**EXHIBIT 10.3**

 

**REGISTRATION RIGHTS AGREEMENT**

 

This Registration Rights Agreement (this “Agreement”) is made and entered into as of January 31,2003, by and among DORCHESTER MINERALS, L.P., a Delaware limited partnership (the “Company”), and the parties listed on Annex A hereto (each, a “Holder” and collectively, the “Holders”); 

 

W I T N E S S E T H: 

 

WHEREAS, the Company, Dorchester Hugoton, Ltd., RepublicRoyalty Company, Spinnaker Royalty Company, L.P. and certain other parties are parties to that certain Combination Agreement, dated as of December 13, 2001 (the “Combination Agreement”), pursuant to which Dorchester Hugoton, Ltd.,Republic Royalty Company and Spinnaker Royalty Company, L.P. have agreed to combine their business and properties into the Company (the “Combination”); and 

 

WHEREAS, in connection with the Combination, the Holders will receive LP Units as theMerger Consideration; 

 

WHEREAS, the Companyhas agreed to register the LP Units as set forth herein; and 

 

WHEREAS, capitalized terms not defined herein have the meaning given to them in the Combination Agreement; 

 

NOW, THEREFORE, in consideration of the premises and the mutual terms, covenants and conditions herein contained, and intending to belegally bound hereby, the parties hereto hereby agree as follows: 

 

The Company and the Holders covenant and agree as follows: 

 

1. Definitions. For purposes of this Agreement: 

 

(a) The term “Best Efforts” means a Person’s reasonable best efforts without the incurrence of unreasonable expense.

 

(b) The term “Commission” means theSecurities and Exchange Commission. 

 

(c) The term“Expenses” means all expenses incident to the Company’s performance of or compliance with Section 2.1 or 2.2, including, without limitation, all registration, filing and National Association of Securities Dealers fees, all fees andexpenses of complying with securities or blue sky laws, all word processing, duplicating and printing expenses, messenger and delivery expenses, the fees and disbursements of counsel for the Company and of its independent public accountants,including the expenses of any special audits or “cold comfort” letters required by or incident to such performance and compliance, the reasonable fees and disbursements of special counsel to the Holders selected by the Requisite Threshold,premiums and other costs of policies of insurance against liabilities arising out of the public offering of the Registrable Securities being registered and any fees and disbursements of underwriters 

customarily paid by issuers or sellers of securities; provided, however, that “Expenses” shall not include underwriting discountsand commissions. 

 

(d) The term “Person”means an individual, partnership, corporation, limited liability company, trust or unincorporated organization, or government or agency or political subdivision thereof. 

 

(e) The terms “register,” “registered” and “registration” refer to aregistration of securities effected by preparing and filing a registration statement or similar document in compliance with the Securities Act (as defined below), and the declaration or ordering of effectiveness of such registration statement ordocument. 

 

(f) The term “RegistrableSecurities” means the LP Units received by a Holder pursuant to the Combination Agreement. As to any Registrable Security, once issued such security shall cease to be a Registrable Security when (i) it has been effectively registered under theSecurities Act and disposed of in accordance with the registration statement covering it, (ii) it is sold pursuant to Rule 144 or Rule 145 (or any similar provisions then in force) under the Securities Act or in a private transaction in which theHolder’s rights under this Agreement are not assigned. 

 

(g) The term “Requisite Threshold” means any holder or holders of an aggregate of at least fifty-one percent (51%) of all Registrable Securities. 

 

(h) The term “Securities Act” means the Securities Act of 1933, as amended, and the term“Exchange Act” means the Securities Exchange Act of 1934, as amended. 

