Document:

FIRST AMENDMENT TO
                            AGREEMENT OF PARTNERSHIP
                       PW/GEODYNE NPI PARTNERSHIP P-6

       The Agreement of  Partnership  of PW/Geodyne  NPI  Partnership  P-6 dated
November 28, 1989 (the "Agreement") is hereby amended as follows:

       A.  The first  sentence of Section 2.1 is hereby  deleted and replaced
by the following provision:

       "The NPI  Partnership  shall be  conducted  under  the name  Geodyne  NPI
Partnership P-6."

       B.  All  references in the Agreement to  "PW/Geodyne  NPI  Partnership
P-6" are hereby changed to "Geodyne NPI Partnership P-6".

       C.  The third  sentence of Section 2.1 is hereby  deleted and replaced
by the following provision:

       "The office and principal place of business of the NPI Partnership  shall
be c/o Geodyne Energy Company, Two West Second, Tulsa, Oklahoma 74103."

       D.  The  name of the  "General  Partner"  and the  "Limited  Partnership"
reflected   in  Article   One  has  been   changed   from   "PaineWebber/Geodyne
Institutional/Pension   Energy  Income  Limited  Partnership  P-6"  to  "Geodyne
Institutional/Pension  Energy Income Limited Partnership P-6". All references in
the Agreement to the name of the "General Partner" and the "Limited Partnership"
are hereby  changed to reflect  this name  change.  This change  reflects a name
change only and not a change of entity.

       In all other respects the Agreement is hereby ratified and affirmed.

 DATED:    February 26, 1993
                                         Managing Partner:

                                         Geodyne Energy Company

                                         /s/ Michael E. Luttrell
                                         -------------------------------
                                         Michael E. Luttrell
                                         Executive Vice President

                                      -1-
<PAGE>

                                         General Partner:

                                         Geodyne Institutional/Pension
                                         Energy Income Limited
                                         Partnership P-6
                                         By:  Geodyne Properties, Inc.,
                                              General Partner

                                         By: /s/ Michael E. Luttrell
                                             ---------------------------
                                              Michael E. Luttrell,
                                              Executive Vice President

                                      -2-SECOND AMENDMENT TO
                            AGREEMENT OF PARTNERSHIP
                          GEODYNE NPI PARTNERSHIP P-6

      This Second  Amendment to  Agreement  of  Partnership  of  PW/Geodyne  NPI
Partnership  P-6 (the  "Partnership")  is entered  into by and  between  Geodyne
Resources,  Inc.  ("Resources"),  a Delaware corporation,  as successor Managing
Partner, and Geodyne Institutional/Pension Energy Income Limited Partnership P-6
("Geodyne P-6"), as General Partner.

      WHEREAS,  on November 28, 1989,  Geodyne  Energy  Company  ("Energy"),  as
Managing Partner, and Geodyne P-6, as General Partner, executed and entered into
that certain  Agreement of Partnership of PW/Geodyne  NPI  Partnership  P-6 (the
"Agreement"); and

      WHEREAS, on February 26, 1993, Energy and Geodyne P-6 executed and entered
into that certain First Amendment to Agreement,  whereby it changed (i) the name
of the  Partnership  from  "PW/Geodyne  NPI  Partnership  P-6" to  "Geodyne  NPI
Partnership  P-6",  (ii) the  address of the  Partnership's  principal  place of
business,  and (iii) the  address  for the  Partnership's  agent for  service of
process; and

      WHEREAS,  Section 10.1 of the Agreement provides that the managing partner
of the partnership (the "Managing Partner") may, without prior notice or consent
of any other Partner (as defined in the Amended Agreement),  amend any provision
of this  Agreement if, in its opinion,  such  amendment does not have a material
adverse  effect  upon  the  Limited  Partnership  (as  defined  in  the  Amended
Agreement); and

      WHEREAS,   Energy   merged  with  and  into  Geodyne   Resources,   Inc.
("Resources"), its parent corporation, effective June 30, 1996; and

      WHEREAS,  Section 6.1 of the Agreement  provides that the Managing Partner
may assign its  Managing  Partner  Interest to any entity  which shall  become a
successor  Managing Partner,  if such assignment is in connection with a merger;
and

      WHEREAS,  as a result of the  merger of  Energy  with and into  Resources,
ownership of the Managing  Partner  Interest in the  Partnership  is assigned to
Resources by operation of law; and

      WHEREAS,  as a result of the  merger of  Energy  with and into  Resources,
Resources  has  now  succeeded  to  the  position  of  Managing  Partner  of the
Partnership; and

      WHEREAS, Resources, as Managing Partner, desires to amend the Agreement in
order to reflect Resources as the new Managing Partner.

                                      -1-
<PAGE>

      NOW,  THEREFORE,  in  consideration  of  the  covenants,   conditions  and
agreements herein contained, the parties hereto hereby agree as follows:

       All  references in the Agreement to Geodyne  Energy Company as Managing
       Partner are hereby  amended to  reflect,  instead,  Geodyne  Resources,
       Inc. as Managing Partner.

       IN WITNESS  WHEREOF,  the parties hereto have hereunto set their hands as
of the 1st day of July, 1996.

                                       Geodyne Energy Company
                                       by Geodyne Resources, Inc.
                                       as successor by merger

                                       By:  /s/ Dennis R. Neill
                                            ----------------------------
                                            Dennis R. Neill
                                            President

                                       Geodyne Resources, Inc.
                                       as Managing Partner

                                       By:  /s/ Dennis R. Neill
                                            ----------------------------
                                            Dennis R. Neill
                                            President

                                       Geodyne Institutional/Pension
                                       Energy Income Limited
                                       Partnership P-6
                                       as General Partner

                                       By Geodyne Resources, Inc.
                                          General Partner

                                       By:  /s/ Dennis R. Neill
                                            ----------------------------
                                            Dennis R. Neill
                                            President

                                      -2-CERTIFICATE OF LIMITED PARTNERSHIP
                                      OF
                  PAINEWEBBER/GEODYNE INSTITUTIONAL/PENSION
                    ENERGY INCOME LIMITED PARTNERSHIP P-7

       The undersigned  General Partner hereby duly executes this Certificate of
Limited Partnership of PaineWebber/Geodyne  Institutional/Pension  Energy Income
Limited  Partnership  P-7 (the  "Partnership")  which is  being  filed  with the
Secretary of State of Oklahoma in accordance  with the Oklahoma  Revised Uniform
Limited Partnership Act.

       1.    The   name   of   the    Partnership    is    PaineWebber/Geodyne
Institutional/Pension Energy Income Limited Partnership P-7.

       2. The address of the registered  office of the  Partnership is 320 South
Boston  Ave.,  The  Mezzanine,  Tulsa,  Oklahoma  74103,  and  the  name  of the
registered  agent  whose  business  office  address  will  be  the  same  as the
registered office address is Geodyne Properties, Inc.

       3.    The address of the  principal  office of the  Partnership  in the
United States where its  Partnership  records are to be kept or made available
is c/o Geodyne Properties,  Inc., 320 South Boston Ave., The Mezzanine, Tulsa,
Oklahoma 74103-3708.

       4. The name, the mailing address,  and the street address of the business
or residence of each general partner of the Partnership are as follows:

       Name                 Mailing Address              Business Address

Geodyne Properties,      320 South Boston Ave.         320 South Boston Ave.
   Inc.                  The Mezzanine                 The Mezzanine
                         Tulsa, Oklahoma               Tulsa, Oklahoma
                        74103-3708                     74103-3708

<PAGE>

       5.    The latest  date upon which the  Partnership  is to  dissolve  is
February 28, 2012.

       SIGNED on this 28th day of February, 1992.

                                           GENERAL PARTNER:

                                           Geodyne Properties, Inc.
                                           a Delaware corporation

                                           By:  /s/ Michael E. Luttrell
                                                ---------------------------
                                                 Michael E. Luttrell
                                                 Executive Vice PresidentPAINEWEBBER/GEODYNE INSTITUTIONAL/PENSION ENERGY
                        INCOME LIMITED PARTNERSHIP P-7
                        AGREEMENT OF LIMITED PARTNERSHIP

       This Agreement of Limited  Partnership  (this  "Agreement"),  dated as of
February 28, 1992, is entered into by and between  Geodyne  Properties,  Inc., a
Delaware corporation,  as General Partner, and Geodyne Institutional  Depositary
Company, a Delaware corporation, as the sole initial Limited Partner.

       Whereas,  the parties hereto desire to form a limited  partnership  under
the Oklahoma Revised Uniform Limited Partnership Act pursuant to this Agreement;

       Now,  Therefore,  in  consideration of the mutual promises and agreements
made  herein,  the  parties,  intending  to be legally  bound,  hereby  agree as
follows:

                                   ARTICLE ONE

                                  DEFINED TERMS

       The  defined  terms used in this  Agreement  shall,  unless  the  context
otherwise  requires,  have the  meanings  specified  in this  Article  One.  The
singular  shall  include the plural and the  masculine  gender shall include the
feminine, the neuter, and vice versa, as the context requires.

       "Accountants"   shall  mean  Ernst  &  Young  or  such  other  nationally
recognized firm of independent  certified public accountants as shall be engaged
from time to time by the General Partner for the Partnership.

       "Acquisition  Reserve  Report" shall mean a Hydrocarbon  reserve  report,
made available to the Partnership, prepared by an Independent Petroleum Engineer
acceptable to the General Partner in connection with the proposed acquisition of
a  Net  Profits  Interest  or  Royalty,   which  shall  include  statements  (i)
identifying  reserves  of  Hydrocarbons  referred  to in such  report  as Proved
Developed Producing Reserves, Proved Developed Non-Producing Reserves, or Proved
Undeveloped  Reserves,  as the case may be, and identifying all computations and
determinations made for purposes of such report, including,  without limitation,
the present and future prices for  Hydrocarbons and the present and future costs
to  produce  and  develop  such  Hydrocarbons  used  in  such  computations  and
determinations;  (ii) with respect to the determination of the nature and extent
of the reserves of Hydrocarbons  reflected in such report,  that the collection,
analysis,   and   evaluation  of  the  basic   physical  data  upon  which  such
determination is based were performed by such Independent Petroleum Engineer or,
if such data were collected by another Person,  that such Independent  Petroleum
Engineer  has  made  inquiry  with  respect  to the  methods  employed  in  such
collection;   (iii)  specifying  the  respective  amounts  of  Proved  Developed
Producing  Reserves,   Proved  Developed   Non-Producing  Reserves,  and  Proved
Undeveloped Reserves

                                      -1-
<PAGE>

contained  therein;  and (iv) indicating such Independent  Petroleum  Engineer's
opinion as to the respective  estimated present values of future net revenues of
each  category of reserves  contained  therein  determined  in  accordance  with
criteria  satisfactory  to the General  Partner and otherwise in accordance with
sound engineering and industry practices, including such standards and practices
as may be  promulgated  by the Society of  Petroleum  Engineers  of the American
Institute of Mining and Metallurgical  Engineers. Any such report may state that
such Independent  Petroleum  Engineer expresses no opinion and makes no warranty
or representation  with respect to the proposed  acquisition of such Net Profits
Interest or Royalty and that such Independent  Petroleum  Engineer is relying on
information furnished by the General Partner as to the historical volumes of any
Hydrocarbons  actually produced and as to the proposed ownership interest of the
Partnership in such Producing Property.

       "Acquisitions  Fee"  shall  mean the fee paid by the  Partnership  to the
General  Partner  pursuant to Section 4.7B of this Agreement in connection  with
the  Partnership's  acquisition  of Net Profits  Interests and Royalties and the
conduct of its business operations.

       "Act" shall mean the Oklahoma Revised Uniform Limited Partnership Act, as
amended from time to time.

       "Activation" or "Activated"  shall mean the date on which the Certificate
of Limited Partnership is filed with the Oklahoma Secretary of State.

       "Affiliate"  shall mean, when used with reference to a specified  Person:
(a) any Person directly or indirectly owning, controlling, or holding with power
to vote  10% or more  of the  outstanding  voting  securities  of the  specified
Person;  (b) any Person 10% or more of whose  outstanding  voting securities are
directly  or  indirectly  owned,  controlled,  or held with power to vote by the
specified Person; (c) any Person directly or indirectly controlling,  controlled
by, or under common control with, the specified Person; (d) any Person who is an
officer, director,  partner, or trustee of, or serves in a similar capacity with
respect to, the specified  Person;  (e) any Person of which the specified Person
is an  officer,  director,  partner,  or trustee,  or with  respect to which the
specified Person serves in a similar  capacity;  and (f) any spouse or immediate
relative of the specified Person sharing the same household. Notwithstanding the
foregoing,  no Person shall be deemed to be an Affiliate solely by reason of its
ownership  of  depositary  units or limited  partnership  interests in a limited
partnership.

       "Affiliated  Program" shall mean a drilling or income program (whether in
the form of a  limited  partnership,  general  partnership,  joint  venture,  or
otherwise)  whether currently  existing or hereafter formed,  interests in which
were or are offered to Persons not engaged in a trade or business within the oil
and gas industry (other than by virtue of their  participation  in an Affiliated
Program)  and of which the General  Partner or its  Affiliate  serves as general
partner,  venturer,  sponsor, or manager,  including,  without  limitation,  any
Income Program and any I/P Program.

                                      -2-
<PAGE>

       "Agreement"   shall  mean  this  Agreement  of  Limited   Partnership  as
originally executed and as amended from time to time.

