be resolved before the Partnership can make decisions regarding
significant capital expenditures for production enhancement or material changes
in its current distribution policy.
Page 10 of 11
<PAGE> 11
DORCHESTER HUGOTON, LTD.
(A Texas Limited Partnership)
OTHER INFORMATION
PART II
ITEM 1. LEGAL PROCEEDINGS: See Notes to Condensed Financial Statements.
ITEM 5. OTHER INFORMATION: Effective August 1995, the Partnership established
a new Advisory Committee consisting of two independent advisors to
function as the audit committee for the Partnership and to review and
approve any transactions between the Partnership and the General
Partners, including any compensation and benefits paid to the General
Partners by the Partnership. The Partnership is pleased to announce
that Mr. Rawles Fulgham of Dallas, Texas and Mr. W. Randall Blank of
Houston, Texas have agreed to serve on the Advisory Committee. Until
his recent retirement, Mr. Fulgham served as Executive Director of
Merrill Lynch Private Capital, Inc. He currently serves as a director
of Dresser Industries, Inc., NCH Corporation, INDRESCO, Inc., Banctec,
Inc. and Republic Financial Services, Inc. Mr. Fulgham was until
recently the Chairman of Children's Medical Center of Dallas and he is
a former trustee of long-standing of the Virginia Military Institute
Foundation. Mr. Blank is currently Executive Vice President of
Rockland Pipeline Company in Houston, Texas and on the Board of
Directors of the Gas Processors' Association. The formation of the
Advisory Committee has been approved by the Nasdaq Listing
Qualifications Committee and resolves the previous pending request by
the Partnership for an exemption from the NASD limited partnership
governance rules, as discussed in the Partnership's 1994 Annual Report
on Form 10-K.
Also, as previously announced, effective August 21, 1995 the transfer
agent for the Partnership's depositary units will change from Society
Bank to American Stock Transfer & Trust Company, 40 Wall Street, New
York, New York 10005. The Partnership has amended both the
Partnership Agreement and the Depositary Agreement to conform to each
of the foregoing changes. Additionally, the Partnership has made
certain other amendments to the Partnership Agreement which were
necessary to conform to, or to provide desired flexibility permitted
by, changes in Texas partnership law and federal tax law. The
amendments are filed with the Form 10-Q.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K:
a) Exhibits - 3. Amended and Restated Certificate and
Agreement of Limited Partnership, as amended
4.1 Depositary Agreement, as amended.
27 Financial Data Schedule
b) Reports on Form 8-K - None.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DORCHESTER HUGOTON, LTD.
Registrant
/s/ Kathleen A. Rawlings
Date: August 10, 1995 ----------------------------------------
Kathleen A. Rawlings
Controller (Principal Accounting Officer)
Page 11 of 11
<PAGE> 12
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<S> <C>
3. Amended and Restated Certificate and Agreement of Limited
Partnership, as amended
4.1 Depositary Agreement, as amended.
27 Financial Data Schedule
</TABLE>
<PAGE> 1
EXHIBIT 3
CERTIFICATE OF AMENDMENT
TO
AMENDED AND RESTATED CERTIFICATE AND
AGREEMENT OF LIMITED PARTNERSHIP OF
DORCHESTER HUGOTON, LTD.
August 9, 1995
This Certificate of Amendment to Amended and Restated Certificate and
Agreement of Limited Partnership of Dorchester Hugoton, Ltd., a Texas limited
partnership (the "Partnership") is made and adopted on behalf of the
Partnership by P.A. Peak, Inc., a Delaware corporation ("Peak") and James E.
Raley, Inc., a Delaware corporation ("Raley"), the General Partners (herein so
called) of the Partnership.
A. The Partnership was originally formed by the filing of a
Certificate and Agreement of Limited Partnership in the office of the Secretary
of State of Texas on June 17, 1982. The original Certificate and Agreement was
amended and restated by that certain Amended and Restated Certificate and
Agreement of Limited Partnership of the Partnership filed in the office of the
Secretary of State of Texas on August 20, 1982 and subsequently amended by
Certificates of Amendment filed in the office of the Secretary of State of
Texas on or about July 30, 1985, October 20, 1987, November 10, 1988, August 3,
1989, April 26, 1990, August 30, 1990, February 15, 1991 and December 29, 1994
(as so amended, the "Restated Certificate and Agreement").
B. Effective September 1, 1992, the Partnership became subject to
and thereafter governed by the Texas Revised Limited Partnership Act (the
"TRLPA").
C. The General Partners hereby amend the Restated Certificate and
Agreement, as permitted by and in accordance with the TRLPA and Section 11.03
of the Restated Certificate and Agreement, as follows:
1. The following new Section 2.05 is added to the
Restated Certificate and Agreement:
2.05. Registered Office; Registered Agent.
The address of the registered office of the Partnership in the
State of Texas is 350 North St. Paul Street, Dallas, Texas
75201. The Partnership's registered agent for service of
process on the Partnership in the State of Texas is C T
Corporation System, whose business office is the same as the
Partnership's registered office. The General Partners may
change the registered office and/or agent of the Partnership
in the State of Texas from time to time in accordance with
applicable law. In connection with the qualification of the
Partnership in any other jurisdiction, the General Partners
may designate a registered office and
<PAGE> 2
registered agent in such jurisdiction and change the
registered office and registered agent in such jurisdiction
from time to time.
2. Section 11.04 of the Restated Certificate and
Agreement is hereby amended in its entirety to read as follows:
11.04. Applicable Law. This Agreement is entered
into and shall be construed and enforced in accordance with
the applicable laws of the State of Texas. The relationship
between the Partners to the extent not explicitly provided for
herein shall be controlled by the laws of the State of Texas,
including the Texas Revised Limited Partnership Act, as
amended from time to time.
All other references in the Restated Certificate and Agreement to the "Texas
Uniform Limited Partnership Act" are hereby amended to refer to the "Texas
Revised Limited Partnership Act, as amended from time to time."
3. Section 3.08(a) of the Restated Certificate and
Agreement is hereby amended in its entirety to read as follows:
3.08. Compensation of General Partners.
(a) Subject to the provisions of Section
3.08(b) below, the General Partners shall be entitled to
receive reasonable compensation from the Partnership for
services rendered in operating and managing the Partnership in
an annual aggregate amount equal to $250,000 plus one percent
(1%) of Gross Income, or such lesser amount as the General
Partners may from time to time determine is appropriate. The
compensation payable to the General Partners under this
Section 3.08(a) shall be divided among the General Partners
equally or as they may otherwise mutually agree. For purposes
of this Section, the term "Gross Income" shall mean the annual
gross income of the Partnership from the Partnership
Properties.
4. The following new Section 3.10 is added to the
Restated Certificate and Agreement:
3.10 Advisory Committee. The Partnership shall
establish and maintain (as long as required to meet the
continuing listing qualifications of any publicly traded
securities market on which the Partnership's securities trade
or for so long thereafter as the General Partners deem it
necessary or advisable) an Advisory Committee to the
Partnership which shall consist of two individuals, neither of
whom is an officer or employee of the Partnership and neither
of whom has any relationship with the General Partners that
would interfere with the advisors exercise of independent
judgment. Each Advisory Committee member shall be appointed
by the General Partners, on behalf of the Partnership, for a
two-year term except that one advisor shall initially
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be appointed for a one-year term. Advisory Committee members
shall be entitled to indemnification by the Partnership and
other immunities or liability limitations as and to the same
extent provided to the General Partners under the Partnership
Agreement or otherwise and shall be entitled to receive
reasonable compensation from the Partnership for their
services and to be reimbursed by the Partnership for any
expenses incurred by them in performing their duties on behalf
of the Partnership. The Advisory Committee will function as
the audit committee for the Partnership and will review and
approve any and all transactions between the Partnership and
its General Partners and their Affiliates, including but not
limited to, any compensation and benefits paid to the General
Partners. In carrying out its duties, the Advisory Committee
shall, among other things, review and approve the appointment
of the Partnership's independent auditors annually. In
addition, the Advisory Committee will meet with
representatives of the independent auditors at least annually,
review the annual financial statements and other financial
information included in the Partnership's periodic public
reports, review changes in the significant accounting policies
of the Partnership and undertake such other activities as the
General Partners may from time to time request.
5. The definition of "Units" contained in Article I of
the Restated Certificate and Agreement is hereby amended in its entirety to
read as follows:
"Unit" means a unit of limited partnership interest
in the Partnership of a Limited Partner and shall be an
undivided interest of the Limited Partners to be allocated
Income and Deductions by, and to receive Distributions from,
the Partnership, the exact amount of which undivided interest
shall be determined by dividing one by 10,744,380 (or such
lesser number as may from time to time equal the aggregate
issued and outstanding Depositary Receipts following any
purchase and retirement of Depositary Receipts by the
Partnership).
6. Section 3.02 of the Restated Certificate and
Agreement is amended to delete the word "and" from the end of subpart (t), to
re-letter subpart (u) as subpart (v) and to add the following new subpart (u):
(u) Purchase and retire Depositary Receipts from
time to time on the open market, in private transactions or
otherwise on such terms, and in such amounts, as the General
Partners may determine to be in the best interest of the
Limited Partners and holders from time to time of Depositary
Receipts; provided that no such Depositary Receipts shall be
purchased from any General Partner or any Affiliate thereof
without prior approval by the Advisory Committee; and
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7. The address of the principal office in the United
States where the Partnership's records are to be kept or made available under
Section 1.07 of the Texas Revised Limited Partnership Act is: 9696 Skillman
Street, Suite 320, Dallas, Texas 75243.
8. The current mailing address and street address of
each General Partner is as set forth under their names on the signature pages
of this Certificate of Amendment.
9. The definitions of "Capital Account," "Capital
Contribution" and "Code" contained in Article I of the Restated Certificate and
Agreement are hereby amended in their entirety to read as follows:
"Capital Account" means the capital account maintained for a
Partner pursuant to Section 5.03.
"Capital Contribution" means any cash, cash equivalents or the
Net Agreed Value of Contributed Property that a Partner contributes to
the Partnership.
"Code" means the Internal Revenue Code of 1986, as amended and
in effect from time to time, as interpreted by the applicable
regulations thereunder. Any reference herein to a specific section or
sections of the Code shall be deemed to include a reference to any
corresponding provision of future law.
10. The definition of "Contributed Properties" contained
in Article I of the Restated Certificate and Agreement is hereby amended in its
entirety to read as follows:
"Original Contributed Properties" means the properties
described on Exhibit A hereto.
All references to Contributed Properties in the Restated Certificate
and Agreement shall be changed to Original Contributed Properties.
11. The following definitions are hereby added to Article
I of the Restated Certificate and Agreement:
"Adjusted Capital Account" means the Capital Account
maintained for each Partner as of the end of each taxable year of the
Partnership, (a) increased by any amounts that such Partner is
obligated to restore under the standards set by Treasury Regulation
Section 1.704-1(b)(2)(ii)(c) (or is deemed obligated to restore under
Treasury Regulation Sections 1.704-2(g) and 1.704-2(i)(5)) and (b)
decreased by (i) the amount of all losses and deductions that, as of
the end of such taxable year, are reasonably expected to be allocated
to such Partner in subsequent years under Sections 704(e)(2) and
706(d) of the Code and Treasury Regulation Section 1.751-1(b)(2)(ii),
and (ii) the amount of all distributions that, as of the end of such
taxable year, are reasonably expected to be made to such Partner in
subsequent years in accordance with the terms of this Agreement to the
extent they exceed offsetting increases to such Partner's Capital
Account that are reasonably expected to occur during (or prior to) the
year in which such distributions are reasonably expected to
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be made (other than increases as a result of a minimum gain chargeback
pursuant to Section 6.01(c)(i) or 6.01(c)(ii)). The foregoing
definition of Adjusted Capital Account is intended to comply with the
provisions of Treasury Regulation Section 1.704-1(b)(2)(ii)(d) and
shall be interpreted consistently therewith.
"Adjusted Property" means any property the Carrying Value of
which has been adjusted pursuant to Section 5.03(b)(v). Once an
Adjusted Property is deemed distributed by, and recontributed to, the
Partnership for federal income tax purposes upon a termination thereof
pursuant to Section 708 of the Code, such property shall thereafter
constitute a Contributed Property until the Carrying Value of such
property is subsequently adjusted pursuant to Section 5.03(b)(v).
"Agreed Value" means the value of the property of the
Partnership as determined in the sole discretion of the General
Partners.
"Book-Tax Disparity" means with respect to any item of
Contributed Property or Adjusted Property, as of the date of any
determination, the difference between the Carrying Value of such
Contributed Property or Adjusted Property and the adjusted basis
thereof for federal income tax purposes as of such date. A Partner's
share of the Partnership's Book-Tax Disparities in all of its
Contributed Property and Adjusted Property will be reflected by the
difference between such Partner's Capital Account balance as
maintained pursuant to Section 5.03 and the hypothetical balance of
such Partner's Capital Account computed as if it had been maintained
strictly in accordance with federal income tax accounting principles.
"Carrying Value" means (a) with respect to a Contributed
Property, the Agreed Value of such property reduced (but not below
zero) by all depletion, depreciation, amortization and cost recovery
deductions charged to the Partners' Capital Accounts in respect of
such Contributed Property, and (b) with respect to any other
Partnership property, the adjusted basis of such property for federal
income tax purposes. The Carrying Value of any property shall be
adjusted from time to time in accordance with Sections 5.03(b)(v) and
to reflect changes, additions or other adjustments to the Carrying
Value for dispositions and acquisitions of Partnership properties, as
deemed appropriate by the General Partners.
"Contributed Property" means each property or other asset, in
such form as may be permitted by the Texas Revised Limited Partnership
Act, but excluding cash, contributed to the Partnership (or deemed
contributed to the Partnership on termination and reconstitution
thereof pursuant to Section 708 of the Code). Once the Carrying Value
of a Contributed Property is adjusted pursuant to Section 5.03(b)(v),
such property shall no longer constitute a Contributed Property, but
shall be deemed an Adjusted Property.
"Economic Risk of Loss" has the meaning set forth in Treasury
Regulation Section 1.752-2(a).
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"Net Agreed Value" means, (a) in the case of any Contributed
Property, the Agreed Value of such property reduced by any liabilities
either assumed by the Partnership upon such contribution or to which
such property is subject when contributed, and (b) in the case of any
property distributed to a Partner or assignee of a Partner by the
Partnership, the Partnership's Carrying Value of such property (as
adjusted pursuant to Section 5.03(b)(v) at the time such property is
distributed, reduced by any indebtedness either assumed by such
Partner or assignee of such Partner upon such distribution or to which
such property is subject at the time of distribution, in either case,
as determined under Section 752 of the Code.
"Net Income" means, for any taxable year, the excess, if any,
of the Partnership's items of income and gain for such taxable year
over the Partnership's items of loss and deduction for such taxable
year. The items included in the calculation of Net Income shall be
determined in accordance with Section 5.03(b) and shall not include
any items specially allocated under Section 6.01(c).
"Net Loss" means, for any taxable year, the excess, if any, of
the Partnership's items of loss and deduction for such taxable year
over the Partnership's items of income and gain for such taxable year.
The items included in the calculation of Net Loss shall be determined
in accordance with Section 5.03(b) and shall not include any items
specially allocated under Section 6.01(c).
"Nonrecourse Deductions" means any and all items of loss,
deduction or expenditures (described in Section 705(a)(2)(B) of the
Code) that, in accordance with the principles of Treasury Regulation
Section 1.704- 2(b), are attributable to a Nonrecourse Liability.
"Nonrecourse Liability" has the meaning set forth in Treasury
Regulation Section 1.752-1(a)(2).
"Partner Nonrecourse Debt" has the meaning set forth in
Treasury Regulation Section 1.704-2(b)(4).
"Partner Nonrecourse Debt Minimum Gain" has the meaning set
forth in Treasury Regulation Section 1.704- 2(i)(2).
"Partner Nonrecourse Deductions" means any and all items of
loss, deduction or expenditure (including, without limitation, any
expenditure described in Section 705(a)(2)(B) of the Code) that, in
accordance with the principles of Treasury Regulation Section
1.704-2(i) are attributable to a Partner Nonrecourse Debt.
"Partnership Minimum Gain" means the amount determined in
accordance with the principles of Treasury Regulation Section
1.704-2(d).
"Recapture Income" means any gain recognized by the
Partnership (computed without regard to any adjustment required by
Sections 734 or 743 of the Code) upon the disposition of any property
or asset of the Partnership, which gain is characterized
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as ordinary income because it represents the recapture of deductions
previously taken with respect to such property or asset.
"Residual Gain" or "Residual Loss" means any item of gain or
loss, as the case may be, of the Partnership recognized for federal
income tax purposes resulting from a sale, exchange or other
disposition of a Contributed Property or Adjusted Property, to the
extent such item of gain or loss is not allocated pursuant to Section
6.02(b)(i)(A) or 6.02(b)(ii)(A), respectively, to eliminate Book-Tax
Disparities.
"Unrealized Gain" attributable to any item of Partnership
property means, as of any date of determination, the excess, if any,
of (a) the fair market value of such property as of such date over (b)
the Carrying Value of such property as of such date (prior to any
adjustment to be made pursuant to Section 5.03(b)(v) as of such date).
The fair market value of any Partnership property shall be determined
by the General Partners using such reasonable method of valuation as
the General Partners may adopt. The General Partners shall allocate
such aggregate value among the assets of the Partnership (in such
manner as the General Partners determine in their sole discretion to
be reasonable) to arrive at a fair market value for individual
properties.
"Unrealized Loss" attributable to any item of Partnership
property means, as of any date of determination, the excess, if any,
of (a) the Carrying Value of such property as of such date (prior to
any adjustment to be made pursuant to Section 5.03(b)(v) as of such
date) over (b) the fair market value of such property as of such date.
The fair market value of any Partnership property shall be determined
by the General Partners using such reasonable method of valuation as
the General Partners may adopt. The General Partners shall allocate
such aggregate value among the assets of the Partnership (in such
manner as the General Partners determine in their sole discretion to
be reasonable) to arrive at a fair market value of individual
properties.
12. The heading for Article V of the Restated Certificate
and Agreement is deleted in its entirety and the following substituted in lieu
thereof:
CAPITAL CONTRIBUTIONS AND CAPITAL ACCOUNTS
13. The following Section 5.03 is added to the end of
Article V of the Restated Certificate and Agreement:
5.03 Capital Accounts.
(a) The Partnership shall maintain for each
Partner (or a beneficial owner of Units held by a nominee in
any case in which the nominee has furnished the identity of
such owner to the Partnership in accordance with Section
6031(c) of the Code or any other method acceptable to the
General Partners in their sole discretion) a separate Capital
Account in accordance with the provisions hereof which shall
be interpreted in a manner consistent
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with the rules of Treasury Regulation Section
1.704-1(b)(2)(iv). Such Capital Account shall be increased by
(i) the amount of all Capital Contributions made by such
Partner pursuant to this Agreement and (ii) all items of
Partnership income and gain (including, without limitation,
income and gain exempt from tax) computed in accordance with
Section 5.03(b) and allocated to such Partner pursuant to
Section 6.01, and decreased by the amount of cash or Net
Agreed Value of all actual and deemed distributions of cash or
property made to such Partner pursuant to this Agreement and
all items of Partnership deduction and loss computed in
accordance with Section 5.03(b) and allocated to such Partner
pursuant to Section 6.01.
(b) For purposes of computing the amount of any
item of income, gain, loss or deduction to be reflected in the
Partners' Capital Accounts, the determination, recognition and
classification of any such item shall be the same as its
determination, recognition and classification for federal
income tax purposes (including, without limitation, any method
of depletion, depreciation, cost recovery or amortization used
for that purpose), provided that:
(i) All fees and other expense incurred
by the Partnership to promote the sale of or to sell
a Partnership Interest that can neither be deducted
nor amortized under Section 709 of the Code, if any,
shall, for purposes of Capital Account maintenance,
be treated as an item of deduction at the time such
fees and other expenses are incurred.
(ii) Except as otherwise provided in
Treasury Regulation Section 1.704- 1(b)(2)(iv)(m),
the computation of all items of income, gain, loss
and deduction shall be made without regard to any
election under Section 754 of the Code by the
Partnership and, as to those items described in
Section 705(a)(1)(B) or 705(a)(2)(B) of the Code,
without regard to the fact that such items are not
includable in gross income or are neither currently
deductible nor capitalized for federal income tax
purposes. To the extent an adjustment to the
adjusted tax basis of any Partnership asset pursuant
to Section 734(b) or 743(b) of the Code is required
pursuant to Treasury Regulation Section
1.704-1(b)(2)(iv)(m) to be taken into account in
determining Capital Accounts, the amount of such
adjustment to the Capital Accounts shall be treated
as an item of gain (if the adjustment increases the
basis of the asset) or loss (if the adjustment
decreases such basis).
(iii) Any income, gain or loss
attributable to the taxable disposition of any
Partnership property shall be determined as if the
adjusted basis of such property as of such date of
disposition was equal in amount to the Partnership's
Carrying Value with respect to such property as of
such date.
(iv) In accordance with the requirements
of Section 704(b) of the Code, any deductions for
depletion, depreciation, cost recovery
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or amortization attributable to any Contributed
Property shall be determined as if the adjusted basis
of such property on the date it was acquired by the
Partnership was equal to the Agreed Value of such
property. Upon an adjustment pursuant to Section
5.03(b)(v) to the Carrying Value of any Partnership
property subject to depletion, depreciation, cost
recovery or amortization, any further deductions for
such depletion, depreciation, cost recovery or
amortization attributable to such property shall be
determined (A) as if the adjusted basis of such
property were equal to the Carrying Value of such
property immediately following such adjustment and
(B) using a rate of depletion, depreciation, cost
recovery or amortization derived from the same method
and useful life (or, if applicable, the remaining
useful life) as is applied for federal income tax
purposes; provided however, that, if the asset has a
zero adjusted basis for federal income tax purposes,
depletion, depreciation, cost recovery or
amortization deductions shall be determined using any
reasonable method that the General Partners may
adopt.
(v) Consistent with the provisions of
Treasury Regulation Section 1.704- 1(b)(2)(iv)(f),
immediately prior to any distribution to a Partner of
any Partnership property (other than a distribution
of cash that is not in redemption or retirement of a
Partnership Interest), the Carrying Value of each
Partnership property immediately prior to such
distribution shall be adjusted upward or downward to
reflect any Unrealized Gain or Unrealized Loss
attributable to such partnership property. Any such
Unrealized Gain or Unrealized Loss so reflected in
the Carrying Value of Partnership property shall be
treated as an item of income, gain, loss or deduction
recognized by the Partnership on the date of the
adjustment to the Carrying Value of Partnership
property.
(vi) A transferee of a Partnership
Interest shall succeed to a pro rata portion of the
Capital Account of the transferor relating to the
Partnership Interest so transferred; provided
however, that, if the transfer causes a termination
of the Partnership under Section 708(b)(1)(B) of the
Code, the Partnership's properties shall be deemed to
have been distributed in liquidation of the
Partnership to the Partners (including any transferee
of a Partnership Interest that is a party to the
transfer causing such termination) and recontributed
by such Partners to the Partnership. In such event,
the Carrying Values of the Partnership properties
shall be adjusted immediately prior to such deemed
distribution pursuant to Section 5.03(b)(v) and such
Carrying Values shall then constitute the Agreed
Values of such properties upon such deemed
contribution to the reconstituted Partnership. The
Capital Accounts of such reconstituted Partnership
shall be maintained in accordance with the provisions
of this Section 5.03.
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14. The existing Section 6.01 of the Restated Certificate
and Agreement is deleted in its entirety and the following Sections are
substituted and added to Article VI:
ARTICLE VI
ALLOCATIONS AND DISTRIBUTIONS
6.01 Allocations of Net Income and Net Loss. For purposes of
maintaining the Capital Accounts and in determining the rights of the Partners
among themselves, the Partnership's items of income, gain, loss and deduction
(computed in accordance with Section 5.03(b)) shall be allocated among the
Partners in each taxable year (or portion thereof) as provided herein below.
(a) Net Income. After giving effect to the allocations set forth
in Sections 6.01(c), Net Income for each taxable year (and all items of income,
gain, loss and deduction taken into account in computing Net Income for such
taxable year) shall be allocated as follows:
(i) First, to the General Partners to the extent of Net
Loss previously allocated to them under Section 6.01(b)(ii) for which
Net Income has not previously been allocated pursuant to this Section
6.01(a)(i); and
(ii) Second, to the Partners in proportion to their
respective Profit Sharing Percentages.
(b) Net Loss. After giving effect to the allocations set forth in
Section 6.01(c), Net Loss for each taxable year (and all items of income, gain,
loss and deduction taken into account in computing Net Loss for such taxable
year) shall be allocated as follows:
(i) First, to the Partners in proportion to their
respective Profit Sharing Percentages; provided that Net Loss shall
not be allocated pursuant to this Section 6.01(b)(i) to the extent
that such allocation would cause any Limited Partner to have a deficit
balance in its Adjusted Capital Account at the end of such taxable
year (or increase any existing deficit balance in its Adjusted Capital
Account); and
(ii) Second, the balance to the General Partners, in
proportion to their respective Profit Sharing Percentages.
(c) Required Allocations. Notwithstanding any other provision of
this Section 6.01, the following special allocations shall be made for each
taxable year:
(i) Partnership Minimum Gain Chargeback. Notwithstanding
any other provision of this Section 6.01, if there is a net decrease
in Partnership Minimum Gain during any Partnership taxable period,
each Partner shall be allocated items of Partnership income and gain
for such period (and, if necessary, subsequent periods) in the manner
and amounts provided in Treasury Regulation Sections 1.704-2(f)(6),
1.704-2(g)(2) and 1.704- 2(i)(4), or any successor provision. For
purposes of this
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Section 6.01(c), each Partner's Adjusted Capital Account balance shall
be determined, and the allocation of income or gain required hereunder
shall be effected, prior to the application of any other allocations
pursuant to this Section 6.01(c) with respect to such taxable period
(other than an allocation pursuant to Sections 6.01(c)(v) and
6.01(c)(vi)). This Section 6.01(c)(i) is intended to comply with the
Partnership Minimum Gain chargeback requirement in Treasury Regulation
Section 1.704-2(f) and shall be interpreted consistently therewith.
