EXHIBIT 2.2
CONTRIBUTION AGREEMENT
BY AND AMONG
XXX PARTNERS, LTD.,
XXXXXX PETROLEUM, LTD.,
XXXXX XXXXX OIL & GAS, INC.,
P.A. PEAK, INC.,
XXXXX X. XXXXX, INC.,
DORCHESTER MINERALS MANAGEMENT GP LLC, AND
DORCHESTER MINERALS MANAGEMENT LP
DATED AS OF DECEMBER 13, 2001
Table of Contents
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ARTICLE I CONTRIBUTION TRANSACTIONS..............................................................................2
1.1 Contribution to General Partner by XXX and Xxxxxx...................................................2
1.2 Contribution to General Partner by SAOG.............................................................3
1.3 Contribution to General Partner by Peak and Xxxxx...................................................3
1.4 Partnership Agreement and Consideration.............................................................3
1.5 Contributions to DMMLLC; LLC Agreement and Consideration...........................................3
1.6 The Closing.........................................................................................3
1.7 Closing Deliveries..................................................................................4
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE CONTRIBUTORS....................................................4
2.1 Existence and Good Standing.........................................................................4
2.2 Authority...........................................................................................5
2.3 Equity Ownership....................................................................................5
2.4 No Violation........................................................................................5
2.5 Consents and Approvals..............................................................................5
2.6 Acquisition Entirely for Own Account................................................................5
2.7 Disclosure of Information; Due Diligence...........................................................6
2.8 Investment Experience; Accredited Purchaser Status.................................................6
2.9 Restricted Securities...............................................................................6
ARTICLE III REPRESENTATIONS AND WARRANTIES OF GENERAL PARTNER AND DMMLLC.........................................6
3.1 Existence and Good Standing.........................................................................6
3.2 Authority...........................................................................................7
3.3 No Violation........................................................................................7
3.4 Consents and Approvals..............................................................................7
ARTICLE IV ADDITIONAL COVENANTS..................................................................................7
4.1 Taxes...............................................................................................7
4.2 Amendment and Restatement of Agreements.............................................................7
ARTICLE V CONDITIONS TO THE CLOSING..............................................................................7
5.1 Conditions to Each Party's Obligation to Close......................................................7
ARTICLE VI TERMINATION, AMENDMENT AND WAIVER.....................................................................8
6.1 Termination.........................................................................................8
6.2 Effect of Termination...............................................................................8
6.3 Extensions; Waiver.................................................................................8
ARTICLE VII REMEDIES.............................................................................................8
7.1 Right to Indemnification Not Affected by Knowledge..................................................8
7.2 Indemnification by the Contributors.................................................................9
7.3 Notice and Defense of Third-Party Claims............................................................9
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Table of Contents
(continued)
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7.4 Limitations of Liability...........................................................................10
7.5 Specific Performance; Injunctive and Other Equitable Relief........................................10
ARTICLE VIII MISCELLANEOUS......................................................................................11
8.1 Survival of Representations and Warranties.........................................................11
8.2 Brokers and Finders................................................................................11
8.3 Entire Agreement; Assignment......................................................................11
8.4 Amendment and Modification.........................................................................11
8.5 Waiver; Consents..................................................................................11
8.6 Further Assurances.................................................................................11
8.7 Severability.......................................................................................11
8.8 Address for Notices................................................................................12
8.9 Governing Law......................................................................................14
8.10 Descriptive Headings..............................................................................14
8.11 Parties in Interest; No Third-Party Beneficiary..................................................14
8.12 Counterparts......................................................................................14
8.13 Incorporation by Reference........................................................................14
8.14 Certain Definitions...............................................................................15
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LIST OF EXHIBITS
Exhibit A Form of Limited Liability Agreement of DMMLLC
Exhibit B Form of Limited Partnership Agreement of General Partner
Exhibit C Form of Transfer Restriction Agreement
Exhibit D Percentage Interests in DMMLLC
Exhibit E Form of Assignment
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CONTRIBUTION AGREEMENT
This
Contribution Agreement (the "Agreement"), dated as of December 13,
2001, is by and among XXX Partners, Ltd., a
Texas limited partnership ("XXX"),
Xxxxxx Petroleum, Ltd., a
Texas limited partnership ("Xxxxxx"), Xxxxx Xxxxx Oil
& Gas Company, Inc., a
Texas corporation ("SAOG"), P.A. Peak, Inc., a Delaware
corporation ("Peak"), Xxxxx X. Xxxxx, Inc., a Delaware corporation ("Xxxxx"),
Dorchester Minerals Management LP, a Delaware limited partnership ("General
Partner") and its general partner, Dorchester Minerals Management GP LLC, a
Delaware limited liability company ("DMMLLC"). Each of SAM, Vaughn, SAOG, Peak
and Xxxxx is a "Contributor" and, collectively, they are sometimes referred to
as the "Contributors." Each of SAM, Vaughn, SAOG, Peak, Xxxxx, General Partner
and DMMLLC is a "Party" and, collectively, they are sometimes referred to as the
"Parties."
RECITALS
WHEREAS, General Partner was formed on December 12, 2001 pursuant to
the Delaware Revised Uniform Limited Partnership Act upon the filing of a
certificate of limited partnership with the office of the Secretary of State of
Delaware. DMMLLC is the sole general partner of General Partner. The
Contributors are currently the sole limited partners of General Partner;
WHEREAS, DMMLLC was formed on December 12, 2001 pursuant to the
Delaware Limited Liability Company Act upon the filing of a certificate of
formation with the office of the Secretary of State of Delaware. The
Contributors are currently the sole members of DMMLLC;
WHEREAS, Republic Royalty Company, a
Texas general partnership of which
XXX and Xxxxxx are the general partners ("RRC"), Spinnaker Royalty Company,
L.P., a
Texas limited partnership, of which SAOG is the general partner ("SRC")
and Dorchester Hugoton, Ltd., a
Texas limited partnership of which Peak and
Xxxxx are the general partners ("DHL"), are engaged in a transaction which will
result in the combination of the businesses and properties of RRC, SRC and DHL
(the "Transaction") pursuant to a Combination Agreement of even date herewith
(the "Combination Agreement");
WHEREAS, prior to or simultaneously with the closing of the
Transaction, RRC will be converted into a Delaware limited partnership (and
after such conversion the term "RRC" shall be deemed to refer to such limited
partnership as well);
WHEREAS, as a result of the Transaction, but prior to the Closing (as
defined herein), SAM, Vaughn, and SAOG will each own general partner interests
in Dorchester Minerals, L.P., a Delaware limited partnership (the
"Partnership");
WHEREAS, as a result of the Transaction, but prior to the Closing, Peak
and Xxxxx will each own limited partner interests in the Partnership;
WHEREAS, XXX, Xxxxxx and SAOG desire to contribute their general
partner interests in the Partnership to General Partner and certain cash to
DMMLLC in accordance with the terms and provisions of this Agreement;
WHEREAS, Peak desires to contribute its limited partner interests in
the Partnership and certain cash to a limited partnership to be formed prior to
the Closing as an indirect subsidiary of Peak ("Peak LP"), and immediately
thereafter, to cause Peak LP to contribute such limited partner interests and
certain cash to General Partner and certain cash to DMMLLC (collectively, the
"Peak Contribution"), and at Closing, Peak LP shall replace Peak as a member of
DMMLLC and as a limited partner of General Partner;
WHEREAS, in order to effect the steps contemplated by the Peak
Contribution in a single transaction with the contributions by the other
Contributors pursuant to the terms and provisions of this Agreement, Peak will
contribute (i) its limited partner interests in the Partnership and certain cash
directly to General Partner in exchange for Peak LP's receipt from the General
Partner of the consideration provided for herein and (ii) certain cash to DMMLLC
in exchange for Peak LP's receipt from DMMLLC of the consideration provided for
herein;
WHEREAS, Xxxxx will be converted into a Delaware general partnership
prior to Closing (and after such conversion the term "Xxxxx" shall be deemed to
refer to such general partnership as well), and Xxxxx desires to contribute its
limited partner interests in the Partnership and certain cash to General Partner
and certain cash to DMMLLC;
WHEREAS, in connection with these capital contributions to General
Partner and DMMLLC and to admit Peak LP as a substituted member in DMMLLC and a
substituted limited partner in General Partner (in each case replacing Peak),
the original limited liability company agreement of DMMLLC will be amended and
restated in substantially the form attached hereto as Exhibit A (the "LLC
Agreement"), the original limited partnership agreement of General Partner will
be amended and restated in substantially the form attached hereto as Exhibit B
(the "Partnership Agreement"), and the members of DMLLC and partners of General
Partner will enter into a transfer restriction agreement in substantially the
form attached hereto as Exhibit C (the "Transfer Restriction Agreement");
WHEREAS, the Parties intend that for federal income tax purposes, the
above contributions qualify for non-recognition treatment under Section 721 of
the Internal Revenue Code of 1986, as amended (the "Code");
WHEREAS, the Parties are making certain representations, warranties,
covenants and indemnities herein as an inducement to the other Parties to enter
into this Agreement;
NOW, THEREFORE, in consideration of the respective representations,
warranties and covenants contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Parties hereby agree as follows:
ARTICLE I
CONTRIBUTION TRANSACTIONS
1.1 Contribution to General Partner by XXX and Xxxxxx. Subject to the
terms and conditions of this Agreement, XXX and Xxxxxx shall each contribute,
convey, assign, transfer, set over and deliver to General Partner at the Closing
all of their respective right, title and interest in and to all general partner
interests in the Partnership held by them, including, without
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limitation, the general partner interests issued to them pursuant to the
Combination Agreement (collectively, the "XXX/Xxxxxx Contribution").
1.2 Contribution to General Partner by SAOG. Subject to the terms and
conditions of this Agreement, SAOG shall contribute, convey, assign, transfer,
set over and deliver to General Partner at the Closing all of its right, title
and interest in and to all general partner interests in the Partnership held by
it, including, without limitation, the general partner interests issued to it
pursuant to the Combination Agreement (the "SAOG Contribution").
1.3 Contribution to General Partner by Peak and Xxxxx. Subject to the
terms and conditions of this Agreement, Peak and Xxxxx shall each contribute,
convey, assign, transfer, set over and deliver to General Partner at the Closing
(i) all of their respective right, title and interest in and to all limited
partner interests in the Partnership issued to them pursuant to the Combination
Agreement with respect to their general partner interests in DHL and (ii) cash
in the amount such that if that amount were added to such Person's capital
account in DHL immediately prior to the closing of the Transaction, such
Person's capital account balance would equal one-half of one percent (0.5%) of
the aggregate capital account balance of all partners of DHL after all cash
amounts have been contributed under this Section 1.3 (collectively, the
"Peak/Xxxxx Contribution" and together with the XXX/Xxxxxx Contribution and the
SAOG Contribution, the "GP Contributions").
1.4 Partnership Agreement and Consideration. Subject to the terms and
conditions of this Agreement, at the Closing the following will occur: (i)
DMMLLC, SAM, Vaughn, SAOG, Xxxxx and Peak LP shall enter into the Partnership
Agreement (with Peak joining to evidence its agreement with the substitution of
Peak LP), (ii) in exchange for the GP Contributions, "Ownership Interests" as
provided in the Partnership Agreement will be issued to SAM, Vaughn, SAOG, Xxxxx
and Peak LP (the "LP Interests) and (iii) DMMLLC shall contribute to the General
Partner the amounts contributed to DMMLLC pursuant to Section 1.5.
1.5 Contributions to DMMLLC; LLC Agreement and Consideration. Subject
to the terms and conditions of this Agreement, at the Closing the following will
occur: (i) SAM, Vaughn, SAOG, Xxxxx and Peak LP shall enter into the LLC
Agreement (with Peak joining to evidence its agreement with the substitution of
Peak LP) and (ii) each Contributor shall contribute to DMMLLC at Closing cash in
an amount equal to the product of (A) the percentage set forth opposite its name
on Exhibit D, (B) one-tenth of one percent (0.1%) and (C) the quotient of (x)
the aggregate amount (expressed in dollars) at which the GP Contributions are or
are to be credited to the capital accounts of the limited partners of the
General Partner divided by (y) 0.999 (the "LLC Contributions"), in consideration
for the issuance by DMMLLC of "Ownership Interests" as provided in the LLC
Agreement ("Member Interests").
1.6 The Closing. The consummation of the transactions contemplated in
this Agreement (the "Closing") will take place at the offices of Xxxxxxxx &
Xxxxxx L.L.P., 0000 Xxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxx 00000,
simultaneously with or immediately following the closing of the Transaction, or
at such other time and place as the Parties may agree. The date on which the
Closing occurs is referred to herein as the "Closing Date". All documents
entered into at the Closing shall be deemed to have been entered into
simultaneously.
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1.7 Closing Deliveries. Subject to the terms and conditions of this
Agreement:
(a) At the Closing, each of the Contributors will execute and deliver
to General Partner, or cause to be so executed and delivered, the following:
(i) An assignment in the form attached hereto as Exhibit E of
the general and/or limited partner interests in the Partnership representing
their respective GP Contributions; and
(ii) Such other documents as may be reasonably requested by
General Partner.
(b) At the Closing, General Partner will execute and deliver to each
Contributor, or cause to be so executed and delivered, such documents as may be
reasonably requested by any Contributor.
(c) At the Closing, each of the Contributors will deliver, or cause to
be delivered, to DMMLLC, the following:
(i) an amount of cash (which delivery may be effected by wire
transfer of immediately available funds) equal to that determined in accordance
with Section 1.5; and
(ii) such other documents as may be reasonably requested by
DMMLLC.
(d) At the Closing, DMMLLC will execute and deliver to each
Contributor, or cause to be so executed and delivered such documents as may be
reasonably requested by any Contributor.
(e) At the Closing, the parties specified in Section 1.4 shall enter
into the Partnership Agreement, the parties specified in Section 1.5 shall enter
into the LLC Agreement, and each of SAM, Vaughn, SAOG, Xxxxx and Peak LP shall
enter into the Transfer Restriction Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE CONTRIBUTORS
Each Contributor hereby separately represents and warrants to General
Partner and DMMLLC and to each other Contributor and to Peak LP as of the date
hereof the following as to itself only (and, in the case of Section 2.1 and
Sections 2.6 through 2.9, Peak also makes such representations and warranties on
behalf of Peak LP, which for purposes of Sections 2.6 through 2.9 shall also be
deemed a Contributor):
2.1 Existence and Good Standing. XXX is a limited partnership duly
formed and validly existing under the laws of the State of
Texas. Xxxxxx is a
limited partnership duly formed and validly existing under the laws of the State
of
Texas. SAOG is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of
Texas. Peak is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware. At Closing, Peak LP will be a limited partnership duly formed,
validly existing and in good standing under the laws of the State of Delaware.
Xxxxx is a corporation duly
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incorporated, validly existing and in good standing under the laws of the State
of Delaware and at Closing will be a general partnership duly formed, validly
existing and in good standing under the laws of the State of Delaware. Each
Contributor has all requisite corporate or partnership power and authority to
carry on its business as it is now being conducted.
2.2 Authority. Each Contributor has all requisite corporate or
partnership power and authority to execute, deliver and perform this Agreement,
the Partnership Agreement, the LLC Agreement and the Transfer Restriction
Agreement. This Agreement and each other such agreement has been duly and
validly executed and delivered by the Contributor and, assuming the due
authorization, execution and delivery hereof and thereof by the other parties
hereto and thereto, constitutes the valid and binding obligation of the
Contributor, enforceable against such Contributor in accordance with its terms,
subject to the effect of bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to creditors' rights generally and general equitable
principles.
2.3 Equity Ownership. Each Contributor will at the time of Closing
legally and beneficially own the outstanding partnership interests in the
Partnership issued to such Contributor pursuant to the Combination Agreement
with respect to their general partner interests in RRC, SRC or DHL (as
applicable), free and clear of all security interests, claims, liens or other
encumbrances of any nature whatsoever.
2.4 No Violation. The execution and delivery of this Agreement, the
consummation of the GP Contributions and the LLC Contributions (collectively,
the "Contributions") and the transactions contemplated hereby, including without
limitation the execution and delivery of the Partnership Agreement, the LLC
Agreement and the Transfer Restriction Agreement, by the Contributor will not
(i) violate any of the formation or governing documents of the Contributor, (ii)
violate any provision of or result in the breach of or entitle any party to
accelerate (whether after the giving of notice or lapse of time or both) any
obligation under any mortgage, lien, lease, contract, license, instrument or any
other agreement to which such Contributor is a party, (iii) result in the
creation or imposition of any lien, charge, pledge, security interest or other
encumbrance upon the property of such Contributor, or (iv) to the knowledge of
such Contributor, violate or conflict with any order, award, judgment or decree
or other restriction of any law, ordinance or regulation to which such
Contributor or any of such Contributor's interest, is subject.
2.5 Consents and Approvals. No prior consent, approval or authorization
of, or declaration, filing or registration with any Governmental Authority,
Person or entity, domestic or foreign, is required of or by the Contributor in
connection with the execution, delivery and performance of this Agreement by the
Contributor and the transactions contemplated hereby, except such, if any, as
will have been received, made or done at the time of Closing.
2.6 Acquisition Entirely for Own Account. This Agreement is made with
the Contributor in reliance upon its representation, which by its execution of
this Agreement is hereby confirmed, that the LP Interests and Member Interests
to be received by the Contributor will be acquired for investment for the
Contributor's own account, and not with a view toward the distribution of any
part thereof, and that such Contributor has no present intention of selling,
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granting any participation in, or otherwise distributing the same in a manner
contrary to the Securities Act or applicable state securities laws.
2.7 Disclosure of Information; Due Diligence. Each Contributor
represents that it had the opportunity to ask questions of and receive answers
from General Partner and DMMLLC regarding General Partner and DMMLLC regarding
DMMLLC and the terms and conditions of the offering of the LP Interests and
Member Interests hereunder and to obtain additional information necessary to
verify the accuracy of the information supplied or to which such Contributor had
access.
2.8 Investment Experience; Accredited Purchaser Status. Each
Contributor is able to fend for itself in the transactions contemplated by this
Agreement, can bear the economic risk of its investment (including the possible
complete loss of such investment) for an indefinite period of time and has such
knowledge and experience in financial or business matters that it is capable of
evaluating the merits and risks of the investments in the LP Interests and
Member Interests. Each Contributor understands that the LP Interests and Member
Interests to be acquired hereunder have not been registered under the Securities
Act, or under the securities laws of any jurisdiction, by reason of reliance
upon certain exemptions, and that the reliance on such exemptions is predicated,
in part, upon the accuracy of the Contributor's representations and warranties
in this Article II. Each Contributor is familiar with Regulation D promulgated
under the Securities Act and each is an "accredited investor" as defined in Rule
501(a) of such Regulation D.
2.9 Restricted Securities. Each Contributor understands that the LP
Interests and Member Interests to be acquired hereunder are characterized as
"restricted securities" under the federal securities laws inasmuch as they are
being acquired from General Partner and DMMLLC in transactions not involving a
public offering and that under such laws and applicable regulations such
securities may be resold without registration under the Securities Act only in
certain limited circumstances and in accordance with the terms and conditions
set forth in the LLC Agreement or Partnership Agreement, as applicable. Each
Contributor represents that it is familiar with Rule 144, as presently in
effect, and understands the resale limitations imposed thereby and by the
Securities Act.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
GENERAL PARTNER AND DMMLLC
General Partner and DMMLLC each hereby separately represents and
warrants to each Contributor and to Peak LP, as of the date hereof, as follows
as to itself only:
3.1 Existence and Good Standing. General Partner is a limited
partnership duly formed, validly existing and in good standing under the laws of
the State of Delaware. DMMLLC is a limited liability company duly formed,
validly existing and in good standing under the laws of the State of Delaware.
It has all requisite power and authority to carry on its business as it is now
being conducted.
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3.2 Authority. It has all requisite power and authority to execute,
deliver and perform this Agreement. This Agreement has been duly and validly
executed and delivered by it, and, assuming the due authorization, execution and
delivery hereof by the other parties hereto, constitutes or will constitute, as
applicable, its valid and binding obligation, enforceable against it in
accordance with its terms, subject to the effect of bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to creditors' rights
generally and general equitable principles.
3.3 No Violation. The execution and delivery of this Agreement, the
consummation of the Contributions and the transactions contemplated hereby by it
will not (i) violate any of its formation or governing documents, (ii) violate
any provision of, or result in the breach of, or entitle any party to accelerate
(whether after the giving of notice or lapse of time or both) any obligation
under any mortgage, lien, lease, contract, license, instrument or any other
agreement to which it is a party, (iii) result in the creation or imposition of
any lien, charge, pledge, security interest or other encumbrance upon its
property, or (iv) to its knowledge, violate or conflict with any order, award,
judgment or decree or other restriction of any law, ordinance or regulation to
which it or any of its interest, is subject.
3.4 Consents and Approvals. No prior consent, approval or authorization
of, or declaration, filing or registration with any Governmental Authority,
Person or entity, domestic or foreign, is required of or by it in connection
with the execution, delivery and performance of this Agreement and the
transactions contemplated hereby, except such, if any, as will have been
received, made or done at the time of Closing.
ARTICLE IV
ADDITIONAL COVENANTS
4.1 Taxes. For federal income tax purposes, the Parties will treat the
Contributions contemplated by this Agreement as qualifying under Section 721 of
the Code. For federal income tax purposes, all Parties shall report the
transactions under this Agreement in a manner consistent with the preceding
sentence.
4.2 Amendment and Restatement of Agreements. At the Closing, each
Contributor, DMMLLC and the General Partner shall take all such action as is
within their control to cause the LLC Agreement, the Partnership Agreement and
the Transfer Restriction Agreement to be entered into.
ARTICLE V
CONDITIONS TO THE CLOSING
5.1 Conditions to Each Party's Obligation to Close. The respective
obligations of each Party to effect the transactions contemplated by this
Agreement shall be subject to the fulfillment or waiver, if permissible, of the
following conditions prior to the Closing:
(a) no preliminary or permanent injunction or other order or decree by
any federal or state court which prevents the consummation of the transactions
contemplated by this Agreement
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shall have been issued and remain in effect (each Party hereby agreeing to use
its reasonable efforts to have any such injunction, order or decree lifted);
(b) no action shall have been taken, and no statute, rule or regulation
shall have been enacted, by any state or federal government or governmental
agency in the United States which would prevent the consummation of the
transactions contemplated by this Agreement or make the consummation of the
transactions contemplated by this Agreement illegal; and
(c) the closing of the Transaction pursuant to the Combination
Agreement shall have occurred or be occurring simultaneously with Closing.
ARTICLE VI
TERMINATION, AMENDMENT AND WAIVER
6.1 Termination.
(a) Any Contributor shall have the right to terminate this Agreement:
(i) upon the termination of the Combination Agreement; or
(ii) if the transactions contemplated by this Agreement are
enjoined by a final, unappealable court order.
(b) This Agreement may be terminated and the transactions contemplated
hereby abandoned at any time prior to the Closing by mutual written agreement of
General Partner, DMMLLC and the Contributors.
6.2 Effect of Termination. If this Agreement is terminated by a Party
pursuant to the provisions of Section 6.1, this Agreement shall forthwith become
void and there shall be no further obligations on the part of any of the
Parties, or their respective stockholders, partners, members, directors,
officers, managers, employees, agents or representatives. Notwithstanding the
preceding sentence or any other provision set forth herein, nothing in this
Section 6.2 shall relieve any Party from liability for any breach of this
Agreement.
6.3 Extensions; Waiver. At any time prior to the Closing, the Parties
may (a) extend the time for the performance of any of the obligations or other
acts of the other Parties, (b) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant thereto and
(c) waive compliance with any of the agreements or conditions herein. Any
agreement on the part of a Party to any such extension or waiver shall be valid
if set forth in an instrument in writing signed on behalf of such Party.
ARTICLE VII
REMEDIES
7.1 Right to Indemnification Not Affected by Knowledge. The right to
indemnification in accordance with the provisions of this Article will not be
affected by any investigation conducted with respect to, or any Knowledge of the
Indemnified Party, whether before or after the execution and delivery of this
Agreement or the Closing Date, with respect to
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the accuracy or inaccuracy of or compliance with, any such representation,
warranty, covenant or obligation.
7.2 Indemnification by the Contributors. Except as otherwise expressly
provided in this Article VII and subject to the limitations stated in this
Article VII, each Contributor agrees to, and shall, defend, indemnify and hold
harmless General Partner, DMMLLC and each other Contributor from and against,
and shall reimburse General Partner, DMMLLC and each other Contributor for, each
and every claim, action, demand, cost, expense, Liability, penalty and other
damage incurred by General Partner, DMMLLC and each other Contributor,
including, without limitation, reasonable attorney's fees (collectively, a
"Loss"), relating to, resulting from or arising out of (including, without
limitation, as a result of any allegation by any third party) the following:
(a) any inaccuracy in any representation or warranty of the
indemnifying Contributor (including, in the case of Peak, Peak LP)
under this Agreement; or
(b) any breach or nonfulfillment of any covenant, agreement or
other obligation of the indemnifying Contributor (including, in the
case of Peak, Peak LP) under this Agreement.
7.3 Notice and Defense of Third-Party Claims. If any judicial,
administrative, arbitration or investigatory proceeding or other proceeding,
claim or controversy (collectively, a "Proceeding") shall be brought or asserted
under this Article VII against an indemnified party or any successor thereto
(the "Indemnified Person") in respect of which indemnity may be sought under
this Article VII from an indemnifying person or any successor thereto (the
"Indemnifying Person"), the Indemnified Person shall give prompt written notice
of such Proceeding to the Indemnifying Person who shall assume the defense
thereof, including the employment of counsel reasonably satisfactory to the
Indemnified Person and the payment of all reasonable expenses; provided, that
any delay or failure so to notify the Indemnifying Person shall relieve the
Indemnifying Person of its obligations hereunder only to the extent, if at all,
that it is materially prejudiced by reason of such delay or failure. In no event
shall any Indemnified Person be required to make any expenditure or bring any
cause of action to enforce the Indemnifying Person's obligations and Liability
under and pursuant to the indemnifications set forth in this Article VII. The
Indemnified Person shall have the right to employ separate counsel in any of the
foregoing Proceedings and to participate in the defense thereof, but the
reasonable fees and expenses of such counsel shall be at the expense of the
Indemnified Person unless the Indemnified Person shall in good faith determine
that there exist actual or potential conflicts of interest which make
representation by the same counsel inappropriate. The Indemnified Person's right
to participate in the defense or response to any Proceeding should not be deemed
to limit or otherwise modify its rights or obligations under this Article VII.
In the event that the Indemnifying Person, within twenty (20) days after notice
of any such Proceeding, fails to assume the defense thereof, the Indemnified
Person shall have the right to undertake the defense, compromise or settlement
of such Proceeding for the account of and at the expense of the Indemnifying
Person. Anything in this Article VII to the contrary notwithstanding, the
Indemnifying Person shall not, without the Indemnified Person's prior written
consent (which consent shall not be unreasonably withheld), settle or compromise
any Proceeding or consent to the entry of any judgment with respect to any
Proceeding; provided, however, the Indemnified
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Person's prior written consent is not required if (A) there is no finding or
admission of any violation of law, rule, regulation or other legal requirement
or any violation of the rights of any person and no effect on any other claims
that may be made against the Indemnified Person, (B) the Indemnified Person
receives as part of such settlement a legal, binding and enforceable
unconditional satisfaction and/or release, in form and substance reasonably
satisfactory to it, providing that any claimed liability of the Indemnified
Person with respect thereto is being fully satisfied by reason of such
compromise or settlement and that the Indemnified Person is being released from
any and all obligations or liabilities it may have with respect thereto, and (C)
the sole relief provided is monetary damages that are paid in full by the
Indemnifying Person.
7.4 Limitations of Liability.
(a) No party will have any Liability (for indemnification or otherwise)
with respect to the matters described in Section 7.2(a) until the total of all
Losses incurred or suffered by an Indemnified Person with respect to such
matters exceeds $10,000, and then such party shall have Liability for such
Indemnified Party's Losses in their entirety, subject to the other limitations
contained in this Section 7.4.
(b) In calculating the amount of any Loss for which any Indemnifying
Person is liable under this Article VII there shall be taken into consideration
the amount of any insurance recoveries from third-party insurers which the
Indemnified Person actually receives as a direct consequence of the
circumstances to which the Loss related or from which the Loss resulted or
arose, except to the extent such insurance recoveries have or are reasonably
anticipated to result in future or retroactive premium increases.
(c) Notwithstanding anything to the contrary in this Agreement, in no
event shall any Party be liable to another Party, except with respect to a
Liability imposed as a result of a third-party claim or allegation, for any
exemplary, punitive, special, indirect, consequential, remote, or speculative
damages, EVEN IF CAUSED BY THE SOLE, JOINT, AND/OR CONCURRENT NEGLIGENCE, STRICT
LIABILITY, OR OTHER FAULT OF SUCH PARTY.
7.5 Specific Performance; Injunctive and Other Equitable Relief. Each
Party hereto acknowledges that a violation or attempted violation of any of the
covenants and agreements in Sections 1.1, 1.2, 1.3, 1.4 and 1.5 hereof will
cause such damage to the other Parties as will be irreparable, the exact amount
of which would be difficult or impossible to ascertain and for which there will
be no adequate remedy at law, agrees that the other Parties hereto shall be
entitled as a matter of right to specific performance and injunctive and other
equitable relief in case of such violation or attempted violation as well as any
injunctive and other equitable relief in case of such violation or attempted
violation as well as any and all costs and expenses sustained or incurred in
obtaining any such equitable relief, including, without limitation, reasonable
attorneys' fees, and agrees to waive any requirement for the securing or posting
of any bond or other security in connection with the obtaining of any such
injunction or other equitable relief.
10
ARTICLE VIII
MISCELLANEOUS
8.1 Survival of Representations and Warranties. The Parties agree that
all of their respective representations and warranties contained in this
Agreement, the Schedules hereto or any certificate, agreement or document
delivered under this Agreement shall survive the Closing.
8.2 Brokers and Finders. All negotiations on behalf of the Parties
relating to this Agreement and the transactions contemplated by this Agreement
have been carried on by the Parties and their respective agents directly without
the intervention of any other person in such manner as to give rise to any claim
against any other Party for financial advisory fees, brokerage or commission
fees, finder's fees or other like payment in connection with the consummation of
the transactions contemplated hereby.
8.3 Entire Agreement; Assignment. This Agreement (a) constitutes the
entire agreement among the Parties with respect to the subject matter hereof,
and supersedes all other prior agreements and understandings, both written and
oral, among the Parties or any of them with respect to the subject matter
hereof, and (b) shall not be assigned by operation of law or otherwise, except
that Peak may assign this Agreement to Peak LP if the obligations of Peak
hereunder are assumed in writing by Peak LP and that nothing contained herein
shall be deemed to prevent or restrict the conversion of RRC from a
Texas
general partnership to a Delaware limited partnership or the conversion of Xxxxx
from a Delaware corporation to a Delaware general partnership. No assignment
shall relieve the assigning party of any obligation hereunder.
8.4 Amendment and Modification. This Agreement may be amended,
modified, terminated, rescinded or supplemented only by written agreement of all
of the Parties.
8.5 Waiver; Consents. Any failure of a Party to comply with any
obligation, covenant, agreement or condition herein may be waived by the Party
affected thereby only by a written instrument signed by the Party granting such
waiver. No waiver, or failure to insist upon strict compliance, by any Party of
any condition or any breach of any obligation, term, covenant, representation,
warranty or agreement contained in this Agreement, in any one or more instances,
shall be construed to be a waiver of, or estoppel with respect to, any other
condition or any other breach of the same or any other obligation, term,
covenant, representation, warranty or agreement. Whenever this Agreement
requires or permits consent by or on behalf of any Party hereto, such consent
shall be given in writing in a manner consistent with the requirements for a
waiver.
8.6 Further Assurances. From time to time, the Parties shall execute
and deliver such further agreements, documents, certificates and other
instruments and shall take or cause to be taken such other actions as shall be
reasonably necessary or advisable to carry out the purposes of and effect the
transactions contemplated by this Agreement.
8.7 Severability. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, which shall remain in full force and effect.
11
8.8 Address for Notices. All notices, demands, consents and reports
provided for in this Agreement shall be in writing and shall be given to the
Parties at the addresses set forth herein or at such other addresses as a Party
may hereafter specify in writing. Such notices may be delivered by hand or by
telecopy or may be mailed, postage prepaid, by certified or registered mail, by
a deposit in a depository for the receipt of mail regularly maintained by the
United States Postal Service. All notices which are hand delivered or delivered
by telecopy shall be deemed given on the date of delivery. Except as otherwise
provided herein, all notices which are mailed in the manner provided above shall
be deemed given upon receipt.
if to XXX:
XXX Partners, Ltd.
c/o XXX Partners Management, Inc.
0000 Xxx Xxxx Xxx., Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: X.X. Xxxxx, Xx.
Telecopy No.: (000) 000-0000
with a copy to:
Xxxxxxxx & Knight L.L.P.
0000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxx Xxxxxxxxxxx
Telecopy No.: (000) 000-0000
if to Xxxxxx:
Xxxxxx Petroleum, Ltd.
c/o VPL (GP), LLC
0000 Xxx Xxxx Xxx., Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxx
Telecopy No.: (000) 000-0000
with a copy to:
Xxxxxxxx & Xxxxxx L.L.P.
0000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxx Xxxxxxxxxxx
Telecopy No.: (000) 000-0000
12
if to SAOG:
Xxxxx Xxxxx Oil & Gas, Inc.
0000 Xxx Xxxx Xxx., Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxx Xxxxx XxXxxxxxx
Telecopy No.: (000) 000-0000
with a copy to:
Xxxxxxxx & Knight L.L.P.
0000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxx Xxxxxxxxxxx
Telecopy No.: (000) 000-0000
if to Peak or Peak LP:
P.A. Peak, Inc. or P.A. Peak Holdings, Ltd., as applicable
0000 X. Xxxxxx Xxxx, Xxxxx 000 - XX00
Xxxxxxx, Xxxxx 00000-0000
Attention: Xxxxxxx X. Peak
Telecopy No.: (000) 000-0000
with a copy to:
Xxxxx X. Xxxxxx, Esq.
Xxxxx Liddell & Xxxx LLP
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Telecopy No.: (000) 000-0000
if to Xxxxx:
Xxxxx X. Xxxxx, Inc. or Xxxxx X. Xxxxx General Partnership,
as applicable
0000 X. Xxxxxx Xxxx, Xxxxx 000 - XX00
Xxxxxxx, Xxxxx 00000-0000
Attention: Xxxxx X. Xxxxx
Telecopy No.: (000) 000-0000
with a copy to:
Xxxxx X. Xxxxxx, Esq.
Xxxxx Liddell & Xxxx LLP
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Telecopy No.: (000) 000-0000
13
if to General Partner:
Dorchester Minerals Management LLC
0000 Xxx Xxxx Xxx., Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxx Xxxxx XxXxxxxxx, Xxxxx X. Xxxxxx and
Xxxxx X. Xxxxx
Telecopy Nos.: (000) 000-0000, (000) 000-0000, and
(000) 000-0000
with a copies to:
Xxxxx X. Xxxxxx, Esq.
Xxxxx Liddell & Xxxx LLP
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Telecopy No.: (000) 000-0000
and
Xxxxxxxx & Xxxxxx L.L.P.
0000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxx Xxxxxxxxxxx
Telecopy No.: (000) 000-0000
8.9 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas, regardless of the laws that
might otherwise govern under applicable principles of conflicts of laws thereof.
8.10 Descriptive Headings. The descriptive headings are inserted for
convenience of reference only and are not intended to be part of or to affect
the meaning or interpretation of this Agreement.
8.11 Parties in Interest; No Third-Party Beneficiary. This Agreement
shall be binding upon and inure solely to the benefit of each Party hereto, and
nothing in this Agreement, express or implied, is intended to confer upon any
other person any rights or remedies of any nature whatsoever under or by reason
of this Agreement.
8.12 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
8.13 Incorporation by Reference. Any and all Schedules, Exhibits,
annexes, statements, reports, certificates or other documents or instruments
referred to herein or attached hereto are incorporated herein by reference
hereto as though fully set forth at the point referred to in the Agreement.
14
8.14 Certain Definitions. For the purposes of this Agreement, the
following terms shall have the meanings specified or referred to below whether
or not capitalized when used in this Agreement.
(a) "GAAP" means generally accepted United States accounting
principles, consistently applied.
(b) "Governmental Authority" means the governments of the United States
and any state or county, city, and political subdivisions that exercises
jurisdiction over any Party, and any agency, department, board, or other
instrumentality thereof that exercises jurisdiction over any Party.
(c) "Knowledge." An individual shall be deemed to have "Knowledge" of a
particular fact or other matter if the individual has current, actual knowledge
of such fact or other matter. An entity shall be deemed to have "Knowledge" of a
particular fact or other matter if any general partner, manager, director or
executive officer of such entity or such entity's general partner or any member
(as applicable) has current, actual knowledge of such fact or other matter.
(d) "Liability" means any debt, obligation, duty or liability of any
nature (including any undisclosed, unfixed, unliquidated, unsecured, unmatured,
unaccrued, unasserted, contingent, conditional, STRICT LIABILITY, inchoate,
implied, vicarious, joint, several or secondary liability), regardless of
whether such debt, obligation, duty or liability would be required to be
disclosed on a balance sheet prepared in accordance with GAAP.