 

2. Registration. 

 

2.1 Registration on Request. 

 

(a) From time to time after six (6) months from the date of the closing of the Combination, upon the written request of the Requisite Threshold that the Company effect the registration under the Securities Act of at least twenty-fivepercent (25%) of the Registrable Securities held by the requesting party or parties and specifying the intended method of disposition thereof and whether or not such requested registration is to be an underwritten offering, the parties hereto agreeas follows: 

 

(i) the Company will promptly givewritten notice of such requested registration to all other holders of Registrable Securities, if any; and 

 

(ii) promptly after the performance of any obligations imposed under clause (i) of this Section 2.1(a), and subject to the limitationsset forth in Section 2.1(c) and Section 3, the Company will use its Best Efforts to effect the registration under the Securities Act of the Registrable Securities that the Company has been requested to register by the Requisite Threshold and theother holders of Registrable Securities by written request given to the Company within thirty (30) days after the giving of such written notice by the Company (which request shall specify the intended method of disposition of such RegistrableSecurities) and to qualify the securities subject to such registration under the securities laws of such states as the 

 

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Requisite Threshold shall reasonably request, all to the extent requisite to permit the disposition (in accordance with the intended methodsthereof as aforesaid) of the Registrable Securities to be registered and cause such registration to remain effective for a period of not less than one hundred eighty (180) days following its effective date or such shorter period as shall terminatewhen all Registrable Securities covered by such registration statement have been sold. In the case of a shelf registration statement on Form S-3 or any successor form under the Securities Act for an offering to be made on a continuous basis pursuantto Rule 415 under the Securities Act, the Company shall cause such registration to remain effective for a period of not less than one (1) year following its effective date or such shorter period as shall terminate when all of the RegistrableSecurities covered by such registration statement have been sold. The Company shall not be required to qualify the securities subject to such registration in any jurisdiction where, as a result thereof, the Company would become subject to generalservice of process or to taxation or to qualification to do business as a foreign corporation or partnership doing business in such jurisdiction solely as a result of such qualification. 

 

(b) Registration Statement Form. Subject to Section 2.1(c), registrations under this Section 2.1 shallbe on such appropriate registration form of the Commission as shall be reasonably selected by the Company and reasonably acceptable to the Requisite Threshold and as shall permit the disposition of such Registrable Securities in accordance with theintended method or methods of disposition specified in the request for such registration, provided that not more than two (2) registrations under this Section 2.1 shall be a shelf registration statement on Form S-3 or any successor form under theSecurities Act for an offering to be made on a continuous basis pursuant to Rule 415 under the Securities Act. The Company shall not be obligated to effect any such shelf registration on Form S-3, pursuant to this Section 2.2 if Form S-3 is notavailable for such offering by the Holders. 

 

(c) Limitations with respect to Requested Registrations. 

 

(i) The Company shall have no obligation to take or continue any action to effect a requested registration under this Section 2.1 after the Company has effected four (4) registrations that arerequested pursuant to this Section 2.1; provided that, a registration requested pursuant to this Section 2.1 shall not be deemed to have been effected (1) unless a registration statement with respect thereto has been declared effective for a periodof at least ninety (90) days, (2) if after a registration statement has become effective, such registration is terminated by any stop order, injunction or other order or requirement of the Commission or other governmental agency or court, or (3) ifthe conditions to closing specified in the purchase agreement or underwriting agreement entered into in connection with such registration are not satisfied, other than as a result of the voluntary termination of such offering by the RequisiteThreshold. 

 

(ii) Notwithstanding the foregoing,if the Company shall furnish, to the Holders requesting a registration statement pursuant to this Section 2.1, a certificate signed by the Chief Executive Officer of the Company stating that, in the good faith judgment of the Board of Managers ofthe Company, a postponement would be in the best interests of the Company and its partners due to a pending transaction, investigation or other event, then the Company shall have the right to defer such filing for a period of not more than ninety(90) days following receipt of the request (made pursuant to Section 2.1(a) hereof) of the Requisite Threshold. 

 

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(d)Selection of Underwriters. If a requested registration pursuant to this Section 2.1 involves an underwritten offering, the underwriter or underwriters thereof shall be selected by the Requisite Threshold and reasonably acceptable to theCompany. 

 

(e) Priority in RequestedRegistrations. If a requested registration pursuant to this Section 2.1 involves an underwritten offering, and the managing underwriter(s) shall advise the Company that, in its opinion, the number of securities requested to be included in suchregistration exceeds the number that can be sold in such offering within a price range acceptable to the Requisite Threshold, the Company will include in such registration the number of Registrable Securities that the Company is so advised can besold in such offering, pro-rata among the Registrable Securities requested to be included in such registration. 