       "Capital  Account"  shall  mean,  as to any  Partner or Unit  Holder,  an
account  maintained  on the  books of the  Partnership  in  accordance  with the
provisions of Section 5.4 below.

       "Capital  Contribution" shall mean the cash contributions of a Partner or
Unit Holder to the Partnership.

       "Certificate  of  Limited  Partnership"  shall  mean the  certificate  of
limited  partnership,  and any  and  all  amendments  thereto  and  restatements
thereof, filed on behalf of the Partnership as required under the Act.

       "Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time (or any corresponding provisions of succeeding law).

       "Commissions"  shall mean the cash fees payable to the Dealer Manager and
the Selected  Dealers in connection with their  participation in the offering of
Units.

       "Consent"  shall  mean the  consent  of a Person,  given as  provided  in
Section 12.1, to do the act or thing for which the consent is solicited,  or the
act of granting such consent, as the context may require.

       "Dealer  Manager"  shall  mean  PaineWebber   Incorporated,   a  Delaware
corporation.

       "Depositary"  shall mean  Geodyne  Institutional  Depositary  Company,  a
Delaware corporation and a wholly owned subsidiary of Geodyne Resources,  as the
sole initial Limited Partner or any Person who at the time of reference  thereto
has been admitted to the Partnership  with the consent of the General Partner as
a successor to the interest of Geodyne  Institutional  Depositary Company in the
Partnership,  which will upon the Activation of the Partnership acquire and hold
on behalf of the Unit Holders the Limited Partner interests  attributable to the
Units initially issued to the Unit Holders.

       "Depositary  Receipt" shall mean a document  issued in registered form by
the Depositary evidencing the ownership of one or more Units.

       "Direct  Administrative  Costs"  shall mean the  actual  and  necessary
direct costs  attributable  to goods and services  provided to the Partnership
by parties other than the General Partner or its Affiliates,  whether incurred
by or for the benefit of the  Partnership  directly or incurred by the General
Partner or its  Affiliates,  including  the annual audit fees,  legal fees and
expenses,  the costs of reviewing tax returns and reports, the cost of reserve
evaluations prepared by an Independent  Petroleum Engineer pursuant to Section
10.4A(iv)  and 10.4C of this  Agreement  and all  other  such  costs  directly
incurred by or for the benefit of the Partnership. Direct

                                      -3-
<PAGE>

Administrative   Costs  shall  not  include  any  Property   Acquisition  Costs,
Organization and Offering Costs, or General and Administrative Costs.

       "Engineering  Review  Letter"  shall  mean  a  document  prepared  by  an
Independent  Petroleum Engineer  acceptable to the General Partner in connection
with the proposed acquisition of a Net Profits Interest or Royalty,  which shall
include statements  indicating that (i) such Independent  Petroleum Engineer has
reviewed an oil and gas reserve  report  prepared  by the  engineering  staff of
Geodyne Resources, Inc. or an Affiliate; (ii) in the opinion of such Independent
Petroleum  Engineer,  the reserve  report was prepared in accordance  with sound
engineering  and industry  practices,  including such standards and practices as
may be  promulgated  by the  Society  of  Petroleum  Engineers  of the  American
Institute of Mining and Metallurgical  Engineers;  and (iii) with respect to the
determination of the nature and extent of the reserves of Hydrocarbons reflected
in such  report,  such  Independent  Petroleum  Engineer  has made  inquiry with
respect to the methods employed in the collection,  analysis,  and evaluation of
the basic physical data upon which such determination is based.

       "Farmout" shall mean an agreement whereby the owner of a Lease or Working
Interest  agrees to assign  its  interest  in  certain  specific  acreage to the
assignee,  retaining some interest such as an overriding  royalty interest,  oil
and gas  payment,  offset  acreage,  or other type of  interest,  subject to the
drilling of one or more specific  wells or other  performance  as a condition of
the assignment.

       "Fiscal Year" shall mean the calendar year.

       "General and  Administrative  Costs" shall mean all customary and routine
legal,  accounting,  data  processing,  depreciation  (other  than  depreciation
relating  to real  property),  geological,  engineering,  travel,  office  rent,
telephone, secretarial, employee compensation and benefits, and other items of a
general and administrative nature, whether like or unlike the foregoing, and any
other  incidental   expenses   reasonably   necessary  to  the  conduct  of  the
Partnership's  business,  and generated by the General  Partner or any Affiliate
(including the Depositary) other than an Affiliated Program,  computed on a cost
basis,  determined by the General Partner in accordance with generally  accepted
accounting  principles  and subject to review by the  Accountants  in connection
with the  annual  audit of the  Partnership  arid its  Affiliates.  General  and
Administrative  Costs shall not include any Property  Acquisition Costs,  Direct
Administrative  Costs, or Organization and Offering Costs of the Partnership nor
shall it  include  any  portion  of the  salaries,  benefits,  compensation,  or
remuneration  with respect to  "Controlling  Persons" as that term is defined in
Section 4.7C of this Agreement.

       "General  Partner"  shall  mean  Geodyne  Properties,  Inc.,  a  Delaware
corporation,  acting in such  capacity,  and any  other  Person  admitted  as an
additional or substituted  General Partner pursuant to the provisions of Article
Six of this Agreement.

                                      -4-
<PAGE>

       "Geodyne  Properties" shall mean Geodyne  Properties,  Inc., a Delaware
corporation.

       "Hydrocarbons" shall mean crude oil, natural gas, condensate, natural gas
liquids, and other liquid or gaseous hydrocarbons,  and any minerals produced in
association therewith.

       "Improved  Recovery"  shall  mean all  methods of  supplementing  natural
forces and mechanisms of primary  recovery or otherwise  increasing the ultimate
recovery  from a  Partnership  Property,  including,  but not limited to,  water
flooding, pressure maintenance,  gas cycling, fluid injection, polymer flooding,
chemical flooding, and the use of miscible displacement fluids.

       "Incapacity"  or  "Incapacitated"  shall  mean the entry of any order for
relief  under  any  bankruptcy  law  (except  that,  in the case of the  General
Partner, the term "bankruptcy" shall mean only being subject to Chapter 7 of the
Bankruptcy Code of 1984), the adjudication of interdiction,  of incompetence, or
of insanity, or the death, dissolution,  or termination (other than by merger or
consolidation  under  which the  surviving  entity  agrees to assume  all of the
obligations and  responsibilities of the merged or consolidated Person set forth
in this Agreement), as the case may be, of any Person.

       "Income  Programs"  shall mean any  Affiliated  Program  sponsored by the
General  Partner or any of its Affiliates  for the primary  purpose of acquiring
Working Interests in Producing Properties.

       "Independent  Petroleum  Engineer"  shall mean a Person  with no material
relationship  to the General Partner or its Affiliates who is in the business of
rendering  opinions regarding the value of oil and gas properties based upon the
evaluation of all pertinent  economic,  financial,  geological,  and engineering
information available to the General Partner or its Affiliates.

       "Investment Income" shall mean all interest and dividend income earned on
temporary  investments of the Partnership at any time prior to the time at which
an amount equal to the Capital  Contributions  to the Partnership  available for
the  acquisition of Net Profits  Interests or Royalties has been (i) expended or
(ii) returned pursuant to Section 3.3 of this Agreement.

       "I/P  Partnership"  shall mean a  partnership  formed as a part of an I/P
Program.

       "I/P Programs" shall mean the Paine Webber/Geodyne  Institutional/Pension
Energy Income Partners and the PaineWebber/Geodyne  Institutional/Pension Energy
Income  Program II and any subsequent  Affiliated  Program formed by the General
Partner  or  any  Affiliate  for  investment  primarily  by  pension  and  other
tax-exempt plans and accounts  (including any other  partnerships in which units
are offered pursuant to the Prospectus).

                                      -5-
<PAGE>

       "Lease"  shall mean a lease,  mineral  interest,  royalty,  or overriding
royalty  covering  Hydrocarbons  (or a  contractual  right  to  acquire  such an
interest),  or an undivided  interest therein or portion thereof,  together with
all easements,  permits, licenses,  servitudes, and rights-of-way situated upon,
or used or held for future use in connection with, the exploration, development,
or operation of such interest.

       "Limited  Partner" shall mean the Depositary in its capacity as a limited
partner of the Partnership and any Substituted Limited Partner.

       "Net Profits  Interest"  shall mean an interest in one or more  Producing
Properties  which  entitles the holder thereof to a  proportionate  share of the
gross revenues from the production of Hydrocarbons  from the Producing  Property
or  Properties  less all  operating,  production,  development,  transportation,
transmission,  and marketing expenses, and all severance, sales, ad valorem, and
excise taxes attributable to such production.

       "Notification" shall mean a writing,  containing the information required
by this Agreement to be  communicated  to any Person,  hand delivered or sent by
United States mail, postage prepaid,  to such Person at the last address of such
Person  reflected  on the records of the  Partnership,  the date of the postmark
therefor being deemed the date of the giving of Notification; provided, however,
that any written  communication  containing the information sent or delivered to
the Person and actually received by the Person shall constitute Notification for
all purposes of this Agreement.

       "Organization  and  Offering  Costs"  shall  mean all costs and  expenses
incurred  by the General  Partner  and its  Affiliates  in  connection  with the
organization and Activation of the Partnership,  including,  without limitation,
the legal, printing, accounting, and other direct and indirect costs incurred in
connection  with preparing this Agreement and preparing and filing a Certificate
of Limited Partnership,  the costs incurred with respect to the registration for
offer and sale of the Units under applicable  federal and state securities laws,
the wholesale offering and marketing fees and expenses of the Dealer Manager and
Geodyne  Securities,  Inc., a subsidiary of Geodyne Resources,  Inc., which is a
registered  broker-dealer,  and other front-end fees.  Organization and Offering
Costs shall not include the Commissions  paid to the Dealer Manager or reallowed
to the Selected Dealers,  but shall include fees and expenses (including expense
reimbursements  and interest on Commissions)  paid to Persons in connection with
the offering and issuance of Units, including due diligence expenses paid to the
Dealer Manager and others.

       "Partner"  shall mean the General  Partner or any Limited  Partner of the
Partnership.

       "Partnership" shall mean the limited partnership formed hereby.

                                      -6-
<PAGE>

       "Partnership Account" shall mean the bank account or accounts established
by the General Partner pursuant to Section 10.3 of this Agreement.

       "Partnership Property" shall mean all interests,  properties,  and rights
of any type owned by the Partnership.

       "Partnership Well" shall mean any well in which the Partnership has a Net
Profits Interest, Royalty, or other nonoperating interest.

       "Payout" shall mean that time at which cash  distributions have been made
by a Partnership to each Unit Holder (and his predecessors in interest,  if any)
in an aggregate amount equal to $100 for each Unit held by such Unit Holder.

       "Person"   shall   mean   any   individual,   partnership,   corporation,
association, trust, or other entity.

       "Prior Limited Partnership" shall mean any limited partnership  activated
prior to the  Activation of the  Partnership  (i) of which  depositary  units or
units of limited  partnership  interest  were  offered and sold  pursuant to the
Prospectus  or  pursuant  to an  offering  of units in an Income  Program or I/P
Program or (ii) that is otherwise formed pursuant to an Affiliated Program.

       "Producing  Property"  shall  mean  any  property  (or  interest  in such
property) with a well or wells capable of producing  Hydrocarbons  in commercial
quantities or properties  unitized with or adjacent to such properties which are
acquired as an incidental part of the acquisition of such  properties.  The term
also includes lease and well machinery and equipment, gathering systems, storage
facilities  or  processing   installations   or  other  equipment  and  property
associated  with the  production of  Hydrocarbons.  Interests in properties  may
include  Net  Profits  Interests,  Royalties,  production  payments,  and  other
nonworking and nonoperating interests.

       "Property Acquisition Costs" shall mean, without duplication,  the sum of
(i) the prices paid to  unaffiliated  Persons by the  Partnership or the General
Partner or an Affiliate to acquire Net Profits Interests or Royalties ultimately
sold to the  Partnership,  including the price paid to acquire a purchase option
with respect to any such interest;  (ii) title  insurance or examination  costs,
brokers' commissions and finders' fees, filing fees,  recording costs,  transfer
taxes,  if any,  and like  charges in  connection  with the  acquisition  of Net
Profits  Interests or  Royalties;  (iii) ad valorem taxes paid by the buyer with
respect to such  interest to the date of its transfer to the  Partnership;  (iv)
interest and other  financing  fees and costs  actually  incurred by the General
Partner or its Affiliates to acquire or maintain such  interests  prior to their
transfer  to the  Partnership;  and (v) all  reasonable,  necessary,  and actual
expenses  incurred by the General Partner or an Affiliate in connection with the
acquisition of Net Profits  Interests or Royalties and paid to third parties who
are not Affiliates for geological, geophysical, seismic, land,

                                      -7-
<PAGE>

engineering,  drafting,  accounting,  auditing,  legal, and other like services,
including  the  Partnership's  costs,  incurred (to the extent  consistent  with
generally accepted industry standards) in connection with the review of proposed
acquisitions of interests in Producing Properties,  whether or not acquired, and
the preparation and review of Acquisition Reserve Reports and Engineering Review
Letters,  all  allocated  to the  property  in  accordance  with the  allocation
procedures  used  by  the  General  Partner,  any  of  its  Affiliates,  or  the
Partnership;  provided that the portion of the General  Partner's or Affiliates'
expenses allocated to the property,  as set forth in items (iii), (iv), and (v),
shall  have  been  incurred  not more than 36 months  prior to  transfer  to the
Partnership.

