EXHIBIT 10.1

CONTRIBUTION AND EXCHANGE AGREEMENT
 
by and among
 
DORCHESTER MINERALS, L.P.
 
TIGGATOR, INC.
 
TRB MINERALS, LP
 
and
 
WEST FORK PARTNERS, L.P.
 
 
 
May 15, 2009
 
 

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TABLE OF CONTENTS
                                                                                                                        Page
 

ARTICLE 1
CLOSING; CONTRIBUTION
1
 
1.1
Closing
1
1.2
Contribution
1
1.3
Instruments of Conveyance
4
1.4
No Liabilities Assumed by the Partnership
4
1.5
Tax Consequences
4
 
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE PARTNERSHIP
5
 
2.1
Organization and Existence
5
2.2
Governing Documents
5
2.3
Capitalization of the Partnership
5
2.4
Authority Relative to this Agreement
6
2.5
Noncontravention
6
2.6
Governmental Approvals
7
2.7
Financial Statements
7
2.8
Absence of Undisclosed Liabilities
7
2.9
Absence of Certain Changes
7
2.10
Compliance With Laws
8
2.11
Brokerage Fees
8
2.12
Listing
8
2.13
SEC Filings
8
 
ARTICLE 3
REPRESENTATIONS AND WARRANTIES  OF THE CONTRIBUTORS
9
 
3.1
Organization and Existence
9
3.2
Authority Relative to this Agreement
9
3.3
Noncontravention
9
3.4
Governmental Approvals
10
3.5
Title to the Properties
10
3.6
Absence of Undisclosed Liabilities
10
3.7
Absence of Certain Changes
10
3.8
Tax Matters
10
3.9
Compliance with Laws
11
3.10
Legal Proceedings
11
3.11
Permits
11
3.12
Environmental Matters
12
3.13
Proceeds of Production
13
3.14
Commitments
13
3.15
No Alienation
13
3.16
Make-Up Rights
13
3.17
Imbalances
13
3.18
Basic Documents
14
3.19
Commitments, Abandonments or Proposals
14
3.20
Area of Mutual Interest and Other Agreements; Tax Partnerships
14
3.21
Payment of Expenses
14
3.22
Oral Contracts
15
3.23
Preferential Rights and Consents to Assign
15
3.24
No Participating Minerals
15
3.25
Brokerage Fees
15
3.26
Investment Intent
15
3.27
Disclosure
16
 
ARTICLE 4
CONDUCT OF THE CONTRIBUTORS PENDING CLOSING;  
CERTAIN ACTIONS RELATING TO CLOSING
 
16
 
4.1
Conduct and Preservation of Business of the Contributors
16
4.2
Restrictions on Certain Actions of the Contributors
16
 
ARTICLE 5
ADDITIONAL AGREEMENTS
17
 
5.1
Access to Information; Confidentiality
17
5.2
Notification of Certain Matters
17
5.3
Reasonable Best Efforts
17
5.4
Public Announcements
18
5.5
Amendment of Schedules
18
5.6
Fees and Expenses
18
5.7
Tax Reporting
18
5.8
Tax Disclosure
18
5.9
Post-Closing Assurances and Access to Records
19
5.10
NASDAQ Listing
19
 
ARTICLE 6
CONDITIONS
19
 
6.1
Conditions to Obligations of the Parties
19
6.2
Conditions to Obligation of the Contributors
19
6.3
Conditions to Obligation of the Partnership
20
 
ARTICLE 7
PRODUCTION, PROCEEDS, EXPENSES AND TAX MATTERS
21
 
7.1
Division of Ownership
21
7.2
Division of Expenses
22
7.3
Recording and Transfer Expenses
22
7.4
Taxes
22
7.5
Casualty Loss
23
7.6
Gas Imbalances
23
 
ARTICLE 8
TERMINATION, AMENDMENT AND WAIVER
23
 
8.1
Termination
23
8.2
Effect of Termination
24
8.3
Amendment
24
8.4
Waiver
24
 
ARTICLE 9
INDEMNIFICATION
25
 
9.1
Survival of Representations, Warranties, Covenants and Agreements
25
9.2
Indemnification
25
9.3
Indemnification Procedures
26
 
ARTICLE 10
MISCELLANEOUS
28
 
10.1
Notices
28
10.2
Entire Agreement
29
10.3
Binding Effect; Assignment; Third Party Benefit
29
10.4
Severability
29
10.5
Governing Law; Consent to Jurisdiction
29
10.6
Descriptive Headings
30
10.7
Gender
30
10.8
References
30
10.9
Counterparts
30
10.10
Injunctive Relief
30
 
ARTICLE 11
DEFINITIONS
31
 
11.1
Certain Defined Terms
31
11.2
Certain Additional Defined Terms
35
       
 
 
 
 
 
 
 
INDEX TO EXHIBITS AND SCHEDULES
 
 
 
Exhibits
 
   
Exhibit 1.2(a)(i)
Properties
 
Exhibit 1.3
Instruments of Conveyance
 
Exhibit 6.2(e)
Surface Use Agreement
       
Schedules
 
     
Partnership Schedules
 
 
Schedule 2.5
Noncontravention
 
Schedule 2.6
Governmental Approvals
 
Schedule 2.7
Financial Statements
 
Schedule 2.8
Absence of Undisclosed Liabilities
 
Schedule 2.9
Absence of Certain Changes
 
Schedule 2.10
Compliance With Laws
         
Contributors Schedules
 
 
Schedule 1.2(b)
Consideration for Contribution
 
Schedule 1.4
No Liabilities Assumed by the Partnership
 
Schedule 3.3
Noncontravention
 
Schedule 3.4
Governmental Approvals
 
Schedule 3.5
Title to the Properties
 
Schedule 3.6
Absence of Undisclosed Liabilities
 
Schedule 3.7
Absence of Certain Changes
 
Schedule 3.9
Compliance With Laws
 
Schedule 3.10
Legal Proceedings
 
Schedule 3.11
Permits
 
Schedule 3.12
Environmental Matters
 
Schedule 3.13
Ownership
 
Schedule 4.2(a)
Permitted Encumbrances
 

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CONTRIBUTION AND EXCHANGE AGREEMENT
 
THIS CONTRIBUTION AND EXCHANGE AGREEMENT (“Agreement”) is executed as of May 15,
2009 by and among Dorchester Minerals, L.P., a Delaware limited partnership (the
“Partnership”), Tiggator, Inc., a Texas corporation (“Tiggator”), TRB Minerals,
LP, a Texas limited partnership (“TRB Minerals”), and West Fork Partners, L.P.,
a Texas limited partnership (“West Fork Partners”).  Tiggator, TRB Minerals and
West Fork Partners are sometimes referred to individually as a “Contributor” and
collectively as the “Contributors”.
 
W I T N E S S E T H:
 
WHEREAS, the Contributors own interests in certain oil and gas properties;
 
WHEREAS, the Contributors desire to contribute all of their interests in certain
oil and gas properties and other assets to the Partnership in exchange for
Common Units; and
 
WHEREAS, the Partnership desires to accept such interests in the oil and gas
properties and other assets owned by the Contributors and the Contributors
desire to accept such Common Units.
 
NOW, THEREFORE, in consideration of the premises and the mutual covenants and
agreements herein contained, and intending to be legally bound hereby, the
parties hereto hereby agree as follows:
 
 
 
ARTICLE 1
 
CLOSING; CONTRIBUTION
 
1.1           Closing. The closing of the transactions contemplated by this
Agreement (the “Closing”) shall take place at the offices of Thompson & Knight
LLP, One Arts Plaza, 1722 Routh Street, Suite 1500, Dallas, Texas 75201, at 9:00
a.m., local time, on June 30, 2009, or at such other time or place or on such
other date as the parties hereto shall agree (the “Closing Date”).
 
1.2           Contribution.  At the Closing, and on the terms and subject to the
conditions set forth in this Agreement,
 
(a)           the Contributors shall assign, transfer, deliver and convey
(collectively, “transfer”), or cause to be transferred, to the Partnership, and
the Partnership shall acquire from the Contributors, all of the following
(collectively, the “Properties”):
 
(i)           all of the Contributors’ undivided interests in and to the Oil and
Gas and Other Minerals in, on and under the properties, rights and interests
(including without limitation the Contributors’ interests in oil, gas and any
mineral leases, royalty interests, overriding royalty interests, fee
 

 
 

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royalty interests, fee mineral interests and other interests) described in
Exhibit 1.2(a)(i), attached hereto and made a part hereof;
 
(ii)           all of the Contributors’ interests in and to all Oil and Gas
and/or Other Mineral unitization, lease pooling and/or communitization
agreements, declarations and/or orders, and in and to the properties, rights and
interests covered and the Units created thereby, as it relates to the
properties, rights and interests described in Section 1.2(a)(i);
 
(iii)           all of the Contributors’ interests in and rights under all
operating agreements, production sales contracts, processing agreements,
transportation agreements, gas balancing agreements, farm-out and/or farm-in
agreements, salt water disposal agreements, area of mutual interest agreements
and other contracts and/or agreements which cover, affect, or otherwise relate
to the properties, rights and interests described in Sections 1.2(a)(i) or (ii),
or to the operation of such properties, rights and interests or to the treating,
handling, storing, processing, transporting or marketing of Oil and Gas or Other
Minerals produced from (or allocated to) such properties, rights and interests,
as same may be amended or supplemented from time to time;
 
(iv)           all interests in all Oil and Gas and Other Minerals produced from
or allocated to the properties, rights and interests described in Sections
1.2(a)(i) or (ii), and any products processed or obtained therefrom
(collectively, the “Production”), together with (i) all proceeds of Production
(regardless of whether the severance of the Production to which such proceeds
relates occurred on, before or after the Reference Date, other than proceeds of
Production that are attributable to periods prior to the Reference Date and that
are actually received by a Contributor prior to the Reference Date), and
(ii) all liens and security interests securing payment of the proceeds from the
sale of such Production, including, but not limited to, those liens and security
interests provided for under statutes enacted in the jurisdiction in which the
Properties are located, or statutes made applicable to the Properties under
federal law (or some combination of federal and state law);
 
(v)           all interests in all payments received, or to be received, in lieu
of production from the properties, rights and interests described in Sections
1.2(a)(i) or (ii) (regardless of whether such payments accrued, and/or the
events which gave rise to such payments occurred, on, before or after the
Reference Date, other than payments attributable to periods prior to the
Reference Date and that are actually received by a Contributor prior to the
Reference Date), including, without limitation, (i) “take or pay” payments and
similar payments, (ii) payments received in settlement of or pursuant to a
judgment rendered with respect to take or pay or similar obligations or other
obligations under a production sales contract, (iii) payments received under a
gas balancing agreement or similar written
 
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 or oral arrangement, as a result of (or received otherwise in settlement of or
pursuant to judgment rendered with respect to) rights held by a Contributor as a
result of such Contributor (and/or its predecessors in title) taking or having
taken less gas from lands covered by a property right or interest described in
Sections 1.2(a)(i) or (ii), than its ownership of such property right or
interest would entitle it to receive and (iv) shut-in rental or royalty
payments;
 
(vi)           to the extent legally transferable, all interests in all
favorable contract rights and choses in action (i.e., rights to enforce
contracts or to bring claims thereunder) related to the properties, rights and
interests described in Sections 1.2(a)(i) – (v) (regardless of whether the same
arose, and/or the events which gave rise to the same occurred on, before or
after the Reference Date hereof, and further regardless of whether same arise
under contract, the law or in equity);
 
(vii)           an amount of cash in immediately available funds equal to the
cash receipts received by the Contributors during the period beginning on the
Reference Date and ending on the Closing Date (the “Contributed Cash”); and
 
(viii)           all rights, estates, powers and privileges appurtenant to the
foregoing rights, interests and properties, including without limitation
executive rights (i.e., rights to execute leases), rights to receive bonuses and
delay rentals and rights to grant pooling authority; and
 
(b)           Prior to the Closing, the Partnership shall designate American
Stock Transfer and Trust Company (the “Exchange Agent”) for the purpose of
issuing and delivering to the Contributors 1,600,000 Common Units (the “Subject
Units”) to be allocated among the Contributors in accordance with a schedule to
be provided by the Contributors to the Partnership no later than five days prior
to the Closing (the “Subject Units Allocation Schedule”).  Promptly after the
Closing, the Partnership will send, or will cause the Exchange Agent to send, to
each Contributor (i) a certificate representing that number of whole Common
Units that such member has a right to receive pursuant to this Section 1.2(b)
and (ii) a Transfer Application for use in admission of the Contributors as
limited partners in the Partnership.  Each Contributor, upon delivery to the
Partnership of a properly completed Transfer Application, will be admitted into
the Partnership as a limited partner in accordance with the Partnership
Agreement.  Prior to such time, each such party shall have the rights of an
“Assignee” under the Partnership Agreement.
 