 

2.2 Piggyback Registration. The holders of Registrable Securities are entitled to “piggyback” (i) on a registration bythe Partnership for an offering of equity securities of the Partnership for cash (other than an offering relating solely to an employee benefit plan) and (ii) on a registration requested by the General Partner and its Affiliates pursuant to demandregistration rights, provided that the party exercising the demand registration may, at any time, abandon or delay any such registration initiated by it. If the proposed offering upon which the holders of Registrable Securities exercise theirpiggyback rights shall be an underwritten offering, then, in the event that the managing underwriter or managing underwriters of such offering advise the Partnership and the Holders electing to exercise piggyback rights in writing that in theiropinion the inclusion of all of such Holder’s Partnership Securities would adversely and materially affect the success of the offering, the securities that shall be included in such offering shall be allocated among the Partnership or theparties exercising demand registration rights, as applicable, and the Holders exercising piggyback registration rights in proportion to the total number of securities that the Partnership or the parties exercising demand registration rights, asapplicable, propose to register in relation to the total number of Registrable Securities that the Holders exercising piggyback registration rights propose to register. 

 

2.3 Termination of Registration Rights. The Holders will have no rights to request registration underthis Section 2 after the later of (i) December 31, 2010 or (ii) two (2) years following the withdrawal or removal of Dorchester Minerals Management LP as the general partner of the Company. 

 

3. Registration Procedures. 

 

(a) The Company will use its Best Efforts to furnish to eachHolder requesting registration pursuant to this Agreement a copy of the requisite registration statement, each amendment and supplement to such registration statement and a reasonable number of copies of the prospectus included in such registrationstatement (including each preliminary prospectus), as each such Holder may reasonably request in order to facilitate such Holder’s disposition of its securities covered by such registration statement. 

 

(b) The Company represents and covenants that any registrationstatement covering sales of Registrable Securities by a Holder pursuant to this Agreement will not contain an untrue statement of fact or omit to state any material fact required to be stated in the prospectus or that is necessary to make thestatements in the prospectus, in light of the circumstances then existing, not misleading. The Company will use its Best Efforts to notify the 

 

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Holders requesting registration pursuant to this Agreement, at any time when a prospectus relating to the requisite registration statement isrequired to be delivered under the Securities Act (within the period that the Company is required to keep such registration statement effective), of the happening of any event as a result of which the prospectus included in the requisiteregistration statement (as then in effect) contains an untrue statement of a material fact or omits to state any material fact required to be stated in the prospectus or that is necessary to make the statements in the prospectus, in light of thecircumstances then existing, not misleading. The Company will prepare (and, as soon as reasonably practicable, file) a supplement or amendment to that prospectus so that, as thereafter delivered to the purchasers of those securities covered by suchregistration statement, that prospectus will not contain an untrue statement of a material fact or omit to state any material fact required to be stated in the prospectus or that is necessary to make the statements in the prospectus, in light of thecircumstances then existing, not misleading. However, if the Board of Managers of the Company determines in its good faith judgment that filing any supplement or amendment to such registration statement to keep such registration statement availablefor use by such Holders for resales of the securities covered by such registration statement would require the Company to disclose material information that the Company has a bona fide business purpose for preserving as confidential, then, upon theCompany’s notice to each Holder (the “Suspension Notice”), the Company’s obligation to supplement or amend such registration statement will be suspended. That suspension will remain in effect until the Company notifies suchHolders in writing that the reasons for suspending those obligations no longer exist and the Company amends or supplements such registration statement as may be required. The Company does not have the right to delay filing any supplement oramendment for more than thirty (30) consecutive days or sixty (60) days (including consecutive and non-consecutive days). As soon as a Holder receives a Suspension Notice from the Company under this Section 3(b), that Holder will immediatelydiscontinue disposing of securities covered by such registration statement until that Holder receives copies of the supplemented or amended prospectus referred to in this Section 3(b). At the Company’s requests, each Holder will deliver to theCompany all copies of the prospectus covering such securities current at the time of that request. 