       "Property  Investment Period" shall have the meaning set forth in Section
5.2.

       "Prospectus"  shall mean the prospectus  pursuant to which the Units were
offered,  including  all  supplements  or amendments  thereto  delivered in such
offering, if any.

       "Proved  Reserves" shall mean those  quantities of  Hydrocarbons,  which,
upon analysis of geologic and engineering data, appear with reasonable certainty
to be recoverable in the future from known Hydrocarbon reservoirs under existing
economic  and  operating  conditions.  Proved  Reserves  are  limited  to  those
quantities  of  Hydrocarbons  which can be expected,  with little  doubt,  to be
recoverable  commercially at current prices and costs, under existing regulatory
practices  and with  existing  conventional  equipment  and  operating  methods.
Depending  upon their  status of  development,  such  Proved  Reserves  shall be
subdivided   into  the   following   classifications   and  have  the  following
definitions:

            (a) "Proved Developed Reserves" shall mean Proved Reserves which can
       be  expected  to  be  recovered  through  existing  wells  with  existing
       equipment and operating methods. This classification shall include:

                  (1) "Proved  Developed  Producing  Reserves," which are Proved
                  Developed  Reserves  that are  expected  to be  produced  from
                  existing  completion  intervals  now  open for  production  in
                  existing wells; and

                  (2)  "Proved  Developed  Non-Producing  Reserves,"  which  are
                  Proved  Developed  Reserves  that  exist  behind the casing of
                  existing wells, or at minor depths below the present bottom of
                  such wells,  which are expected to be produced  through  these
                  wells in the  predictable  future,  where  the cost of  making
                  Hydrocarbons  available  for  production  should be relatively
                  small compared to the cost of a new well.

                                      -8-
<PAGE>

      Additional Hydrocarbons expected to be obtained through the application of
      Improved Recovery  techniques are included as "Proved Developed  Reserves"
      only  after  testing  by a pilot  project  or after  the  operation  of an
      installed  program  has  confirmed  through   production   responses  that
      increased recovery will be achieved.

            (b) "Proved  Undeveloped  Reserves"  shall mean all Proved  Reserves
      which are expected to be recovered from new wells on undrilled  acreage or
      from existing wells where a relatively  major  expenditure is required for
      recompletion.  Such  reserves  on  undrilled  acreage are limited to those
      drilling units offsetting  productive units which are virtually certain of
      production when drilled; provided that Proved Reserves for other undrilled
      units can be claimed where it can be demonstrated with certainty, based on
      accepted geological,  geophysical,  and engineering studies and data, that
      there is continuity of production from an existing  productive  formation.
      No estimates for Proved Undeveloped  Reserves shall be attributable to any
      acreage for which an Improved Recovery  technique is contemplated,  unless
      the technique to be employed has been proved  effective by actual tests in
      the same area and reservoir.

       "Retirement Plan" shall mean any individual  retirement  account (as that
term is defined in Section 408(a) of the Code), Keogh Plan established  pursuant
to Section  401(c) of the Code,  or any plan,  fund,  or program  subject to the
Employee  Retirement  Income  Security  Act of 1974,  as  amended,  or any trust
created and administered pursuant to any of the foregoing.

       "Revenues" shall mean the Partnership's  gross revenues from all sources,
including  interest  income,  its interest in proceeds from sales of production,
the Partnership's share of revenues from partnerships or joint ventures of which
it is a member,  proceeds  from  sales or other  dispositions  of  interests  in
Hydrocarbon properties or other Partnership assets,  provided that contributions
to  Partnership  capital by the  Partners  and the  proceeds of any  Partnership
borrowings are specifically excluded.

       "Royalty"  shall mean an interest,  including an  overriding  royalty but
excluding a Net Profits Interest,  in gross production or the proceeds therefrom
which does not require the owner thereof to bear any of the cost of  production,
development, operation, or maintenance.

       "Selected  Dealer"  shall mean a member in good  standing of the National
Association  of Securities  Dealers,  Inc. which has been selected by the Dealer
Manager to offer and sell the Units.

       "State" shall mean the State of Oklahoma.

       "Subscription  Agreement"  shall  mean  the  Subscription  Agreement  and
Investor  Representation  Form in the form attached to the Prospectus as Exhibit
B.

                                      -9-
<PAGE>

       "Subsequent  Limited  Partnership"  shall  mean any  limited  partnership
activated after the Activation of the Partnership of which Units are offered and
sold pursuant to the Prospectus.

       "Substituted  Limited Partner" shall mean any Unit Holder admitted to the
Partnership as a Substituted Limited Partner pursuant to Section 7.3 or Sections
8.1 and 8.2 of this Agreement.

       "Treasury  Regulations"  shall mean the  federal  income tax  regulations
promulgated by the U.S. Treasury Department, as amended from time to time.

       "Unit"  shall mean an  increment  of the  attributes  of an interest as a
Limited  Partner that is either (i) assigned to a Unit Holder by the  Depositary
and is evidenced by a  Depositary  Receipt or (ii) unless the context  otherwise
requires,  held directly by a Substituted  Limited  Partner and, in either case,
which  increment  represents a subscription  amount of $100 (less any applicable
amount for reduced fees and Commissions).

       "Unit  Holder"  shall mean any Person who holds  Depositary  Receipts  in
accordance with Section 7.1 or Section 8.1 hereof as reflected in the records of
the Partnership and the Depositary and, unless the context  otherwise  requires,
any Person who becomes a Substituted Limited Partner.

       "Unit Holders'  Subscriptions"  shall mean the aggregate dollar amount of
Units  initially  subscribed for by Unit Holders,  determined by multiplying the
number of Units issued to the Unit Holders by $100.

       "Working  Interest"  shall mean an  interest  (whether  held  directly or
indirectly) in a Lease which is burdened with the obligation to pay some portion
of the expense of development,  operation,  or maintenance.  A Working  Interest
does not include a Net Profits Interest or Royalty.

                                   ARTICLE TWO

                           NAME, PLACE OF BUSINESS,
                                AND OFFICE; TERM

       Section 2.1 Name,  Place of Business,  and Office;  Agent The Partnership
shall be  conducted  under  the name  PaineWebber/Geodyne  Institutional/Pension
Energy Income  Limited  Partnership  P-7. The business of the  Partnership  may,
however,  be conducted under any other name deemed necessary or desirable by the
General  Partner  in order to  comply  with  applicable  laws.  The  office  and
principal place of business of the Partnership  shall be do Geodyne  Properties,
Inc., 320 South Boston Avenue, The Mezzanine,  Tulsa,  Oklahoma 74103-3708.  The
agent for  service of process on the  Partnership  shall be Geodyne  Properties,
Inc., 320 South Boston Avenue, The Mezzanine,  Tulsa,  Oklahoma 74103-3708.  The
General  Partner may change the principal  place of business and the location of
such office and may establish

                                      -10-
<PAGE>

such  additional  offices  as it deems  advisable  from time to time;  provided,
however,  that in the event the principal  place of business of the  Partnership
shall be changed,  the General Partner shall provide Notification thereof to the
Unit  Holders.  The General  Partner shall not be obligated to provide a copy of
the Certificate of Limited  Partnership as filed with the Oklahoma  Secretary of
State to the Depositary or Unit Holders. A Unit Holder may obtain a copy of such
Certificate of Limited  Partnership by making a written request  therefor to the
General Partner.

       Section 2.2 Purpose The business and purpose of the Partnership  shall be
to acquire,  own, hold, manage, trade, sell, and exchange Net Profits Interests,
Royalties,  or other  nonoperating  interests in  Hydrocarbon  properties of all
kinds onshore and offshore in the continental United States, including,  without
limitation,  Net Profits Interests,  Royalties,  interests in general or limited
partnerships,  joint  ventures,  and other  entities  that hold or are formed to
acquire  interests in such  properties or interests;  to purchase,  lease,  own,
hold, operate, sell, and exchange all equipment, machinery, facilities, systems,
and plants  necessary or appropriate  for such  purposes;  and to do any and all
things  necessary  or proper in  connection  with or incident  to the  foregoing
activities.

       Section 2.3 Term The Partnership shall continue in force and effect for a
period of ten (10)  years  from the date of its  Activation,  provided  that the
General Partner may extend the term of the Partnership for up to five periods of
two years each if it believes  each such  extension is in the best  interests of
the Unit Holders,  or until dissolution prior thereto pursuant to the provisions
hereof.

                                  ARTICLE THREE

                              PARTNERS AND CAPITAL

       Section 3.1 General Partner

       A. The name, address,  and Capital  Contribution of the General Partner
are set forth in Schedule A which is attached hereto and  incorporated  herein
by reference.

       B. The  General  Partner  shall not be  required  to make any  additional
Capital  Contribution  except as set forth in the next  sentence and in Sections
3.3 and 9.2C. The General Partner shall  contribute an amount of cash sufficient
to pay its  share of costs  allocated  to it  pursuant  to  Section  5.1 of this
Agreement  as such costs are  incurred to the extent that the amount of Revenues
allocated  to it (and/or the amount of  Partnership  borrowings  incurred on its
behalf) is insufficient to pay such costs.

                                      -11-
<PAGE>

       Section 3.2  Limited Partners and Unit Holders

       A. The name,  address,  and Capital  Contribution  of the  Depositary  as
Limited  Partner  are set  forth in  Schedule  A which is  attached  hereto  and
incorporated herein by reference.

       B.  Neither the  Depositary  nor any Unit  Holder  shall be required to
make any additional Capital Contribution to the Partnership.

       C. The Depositary shall engage in no business activity and shall incur no
liabilities  other than acting as Depositary  for the  Partnership  or any other
limited  partnerships  that are Affiliated  Programs.  The Depositary  shall not
amend its Certificate of  Incorporation  or By-laws without the prior Consent of
the Unit  Holders  owning  more than 50% of the  outstanding  Units,  except for
amendments that do not adversely affect the Unit Holders.

       Section 3.3  Certain Returns of Capital

       A. Any portion of the Capital  Contribution  of the Unit Holders  (except
for necessary operating capital and amounts reserved for identified  activities)
that has not been expended or committed for use for the acquisition of interests
in  Producing  Properties,  as  evidenced  by a  written  agreement,  or in  the
determination  of the General Partner will not be committed for such use, by the
second  anniversary  of the  Activation  of the  Partnership  will  promptly  be
refunded  prorate  to the  Unit  Holders  as a return  of part of their  Capital
Contributions at the earlier of such  determination or the second anniversary of
the Activation of the Partnership. In addition, the General Partner shall return
cash to the  Partnership  in an amount equal to that portion of the total of (i)
the amount paid to the General Partner in respect of the Acquisitions  Fee, (ii)
the amount paid to the General  Partner in  consideration  of its payment of the
Organization  and  Offering  Costs,   and  (iii)  the  Commissions,   which  are
attributable  (on a  proportionate  basis) to the  unexpended  amount of Capital
Contributions  so  refunded,  which cash shall be refunded  pro rata to the Unit
Holders  together with the unexpended  Capital  Contributions  so refunded.  All
amounts so refunded to the Unit  Holders  shall  reduce  dollar for dollar their
Capital Accounts.

       B. The  Prospectus  may  provide  that if certain  conditions  (which may
include,  without limitation,  the condition that the General Partner, on behalf
of the  Partnership,  has  acquired  or  entered  into a  commitment  to acquire
interests in Producing  Properties  which the General Partner believes will meet
certain  objectives  described in such Prospectus) have not been satisfied on or
before a specified  date,  the  Partnership  will return all or part of the Unit
Holders'  Capital  Contributions  together with all interest earned thereon.  If
such  conditions  are a term of offering of the Units and by such specified date
such conditions have not been met, then the General Partner will return all Unit
Holders'  Capital  Contributions  together  with all  interest  thereon  and the
Partnership shall thereupon be

                                      -12-
<PAGE>

dissolved and terminated in accordance with the terms hereof.  To the extent any
Acquisitions  Fees,  payments in respect of Organization and Offering Costs, and
Commissions have been paid, the General Partner will make cash  contributions to
the Partnership in the same manner as provided in Section 3.3A.

       Section 3.4  Partnership Capital

       A. No Partner shall be paid interest on any Capital  Contribution  to the
Partnership  or  on  such  Partner's   Capital  Account,   notwithstanding   any
disproportion therein as between Partners.

       B. Except as provided in Sections  3.3,  6.1, and 9.2 of this  Agreement,
neither the General Partner nor any Unit Holder shall have the right to withdraw
from the  Partnership  or to  withdraw  or  receive  any  return of its  Capital
Contribution.   Under   circumstances   involving   a  return  of  any   Capital
Contribution,  no Unit Holder shall have priority over any other Unit Holder nor
shall any Unit Holder have the right to receive  any  property  other than cash,
except as may otherwise be provided in this Agreement.