(c)           The Properties shall not include:
 
(i)           Any and all claims and causes of action made or currently
maintained in West Fork Partners, LP v. Chesapeake Exploration L.L.C.,
 
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et al; Cause No. DC-08-11224 filed and currently pending in the 95th Judicial
District Court, Dallas County, Texas;
 
(ii)           Any claims or causes of action: (a) for losses or damages not
related to Production or the payments therefor prior to the Reference Date; (b)
arising out of acts or omissions in violation of, or related to, the Existing
Surface Use Agreements or the Mitigation Banking Instrument Agreement; (c) for
shut-in royalties paid prior to the Reference Date which were incorrectly
allocated amongst the Contributors; and (d) for royalties paid prior to the
Reference Datewhich were incorrectly allocated amongst the Contributors;
 
(iii)           The rights reserved to the lessor which relate to the use of the
surface of the Properties described in that certain Paid-up Oil and Gas Lease,
dated May 3, 2003 between West Fork Partners, L.P., Tigattor, Inc., Squaretop
Partners, L.P. and Dale Resources, L.L.C., including without limitation, the
rights which inure to the surface owner in Paragraphs 13, 14, 15, 17 (sic), 18
(sic), 19 (sic), 20 (sic), 21 (sic), 22 (sic), sub paragraphs 1, 2, 3, and 8 of
23 (sic), and 29; and
 
(iv)           The Existing Surface Use Agreements.
 
1.3           Instruments of Conveyance.  In order to effectuate the transfer of
the Properties contemplated by Section 1.2, at the Closing, each Contributor
shall execute and deliver, or cause to be executed and delivered to the
Partnership, dated as of the Closing Date, the deeds and conveyances
substantially in the form attached hereto as Exhibit 1.3 (the “Conveyances”) and
such deeds (in reasonable and local customary form and describing the
Properties) and other bills of sale, certificates of title and other documents
or instruments of assignment, transfer, or conveyance as the Partnership shall
reasonably deem necessary or appropriate to vest in or confirm to the
Partnership good and marketable title to the Properties, which shall be
transferred at Closing.
 
1.4           No Liabilities Assumed by the Partnership.  Except for the
contracts set forth on Schedule 1.4 and all liabilities, commitments and
obligations included in and evidenced by the terms of such contracts, the
Partnership shall not assume or take title to the Properties subject to, or in
any way be liable or responsible for any liabilities, contracts, commitments and
other obligations of any Contributor.  Notwithstanding anything to the contrary
contained herein, the Partnership shall not be liable to any Contributor for any
claims relating to the matters set forth in Section 1.2(c) for the acts or
omissions of any other person or entity, including any lessee of the
Partnership.  The Partnership shall only be liable to any Contributor for its
own acts or omissions.
 
1.5           Tax Consequences.  For United States federal income tax purposes,
the transfer of the Properties to the Partnership is intended to be treated as a
contribution to the capital of the Partnership by the Contributors under Section
721 of the Code in exchange for the consideration described in Section 1.2(b).
 
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ARTICLE 2
 
REPRESENTATIONS AND WARRANTIES OF THE PARTNERSHIP
 
 
The Partnership represents and warrants to the Contributors that:
 
2.1           Organization and Existence.  The Partnership is a limited
partnership duly organized, validly existing and in good standing under the laws
of the State of Delaware.  The Partnership has full power and authority to own,
lease or otherwise hold and operate its properties and assets and to carry on
its business as presently conducted.  The Partnership is duly qualified and in
good standing to do business as a foreign limited partnership in each
jurisdiction in which the conduct or nature of its business or the ownership,
leasing, holding or operating of its properties makes such qualification
necessary, except such jurisdictions where the failure to be so qualified or in
good standing, individually or in the aggregate, would not have a Material
Adverse Effect on the Partnership.
 
2.2           Governing Documents.  The Partnership Agreement has been duly
authorized, executed and delivered by the Partnership and is, and will be, a
valid and legally binding agreement of, enforceable against the Partnership in
accordance with its terms; provided that the enforceability thereof may be
limited by bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws relating to or affecting creditors’ rights generally
and by general principles of equity (regardless of whether such enforceability
is considered in a proceeding in equity or at law).
 
2.3           Capitalization of the Partnership.
 
(a)           All of the outstanding Common Units have been duly authorized and
validly issued in accordance with the Partnership Agreement, are fully paid and
nonassessable.  Dorchester Minerals Management LP, a Delaware limited
partnership (the “Partnership GP”), is the sole general partner of the
Partnership.  On the date hereof, the issued and outstanding limited partner
interests of the Partnership consist of 28,240,431 Common Units.
 
(b)           The Subject Units (and the limited partner interests represented
thereby), will be duly authorized in accordance with the Partnership Agreement,
and, when issued and delivered to the Contributors in accordance with the terms
hereof, will be validly issued, fully paid (to the extent required under the
Partnership Agreement) and nonassessable and will be issued free and clear of
any lien, claim or Encumbrance.
 
(c)           Except for the Subject Units or as described in the Partnership
Agreement, there are no preemptive rights or other rights to subscribe for or to
purchase, nor any restriction upon the voting or transfer of, any interests in
the Partnership pursuant to the Partnership Agreement or any other agreement or
instrument to which the Partnership is a party or by which it may be
bound.  Neither the offering nor the sale of the Subject Units, as contemplated
by this Agreement, gives rise to any rights for or relating to the registration
of any
 
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 Common Units or other securities of the Partnership.  Except for the Subject
Units or as described in the Partnership Agreement, no options, warrants or
other rights to purchase, agreements or  other obligations to issue, or rights
to convert any obligations into or exchange any securities for, Common Units or
other securities of the Partnership are outstanding.
 
(d)           The Subject Units when issued and delivered against payment
therefor as provided herein, will conform in all material respects to the
description thereof contained in the Partnership Agreement.  The Partnership has
all requisite power and authority to issue, sell and deliver the Subject Units
in accordance with and upon the terms and conditions set forth in this Agreement
and the Partnership Agreement.  As of the Closing Date, all partnership action
for the authorization, issuance, sale and delivery of the Subject Units shall
have been validly taken, and no other authorization by any of such parties is
required therefore.
 
2.4           Authority Relative to this Agreement.  The Partnership has full
partnership power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby.  The execution, delivery and
performance by the Partnership of this Agreement, and the consummation by it of
the transactions contemplated hereby, have been duly authorized by the
Partnership GP, and no other partnership proceedings on the part of the
Partnership are necessary to authorize the execution, delivery and performance
by the Partnership of this Agreement and the consummation by it of the
transactions contemplated hereby.  This Agreement has been duly executed and
delivered by the Partnership and constitutes, and each other agreement,
instrument or document executed or to be executed by the Partnership in
connection with the transactions contemplated hereby has been, or when executed
will be, duly executed and delivered by the Partnership and constitutes, or when
executed and delivered will constitute, a valid and legally binding obligation
of the Partnership enforceable against the Partnership in accordance with their
respective terms, except that such enforceability may be limited by
(i) applicable bankruptcy, insolvency, reorganization, moratorium and similar
laws affecting creditors’ rights generally and (ii) equitable principles which
may limit the availability of certain equitable remedies (such as specific
performance) in certain instances.
 
2.5           Noncontravention.  Except as otherwise indicated on Schedule 2.5,
the execution, delivery and performance by the Partnership of this Agreement and
the consummation by it of the transactions contemplated hereby do not and will
not (i) conflict with or result in a violation of any provision of the
Partnership Agreement or the certificate of limited partnership of the
Partnership, (ii) conflict with or result in a violation of any provision of, or
constitute (with or without the giving of notice or the passage of time or both)
a default under, or give rise (with or without the giving of notice or the
passage of time or both) to any right of termination, cancellation or
acceleration under, any bond, debenture, note, mortgage, indenture, lease,
contract, agreement or other instrument or obligation to which the Partnership
is a party or by which the Partnership or any of its properties may be bound,
(iii) result in the creation or imposition of any Encumbrance upon the
properties of the Partnership or (iv) assuming compliance with the matters
referred to in  Section 2.6, violate any Applicable Law binding upon the
Partnership, except, in the case of clauses (ii), (iii) and (iv) of this Section
2.5, for any such conflicts, violations, defaults, terminations, cancellations,
accelerations or Encumbrances which would not, individually or in the aggregate,
have a Material Adverse Effect on the Partnership.
 
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          2.6           Governmental Approvals.  No consent, approval, order or
authorization of, or declaration, filing or registration with, any Governmental
Entity is required to be obtained or made by the Partnership in connection with
the execution, delivery or performance by the Partnership of this Agreement or
the consummation by it of the transactions contemplated hereby, other than
(i) compliance with any applicable state securities or takeover laws, (ii) as
set forth on Schedule 2.6, (iii) filings with Governmental Entities to occur in
the ordinary course following the consummation of the transactions contemplated
hereby, and (iv) such consents, approvals, orders or authorizations which, if
not obtained, and such declarations, filings or registrations which, if not
made, would not, individually or in the aggregate, have a Material Adverse
Effect on the Partnership.
 
2.7           Financial Statements.  Attached as Schedule 2.7 or filed with the
SEC Filings are copies of (i) the Partnership’s unaudited consolidated balance
sheet as of March 31, 2009 (the “Partnership Latest Balance Sheet”), and the
related unaudited consolidated statements of income, partners’ equity and cash
flows for the three-month period then ended (the “Partnership Unaudited
Financial Statements”), and (ii) the Partnership’s audited consolidated balance
sheet as of December 31, 2008, and the related audited consolidated statements
of income, unitholders’ equity and cash flows for the year then ended, and the
notes and schedules thereto, together with the report thereon of Grant Thornton
LLP, independent certified public accountants (the “Partnership Audited
Financial Statements”) (collectively, the “Partnership Financial
Statements”).  The Partnership Financial Statements (A) have been prepared from
the books and records of the Partnership in conformity with generally accepted
accounting principles applied on a basis consistent with preceding years
throughout the periods involved, and (B) accurately and fairly present the
Partnership’s consolidated financial position as of the respective dates thereof
and its consolidated results of operations and cash flows for the periods then
ended, except that the Partnership Unaudited Financial Statements are subject to
audit adjustments, which in the Partnership’s reasonable judgment should not be
material in the aggregate.
 
2.8           Absence of Undisclosed Liabilities.  To the Knowledge of the
Partnership, as of the date of this Agreement, the Partnership has no liability
or obligation with respect to the property held by the Partnership (whether
accrued, absolute, contingent, unliquidated or otherwise), except
(i) liabilities reflected on the Partnership Latest Balance Sheet,
(ii) liabilities described in the notes accompanying the Partnership Audited
Financial Statements, (iii) liabilities which have arisen since the date of the
Partnership Latest Balance Sheet in the ordinary course of business (none of
which is a material liability for breach of contract, tort or infringement),
(iv) liabilities arising under executory provisions of contracts entered into in
the ordinary course of business (none of which is a material liability for
breach of contract), (v) liabilities disclosed on Schedule 2.8 and (vi) other
liabilities which, in the aggregate, are not material to the Partnership.
 