 

(c) After receiving notice of any stop order issued or threatened by the Commission with respect to the requisite registration statement,the Company will use its Best Efforts to (i) advise the Holders and (ii) take all actions required to prevent the Commission from entering that stop order or and to remove it if it has been entered. 

 

(d) The Company will use its Best Efforts to cause allsecurities included in the requisite registration statement to be listed, by the date of the first sale of such securities pursuant to such registration statement, on the principal securities exchange that the Company’s LP Units are then listedon. The Company agrees to facilitate the delivery of the Registrable Securities upon any sale by a Holder pursuant to this Agreement. The Company agrees to enter into customary underwriting agreements (which may require representations, covenants orindemnification), cooperate in any due diligence conducted by underwriters, and deliver or cause to be delivered to the Holders and the underwriters, if any, any certificates, opinions or comfort letters customarily required. 

 

(e) Each Holder will sell its Registrable Securitiesregistered in accordance with Section 2 in compliance the prospectus delivery requirements under the Securities Act. 

 

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(f) TheCompany may require the Holders to furnish to the Company information regarding the Holders and the distribution of the securities covered by the requisite registration statement as the Company may from time to time request in writing. Each Holderrepresents and covenants that any such information provided by such Holder with respect to a registration statement covering Registrable Securities by such Holder pursuant to this Agreement will not contain an untrue statement of fact or omit tostate any material fact required to be stated in the prospectus regarding the Holder or that is necessary to make the statements in the prospectus regarding the Holder, in light of the circumstances then existing, not misleading. Each Holder will(i) notify the Company as promptly as practicable of any inaccuracy or change in information that Holder previously furnished to the Company or of the occurrence of any event that would cause any prospectus relating to such securities to (A) containan untrue statement of a material fact regarding that Holder or its resale of such securities or (B) omit to state any material fact regarding that Holder or its resale of such securities required to be stated in that prospectus or necessary to makethe statements in that prospectus not misleading in light of the circumstances then existing and (ii) promptly furnish to the Company any additional information so that the prospectus will not contain, with respect to that Holder or its distributionof such securities, an untrue statement of a material fact or omit to state a material fact required to be stated in it or necessary to make the statements in that prospectus, in light of the circumstances then existing, not misleading.

 

4. Expenses. Except as set forth inSection 6, the Company will pay all Expenses of the Holders in connection with any registration pursuant to Section 2, other than underwriting discounts or commissions. 

 

5. Market-Standoff Agreement

 

(a) Market-Standoff Period; Agreement. In connection with the first follow-on offering of theCompany’s securities by the Company for cash after the closing date of the Combination and upon request of the Company or managing underwriter(s) of such offering of the Company’s securities, each Holder agrees not to sell, make any shortsale of, loan, grant any option for the purchase of, or otherwise dispose of any securities of the Company (other than those included in the registration) without the prior written consent of the Company or the managing underwriter(s), as the casemay be, for such period of time (not to exceed one hundred eighty (180 days) from the date of such request by the Company or the managing underwriter(s) and to execute an agreement reflecting the foregoing as may be requested by the managingunderwriter(s) at the time of the Company’s follow-on offering. The managing underwriter(s) are intended third party beneficiaries of this Section 5 and shall have the right, power and authority to enforce the provisions of this Section 5 asthough they were a party hereto. 

 

(b)Limitations. The obligations described in Section 5(a) shall not apply to a registration relating solely to employee benefit plans, or to a registration relating solely to a transaction pursuant to Rule 145 under the Securities Act.

 

(c) Stop-Transfer Instructions. In orderto enforce the foregoing covenants, the Company may impose stop-transfer instructions with respect to the Registrable Securities of each Holder. 

 

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(d)Transferees Bound. Each Holder agrees that it will not transfer securities of the Company unless each transferee agrees in writing to be bound by all of the provisions of this Section 6. 