       Section 3.5  Application  of Capital  Contributions  The General  Partner
shall deposit in the  Partnership  Account the Capital  Contributions  and apply
such  Capital  Contributions  to (i) pay to the General  Partner  the  aggregate
amount due pursuant to Section 4.7B in  consideration  of the General  Partner's
payment of Organization and Offering Costs, (ii) pay Commissions,  and (iii) pay
to the  General  Partner  the  Acquisitions  Fee.  The  balance of such  Capital
Contributions  shall be held in the  Partnership  Account  to be  applied to the
payment of  Property  Acquisition  Costs and,  to the extent not  payable out of
Revenues  or  Investment  Income,   Direct   Administrative   Costs,  and  other
Partnership  costs;  provided,  however,  that  such  funds  may be  temporarily
invested prior to the payment of such costs in accordance with Section 10.3.

       Section 3.6 Liability of Partners and Unit Holders

       A.  Except as provided in the Act,  neither the  Depositary  nor the Unit
Holders shall be personally  liable for any debts,  liabilities,  contracts,  or
obligations of the Partnership. To the extent that any distribution is deemed to
constitute a return of capital under the Act, the General Partner shall not seek
to recover any  distribution  unless the  General  Partner has applied all other
available  Partnership  assets to the payment of liabilities of the  Partnership
and the liabilities of the  Partnership,  other than to Partners,  have not been
fully paid,  satisfied,  assumed,  or discharged.  The Unit Holders that are not
Substituted  Limited  Partners  shall  have no  obligation  to return  any funds
distributed to them by the Partnership  that are later determined to be a return
of the  Capital  Contributions.  In no event  shall the  Depositary  or any Unit
Holder be obligated to make any  contribution to the Partnership for any purpose
whatsoever other than Capital  Contributions of the Depositary  representing the
proceeds of the offering of Units.

                                      -13-
<PAGE>

       B. Each of the General  Partner and any successor or  additional  General
Partner  subsequently  admitted to the  Partnership  agrees that it shall remain
liable for any  obligation  or recourse  liability of the  Partnership  incurred
during  the  period  in which it is a  General  Partner  and to the  extent  the
Partnership has incurred liability.

                                  ARTICLE FOUR

                                   MANAGEMENT

       Section 4.1 Management and Control of the Partnership

       A.  Subject to the  Consent of the Unit  Holders as and when  required by
this Agreement,  the General Partner,  within the authority  granted to it under
and in accordance with the provisions of this Agreement, shall have the full and
exclusive  right  to  manage  and  control  the  business  and  affairs  of  the
Partnership and to make all decisions  regarding the business of the Partnership
and shall have all of the rights,  powers,  and obligations of a general partner
of a limited partnership under the laws of the State.

       B. The Depositary and the Unit Holders, as such, shall not participate in
the management of or have any control over the Partnership's  business nor shall
the Depositary or the Unit Holders,  as such,  have the power to represent,  act
for, sign for, or bind the General  Partner or the  Partnership.  The Depositary
and each of the Unit  Holders  hereby  consent to the  exercise  by the  General
Partner of the powers conferred on it by this Agreement.

       Section 4.2 Authority of the General Partner

       A. In addition to any other rights and powers  which the General  Partner
may possess under this Agreement and the Act, the General Partner shall,  except
and subject to the extent otherwise provided or limited in this Agreement,  have
all specific  rights and powers required or appropriate to its management of the
Partnership's  business  which,  by  way  of  illustration  but  not  by  way of
limitation, shall include the following rights and powers to:

            (i)   expend the Capital  Contributions  of the Partners and apply
       Partnership Revenues in furtherance of the business of the Partnership;

           (ii)  acquire  and manage Net  Profits  Interests  and  Royalties  in
       Hydrocarbon  properties  and hold all such  interests  in the name of the
       Partnership; provided, however, that in connection therewith, the General
       Partner shall, contemporaneously with the acquisition of an interest in a
       Producing Property, or as soon as practicable  thereafter,  file or cause
       to be filed  for  recordation  an  appropriate  conveyance  or  agreement
       evidencing the Partnership's  interest in such Producing  Property in the
       jurisdiction where such Producing Property is located pursuant to

                                      -14-
<PAGE>

      such jurisdiction's  Uniform Commercial Code (or comparable law) and/or in
      the real property  records of the clerk or recorder of the county in which
      the Producing Property is situated; and, provided further, that filings of
      such  conveyances or agreements  shall also be made as the General Partner
      believes  necessary to establish the  Partnership's  priority of interest;
      and,  provided further,  interests in Producing  Properties may be held in
      the name of Geodyne Nominee  Corporation,  or such other entity designated
      by the General  Partner whose only  business is to hold title,  as nominee
      for the  Partnership if such action is deemed by the General Partner to be
      necessary or beneficial  to the  Partnership  and the nominee  conducts no
      other business or operations; provided however, no such interests shall be
      held in the name of a nominee on a  permanent  basis  unless  the  General
      Partner  obtains either a ruling from the Internal  Revenue  Service or an
      opinion of qualified tax counsel to the effect that such  arrangement will
      not change the ownership  status of such interests by the  Partnership for
      federal income tax purposes;

            (iii) execute such instruments and agreements,  do such acts, employ
      such  persons,  and  contract  for such  services as the  General  Partner
      determines  are  necessary  or  appropriate  to conduct the  Partnership's
      business, including the entering into management and advisory contracts;

            (iv) enter into any partnership agreement,  sharing arrangement,  or
      joint venture with any Person  acceptable to the General Partner and which
      is engaged in any  business or  transaction  in which the  Partnership  is
      authorized to engage,  provided that the  Partnership  shall not be deemed
      thereby to be an  "investment  company"  for  purposes  of the  Investment
      Company Act of 1940, as amended;

            (v) abandon or  otherwise  dispose of any  interest  in  Hydrocarbon
      properties  acquired  for the  Partnership  upon  such  terms and for such
      consideration as the General Partner may determine;

            (vi) sell production  payments payable out of all or any part of any
      one or more of the Producing  Properties  acquired by the  Partnership and
      devote and expend the proceeds of any such sale for any of the purposes of
      the Partnership for which the proceeds of borrowings may be applied;

            (vii) borrow monies from time to time,  for the purposes and subject
      to the  limitations  stated in Section  4.3D,  in the form of  recourse or
      nonrecourse  borrowings,  or  otherwise  draw,  make,  execute,  and issue
      promissory  notes and other  negotiable or  nonnegotiable  instruments and
      evidences of indebtedness, and secure the payments of the sums so borrowed
      and mortgage,  pledge,  or assign in trust all or any part of  Partnership
      Property,  including  interests in Producing  Properties,  production  and
      proceeds  of  production,  assign any  monies  owing or to be owing to the
      Partnership,  and engage in any other means of financing  customary in the
      petroleum industry; provided, however, that a

                                      -15-
<PAGE>

      creditor who makes a nonrecourse loan to the Partnership shall not have or
      acquire,  at any time as a result  of  making  the  loan,  any  direct  or
      indirect interest in the profits,  capital, or property of the Partnership
      other than as a secured creditor;

            (viii) invest Capital  Contributions  and other  Partnership funds
      temporarily in the investments set forth in Section 10.3;

            (ix)  employ  on  behalf  of  the  Partnership  agents,   employees,
      accountants,  lawyers, geologists,  geophysicists,  landpersons,  clerical
      help,  and such other  assistance and consulting and other services as the
      General  Partner may deem necessary or convenient and to pay therefor such
      remuneration as the General Partner may deem reasonable and appropriate;

            (x) incur expenses for travel, telephone,  telegraph, insurance, and
      for such other things,  whether  similar or  dissimilar,  as may be deemed
      necessary or  appropriate  for carrying on and  performing the business of
      the Partnership;

            (xi) enter into such  agreements and contracts with such parties and
      give such receipts,  releases,  and discharges with respect to any and all
      of the foregoing and any matters  incident  thereto as the General Partner
      may deem advisable or appropriate;

            (xii)  guarantee  the payment of money or the  performance  of any
      contract or obligation by any person,  firm, or corporation on behalf of
      the Partnership;

            (xiii)  sue and be  sued,  pursue  and  participate  in  arbitration
      proceedings,  complain  and defend and  settle  and  compromise  claims or
      causes of action in the name and on behalf of the Partnership;

            (xiv) make such  classifications  and  determinations as the General
      Partner  deems  advisable,  having due regard for any  relevant  generally
      accepted accounting principles and oil and gas industry practices;

            (xv)  purchase  insurance,  or extend the General  Partner's  or its
      Affiliates'  insurance,  at the  Partnership's  expense,  to  protect  the
      Partnership  Property and the business of the  Partnership  against  loss,
      and,  subject to the  limitations  stated in Section  4.10, to protect the
      General  Partner  against  liability  to  third  parties  arising  out  of
      Partnership activities, such insurance to be in such limits, to be subject
      to such deductibles,  and to cover such risks as the General Partner deems
      appropriate;

            (xvi) pay all ad  valorem  taxes  levied  or  assessed  against  the
      Partnership  Properties,  all taxes upon or measured by the  production of
      Hydrocarbons  therefrom,  and all other taxes  (other  than income  taxes)
      directly related to operations conducted by the Partnership;

                                      -16-
<PAGE>

            (xvii) subject to the restrictions contained elsewhere herein, enter
      into  agreements  on  behalf of the  Partnership  with  Affiliates  of the
      General Partner;

            (xviii) sell or otherwise  dispose of for value all or substantially
      all of the properties  and other assets of the  Partnership to the General
      Partner,  or any of its  Affiliates or Affiliated  Programs,  or any other
      Person and receive for the Partnership  consideration  consisting of cash,
      securities,  other property,  or any other form of  consideration,  or any
      combination  thereof, at such prices and in such forms of consideration as
      it deems in the best  interests of the Unit  Holders;  provided,  however,
      that no such sale shall be  consummated  without the prior  Consent of the
      Unit Holders pursuant to the provisions of Section 4.5D of this Agreement.
      In the event of the  dissolution of the  Partnership  followed by any such
      sale of the Partnership's  assets,  the General Partner shall,  subject to
      the  provisions  of  Section  9.2 of  this  Agreement,  be  appointed  the
      liquidating agent for the Partnership;

            (xviv) make,  exercise,  or deliver any general  assignment  for the
      benefit of the Partnership's creditors, but only upon the prior Consent of
      the Unit Holders pursuant to the provisions of Section 4.5D;

            (xx) perform all duties imposed by Sections 6221 through 6232 of the
      Code on the General Partner as "tax matters  partner" of the  Partnership,
      including (but not limited to) the following: (a) the power to conduct all
      audits and other  administrative  proceedings  with respect to Partnership
      tax items;  (b) the power to extend the  statute  of  limitations  for all
      Partners and Unit Holders with respect to Partnership  tax items;  (c) the
      power to file a petition with an appropriate federal court for review of a
      final  Partnership  administrative  adjustment  and (d) the power to enter
      into a  settlement  with the  Internal  Revenue  Service on behalf of, and
      binding upon,  each of the Unit Holders  having less than a 1% interest in
      Revenues unless such Unit Holder notifies the Internal Revenue Service and
      the General Partnerthat the General Partner may not act on its behalf;

          (xxi) cause the  Partnership to redeem or repurchase the Units held by
       a Unit Holder at a purchase price  determined by the General  Partner if,
       as a result  of any  misrepresentations  made by the Unit  Holder  to the
       Partnership  relating  to the Unit  Holder's  citizenship  or other legal
       status,  the tax or other legal status of the  Partnership is jeopardized
       or a substantial  risk of  cancellation  or forfeiture of any property of
       the Partnership is created; and

          (xxii) take such other  action and  perform  such other acts as may be
       deemed appropriate to carry out the business of the Partnership.

                                      -17-
<PAGE>

       B. No person,  firm, or corporation dealing with the Partnership shall be
required to inquire into the authority of the General Partner to take or refrain
from  taking any action or make or refrain  from  making any  decision,  but any
person so inquiring  shall be entitled to rely upon a certificate of the General
Partner as to its due authorization.

       Section 4.3 Sales, Purchases,  and Management of Net Profits Interests
       -----------------------------------------------------------------------
and Royalties; Additional Financing
-----------------------------------

       A.  The  provisions  of  Section  4.3C  notwithstanding,  if one or  more
Affiliated  Programs intends to acquire Working  Interests,  acquisitions of Net
Profits  Interests  by the  Partnership  may be made  in  connection  with  such
Affiliated  Program's  acquisitions of Working Interests.  Net Profits Interests
acquired  by the  Partnership  may either be (1)  carved  out of the  Affiliated
Program's Working Interests,  (2) reserved from the Affiliated Program's Working
Interests by the sellers of such Working  Interests on such basis as the General
Partner determines,  or (3) purchased from third parties.  Except as provided in
the following sentence,  any Net Profits Interest acquired by a Partnership from
an Affiliated Program may not exceed 75% of the net profits  attributable to the
aggregate  Working  Interests  in  the  Producing  Properties  acquired  by  the
Affiliated  Program  together with the Net Profits  Interest of the Partnership.
With respect to the Producing  Properties  acquired  from  National  Cooperative
Refinery  Association pursuant to that certain Purchase and Sale Agreement dated
August 16, 1991 by and between  National  Cooperative  Refinery  Association and
Geodyne  Production  Company,  et al.,  the Net Profits  Interest  acquired by a
Partnership may not exceed 90% of the net profits  attributable to the aggregate
Working Interests in the Producing  Properties acquired by an Affiliated Program
together with the Net Profits Interest of the Partnership. The primary factor in
determining the sharing of net profits between the Working Interests acquired by
the Affiliated  Program and the Net Profits Interest acquired by the Partnership
will be the amount of money  contributed to each  acquisition by each purchaser.
In fixing such  sharing  percentage,  the General  Partner need not give special
consideration to risks associated with the ownership of the Working Interests or
to costs of equipment  which will be owned by the Affiliated  Program as Working
Interest  owners  if such  costs  will be  amortized  against  the  proceeds  of
Hydrocarbon  production  in arriving at the amount of net profits from which the
Partnership's   (as  Net  Profits   Interest  holder)  share  of  production  is
determined,  if the  Partnership  acquires  a Royalty  interest  in a  Producing
Property in which a Working Interest is acquired by the Affiliated Program, each
participant's  portion of the purchase  price will be determined on the basis of
an appraisal by the General Partner's  petroleum  reservoir engineer of the fair
market values of the respective interests in the property being acquired (taking
into account the tax consequences  applicable to the several  participants).  If
the General Partner or an Affiliate other than an Affiliated Program acquires an
interest in any such property  acquisition of a Royalty,  such appraisal will be
performed by an  Independent  Petroleum  Engineer and if the  aggregate  revenue
interest of the General  Partner and its  Affiliates in any  Affiliated  Program
participating in such property acquisition is

                                      -18-
<PAGE>

greater than their  aggregate  revenue  interest in the  Partnership,  then with
respect to the property  interests so acquired,  the greater  aggregate  revenue
interest shall be reduced so as not to exceed the lesser revenue interest.