(e) "Person" means any natural person, corporation, joint venture,
partnership, limited partnership, limited liability company, trust, estate,
business trust, association, Governmental Authority, or any other juristic
entity.
(a) "Rule 144" means Rule 144, promulgated under the authority of the
Securities Act, as amended as of the date hereof.
(b) "Securities Act" means the Securities Act of 1933, as amended as of
the date hereof.
15
IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be
executed on its behalf as of the date first above written.
XXX PARTNERS, LTD.
By: XXX Partners Management, Inc., its
general partner
By: /s/ X. X. XXXXX, XX.
-----------------------------------
Name: X. X. Xxxxx, Xx.
---------------------------------
Title: Secretary
--------------------------------
XXXXXX PETROLEUM, LTD.
By: VPL(GP), LLC, its general partner
By: /s/ XXXXXX X. XXXXXX
-----------------------------------
Name: Xxxxxx X. Xxxxxx
---------------------------------
Title: CEO and Manager
--------------------------------
XXXXX XXXXX OIL & GAS, INC.
By: /s/ WM. XXXXX XXXXXXXXX
-----------------------------------------
Name: Wm. Xxxxx XxXxxxxxx
---------------------------------------
Title: Vice President
--------------------------------------
P.A. PEAK, INC.
By: /s/ XXXXXXX X. PEAK
-----------------------------------------
Name: Xxxxxxx X. Peak
---------------------------------------
Title: President
--------------------------------------
XXXXX X. XXXXX, INC.
By: /s/ XXXXX X. XXXXX
-----------------------------------------
Name: Xxxxx X. Xxxxx
---------------------------------------
Title: President
--------------------------------------
16
DORCHESTER MINERALS
MANAGEMENT LP
By: Dorchester Minerals Management LLC,
its general partner
By: /s/ XXXXX X. XXXXX
-----------------------------------
Name: Xxxxx X. Xxxxx
---------------------------------
Title: COO
--------------------------------
DORCHESTER MINERALS
MANAGEMENT GP LLC
By: /s/ XXXXX X. XXXXX
------------------------------------------
Name: Xxxxx X. Xxxxx
----------------------------------------
Title: COO
---------------------------------------
17
EXHIBIT A
FORM OF AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT OF DMMLLC
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF DORCHESTER MINERALS MANAGEMENT GP LLC
------------ ---, ------
================================================================================
THE MEMBERSHIP INTERESTS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY JURISDICTION. NO MEMBERSHIP
INTEREST MAY BE SOLD OR OFFERED FOR SALE (WITHIN THE MEANING OF ANY SECURITIES
LAW) UNLESS A REGISTRATION STATEMENT UNDER ALL APPLICABLE SECURITIES LAWS WITH
RESPECT TO THE INTEREST IS THEN IN EFFECT OR AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THOSE LAWS IS THEN APPLICABLE TO THE INTEREST. A MEMBERSHIP
INTEREST ALSO MAY NOT BE TRANSFERRED OR ENCUMBERED UNLESS THE APPLICABLE
PROVISIONS OF THIS AGREEMENT AND THE TRANSFER RESTRICTION AGREEMENT ATTACHED
HERETO AS EXHIBIT A ARE SATISFIED.
================================================================================
1
TABLE OF CONTENTS
I. DEFINITIONS..................................................................................................1
Section 1.1. Definitions....................................................................................1
II. NAME, PRINCIPAL OFFICE, REGISTERED OFFICES AND AGENTS, TERM,
STATUS OF MEMBERS AND TAX STATUS.............................................................................8
Section 2.1. Name of Company................................................................................8
Section 2.2. Principal Office...............................................................................8
Section 2.3. Registered Offices and Agents..................................................................8
Section 2.4. Term...........................................................................................8
Section 2.5. Status of Members..............................................................................8
Section 2.6. Tax Status.....................................................................................8
III. CHARACTER OF BUSINESS........................................................................................8
Section 3.1. Purposes of the Company........................................................................8
IV. FORMATION, FOREIGN REGISTRATION AND NO PARTNERSHIP...........................................................8
Section 4.1. Formation......................................................................................8
Section 4.2. Foreign Registration...........................................................................9
Section 4.3. No Partnership.................................................................................9
V. CAPITAL CONTRIBUTIONS........................................................................................9
Section 5.1. Initial Contributions..........................................................................9
Section 5.2. Subsequent Contributions.......................................................................9
Section 5.3. Return of Contributions........................................................................9
Section 5.4. Advances by Members............................................................................9
VI. RIGHTS, POWERS AND OBLIGATIONS OF MEMBERS....................................................................9
Section 6.1. Members' Fees and Reimbursement of Expenses....................................................9
Section 6.2. Duties of Members/Other Activities............................................................10
Section 6.3. Dealing with Related Persons..................................................................10
Section 6.4. Liability of Members..........................................................................10
Section 6.5. No Resignation................................................................................10
Section 6.6. Power, Voting and Consent.....................................................................10
Section 6.7. Succession Plan...............................................................................12
VII. MEETINGS OF THE MEMBERS.....................................................................................12
Section 7.1. Annual Meeting................................................................................12
Section 7.2. Special Meetings..............................................................................12
Section 7.3. Notice of Annual or Special Meeting...........................................................12
Section 7.4. Business at Special Meeting...................................................................13
Section 7.5. Quorum of Members.............................................................................13
Section 7.6. Proxies.......................................................................................13
Section 7.7. Action by Written Consent Without a Meeting and Telephonic Meetings...........................13
VIII. BOARD OF MANAGERS..........................................................................................14
Section 8.1. Powers........................................................................................14
Section 8.2. Number of Managers............................................................................14
i
Section 8.3. Election and Term.............................................................................15
Section 8.4. Loss of Appointment Right.....................................................................15
Section 8.5. Resignation and Removal.......................................................................16
Section 8.6. Compensation of Managers......................................................................16
Section 8.7. Chairman of the Board of Managers.............................................................16
IX. MEETINGS OF THE BOARD OF MANAGERS...........................................................................16
Section 9.1. Annual Meeting................................................................................16
Section 9.2. Regular Meetings..............................................................................17
Section 9.3. Special Meetings..............................................................................17
Section 9.4. Location of and Business at Regular or Special Meeting........................................17
Section 9.5. Quorum of Managers............................................................................17
Section 9.6. Votes.........................................................................................17
Section 9.7. Act of Managers Meeting.......................................................................17
Section 9.8. Act of Managers as to Former Properties and Operations of Dorchester Hugoton, Ltd.............18
Section 9.9. Action by Unanimous Written Consent Without a Meeting and Telephonic Meetings.................19
Section 9.10. Interested Managers..........................................................................19
Section 9.11. The Advisory Committee.......................................................................19
Section 9.12. Operating Committee..........................................................................20
Section 9.13. Other Committees.............................................................................21
Section 9.14. Procedure, Meetings, Quorum of Committees....................................................21
X. NOTICES.....................................................................................................21
Section 10.1. Methods of Giving Notice.....................................................................21
Section 10.2. Waiver of Notice.............................................................................21
Section 10.3. Attendance as Waiver.........................................................................21
XI. OFFICERS....................................................................................................22
Section 11.1. Officers.....................................................................................22
Section 11.2. Election and Qualification...................................................................22
Section 11.3. Salaries.....................................................................................22
Section 11.4. Term, Removal and Vacancies..................................................................22
Section 11.5. Chief Executive Officer......................................................................22
Section 11.6. Chief Operating Officer......................................................................22
Section 11.7. Chief Financial Officer......................................................................23
XII. INDEMNIFICATION.............................................................................................23
Section 12.1. Right to Indemnification.....................................................................23
Section 12.2. Advance of Expenses..........................................................................23
Section 12.3. Indemnification of Employees and Agents......................................................24
Section 12.4. Appearance as a Witness......................................................................24
Section 12.5. Non-Exclusivity of Rights....................................................................24
Section 12.6. Insurance....................................................................................24
Section 12.7. Member Notification..........................................................................24
Section 12.8. No Personal Liability........................................................................24
Section 12.9. Interest in Transaction......................................................................24
Section 12.10. Successors and Assigns......................................................................25
Section 12.11. Savings Clause..............................................................................25
Section 12.12. Exculpation.................................................................................25
XIII. ALLOCATIONS................................................................................................25
Section 13.1. Consent to Allocations.......................................................................25
Section 13.2. Distributive Shares for Tax Purposes.........................................................26
Section 13.3. Code Section 704(c)..........................................................................28
Section 13.4. Capital Accounts.............................................................................28
Section 13.5. Compliance with the Code.....................................................................30
ii
XIV. DISTRIBUTIONS..............................................................................................30
Section 14.1. "Net Cash Flow" Defined......................................................................30
Section 14.2. Distribution of Net Cash Flow................................................................30
Section 14.3. Amount Withheld..............................................................................31
XV. TRANSFER OF INTERESTS.......................................................................................31
Section 15.1. Transfer Restriction Agreement...............................................................31
Section 15.2. Transfers of Interests and Admission of New Members..........................................31
Section 15.3. Securities Laws Restrictions.................................................................32
XVI. BOOKS OF ACCOUNT AND COMPANY RECORDS........................................................................33
Section 16.1. Books of Account.............................................................................33
Section 16.2. Inspection...................................................................................33
Section 16.3. Fiscal Year and Accounting Method............................................................33
Section 16.4. Financial Reports............................................................................33
Section 16.5. Tax Returns..................................................................................33
Section 16.6. Tax Elections................................................................................33
Section 16.7. Tax Matters Partner..........................................................................34
Section 16.8. Bank Accounts................................................................................34
XVII. DISSOLUTION, WINDING UP AND DISTRIBUTION...................................................................34
Section 17.1. Events of Dissolution........................................................................34
Section 17.2. Dissolution and Winding Up...................................................................35
Section 17.3. Final Statement..............................................................................35
Section 17.4. Distribution In-Kind.........................................................................35
Section 17.5. Deemed Distribution and Recontribution.......................................................35
XVIII. MISCELLANEOUS.............................................................................................36
Section 18.1. Execution in Counterparts....................................................................36
Section 18.2. Address and Notice...........................................................................36
Section 18.3. Partition....................................................................................37
Section 18.4. Further Assurances...........................................................................37
Section 18.5. Titles and Captions..........................................................................38
Section 18.6. Number and Gender of Pronouns................................................................38
Section 18.7. Entire Agreement.............................................................................38
Section 18.8. Amendment....................................................................................38
Section 18.9. Exhibits and Schedules.......................................................................38
Section 18.10. Agreement Binding...........................................................................38
Section 18.11. Waiver......................................................................................38
Section 18.12. Remedies....................................................................................38
Section 18.13. GOVERNING LAW...............................................................................38
Section 18.14. Dispute Resolution..........................................................................39
Section 18.15. Waiver......................................................................................41
Section 18.16. U.S. Dollars................................................................................41
iii
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF DORCHESTER MINERALS MANAGEMENT GP LLC
This Amended and Restated Limited Liability Company Agreement of
Dorchester Minerals Management GP LLC dated as of ________ ____ _____ (the
"Effective Date"), is entered into by and among XXX Partners, Ltd., a Texas
limited partnership, Xxxxxx Petroleum, Ltd., a Texas limited partnership, Xxxxx
Xxxxx Oil & Gas, Inc., a Texas corporation, P.A. Peak Holdings LP, a Delaware
limited partnership, and Xxxxx X. Xxxxx General Partnership, a Delaware general
partnership.
WITNESSETH
WHEREAS, effective December 12, 2001, a Certificate of Formation (the
"Certificate") was filed in the office of the Secretary of State of Delaware for
the formation of Dorchester Minerals Management GP LLC, a Delaware limited
liability company (the "Company");
WHEREAS, in connection with the formation of the Company, its members
executed that certain Limited Liability Company Agreement of Dorchester Minerals
Management GP LLC dated December 12, 2001; (the "Original Agreement");
WHEREAS, the parties hereto desire to amend and restate the Original
Agreement as of the date hereof upon the terms and conditions set forth herein
and to substitute P.A. Peak Holdings LP, a Delaware limited partnership, as a
Member of the Company in lieu of P.A. Peak, Inc., a Delaware corporation;
NOW, THEREFORE, in consideration of the mutual covenants set forth
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree to
continue the Company upon the following terms and conditions and to amend and
restate the Original Agreement upon the terms and conditions set forth herein:
I. DEFINITIONS
Section 1.1. Definitions. The following terms shall have the following
meanings when used in this Agreement:
"AAA" shall have the meaning set forth in Section 18.14 hereof.
"Act" shall mean the Delaware Limited Liability Company Act, as
amended.
"Actual Depletion Deductions" means with respect to any Member, such
Member's actual depletion allowance with respect to such Member's share of
production from the oil and gas properties owned by Dorchester Operating LP and
Dorchester Minerals; provided that, for purposes of this Agreement and computing
a Member's Capital Account, such Member's Actual
1
Depletion Deductions with respect to any single oil or gas property shall not
exceed the adjusted basis of such oil or gas property allocated to such Member
(or its predecessor in interest) pursuant to Code Section 613A(c)(7)(D). Each
Member shall notify the Company of the amount of its Actual Depletion Deductions
within ninety (90) days of the end of each Fiscal Year.
"Actual Gains or Actual Losses" means with respect to any Member (i)
the excess, if any, of such Member's share of the total amount realized from the
disposition of any oil or gas property over such Member's remaining adjusted tax
basis in such property or (ii) the excess, if any, of such Member's remaining
adjusted tax basis in such property over such Member's share of the total amount
realized from the disposition of such property. A Member's share of the total
amount realized from the disposition of oil or gas property shall be determined
pursuant to Treasury Regulations Section 1.704-1(b)(4)(v).
"Affiliate" shall mean, with respect to any Person, (i) any Person
directly or indirectly controlling, controlled by or under common control with
such Person, (ii) any Person owning or controlling ten percent (10%) or more of
the outstanding voting interests of such Person, (iii) any officer, director,
member, manager or general partner of such Person, or (iv) any Person who is an
officer, director, general partner, trustee, member, manager or holder of ten
percent (10%) or more of the voting interests of any Person described in clauses
(i) through (iii) of this sentence.
"Agreement" shall mean this Amended and Restated Limited Liability
Company Agreement of Dorchester Minerals Management GP LLC.
"Appointed Managers" shall have the meaning set forth in Section 8.2
hereof.
"Appointing Member" shall have the meaning set forth in Section 8.3
hereof.
"Appointment Right" shall have the meaning set forth in Section 8.2
hereof.
"Board of Managers" shall mean the Board of Managers for the Company as
established and operated pursuant to this Agreement.
"Book Value" shall mean with respect to any asset, the asset's adjusted
basis for federal income tax purposes, except as follows:
(i) the initial Book Value of any asset contributed (or deemed
contributed, including as a result of the constructive termination of the
Company pursuant to Code Section 708(b)(1)(B)) to the Company shall be such
asset's gross fair market value at the time of such contribution;
(ii) the Book Value of all Company assets shall be adjusted to equal
their respective gross fair market values at the times specified in Treasury
Regulations under Section 704(b) of the Code if the Company so elects; and
(iii) if the Book Value of an asset has been determined pursuant to
clause (i) or (ii), such Book Value shall thereafter be adjusted in the same
manner as would the asset's adjusted basis for federal income tax purposes,
except that depreciation deductions shall be computed in accordance with
Subparagraph (iv) of the definition of Net Profit and Net Loss and the Book
2
Value shall be adjusted by the Actual Depletion Deductions or Simulated
Depletion Deductions, as applicable.
"Business Day" shall mean any day other than Saturday or Sunday or any
other day upon which banks in Dallas, Texas are permitted or required by law to
close.
"Business Opportunities Agreement" shall have the meaning set forth in
Section 6.2.
"Capital Account" shall have the meaning set forth in Section 13.4
hereof.
"Certificate" shall have the meaning set forth in the recitals to this
Agreement.
"Change in Control" shall mean for each Member that the Person or
Persons who are in the original Member Control Group of such Member shall no
longer directly, or indirectly through one or more entities, possess
collectively both the exclusive power to vote or control the voting of, and the
exclusive power to dispose or control the disposition of, at least a majority of
the equity ownership of the Member.
"Code" shall mean the Internal Revenue Code of 1986, as amended, or its
successor.
"Company" shall mean the limited liability company formed by this
Agreement.
"Company Minimum Gain" shall mean the amount computed under Treasury
Regulations Section 1.704-2(d)(1) with respect to the Company's nonrecourse
liabilities as determined under Treasury Regulations Section 1.752-1(a)(2).
"Company Nonrecourse Deductions" shall mean any loss, deduction, or
Code Section 705(a)(2)(B) expenditure (or item thereof) that is attributable to
nonrecourse liabilities (as defined in Treasury Regulations Section
1.752-1(a)(2)) of the Company and characterized as "nonrecourse deductions"
pursuant to Treasury Regulations Section 1.704-2(b)(1) and Section 1.704-2(c).
"
Contribution Agreement" shall mean that certain
Contribution Agreement
made by and among SAM, Vaughn, SAOG, P.A. Peak, Inc., a Delaware corporation,
Xxxxx X. Xxxxx, Inc., a Delaware corporation, the Partnership and the Company,
dated as of December 12, 2001.
"Covered Person" shall have the meaning set forth in Section 12.1
hereof.
"Depletable Property" means interests in oil, gas or other minerals
eligible for depletion under Code Section 613 or 613A.
"Disabling Conduct" shall mean conduct that constitutes fraud, willful
misconduct, bad faith or gross negligence or conduct that is outside the scope
of conduct permitted in this Agreement or is in breach of this Agreement, any
Governance Agreement or any other agreement between or among (i) any of the
Company, the Partnership, Dorchester Minerals, Dorchester Operating LP and
Dorchester Operating LLC and (ii) the Person whose conduct is in question or in
knowing violation of applicable laws.
3
"Dorchester Minerals" shall mean Dorchester Minerals, Ltd., a Delaware
limited partnership.
"Dorchester Minerals Limited Partnership Agreement" shall mean that
certain Amended And Restated Agreement Of Limited Partnership of Dorchester
Minerals, Ltd., dated _______________, 200__ made by and among the Partnership
as general partner and the limited partners noted therein.
"Dorchester Operating LLC" shall mean Dorchester Minerals Operating GP
LLC, a Delaware limited liability company.
"Dorchester Operating LP" shall mean Dorchester Minerals Operating LP,
a Delaware limited partnership.
"Effective Date" shall have the meaning set forth in the preamble to
this Agreement.
"Event of Dissolution" shall have the meaning set forth in Section 17.1
hereof.
"Familial Transfer" shall have the meaning assigned that term in the
Transfer Restriction Agreement.
"Fiscal Year" shall mean the fiscal year of the Company as set forth in
Section 16.3 hereof.
"Governance Agreements" shall mean this Agreement, the Limited
Partnership Agreement, the Dorchester Minerals Limited Partnership Agreement,
the limited liability company agreement of Dorchester Operating LLC, the limited
partnership agreement of Dorchester Operating LP, the Business Opportunities
Agreement, and the Transfer Restriction Agreement.
"Gross Income" shall mean for each Fiscal Year or other period, an
amount equal to the Company's gross income as determined for federal income tax
purposes for such Fiscal Year or period but computed with the adjustments
specified in Subparagraphs (i) and (iii) of the definition of Net Profit and Net
Loss.
"Independent Managers" shall have the meaning set forth in Section 8.2
hereof.
"Limited Partnership Agreement" shall mean that certain Amended and
Restated Limited Partnership Agreement of Dorchester Minerals Management LP, a
Delaware limited partnership, dated as of ______, ___ 200_ by and among the
Company, as General Partner, and the Limited Partners noted therein.
"Managers" shall mean the Appointed Managers and the Independent
Managers, and "Manager" shall mean either an Appointed Manager or an Independent
Manager.
"Market Rules" shall have the meaning set forth in Section 8.2.
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"Member" or "Members" shall mean SAM, Vaughn, SAOG, Peak LP, Xxxxx XX
and any assignee of all or any part of their respective interests in the Company
who is admitted to the Company as a Member in conformity with the provisions of
this Agreement.
"Member Consent" shall have the meaning assigned to it in Section 6.6
hereof.
"Member Control Group" shall mean (i) for Peak LP: Preston A Peak and
his daughter Xxxxxxxx Peak; (ii) for Xxxxx XX: Xxxxx X. Xxxxx, his spouse Xxxxx
Xxxxx, and his children, Xxxxx X. Xxxxx, Xxxxxx Xxxxxx and Xxxxxxxx Xxxxxxx;
(iii) for Xxxxxx: Xxxxx X. Xxxxxx, Xxxx X. Xxxxxx, Xx., Xxxxxx X. Xxxxxx and
Xxxxx X. Xxxxxx; (iv) for XXX: Xxxxxxxxx X. Xxxxx, XX, Xxxxxxx Xxxx Xxxxx and
Xxxxxxx X. Xxxxxxx, as Trustees of the 2000 Xxxxxxx Xxxx Xxxxx Exempt Trust and
beneficiaries named therein; Xxxxxxxxx Xxxxx Xxxxxx and Xxxxxxx X. Xxxxxxx, as
Trustees of the 2000 Xxxxxxxxx Xxxxx Xxxxxx Exempt Trust and beneficiaries named
therein; Xxxxxxxxxxx X. Xxxxx and Xxxxxxx X. Xxxxxxx, as Trustees of the 2000
Xxxxxxxxxxx X. Xxxxx Exempt Trust and beneficiaries named therein; Xxxxxxxx
Xxxxx Perevalova and Xxxxxxx X. Xxxxxxx, as Trustees of the 2000 Xxxxxxxx Xxxxx
Perevalova Exempt Trust and beneficiaries named therein; Xxxxxxxx Xxxxx Aston
and Xxxxxxx X. Xxxxxxx, as Trustees of the 2000 Xxxxxxxx Xxxxx Aston Exempt
Trust and beneficiaries named therein; X.X. Xxxxx, Xx. and his daughters, Xxxx
Xxx Xxxxxxxxx and Xxx Xxxxxxxx Xxxxxxxx; and Xxxxxxx Xxxxx XxXxxxxxx; and (v)
for SAOG: Xxxxxxxxx X. Xxxxx, XX; X.X. Xxxxx, Xx. and Xxxxxxx Xxxxx XxXxxxxxx.
"Member Nonrecourse Debt" shall mean any nonrecourse debt of the
Company which meets the requirements of "partner nonrecourse debt" set forth in
Treasury Regulations Section 1.704-2(b)(4).
"Member Nonrecourse Debt Minimum Gain" shall mean the partner
nonrecourse debt minimum gain attributable to "partner nonrecourse debt" as
determined under Treasury Regulations Section 1.704-2(i)(3).
"Member Nonrecourse Deductions" shall mean any loss, deduction, or Code
Section 705(a)(2)(B) expenditure, or item thereof, that is attributable to a
Member Nonrecourse Debt, as determined by Treasury Regulations Section
1.704-2(i)(2).
"Net Cash Flow" shall have the meaning set forth in Section 14.1
hereof.
"Net Profit" and "Net Loss" shall mean for each Fiscal Year or other
period, an amount equal to the Company's taxable income or loss for such Fiscal
Year or other period, determined in accordance with Code Section 703(a) (for
this purpose, all items of income, gain, loss or deduction required to be stated
separately pursuant to Code Section 703(a)(1) shall be included in taxable
income or loss with the following adjustments:
(i) any income of the Company that is exempt from federal income tax or
not otherwise taken into account in computing Net Profit or Net Loss shall be
added to such taxable income or loss;
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(ii) any expenditures of the Company described in Code Section
705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures under Code
Section 704(b), and not otherwise taken into account in computing Net Profit or
Net Loss, shall be subtracted from such taxable income or loss;
(iii) gain or loss resulting from any disposition of Company property
with respect to which gain or loss is recognized for federal income tax purposes
shall be computed by reference to the Book Value of such property rather than
its adjusted tax basis;
(iv) in lieu of the depletion, depreciation, amortization and other
cost recovery deductions taken into account in computing taxable income or loss,
there shall be taken into account depreciation, amortization or other cost
recovery deductions on the assets' respective Book Values for such Fiscal Year
or other period determined in accordance with Treasury Regulations Section
1.704-1(b)(2)(iv)(g);
(v) the amount of any Gross Income allocated to the Members pursuant to
Sections 13.2(d), 13.2(e), 13.2(f), 13.2(j) and 13.2(k) shall not be included as
income or revenue; and
(vi) any amount allocated to the Members pursuant to Sections 13.2(h),
13.2(i). 13.2(j) and 13.2(k) shall not be included as a loss, deduction or Code
Section 705(a)(2)(B) expenditure.
"Ownership Interest" shall mean the interest in the Company held by a
Member.
"Ownership Percentage" shall mean 20.5% for Xxxxxx, 20.5% for XXX,
20.0% for SAOG, 19.5% for Peak LP and 19.5% for Xxxxx XX, until adjusted in
accordance with this Agreement.
"Partnership" shall have the meaning set forth in Section 3.1 hereof.
"Peak LP" means P.A. Peak Holdings LP, a Delaware limited partnership,
and (for purposes of the definition of "Member Control Group", of Section 8.2
and of Section 9.8) any assignee of all or any part of the interests in the
Company originally held by Peak LP who is admitted to the Company as a Member in
conformity with the provisions of this Agreement.
"Peak LP/Xxxxx XX Appointment Right" shall have the meaning set forth
in Section 8.2 hereof.
"Person" shall mean an individual person, partnership, limited
partnership, limited liability company, trust, corporation or other entity or
organization.
"Prime Rate" means the "prime," "reference" or "base" rate of interest
for commercial loans as announced by Bank of America on the first Business Day
following the date upon which the event occurs requiring reference to the Prime
Rate and adjusted thereafter on the first day of each rate change or, if less,
the maximum rate permitted by applicable law.
"Proportionate Share" means a Member's share of an item or obligation
equal to the Ownership Percentage of the Member divided by the aggregate
Ownership Percentages owned by all Members entitled or obligated to share in the
item or obligation.
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"Xxxxx XX" means Xxxxx X. Xxxxx General Partnership, a Delaware general
partnership, and (for purposes of the definition of "Member Control Group", of
Section 8.2 and of Section 9.8) any assignee of all or any part of the interests
in the Company originally held by Xxxxx XX who is admitted to the Company as a
Member in conformity with the provisions of this Agreement.
"XXX" means XXX Partners, Ltd., a Texas limited partnership, and (for
purposes of the definition of "Member Control Group" and of Section 8.2) any
assignee of all or any part of the interests in the Company originally held by
XXX who is admitted to the Company as a Member in conformity with the provisions
of this Agreement.
"SAOG" means Xxxxx Xxxxx Oil & Gas, Inc., a Texas corporation, and (for
purposes of the definition of "Member Control Group" and of Section 8.2) any
assignee of all or any part of the interests in the Company originally held by
SAOG who is admitted to the Company as a Member in conformity with the
provisions of this Agreement.
"XXX/SAOG Appointment Right" shall have the meaning set forth in
Section 8.2 hereof.
"Simulated Depletion Deductions" means the simulated depletion
allowance computed by the Company with respect to its oil and gas properties
pursuant to Section 1.704-1(b)(2)(iv)(k)(2) of the Treasury Regulations. In
computing such amounts, the Board of Managers shall have complete and absolute
discretion to make any and all permissible elections.
"Simulated Gains" or "Simulated Losses" means the simulated gains or
simulated losses computed by the Company with respect to its oil and gas
properties pursuant to Section 1.704-1(b)(2)(iv)(k)(2) of the Treasury
Regulations. In computing such simulated gains or losses, the Board of Managers
shall have complete and absolute discretion to make any and all permissible
elections.
"Tax Matters Partner" shall have the meaning set forth in Section 16.7
hereof.
"Transfer Restriction Agreement" shall mean the Transfer Restriction
Agreement of even date herewith by and among the Company, the Partnership,
Xxxxxx, XXX, SAOG, Peak LP and Xxxxx XX, a copy of which is attached hereto as
Exhibit A.
"Treasury Regulations" shall mean the Income Tax Regulations, including
Temporary Regulations, promulgated under the Code, as such regulations may be
amended from time to time (including corresponding provisions of succeeding
regulations).
"Xxxxxx" means Xxxxxx Petroleum, Ltd., a Texas limited partnership, and
(for purposes of the definition of "Member Control Group" and of Section 8.2)
any assignee of all or any part of the interests in the Company originally held
by Xxxxxx who is admitted to the Company as a Member in conformity with the
provisions of this Agreement.
"Xxxxxx Appointment Right" shall have the meaning set forth in Section
8.2 hereof.
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II. NAME, PRINCIPAL OFFICE, REGISTERED OFFICES AND AGENTS,
TERM, STATUS OF MEMBERS AND TAX STATUS
Section 2.1. Name of Company. The name of the Company is Dorchester
Minerals Management GP LLC.
Section 2.2. Principal Office. The location of the principal office of
the Company where records are to be kept or made available shall be 0000 Xxx
Xxxx Xxxxxx, Xxxxxx, Xxxxx 00000. The principal office of the Company may be
changed by the Board of Managers.
Section 2.3. Registered Offices and Agents. The location of the
registered office of the Company in the State of Delaware shall be c/o The
Corporation Trust Company, Corporation Trust Center, 0000 Xxxxxx Xxxxxx, Xxx
Xxxx xx Xxxxxxxxxx, Xxxxxx of Newcastle, Delaware. The Board of Managers shall
establish such other registered offices and appoint such other registered agents
as it deems necessary or appropriate for the business of the Company. The
registered offices and agents of the Company may be changed from time to time by
the Board of Managers.
Section 2.4. Term. The Company shall have perpetual existence unless an
Event of Dissolution (as defined in Section 17.1 hereof) shall occur prior to
such time and the Company is not continued as hereinafter provided.
Section 2.5. Status of Members. Upon the Effective Date the Members
shall constitute all of the members of the Company.
Section 2.6. Tax Status. The Company shall be operated such that it
will be classified as a "partnership" for federal and, as determined by the
Board of Managers, state income tax purposes. No action shall be made to treat
the Partnership, Dorchester Operating LP or Dorchester Operating LLC as a
corporation for federal income tax purposes and Dorchester Operating LP and
Dorchester Operating LLC will be disregarded and their assets treated as owned
by the Partnership for federal income tax purposes.
III. CHARACTER OF BUSINESS
Section 3.1. Purposes of the Company. The purposes of the Company are
to act as the general partner of Dorchester Minerals Management LP, a Delaware
limited partnership (the "Partnership") which shall (i) act as the general
partner of Dorchester Minerals, (ii) provide or cause to be provided certain
management and administrative services to Dorchester Minerals, and (iii) own
oil, gas and other mineral interests and other properties via Dorchester
Operating LP, and conduct operations with respect thereto. The Company may
accomplish its purposes through the agency of its own employees and independent
contractors and/or the employees and independent contractors of its Members or
any subsidiary of the Company or the Partnership including, but not limited to,
Dorchester Operating LLC and Dorchester Operating LP.
IV. FORMATION, FOREIGN REGISTRATION AND NO PARTNERSHIP
Section 4.1. Formation. The Company was formed as a Delaware limited
liability company by the filing of the Certificate under and pursuant to the Act
with the Secretary of State
8
of the State of Delaware on December 12, 2001. Upon the Effective Date, the
Company is hereby continued upon the terms set forth herein.
Section 4.2. Foreign Registration. The Company shall register to
conduct business in such states and jurisdictions as the Board of Managers deems
appropriate.
Section 4.3. No Partnership. The Members intend that the Company not be
a partnership (including, without limitation, a limited partnership) or joint
venture, and that no Member be a partner or joint venturer of any other Member
with regard to the activities of the Company for any purposes other than federal
and, if applicable, state tax purposes, and this Agreement may not be construed
to suggest otherwise.
V. CAPITAL CONTRIBUTIONS
Section 5.1. Initial Contributions. Upon the execution of the Original
Agreement, each Member made an initial capital contribution in the amount set
forth on Schedule I hereto. Contemporaneously with the execution by such Member
of this Agreement, each Member shall make the additional contribution required
of such Member pursuant to the
Contribution Agreement, which shall be credited
to the Capital Account of such Member.
Section 5.2. Subsequent Contributions. All subsequent contributions
require the consent of all the Members. No Member shall be required to make any
subsequent contributions to the Company without the consent of all the Members.
Section 5.3. Return of Contributions. A Member is not entitled to the
return of any part of its capital contributions or to be paid interest in
respect of either its Capital Account or its capital contributions. An unrepaid
capital contribution is not a liability of the Company or of any Member. A
Member is not required to contribute or to lend any cash or property to the
Company to enable the Company to return any Member's capital contribution.
Section 5.4. Advances by Members. If the Company does not have
sufficient cash to pay its obligations, any Member(s) that may agree to do so
may advance all or part of the needed funds to or on behalf of the Company if
Member Consent is obtained. An advance described in this Section 5.4 constitutes
a loan from the Member to the Company, bears interest at the Prime Rate from the
date of the advance until the date of repayment, and is not a capital
contribution.
VI. RIGHTS, POWERS AND OBLIGATIONS OF MEMBERS
Section 6.1. Members' Fees and Reimbursement of Expenses. Except as
otherwise provided in Section 6.3 hereof, the Members shall not be paid any fees
or other compensation whatsoever for services, whether ordinary or
extraordinary, foreseen or unforeseen, rendered to or for the benefit of the
Company. However, all expenses incurred by a Member for and on behalf of the
Company in connection with the business of the Company hereunder (including,
without limitation, charges for legal, accounting, data processing,
administrative, executive, tax and other services rendered by employees of any
Member) will be paid or promptly reimbursed by the Company; provided, however,
that any salary or compensation expense incurred by a Member and attributable to
the provision by the Member of the services of its officers in connection with
the business of the Company hereunder shall not be reimbursed to such Member
9
but the actual out-of-pocket expenses incurred by the Member (other than salary
or compensation expense) with respect to such provision of the services of its
officers hereunder shall be reimbursed by the Company. Nothing contained in this
Section 6.1 is intended to affect the Ownership Interest or Ownership Percentage
of any Member or the amount that may be payable to any Member by reason of its
interest in the Company.
Section 6.2. Duties of Members/Other Activities. The relationship
existing pursuant to this Agreement shall not prohibit any Manager, any Member
or any Person which is a member, manager, officer, director, parent, subsidiary
or Affiliate of a Member or Manager, or any Person in which a Member, a Manager
or the members, managers, officers, directors, parent, subsidiaries or
Affiliates of a Member or Manager may have an interest, from engaging in any
other business, investment or profession, except to the extent restricted herein
or in a separate written agreement, including but not limited to the Dorchester
Minerals Limited Partnership Agreement, the Limited Partnership Agreement and
the Business Opportunities Agreement made by and among the Company, Dorchester
Minerals and the Partnership dated as of December 13, _____ (the "Business
Opportunities Agreement"). Neither the Company nor any of the Members shall have
any rights by virtue of this Agreement in or to any of such businesses,
professions or investments, or in or to any income or profit derived therefrom.
Section 6.3. Dealing with Related Persons. Subject to the provisions of
Section 6.6 and Section 9.11 hereof, the Company may employ or retain a Manager,
a Member or an Affiliate of a Member or Manager to render or perform a service,
may contract to buy property or services from or sell property or services to a
Member, a Manager or any such Affiliate, and may otherwise deal with such
Member, Manager or any such Affiliate; provided, however, that if the Company
employs, retains or contracts with a Member, Manager or an Affiliate thereof,
the charges made for services rendered and materials furnished by such Member,
Manager or Affiliate shall be a reasonable amount comparable to the amount that
would have been charged by others in the same line of business and not so
related, and such relationship and charges shall be promptly disclosed in
writing to the other Members.
Section 6.4. Liability of Members. No Member shall be liable,
responsible, or accountable in damages or otherwise to any other Member or the
Company for any act performed by it within the scope of the authority conferred
on it by this Agreement, or made in good faith, except such liability, if any,
as it may have for Disabling Conduct.
Section 6.5. No Resignation. Except for assignments, sales or other
transfers of a Member's entire Ownership Interest made in compliance with
Article XV hereof, no Member shall have the right to resign or withdraw from the
Company prior to the dissolution and winding up of the Company, without prior
written Member Consent. Any Member who resigns or withdraws from the Company in
violation of the foregoing provision or who has resigned or withdrawn from the
Company in a manner not expressly permitted herein, shall be liable to the
Company and the Members for any damages sustained by reason of such resignation
or withdrawal.