 

6. Indemnification. In the event any RegistrableSecurities are included in a registration statement under this Agreement: 

 

(a) To the extent permitted by law, the Company will indemnify and hold harmless the Holder, the officers and directors of the Holder, each Person that serves as an investment manager of the Holderwith respect to the Registrable Securities and each other Person, if any, who controls the Holder within the meaning of Section 15 of the Securities Act (each, an “Indemnified Party” and, collectively, the “Indemnified Parties”),against any losses, claims, damages, liabilities or expenses, joint or several, to which any such Indemnified Party may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages, liabilities or expenses (oractions in respect thereof) arise out of or are based upon (i) any untrue statement or alleged untrue statement of a material fact contained in any registration statement under which such Registrable Securities were registered under the SecuritiesAct pursuant hereto, or any post-effective amendment thereof, or the omission or alleged omission therefrom of a material fact required to be stated therein or necessary to make the statements therein not misleading, or (ii) any untrue statement oralleged untrue statement of a material fact contained in any preliminary prospectus, if used prior to the effective date of the registration statement and not corrected in the final prospectus, or contained in the final prospectus (as amended orsupplemented, if the Company shall have filed with the Commission any amendment thereof or supplement thereto), or the omission or alleged omission therefrom of a material fact required to be stated therein or necessary to make the statementstherein not misleading; and will reimburse any such Indemnified Party for any legal or other expenses reasonably incurred by such Indemnified Party in connection with investigating or defending any such loss, claim, damage, liability or expense;provided, however, that the indemnity agreement contained in this Section 6(a) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or expense if such settlement is effected without the consent of the Company(which consent shall not be unreasonably withheld); and provided further that the Company shall not be liable in any such case to the extent that any such loss, claim, damage, liability or expense arises out of or is based upon any such untruestatement or omission or alleged untrue statement or omission which has been made in said registration statement, preliminary prospectus, prospectus or amendment or supplement or omitted therefrom in reliance upon and in conformity with informationfurnished in writing to the Company by the Holder specifically for use in the preparation thereof. 

 

(b) Promptly after receipt by an Indemnified Party under this Section 6 of notice of the commencement of any action (including anygovernmental action), such Indemnified Party will, if a claim in respect thereof is to be made against the Company under this Section 6, notify the Company in writing of the commencement thereof and the Company shall have the right to participatein, and, to the extent the Company so desires, to assume the defense thereof with counsel mutually satisfactory to the parties; provided, however, that an Indemnified Party shall have the right to retain its own counsel, with the fees and expensesto be paid by the Company, if representation of such Indemnified Party by the counsel retained by the Company would be inappropriate due to actual or potential differing interests between such Indemnified Party and any other party represented bysuch counsel in such proceeding. The 

 

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failure to so notify the Company within a reasonable time of the commencement of any such action, if prejudicial to its ability to defendsuch action, shall relieve the Company of any liability to the Indemnified Party under this Section 6, but the omission so to notify the Company will not relieve it of any liability that it may have to any Indemnified Party otherwise than under thisSection 6. 

 

(c) If the indemnification providedfor in this Section 6 from the Company is unavailable to an Indemnified Party hereunder in respect of any losses, claims, damages, liabilities or expenses referred to herein, then the Company, in lieu of indemnifying such Indemnified Party, shallcontribute to the amount paid or payable by the Company as a result of such losses, claims, damages, liabilities or expenses in such proportion as is appropriate to reflect the relative fault of the Company and Indemnified Parties in connection withthe actions which resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations. The relative fault of the Company and Indemnified Parties shall be determined by reference to, among otherthings, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, has been made by, or relates to information supplied by, the Company or IndemnifiedParties, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such action. The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and expenses referredto above shall be deemed to include, subject to the limitations set forth in Section 6 hereof, any legal or other fees or expenses reasonably incurred by such party in connection with any investigation or proceeding. 

 

The parties hereto agree that it would not be just andequitable if contribution pursuant to this Section 6 were determined by pro rata allocation or by any other method of allocation which does not take into account the equitable considerations referred to in the immediately preceding paragraph. NoPerson guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. 