       B. Net Profits  Interests and Royalties  whose purchase price exceeds 10%
of the Unit Holders' Subscriptions may be acquired by the Partnership only if an
Acquisition  Reserve Report or an Engineering  Review Letter with respect to not
less than 80% of the  estimated  Proved  Reserves  (as  estimated by the General
Partner)  attributable  thereto has been  received and  evaluated by the General
Partner.

       C. Neither the General Partner,  Geodyne Resources,  Inc., nor any Person
controlled by Geodyne Resources, Inc. shall sell, transfer, or convey any or all
of its interest in Producing Properties (including any Net Profits Interests and
any Royalty interest  therein) to the Partnership or purchase or acquire any oil
and gas  properties or interests from the  Partnership,  directly or indirectly,
except pursuant to transactions that are fair and reasonable to the Unit Holders
under the  circumstances at the time any such  transaction is consummated.  Such
transactions shall be further subject to the following restrictions:

            (i) Prior to the date on which the  Partnership  has fully  expended
       that portion of its Capital  Contributions  available for the acquisition
       of Net Profits  Interests  and  Royalties,  neither the General  Partner,
       Geodyne Resources,  Inc., nor any Person controlled by Geodyne Resources,
       Inc.  (other than an  Affiliated  Program or a Person  acquiring  for the
       benefit  of an  Affiliated  Program)  shall  acquire an  interest  in any
       Producing  Property after the Activation of the Partnership  unless prior
       thereto the  General  Partner  determines  that such  interest  cannot be
       acquired  by the  Partnership  because  of  insufficient  funds  for such
       purchase or the General  Partner  determines  that the  acquisition of an
       interest in such Producing Property would not be in the best interests of
       the Partnership;

            (ii) Any purchase from the General Partner or any Affiliate thereof,
       other than an  Affiliated  Program in which the  interest  of the General
       Partner or an Affiliate thereof is substantially  similar to or less than
       the General  Partner's  interest in the Partnership,  of an interest in a
       Producing  Property  that has been  held for less  than two years and for
       which there have not been significant expenditures made, shall be made at
       the  Property  Acquisition  Cost  for  such  interest,  as  adjusted  for
       intervening  operations,  unless the General Partner has cause to believe
       that such adjusted cost is materially  more than the fair market value of
       such interest, in which case such purchase shall be made at a price equal
       to  the  fair  market  value  thereof  as  determined  by an  Independent
       Petroleum Engineer;

                                      -19-
<PAGE>

            (iii) Any purchase from an Affiliated  Program in which the interest
      of the General Partner or an Affiliate thereof is substantially similar to
      or less than the  General  Partner's  interest in the  Partnership,  of an
      interest  in a  Producing  Property  that has been  held for less than six
      months and for which there have not been  significant  expenditures  made,
      shall be made at the  Property  Acquisition  Cost for  such  interest,  as
      adjusted for intervening operations,  unless the General Partner has cause
      to believe that such adjusted cost is materially more than the fair market
      value of such  interest,  in which  case the  purchase  shall be made at a
      price  equal  to  the  fair  market  value  thereof  as  determined  by an
      Independent Petroleum Engineer;

            (iv) In all  circumstances  other than those  described  in (ii) and
      (iii) above, any purchase of an interest in a Producing  Property from the
      General Partner or an Affiliate thereof,  including an Affiliated Program,
      shall be made at a price not greater than the fair market value thereof as
      determined by an Independent Petroleum Engineer;

            (v) Neither the General  Partner nor any  Affiliate  thereof,  other
      than an Affiliated Program where the interest of the General Partner or an
      Affiliate  is  substantially  similar to or less than its  interest in the
      Partnership,  shall purchase an interest in a Producing  Property from the
      Partnership  except in connection with the liquidation of the Partnership,
      in which  case such  purchase  shall be made at a price  equal to the fair
      market value thereof as determined by an Independent Petroleum Engineer;

            (vi) Any sale or  transfer of an interest in any type of property to
      an  Affiliated  Program  shall be made at a price equal to its fair market
      value as determined by an Independent  Petroleum  Engineer if the property
      interest has been held by the  Partnership  for more than six months or if
      there have been  significant  expenditures  made in  connection  with such
      property interest.  Otherwise, if the General Partner deems it in the best
      interest  of the  Partnership,  the  sale or  transfer  may be made at the
      Property  Acquisition  Cost of such interest,  as adjusted for intervening
      operations. If sales or transfers from the Partnership within the first 24
      months  following  its  Activation  to  Affiliated  Programs  exceed on an
      aggregate basis 5% of Unit Holders'  Subscriptions,  the proceeds received
      from  such   transactions   shall  be   treated  as   unexpended   Capital
      Contributions subject to the provisions of Section 3.3A;

            (vii) Any sale or transfer to the General  Partner or any  Affiliate
      thereof,   other  than  an  Affiliated  Program,  of  an  interest  in  an
      undeveloped  property  shall  be  made  at  the  higher  of  its  Property
      Acquisition  Cost or fair market  value as  determined  by an  Independent
      Petroleum Engineer;

            (viii) If a Net Profits  Interest or Royalty held by the Partnership
      burdens  undeveloped  acreage  in  which  an  Affiliated  Program  owns an
      interest,  and if the owner of such undeveloped  leasehold  interest shall
      have the  right  to farm  out all or a  portion  of the  Working  Interest
      constituting  such  undeveloped  leasehold  interest,  and if the  Working
      Interest remaining or reverting to the owner of the undeveloped  leasehold
      interest is

                                      -20-
<PAGE>

      reduced by such  Farmout,  the Net Profits  Interest  or Royalty  shall be
      proportionately  reduced, but shall share  proportionately in any benefits
      derived from such Farmout.  In the event a Net Profits  Interest does not,
      by its  terms,  provide  the  specific  consequences  of a Farmout  of the
      Working Interest  constituting such undeveloped  leasehold interest and if
      such  undeveloped  leasehold  interest is farmed out to an Affiliate,  the
      General Partner may subordinate the  Partnership's Net Profits Interest to
      such  Farmout,  provided  that the Net Profits  Interest  shall burden any
      Working  Interest or other  interest  retained by, or which may revert to,
      the  owner of the  undeveloped  leasehold  interest  pursuant  to any such
      Farmout.  The terms of the  Farmout  will be  consistent  with and no less
      favorable to the Partnership  than the terms of Farmouts  prevalent in the
      geographic area for similar arrangements;

            (ix) Net Profits  Interests  or  Royalties  may be sold or otherwise
      transferred from or to an Affiliated Program only pursuant to transactions
      that comply with this Article,  provided that the compensation arrangement
      or any other interest or right of the General  Partner or any Affiliate is
      the same in the Partnership and Affiliated Program,  or if different,  the
      compensation  of the  General  Partner  does not  exceed  the lower of the
      compensation  it would have received in the  Partnership or the Affiliated
      Program;

            (x) If the General Partner or any Affiliate thereof acts as operator
      of Producing  Properties  burdened with a Net Profits  Interest or Royalty
      owned by the Partnership,  such services must be performed  pursuant to an
      operating  agreement  substantially  similar  to a  model  form  operating
      agreement issued by the American  Association of Petroleum  Landmen and an
      accounting  procedure  for  joint  operations  issued  by the  Council  of
      Petroleum  Accountants  Society of North  America,  all in a form which is
      customary  and  usual  for the  geographic  area in which  the  applicable
      property  is  located,  except in the case  when the  General  Partner  or
      Affiliate accedes to an operating agreement as a result of the purchase of
      an interest in Producing Properties, in which case such existing operating
      agreement may differ from such model form operating agreement. In no event
      shall any consideration  received by the General Partner or its Affiliates
      for operator  services be in excess of the competitive rate or duplicative
      of  any  consideration  or   reimbursements   received  pursuant  to  this
      Agreement.  The General Partner may not benefit by interpositioning itself
      between the Partnership and the actual provider of operator services; and

            (xi) To the extent the  General  Partner  or any  Affiliate  thereof
      acquires  an interest  in a  Producing  Property in which the  Partnership
      acquires an  interest,  the  General  Partner or  Affiliate  shall pay its
      allocable  portion  of the  cost  of the  preparation  of the  Acquisition
      Reserve  Report  or  Engineering  Review  Letter,  as  the  case  may  be,
      respecting such Producing Property.

                                      -21-
<PAGE>

For  purposes  of  Sections  4.3C(ii),   4.3C(iii),  and  4.3C(vi)  above,  each
adjustment for intervening  operations shall be a reduction in the amount of the
Property  Acquisition Costs equal to the amount of revenues  attributable to the
interests in the Producing  Properties from the time of their acquisition by the
General Partner or such Affiliate until they are  subsequently  transferred to a
Partnership  less the  total  amount  of (x) the  expenditures  made  and  costs
incurred,  if any, by the General Partner or its Affiliate in the production and
marketing of oil and gas from wells located on the Producing Properties;  (y) an
imputed  interest  charge on the amount of the funds of the  General  Partner or
Affiliate used to acquire the interests in the Producing Properties for which no
actual interest costs were incurred, from the time of the expenditure thereof to
acquire  the  interests  in the  Producing  Properties  until  the  recovery  or
reimbursement  thereof  pursuant to this Agreement at a rate equal to the lesser
of the weighted  average rate of interest then being paid by the General Partner
or such Affiliate on its outstanding  indebtedness or the prime rate of interest
then being charged by Norwest Bank Minnesota,  N.A., provided that such interest
rate shall in no event exceed the maximum  allowed by law; and (z)  expenditures
made and costs incurred by the General  Partner or such  Affiliate,  if any, for
processing  facilities,  pipelines,  gas  sales  facilities,  Improved  Recovery
projects,  drilling  costs,  and other  procedures and  facilities  necessary to
produce  efficiently  and  market  the  oil and gas  reserves  from a  Producing
Property,  all to the  extent  such  costs  and  expenditures  are not  Property
Acquisition Costs.

       D. If the  General  Partner  determines  that  funds in  addition  to the
Capital  Contributions  are required for the payment of Partnership costs (other
than Property  Acquisition Costs and General and Administrative Costs (which are
payable solely out of Partnership  Revenues)),  the General Partner may apply or
reserve Revenues or Investment  Income for the payment of such Partnership costs
and/or the General  Partner may cause the  Partnership  to borrow  funds for the
payment  of such  Partnership  costs;  provided,  however,  that  the  aggregate
outstanding principal amount of such borrowings shall not at any one time exceed
an amount equal to 5% of the Unit Holders'  Subscriptions.  The  Partnership may
borrow for the account of either the Unit Holders or the General  Partner to pay
Partnership  costs  allocable to them  independently  of one  another.  Any such
borrowings  shall be repaid as provided in Section  5.1. No creditor who makes a
nonrecourse loan to the Partnership may have or acquire, at any time as a result
of making the loan, any direct or indirect interest in the profits,  capital, or
property of the Partnership other than as a secured creditor.

       E. The General  Partner shall have the authority to secure the payment of
borrowings  incurred  by it for its own  account or for  purposes  of paying its
allocable share of Partnership  costs by the assigning to lenders all or part of
its rights to receive distributions of Partnership Revenues,  and by granting or
causing the Partnership to grant such lenders a security interest or mortgage in
an undivided  interest in any Partnership  Property not to exceed its percentage
interest in Revenues; provided, however, that the General

                                      -22-
<PAGE>

Partner  shall  retain  unencumbered  at  least a 1%  interest  in each  item of
Partnership Property and each item of Partnership income, gain, loss, deduction,
and credit.  Notwithstanding  anything to the contrary in this Agreement, in the
event of any sale or  foreclosure  of the  General  Partner's  interest  (or the
exercise by an assignee or creditor of any pre-foreclosure  remedies that confer
rights  or  benefits  similar  to those  that  could  have  been  obtained  upon
foreclosure)  in full or partial  satisfaction of such  borrowings,  appropriate
adjustments  shall be made in the Capital  Accounts  of the General  Partner and
Unit Holders and in the method by which  Revenues and costs are allocated to the
General  Partner and Unit Holders to assure that the  Partnership  will not bear
any of the costs  attributable to such sold or foreclosed  interest and that the
General  Partner will not share or participate in any of the capital,  Revenues,
costs, or distributions  attributable to such sold or foreclosed interest except
to the extent of the unencumbered  interest retained by the General Partner. The
General Partner shall indemnify the Partnership and the Unit Holders against any
expenses  resulting  from the  granting  of a security  interest in or a sale or
foreclosure of the General Partner's interest.