(ii) Chargeback of Partner Nonrecourse Debt Minimum Gain.
Notwithstanding the other provisions of this Section 6.01 (other than
Section 6.01(c)(i)), except as provided in Treasury Regulation Section
1.704- 2(i)(4), if there is a net decrease in Partner Nonrecourse Debt
Minimum Gain during any Partnership taxable period, any Partner with a
share of Partner Nonrecourse Debt Minimum Gain at the beginning of
such taxable period shall be allocated items of Partnership income and
gain for such period (and, if necessary, subsequent periods) in the
manner and amounts provided in Treasury Regulation Sections
1.704-2(i)(4) and 1.704- 2(j)(2)(ii), or any successor provisions.
For purposes of this Section 6.01(c), each Partner's Adjusted Capital
Account balance shall be determined, and the allocation of income or
gain required hereunder shall be effected, prior to the application of
any other allocations pursuant to this Section 6.01(c), other than
Section 6.01(c)(i) and other than an allocation pursuant to Sections
6.01(c)(v) and 6.1(c)(vi), with respect to such taxable period. This
section 6.01(c)(ii) is intended to comply with the chargeback of items
of income and gain requirement in Treasury Regulation Section
1.704-2(i)(4) and shall be interpreted consistently therewith.
(iii) Qualified Income Offset. In the event any Partner
unexpectedly receives any adjustments, allocations or distributions
described in Treasury Regulation Sections 1.704-1(b)(2)(ii)(d)(4),
1.704- 1(b)(2)(ii)(d)(5), or 1.704-1(b)(2)(ii)(d)(6), items of
Partnership income and gain shall be specially allocated to such
Partner in an amount and manner sufficient to eliminate, to the extent
required by the Treasury Regulations promulgated under Section 704(b)
of the Code, the deficit balance, if any, in its Adjusted Capital
Account created by such adjustments, allocations or distributions as
quickly as possible unless such deficit balance is otherwise
eliminated or to be eliminated pursuant to Section 6.01(c)(i) or (ii).
(iv) Gross Income Allocations. In the event any Partner
has a deficit balance in its Adjusted Capital Account at the end of
any Partnership taxable year, such Partner shall be allocated a pro
rata portion of each item of Partnership gross income and gain in the
amount of such excess as quickly as possible; provided, that an
allocation pursuant to this Section 6.01(c)(iv) shall be made only if
and to the extent that such Partner would have a deficit balance in
its Adjusted Capital Account after all other allocations provided for
in this Section 6.01 have been tentatively made as if this Section
6.01(c)(iv) were not in this Agreement.
(v) Nonrecourse Deductions. Nonrecourse Deductions for
any taxable period shall be allocated to the Partners in accordance
with their respective Profit Sharing Percentages.
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<PAGE> 12
(vi) Partner Nonrecourse Deductions. Partner Nonrecourse
Deductions for any taxable period shall be allocated 100% to the
Partner that bears the Economic Risk of Loss with respect to the
Partner Nonrecourse Debt to which such Partner Nonrecourse Deductions
are attributable in accordance with Treasury Regulation Section
1.704-2(i). If more than one Partner bears the Economic Risk of Loss
with respect to a Partner Nonrecourse Debt, such Partner Nonrecourse
Deductions attributable thereto shall be allocated between or among
such Partners in accordance with the ratios in which they share such
Economic Risk of Loss.
(vii) Nonrecourse Liabilities. For purposes of Treasury
Regulation Section 1.752-3(a)(3), the partners agree that "excess
nonrecourse liabilities" of the Partnership as defined in such Section
shall be allocated among the Partners in accordance with their
respective Profit Sharing Percentages.
(viii) Curative Allocations. It is the intent of the
Partners that, to the extent possible, any special allocations of
items of income or gain pursuant to this Section 6.01(c) will be
offset with special allocations of other items of income, gain, loss,
and deduction pursuant to this Section 6.01(c) or Sections 6.01(a) or
(b) hereof. Therefore, notwithstanding Sections 6.01(a) and (b)
hereof, the General Partners are hereby authorized to make such
offsetting special allocations of income, gain, loss, or deduction in
whatever manner they deem appropriate so that, after such offsetting
special allocations are made, each Partner's Capital Account balance
is, to the extent possible, equal to the Capital Account balance such
Partner would have had if such unexpected adjustments, allocations, or
distributions had not occurred and all Partnership items were
allocated pursuant to Sections 6.01(a) and (b) hereof.
6.02 Allocations for Tax Purposes.
(a) Except as otherwise provided herein, for federal income tax
purposes, each item of income, gain, loss and deduction shall be allocated
among the Partners in the same manner as its correlative item of "book" income,
gain, loss or deduction is allocated pursuant to Section 6.01.
(b) In an attempt to eliminate Book-Tax Disparities attributable
to a Contributed Property or Adjusted Property, items of income, gain, loss,
depletion, depreciation, amortization and cost recovery deductions shall be
allocated for federal income tax purposes among the Partners as follows:
(i) (A) in the case of a Contributed Property, such items
attributable thereto shall be allocated among the Partners in the
manner provided under Section 704(c) of the Code that takes into
account the variation between the Agreed Value of such property and
its adjusted basis at the time of contribution; and (B) any item of
Residual Gain or Residual Loss attributable to a Contributed Property
shall be allocated among the Partners in the same manner as its
correlative item of "book" gain or loss is allocated pursuant to
Section 6.01.
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(ii) (A) in the case of an Adjusted Property, such items
shall (1) first, be allocated among the Partners in a manner
consistent with the principles of Section 704(c) of the Code to take
into account the Unrealized Gain or Unrealized Loss attributable to
such property and the allocations thereof pursuant to Section
5.03(b)(v), and (2) second, in the event such property was originally
a Contributed Property, be allocated among the Partners in a manner
consistent with Section 6.02(b)(i)(A); and (B) any item of Residual
Gain or Residual Loss attributable to an Adjusted Property shall be
allocated among the Partners in the same manner as its correlative
item of "book" gain or loss is allocated pursuant to Section 6.01.
(iii) The General Partners shall apply the principles of
Regulation Section 1.704-3(d) to eliminate Book-Tax Disparities.
(c) For the proper administration of the Partnership and for the
preservation of uniformity of the Units, the General Partners shall have sole
discretion to (i) adopt such conventions as the General Partners deem
appropriate in determining the amount of depletion, depreciation, amortization
and cost recovery deductions; (ii) make special allocations for federal income
tax purposes of income (including, without limitation, gross income) or
deductions; and (iii) amend the provisions of this Agreement as appropriate to
reflect the proposal or promulgation of Treasury regulations under Section
704(b) or Section 704(c) of the Code or otherwise to preserve or achieve
uniformity of the Units. The General Partners may adopt such conventions, make
such allocations and make such amendments to this Agreement as provided in this
Section 6.02(c) only if such conventions, allocations or amendments (i) would
not have a material adverse effect on the Partners, the holders of the Units or
the Partnership, (ii) are consistent with the principles of Section 704 and/or
Section 704(c) of the Code, and (iii) would not be in violation of any other
provisions of this Agreement..
(d) Subject to any other limitations contained in this Agreement
and provided that such actions do not have a material adverse effect on the
Partners, the holders of Units or the Partnership, the General Partners in
their sole discretion may (i) determine to depreciate or amortize the portion
of an adjustment under Section 743(b) or 734(b) of the Code attributable to
unrealized appreciation in any Adjusted Property (to the extent of the
unamortized Book-Tax Disparity) using a predetermined rate derived from the
depletion, depreciation or amortization method and useful life applied to the
Partnership's common basis of such property despite the inconsistency of such
approach with Proposed Treasury Regulation Section 1.168-2(n), Treasury
Regulation Section 1.167(c)-1(a)(B) or the legislative history of Section 197
of the Code; (ii) adopt depletion, depreciation and amortization conventions
under which all purchasers acquiring Units in the same month would receive
depletion, depreciation and amortization deductions, based upon the same
applicable rates as if they had purchased a direct interest in the
Partnership's property; and/or (iii) use any other reasonable depletion,
depreciation and amortization conventions that may be available to preserve the
uniformity of the intrinsic tax characteristics of the Units.
(e) Any gain allocated to the Partners upon the sale or other
taxable disposition of any Partnership asset shall, to the extent possible,
after taking into account other required allocations of gain pursuant to this
Section 6.02, be characterized as Recapture Income in
-13-
<PAGE> 14
the same proportions and to the same extent as such Partners (or their
predecessors in interest) have been allocated any deductions directly or
indirectly giving rise to the treatment of such gains as Recapture Income.
(f) All items of income, gain, loss, deduction and credit
recognized by the Partnership for federal income tax purposes and allocated to
the Partners in accordance with the provisions hereof shall be determined
without regard to any election under Section 754 of the Code which may be made
by the Partnership, provided, however, that such allocations, once made, shall
be adjusted as necessary or appropriate to take into account those adjustments
permitted or required by Sections 734 and 743 of the Code.
(g) Each item of Partnership income, gain, loss and deduction
attributable to a transferred Partnership Interest of a General Partner or to
transferred Units shall, for federal income tax purposes, be determined on a
monthly basis and shall be allocated to the Partners as of the close of the
NASDAQ Stock Exchange on the last day of each month. Gain or loss on a sale or
other disposition of any assets of the Partnership other than in the ordinary
course of business shall be allocated to the Partners as of the close of the
NASDAQ Stock Exchange on the last day of the month in which such gain or loss
is recognized for federal income tax purposes. The General Partners may
revise, alter or otherwise modify such methods of allocation as the General
Partners determine necessary, to the extent permitted or required by Section
706 of the Code and the regulations or rulings promulgated thereunder.
(h) Allocations that would otherwise be made to a Limited Partner
under the provisions of this Article VI shall instead be made to the beneficial
owner of Units held by a nominee in any case in which the nominee has furnished
the identity of such owner to the Partnership in accordance with Section
6031(c) of the Code or any other method acceptable to the General Partners in
the sole discretion of the General Partners.
15. The existing Section 10.05(c) of the Restated
Certificate and Agreement is deleted in its entirety and the following Section
is substituted in lieu thereof:
(c) Finally, to all Partners in accordance with, and to
the extent of, the positive balances in their respective Capital
Accounts, as determined after taking into account all Capital Account
adjustments pursuant to the provisions of this Agreement, in
accordance with the requirements of Treasury Regulation Section
1.704-1(b)(2)(ii)(b)(2).
16. The existing Section 10.05(d) of the Restated
Certificate and Agreement is deleted in its entirety.
-14-
<PAGE> 15
IN WITNESS WHEREOF, this Certificate of Amendment to Amended and
Restated Certificate and Agreement of Limited Partnership of Dorchester
Hugoton, Ltd. has been executed by the following General Partners on the
date(s) indicated below, to be effective as of the day and year this
Certificate of Amendment is filed in the office of the Secretary of State of
Texas.
GENERAL PARTNER:
P.A. PEAK, INC.
DATED: August 9, 1995 By: /s/ PRESTON A. PEAK
Preston A. Peak, President
Address: 929 Thanksgiving Tower
1601 Elm Street
Dallas, Texas 75201
GENERAL PARTNER:
JAMES E. RALEY, INC.
DATED: August 9, 1995 By: /s/ JAMES E. RALEY
James E. Raley, President
Address: 9666 Atherton Drive
Dallas, Texas 75243
-15-
<PAGE> 16
CERTIFICATE OF AMENDMENT
TO THE
AMENDED AND RESTATED
CERTIFICATE AND AGREEMENT
OF
LIMITED PARTNERSHIP
OF
DORCHESTER HUGOTON, LTD.
Dated as of December 29, 1994
We, the undersigned, pursuant to the provisions of Section 2.02 of the
Texas Revised Limited Partnership Act and Section 11.03 (b) of the Amended and
Restated Certificate and Agreement of Limited Partnership of Dorchester
Hugoton, Ltd., a Texas limited partnership (the "Partnership"), dated as of
August 19, 1982, and filed in the Office of the Secretary of State of Texas on
August 20, 1982, as amended by the Certificate of Amendment dated as of July 1,
1985, and filed in the Office of the Secretary of State of Texas on July 30,
1985, as amended by the Certificate of Amendment dated as of October 15, 1987,
and filed in the Office of the Secretary of State of Texas on October 20, 1987,
as amended by the Certificate of Amendment dated as of November 3, 1988, and
filed in the Office of the Secretary of State of Texas on November 10, 1988, as
amended by the Certificate of Amendment dated July 26, 1989, and filed in the
Office of the Secretary of State of Texas on August 3, 1989, and as amended by
the Certificate of Amendment dated as of April 24, 1990, and filed in the
Office of the Secretary of State of Texas on April 26, 1990, and as amended by
the Certificate of Amendment dated as of August 16, 1990, and filed in the
Office of the Secretary of State of Texas on August 30, 1990, as amended by the
Certificate of Amendment dated as of February 14, 1991, and filed in the Office
of the Secretary of State of Texas on February 15, 1991 (as amended, the
"Restated Certificate"), make the following amendments to the Restated
Certificate:
1. Effective January 1, 1995, Section 3.08(a) of the Restated
Certificate is hereby amended in its entirety to read as
follows:
Subject to the provisions of Section 3.08(b) below,
the General Partners shall be entitled to receive
reasonable compensation from the Partnership for
services rendered in operating and managing the
<PAGE> 17
Partnership in an annual aggregate amount equal to
$250,000 plus 1% of Gross Income. The compensation
payable to the General Partners under this Section
3.08(a) shall be divided among the General Partners
equally. For purposes of this Section, the term
"Gross Income" shall mean an annual gross income of
the Partnership from the Partnership Properties.
2. The present addresses of the General Partners and the Limited
Partner of the Partnership are set forth below their
respective names on the signature pages hereof.
2
<PAGE> 18
IN WITNESS WHEREOF, this Certificate of Amendment has been executed by
the respective parties on the date(s) set forth below to be effective as of the
day and year first written above.
GENERAL PARTNER
---------------
JAMES E. RALEY, INC.
9666 Atherton Drive
Dallas, Texas 75243
By: /s/ JAMES E. RALEY
------------------------------
James E. Raley, President
THE STATE OF TEXAS )
)
COUNTY OF DALLAS )
BEFORE ME, the undersigned authority, on this day personally appeared
JAMES E. RALEY, known to me to be the person and officer whose name is
subscribed to the foregoing instrument and, upon oath, swore and acknowledged
to me that the same was the act of JAMES E. RALEY, INC., a Delaware
corporation, and that he executed the same as the act of such corporation for
the purposes and consideration therein expressed, and in the capacity therein
stated, and that the statements contained therein are true and correct.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this 21st day of December,
A.D., 1994.
MARTYE SHERMAN
[SEAL] NOTARY PUBLIC
State of Texas
Comm. Exp. 06-27-97 /s/ MARTYE SHERMAN
------------------------------
Notary Public in and for the
State of Texas
3
<PAGE> 19
GENERAL PARTNER
---------------
P.A. PEAK, INC.
929 Thanksgiving Tower
1601 Elm Street
Dallas, Texas 75201
By: /s/ PRESTON A. PEAK
------------------------------
Preston A. Peak, President
THE STATE OF TEXAS )
)
COUNTY OF DALLAS )
BEFORE ME, the undersigned authority, on this day personally appeared
PRESTON A. PEAK, known to me to be the person and officer whose name is
subscribed to the foregoing instrument and, upon oath, swore and acknowledged
to me that the same was the act of P.A. PEAK, INC., a Delaware corporation, and
that he executed the same as the act of such corporation for the purposes and
consideration therein expressed, and in the capacity therein stated, and that
the statements contained therein are true and correct.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this 21st day of December,
A.D., 1994.
MARTYE SHERMAN
[SEAL] NOTARY PUBLIC
State of Texas
Comm. Exp. 06-27-97 /s/ MARTYE SHERMAN
------------------------------
Notary Public in and for the
State of Texas
4
<PAGE> 20
SOLE LIMITED PARTNER
--------------------
HUGOTON NOMINEE, INC.
9696 Skillman Street
Suite 320, LB-42
Dallas, Texas 75243
By: /s/ PRESTON A. PEAK
------------------------------
Preston A. Peak, President
THE STATE OF TEXAS )
)
COUNTY OF DALLAS )
BEFORE ME, the undersigned authority, on this day personally appeared
PRESTON A. PEAK, known to me to be the person and officer whose name is
subscribed to the foregoing instrument and, upon oath, swore and acknowledged
to me that the same was the act of HUGOTON NOMINEE, INC., a Texas corporation,
and that he executed the same as the act of such corporation for the purposes
and consideration therein expressed, and in the capacity therein stated, and
that the statements contained therein are true and correct.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this 21st day of December,
A.D., 1994.
MARTYE SHERMAN
[SEAL] NOTARY PUBLIC
State of Texas
Comm. Exp. 06-27-97 /s/ MARTYE SHERMAN
------------------------------
Notary Public in and for the
State of Texas
5
<PAGE> 21
CERTIFICATE OF AMENDMENT
TO THE
AMENDED AND RESTATED
CERTIFICATE AND AGREEMENT
OF
LIMITED PARTNERSHIP
OF
DORCHESTER HUGOTON, LTD.
Dated as of February 14, 1991
We, the undersigned, pursuant to the provisions of Section 25 of the
Texas Uniform Limited Partnership Act and Section 11.03(b) of the Amended and
Restated Certificate and Agreement of Limited Partnership of Dorchester
Hugoton, Ltd., a Texas limited partnership (the "Partnership"), dated as of
August 19, 1982, and filed in the office of the Secretary of State of Texas on
August 20, 1982, as amended by the Certificate of Amendment dated as of July 1,
1985, and filed in the office of the Secretary of State of Texas on July 30,
1985, as amended by the Certificate of Amendment dated as of October 15, 1987,
and filed in the office of the Secretary of State of Texas on October 20, 1987,
as amended by the Certificate of Amendment dated as of November 3, 1988, and
filed in the office of the Secretary of State of Texas on November 10, 1988, as
amended by the Certificate of Amendment dated July 26, 1989, and as amended by
the Certificate of Amendment dated as of August 16, 1990, and filed in the
Office of the Secretary of State of Texas on August 30, 1990 (as amended, the
"Restated Certificate"), make the following amendments to the Restated
Certificate:
1. Effective February 11, 1991, Howard C. Wadsworth (Inc), a
Delaware corporation and a General Partner of the Partnership,
assigned its Partnership Interest (as defined therein) as a
General Partner of the Partnership to James E. Raley, Inc., a
Delaware corporation and a General Partner of the Partnership,
and P.A. Peak, Inc., a Delaware corporation and a General
Partner of the Partnership, in equal shares, whereupon as of
such date James E. Raley, Inc. and P.A. Peak, Inc. assumed all
of the rights and obligations of Howard
<PAGE> 22
C. Wadsworth (Inc) as such General Partners, in equal shares.
2. Effective February 14, 1991, Section 3.08(a) of the Restated
Certificate is hereby amended in its entirety to read as
follows:
Subject to the provisions of Section 3.08(b) below,
the General Partners shall be entitled to receive
reasonable compensation from the Partnership for
services rendered in operating and managing the
Partnership in an annual aggregate amount equal to
$150,000 plus 1% of Gross Income. The compensation
payable to the General Partners under this Section
3.08(a) shall be divided among the General Partners
equally. For purposes of this Section, the term
"Gross Income" shall mean the annual gross income of
the Partnership from the Partnership Properties.
3. Effective February 14, 1991, Section 10.02(a) of the Restated
Certificate is hereby amended in its entirety to read as
follows:
Within sixty (60) days after the Withdrawal causing
the dissolution, the remaining General Partner(s)
must elect to continue the Partnership and may select
a Successor General Partner or Successor General
Partners, as the case may be, so that after such
selection, there shall be two General Partners. The
remaining General Partner(s) shall notify the Limited
Partners of such selection and, upon the written
request of Limited Partners holding more than 25% of
the Units, shall call a meeting of the Limited
Partners to ratify such selection. If a Majority in
Interest of the Limited Partners shall disapprove the
selection of such Successor General Partner(s), then
the remaining General Partner(s) may select one or
more other Successor General Partner(s), as
appropriate, to so act, subject to the right of a
Majority in Interest of the Limited Partners to
disapprove such selection as herein provided. The
General Partners may not select an Affiliate to be a
Successor General Partner.
4. The present addresses of the General Partners and the Limited
Partner of the Partnership are set forth below their
respective names on the signature pages hereof.
2
<PAGE> 23
IN WITNESS WHEREOF, this Certificate of Amendment has been executed by
the respective parties on the date(s) set forth below to be effective as of the
day and year first written above.
GENERAL PARTNER
---------------
JAMES E. RALEY, INC.
9666 Atherton Drive
Dallas, Texas 75243
By: /s/ JAMES E. RALEY
------------------------------
James E. Raley, President
THE STATE OF TEXAS )
)
COUNTY OF DALLAS )
BEFORE ME, the undersigned authority, on this day personally appeared
JAMES E. RALEY, known to me to be the person and officer whose name is
subscribed to the foregoing instrument and, upon oath, swore and acknowledged
to me that the same was the act of JAMES E. RALEY, INC., a Delaware
corporation, and that he executed the same as the act of such corporation for
the purposes and consideration therein expressed, and in the capacity therein
stated, and that the statements contained therein are true and correct.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this 14th day of February,
A.D., 1991.
VANESSA L. JENSEN, Notary Public
[SEAL] in and for The State of Texas
My Commission Expires 10-18-93 /s/ VANESSA L. JENSEN
------------------------------
Notary Public in and for the
State of Texas
My Commission Expires:
Oct. 18, 1993
- ----------------------
3
<PAGE> 24
GENERAL PARTNER
---------------
P.A. PEAK, INC.
929 Thanksgiving Tower
1601 Elm Street
Dallas, Texas 75201
By: /s/ PRESTON A. PEAK
------------------------------
Preston A. Peak, President
THE STATE OF TEXAS )
)
COUNTY OF DALLAS )
BEFORE ME, the undersigned authority, on this day personally appeared
PRESTON A. PEAK, known to me to be the person and officer whose name is
subscribed to the foregoing instrument and, upon oath, swore and acknowledged
to me that the same was the act of P.A. PEAK, INC., a Delaware corporation, and
that he executed the same as the act of such corporation for the purposes and
consideration therein expressed, and in the capacity therein stated, and that
the statements contained therein are true and correct.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this 14th day of February,
A.D., 1991.
VANESSA L. JENSEN, Notary Public
[SEAL] in and for The State of Texas
My Commission Expires 10-18-93 /s/ VANESSA L. JENSEN
------------------------------
Notary Public in and for the
State of Texas
My Commission Expires:
Oct. 18, 1993
- ----------------------
4
<PAGE> 25
SOLE LIMITED PARTNER
--------------------
HUGOTON NOMINEE, INC.
9696 Skillman Street
Suite 320, LB-42
Dallas, Texas 75243
By: /s/ PRESTON A. PEAK
------------------------------
Preston A. Peak, President
THE STATE OF TEXAS )
)
COUNTY OF DALLAS )
BEFORE ME, the undersigned authority, on this day personally appeared
PRESTON A. PEAK, known to me to be the person and officer whose name is
subscribed to the foregoing instrument and, upon oath, swore and acknowledged
to me that the same was the act of HUGOTON NOMINEE, INC., a Texas corporation,
and that he executed the same as the act of such corporation for the purposes
and consideration therein expressed, and in the capacity therein stated, and
that the statements contained therein are true and correct.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this 14th day of February,
A.D., 1991.
VANESSA L. JENSEN, Notary Public
[SEAL] in and for The State of Texas
My Commission Expires 10-18-93 /s/ VANESSA L. JENSEN
------------------------------
Notary Public in and for the
State of Texas
My Commission Expires:
Oct. 18, 1993
- ----------------------
5
<PAGE> 26
CERTIFICATE OF AMENDMENT
TO THE
AMENDED AND RESTATED
CERTIFICATE AND AGREEMENT
OF
LIMITED PARTNERSHIP
OF
DORCHESTER HUGOTON, LTD.
Dated as of August 16, 1990
We, the undersigned, pursuant to the provisions of Section 25 of the
Texas Uniform Limited Partnership Act and Section 11.03(b) of the Amended and
Restated Certificate and Agreement of Limited Partnership of Dorchester
Hugoton, Ltd., a Texas limited partnership (the "Partnership"), dated as of
August 19, 1982, and filed in the office of the Secretary of State of Texas on
August 20, 1982, as amended by the Certificate of Amendment dated as of July 1,
1985, and filed in the office of the Secretary of State of Texas on July 30,
1985, as amended by the Certificate of Amendment dated as of October 15, 1987,
and filed in the office of the Secretary of State of Texas on October 20, 1987,
and as amended further by the Certificate of Amendment dated as of November 3,
1988, and filed in the office of the Secretary of State of Texas on November
10, 1988, and as amended further by the Certificate of Amendment dated July 26,
1989 (as amended, the "Restated Certificate"), make the following amendments to
the Restated Certificate:
1. Effective August 16, 1990, James A. Ford, Inc., a Texas
corporation and a general partner of the Partnership, merged
its interest as a general partner of the Partnership into
James E. Raley, Inc., a Delaware corporation wholly-owned by
James E. Raley. As of such date, James E. Raley, Inc. was
admitted as a general partner of the Partnership and assumed
all the rights and obligations of James A. Ford, Inc. as such
a partner.
2. The present addresses of the general partners and the limited
partner of the Partnership are set forth below their
respective names on the signature pages hereof.
IN WITNESS WHEREOF, this Certificate of Amendment has been executed by
the respective parties on the date(s) set forth below to be effective as of the
day and year first written above.
<PAGE> 27
SURVIVING GENERAL PARTNER
-------------------------
JAMES E. RALEY, INC.