 

7. Reports Under Exchange Act. With a view to makingavailable to the Holder the benefits of Rule 144 and Rule 145 under the Securities Act and any other rule or regulation of the Commission that may at any time permit the Holder to sell securities of the Company to the public without registration,the Company agrees to: 

 

(a) file with theCommission in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act, and the rules and regulations adopted by the Commission thereunder; and 

 

(b) furnish to the Holder such information as may bereasonably requested in availing the Holder of any rule or regulation of the Commission that permits the sale of any securities without registration. 

 

8. Assignment of Registration Rights. The right to cause the Company to register Registrable Securities pursuant to this Agreementmay be assigned, in whole or in part, by the Holder to not more than four (4) Persons without the prior written consent of the Company. 

 

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9.Condition to the Obligation of the Parties. The effectiveness of this Agreement and the respective obligations of each party to effect the transactions contemplated by this Agreement shall be subject to the fulfillment of the condition thatthe Combination shall have been consummated in accordance with the terms of the Combination Agreement. 

 

10. Notices. All notices and other communications provided for or permitted hereunder shall be made in writing and shall be deemedto have been duly given or made if (i) delivered personally, (b) expedited delivery service or (c) certified or registered mail, postage prepaid. Any such notice shall be deemed given upon its receipt at the following address: 

 
 (a) If to a Holder, initially at 
 

c/o Energy Trust, LLC 

551 Fifth Avenue, 37th Floor 

New York, New York 10176

Fax: (212) 557-0876 

 

and thereafter at such other address, notice of which is given to the Company in accordance with this Section10; and 

 
 (b) If to the Company, initially at 
 

Dorchester Minerals, L.P. 

c/o Dorchester Minerals Management GP LLC 

3738 Oak LawnAvenue, Suite 300 

Dallas, Texas 75219 

Attention: William Casey McManemin 

Fax: (214) 559-0301 

 

and thereafter at such other address, notice of which is given in accordance with this Section 10. 

 

11. Counterparts. This Agreement may be executed in twoor more counterparts, all of which will be considered one and the same agreement and will become effective when one or more counterparts have been signed by each of the parties and delivered to the other parties, it being understood that all partiesneed not sign the same counterpart. 

 

12.Entire Agreement. This Agreement constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter of this Agreement. No provision of thisAgreement will be construed as the basis for any liability of the Company in connection with the Combination Agreement or any of the transactions contemplated thereby (other than the registration of the Registrable Securities pursuant to thisAgreement). 

 

13. Governing Law;Jurisdiction. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF TEXAS, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW REQUIRING 

 

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THE APPLICATION OF THE LAW OF ANOTHER STATE, EXCEPT TO THE EXTENT THE DGCL EXPRESSLY APPLIES TO A PARTICULAR MATTER. 

 

14. Amendments and Waivers. The provisions of thisAgreement, including the provisions of this sentence, may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof (which may be generally or in a particular instance and either retroactively orprospectively) may not be given, except pursuant to a writing signed by the Company and the holders of at least a majority of the Registrable Securities. 

 

**[SIGNATURES APPEARON FOLLOWING PAGE]**

 

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IN WITNESSWHEREOF, the parties hereto have executed and delivered this Agreement as of the date first above written. 

 

**Company:**

 

Dorchester Minerals, L.P.

By:
 
Dorchester Minerals Management LP,its general partner

By:
 
Dorchester Minerals Management GP LLC, its general partner

By:
 
/s/    WILLIAM CASEYMCMANEMIN        
  
**William Casey McManemin, Chief Executive Officer**

 

**Holders:**

 

Energy Trust, LLC, on behalf of each Holder listed on Annex A as its 

investment manager

 

By:
 
/s/    PATRICK H.SWEARINGEN        
  
**Name: Patrick H. Swearingen**
  
**Title: Director**

 

**ANNEXA**

 

**List of Holders**

 

Lucent Technologies, Inc. Master Pension Trust 

 

AT&T Long Term Investment Trust 

 

Delta Master Trust 

 

Boeing Company Employee Retirement Plans Master Trust

 

Bell Atlantic Master Trust 

 

Kodak Retirement Income Plan Trust 

 

Eastman Retirement Assistance Plan Trust