Section 6.6. Power, Voting and Consent. Notwithstanding the fact that
the Company is to be managed by its Board of Managers pursuant to Section 8.1
hereof, the Members shall have the right and obligation to make decisions with
respect to the matters specified in this Section 6.6
10
and with respect to any other matter that is expressly designated herein as a
matter within the control of the Members or submitted by the Managers to the
Members for a vote. The Members hereby delegate to the Board of Managers all
other decisions relating to the Company. Decisions by the Board of Managers
shall be made in the manner provided in Article IX. Affirmative decisions by the
Members shall require approval by a majority of the Members on a per capita
basis; provided, however, that an affirmative decision with respect to any of
the following matters shall require approval by two-thirds (2/3) of the Members
on a per capita basis (as applicable, a "Member Consent") and the Managers and
officers shall not take, or, to the extent within their control, permit the
occurrence of, action with respect to any such matter without Member Consent:
(a) The issuance of any equity security of the Company, the
Partnership, Dorchester Operating LP or Dorchester Operating LLC or the
issuance of any rights, warrants, options, convertible securities or
indebtedness, exchangeable securities or indebtedness or other rights,
exercisable for or convertible or exchangeable into any such equity
security of the Company, the Partnership, Dorchester Operating LP or
Dorchester Operating LLC;
(b) The resignation or withdrawal of any Person as a Member of
the Company or as a partner of the Partnership;
(c) Except as expressly authorized herein, the direct or
indirect redemption, purchase or other acquisition by the Company, the
Partnership, Dorchester Operating LP or Dorchester Operating LLC of any
membership interest or other equity security of the Company, the
Partnership, Dorchester Operating LP or Dorchester Operating LLC;
(d) Any amendment of this Agreement, the Limited Partnership
Agreement, the limited partnership agreement of Dorchester Operating LP
or the limited liability agreement of Dorchester Operating LLC or any
amendment to the Transfer Restriction Agreement, the Business
Opportunities Agreement or any other agreement between the Company, the
Partnership, Dorchester Operating LP or Dorchester Operating LLC and
any Member or any Affiliate of any Member;
(e) Any merger, combination, consolidation, restructuring,
reorganization, recapitalization, or any other major transaction
involving the structure, ownership or voting of the Company, the
Partnership, Dorchester Operating LP or Dorchester Operating LLC;
(f) The sale, lease, pledge or other disposition of assets of
the Company, the Partnership, Dorchester Operating LP or Dorchester
Operating LLC, other than in the ordinary course of business;
(g) Any acquisition by the Company, the Partnership,
Dorchester Operating LP or Dorchester Operating LLC of (i) the equity
ownership or all or a substantial portion of the assets of any other
entity, or (ii) any other assets other than in the ordinary course of
business, or (iii) any other assets that are not consistent with its
business;
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(h) The filing by the Company, the Partnership, Dorchester
Operating LP or Dorchester Operating LLC of a petition under federal
bankruptcy laws or any other insolvency law, or the admission in
writing by the Company, the Partnership, Dorchester Operating LP or
Dorchester Operating LLC of its insolvency or general inability to pay
its debts as they become due;
(i) An election to dissolve the Company, the Partnership,
Dorchester Operating LP or Dorchester Operating LLC;
(j) Any borrowing from a Member pursuant to Section 5.4; and
(k) Any action or decision that is inconsistent with the
purposes of the Company as set forth in Section 3 hereof or of the
purposes of the Partnership, Dorchester Operating LP or Dorchester
Operating LLC as set forth in their respective Governance Agreements.
In the event that a Member transfers his entire Ownership Interest to
one or more other Persons, and: (i) no such transferee is admitted as a Member;
or (ii) all such transferees were already Members or are wholly owned
subsidiaries of Members and/or are Persons wholly owning one or more Members;
then the total number of voting Members for purpose of any such per capita vote
shall be reduced accordingly.
No Member has the authority to bind the Company unless the Member is
expressly granted such authority by the Board of Managers by a vote pursuant to
Section 9.7.
Section 6.7. Succession Plan. Prior to the date that less than three of
the Persons who are Members as of the Effective Date continue to own Ownership
Interests, the Members shall establish a succession plan that provides for
officers or other Persons actually directing and in charge of the management of
the Company's business to become Members, either directly or indirectly through
ownership, in whole or in part, of a Member.
VII. MEETINGS OF THE MEMBERS
Section 7.1. Annual Meeting. Beginning in 200__, an annual meeting of
the Members shall be held on May 1 of each year (or the next succeeding business
day, if May 1 is not a business day) or at such other time and date as may be
determined by Member Consent. The annual meeting shall be held at the Company's
principal office or such other location agreed to by all the Members. At such
meeting the Members entitled to vote thereat shall elect the Independent
Managers, and may transact such other business as properly may be brought before
the meeting and that is within the scope of the permitted decisions specified in
Section 6.6 hereof.
Section 7.2. Special Meetings. Special meetings of the Members may be
called by the Chairman of the Board of Managers, the Board of Managers or any
two Members.
Section 7.3. Notice of Annual or Special Meeting. Written or printed
notice stating the location, day and hour of the meeting and, in case of a
special meeting, the general purpose or purposes for which the meeting is
called, shall be delivered in accordance with Article X not less
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than ten (10) days before the date of the meeting, either personally or by
telefax communication (which shall be deemed given at the time the sender
receives confirmation of delivery), by or at the direction of the Chairman of
the Board of Managers, the Secretary, or the Member calling the meeting, to each
Member.
Section 7.4. Business at Special Meeting. The business transacted at
any special meeting of the Members shall be limited to such business that is
within the scope of the permitted decisions specified in Section 6.6 hereof and
that is stated in the notice thereof, and no unrelated business shall be
conducted at such special meeting beyond the general scope identified in the
notice unless all Members, whether such Member is present or not, agree in
writing to consider and vote upon additional unrelated business.
Section 7.5. Quorum of Members. Unless otherwise provided by applicable
law, the Certificate of Formation or this Agreement, the presence of a majority
of the Members on a per capita basis and represented in person or by proxy,
shall constitute a quorum at a meeting of the Members. The Members present at a
duly organized meeting may continue to transact business until adjournment, and
the subsequent withdrawal of any Member or the refusal of any Member to vote
shall not affect the presence of a quorum at the meeting.
Section 7.6. Proxies. At any meeting of the Members, each Member having
the right to vote shall be entitled to vote either in person or by proxy
executed in writing by the Member or by his duly authorized attorney- in- fact.
Proxies shall be valid until revoked or superseded by a subsequently dated
proxy. Each proxy shall be revocable whether or not coupled with an interest,
unless made irrevocable by law.
Section 7.7. Action by Written Consent Without a Meeting and Telephonic
Meetings. Any action required or permitted by applicable law, the Certificate of
Formation, or this Agreement to be taken at a meeting of the Members may be
taken without a meeting, without prior notice, and without a vote, if a consent
in writing, setting forth the action so taken, is signed by Members having not
less than the minimum number of votes that would be necessary to take such
action at a meeting at which Members entitled to vote on the action were present
and voting. Any such written consent does not have to be unanimous (unless the
action that is approved in such written consent would require the unanimous
approval of all Members at a meeting at which all of the Members were present).
Every written consent must bear the date of signature of each Member who signs
the consent. No written consent shall be effective to take the action that is
the subject of the consent unless, within sixty (60) days after the date of the
earliest dated consent delivered to the Company in the manner required by this
Section 7.7, a consent or consents signed by Members having not less than the
minimum number of votes that would be necessary to take the action that is the
subject of the consent are delivered to the Company by delivery to its
registered office, its principal place of business, or an officer or agent of
the Company having custody of the books in which proceedings of meetings of
Members are recorded. Delivery shall be by hand or certified or registered mail,
return receipt requested or confirmed telefax communication. Delivery to the
Company's principal place of business shall be addressed to the Chief Executive
Officer of the Company. Prompt notice of the taking of any action by Members
without a meeting by less than unanimous written consent shall be given by the
Company to those Members who did not consent in writing to the action. With
prior Member Consent, Members may participate in and hold a meeting of the
Members by conference
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telephone or similar communications equipment by means of which all Persons
participating in the meeting can hear each other, and participation in such a
meeting shall constitute presence in person at such meeting, except where a
Person participates in the meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.
VIII. BOARD OF MANAGERS
Section 8.1. Powers. The business and affairs of the Company shall be
managed by or under the direction of its Board of Managers, which may exercise
all such powers of the Company and do all such lawful acts and things as are not
by non-waivable provisions of the Act or by the Certificate of Formation or by
this Agreement directed or required to be exercised and done by the Members. No
individual Manager has the authority to bind the Company unless the Manager is
granted such authority by the Board of Managers.
Section 8.2. Number of Managers. The Board of Managers shall consist of
(a) five (5) Managers, with each Member appointing one such Manager
(collectively, the "Appointed Managers"); and (b) three independent managers
(other than the Appointed Managers) or such other, greater number of independent
managers (other than the Appointed Managers) as required by the rules and
regulations of the market quotation system or securities exchange, as the case
may be, on which units of Dorchester Minerals are or are intended to be listed
(the "Market Rules"), which independent managers shall meet the requirements for
members of the "Advisory Committee" as defined in the Dorchester Minerals
Limited Partnership Agreement. The independent managers in clause (b) of the
preceding sentence are referred to herein as the "Independent Managers." No two
or more Members may designate the same individual as a Manager to serve on the
Board of Managers. The initial Appointed Manager for each Appointing Member
shall be as follows:
APPOINTING MEMBER APPOINTED MANAGER
----------------- -----------------
XXX X.X. Xxxxx, Xx.
Xxxxxx Xxxxxx X. Xxxxxx
SAOG Xxxxxxx Xxxxx XxXxxxxxx
Peak XX Xxxxxxx A. Peak
Xxxxx XX Xxxxx X. Xxxxx
Peak LP and Xxxxx XX shall collectively have the right to appoint one (1)
Independent Manager (the "Peak LP/Xxxxx XX Appointment Right"). Xxxxxx shall
have the right to appoint one (1) Independent Manager (the "Xxxxxx Appointment
Right"). XXX and SAOG shall collectively have the right to appoint one (1)
Independent Manager (the "XXX/SAOG Appointment Right"). (Such rights are
referred to herein collectively as the "Appointment Rights.") If any additional
Independent Managers are required by the Market Rules or if any such Appointment
Right is lost by any Members as to any Independent Managers pursuant to Section
8.4, such Independent
14
Managers shall be appointed by a vote of the majority of the Members. Each such
Independent Manager shall meet the requirements for independent directors set
forth in the Market Rules.
Section 8.3. Election and Term.
(a) Each Appointed Manager shall serve until the earlier of his death,
resignation or removal from office which may be with or without cause by the
Member that appointed such Manager (the "Appointing Member"). In the event of a
vacancy on the Board of Managers (other than a vacancy which must be filled with
an Independent Manager), then the Appointing Member that appointed the Appointed
Manager whose failure to continue to serve as a Manager has created the vacancy
shall fill such vacancy by delivery of written notice to the Company and each
other Member designating a replacement Manager to fill such vacancy (or, if such
appointment right has been lost pursuant to Section 8.4, such vacancy shall be
filled by majority vote of the Members specified in Section 8.4). Upon receipt
of such written notice by the Company, the replacement Appointed Manager shall
be appointed as a Manager hereunder, unless objected to in writing on a
reasonable basis by all of the Appointed Managers other than the Manager who is
being replaced pursuant to this Section 8.3(a) and any Manager whose Appointing
Member, or an Affiliate thereof, has the appointment right with respect to such
replacement.
(b) Each Independent Manager shall hold office until the next annual
meeting of the Members, unless such Independent Manager shall sooner cease to
serve as a result of his death, resignation or removal. In the event of a
vacancy on the Board of Managers which must be filled with an Independent
Manager, such vacancy shall be filled by written notice to the Company and each
Member given by the Member or Members having the Appointment Right with respect
to the Independent Manager whose death, resignation or removal necessitated the
appointment of a replacement Independent Manager (or, if such Appointment Right
has been lost pursuant to Section 8.4, such vacancy shall be filled by majority
vote of the Members specified in Section 8.4). Upon receipt of such written
notice by the Company, the replacement Independent Manager shall be appointed as
an Independent Manager hereunder, unless objected to in writing on a reasonable
basis by all of the Appointed Managers other than any Manager whose Appointing
Member, or an Affiliate thereof, has or shares the Appointment Right with
respect to the replacement Independent Manager.
(c) Managers need not be residents of the State of Delaware or Members
of the Company.
Section 8.4. Loss of Appointment Right. If at any time after the
Effective Date a Change in Control of any Member occurs, then such Member shall
lose all appointment and removal rights stated in Sections 8.2 and 8.3 unless
and until the other Members unanimously consent to the continuation of such
Member's appointment and removal rights following such Change in Control. In the
event that a Member loses appointment and removal rights in accordance with this
Section 8.4, then the remainder of the Members shall exercise such Member's
appointment and removal rights by majority vote; provided, that no Manager
appointed pursuant to such rights may concurrently be serving as either an
Appointed Manager or an Independent Manager. Notwithstanding the foregoing, if
either of the Members sharing a particular Appointment Right (but not both)
experience a Change in Control, such Appointment
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Right shall be solely vested in the Member, if any, which did not experience a
Change in Control. In the event that both of the Members sharing a particular
Appointment Right lose their appointment and removal rights in accordance with
this Section 8.4, such Appointment Right shall immediately expire. A Change in
Control of a Member shall not affect the right of that Member to vote on all
matters on which Members are entitled to vote by law or under this Agreement or
on any other matter presented to a vote of the Members, including without
limitation, any vote that could in any way adversely affect such Member's
interest in the capital or profits of the Company or of the Partnership.
Section 8.5. Resignation and Removal. Any Manager may resign at any
time upon giving written notice to the Company. Any Appointed Manager or any
Independent Manager appointed pursuant to an Appointment Right may be removed
only by his Appointing Member, or the Member or Members having the Appointment
Right with respect to such Independent Manager (as applicable), in accordance
with Section 8.3. Any other Independent Manager may be removed at any time with
or without cause by the vote of two-thirds (2/3) of the Members.
Section 8.6. Compensation of Managers. The Managers may be paid their
expenses of attendance at each meeting of the Board of Managers; however,
Appointed Managers shall not receive any compensation for serving as a Manager
or as a member of any committee of the Board of Managers. The Independent
Managers shall be compensated in such amounts as shall be established by the
Appointed Managers. This provision shall not preclude any Manager from serving
the Company in any other capacity and receiving compensation therefor. In
addition to the foregoing, all expenses incurred by a Manager in the performance
of its duties hereunder or for and on behalf of the Company in connection with
the business of the Company (including, without limitation, charges for legal,
accounting, data processing, administrative, executive, tax and other services
rendered by employees of any Manager) will be paid or promptly reimbursed by the
Company; provided, however, that any salary or compensation expense incurred by
a Manager and attributable to the provision by the Manager of the services of
its officers in connection with the business of the Company hereunder shall not
be reimbursed to such Manager but the actual out-of-pocket expenses incurred by
the Manager (other than salary or compensation expense) with respect to such
provision of the services or its officers hereunder shall be reimbursed by the
Company.
Section 8.7. Chairman of the Board of Managers. The Board may, but
shall not be required to, from time to time, by majority vote designate one
Manager to serve as Chairman of the Board of Managers; provided, however, that
any such Chairman of the Board of Managers shall not, in such capacity, be an
officer of the Company. The Chairman of the Board of Managers shall preside at
all meetings of the Board of Managers and shall have such other powers and
duties as usually pertain to such position or as may be delegated to him by the
Board of Managers. The Chairman of the Board of Managers shall serve as such
until the earlier of his death, resignation or removal from office by the Board
of Managers.
IX. MEETINGS OF THE BOARD OF MANAGERS
Section 9.1. Annual Meeting. An annual meeting of the Board of Managers
shall be held immediately following the annual meeting of the Members, and no
notice of such meeting shall be necessary in order legally to constitute the
meeting, provided a quorum shall be present.
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Section 9.2. Regular Meetings. The Board of Managers shall schedule
regular meetings of the Board of Managers at quarterly intervals, or such other
regular intervals as the Board of Managers shall determine to be appropriate.
Section 9.3. Special Meetings. Upon not less than twenty-four (24)
hours' prior written notice, special meetings of the Board of Managers may be
called by any two Managers, the Chairman of the Board or the Chief Executive
Officer, but notice need not be given to any Manager who shall, either before or
after the meeting, submit a signed waiver of such notice or who shall attend
such meeting without protesting, prior to or at its commencement, the lack of
notice to such Manager.
Section 9.4. Location of and Business at Regular or Special Meeting.
Meetings of the Board of Managers shall be held at the principal office of the
Company, or at such other place or places as shall be agreed upon by the Board
of Managers. Neither the business to be transacted at, nor the purpose of, any
regular meeting of the Board of Managers need be specified. The business to be
transacted at, and the general purpose of any special meeting shall be
identified in the notice or waiver of notice of such meeting, and no unrelated
business shall be conducted by the Board of Managers at such special meeting
beyond the general scope of the business and purpose identified in the notice
and waiver.
Section 9.5. Quorum of Managers. Five Managers, at least four of whom
shall be Appointed Managers, shall constitute a quorum for the transaction of
business by the Board of Managers.
Section 9.6. Votes. Each Manager on the Board of Managers shall have
one vote. Managers shall not have the authority to permit voting by proxy.
Section 9.7. Act of Managers Meeting. The act of a majority of the
total number of Managers, at a meeting at which a quorum is present, shall be
the act of the Board of Managers, unless the act of a greater number is required
by law, the Certificate of Formation or this Agreement. Tie votes do not
constitute a majority. Notwithstanding the foregoing, the following actions
shall require the consent of two-thirds (2/3) of the Appointed Managers or
two-thirds (2/3) of the Operating Committee, in addition to any vote of the
Advisory Committee that may be required under Section 9.11:
(a) The issuance of any equity security of Dorchester Minerals
or the issuance of any rights, warrants, options, convertible
securities or indebtedness, exchangeable securities or indebtedness or
other rights, exercisable for or convertible or exchangeable securities
into any such equity security of the Dorchester Minerals;
(b) The direct or indirect redemption, purchase or other
acquisition of any membership interest or other equity security of
Dorchester Minerals;
(c) Any amendment of or proposal to amend the Dorchester
Minerals Limited Partnership Agreement or any amendment to the Business
Opportunities Agreement or any other agreement between Dorchester
Minerals and any Member or Manager or any Affiliate of any Member or
Manager;
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(d) Any merger, combination, consolidation, restructuring
reorganization, recapitalization or any other major transaction
involving the structure, ownership or voting of Dorchester Minerals;
(e) The sale, lease or other disposition of all or
substantially all of the assets of Dorchester Minerals, other than in
the ordinary course of business;
(f) Any acquisition by Dorchester Minerals of (i) the equity
ownership or all or a substantial portion of the assets of any other
entity, (ii) any other assets other than in the ordinary course of
business, or (iii) any other assets that are not consistent with its
business;
(g) The filing by Dorchester Minerals of a petition under
federal bankruptcy laws or any other insolvency law, or the admission
in writing by Dorchester Minerals of its insolvency or general
inability to pay its debts as they become due;
(h) Any election to dissolve Dorchester Minerals;
(i) Any transaction between Dorchester Minerals and a Member
or Manager or an Affiliate of a Member or Manager (and any other
agreement for the benefit of a Member, a Manager or an Affiliate of a
Member or Manager) other than immaterial transactions undertaken in the
ordinary course of Dorchester Minerals' business;
(j) Any action or decision that is inconsistent with the
purposes of Dorchester Minerals as set forth in the Dorchester Minerals
Limited Partnership Agreement;
(k) Any removal of an officer of the Company, the Partnership,
Dorchester Operating LLC or Dorchester Operating LP; and
(l) The submission to a vote of the Members of any other
matter which does not under Section 6.6 already require the approval of
the Members.
Section 9.8. Act of Managers as to Former Properties and Operations of
Dorchester Hugoton, Ltd. For a period of two (2) years after the Effective Date,
any of the following actions which involve properties or operations which were
owned or conducted by Dorchester Hugoton, Ltd., must be approved by one of the
Appointed Managers appointed by either Peak LP or Xxxxx XX, or either of their
respective successors or assigns, in addition to any other vote or approval
which may be required under this Agreement:
(a) Material changes in personnel;
(b) Significant sales or transfers of assets or interests in
assets;
(c) Changes in marketing strategy;
(d) Changes in lessee/lessor relationships, including but not
limited to, termination, extension or amendment of leases; and
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(e) Outsourcing of significant operations or functions.
Section 9.9. Action by Unanimous Written Consent Without a Meeting and
Telephonic Meetings. Any action required or permitted to be taken at a meeting
of the Board of Managers or committee thereof under the provisions of any
applicable law, the Certificate of Formation or this Agreement may be taken
without a meeting if a consent in writing setting forth the action so taken is
signed by all members of the Board of Managers or committee thereof. Such
consent shall have the same force and effect as a unanimous vote of the Board of
Managers or committee thereof. Managers may participate in and hold a meeting of
the Board of Managers by conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and participation in such a meeting shall constitute presence in
person at such meeting, except where a person participates in the meeting for
the express purpose of objecting to the transaction of any business on the
ground that the meeting is not lawfully called or convened.
Section 9.10. Interested Managers. No contract or transaction between
the Company and one or more of its Managers or officers, or between the Company
and any other corporation, partnership, association, or other organization in
which one (1) or more of its Managers or officers are members, managers,
shareholders, partners, officers or directors or have a financial interest,
shall be void or voidable solely for this reason, or solely because the Manager
or officer is present at or participates in the meeting of the Board of Managers
or committee thereof that authorizes the contract or transaction by the vote
otherwise required for such authorization hereunder, or solely because his or
its or their votes are counted for such purpose, if:
(i) The material facts as to his relationship or
interest and as to the contract or transaction are disclosed
or are known to the Board of Managers or the committee, and
the Board of Managers or the committee in good faith
authorizes the contract or transaction by the affirmative vote
of a majority of the disinterested Managers or committee
members, even though the disinterested Managers or committee
members be less than a quorum;
(ii) the material facts as to his relationship or
interest and as to the contract or transaction are disclosed
or are known to the Members entitled to vote thereon, and the
contract or transaction is specifically approved in good faith
by vote of the Members; or
(iii) the contract or transaction is fair as to the
Company as of the time it is authorized, approved or ratified
by the Board of Managers, a committee thereof or the Members.
Interested Managers may be counted in determining the presence of a
quorum at a meeting of the Board of Managers or committee thereof that
authorizes the contract or transaction.
Section 9.11. The Advisory Committee.
(a) Designation. The Board of Managers, by resolution adopted
by a majority of the full Board of Managers, which shall include not
less than four of the Appointed
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Managers, shall designate an advisory committee (the "Advisory
Committee"), which shall have the authority assigned to it in Sections
9.11(b) and (c) below and such other authority as may be delegated to
it by the Board of Managers, subject to the limitations imposed by
applicable law, the Certificate and this Agreement.
(b) Audit Committee Function. The Advisory Committee will
function as the audit committee for Dorchester Minerals to the extent
required by Market Rules.
(c) Transactions with Affiliates. The Advisory Committee will
act as the "Advisory Committee" as contemplated in the Dorchester
Minerals Limited Partnership Agreement. The Advisory Committee will
also review (i) any and all transactions between the Company, the
Partnership, Dorchester Operating LLC or Dorchester Operating LP, on
the one hand, and a Member or Affiliate (other than Dorchester
Minerals) thereof, on the other hand, and (ii) any compensation or
benefits paid by the Company, the Partnership, Dorchester Operating
LLC, Dorchester Operating LP or Dorchester Minerals to any executive
officer of any of such companies, and all such matters described in
this sentence shall be subject to approval by the Advisory Committee.
(d) Membership. The Advisory Committee shall be composed of
the Independent Managers. The designation of the Advisory Committee and
the delegation thereto of authority shall not operate to relieve the
Board of Managers, or any member thereof, of any responsibility imposed
upon it or him by law.
(e) Required Vote. Any and all matters decided upon by the
Advisory Committee shall require the majority approval of the members
of the Advisory Committee.
Section 9.12. Operating Committee.
(a) Designation. The Board of Mangers, by resolution adopted
by a majority of the full Board of Managers, may designate a committee
to be known as the Operating Committee, which, to the extent provided
in such resolution or in this Agreement, shall have and may exercise
all the authority of the Board of Managers, subject to the limitations
imposed by applicable law, the Certificate and this Agreement.
(b) Membership. The Operating Committee shall be composed of
the Appointed Managers. The designation of the Operating Committee and
the delegation thereto of authority shall not operate to relieve the
Board of Managers, or any member thereof, of any responsibility imposed
upon it or him by law.
(c) Required Vote Any and all matters decided upon by the
Operating Committee shall require the approval of a majority of the
total number of members of the Operating Committee, at a meeting at
which a quorum is present, unless the act of a greater number is
required by law, the Certificate of Formation or this Agreement. Tie
votes do not constitute a majority.
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Section 9.13. Other Committees. The Board of Managers, by resolution
adopted by a majority of the full Board of Managers, which majority shall
include not less than four of the Appointed Managers, may designate one or more
other committees from among its members, each of which, to the extent provided
in such resolution or in this Agreement, shall have and may exercise all the
authority of the Board of Managers, subject to the limitations imposed by
applicable law, the Certificate and this Agreement.
Section 9.14. Procedure, Meetings, Quorum of Committees. Regular
meetings of the Operating Committee or any other committee of the Board of
Managers, of which no notice shall be necessary, may be held at such times and
places as shall be fixed by resolution adopted by a majority of the members
thereof. Special meetings of the Operating Committee or any other committee of
the Board shall be called at the request of the Board, the Chairman of the
Board, or any two (2) members of such committee. Four-fifths of the Operating
Committee, and a majority of any other committee of the Board, shall constitute
a quorum for the transaction of business at any meeting. The Operating Committee
or any other committee of the Board shall keep regular minutes of its
proceedings and report the same to the Board of Managers when required.
X. NOTICES
Section 10.1. Methods of Giving Notice. Whenever any notice is required
to be given to any Member or Manager under the provisions of any applicable law,
the Certificate of Formation or this Agreement, it shall be given in writing and
delivered personally or delivered by facsimile communication ("telefax") to such
Member or Manager at such address (and at such member facsimile) as appears on
the books of the Company; provided, however, notice of special meetings of the
Managers may also be given by telephone, and, with the approval of all such
Members or Managers, any other notice may be given by telephone or electronic
mail. Any such notice shall be deemed to be given at the time the recipient
actually receives the notice in the case of personal delivery, when the sender
receives electronic confirmation of delivery with respect to any notice given by
facsimile communication, when the sender actually speaks to the recipient in the
case of telephonic notice or when the recipient reads the message in the case of
electronic mail.
Section 10.2. Waiver of Notice. Whenever any notice is required to be
given to any Member or Manager under the provisions of any applicable law, the
Certificate of Formation or this Agreement, a waiver thereof in writing signed
by the person or persons entitled to said notice, whether before or after the
time stated therein, shall be deemed equivalent to the giving of such notice.
Section 10.3. Attendance as Waiver. Attendance of a Member or Manager
at a meeting shall constitute a waiver of notice of such meeting, except where a
Member or Manager attends a meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business on the ground that
the meeting is not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, a meeting need be specified in any written
waiver unless required by any applicable law, the Certificate of Formation or
this Agreement.
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XI. OFFICERS
Section 11.1. Officers. The Managers shall elect the officers of the
Company as provided in this Agreement. The officers of the Company shall consist
of a Chief Executive Officer (who initially shall be Xxxxxxx Xxxxx XxXxxxxxx), a
Chief Financial Officer (who initially shall be X.X. Xxxxx, Xx.), a Chief
Operating Officer (who initially shall be Xxxxx X. Xxxxx) and a Secretary (who
initially shall be X. X. Xxxxx, Xx.) to serve at the pleasure of the Managers
and who shall hold their offices for such terms and shall exercise such power
and perform such duties as shall be determined from time to time by the Board of
Managers or the Operating Committee.
Section 11.2. Election and Qualification. The Managers, at each annual
meeting, shall choose the Chief Executive Officer, the Chief Financial Officer,
the Chief Operating Officer and the Secretary. The Managers may, from time to
time, choose such other officers as they may deem necessary or appropriate.
Section 11.3. Salaries. No person shall receive any compensation in
such person's capacity as an elected officer of the Company.
Section 11.4. Term, Removal and Vacancies. Each officer of the Company
shall hold office until his successor is chosen and qualified or until his
death, resignation, or removal. Any officer may resign at any time upon giving
written notice to the Company. Any officer may be removed by the Board of
Managers or the Operating Committee with or without cause, upon the requisite
approval under Section 9.8, if any, but such removal shall be without prejudice
to the contract or other legal rights, if any, of the person so removed.
Election or appointment of an officer shall not of itself create contract
rights. Any vacancy occurring in any office of the Company by death,
resignation, removal or otherwise shall be filled by the Board of Managers.
Section 11.5. Chief Executive Officer. The Chief Executive Officer
shall have general powers of oversight, supervision and management of the
business and affairs of the Company, and shall see that all orders and
resolutions of the Board of Managers and/or the Operating Committee are carried
into effect. The Chief Executive Officer shall have such other powers and duties
as usually pertain to such office or as may be delegated by the Board of
Managers or the Operating Committee. The other officers shall report to the
Chief Executive Officer. The Chief Executive Officer shall execute bonds,
mortgages, debt instruments, contracts, licenses, leases, agreements, legal
pleadings (upon the advice of counsel), governmental filings, and other
documentation, except where the signing and execution thereof shall be expressly
delegated by the Board of Managers or the Operating Committee to some other
officer or agent of the Company.
Section 11.6. Chief Operating Officer. The Chief Operating Officer
shall, in the absence or disability of the Chief Executive Officer, perform the
duties and exercise the powers of the Chief Executive Officer. The Chief
Operating Officer shall have charge of the operations of the Company and shall
have such other powers and duties as usually pertain to such office or as the
Board of Managers or the Operating Committee shall prescribe or as the Chief
Executive Officer shall delegate.
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Section 11.7. Chief Financial Officer. The Chief Financial Officer
shall have the charge of the funds and the financial condition of the Company
and shall have such other powers and duties as usually pertain to such office or
as the Board of Managers or the Operating Committee shall prescribe or as the
Chief Executive Officer shall delegate.
XII. INDEMNIFICATION
Section 12.1. Right to Indemnification. Subject to the limitations and
conditions set forth in this Article XII, each Person who was or is made a party
or is threatened to be made a party to or is involved in any threatened, pending
or completed action, suit or proceeding, whether civil, criminal,
administrative, arbitrative or investigative (a "Proceeding"), or any appeal in
such a Proceeding or any inquiry or investigation that could lead to such a
Proceeding, by reason of the fact that he or she, or a Person of whom he or she
is the legal representative, is or was a Member, Manager or officer of the
Company or while a Member, Manager or officer of the Company is or was serving
at the request of the Company as a partner, director, officer, manager, member,
venturer, proprietor, trustee, employee, agent, or similar functionary of
another foreign or domestic limited liability company, corporation, partnership,
joint venture, sole proprietorship, trust, employee benefit plan or other
enterprise (a "Covered Person"), shall be indemnified by the Company to the
fullest extent permitted by the Act, as the same exists or may be amended (but,
in the case of any such amendment, only to the extent that such amendment
permits the Company to provide broader indemnification rights than said law
permitted the Company to provide prior to such amendment) against judgments,
penalties (including excise and similar taxes and punitive damages), fines,
settlements and reasonable expenses (including, without limitation, attorneys'
fees) actually incurred by such Person in connection with such Proceeding, and
indemnification under this Section 12.1 shall continue as to a Person who has
ceased to serve in the capacity that initially entitled such Person to indemnity
under this Section. Such actions covered by such indemnification shall include
those brought by a Member or the Company. The rights granted pursuant to this
Article XII shall be deemed contract rights, and no amendment, modification or
repeal of this Article XII shall have the effect of limiting or denying any such
rights with respect to actions taken or Proceedings arising prior to any such
amendment, modification or repeal. IT IS EXPRESSLY ACKNOWLEDGED THAT THE
INDEMNIFICATION PROVIDED IN THIS ARTICLE XII COULD INVOLVE INDEMNIFICATION FOR
NEGLIGENCE OR UNDER THEORIES OF STRICT LIABILITY; provided, however, that
notwithstanding the foregoing or any other provision of this Agreement, the
Company shall not provide indemnification to any Person in respect of any
Disabling Conduct. The negative disposition of any Proceeding by judgment,
order, settlement, conviction or upon a plea of nolo contendere, or its
equivalent, shall not, of itself, create a presumption that the Covered Person
acted in a manner contrary to the standard set forth in this Section.
Section 12.2. Advance of Expenses. The right to indemnification
conferred in this Article XII shall include the right to be paid or reimbursed
by the Company the reasonable expenses incurred by a Person of the type entitled
to be indemnified under Section 12.1 or 12.3 who was, is or is threatened to be
made a named defendant or respondent in a Proceeding in advance of the final
disposition of the Proceeding and without any determination as to the Person's
ultimate entitlement to indemnification; provided, however, that the payment of
such expenses incurred by any such Person in advance of the final disposition of
a Proceeding shall be
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made only upon the delivery to the Company of a written affirmation by such
Person of his good faith belief that he has met the standard of conduct
necessary for indemnification under Section 12.1 or 12.3 and a written
undertaking, by or on behalf of such Person, to repay all amounts so advanced if
it shall ultimately be determined that such indemnified Person is not entitled
to be indemnified under Section 12.1 or 12.3.
Section 12.3. Indemnification of Employees and Agents. The Company may
indemnify and advance expenses to any employee or agent of the Company to the
same extent permitted under Section 12.1 for Covered Persons. In addition, the
Company may (by a resolution of the Members) indemnify and advance expenses to
any Person whether or not he is an employee or agent of the Company but who is
or was serving at the request of the Company as a manager, director, officer,
partner, venturer, proprietor, trustee, employee, agent or similar functionary
of another foreign or domestic limited liability company, corporation,
partnership, joint venture, sole proprietorship, trust, employee benefit plan or
other enterprise against any liability asserted against him and incurred by him
in such a capacity or arising out of his status as such a Person, to the same
extent permitted under Section 12.1 for Covered Persons.
Section 12.4. Appearance as a Witness. Notwithstanding any other
provision of this Article XII the Company may pay or reimburse expenses incurred
by a Member, Manager, officer, employee or agent in connection with his
appearance as a witness or other participation in a Proceeding at a time when he
is not a named defendant or respondent in the Proceeding.
Section 12.5. Non-Exclusivity of Rights. The right to indemnification
and the advancement and payment of expenses conferred in this Article XII shall
not be exclusive of any other right a Person indemnified pursuant to this
Article XII may have or may acquire under any law (common or statutory), any
provision of the Certificate or this Agreement, a vote of Members or Managers or
otherwise.
Section 12.6. Insurance. The Company may purchase and maintain
insurance, to the extent and in such amounts as the Board of Managers shall, in
its sole discretion, deem reasonable, to protect itself, the Partnership,
Dorchester Operating LP and/or Dorchester Operating LLC, and/or any Covered
Persons or other Persons indemnifiable under the provisions of this Article XII.
against any expense, liability or loss, whether or not the Company would have
the power to indemnify such Person against such expenses, liability or loss
under this Article XII.
Section 12.7. Member Notification. To the extent required by law, any
indemnification of or advance of expenses to a Person in accordance with this
Article XII shall be reported in writing to the Members within the thirty
(30)-day period immediately following the date of the indemnification or
advance.
Section 12.8. No Personal Liability. In no event may any Covered Person
subject the Members to personal liability by reason of any indemnification of an
Covered Person under this Agreement or otherwise.
Section 12.9. Interest in Transaction. A Covered Person shall not be
denied indemnification in whole or in part under this Article XII because the
Covered Person had an
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interest in the transaction with respect to which the indemnification applies if
the transaction is otherwise permitted by the terms of the Governance
Agreements.
Section 12.10. Successors and Assigns. The provisions of this Article
XII are for the benefit of the Covered Persons and their heirs, successors,
assigns, administrators and personal representatives and shall not be deemed to
be for the benefit of any other Persons. The provisions of this Section 12.10
shall not be amended in any way that would diminish the rights of Covered
Persons under this Article XII without the consent of all Members.
Section 12.11. Savings Clause. If all or any portion of this Article
XII shall be invalidated on any ground by any court of competent jurisdiction,
then the Company shall nevertheless indemnify and hold harmless any Person
indemnified pursuant to this Article XII as to costs, charges and expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
with respect to any action, suit or proceeding, whether civil, criminal,
administrative or investigative, to the fullest extent permitted by any
applicable portion of this Article XII that shall not have been invalidated and,
subject to this Article XII, to the fullest extent permitted by applicable law.
Section 12.12. Exculpation. The following exculpatory provisions shall
apply to this Agreement:
(a) General. Notwithstanding any other terms of this
Agreement, whether express or implied, or obligation or duty at law or
in equity, no Covered Person nor any officer, employee, representative
or agent of the Company or its Affiliates shall be liable to the
Company or any Member for any act or omission (in relation to the
Company, this Agreement, any related document or any transaction or
investment contemplated hereby or thereby) taken or omitted in good
faith by such Person and in the reasonable belief that such act or
omission is in or is not contrary to the best interests of the Company
and is within the scope of authority granted to such Person by this
Agreement or the other Governance Agreements except in the following
circumstances: (i) such act or omission constitutes Disabling Conduct
or (ii) with respect to liability that may arise under any other
agreement, such act or omission constitutes a breach of that agreement.
(b) Reliance. A Covered Person or other officer, employee,
representative or agent of the Company may rely and shall incur no
liability in acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report, notice, request,
consent, order, bond, debenture, paper, document, signature or writing
reasonably believed by it to be genuine, and may rely on a certificate
signed by an officer of any Person in order to ascertain any fact with
respect to such Person or within such Person's knowledge and may rely
on an opinion of counsel selected by such Covered Person or other
officer, employee, representative or agent of the Company with respect
to legal matters unless such Covered Person acts in bad faith.
XIII. ALLOCATIONS
Section 13.1. Consent to Allocations. Each Member as a condition of
becoming a Member expressly consents to the following allocations as set forth
in this Article XIII.
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Section 13.2. Distributive Shares for Tax Purposes. There shall be
allocated to each Member for federal income tax purposes a separate distributive
share of all Company income, gain, loss, deduction and credit as follows:
(a) Except as otherwise provided in this Article XIII, Net
Profit, if any, of the Company (and each item thereof) for each Fiscal
Year or other period shall be allocated among the Members pro rata in
accordance with their Ownership Percentages.