       F. The General  Partner may cause the Partnership to acquire assets which
may otherwise not be considered  suitable for  investment by the  Partnership if
they are  acquired  as part of a package  consisting  primarily  of Net  Profits
Interests and/or Royalties in Producing Properties;  provided,  however, that in
the event any such assets are acquired by the  Partnership,  the General Partner
shall use its best efforts to sell or otherwise dispose of such assets for value
as soon as practicable  and any proceeds  realized from such sale or disposition
shall be  allocated  among the General  Partner and the Unit Holders in the same
proportions as the costs thereof were charged to their respective accounts.

       Section 4.4 Prohibited TransactionsNotwithstanding any other provision of
this  Agreement  to the  contrary,  the  following  transactions  are  expressly
prohibited:

           (i) the  Partnership  shall not make any loans  to, or  purchase  a
       production payment from, the General Partner or any Affiliate;

           (ii)  neither the General  Partner nor any  Affiliate  shall make any
       loans to the  Partnership  except at a rate of interest  not in excess of
       the interest  cost  incurred by the General  Partner or Affiliates or the
       amount of  interest  that would be charged  to the  Partnership  (without
       regard to the General  Partner's or  Affiliate's  financial  abilities or
       guarantees) by unrelated banks on comparable  loans for the same purpose,
       whichever  is lower,  and the General  Partner and  Affiliates  shall not
       receive points or financing charges or fees, regardless of the amount;

          (iii) except as expressly  contemplated  hereby,  no agent,  attorney,
       accountant,  or other  independent  consultant or contractor  who is also
       employed on a full-time  basis by the  General  Partner or any  Affiliate
       shall be compensated by the Partnership for his or her services;

                                      -23-
<PAGE>

          (iv) other than those received for the account of the Partnership,  no
       rebates  or  give-ups  may be  received  by the  General  Partner  or any
       Affiliate in connection with Partnership operations or expenditures,  nor
       may the General  Partner or any Affiliate  participate  in any reciprocal
       business  arrangement that would circumvent any of the provisions of this
       Agreement;

           (v) on a monthly  basis,  costs  paid and  revenues  received  by the
       General Partner or an Affiliate for the account of the Partnership  shall
       be determined and the net amount  resulting from such monthly  settlement
       shall be deposited into a Partnership  Account and no funds which,  after
       such monthly settlement, are determined to be held for the account of the
       Partnership  shall  be  kept  in any  account  other  than a  Partnership
       Account,  and the General  Partner shall not employ,  or permit any other
       Person to  employ,  such funds in any  manner  except  for the  exclusive
       benefit of the Partnership;  it being understood that the General Partner
       may invest  Partnership funds temporarily in the investments set forth in
       Section  10.3 of this  Agreement  pending  their use by the  Partnership.
       After such monthly  settlement,  Partnership  funds may not be commingled
       with separate funds of the General Partner or any other Person; and

           (vi) the  Partnership  shall not make any  advance  payment  to the
       General Partner or its Affiliates.

       Section 4.5 Restrictions on the Authority of the General Partner
       ----------------------------------------------------------------

       A. Anything in this  Agreement to the contrary  notwithstanding,  it is
agreed that:

            (i) the General Partner and its Affiliates shall not take any action
       with  respect to the assets or  property  of the  Partnership  (except as
       provided  in  Section   4.3E)  which  does  not  benefit   primarily  the
       Partnership, including:

                 (a)the  utilization  of  Partnership  funds  as  compensating
            balances  for the benefit of the General  Partner or an  Affiliate
            of the General Partner; and

                 (b)the  commitment  of  future  production  from  Partnership
            Properties;

           (ii) all benefits from marketing  arrangements or other relationships
       affecting  property  of the  General  Partner or its  Affiliates  and the
       Partnership  shall be fairly and equitably  apportioned  according to the
       respective interests of each; and

           (iii) neither the General  Partner nor any Affiliate  shall render to
       the  Partnership  any  services or sell or lease to the  Partnership  any
       equipment or supplies unless:

                                      -24-
<PAGE>

                 (a)such Person is engaged, independently of the Partnership and
            as an ordinary  and ongoing  business,  in the business of rendering
            such services or selling or leasing such equipment and supplies to a
            substantial  extent to other  Persons in the oil and gas industry in
            addition  to  drilling  and  income  programs  in which the  General
            Partner or any of its Affiliates have an interest; and

                 (b)the  compensation,  price, or rental therefor is competitive
            with the compensation, price, or rental of other Persons in the area
            engaged in the business of rendering  comparable services or selling
            or leasing comparable  equipment and supplies which could reasonably
            be made available to the Partnership;

       provided  that,  if such Person is not  engaged in a business  within the
       meaning of  subdivision  (a), then such  compensation,  price,  or rental
       shall be the cost of such services, equipment, or supplies to such Person
       or the competitive rate which could be obtained in the area, whichever is
       less.

       B. The General Partner shall not have the authority to:

           (i) do any act in  contravention  of this  Agreement or which would
       make  it  impossible   to  carry  on  the  ordinary   business  of  the
       Partnership;

           (ii)   confess a judgment against the Partnership;

           (iii) possess Partnership Property or assign,  pledge, or hypothecate
       rights in  specific  Partnership  Property  for other than a  Partnership
       purpose except as otherwise permitted in Section 4.3E;

           (iv)  admit a Person as a General  Partner or a  Substituted  Limited
       Partner or permit any  transfer  of Units  except as  otherwise  provided
       herein; or

           (v)  knowingly  perform  any act  which  would  result in loss of the
       Depositary's or any  Substituted  Limited  Partner's  status as a limited
       partner  under  the Act or the laws of the  State or the loss of  limited
       liability  under  the  laws  of  any  other  jurisdiction  in  which  the
       Partnership  is doing  business,  or would subject the  Depositary or any
       Unit  Holder  to  liability  as a  general  partner  in any  jurisdiction
       including use of the  Depositary's  or a Unit Holder's name in conducting
       the business of the Partnership.

       C. The General  Partner  shall not lease,  sell,  abandon,  or  otherwise
dispose of any assets of the Partnership to the General Partner or to any of its
Affiliates, except as otherwise permitted by this Agreement;  provided, however,
that if the  Partnership  should  own any  inventory  or other  materials,  such
inventory or materials may be

                                      -25-
<PAGE>

transferred  to the General  Partner or any of its  Affiliates at the applicable
rates set forth in the standard form of accounting procedure then recommended by
the Council of Petroleum Accountants Societies of North America.

       D. Notwithstanding any other provision of this Agreement to the contrary,
without  the  prior  Consent  of  Unit  Holders  owning  more  than  50%  of the
outstanding  Units granted  pursuant to Article  Twelve of this  Agreement,  the
General Partner shall not:

           (i) lease,  sell,  or  dispose of all or  substantially  all of the
       Partnership's assets except pursuant to Article Nine of this Agreement;

           (ii)   make,  exercise,  or deliver any general  assignment for the
       benefit of the Partnership's creditors; or

           (iii)  except  as set  forth  in  Section  8.1F or  11.1,  amend  any
       provision of this Agreement.

       Section 4.6 Duties and  Obligations  of the  General  Partner The General
Partner shall:

           (i) use its best efforts to take all actions that may be necessary or
       appropriate for the continuation of the Partnership's  valid existence as
       a limited  partnership or partnership in commendam  under the laws of the
       State and the laws of any other  jurisdiction in which the Partnership is
       doing business;

           (ii)  devote to the  Partnership  the time  that it shall  deem to be
       necessary to conduct the  Partnership's  business and affairs in the best
       interests of the Partnership;

          (iii) be under a fiduciary  duty and obligation to conduct the affairs
       of the  Partnership in the best interests of the  Partnership,  including
       the safekeeping and use of all Partnership  funds arid assets (whether or
       not in the immediate  possession  or control of the General  Partner) and
       shall not employ,  or permit  another to employ,  such funds or assets in
       any manner except for the exclusive benefit of the Partnership;

          (iv) at all times act with  integrity  and good faith and exercise due
       diligence  in all  activities  relating to the conduct of the business of
       the Partnership and in resolving conflicts of interest;

           (v) prepare or cause to be  prepared  and shall file on or before the
       due date (or any  extension  thereof)  any federal,  state,  or local tax
       returns required to be filed by the Partnership;

          (vi)  cause  the  Partnership  to  pay  any  taxes  payable  by  the
       Partnership;

                                      -26-
<PAGE>

          (vii) use its best  efforts  to cause the  Partnership  to be  formed,
       reformed,  qualified to do business,  or registered  under any applicable
       assumed or  fictitious  name statute or similar law in any state in which
       the  Partnership  then  owns  property  or  transacts  business,  if such
       formation,  reformation,  qualification,  or registration is necessary or
       advisable in its  counsel's  opinion to protect the limited  liability of
       the Depositary and the Unit Holders or to permit the Partnership lawfully
       to own property or transact business;

         (viii)  cause to be filed the  Certificate  of Limited  Partnership  as
      required by the Act and any  necessary  amendments to the  Certificate  of
      Limited  Partnership and other similar  documents that are required by law
      to be filed and recorded for any reason, in the office or offices that are
      required  under  the laws of the  State or any  other  state in which  the
      Partnership is then formed or qualified;

          (ix) do all other acts and things  (including  making  publications or
      periodic filings of this Agreement, or amendments hereto, or other similar
      documents without the necessity of mailing or delivering copies of them to
      each Unit  Holder)  that may now or  hereafter  be  deemed by the  General
      Partner to be necessary,

               (a)  for  the  perfection  and  continued  maintenance  of  the
            Partnership as a limited partnership under the laws of the State,

               (b) to protect the limited  liability of the  Depositary  and the
            Unit Holders under the laws of the State and other  jurisdictions in
            which the Partnership is doing business, and

               (c) to cause this Agreement,  certificates, or other documents to
            reflect  accurately  the  agreement  of the  Partners  and the  Unit
            Holders,  the identity of the Depositary as the sole initial Limited
            Partner,  and the  amount of the  Capital  Contribution  made by the
            Depositary on behalf of the Unit Holders;

            (x) from time to time  submit to any  appropriate  state  securities
      administrator all documents,  papers,  statistics, and reports required to
      be filed with or submitted to such state securities administrator; and

            (xi)  inform  each Unit Holder of all  administrative  and  judicial
       proceedings  for an adjustment at the  Partnership  level for partnership
       tax items and forward to each Unit  Holder  within 30 days of receipt all
       notices  received  from  the  Internal  Revenue  Service   regarding  the
       commencement  of  a  partnership  level  audit  or  a  final  partnership
       administrative  adjustment,  and  perform  all other  duties  imposed  by
       Sections 6221 through 6232 of the Code on

                                      -27-
<PAGE>

      the  General  Partner as the "tax  matters  partner"  of the  Partnership,
      including those set forth in Section 4.2A(xx) of this Agreement.

       Section 4.7 Compensation of the General Partner

       A.  Except as provided in  Articles  Four and Five,  the General  Partner
shall  not,  either in its  capacity  as General  Partner  or in its  individual
capacity, receive any salary, fees, or profits from the Partnership.

       B. In  consideration  of its payment of Organization  and Offering Costs,
the General Partner shall be paid in cash by the Partnership an amount equal to:
(i) 3.5% of individual Unit Holders' Subscriptions for 2,500 Units or less, (ii)
2.625% of individual Unit Holders'  Subscriptions  for more than 2,500 Units but
less than or equal to 5,000  Units,  (iii)  1.75% of  individual  Unit  Holders'
Subscriptions  for more than 5,000 Units but less than or equal to 7,500  Units,
(iv) 1.0% of individual  Unit Holders'  Subscriptions  for more than 7,500 Units
but less than or equal to 10,000  Units,  (v) .25% of  individual  Unit Holders'
Subscriptions  for more than 10,000 Units but less than 100,000 Units,  and (vi)
no  Organization  and Offering Costs shall be paid for individual  Unit Holders'
Subscriptions  of  100,000  Units  or more.  In  consideration  of its  services
rendered  in  connection  with  the  Partnerships'  acquisition  of Net  Profits
Interests and Royalties and the conduct of its business operations,  the General
Partner  shall be paid the  Acquisitions  Fee in an amount  equal to 3.5% of the
Unit Holders' Subscriptions.  Notwithstanding the foregoing, the General Partner
shall not be  entitled to any payment in respect of  Organization  and  Offering
Costs or the Acquisitions Fee in the event that Unit Holders'  Subscriptions are
to be  returned  in  accordance  with  Section  3.3B as a result of a failure to
satisfy conditions specified in the Prospectus.