9666 Atherton Drive
Dallas, Texas 75243
By: /s/ JAMES E. RALEY
------------------------------
James E. Raley,
President
STATE OF TEXAS )
)
COUNTY OF DALLAS )
BEFORE ME, the undersigned authority, on this day personally appeared
JAMES E. RALEY, known to me to be the person and officer whose name is
subscribed to the foregoing instrument and, upon oath, swore and acknowledged
to me that the same was the act of JAMES E. RALEY, INC., a Delaware
corporation, and that he executed the same as the act of such corporation for
the purposes and consideration therein expressed, and in the capacity therein
stated, and that the statements contained therein are true and correct.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this 16th day of August,
A.D., 1990.
INES TAYLOR Notary Public
[SEAL] in and for The State of Texas
My Commission Expires 6-2-93 /s/ INES TAYLOR
------------------------------
Notary Public in and for
the State of Texas
My Commission Expires:
INES TAYLOR
6-2-93 ------------------------------
- ---------------------- (Printed Name of Notary)
<PAGE> 28
MERGING GENERAL PARTNER
-----------------------
JAMES A. FORD, INC.
4097 Clayton Nolan Dr.
Horseshoe Bay, Texas 78654
By: /s/ JAMES A. FORD
------------------------------
James A. Ford,
President
STATE OF TEXAS )
)
COUNTY OF DALLAS )
BEFORE ME, the undersigned authority, on this day personally appeared
JAMES A. FORD, known to me to be the person and officer whose name is
subscribed to the foregoing instrument and, upon oath, swore and acknowledged
to me that the same was the act of JAMES A. FORD, INC., a Delaware corporation,
and that he executed the same as the act of such corporation for the purposes
and consideration therein expressed, and in the capacity therein stated, and
that the statements contained therein are true and correct.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this 16th day of August,
A.D., 1990.
INES TAYLOR Notary Public
[SEAL] in and for The State of Texas
My Commission Expires 6-2-93 /s/ INES TAYLOR
------------------------------
Notary Public in and for
the State of Texas
My Commission Expires:
INES TAYLOR
6-2-93 ------------------------------
- ---------------------- (Printed Name of Notary)
<PAGE> 29
GENERAL PARTNER
---------------
P. A. Peak, INC.
929 Thanksgiving Tower
1601 Elm Street
Dallas, Texas 75201
By: /s/ PRESTON A. PEAK
------------------------------
Preston A. Peak,
President
STATE OF TEXAS )
)
COUNTY OF DALLAS )
BEFORE ME, the undersigned authority, on this day personally appeared
PRESTON A. PEAK, known to me to be the person and officer whose name is
subscribed to the foregoing instrument and, upon oath, swore and acknowledged
to me that the same was the act of P.A. PEAK, INC., a Delaware corporation, and
that he executed the same as the act of such corporation for the purposes and
consideration therein expressed, and in the capacity therein stated, and that
the statements contained therein are true and correct.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this 16th day of August,
A.D., 1990.
INES TAYLOR Notary Public
[SEAL] in and for The State of Texas
My Commission Expires 6-2-93 /s/ INES TAYLOR
------------------------------
Notary Public in and for
the State of Texas
My Commission Expires:
INES TAYLOR
6-2-93 ------------------------------
- ---------------------- (Printed Name of Notary)
<PAGE> 30
SOLE LIMITED PARTNER
--------------------
HUGOTON NOMINEE, INC.
9696 Skillman Street
Suite 320, LB-42
Dallas, Texas 75243
By: /s/ KATHLEEN RAWLINGS
------------------------------
Kathleen Rawlings,
President
STATE OF TEXAS )
)
COUNTY OF DALLAS )
BEFORE ME, the undersigned authority, on this day personally appeared
KATHLEEN RAWLINGS, known to me to be the person and officer whose name is
subscribed to the foregoing instrument and, upon oath, swore and acknowledged
to me that the same was the act of HUGOTON NOMINEE, INC., a Texas corporation,
and that she executed the same as the act of such corporation for the purposes
and consideration therein expressed, and in the capacity therein stated, and
that the statements contained therein are true and correct.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this 29th day of August,
A.D., 1990.
VANESSA L. JENSEN, Notary Public
[SEAL] in and for The State of Texas
My Commission Expires 10-18-93 /s/ VANESSA L. JENSEN
------------------------------
Notary Public in and for
the State of Texas
My Commission Expires:
VANESSA L. JENSEN
Oct. 18, 1993 ------------------------------
- ---------------------- (Printed Name of Notary)
<PAGE> 31
GENERAL PARTNER
---------------
HOWARD C. WADSWORTH (INC.)
9696 Skillman Street
Suite 320, LB-42
Dallas, Texas 75243
By:
------------------------------
Howard C. Wadsworth,
President
STATE OF TEXAS )
)
COUNTY OF DALLAS )
BEFORE ME, the undersigned authority, on this day personally appeared
HOWARD C. WADSWORTH, known to me to be the person and officer whose name is
subscribed to the foregoing instrument and, upon oath, swore and acknowledged
to me that the same was the act of HOWARD C. WADSWORTH (INC.), a Delaware
corporation, and that he executed the same as the act of such corporation for
the purposes and consideration therein expressed, and in the capacity therein
stated, and that the statements contained therein are true and correct.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this ________ day of ________,
A.D., 1990.
------------------------------
Notary Public in and for
the State of Texas
My Commission Expires:
------------------------------
- ---------------------- (Printed Name of Notary)
<PAGE> 32
CERTIFICATE OF AMENDMENT
TO THE
AMENDED AND RESTATED
CERTIFICATE AND AGREEMENT
OF
LIMITED PARTNERSHIP
OF
DORCHESTER HUGOTON, LTD.
Dated as of April 24, 1990
We, the undersigned, pursuant to the provisions of Section 25 of the
Texas Uniform Limited Partnership Act and Section 11.03(b) of the Amended and
Restated Certificate and Agreement of Limited Partnership of Dorchester
Hugoton, Ltd., a Texas limited partnership (the "Partnership"), dated as of
August 19, 1982, and filed in the office of the Secretary of State of Texas on
August 20, 1982, as amended by the Certificate of Amendment dated as of July 1,
1985, and filed in the office of the Secretary of State of Texas on July 30,
1985, as amended by the Certificate of Amendment dated as of October 15, 1987,
and filed in the office of the Secretary of State of Texas on October 20, 1987,
and as amended by the Certificate of Amendment dated as of November 3, 1988,
and filed in the office of the Secretary of State of Texas on November 10, 1988
and as amended further by the Certificate of Amendment dated as of July 26,
1989, and filed in the office of the Secretary of State of Texas on August 3,
1989 (as amended, the "Restated Certificate"), make the following amendments to
the Restated Certificate:
1. Effective April 24, 1990, James A. Ford, an individual and
resident of Texas, and a general partner of the Partnership,
transferred his interest as a general partner of the
Partnership to James A. Ford, Inc., a Texas corporation
wholly-owned by James A. Ford. As of such date, James A. Ford,
Inc. was admitted as a general partner of the Partnership and
assumed all the rights and obligations of Jams A. Ford as such
general partner.
2. The present addresses of the general partners and the limited
partner of the Partnership are set forth below their
respective names on the signature pages hereof.
IN WITNESS WHEREOF, this Certificate of Amendment has been executed by
the respective parties on the date(s) set forth below to be effective as of the
day and year first written above.
<PAGE> 33
TRANSFEROR GENERAL PARTNER
--------------------------
/s/ JAMES A. FORD
------------------------------
JAMES A. FORD
9696 Skillman Street
Suite 320, LB-42
Dallas, Texas 75243
STATE OF TEXAS )
)
COUNTY OF DALLAS )
BEFORE ME, the undersigned authority, on this day personally appeared
JAMES A. FORD, known to me to be the person whose name is subscribed to the
foregoing instrument and, upon oath, swore and acknowledged to me that he
executed the same for the purposes and consideration therein expressed, and
that the statements contained therein are true and correct.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this 24th day of April, A.D.
1990.
/s/ MARTYE SHERMAN
[ S E A L ] ------------------------------
Notary Public in and for
the State of Texas
My Commission Expires:
Martye Sherman
6/27/93 ------------------------------
- ---------------------- (Printed Name of Notary)
<PAGE> 34
TRANSFEREE GENERAL PARTNER
--------------------------
JAMES A. FORD, INC., a
Texas corporation
9696 Skillman Street
Suite 320, LB-42
Dallas, Texas 75243
By: /s/ JAMES A. FORD
------------------------------
James A. Ford, President
STATE OF TEXAS )
)
COUNTY OF DALLAS )
BEFORE ME, the undersigned authority, on this day personally appeared
JAMES A. FORD, known to me to be the person and officer whose name is
subscribed to the foregoing instrument and, upon oath, swore and acknowledged
to me that the same was the act of JAMES A. FORD, INC. a Texas corporation,
and that he executed the same as the act of such corporation for the purposes
and consideration therein expressed, and in the capacity therein stated, and
that the statements contained therein are true and correct.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this 24th day of April, A.D.
1990.
/s/ MARTYE SHERMAN
[ S E A L ] ------------------------------
Notary Public in and for
the State of Texas
My Commission Expires:
Martye Sherman
6/27/93 ------------------------------
- ---------------------- (Printed Name of Notary)
<PAGE> 35
GENERAL PARTNER
---------------
P.A. PEAK, INC., a
Delaware corporation
929 Thanksgiving Tower
1601 Elm Street
Dallas, Texas 75201
By: /s/ PRESTON A. PEAK
------------------------------
Preston A. Peak, President
STATE OF TEXAS )
)
COUNTY OF DALLAS )
BEFORE ME, the undersigned authority, on this day personally appeared
PRESTON A. PEAK, known to me to be the person and officer whose name is
subscribed to the foregoing instrument and, upon oath, swore and acknowledged
to me that the same was the act of P.A. PEAK, INC., a Delaware corporation, and
that he executed the same as the act of such corporation for the purposes and
consideration therein expressed, and in the capacity therein stated, and that
the statements contained therein are true and correct.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this 24th day of April, A.D.
1990.
/s/ MARTYE SHERMAN
[ S E A L ] ------------------------------
Notary Public in and for
the State of Texas
My Commission Expires:
Martye Sherman
6/27/93 ------------------------------
- ---------------------- (Printed Name of Notary)
<PAGE> 36
GENERAL PARTNER
---------------
HOWARD C. WADSWORTH (INC), a
Delaware corporation
9696 Skillman Street
Suite 320, LB-42
Dallas, Texas 75243
By: /s/ HOWARD C. WADSWORTH
-------------------------------
Howard C. Wadsworth, President
STATE OF TEXAS )
)
COUNTY OF DALLAS )
BEFORE ME, the undersigned authority, on this day personally appeared
HOWARD C. WADSWORTH, known to me to be the person and officer whose name is
subscribed to the foregoing instrument and, upon oath, swore and acknowledged
to me that the same was the act of HOWARD C. WADSWORTH (INC), a Delaware
corporation, and that he executed the same as the act of such corporation for
the purposes and consideration therein expressed, and in the capacity therein
stated, and that the statements contained therein are true and correct.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this 24th day of April, A.D.
1990.
/s/ MARTYE SHERMAN
[ S E A L ] ------------------------------
Notary Public in and for
State of Texas
My Commission Expires:
Martye Sherman
6/27/93 ------------------------------
- ---------------------- (Printed Name of Notary)
<PAGE> 37
SOLE LIMITED PARTNER
--------------------
HUGOTON NOMINEE, INC., a
Texas corporation
9696 Skillman Street
Suite 320, LB-42
Dallas, Texas 75243
By: /s/ KATHLEEN A. BARRAND RAWLINGS
----------------------------------
Kathleen A. Barrand Rawlings,
President
STATE OF TEXAS )
)
COUNTY OF DALLAS )
BEFORE ME, the undersigned authority, on this day personally appeared
KATHLEEN A. BARRAND RAWLINGS, known to me to be the person and officer whose
name is subscribed to the foregoing instrument and, upon oath, swore and
acknowledged to me that the same was the act of HUGOTON NOMINEE, INC., a Texas
corporation, and that she executed the same as the act of such corporation for
the purposes and consideration therein expressed, and in the capacity therein
stated, and that the statements contained therein are true and correct.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this 24th day of April, A.D.
1990.
/s/ MARTYE SHERMAN
[ S E A L ] ------------------------------
Notary Public in and for
the State of Texas
My Commission Expires:
Martye Sherman
6/27/93 ------------------------------
- ---------------------- (Printed Name of Notary)
<PAGE> 38
CERTIFICATE OF AMENDMENT
TO THE
AMENDED AND RESTATED
CERTIFICATE AND AGREEMENT
OF
LIMITED PARTNERSHIP
OF
DORCHESTER HUGOTON, LTD.
Dated as of July 26, 1989
We, the undersigned, pursuant to the provisions of Section 25 of the
Texas Uniform Limited Partnership Act and Section 11.03(b) of the Amended and
Restated Certificate and Agreement of Limited Partnership of Dorchester
Hugoton, Ltd., a Texas limited partnership (the "Partnership"), dated as of
August 19, 1982, and filed in the office of the Secretary of State of Texas on
August 20, 1982, as amended by the Certificate of Amendment dated as of July 1,
1985, and filed in the office of the Secretary of State of Texas on July 30,
1985, as amended by the Certificate of Amendment dated as of October 15, 1987,
and filed in the office of the Secretary of State of Texas on October 20, 1987,
and as amended further by the Certificate of Amendment dated as of November 3,
1988, and filed in the office of the Secretary of State of Texas on November
10, 1988 (as amended, the "Restated Certificate"), make the following amendments
to the Restated Certificate:
1. Effective June 16, 1989, Howard C. Wadsworth (Inc), a Texas
corporation, a general partner of the Partnership
("HCW-Texas"), merged into its wholly-owned subsidiary, Howard
C. Wadsworth (Inc), a Delaware corporation ("HCW-Delaware").
The surviving corporation of such merger is HCW-Delaware,
which as of such date succeeded HCW-Texas as a general partner
of the Partnership and assumed all the rights and obligations
of HCW-Texas as such general partner.
2. Effective July 24, 1989, Preston A. Peak, an individual and
resident of Texas, and a general partner of the Partnership,
transferred his interest as a general partner of the
Partnership to P.A. Peak, Inc., a Delaware corporation
wholly-owned by Preston A. Peak. As of such date, P.A. Peak,
Inc. was admitted as a general partner of the Partnership and
assumed all the rights and obligations of Preston A. Peak as
such general partner.
<PAGE> 39
3. Effective July 26, 1989, the definition of "Unit" contained in
Article I of the Restated Certificate is hereby amended in its
entirety to read as follows:
"Unit" means a unit of limited partnership
interest in the Partnership of a Limited Partner and
shall be an undivided 1/10,744,380th interest of the
Limited Partners to be allocated Income and
Deductions by, and to receive Distributions from, the
Partnership.
4. The present addresses of the general partners and the limited
partner of the Partnership are set forth below their
respective names on the signature pages hereof.
IN WITNESS WHEREOF, this Certificate of Amendment has been executed by
the respective parties on the date(s) set forth below to be effective as of the
day and year first written above.
-2-
<PAGE> 40
GENERAL PARTNER
---------------
HOWARD C. WADSWORTH (INC), a
Delaware corporation
9696 Skillman Street
Suite 320, LB-42
Dallas, Texas 75243
By: /s/ HOWARD C. WADSWORTH
-------------------------------
Howard C. Wadsworth, President
STATE OF TEXAS )
)
COUNTY OF DALLAS )
BEFORE ME, the undersigned authority, on this day personally appeared
HOWARD C. WADSWORTH, known to me to be the person and officer whose name is
subscribed to the foregoing instrument and, upon oath, swore and acknowledged
to me that the same was the act of HOWARD C. WADSWORTH (INC), a Delaware
corporation, and that he executed the same as the act of such corporation for
the purposes and consideration therein expressed, and in the capacity therein
stated, and that the statements contained therein are true and correct.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this 2nd day of August, A.D.,
1989.
/s/ MARTYE SHERMAN
[ S E A L ] ------------------------------
Notary Public in and for
the State of Texas
My Commission Expires:
Martye Sherman
6/27/93 ------------------------------
- ---------------------- (Printed Name of Notary)
<PAGE> 41
SOLE LIMITED PARTNER
--------------------
HUGOTON NOMINEE, INC., a Texas
corporation
9696 Skillman Street
Suite 320, LB-42
Dallas, Texas 75243
By: /s/ KATHLEEN A. BARRAND
-------------------------------
Kathleen A. Barrand, President
STATE OF TEXAS )
)
COUNTY OF DALLAS )
BEFORE ME, the undersigned authority, on this day personally appeared
KATHLEEN A. BARRAND, known to me to be the person and officer whose name is
subscribed to the foregoing instrument and, upon oath, swore and acknowledged
to me that the same was the act of HUGOTON NOMINEE, INC., a Texas corporation,
and that she executed the same as the act of such corporation for the purposes
and consideration therein expressed, and in the capacity therein stated, and
that the statements contained therein are true and correct.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this 28th day of July, 1989.
/s/ MARTYE SHERMAN
[ S E A L ] ------------------------------
Notary Public in and for
the State of Texas
My Commission Expires:
Martye Sherman
6/27/93 ------------------------------
- ---------------------- (Printed Name of Notary)
<PAGE> 42
GENERAL PARTNER
---------------
/s/ JAMES A. FORD
------------------------------
James A. Ford
9696 Skillman Street
Suite 320, LB-42
Dallas, Texas 75243
STATE OF COLORADO )
)
COUNTY OF EL PASO )
BEFORE ME, the undersigned authority, on this day personally appeared
JAMES A. FORD, known to me to be the person whose name is subscribed to the
foregoing instrument and, upon oath, swore and acknowledged to me that he
executed the same for the purposes and consideration therein expressed, and
that the statements contained therein are true and correct.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this 1st day of August, A.D.,
1989.
/s/ DONNA L. BERG
[ S E A L ] ------------------------------
Notary Public in and for
the State of Colorado
My Commission Expires:
Donna L. Berg
8/19/1989 ------------------------------
- ---------------------- (Printed Name of Notary)
<PAGE> 43
TRANSFEREE GENERAL PARTNER
--------------------------
P.A. PEAK, INC., a Delaware
corporation
929 Thanksgiving Tower
1601 Elm Street
Dallas, Texas 75201
By: /s/ PRESTON A. PEAK
------------------------------
Preston A. Peak, President
STATE OF TEXAS )
)
COUNTY OF DALLAS )
BEFORE ME, the undersigned authority, on this day personally appeared
PRESTON A. PEAK, known to me to be the person and officer whose name is
subscribed to the foregoing instrument and, upon oath, swore and acknowledged
to me that the same was the act of P.A. PEAK, INC., a Delaware corporation, and
that he executed the same as the act of such corporation for the purposes and
consideration therein expressed, and in the capacity therein stated, and that
the statements contained therein are true and correct.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this 28th day of July, A.D.,
1989.
/s/ KATHLEEN A. BARRAND
[ S E A L ] ------------------------------
Notary Public in and for
the State of Texas
My Commission Expires:
Kathleen A. Barrand
9/25/91 ------------------------------
- ---------------------- (Printed Name of Notary)
<PAGE> 44
TRANSFEROR GENERAL PARTNER
--------------------------
/s/ PRESTON A. PEAK
------------------------------
Preston A. Peak
9696 Skillman Street
Suite 320, LB-42
Dallas, Texas 75243
STATE OF TEXAS )
)
COUNTY OF DALLAS )
BEFORE ME, the undersigned authority, on this day personally appeared
PRESTON A. PEAK, known to me to be the person whose name is subscribed to the
foregoing instrument and, upon oath, swore and acknowledged to me that he
executed the same for the purposes and consideration therein expressed, and
that the statements contained therein are true and correct.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this 28th day of July, A.D.,
1989.
/s/ KATHLEEN A. BARRAND
[ S E A L ] ------------------------------
Notary Public in and for
the State of Texas
My Commission Expires:
Kathleen A. Barrand
9/25/91 ------------------------------
- ---------------------- (Printed Name of Notary)
<PAGE> 45
CERTIFICATE OF AMENDMENT
TO THE
AMENDED AND RESTATED
CERTIFICATE AND AGREEMENT
OF
LIMITED PARTNERSHIP
OF
DORCHESTER HUGOTON, LTD.
Dated as of November 3, 1988
We, the undersigned, pursuant to Sections 25 and 26 of the
Texas Uniform Limited Partnership Act, TEX. REV. CIV. STAT. ANN. art. 6132a,
25-26 (Vernon 1970), and Section 11.03(b) of the Amended and Restated
Certificate and Agreement of Limited Partnership of Dorchester Hugoton, Ltd., a
Texas limited partnership (the "Partnership"), dated as of August 19, 1982. and
filed in the office of the Secretary of State of Texas on August 20, 1982, as
amended by the Certificate of Amendment, dated as of July 1, 1985, and filed in
the office of the Secretary of State of Texas on July 30, 1985, as amended by
the Certificate of Amendment, dated as of October 15, 1987, and filed in the
office of the Secretary of State of Texas, October 20, 1987 (as amended, the
"Restated Certificate") make the following amendments to the Restated
Certificate:
Effective November 3, 1988, the principal place of business as
contained in Section 2.02 of Article II of the Restated Certificate is hereby
amended in its entirety to read as follows:
2.02 Principal Place of Business. The principal place of
business of the Partnership is 9696 Skillman Street, Suite 320-LB42,
Dallas, Texas 75243-8200. The General Partners may change the
principal place of business of the Partnership and the Limited
Partners shall be furnished with written notice of any such change.
The General Partners may establish such other places of business as
they may determine to be in the best interests of the Partnership.
IN WITNESS WHEREOF, this Certificate of Amendment has been
duly executed by the respective parties on the date(s) set forth below to be
effective as of the day and year first written above.
<PAGE> 46
GENERAL PARTNER
---------------
/s/ JAMES A. FORD
------------------------------
James A. Ford
9696 Skillman Street
Suite 320, LB-42
Dallas, Texas 75243-8200
STATE OF TEXAS
COUNTY OF DALLAS
BEFORE ME, the undersigned authority, on this day personally appeared
JAMES A. FORD, known to me to be the person whose name is subscribed on the
foregoing document, and, being by me first duly sworn declared that the
statements contained therein are true and correct.
GIVEN UNDER MY HAND AND SEAL of office on the 3rd day of November.
/s/ MARTYE SHERMAN
(SEAL) ------------------------------
Notary Public in and for
The State of Texas
My Commission expires:
Martye Sherman
6/26/89 ------------------------------
- ---------------------- (Printed name of notary)
<PAGE> 47
GENERAL PARTNER
--------------------------
/s/ PRESTON A. PEAK
------------------------------
Preston A Peak
9696 Skillman Street
Suite 320 LB-42
Dallas, Texas 75243-8200
STATE OF TEXAS
COUNTY OF DALLAS
BEFORE ME, the undersigned authority, on this day personally appeared
PRESTON A. PEAK, known to me to be the person whose name is subscribed on the
foregoing document, and, being by me first duly sworn declared that the
statements contained therein are true and correct.
GIVEN UNDER MY HAND AND SEAL of office on this 3rd day of November.
/s/ MARTYE SHERMAN
(SEAL) ------------------------------
Notary Public in and for
The State of Texas
My Commission expires:
Martye Sherman
6/26/89 ------------------------------
- ---------------------- (Printed name of notary)
<PAGE> 48
GENERAL PARTNER
---------------
HOWARD C. WADSWORTH (INC)
9696 Skillman Street
Suite 320 LB-42
Dallas, Texas 75243-8200
By: /s/ HOWARD C. WADSWORTH
-------------------------------
Howard C. Wadsworth, President
STATE OF TEXAS
COUNTY OF DALLAS
BEFORE ME, the undersigned authority, on this day personally appeared
HOWARD C. WADSWORTH, known to me to be the person whose name is subscribed on
the foregoing document, and, being by me first duly sworn declared that the
same was the act of said HOWARD C. WADSWORTH (INC), a corporation, and that he
executed the same as the act of said corporation and that the statements
contained therein are true and correct.
GIVEN UNDER MY HAND AND SEAL of office on this 3rd day of November.
/s/ MARTYE SHERMAN
(SEAL) ------------------------------
Notary Public in and for
The State of Texas
My Commission expires:
Martye Sherman
6/26/89 ------------------------------
- ---------------------- (Printed name of notary)
<PAGE> 49
LIMITED PARTNER
HUGOTON NOMINEE, INC.
9696 Skillman Street
Suite 320 LB-42
Dallas, Texas 75243-8200
By: /s/ KATHLEEN A. BARRAND
-------------------------------
Kathleen A. Barrand, President
STATE OF TEXAS
COUNTY OF DALLAS
BEFORE ME, the undersigned authority, on this day personally appeared
KATHLEEN A. BARRAND, known to me to be the person whose name is subscribed on
the foregoing document, and, being by me first duly sworn, declared that the
same was the act of said HUGOTON NOMINEE, INC., a corporation, and that she
executed the same as the act of said corporation and that the statements
contained therein are true and correct.
GIVEN UNDER MY HAND AND SEAL of office on this 3rd day of November.
/s/ MARTYE SHERMAN
(SEAL) ------------------------------
Notary Public in and for
The State of Texas
My Commission expires:
Martye Sherman
6/26/89 ------------------------------
- ---------------------- (Printed name of notary)
<PAGE> 50
CERTIFICATE OF AMENDMENT
TO THE
AMENDED AND RESTATED
CERTIFICATE AND AGREEMENT
OF
LIMITED PARTNERSHIP
OF
DORCHESTER HUGOTON, LTD.
Dated as of October 15, 1987
We, the undersigned, pursuant to Sections 25 and 26 of the Texas
Uniform Limited Partnership Act, TEX. REV. CIV. STAT. ANN. art. 6132a,
Sections 25-26 (Vernon 1970), and Section 11.03(b) of the Amended and Restated
Certificate and Agreement of Limited Partnership of Dorchester Hugoton, Ltd., a
Texas limited partnership (the "Partnership"), dated as of August 19, 1982, and
filed in the office of the Secretary of State of Texas on August 20, 1982, as
amended by the Certificate of Amendment, dated as of July 1, 1985, and filed in
the office of the Secretary of State of Texas on July 30, 1985 (as amended, the
"Restated Certificate"), make the following amendments to the Restated
Certificate:
1. Effective October 15, 1987, the definition of "Unit" contained
in Article I of the Restated Certificate is hereby amended in its entirety to
read as follows:
"Unit" means a unit of limited partnership interest in the
Partnership of a Limited Partner and shall be an undivided
1/5,372,190th interest of the Limited Partners to be allocated Income
and Deductions by, and to receive Distributions from, the Partnership.