(b) Except as otherwise provided in this Article XIII, Net
Loss, if any, of the Company (and each item thereof) for each Fiscal
Year or other period shall be allocated to the Members pro rata in
accordance with their Ownership Percentages.
(c) The provisions of this Agreement relating to the
allocation of Gross Income, Net Profit and Net Loss are intended to
comply with the Treasury Regulations under Section 704(b) of the Code
and shall be interpreted and applied in a manner consistent with such
Treasury Regulations.
(d) Notwithstanding any other provision of this Agreement to
the contrary, if in any Fiscal Year or other period there is a net
decrease in the amount of the Company Minimum Gain, then each Member
shall first be allocated items of Gross Income for such year (and, if
necessary, subsequent years) in an amount equal to such Member's share
of the net decrease in such minimum gain during such year (as
determined under Treasury Regulations Section 1.704-2(g)(2)); provided,
however, if there is insufficient Gross Income in a year to make the
allocation specified above for all Members for such year, the Gross
Income shall be allocated among the Members in proportion to the
respective amounts they would have been allocated above had there been
an unlimited amount of Gross Income for such year.
(e) Notwithstanding any other provision of this Agreement to
the contrary other than Section 13.2(d), if in any year there is a net
decrease in the amount of the Member Nonrecourse Debt Minimum Gain,
then each Member shall first be allocated items of Gross Income for
such year (and, if necessary, subsequent years) in an amount equal to
such Member's share of the net decrease in such minimum gain during
such year (as determined under Treasury Regulations Section
1.704-2(i)(4)); provided, however, if there is insufficient Gross
Income in a Fiscal Year to make the allocation specified above for all
Members for such year, the Gross Income shall be allocated among the
Members in proportion to the respective amounts they would have been
allocated had there been an unlimited amount of Gross Income for such
Fiscal Year.
(f) Notwithstanding any other provision of this Agreement to
the contrary (except Sections 13.2(d) and 13.2(e) which shall be
applied first), if in any Fiscal Year or other period a Member
unexpectedly receives an adjustment, allocation or distribution
described in Treasury Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5)
or (6), items of Gross Income shall first be allocated to Members with
negative Capital Account balances (adjusted in accordance with Section
13.4(e)), in proportion to such negative balances, until such balances
are increased to zero.
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(g) Notwithstanding the provisions of Section 13.2(b), Net
Loss (or items thereof) shall not be allocated to a Member if such
allocation would cause or increase a negative balance in such Member's
Capital Account (adjusted in accordance with Section 13.4(e)) and shall
be reallocated to the other Members, subject to the limitations of this
Section 13.2(g).
(h) Any Member Nonrecourse Deductions shall be allocated to
the Member who bears the economic risk of loss with respect to the
Member Nonrecourse Debt to which such deductions are attributable.
(i) Company Nonrecourse Deductions shall be allocated to the
Members pro rata in accordance with their Ownership Percentages.
(j) In the event that any Gross Income, Net Loss (or items
thereof) or deductions are allocated pursuant to Sections 13.2(d)
through 13.2(i), subsequent Gross Income, Net Profit or Net Loss (or
items thereof) will first be allocated (subject to Sections 13.2(d)
through 13.2(i)) to the Members in a manner which will result in each
Member having a Capital Account balance equal to that which would have
resulted had the original allocation of Gross Income, Net Loss (or
items thereof) or deductions pursuant to Sections 13.2(d) through
13.2(i) not occurred; provided, however, no allocations pursuant to
this Section 13.2(j), which are intended to offset allocations pursuant
to Section 13.2(h) and Section 13.2(i), shall be made prior to the
Fiscal Year during which there is a net decrease in Member Nonrecourse
Debt Minimum Gain or Company Minimum Gain, and then only to the extent
necessary to avoid any potential economic distortions caused by such
net decrease in Member Nonrecourse Debt Minimum Gain or Company Minimum
Gain, and no such allocation pursuant to this Section 13.2(j) shall be
made to the extent that the Board of Managers reasonably determines
that it is likely to duplicate a subsequent mandatory allocation
pursuant to Section 13.2(d) or Section 13.2(e).
(k) Unless the Board of Managers elects to adjust Capital
Accounts to reflect Actual Depletion Deductions pursuant to Section
1.704-1(b)(2)(iv)(k)(3) of the Treasury Regulations, the portion of the
total amount realized by the Company upon the taxable disposition of a
Depletable Property that represents recovery of its simulated adjusted
tax basis therein will be allocated to the Members in the same
proportion as the aggregate adjusted tax basis of such property was
allocated to such Members (or their predecessors in interest). If the
Board of Managers elects to use Actual Depletion Deductions pursuant to
Section 1.704-1(b)(2)(iv)(k)(3) of the Treasury Regulations, the
portion of the total amount realized by the Company upon a taxable
disposition of such property that equals the Members' aggregate
remaining adjusted basis therein will be allocated to the Members in
proportion to their respective remaining adjusted tax bases in such
property. Any amount realized in excess of the above amounts shall be
allocated among the Members in accordance with their Ownership
Percentages.
(l) If an interest in the Company is transferred, the Gross
Income, Net Profit or Net Loss allocable to the holder of such Company
interest for the then Fiscal Year shall be allocated proportionately
between the assignor and the assignee based on the
27
number of calendar days during such Fiscal Year for which each party
was the owner of the transferred interest in the Company or upon some
other reasonable method.
Section 13.3. Code Section 704(c). In accordance with Code Section
704(c) and the Treasury Regulations thereunder, depletion, depreciation,
amortization, income, gain and loss, as determined for tax purposes, with
respect to any property whose Book Value differs from its adjusted basis for
federal income tax purposes shall, for tax purposes, be allocated among the
Members so as to take account of any variation between the adjusted basis of
such property to the Company for federal income tax purposes and its Book Value.
The Company shall utilize such method to eliminate book-tax disparities
attributable to a contributed property or adjusted property as shall be
determined by the Board of Managers. Allocations pursuant to this Section 13.3
are solely for purposes of federal, state, and local taxes and shall not affect,
or in any way be taken into account in computing, any Member's Capital Account
or share of Net Profit, Net Loss, other items, or distributions pursuant to any
provision of this Agreement.
Section 13.4. Capital Accounts. A separate capital account ("Capital
Account") shall be maintained for each Member, as follows:
(a) There shall be credited to each Member's Capital Account
the amount of any cash actually contributed by such Member to the
capital of the Company (or deemed contributed pursuant to Treasury
Regulations Section 1.704-1(b)(2)(iv)(c)), the fair market value of any
property contributed by such Member to the capital of the Company (net
of any liabilities secured by such property that the Company is
considered to assume or to take subject to under Code Section 752),
such Member's share of the Gross Income and Net Profit (and all items
thereof) of the Company and such Member's share of Simulated Gain or,
if the Board of Managers elects to use Actual Depletion Deductions
pursuant to Section 1.704-1(b)(2)(iv)(k)(3) of the Treasury
Regulations, such Member's Actual Gains. There shall be charged against
each Member's Capital Account the amount of all cash distributed to
such Member by the Company (or deemed distributed pursuant to Treasury
Regulations Section 1.704-1(b) (2) (iv) (c)), the fair market value of
any property distributed to such Member by the Company (net of any
liability secured by such property that the Member is considered to
assume or take subject to under Code Section 752), such Member's share
of the Net Loss (and all items thereof) of the Company and either such
Member's distributive share of Simulated Losses and Simulated Depletion
Deductions or, if the Board of Managers elects to use Actual Depletion
Deductions pursuant to Section 1.704-1(b)(2)(iv)(k)(3) of the Treasury
Regulations, such Member's Actual Losses and Actual Depletion
Deductions.
(b) If the Company at any time distributes any of its assets
in-kind to any Member, the Capital Account of each Member shall be
adjusted to account for that Member's allocable share (as determined
under this Article XIII) of the Net Profit or Net Loss that would have
been realized by the Company had it sold the assets that were
distributed at their respective fair market values immediately prior to
their distribution, but only to the extent not previously reflected in
the Members' Capital Accounts.
(c) Any adjustments to the tax basis (or Book Value) of
Company property under Code Sections 732, 734 or 743 will be reflected
as adjustments to the Capital
28
Accounts of the Members, only in the manner and to the extent provided
in Treasury Regulations Section 1.704-1(b)(2)(iv)(m).
(d) Upon the decision of the Board of Managers, the Capital
Accounts of the Members shall be adjusted to reflect a revaluation of
Company property to its fair market value on the date of adjustment
upon the occurrence of any of the following events:
(i) An increase in any new or existing Member's
Ownership Interest resulting from the contribution of money or
property by such Member to the Company,
(ii) Any reduction in a Member's Ownership Interest
resulting from a distribution to such Member in redemption of
all or part of its Ownership Interest, unless such
distribution is pro rata to all Members in accordance with
their respective Ownership Interests, and
(iii) Whenever otherwise allowed under Treasury
Regulations Section 1.704-1(b)(2)(iv)(f).
The adjustments to Capital Accounts shall reflect
the manner in which the unrealized Net Profit or Net Loss inherent in
the property would be allocated if there were a disposition of the
Company's property at its fair market value on the date of adjustment.
(e) For purposes of Sections 13.2(d) through 13.2(i) a
Member's Capital Account shall be reduced by the net adjustments,
allocations and distributions described in Treasury Regulations
Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6) which, as of the end of
the Company's taxable year are reasonably expected to be made to such
Member, and shall be increased by the sum of (i) any amount which the
Member is required to restore to the Company upon liquidation of its
Ownership Interest in the Company (or which is so treated pursuant to
Treasury Regulations Section 1.704-1(b)(2)(ii)(c)) pursuant to the
terms of this Agreement or under state law, (ii) the Member's share (as
determined under Treasury Regulations Section 1.704-2(g)(1)) of Company
Minimum Gain, (iii) the Member's share (as determined under Treasury
Regulations Section 1.704-2(i)(5)) of Member Nonrecourse Debt Minimum
Gain and (iv) the Member's share (as determined under Section 752 of
the Code) of any recourse indebtedness of the Company to the extent
that such indebtedness could not be repaid out of the Company's assets
if all of the Company's assets were sold at their respective Book
Values as of the end of the Fiscal Year or other period and the
proceeds from the sales were used to pay the Company's liabilities. For
the purposes of clause (iv) above, the amounts computed pursuant to
clause (i) above for each Member shall be considered to be proceeds
from the sale of the assets of the Company to the extent such amounts
would be available to satisfy (directly or indirectly) the indebtedness
specified in clause (iv).
(f) For purposes of computing the Members' Capital Accounts,
Simulated Depletion Deductions, and Simulated Losses shall be allocated
among the Members in the same proportions as they (or their
predecessors in interest) were allocated the basis of
29
Partnership oil and gas properties pursuant to Code Section
613A(c)(7)(D), the Treasury Regulations thereunder, and Section
1.704-1(b)(4)(v) of the Treasury Regulations. Simulated Gains shall be
allocated among the Partners in accordance with their Ownership
Percentages. In accordance with Code Section 613A(c)(7)(D) and the
Treasury Regulations thereunder and Section 1.704-1(b)(4)(v) of the
Treasury Regulations, the adjusted basis of all oil and gas properties
shall be shared by the Members in proportion to the Ownership
Percentages.
(g) It is the intention of the Members that the Capital
Accounts of the Company be maintained strictly in accordance with the
Capital Account maintenance requirements of Treasury Regulations
Section 1.704-1(b). The foregoing provisions and the other provisions
of this Agreement relating to the maintenance of Capital Accounts are
intended to comply with Treasury Regulations Section 1.704-1(b), and
shall be interpreted and applied in a manner consistent with such
regulations and any amendment or successor provision thereto. The
Members agree to make any appropriate modifications if events might
otherwise cause this Agreement not to comply with Treasury Regulations
Section 1.704-1(b).
(h) A deficit in a Member's Capital Account shall not be
considered an asset of the Company, and no Member shall be obligated to
restore or otherwise be responsible for a deficit or negative balance
in such Member's Capital Account.
Section 13.5. Compliance with the Code. It is intended that the tax
allocations in this Article XII effect an allocation for federal income tax
purposes in a manner consistent with Sections 704 and 706 of the Code and comply
with any limitations or restrictions therein. The Board of Managers shall have
complete discretion to make the allocations pursuant to this Article XII and the
allocations and adjustments to Capital Accounts in any manner consistent with
Sections 704 and 706 of the Code.
XIV. DISTRIBUTIONS
Section 14.1. "Net Cash Flow" Defined. The term "Net Cash Flow" for any
fiscal period shall mean all Company cash revenues resulting from the Company's
business less the amount of all expenses, reserves and obligations of the
Company (including, without limitation, expenses and obligations to which the
assets of the Company are subject even if the expense or obligation was not
originally incurred by the Company or assumed by the Company) plus the proceeds
of sale (principal and interest), refinancing, condemnation, insurance, or
otherwise, less the amount of all expenses and obligations of the Company
relating thereto (including, without limitation, expenses and obligations to
which the assets of the Company are subject even if the expense or obligation
was not originally incurred by the Company or assumed by the Company).
Section 14.2. Distribution of Net Cash Flow. Except as provided in
Article XVII, and subject to the last sentence of Section 8.4, Net Cash Flow, if
any, shall be distributed to the Members pro rata in accordance with their
Ownership Percentages at such time or times as determined by the Board of
Managers.
30
Section 14.3. Amount Withheld. Notwithstanding any other provision of
this Agreement to the contrary, the Board of Managers is authorized to take any
action that it determines to be necessary or appropriate to cause the Company to
comply with any withholding or other payment requirements established under the
Code or any other federal, state or local law including, without limitation,
pursuant to Sections 1441, 1442, 1445 and 1446 of the Code. To the extent that
the Company is required to pay to any governmental authority any amount
resulting from either the allocation of income or gain or a distribution to any
Member (including, without limitation, by reason of Sections 1441, 1442, 1445 or
1446 of the Code), the amount so paid shall be treated as a distribution of cash
to the Member and any future distributions to which such Member is entitled
shall be reduced to the extent of any amount treated as a distribution pursuant
to this Section 14.3. The Capital Account of the Member for which amounts are
paid over to a governmental authority pursuant to this Section 14.3 shall be
decreased by such amount paid over to the governmental authority. A Member who
has had amounts paid over to a governmental authority pursuant to this Section
14.3 shall be entitled to receive any refund of any such tax, penalty, interest
or other amount received by the Company on account of amounts paid on behalf of
the Member pursuant to this Section 14.3; provided, however, that the amount due
such Member shall be reduced by any expenses of the Company incurred in
connection with the payment or refund of such tax, penalty, interest or other
amount. The Company shall have no duty or obligation to seek to obtain or
collect any refund or expend any amount to reduce the amount of any withholding,
penalty, interest or other amount otherwise payable to any governmental
authority; however, upon request by a Member, the Company shall take reasonable
steps to cooperate with the Member on a refund request provided that the Company
is reimbursed by the Member for the Company's costs and expenses arising from
such cooperation. If at any time a Member's interest in the Company is
transferred or assigned, the proposed assignee shall certify to non-foreign
status prior to the transfer or assignment of the interest. Such certifications
shall be made on a form to be provided by the Board of Managers. Each Member
shall notify the Company if it becomes either a "Foreign Person", as defined in
Code Section 1445, or a "Foreign Partner", as defined in Code Section 1446,
within thirty (30) calendar days of such change.
XV. TRANSFER OF INTERESTS
Section 15.1. Transfer Restriction Agreement. Each Member as of the
date of this Agreement is also a party to the Transfer Restriction Agreement. As
a condition to being admitted as a Member, any other Person must become a party
to the Transfer Restriction Agreement, in accordance with the procedures set
forth therein. The Transfer Restriction Agreement, a copy of which is attached
hereto as Exhibit A, is incorporated by reference in this Agreement as if fully
set forth herein and forms a part of this Agreement.
Section 15.2. Transfers of Interests and Admission of New Members. No
Member may assign, sell or otherwise transfer by operation of law or otherwise,
any of its right, title or interest or any portion thereof in the Company unless
such Member shall first comply with the provisions of the Transfer Restriction
Agreement applicable to the proposed assignment, sale or transfer. In the event
an Affiliate Transfer or a Familial Transfer results in the entirety of a
Member's Ownership Interest in the Company being transferred, then (subject to
such transferee's joining in this Agreement as provided below) such transferee
shall be substituted for that Member automatically upon such transfer without
the consent of the Members, and shall
31
have all the rights of such Member under this Agreement. In the event of an
Affiliate Transfer or a Familial Transfer of the entirety of a Member's
Ownership Interest divided between or among more than one transferee, only one
such transferee may become a substituted Member and the remainder of such
transferees shall be treated as and have the rights of assignees under the Act.
The transferor shall designate in a written notice to the Company and to each
other Member which such transferee shall become the substituted Member, and such
designated transferee shall (subject to such transferee's joining in this
Agreement as provided below) be substituted for the transferor Member
automatically upon such transfer without the consent of the Members with respect
to the Ownership Interest transferred to such transferee, and shall have all the
rights of such transferring Member under this Agreement. In the event of an
Affiliate Transfer or a Familial Transfer of less than the entirety of a
Member's Ownership Interest, such transferee shall not be a substituted Member;
but the transferring Member shall remain a Member and retain all rights as a
Member under this Agreement. Any other transferee of a Member's Ownership
Interest in the Company shall be admitted to the Company as a substituted Member
only if (i) the assignment, sale or other transfer pursuant to which the
transferee acquired such Ownership Interest was effected in accordance with the
Transfer Restriction Agreement and (ii) "Holder Consent" (as defined in the
Transfer Restriction Agreement) of such assignment sale or other transfer has
been obtained. If such a transferee is not admitted as a substituted Member
under this Article XV, it shall have none of the powers of a Member hereunder
but shall, subject to the further provisions hereof, have only such rights of an
assignee under the Act as are consistent with this Agreement. Such assignee
shall have no voting rights or consent rights (and shall have no power to elect
Managers) or any other power to participate in the management of the Company,
but shall be subject to the provisions of the Transfer Restriction Agreement
including, without limitation, the obligations under Articles II, IV and V
thereof, but shall not be entitled to exercise the rights of a party thereto,
including, without limitation, under Article III or VI thereof. In the event of
any permitted transfer of an interest in the Company pursuant to this Article XV
and the Transfer Restriction Agreement, the interest so transferred shall remain
subject to all terms and provisions of this Agreement and the Transfer
Restriction Agreement, and the transferee shall be deemed, by accepting the
interest so transferred, to have assumed all the liabilities and unperformed
obligations, under this Agreement, the Transfer Restriction Agreement or
otherwise, which are appurtenant to the interest so transferred; shall hold such
interest subject to all unperformed obligations of the transferor Member
hereunder and under the Transfer Restriction Agreement; and shall agree in
writing to the foregoing if requested by the Board of Managers or the Members
and shall join in and be bound by the terms of this Agreement. No assignment
shall relieve the assignor from its obligations prior to this Agreement or the
Transfer Restriction Agreement, except that if the transferee is admitted as a
Member, the assignor shall be relieved of obligations hereunder and under the
Transfer Restriction Agreement accruing after the admission of the transferee as
a Member.
Section 15.3. Securities Laws Restrictions. Notwithstanding any other
provision of this Article XV, no transfer of an interest in the Company may be
made if the transfer would violate federal or state securities laws.
32
XVI. BOOKS OF ACCOUNT AND COMPANY RECORDS
Section 16.1. Books of Account. At all times during the continuance of
the Company, the Managers shall keep or cause to be kept, full and true books of
account in which shall be entered fully and accurately all transactions of the
Company.
Section 16.2. Inspection. All of the books of account of the Company,
together with an executed copy of this Agreement and any amendments hereto,
shall at all times be maintained at the principal office of the Company and
shall be open to the inspection and examination of the Members or their
representatives. Any Member may, at any time and from time to time, at its own
expense, cause an audit of the books of the Company to be made by a certified
public accountant or other person designated by such Member.
Section 16.3. Fiscal Year and Accounting Method. The fiscal year of the
Company shall end on December 31 in each year, and the books of the Company
shall be kept on a cash method of accounting by the Board of Managers.
Section 16.4. Financial Reports. For each Fiscal Year during the term
hereof, the Board of Managers shall deliver to all the Members, as soon as
reasonably practicable after the expiration of such Fiscal Year, an unaudited
financial report of the Company, including a balance sheet, profit and loss
statement, and a statement showing distributions to the Members and the
allocation among the Members of taxable income, gains, losses, deductions and
credits of the Company. In addition, the Board of Managers shall cause to be
delivered to all the Members monthly unaudited statements of profit and loss
prepared on a cash basis, such statements to reflect profit and loss on both a
monthly and year-to-date basis. Each such monthly statement shall be so
delivered within sixty (60) days after the end of the month to which the
statement pertains. An accounting of all items of receipt, income, profit, cost,
expense and loss shall also be prepared made by the Board of Managers upon the
dissolution of the Company.
Section 16.5. Tax Returns. The Company shall cause all income tax
returns to be prepared or reviewed in compliance with this Agreement (in
particular the tax allocations in Article XIII hereof) by such firm of
independent certified public accountants as shall be selected by the Board of
Managers, shall cause such tax returns to be timely filed with the appropriate
authorities and shall cause copies thereof and all related matters needed by any
Member for the preparation of its tax returns to be promptly delivered to all
Members. Copies of such tax returns shall be kept at the principal office of the
Company and shall be available for inspection by any Member during normal
business hours. The income tax documentation to be generated hereunder shall
include any additional information reasonably requested by a Member for the
preparation of its return.
Section 16.6. Tax Elections.
(a) In the event of a transfer of all or part of an interest
of a Member authorized by this Agreement, the Company shall, upon the
request of the transferee, elect pursuant to Section 754 of the Code to
adjust the basis of Company property, and any basis adjustment relating
to such transfer, whether made under Section 754 of the
33
Code or otherwise, shall be allocated solely to the transferee;
provided, however, that each transferee shall pay the additional
bookkeeping and accounting costs which result from the basis adjustment
pertaining to such transferee. Each of the Members shall supply to the
Company upon request the information necessary properly to give effect
to such election.
(b) All other federal income tax elections required or
permitted to be made by the Company shall be made in such manner as may
be agreed upon by the Board of Managers. No Member shall take any
action or refuse to take any action which would cause the Company to
forfeit the benefits of any tax election previously made or agreed to
be made.
Section 16.7. Tax Matters Partner. XXX is hereby designated as the "Tax
Matters Partner" of the Company within the meaning of Section 6231(a)(7) of the
Code and shall have the power to manage and control, on behalf of the Company,
any administrative proceeding at the Company level with the Internal Revenue
Service relating to the determination of any item of Company income, gain, loss,
deduction, or credit for federal income-tax purposes. The Tax Matters Partner
shall comply with all statutory provisions of the Code applicable to a "tax
matters partner" and shall, without limitation, within thirty (30) calendar days
of the receipt of any notice from the Internal Revenue Service in any
administrative proceeding at the Company level relating to the determination of
any Company item of income, gain, loss, deduction, or credit, mail a copy of
such notice to each Member.
Section 16.8. Bank Accounts. The funds of the Company shall be
deposited in the name of the Company in such bank accounts and with such
signatories as shall be selected by the Board of Managers. All deposits,
including security deposits, funds required to be escrowed and other funds not
currently distributable or needed in the operation of the Company business
shall, to the extent permitted by law, be deposited in such interest-bearing
bank accounts or invested in such financial instruments (including, without
limitation, hedge contracts and commodity contracts) as shall be approved by the
Board of Managers.
XVII. DISSOLUTION, WINDING UP AND DISTRIBUTION
Section 17.1. Events of Dissolution. Each of the following shall be an
"Event of Dissolution," and unless the Company and its business is continued
pursuant to Section 17.5 hereof, the Company shall be dissolved:
(a) upon the approval by Member Consent of an election to
dissolve the Company;
(b) at any time there are no Members, unless the business of
the Company is continued pursuant to Section 18-801(4) of the Act; or
(c) upon the entry of a decree of judicial dissolution of the
Company under Section 18-802 of the Act.
34
The death, retirement, resignation, expulsion, bankruptcy or
dissolution of any Member or the occurrence of any other event that terminates
the continued membership of any Member shall not cause the Company to be
dissolved or its affairs to be wound up.
Section 17.2. Dissolution and Winding Up. Notwithstanding any other
provision of this Agreement, upon the dissolution of the Company, the Board of
Managers (which term, for purposes of this Section and Section 17.4 shall
include the respective trustee, receiver or successor, if any, of either or both
thereof) shall have the responsibility for expeditiously dissolving and
liquidating the Company. They shall promptly proceed to wind up the affairs of
the Company and, after payment (or making provision for payment) of liabilities
owing to creditors, shall set up such reserves as they deem reasonably necessary
or appropriate for any contingent or unforeseen liabilities or obligations of
the Company. Said reserves may be paid over to a bank or an attorney-at-law, to
be held in escrow for the purpose of paying any such contingent or unforeseen
liabilities or obligations. After paying such liabilities and setting up such
reserves, the Board shall cause the remaining net assets of the Company to be
paid or distributed to the Members or their assigns in accordance with the
positive Capital Account balances of the Members. At the expiration of such
period as the Board of Managers may deem advisable, any remaining reserves shall
be paid or distributed to the Members or their assigns in the same manner as the
preceding sentence. No Member shall receive any additional compensation for any
services performed pursuant to this Article XVII.
Section 17.3. Final Statement. Upon the dissolution of the Company, a
final certified statement of its assets and liabilities shall be prepared by the
Company's certified public accountants and furnished to the Members within
ninety (90) days after such dissolution.
Section 17.4. Distribution In-Kind. If all the Members agree that it
shall be impractical to liquidate part or all the assets of the Company, then
assets which they agree are not suitable for liquidation may be distributed to
the Members in-kind, subject to the order of priority set forth in Section 17.2
hereof and, further, subject to such conditions relating to the management and
disposition of the assets distributed as the Board of Managers deems reasonable
and equitable. If Company assets are to be distributed in-kind, then prior to
any such distribution, the Capital Accounts of the Members shall be adjusted to
reflect the manner in which the unrealized taxable income, gain, loss and
deduction inherent in such property (to the extent that such items have not been
previously reflected in the Capital Accounts) would be allocated among the
Members if there were a taxable disposition of such property on the date of its
distribution for its then fair market value determined mutually by the Members.
Section 17.5. Deemed Distribution and Recontribution. Notwithstanding
any other provision of this Article XVII, in the event the Company is liquidated
within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g) but no Event of
Dissolution has occurred, the assets of the Company shall not be liquidated, the
Company's liabilities shall not be paid or discharged, and the Company's affairs
shall not be wound up. Instead, the Company shall be deemed to have contributed
its assets in-kind to a new limited liability company, which shall be deemed to
have assumed and taken all Company assets subject to all Company liabilities.
Immediately thereafter, the Company shall be deemed to have liquidated and
distributed the interests in the new limited liability company in-kind to the
Members.
35
XVIII. MISCELLANEOUS
Section 18.1. Execution in Counterparts. This Agreement may be executed
in counterparts, all of which taken together shall be deemed one original.
Section 18.2. Address and Notice. The address of each Member for all
purposes shall be as follows:
If to Xxxxxx:
0000 Xxx Xxxx Xxx., Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxx X. Xxxxxx
Telecopy No.: (000) 000-0000
With copies to:
0000 Xxx Xxxx Xxx., Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxx
Telecopy No.: (000) 000-0000
With additional copies to:
Xxx Xxxxxxxxxxx
Xxxxxxxx & Knight L.L.P.
0000 Xxxxxxx Xxxxxx, Xxxxx 0000
Telecopy No.: (000) 000-0000
If to XXX:
0000 Xxx Xxxx Xxx., Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: X. X. Xxxxx, Xx.
Telecopy No.: (000) 000-0000
With copies to:
Xxx Xxxxxxxxxxx
Xxxxxxxx & Xxxxxx L.L.P.
0000 Xxxxxxx Xxxxxx, Xxxxx 0000
Telecopy No.: (000) 000-0000
If to SAOG:
0000 Xxx Xxxx Xxx., Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxx Xxxxx XxXxxxxxx
Telecopy No.: (000) 000-0000
36
With copies to:
Xxx Xxxxxxxxxxx
Xxxxxxxx & Knight L.L.P.
0000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Telecopy No.: (000) 000-0000
If to Peak LP:
0000 X. Xxxxxx Xx.
Xxxxx 000 - XX00
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Peak
Telecopy No.: (000) 000-0000
With copies to:
Xxxxx X. Xxxxxx
Xxxxx Xxxxxxx & Xxxx LLP
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Telecopy No.: (000) 000-0000
If to Xxxxx XX:
0000 X. Xxxxxx Xx.
Xxxxx 000 - XX00
Xxxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxx
Telecopy No.: (000) 000-0000
With copies to:
Xxxxx X. Xxxxxx
Xxxxx Liddell & Xxxx LLP
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Telecopy No.: (000) 000-0000
or such other address or addresses of which any Member shall have given the
other Members notice. Any notice shall be in accordance with Section 10.1.
Section 18.3. Partition. The Members hereby agree that no Member shall
have the right while this Agreement remains in effect to have the assets of the
Company partitioned, or to file a complaint or institute any proceeding at law
or in equity to have any Company asset partitioned, and each Member hereby
waives any such right. It is the intention of the Members that during the term
of this Agreement, the rights of the Members as among themselves shall be
governed by the terms of this Agreement.
Section 18.4. Further Assurances. Each Member hereby covenants and
agrees to execute and deliver such instruments as may be reasonably requested by
any other Member to convey any interest or to take any other action required or
permitted under this Agreement.
37
Section 18.5. Titles and Captions. All article, section, or subsection
titles or captions contained in this Agreement or the table of contents hereof
are for convenience only and shall not be deemed part of the context of this
Agreement.
Section 18.6. Number and Gender of Pronouns. All pronouns and any
variations thereof shall be deemed to refer to the masculine, feminine, neuter,
singular or plural as the identity of the Person or Persons may require.
Section 18.7. Entire Agreement. This Agreement contains the entire
understanding between and among the Members and supersedes any prior
understandings and agreements between and among them respecting the subject
matter of this Agreement.
Section 18.8. Amendment. This Agreement may be amended or modified only
by a written document executed by such number of the Members as shall constitute
Member Consent.
Section 18.9. Exhibits and Schedules. All exhibits and schedules
referred to herein are attached hereto and made a part hereof for all purposes.
Section 18.10. Agreement Binding. This Agreement shall be binding upon
the heirs, executors, administrators, successors, and assigns of the Members.
Section 18.11. Waiver. No failure by any Member to insist upon the
strict performance of any covenant, duty, agreement, or condition of this
Agreement or to exercise any right or remedy consequent upon a breach thereof
shall constitute a waiver of any such breach or any other covenant, agreement,
term, or condition. Any Member by the issuance of written notice may, but shall
be under no obligation to, waive any of its rights or any conditions to its
obligations hereunder, or any duty, obligation or covenant of any other Member.
No waiver shall affect or alter the remainder of this Agreement but each and
every covenant, agreement, term, and condition of this Agreement shall continue
in full force and effect with respect to any other then existing or subsequent
breach thereof.
Section 18.12. Remedies. The rights and remedies of the Members set
forth in this Agreement shall not be mutually exclusive or exclusive of any
right, power or privilege provided by law or in equity or otherwise and the
exercise of one or more of the provisions hereof shall not preclude the exercise
of any other provisions hereof or of any legal, equitable or other right. Each
of the Members confirms that damages at law may be an inadequate remedy for a
breach or threatened breach of any provision hereof. The respective rights and
obligations hereunder shall be enforceable by specific performance, injunction,
or other equitable remedy, but nothing herein contained is intended to, or shall
limit or affect any rights at law or by statute or otherwise of any Member
aggrieved as against another Member for a breach or threatened breach of any
provision hereof, it being the intention of this section to make clear the
agreement of the Members that the respective rights and obligations of the
Members hereunder shall be enforceable in equity as well as at law or otherwise.
Section 18.13. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED,
ENFORCED, AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF DELAWARE (WITHOUT
REGARD TO ITS CHOICE OF LAW PRINCIPLES).
38
Section 18.14. Dispute Resolution.
(a) NEGOTIATION. THE PARTNERS SHALL ATTEMPT TO RESOLVE ANY
DISPUTE ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TERMINATION, BREACH, OR VALIDITY OF THIS AGREEMENT, PROMPTLY BY GOOD
FAITH NEGOTIATION AMONG EXECUTIVES WHO HAVE AUTHORITY TO RESOLVE THE
CONTROVERSY. ANY PARTNER MAY GIVE THE OTHER PARTNERS WRITTEN NOTICE OF
ANY DISPUTE NOT RESOLVED IN THE NORMAL COURSE OF BUSINESS. WITHIN 10
DAYS AFTER DELIVERY OF THE NOTICE, THE RECEIVING PARTNER SHALL SUBMIT
TO THE OTHERS A WRITTEN RESPONSE. THE NOTICE AND THE RESPONSE SHALL
INCLUDE (A) A STATEMENT OF THE PARTNER'S CONCERNS AND PERSPECTIVES ON
THE ISSUES IN DISPUTE, (B) A SUMMARY OF SUPPORTING FACTS AND
CIRCUMSTANCES AND (C) THE IDENTITY OF THE EXECUTIVE WHO WILL REPRESENT
THAT PARTNER AND OF ANY OTHER PERSON WHO WILL ACCOMPANY THE EXECUTIVE.
WITHIN 15 DAYS AFTER DELIVERY OF THE ORIGINAL NOTICE, THE EXECUTIVES OF
THE PARTNERS SHALL MEET AT A MUTUALLY ACCEPTABLE TIME AND PLACE, AND
THEREAFTER AS OFTEN AS THEY REASONABLY DEEM NECESSARY, TO ATTEMPT TO
RESOLVE THE DISPUTE. ALL NEGOTIATIONS PURSUANT TO THIS CLAUSE AND
CLAUSE (B) BELOW ARE CONFIDENTIAL AND SHALL BE TREATED AS COMPROMISE
AND SETTLEMENT NEGOTIATIONS FOR PURPOSES OF APPLICABLE RULES OF
EVIDENCE.
(b) MEDIATION. IF A DISPUTE HAS NOT BEEN RESOLVED BY
DISCUSSION BETWEEN OR AMONG THE MEMBERS WITHIN 20 DAYS OF THE DISPUTING
PARTNERS' NOTICE, ANY MEMBER MAY BY NOTICE TO THE OTHER MEMBERS WITH
WHOM SUCH DISPUTE EXISTS REQUIRE MEDIATION OF THE DISPUTE, WHICH NOTICE
SHALL IDENTIFY THE NAMES OF NO FEWER THAN THREE (3) POTENTIAL
MEDIATORS. EACH MEMBER AMONG WHOM THE DISPUTE EXISTS WILL IN GOOD FAITH
ATTEMPT TO AGREE UPON A MEDIATOR AND AGREES TO PARTICIPATE IN MEDIATION
OF THE DISPUTE IN GOOD FAITH. IF THE PARTIES ARE UNABLE TO AGREE UPON A
MEDIATOR WITHIN FIFTEEN (15) DAYS AFTER SUCH NOTICE, THE MEMBERS AGREE
TO PROCEED TO MEDIATION UNDER THE COMMERCIAL MEDIATION RULES OF THE
AMERICAN ARBITRATION ASSOCIATION IN EFFECT ON THE DATE OF THIS
AGREEMENT. IF SUCH DISPUTE SHALL NOT HAVE BEEN RESOLVED BY MEDIATION
WITHIN THE TIME PERIOD SPECIFIED N SUBSECTION (C) BELOW, ARBITRATION
MAY BE INITIATED PURSUANT TO SUBSECTION (C) BELOW. ALL EXPENSES OF THE
MEDIATOR SHALL BE EQUALLY SHARED BY THE MEMBERS AMONG WHOM THE DISPUTE
EXISTS.
(c) BINDING ARBITRATION.
(i) ANY DISPUTE ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE BREACH, TERMINATION, OR VALIDITY OF THE
39
AGREEMENT WHICH HAS NOT BEEN RESOLVED BY MEDIATION WITHIN 30
DAYS OF THE INITIATION OF SUCH PROCEDURE, OR WHICH HAS NOT
BEEN RESOLVED PRIOR TO THE TERMINATION OF MEDIATION, SHALL BE
RESOLVED BY ARBITRATION IN ACCORDANCE WITH THE COMMERCIAL
ARBITRATION RULES OF THE AMERICAN ARBITRATION ASSOCIATION
("AAA") IN EFFECT ON THE DATE OF THIS AGREEMENT. IF A PARTY TO
A DISPUTE FAILS TO PARTICIPATE IN MEDIATION, THE OTHERS MAY
INITIATE ARBITRATION BEFORE EXPIRATION OF THE ABOVE PERIOD. IF
THE AMOUNT OF THE CLAIM ASSERTED BY ANY PARTY IN THE
ARBITRATION EXCEEDS $1,000,000, THE PARTNERS AGREE THAT THE
AMERICAN ARBITRATION ASSOCIATION OPTIONAL PROCEDURES FOR
LARGE, COMPLEX COMMERCIAL DISPUTES WILL BE APPLIED TO THE
DISPUTE.