2.9           Absence of Certain Changes.  As of the date of this Agreement,
except as disclosed on Schedule 2.9, since the date of the Partnership Unaudited
Financial Statements, (i) to the Knowledge of the Partnership there has not been
any Material Adverse Effect on the Partnership or any event or condition that
might reasonably be expected to result in any Material Adverse Effect on the
Partnership, (ii) the business of the Partnership has been conducted only in its
ordinary course of business, (iii) the Partnership has not incurred any material
liability,
 
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engaged in any material transaction or entered into any material agreement
outside the ordinary course of business, and (iv) the Partnership has not
suffered any material loss, damage, destruction or other casualty to any of its
assets (whether or not covered by insurance).
 
2.10           Compliance With Laws.  Except as disclosed on Schedule 2.10, to
the Knowledge of the Partnership, the Partnership has complied in all respects
with all Applicable Laws, except for noncompliance with such Applicable Laws
which, individually or in the aggregate, do not and will not have a Material
Adverse Effect on the Partnership.  Except as disclosed on Schedule 2.10, the
Partnership has not received any written notice from any Governmental Entity,
which has not been dismissed or otherwise disposed of, that the Partnership has
not so complied.  The Partnership has not been charged or, to the Knowledge of
the Partnership, threatened with, or under investigation with respect to, any
violation of any Applicable Law relating to any aspect of the business of the
Partnership, other than violations which, individually or in the aggregate, do
not and in the reasonable judgment of the Partnership will not have a Material
Adverse Effect on the Partnership.
 
2.11           Brokerage Fees.  The Partnership has not retained any financial
advisor, broker, agent or finder or paid or agreed to pay any financial advisor,
broker, agent or finder on account of this Agreement or any transaction
contemplated hereby.
 
2.12           Listing.  The outstanding Common Units are listed for trading on
the NASDAQ Global Select Market.
 
2.13           SEC Filings.  Since January 1, 2008, the Partnership has filed
with the Securities and Exchange Commission all forms, reports, schedules,
statements, and other documents required to be filed by it under the Securities
Act of 1933, as amended, and the rules and regulations promulgated thereunder,
the Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder, and all other federal securities laws.  All forms,
reports, schedules, statements, and other documents (including all amendments
thereto) filed by the Partnership with the Securities and Exchange Commission
since such date are herein collectively referred to as the “SEC Filings.”  The
Partnership has delivered or made available to the Contributors accurate and
complete copies of all the SEC Filings in the form filed by the Partnership with
the Securities and Exchange Commission.  The SEC Filings, at the time filed,
complied in all material respects with all applicable requirements of federal
securities laws.  To the Knowledge of the Partnership, none of the SEC Filings,
including, without limitation, any financial statements or schedules included
therein, at the time filed, contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or necessary in
order to make the statements contained therein, in light of the circumstances
under which they were made, not misleading.  All material contracts of the
Partnership have been included in the SEC Filings, except for those contracts
not required to be filed pursuant to the rules and regulations of the Securities
and Exchange Commission.  The Partnership shall deliver or make available to the
Contributors as soon as they become available accurate and complete copies of
all forms, reports, and other documents furnished by it to its limited partners
generally or filed by it with the Securities and Exchange Commission subsequent
to the date hereof and prior to the Closing Date.
 
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ARTICLE 3
 
REPRESENTATIONS AND WARRANTIES
OF THE CONTRIBUTORS
 
 
 
The Contributors hereby jointly and severally represent and warrant to the
Partnership as follows:
 
3.1           Organization and Existence.  The Contributors are duly organized,
validly existing and in good standing under the laws of the State of Texas.  The
Contributors have full power and authority to own, lease or otherwise hold and
operate their properties and assets and to carry on their businesses as
presently conducted.  The Contributors are duly qualified and in good standing
to do business in each jurisdiction in which the conduct or nature of their
businesses or the ownership, leasing or holding of its properties makes such
qualification necessary, except such jurisdictions where the failure to be so
qualified or in good standing, individually or in the aggregate, would not have
a Material Adverse Effect on any Contributor, the Properties or any Oil and Gas
Lease.
 
3.2           Authority Relative to this Agreement.  The Contributors have full
power and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby.  The execution, delivery and performance by
the Contributors of this Agreement, and the consummation by them of the
transactions contemplated hereby, have been duly authorized by all necessary
action, and no other proceedings are necessary to authorize the execution,
delivery and performance by the Contributors of this Agreement and the
consummation by them of the transactions contemplated hereby.  This Agreement
has been duly executed and delivered by the Contributors and constitutes, and
each other agreement, instrument or document executed or to be executed by the
Contributors in connection with the transactions contemplated hereby has been,
or when executed will be, duly executed and delivered by the Contributors and
constitutes, or when executed and delivered will constitute, a valid and legally
binding obligation of the Contributors enforceable against the Contributors in
accordance with their respective terms, except that such enforceability may be
limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium and
similar laws affecting creditors’ rights generally and (ii) equitable principles
which may limit the availability of certain equitable remedies (such as specific
performance) in certain instances.
 
3.3           Noncontravention.  Except as otherwise indicated on Schedule 3.3,
the execution, delivery and performance by the Contributors of this Agreement
and the consummation by them of the transactions contemplated hereby, do not and
will not (i) conflict with or result in a violation of any provision of the
respective governing instruments of the Contributors, (ii) conflict with or
result in a violation of any provision of, or constitute (with or without the
giving of notice or the passage of time or both) a default under, or give rise
(with or without the giving of notice or the passage of time or both) to any
right of termination, cancellation or acceleration under, any bond, debenture,
note, mortgage, indenture, lease, contract, agreement or other instrument or
obligation to which any Contributor is a party or by which any Contributor or
any of the Properties may be bound, (iii) result in the creation or imposition
of any Encumbrance upon the Properties or (iv) assuming compliance with the
matters referred to in Section 3.4, violate any Applicable Law binding upon the
Contributors,
 
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except in the case of clauses (ii), (iii) and (iv) of this Section 3.3, for any
such conflicts, violations, defaults, terminations, cancellations, accelerations
or Encumbrances which would not, individually or in the aggregate, have a
Material Adverse Effect on any Contributor or the Properties.
 
3.4           Governmental Approvals.  No consent, approval, order or
authorization of, or declaration, filing or registration with, any Governmental
Entity is required to be obtained or made by the Contributors in connection with
the execution, delivery or performance by the Contributors of this Agreement or
the consummation by them of the transactions contemplated hereby, other than
(i)  compliance with any applicable state securities or takeover laws, (ii) as
set forth on Schedule 3.4, (iii) filings with Governmental Entities to occur in
the ordinary course following the consummation of the transactions contemplated
hereby and (iv) such consents, approvals, orders or authorizations which, if not
obtained, and such declarations, filings or registrations which, if not made,
would not, individually or in the aggregate, have a Material Adverse Effect on
the Contributors or the Properties.
 
3.5           Title to the Properties.  The Contributors have good and
marketable title to all of the Properties, free and clear of all Encumbrances
other than Encumbrances set forth on Schedule 3.5.  Except for those interests
expressly identified on Schedule 3.5, the Properties do not include any mineral
or royalty interest of less than a perpetual duration.
 
3.6           Absence of Undisclosed Liabilities.  As of the date of this
Agreement, the Contributors have no liability or obligation with respect to the
Properties (whether accrued, absolute, contingent, unliquidated or otherwise),
except as disclosed on Schedule 3.6.
 
3.7           Absence of Certain Changes.  As of the date of this Agreement,
except as disclosed on Schedule 3.7, since the Reference Date, (i) there has not
been any Material Adverse Effect on any Contributor, the Properties or, to the
Knowledge of the Contributors, on any Oil and Gas Lease, or any event or
condition that might reasonably be expected to result in any Material Adverse
Effect on any Contributor, the Properties or, to the Knowledge of the
Contributors, on any Oil and Gas Lease, (ii) the businesses of the Contributors
have been conducted only in their ordinary course of business, (iii) the
Contributors have not incurred any material liability, engaged in any material
transaction or entered into any material agreement outside the ordinary course
of business with respect to the Properties, (iv) the Contributors have not
suffered any material loss, damage, destruction or other casualty to any of the
Properties (whether or not covered by insurance), (v) the Contributors have not
taken any of the actions set forth in Section 4.2 except as permitted thereunder
and (vi) to the Knowledge of the Contributors, the Oil and Gas Leases have not
suffered any material loss, damage, destruction or other casualty.
 
3.8           Tax Matters.  As of the Closing Date, all Tax Returns required to
be filed with respect to the Properties, including those relating to Property
Taxes, severance Taxes and any other Taxes imposed on or with respect to the
Properties and any production therefrom, have been timely filed with the
applicable Taxing authority, except in such cases where the failure to file
would not have a Material Adverse Effect on the Properties, and all Taxes
required to be shown thereon have been paid.  There are no liens for Taxes
(other than for taxes not yet due and payable) upon any of the
Properties.  There has been no issue raised or adjustment proposed (and
 
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to the Knowledge of the Contributors, none is pending) by the IRS or any other
Taxing authority in connection with any of such Tax Returns, nor has any
Contributor received any written notice from the IRS or any such other taxing
authority that any such Tax Return is being audited or may be audited or
examined.  No Contributor has agreed to the extension or waiver of any statute
of limitations on the assessment or collection of any such Tax or with respect
to any such Tax Return.  No Contributor is a “foreign person” within the meaning
of Section 1445 (or similar provisions) of the Code (i.e., no Contributor is a
disregarded entity as defined in Section 1.1445-2(b)(2)(iii) of the Treasury
Regulations and no Contributor is a non-resident alien, foreign corporation,
foreign partnership, foreign trust or foreign estate as those terms are defined
in the Code and the Treasury Regulations).
 
3.9           Compliance with Laws.  Except as disclosed on Schedule 3.9, the
Contributors have complied in all respects with all Applicable Laws relating to
the ownership or, to the Knowledge of the Contributors, the operation of the
Properties, except for noncompliance with such Applicable Laws which,
individually or in the aggregate, do not and will not have a Material Adverse
Effect on any Contributor or the Properties.  Except as disclosed on Schedule
3.9, the Contributors have not received any written notice from any Governmental
Entity, which has not been dismissed or otherwise disposed of, that the
Contributors have not so complied.  The Contributors have not, and to the
Knowledge of the Contributors, the Lessees have not, been charged or, to the
Knowledge of the Contributors, threatened with, or under investigation with
respect to, any violation of any Applicable Law relating to any aspect of the
ownership or operation of the Properties, other than violations which,
individually or in the aggregate, do not and will not have a Material Adverse
Effect on any Contributor or the Properties.
 
3.10           Legal Proceedings.  Except as disclosed on Schedule 3.10, there
are no Proceedings pending or, to the Knowledge of the Contributors, threatened
against or involving any Contributor, the Properties, the Oil and Gas Leases or
the rights of the Contributors with respect to the Properties.  The Contributors
are not subject to any judgment, order, writ, injunction, or decree of any
Governmental Entity which has had or is reasonably likely to materially affect
title to or the value of any of the Properties.  There are no Proceedings
pending or, to the Knowledge of the Contributors, threatened against the
Contributors or the Properties (or any Oil and Gas Lease), seeking to restrain,
prohibit, or obtain damages or other relief in connection with this Agreement or
the transactions contemplated hereby or which could reasonably be expected to
affect the Contributors’ ability to consummate the transactions contemplated
hereby.
 
3.11           Permits.  To the Knowledge of the Contributors, all Lessees hold
all Permits necessary or required for the conduct of their businesses as
currently conducted, except for Permits the absence of which do not and will not
have a Material Adverse Effect on any Contributor, the Properties or any Oil and
Gas Lease.  Each of such Permits is in full force and effect and the
Contributors and such Lessees are in compliance with each such Permit, except in
such respects as would not reasonably be expected to have a Material Adverse
Effect on any Contributor, the Properties or any Oil and Gas Lease.  Except as
disclosed on Schedule 3.11, the Contributors and the Lessees have not received
any written notice from any Governmental Entity and no Proceeding is pending or,
to the Knowledge of the Contributors and the Lessees, threatened with respect to
any alleged failure by the Contributors or the Lessees to have any
 
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Permit the absence of which would have a Material Adverse Effect on any
Contributor, the Properties or the Oil and Gas Leases.
 