2. The present addresses of the General Partners are set forth
below their respective names on the signature pages hereof.
3. The first two pages of Exhibit A-1 to the Restated
Certificate, consisting of a two-page preamble relating to the Stevens County,
Kansas, leasehold interests of the Partnership, are hereby deleted therefrom
and the following is hereby substituted therefor:
EXHIBIT "A"
STEVENS COUNTY, KANSAS, LEASEHOLDS
The leasehold estates created by or existing under and by
virtue of those certain oil, gas and mineral leases hereinafter
described, covering lands in Stevens County, Kansas, hereinafter
described, insofar as said leasehold estates cover the oil, gas and
other mineral leasehold rights in, and the title to oil, gas and other
minerals in and that
<PAGE> 51
may be produced from all zones and horizons all or part of which are
situated above sea level, save and except the zones and horizons
situated in their entirety below the base of the Wreford Limestone of
the Council Grove Group down to the base of the Forakre Limestone of
the Council Grove Group but including the overriding royalty interest
in said leases at specified depths described in the Assignment dated
July 10, 1981, recorded in Volume 92, page 458 of the Records of the
Register of Deeds, Stevens County, Kansas; but subject, however, to
the exceptions, limitations and burdens hereinafter referred to and to
the exception and limitation that certain of said leasehold estates
are limited to gas rights only and that rights, titles and interests
with respect to oil and minerals other than gas are intended to be
included herein and covered hereby only to the extent owned by
assignors. Each said leasehold estate is the full leasehold estate
(i.e., subject to a royalty reserved by the lease to lessors measured
by no more than 1/8th) with respect to the gas and gas rights in and
under the lands hereinafter described as covered thereby (subject to
the exceptions, limitations and burdens herein specified or referred
to), except that with respect to the seven Group "C" well units last
described below only an undivided 2/5 interest in the full leasehold
estate in the lands included in and comprising said units is included
in and covered hereby (subject to said exceptions, limitations and
burdens).
There are expressly excepted from the leasehold estates
included herein and covered hereby all necessary and appropriate
rights and privileges, with respect to ingress and egress and
otherwise, for the drilling of wells into zones and horizons situated
in their entirety below the base of the Wreford Limestone of the
Council Grove Group down to the base of the Forakre Limestone of the
Council Grove Group and for the operation of wells drilled to such
zones and horizons, including but without limitation, all necessary or
appropriate easements and privileges for the gathering, storage,
handling and transportation of any and all production from wells
drilled to zones and formations below the base of the Wreford
Limestone and down to the base of the Forakre Limestone, and for the
carrying on of secondary recovery operations for such formations,
provided, however, that the exercise of such rights and privileges
shall not unreasonably interfere with the exercise of similar rights
and privileges by the owners of zones and horizons which are situated
above the base of the Wreford Limestone down to the base of the
Forakre Limestone. There are also expressly excepted all hereditaments
and appurtenances insofar as they pertain to any and all of the
interests, properties or rights which are herein expressly excepted.
Certain of the leasehold estates hereinafter described are
subject to overriding royalties or payments out of production
heretofore reserved with respect to gas produced
-2-
<PAGE> 52
and marketed therefrom, those particular leases and tracts of land so
burdened by said reserved interests being hereinafter specified and
reference made to the appropriate contract or instrument containing
the terms and provisions of such reservations.
Further said leasehold estates are subject to the terms and
provisions of (a) that certain Gas Purchase and Sales Agreement dated
January 1, 1961, between Panhandle Eastern Pipe Line Company, as
Buyer, and Dorchester Corporation, as Seller, as amended by Amendment
to Gas Purchase and Sales Agreement dated April 20, 1973, by and
between Panhandle Eastern Pipe Line Company, as Buyer, and Dorchester
Gas Producing Company, as Seller, (b) certain Operating Agreement and
other agreements or instruments hereinafter specifically described,
and (c) division orders, and unitization agreements relating to said
leaseholds which are recorded in the appropriate records of said
county.
The remainder of the Restated Certificate remains unchanged.
IN WITNESS WHEREOF, this Certificate of Amendment has been duly
executed by the respective parties on the date(s) set forth below to be
effective as of the day and year first written above.
-3-
<PAGE> 53
GENERAL PARTNERS:
/s/ JAMES A. FORD
------------------------------
James A. Ford
9696 Skillman Street
Suite 320, LB-42
Dallas, Texas 75243
STATE OF TEXAS )
)
COUNTY OF DALLAS )
BEFORE ME, the undersigned authority, on this day personally appeared
JAMES A. FORD, known to me to be the person whose name is subscribed on the
foregoing document, and, being by me first duly sworn declared that the
statements contained therein are true and correct.
GIVEN UNDER MY HAND AND SEAL of office on this 16th day of October,
1987.
/s/ MARTYE L. SHERMAN
[SEAL] ------------------------------
Notary Public in and for
The State of Texas
My Commission expires:
Martye L. Sherman
6/27/89 ------------------------------
- ---------------------- [Printed name of notary]
-4-
<PAGE> 54
/s/ PRESTON A. PEAK
------------------------------
Preston A. Peak
9696 Skillman Street
Suite 320 LB 42
Dallas, Texas 75243
STATE OF TEXAS )
)
COUNTY OF DALLAS )
BEFORE ME, the undersigned authority, on this day personally appeared
PRESTON A. PEAK, known to me to be the person whose name is subscribed on the
foregoing document, and, being by me first duly sworn declared that the
statements contained therein are true and correct.
GIVEN UNDER MY HAND AND SEAL of office on this 16th day of October,
1987.
/s/ MARTYE L. SHERMAN
[SEAL] ------------------------------
Notary Public in and for
The State of Texas
My Commission expires:
Martye L. Sherman
6/27/89 ------------------------------
- ---------------------- [Printed name of notary]
-5-
<PAGE> 55
HOWARD C. WADSWORTH (INC)
9696 Skillman Street
Suite 320 LB 42
Dallas, Texas 75243
By: /s/ HOWARD C. WADSWORTH
-------------------------------
Howard C. Wadsworth, President
STATE OF TEXAS )
)
COUNTY OF DALLAS )
BEFORE ME, the undersigned authority, on this day personally appeared
HOWARD C. WADSWORTH, known to me to be the person whose name is subscribed on
the foregoing document, and, being by me first duly sworn declared that the
same was the act of said HOWARD C. WADSWORTH (INC), a corporation, and that he
executed the same as the act of said corporation and that the statements
contained therein are true and correct.
GIVEN UNDER MY HAND AND SEAL of office on this 16th day of October,
1987.
/s/ MARTYE L. SHERMAN
[SEAL] ------------------------------
Notary Public in and for
The State of Texas
My Commission expires:
Martye L. Sherman
6/27/89 ------------------------------
- ---------------------- [Printed name of notary]
-6-
<PAGE> 56
LIMITED PARTNER:
HUGOTON NOMINEE, INC.
By: /s/ KATHLEEN A. BARRAND
------------------------------
Its: President
-----------------------------
STATE OF TEXAS )
)
COUNTY OF DALLAS )
BEFORE ME, the undersigned authority, on this day personally appeared
KATHLEEN A. BARRAND, known to me to be the person whose name is subscribed on
the foregoing document, and, being by me first duly sworn, declared that the
same was the act of said HUGOTON NOMINEE, INC., a corporation, and that she
executed the same as the act of said corporation and that the statements
contained therein are true and correct.
GIVEN UNDER MY HAND AND SEAL on this 16th day of October,
1987.
/s/ MARTYE L. SHERMAN
[SEAL] ------------------------------
Notary Public in and for
The State of Texas
My Commission expires:
Martye L. Sherman
6/27/89 ------------------------------
- ---------------------- [Printed name of notary]
-6-
<PAGE> 57
CERTIFICATE OF AMENDMENT
TO
AMENDED AND RESTATED CERTIFICATE AND
AGREEMENT OF LIMITED PARTNERSHIP
OF DORCHESTER HUGOTON, LTD.
Dated as of July 1, 1985
We, the undersigned, make the following amendments to the Amended and
Restated Certificate and Agreement of Limited Partnership of Dorchester
Hugoton, Ltd. (the "Partnership") dated as of August 19, 1982, and filed in the
office of the Secretary of State of Texas on August 20, 1982 (the "Certificate
and Agreement"), which amended and restated the original Certificate and
Agreement of Limited Partnership dated as of June 16, 1982, and filed in the
office of the Secretary of State of Texas on June 17, 1982, to-wit:
1. Effective July 1, 1985, John R. Barnes, with the consent of
the other General Partners of the Partnership in accordance with the terms of
the Certificate and Agreement, transferred his entire Partnership Interest (as
defined therein) as a General Partner of the Partnership to Howard C. Wadsworth
(Inc), a Texas corporation, which as of such date was admitted as a General
Partner of the Partnership and assumed all of the rights and obligations of
John R. Barnes as such General Partner.
2. The present addresses of the General Partners and Limited
Partner of the Partnership are set forth below next to their respective names.
<PAGE> 58
IN WITNESS WHEREOF, this Certificate and Amendment has been executed by
the respective parties on the date(s) set forth below to be effective as of the
day and year first above written.
GENERAL PARTNERS:
-----------------
/s/ JAMES A. FORD
------------------------------
James A. Ford
9708 Skillman Street
Suite 107
Dallas, Texas 75243
STATE OF TEXAS )
SS.:
COUNTY OF DALLAS )
BEFORE ME, the undersigned authority, in and for said County and State,
on this day personally appeared JAMES A. FORD, known to me to be the person
whose name is subscribed to the foregoing instrument, and, upon oath, swore and
acknowledged to me that he executed the same as his free act and deed, for the
purposes and consideration therein expressed, and that the statements therein
are true and correct.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this 22nd day of July, 1985.
/s/ KATHLEEN A. BARRAND
------------------------------
Notary Public in and for
Dallas County, Texas
My Commission Expires:
9/87
- ----------------------
<PAGE> 59
/s/ PRESTON A. PEAK
------------------------------
Preston A. Peak
9708 Skillman Street
Suite 107
Dallas, Texas 75243
STATE OF TEXAS )
SS.:
COUNTY OF DALLAS )
BEFORE ME, the undersigned authority, in and for said County and State,
on this day personally appeared PRESTON A. PEAK, known to me to be the person
whose name is subscribed to the foregoing instrument, and, upon oath, swore and
acknowledged to me that he executed the same as his free act and deed, for the
purposes and consideration therein expressed, and that the statements therein
are true and correct.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this 19th day of July, 1985.
/s/ KATHLEEN A. BARRAND
------------------------------
Notary Public in and for
Dallas County, Texas
My Commission Expires:
9/87
- ----------------------
-3-
<PAGE> 60
HOWARD C. WADSWORTH (INC)
9708 Skillman Street
Suite 107
Dallas, Texas 75243
By: /s/ HOWARD C. WADSWORTH
------------------------------
Howard C. Wadsworth,
President
STATE OF TEXAS )
SS.:
COUNTY OF DALLAS )
BEFORE ME, the undersigned authority, in and for said County and State,
on this day personally appeared HOWARD C. WADSWORTH, known to me to be the
person and officer whose name is subscribed to the foregoing instrument, and,
upon oath, swore and acknowledged to me that the same was the act of the said
HOWARD C. WADSWORTH (INC), a corporation, and that he executed the same as the
act of such corporation for the purposes and consideration therein expressed,
and in the capacity therein stated, and that the statements therein are true
and correct.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this 19th day of July, 1985.
/s/ KATHLEEN A. BARRAND
------------------------------
Notary Public in and for
Dallas County, Texas
My Commission Expires:
9/87
- ----------------------
<PAGE> 61
SOLE LIMITED PARTNER:
---------------------
HUGOTON NOMINEE, INC.
9708 Skillman Street
Suite 107
Dallas, Texas 75243
By: /s/ KATHLEEN A. BARRAND
------------------------------
Authorized Officer
STATE OF TEXAS )
SS.:
COUNTY OF DALLAS )
BEFORE ME, the undersigned authority, in and for said County and State,
on this day personally appeared KATHLEEN A. BARRAND, known to me to be the
person and officer whose name is subscribed to the foregoing instrument, and,
upon oath, swore and acknowledged to me that the same was the act of the said
HUGOTON NOMINEE, INC., a corporation, and that she executed the same as the act
of such corporation for the purposes and consideration therein expressed, and
in the capacity therein stated, and that the statements therein are true and
correct.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this 22nd day of July, 1985.
/s/ CHARLOTTE A. MORRIS
------------------------------
Notary Public in and for
Dallas County, Texas
My Commission Expires:
January 28, 1989
- ----------------------
<PAGE> 62
TRANSFEROR GENERAL PARTNER:
---------------------------
/s/ JOHN R. BARNES
------------------------------
John R. Barnes
STATE OF TEXAS )
SS.:
COUNTY OF DALLAS )
BEFORE ME, the undersigned authority, in and for said County and State,
on this day personally appeared JOHN R. BARNES, known to me to be the person
whose name is subscribed on the foregoing instrument, and, upon oath, swore and
acknowledged to me that he executed the same as his free act and deed, for the
purposes and consideration therein expressed and that the statements therein are
true and correct.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this 22nd day of July, 1985.
/s/ CHARLOTTE MORRIS
------------------------------
Notary Public in and for
Dallas County, Texas
My Commission Expires:
January 28, 1989
- ----------------------
<PAGE> 63
AMENDED AND RESTATED
CERTIFICATE AND AGREEMENT
OF
LIMITED PARTNERSHIP
OF
DORCHESTER HUGOTON, LTD.
AUGUST 19, 1982
<PAGE> 64
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE I - Definitions................................................................ 2
ARTICLE II - Organization.............................................................. 7
2.01 Name of the Partnership................................................... 7
2.02 Principal Place of Business............................................... 7
2.03 Purpose................................................................... 7
2.04 Commencement.............................................................. 7
ARTICLE III - The General Partners..................................................... 7
3.01 Allocation of Authority and Responsibility
Between the General Partners.............................................. 7
3.02 Authority of General Partners............................................. 8
3.03 Limitations on General Partners........................................... 10
3.04 Covenants of General Partners
Respecting Federal Income Tax Matters..................................... 11
3.05 Liability of General Partners............................................. 12
3.06 Indemnification........................................................... 12
3.07 Reimbursement of General Partners......................................... 14
3.08 Compensation of General Partners.......................................... 14
3.09 Reliance by Third Parties................................................. 14
ARTICLE IV - The Limited Partners...................................................... 15
4.01 Rights of Limited Partners................................................ 15
4.02 Voting by Limited Partners................................................ 16
4.03 Limitations on Limited Partners........................................... 17
4.04 Representations of the Limited Partners................................... 17
4.05 Power of Attorney......................................................... 18
ARTICLE V - Contributions.............................................................. 19
5.01 Initial Contributions..................................................... 19
5.02 Additional Funding........................................................ 19
ARTICLE VI - Allocations............................................................... 20
6.01 Tax Allocations........................................................... 20
ARTICLE VII - Distributions............................................................ 20
7.01 Interim Distributions..................................................... 20
7.02 Liquidating Distributions................................................. 20
</TABLE>
(i)
<PAGE> 65
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE VIII - Books, Records and Reports.............................................. 20
8.01 Method of Accounting.......................................................... 20
8.02 Fiscal Year................................................................... 21
8.03 Capital Accounts.............................................................. 21
8.04 Audits........................................................................ 21
8.05 Reports and Financial Statements.............................................. 21
8.06 Tax Reports................................................................... 22
8.07 Operations Reports............................................................ 22
8.08 Inspection.................................................................... 22
ARTICLE IX - Transfer of Partnership Interests......................................... 22
9.01 General Partners.............................................................. 22
9.02 Limited Partners.............................................................. 23
9.03 Transfer to Non-citizen....................................................... 24
9.04 Redemption of Non-citizen's Units............................................. 25
9.05 Subdivided Units Prohibited................................................... 26
ARTICLE X - Dissolution and Liquidation................................................ 26
10.01 Dissolution................................................................... 26
10.02 Reconstitution................................................................ 27
10.03 Winding Up.................................................................... 27
10.04 Accounting on Dissolution..................................................... 28
10.05 Liquidation................................................................... 28
ARTICLE XI - Miscellaneous............................................................. 28
11.01 Right to Compete.............................................................. 28
11.02 Scope of Agreement............................................................ 29
11.03 Amendments.................................................................... 29
11.04 Applicable Law................................................................ 30
11.05 Notices....................................................................... 30
11.06 Assigns....................................................................... 30
11.07 Gender and Number............................................................. 30
11.08 Execution..................................................................... 30
SIGNATURES AND JURATS................................................................... 31
EXHIBIT A - Description of Contributed Properties
EXHIBIT B - Form of Certificate of Limited
Partnership Units
</TABLE>
(ii)
0254k
<PAGE> 66
AMENDED AND RESTATED
CERTIFICATE AND AGREEMENT
OF
LIMITED PARTNERSHIP
OF
DORCHESTER HUGOTON, LTD.
THIS CERTIFICATE AND AGREEMENT OF LIMITED PARTNERSHIP is made and entered
into as of the 19th day of August, 1982, by and among John R. Barnes, James A.
Ford and Preston A. Peak, individuals residing in Dallas County, Texas, as
General Partners, George S. Rooker, as a withdrawing General Partner, Dorchester
Gas Corporation, a Delaware corporation ("Dorchester"), as the initial Limited
Partner, Hugoton Nominee, Inc., a Texas corporation ("Nominee"), in its capacity
as Nominee under a Nominee Agreement dated as of August 19, 1982, as the initial
substituted Limited Partner, and all other parties admitted to the Partnership
created hereby as Limited Partners in accordance with the terms hereof, for the
purpose of amending and restating in its entirety the Agreement of Limited
Partnership of Dorchester Hugoton, Ltd., a Texas limited partnership, as filed
in the office of the Secretary of State of Texas on June 17, 1982;
WHEREAS, Dorchester wishes to distribute to its stockholders an 80% working
interest in Dorchester's beneficial interest in certain oil and gas leases and
properties described on Exhibit A ("the Contributed Properties");
WHEREAS, Dorchester has caused the Contributed Properties to be contributed
to the Partnership;
WHEREAS, Dorchester, as the initial Limited Partner, has deposited the
Units with Mercantile National Bank at Dallas, as Depositary, pursuant to the
terms of a Depositary Agreement dated as of June 17, 1982, for distribution to
Dorchester stockholders of record on July 2, 1982 as a dividend, and to certain
key employees (collectively, the "Distributees");
WHEREAS, it is necessary to provide a nominee to act as a limited partner
of record until such time as the Distributees or their successors and assigns
elect to become, and are admitted as, substituted Limited Partners under this
Agreement and applicable state law;
WHEREAS, Nominee, in such capacity, is hereby substituted for Dorchester as
Limited Partner of record; and
<PAGE> 67
WHEREAS, George S. Rooker desires to withdraw as a General Partner and
transfer his interest in the Partnership as a General Partner to James A. Ford;
WHEREAS, the General Partners desire to otherwise amend the Agreement of
Limited Partnership as permitted by its terms;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
When used in this Agreement, the following terms have the meanings assigned
to them in this Section.
"Affiliate" means (i) a General Partner; (ii) any Person directly or
indirectly owning, controlling or holding with power to vote, 10% or more of the
outstanding voting securities of a General Partner; (iii) any Person, 10% or
more of whose outstanding voting securities are directly or indirectly owned,
controlled or held with power to vote, by a General Partner; (iv) any Person
directly or indirectly controlling, controlled by or under common control with a
General Partner; (v) any officer or director of a General Partner; and (vi) any
partnership in which a General Partner or any Affiliate acts as a partner; (vii)
any spouse of an Affiliate; (viii) any lineal ancestor, lineal descendant,
brother or sister of an Affiliate.
"Area of Interest" means the geographical areas covered by the Contributed
Properties, the areas included within any area of interest defined in any
agreement existing on the Commencement Date covering the Contributed Properties
and such other geographical areas within the Hugoton Embayment as the General
Partners may designate from time to time.
"Applicable Percentage Interest" means, when referring to the Limited
Partners, Limited Partners who own, at the time of determination, more than the
following percentage of the Units owned by all Limited Partners:
<TABLE>
<CAPTION>
TIME OF DETERMINATION APPLICABLE PERCENTAGE INTEREST
--------------------- ------------------------------
<S> <C>
From June 16, 1982 to June 16, 1984 100%
From June 17, 1984 to June 16, 1985 95%
From June 17, 1985 to June 16, 1986 90%
From June 17, 1986 to June 16, 1987 85%
After June 16, 1987 80%
</TABLE>
"Capital Account", as to each Partner, means an account (i) to which are
credited Capital Contributions made by and Income allocated to such Partner
-2-
<PAGE> 68
and (ii) to which are charged Deductions allocated to such Partner and
Distributions made to such Partner.
"Capital Contribution" means the amount of cash and the agreed value of any
property contributed by a Partner to the Partnership.
"Code" means the Internal Revenue Code of 1954, as amended and hereafter
amended, and applicable regulations thereunder.
"Commencement Date" means the date that a certificate of limited
partnership is duly filed with the Secretary of the State of Texas.
"Contributed Properties" means the properties described on Exhibit A
hereto.
"Deductions" means expenses, depreciation, depletion, losses and other
deductions determined in accordance with federal income tax principles, and any
other expenditures which are not capitalizable for federal income tax purposes
and which do not constitute Distributions or principal repayments of Loans,
except that for book purposes no percentage depletion will be taken and cost
depletion and gain or loss on the disposition of depletable properties will be
computed by the Partnership based on the book basis of such properties.
"Depositary" means Mercantile National Bank at Dallas, Dallas, Texas for
the Depositary Units or any successor to it as Depositary under the Depositary
Agreement.
"Depositary Account" means the account established by the Depositary
pursuant to the Depositary Agreement to hold Depositary Units.
"Depositary Agreement" means the agreement so designated, entered into
among the Partnership, the Depositary, and the General Partners, as
attorney-in-fact of the Limited Partners in the Partnership, and holders from
time to time of Depositary Receipts, as it may be amended or supplemented from
time to time.
"Depositary Receipt" means a Depositary Receipt, issued by the Depositary
in accordance with the Depositary Agreement, evidencing ownership of one or more
Depositary Units.
"Depositary Unit" means a Unit on deposit with the Depositary pursuant to
the Depositary Agreement.
"Distributable Cash" at the end of any relevant period means all cash of
the Partnership which is in excess of the amount which the General Partners
determine in their sole discretion is required to be retained as working capital
or reserves to pay projected or contingent costs or otherwise to carry on the
business of the Partnership.
-3-
<PAGE> 69
"Distribution" means the amount of cash and the agreed value of any
property distributed by the Partnership to a Partner.
"Eligible Citizen" means (a) a citizen or national of the United States, or
(b) an alien lawfully admitted for permanent residence in the United States as
defined in 8 U.S.C. 1101(a)(20), or (c) a private, public or municipal
corporation organized under the laws of the United States or of any State or of
the District of Columbia, or territory thereof, or (d) an association (including
a partnership) of such citizens, nationals, resident aliens, or private, public
or municipal corporations, States or political subdivisions of States.
"Entity" means any corporation, association, partnership, joint venture,
trust, estate or other organization.
"General Partners" means the Person or Persons serving as General Partners
under this Agreement during the period they are so serving.
"Income" means all income and gain determined in accordance with federal
income tax principles and other amounts not properly treated as Capital
Contributions, Loan proceeds or a return of capital.
"Lease" means an oil or gas lease, permit, license, option, application or
interest in real property, or a contractual right in or affecting the foregoing,
which permits the exploration for or production of oil, gas or related
hydrocarbons or the receipt of such production or proceeds therefrom.
"Limited Partner", for purposes of allocations and Distributions, means
each Person, including a General Partner, who has acquired one or more Units
pursuant to the terms of this Agreement and for all other purposes, means each
Person who owns one or more Units and who has been designated as a limited
partner of the Partnership on the certificate of limited partnership of the
Partnership on file with the Secretary of State of the State of Texas.
"Limited Partners Pro Rata" means among the Limited Partners in the ratio
of the Units owned by each.
"Liquidating Trustee" (i) means the General Partners unless the Partnership
is dissolved by reason of the Withdrawal of all of them except as permitted by
Section 10.01(d); (ii) means the non-Withdrawing General Partner(s) if the
Partnership is dissolved by the Withdrawal of one but not all of the General
Partners pursuant to Section 10.01(b) and (iii) means a Person selected by a
vote of the Applicable Percentage Interest of the Limited Partners if all of the
General Partners have withdrawn from the Partnership other than as permitted by
Section 10.01(d).
"Loan" means a debt of the Partnership created by borrowing money or
selling a Partnership debt obligation for cash.
-4-
<PAGE> 70
"Majority in Interest" means, when referring to the Limited Partners,
Limited Partners who own, at the time of determination, more than 50% of the
Units owned by all Limited Partners.
"Management Agreement" means the agreement so designated which may be
entered into between the Partnership and a third party relating to the operation
of the Partnership.
"Net Income" for each year means the excess of Income for such year over
Deductions for such year, exclusive of Deductions attributable to Contributed
Property.
"Non-citizen" means a person who is not an Eligible Citizen, and
"Non-citizen Assignee" means an Assignee who has certified in a Transfer
Application or otherwise that he is not an Eligible Citizen or is given that
status pursuant to Section 9.03(d).
"Non-Recourse Loan" means a Loan as to which no Partner is liable other
than in respect of his interest in Partnership assets, excluding the asset
consisting of the right of the Partnership to Capital Contributions from a
Partner.