(ii) THE AAA SHALL SUGGEST A PANEL OF ARBITRATORS,
EACH OF WHOM SHALL BE KNOWLEDGEABLE WITH RESPECT TO THE
SUBJECT MATTER OF THE DISPUTE. ARBITRATION SHALL BE BEFORE A
SOLE ARBITRATOR IF THE DISPUTING PARTNERS AGREE ON THE
SELECTION OF A SOLE ARBITRATOR. IF NOT, ARBITRATION SHALL BE
BEFORE THREE INDEPENDENT AND IMPARTIAL ARBITRATORS, ALL OF
WHOM SHALL BE APPOINTED BY THE AAA IN ACCORDANCE WITH ITS
RULES.
(ii) THE PLACE OF ARBITRATION SHALL BE DALLAS, TEXAS.
(iii) THE ARBITRATOR(S) ARE NOT EMPOWERED TO AWARD
DAMAGES IN EXCESS OF COMPENSATORY DAMAGES.
(iv) THE AWARD RENDERED BY THE ARBITRATORS SHALL BE
IN WRITING AND SHALL INCLUDE A STATEMENT OF THE FACTUAL BASES
AND THE LEGAL CONCLUSIONS RELIED UPON BY THE ARBITRATORS IN
MAKING SUCH AWARD. THE ARBITRATORS SHALL DECIDE THE DISPUTE IN
COMPLIANCE WITH THE APPLICABLE SUBSTANTIVE LAW AND CONSISTENT
WITH THE PROVISIONS OF THE AGREEMENT, INCLUDING LIMITS ON
DAMAGES. THE AWARD RENDERED BY THE ARBITRATOR(S) SHALL BE
FINAL AND BINDING, AND JUDGMENT UPON THE AWARD MAY BE ENTERED
BY ANY COURT HAVING JURISDICTION THEREOF.
(v) ALL MATTERS RELATING TO THE ENFORCEABILITY OF
THIS ARBITRATION AGREEMENT AND ANY AWARD RENDERED PURSUANT TO
THIS AGREEMENT SHALL BE GOVERNED BY THE FEDERAL ARBITRATION
ACT, 9 U.S.C. Section 1-16. THE ARBITRATOR(S) SHALL APPLY THE
SUBSTANTIVE LAW OF THE STATE OF DELAWARE, EXCLUSIVE OF ANY
CONFLICT OF LAW RULES.
40
(vi) EACH PARTNER IS REQUIRED TO CONTINUE TO PERFORM
ITS OBLIGATIONS UNDER THIS CONTRACT PENDING FINAL RESOLUTION
OF ANY DISPUTE ARISING OUT OF OR RELATING TO THIS CONTRACT,
UNLESS TO DO SO WOULD BE IMPOSSIBLE OR IMPRACTICABLE UNDER THE
CIRCUMSTANCES.
(vii) NOTHING IN THIS SECTION 18.14 SHALL LIMIT THE
PARTNERS' RIGHTS TO OBTAIN PROVISIONAL, ANCILLARY OR EQUITABLE
RELIEF FROM A COURT OF COMPETENT JURISDICTION.
(d) EXPENSES. EACH PARTY SHALL PAY ITS OWN EXPENSES OF
ARBITRATION AND THE EXPENSES OF THE ARBITRATORS SHALL BE EQUALLY
SHARED; PROVIDED, HOWEVER, IF IN THE OPINION OF THE ARBITRATORS ANY
CLAIM BY EITHER PARTY HEREUNDER OR ANY DEFENSE OR OBJECTION THERETO BY
THE OTHER PARTY WAS UNREASONABLE AND NOT MADE IN GOOD FAITH, THE
ARBITRATORS MAY ASSESS, AS PART OF THE AWARD, ALL OR ANY PART OF THE
ARBITRATION EXPENSE (INCLUDING, WITHOUT LIMITATION, REASONABLE
ATTORNEYS' FEES) OF THE OTHER PARTY AND OF THE ARBITRATORS AGAINST THE
PARTY RAISING SUCH UNREASONABLE CLAIM, DEFENSE, OR OBJECTION. NOTHING
HEREIN SET FORTH SHALL PREVENT THE PARTIES FROM SETTLING ANY DISPUTE BY
MUTUAL AGREEMENT AT ANY TIME.
Section 18.15. WAIVER. EACH MEMBER WAIVES ANY RIGHT THAT THE MEMBER MAY
HAVE TO COMMENCE ANY ACTION IN ANY COURT WITH RESPECT TO ANY DISPUTE AMONG THE
MEMBERS RELATING TO OR ARISING UNDER THIS AGREEMENT OR THE RIGHTS OR OBLIGATIONS
OF ANY MEMBER HEREUNDER, OTHER THAN AN ACTION BROUGHT TO ENFORCE THE ARBITRATION
PROVISIONS OF SECTION 18.14 HEREOF. THE MEMBERS AGREE THAT ANY SUCH ACTION SHALL
BE BROUGHT (AND VENUE FOR ANY SUCH ACTION SHALL BE APPROPRIATE) IN DALLAS,
TEXAS.
Section 18.16. U.S. Dollars. Any reference in this Agreement to
"dollars," "funds" or "sums" or any amounts denoted with a "$" shall be
references to United States dollars.
[FOLLOWING ARE THE SIGNATURE PAGES.]
41
IN WITNESS WHEREOF, the undersigned parties have executed this Amended
and Restated Limited Liability Company Agreement on the ____ day of
_____________, ________.
XXX PARTNERS, LTD.
By: XXX Partners Management, Inc., its general partner
By:
------------------------------------------
X. X. Xxxxx, Xx., Secretary
XXXXXX PETROLEUM, LTD.
By: VPL (GP), LLC, its general partner
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
XXXXX XXXXX OIL & GAS, INC.
By:
---------------------------------------------
Xxxxxxx Xxxxx XxXxxxxxx, Vice President
P.A. Peak Holdings LP, a Delaware limited partnership
By: Peak Limited Liability Company No. 1,
a Texas limited liability company, its General Partner
By:
---------------------------------------------
Xxxxxxx X. Peak, President
42
XXXXX X. XXXXX GENERAL PARTNERSHIP,
a Texas general partnership
By: YELAR GP LLC, a Texas limited liability company,
its General Partner
By:
---------------------------------------------
Xxxxx X. Xxxxx, President
By: YELAR LP, a Texas limited partnership,
its General Partner
By:
---------------------------------------------
Xxxxx X. Xxxxx, President
And joined in for the limited purpose of agreeing to the
substitution of Peak LP as a Member of the Company in lieu
of P.A. Peak, Inc.:
P.A. Peak, Inc.,
a Delaware corporation
By:
---------------------------------------------
Xxxxxxx X. Peak, President
43
EXHIBIT A
Transfer Restriction Agreement
1
SCHEDULE I
Capital Contributions Under Original Agreement
Xxxxxx $ 2.46
XXX 2.46
SAOG 2.40
Peak LP 2.34
Xxxxx XX 2.34
------
$12.00
EXHIBIT B
FORM OF AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF
GENERAL PARTNER
2
AMENDED AND RESTATED
LIMITED PARTNERSHIP AGREEMENT
OF DORCHESTER MINERALS MANAGEMENT LP
------------ ---, ------
================================================================================
THE PARTNERSHIP INTERESTS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY JURISDICTION. NO PARTNERSHIP
INTEREST MAY BE SOLD OR OFFERED FOR SALE (WITHIN THE MEANING OF ANY SECURITIES
LAW) UNLESS A REGISTRATION STATEMENT UNDER ALL APPLICABLE SECURITIES LAWS WITH
RESPECT TO THE INTEREST IS THEN IN EFFECT OR AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THOSE LAWS IS THEN APPLICABLE TO THE INTEREST. A PARTNERSHIP
INTEREST ALSO MAY NOT BE TRANSFERRED OR ENCUMBERED UNLESS THE APPLICABLE
PROVISIONS OF THIS AGREEMENT AND THE TRANSFER RESTRICTION AGREEMENT ATTACHED
HERETO AS EXHIBIT A ARE SATISFIED.
================================================================================
TABLE OF CONTENTS
I. DEFINITIONS...............................................................................................1
Section 1.1. Definitions..............................................................................1
II. NAME, PRINCIPAL OFFICE, REGISTERED OFFICES AND AGENTS, TERM, STATUS OF MEMBERS AND TAX STATUS............6
Section 2.1. Name of Partnership......................................................................6
Section 2.2. Principal Office.........................................................................6
Section 2.3. Registered Offices and Agents............................................................6
Section 2.4. Term.....................................................................................7
Section 2.5. Status of Partners.......................................................................7
Section 2.6. Tax Status...............................................................................7
III. CHARACTER OF BUSINESS.....................................................................................7
Section 3.1. Purposes of the Company..................................................................7
IV. FORMATION AND FOREIGN REGISTRATION........................................................................7
Section 4.1. Formation................................................................................7
Section 4.2. Foreign Registration.....................................................................7
V. CAPITAL CONTRIBUTIONS.....................................................................................8
Section 5.1. Initial Contributions....................................................................8
Section 5.2. Subsequent Contributions.................................................................8
Section 5.3. Return of Contributions..................................................................8
Section 5.4. Advances by Partners.....................................................................8
VI. RIGHTS, POWERS AND OBLIGATIONS OF PARTNERS................................................................8
Section 6.1. Partners' Fees and Reimbursement of Expenses.............................................8
Section 6.2. Duties of Partners/Other Activities......................................................8
Section 6.3. Dealing with Related Persons.............................................................9
Section 6.4. Liability of Partners....................................................................9
Section 6.5. No Resignation...........................................................................9
VII. THE GENERAL PARTNER.......................................................................................9
Section 7.1. Powers...................................................................................9
Section 7.2. No Removal..............................................................................10
-i-
VIII. THE LIMITED PARTNERS.....................................................................................10
Section 8.1. No Authority Vested in Limited Partners.................................................10
Section 8.2. No Meetings.............................................................................10
Section 8.3. Action by Written Consent Without a Meeting.............................................10
IX. NOTICES..................................................................................................11
Section 9.1. Methods of Giving Notice................................................................11
Section 9.2. Waiver of Notice........................................................................11
X. OFFICERS.................................................................................................11
Section 10.1. Officers................................................................................11
Section 10.2. Salaries................................................................................11
Section 10.3. Term, Removal and Vacancies.............................................................11
XI. INDEMNIFICATION..........................................................................................12
Section 11.1. Right to Indemnification................................................................12
Section 11.2. Advance of Expenses.....................................................................12
Section 11.3. Indemnification of Employees and Agents.................................................13
Section 11.4. Appearance as a Witness.................................................................13
Section 11.5. Non-Exclusivity of Rights...............................................................13
Section 11.6. Insurance...............................................................................13
Section 11.7. Partner Notification....................................................................13
Section 11.8. No Personal Liability...................................................................13
Section 11.9. Interest in Transaction.................................................................13
Section 11.10. Successors and Assigns..................................................................13
Section 11.11. Savings Clause..........................................................................14
Section 11.12. Exculpation.............................................................................14
XII. ALLOCATIONS..............................................................................................14
Section 12.1. Consent to Allocations..................................................................14
Section 12.2. Distributive Shares for Tax Purposes....................................................14
Section 12.3. Code Section 704(c).....................................................................17
Section 12.4. Capital Accounts........................................................................17
Section 12.5. Compliance with the Code................................................................19
XIII. DISTRIBUTIONS............................................................................................20
Section 13.1. "Net Cash Flow" Defined.................................................................20
Section 13.2. Distribution of Net Cash Flow...........................................................20
Section 13.3. Amount Withheld.........................................................................20
ii
XIV. TRANSFER OF INTERESTS....................................................................................21
Section 14.1. Transfer Restriction Agreement..........................................................21
Section 14.2. Transfers of Interests and Admission of New Partners....................................21
Section 14.3. Securities Laws Restrictions............................................................22
XV. BOOKS OF ACCOUNT AND PARTNERSHIP RECORDS.................................................................22
Section 15.1. Books of Account........................................................................22
Section 15.2. Inspection..............................................................................22
Section 15.3. Fiscal Year and Accounting Method.......................................................22
Section 15.4. Financial Reports.......................................................................22
Section 15.5. Tax Returns.............................................................................22
Section 15.6. Tax Elections...........................................................................23
Section 15.7. Tax Matters Partner.....................................................................23
Section 15.8. Bank Accounts...........................................................................23
XVI. DISSOLUTION, WINDING UP AND DISTRIBUTION.................................................................24
Section 16.1. Events of Dissolution...................................................................24
Section 16.2. Dissolution and Winding Up..............................................................24
Section 16.3. Final Statement.........................................................................24
Section 16.4. Distribution In-Kind....................................................................24
Section 16.5. Continuation of Partnership.............................................................24
Section 16.6. Deemed Distribution and Recontribution..................................................25
XVII. MISCELLANEOUS............................................................................................25
Section 17.1. Execution in Counterparts...............................................................25
Section 17.2. Address and Notice......................................................................25
Section 17.3. Partition...............................................................................27
Section 17.4. Further Assurances......................................................................27
Section 17.5. Titles and Captions.....................................................................27
Section 17.6. Number and Gender of Pronouns...........................................................27
Section 17.7. Entire Agreement........................................................................27
Section 17.8. Amendment...............................................................................27
Section 17.9. Exhibits and Schedules..................................................................27
Section 17.10. Agreement Binding.......................................................................27
Section 17.11. Waiver..................................................................................27
Section 17.12. Remedies................................................................................27
-iii-
Section 17.13. GOVERNING LAW...........................................................................28
Section 17.14. DISPUTE RESOLUTION......................................................................28
Section 17.15. WAIVER..................................................................................30
Section 17.16. U.S. Dollars............................................................................31
-iv-
AMENDED AND RESTATED
LIMITED PARTNERSHIP AGREEMENT
OF DORCHESTER MINERALS MANAGEMENT LP
This Amended and Restated Limited Partnership Agreement of Dorchester
Minerals Management LP dated as of ________ ____ _____ (the "Effective Date"),
is entered into by and among Dorchester Minerals Management LLC, a Delaware
limited liability company, as general partner, and XXX Partners, Ltd., a Texas
limited partnership ("XXX"), Xxxxxx Petroleum, Ltd., a Texas limited partnership
("Xxxxxx"), Xxxxx Xxxxx Oil & Gas, Inc., a Texas corporation ("SAOG"), P.A. Peak
Holdings LP, a Delaware limited partnership ("Peak LP") and Xxxxx X. Xxxxx
General Partnership, a Delaware general partnership ("Xxxxx XX"), as limited
partners. Each of SAM, Vaughn, SAOG, Peak LP and Xxxxx XX is a "Limited Partner"
and, collectively, they are sometimes referred to as the "Limited Partners." The
General Partner and each Limited Partner is a "Partner" and, collectively, they
are sometimes referred to as the "Partners."
WITNESSETH
WHEREAS, effective December 12, 2001, a Certificate of Limited
Partnership (the "Certificate") was filed in the office of the Secretary of
State of Delaware for the formation of Dorchester Minerals Management LP, a
Delaware limited partnership (the "Partnership");
WHEREAS, in connection with the formation of the Partnership, its
partners executed that certain Limited Partnership Agreement of Dorchester
Minerals Management LP (the "Original Agreement");
WHEREAS, the parties hereto desire to amend and restate the Original
Agreement as of the date hereof upon the terms and conditions set forth herein
and to substitute Peak LP as a Limited Partner of the Partnerships in lieu of
P.A. Peak, Inc., a Delaware corporation;
NOW, THEREFORE, in consideration of the mutual covenants set forth
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree to
continue the Partnership upon the following terms and conditions and to amend
and restate the Original Agreement upon the terms and conditions set forth
herein:
I. DEFINITIONS
Section 1.1. Definitions. The following terms shall have the following
meanings when used in this Agreement:
"AAA" shall have the meaning set forth in Section 17.14 hereof.
"Act" shall mean the Delaware Revised Uniform Limited Partnership Act,
as amended.
1
"Actual Depletion Deductions" means with respect to any Partner, such
Partner's actual depletion allowance with respect to such Partner's share of
production from the oil and gas properties owned by the Operating Subsidiaries
and Dorchester Minerals; provided that, for purposes of this Agreement and
computing a Partner's Capital Account, such Partner's Actual Depletion
Deductions with respect to any single oil or gas property shall not exceed the
adjusted basis of such oil or gas property allocated to such Partner (or its
predecessor in interest) pursuant to Code Section 613A(c)(7)(D). If the General
Partner elects to use Actual Depletion Deductions pursuant to Section
1.704-1(b)(2)(iv)(k) of the Treasury Regulations, each Partner shall notify the
Partnership of the amount of its Actual Depletion Deductions within ninety (90)
days of the end of each Fiscal Year.
"Actual Gains or Actual Losses" means with respect to any Partner (i)
the excess, if any, of such Partner's share of the total amount realized from
the disposition of any oil or gas property over such Partner's remaining
adjusted tax basis in such property or (ii) the excess, if any, of such
Partner's remaining adjusted tax basis in such property over such Partner's
share of the total amount realized from the disposition of such property. A
Partner's share of the total amount realized from the disposition of oil or gas
property shall be determined pursuant to Treasury Regulations Section
1.704-1(b)(4)(v).
"Affiliate" shall mean, with respect to any Person, (i) any Person
directly or indirectly controlling, controlled by or under common control with
such Person, (ii) any Person owning or controlling ten percent (10%) or more of
the outstanding voting interests of such Person, (iii) any officer, director,
member, manager or general partner of such Person, or (iv) any Person who is an
officer, director, general partner, trustee, member, manager or holder of ten
percent (10%) or more of the voting interests of any Person described in clauses
(i) through (iii) of this sentence.
"Affiliate Transfer" shall have the meaning assigned that term in the
Transfer Restriction Agreement.
"Agreement" shall mean this Amended and Restated Limited Partnership
Agreement of Dorchester Minerals Management LP.
"Book Value" shall mean with respect to any asset, the asset's adjusted
basis for federal income tax purposes, except as follows:
(i) the initial Book Value of any asset contributed (or deemed
contributed, including as a result of the constructive termination of the
Partnership pursuant to Code Section 708(b)(1)(B)) to the Partnership shall be
such asset's gross fair market value at the time of such contribution;
(ii) the Book Value of all Partnership assets shall be adjusted to
equal their respective gross fair market values at the times specified in
Treasury Regulations under Section 704(b) of the Code if the Partnership so
elects; and
(iii) if the Book Value of an asset has been determined pursuant to
clause (i) or (ii) , such Book Value shall thereafter be adjusted in the same
manner as would the asset's adjusted basis for federal income tax purposes,
except that depreciation deductions shall be computed in accordance with
Subparagraph (iv) of the definition of Net Profit and Net Loss and the Book
2
Value shall be adjusted by the Actual Depletion Deductions or Simulated
Depletion Deductions, as applicable.
"Business Day" shall mean any day other than Saturday or Sunday or any
other day upon which banks in Dallas, Texas are permitted or required by law to
close.
"Business Opportunities Agreement" shall have the meaning set forth in
Section 6.2.
"Capital Account" shall have the meaning set forth in Section 12.4
hereof.
"Certificate" shall have the meaning set forth in the recitals to this
Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as amended, or its
successor.
"
Contribution Agreement" shall mean that certain
Contribution Agreement
made by and among SAM, Vaughn, SAOG, P.A. Peak, Inc., a Delaware corporation,
Xxxxx X. Xxxxx, Inc., a Delaware corporation, the Partnership and the General
Partner, dated as of December 13, 2001.
"Covered Person" shall have the meaning set forth in Section 11.1
hereof.
"Depletable Property" means interests in oil, gas or other minerals
eligible for depletion under Code Section 613 or 613A.
"Disabling Conduct" shall mean conduct that constitutes fraud, willful
misconduct, bad faith or gross negligence or conduct that is outside the scope
of conduct permitted in this Agreement or is in breach of this Agreement, any
Governance Agreement or any other agreement between or among (i) any of the
General Partner, the Partnership, Dorchester Minerals, Dorchester Operating LP
and Dorchester Operating LLC and (ii) the Person whose conduct is in question or
in knowing violation of applicable laws.
"Dorchester Minerals" shall mean Dorchester Minerals, L.P., a Delaware
limited partnership.
"Dorchester Minerals Limited Partnership Agreement" shall mean that
certain Amended And Restated Agreement Of Limited Partnership of Dorchester
Minerals, L.P., dated ________________, 200__ made by and among the Partnership
as general partner and the limited partners noted therein.
"Dorchester Operating LLC" shall mean Dorchester Minerals Operating
LLC, a Delaware limited liability company.
"Dorchester Operating LP" shall mean Dorchester Minerals Operating LP,
a Delaware limited partnership.
"Effective Date" shall have the meaning set forth in the preamble to
this Agreement.
"Event of Dissolution" shall have the meaning set forth in Section 16.1
hereof.
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"Familial Transfer" shall have the meaning assigned that term in the
Transfer Restriction Agreement.
"Fiscal Year" shall mean the fiscal year of the Partnership as set
forth in Section 15.3 hereof.
"General Partner" shall mean Dorchester Minerals Management LLC, a
Delaware limited liability company, and any assignee of all or any part of its
interest in the Partnership who is admitted to the Partnership as a General
Partner in conformity with the provisions of this Agreement.
"Governance Agreements" shall mean this Agreement, the Limited
Liability Company Agreement, the Dorchester Minerals Limited Partnership
Agreement, the limited liability company agreement of Dorchester Operating LLC,
the limited partnership agreement of Dorchester Operating LP, the Business
Opportunities Agreement, and the Transfer Restriction Agreement.
"Gross Income" shall mean for each Fiscal Year or other period, an
amount equal to the Partnership's gross income as determined for federal income
tax purposes for such Fiscal Year or period but computed with the adjustments
specified in Subparagraphs (i) and (iii) of the definition of Net Profit and Net
Loss.
"Limited Liability Company Agreement" shall mean that certain Amended
and Restated Limited Liability Company Agreement of Dorchester Minerals
Management LLC, a Delaware limited liability company, dated as of _________,
200__ by and among Xxxxxx, XXX, SAOG, Peak LP and Xxxxx XX.
"Limited Partner" or "Limited Partners" shall mean SAM, Vaughn, SAOG,
Peak LP, Xxxxx XX and any assignee of all or any part of their respective
interests in the Partnership who is admitted to the Partnership as a Limited
Partner in conformity with the provisions of this Agreement.
"Net Cash Flow" shall have the meaning set forth in Section 13.1
hereof.
"Net Profit" and "Net Loss" shall mean for each Fiscal Year or other
period, an amount equal to the Partnership's taxable income or loss for such
Fiscal Year or other period, determined in accordance with Code Section 703(a)
(for this purpose, all items of income, gain, loss or deduction required to be
stated separately pursuant to Code Section 703(a)(1) shall be included in
taxable income or loss) with the following adjustments:
(i) any income of the Partnership that is exempt from federal income
tax or not otherwise taken into account in computing Net Profit or Net Loss
shall be added to such taxable income or loss;
(ii) any expenditures of the Partnership described in Code Section
705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures under Code
Section 704(b), and not otherwise taken into account in computing Net Profit or
Net Loss, shall be subtracted from such taxable income or loss;
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(iii) gain or loss resulting from any disposition of Partnership
property with respect to which gain or loss is recognized for federal income tax
purposes shall be computed by reference to the Book Value of such property
rather than its adjusted tax basis;
(iv) in lieu of the depletion, depreciation, amortization and other
cost recovery deductions taken into account in computing taxable income or loss,
there shall be taken into account depreciation, amortization or other cost
recovery deductions on the assets' respective Book Values for such Fiscal Year
or other period determined in accordance with Treasury Regulations Section
1.704-1(b)(2)(iv)(g);
(v) the amount of any Gross Income allocated to the Partners pursuant
to Sections 12.2(d), 12.2(e), 12.2(f), 12.2(j), 12.2(k) and 12.2(l) shall not be
included as income or revenue; and
(vi) any amount allocated to the Partners pursuant to Sections 12.2(h),
12.2(i), 12.2(j), 12.2(k) and 12.2(l) shall not be included as a loss, deduction
or Code Section 705(a)(2)(B) expenditure.
"Operating Subsidiaries" shall mean Dorchester Minerals Operating GP
LLC and Dorchester Minerals Operating LP.
"Ownership Interest" shall mean the interest in the Partnership held by
a Partner.
"Ownership Percentage" shall mean 0.1% for the General Partner, 20.48%
for Xxxxxx, 20.48% for XXX, 19.98% for SAOG, 19.48% for Peak LP and 19.48% for
Xxxxx XX, until adjusted in accordance with this Agreement.
"Partner" means the General Partner or a Limited Partner.
"Partner Nonrecourse Debt" shall mean any nonrecourse debt of the
Company which meets the requirements of "partner nonrecourse debt" set forth in
Treasury Regulations Section 1.704-2(b)(4).
"Partner Nonrecourse Debt Minimum Gain" shall mean the partner
nonrecourse debt minimum gain attributable to "partner nonrecourse debt" as
determined under Treasury Regulations Section 1.704-2(i)(3).
"Partner Nonrecourse Deductions" shall mean any loss, deduction, or
Code Section 705(a)(2)(B) expenditure, or item thereof, that is attributable to
a Partner Nonrecourse Debt, as determined by Treasury Regulations Section
1.704-2(i)(2).
"Partnership" shall mean the limited partnership formed by this
Agreement.
"Partnership Minimum Gain" shall mean the amount computed under
Treasury Regulations Section 1.704-2(d)(1) with respect to the Partnership's
nonrecourse liabilities as determined under Treasury Regulations Section
1.752-1(a)(2).
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"Partnership Nonrecourse Deductions" shall mean any loss, deduction, or
Code Section 705(a)(2)(B) expenditure (or item thereof) that is attributable to
nonrecourse liabilities (as defined in Treasury Regulations Section
1.752-1(a)(2)) of the Partnership and characterized as "nonrecourse deductions"
pursuant to Treasury Regulations Section 1.704-2(b)(1) and Section 1.704-2(c).
"Person" shall mean an individual person, partnership, limited
partnership, limited liability company, trust, corporation or other entity or
organization.
"Prime Rate" means the "prime," "reference" or "base" rate of interest
for commercial loans as announced by Bank of America on the first Business Day
following the date upon which the event occurs requiring reference to the Prime
Rate and adjusted thereafter on the first day of each rate change or, if less,
the maximum rate permitted by applicable law.
"Simulated Depletion Deductions" means the simulated depletion
allowance computed by the Partnership with respect to its oil and gas properties
pursuant to Section 1.704-1(b)(2)(iv)(k)(2) of the Treasury Regulations. In
computing such amounts, the General Partner shall have complete and absolute
discretion to make any and all permissible elections.
"Simulated Gains" or "Simulated Losses" means the simulated gains or
simulated losses computed by the Partnership with respect to its oil and gas
properties pursuant to Section 1.704-1(b)(2)(iv)(k)(2) of the Treasury
Regulations. In computing such simulated gains or losses, the General Partner
shall have complete and absolute discretion to make any and all permissible
elections.
"Tax Matters Partner" shall mean as defined in Section 15.7 hereof.
"Transfer Restriction Agreement" shall mean the Transfer Restriction
Agreement of even date herewith by and among the Company, the Partnership,
Xxxxxx, XXX, SAOG, Peak LP and Xxxxx XX, a copy of which is attached hereto as
Exhibit A.
"Treasury Regulations" shall mean the Income Tax Regulations, including
Temporary Regulations, promulgated under the Code, as such regulations may be
amended from time to time (including corresponding provisions of succeeding
regulations).
II. NAME, PRINCIPAL OFFICE, REGISTERED OFFICES AND AGENTS,
TERM, STATUS OF MEMBERS AND TAX STATUS
Section 2.1. Name of Partnership. The name of the Partnership is
Dorchester Minerals Management LP.
Section 2.2. Principal Office. The location of the principal office of
the Partnership where records are to be kept or made available shall be 0000 Xxx
Xxxx Xxxxxx, Xxxxxx, Xxxxx 00000. The principal office of the Partnership may be
changed by the General Partner.
Section 2.3. Registered Offices and Agents. The location of the
registered office of the Partnership in the State of Delaware shall be c/o The
Corporation Trust Company, Corporation
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Trust Center, 0000 Xxxxxx Xxxxxx, Xxx Xxxx xx Xxxxxxxxxx, Xxxxxx of Newcastle,
Delaware. The General Partner shall establish such other registered offices and
appoint such other registered agents as it deems necessary or appropriate for
the business of the Partnership. The registered offices and agents of the
Partnership may be changed from time to time by the General Partner.
Section 2.4. Term. The Partnership shall have a perpetual existence
unless an Event of Dissolution (as defined in Section 16.1 hereof) shall occur
and the Partnership is not continued as hereinafter provided.
Section 2.5. Status of Partners. Upon the Effective Date the Partners
shall constitute all of the partners of the Partnership.
Section 2.6. Tax Status. The Partnership shall be operated such that it
will be classified as a "partnership" for federal and, as determined by the
General Partner, state income tax purposes. No action shall be made to treat
either Operating Subsidiary as a corporation for federal income tax purposes and
each Operating Subsidiary will be disregarded and its assets treated as owned by
the Partnership for federal income tax purposes.
III. CHARACTER OF BUSINESS
Section 3.1. Purposes of the Company. The purposes of the Company are
to (i) act as the general partner of Dorchester Minerals, (ii) provide or cause
to be provided certain management and administrative services to Dorchester
Minerals, and (iii) own oil, gas and other mineral interests and other
properties through its subsidiary Dorchester Operating LP, and conduct
operations with respect thereto. The Partnership may accomplish its purposes
through the agency of its own employees and independent contractors and/or the
members, managers, officers, employees, agents and independent contractors of
its Partners or any subsidiary of the Partnership, including, but not limited
to, Dorchester Operating LLC and Dorchester Operating LP.
IV. FORMATION AND FOREIGN REGISTRATION
Section 4.1. Formation. The Partnership was formed as a Delaware
limited partnership by the filing of the Certificate under and pursuant to the
Act with the Secretary of State of the State of Delaware on December 12, 2001.
Upon the Effective Date, the Partnership is hereby continued upon the terms set
forth herein.
Section 4.2. Foreign Registration. The Partnership shall register to
conduct business in the State of Texas and such other states and jurisdictions
as the General Partner deems appropriate.
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V. CAPITAL CONTRIBUTIONS
Section 5.1. Initial Contributions. Upon the execution of the Original
Agreement, each Partner made an initial capital contribution in the amount set
forth on Schedule I hereto. Contemporaneously with the execution by such Partner
of this Agreement, each Partner shall make the additional contribution required
of such Partner pursuant to the
Contribution Agreement, which shall be credited
to the Capital Account of such Partner, which the Partners agree constitutes the
net fair market value of the property contributed by such Partner to the capital
of the Partnership as contemplated by Section 12.4 hereof.
Section 5.2. Subsequent Contributions. All subsequent contributions
require the consent of all the Partners. No Partner shall be required to make
any subsequent contributions to the Partnership without the consent of all the
Partners.
Section 5.3. Return of Contributions. A Partner is not entitled to the
return of any part of its capital contributions or to be paid interest in
respect of either its Capital Account or its capital contributions. An unrepaid
capital contribution is not a liability of the Partnership or of any Partner. A
Partner is not required to contribute or to lend any cash or property to the
Partnership to enable the Partnership to return any Partner's capital
contribution.
Section 5.4. Advances by Partners. If the Partnership does not have
sufficient cash to pay its obligations, any Partner(s) that may agree to do so
may advance all or part of the needed funds to or on behalf of the Partnership
if the Consent of the General Partner is obtained. An advance described in this
Section 5.4 constitutes a loan from the Partner to the Partnership, bears
interest at the Prime Rate from the date of the advance until the date of
repayment, and is not a capital contribution.
VI. RIGHTS, POWERS AND OBLIGATIONS OF PARTNERS
Section 6.1. Partners' Fees and Reimbursement of Expenses. Except as
otherwise provided in Section 6.3 hereof, the Partners shall not be paid any
fees or other compensation whatsoever for services, whether ordinary or
extraordinary, foreseen or unforeseen, rendered to or for the benefit of the
Partnership. However, all expenses incurred by the General Partner in connection
with the performance of its duties hereunder or for and on behalf of the
Partnership in connection with the business of the Partnership (including,
without limitation, charges for legal, accounting, data processing,
administrative, executive, tax and other services rendered by employees of the
General Partner) will be paid or promptly reimbursed by the Partnership. Nothing
contained in this Section 6.1 is intended to affect the Ownership Interest or
Ownership Percentage of any Partner or the amount that may be payable to any
Partner by reason of its interest in the Partnership.
Section 6.2. Duties of Partners/Other Activities. The relationship
existing pursuant to this Agreement shall not prohibit any Partner or any Person
which is a member, manager, officer, director, parent, subsidiary or Affiliate
of a Partner, or any Person in which a Partner or the members, managers,
officers, directors, parent, subsidiaries or Affiliates of a Partner may have an
interest, from engaging in any other business, investment or profession, except
to the extent restricted herein or in a separate written agreement, including
but not limited to the Dorchester
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Minerals Limited Partnership Agreement, the Limited Liability Company Agreement
and the Business Opportunities Agreement made by and among the Partnership,
Dorchester Minerals, the General Partner, SAM, Vaughn, SAOG, P.A. Peak, Inc., a
Delaware corporation, and Xxxxx X. Xxxxx, Inc., a Delaware corporation dated as
of December 13, 2001 (the "Business Opportunities Agreement"). Neither the
Partnership nor any of the Partners shall have any rights by virtue of this
Agreement in or to any of such businesses, professions or investments, or in or
to any income or profit derived therefrom.
Section 6.3. Dealing with Related Persons. The Partnership may employ
or retain a Partner or an Affiliate of a Partner to render or perform a service,
may contract to buy property or services from or sell property or services to a
Partner or any such Affiliate, and may otherwise deal with such Partner or any
such Affiliate; provided, however, that if the Partnership employs, retains or
contracts with a Partner or an Affiliate thereof, the charges made for services
rendered and materials furnished by such Partner or Affiliate shall be a
reasonable amount comparable to the amount that would have been charged by
others in the same line of business and not so related, and such relationship
and charges shall be promptly disclosed in writing to the other Partners.
Section 6.4. Liability of Partners. No Partner shall be liable,
responsible, or accountable in damages or otherwise to any other Partner or the
Partnership for any act performed by it within the scope of the authority
conferred on it by this Agreement, or made in good faith, except such liability,
if any, as it may have for Disabling Conduct.
Section 6.5. No Resignation. Except for assignments, sales or other
transfers of a Partner's entire Ownership Interest made in compliance with
Article XIV hereof, no Partner shall have the right to resign or withdraw from
the Partnership prior to the dissolution and winding up of the Partnership,
without prior written consent of the General Partner. Any Partner who resigns or
withdraws from the Partnership in violation of the foregoing provision or who
has resigned or withdrawn from the Partnership in a manner not expressly
permitted herein, shall be liable to the Partnership and the Partners for any
damages sustained by reason of such resignation or withdrawal.
VII. THE GENERAL PARTNER
Section 7.1. Powers. The business and affairs of the Partnership shall
be managed by or under the direction of the General Partner, which may exercise
all such powers of the Partnership and do all such lawful acts and things as are
not by non-waivable provisions of the Act or by the Certificate or by this
Agreement directed or required to be exercised and done by the Limited Partners.
The General Partner is authorized on behalf of the Partnership, consistent with
the other provisions of this Agreement:
(a) To enter into and carry out contracts and agreements
related to the operation of the Partnership (including, but not limited
to, contracts and agreements for the purchase and sale of assets, the
incurrence of indebtedness of the Partnership or any of its Operating
Subsidiaries);
(b) To bring and defend actions at law or in equity;
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(c) To manage and operate all of the assets of the
Partnership;
(d) To discharge, employ or retain, on behalf of the
Partnership, such persons, firms, or corporations as may be necessary
in the operation and management of the business of the Partnership,
including, without limitation, accountants and attorneys; and
(e) To undertake any other act or action to conduct the
affairs of the Partnership consistent with this Agreement.
Section 7.2. No Removal. The General Partner shall not be subject to
removal by the Limited Partners.
VIII. THE LIMITED PARTNERS
Section 8.1. No Authority Vested in Limited Partners. Except for such
matters, if any, as by the non-waivable provisions of the Act or by the
Certificate or by this Agreement are directed or required to be exercised and
done by the Limited Partners, the Limited Partners shall have no authority to
act on behalf of or bind the Partnership or to vote on, approve or consent to
any matter. The Limited Partners shall have no authority to remove the General
Partner.
Section 8.2. No Meetings. There shall be no meetings of the Partners or
the Limited Partners. The Limited Partners shall take action they are required
or permitted to take solely through written consents in the manner described in
Section 8.3 below.
Section 8.3. Action by Written Consent Without a Meeting. Any Limited
Partner action required or permitted by applicable law, the Certificate of
Limited Partnership, or this Agreement shall be taken by consent in writing,
setting forth the action so taken, signed by two-thirds (2/3) of the Limited
Partners on a per capita basis, unless otherwise required by law. Any such
written consent does not have to be unanimous (unless the action that is
approved in such written consent would require the unanimous approval of all
Limited Partners). Every written consent must bear the date of signature of each
Limited Partner who signs the consent. No written consent shall be effective to
take the action that is the subject of the consent unless, within sixty (60)
days after the date of the earliest dated consent delivered to the Partnership
in the manner required by this Section 8.3, a consent or consents signed by the
required Limited Partners are delivered to the Partnership by delivery to its
registered office, its principal place of business, or an officer or agent of
the Partnership having custody of the books in which proceedings of meetings of
Limited Partners are recorded. Delivery shall be by hand or certified or
registered mail, return receipt requested or confirmed telefax communication.