       C. Except as otherwise provided in this Section 4.7C, the General Partner
shall be reimbursed by the Partnership for General and Administrative  Costs and
Direct  Administrative  Costs incurred by it on behalf of the  Partnership,  and
such costs shall be  allocated  among the Partners and Unit Holders as set forth
in  Section  5.1  of  this  Agreement.  The  aggregate  amount  of  General  and
Administrative Costs allocable to the accounts of the Unit Holders for which the
General  Partner  will be  reimbursed  will  not,  (i) in the  first  12  months
following  Activation of the Partnership,  exceed an amount equal to 2.5% of the
Unit Holders' Subscriptions,  and (ii) in any succeeding 12-month period, exceed
an amount equal to 1% of the Unit  Holders'  Subscriptions;  provided,  however,
that   notwithstanding   the   foregoing,   the  amount  of  such   General  and
Administrative  Costs allocated to the Unit Holders during each of the third and
subsequent 12-month periods of Partnership operations shall not exceed an amount
equal to 15% of Revenues allocable to their accounts. General and Administrative
Costs  shall be  allocated  to the  Partnership  in  accordance  with the method
described in the Prospectus  or, after  Notification  to the Unit Holders,  such
other method on the basis of assets, Revenues, time

                                      -28-
<PAGE>

records,   or  other  methods  conforming  with  generally  accepted  accounting
principles. No portion of the salaries, benefits,  compensation, or remuneration
of Controlling Persons shall be reimbursed to the General Partner as General and
Administrative  Costs. For purposes of this Section 4.7C,  "Controlling Persons"
shall include  directors,  executive  officers,  and those Persons holding 5% or
more  interest in the General  Partner or a Person having the power to direct or
cause the  direction of the General  Partner,  whether  through the ownership of
voting  securities,  by contract,  or otherwise.  All General and Administrative
Costs  allocable  to the accounts of the Unit Holders will be paid solely out of
Revenues  allocable to the Unit Holders.  To the extent that the General Partner
determines  that Revenues are  insufficient to permit  reimbursement  in full of
such General and  Administrative  Costs in the period in which they are incurred
or accrued (or the General  Partner  elects to receive less than the full amount
payable in order that funds may be available for distribution to Unit Holders or
any other reason) or the amounts  actually  reimbursed by the Partnership do not
exceed  the   foregoing   limitations,   such   unpaid  or  unused   General  or
Administrative  Costs may be carried  forward and increase the maximum amount of
reimbursable General and Administrative Costs for any other period.

       Section  4.8  Contracts  with the  General  Partner  and  Affiliates  All
services (other than services provided  pursuant to this Agreement)  provided to
the Partnership by the General Partner or any Affiliate  thereof for which it is
compensated shall be embodied in a written contract  precisely setting forth the
services to be rendered  and the  compensation  to be paid.  Subject to and upon
fulfilling the conditions of Section 12.3, the Partnership,  upon the Consent of
Unit Holders owning more than 50% of the outstanding Units may (i) terminate any
contract  relating  to a  transaction  between the  Partnership  and the General
Partner or any  Affiliate  thereof  without  penalty on 60 days'  prior  written
notice,  (ii) replace the General Partner as a party to the contract,  and (iii)
select and agree upon a replacement Person therefor.

       Section 4.9 Other  Operations The General  Partner shall devote such time
to the Partnership as is necessary to manage the affairs of the Partnership, and
the General  Partner and its Affiliates  shall at all times be free,  subject to
any restrictions  contained herein, to engage in all aspects of the Hydrocarbons
and natural  resources  business  for their own accounts and for the accounts of
others.  Without  limiting the generality of the foregoing,  the General Partner
and  its  Affiliates  shall  have  the  right  to  organize  and  operate  other
partnerships,  joint ventures,  or other oil and gas investment programs whether
similar or dissimilar to the Partnership.

       Section  4.10  Prosecution,   Defense,   and  Settlement  of  Claims;
Indemnification

       A. The General Partner shall arrange to prosecute,  defend,  settle, or
compromise  actions at law or in equity at the expense of the  Partnership  as
may be necessary to enforce or protect the interests of the  Partnership.  The
General Partner shall satisfy any

                                      -29-
<PAGE>

judgment, decree, decision, or settlement,  first, out of any insurance proceeds
available  therefor,  next,  out of the  Partnership  assets and Revenues,  and,
finally, out of the assets of the General Partner.

       B. Neither the General  Partner nor any of its Affiliates  shall have any
liability  to any  Unit  Holder  for  any  liability  or  loss  suffered  by the
Partnership which arises out of any action or inaction of the General Partner or
such  Affiliate  if the  General  Partner  or such  Affiliate,  in  good  faith,
determines  that  such  course  of  conduct  was in the  best  interests  of the
Partnership,  the General  Partner or such  Affiliate was acting on behalf of or
performing services for the Partnership,  and such liability or loss was not the
result of negligence or misconduct of the General Partner or such Affiliate. The
General  Partner  and  each  of  its  Affiliates  shall  be  indemnified  by the
Partnership against any losses,  judgments,  liabilities,  expenses, and amounts
paid in settlement of any claims  sustained by it or them in connection with the
Partnership,  provided  that  the same  were not the  result  of  negligence  or
misconduct  on  the  part  of  the  General  Partner  or  such  Affiliate.   Any
indemnification  under this Section 4.10 shall be recoverable  solely out of the
tangible net assets of the  Partnership.  All amounts payable under this Section
4.10 shall be a liability of the  Partnership  only and the Unit Holders and the
Depositary will not have any liability therefor.

       C.  Notwithstanding the foregoing,  the General Partner,  its Affiliates,
and any  Person  acting  as a  broker-dealer  shall not be  indemnified  for any
losses,  liabilities, or expenses arising from or out of an alleged violation of
federal  and state  securities  laws by such  party  unless (i) there has been a
successful adjudication on the merits of each count involving alleged securities
law  violations  as to the  particular  indemnitee;  (ii) such  claims have been
dismissed with prejudice on the merits by a court of competent  jurisdiction  as
to the  particular  indemnitee;  or  (iii) a  court  of  competent  jurisdiction
approves a settlement of the claims against the particular  indemnitee and finds
that  indemnification  of the  settlement  and related costs should be made, and
such  indemnitee  has  apprised  the  court of the  published  positions  of the
Securities  and Exchange  Commission  and the  position of any state  securities
regulatory  authorities of those states in which the plaintiffs  claim they were
offered or sold Units regarding  indemnification for violations of security laws
prior to obtaining court approval of such indemnification.

       D. The Partnership shall not incur the costs of that portion of insurance
which insures the General  Partner against any liability as to which the General
Partner is herein  prohibited  from being  indemnified  under this Section 4.10;
provided,  however,  that the Partnership shall not be precluded from purchasing
and paying for such types of insurance,  including extended coverage  liability,
casualty,  and workers' compensation  insurance,  as is customary in the oil and
gas industry.

       E. The  advancement  of Partnership  funds to the General  Partner or its
Affiliates  for legal expenses and other costs incurred as a result of any legal
action for which  indemnification  is being  sought is  permissible  only if the
Partnership has adequate funds available

                                      -30-
<PAGE>

therefor  and the  following  conditions  are  satisfied:  (i) the legal  action
relates  to acts or  omissions  with  respect  to the  performance  of duties or
services on behalf of the  Partnership;  (ii) the legal action is initiated by a
third party who is not a Unit Holder, or the legal action is initiated by a Unit
Holder  and  a  court  of  competent  jurisdiction  specifically  approves  such
advancement;  and (iii) the General Partner or its Affiliates undertake to repay
the advanced funds to the  Partnership,  together with the applicable legal rate
of interest thereon, in cases in which such party is found not to be entitled to
indemnification.

       Section  4.11  Dealer  Manager The Dealer  Manager  shall have no duties,
responsibilities,  or obligations to the Partnership,  the General Partner,  the
Depositary,  or any  Unit  Holder  as a  consequence  of its  right  to  receive
Commissions,  except to the extent provided under the Securities Act of 1933, as
amended.  The  Dealer  Manager  has  not  assumed,  and  will  not  assume,  any
responsibility  with respect to the  Partnership nor will it be permitted by the
General Partner to assume any duties, responsibilities, or obligations regarding
the management,  operations,  or any of the business  affairs of the Partnership
subsequent to the date on which the Partnership is Activated.

                                  ARTICLE FIVE

                          ALLOCATIONS AND DISTRIBUTIONS

       Section 5.1 Allocation of Costs and Expenses All fees and payments to the
General Partner  required by Section 4.7B and Commissions will be charged 99% to
the Unit Holders with whom and to the extent such  Commissions  and Section 4.7B
fees  and  payments  are  associated  and 1% to the  General  Partner.  Property
Acquisition  Costs will be charged 99% to the  Unitholders and 1% to the General
Partner.  All  Organization  and Offering Costs will be charged  entirely to the
General Partner (in  consideration of which the General Partner will be paid the
amount  provided in the first  sentence of Section  4.7B).  Except as  otherwise
provided  in  this  Article  Five,  General  and  Administrative  Costs,  Direct
Administrative  Costs,  and all other  Partnership  costs and  expenses  will be
charged to the accounts of the General  Partner and the Unit Holders in the same
proportions that Revenues are being allocated to them at the time such costs and
expenses are incurred. The cost of repayment of any Partnership borrowings shall
be charged to the Partners and Unit Holders in the manner in which costs paid by
the  proceeds  of such  borrowings  are  allocated  as  provided  above and such
borrowings  shall be repaid from  Revenues  allocable  to the  Partners and Unit
Holders to whom such borrowings are allocable.  Notwithstanding  anything to the
contrary

                                      -31-
<PAGE>

contained  herein,  if and to the extent the Partnership sells any interest in a
Producing  Property  and  applies  any  portion of the  proceeds  thereof to the
purchase of any  additional  interests  in  Producing  Properties,  the Property
Acquisition Costs of the additional  interests in Producing Properties shall, to
the  extent of the amount of such  proceeds,  be  allocated  to and borne by the
General  Partner  and the Unit  Holders in the same  proportions  that such sale
proceeds were allocated and credited to them.

       Section 5.2 Allocation of Revenues

       A. Investment  Income will be allocated 99% to the Unit Holders and 1% to
the General  Partner.  Except as otherwise  provided in this Article Five and in
Section 4.3F, until Payout, all other Partnership Revenues will be allocated 95%
to the Unit Holders and 5% to the General Partner.  After Payout,  Revenues will
be allocated 85% to the Unit Holders and 15% to the General  Partner;  provided,
however,  that if, at  Payout,  the  total  amount  of cash  distributed  by the
Partnership to the Unit Holders from the commencement of the Property Investment
Period has averaged on a  twelve-month  basis an amount that is less than 12% of
the Unit Holders'  Subscriptions,  the  percentage of Revenues  allocated to the
General Partner will increase to only 10% and the Unit Holders will be allocated
90% thereof until such time, if ever, that the distributions to the Unit Holders
from the commencement of the Property  Investment  Period reaches a twelve-month
average equal to at least 12% of the Unit Holders' Subscriptions,  at which time
Revenues will  thereafter be allocated 15% to the General Partner and 85% to the
Unit Holders.  As used herein, the "Property  Investment Period" shall mean that
period  which begins with the first day of the calendar  quarter  following  the
calendar  quarter  during which either 90% or 50%, as the General  Partner shall
elect,  of the  Partnership's  capital  available  for  purchasing  Net  Profits
Interests and Royalties  has been so expended.  Where  proceeds from the sale of
all or any part of the  Partnership's  Net Profits  Interests  and Royalties are
distributed  to  the  Partners  and  a  portion  of  the  distributable   amount
attributable  to such sale  proceeds is  sufficient in amount to cause Payout to
occur in  accordance  with the  allocation  percentages  in effect until Payout,
Payout  shall  be  deemed  to  occur  such  that  Revenues  attributable  to the
distributed  portion  of such sale  proceeds  in excess of the  portion of sales
proceeds  sufficient  in amount to cause  Payout to occur shall be  allocated in
accordance with the allocation percentages in effect after Payout.

       B. Notwithstanding the other provisions of this Section 5.2 and except as
provided in Section 4.3F, if the  allocation of Revenues  realized from the sale
of any Royalty or Net Profits  Interest  would  result in the  recognition  of a
"simulated  loss," as such  term is  defined  in  Treasury  Regulations  Section
1.704-1(b),  by the Partnership,  then such Revenues shall, to the extent of the
amount  of the  "simulated  adjusted  tax  basis,"  as such term is  defined  in
Treasury  Regulations  Section  1.704-1(b),  of  such  Royalty  or  Net  Profits
Interest,  be allocated to the General  Partner and the Unit Holders in the same
proportions that the aggregate adjusted tax basis of such property was allocated
to them (or their predecessors in interest) pursuant to Section 5.5(u).

                                      -32-
<PAGE>

       Section 5.3 Allocations Among Unit Holders

       A. Allocations of costs, expenses, and Revenues to the Unit Holders other
than  Substituted  Limited  Partners  herein shall be actually  allocated to the
Depositary  for the  account of the Unit  Holders.  Except  for those  costs and
expenses  referred to in Section 5.1 which are to be charged  and  allocated  to
each Unit Holder in the same manner as such costs and  expenses are paid by such
Unit Holder,  all profits and losses and each item of income,  gain, loss, cost,
deduction,  or  credit  allocated  to the Unit  Holders,  as a  class,  shall be
allocated  to each Unit Holder in the ratio that (i) the number of Units held of
record by each Unit  Holder as of the first day of each month  during the period
("Monthly Record Date") bears to (ii) the aggregate number of Units  outstanding
on each such Monthly Record Date.  Distributions  pursuant to Section 5.7 hereof
will be made to Unit Holders of record on the first day of the calendar  quarter
to which the  distribution  relates  in the ratio  which (x) the number of Units
owned of  record by each Unit  Holder  on such date  bears to (y) the  aggregate
number of Units  outstanding on such date.  Such payment shall  constitute  full
payment  and  satisfaction  of the  Partnership's  liability  in respect of such
payment  regardless  of any claim of any Person who may have an interest in such
payment by reason of an assignment or otherwise.