"Partners" means the General Partners and the Limited Partners.
"Partnership" means the limited partnership created by this Agreement.
"Partnership Interest", as to any Partner, means all of the interests of
that Partner in the Partnership, including, without limitation, his (i) right to
a distributive share of the profits and losses of the Partnership; (ii) right to
a distributive share of the assets of the Partnership and (iii) right, if a
General Partner, to participate in the management of the affairs of the
Partnership.
"Partnership Property" means all real or personal property in which the
Partnership has an ownership interest.
"Person" means any individual or Entity.
"Prime Rate" means, at any time, the rate of interest per annum then most
recently established by Mercantile National Bank at Dallas, Dallas, Texas, as
its prime rate on commercial loans.
"Profit Sharing Percentage" (i) for each Limited Partner, means the
percentage obtained by multiplying 99% by a fraction, the numerator of which is
the number of Units owned by such Limited Partner and the denominator of which
is the number of Units owned by all Limited Partners; and (ii) for the General
Partners, means an aggregate of 1%.
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<PAGE> 71
"Profit Sharing Ratio" means to the Partners in the ratio of their Profit
Sharing Percentages.
"Recourse Loan" means a Loan as to which the General Partners are liable in
the event the assets of the Partnership are insufficient to discharge such Loan.
"Section 1504 Affiliate of a General Partner" means an affiliate of a
General Partner within the meaning of Section 1504 of the Code.
"Section 754 Election" means an election under Section 754 of the Code (or
corresponding provisions of future law) relating to the adjustment for tax
purposes of the basis of the assets of the Partnership as provided in Section
734 and 743 of the Code.
"Section 38 Property" means property defined as such in Section 48 of the
Code.
"Successor General Partner" means the Person or Persons selected by the
remaining General Partners, if any, pursuant to Section 10.02(a) or by the
Applicable Percentage Interest of the Limited Partners pursuant to Section
4.01(e) to acquire the Partnership Interest of a Person who has Withdrawn or has
been removed as a General Partner of the Partnership.
"Transfer" means a sale, exchange, assignment, gift or any other
disposition whether voluntary or involuntary, during life or upon death, testate
or intestate.
"Unit" means a unit of limited partnership interest in the Partnership of a
Limited Partner and shall be an undivided 1/1,790,730th interest of the Limited
Partners to be allocated Income and Deductions by, and to receive Distributions
from, the Partnership.
"Unrelated Person" means any Person other than a Partner or an Affiliate.
"Winding Up" means the period following the dissolution of the Partnership.
"Withdrawal" means (i) the agreement of the General Partners to dissolve
the Partnership, (ii) a Transfer by a General Partner of his management rights
in the Partnership, (iii) the death, dissolution, resignation, insanity or other
incapacity of a General Partner, (iv) the bankruptcy of a General Partner or (v)
termination of a marital relationship in which all or a part of the record or
beneficial ownership of the General Partner is transferred. For purposes of this
Agreement, bankruptcy of a General Partner shall occur when a voluntary or
involuntary petition in bankruptcy under 11 U.S.C. 101 et seq. is filed by or
against said General Partner, as the debtor, and an order for relief is entered
pursuant to 11 U.S.C. 101 et seq., or an involuntary petition is filed against
such General Partner pursuant to 11 U.S.C. 101 et seq.
-6-
<PAGE> 72
and prior to entry of an order for relief, the said involuntary petition is not
dismissed within 60 days of filing. The term "Withdraw" means the taking or
suffering of any action constituting a Withdrawal.
ARTICLE II
ORGANIZATION
2.01. Name of the Partnership. The name of the Partnership is Dorchester
Hugoton, Ltd. The business of the Partnership shall be conducted under such name
or in the name of a General Partner or under such other name as the General
Partners deem to be in the best interests of the Partnership.
2.02. Principal Place of Business. The principal place of business of the
Partnership is 5735 Pineland Drive, Suite 129, Dallas, Texas 75231. The General
Partners may change the principal place of business of the Partnership and the
Limited Partners shall be furnished with written notice of any such change. The
General Partners may establish such other places of business as they may
determine to be in the best interests of the Partnership.
2.03. Purpose. The purpose of the Partnership is to own, hold, explore,
develop and operate the Contributed Properties and any other properties acquired
pursuant to this Agreement and to do all things necessary, appropriate or
incidental to the foregoing. The Partnership may engage in the foregoing alone
or in association with others. In furtherance of such purpose the General
Partners shall have the powers and be subject to the restrictions provided in
Article III hereof.
2.04. Commencement. The Partnership shall commence upon the date that a
certificate of limited partnership of the Partnership is duly filed with the
office of the Secretary of State of Texas.
ARTICLE III
THE GENERAL PARTNERS
3.01. Allocation of Authority and Responsibility Between the General
Partners. So long as there is more than one General Partner, the approval of a
majority of the General Partners is required to bind the Partnership, except as
the General Partners may from time to time delegate responsibility among
themselves or to others. If there are only two General Partners, a majority
shall mean both General Partners. If there is only one General Partner, such
General Partner shall have all the rights and duties delegated to the General
Partners hereunder.
-7-
<PAGE> 73
3.02. Authority of General Partners. Except as provided in Section 3.03,
the General Partners shall have complete and exclusive discretion in the
management and control of the business of the Partnership and all of its assets
and, without limiting the generality of the foregoing, but subject to any
specific limitations contained in this Agreement and to applicable law, are
hereby authorized and empowered on behalf of the Partnership to:
(a) purchase or otherwise acquire any Lease or other interest in oil
or gas property located within an Area of Interest;
(b) purchase or otherwise acquire other real or personal property of
every nature considered necessary or appropriate to carry on and conduct
the business of the Partnership;
(c) borrow monies for the business of the Partnership, and from time
to time, without limit as to amount, draw, make, execute and issue
promissory notes and other negotiable or non-negotiable instruments and
evidences of indebtedness, and to secure the payment of the sums so
borrowed, and to mortgage, pledge or assign in trust all or any part of the
Partnership Property or to assign any monies owing or to be owing to the
Partnership, and to engage in any other means of financing;
(d) enter into the Management Agreement and any agreement for sharing
of profits, joint venture or partnership with any Person, government or
agency thereof, which is engaged in any business or transaction capable of
being conducted so as to directly or indirectly benefit the Partnership;
(e) explore and prospect by geological, geophysical or other methods
for the location of anomalies or other indications favorable to the
accumulation of oil and gas, including specifically the power to contract
with third parties for such purposes;
(f) maintain, explore, develop, operate, manage and defend the
Partnership Property; drill, test, plug, abandon or complete, equip, rework
and recomplete any number of wells on the Partnership Property for the
production of oil and gas located thereunder and contract with third
parties for such purposes; carry out a program or programs of secondary or
tertiary recovery on Partnership Property and do any and all other things
necessary or appropriate to carry out the terms and provisions of this
Agreement which would or might be done by a normal and prudent operator in
the exploration, development, operation, production and management of its
own property;
(g) enter into and execute leases, drilling contracts, farmout
agreements, farmin agreements, operating agreements, unitization
agreements, pooling agreements, gas processing agreements, recycling
-8-
<PAGE> 74
contracts, dry and bottom hole and acreage contribution letters,
participation agreements, agreements as to rights-of-way, any other
agreements customarily employed in the oil and gas industry in connection
with the acquisition, sale, exploration, development, operation or
production of oil and gas properties and any and all other instruments or
documents necessary or appropriate to carry on and conduct the business of
the Partnership;
(h) sell the production accruing to the properties acquired by the
Partnership, and execute gas sales contracts, casinghead gas contracts,
transfer orders, division orders or any other instruments in connection
with the sale of production from the Partnership's interest in any
property;
(i) sell, assign, convey or otherwise dispose of all or any part of
Partnership Property, any interest therein, or any interest payable
therefrom, and in connection therewith, execute and deliver such deeds,
assignments and conveyances as may be necessary or appropriate;
(j) employ on behalf of the Partnership agents, employees,
accountants, lawyers, geologists, geophysicists, landmen, clerical help and
such other assistance and services as may be necessary or appropriate;
(k) purchase, lease, rent or otherwise acquire or obtain the use of
machinery, equipment, tools, materials and all other kinds and types of
real or personal property that may in any way be deemed necessary,
convenient or advisable in connection with carrying on the business of the
Partnership, and incur expenses for travel, telephone, telegraph, insurance
and such other things, whether similar or dissimilar, as may be deemed
necessary or appropriate for carrying on the business of the Partnership;
(l) pay delay rentals, shut-in gas royalty payments, property taxes,
and any other amounts necessary or appropriate to the maintenance or
operation of any Partnership Property;
(m) make and enter into such agreements and contracts with such
parties and give such receipts, releases and discharges with respect to any
and all of the foregoing and any matters incident thereto as may be
necessary or appropriate;
(n) guarantee the payment of money or the performance of any contract
or obligation by any Person (other than an Affiliate);
(o) sue and be sued, complain and defend in the name and on behalf of
the Partnership;
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<PAGE> 75
(p) quitclaim, surrender, release or abandon any Partnership Property,
with or without consideration therefor;
(q) execute and deliver all negotiable instruments, checks, drafts or
other orders for payment of funds belonging to the Partnership;
(r) execute powers of attorney, consents, waivers and such other
documents as may be necessary or appropriate before any court,
administrative board or agency or any governmental authority, affecting the
Partnership Property;
(s) at the Partnership's expense, purchase insurance, or extend the
General Partners' insurance to protect the Partnership's properties and
business against loss and protect the General Partners against liability to
third parties arising out of Partnership activities;
(t) execute and deliver such other documents and perform such other
acts as the General Partners in their sole discretion may determine to be
necessary or appropriate to carry out the business and affairs of the
Partnership; and
(u) take such action as they deem appropriate to cause Units in the
Partnership or the Depositary Receipts to be readily tradable.
3.03 Limitations on General Partners. Notwithstanding any other provisions
of this Agreement, the following prohibitions, restrictions and requirements
shall be applicable:
(a) An Affiliate may enter into contracts with the Partnership as
operator, seller or purchaser of properties or services, or in other
capacities, so long as the transactions are fair and reasonable to the
Partnership and the terms of any contract or conveyance are no less
favorable to the Partnership than those which could be obtained from
Unrelated Persons.
(b) The Partnership shall not acquire any Lease or other oil and gas
interest or otherwise engage in any exploratory operations outside the Area
of Interest, or make any other investment not in furtherance of the
purposes of the Partnership.
(c) The Partnership shall not sell all or any part of a Lease to an
Affiliate without the prior consent of a Majority in Interest of the
Limited Partners.
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<PAGE> 76
(d) No Affiliate shall render to the Partnership any oil field
equipage, or drilling services or sell or lease to the Partnership any
equipment or related supplies unless (i) if such Person is engaged,
independently of the Partnership and as an ordinary ongoing business, in
the business of providing such services or selling or leasing such items to
a substantial extent to other Persons in the oil and gas industry in
addition to partnerships in which such Person has an interest, the
compensation, price or rental therefor is competitive with rates and prices
charged by other Persons in the area engaged in the business of providing
comparable services or items that could reasonably be made available to the
Partnership or (ii) if such Person is not engaged in such a business, the
compensation, price or rental therefor is the Affiliate's cost of such
services, equipment or supplies or the competitive rate that could be
obtained in the area, whichever is less.
(e) Any services for which an Affiliate is to receive compensation
from the Partnership shall be described in a written contract which also
specifies all compensation to be paid.
(f) The General Partners shall not permit the Partnership to do
business in any jurisdiction or political subdivision in which the General
Partners and the Partnership have not previously taken such steps as may be
necessary to assure for the Limited Partners substantially the same limited
liability as is provided for limited partners in limited partnerships
formed under The Texas Uniform Limited Partnership Act.
(g) No loans may be made by the Partnership to any Affiliate.
(h) A creditor who makes a Non-Recourse Loan to the Partnership shall
not have or acquire, at any time as a result of making the Loan, any direct
or indirect interest in the profits, capital or property of the
Partnership, other than as a secured creditor.
3.04. Covenants of General Partners Respecting Federal Income Tax Matters.
For purposes of this Section 3.04, ownership of stock by any Person includes
stock owned constructively by that Person after application of the attribution
rules of Section 318 of the Code. Each General Partner covenants and agrees with
the Partners and the Partnership as follows:
(a) After the Commencement Date, no Person will be admitted to the
Partnership as a substituted limited partner if such Person owns stock of
any General Partner or of any Section 1504 Affiliate of a General Partner
if the then Limited Partners and such Person then own, individually or in
the aggregate, more than 20% of the stock of such General Partner or of
such Section 1504 Affiliate of a General Partner.
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(b) After the Commencement Date, no General Partner will consent to
the acquisition by a Limited Partner of stock of such General Partner or of
any Section 1504 Affiliate of such General Partner if such acquisition
would cause the then Partners to own, individually or in the aggregate,
more than 20% of the stock of such General Partner or of such Section 1504
Affiliate of such General Partner.
(c) Neither such General Partner nor any Section 1504 Affiliate of
such General Partner will redeem stock if after such redemption, the
Limited Partners would then own, individually or in the aggregate, more
than 20% of the stock of such General Partner or of any Section 1504
Affiliate of such General Partner.
3.05. Liability of General Partners. No General Partner, nor any
stockholder, director, officer, employee or agent of a General Partner, shall be
liable to the Partnership or to the Partners for losses sustained or liabilities
incurred as a result of any act or omission which such General Partner in good
faith reasonably believed to be in, or not opposed to, the best interests of the
Partnership, unless such act or omission constituted gross negligence, willful
or wanton misconduct or breach of such General Partner's fiduciary obligations
to the Limited Partners. A General Partner may rely upon, and shall have no
liability to the other Partners or to the Partnership if it relies upon, the
opinion of the Partnership's independent public accountants with respect to any
matter relating to computations and determinations which affect allocations as
provided in Article VI or Distributions as provided in Article VII.
3.06. Indemnification. Each General Partner shall be indemnified by the
Partnership as follows:
(a) In any threatened, pending or completed action, suit or proceeding
to which a General Partner was or is a party, or is threatened to be made a
party, by reason of the fact that it is or was a General Partner of the
Partnership (other than an action by or in the right of the Partnership),
involving an alleged cause of action arising out of, or in any way
connected with, the manner in which such General Partner conducted the
Partnership's business, the Partnership shall indemnify such General
Partner against all expenses, including attorneys' fees, judgments and
amounts paid in settlement, actually and reasonably incurred by such
General Partner in connection with such action, suit or proceeding if, in
the transaction giving rise to such action, suit or proceeding, such
General Partner acted in good faith and in a manner such General Partner
reasonably believed to be in, or not opposed to, the best interests of the
Partnership and such General Partner's conduct in such transaction did not
constitute gross negligence, willful or wanton misconduct or willful breach
of such General Partner's fiduciary
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obligations to the Limited Partners. The termination of any action, suit or
proceeding by judgment, order or settlement shall not, of itself, create a
presumption that a General Partner did not act in good faith and in a
manner which such General Partner reasonably believed to be in, or not
opposed to, the best interests of the Partnership.
(b) In any threatened, pending or completed action, suit or proceeding
by or in the right of the Partnership, to which a General Partner was or is
a party, or is threatened to be made a party, by reason of the fact that it
is or was a General Partner of the Partnership, involving an alleged cause
of action arising out of the manner in which such General Partner managed
the internal affairs of the Partnership as prescribed by this Agreement or
by The Texas Uniform Limited Partnership Act, or both (but excluding the
activities covered in Section 3.06(a)), the Partnership shall indemnify
such General Partner against all expenses, including attorneys' fees,
judgments and amounts paid in settlement, actually and reasonably incurred
by such General Partner in connection with such action, suit or proceeding
if, in the transaction giving rise to such action, suit or proceeding, such
General Partner acted in good faith and in a manner such General Partner
reasonably believed to be in, or not opposed to, the best interests of the
Partnership, except that no indemnification shall be made in respect of any
claim, issue or matters as to which such General Partner shall have been
adjudged to be liable for gross negligence, willful or wanton misconduct or
breach of such General Partner's fiduciary obligations to the Limited
Partners, unless and only to the extent that the court in which such
action, suit or proceeding was brought shall determine upon application
that, despite the adjudication of liability but in view of all
circumstances of the case, such General Partner is fairly and reasonably
entitled to indemnity for such expenses which such court shall deem proper.
(c) To the extent that a General Partner has been successful on the
merits or otherwise in defense of any action, suit or proceeding referred
to in Section 3.06(a) or (b), or in defense of any claim, issue or matter
therein, the Partnership shall indemnify such General Partner against the
expenses, including attorneys' fees, actually and reasonably incurred by
such General Partner in connection therewith.
(d) Any indemnification under Section 3.06(a) or (b), unless ordered
by a court, shall be made by the Partnership only as authorized in the
specific case and only upon a determination by independent legal counsel in
a written opinion to the Partnership that indemnification of the General
Partner in favor of whom indemnity is sought is proper in the circumstances
because such General Partner
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has met the applicable standard of conduct set forth in Section 3.06(a) or
(b).
(e) Expenses incurred by a General Partner in defending any action,
suit or proceeding subject to Section 3.06(a) or (b) shall be advanced by
the Partnership prior to the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of such General
Partner to repay such amount unless it shall be determined ultimately that
such General Partner is entitled to be indemnified as authorized in this
Section 3.06.
(f) For purposes of this Section 3.06, indemnification of a General
Partner shall include indemnification of its stockholders, directors,
officers, employees and agents.
3.07. Reimbursement of General Partners. The General Partners shall be
reimbursed for all expenses incurred by them on behalf of the Partnership,
including their general and administrative expenses.
3.08. Compensation of General Partners.
(a) Subject to the provisions of Section 3.08(b) below, the General
Partners shall be entitled to receive reasonable compensation from the
Partnership for services rendered in operating and managing the Partnership
in an annual aggregate amount equal to $75,000 plus 1% of Gross Income. The
compensation payable to the General Partners under this Section 3.08(a)
shall be divided among the General Partners equally. For purposes of this
Section, the term "Gross Income" shall mean the annual gross income of the
Partnership from the Partnership Properties.
(b) Notwithstanding the provisions of Section 3.08(a) above, no
General Partner shall be entitled to receive any compensation from the
Partnership for services rendered in operating and managing the Partnership
during any period of time in which such General Partner is a full-time
employee of Dorchester. Any General Partner who is not a full-time employee
of Dorchester shall be entitled to receive his pro rata share of the
compensation provided for in Section 3.08(a) above.
3.09. Reliance by Third Parties. Notwithstanding any other provision of
this Agreement, any action taken by a General Partner on behalf of the
Partnership shall be binding as to any party who acts in reliance on the
authority of the General Partner to take such action, and such party shall have
no duty to ascertain whether the General Partner has such authority, but this
Section 3.09 in no way affects the liability of a General Partner to the
Partnership or to the Limited Partners to the extent otherwise provided by this
Agreement.
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ARTICLE IV
THE LIMITED PARTNERS
4.01. Rights of Limited Partners. The Limited Partners shall have the
following rights:
(a) Each Limited Partner shall have the right, subject to Section
8.08, to inspect the books and records of the Partnership.
(b) A Majority in Interest of the Limited Partners shall have the
right, subject to Section 4.02, to waive any restriction on the General
Partners contained in this Agreement.
(c) The Applicable Percentage Interest of the Limited Partners shall
have the right, subject to Section 4.02, to amend this Agreement pursuant
to Section 11.03.
(d) The Applicable Percentage Interest of the Limited Partners shall
have the right, subject to Section 4.02, to dissolve the Partnership.
(e) The Applicable Percentage Interest of the Limited Partners shall
have the right to remove one or all of the General Partners and elect a
Successor General Partner to operate and carry on the business of the
Partnership, subject to Section 4.02 and compliance with the following:
(i) The Partnership Interest of each removed General Partner must
be terminated by agreement between such terminating Partner and the
Successor General Partner or, in the absence of an agreement, in
accordance with the following: The assets of the Partnership shall be
valued, and gain and loss allocated, as if all assets were sold for
their fair market value as determined by a firm of consulting engineers
acceptable to a Majority in Interest of the Limited Partners. Then,
within 30 days after such valuation is completed, the Successor General
Partner shall pay for the Partnership Interest of each removed General
Partner for cash equal to the Capital Account balance of such Partner,
after adjustment for the valuation and allocation provided above, plus
interest at a rate equal to the lower of (A) the Prime Rate or (B) the
highest rate permitted by law, for the period from the valuation date
until the payment date. The Partnership Interest of each terminating
Partner, including Income and Deductions attributable
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thereto realized after the valuation date, shall be owned by the
Successor General Partner.
(ii) The Successor General Partner must make arrangements,
satisfactory to the removed General Partner, to release the removed
General Partner from personal liability with respect to all Partnership
liabilities, if any, or to provide the removed General Partner with
indemnity satisfactory to it against all liabilities of the Partnership
with respect to which such release is not obtained.
(iii) This Agreement and the certificate of limited partnership of
the Partnership on file with the Secretary of State of the State of
Texas must be amended to delete references to the terminating Partner(s)
and to name the Successor General Partner.
(f) The Applicable Percentage Interest of the Limited Partners shall
have the right, subject to Section 4.02, to approve or reject the sale of
all or substantially all of the Partnership Property; provided, however,
the Limited Partners shall not have such right with respect to any sale
approved or recommended by the General Partners.
(g) A Majority in Interest of the Limited Partners shall have the
right, subject to Sections 4.02 and 10.02(a), to disapprove the selection
of a Successor General Partner by the remaining General Partner(s) pursuant
to the provisions of Section 10.02(a).
4.02. Voting by Limited Partners. Meetings of the Limited Partners may be
called by any General Partner and shall be called by the General Partners within
15 days following the written request of Limited Partners holding more than 50%
of the Units. The call will state the nature of the business to be transacted,
and no other business will be considered. The meeting will be held not less than
30 nor more than 60 days after the date of mailing of the notice and shall be at
a reasonable time and place. Any action which may be taken at a meeting of the
Limited Partners may be taken without a meeting if a consent in writing, setting
forth the action so taken, shall be signed by Limited Partners owning not less
than the minimum percentage of Units that would be necessary to authorize or
take such action at a meeting at which all Limited Partners were present and
voted. For purposes of obtaining a written consent, a General Partner may
require response by a specified date not later than 30 days after the date any
proposal is submitted to the Limited Partners. Any Limited Partner failing to
notify the Partnership of his support for or opposition to the proposal within
the specified time shall be conclusively deemed to have opposed the proposal.
The General Partners may develop such other rules and procedures as they may
deem necessary, desirable or convenient to provide for meetings of Limited
Partners to vote, or to obtain the written consent of Limited Partners, as to
matters on which a vote of Limited
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Partners is sought. Such rules and procedures shall be in writing and shall
provide for call and notice of meeting and quorum requirements (which shall
require that holders of not less than 50% of the Units be present in person or
by proxy). Notwithstanding the foregoing, no such meeting shall be held or vote
taken until such time as: (i) counsel for the Partnership, or counsel for the
Limited Partners (which shall be other than counsel for the General Partners
and which counsel shall be acceptable to a Majority in Interest of the Limited
Partners) shall have delivered to the Partnership an opinion in form and
substance satisfactory to the General Partners, to the effect that neither the
holding of such meeting nor the taking of such vote will result in the loss of
any Limited Partner's limited liability and (ii) a favorable ruling shall have
been received by the Partnership from the Internal Revenue Service or an
opinion of counsel (which may be counsel for the Partnership or counsel for the
Limited Partners, as provided above) in form and substance satisfactory to the
General Partners, to the effect that neither the holding of such meeting nor
the taking of such vote will adversely affect the federal income tax status of
the Partnership.
4.03. Limitations on Limited Partners. No Limited Partner (other than a
General Partner in its capacity as such) shall have any right, power or
authority to take part in the management or control of the business of, or
transact any business for, the Partnership, to sign for or on behalf of the
Partnership, or to bind the Partnership in any manner whatsoever. All
management responsibility is vested in the General Partners and all authority
to act on behalf of the Partnership is vested in the General Partners.
4.04. Representations of the Limited Partners. Each Limited Partner
represents to and agrees with, the Partners and the Partnership as follows:
(a) He will promptly execute (with acknowledgment or affidavit, if
requested by a General Partner) all agreements, certificates, tax
statements, tax returns and other documents that may be required of the
Partnership or its Partners by the laws of the United States of America,
the State of Texas or any other state in which the Partnership conducts or
plans to conduct business, any foreign country or any political subdivision
or agency of any of the foregoing.
(b) Either (i) he is (a) a citizen or national of the United States,
or (b) an alien lawfully admitted for permanent residence in the United
States as defined in 8 USC 1101(a)(20), or (c) a private, public or
municipal corporation organized under the laws of the United States or of
any State or of the District of Columbia, or territory thereof, or (d) an
association (including a partnership) of such citizens, nationals, resident
aliens, or private, public or municipal corporations, States or political
subdivisions of States or (ii) he has notified the General Partners that he
is not an Eligible Citizen and the General Partners have, in accordance
with the terms
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of this Agreement, consented to his admission as a Limited Partner
notwithstanding such status.
(c) He will notify the General Partners immediately if he breaches any
of the foregoing covenants and agreements.
Each Limited Partner whose representation contained in Section 4.04(b) is or
becomes untrue shall be deemed to have irrevocably constituted and appointed the
General Partners, and each of them as his lawful attorney-in-fact to take all
such action on his behalf which may be necessary to preserve the Partnership's
right to hold or acquire interests in federal Leases.