Delivery to the Partnership's principal place of business shall be addressed to
the General Partner of the Partnership. Prompt notice of the taking of any
action by Limited Partners without a meeting by less than unanimous written
consent shall be given to those Limited Partners who did not consent in writing
to the action.
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IX. NOTICES
Section 9.1. Methods of Giving Notice. Whenever any notice is required
to be given to any Partner or Manager under the provisions of any applicable
law, the Certificate of Limited Partnership or this Agreement, it shall be given
in writing and delivered personally or delivered by facsimile communication
("telefax") (or, with the approval of all such Partners, via telephone or
electronic mail) to such Partners at such address (and at such member facsimile)
as appears on the books of the Partnership, and such notice shall be deemed to
be given at the time the recipient actually receives the notice in the case of
personal delivery, when the sender receives electronic confirmation of delivery
with respect to any notice given by facsimile communication, when the sender
actually speaks to the recipient in the case of telephonic notice or when the
recipient reads the message in the case of electronic mail.
Section 9.2. Waiver of Notice. Whenever any notice is required to be
given to any Partner under the provisions of any applicable law, the Certificate
of Limited Partnership or this Agreement, a waiver thereof in writing signed by
the person or persons entitled to said notice, whether before or after the time
stated therein, shall be deemed equivalent to the giving of such notice.
X. OFFICERS
Section 10.1. Officers. The General Partner may designate one or more
individuals to serve as officers of the Partnership. The Partnership shall have
such officers as the General Partner may from time to time determine, which
officers may (but need not) include a President, a Chief Executive Officer, a
Chief Operating Officer, a Chief Financial Officer, one or more Vice Presidents
(and in case of each such Vice President, with such descriptive title, if any,
as the General Partner shall deem appropriate), a Secretary, a Treasurer, a
Controller and one or more Assistant Secretaries and Assistant Treasurers. Any
two or more offices may be held by the same person.
Section 10.2. Salaries. No person shall receive any compensation in
such person's capacity as an elected officer. However, the General Partner may
authorize the Partnership to pay reasonable and customary compensation to any
such officer for services provided as an employee of the Partnership or of an
Operating Subsidiary, subject to the limitations in Section 6.3 relating to
transactions with Affiliates.
Section 10.3. Term, Removal and Vacancies. Each officer of the
Partnership shall hold office until his successor is chosen and qualified or
until his death, resignation, or removal. Any officer may resign at any time
upon giving written notice to the Partnership. Any officer may be removed by the
General Partner with or without cause, but such removal shall be without
prejudice to the contract or other legal rights, if any, of the person so
removed. Election or appointment of an officer shall not of itself create
contract rights. Any vacancy occurring in any office of the Partnership by
death, resignation, removal or otherwise shall be filled by the General Partner.
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XI. INDEMNIFICATION
Section 11.1. Right to Indemnification. Subject to the limitations and
conditions set forth in this Article XI, each Person who was or is made a party
or is threatened to be made a party to or is involved in any threatened, pending
or completed action, suit or proceeding, whether civil, criminal,
administrative, arbitrative or investigative (a "Proceeding"), or any appeal in
such a Proceeding or any inquiry or investigation that could lead to such a
Proceeding, by reason of the fact that he or she, or a Person of whom he or she
is the legal representative, is or was a Partner or officer of the Partnership
or while a Partner or officer of the Partnership is or was serving at the
request of the Partnership as a partner, director, officer, manager, member,
venturer, proprietor, trustee, employee, agent, or similar functionary of
another foreign or domestic limited liability company, corporation, partnership,
joint venture, sole proprietorship, trust, employee benefit plan or other
enterprise (a "Covered Person"), shall be indemnified by the Partnership to the
fullest extent permitted by the Act, as the same exists or may be amended (but,
in the case of any such amendment, only to the extent that such amendment
permits the Partnership to provide broader indemnification rights than said law
permitted the Partnership to provide prior to such amendment) against judgments,
penalties (including excise and similar taxes and punitive damages), fines,
settlements and reasonable expenses (including, without limitation, attorneys'
fees) actually incurred by such Person in connection with such Proceeding, and
indemnification under this Section 11.1 shall continue as to a Person who has
ceased to serve in the capacity that initially entitled such Person to indemnity
under this Section. Such actions covered by such indemnification shall include
those brought by a Partner or the Partnership. The rights granted pursuant to
this Article XI shall be deemed contract rights, and no amendment, modification
or repeal of this Article XI shall have the effect of limiting or denying any
such rights with respect to actions taken or Proceedings arising prior to any
such amendment, modification or repeal. IT IS EXPRESSLY ACKNOWLEDGED THAT THE
INDEMNIFICATION PROVIDED IN THIS ARTICLE XI COULD INVOLVE INDEMNIFICATION FOR
NEGLIGENCE OR UNDER THEORIES OF STRICT LIABILITY; provided, however, that
notwithstanding the foregoing or any other provision of this Agreement, the
Partnership shall not provide indemnification to any Person in respect of any
Disabling Conduct. The negative disposition of any Proceeding by judgment,
order, settlement, conviction or upon a plea of nolo contendere, or its
equivalent, shall not, of itself, create a presumption that the Covered Person
acted in a manner contrary to the standard set forth in this Section.
Section 11.2. Advance of Expenses. The right to indemnification
conferred in this Article XI shall include the right to be paid or reimbursed by
the Partnership the reasonable expenses incurred by a Person of the type
entitled to be indemnified under Section 11.1 or 11.3 who was, is or is
threatened to be made a named defendant or respondent in a Proceeding in advance
of the final disposition of the Proceeding and without any determination as to
the Person's ultimate entitlement to indemnification; provided, however, that
the payment of such expenses incurred by any such Person in advance of the final
disposition of a Proceeding shall be made only upon the delivery to the
Partnership of a written affirmation by such Person of his good faith belief
that he has met the standard of conduct necessary for indemnification under
Section 11.1 or 11.3 and a written undertaking, by or on behalf of such Person,
to repay all amounts so advanced if it shall ultimately be determined that such
indemnified Person is not entitled to be indemnified under Section 11.1 or 11.3.
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Section 11.3. Indemnification of Employees and Agents. The Partnership
may indemnify and advance expenses to any employee or agent of the Partnership
to the same extent permitted under Section 11.1 for Covered Persons. In
addition, the Partnership may (by action of the General Partner) indemnify and
advance expenses to any Person whether or not he is an employee or agent of the
Partnership but who is or was serving at the request of the Partnership as a
manager, director, officer, partner, venturer, proprietor, trustee, employee,
agent or similar functionary of another foreign or domestic limited liability
company, corporation, partnership, joint venture, sole proprietorship, trust,
employee benefit plan or other enterprise against any liability asserted against
him and incurred by him in such a capacity or arising out of his status as such
a Person, to the same extent permitted under Section 11.1 for Covered Persons.
Section 11.4. Appearance as a Witness. Notwithstanding any other
provision of this Article XI the Partnership may pay or reimburse expenses
incurred by a Partner, officer, employee or agent in connection with his
appearance as a witness or other participation in a Proceeding at a time when he
is not a named defendant or respondent in the Proceeding.
Section 11.5. Non-Exclusivity of Rights. The right to indemnification
and the advancement and payment of expenses conferred in this Article XI shall
not be exclusive of any other right a Person indemnified pursuant to this
Article XI may have or may acquire under any law (common or statutory), any
provision of the Certificate or this Agreement, action of the General Partner or
otherwise.
Section 11.6. Insurance. The Partnership may purchase and maintain
insurance, to the extent and in such amounts as the General Partner shall, in
its sole discretion, deem reasonable, to protect itself, the Partnership,
Dorchester Operating LP and/or Dorchester Operating LLC, and/or any Covered
Persons or other Persons indemnifiable under the provisions of this Article XI
against any expense, liability or loss, whether or not the Partnership would
have the power to indemnify such Person against such expenses, liability or loss
under this Article XI.
Section 11.7. Partner Notification. To the extent required by law, any
indemnification of or advance of expenses to a Person in accordance with this
Article XI shall be reported in writing to the Limited Partners within the
thirty (30)-day period immediately following the date of the indemnification or
advance.
Section 11.8. No Personal Liability. In no event may any Covered Person
subject the Limited Partners to personal liability by reason of any
indemnification of a Covered Person under this Agreement or otherwise.
Section 11.9. Interest in Transaction. A Covered Person shall not be
denied indemnification in whole or in part under this Article XI because the
Covered Person had an interest in the transaction with respect to which the
indemnification applies if the transaction is otherwise permitted by the terms
of the Governance Agreements.
Section 11.10. Successors and Assigns. The provisions of this Article
XI are for the benefit of the Covered Persons and their heirs, successors,
assigns, administrators and personal representatives and shall not be deemed to
be for the benefit of any other Persons. The
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provisions of this Section 11.10 shall not be amended in any way that would
diminish the rights of Covered Persons under this Article XI without the consent
of all Partners.
Section 11.11. Savings Clause. If all or any portion of this Article XI
shall be invalidated on any ground by any court of competent jurisdiction, then
the Partnership shall nevertheless indemnify and hold harmless any Person
indemnified pursuant to this Article XI as to costs, charges and expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
with respect to any action, suit or proceeding, whether civil, criminal,
administrative or investigative, to the fullest extent permitted by any
applicable portion of this Article XI that shall not have been invalidated and,
subject to this Article XI, to the fullest extent permitted by applicable law.
Section 11.12. Exculpation. The following exculpatory provisions shall
apply to this Agreement:
(a) General. Notwithstanding any other terms of this
Agreement, whether express or implied, or obligation or duty at law or
in equity, no Covered Person nor any officer, employee, representative
or agent of the Partnership or its Affiliates shall be liable to the
Partnership or any Partner for any act or omission (in relation to the
Partnership, this Agreement, any related document or any transaction or
investment contemplated hereby or thereby) taken or omitted in good
faith by such Person and in the reasonable belief that such act or
omission is in or is not contrary to the best interests of the
Partnership and is within the scope of authority granted to such Person
by this Agreement or the other Governance Agreements except in the
following circumstances: (i) such act or omission constitutes Disabling
Conduct or (ii) with respect to liability that may arise under any
other agreement, such act or omission constitutes a breach of that
agreement.
(b) Reliance. A Covered Person or other officer, employee,
representative or agent of the Partnership may rely and shall incur no
liability in acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report, notice, request,
consent, order, bond, debenture, paper, document, signature or writing
reasonably believed by it to be genuine, and may rely on a certificate
signed by an officer of any Person in order to ascertain any fact with
respect to such Person or within such Person's knowledge and may rely
on an opinion of counsel selected by such Covered Person or other
officer, employee, representative or agent of the Partnership with
respect to legal matters unless such Covered Person acts in bad faith.
XII. ALLOCATIONS
Section 12.1. Consent to Allocations. Each Partner as a condition of
becoming a Partner expressly consents to the following allocations as set forth
in this Article XII.
Section 12.2. Distributive Shares for Tax Purposes. There shall be
allocated to each Partner for federal income tax purposes a separate
distributive share of all Partnership income, gain, loss, deduction and credit
as follows:
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(a) Except as otherwise provided in this Article XII, Net
Profit, if any, of the Partnership (and each item thereof) for each
Fiscal Year or other period shall be allocated among the Partners pro
rata in accordance with their Ownership Percentages.
(b) Except as otherwise provided in this Article XII, Net
Loss, if any, of the Partnership (and each item thereof) for each
Fiscal Year or other period shall be allocated to the Partners pro rata
in accordance with their Ownership Percentages.
(c) The provisions of this Agreement relating to the
allocation of Gross Income, Net Profit and Net Loss are intended to
comply with the Treasury Regulations under Section 704(b) of the Code
and shall be interpreted and applied in a manner consistent with such
Treasury Regulations.
(d) Notwithstanding any other provision of this Agreement to
the contrary, if in any Fiscal Year or other period there is a net
decrease in the amount of the Partnership Minimum Gain, then each
Partner shall first be allocated items of Gross Income for such year
(and, if necessary, subsequent years) in an amount equal to such
Partner's share of the net decrease in such minimum gain during such
year (as determined under Treasury Regulations Section 1.704-2(g)(2));
provided, however, if there is insufficient Gross Income in a year to
make the allocation specified above for all Partners for such year, the
Gross Income shall be allocated among the Partners in proportion to the
respective amounts they would have been allocated above had there been
an unlimited amount of Gross Income for such year.
(e) Notwithstanding any other provision of this Agreement to
the contrary other than Section 12.2(d), if in any year there is a net
decrease in the amount of the Partner Nonrecourse Debt Minimum Gain,
then each Partner shall first be allocated items of Gross Income for
such year (and, if necessary, subsequent years) in an amount equal to
such Partner's share of the net decrease in such minimum gain during
such year (as determined under Treasury Regulations Section
1.704-2(i)(4)); provided, however, if there is insufficient Gross
Income in a Fiscal Year to make the allocation specified above for all
Partners for such year, the Gross Income shall be allocated among the
Partners in proportion to the respective amounts they would have been
allocated had there been an unlimited amount of Gross Income for such
Fiscal Year.
(f) Notwithstanding any other provision of this Agreement to
the contrary (except Sections 12.2(d) and 12.2(e) which shall be
applied first), if in any Fiscal Year or other period a Partner
unexpectedly receives an adjustment, allocation or distribution
described in Treasury Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5)
or (6), items of Gross Income shall first be allocated to Partners with
negative Capital Account balances (adjusted in accordance with Section
12.4(e)), in proportion to such negative balances, until such balances
are increased to zero.
(g) Notwithstanding the provisions of Section 12.2(b), Net
Loss (or items thereof) shall not be allocated to a Partner if such
allocation would cause or increase a negative balance in such Partner's
Capital Account (adjusted in accordance with Section
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12.4(e)) and shall be reallocated to the other Partners, subject to the
limitations of this Section 12.2(g).
(h) Any Partner Nonrecourse Deductions shall be allocated to
the Partner who bears the economic risk of loss with respect to the
Partner Nonrecourse Debt to which such deductions are attributable.
(i) Partnership Nonrecourse Deductions shall be allocated to
the Partners pro rata in accordance with their Ownership Percentages.
(j) In the event that any Gross Income, Net Loss (or items
thereof) or deductions are allocated pursuant to Sections 12.2(d)
through 12.2(i) , subsequent Gross Income, Net Profit or Net Loss (or
items thereof) will first be allocated (subject to Sections 12.2(d)
through 12.2(i)) to the Partners in a manner which will result in each
Partner having a Capital Account balance equal to that which would have
resulted had the original allocation of Gross Income, Net Loss (or
items thereof) or deductions pursuant to Sections 12.2(d) through
12.2(i) not occurred; provided, however, no allocations pursuant to
this Section 12.2(j), which are intended to offset allocations pursuant
to Section 12.2(h) and Section 12.2(i), shall be made prior to the
Fiscal Year during which there is a net decrease in Partner Nonrecourse
Debt Minimum Gain or Partnership Minimum Gain, and then only to the
extent necessary to avoid any potential economic distortions caused by
such net decrease in Partner Nonrecourse Debt Minimum Gain or
Partnership Minimum Gain, and no such allocation pursuant to this
Section 12.2(j) shall be made to the extent that the General Partner
reasonably determines that it is likely to duplicate a subsequent
mandatory allocation pursuant to Section 12.2(d) or Section 12.2(e).
(k) Unless the General Partner elects to adjust Capital
Accounts to reflect Actual Depletion Deductions pursuant to Section
1.704-1(b)(2)(iv)(k)(3) of the Treasury Regulations, the portion of the
total amount realized by the Partnership upon the taxable disposition
of a Depletable Property that represents recovery of its simulated
adjusted tax basis therein will be allocated to the Partners in the
same proportion as the aggregate adjusted tax basis of such property
was allocated to such Partners (or their predecessors in interest). If
the General Partner elects to use Actual Depletion Deductions pursuant
to Section 1.704-1(b)(2)(iv)(k)(3) of the Treasury Regulations, the
portion of the total amount realized by the Partnership upon a taxable
disposition of such property that equals the Partners' aggregate
remaining adjusted basis therein will be allocated to the Partners in
proportion to their respective remaining adjusted tax bases in such
property. Any amount realized in excess of the above amounts shall be
allocated among the Partners in accordance with their Ownership
Percentages.
(l) Notwithstanding the other provisions of this Section 12.2,
the Net Profits or Net Losses (and, if necessary, Gross Income and
items thereof) of the Partnership for the taxable year of liquidation
of the Partnership shall be allocated (and such allocations shall be
taken into account in determining the final liquidating distributions
of the Partnership), to the extent possible, in a manner such that the
Capital Accounts of the Partners immediately prior to the final
liquidating distributions stand in the ratio of their
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Ownership Percentages, so that the distribution of positive Capital
Account balances pursuant to Section 16.2 will, to the maximum extent
possible, be in the same amounts if the distribution had been made
pursuant to Ownership Percentages without regard to Section 16.2.
(m) If a Partnership interest is transferred, the Gross
Income, Net Profit or Net Loss allocable to the holder of such
Partnership interest for the then Fiscal Year shall be allocated
proportionately between the assignor and the assignee based on the
number of calendar days during such Fiscal Year for which each party
was the owner of the transferred Partnership interest, or upon some
alternative reasonable method.
Section 12.3. Code Section 704(c). In accordance with Code Section
704(c) and the Treasury Regulations thereunder, depletion, depreciation,
amortization, income, gain and loss, as determined for tax purposes, with
respect to any property whose Book Value differs from its adjusted basis for
federal income tax purposes shall, for tax purposes, be allocated among the
Partners so as to take account of any variation between the adjusted basis of
such property to the Partnership for federal income tax purposes and its Book
Value. The Partnership shall utilize such method to eliminate book-tax
disparities attributable to a contributed property or adjusted property as shall
be determined by the General Partner. Allocations pursuant to this Section 12.3
are solely for purposes of federal, state, and local taxes and shall not affect,
or in any way be taken into account in computing, any Partner's Capital Account
or share of Net Profit, Net Loss, other items, or distributions pursuant to any
provision of this Agreement.
Section 12.4. Capital Accounts. A separate capital account ("Capital
Account") shall be maintained for each Partner, as follows:
(a) There shall be credited to each Partner's Capital Account
the amount of any cash actually contributed by such Partner to the
capital of the Partnership (or deemed contributed pursuant to Treasury
Regulations Section 1.704-1(b)(2)(iv)(c)), the fair market value of any
property contributed by such Partner to the capital of the Partnership
(net of any liabilities secured by such property that the Partnership
is considered to assume or to take subject to under Code Section 752),
such Partner's share of the Gross Income and Net Profit (and all items
thereof) of the Partnership and such Partner's share of Simulated Gain
or, if the General Partner elects to use Actual Depletion Deductions
pursuant to Section 1.704-1(b)(2)(iv)(k)(3) of the Treasury
Regulations, such Partner's Actual Gains. There shall be charged
against each Partner's Capital Account the amount of all cash
distributed to such Partner by the Partnership (or deemed distributed
pursuant to Treasury Regulations Section 1.704-1(b) (2) (iv) (c)), the
fair market value of any property distributed to such Partner by the
Partnership (net of any liability secured by such property that the
Partner is considered to assume or take subject to under Code Section
752), such Partner's share of the Net Loss (and all items thereof) of
the Partnership and either such Partner's distributive share of
Simulated Losses and Simulated Depletion Deductions or, if the General
Partner elects to use Actual Depletion Deductions pursuant to Section
1.704-1(b)(2)(iv)(k)(3) of the Treasury Regulations, such Partner's
Actual Losses and Actual Depletion Deductions.
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(b) If the Partnership at any time distributes any of its
assets in-kind to any Partner, the Capital Account of each Partner
shall be adjusted to account for that Partner's allocable share (as
determined under this Article XII) of the Net Profit or Net Loss that
would have been realized by the Partnership had it sold the assets that
were distributed at their respective fair market values immediately
prior to their distribution, but only to the extent not previously
reflected in the Partners' Capital Accounts.
(c) Any adjustments to the tax basis (or Book Value) of
Partnership property under Code Sections 732, 734 or 743 will be
reflected as adjustments to the Capital Accounts of the Partners, only
in the manner and to the extent provided in Treasury Regulations
Section 1.704-1(b)(2)(iv)(m).
(d) Upon the decision of the General Partner, the Capital
Accounts of the Partners shall be adjusted to reflect a revaluation of
Partnership property to its fair market value on the date of adjustment
upon the occurrence of any of the following events:
(i) An increase in any new or existing Partner's
Ownership Interest resulting from the contribution of money or
property by such Partner to the Partnership,
(ii) Any reduction in a Partner's Ownership Interest
resulting from a distribution to such Partner in redemption of
all or part of its Ownership Interest, unless such
distribution is pro rata to all Partners in accordance with
their respective Ownership Interests, and
(iii) Whenever otherwise allowed under Treasury
Regulations Section 1.704-1(b)(2)(iv)(f).
The adjustments to Capital Accounts shall reflect
the manner in which the unrealized Net Profit or Net Loss inherent in
the property would be allocated if there were a disposition of the
Partnership's property at its fair market value on the date of
adjustment.
(e) For purposes of Sections 12.2(d) through 12.2(i) a
Partner's Capital Account shall be reduced by the net adjustments,
allocations and distributions described in Treasury Regulations
Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6) which, as of the end of
the Partnership's taxable year are reasonably expected to be made to
such Partner, and shall be increased by the sum of (i) any amount which
the Partner is required to restore to the Partnership upon liquidation
of its Ownership Interest in the Partnership (or which is so treated
pursuant to Treasury Regulations Section 1.704-1(b)(2)(ii)(c)) pursuant
to the terms of this Agreement or under state law, (ii) the Partner's
share (as determined under Treasury Regulations Section 1.704-2(g)(1))
of Partnership Minimum Gain, (iii) the Partner's share (as determined
under Treasury Regulations Section 1.704-2(i)(5)) of Partner
Nonrecourse Debt Minimum Gain and (iv) the Partner's share (as
determined under Section 752 of the Code) of any recourse indebtedness
of the Partnership to the extent that such indebtedness could not be
repaid out of the Partnership's assets if all of the Partnership's
assets were sold at their respective Book Values as of the end of the
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Fiscal Year or other period and the proceeds from the sales were used
to pay the Partnership's liabilities. For the purposes of clause (iv)
above, the amounts computed pursuant to clause (i) above for each
Partner shall be considered to be proceeds from the sale of the assets
of the Partnership to the extent such amounts would be available to
satisfy (directly or indirectly) the indebtedness specified in clause
(iv).
(f) For purposes of computing the Partners' Capital Accounts,
Simulated Depletion Deductions and Simulated Losses shall be allocated
among the Partners in the same proportions as they (or their
predecessors in interest) were allocated the basis of Partnership oil
and gas properties pursuant to Code Section 613A(c)(7)(D), the Treasury
Regulations thereunder, and Section 1.704-1(b)(4)(v) of the Treasury
Regulations. Simulated Gains shall be allocated among the Partners in
accordance with their Ownership Percentages, subject however to Section
12.2(l). In accordance with Code Section 613A(c)(7)(D) and the Treasury
Regulations thereunder and Section 1.704-1(b)(4)(v) of the Treasury
Regulations, the adjusted basis of all oil and gas properties shall be
shared by the Partners in proportion to the Ownership Percentages;
provided, however, that in the case of the Partnership's share of the
basis of oil and gas properties contributed or deemed to be contributed
by the Partners to Dorchester Minerals at the time of its formation,
the adjusted basis of such oil and gas properties shall be allocated
among the Partners in amounts equal to their respective shares of such
basis in the properties so contributed.
(g) It is the intention of the Partners that the Capital
Accounts of the Partnership be maintained strictly in accordance with
the Capital Account maintenance requirements of Treasury Regulations
Section 1.704-1(b). The foregoing provisions and the other provisions
of this Agreement relating to the maintenance of Capital Accounts are
intended to comply with Treasury Regulations Section 1.704-1(b), and
shall be interpreted and applied in a manner consistent with such
regulations and any amendment or successor provision thereto. The
Partners agree to make any appropriate modifications if events might
otherwise cause this Agreement not to comply with Treasury Regulations
Section 1.704-1(b).
(h) A deficit in a Partner's Capital Account shall not be
considered an asset of the Partnership, and no Partner shall be
obligated to restore or otherwise be responsible for a deficit or
negative balance in such Partner's Capital Account.
Section 12.5. Compliance with the Code. It is intended that the tax
allocations in this Article XII effect an allocation for federal income tax
purposes in a manner consistent with Sections 704 and 706 of the Code and comply
with any limitations or restrictions therein. The General Partner shall have
complete discretion to make the allocations pursuant to this Article XII and the
allocations and adjustments to Capital Accounts in any manner consistent with
Sections 704 and 706 of the Code.
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XIII. DISTRIBUTIONS
Section 13.1. "Net Cash Flow" Defined. The term "Net Cash Flow" for any
fiscal period shall mean all Partnership cash revenues resulting from the
Partnership's business plus the proceeds of sale (principal and interest),
refinancing, condemnation, insurance, or otherwise of any Partnership assets
less the amount of all expenses, reserves (for expenses reasonably anticipated
to be paid within ninety (90) days) and obligations of the Partnership
(including, without limitation, expenses and obligations to which the assets of
the Partnership are subject even if the expense or obligation was not originally
incurred by the Partnership or assumed by the Partnership) which have been paid,
which are currently due and payable or in the case of reserves, which have been
established.
Section 13.2. Distribution of Net Cash Flow. Except as provided in
Article XVI, Net Cash Flow, if any, shall be distributed to the Partners pro
rata in accordance with their Ownership Percentages at such time or times as
determined by the General Partner provided, however, that no less frequently
than quarterly, all Net Cash Flow shall be distributed in accordance with
Ownership Percentages regardless of any action by the General Partner.
Section 13.3. Amount Withheld. Notwithstanding any other provision of
this Agreement to the contrary, the General Partner is authorized to take any
action that it determines to be necessary or appropriate to cause the
Partnership to comply with any withholding or other payment requirements
established under the Code or any other federal, state or local law including,
without limitation, pursuant to Sections 1441, 1442, 1445 and 1446 of the Code.
To the extent that the Partnership is required to pay to any governmental
authority any amount resulting from either the allocation of income or gain or a
distribution to any Partner (including, without limitation, by reason of
Sections 1441, 1442, 1445 or 1446 of the Code), the amount so paid shall be
treated as a distribution of cash to the Partner and any future distributions to
which such Partner is entitled shall be reduced to the extent of any amount
treated as a distribution pursuant to this Section 13.3. The Capital Account of
the Partner for which amounts are paid over to a governmental authority pursuant
to this Section 13.3 shall be decreased by such amount paid over to the
governmental authority. A Partner who has had amounts paid over to a
governmental authority pursuant to this Section 13.3 shall be entitled to
receive any refund of any such tax, penalty, interest or other amount received
by the Partnership on account of amounts paid on behalf of the Partner pursuant
to this Section 13.3; provided, however, that the amount due such Partner shall
be reduced by any expenses of the Partnership incurred in connection with the
payment or refund of such tax, penalty, interest or other amount. The
Partnership shall have no duty or obligation to seek to obtain or collect any
refund or expend any amount to reduce the amount of any withholding, penalty,
interest or other amount otherwise payable to any governmental authority;
however, upon request by a Partner, the Partnership shall take reasonable steps
to cooperate with the Partner on a refund request provided that the Partnership
is reimbursed by the Partner for the Partnership's costs and expenses arising
from such cooperation. If at any time a Partner's interest in the Partnership is
transferred or assigned, the proposed assignee shall certify to non-foreign
status prior to the transfer or assignment of the interest. Such certifications
shall be made on a form to be provided by the General Partner. Each Partner
shall notify the Partnership if it becomes either a "Foreign Person", as defined
in Code Section 1445, or a "Foreign Partner", as defined in Code Section 1446,
within thirty (30) calendar days of such change.
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XIV. TRANSFER OF INTERESTS
Section 14.1. Transfer Restriction Agreement. Each Partner as of the
date of this Agreement is also a party to the Transfer Restriction Agreement. As
a condition to being admitted as a Partner, any other Person must become a party
to the Transfer Restriction Agreement, in accordance with the procedures set
forth therein. The Transfer Restriction Agreement, a copy of which is attached
hereto as Exhibit A, is incorporated by reference in this Agreement as if fully
set forth herein and forms a part of this Agreement.
Section 14.2. Transfers of Interests and Admission of New Partners. No
Partner may assign, sell or otherwise transfer by operation of law or otherwise,
any of its right, title or interest or any portion thereof in the Partnership
unless such Partner shall first comply with the provisions of the Transfer
Restriction Agreement applicable to the proposed assignment, sale or transfer.
In the event an Affiliate Transfer or a Familial Transfer results in the
entirety of a Partner's Ownership Interest in the Partnership being transferred,
then such transferee shall (subject to such transferee's joining in this
Agreement as provided below) be substituted for that Partner automatically upon
such transfer without the consent of the Partners, and shall have all the rights
of such Partner under this Agreement. In the event of an Affiliate Transfer or a
Familial Transfer of the entirety of a Partner's Ownership Interest divided
between or among more than one transferee, only one such transferee may become a
substituted Partner and the remainder of such transferees shall be treated as
and have the rights of assignees under the Act. The transferor shall designate
in a written notice to the Partnership and to each other Partner which such
transferee shall become the substituted Partner, and such designated transferee
shall (subject to such transferee's joining in this Agreement as provided below)
be substituted for the transferor Partner automatically upon such transfer
without the consent of the Partners with respect to the Ownership Interest
transferred to such transferee, and shall have all the rights of such
transferring Partner under this Agreement. In the event of an Affiliate Transfer
or a Familial Transfer of less than the entirety of a Partner's Ownership
Interest, such transferee shall not be a substituted Partner; but the
transferring Partner shall remain a Partner and retain all rights as a Partner
under this Agreement. Any other transferee of a Partner's Ownership Interest in
the Partnership shall be admitted to the Partnership as a substituted Partner
only if (i) the assignment, sale or other transfer pursuant to which the
transferee acquired such Ownership Interest was effected in accordance with the
Transfer Restriction Agreement and (ii) "Holder Consent" (as defined in the
Transfer Restriction Agreement) of such assignment sale or other transfer has
been obtained. If such a transferee is not admitted as a substituted Partner
under this Article XIV, it shall have none of the powers of a Partner hereunder
but shall, subject to the further provisions hereof, have only such rights of an
assignee under the Act as are consistent with this Agreement. Such assignee
shall have no voting rights or consent rights (and shall have no power to elect
officers) or any other power to participate in the management of the
Partnership, but shall be subject to the provisions of the Transfer Restriction
Agreement including, without limitation, the obligations under Articles II, IV
and V thereof, but shall not be entitled to exercise the rights of a party
thereto, including, without limitation, under Article III or VI thereof. In the
event of any permitted transfer of an interest in the Partnership pursuant to
this Article XIV and the Transfer Restriction Agreement, the interest so
transferred shall remain subject to all terms and provisions of this Agreement
and the Transfer Restriction Agreement, and the transferee shall be deemed, by
accepting the interest so transferred, to have assumed all the liabilities and
unperformed obligations, under this Agreement, the Transfer Restriction
21
Agreement or otherwise, which are appurtenant to the interest so transferred;
shall hold such interest subject to all unperformed obligations of the
transferor Partner hereunder and under the Transfer Restriction Agreement; and
shall agree in writing to the foregoing if requested by the General Partner and
shall join in and be bound by the terms of this Agreement. No assignment shall
relieve the assignor from its obligations prior to this Agreement or the
Transfer Restriction Agreement, except that if the transferee is admitted as a
Partner, the assignor shall be relieved of obligations hereunder and under the
Transfer Restriction Agreement accruing after the admission of the transferee as
a Partner.
Section 14.3. Securities Laws Restrictions. Notwithstanding any other
provision of this Article XIV, no transfer of an interest in the Partnership may
be made if the transfer would violate federal or state securities laws.
XV. BOOKS OF ACCOUNT AND PARTNERSHIP RECORDS
Section 15.1. Books of Account. At all times during the continuance of
the Partnership, the General Partner shall keep or cause to be kept, full and
true books of account in which shall be entered fully and accurately all
transactions of the Partnership.
Section 15.2. Inspection. All of the books of account of the
Partnership, together with an executed copy of this Agreement and any amendments
hereto, shall at all times be maintained at the principal office of the
Partnership and shall be open to the inspection and examination of the Partners
or their representatives. Any Partner may, at any time and from time to time, at
its own expense, cause an audit of the books of the Partnership to be made by a
certified public accountant or other person designated by such Partner.
Section 15.3. Fiscal Year and Accounting Method. The fiscal year of the
Partnership shall end on December 31 in each year, and the books of the
Partnership shall be kept on a cash method of accounting by the General Partner.
Section 15.4. Financial Reports. For each Fiscal Year during the term
hereof, the General Partner shall deliver to all the Partners as soon as
reasonably practicable after the expiration of such Fiscal Year, an unaudited
financial report of the Partnership, including a balance sheet, profit and loss
statement, and a statement showing distributions to the Partners and the
allocation among the Partners of taxable income, gains, losses, deductions and
credits of the Partnership. In addition, the General Partner shall cause to be
delivered to all the Partners monthly unaudited statements of profit and loss
prepared on a cash basis, such statements to reflect profit and loss on both a
monthly and year-to-date basis. Each such monthly statement shall be so
delivered within sixty (60) days after the end of the month to which the
statement pertains. An accounting of all items of receipt, income, profit, cost,
expense and loss shall also be prepared made by the General Partner upon the
dissolution of the Partnership.
Section 15.5. Tax Returns. The Partnership shall cause all income tax
returns to be prepared or reviewed in compliance with this Agreement (in
particular the tax allocations in Article XII hereof) by such firm of
independent certified public accountants as shall be selected by the General
Partner, shall cause such tax returns to be timely filed with the appropriate
authorities and shall cause copies thereof and all related matters needed by any
Partner for the
22
preparation of its tax returns to be promptly delivered to all Partners. Copies
of such tax returns shall be kept at the principal office of the Partnership and
shall be available for inspection by any Partner during normal business hours.
The income tax documentation to be generated hereunder shall include any
additional information reasonably requested by a Partner for the preparation of
its return.
Section 15.6. Tax Elections.
(a) In the event of a transfer of all or part of an interest
of a Partner authorized by this Agreement, the Partnership shall, upon
the request of the transferee, elect pursuant to Section 754 of the
Code to adjust the basis of Partnership property, and any basis
adjustment relating to such transfer, whether made under Section 754 of
the Code or otherwise, shall be allocated solely to the transferee;
provided, however, that each transferee shall pay the additional
bookkeeping and accounting costs which result from the basis adjustment
pertaining to such transferee. Each of the Partners shall supply to the
Partnership upon request the information necessary properly to give
effect to such election.
(b) All other federal income tax elections required or
permitted to be made by the Partnership shall be made in such manner as
may be agreed upon by the General Partner. No Partner shall take any
action or refuse to take any action which would cause the Partnership
to forfeit the benefits of any tax election previously made or agreed
to be made.
Section 15.7. Tax Matters Partner. The General Partner is hereby
designated as the "Tax Matters Partner" of the Partnership within the meaning of
Section 6231(a)(7) of the Code and shall have the power to manage and control,
on behalf of the Partnership, any administrative proceeding at the Partnership
level with the Internal Revenue Service relating to the determination of any
item of Partnership income, gain, loss, deduction, or credit for federal
income-tax purposes. The Tax Matters Partner shall comply with all statutory
provisions of the Code applicable to a "tax matters partner" and shall, without
limitation, within thirty (30) calendar days of the receipt of any notice from
the Internal Revenue Service in any administrative proceeding at the Partnership
level relating to the determination of any Partnership item of income, gain,
loss, deduction, or credit, mail a copy of such notice to each Partner.
Section 15.8. Bank Accounts. The funds of the Partnership shall be
deposited in the name of the Partnership in such bank accounts and with such
signatories as shall be selected by the General Partner. All deposits, including
security deposits, funds required to be escrowed and other funds not currently
distributable or needed in the operation of the Partnership business shall, to
the extent permitted by law, be deposited in such interest-bearing bank accounts
or invested in such financial instruments (including, without limitation, hedge
contracts and commodity contracts) as shall be approved by the General Partner.
23
XVI. DISSOLUTION, WINDING UP AND DISTRIBUTION
Section 16.1. Events of Dissolution. Each of the following shall be an
"Event of Dissolution," and unless the Partnership and its business is continued
pursuant to Section 16.5 hereof, the Partnership shall be dissolved upon the
withdrawal of the General Partner or the occurrence of any other event that
results in the General Partner ceasing to be a General Partner, without the
subsequent election of a successor general partner, which successor is hereby
authorized to continue the business of the Partnership.
The Limited Partners shall have no right to dissolve the Partnership or to vote
on or consent to any such dissolution.
Section 16.2. Dissolution and Winding Up. Notwithstanding any other
provision of this Agreement, upon the dissolution of the Partnership, the
General Partner (which term, for purposes of this Section and Section 16.4 shall
include the respective trustee, receiver or successor, if any, of either or both
thereof) shall have the responsibility for expeditiously dissolving and
liquidating the Partnership. The General Partner shall promptly proceed to wind
up the affairs of the Partnership and, after payment (or making provision for
payment) of liabilities owing to creditors, shall set up such reserves as they
deem reasonably necessary or appropriate for any contingent or unforeseen
liabilities or obligations of the Partnership. Said reserves may be paid over to
a bank or an attorney-at-law, to be held in escrow for the purpose of paying any
such contingent or unforeseen liabilities or obligations. After paying such
liabilities and setting up such reserves, the General Partner shall cause the
remaining net assets of the Partnership to be paid or distributed to the
Partners or their assigns in accordance with the positive Capital Account
balances of the Partners. At the expiration of such period as the General
Partner may deem advisable, any remaining reserves shall be paid or distributed
to the Partners or their assigns in the same manner as the preceding sentence.