 
 
            3.12           Environmental Matters.  Except as disclosed on
Schedule 3.12, to the Knowledge of the Contributors:
 
(a)           There are no material violations of Applicable Environmental Laws
that arise from any Environmental Condition on or at (i) the real properties to
which the Properties relate (the “Real Properties”), (ii) the Properties, or
(iii) the operations under any Oil and Gas Lease, which have not been corrected
or Remediated, and for which all applicable fines or penalties have not been
paid in full, in compliance with the requirements of any Governmental Entity
having jurisdiction, or that would otherwise have a Material Adverse Effect.
 
(b)           None of the Contributors have received any notifications of any
Proceedings pending or threatened against any Contributor or any of the Real
Properties or the Properties, alleging that any Contributor or any of the Real
Properties or the Properties are in violation of, or otherwise subject to
liability under, any Applicable Environmental Law, other than any such
notifications that any Contributor has resolved in accordance with Applicable
Environmental Laws.
 
(c)           None of the Contributors have received any notice of any
investigation or inquiry or request for information regarding the Real
Properties, the Properties, any other property, or the operations under any Oil
and Gas Lease from any Governmental Entity under any Applicable Environmental
Law, including, without limitation, CERCLA and RCRA.
 
(d)           As of the date hereof, (i) neither the Real Properties nor the
Properties have been used for Disposal of any Hazardous Materials, (ii) no
Release of Hazardous Materials has occurred on the Real Properties or the
Properties, and (iii) no condition otherwise exists on any Real Properties or
Properties, such that any Real Properties or any Properties would be subject to
any remedial obligations under any Applicable Environmental Laws, which
obligations would have a Material Adverse Effect on any Contributor, the
Properties or the Oil and Gas Leases.
 
(e)           There has been no claim against any Contributor asserting
Environmental Liability or an other liability for exposure of any Person or
property (such as livestock, cattle, horses, pigs, goats, sheep and chickens,
but not real property) to Hazardous Materials in connection with any of the Real
Properties, the Properties or under any Oil and Gas Leases that any Contributor
or the responsible Person has not resolved.
 
(f)           There are no Environmental Liabilities resulting from any breach
of Applicable Environmental Laws pertaining to the use or operation on the Real
Properties or the Properties or under the Oil and Gas Leases or otherwise on or
 
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prior to Closing Date that the Contributors or the responsible Person has not
resolved or that would have a Material Adverse Effect.
 
(g)           All of the Real Properties and the Properties are in compliance
with all Applicable Environmental Laws; all Contributors have complied with all
Applicable Environmental Laws with respect to the Properties and the Oil and Gas
Leases; and all operations on the Real Properties or related to the Properties
or under the Oil and Gas Leases are in compliance with the Applicable
Environmental Laws.
 
(h)           All material Permits required under Applicable Environmental Laws
that are necessary to the operation of the Properties under the Oil and Gas
Leases or otherwise, as currently operated have been obtained and are in full
force and effect, and the Properties have been operated at all time in material
compliance with such Permits.
 
(i)           Contributors either have made, or will, immediately after the
execution of this Agreement, make available to the Partnership all environmental
assessment, investigatory, and audit reports, studies, analyses, and
correspondence relating to the Properties or the Real Properties that are in
actual or constructive control of any Contributor and addressing Releases or
threatened Releases, Remediations, Environmental Liabilities, Environmental
Conditions, or violations of Applicable Environmental Laws.
 
3.13           Proceeds of Production.  All proceeds of production from the
Properties which have been paid to the Contributors are set forth on Exhibit
3.13 by month, payee, and amount paid.
 
3.14           Commitments.  The Contributors have incurred no expenses, and
have made no commitments to make expenditures (and the Contributors have not
entered into any agreements that would obligate the Partnership to make
expenditures), in connection with (and no other obligations or liabilities have
been incurred which would adversely affect) the ownership or operation of the
Properties after the Closing Date.
 
3.15           No Alienation.  Within 120 days of the date hereof, the
Contributors have not sold, assigned, conveyed, or transferred or contracted to
sell, assign, convey or transfer any right or title to, or interest in, the
Properties.
 
3.16           Make-Up Rights.  No Contributor and, to the Knowledge of the
Contributors, no other party, has received prepayments (including, but not
limited to, payments for gas not taken pursuant to “take-or-pay” or similar
arrangements) for any oil or gas produced from the Properties or related to the
Oil and Gas Leases as a result of which the obligation does or may exist to
deliver oil or gas produced from the Properties after the Reference Date without
then receiving payment (or without then receiving full payment) therefore or to
make repayments in cash.
 
3.17           Imbalances.  To the Knowledge of the Contributors, there are no
imbalances among the owners of the interests in any wells and units related to
the Properties that
 
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could have a Material Adverse Effect on the net revenues that the Partnership
will be entitled to receive from the Properties from the then current month’s
production.
 
 
        3.18           Basic Documents.  To the Knowledge of the Contributors:
 
(a)           The Contributors are not in breach or default (and no situation
exists which with the passing of time or giving of notice would create a breach
or default) of their obligations under any Basic Documents, and (ii) no breach
or default by any third party (or situation which with the passage of time or
giving of notice would create a breach or default) exists under any Basic
Documents, to the extent such breach or default (whether by the Contributors or
such third party) could reasonably be expected to have a Material Adverse Effect
on the Properties after the Closing Date;
 
(b)           All payments (including all delay rentals, royalties and shut-in
royalties) owing under Basic Documents have been and are being made (timely, and
before the same became delinquent) by third parties where the non-payment of
same by a third party could materially and adversely affect the ownership,
exploration, development, operation, maintenance, value or use of any of the
Properties after the Closing Date; and
 
(c)           No Basic Document involves an assumption by the Partnership or its
successors of any current liabilities which would be required to be set forth on
a balance sheet of any of the Contributors in accordance with GAAP.
 
For the purposes of the representations contained in this Section 3.18 (and
without limitation of such representations), the non-payment of an amount, or
non-performance of an obligation, where such non-payment, or non-performance,
could result in the forfeiture or termination of rights of the Contributors or
any Lessee under a Basic Document, shall be considered material.
 
3.19           Commitments, Abandonments or Proposals.  The Contributors have
incurred no expenses, and have made no commitments to make expenditures
(including the Contributors have not entered into any agreements that would
obligate the Partnership to make expenditures), in connection with (and no other
obligations or liabilities have been incurred which would adversely affect) the
ownership of the Properties by the Partnership after the Closing Date.
 
3.20           Area of Mutual Interest and Other Agreements; Tax
Partnerships.  No Property is subject to any area of mutual interest
agreements.  No Property is subject to any farm-out or farm-in agreement under
which any party thereto is entitled to receive assignments not yet made, or
could earn additional assignments after the Closing Date.  No Property is
subject to (or has related to it) any tax partnership.
 
3.21           Payment of Expenses.  All expenses relating to the ownership or,
to the Knowledge of the Contributors, the operation of the Properties, have
been, and are being, paid (timely, and before the same become delinquent) by the
Contributors, except such expenses and
 
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taxes as are disputed in good faith by the Contributors and for which an
adequate accounting reserve has been established by the Contributors.
 
3.22           Oral Contracts.  The Contributors have not entered into any oral
contract with respect to the Properties.
 
 
          3.23           Preferential Rights and Consents to Assign.  There are
no consents to assignment or waivers of preferential rights to purchase that
must be obtained from third parties in order for the Contributors to consummate
the transactions contemplated by this Agreement without violating or breaching a
duty or obligation of the Contributors.
 
3.24           No Participating Minerals.  To the Contributors’ Knowledge, the
Properties do not include any unleased or other mineral interest where the
Contributors have agreed to bear a share of drilling, operating or other costs
as a participating mineral owner.
 
3.25           Brokerage Fees.  The Contributors have not retained any financial
advisor, broker, agent or finder or paid or agreed to pay any financial advisor,
broker, agent or finder on account of this Agreement or any transaction
contemplated hereby.
 
3.26           Investment Intent.Each Contributor is an “accredited investor”
within the meaning of Securities and Exchange Commission Rule 501 of Regulation
D, as presently in effect.
 
(b)           Each Contributor is acquiring the Subject Units for its own
account for investment and not with a view to, or for sale or other disposition
in connection with, any public distribution of all or any part thereof.
 
(c)           Each Contributor has carefully reviewed this Agreement, the SEC
Filings, the Partnership Agreement and other documentation relating to the
Partnership and have had such opportunity as deemed necessary by such
Contributor and its advisors and affiliates to ask questions of the Partnership
and their affiliates, officers and employees to enable such Contributor to make
an informed investment decision concerning the receipt of the Subject Units
pursuant to the transactions contemplated by this Agreement, the operation of
the Partnership, and the investment risks associated with such Contributor’s
investment in the Partnership.
 
(d)           The Contributors, by entering into this Agreement, (i) request
admission as limited partners of the Partnership and agree to comply with, and
be bound by, and hereby execute, the Partnership Agreement, (ii) represent and
warrant that the Contributors have all right, power and authority and the
capacity necessary to enter into the Partnership Agreement, (iii) appoint the
general partner of the Partnership and, if a liquidator shall be appointed, the
liquidator of the Partnership as the Contributors’ attorney-in-fact to execute,
swear to, acknowledge and file any document, including, without limitation, the
Partnership Agreement and any amendment thereto necessary or appropriate for
such Contributors’ admission as a limited partner and as a party to the
Partnership Agreement, (iv) gives the power of attorney provided for in the
Partnership
 
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Agreement and (v) makes the waivers and gives the consents and approvals
contained in the Partnership Agreement.
 
        3.27           Disclosure.
 
(a)           The Contributors have provided the Partnership with a copy of all
Records that the Contributors have received since September 30, 2008.
 
 
 
ARTICLE 4
 
 
CONDUCT OF THE CONTRIBUTORS PENDING CLOSING;
CERTAIN ACTIONS RELATING TO CLOSING
 
 
 
4.1           Conduct and Preservation of Business of the Contributors.  The
Contributors hereby covenant and agree with the Partnership that, except as
contemplated by this Agreement, during the period from the date hereof to the
Closing Date, the Contributors (i) shall conduct their operations according to
the ordinary course of business and in material compliance with all Applicable
Laws and (ii) shall use their reasonable best efforts to preserve, maintain and
protect the Properties.
 
4.2           Restrictions on Certain Actions of the Contributors.  Except as
otherwise expressly provided in this Agreement, prior to the Closing Date, no
Contributor shall, without the consent of the Partnership (which consent shall
not be unreasonably withheld):
 
(a)           mortgage or pledge any of the Properties or create or suffer to
exist any Encumbrance thereupon, other than Permitted Encumbrances as set forth
on Schedule 4.2(a);
 
(b)           sell, lease, transfer or otherwise dispose of, directly or
indirectly, any of the Properties, except in the ordinary course of business;
 
(c)           amend, modify or change any existing lease or contract with
respect to the Properties, other than in the ordinary course of the business;
 
(d)           waive, release, grant or transfer any rights of value relating to
the Properties, other than in the ordinary course of business;
 
(e)           delay payment of any account payable or any known or accrued
liability relating to the Properties beyond the earlier of thirty (30) days or
its due date or the date when such liability would have been paid in the
ordinary course of business, unless such delay is due to a good faith dispute as
to liability or amount;
 
(f)           permit any current insurance or reinsurance or continuation
coverage to lapse if such policy insures risks, contingencies or liabilities
(including product liability) related to the Properties other than in connection
with any advance renewal or replacement of an existing insurance policy;
 
 
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(g)           except as set forth in this Section 4.2, take any action which
would make any of the representations or warranties of the Contributors untrue
as of any time from the date of this Agreement to the Closing Date, or would
result in any of the conditions set forth in this Agreement not being satisfied;
 
(h)           merge into or with or consolidate with any other Person or acquire
all or substantially all of the business or assets of any other Person; or
 
(i)           agree in writing or otherwise to take any of the actions described
in this Section 4.2.
 