4.05. Power of Attorney. Each of the Limited Partners does hereby
irrevocably constitute and appoint the General Partners, and each of them, his
true and lawful attorney-in-fact and agent, to execute, acknowledge, verify,
swear to, deliver, record and file, in that Limited Partner's place and stead,
all instruments, documents, and certificates which may be required from time to
time, by the laws of the United States of America, the State of Texas, any other
state in which the Partnership conducts or plans to conduct business, any
foreign country, or any political subdivision or agency of any of the foregoing,
to effectuate, implement and continue the valid existence of the Partnership,
including without limitation the power and authority to execute, verify, swear
to, acknowledge, deliver, record and file:
(a) all certificates and other instruments (including counterparts of
this Agreement and amendments thereto) which the General Partners deem
appropriate to form, qualify or continue the Partnership as a limited
partnership (or a partnership in which the Limited Partners have limited
liability) in the State of Texas and all other jurisdictions in which the
Partnership conducts or plans to conduct business;
(b) all instruments which the General Partners deem appropriate to
reflect any amendment to this Agreement or modification of the Partnership
made in accordance with the terms of this Agreement;
(c) all conveyances and other instruments which the General Partners
deem appropriate to reflect the dissolution and termination of the
Partnership pursuant to the terms of this Agreement, including the writing
required by The Texas Uniform Limited Partnership Act to cancel the
Partnership's certificate of limited partnership filed with the Secretary
of State of the State of Texas;
(d) all instruments relating to the admission of any additional or
substituted limited partner;
(e) a certificate of assumed name and such other certificates and
instruments as may be necessary under the fictitious or
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assumed name statutes from time to time in effect in the State of Texas and
all other jurisdictions in which the Partnership conducts or plans to
conduct business; and
(f) with the Department of Interior (including any bureau, office, or
other unit thereof, whether in Washington, D.C. or in the field, or any
officer or employee thereof), as well as with any other federal or state
agencies, departments, bureaus, offices, or authorities (A) any and all
offers to lease and leases of, or with respect to, (including amendments,
modifications, supplements, renewals, and exchanges thereof) any lands
under the jurisdiction of the United States or any state (including without
limitation lands within the public domain, acquired lands, and Indian
lands) under any act or regulation which provides for the leasing thereof;
(B) all statements of interest and holdings on behalf of the Partnership or
such Limited Partner; (C) any other statements, notices, or communications
required or permitted to be filed or which may hereafter be required or
permitted to be filed, under any law, rule, or regulation of the United
States or any state, including, without limitation, the Mineral Lands
Leasing Act of 1920, as amended, 30 USC sec.181 et seq., The Mineral
Leasing Act for Acquired Lands of 1947, as amended, 30 USC sec.351, et
seq., the Outer Continental Shelf Lands Act, as amended, 43 USC sec.1331,
et seq., and the Right-of-Way Leasing Act of 1930, 30 USC sec.301 et seq.,
relating to the leasing of lands for oil or gas exploration or development;
(D) any request for approval of assignments or transfers of oil and gas
leases, any unitization or pooling agreements, and any other documents
relating to lands under the jurisdiction of the United States or any state;
and (E) any other documents or instruments which the General Partner in its
sole discretion determines should be filed.
This power of attorney shall be deemed to be coupled with an interest,
shall be irrevocable, shall survive the death, dissolution, bankruptcy,
incompetency or legal disability of a Limited Partner and shall extend to each
Limited Partner's heirs, successors and assigns and may be exercised for all
Limited Partners (or any of them) required to execute any instrument.
ARTICLE V
CONTRIBUTIONS
5.01. Initial Contributions. The General Partners hereby contribute an
aggregate of $5,000 to the Partnership and Dorchester hereby contributes the
Contributed Properties to the Partnership.
5.02. Additional Funding. No Limited Partner shall be required to make any
additional contributions to the Partnership. If additional funds are
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required, the General Partners will attempt to obtain Non-Recourse Loans, but
shall not be obligated to seek Recourse Loans if Non-Recourse Loans are not
available. If any General Partner loans any funds to the Partnership, the amount
thereof shall be treated as a personal debt of the Partnership, shall bear
interest at the Prime Rate, as it changes from time to time.
ARTICLE VI
ALLOCATIONS
6.01. Tax Allocations. Income, Deductions and federal tax credits shall be
allocated on a monthly basis to the Partners in accordance with their Profit
Sharing Percentages.
ARTICLE VII
DISTRIBUTIONS
7.01. Interim Distributions. Prior to the dissolution of the Partnership,
the Distributable Cash of the Partnership shall be determined at least as of the
end of each calendar quarter, and more frequently if the General Partners think
it appropriate, and the amount determined for each such period shall be
distributed to the Partners within 30 days after such period in the Profit
Sharing Ratios.
7.02. Liquidating Distributions. After dissolution of the Partnership,
Distributions shall be made in accordance with Article X.
ARTICLE VIII
BOOKS, RECORDS AND REPORTS
8.01. Method of Accounting. Unless otherwise provided by applicable
statute, regulation or accepted practices, the Partnership shall keep its books
and tax returns in accordance with the following:
(a) All intangible drilling and development costs, within the meaning
of Section 263(c) of the Code, shall be deducted as expenses.
(b) For book purposes, cost depletion and gain or loss in the
disposition of depletable properties shall be computed by the Partnership
based on the adjusted value of such properties on the books of the
Partnership.
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(c) Depreciation shall be computed on the basis as it is computed for
federal income tax purposes, and the General Partners shall have the right
to elect any method of depreciation allowed by the Code or applicable
regulations.
(d) The General Partners shall have the right to elect the cash or
accrual method of accounting and the right to make or to decline to make in
their sole discretion all elections required or permitted to be made for
federal income tax purposes, including the Section 754 Election, and such
election, other than the Section 754 Election, shall also be controlling
for book purposes.
(e) Except as provided in Section 8.01(b), the classification,
realization and recognition of Income, Deductions and other items shall be
consistent with their treatment for federal income tax purposes applicable
to a partnership electing the method of accounting adopted by the
Partnership and the elections provided for above, other than the Section
754 Election.
(f) All items of Income and Deductions recognized during a fiscal year
shall be allocated as of the end of such fiscal year, based on the facts
and circumstances existing as of the end of such year. Interim reports may
be based on the facts and circumstances existing at the time of such
reports, subject to year-end adjustments.
8.02. Fiscal Year. The fiscal year for the Partnership shall be such year
as approved by the Internal Revenue Service as submitted by the General
Partners. In the event such year is disapproved, the fiscal year of the
Partnership shall be the calendar year.
8.03. Capital Accounts. The Partnership shall maintain a Capital Account
for each Partner.
8.04. Audits. An annual audit of the Partnership's books of account shall
be made by independent certified public accountants selected by the General
Partners. Copies of each annual report of such accountants shall be given to
each Partner.
8.05. Reports and Financial Statements. The General Partners shall cause an
annual report of the Partnership's activities to be prepared and transmitted to
each Partner of record on the last business day of the fiscal year within 90
days after the close of the Partnership's fiscal year. Such report shall
contain, except as otherwise indicated, at least the following information:
(a) Financial statements accompanied by a report thereon by the
Partnership's independent certified public accountants. Along with such
financial statements shall be a summary itemization, by
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type or classification, of the total fees and compensation, including any
overhead reimbursements, paid by the Partnership, or indirectly on behalf
of the Partnership, to the General Partners and Affiliates.
(b) A general summary of Leases in which the Partnership owns an
interest, except succeeding reports need contain only material changes, if
any, regarding such Leases.
(c) The total oil and gas proved reserves of the Partnership and
dollar value thereof at then existing prices. The reserve computations
shall be based upon engineering reports prepared by an independent
petroleum engineer.
8.06. Tax Reports. Within two and one-half months of the end of each fiscal
year, the General Partners shall furnish to each Limited Partner, a statement
setting forth all information concerning the Partnership's operations for the
preceding fiscal year as is required by applicable regulations under the Code
and any applicable state law.
8.07. Operations Reports. The General Partners shall deliver an operations
report to each Limited Partner at the end of each calendar quarter. Such
quarterly operations report shall include (i) a statement showing the
Partnership's cash balance and the principal amount of any outstanding Loans of
the Partnership; (ii) a summary of any development drilling, reworking of
existing wells or significant developments with regard to any producing wells;
and (iii) a production and cash flow summary of the Partnership.
8.08. Inspection. The books and records of the Partnership shall be
maintained at the principal place of business of the Partnership, and shall be
open to inspection, audit and copying by any Partner (or his designated
representative), at all reasonable times during any business day, at the expense
of such Partner.
ARTICLE IX
TRANSFER OF PARTNERSHIP INTERESTS
9.01. General Partners. The Partnership Interest of a General Partner may
be Transferred, in whole or in part, only with the consent of the other General
Partners except where such Transfer is by reason of merger of a transferor
corporate General Partner into another corporation, or other transaction
constituting a reorganization under Section 368 of the Code. In any such event,
the transferee shall become a General Partner of the Partnership and shall
succeed to and enjoy the rights and privileges and bear the obligations and
burdens of the transferor General Partner. Each Limited Partner hereby
irrevocably grants his consent to a Transfer by a General Partner of all or a
part of its Partnership Interest to the extent permitted
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by the preceding sentence and, upon such Transfer, the transferor General
Partner shall be released from its obligations under this Agreement. The
foregoing restriction shall not be applicable to the Transfer of all or any part
of a General Partner's interest in Income or Distributions of the Partnership
and shall not be applicable to any Transfer by a General Partner of any Units
held by it.
9.02. Limited Partners. Subject to the other provisions of this Article IX,
a Limited Partner may Transfer all or part of his Units to any Person or
Persons; provided, however, that such Transfer shall not confer upon the
transferee any right to become a substituted limited partner. A transferee of
all or a part of Units held prior thereto by a Limited Partner may be admitted
to the Partnership as a substituted limited partner only if the transferee has
received the permission of the General Partners, which permission may be
withheld in the sole discretion of the General Partners. Unless and until any
transferee becomes a substituted limited partner, the transferee's status and
rights shall be limited to the rights of a transferee of limited partnership
interests under The Texas Uniform Limited Partnership Act.
No Transfer of a Unit or Units by a Limited Partner or consent thereto by
the General Partners shall effect the substitution of such Limited Partner's
transferee as a substituted limited partner until such transferee and all of
the Partners (either individually or through their agent or attorney-in-fact,
including a General Partner as such attorney-in-fact) execute all amendments,
certificates and other documents and perform all acts relating to such
substitution as the General Partners deem appropriate to comply with the
applicable requirements of law or to preserve the limited liability status of
the Partnership upon the completion of such substitution. Without in any way
limiting the power of attorney contained in Section 4.05, each Partner agrees
upon request of the General Partners to execute such amendments, certificates
or other documents and perform such acts. Each General Partner hereby
constitutes and appoints the other General Partner its attorney-in-fact to
consent to the admission of substituted limited partners. If and when the
consent of the General Partners provided for herein is secured and the other
requirements of this Section 9.02 are satisfied, the transferee shall become a
substituted limited partner as to the Units thus Transferred. Each Limited
Partner hereby irrevocably grants his consent to any such substitution to the
extent permitted by this Section 9.02.
A purported Transfer of a Unit or Units, otherwise permitted by the
provisions of this Article IX, shall be effective on the last day of the month
in which the General Partners have received a copy of the instrument of
assignment and all such certificates and documents of the character described
above as the General Partners may have requested.
The General Partners hereby consent to the transfer of the Units owned by
Dorchester to the holders of record at the close of business on July 2, 1982, of
shares of Common Stock of Dorchester and to certain key employees of
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Dorchester by (a) depositing the Certificates of Ownership of such Units with a
bank or trust company and (b) providing for the issuance to such holders of
record and key employees of Depositary Receipts therefor, and Nominee, in such
capacity, shall be substituted for Dorchester as Limited Partner hereunder,
subject to the rights of such holders of record and key employees to become
substituted Limited Partners hereunder in accordance with the terms hereof and
of the Depositary Agreement.
9.03. Transfer to Non-citizen.
(a) Notwithstanding any other provision of this Article but subject to
the provisions of Section 9.03(e), if a Limited Partner transfers his
interest to a non-Eligible Citizen, then a Depositary Receipt evidencing
the transferred Depositary Units will be issued and delivered to him, but
he shall not be entitled to admission as a substituted limited partner and
shall remain a Non-citizen Assignee until he transfers the Units or he
becomes an Eligible Citizen, so certifies to the General Partners, and
elects to become a substituted limited partner.
(b) The General Partners shall be deemed to be the Limited Partner in
respect of the Depositary Units owned by a Non-citizen Assignee. The
General Partners shall, in exercising voting rights in respect of such
Units on any matter, distribute the votes in the same ratios as the votes
of Limited Partners in respect of Units other than those of Non-citizen
Assignees are cast - either for, against, or abstaining as to the matter.
The General Partners shall accord to Non-citizen Assignees the same rights
as those of a Limited Partner to obtain any information or account of the
Partnership's transactions or to inspect the Partnership's books. Upon
dissolution of the Partnership, a Non-citizen Assignee shall have no right
to receive a distribution in kind, but shall be entitled to the cash
equivalent thereof, and the General Partners shall provide cash to the
Partnership to the extent necessary to satisfy the Non-citizen Assignee's
right to cash in exchange for an assignment of his share of the
distribution in kind.
(c) At any time after he can and does certify that he has become an
Eligible Citizen, a Non-citizen Assignee may, upon application to the
General Partner and the Depositary, elect to be admitted as a substituted
limited partner, and upon his admission the General Partners shall cease to
be a Limited Partner in respect of the Assignee's Depositary Units.
(d) If the General Partners determine, with the advice of counsel,
that a Limited Partner is not an Eligible Citizen, the General Partners may
require that the Limited Partner's status be changed to that of a
Non-citizen Assignee, and thereupon the General
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Partners shall substitute for such Non-citizen Assignee as the Limited
Partner in respect of his Depositary Units.
(e) Notwithstanding any other provision of this Section 9.03 or the
applicability thereof to other provisions of this Agreement and the
Depositary Agreement, if the General Partners determine, with the advice of
counsel, that applicable law permits a non-Eligible Citizen to become a
Limited Partner, then the foregoing provisions of this Section 9.03 and the
applicability thereof to other provisions of this Agreement and the
Depositary Agreement shall be and remain of no force and effect until such
time as the General Partners shall determine, with the advice of counsel,
that a change in applicable law or the acquisition of certain Partnership
Property then requires that such provisions and the applicability thereof
be reinstated and enforced as written.
9.04 Redemption of Non-citizen's Units.
(a) If at any time the Partnership or any General Partner is named a
party in any judicial or administrative proceeding that seeks the
cancellation or forfeiture of any property in which the Partnership has an
interest because of the nationality (or any other status that subjects the
Partnership to the risk of losing its eligibility to acquire or hold oil
and gas leasehold interests on federal lands) of any one or more Limited
Partners, the General Partners may redeem the partnership interest of such
Limited Partner as follows:
(1) The General Partners shall, not later than the 30th day before
the date fixed for redemption, give notice of redemption to the Limited
Partner or Assignee, at his last address designated on the records of
the Depositary, by registered or certified mail, postage prepaid. The
notice shall be deemed to have been given when so mailed. The notice
shall specify the Depositary Units to be redeemed (hereinafter called
"redeemed Units"), the date fixed for redemption, the place of payment,
that payment of the redemption price will be made upon surrender of the
Depositary Receipt evidencing the redeemed Units, and that on and after
the date fixed for redemption, distributions to which the Limited
Partner would otherwise be entitled in respect of the redeemed Units
will be withheld.
(2) The redemption price shall be the fair market value of the
redeemed Units as determined by an independent appraiser selected by the
General Partners, provided that if on the redemption date the Depositary
Units are listed for trading on a national securities exchange, the
redemption price shall be the number of redeemed Units multiplied
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by the closing price per Unit at which the Depositary Units were traded
on that date or, if there were no trades on that date, on the most
recent date on which they were traded.
(3) Upon surrender by or on behalf of the Limited Partner, at the
place specified in the notice of redemption, of the Depositary Receipt
evidencing the redeemed Units, duly endorsed in blank or accompanied by
an assignment duly executed in blank, the Limited Partner or his duly
authorized representative shall be entitled to receive the redemption
price and all withheld distributions, without interest.
(4) After the redemption date, the General Partners shall be
treated as an Assignee of the redeemed Units with the right to become a
Limited Partner in respect of such Units.
(b) The provisions of this Section shall be applicable also to
Depositary Units held by (1) a Non-citizen Assignee, (2) any other Assignee
determined to be not an Eligible Citizen, or (3) a Limited Partner as
nominee of a person determined to be not an Eligible Citizen.
(c) Nothing in this Section shall prevent the recipient of a notice of
redemption from transferring his Depositary Units before the redemption
date. Upon receipt of notice of such a transfer, the General Partner shall
withdraw the notice of redemption and remit to the transferee any withheld
distributions, without interest.
9.05. Subdivided Units Prohibited. Limited Partners shall not be permitted
to Transfer a fractional part of a Unit.
ARTICLE X
DISSOLUTION AND LIQUIDATION
10.01. Dissolution. The Partnership shall be dissolved upon the first to
occur of the following events:
(a) The failure of the Partnership to own any oil and gas properties.
(b) The Withdrawal of a General Partner (subject to reconstitution
pursuant to Section 10.02.).
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<PAGE> 92
(c) The agreement of the Applicable Percentage Interest of the Limited
Partners.
(d) The agreement of all General Partners.
(e) December 31, 2050.
The dissolution shall be effective on the day the event occurs giving rise to
the dissolution, but the Partnership shall not terminate until all its affairs
have been wound up and its assets distributed as provided in this Article X.
10.02. Reconstitution. If the Partnership dissolves because of the
Withdrawal of a General Partner, the Partnership shall not liquidate, but shall
be reconstituted and shall continue as it was before, subject to compliance with
the following:
(a) Within 60 days after the Withdrawal causing the dissolution, the
remaining General Partner(s) must elect to continue the Partnership and
shall select a Successor General Partner or Successor General Partners, as
the case may be, so that after such selection, there shall be three General
Partners. The remaining General Partner(s) shall notify the Limited
Partners of such selection and, upon the written request of Limited
Partners holding more than 25% of the Units, shall call a meeting of the
Limited Partners to ratify such selection. If a Majority in Interest of the
Limited Partners shall disapprove the selection of such Successor General
Partner(s), then the remaining General Partner(s) shall select one or more
other Successor General Partner(s), as appropriate, to so act, subject to
the right of a Majority in Interest of the Limited Partners to disapprove
such selection as herein provided. The General Partners may not select an
Affiliate to be a Successor General Partner.
(b) If all the remaining General Partners are corporations, then
either such corporations must meet the net worth requirements specified by
the Internal Revenue Service as a condition for issuing a ruling that a
limited partnership is not taxable as a corporation, or the Limited
Partners must elect, pursuant to and subject to Section 4.02, a Successor
General Partner meeting or rendering inapplicable such requirement.
(c) The interest of the Withdrawing General Partner must be purchased
in compliance with the provisions of Section 4.01(e) as if it were a
removed General Partner.
10.03. Winding Up. Upon dissolution of the Partnership, the Liquidating
Trustee shall, as promptly as possible, but in an orderly and businesslike
manner so as to not involve undue sacrifice, proceed diligently to wind up the
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affairs of the Partnership and to convert its assets into cash, notes or other
investment assets which can readily be distributed to and held by the Partners.
In no event shall the assets be transferred to a corporation controlled by one
or more Partners.
10.04. Accounting on Dissolution. Upon dissolution, a proper accounting
shall be made of the Partnership's assets, liabilities and operations from the
date of the last previous accounting to the date of dissolution. The value of
any unsold asset shall be determined by a qualified and experienced independent
third party and gain or loss allocated (for book purposes only) as if it has
been sold at such value. The Income and Deductions realized subsequent to the
date of dissolution shall be allocated in accordance with Article VI and proper
adjustments made to the Capital Account of each Partner. If after such
allocations, there is a deficit in the Capital Account of a General Partner,
such Partner shall contribute cash equal to such deficit. Any item of Income or
Deduction realized after dissolution of the Partnership and attributable to
unknown or contingent items shall also be allocated as provided in Article VI.
10.05. Liquidation. The assets of the Partnership shall be applied in the
following order of priority:
(a) First, there shall be paid all liabilities of the Partnership to
creditors other than Partners. If any liability is contingent, or uncertain
in amount, a reserve equal to the maximum amount to which the Partnership
could be reasonably held liable will be established. Upon the satisfaction
or other discharge of such contingency, the amount of the reserve not
required, if any, will be distributed in accordance with the balance of
this Section 10.05.
(b) Second, the debts, if any, of the Partnership to the Partners
shall be paid.
(c) Third, to the Partners in an amount equal to their then existing
Capital Accounts. If any General Partner's Capital Account is less than
zero, then each such Partner shall contribute cash to the Partnership equal
to such deficit.
(d) Fourth, to the Partners in accordance with their Profit Sharing
Percentages.
ARTICLE XI
MISCELLANEOUS
11.01. Right to Compete. Each Partner agrees with every other Partner that
(i) any Partner and any Person affiliated with a Partner may engage in or
possess any interest in another business venture or ventures; (ii) neither the
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<PAGE> 94
Partnership nor the Partner shall have any rights by virtue of this Agreement in
said independent venture or to the income or profits derived therefrom; and
(iii) any General Partner may organize and be a general partner in other limited
partnerships organized for the exploration for oil, gas and other minerals or
for any other purpose.
11.02. Scope of Agreement. This Agreement constitutes the entire agreement
among the parties hereto.
11.03. Amendments.
(a) Proposal of Amendments. Amendments to this Agreement may be
proposed by any General Partner, or by Limited Partners owning not less
than 50% of the Units. However, no amendment shall be made which would
cause the Partnership to be classified as an association taxable as a
corporation for purposes of the Code.
(b) Certain Amendments Without Notice to Limited Partners. Without
notice to the Limited Partners, the General Partners may make amendments to
this Agreement which do not adversely affect the rights of the Limited
Partners in any material respect, including without limitation amendments
necessary (i) to reflect the admission of a substituted limited partner;
(ii) to make any change which the General Partners, upon the advice of
counsel, determine necessary or advisable to qualify or continue the
qualification of the Partnership under the laws of any jurisdiction or to
preserve the tax status of the Partnership or the limited liability status
of the Limited Partners; (iii) for the purpose of adding to this Agreement
any further covenants, restrictions or provisions for the protection of the
Limited Partners provided that such addition will not adversely affect the
interests of the Limited Partners; (iv) to facilitate the assignability of
Units (but not the right to become a substituted Limited Partner) or the
tradability of the Depositary Receipts; or (v) to cure any ambiguity,
formal defect or omission or to correct or supplement any provision
contained herein which may be inconsistent with any provision contained
herein.
(c) Procedure to be Followed. Following any proposal of an amendment
pursuant to Section 11.03(a), the General Partners shall, within 15 days
after receipt thereof, submit the proposed amendment to the Limited
Partners for approval at a meeting or by written consent, pursuant to and
subject to Section 4.02. Any proposed amendment approved by the General
Partners and the Applicable Percentage Interest of the Limited Partners
shall constitute an amendment of this Agreement; provided, however, that
the written agreement of all Partners shall be required in respect of any
amendment which provides for a change in the purposes of the Partnership
and the written agreement of any affected Partner shall be required for any
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<PAGE> 95
change in the priority regarding Distributions or any reallocation of
Income, Deductions or credits.
11.04. Applicable Law. This Agreement is entered into and shall be
construed and enforced in accordance with the applicable laws of the State of
Texas. The relationship between the Partners to the extent not explicitly
provided for herein shall be controlled by the laws of The State of Texas
including The Texas Uniform Limited Partnership Act.
11.05. Notices. All notices or other communications required or permitted
to be given pursuant to this Agreement shall be in writing and shall be
considered as properly given or made if mailed from within the United States by
first class United States mail, postage prepaid, or by prepaid telegram or
telex, and addressed to each Partner at its address as set out on the signature
pages to this Agreement, on any schedule hereto or in any document in which such
Partner has agreed to be bound by the terms and provisions hereof. Any Partner
may change his address by giving a notice in writing stating his new address to
the Partnership.
11.06. Assigns. This Agreement shall be binding upon and inure to the
benefit of the Partners and any heir, personal representative, successor or
assign thereof, and the Partners covenant and agree that they and their heirs,
personal representatives, successors and assigns shall execute and deliver any
and all instruments, releases, assignments and consents that may be required of
them in accordance with the provisions of this Agreement.
11.07. Gender and Number. When the context requires, the gender of all
words used herein shall include the masculine, feminine and neuter and the
number of all words shall include the singular and plural.
11.08. Execution. This Agreement may be executed in several counterparts
and by the several parties hereto on separate counterparts, and each
counterpart, when so executed and delivered, shall constitute an original
instrument, and all such separate counterparts shall constitute but one and the
same agreement.
[The remainder of this page intentionally left blank]
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<PAGE> 96
IN WITNESS WHEREOF, this Agreement has been executed as of the day and year
first above written by the parties hereto.
GENERAL PARTNERS:
James A. Ford
7434 Greenville Ave.
Dallas, Texas 75231
By: /s/ JAMES A. FORD
STATE OF TEXAS )
) ss.:
COUNTY OF DALLAS )
BEFORE ME, the undersigned authority, in and for said County and State, on
this day personally appeared JAMES A. FORD, known to me to be the person whose
name is subscribed to the foregoing instrument, and, upon oath, swore and
acknowledged to me that he executed the same as his free act and deed, for the
purposes and consideration therein expressed, and that the statements therein
are true and correct.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this 19th day of August, 1982.
/s/ SHARON DUREN
Notary Public in and for
Dallas County, Texas
My Commission Expires:
3/12/85
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<PAGE> 97
John R. Barnes
5735 Pineland Drive
Suite 129
Dallas, Texas 75231
By: /s/ JOHN R. BARNES
-----------------------
STATE OF TEXAS )
)
COUNTY OF DALLAS )
BEFORE ME, the undersigned authority, in and for said County and State, on
this day personally appeared JOHN R. BARNES, known to me to be the person whose
name is subscribed on the foregoing instrument, and, upon oath, swore and
acknowledged to me that he executed the same as his free act and deed, for the
purposes and consideration therein expressed, and the statements therein are
true and correct.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this 19th day of August, 1982.