No Partner shall receive any additional compensation for any services performed
pursuant to this Article XVI.
Section 16.3. Final Statement. Upon the dissolution of the Partnership,
a final certified statement of its assets and liabilities shall be prepared by
the Partnership's certified public accountants and furnished to the Partners
within ninety (90) days after such dissolution.
Section 16.4. Distribution In-Kind. If all the Partners agree that it
shall be impractical to liquidate part or all the assets of the Partnership,
then assets which they agree are not suitable for liquidation may be distributed
to the Partners in-kind, subject to the order of priority set forth in Section
16.2 hereof and, further, subject to such conditions relating to the management
and disposition of the assets distributed as the General Partner deems
reasonable and equitable. If Partnership assets are to be distributed in-kind,
then prior to any such distribution, the Capital Accounts of the Partners shall
be adjusted to reflect the manner in which the unrealized taxable income, gain,
loss and deduction inherent in such property (to the extent that such items have
not been previously reflected in the Capital Accounts) would be allocated among
the Partners if there were a taxable disposition of such property on the date of
its distribution for its then fair market value determined mutually by the
Partners.
Section 16.5. Continuation of Partnership. If dissolution occurs due to
an "event of withdrawal" (as defined in Section 17-402(a) of the Act) with
respect to the General Partner, the
24
Limited Partners hereby agree to continue the Partnership and elect a new
General Partner by limited partner consent pursuant to Section 8.3 hereof and
the Partnership automatically shall be reconstituted and the Limited Partners
and the successor General Partner shall, and hereby agree to, carry on the
business of the Partnership.
Section 16.6. Deemed Distribution and Recontribution. Notwithstanding
any other provision of this Article XVI, in the event the Partnership is
liquidated within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g) but no
Event of Dissolution has occurred, the assets of the Partnership shall not be
liquidated, the Partnership's liabilities shall not be paid or discharged, and
the Partnership's affairs shall not be wound up. Instead, the Partnership shall
be deemed to have contributed its assets in-kind to a new limited partnership,
which shall be deemed to have assumed and taken all Partnership assets subject
to all Partnership liabilities. Immediately thereafter, the Partnership shall be
deemed to have liquidated and distributed the interests in the new limited
partnership in-kind to the Partners.
XVII. MISCELLANEOUS
Section 17.1. Execution in Counterparts. This Agreement may be executed
in counterparts, all of which taken together shall be deemed one original.
Section 17.2. Address and Notice. The address of each Partner for all
purposes shall be as follows:
If to Xxxxxx:
0000 Xxx Xxxx Xxx., Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxx
Telecopy No.: (000) 000-0000
With copies to:
Xxx Xxxxxxxxxxx
Xxxxxxxx & Xxxxxx L.L.P.
0000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Telecopy No.: (000) 000-0000
If to XXX:
0000 Xxx Xxxx Xxx., Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: X. X. Xxxxx, Xx.
Telecopy No.: (000) 000-0000
25
With copies to:
Xxx Xxxxxxxxxxx
Xxxxxxxx & Knight L.L.P.
0000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Telecopy No.: (000) 000-0000
If to SAOG:
0000 Xxx Xxxx Xxx., Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxx Xxxxx XxXxxxxxx
Telecopy No.: (000) 000-0000
With copies to:
Xxx Xxxxxxxxxxx
Xxxxxxxx & Knight L.L.P.
0000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Telecopy No.: (000) 000-0000
If to Peak LP:
0000 X. Xxxxxx Xx.
Xxxxx 000 - XX00
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Peak
Telecopy No.: (000) 000-0000
With copies to:
Xxxxx X. Xxxxxx
XXXXX XXXXXXX & XXXX LLP
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000-0000
Telecopy No.: (000) 000-0000
If to Xxxxx XX:
0000 X. Xxxxxx Xx.
Xxxxx 000 - XX00
Xxxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxx
Telecopy No.: (000) 000-0000
With copies to:
Xxxxx X. Xxxxxx
XXXXX LIDDELL & XXXX LLP
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000-0000
Telecopy No.: (000) 000-0000
26
or such other address or addresses of which any Partner shall have given the
other Partners notice. Any notice shall be in accordance with Section 10.1.
Section 17.3. Partition. The Partners hereby agree that no Partner
shall have the right while this Agreement remains in effect to have the assets
of the Partnership partitioned, or to file a complaint or institute any
proceeding at law or in equity to have any Partnership asset partitioned, and
each Partner hereby waives any such right. It is the intention of the Partners
that during the term of this Agreement, the rights of the Partners as among
themselves shall be governed by the terms of this Agreement.
Section 17.4. Further Assurances. Each Partner hereby covenants and
agrees to execute and deliver such instruments as may be reasonably requested by
any other Partner to convey any interest or to take any other action required or
permitted under this Agreement.
Section 17.5. Titles and Captions. All article, section, or subsection
titles or captions contained in this Agreement or the table of contents hereof
are for convenience only and shall not be deemed part of the context of this
Agreement.
Section 17.6. Number and Gender of Pronouns. All pronouns and any
variations thereof shall be deemed to refer to the masculine, feminine, neuter,
singular or plural as the identity of the Person or Persons may require.
Section 17.7. Entire Agreement. This Agreement contains the entire
understanding between and among the Partners and supersedes any prior
understandings and agreements between and among them respecting the subject
matter of this Agreement.
Section 17.8. Amendment. This Agreement may be amended or modified only
by a written document executed by all the Partners.
Section 17.9. Exhibits and Schedules. All exhibits and schedules
referred to herein are attached hereto and made a part hereof for all purposes.
Section 17.10. Agreement Binding. This Agreement shall be binding upon
the heirs, executors, administrators, successors, and assigns of the Partners.
Section 17.11. Waiver. No failure by any Partner to insist upon the
strict performance of any covenant, duty, agreement, or condition of this
Agreement or to exercise any right or remedy consequent upon a breach thereof
shall constitute a waiver of any such breach or any other covenant, agreement,
term, or condition. Any Partner by the issuance of written notice may, but shall
be under no obligation to, waive any of its rights or any conditions to its
obligations hereunder, or any duty, obligation or covenant of any other Partner.
No waiver shall affect or alter the remainder of this Agreement but each and
every covenant, agreement, term, and condition of this Agreement shall continue
in full force and effect with respect to any other then existing or subsequent
breach thereof.
Section 17.12. Remedies. The rights and remedies of the Partners set
forth in this Agreement shall not be mutually exclusive or exclusive of any
right, power or privilege provided
27
by law or in equity or otherwise and the exercise of one or more of the
provisions hereof shall not preclude the exercise of any other provisions hereof
or of any legal, equitable or other right. Each of the Partners confirms that
damages at law may be an inadequate remedy for a breach or threatened breach of
any provision hereof. The respective rights and obligations hereunder shall be
enforceable by specific performance, injunction, or other equitable remedy, but
nothing herein contained is intended to, or shall limit or affect any rights at
law or by statute or otherwise of any Partner aggrieved as against another
Partner for a breach or threatened breach of any provision hereof, it being the
intention of this section to make clear the agreement of the Partners that the
respective rights and obligations of the Partners hereunder shall be enforceable
in equity as well as at law or otherwise.
Section 17.13. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED,
ENFORCED, AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF DELAWARE (WITHOUT
REGARD TO ITS CHOICE OF LAW PRINCIPLES).
Section 17.14. DISPUTE RESOLUTION.
(a) NEGOTIATION. THE PARTNERS SHALL ATTEMPT TO RESOLVE ANY
DISPUTE ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TERMINATION, BREACH, OR VALIDITY OF THIS AGREEMENT, PROMPTLY BY GOOD
FAITH NEGOTIATION AMONG EXECUTIVES WHO HAVE AUTHORITY TO RESOLVE THE
CONTROVERSY. ANY PARTNER MAY GIVE THE OTHER PARTNERS WRITTEN NOTICE OF
ANY DISPUTE NOT RESOLVED IN THE NORMAL COURSE OF BUSINESS. WITHIN 10
DAYS AFTER DELIVERY OF THE NOTICE, THE RECEIVING PARTNER SHALL SUBMIT
TO THE OTHERS A WRITTEN RESPONSE. THE NOTICE AND THE RESPONSE SHALL
INCLUDE (A) A STATEMENT OF THE PARTNER'S CONCERNS AND PERSPECTIVES ON
THE ISSUES IN DISPUTE, (B) A SUMMARY OF SUPPORTING FACTS AND
CIRCUMSTANCES AND (C) THE IDENTITY OF THE EXECUTIVE WHO WILL REPRESENT
THAT PARTNER AND OF ANY OTHER PERSON WHO WILL ACCOMPANY THE EXECUTIVE.
WITHIN 15 DAYS AFTER DELIVERY OF THE ORIGINAL NOTICE, THE EXECUTIVES OF
THE PARTNERS SHALL MEET AT A MUTUALLY ACCEPTABLE TIME AND PLACE, AND
THEREAFTER AS OFTEN AS THEY REASONABLY DEEM NECESSARY, TO ATTEMPT TO
RESOLVE THE DISPUTE. ALL NEGOTIATIONS PURSUANT TO THIS CLAUSE AND
CLAUSE (B) BELOW ARE CONFIDENTIAL AND SHALL BE TREATED AS COMPROMISE
AND SETTLEMENT NEGOTIATIONS FOR PURPOSES OF APPLICABLE RULES OF
EVIDENCE.
(b) MEDIATION. IF A DISPUTE HAS NOT BEEN RESOLVED BY
DISCUSSION BETWEEN OR AMONG THE PARTNERS WITHIN 20 DAYS OF THE
DISPUTING PARTNERS' NOTICE, ANY MEMBER MAY BY NOTICE TO THE OTHER
PARTNERS WITH WHOM SUCH DISPUTE EXISTS REQUIRE MEDIATION OF THE
DISPUTE, WHICH NOTICE SHALL IDENTIFY THE NAMES OF NO FEWER THAN THREE
(3) POTENTIAL MEDIATORS. EACH PARTNER AMONG WHOM THE DISPUTE EXISTS
WILL IN GOOD FAITH ATTEMPT TO AGREE UPON A MEDIATOR AND AGREES TO
PARTICIPATE IN MEDIATION
28
OF THE DISPUTE IN GOOD FAITH. IF THE PARTIES ARE UNABLE TO AGREE UPON A
MEDIATOR WITHIN FIFTEEN (15) DAYS AFTER SUCH NOTICE, THE PARTNERS AGREE
TO PROCEED TO MEDIATION UNDER THE COMMERCIAL MEDIATION RULES OF THE
AMERICAN ARBITRATION ASSOCIATION IN EFFECT ON THE DATE OF THIS
AGREEMENT. IF SUCH DISPUTE SHALL NOT HAVE BEEN RESOLVED BY MEDIATION
WITHIN THE TIME PERIOD SPECIFIED N SUBSECTION (C) BELOW, ARBITRATION
MAY BE INITIATED PURSUANT TO SUBSECTION (C) BELOW. ALL EXPENSES OF THE
MEDIATOR SHALL BE EQUALLY SHARED BY THE PARTNERS AMONG WHOM THE DISPUTE
EXISTS.
(c) BINDING ARBITRATION.
(i) ANY DISPUTE ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE BREACH, TERMINATION, OR VALIDITY OF THE
AGREEMENT WHICH HAS NOT BEEN RESOLVED BY MEDIATION WITHIN 30
DAYS OF THE INITIATION OF SUCH PROCEDURE, OR WHICH HAS NOT
BEEN RESOLVED PRIOR TO THE TERMINATION OF MEDIATION, SHALL BE
RESOLVED BY ARBITRATION IN ACCORDANCE WITH THE COMMERCIAL
ARBITRATION RULES OF THE AMERICAN ARBITRATION ASSOCIATION
("AAA") IN EFFECT ON THE DATE OF THIS AGREEMENT. IF A PARTY TO
A DISPUTE FAILS TO PARTICIPATE IN MEDIATION, THE OTHERS MAY
INITIATE ARBITRATION BEFORE EXPIRATION OF THE ABOVE PERIOD. IF
THE AMOUNT OF THE CLAIM ASSERTED BY ANY PARTY IN THE
ARBITRATION EXCEEDS $1,000,000, THE PARTNERS AGREE THAT THE
AMERICAN ARBITRATION ASSOCIATION OPTIONAL PROCEDURES FOR
LARGE, COMPLEX COMMERCIAL DISPUTES WILL BE APPLIED TO THE
DISPUTE.
(ii) THE AAA SHALL SUGGEST A PANEL OF ARBITRATORS,
EACH OF WHOM SHALL BE KNOWLEDGEABLE WITH RESPECT TO THE
SUBJECT MATTER OF THE DISPUTE. ARBITRATION SHALL BE BEFORE A
SOLE ARBITRATOR IF THE DISPUTING PARTNERS AGREE ON THE
SELECTION OF A SOLE ARBITRATOR. IF NOT, ARBITRATION SHALL BE
BEFORE THREE INDEPENDENT AND IMPARTIAL ARBITRATORS, ALL OF
WHOM SHALL BE APPOINTED BY THE AAA IN ACCORDANCE WITH ITS
RULES.
(iii) THE PLACE OF ARBITRATION SHALL BE DALLAS,
TEXAS.
(iv) THE ARBITRATOR(S) ARE NOT EMPOWERED TO AWARD
DAMAGES IN EXCESS OF COMPENSATORY DAMAGES.
(v) THE AWARD RENDERED BY THE ARBITRATORS SHALL BE IN
WRITING AND SHALL INCLUDE A STATEMENT OF THE
29
FACTUAL BASES AND THE LEGAL CONCLUSIONS RELIED UPON BY THE
ARBITRATORS IN MAKING SUCH AWARD. THE ARBITRATORS SHALL DECIDE
THE DISPUTE IN COMPLIANCE WITH THE APPLICABLE SUBSTANTIVE LAW
AND CONSISTENT WITH THE PROVISIONS OF THE AGREEMENT, INCLUDING
LIMITS ON DAMAGES. THE AWARD RENDERED BY THE ARBITRATOR(S)
SHALL BE FINAL AND BINDING, AND JUDGMENT UPON THE AWARD MAY BE
ENTERED BY ANY COURT HAVING JURISDICTION THEREOF.
(vi) ALL MATTERS RELATING TO THE ENFORCEABILITY OF
THIS ARBITRATION AGREEMENT AND ANY AWARD RENDERED PURSUANT TO
THIS AGREEMENT SHALL BE GOVERNED BY THE FEDERAL ARBITRATION
ACT, 9 U.S.C. SECTION 1-16. THE ARBITRATOR(S) SHALL APPLY THE
SUBSTANTIVE LAW OF THE STATE OF DELAWARE, EXCLUSIVE OF ANY
CONFLICT OF LAW RULES.
(vii) EACH PARTNER IS REQUIRED TO CONTINUE TO PERFORM
ITS OBLIGATIONS UNDER THIS CONTRACT PENDING FINAL RESOLUTION
OF ANY DISPUTE ARISING OUT OF OR RELATING TO THIS CONTRACT,
UNLESS TO DO SO WOULD BE IMPOSSIBLE OR IMPRACTICABLE UNDER THE
CIRCUMSTANCES.
(viii) NOTHING IN THIS SECTION 17.14 SHALL LIMIT THE
PARTNERS' RIGHTS TO OBTAIN PROVISIONAL, ANCILLARY OR EQUITABLE
RELIEF FROM A COURT OF COMPETENT JURISDICTION.
(d) EXPENSES. EACH PARTY SHALL PAY ITS OWN EXPENSES OF
ARBITRATION AND THE EXPENSES OF THE ARBITRATORS SHALL BE EQUALLY
SHARED; PROVIDED, HOWEVER, IF IN THE OPINION OF THE ARBITRATORS ANY
CLAIM BY EITHER PARTY HEREUNDER OR ANY DEFENSE OR OBJECTION THERETO BY
THE OTHER PARTY WAS UNREASONABLE AND NOT MADE IN GOOD FAITH, THE
ARBITRATORS MAY ASSESS, AS PART OF THE AWARD, ALL OR ANY PART OF THE
ARBITRATION EXPENSE (INCLUDING, WITHOUT LIMITATION, REASONABLE
ATTORNEYS' FEES) OF THE OTHER PARTY AND OF THE ARBITRATORS AGAINST THE
PARTY RAISING SUCH UNREASONABLE CLAIM, DEFENSE, OR OBJECTION. NOTHING
HEREIN SET FORTH SHALL PREVENT THE PARTIES FROM SETTLING ANY DISPUTE BY
MUTUAL AGREEMENT AT ANY TIME.
Section 17.15. WAIVER. EACH PARTNER WAIVES ANY RIGHT THAT THE PARTNER
MAY HAVE TO COMMENCE ANY ACTION IN ANY COURT WITH RESPECT TO ANY DISPUTE AMONG
THE PARTNERS RELATING TO OR ARISING UNDER THIS AGREEMENT OR THE RIGHTS OR
OBLIGATIONS OF ANY PARTNER HEREUNDER, OTHER THAN AN ACTION BROUGHT TO ENFORCE
THE ARBITRATION PROVISIONS OF SECTION 17.14 HEREOF. THE PARTNERS AGREE THAT ANY
SUCH ACTION SHALL BE BROUGHT (AND VENUE FOR ANY SUCH ACTION SHALL BE
APPROPRIATE) IN DALLAS, TEXAS.
30
Section 17.16. U.S. Dollars. Any reference in this Agreement to
"dollars," "funds" or "sums" or any amounts denoted with a "$" shall be
references to United States dollars.
[FOLLOWING ARE THE SIGNATURE PAGES.]
31
IN WITNESS WHEREOF, the undersigned parties have executed this
Agreement on the ____ day of _____________, 2001.
GENERAL PARTNER:
DORCHESTER MINERALS MANAGEMENT GP LLC
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
LIMITED PARTNERS:
XXX PARTNERS, LTD.
By: XXX Partners Management, Inc., its general partner
By:
-------------------------------
X. X. Xxxxx, Xx., Secretary
XXXXXX PETROLEUM, LTD.
By: VPL (GP), LLC, its general partner
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
XXXXX XXXXX OIL & GAS, INC.
By:
----------------------------------------
Xxxxxxx Xxxxx XxXxxxxxx, Vice President
32
P.A. PEAK HOLDINGS LP, a Delaware limited partnership
By: Peak Limited Liability Company No. 1,
a Texas limited liability company, its General Partner
By:
----------------------------------------
Xxxxxxx X. Peak, President
XXXXX X. XXXXX GENERAL PARTNERSHIP,
a Delaware general partnership
By: YELAR LLC, a Texas limited liability company,
its General Partner
By:
----------------------------------------
Xxxxx X. Xxxxx, President
By: YELAR LP, a Texas limited partnership,
is General Partner
By:
----------------------------------------
Xxxxx X. Xxxxx, President
And joined in for the limited purpose of agreeing to
the substitution of Peak LP as a Limited Partner of the
Partnership in lieu of P.A. Peak, Inc.:
P. A. Peak, Inc.,
a Delaware corporation
By:
----------------------------------------
Xxxxxxx X. Peak, President
33
EXHIBIT A
Transfer Restriction Agreement
SCHEDULE I
Capital Contributions under Original Agreement
GENERAL PARTNER:
DORCHESTER MINERALS $ 1.99
MANAGEMENT GP LLC
LIMITED PARTNERS:
XXXXXX $ 576.13
XXX 576.13
SAOG 561.81
PEAK LP 136.97
XXXXX XX 136.87
---------
$1,990.00
SCHEDULE II
Additional Capital Contributions Pursuant to
Contribution Agreement
PROPERTY CONTRIBUTED FAIR MARKET VALUE
-------------------- -----------------
GENERAL PARTNER:
DORCHESTER MINERALS MANAGEMENT GP LLC
LIMITED PARTNERS:
XXXXXX
XXX
SAOG
PEAK XX
XXXXX GP
---------------------------------------------------------------------------------------
EXHIBIT C
FORM OF TRANSFER RESTRICTION AGREEMENT
TRANSFER RESTRICTION AGREEMENT
OF DORCHESTER MINERALS MANAGEMENT GP LLC
AND DORCHESTER MINERALS MANAGEMENT LP
DECEMBER 13, 2001
TABLE OF CONTENTS
PAGE
----
I. DEFINITIONS...............................................................................................1
Section 1.1. Definitions..............................................................................1
II. RESTRICTIONS ON TRANSFER..................................................................................4
Section 2.1. General Restriction on Transfer..........................................................4
Section 2.2. No Separate Transfers of Company Ownership and Partnership Ownership Interests...........4
Section 2.3. Securities Laws Restrictions.............................................................5
Section 2.4. Continuation of Restrictions After Transfer..............................................5
III. PERMITTED TRANSFERS.......................................................................................5
Section 3.1. Permitted Affiliate Transfers............................................................5
Section 3.2. Permitted Familial Transfers.............................................................5
Section 3.3. Pledges and Security Interests...........................................................6
IV. PERMITTED SALES SUBJECT TO RIGHT OF FIRST REFUSAL.........................................................6
Section 4.1. Sale of Ownership Interests..............................................................6
Section 4.2. Notice of Sale...........................................................................6
Section 4.3. Right of First Refusal...................................................................6
Section 4.4. Exercise of Option.......................................................................6
Section 4.5. Allocation of Interest Among Remaining Holders...........................................7
Section 4.6. Closing of Sale..........................................................................7
Section 4.7. Failure to Exercise Option...............................................................7
V. PURCHASE OPTIONS..........................................................................................7
Section 5.1. Purchase Events..........................................................................7
Section 5.2. Notice of Sale...........................................................................9
Section 5.3. Purchase Option..........................................................................9
Section 5.4. Exercise of Purchase Option..............................................................9
Section 5.5. Allocation of Interest Among Remaining Holders...........................................9
Section 5.6. Closing of Sale..........................................................................9
Section 5.7. Failure to Exercise Option...............................................................9
Section 5.8. Purchase Price..........................................................................10
-i-
TABLE OF CONTENTS
(CONTINUED)
PAGE
----
Section 5.9. Procedure for Appraisal and Determination of Fair Market Value..........................10
Section 5.10. Effect on Seller's Interest.............................................................10
Section 5.11. Applicability to Transferees............................................................11
VI. TAKE ALONG RIGHT.........................................................................................11
Section 6.1. Transactions Covered....................................................................11
Section 6.2. Notice..................................................................................11
Section 6.3. Election to Participate.................................................................11
Section 6.4. Title...................................................................................12
VII. OTHER PROVISIONS APPLICABLE TO TRANSFERS.................................................................12
Section 7.1. Waiver of Rights to Object..............................................................12
VIII. NOTICES..................................................................................................12
Section 8.1. Methods of Giving Notice................................................................12
Section 8.2. Waiver of Notice........................................................................12
IX. MISCELLANEOUS............................................................................................12
Section 9.1. Execution in Counterparts...............................................................12
Section 9.2. Address and Notice......................................................................12
Section 9.3. Further Assurances......................................................................14
Section 9.4. Titles and Captions.....................................................................14
Section 9.5. Number and Gender of Pronouns...........................................................14
Section 9.6. Entire Agreement........................................................................14
Section 9.7. Amendment...............................................................................14
Section 9.8. Agreement Binding.......................................................................14
Section 9.9. Waiver..................................................................................14
Section 9.10. Remedies................................................................................15
Section 9.11. GOVERNING LAW...........................................................................15
Section 9.12. DISPUTE RESOLUTION......................................................................15
Section 9.13. WAIVER..................................................................................17
Section 9.14. U.S. Dollars............................................................................18
-ii-
TRANSFER RESTRICTION AGREEMENT
OF DORCHESTER MINERALS MANAGEMENT GP LLC
AND DORCHESTER MINERALS MANAGEMENT LP
This Transfer Restriction Agreement (the "Agreement") dated as of
December 13, 2001 (the "Effective Date"), is entered into by and among
Dorchester Minerals Management LP, a Delaware limited partnership (the
"Partnership"), Dorchester Minerals Management GP LLC, a Delaware limited
liability company (the "Company"), XXX Partners, Ltd., a Texas limited
partnership ("XXX"), Xxxxxx Petroleum, Ltd., a Texas limited partnership
("Xxxxxx"), Xxxxx Xxxxx Oil & Gas, Inc., a Texas corporation ("SAOG"), P.A. Peak
Holdings LP, a Delaware limited partnership ("Peak LP") and Xxxxx X. Xxxxx
General Partnership, a Delaware general partnership ("Xxxxx XX"). Each of SAM,
Vaughn, SAOG, Peak LP and Xxxxx XX is a "Holder " and, collectively, they are
sometimes referred to as the "Holders."
WITNESSETH
WHEREAS, the Holders are the members of the Company and the limited
partners of the Partnership of which the Company is the general partner;
WHEREAS, the Amended and Restated Limited Liability Company Agreement
of Dorchester Minerals Management GP LLC (the "LLC Agreement") and the Amended
and Restated Limited Partnership Agreement of Dorchester Minerals Management LP
("Limited Partnership Agreement"), each of which has been executed and delivered
by the Holders contemporaneously with this Agreement, each contemplates that the
Holders, in their capacities as members of the Company and limited partners of
the Partnership, will become parties to this Agreement providing for certain
restrictions upon the transfer of, and certain rights to purchase and
obligations to sell, ownership interests held by the Holders in the Company and
limited partnership interests held by the Holders in the Partnership;
NOW, THEREFORE, in consideration of the mutual covenants set forth
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree
upon the terms and conditions set forth herein:
I. DEFINITIONS
Section 1.1. Definitions. The following terms shall have the following
meanings when used in this Agreement:
"AAA" means the American Arbitration Association and the office thereof
located in Dallas, Texas.
"Acceptance Notice" shall mean a notice by a Remaining Holder to a
Selling Holder that the Remaining Holder is exercising its right to purchase
Ownership Interests of the Selling Holder pursuant to Article IV or Article V,
as applicable.
1
"Affiliate" shall mean, with respect to any Person, (i) any other
Person or Group of Persons beneficially owning eighty percent (80%) or more of
the outstanding equity ownership interests of such Person, (ii) any other Person
eighty percent (80%) or more of the outstanding equity ownership interests of
which are beneficially owned by such Person or (iii) any other Person eighty
percent (80%) or more of the outstanding equity ownership interests of which are
beneficially owned by a third Person or Group of Persons who beneficially own
eighty percent (80%) or more of the outstanding voting securities of such
Person.
"Affiliate Transfer" shall have the meaning set forth in Section 3.1 of
the Agreement.
"Agreement" shall mean this Transfer Restriction Agreement.
"Beneficially own," "beneficially owned" and "beneficial ownership"
shall mean voting power which includes the power to vote, or to direct the
voting of, a security and investment power, which includes the power to dispose
or to direct the disposition of, a security.
"Business Day" shall mean any day other than Saturday or Sunday or any
other day upon which banks in Dallas, Texas are permitted or required by law to
close.
"Company" shall have the meaning set forth in the Preamble to this
Agreement.
"Company Ownership Interest" shall mean the member interest in the
Company held by a Holder.
"Effective Date" shall have the meaning set forth in the preamble to
this Agreement.
"Electing Participant" shall have the meaning set forth in Section 6.3
of this Agreement.
"Electing Purchasers" shall mean the Remaining Holders who elect to
participate in the purchase of a Selling Holder's Ownership Interest pursuant to
Article IV or Article V, as applicable.
"Familial Transfer" shall have the meaning set forth in Section 3.2 of
this Agreement.
"Family Members" shall mean as to any individual only such individual's
spouse, son(s), daughter(s), grandchildren, mother, father, aunt(s), uncle(s),
niece(s) or nephew(s) and shall include any Person so related by adoption if
adopted before age eighteen (18).
"Group of Persons" shall mean not more than five (5) Persons.
"Holder" or "Holders" shall mean SAM, Vaughn, SAOG, Peak LP, Xxxxx XX
and any assignee of all or any part of their respective interests in the Company
or the Partnership.
"Holder Consent" shall mean (i) as to a proposed transfer to another
Holder, approval by both (A) Partners owning a majority of the Partnership
Ownership Interest (measured by Partnership Ownership Percentage) and (B)
Members owning a majority of the Company Ownership Interest (measured by Company
Ownership Percentage) and (ii) as to a proposed transfer to a Person other than
another Holder, approval by both (A) Partners owning a majority
2
of the Partnership Ownership Interest (measured by Partnership Ownership
Percentage) owned by Partners not involved in the proposed transfer and (B)
Members owning a majority of the Company Ownership Interest (measured by Company
Ownership Percentage) owned by Members not involved in the proposed transfer.
Holder Consent may be given or withheld in the sole discretion of the Members
and Partners.
"LLC Agreement" shall have the meaning set forth in the Preamble to
this Agreement.
"Limited Partnership Agreement" shall have the meaning set forth in the
Preamble to this Agreement.
"Majority Seller" shall have the meaning set forth in Section 6.1
hereof.
"Member" or "Members" shall mean SAM, Vaughn, SAOG, Peak LP, Xxxxx XX
and any assignee of all or any part of their respective interests in the Company
who is admitted to the Company as a Member in conformity with the provisions of
the LLC Agreement.
"Offered Interest" shall mean a Selling Holder's Ownership Interest
that is subject to purchase under Article IV or Article V, as applicable.
"Option Period" shall mean the sixty (60) day period specified in
Section 4.3 or Section 5.3, as applicable.
"Ownership Interests" of a Holder shall mean, collectively, the
Partnership Ownership Interest and the Company Ownership Interest held by such
Holder.
"Partner" or "Partners" shall mean SAM, Vaughn, SAOG, Peak LP, Xxxxx XX
and any assignee of all or any part of their respective interests in the
Partnership who is admitted to the Partnership as a Partner in conformity with
the provisions of the Limited Partnership Agreement.
"Partnership" shall have the meaning set forth in the Preamble to this
Agreement.
"Partnership Ownership Interest" shall mean the limited partnership
interest in the Partnership held by a Holder.
"Partnership Ownership Percentage" shall mean the percentage of the
limited partnership interest in the Partnership held by a Holder and shall mean
20.5% for Xxxxxx, 20.5% for XXX, 20.0% for SAOG, 19.5% for Peak LP and 19.5% for
Xxxxx XX, until adjusted in accordance with the Limited Partnership Agreement.
"Person" shall mean an individual person, partnership, limited
partnership, limited liability company, trust, corporation or other entity or
organization.
"Pro Rata Portion" shall mean a portion of an Offered Interest
represented by a fraction, the numerator of which is the Proportionate Share of
the purchasing Holder and the denominator of which is the total of the
Proportionate Shares of all the purchasing Holders.
3
"Proportionate Share" shall mean the "Ownership Percentage" (as
determined in accordance with the LLC Agreement) of a Holder divided by the
total "Ownership Percentage" (as determined in accordance with the LLC
Agreement) of all Holders.
"Purchase Event" shall have the meaning set forth in Section 5.1
hereof.
"Purchase Event Notice" shall have the meaning set forth in Section 5.2
hereof.
"Remaining Holders" shall mean all Holders other than the Selling
Holder or, in the case of Article VI, other than the Holder or Holders
comprising the Majority Seller.
"RFR Notice" shall have the meaning set forth in Section 4.2 hereof.
"Selling Holder" shall mean a Holder whose Ownership Interest is the
subject of a sale under Article IV or a purchase option under Article V.
"Selling Party" shall have the meaning set forth in Section 6.3 hereof.
"Subject Interest" shall have the meaning set forth in Section 6.2
hereof.
"Take Along Notice" shall have the meaning set forth in Section 6.2
hereof.
"Take Along Option Period" shall have the meaning set forth in Section
6.3 hereof.
"Third Appraiser" shall have the meaning set forth in Section 5.9
hereof.
II. RESTRICTIONS ON TRANSFER
Section 2.1. General Restriction on Transfer. Except as expressly
provided to the contrary in this Agreement, no Holder may assign, sell or
otherwise transfer by operation of law or otherwise, any of its right, title or
interest or any portion thereof of such Holder's Ownership Interest unless such
Holder shall first obtain Holder Consent and comply with the requirements of
Article IV hereof. Any purported or attempted assignment, sale or transfer of
all or any part of a Holder's Ownership Interest made in violation of this
Agreement shall be null and void.
Section 2.2. No Separate Transfers of Company Ownership and Partnership
Ownership Interests. The provisions of this Section 2.2 shall apply to all
assignments, sales or other transfer of Ownership Interests, whether or not
permitted under any other provision of this Agreement. It is the intent of the
parties hereto that assignments, sales and other transfers of Company Ownership
Interests and Partnership Ownership Interests be made only as a unit so that the
ownership of the Company Ownership Interests and the Partnership Ownership
Interests are held in the same relative proportions by the Holders or other
owners thereof. Accordingly, no Holder may assign, sell or otherwise transfer
all or any portion of a Company Ownership Interest or a Partnership Ownership
Interest to any Person, including, without limitation, pursuant to an
assignment, sale or other transfer permitted under other provisions of this
Agreement, unless the Holder also simultaneously assigns, sells or transfers to
the same Person the same relative portion of his respective Partnership
Ownership Interest or Company Ownership Interest.
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Section 2.3. Securities Laws Restrictions. Notwithstanding any other
provision of this Agreement, no transfer of an Ownership Interest may be made if
the transfer would violate any federal or state securities laws. The Company or
the Partnership may require evidence satisfactory to it in its reasonable
discretion of compliance with such laws.
Section 2.4. Continuation of Restrictions After Transfer. In the event
of any permitted transfer of an Ownership Interest pursuant to this Agreement,
the interest so transferred shall remain subject to all terms and provisions of
this Agreement, including this Section 2.4, and the transferee shall be deemed,
by accepting the interest so transferred, to have assumed all the liabilities
and unperformed obligations, under this Agreement or otherwise, which are
appurtenant to the interest so transferred; shall hold such interest subject to
all unperformed obligations of the transferor Holder; and shall agree in writing
to the foregoing if requested by the Company or any Holder.
III. PERMITTED TRANSFERS
Section 3.1. Permitted Affiliate Transfers. Notwithstanding Section 2.1
hereof, but subject to Sections 2.2 and 2.3 and Article V hereof, without the
consent of the other Holders and without compliance with Articles IV or VI, any
Holder may transfer any or all of its Ownership Interest to:
(i) any Affiliate of such Holder; or
(ii) any liquidating trust or other trust if a Person
or Group of Persons who beneficially own all of the equity
ownership interests in the Holder are collectively the
beneficiaries of eighty percent (80%) or more of the assets of
such trust.
A transfer permitted under this Section 3.1 is referred to herein as an
"Affiliate Transfer".
Section 3.2. Permitted Familial Transfers. Notwithstanding Section 2.1
hereof, but subject to Sections 2.2 and 2.3 and Article V hereof, without the
consent of the other Holders and without compliance with Articles IV or VI, any
Holder may transfer any or all of its Ownership Interest to:
(i) any Family Member of such Holder or of a Person
who is the beneficial owner of a majority of the equity
ownership interests of such Holder;
(ii) any partnership, limited partnership, limited
liability company, corporation or other entity or organization
eighty percent (80%) or more of the equity ownership interests
of which are beneficially owned, collectively, by one or more
Family Member(s) of such Holder or of a Person who is the
beneficial owner of a majority of the equity ownership
interests of such Holder; or
(iii) any trust, if one or more Family Members of
such Holder or of a Person who is the beneficial owner of a
majority of the equity ownership interests in such Holder are
collectively the beneficiaries of eighty percent (80%) or more
of the assets of such trust.
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The provisions of this Section 3.2 shall not be applicable to transfers that are
also subject to Section 5.1(x) hereof. A transfer permitted under this Section
3.2 is referred to herein as a "Familial Transfer".
Section 3.3. Pledges and Security Interests. Notwithstanding Section
2.1 hereof, but subject to Sections 2.2, 2.3 and Article V hereof, without the
consent of the other Holders and without compliance with Articles IV and VI, any
Holder may pledge or grant a security interest in its Ownership Interest to a
bank or other lending institution to secure an obligation for borrowed money
created in a bona fide financing transaction (a "Pledge") provided that the
pledgee or holder of the security interest shall agree in writing, for the
benefit of the other Holders, (i) that the Ownership Interest that is the
subject of such pledge or security interest is subject to this Agreement, (ii)
to give each Member not less than sixty (60) days prior written notice of any
proposed foreclosure, sale, taking or other disposition of any Ownership
Interest pursuant to, as a result of or in connection with such Pledge, and
(iii) that the rights of the Members under Article V hereof, including, without
limitation, Sections 5.1(xii) and 5.11 thereof, shall apply to any such proposed
foreclosure, sale, taking or other disposition and to the Ownership Interest
subject to such Pledge.
IV. PERMITTED SALES SUBJECT TO RIGHT OF FIRST REFUSAL
Section 4.1. Sale of Ownership Interests. If the Selling Holder desires
to effect a Sale, as hereinafter defined, of all or a part of its Ownership
Interest to any Person other than pursuant to Sections 3.1 or 3.2 hereof, then,
in addition to obtaining Holder Consent pursuant to Section 2.1, the Selling
Holder shall comply with the provisions of this Article IV. For purposes of this
Agreement, the term "Sale" shall mean any transfer for value of any Ownership
Interests, directly or indirectly, including, without limitation, any such
transfer pursuant to a transaction, or a series of related transactions, as a
consequence of which any Ownership Interests are assigned or transferred to an
Affiliate of the transferor of such Ownership Interests, which Affiliate
simultaneously or subsequently engages in any business combination with a Person
which is not an Affiliate of the original transferor of such Ownership Interest.