 
 
ARTICLE 5
 
ADDITIONAL AGREEMENTS
 
 
 
5.1           Access to Information; Confidentiality.  Each Contributor hereby
agrees to provide the Partnership copies of the Records (i) in its possession or
control, or (ii) received by it subsequent to the date hereof and prior to the
Closing Date as soon as reasonably practicable after the date of receipt of such
Records.  From the date hereof through the Closing, each Contributor shall
afford the Partnership and their representatives reasonable access to the
offices and personnel of such Contributor, and to the Properties and the Records
during normal business hours, in order that the Partnership may have a full
opportunity to make such investigations as it desires with respect to the
Properties; provided that such investigation shall be upon reasonable notice and
shall not unreasonably disrupt the personnel and operations of such Contributor
or impede the efforts of such Contributor to comply with their other obligations
under this Agreement.  Each party shall hold in confidence all such information
on the terms and subject to the conditions contained in that certain Mutual
Nondisclosure Agreement dated September 22, 2008 by and between the Partnership
and Wallace L. Hall, Jr.
 
5.2           Notification of Certain Matters.   Each party shall give prompt
notice to the other parties of (i) any fact or circumstance which would be
likely to cause any representation or warranty of such party contained in this
Agreement to be untrue or inaccurate in any material respect and (ii) any
material failure of such party to comply with or satisfy any covenant, condition
or agreement to be complied with or satisfied by it hereunder.  The delivery of
any notice pursuant to this Section 5.2 shall not be deemed to (i) modify the
representations or warranties hereunder of the party delivering such notice,
(ii) modify the conditions set forth in ARTICLE 6 or (iii) limit or otherwise
affect the remedies available hereunder to any party receiving such notice.
 
5.3           Reasonable Best Efforts.  Each party hereto agrees that it will
not voluntarily undertake any course of action inconsistent with the provisions
or intent of this Agreement and will use its reasonable best efforts to take, or
cause to be taken, all action and to do, or cause to be done, all things
reasonably necessary, proper or advisable under Applicable Laws to consummate
the transactions contemplated by this Agreement, including, without limitation,
(i) cooperating in determining whether any other consents, approvals, orders,
authorizations, waivers, declarations, filings or registrations of or with any
Governmental Entity or third party are required in connection with the
consummation of the transactions contemplated
 
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hereby, (ii) using its reasonable best efforts to obtain any such consents,
approvals, orders, authorizations and waivers and to effect any such
declarations, filings and registrations, (iii) using its reasonable best efforts
to cause to be lifted or rescinded any injunction or restraining order or other
order adversely affecting the ability of the parties to consummate the
transactions contemplated hereby, (iv) using its reasonable best efforts to
defend, and to cooperate in defending, all lawsuits or other legal proceedings
challenging this Agreement or the consummation of the transactions contemplated
hereby and (v) executing of any additional instruments necessary to consummate
the transactions contemplated hereby.
 
5.4           Public Announcements.  The Partnership may from time-to-time make
such press releases or otherwise make public statements with respect to this
Agreement of the transactions contemplated hereby as the Partnership deems
appropriate, in its sole discretion.  No Contributor shall issue any press
release or otherwise make any public statement with respect to this Agreement or
the transactions contemplated hereby without the prior written consent of the
Partnership.
 
5.5           Amendment of Schedules.  Each party hereto agrees that, with
respect to the representations and warranties of such party contained in this
Agreement, such party shall have the continuing obligation until the Closing to
supplement or amend the Schedules hereto with respect to any matter hereafter
discovered which, if known at the date of this Agreement, would have been
required to be set forth or described in the Schedules.  For all purposes of
this Agreement, including without limitation for purposes of determining whether
the conditions set forth in Sections 6.2(a) and 6.3(a) have been fulfilled, the
Schedules hereto shall be deemed to include only that information contained
therein on the date of this Agreement and shall be deemed to exclude all
information contained in any supplement or amendment thereto.
 
5.6           Fees and Expenses.  All fees and expenses, including fees and
expenses of counsel, financial advisors and accountants, incurred in connection
with this Agreement and the transactions contemplated hereby shall be paid by
the party incurring such fee or expense, whether or not the Closing shall have
occurred.
 
5.7           Tax Reporting.  The Partnership and the Contributors agree, to the
extent allowable, to report the contribution to the Partnership by the
Contributors of the Properties as a non-taxable contribution under Section 721
of the Code.
 
5.8           Tax Disclosure.  Except as reasonably necessary to comply with
applicable securities laws and notwithstanding anything in this Agreement to the
contrary or in any other agreement to which the Partnership or any Contributor
is bound, the parties hereto (and each employee, representative, or other agent
of any of the parties) are expressly authorized to disclose to any and all
persons, without limitation of any kind, the U.S. federal income “tax treatment”
and “tax structure” (as those terms are defined in Sections 1.6011-4(c)(8) and
(9) of the Treasury Regulations, respectively) of the transactions contemplated
by this Agreement and all materials of any kind (including opinions or other tax
analyses) that are provided to such parties relating to such “tax treatment” and
“tax structure” of the transactions contemplated by this Agreement.  For these
purposes, “tax structure” is limited to facts relevant to the U.S. federal
income tax treatment of the transaction described herein.
 
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5.9           Post-Closing Assurances and Access to Records.  After the Closing,
the Contributors and the Partnership shall execute, acknowledge and deliver or
cause to be executed, acknowledged and delivered such instruments and take such
other action as may be necessary or advisable to carry out their obligations
under this Agreement and under any exhibit, document, certificate or other
instrument delivered pursuant hereunto.  After the Closing, each Contributor
shall grant the Partnership and its authorized representatives reasonable access
(including copying privileges at such Contributor’s sole cost and expense)
during such Contributor’s normal business hours to all Records of such
Contributor pertaining to the Properties and not included in the Properties,
wheresoever such Records may be located for the purpose of prosecuting or
defending claims, lawsuits or other proceedings, for audit purposes, or to
comply with legal process, rules, regulations or orders of any board, agency,
tribunal or government.
 
5.10           NASDAQ Listing.  The Partnership shall use its reasonable efforts
to cause the Subject Units to be approved for listing on the NASDAQ Global
Select Market.
 
 
 
ARTICLE 6
 
CONDITIONS
 
 
 
6.1           Conditions to Obligations of the Parties.  The obligations of the
parties to consummate the transactions contemplated by this Agreement shall be
subject to the fulfillment on or prior to the Closing Date of each of the
following conditions:
 
(a)           Legal Proceedings.  No preliminary or permanent injunction or
other order, decree, or ruling issued by a Governmental Entity, and no statute,
rule, regulation, or executive order promulgated or enacted by a Governmental
Entity, shall be in effect which restrains, enjoins, prohibits, or otherwise
makes illegal the consummation of the transactions contemplated hereby; and no
Proceeding by a Governmental Entity shall have been commenced or threatened (and
be pending or threatened on the Closing Date) against the Partnership, any
Contributor or the Properties, or any of their respective affiliates,
associates, directors, or officers seeking to prevent or challenging the
transactions contemplated hereby.
 
(b)           Consents.  All consents, approvals, orders, authorizations and
waivers of, and all declarations, filings and registrations with, third parties
(including Governmental Entities) required to be obtained or made by or on the
part of the parties hereto, or otherwise reasonably necessary for the
consummation of the transactions contemplated hereby, shall have been obtained
or made, and all thereof shall be in full force and effect at the time of
Closing, unless the failure to obtain or make any such consent, approval, order,
authorization, waiver, declaration, filing or registration would not have a
Material Adverse Effect on the Partnership.
 
6.2           Conditions to Obligation of the Contributors.  The obligation of
the Contributors to consummate the transactions contemplated by this Agreement
shall be subject to the fulfillment on or prior to the Closing Date of each of
the following conditions:
 
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(a)           Representations and Warranties.   All the representations and
warranties of the Partnership contained in this Agreement and in
any agreement,  instrument  or  document  delivered pursuant hereto or in
connection herewith on or prior to the Closing Date, shall be true and correct
in all material respects on and as of the Closing Date as if made on and as of
such date, except as affected by transactions permitted by this Agreement and
except to the extent that any such representation or warranty is made as of a
specified date, in which case such representation or warranty shall have
been true and correct in all material respects as of such specified date.
 
(b)           Covenants and Agreements.  The Partnership shall have performed
and complied with in all material respects all covenants and agreements required
by this Agreement to be performed or complied with by it on or prior to the
Closing Date.
 
(c)           No Material Adverse Effect.  Since the date of this Agreement,
there shall not have occurred any Material Adverse Effect with respect to the
Partnership.
 
(d)           Certificates.  The Contributors shall have received a certificate
from the Partnership, dated the Closing Date, representing and certifying that
the conditions set forth in Sections 6.1 and 6.2 have been fulfilled and a
certificate as to the incumbency of the officer(s) executing this Agreement on
behalf of the Partnership.
 
(e)           Surface Use Agreement.  The Partnership shall have executed and
delivered to the Contributors the Surface Use Agreement in the form attached
hereto as Exhibit 6.2(e) (the “Surface Use Agreement”).
 
6.3           Conditions to Obligation of the Partnership.  The obligation of
the Partnership to consummate the transactions contemplated by this Agreement
shall be subject to the fulfillment on or prior to the Closing Date of each of
the following conditions:
 
(a)           Representations and Warranties.   All the representations and
warranties of the Contributors contained in this Agreement and in any agreement,
instrument  or document delivered pursuant hereto or in connection herewith on
or prior to the Closing Date, shall be true and correct in all material respects
on and as of the Closing Date as if made on and as of such date, except as
affected by transactions permitted by this Agreement and except to the extent
that any such representation or warranty is made as of a specified date, in
which case such representation or warranty shall have been true and correct in
all material respects as of such specified date.
 
(b)           Covenants and Agreements.  Each Contributor shall have performed
and complied with in all material respects all covenants and agreements required
by this Agreement to be performed or complied with by it on or prior to the
Closing Date.
 
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(c)           No Material Adverse Effect.  Since the date of this Agreement,
there shall not have occurred any Material Adverse Effect with respect to the
Properties.
 
(d)           Certificates.  The Partnership shall have received a certificate
from the Contributors, dated the Closing Date, representing and certifying that
the conditions set forth in Sections 6.1 and 6.3 have been fulfilled and a
certificate as to the incumbency of the officer(s) executing this Agreement on
behalf of each Contributor.
 
(e)           Conveyances.  The Contributors shall have executed and delivered
to the Partnership the Conveyances and such deeds (in reasonable and local
customary form and describing the transferred Properties) and other bills of
sale, certificates of title and other documents or instruments of assignment,
transfer, or conveyance as the Partnership shall reasonably deem necessary or
appropriate to vest in or confirm to the Partnership good and marketable title
to such Properties, which shall be transferred at the Closing.
 
(f)           Surface Use Agreement.  The Contributors and Surface Owners shall
have executed and delivered to the Partnership the Surface Use Agreement.
 
(g)           Common Unit Lockup Agreement.  The Persons listed on the Subject
Units Allocation Schedule shall have executed and delivered to the Partnership
the Common Unit Lockup Agreement in the form attached hereto as Exhibit 6.3(g).
 
(h)           Due Diligence.  In consideration of the time and expense to be
incurred by the Partnership in connection with the transactions contemplated
hereby, the due diligence investigation of the Partnership with respect to the
Properties shall have been completed to the satisfaction of the Partnership, in
its sole discretion, including but not limited to confirmation of the accuracy
of information described in Section 3.13 of this Agreement.
 
(i)           Contributed Cash.  The Contributors shall have delivered the
Contributed Cash to the Partnership.
 
 
 
ARTICLE 7
 
PRODUCTION, PROCEEDS, EXPENSES AND TAX MATTERS
 
 
 
7.1           Division of Ownership.  After the Closing, all Production from the
Properties, together with (i) the proceeds of such Production and any other
amounts attributable to the Properties and (ii) any other proceeds received by
any Contributor attributable to the Properties, from whatever source, including,
without limitation, any bonuses, delay rentals, royalty payments, overriding
royalty payments and shut-in royalty payments, other than Production
attributable to periods prior to the Reference Date and for which the
Contributor has received payment prior to the Reference Date (collectively
herein called the “Partnership-Entitled Production and Proceeds”), shall be
owned by the Partnership, and should any
 
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Contributor receive payment for any such Partnership-Entitled Production and
Proceeds, such Contributor shall within five (5) Business Days after the end of
each calendar month during which any such payments are received, either endorse
and deliver to the Partnership any checks received by such Contributor
attributable to such Partnership-Entitled Production and Proceeds or transfer
any cash proceeds by wire transfer to an account designated by the
Partnership.  The Partnership shall prepare letters in lieu of division or
transfer orders and at Closing the Contributors shall execute and deliver such
letters in lieu to each purchaser of Oil and Gas and Other Minerals.  In the
event such letters cannot reasonably be delivered at Closing, the Contributors
shall cooperate with the Partnership in delivering such letters after Closing.
 