/s/ SHARON DUREN
-------------------------
Notary Public in and for
Dallas County, Texas
My Commission Expires:
3/12/85
- ----------
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<PAGE> 98
Preston A. Peak
3500 Princeton Avenue
Dallas, Texas 75205
By: /s/ PRESTON A. PEAK
----------------------
STATE OF TEXAS )
) ss.:
COUNTY OF DALLAS )
BEFORE ME, the undersigned authority, in and for said County and State, on
this day personally appeared PRESTON A. PEAK, known to me to be the person
whose name is subscribed to the foregoing instrument, and, upon oath, swore and
acknowledged to me that he executed the same as his free act and deed, for the
purposes and consideration therein expressed, and that the statements therein
are true and correct.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this 19th day of August, 1982.
/s/ SHARON DUREN
--------------------------
Notary Public in and for
Dallas County, Texas
My Commission Expires:
3/12/85
- ----------
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<PAGE> 99
WITHDRAWING GENERAL PARTNER:
George S. Rooker
6706 Gateridge
Dallas, Texas 75240
By: /s/ GEORGE S. ROOKER
------------------------
STATE OF TEXAS )
) ss.:
COUNTY OF DALLAS )
BEFORE ME, the undersigned authority, in and for said County and State, on
this day personally appeared GEORGE S. ROOKER, known to me to be the person
whose name is subscribed to the foregoing instrument, and, upon oath, swore and
acknowledged to me that he executed the same as his free act and deed, for the
purposes and consideration therein expressed, and that the statements therein
are true and correct.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this 19th day of August, 1982.
/s/ SHARON DUREN
-------------------------
Notary Public in and for
Dallas County, Texas
My Commission Expires:
3/12/85
- ------------
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<PAGE> 100
INITIAL LIMITED PARTNER:
Dorchester Gas Corporation
5735 Pineland Drive
P. O. Box 31049
Dallas, Texas 75231
By: /s/ GEORGE S. ROOKER
-------------------------
George S. Rooker
Chairman of the Board
STATE OF TEXAS )
) ss.:
COUNTY OF DALLAS )
BEFORE ME, the undersigned authority, in and for said County and State, on
this day personally appeared GEORGE S. ROOKER, known to me to be the person and
officer whose name is subscribed to the foregoing instrument, and, upon oath,
swore and acknowledged to me that the same was the act of the said DORCHESTER
GAS CORPORATION, a corporation, and that he executed the same as the act of such
corporation for the purposes and consideration therein expressed, and in the
capacity therein stated, and that the statements therein are true and correct.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this 19th day of August, 1982.
/s/ SHARON DUREN
-------------------------
Notary Public in and for
Dallas County, Texas
My Commission Expires:
3-12-85
- -------------------
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<PAGE> 101
SUBSTITUTED LIMITED PARTNER:
Hugoton Nominee, Inc.
5735 Pineland Drive
Suite 129
Dallas, Texas 75231
By: /s/ HOWARD C. WADSWORTH
---------------------------
Howard C. Wadsworth
President
STATE OF TEXAS )
) ss.:
COUNTY OF DALLAS )
BEFORE ME, the undersigned authority, in and for said County and State, on
this day personally appeared HOWARD C. WADSWORTH, known to me to be the person
and officer whose name is subscribed to the foregoing instrument, and, upon
oath, swore and acknowledged to me that the same was the act of the said HUGOTON
NOMINEE, INC., a corporation, and that he executed the same as the act of such
corporation for the purposes and consideration therein expressed, and in the
capacity therein stated, and that the statements therein are true and correct.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this 19th day of August, 1982.
/s/ SHARON DUREN
---------------------------
Notary Public in and for
Dallas County, Texas
My Commission Expires:
3/12/85
- ------------
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<PAGE> 102
EXHIBIT A
TO
CERTIFICATE AND AGREEMENT
OF LIMITED PARTNERSHIP
OF DORCHESTER HUGOTON, LTD.
DESCRIPTION OF CONTRIBUTED PROPERTIES AGREED VALUE
- ------------------------------------- ------------
See Exhibit A-1 attached hereto $8,200,000
and incorporated herein.
0255k
<PAGE> 1
EXHIBIT 4.1
Amendment
This Amendment is made this July 14, 1995 to the Amended and Restated
Depositary Agreement dated August 19, 1982 and effective June 17, 1982 between
and among Dorchester Gas Corporation, a Delaware corporation ("Corporation"),
Dorchester Hugoton, Ltd., a Texas limited partnership ("DH"), Mercantile
National Bank at Dallas, a national banking association, as Depositary and John
R. Barnes, an individual ("Barnes"), (for himself as a general partner of DH
and as attorney-in- fact for the limited partners of DH and the holders from
time to time of Depositary Receipts issued under this Agreement).
Witnesseth
Whereas the General Partners of Dorchester Hugoton, Ltd. have reviewed audited
financial statements and various insurance policies of American Stock Transfer
& Trust Company and effective August 21, 1995 have appointed American Stock
Transfer & Trust Company as successor transfer agent, registrar, and depositary
under the Amended and Restated Depositary Agreement dated August 19, 1982.
Whereas on July 14, 1995 by separate agreement American Stock Transfer & Trust
Company agreed to be fully bound by the terms and provisions of the Amended and
Restated Depositary Agreement dated August 19, 1982 as Amended through July 14,
1995.
Now therefor in consideration of the premises and promises hereinafter
contained, it is agreed by and among the parties hereto as follows:
1. Article X, Section 10.01 paragraph (c) line four shall be revised to
read:
"having a combined capital and surplus of at least 10,000,000.
Any successor"
Agreed to this 14th day of July 1995
DORCHESTER HUGOTON, LTD.
/s/ JAMES E. RALEY
by: James E. Raley, Inc.
James E. Raley, President
General Partner
LIMITED PARTNERS IN
DORCHESTER HUGOTON, LTD.
/s/ PRESTON A. PEAK
by: Preston A. Peak
as Attorney-in-fact for
all Limited Partners
<PAGE> 2
[DORCHESTER HUGOTON, LTD. LETTERHEAD]
July 14, 1995
Mr. Harry Shulman
American Stock Transfer & Trust Company
40 Wall Street
New York, NY 10005
Dear Mr. Shulman:
As provided for in Section 3.12 of the Amended and Restated Depositary
Agreement effective as of June 17, 1982 and signed on August 19, 1982, and as
may have been amended from time to time in writing, we, the General Partners of
Dorchester Hugoton, Ltd., do hereby appoint American Stock Transfer & Trust
Company as the Sole Transfer Agent, Registrar and Depositary of Dorchester
Hugoton, Ltd. We are furnishing to you with this letter a list of persons
currently authorized to act in various duties for the Partnership.
By accepting the appointment as the Sole Transfer Agent, Registrar and
Depositary of Dorchester Hugoton, Ltd. it is understood that American will be
fully bound by the terms of the Amended and Restated Depositary Agreement, a
copy of which is attached hereto. It is understood that the initial term of
the appointment shall commence on August 21, 1995 for a period of three years.
The monthly fee for the initial term shall be $750 plus out of pocket expenses
limited to postage, envelopes, checks and cash distributions actually paid by
American on behalf of Dorchester Hugoton, Ltd.
Also attached is a complete copy of the Partnership Agreement (including
amendments) of Dorchester Hugoton, Ltd., a 1994 Form 10-K and a specimen stock
certificate. The Partnership is authorized to issue and has issued 10,744,380
Depositary Receipts for Units of Limited Partnership Interest.
The address to be used for any correspondence or notices to Dorchester Hugoton,
Ltd. shall be 9696 Skillman Street, Suite 320 - LB 42, Dallas, Texas 75243.
The address to be used for any correspondence or notices to American shall be
40 Wall Street, New York, New York 10005. Any changes in the address of either
of the parties shall be made by providing the other party written notice within
five days of the actual change.
Sincerely,
P.A. PEAK, INC.
/s/ Preston A. Peak
Preston A. Peak, President,
P.A. Peak, Inc., General Partner
JAMES E. RALEY, INC.
/s/ James E. Raley
James E. Raley, President,
James E. Raley, Inc., General Partner
Agreed and Accepted this 14th day of July, 1995:
/s/ Harry Shulman
for American Stock Transfer & Trust Company
<PAGE> 3
AMENDED AND RESTATED
DEPOSITARY AGREEMENT
THIS AGREEMENT made and entered into on this 19th day of August, 1982
but effective as of the 17th day of June, 1982, between and among DORCHESTER
GAS CORPORATION, a Delaware corporation ("Corporation"), DORCHESTER HUGOTON,
LTD., a Texas limited partnership ("DH"), MERCANTILE NATIONAL BANK AT DALLAS, a
national banking association, as Depositary, and JOHN R. BARNES, an individual
("Barnes"), (for himself as a general partner of DH and as attorney-in-fact for
the limited partners of DH and the holders from time to time of Depositary
Receipts issued under this Agreement).
W I T N E S S E T H :
WHEREAS
A. DH is a limited partnership created pursuant to a Certificate and
Agreement of Limited Partnership dated as of June 16, 1982 (as amended, the
"Partnership Agreement"), with Barnes, George S. Rooker and Preston A. Peak, as
initial general partners, and the Corporation as the initial limited partner.
B. The Corporation will distribute all Limited Partnership Units of
DH it owns to the holders of its Common Stock of record at the close of
business on July 2, 1982 and to certain key employees of the Corporation.
C. The limited partners of DH may from time to time wish to transfer
their partnership interests in DH as provided for in the Partnership Agreement,
and such transfers would be facilitated by having one institution act as
depositary of such interests.
NOW, THEREFORE, in consideration of the premises and the promises
hereinafter contained, it is agreed by and among the parties hereto as follows:
ARTICLE I
Definitions
The following definitions shall for all purposes, unless otherwise
clearly indicated, apply to the terms used in this Agreement:
"Agreement" means this Depositary Agreement, as it may from time to
time be amended or supplemented.
"Assignee" means a person to whom one or more Units have been
transferred, by assignment of a Depositary Receipt or otherwise, and who has
not become a Substituted Limited Partner, and who by such assignment has an
interest in DH
<PAGE> 4
equivalent to that of a Limited Partner but (a) limited to the rights and
obligations appurtenant to a Unit to share in the profits, gains, losses,
deductions, credits and cash or cash equivalent distributions, including
liquidating cash or cash equivalent distributions, and (b) otherwise subject to
the limitations under the Texas Uniform Limited Partnership Act on the rights
of an assignee who has not become a substituted limited partner.
"business day" means Monday through Friday of each week, except that a
legal holiday recognized as such by the Government of the United States or of
the State of Texas shall not be a business day.
"Certificate" means a non-negotiable certificate, issued by DH,
substantially in the form attached to the Partnership Agreement, evidencing
ownership of one or more Units.
"Corporate Office" means the office of the Depositary located in
Dallas, Texas.
"Corporation" means Dorchester Gas Corporation, a Delaware corporation.
"Depositary" means Mercantile National Bank at Dallas, a national
banking association organized and existing under the laws of the United States,
having its principal office at 1704 Main Street, Dallas, Texas 75201, and any
successor to it as Depositary under this Agreement. So long as the Depositary,
the Transfer Agent and the Registrar are the same person, the term "Depositary"
shall include and encompass its duties as Transfer Agent and Registrar.
"Depositary Account" means the account established pursuant to Section
2.03 to hold Units.
"Depositary's Agent" means an agent appointed by the Depositary as
provided in Section 6.05.
"Depositary Receipt" or "Receipt" means a Depositary Receipt, issued by
the Depositary on behalf of DH pursuant to this Agreement substantially in the
form of Exhibit A to this Agreement, evidencing ownership of one or more Units.
"Depositor" means a Limited Partner or Assignee who deposits a Unit or
Units under this Agreement.
"DH" means Dorchester Hugoton, Ltd., a limited partnership organized
and existing under The Texas Uniform Limited Partnership Act, having its
principal office at 5735 Pineland Drive, Suite 129, Dallas, Texas 75231.
"Distribution" means the distribution to be made by the Corporation of
Units to the holders of its Common Stock of record at the close of business on
July 2, 1982, and to certain key employees of the Corporation.
-2-
<PAGE> 5
"Eligible Citizen" means (a) a citizen or national of the United
States, or (b) an alien lawfully admitted for permanent residence in the United
States as defined in 8 USC 1101(a)(20), or (c) a private, public or municipal
corporation organized under the laws of the United States or of any State or of
the District of Columbia, or territory thereof, or (d) an association
(including a partnership) of such citizens, nationals, resident aliens, or
private, public or municipal corporations, States or political subdivisions of
States.
"General Partner" means the person or persons serving as general
partners under the Partnership Agreement during the period they are so serving.
"Initial Limited Partner" means the Corporation.
"Limited Partner" means a person who is a limited partner in DH
pursuant to the Partnership Agreement and includes the Initial Limited Partner,
a Substituted Limited Partner, and any person admitted as an additional Limited
Partner pursuant to the Partnership Agreement.
"Non-citizen" means a person who is not an Eligible Citizen, and
"Non-citizen Assignee" means as Assignee who has certified in a Transfer
Application or otherwise that he is not an Eligible Citizen.
"Partnership Agreement" means the Certificate and Agreement of limited
Partnership of DH dated as of June 16, 1982, as it may from time to time
hereafter be amended or supplemented. A copy of the Partnership Agreement as in
force as of the date of this Agreement is attached to this Agreement as
Exhibit B.
"person" means an individual, corporation, partnership, trust, estate,
unincorporated organization or association.
"record holder" as applied to a Depositary Receipt means the person in
whose name the Depositary Receipt is issued and the Units evidenced thereby are
registered on the books of the Depositary or a Registrar; "holder" as applied
to a Depositary Receipt means, if the Receipt is not endorsed, the record
holder in possession thereof or, if it is endorsed to any person, the person to
whom it is endorsed and who is in possession thereof or, if it is endorsed in
blank, the bearer thereof.
"Registrar" means a bank or trust company appointed to register
Depositary Receipts as provided in Section 3.12; the initial Registrar being
the Depositary.
"Substituted Limited Partner" means a person who is admitted as a
Limited Partner in DH pursuant to the Partnership Agreement in place of and
with all the rights of a Limited Partner.
-3-
<PAGE> 6
"Transfer Agent" means a bank or trust company appointed to act as
transfer agent for Depositary Receipts as provided in Section 3.12; the initial
Transfer Agent being the Depositary.
"Transfer Application" means an Application for Transfer of Units set
forth on the back of the form of Depositary Receipt (Exhibit A) or in a
separate instrument in substantially the same form.
"Unit" means a unit of limited partnership interest in DH.
ARTICLE II
Deposit of Units; Depositary Account
Section 2.01. Deposit of Units. As soon as possible after the date
hereof, the Initial Limited Partner shall deposit all Units and the Certificate
therefor with the Depositary in the Depositary Account.
Section 2.02. Documents Accompanying Deposit. The Corporation shall
deliver to the Depositary a true, correct and complete list showing the names,
addresses, number of shares, stop transfers, lost shares, legended shares,
Non-citizen shareholders status and similar infirmities of the holders of its
Common Stock of record at the close of business on July 2, 1982, the record
date for the Distribution and a list of key employees who will receive Units.
The Corporation and DH, jointly and severally, assume full responsibility for
the completeness, correctness and accuracy of said lists, and the Corporation
and DH shall indemnify and hold harmless the Depositary from all claims, loss,
damages, counsel fees, demands, causes of action and other similar claims which
may be alleged against the Depositary from any source due to any error or
alleged error in the lists.
Upon compliance with applicable federal and state securities laws, the
Corporation shall direct the Depositary to issue Depositary Receipts in the
manner directed and cause such Depositary Receipts to be mailed to the persons
and addresses shown on such lists in the manner that is customary when the
Depositary is acting as a transfer agent. Such mailing shall be insured under
the Depositary's blanket policy or otherwise. An estimate of the value of a
Unit for insurance purposes shall be provided in writing by DH to the
Depositary.
Section 2.03. Depositary Account. The Depositary shall establish, at
its Corporate Office, an account, in a form and in a manner satisfactory to the
Depositary, in which the deposited Units will be held.
Section 2.04. Representations and Warranties of Depositor. The
Initial Limited Partner and thereafter each person depositing one or more Units
under this Agreement shall be deemed thereby to represent and warrant that
(a) he
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is, or is duly authorized to be acting for, a Limited Partner or an Assignee,
(b) each such Unit and the Certificate therefor are validly issued, (c) he is
the owner thereof, or duly authorized by the owner thereof to make the deposit,
and (d) the owner is an Eligible Citizen if required by applicable law. The
Depositary shall not be liable to DH, or any General or Limited Partner or
Assignee, or any other person for any expense or damage incurred as a result of
any breach by a Depositor of these representations and warranties, which shall
survive the deposit of Units and the issuance of Depositary Receipts.
Section 2.05. Representations and Warranties of DH. DH represents and
warrants that (a) upon issuance, each Unit and any Certificate issued in
connection therewith will be validly issued, fully paid and nonassessable, (b)
any Depositary Receipt duly issued by the Depositary under this Agreement will
be fully paid and nonassessable, and (c) neither DH nor any of its affiliates
will at any time direct the issuance of any securities, including Units and
Certificates, if such securities are required to be registered under the
Securities Act of 1933 or any applicable state securities law and such
registration is not in effect. The Depositary shall not be liable to any person
for any expense or damage incurred as a result of any breach by DH of these
representations and warranties, which shall survive the deposit of Units,
Certificates and the issuance of Depositary Receipts.
ARTICLE III
Depositary Receipts
Section 3.01. Issuance of Depositary Receipts. (a) Upon the deposit of
one or more Units, accompanied by such instruments of transfer as the
Depositary may reasonably require, and upon payment of any tax or other
governmental charge in respect of the deposit or of the transfer of the Units,
and payment of any fee of the Depositary provided for in Article IX, the
Depositary shall issue to the Depositor thereof one or more Depositary Receipts
and shall deliver the Receipt or Receipts to the Depositor or to a person
designated by him. One Depositary Receipt shall be issued in a denomination
evidencing all of the Depositor's Units unless the Depositor elects to have
Receipts issued in smaller denominations, subject to Section 3.03(b).
(b) If a Depositor wishes to have any of his Units registered in the name
of, and the Depositary Receipt therefor issued to another person designated by
him, he and such person shall comply with such requirements as DH or the
Depositary may impose, treating the transaction as a transfer subject to the
provisions of Article IV, including the requirement that such person execute a
Transfer Application.
Section 3.02. Effect of Acceptance of Depositary Receipt. By acceptance
of a Depositary Receipt, a Depositor becomes a party to this Agreement, thereby
assenting to all of its provisions, and becomes bound by the terms and
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conditions of this Agreement and the Receipt. The effect of acceptance of a
Depositary Receipt on a person designated by the Depositor pursuant to Section
3.01(b) shall be as set forth in Section 4.03 in respect of a transferee.
Section 3.03. Form of Receipts; Denominations; Execution. (a) Depositary
Receipts shall be substantially in the form of Exhibit A to this Agreement,
with appropriate insertions, modifications and omissions.
(b) Except as the Depositary may otherwise determine, Depositary Receipts
may be in denominations of any number of Units, except that no Receipt shall
represent a fraction of a Unit.
(c) Depositary Receipts may be endorsed with or have incorporated in the
text thereof such legends or recitals or changes not inconsistent with the
provisions of this Agreement as may be required to comply with any applicable
law or any regulation thereunder or with the rules and regulations of any
securities exchange upon which Units or Depositary Receipts are or may be
listed, or to conform with any usage with respect thereto, or to indicate any
special limitation or restriction to which any particular Receipt may be
subject, or as may be for any other reason be required.
(d) Each Depositary Receipt shall be executed by the Depositary by the
manual signature of a duly authorized employee of the Depositary. No Depositary
Receipt shall be entitled to any benefits under this Agreement or be valid
or obligatory for any purpose unless it has been executed by such a manual
signature.
Section 3.04. Number and Registration of Receipts. All Depositary Receipts
issued by the Depositary shall be numbered consecutively. The record holder of
each numbered Receipt shall be registered on the books of the Depositary in a
manner permitting identification, by persons authorized to have access to the
books, of all record holders and their Receipts and the Units evidenced thereby.
Section 3.05. Combinations and Split-ups of Receipts. Upon surrender of a
Depositary Receipt or Receipts for split-up or combination, at the Depositary's
Corporate Office or at any other office it may designate for the purpose, and
subject to the terms and conditions of this Agreement, the Depositary shall
execute and deliver a new Receipt or Receipts, in authorized denominations for
the number of Units requested, evidencing the same aggregate number of such
Units as the number evidenced by the Receipt or Receipts surrendered.
Section 3.06. Lost Receipts. If any Depositary Receipt is mutilated,
destroyed, lost or stolen, the Depositary shall execute and deliver a Receipt
of like form and tenor in exchange and substitution for the mutilated,
destroyed, lost or stolen Receipt; provided that the Depositary may require
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the record holder of the Receipt to file with the Depositary, in a form and
manner satisfactory to it, proof of the mutilation, destruction, loss or
theft, and of his ownership of the Receipt, and to furnish to the Depositary
reasonable indemnification (including posting indemnity bond) satisfactory
to it.
Section 3.07. Limitations on Execution and Delivery, Transfer, Surrender
and Exchange of Receipts. As a condition precedent to the execution and
delivery, transfer, split-up, combination, surrender or exchange of any
Depositary Receipt, the Depositary or any Depositary's Agent may require (a)
payment of a sum sufficient for reimbursement of any tax or other governmental
charge with respect thereto (including any such tax or charge with respect to
Units represented by the Receipt), (b) production of proof satisfactory to it
as to the identity and genuineness of any signature or as to the due
authorization of the action, and (c) compliance with such regulations
consistent with the provisions of this Agreement as the Depositary may
establish.
Section 3.08. Cancellation and Return of Surrendered Receipts. All
Depositary Receipts surrendered to the Depositary or any Depositary's Agent
shall be cancelled. The Depositary shall return to DH cancelled Depositary
Receipts and other instruments, documents and records in accordance with the
policies and regulations of the Depositary, federal securities laws, and rules
and regulations of the securities exchanges upon which Depositary Receipts
are listed.
Section 3.09. Supply of Certificates and Receipts. DH shall deliver to
the Depositary from time to time such quantities of Depositary Receipts as the
Depositary may request to enable the Depositary to perform its obligations
under this Agreement.
Section 3.10. Filing Proofs, Certificates and Other Information.
Following the Distribution, any person presenting a Depositary Receipt may be
required from time to time to file such proof of citizenship, residence or
other matters, or such other information, to execute such certificates, and to
make such representations and warranties as the Depositary may reasonably deem
necessary or proper. The Depositary may withhold the delivery, transfer or
exchange of any Depositary Receipt, or any distribution in respect thereof
until such proof or other information is filed or such certificates are
executed or such representations and warranties are made.
Section 3.11. Refusal of Deposit, Transfer, Etc. The delivery of
Depositary Receipts or Certificates may be suspended, or the transfer of a
Depositary Receipt may be refused, or the transfer, surrender or exchange of
outstanding Depositary Receipts may be suspended during any period when the
register of record holders of Depositary Receipts is closed, or if such action
is deemed necessary or advisable by the Depositary, any of the Depositary's
Agents or DH at any time or from time to time because of any requirement of
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law or of any government or governmental body or commission, or under any
provision of this Agreement, or for any other reason.
Section 3.12. Registrar: Transfer Agent. (a) The Depositary may,
and to the extent required by any law, regulation or applicable stock
exchange rule shall, with the approval of DH, appoint one or more Registrars
and one or more Transfer Agents, for the Depositary Receipts. The Depositary
may be appointed as Registrar or Transfer Agent, or both, if permitted by
applicable law, regulation and stock exchange rule.
(b) A Registrar or Transfer Agent may be removed and a substitute
appointed by the Depositary upon the request or with the approval of DH.
(c) The Depositary shall, at the request of DH, arrange for such
facilities for the delivery, transfer, surrender and exchange of Depositary
Receipts as may be required by law, regulation or applicable stock
exchange rule.
ARTICLE IV
Transfer of Receipts
Section 4.01. Transferability. Subject to the terms and conditions
of this Agreement, title to a Depositary Receipt, upon presentation of
the Receipt properly endorsed, or accompanied by an instrument of transfer
properly executed, by the record holder shall be transferable by delivery
with the same effect as in the case of a negotiable instrument; provided,
however, that until a Receipt has been transferred on the books of the
Depositary as provided in Section 4.02, the Depositary, notwithstanding any
notice to the contrary, may treat the record holder thereof at such time as
the absolute owner thereof for the purpose of determining the person entitled
to any distribution or to any notice provided for in this Agreement and for
all other purposes.
Section 4.02. Transfer of Receipts. Subject to the terms and
conditions of this Agreement, the Depositary shall make transfer on its
books from time to time of Depositary Receipts upon surrender of the
Depositary Receipt or Receipts evidencing the Units owned by the record
holder, in person or by duly authorized attorney, properly endorsed or
accompanied by a properly executed instrument of transfer, and duly stamped
as may be required by law, at the Depositary's Corporate Office or at
any other office it may designate for the purpose, and thereupon the
Depositary shall issue a new Depositary Receipt or Receipts evidencing
the same aggregate number of Units as those evidenced by the Depositary
Receipt or Receipts surrendered, and deliver the new Depositary Receipt or
Receipts to the person entitled thereto. Upon such a transfer, the
transferor shall be deemed to have given the transferee the right to become
a Substituted Limited Partner in DH in respect of the transferred Units
subject to the applicable provisions of the Partnership Agreement.
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Section 4.03. Effect of Acceptance of Depositary Receipt. By acceptance
of a Depositary Receipt, a transferee in respect of the Units evidenced thereby
(a) becomes a party to this Agreement, thereby assenting to all of its
provisions, (b) becomes bound by the terms and conditions of this Agreement and
the Receipt, (c) shall, if accompanied by a properly executed Transfer
Application, be deemed to have requested admission as a Substituted Limited
Partner in DH and to have agreed to be bound by the terms and conditions of the
Partnership Agreement, and (d) shall be deemed to have appointed Barnes, or any
other General Partner of DH, his attorney to execute, swear to, acknowledge and
file any document, including an amendment of the Partnership Agreement (and any
certificate filed with the Secretary of State of Texas in lieu of the filing of
the Partnership Agreement) necessary or appropriate for his admission as a
Substituted Limited Partner in DH and as a party to the Partnership Agreement.