Section 4.2. Notice of Sale. The Selling Holder must give written
notice (the "RFR Notice") to all Remaining Holders of the specific terms and
provisions of the proposed sale, including therewith copies of all relevant
documents and other information pertaining to the proposed transaction.
Section 4.3. Right of First Refusal. The delivery of the RFR Notice
shall automatically grant to the Remaining Holders an option to purchase the
Ownership Interest or portion thereof being offered for sale (an "Offered
Interest") on the same terms and provisions specified therein for a period of
ninety (90) days from the date of the RFR Notice (an "Option Period").
Section 4.4. Exercise of Option. The Remaining Holders shall give
written notice to the Selling Holder prior to the expiration of the Option
Period (an "Acceptance Notice"), if they desire to exercise their option to
purchase the Offered Interest.
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Section 4.5. Allocation of Interest Among Remaining Holders. The
Acceptance Notice shall specify the portion of the Offered Interest that each
Remaining Holder who elects to participate (an "Electing Purchaser") in the
purchase desires to purchase. The Electing Purchasers, collectively, may not
purchase less than all of the Offered Interest. If the Electing Purchasers
cannot agree upon the portion of the Offered Interest that each shall purchase,
each Electing Purchaser may send a separate Acceptance Notice agreeing to
purchase its Pro Rata Portion of the Offered Interest. In that case, each
Electing Purchaser shall be entitled to purchase its Pro Rata Portion of the
Company Ownership Interest and Partnership Ownership Interest comprising the
Offered Interest.
Section 4.6. Closing of Sale. The closing of the sale of the Offered
Interest to the Electing Purchasers shall take place at the principal place of
business of the Company ten (10) days after the end of the Option Period (or, if
such day is not a Business Day, the following Business Day), or at such other
place and time as agreed to by the Selling Holder and the Electing Purchasers.
Section 4.7. Failure to Exercise Option. Subject to Section 2.5 hereof,
if the right of first refusal option under this Article IV is not exercised
within the Option Period as to all of the Offered Interest, or if the Electing
Purchasers default on their obligation to purchase all of the Offered Interest,
the Selling Holder may sell or transfer all but not less than all of the Offered
Interest within ten (10) days thereafter to the prospective purchaser named in
the RFR Notice at a price and on terms no more favorable to such purchaser than
described in the RFR Notice, during which time such transfer shall be considered
a permitted transfer hereunder and the prospective purchaser a permitted
transferee hereunder. The Selling Holder shall not otherwise sell or transfer
the Offered Interest to any Person without again complying with the terms of
this Agreement.
V. PURCHASE OPTIONS
Section 5.1. Purchase Events. In the event that any of the following
(each a "Purchase Event") shall have occurred to or in respect of a Selling
Holder, the Remaining Holders shall have the right upon the terms set forth in
this Article V to purchase the entire Ownership Interest of the Selling Holder
(or, in the case of a Purchase Event pursuant to Section 5.1(x) below, such
portion of the Selling Holder's Ownership Interest as is assigned, sold, or
otherwise transferred as described in Section 5.1(x)):
(i) the Selling Holder shall make an assignment for
the benefit of creditors, commence (as the debtor) a case in
bankruptcy, or commence (as the debtor) any proceeding under
any other insolvency law; or
(ii) a case in bankruptcy or any other proceeding
under any other insolvency law is commenced against the
Selling Holder (as the debtor) and is consented to by the
Selling Holder or remains undismissed for sixty (60) days, or
the Selling Holder consents to or admits the material
allegations against it in any such case or proceeding; or
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(iii) a trustee, receiver, agent, liquidator or
sequestrator (however named) is appointed with respect to the
Selling Holder (as the debtor) and is consented to by the
Selling Holder or remains undismissed for sixty (60) days, or
the Selling Holder consents to or admits the material
allegations against it in any such case or proceeding; or
(iv) a trustee, receiver, agent, liquidator or
sequestrator (however named) is appointed or authorized to
take charge of all or substantially all of the property of the
Selling Holder for the purpose of enforcing a lien against
such property or for the purpose of general administration of
such property for the benefit of creditors and such
appointment or authorization is consented to by the Selling
Holder or is not overturned within ninety (90) days; or
(v) the Selling Holder shall suffer any writ of
attachment or execution or any similar process to be issued or
levied against the interests of the Selling Holder in the
Ownership Interest which is not released, stayed, bonded or
vacated within ninety (90) days after its issue or levy; or
(vi) the Selling Holder shall fail to perform any of
its obligations under this Agreement in a material respect and
such failure continues for a period of at least thirty (30)
days after written notice thereof from the Company, the
Partnership or any Holder; or
(vii) any attempted assignment or hypothecation by
the Selling Holder of any of its rights or interest in the
Company, the LLC Agreement, the Partnership, the Limited
Partnership Agreement or this Agreement, except as expressly
permitted by this Agreement; or
(viii) the Selling Holder shall commence to dissolve
or wind-up and liquidate the assets of its business otherwise
than in connection with a transfer permitted under Section 3.1
or 3.2; or
(ix) the Selling Holder shall become deceased or be
declared legally incompetent to administer his affairs and
either an executor, administrator or guardian of such Selling
Holder's estate has not been appointed within ninety (90) days
of such event or such Selling Holder's interest is not
transferred pursuant to a Familial Transfer within one (1)
year of such event; or
(x) as a result of a divorce, separation or other
domestic relations or family law proceeding an order is
entered purporting to assign, transfer or divide ownership of,
or to require the Selling Holder to assign, sell or otherwise
transfer, all or any interest in Selling Holder's Ownership
Interest, and either such order is not overturned within
ninety (90) days or Selling Holder has not otherwise obtained
sole ownership of the Ownership Interest within such period;
or
(xi) the Selling Holder or any Affiliate thereof, by
entry of a final judgment, order or decree of a court or
governmental agency having proper
8
jurisdiction, shall be declared guilty of a felony involving
moral turpitude, fraud or wrongdoing in connection with any
business activity.
(xii) any Person to whom a pledge or security
interest has been granted pursuant to Section 3.3 hereof gives
notice of any proposed foreclosure, sale, taking or other
disposition of any Ownership Interest of the Selling Holder or
otherwise initiates, or attempts to initiate, any exercise of
rights of foreclosure, sale, taking or other disposition with
respect to any Ownership Interest of the Selling Holder.
Section 5.2. Notice of Sale. As soon as reasonably practicable
following the occurrence of a Purchase Event, the Selling Holder shall give
written notice (the "Purchase Event Notice") of the Purchase Event to all
Remaining Holders. If the Selling Holder shall fail or refuse to give the
Purchase Event Notice, the Company may, but shall have no obligation to, give
the Purchase Event Notice.
Section 5.3. Purchase Option. During the sixty (60) day period
following receipt of the Purchase Event Notice, the Remaining Holders may elect
to exercise their right to purchase the Selling Holder's Ownership Interest (an
"Offered Interest") under this Section 5.3 (an "Option Period"). Then upon the
expiration of the Option Period such right to purchase the Selling Holder's
Ownership Interest hereunder shall terminate, unless and until another Purchase
Event shall occur with respect to the Selling Holder at which time the
provisions of this Article V shall again be applicable to such Selling Holder's
Ownership Interest.
Section 5.4. Exercise of Purchase Option. The Remaining Holders shall
give written notice to the Selling Holder prior to the expiration of the Option
Period (an "Acceptance Notice"), if they desire to exercise their option to
purchase the Offered Interest.
Section 5.5. Allocation of Interest Among Remaining Holders. The
Acceptance Notice shall specify the portion of the Offered Interest that each
Remaining Holders who elects to participate (an "Electing Purchaser") in the
purchase shall purchase. The Electing Purchasers, collectively, may not purchase
less than all of the Offered Interest. If the Electing Purchasers cannot agree
upon the portion of the Offered Interest that each shall purchase, each Electing
Purchasers may send a separate Acceptance Notice agreeing to purchase its Pro
Rata Portion of the Offered Interest. In that case, each Electing Purchaser
shall be entitled to purchase its Pro Rata Portion of the Company Ownership
Interest and Partnership Ownership Interest comprising the Offered Interest.
Section 5.6. Closing of Sale. The closing of the sale of the Offered
Interest to the Electing Purchasers shall take place at the principal place of
business of the Company thirty (30) days after the end of (i) the Option Period
(or, if such day is not a Business Day, the following Business Day), or (ii)
such longer period as may be required to complete the appraisal under Section
5.9, or at such other place and time as agreed to by the Selling Holder and the
Electing Purchaser.
Section 5.7. Failure to Exercise Option. If the purchase option under
this Article V is not exercised within the Option Period as to all of the
Offered Interest, or if the Electing
9
Purchasers default on their obligation to purchase all of the Offered Interest,
the Selling Holder shall not otherwise sell or transfer any of the Offered
Interest to any Person without again complying with the terms of this Agreement.
Section 5.8. Purchase Price. The amount of the purchase price for the
Selling Holder's Ownership Interest (unless agreed upon by the Selling Holder
and the Remaining Holders electing to participate in the purchase) shall be
determined in accordance with Section 5.9 hereof.
Section 5.9. Procedure for Appraisal and Determination of Fair Market
Value. Unless the Electing Purchasers and Selling Holder shall mutually agree
upon the value for the Offered Interest, the value of the Offered Interest shall
be determined by appraisal hereunder. The appraised value of the Offered
Interest shall be determined within thirty (30) days after selection, by a
single independent appraiser selected by agreement between the Electing
Purchasers and Selling Holder (or its estate or representative) and such
appraiser in turn may rely on other experts. If the Electing Purchasers and
Selling Holder (or its estate or representative) cannot agree on a single
independent appraiser within thirty (30) days after the delivery of the
Acceptance Notice by the Electing Purchasers to the Selling Holder, then the
Electing Purchasers, as a group, and the Selling Holder (or its estate or
representative) shall each designate an independent appraiser, which appraisers
shall meet within ten (10) days after their designation and proceed to determine
the value of the Offered Interest within thirty (30) days of such initial
meeting. If, during such thirty (30) day period, the two appraisers cannot reach
agreement on the value of the Offered Interest, then, if the higher appraisal
does not equal or exceed 105% of the lower appraisal, the arithmetic average of
the appraisals designated by the appraisers shall be deemed to be the value of
the Offered Interest; provided, however, that if the higher appraisal exceeds
105% of the lower appraisal, then the appraisers shall jointly appoint a third
appraiser (the "Third Appraiser") within ten (10) days after the expiration of
such thirty (30) day period, whereupon the appraisal that is neither the highest
nor the lowest of the three (3) appraisals shall be deemed to be the value of
the Offered Interest and be binding and conclusive on the parties hereto. If any
appraiser shall fail, refuse or become unable to act, a new appraiser shall be
appointed in his place following the same method as was originally followed with
respect to the appraiser to be replaced. If a single independent appraiser is
selected by agreement between the Electing Purchasers, as a group, and the
Selling Holder (or its estate or representative), the fees and expenses of such
appraiser shall be borne equally by such parties; if the Electing Purchasers, as
a group, and the Selling Holder (or its estate or representative) each designate
appraisers, the fees and expenses of each such designated appraiser shall be
borne by the party designating same; and if a Third Appraiser is designated, the
fees and expenses of such Third Appraiser shall be borne equally by the Electing
Purchasers and the Selling Holder (or its estate or representative). Any
appraiser designated to serve in accordance with this Section 5.9 shall be
independent of the party designating such appraiser. The determination of the
value of the Offered Interest hereunder shall be conclusive on all parties. At
any time during or following the determination of the value of the Offered
Interest by any appraiser, the Electing Purchasers may elect to terminate their
exercise of the option to purchase the Offered Interest, but in that case, the
Electing Purchasers shall pay the fees and expenses of the appraiser selected by
the Selling Holder and Third Appraiser, as well as its own appraiser.
Section 5.10. Effect on Seller's Interest. Without limiting the
generality of any other provision of this Agreement, upon the sale of the
Offered Interest under this Article V, the
10
Selling Holder, without further action, will have no rights in the Partnership
or the Company or against the Partnership or the Company or any Member or
Partner other than the right to receive payment for the Offered Interest in
accordance with this Article.
Section 5.11. Applicability to Transferees. The rights of the Remaining
Holders under this Article V shall not be affected or diminished by any
assignment, sale or transfer of an Ownership Interest effected in connection
with any Purchase Event or any order purporting to effect or to require any such
assignment, sale or transfer, and any such Ownership Interest shall remain
subject to the provisions of this Agreement irrespective of any such assignment,
sale or transfer, whether or not completed, and the assignee, purchaser or
transferee shall take subject to the provisions of this Agreement and shall be
bound thereby to the same extent as the Selling Holder.
VI. TAKE ALONG RIGHT
Section 6.1. Transactions Covered. In the event that one or more
Holders who collectively hold a majority of the Ownership Interests ("Majority
Seller") propose to transfer all or any part of its or their Ownership Interests
constituting majority of all the Ownership Interests in a single transaction or
a series of related transactions to any Person other than pursuant to an
Affiliate Transfer, a Familial Transfer or a Pledge, then such Holder or Holders
shall first comply with this Article VI in addition to compliance with Article
IV hereof.
Section 6.2. Notice. The Majority Seller shall give written notice (the
"Take Along Notice") to each Remaining Holder, contemporaneously with the RFR
Notice under Section 4.2 and, to the extent not specified therein, identifying
that portion of the Majority Seller's Ownership Interest which it desires to
transfer (the "Subject Interest"), the intended method of the transfer, the
price the Majority Seller desires to receive for the Subject Interest, the
proposed transfer date, and all other pertinent terms thereof, including, if
known, the identity of any proposed buyer or buyers of the Subject Interest.
Section 6.3. Election to Participate. Any Remaining Holder may elect to
participate in the contemplated transfer by delivering a written notice to the
Majority Seller, within sixty (60) days (the "Take-Along Option Period") after
receipt of the Take Along Notice, specifying that portion of the Remaining
Holder's Ownership Interest (which may be all of such Ownership Interest) which
such Remaining Holder elects to sell. Each such Remaining Holder who so elects
(an "Electing Participant") shall have the right to transfer in the contemplated
transaction, at the same price and on the same terms, all or any portion of its
Ownership Interest, except as limited in the following sentence. If the Electing
Participants and the Majority Seller (singularly, a "Selling Party", and
collectively, the "Selling Parties") in the aggregate elect to sell a larger
portion of the Ownership Interest than the proposed buyer or buyers wish to
purchase, then each Selling Party shall be entitled to sell to such buyer or
buyers that percentage of its Ownership Interest which is equal to the
percentage of the Ownership Interest to be so purchased by such buyer or buyers
from all the Selling Parties multiplied by a fraction the numerator of which is
the percentage of the Ownership Interest such Selling Party has specified in its
notice under the first sentence of this Section that it elects to sell (without
reference to the limitation imposed by this sentence) and the denominator of
which is the aggregate percentage of the Ownership Interests
11
all of such Selling Parties elect to sell (without reference to the limitation
imposed by this sentence).
Section 6.4. Title. The Ownership Interest proposed to be transferred
by each Majority Seller and Electing Participant shall be transferred free and
clear of all liens, claims and encumbrances of any kind (other than those
imposed by federal and state securities laws, this Agreement, the LLC Agreement
or the Limited Partnership Agreement).
VII. OTHER PROVISIONS APPLICABLE TO TRANSFERS
Section 7.1. Waiver of Rights to Object. All Holders acknowledge that
the methods provided for in this Agreement for determining the price of an
Offered Interest, a Subject Interest or an Ownership Interest are fair as to
dates used, notices, terms and in all other respects, and are administratively
and in substance superior to other methods. Each Holder waives any right that it
may have to use any other method to determine the value of any Offered Interest,
a Subject Interest or an Ownership Interest in connection with this Agreement.
VIII. NOTICES
Section 8.1. Methods of Giving Notice. Whenever any notice is required
to be given to any Holder under the provisions of any applicable law or this
Agreement, it shall be given in writing and delivered personally or delivered by
facsimile communication to such Holder at such address (and at such member
facsimile) as appears on the books of the Company, and such notice shall be
deemed to be given at the time the recipient actually receives the notice in the
case of personal delivery or the sender receives electronic confirmation of
delivery with respect to any notice given by facsimile communication.
Section 8.2. Waiver of Notice. Whenever any notice is required to be
given to any Holder under the provisions of any applicable law or this
Agreement, a waiver thereof in writing signed by the person or persons entitled
to said notice, whether before or after the time stated therein, shall be deemed
equivalent to the giving of such notice.
IX. MISCELLANEOUS
Section 9.1. Execution in Counterparts. This Agreement may be executed
in counterparts, all of which taken together shall be deemed one original.
Section 9.2. Address and Notice. The address of each Holder for all
purposes shall be as follows:
If to Xxxxxx:
0000 Xxx Xxxx Xxx., Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxx
Telecopy No.: (000) 000-0000
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With copies to:
Xxx Xxxxxxxxxxx
Xxxxxxxx & Xxxxxx L.L.P.
0000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Telecopy No.: (000) 000-0000
If to XXX:
0000 Xxx Xxxx Xxx., Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: X. X. Xxxxx, Xx.
Telecopy No.: (000) 000-0000
With copies to:
Xxx Xxxxxxxxxxx
Xxxxxxxx & Knight L.L.P.
0000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Telecopy No.: (000) 000-0000
If to SAOG:
0000 Xxx Xxxx Xxx., Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxx Xxxxx XxXxxxxxx
Telecopy No.: (000) 000-0000
With copies to:
Xxx Xxxxxxxxxxx
Xxxxxxxx & Knight L.L.P.
0000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Telecopy No.: (000) 000-0000
If to Peak LP:
0000 X. Xxxxxx Xx.
Xxxxx 000 - XX00
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Peak
Telecopy No.: (000) 000-0000
With copies to:
Xxxxx X. Xxxxxx
XXXXX XXXXXXX & XXXX LLP
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000-0000
Telecopy No.: (000) 000-0000
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If to Xxxxx XX:
0000 X. Xxxxxx Xx.
Xxxxx 000 - XX00
Xxxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxx
Telecopy No.: (000) 000-0000
With copies to:
Xxxxx X. Xxxxxx
XXXXX LIDDELL & XXXX LLP
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000-0000
Telecopy No.: (000) 000-0000
or such other address or addresses of which any Holders shall have given the
other Holders notice. Any notice shall be in accordance with Section 8.1.
Section 9.3. Further Assurances. Each Holder hereby covenants and
agrees to execute and deliver such instruments as may be reasonably requested by
any other Holder to convey any interest or to take any other action required or
permitted under this Agreement.
Section 9.4. Titles and Captions. All article, section, or subsection
titles or captions contained in this Agreement or the table of contents hereof
are for convenience only and shall not be deemed part of the context of this
Agreement.
Section 9.5. Number and Gender of Pronouns. All pronouns and any
variations thereof shall be deemed to refer to the masculine, feminine, neuter,
singular or plural as the identity of the Person or Persons may require.
Section 9.6. Entire Agreement. This Agreement, together with the LLC
Agreement and the Limited Partnership Agreement, contains the entire
understanding between and among the Holders and supersedes any prior
understandings and agreements between and among them respecting the subject
matter of this Agreement.
Section 9.7. Amendment. This Agreement may be amended or modified only
by a written document executed by all the Holders.
Section 9.8. Agreement Binding. This Agreement shall be binding upon
the heirs, executors, administrators, successors, and assigns of the Holders.
Section 9.9. Waiver. No failure by any Holder to insist upon the strict
performance of any covenant, duty, agreement, or condition of this Agreement or
to exercise any right or remedy consequent upon a breach thereof shall
constitute a waiver of any such breach or any other covenant, agreement, term,
or condition. Any Holder by the issuance of written notice may, but shall be
under no obligation to, waive any of its rights or any conditions to its
obligations hereunder, or any duty, obligation or covenant of any other Holder.
No waiver shall affect or alter the remainder of this Agreement but each and
every covenant, agreement, term, and
14
condition of this Agreement shall continue in full force and effect with respect
to any other then existing or subsequent breach thereof.
Section 9.10. Remedies. The rights and remedies of the Holders set
forth in this Agreement shall not be mutually exclusive or exclusive of any
right, power or privilege provided by law or in equity or otherwise and the
exercise of one or more of the provisions hereof shall not preclude the exercise
of any other provisions hereof or of any legal, equitable or other right. Each
of the Holders confirms that damages at law may be an inadequate remedy for a
breach or threatened breach of any provision hereof. The respective rights and
obligations hereunder shall be enforceable by specific performance, injunction,
or other equitable remedy, but nothing herein contained is intended to, or shall
limit or affect any rights at law or by statute or otherwise of any Holder
aggrieved as against another Holder for a breach or threatened breach of any
provision hereof, it being the intention of this section to make clear the
agreement of the Holder that the respective rights and obligations of the
Holders hereunder shall be enforceable in equity as well as at law or otherwise.
Section 9.11. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED,
ENFORCED, AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF DELAWARE (WITHOUT
REGARD TO ITS CHOICE OF LAW PRINCIPLES).
Section 9.12. DISPUTE RESOLUTION.
(a) NEGOTIATION. THE PARTIES SHALL ATTEMPT TO RESOLVE ANY
DISPUTE ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TERMINATION, BREACH, OR VALIDITY OF THIS AGREEMENT, PROMPTLY BY GOOD
FAITH NEGOTIATION AMONG EXECUTIVES WHO HAVE AUTHORITY TO RESOLVE THE
CONTROVERSY. ANY PARTY MAY GIVE THE OTHER PARTIES WRITTEN NOTICE OF ANY
DISPUTE NOT RESOLVED IN THE NORMAL COURSE OF BUSINESS. WITHIN 10 DAYS
AFTER DELIVERY OF THE NOTICE, THE RECEIVING PARTY SHALL SUBMIT TO THE
OTHERS A WRITTEN RESPONSE. THE NOTICE AND THE RESPONSE SHALL INCLUDE
(A) A STATEMENT OF THE PARTIES' CONCERNS AND PERSPECTIVES ON THE ISSUES
IN DISPUTE, (B) A SUMMARY OF SUPPORTING FACTS AND CIRCUMSTANCES AND (C)
THE IDENTITY OF THE EXECUTIVE WHO WILL REPRESENT THAT PARTY AND OF ANY
OTHER PERSON WHO WILL ACCOMPANY THE EXECUTIVE. WITHIN 15 DAYS AFTER
DELIVERY OF THE ORIGINAL NOTICE, THE EXECUTIVES OF THE PARTIES SHALL
MEET AT A MUTUALLY ACCEPTABLE TIME AND PLACE, AND THEREAFTER AS OFTEN
AS THEY REASONABLY DEEM NECESSARY, TO ATTEMPT TO RESOLVE THE DISPUTE.
ALL NEGOTIATIONS PURSUANT TO THIS CLAUSE AND CLAUSE (B) BELOW ARE
CONFIDENTIAL AND SHALL BE TREATED AS COMPROMISE AND SETTLEMENT
NEGOTIATIONS FOR PURPOSES OF APPLICABLE RULES OF EVIDENCE.
(b) MEDIATION. IF A DISPUTE HAS NOT BEEN RESOLVED BY
DISCUSSION BETWEEN OR AMONG THE PARTIES WITHIN 20 DAYS OF THE DISPUTING
PARTNERS' NOTICE, ANY PARTY MAY BY NOTICE TO THE
15
OTHER PARTIES WITH WHOM SUCH DISPUTE EXISTS REQUIRE MEDIATION OF THE
DISPUTE, WHICH NOTICE SHALL IDENTIFY THE NAMES OF NO FEWER THAN THREE
(3) POTENTIAL MEDIATORS. EACH PARTY AMONG WHOM THE DISPUTE EXISTS WILL
IN GOOD FAITH ATTEMPT TO AGREE UPON A MEDIATOR AND AGREES TO
PARTICIPATE IN MEDIATION OF THE DISPUTE IN GOOD FAITH. IF THE PARTIES
ARE UNABLE TO AGREE UPON A MEDIATOR WITHIN FIFTEEN (15) DAYS AFTER SUCH
NOTICE, THE PARTIES AGREE TO PROCEED TO MEDIATION UNDER THE COMMERCIAL
MEDIATION RULES OF THE AMERICAN ARBITRATION ASSOCIATION IN EFFECT ON
THE DATE OF THIS AGREEMENT. IF SUCH DISPUTE SHALL NOT HAVE BEEN
RESOLVED BY MEDIATION WITHIN THE TIME PERIOD SPECIFIED N SUBSECTION (C)
BELOW, ARBITRATION MAY BE INITIATED PURSUANT TO SUBSECTION (C) BELOW.
ALL EXPENSES OF THE MEDIATOR SHALL BE EQUALLY SHARED BY THE PARTIES
AMONG WHOM THE DISPUTE EXISTS.
(c) BINDING ARBITRATION.
(i) ANY DISPUTE ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE BREACH, TERMINATION, OR VALIDITY OF THE
AGREEMENT WHICH HAS NOT BEEN RESOLVED BY MEDIATION WITHIN 30
DAYS OF THE INITIATION OF SUCH PROCEDURE, OR WHICH HAS NOT
BEEN RESOLVED PRIOR TO THE TERMINATION OF MEDIATION, SHALL BE
RESOLVED BY ARBITRATION IN ACCORDANCE WITH THE COMMERCIAL
ARBITRATION RULES OF THE AMERICAN ARBITRATION ASSOCIATION
("AAA") IN EFFECT ON THE DATE OF THIS AGREEMENT. IF A PARTY TO
A DISPUTE FAILS TO PARTICIPATE IN MEDIATION, THE OTHERS MAY
INITIATE ARBITRATION BEFORE EXPIRATION OF THE ABOVE PERIOD. IF
THE AMOUNT OF THE CLAIM ASSERTED BY ANY PARTY IN THE
ARBITRATION EXCEEDS $1,000,000, THE PARTNERS AGREE THAT THE
AMERICAN ARBITRATION ASSOCIATION OPTIONAL PROCEDURES FOR
LARGE, COMPLEX COMMERCIAL DISPUTES WILL BE APPLIED TO THE
DISPUTE.
(ii) THE AAA SHALL SUGGEST A PANEL OF ARBITRATORS,
EACH OF WHOM SHALL BE KNOWLEDGEABLE WITH RESPECT TO THE
SUBJECT MATTER OF THE DISPUTE. ARBITRATION SHALL BE BEFORE A
SOLE ARBITRATOR IF THE DISPUTING PARTNERS AGREE ON THE
SELECTION OF A SOLE ARBITRATOR. IF NOT, ARBITRATION SHALL BE
BEFORE THREE INDEPENDENT AND IMPARTIAL ARBITRATORS, ALL OF
WHOM SHALL BE APPOINTED BY THE AAA IN ACCORDANCE WITH ITS
RULES.
(iii) THE PLACE OF ARBITRATION SHALL BE DALLAS,
TEXAS.
16
(iv) THE ARBITRATOR(S) ARE NOT EMPOWERED TO AWARD
DAMAGES IN EXCESS OF COMPENSATORY DAMAGES.
(v) THE AWARD RENDERED BY THE ARBITRATORS SHALL BE IN
WRITING AND SHALL INCLUDE A STATEMENT OF THE FACTUAL BASES AND
THE LEGAL CONCLUSIONS RELIED UPON BY THE ARBITRATORS IN MAKING
SUCH AWARD. THE ARBITRATORS SHALL DECIDE THE DISPUTE IN
COMPLIANCE WITH THE APPLICABLE SUBSTANTIVE LAW AND CONSISTENT
WITH THE PROVISIONS OF THE AGREEMENT, INCLUDING LIMITS ON
DAMAGES. THE AWARD RENDERED BY THE ARBITRATOR(S) SHALL BE
FINAL AND BINDING, AND JUDGMENT UPON THE AWARD MAY BE ENTERED
BY ANY COURT HAVING JURISDICTION THEREOF.
(vi) ALL MATTERS RELATING TO THE ENFORCEABILITY OF
THIS ARBITRATION AGREEMENT AND ANY AWARD RENDERED PURSUANT TO
THIS AGREEMENT SHALL BE GOVERNED BY THE FEDERAL ARBITRATION
ACT, 9 U.S.C. Section 1-16. THE ARBITRATOR(S) SHALL APPLY THE
SUBSTANTIVE LAW OF THE STATE OF DELAWARE, EXCLUSIVE OF ANY
CONFLICT OF LAW RULES.
(vii) EACH PARTNER IS REQUIRED TO CONTINUE TO PERFORM
ITS OBLIGATIONS UNDER THIS CONTRACT PENDING FINAL RESOLUTION
OF ANY DISPUTE ARISING OUT OF OR RELATING TO THIS CONTRACT,
UNLESS TO DO SO WOULD BE IMPOSSIBLE OR IMPRACTICABLE UNDER THE
CIRCUMSTANCES.
(viii) NOTHING IN THIS SECTION 9.12 SHALL LIMIT THE
PARTNERS' RIGHTS TO OBTAIN PROVISIONAL, ANCILLARY OR EQUITABLE
RELIEF FROM A COURT OF COMPETENT JURISDICTION.
(d) EXPENSES. EACH PARTY SHALL PAY ITS OWN EXPENSES OF ARBITRATION AND
THE EXPENSES OF THE ARBITRATORS SHALL BE EQUALLY SHARED; PROVIDED,
HOWEVER, IF IN THE OPINION OF THE ARBITRATORS ANY CLAIM BY EITHER PARTY
HEREUNDER OR ANY DEFENSE OR OBJECTION THERETO BY THE OTHER PARTY WAS
UNREASONABLE AND NOT MADE IN GOOD FAITH, THE ARBITRATORS MAY ASSESS, AS
PART OF THE AWARD, ALL OR ANY PART OF THE ARBITRATION EXPENSE
(INCLUDING, WITHOUT LIMITATION, REASONABLE ATTORNEYS' FEES) OF THE
OTHER PARTY AND OF THE ARBITRATORS AGAINST THE PARTY RAISING SUCH
UNREASONABLE CLAIM, DEFENSE, OR OBJECTION. NOTHING HEREIN SET FORTH
SHALL PREVENT THE PARTIES FROM SETTLING ANY DISPUTE BY MUTUAL AGREEMENT
AT ANY TIME.
Section 9.13. WAIVER. EACH HOLDER WAIVES ANY RIGHT THAT THE HOLDER MAY
HAVE TO COMMENCE ANY ACTION IN ANY COURT WITH RESPECT TO ANY DISPUTE AMONG THE
HOLDERS RELATING TO OR ARISING UNDER THIS
17
AGREEMENT OR THE RIGHTS OR OBLIGATIONS OF ANY HOLDER HEREUNDER, OTHER THAN AN
ACTION BROUGHT TO ENFORCE THE ARBITRATION PROVISIONS OF SECTION 9.12 HEREOF. THE
HOLDERS AGREE THAT ANY SUCH ACTION SHALL BE BROUGHT (AND VENUE FOR ANY SUCH
ACTION SHALL BE APPROPRIATE) IN DALLAS, TEXAS.
Section 9.14. U.S. Dollars. Any reference in this Agreement to
"dollars," "funds" or "sums" or any amounts denoted with a "$" shall be
references to United States dollars.
[FOLLOWING ARE THE SIGNATURE PAGES.]
18
IN WITNESS WHEREOF, the undersigned parties have executed this
Agreement on the 13th day of December, 2001.
THE COMPANY
DORCHESTER MINERALS MANAGEMENT GP LLC,
a Delaware limited liability company
By:
--------------------------------------------------
Name:
------------------------------------------------
Title:
-----------------------------------------------
THE PARTNERSHIP
DORCHESTER MINERALS MANAGEMENT LP,
a Delaware limited partnership
By: DORCHESTER MINERALS MANAGEMENT GP LLC, its general partner
By:
--------------------------------------------------
Name:
------------------------------------------------
Title:
-----------------------------------------------
THE HOLDERS
XXX PARTNERS, LTD.
By: XXX Partners Management, Inc., its general partner
By:
--------------------------------------------------
X. X. Xxxxx, Xx., Secretary
XXXXXX PETROLEUM, LTD.
By: VPL (GP), LLC, its general partner
By:
--------------------------------------------------
Name:
------------------------------------------------
Title:
-----------------------------------------------
19
XXXXX XXXXX OIL & GAS, INC.
By:
--------------------------------------------------
Xxxxxxx Xxxxx XxXxxxxxx, Vice President
P.A. PEAK HOLDINGS LP, a Delaware limited partnership
By: Peak Limited Liability Company No. 1,
a Texas limited liability company, its General Partner
By:
--------------------------------------------------
Xxxxxxx X. Peak, President
XXXXX X. XXXXX GENERAL PARTNERSHIP,
a Texas general partnership
By: YELAR GP LLC, a Texas limited liability company,
its General Partner
By:
--------------------------------------------------
Xxxxx X. Xxxxx, President
By: YELAR LP, a Texas limited partnership,
its General Partner
By:
--------------------------------------------------
Xxxxx X. Xxxxx, President
20
EXHIBIT D
PERCENTAGE INTERESTS IN DMMLLC
Percentage
Interests in
DMMLLC
------------
XXX Partners, Ltd. 20.5%
Xxxxxx Petroleum, Ltd. 20.5%
Xxxxx Xxxxx Oil & Gas, Inc. 20.0%
P.A. Peak, Inc. (P.A.
Peak Holdings LP) 19.5%
Xxxxx X. Xxxxx, Inc. (Xxxxx
X. Xxxxx General
Partnership)
19.5%
4
EXHIBIT E
FORM OF ASSIGNMENT OF PARTNERSHIP INTEREST
THIS ASSIGNMENT OF PARTNERSHIP INTEREST (this "Assignment") is made and
entered into effective this ____ day of ___________, ______, by and between
____________________, a ___________________ ("Assignor") and Dorchester Minerals
Management LP, a Delaware limited partnership ("Assignee").
WITNESSETH
[*Alternative for general partners of RRC:
WHEREAS, Assignor owns a 2% general partnership interest in the capital
and profits of Dorchester Minerals, L.P., a Delaware limited partnership (the
"Partnership"), relating solely to the assets of the Partnership previously
owned by Republic Royalty Company (the "Partnership Interest")].
[*Alternative for general partner of SAOG:
WHEREAS, Assignor owns a 4% general partnership interest in the capital
and profits of Dorchester Minerals, L.P., a Delaware limited partnership (the
"Partnership"), relating solely to the assets of the Partnership previously
owned by Spinnaker Royalty Company, L.P. (the "Partnership Interest")].
[*Alternative for general partners of DHL:
WHEREAS, Assignor owns ______________ Common Units of Dorchester
Minerals, L.P., a Delaware limited partnership (the "Partnership"), representing
limited partnership interests in the Partnership (the "Partnership Interest")].
WHEREAS, Assignee desires to acquire from Assignor and Assignor desires
to assign to Assignee, the Partnership Interest in the Partnership.
NOW, THEREFORE, in consideration of the premises, warranties and mutual
covenants set forth herein, the parties hereto agree as follows:
1. Assignment. Assignor hereby assigns to Assignee, and Assignee hereby
acquires from Assignor the Partnership Interest, including but not limited to,
that portion of the rights, title and interests of Assignor in and to the
properties (real and personal), capital, cash flow distributions and profits and
losses of the Partnership which are allocable to the Partnership Interest. From
and after the date hereof, Assignor shall have no rights, title or interests in
the Partnership. [*For DHL general partners: Assignor is delivering herewith to
Assignee the certificate representing the Partnership Interest, properly
endorsed to Assignee.]
2. Effective Date. The Assignment herein is effective as of the date
first set forth above, and from and after that date that portion of the net
profits or net losses of the Partnership allocable to the Partnership Interest
shall be credited to Assignee and Assignor shall have no interests therein or
claims thereto.
3. Future Cooperation on Subsequent Documents. Assignor and Assignee
mutually agree to cooperate at all times from and after the date hereof with
respect to the supplying of any information requested by the other regarding any
of the matters described in this Assignment, and each agrees to execute such
further deeds, bills of sale and assignments as may be reasonably requested for
the purpose of giving effect to, evidencing or giving notice of the transactions
described herein.
4. Successors and Assigns. This Assignment shall be binding upon, and
shall inure to the benefit of, the parties hereto and their respective heirs,
legal representatives, successors and assigns.
5. Modification and Waiver. No supplement, modification, waiver or
termination of this Assignment or any provisions hereof shall be binding unless
executed in writing by the parties to be bound thereby. No waiver of any of the
provisions of this Assignment shall constitute a waiver of any other provision
(whether or not similar), nor shall such waiver constitute a continuing waiver
unless otherwise expressly provided.
6. Governing Law. This Assignment shall be governed by, and construed
in accordance with the laws of, the State of Texas (without regard to principles
of conflict of laws).
7. Counterparts. This Assignment may be executed in any number of
counterparts each of which shall be an original and all of which shall together
constitute one and the same agreement.
[The next page is the signature page]
IN WITNESS WHEREOF, the parties hereto have executed this Assignment to
be effective as of the date first written above.
ASSIGNOR:
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
ASSIGNEE:
DORCHESTER MINERALS
MANAGEMENT LP
By: Dorchester Minerals Management GP LLC,
its general partner
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------