7.2           Division of Expenses.  Except as otherwise provided in Section
7.4, all costs and expenses incurred in connection with the Properties prior to
the Reference Date shall be borne and timely paid by the Contributor pursuant to
Section 4.2(e).
 
7.3           Recording and Transfer Expenses.  The Partnership shall pay all
costs of recording and filing (i) the assignments delivered hereunder for the
Properties, (ii) all state, federal and Indian transfer and assignment
documents, (iii) all applications and other documents required for the transfer
of permits and operatorship of the Properties, and (iv) all other instruments.
 
7.4           Taxes.
 
(a)           All Taxes pertaining to the Properties are the Contributors’
responsibility where attributable to the period prior to the Reference Date and
are the Partnership’s responsibility where attributable to the period on or
after the Reference Date, regardless of when assessed on the Properties.  The
Contributors and their owners shall (i) timely pay all Taxes due or claimed by
any Taxing authority to be due from such party with respect to the Properties
and any production therefrom for all periods prior to the Reference Date
(including, for avoidance of doubt, all Property Taxes due and payable for the
Properties for the year 2008, except to the extent that amounts for the payment
of such Property Taxes have been placed into escrow for the benefit of the
Partnership), except those Taxes that are contested in good faith by appropriate
proceedings and for which adequate reserves have been set aside, (ii) prevent
any liens for Taxes (other than for Taxes not yet due and payable) from being
imposed upon any of the Properties prior to the Closing, and (iii) not agree to
the extension or waiver of any statute of limitations on the assessment or
collection of any Tax or with respect to any Tax Return applicable to the
Properties prior to the Closing.  If, prior to the Closing, an issue is raised
or adjustment proposed by the IRS or any other Taxing authority in connection
with any such Tax Returns, or any Contributor receives any written notice from
the IRS or any such other Taxing authority that any such Tax Return is being
audited or may be audited or examined, such Contributor shall, no later than ten
days after such event, provide written notice thereof to the Partnership
pursuant to Section 10.1.
 
 
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(b)           After the Closing, the Contributors and the Partnership shall
supply the other all information and documents reasonably necessary to comply
with Tax and financial reporting requirements and audits.
 
(c)           Notwithstanding anything in this Agreement to the contrary, each
party to this Agreement and their respective partners and shareholders shall be
responsible for their own federal, state and local income tax liabilities (and
any franchise tax liabilities calculated with respect to net income).
 
(d)           The Contributors agree to report to the Partnership, on the
Closing Date or as soon as reasonably practicable thereafter, each Contributor’s
tax basis in each Property as of the Closing Date.
 
7.5           Casualty Loss.  If any Casualty Loss occurs prior to the Closing,
the affected Contributor shall (i) transfer the affected Property to the
Partnership at Closing, notwithstanding such Casualty Loss, (ii) transfer all
unpaid insurance proceeds, claims, awards, and other payments arising out of
such Casualty Loss to the Partnership and (iii) transfer to the Partnership an
amount equal to all cash sums, if any, paid to such Contributor prior to Closing
as insurance proceeds, awards or other payments arising out of such Casualty
Loss.
 
7.6           Gas Imbalances.  On the Closing Date (and upon the delivery to the
Partnership of the Conveyances), the Partnership shall succeed to the position
of the Contributors with respect to all gas imbalances (whether arising under a
formal gas balancing agreement or not) and to the position of the Contributors
with respect to all make-up obligations.  As a result of such succession, the
Partnership shall (i) be entitled to receive any and all benefits, including
payments of proceeds of production in excess of amounts which it would otherwise
be entitled to produce and receive by virtue of ownership of the Properties,
which the Contributors would have been entitled to receive by virtue of such
position, and (ii) be obligated to suffer any detriments (whether the same be in
the form of obligations to deliver production which would have otherwise been
attributable to its ownership of the Properties without receiving full payment
therefore, or be in the form of the obligation to make payment in cash) which
the Contributors would have been obligated to suffer by virtue of such position.
 
 
 
ARTICLE 8
 
TERMINATION, AMENDMENT AND WAIVER
 
 
 
8.1           Termination.  This Agreement may be terminated and the
transactions contemplated hereby abandoned at any time prior to the Closing in
the following manner:
 
(a)           By unanimous written consent of the parties hereto;
 
(b)           By the Contributors or the Partnership, if:
 
(i)           The Closing shall not have occurred on or before June 30, 2009,
unless such failure to close shall be due to a material breach of this Agreement
by the party seeking to terminate this Agreement pursuant to this Section
8.1(b)(i); or
 
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(ii)           There shall be any Applicable Law that makes consummation of the
transactions contemplated hereby illegal or otherwise prohibited or a
Governmental Entity shall have issued an order, decree or ruling or taken any
other action permanently restraining, enjoining or otherwise prohibiting the
consummation of the transactions contemplated hereby, and such order, decree,
ruling or other action shall have become final and nonappealable;
 
(c)           By the Contributors, if (i) any of the representations and
warranties of the Partnership contained in this Agreement shall not be true and
correct such that the condition set forth in Section 6.2(a) would not be
satisfied, or (ii) the Partnership shall have failed to fulfill in any material
respect any of its material obligations under this Agreement, which failure is
material to the obligations of such party under this Agreement, and, in the case
of each of clauses (i) and (ii) of this Section 8.1(c), such misrepresentation,
breach of warranty or failure (provided it can be cured) has not been cured
within 30 days of notice thereof by the Contributors.
 
(d)           By the Partnership, if (i) any of the representations and
warranties of any  Contributor contained in this Agreement shall not be true and
correct such that the condition set forth in Section 6.3(a) would not be
satisfied or (ii) any Contributor shall have failed to fulfill in any material
respect any of their material obligations under this Agreement, which failure is
material to the obligations of such party under this Agreement, and, in the case
of each of clauses (i) and (ii) of this Section 8.1(d), such misrepresentation,
breach of warranty or failure (provided it can be cured) has not been cured
within 30 days of notice thereof by the Partnership.
 
8.2           Effect of Termination.  In the event of the termination of this
Agreement pursuant to Section 8.1 by the Partnership or the Contributors,
written notice thereof shall forthwith be given to the Partnership or the
Contributors, as applicable, specifying the provision hereof pursuant to which
such termination is made, and this Agreement shall become void and have no
effect, and there shall be no liability hereunder on the part of any party
hereto or the general partner of the Partnership, or any of their respective
directors, officers, employees, shareholders, unitholders or representatives,
except that the agreements contained in this Section 8.2 and ARTICLE 10 shall
survive the termination hereof.  Nothing contained in this Section 8.2 shall
otherwise relieve any party from liability for damages actually incurred as a
result of any breach of this Agreement.
 
8.3           Amendment.  Any provision of this Agreement (including the
Exhibits hereto) may be amended, to the extent permitted by law, prior to the
Closing Date if, and only if, such amendment is in writing and signed by the
parties hereto.
 
8.4           Waiver.  Any of the parties to this Agreement may (i) waive any
inaccuracies in the representations and warranties of the other parties
contained herein or in any document, certificate or writing delivered pursuant
hereto or (ii) waive compliance by the other parties with any of the other’s
agreements or fulfillment of any conditions to its own obligations contained
herein.  Any agreement on the part of a party hereto to any such waiver shall be
valid 
 
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only if set forth in an instrument in writing signed by or on behalf of such
party.  No failure or delay by a party hereto in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege.
 
 
 
ARTICLE 9
 
INDEMNIFICATION
 
 
 
9.1           Survival of Representations, Warranties, Covenants and
Agreements.  All of the representations and warranties of the Partnership in
ARTICLE 2 and the Contributors in ARTICLE 3 shall survive the Closing and
continue in full force and effect through and including the first anniversary of
the Closing Date.  All other covenants and agreements contained in this
Agreement shall survive the Closing until fully performed.
 
9.2           Indemnification.
 
(a)           Subject to Section 9.1, the Contributors hereby agree to indemnify
and hold the Partnership and its Affiliates and their respective directors,
managers, officers, employees, stockholders, unitholders, members, partners,
agents, attorneys, representatives, successors and assigns (collectively, the
“Partnership Indemnified Parties”) harmless from and against, and pay to the
applicable Partnership Indemnified Parties the amount of, any and all losses,
liabilities, claims, obligations, deficiencies, demands, judgments, damages
(including incidental and consequential damages), interest, fines, penalties,
claims, suits, actions, causes of action, assessments, awards, costs and
expenses (including costs of investigation and defense and attorneys’ and other
professionals’ fees), or any diminution in value, whether or not involving a
third party claim (individually, a “Loss” and, collectively, “Losses”):
 
(i)           based upon, attributable to or resulting from the failure of any
of the representations or warranties made by the Contributors in the Transaction
Documents to be true and correct in all respects at and as of the date hereof
and at and as of the Closing Date; and
 
(ii)           based upon, attributable to or resulting from the breach of any
covenant or other agreement on the part of any Contributor under any Transaction
Document.
 
(b)           Subject to Section 9.1, the Partnership hereby agrees to indemnify
and hold the Contributors and their Affiliates and their respective
stockholders, unitholders directors, managers, employees, members, partners,
agents, attorneys, representatives, successors and permitted assigns
(collectively, the “Contributors’ Indemnified Parties”) harmless from and
against, and pay to the applicable Contributors’ Indemnified Parties the amount
of, any and all Losses:
 
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      (i)           based upon, attributable to or resulting from the failure of
any of the representations or warranties made by the Partnership in any
Transaction Document to be true and correct in all respects at the date hereof
and as of the Closing Date;
 
(ii)           based upon, attributable to or resulting from the breach of any
covenant or other agreement on the part of the Partnership under any Transaction
Document; and
 
(iii)           relating to the Properties, arising from or relating to the
ownership or actions or inactions of the Partnership after the Closing Date.
 
(c)           The right to indemnification or any other remedy based on
representations, warranties, covenants and agreements in the Transaction
Documents shall not be affected by any investigation conducted at any time, or
any Knowledge acquired (or capable of being acquired) at any time, whether
before or after the execution and delivery of this Agreement or the Closing
Date, with respect to the accuracy or inaccuracy of or compliance with, any such
representation, warranty, covenant or agreement.  The waiver of any condition
based on the accuracy of any representation or warranty, or on the performance
of or compliance with any such covenant or agreements, will not affect the right
to indemnification or any other remedy based on such representations,
warranties, covenants and agreements.  The remedy of indemnification set forth
in this ARTICLE 9 shall be in addition to any other remedies that any
indemnified party may have under Applicable Laws (whether asserted in a
proceeding at law or in equity).
 
9.3           Indemnification Procedures.
 
(a)           A claim for indemnification for any matter not involving a third
party claim may be asserted by notice to the party from whom indemnification is
sought; provided that failure to so notify the indemnifying party shall not
preclude the indemnified party from any indemnification which it may claim in
accordance with this ARTICLE 9.
 