Section 4.04. Status of Transferee. As provided in the Partnership
Agreement, the transferee of a Depositary Receipt, pending his admission as a
Substituted Limited Partner in DH, has the rights of an Assignee in respect of
the Units evidenced by the Receipt and is entitled to admission as a Substituted
Limited Partner, unless he is a Non-citizen, in which event, if applicable law
requires, he shall be a Non-citizen Assignee and the General Partners of DH
shall be deemed to be the Limited Partner in respect of the Units. The Units of
a Limited Partner or an Assignee are subject to redemption by the General
Partners as provided in the Partnership Agreement if it is determined that
because that Limited Partner or Assignee is not an Eligible Citizen, DH is
subject to certain risks under federal leasing law.
Section 4.05. Filing Notice of Transfers with DH and Secretary of State of
Texas. As promptly as practicable after the last business day of each month,
the Depositary shall prepare as of the close of business on that day a list or
other appropriate evidence of transfers of Depositary Receipts registered by the
Depositary since the last business day of the preceding month (hereinafter
called "transfer record"), and shall furnish the transfer record to DH. Under
Section 9.02 of the Partnership Agreement, the new record holder of a
transferred Depositary Receipt as of the close of business on the last business
day of the month covered by the transfer record, upon delivery to the Depositary
of a properly executed Transfer Application, will if he is an Eligible Citizen,
if required by applicable law, and if he has received the permission of the
general partners of DH, become a Substituted Limited Partner in respect of the
Units evidenced by the Receipt upon the filing for record with the Secretary of
the State of Texas of an amendment of the Partnership Agreement or a certificate
filed in lieu thereof.
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ARTICLE V
Withdrawal of Units
Section 5.01. Withdrawal of Units. (a) At the written request of a
Limited Partner or an Assignee for withdrawal of Units from depositor under
this Agreement, and upon surrender of the Depositary Receipt or Receipts
evidencing the same number of Units at the office of the Depositary or at such
other office as the Depositary may designate, and upon proof satisfactory to
the Depositary that the person surrendering the Receipt or Receipts is the
record holder or a person duly authorized by the record holder, the Depositary
shall requisition from DH and DH shall issue a Certificate or Certificates, in
the name of the record holder of the surrender Receipt or Receipts, evidencing
the Units being withdrawn and such other document or documents as may be
necessary to show that the Units are held directly by the record holder. DH
shall deliver the Certificate or Certificates and such other document or
documents to the record holder or to a person designated by him, or shall
forward them to such place as may be specified by, at the risk or expense of,
the record holder or such person.
(b) The Depositary shall require that a Depositary Receipt surrendered
pursuant to subsection (a) of this Section for withdrawal of Units be
properly endorsed in blank or accompanied by a properly executed instrument of
transfer in blank along with a properly executed Transfer Application, and that
the holder of the Receipt execute and deliver to the Depositary a written order
directing DH to cause the Certificate or Certificates evidencing the Units
being withdrawn to be delivered to or upon the written order of a person
designated in such order.
(c) If the Limited Partner or Assignee withdrawing Units pursuant to
subsection (a) of this Section wishes to have any of the Units registered in
the name of, and the Certificate therefor issued to, another person designated
by him, he and such other person shall comply with such requirements as DH may
impose, treating the transaction as a transfer subject to the provisions of
Article IV.
(d) A Certificate will not be issued to a Non-citizen Assignee unless
permitted under applicable law.
Section 5.02. Redeposit. Redeposit of Units that have been withdrawn
shall be subject to receipt by the Depositary of sixty (60) days' advance
written notice and to such other conditions as may be prescribed in the
Partnership Agreement and this Agreement.
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ARTICLE VI
Duties of Depositary
Section 6.01. Reports. The Depositary shall make available for
inspection by record holders of Depositary Receipts at its Corporate Office,
and at such other places as it may from time to time deem advisable, during
normal business hours, any report, financial statement, or communication
received from DH that is both (1) received by the Depositary as the depositary
or holder of Units and (2) made generally available to the owners of Units or
the record holders of Depositary Receipts.
Section 6.02. Lists of Receipt Holders. As promptly as practicable
upon request by DH, the Depositary shall furnish to DH a list, as of a recent
date, of the names and addresses of all record holders of Depositary Receipts
and the number of Units evidenced by said Receipts.
Section 6.03. Maintenance of Offices, Agencies, Transfer Books by
Depositary. (a) The Depositary shall maintain at its Corporate Office, and at
such other office or offices as it may designate, facilities for the execution
and delivery, transfer, surrender and exchange of Depositary Receipts.
(b) The Depositary shall keep books at its Corporate Office for the
transfer of Depositary Receipts. The books shall be open at all reasonable
times for inspection by the record holders of Depositary Receipts, provided
that such inspection shall not be for the purpose of communicating with holders
of Receipts in the interest of a business or object other than the business of
DH or a matter related to this Agreement or the Receipts.
(c) The Depositary may close the books, at any time or from time to
time, when deemed expedient by it in connection with the performance of its
duties under this Agreement.
Section 6.04. Other Obligations. (a) DH shall take all necessary
action to conform the size, material and form of Depositary Receipts to the
requirements of any stock exchange on which an application may be filed to list
Depositary Receipts for trading.
(b) The Depositary in performing the services set forth in this
Agreement shall comply with any additional requirements that may be imposed
upon it by virtue of its being deemed a transfer agent for Depositary Receipts
by any stock exchange on which Depositary Receipts are listed for trading.
(c) The Depositary shall keep all records required to be kept, and
shall file with the Securities and Exchange Commission all materials required
to be filed with the Commission, under the Securities Exchange Act of 1934, by
virtue of its agreement to act as Depositary under this Agreement. A copy of
any material filed with the Securities and Exchange Commission shall be mailed
to DH within two (2) business days after its filing.
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Section 6.05. Depositary's Agents. The Depositary may from time to
time appoint agents for the purposes of this Agreement and vary or terminate
the appointment of such agents. The Depositary shall notify DH of such
actions.
ARTICLE VII
Information; Distributions; Voting Rights
Section 7.01. Duty to Furnish and Transmit Certain Information. The
General Partners of DH are required by the Partnership Agreement to furnish to
Limited Partners and Assignees certain reports and notices. The General
Partners shall furnish or cause to be furnished to the Depositary a sufficient
quantity of each such report or notice for transmittal to the Limited Partners
and Non-citizen Assignees whose ownership of Units is evidenced by Depositary
Receipts. Upon receipt of any such report or notice from the General Partners,
the Depositary shall mail it within five (5) business days to the record holders
of Depositary Receipts as of the close of business on the last business day of
the month next preceding the month in which such report or notice is received by
the Depositary or as of such other time as the General Partners may specify.
Section 7.02. Distributions. (a) As provided in the Partnership
Agreement, the General Partners may from time to time make distributions to
Limited Partners and Assignees. To facilitate such distributions, the
Depositary shall, at DH's request, furnish to DH as promptly as practicable the
number of Units whose ownership is evidenced by Depositary Receipts as recorded
on the books of the Depositary as of the close of business on the last business
day of the month next preceding the month in which such request is made or as
of such other time or such other business day as DH may specify (such time and
day being hereinafter referred to as the "record date").
(b) Notice of a proposed distribution and the calculation of the
amount of the proposed distribution to be allocated to each Unit shall be given
by DH to the Depositary at least ten (10) business days before the record
date. DH shall deposit with the Depositary, at least five (5) business days
(or, if the deposit is made in federal funds or "collected" funds, two (2)
business days) before the distribution is to be made, funds sufficient to pay
the distribution to the record holders of Depositary Receipts as of the record
date. The Depositary shall have no duty or obligation to invest said funds
pending distribution. Such deposit shall be accompanied by DH's calculation of
the distribution to which the owner of a single Unit would be entitled, upon
which calculation the Depositary shall be entitled to rely. The Depositary
shall calculate the distribution to which each record holder of a Depositary
Receipt or Receipts is entitled, based upon the number of Units evidenced by
his Receipt or Receipts. The Depositary shall make distribution of the funds
received from DH to the record holders of Depositary Receipts as of the record
date. The day and time of the record date shall apply to record holders for
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purposes of the particular distribution, notwithstanding the length of time any
such record holder has held any Depositary Receipt.
Section 7.03. Voting. Whenever the Depositary receives from DH notice
of any meeting at which record holders of Depositary Receipts are entitled or
required to vote or of which they are entitled to notice, the Depositary shall,
at the request of DH, mail to each record holder of a Receipt or Receipts as of
the record date specified in the notice of meeting a copy of the notice which
shall contain a statement as to the voting rights at the meeting of the holders
of Receipts as of the record date. DH shall furnish the Depositary sufficient
copies of said statement to accomplish the foregoing notice. Whether or not a
record holder is entitled or required to vote on any matter shall be governed
by the terms of this Agreement, the Partnership Agreement and applicable law.
The Depositary shall have no duty or responsibility to issue notice to any
person, including Non-citizen Assignees, not a record owner of a Depositary
Receipt. Record holders of Depositary Receipts will not be entitled to notice
as Limited Partners or the right to vote as Limited Partners unless they are
Substituted Limited Partners.
ARTICLE VIII
Status and Other Activity of Depositary;
Force Majeure; Immunities; Indemnification
Section 8.01. Depositary Not a Trustee, Issuer, Etc. The Depositary
is not a trustee. The Depositary shall have no legal or equitable title to
Units deposited under this Agreement. The Depositary shall have no right or
power to sell, invest in, pledge, mortgage, or borrow against any Units
deposited under this Agreement (except for a possessory lien that may be
imposed by the Depositary upon books, records, documents, or other properties
for nonpayment of fees or expenses under this Agreement). Except as provided
in Article VII, the Depositary shall have no right to vote in, receive
distributions of or have any interest in, DH. The Depositary shall not be
liable for any assessments by DH. It is intended that the Depositary shall not
be deemed to be an "issuer" of securities under the federal securities laws or
applicable state securities laws, it being expressly understood and agreed that
the Depositary is acting only as a mere ministerial depositary for and record
holder of Units.
Section 8.02. Other Activity Of Depositary. The Depositary and any
Depositary's Agent may own and deal in, and act as registrar and/or transfer
agent for, any class of securities of Units or Depositary Receipts.
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Section 8.03. Force Majeure. Neither the Depositary nor any
Depositary's Agent nor DH nor any General Partner thereof shall incur any
liability to any holder of a Certificate or Depositary Receipt if by reason of
any provision of any present or future law or any regulation under any present
or future law of the United States of America or of any other governmental
authority, or by reason of any act of God or war or other circumstance beyond
its control (or in the case of the Depositary or the Depositary's Agent by
reason of any provision, present or future, of the Partnership Agreement), the
Depositary, any Depositary's Agent, DH or any General Partner thereof is
prevented or forbidden from doing or performing any act or thing required by
the terms of this Agreement to be done or performed; nor shall the Depositary,
any Depositary's Agent, DH or any General Partner thereof incur liability to
any holder of a Certificate or Receipt by reason of any nonperformance or delay
caused as aforesaid in performance of any act or thing required by the terms of
this Agreement to be done or performed, or by reason of any exercise of, or
failure to exercise, any discretion provided for in this Agreement.
Section 8.04. Immunities. (a) Neither the Depositary nor any
Depositary's Agent nor DH nor any General Partner thereof assumes any
obligation or shall be subject to any liability under this Agreement to holders
of Certificates or Depositary Receipts other than that each of them agrees to
act in good faith in the performance of such duties as are specifically set
forth in this Agreement.
(b) Neither the Depositary nor any Depositary's Agent nor DH nor any
General Partner thereof shall be under any obligation to appear in, prosecute
or defend any action, suit or other proceeding in respect of Units,
Certificates or Depositary Receipts that in its opinion may involve it in
expense or liability unless indemnity, in addition to that provided by Section
8.05, satisfactory to it against all expense and liability be furnished as
often as may be required.
(c) Neither the Depositary nor any Depositary's Agent nor DH nor any
General Partner thereof shall be liable for any action or nonaction by it in
reliance upon the advice of or information from legal counsel, accountants,
any person presenting Units for deposit, any holder of a Certificate or a
Depositary Receipt, or any other person believed by it in good faith to be
competent to give such advice or information. The Depositary, any Depositary's
Agent, DH and each General Partner thereof may rely and shall be protected in
acting upon any written notice, request, direction or other document believed
by it to be genuine and to have been signed or presented by the proper person
or persons.
Section 8.05. Indemnification. (a) The Depositary shall indemnify
DH and each General Partner thereof against, and hold each of them harmless
from, any liability that may arise out of acts performed or omitted by the
Depositary or Depositary's Agents due to gross negligence, bad faith or
intentional misconduct.
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(b) DH shall indemnify the Depositary against, and hold it harmless from,
any liability that may arise out of acts performed or omitted (1) by the
Depositary (including its own negligence or that of Depositary's Agents),
except for any liability due to gross negligence, bad faith or intentional
misconduct, or (2) by DH or any of its agents.
(c) The indemnification and immunities provided for in this Section for
the Depositary, DH and the General Partners thereof shall extend to their
respective officers, directors, stockholders, employees and agents.
Section 8.06. Tax Matters. The Depositary shall have no duties,
obligations or liabilities with respect to (a) allocation and distribution of
federal tax benefits and responsibilities respecting DH, Limited Partners and
Assignees or (b) any income or other tax reporting obligations imposed upon DH
or any partner thereof to the Internal Revenue Service or any other federal,
state or local taxing authority.
ARTICLE IX
Charges, Fees, Expenses
Section 9.01. In General. The charges, fees and reimbursable expenses of
the Depositary shall be based upon the Depositary's fees charged to third
parties for like services, including specifically without limitation its
services as Depositary, Transfer Agent and Registrar hereunder, as the same may
be adjusted from time to time. For special services or disbursements, the
charge, fee or reimbursement shall be determined by mutual agreement of the
Depositary and DH.
Section 9.02. Responsibility for Expenses and Charges. DH shall be
responsible for payment of all charges, fees and expenses of the Depositary
other than such as are expressly provided by this Agreement to be paid by
Depositors or by holders and transferees of the Depositary Receipts.
Section 9.03. Governmental Charges. If an tax or other governmental
charge becomes payable with respect to a Unit or Depositary Receipt evidenced
thereby, or with respect to deposit, transfer or withdrawal of any of the
foregoing, such tax or governmental charge shall be payable by the holder of the
Receipt or Unit, as the case may be, or the transferee in the case of a
transfer. Transfer of a Depositary Receipt or withdrawal of Units may be
refused until such payment is made, and any distribution may be withheld and
be applied to payment of such tax or other governmental charge, the holder or
the transferee remaining liable for any deficiency.
Section 9.04. Special Charges. If at the election of an owner of Units,
or the holder or transferee of a Depositary Receipt, any delivery or
communication from the Depositary is by telegram or telex or similar record
telecommunication mode, or the Depositary incurs any charge or expense for
which it
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<PAGE> 18
is not otherwise liable under this Agreement, the owner, holder or transferee,
as the case may be, shall be liable for such charge or expense.
Section 9.05. Notice Requirement. The Depositary shall give notice of
the imposition of any charge or fee, other than the charges described in
Sections 9.03 and 9.04, upon holders or transferees of Depositary Receipts, or
any change therein, to any securities exchange upon which Depositary Receipts
are listed or, in the absence of such listing, by publication in a newspaper of
general circulation in Dallas, Texas, and shall also give notice thereof in
writing to all record holders of Receipts. The imposition of or a change in any
such charge or fee shall not become effective until ninety (90) days after the
date of such notice, unless it becomes effective in the form of an amendment
pursuant to Section 10.02.
ARTICLE X
Resignation; Removal; Amendment; Termination
Section 10.01. Resignation and Removal of Depositary; Appointment of
Successor Depositary. (a) The Depositary may at any time resign as Depositary
under this Agreement by written notice of its election to do so delivered to
DH, such resignation to take effect upon the appointment of a successor
Depositary and its acceptance of such appointment as hereinafter provided.
(b) The Depositary may at any time be removed by DH by written notice
of removal delivered to the Depositary, such removal to be effective upon the
appointment of a successor Depositary and its acceptance of such appointment as
hereinafter provided.
(c) If the Depositary resigns or is removed, DH shall, within thirty
(30) days after the delivery of the notice of resignation or removal, as the
case may be, appoint a successor Depositary, which shall be a bank or trust
company having a combined capital and surplus of at least $20,000,000. Any
successor Depositary shall execute and deliver to its predecessor and to DH an
instrument in writing accepting its appointment, and thereupon such successor
Depositary, without any further act or deed, shall become fully vested with all
the rights, powers, duties and obligations of its predecessor. The predecessor,
upon payment of all sums due it and on the written request of DH, shall
execute and deliver an instrument transferring to the successor Depositary all
rights and powers of the predecessor under this Agreement, shall duly transfer
all Units and Certificates on deposit to the successor Depositary, and shall
deliver to the successor Depositary a list of the record holders of all
outstanding Depositary Receipts. Any successor Depositary shall promptly mail
notice of its appointment to the record holders of Depositary Receipts.
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<PAGE> 19
(d) Any corporation into or with which the Depositary may be merged or
consolidated shall be the successor of the Depositary without the execution or
filing of any document or any further act.
Section 10.02. Amendment. (a) Any provision of this Agreement, including
the form of Depositary Receipt and the form of Transfer Application, may at
any time and from time to time be amended by agreement between DH and the
Depositary in any respect deemed necessary or desirable by them that does not
adversely affect any substantial right of record holders of Receipts.
(b) The record holders of Depositary Receipts representing twenty-five
percent (25%) or more of the Units may at any time propose an amendment or
amendments of this Agreement.
(c) Any amendment of this Agreement that imposes any fee, tax or charge
(other than fees and charges provided for in this Agreement) upon, or otherwise
adversely affects any substantial right of record holders of Depositary
Receipts shall not be effective until the expiration of thirty (30) days after
notice of the amendment has been given to the record holders of Receipts or, if
the amendment is presented for a vote of the record holders of Receipts, until
it has been approved by the affirmative vote of the record holders of Receipts
representing fifty percent (50%) or more of the Units that are on deposit with
the Depositary at the time.
(d) For the purpose of considering any amendment of this Agreement that
adversely affects any substantial right of the record holders of Depositary
Receipts or any amendment proposed by record holders of Receipts as provided in
subsection (b) of this Section but not adopted by the Depositary and DH, DH
shall call a meeting of the record holders of Receipts to be held at a place in
Dallas, Texas designated by DH. The call shall set forth the time, place and
purpose of the meeting and notice thereof shall be mailed at least twenty (20)
days before the meeting to each record holder at the close of business on the
record date selected by DH for the purpose of the meeting. Any record holder may
waive such notice. At the meeting each record holder shall have one vote for
each Unit evidenced by each Depositary Receipt registered in his name and may
cast such vote in person or by proxy. At the meeting the presence in person or
by proxy of record holders of Depositary Receipts evidencing at least fifty
percent (50%) of the Units that are on deposit with the Depositary at the time
shall be necessary to constitute a quorom. If a proposed amendment is approved
by the record holders of Depositary Receipts evidencing fifty percent (50%) or
more of the Units that are on deposit at the record date and if, in the case of
an amendment that alters the duties or liabilities of the Depositary, DH or any
General Partner thereof, it is approved in writing by whichever of them is or
are affected, the amendment shall be declared adopted, and upon filing with the
Depositary of a certificate of the proceedings of the meeting, verified by the
chairman and
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<PAGE> 20
the secretary thereof, together with any such approval, the amendment shall
thereupon become effective.
(e) In lieu of adoption at a meeting as provided in subsection (d) of this
Section, an amendment of this Agreement may be approved if record holders of
Depositary Receipts as of a record date selected by DH representing fifty
percent (50%) or more of the Units that are on deposit with the Depositary at
the time consent thereto in writing filed with DH.
(f) DH shall give notice as promptly as practicable of any amendment of
this agreement to each securities exchange upon which the Depositary Receipts
are listed and shall also give notice thereof in writing to all record holders
of Receipts. In the discretion of DH, the text or substance of any amendment
may be incorporated in the Depositary Receipts issued after its adoption.
(g) Every record holder of a Depositary Receipt at the time any amendment
of this Agreement becomes effective shall be deemed, by continuing to hold the
Receipt, to consent and agree to the amendment and to be bound by this
Agreement as amended thereby.
(h) No amendment of this Agreement shall impair the right of the record
holder of any Depositary Receipt to surrender the Receipt and withdraw any or
all of the Units evidenced thereby.
Section 10.03. Termination. (a) The Depositary shall terminate this
Agreement, whenever directed to do so by DH, by mailing notice of termination
to the record owners of all Depositary Receipts then outstanding at least
thirty (30) days before the date fixed for the termination in such notice.
(b) The Depositary may terminate this Agreement if, after the Depositary
has delivered to DH a written notice of its election to resign, sixty (60) days
has elapsed and a successor Depositary has not accepted its appointment as
provided in Section 10.01. The Depositary shall mail notice of termination to
the record holders of all outstanding Depositary Receipts. Termination shall be
effected on the date fixed in the notice, which shall be at least thirty (30)
days after it is mailed.
(c) Upon termination of this Agreement, the Depositary shall discontinue
the transfer of Depositary Receipts, shall suspend the distribution of reports,
notices and disbursements to the record holders thereof, and shall not give any
further notices (other than notice of such termination) or perform any further
acts under this Agreement except that DH shall continue to deliver Units
together with any distributions received with respect thereto in exchange for
Receipts surrendered to DH pursuant to Section 5.01. Upon request of DH, the
Depositary shall deliver all books, records, Certificates, Depositary Receipts
and other documents respecting the subject matter of this Agreement to DH.
-18-
<PAGE> 21
(d) Upon termination of this Agreement, DH, its General Partners and
the Limited Partners shall be discharged from all obligations under this
Agreement, except for the obligations of DH under Section 8.05 and Article IX.
ARTICLE XI
Miscellaneous
Section 11.01. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original and all of
which shall constitute one and the same instrument. Copies of this Agreement
shall be filed with the Depositary and shall be open to inspection during
business hours at the Depositary's Corporate Office by any record holder of a
Depositary Receipt.
Section 11.02. Exclusive Benefit of Parties. This Agreement is for the
exclusive benefit of the parties hereto, and their respective successors, and
shall not be deemed to give any legal or equitable right, remedy, or claim to
any other person.
Section 11.03. Invalidity Of Provisions. If any provision of this
Agreement or of the Depositary Receipts is or becomes invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein or therein shall not be affected thereby.
Section 11.04. Notices. (a) Any notice to be given any party to this
Agreement shall be deemed to have been duly given if personally delivered or
sent by mail or by telegram or telex confirmed by letter, addressed to the
party in the manner and at the address shown below, or at such address as the
party has specified in a notice given in accordance with this Section.
To DH:
Dorchester Hugoton, Ltd.
Attention: John R. Barnes
5735 Pineland Drive
Suite 129
Dallas, Texas 75231
To Barnes:
John R. Barnes
5735 Pineland Drive
Suite 129
Dallas, Texas 75231
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<PAGE> 22
To the Depositary:
Mercantile National Bank at Dallas
Attention: Corporation Trust Department
1704 Main Street
Dallas, Texas 75201 (for personal, telegram, or telex delivery)
P.O. Box 225415
Dallas, Texas 75265 (for delivery or confirmation by mail)
(b) Any notice to be given to any record holder of a Depositary Receipt
shall be deemed to have been duly given if personally delivered or sent by mail
or by telegram or telex confirmed by letter, addressed to him at his address as
it appears on the books of the Depositary, or if he has filed with the
Depositary a written request that notices intended for him be mailed to some
other address, at the address designated in such request.
(c) Delivery of a notice sent by mail or by telegram or telex shall be
deemed to be effected at the time when a duly addressed letter containing the
same (or a confirmation thereof in the case of a telegram or telex message) is
deposited, postage prepaid, in a post-office letter box. The Depositary or the
General Partners of DH or DH may, however, act upon any telegram or telex
message received by it or them from either of the others or from any holder of
a Depositary Receipt of a Certificate, notwithstanding that such telegram or
telex message is subsequently confirmed by letter as aforesaid.
Section 11.05. Holders of Receipts to be Parties. The holders of
Depositary Receipts from time to time shall be parties to this Agreement and
shall be bound by all of the terms and conditions hereof and of the Receipts.
Section 11.06. Pronouns and Plurals. Whenever the context may require,
any pronoun used herein shall include the corresponding masculine, feminine, or
neuter forms, and the singular form of nouns, pronouns and verbs shall include
the plural and vice versa.
Section 11.07. Governing Law. This Agreement and the Depositary Receipts
and all rights hereunder and thereunder and provisions hereof and thereof shall
be governed by and construed in accordance with the laws of the State of Texas.
Section 11.08. Captions. The headings of articles and sections in this
Agreement and in the form of Depositary Receipt set forth in Exhibit A hereto
have been inserted for convenience only and are not to be regarded as a part of
this Agreement or of any Receipt or to have any bearing upon the meaning or
interpretation of any provision contained herein or in the Receipt.
-20-
<PAGE> 23
IN WITNESS WHEREOF, the Corporation, DH, Barnes (for himself as a General
Partner of DH and as attorney-in-fact of the Limited Partners) and the
Depositary have duly executed this Agreement as of the day and year first above
set forth.
DORCHESTER GAS CORPORATION
By: /s/ George S. Rooker
--------------------------------------
George S. Rooker, Chairman of the
Board and Chief Executive Officer
DORCHESTER HUGOTON, LTD.
By: /s/ John R. Barnes
--------------------------------------
John R. Barnes, General Partner
LIMITED PARTNERS IN DORCHESTER
HUGOTON, LTD.
By John R. Barnes, as Attorney-in-fact
for all Limited Partners
By: /s/ John R. Barnes
-------------------------------------
John R. Barnes
MERCANTILE NATIONAL BANK AT DALLAS
By: /s/ Lonnie G. Diggs
-------------------------------------
Vice President
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