(b)           In the event that any Proceedings shall be instituted or that any
claim or demand shall be asserted by any third party in respect of which
indemnification may be sought under Section 9.2 (“Third Party Claim”), the
indemnified party shall promptly cause written notice of the assertion of any
Third Party Claim of which it has knowledge which is covered by this indemnity
to be forwarded to the indemnifying party.  The failure of the indemnified party
to give reasonably prompt notice of any Third Party Claim shall not release,
waive or otherwise affect the indemnifying party’s obligations with respect
thereto except to the extent that the indemnifying party can demonstrate actual
loss and prejudice as a result of such failure.  Subject to the provisions of
this Section 9.3, the indemnifying party shall have the right, at its sole
expense, to be represented by counsel of its choice, which must be reasonably
satisfactory to the indemnified
 
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party, and to defend against, negotiate, settle or otherwise deal with any Third
Party Claim which relates to any Losses indemnified against by it hereunder;
provided that the indemnifying party shall  have acknowledged in writing to the
indemnified party its unqualified obligation to indemnify the indemnified party
as provided hereunder.  If the indemnifying party elects to defend
against,  negotiate, settle or otherwise deal with any Third Party Claim which
relates to any Losses indemnified against by it hereunder, it shall within five
days of the indemnified party’s written notice of the assertion of such Third
Party Claim (or sooner, if the nature of the Third Party Claim so requires)
notify the indemnified party of its intent to do so; provided that the
indemnifying party must conduct its defense of the Third Party Claim actively
and diligently thereafter in order to preserve its rights in this regard.  If
the indemnifying party elects not to defend against, negotiate, settle or
otherwise deal with any Third Party Claim which relates to any Losses
indemnified against by it hereunder, fails to notify the indemnified party of
its election as herein provided or contests its obligation to indemnify the
indemnified party for such Losses under this Agreement, the indemnified party
may defend against, negotiate, settle or otherwise deal with such Third Party
Claim.  If the indemnified party defends any Third Party Claim, then the
indemnifying party shall reimburse the indemnified party for the expenses of
defending such Third Party Claim upon submission of periodic bills.  If the
indemnifying party shall assume the defense of any Third Party Claim, the
indemnified party may participate, at his or its own expense, in the defense of
such Third Party Claim; provided that such indemnified party shall be entitled
to participate in any such defense with separate counsel at the expense of the
indemnifying party if (i) so requested by the indemnifying party to participate
or (ii) in the reasonable opinion of counsel to the indemnified party a conflict
or potential conflict exists between the indemnified party and the indemnifying
party that would make such separate representation advisable; and provided,
further, that the indemnifying party shall not be required to pay for more than
one such counsel (plus any appropriate local counsel) for all indemnified
parties in connection with any Third Party Claim.  Each party hereto agrees to
provide reasonable access to each other party to such documents and information
as may reasonably by requested in connection with the defense, negotiation or
settlement of any such Third Party Claim.  Notwithstanding anything in this
Section 9.3 to the contrary, neither the indemnifying party nor the indemnified
party shall, without the written consent of the other party, settle or
compromise any Third Party Claim or permit a default or consent to entry of any
judgment unless the claimant (or claimants) and such party provide to such other
party an unqualified release from all liability in respect of the Third Party
Claim.  If the indemnifying party makes any payment on any Third Party Claim,
the indemnifying party shall be subrogated, to the extent of such payment, to
all rights and remedies of the indemnified party to any insurance benefits or
other claims of the indemnified party with respect to such Third Party Claim.
 
(c)           After any final decision, judgment or award shall have been
rendered by a Governmental Entity of competent jurisdiction and the expiration
of the time in which to appeal therefrom, or a settlement shall have been
 
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consummated, or the indemnified party and the indemnifying party shall have
arrived at a mutually binding agreement, in each case with respect to any Third
Party Claim hereunder, the indemnified party shall  forward to the indemnifying
party notice of any sums due and owing by the indemnifying party pursuant to
this Agreement with respect to such matter and the indemnifying party shall pay
all of such remaining sums so due and owing to the indemnified party by wire
transfer of immediately available funds within five Business Days after the date
of such notice.
 
 
 
ARTICLE 10
 
MISCELLANEOUS
 
 
 
10.1           Notices.  All notices, requests, demands and other communications
required or permitted to be given or made hereunder by any party hereto shall be
in writing and shall be deemed to have been duly given or made if (i) delivered
personally, (ii) transmitted by first class registered or certified mail,
postage prepaid, return receipt requested, (iii) sent by prepaid overnight
courier service or (iv) sent by telecopy or facsimile transmission, answer back
requested, to the parties at the following addresses (or at such other addresses
as shall be specified by the parties by like notice):
 
(a)        If to Tiggator:
 
Tiggator, Inc.
1525 Merrimac Circle, Suite 200
Fort Worth, Texas 76107
Attention: Jane White
Fax:                                                      
 
(b)        If to TRB Minerals:
 
TRB Minerals, LP
5956 Sherry Lane, Suite 1810
Dallas, Texas 75225
Attention: Wallace L. Hall, Jr.
Fax:           214.891.9855
 
(c)        If to West Fork Partners:
 
West Fork Partners, L.P.
5956 Sherry Lane, Suite 1810
Dallas, Texas 75225
Attention: Wallace L. Hall, Jr.
Fax:           214.891.9855
 
 
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              (d)         If to the Partnership:
 
Dorchester Minerals, L.P.
3838 Oak Lawn Avenue, Suite 300
Dallas, Texas  75219
Attention: William Casey McManemin
Fax:           214.559.0933
 
with a copy to:
 
Thompson & Knight LLP
One Arts Plaza
1722 Routh Street, Suite 1500
Dallas, Texas 75201
Attention: Arthur Wright
Fax:           214.969.1303
 
Such notices, requests, demands and other communications shall be effective
(i) if delivered personally or sent by courier service, upon actual receipt by
the intended recipient, (ii) if mailed, the date of delivery as shown by the
return receipt therefor or (iii) if sent by telecopy or facsimile transmission,
when the answer back is received.
 
10.2           Entire Agreement.  This Agreement, together with the Schedules,
Exhibits and other writings referred to herein or delivered pursuant hereto,
constitute the entire agreement between the parties hereto with respect to the
subject matter hereof and supersede all prior agreements and understandings,
both written and oral, between the parties with respect to the subject matter
hereof.
 
10.3           Binding Effect; Assignment; Third Party Benefit.  This Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns; provided that neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any of the parties hereto (by operation of law or otherwise) without
the prior written consent of the other parties.  Nothing in this Agreement,
express or implied, is intended to or shall confer upon any person other than
the parties hereto any rights, benefits or remedies of any nature whatsoever
under or by reason of this Agreement.
 
10.4           Severability.  If any provision of this Agreement is held to be
unenforceable, this Agreement shall be considered divisible and such provision
shall be deemed inoperative to the extent it is deemed unenforceable, and in all
other respects this Agreement shall remain in full force and effect; provided
that if any such provision may be made enforceable by limitation thereof, then
such provision shall be deemed to be so limited and shall be enforceable to the
maximum extent permitted by Applicable Law.
 
10.5           Governing Law; Consent to Jurisdiction.   This Agreement shall be
governed by and construed and enforced in accordance with the laws of the State
of Texas.  Each of the parties submits to the jurisdiction of any state or
federal court sitting in the State of Texas, County of Dallas, or, if it has or
can acquire jurisdiction, in the United States District Court for
 
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 the Northern District of Texas, in any action or proceeding arising out of or
relating to this Agreement, agrees that all claims in respect of the action or
proceeding shall be heard and determined only in any such court, and agrees not
to bring any action or proceeding arising out of or relating to this Agreement
in any other court.  Each of the parties waives any defense of inconvenient
forum to maintenance of any action or proceeding so brought.
 
10.6           Descriptive Headings.  The descriptive headings herein are
inserted for convenience of reference only, do not constitute a part of this
Agreement and shall not affect in any manner the meaning or interpretation of
this Agreement.
 
10.7           Gender.  Pronouns in masculine, feminine and neuter genders shall
be construed to include any other gender, and words in the singular form shall
be construed to include the plural and vice versa, unless the context otherwise
requires.
 
10.8           References.  All references in this Agreement to Articles,
Sections and other subdivisions refer to the Articles, Sections and other
subdivisions of this Agreement unless expressly provided otherwise.  The words
“this Agreement,” “herein,” “hereof,” “hereby,” “hereunder” and words of similar
import refer to this Agreement as a whole and not to any particular subdivision
unless expressly so limited.  Whenever the words “include,” “includes” and
“including” are used in this Agreement, such words shall be deemed to be
followed by the words “without limitation.”  Each reference herein to a Schedule
or Exhibit refers to the item identified separately in writing by the parties
hereto as the described Schedule or Exhibit to this Agreement.  All Schedules
and Exhibits are hereby incorporated in and made a part of this Agreement as if
set forth in full herein.
 
10.9           Counterparts.  This Agreement may be executed by the parties
hereto in any number of counterparts, each of which shall be deemed an original,
but all of which shall constitute one and the same agreement.  Each counterpart
may consist of a number of copies hereof each signed by less than all, but
together signed by all, the parties hereto.
 
10.10          Injunctive Relief.  The parties hereto acknowledge and agree that
irreparable damage would occur in the event any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached.  It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of the provisions of this
Agreement, and shall be entitled to enforce specifically the provisions of this
Agreement, in any court of the United States or any state thereof having
jurisdiction, in addition to any other remedy to which the parties may be
entitled under this Agreement or at law or in equity.
 
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ARTICLE 11
 
DEFINITIONS
 
 
 
11.1           Certain Defined Terms.  As used in this Agreement, each of the
following terms has the meaning given it below:
 
“Affiliate” shall mean, with respect to any Person, any other Person that,
directly or indirectly, through one or more intermediaries, controls, is
controlled by or is under common control with, such person.

“Applicable Environmental Law” shall mean all Applicable Laws pertaining to
the  protection of the environment (e.g., prevention of pollution and
remediation of contamination) and human heath and safety, including, without
limitation, the Clean Air Act, 42 U.S.C. § 7401 et seq.; the Clean Water Act, 33
U.S.C. § 1251 et seq.; the Oil Pollution Act of 1990, 33 U.S.C. § 2702 et seq.;
the Marine Protection, Research, and Sanctuaries Act, 33 U.S.C. § 1401 et seq.;
the National Environmental Policy Act, 42 U.S.C. § 4321 et seq.; the Noise
Control Act, 42. U.S.C. § 4901 et seq.; the Occupational Safety and Health Act,
29 U.S.C. § 651 et seq.; the Resource Conservation and Recovery Act (“RCRA”), 42
U.S.C. § 6901 et seq., as amended by the Hazardous and Solid Waste Amendments of
1984; the Safe Drinking Water Act, 42 U.S.C. § 300f et seq.; the Comprehensive
Environmental Response, Compensation and Liability Act (“CERCLA”), 42 U.S.C. §
9601 et seq., as amended by the Superfund Amendments and Reauthorization Act;
the Emergency Planning and Community Right-to-Know Act, 42 U.S.C. § 11001 et
seq.; the Toxic Substances Control Act, 15 U.S.C. § 2601 et seq.; the Hazardous
Materials Transportation Act, 49 U.S.C. § 1801 et seq.; the Atomic Energy Act,
42 U.S.C. § 2011 et seq.; and the Nuclear Waste Policy Act of 1982, 42 U.S.C. §
10101 et seq.; and all analogous applicable state and local Applicable Laws,
including, without limitation, Tex. Nat. Res. Code, Title 3 (Oil and Gas) and 16
Tex. Admin. Code. pt. 1 (Railroad Commission of Texas).
 
“Applicable Law” shall mean any federal, state, local, or municipal statute,
law, common law, constitution, ordinance, rule or regulation or any judgment,
order, writ, injunction or decree of any Governmental Entity, or any treaty or
other legally enforceable directive or requirement, to which a specified person
or property is subject.
 
“Basic Documents” shall mean (i) all Oil and Gas Leases, and (ii) all contracts
and agreements that are reasonably necessary to own, explore, develop, operate,
maintain or use the Properties in the manner in which they are currently being
owned, explored, developed, operated, maintained or used and in accordance with
the prudent practices of the oil and gas industry; provided however that “Basic
Documents” shall not include that portion of contracts or agreements which
relate to the ownership and operation of the surface of the Properties.
 
“Business Day” shall mean a day on which banks are open for the transaction of
business in Dallas, Texas.
 
“Casualty Loss” shall mean, with respect to all or any major portion of any of
the Properties, any destruction by fire, blowout, storm or other casualty or any
taking, or pending or
 
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threatened taking, in condemnation or expropriation or under the right of
eminent domain of any of the Properties or portion thereof, in each case prior
to the Closing.
 
“Code” shall mean the Internal Revenue Code of 1986, as amended.
 
“Common Unit” shall mean a Common Unit, as defined in the Partnership Agreement.
 
“Disposal” shall mean disposal as defined under RCRA § 103(3), 42 U.S.C. §
6903(3).
 
“Encumbrances” shall mean liens, charges, pledges, options, mortgages, deeds of
trust, security interests, claims, restrictions (whether on voting, sale,
transfer, disposition or otherwise), easements and other encumbrances of every
type and description, whether imposed by law, agreement, understanding or
otherwise.
 
“Environment” shall mean surface water, groundwater, drinking water supply, land
surface or subsurface strata or ambient air.
 
“Environmental Condition” shall mean any event occurring or condition existing
prior to the Closing Date with respect to the Real Properties or the Properties,
or a Hazardous Materials Release or Disposal on or to the Environment at any
Real Properties or the Properties, any of which has caused or may later cause
any Property to be subject to Remediation under, or not to be in compliance
with, any Applicable Environmental Law.
 
“Environmental Liability” shall mean any cost, damage, expense, liability,
obligation, or other responsibility arising from or under either an Applicable
Environmental Law or relating to an Environmental Condition.
 
“Existing Surface Use Agreements” shall include the following:
 
 
(a)
Central Facility Easement, dated May 10, 2003, between West Fork Partners, L.P.,
et al, and Dale Resources, L.L.C., as amended;

 
 
(b)
Well Operation and Subsurface Easement, dated May 10, 2003, between West Fork
Partners, L.P., et al, and Dale Resources, L.L.C., as amended;

 
 
(c)
Right-of-Way and Easement, dated May 10, 2003, between West Fork Partners, L.P.,
et al, and Dale Resources, L.L.C., as amended;

 
 
(d)
Surface Use Development Plan Consent Letter, dated October 16, 2005, between
West Fork Partners, L.P., et al and Dale Resources, L.L.C. (Brentwood Tract);

 
 
(e)
Surface Use Development Plan Consent Letter, dated October 25, 2005, between
West Fork Partners, L.P., et al and Dale Resources, L.L.C. (Duck Lake Tract);

 
 
(f)
Surface Use Development Plan Consent Letter, dated October 25, 2005, between
West Fork Partners, L.P., et al and Dale Resources, L.L.C. (Bass 311 Tract);

 
 
(g)
Surface Use Request Letter, dated January 23, 2006, from Dale Operating Company
to West Fork Partners, L.P., et al.

 
 
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“Governmental Entity” shall mean any court or tribunal in any jurisdiction
(domestic or foreign) or any public, governmental, or regulatory body, agency,
department, commission, board, bureau or other authority or instrumentality
(domestic or foreign).
 
“Hazardous Materials” shall mean any (i) chemical, constituents, material,
pollutant, contaminant, substance or waste that is regulated by any Governmental
Entity or may form the basis of liability under any Applicable Environmental
Law; (ii) asbestos containing material, lead-based paint, polychlorinated
biphenyls, or radon; and (iii) petroleum, Oil and Gas, or petroleum products.
 
“IRS” shall mean the Internal Revenue Service of the United States.
 
“Knowledge” shall be deemed to exist if any individual who is serving as an
officer of such Person (or in any similar capacity) is actually aware of the
fact or other matter in question; or a prudent individual could be expected to
discover or otherwise become aware of such fact or other matter in the course of
conducting a reasonably comprehensive investigation concerning the existence of
such fact or other matter.
 
“Lessee” shall mean any lessee under any Oil and Gas Lease.
 
“Material Adverse Effect” shall mean with respect to any person, property or
asset any adverse change or adverse condition in or relating to the financial
condition of such person, including its subsidiaries, property or asset that is
material to such person, its subsidiaries, property or asset; provided that any
prospective change or changes in the conditions listed above or relating to or
resulting from (i) the transactions contemplated by this Agreement (or the
announcement of such transactions), (ii) any change or changes in the prices of
oil, gas, natural gas liquids or other hydrocarbon products or (iii) general
economic conditions or local, regional, national or international oil and gas
industry conditions, shall not be deemed to constitute a Material Adverse
Effect.
 
“Mitigation Banking Instrument Agreement”  shall mean that certain Mitigation
Banking Instrument Agreement, Trinity River Mitigation Bank, Ltd., Permit No.
199800370, by and between West Fork Partners, L.P,  and the U.S. Army Corps of
Engineers, et al, dated April 2001, as may hereafter be modified or amended.
 
“Oil and Gas” shall mean oil, gas, casinghead gas, drip gasoline, natural
gasoline, condensate, distillate and all other liquid hydrocarbons, associated
gases, vaporous substances or minerals.
 
“Oil and Gas Lease” shall mean an Oil and Gas lease relating to the Properties
and the real and personal property related thereto.
 
“Other Minerals” shall mean sulphur, lignite, coal, uranium, thorium, iron,
geothermal steam, water, carbon dioxide, helium and all other minerals, ores or
substances of value whether or not generally produced from a wellbore in
conjunction with the production of Oil and Gas.
 
“Partnership Agreement” shall mean the Amended and Restated Partnership
Agreement of the Partnership, as currently in effect.
 
 
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“Permits” shall mean licenses, permits, franchises, consents, approvals,
variances, exemptions, waivers and other authorizations of or from Governmental
Entities or pursuant to any Applicable Law or Environmental Applicable Law.
 
“Permitted Encumbrances” shall mean (i) liens for Taxes not yet due and payable,
(ii) statutory liens (including materialmen’s, mechanic’s, repairmen’s
landlord’s, and other similar liens) arising in connection with the ordinary
course of business securing payments not yet due and payable and (iii) such
defects, imperfections or irregularities of title, if any, as are not
substantial in character, amount or extent and do not materially impair the
conduct of normal operations of the Properties.
 
“Person” (whether or not capitalized) shall mean any individual, corporation,
partnership, limited liability company, joint venture, association, joint-stock
company, trust, enterprise, unincorporated organization or Governmental Entity.
 
“Proceedings” shall mean all proceedings, actions, claims, suits, investigations
and inquiries by or before any arbitrator or Governmental Entity.
 
“Property Tax” shall mean any ad valorem, property (real, personal or mixed) or
similar tax.
 
“Reasonable best efforts” shall mean a party’s best efforts in accordance with
reasonable commercial practice and without the incurrence of unreasonable
expense.
 
“Records” shall mean all data, files or records in the control or possession of
a Contributor pertaining to the ownership of the Properties, including but not
limited to all abstracts of title, accounting records, property tax records,
financial reports and projections, escrow reports, books, contract files,
division order files, documents evidencing the prices currently being paid for
production, engineering data, geological and geophysical reports, lease files,
logs, maps, pressure data, production records, supplemental abstracts of title,
title curative materials, title opinions, title reports, notices, evidence of
payment, correspondence and other data related to the Properties; provided,
however, that “Records” shall not include any of the foregoing to the extent
that portion of such records relate to the ownership and operation of the
surface of the Properties.
 
“Reference Date” shall mean March 31, 2009.
 
“Release” shall mean release as defined under CERCLA § 101(22), 42 U.S.C. §
9601(22).
 
“Remediate” or “Remediation” shall mean any action or work taken to remove or
otherwise remedy any Environmental Condition, including (i) any survey, site
assessment, audit, investigation, inspection, sampling, analysis, removal,
excavation, pump and treat, cleanup, abatement, corrective action, remediation,
Disposal, storage, handling, or treatment required under any Applicable
Environmental Law and (ii) any action required to bring any Real Properties or
Properties into compliance with any Applicable Environmental Law.
 
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“Surface Owners” shall mean all Persons that own surface rights to the tracts in
which the Properties are located.
 
“Tax” shall mean (a) any and all taxes, assessments, charges, duties, fees,
levies, imposts or other similar charges imposed by a Governmental Entity,
including all income, franchise, profits, margins, capital gains, capital stock,
transfer, gross receipts, sales, use, transfer, service, occupation, ad valorem,
real or personal property, excise, severance, windfall profits, customs,
premium, stamp, license, payroll, employment, social security, unemployment,
disability, environmental, alternative minimum, add-on, value-added, withholding
and other taxes, assessments, charges, duties, fees, levies, imposts or other
similar charges of any kind, and all estimated taxes, deficiency assessments,
additions to tax, penalties and interest, whether disputed or otherwise, and (b)
any liability of Seller for the payment of any amounts of the type described in
clause (a) as a result of any express or implied obligation to indemnify or
otherwise assume or succeed to the liability of any other Person as a successor,
transferee, by contract, or otherwise..
 
“Tax Return” shall mean any report, return, election, document, estimated tax
filing, declaration, claim for refund, extensions, information returns, or other
filing with respect to any Taxes provided to any Governmental Entity including
any schedules or attachments thereto and any amendment thereof.
 
“Transaction Documents” shall mean this Agreement and any agreement or
certificate delivered pursuant hereto.
 
“Treasury Regulations” shall mean the regulations promulgated by the United
States Treasury Department under the Code.
 
“Transfer Application” shall have the meaning assigned to it in the Partnership
Agreement.
 
“Unit” shall mean , collectively, a drilling, spacing, proration, production or
enhanced recovery unit formed pursuant to a voluntary unitization,
communitization or pooling agreement, or a drilling, spacing, proration,
production or enhanced recovery unit formed under or pursuant to law, rule or
regulation or other action of a regulatory body having jurisdiction.
 
11.2           Certain Additional Defined Terms.  In addition to such terms as
are defined in Section 11.1, the following terms are used in this Agreement as
defined in the Sections set forth opposite such terms:
 
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Defined Term
Section Reference
   
Agreement
Introduction
Applicable Environmental Laws
Section 3.12
Casualty Loss
Section 7.5
CERCLA
Section 3.12
Closing
Section 1.1
Closing Date
Section 1.1
Contributed Cash
Section 1.2(a)(vii)
Contributor
Introduction
Contributors’ Indemnified Parties
Section 9.2(b)
Conveyances
Section 1.3
Disposal
Section 3.12
Exchange Agent
Section 1.2(b)
Hazardous Substance
Section 3.12
Hazardous Waste
Section 3.12
Loss
Section 9.2(a)
Partnership
Introduction
Partnership Audited Financial Statements
Section 2.7
Partnership-Entitled Production and Proceeds
Section 7.1
Partnership Financial Statements
Section 2.7
Partnership GP
Section 2.3(a)
Partnership Indemnified Parties
Section 9.2(a)
Partnership Latest Balance Sheet
Section 2.7
Partnership Unaudited Financial Statements
Section 2.7
Production
Section 1.2(a)(iv)
Properties
Section 1.2
Real Properties
Section 3.12(a)
RCRA
Section 3.12
SEC Filings
Section 2.13
Subject Units
Section 1.2(b)
Subject Units Allocation Schedule
Section 1.2(b)
TRB Minerals
Introduction
Third Party Claim
Section 9.3(b)
Tiggator
Introduction
Transfer
Section 1.2
West Fork Partners
Introduction

 
[Signature Page Follows]
 
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be executed
on its behalf by its representative thereunto duly authorized, as of the date
first above written.
 
 
THE PARTNERSHIP:
 
DORCHESTER MINERALS, L.P.
 
By:           Dorchester Minerals Management LP,
    its general partner
 
  By:     Dorchester Minerals Management GP LLC,
               its general partner
 
                              By:   /s/ William Casey McManemin
                                         William Casey McManemin,
                       Chief Executive Officer and Manager
 
THE CONTRIBUTORS:
 
TIGGATOR, INC.
 
By:        /s/ Wallace L. Hall, Jr.
    Wallace L. Hall, Jr., Vice President
 
 
TRB MINERALS, LP
 
By:       Lizardhead Corp.,
its general partner
 
By:     /s/ Wallace L. Hall,
Jr.                                                                
          Wallace L. Hall, Jr.,
          President
 
                    WEST FORK PARTNERS, L.P.
                    
                    By:         Wetland Partners, L.P.,
                 its general partner
 
                                  By:       WF Investments, Inc.,
                    its general partner
 
                                        By:       /s/ Wallace L. Hall,
Jr.                                                                
                       Wallace L. Hall, Jr.,
                                                  President