       B. Except as otherwise provided in the Code, in the case of a change in a
Unit  Holder's  interest  in  the  Partnership  during  a  taxable  year  of the
Partnership,  all Partnership income, gain, loss, deduction, or credit allocable
to the Unit  Holders  shall be  allocated  pursuant to Section 5.3A above to the
Persons  who  were  Unit  Holders  during  the  period  to  which  such  item is
attributable in accordance  with the Unit Holders'  interests in the Partnership
during  such  period  regardless  of when such item is paid or  received  by the
Partnership.

       Section 5.4 Capital  AccountsCapital  Accounts shall be  established  and
maintained for the General  Partner and each Unit Holder in accordance  with tax
accounting  principles and with valid  regulations  issued by the U.S.  Treasury
Department under Subsection 704(b) of the Code (the "704  Regulations").  To the
extent that tax accounting principles and the 704 Regulations may conflict,  the
latter shall control.  In connection with the  establishment  and maintenance of
such Capital Accounts, the following provisions shall apply:

            (i) The General  Partner's or Unit Holder's Capital Account shall be
      (x)  increased  by the amount of cash  contributed  by or on behalf of the
      General  Partner  or Unit  Holder,  the  fair  market  value  of  property
      contributed by it or on its behalf to the Partnership  (net of liabilities
      securing such  contributed  property that the Partnership is considered to
      assume or take subject to under  Section 752 of the Code) and  allocations
      to it of income and gain  (except to the  extent  such  income or gain has
      previously been reflected in its Capital  Account by adjustments  thereto)
      and (y) decreased by the amount of cash distributed to

                                      -33-
<PAGE>

      the General  Partner or Unit  Holder,  the fair  market  value of property
      distributed to the General Partner or Unit Holder by the Partnership  (net
      of liabilities securing such distributed property that the General Partner
      or Unit Holder is  considered  to assume or take subject to under  Section
      752 of the Code) and  allocations  to it of  Partnership  loss,  deduction
      (except to the extent such loss or deduction has previously been reflected
      in its Capital Account by adjustments thereto), and expenditures described
      in Section  705(a)(2)(B)  of the Code and  Treasury  Regulations  Sections
      l.704-1(b)(2)(iv)(i)(2) and (3).

            (ii) In the event Partnership Property is distributed to the General
      Partner or Unit Holder,  then,  before the Capital  Account of the General
      Partner  or Unit  Holder is  adjusted  as  required  by clause (i) of this
      Section 5.4, the Capital  Accounts of the General Partner and Unit Holders
      shall be adjusted to reflect  the manner in which the  unrealized  income,
      gain, loss, and deduction inherent in such Partnership  Property (that has
      not been reflected in such Capital Accounts previously) would be allocated
      among  the  General  Partner  and Unit  Holders  if there  were a  taxable
      disposition of such Partnership  Property for its fair market value on the
      date of distribution.

            (iii)  If,  pursuant  to this  Agreement,  Partnership  Property  is
      reflected  on the books of the  Partnership  at a book value that  differs
      from the adjusted tax basis of such Partnership Property, then the General
      Partner's and Unit Holders'  Capital Accounts shall thereafter be adjusted
      in accordance  with the 704  Regulations  for  allocations  to the General
      Partner and Unit Holders of  depreciation,  depletion,  amortization,  and
      gain or  loss,  as  computed  for  book  purposes,  with  respect  to such
      Partnership Property.

            (iv) The General  Partner's and Unit Holders' Capital Accounts shall
      be reduced by a simulated  depletion allowance computed on each oil or gas
      property  using  either  the  cost  depletion  method  or  the  percentage
      depletion  method (without regard to the limitations  under the Code which
      could  apply to fewer than all of the General  Partner and Unit  Holders);
      provided,  however,  that the choice between the cost depletion method and
      the percentage  depletion  method shall be made on a  property-by-property
      basis and such choices shall be binding for all Partnership  taxable years
      during  which such oil or gas  property is held by the  Partnership.  Such
      reductions  for depletion  shall not exceed the aggregate  adjusted  basis
      allocated to the General Partner and Unit Holders with respect to such oil
      or gas property.  Such  reductions for depletion  shall be allocated among
      the  General  Partner's  and Unit  Holders'  Capital  Accounts in the same
      proportions as the adjusted basis in the particular  property is allocated
      to the General  Partner and each Unit Holder pursuant to Section 5.5. Upon
      the taxable disposition of an oil or gas property by the Partnership,  the
      Partnership's  simulated  gain or loss shall be determined by  subtracting
      its simulated adjusted basis (aggregate adjusted tax basis of the General

                                      -34-
<PAGE>

      Partner and the Unit Holders less simulated depletion  allowances) in such
      property  from the amount  realized  on such  disposition  and the General
      Partner's  and  Unit  Holders'  Capital  Accounts  shall be  increased  or
      reduced,  as the case may be, by the amount of the simulated  gain or loss
      on such  disposition  in  proportion  to the  General  Partner's  and Unit
      Holders' allocable shares of the Revenues realized on such disposition.

            (v) For purposes of determining  the Capital  Account balance of the
      General  Partner  and any  Unit  Holder  as of the end of any  Partnership
      taxable year, the General Partner's and such Unit Holder's Capital Account
      shall be reduced by:

                  (a) adjustments  that, as of the end of such year,  reasonably
            are  expected  to be made to the  General  Partner's  and such  Unit
            Holder's Capital Account pursuant to paragraph  (b)(2)(iv)(k) of the
            704 Regulations for depletion allowances with respect to oil and gas
            properties of the Partnership,

                  (b)  allocations of loss and deduction  that, as of the end of
            such year, reasonably are expected to be made to the General Partner
            or such Unit Holder pursuant to Code Section 704(e)(2), Code Section
            706(d),  and paragraph  (b)(2)(ii) of Section 1.751-1 of regulations
            promulgated under the Code, and

                  (c) distributions that, as of the end of such year, reasonably
            are  expected to be made to the General  Partner or such Unit Holder
            to the extent they exceed offsetting  increases (excluding increases
            which are to occur by reason of a minimum  gain  chargeback,  within
            the meaning of Treasury Regulations Section  1.704-l(b)(4)(iv)(e) or
            Treasury  Regulations  Section   1.704-1T(b)(4)(iv)(h)(4))   to  the
            General  Partner's  or  such  Unit  Holder's  Capital  Account  that
            reasonably   are   expected  to  occur  during  (or  prior  to)  the
            Partnership taxable years in which such distributions reasonably are
            expected to be made.

            (vi) The Capital  Accounts of the General  Partner and Unit  Holders
      which are charged with an item of Partnership expense (excluding, however,
      any  expense  described  in  Section  705(a)(2)(B)  of the Code)  shall be
      credited  with any portion of that  expense  which is finally  determined,
      judicially or administratively, to be nondeductible for federal income tax
      purposes,  less any amortization or depreciation thereof incurred prior to
      the date that the credit is made.

            (vii) In  allocating  income and costs for any Fiscal  Year in which
      the ratio for sharing  income and costs changes  pursuant to Section 5.2A,
      the  allocations  of income and costs shall be made,  and the books of the
      Partnership  shall be closed, as soon as practicable after the date Payout
      occurs, to determine the General Partner's and each Unit Holder's share of
      pre-change

                                      -35-
<PAGE>

      income and costs and the General Partner's and each Unit Holder's share of
      post-change income and costs for that Fiscal Year.

            (viii)  Notwithstanding any other provision of this Agreement to the
      contrary,  if, under any provision of this Agreement,  the Capital Account
      of the  General  Partner or any Unit  Holder is  adjusted  to reflect  the
      difference  between the basis to the  Partnership of Partnership  Property
      and such  Partnership  Property's  fair  market  value,  then all items of
      income,  gain,  loss,  and  deduction  with  respect  to such  Partnership
      Property shall be allocated among the General Partner and the Unit Holders
      so as to  take  account  of  the  variation  between  the  basis  of  such
      Partnership  Property  and  its  fair  market  value  at the  time  of the
      adjustment to the General  Partner's or such Unit Holder's Capital Account
      in accordance with the  requirements of Subsection  704(c) of the Code, or
      in the same manner as provided under Subsection 704(c) of the Code.

            (ix) Subject only to the provisions of Section 5.4(x),

                  (a) there shall be allocated to the General Partner,  any item
            of loss, deduction,  or allowance that, but for this Section 5.4(ix)
            would have been  allocated to any Unit Holder that is not  obligated
            to restore any deficit balance in such Unit Holder's Capital Account
            and would (after the increase of such Capital  Account by the amount
            of any losses or deductions  (less  chargebacks  of income and gain)
            previously  allocated  to  such  Unit  Holder  and  attributable  to
            nonrecourse  debt  of the  Partnership)  have  thereupon  caused  or
            increased a deficit balance in such Unit Holder's Capital Account as
            of  the  end  of  the  Partnership's  taxable  year  to  which  such
            allocation  related (after taking into  consideration the provisions
            of Section 5.4(v) hereof);

                  (b) any Unit  Holder  that is not  obligated  to  restore  any
            deficit  balance in such Unit Holder's  Capital Account who receives
            an  adjustment,  allocation,  or  distribution  specified in Section
            5.4(v)  hereof  shall be  allocated  items of income  and gain in an
            amount and manner  sufficient to eliminate  such deficit  balance as
            quickly as possible;

                  (c) in the  event  any  allocations  of  loss,  deduction,  or
            allowance are made to the General Partner  pursuant to clause (a) of
            this Section  5.4(ix),  the General  Partner  shall be  subsequently
            allocated all items of income and gain until the aggregate amount of
            such allocations of income and gain is equal to the aggregate amount
            of any such allocations of loss,  deduction,  or allowance allocated
            to the  General  Partner  pursuant  to  clause  (a) of this  Section
            5.4(ix); and

                                      -36-
<PAGE>

                  (d) in the event a Unit Holder is allocated items of income or
            gain solely by reason of the provisions of Section 5.4(ix)(b),  then
            the General Partner will thereafter be allocated items of income and
            gain in an amount and manner  sufficient to eliminate any cumulative
            over-allocations  of  income  and gain to such  Unit  Holder  to the
            extent such  allocation  to the General  Partner  does not create or
            increase the deficit balance of such Unit Holder's Capital Account.

            (x) In the event there is a net decrease in the "minimum  gain" with
      respect to non-recourse debt of the Partnership as such term is defined in
      the 704  Regulations,  or there is a net decrease in the "minimum  gain of
      the  Partnership  with  respect to any  partner  non-recourse  debt of the
      Partnership,"  as such term is  defined in the 704  Regulations,  during a
      Partnership  taxable year, the General  Partner and all Unit Holders shall
      be allocated, before any other allocation is made under this Article Five,
      income  and  gain of the  Partnership  for  such  taxable  year  (and,  if
      necessary,  subsequent years) in the amount and of the character  required
      by the 704  Regulations.  The allocations  required by this Section 5.4(x)
      shall  be  made  as   required   by  and  in   accordance   with   Section
      1.704-1(b)(4)(iv)  of  the  704  Regulations.  It  is  intended  that  the
      provision set forth in this Section 5.4(x) will constitute a "minimum gain
      chargeback"  as  described  in  Section   1.704-l(b)(4)(iv)   of  the  704
      Regulations. The 704 Regulations shall control in the case of any conflict
      between the 704 Regulations and this Section 5.4(x).

       Section 5.5  Allocations  for Federal Income Tax Purposes With respect to
the various allocations of Partnership income, gain, loss, deduction, and credit
for federal income tax purposes, it is hereby agreed as follows:

           (i) To the extent  permitted  by law, all  charges,  deductions,  and
       losses  shall be  allocated  for federal  income tax purposes in the same
       manner as the costs in  respect of which such  charges,  deductions,  and
       losses are charged to the General Partner and Unit Holders, respectively.
       The General  Partner and Unit Holders bearing the costs shall be entitled
       to  the  deductions   (including,   without  limitation,   cost  recovery
       allowances,  depreciation,  and  cost  depletion)  and  credits  that are
       attributable to such costs.

           (ii) The  Partnership  shall allocate to the General Partner and each
       Unit  Holder  its  portion  of the  adjusted  basis  in  each  depletable
       Partnership  Property as required  by Section  613A(c)(7)(D)  of the Code
       based upon the interest of the General Partner or such Unit Holder in the
       capital  of the  Partnership  as of the time of the  acquisition  of such
       Partnership   Property.  To  the  extent  permitted  by  the  Code,  such
       allocation  shall  be based  upon  the  General  Partner's  or said  Unit
       Holder's  interest  (x) in the  Partnership  capital  used to acquire the
       property,  or  (y)  in  the  adjusted  basis  of  the  property  if it is
       contributed to the

                                      -37-
<PAGE>

      Partnership.  If such allocation of basis is not permitted under the Code,
      then basis will be allocated in the  permissible  manner which the General
      Partner deems will most closely achieve the result intended above.

          (iii)  Partnership  income shall be allocated  for federal  income tax
       purposes in the same manner as it is allocated to the respective accounts
       of the General  Partner and Unit Holders  pursuant to Sections  5.2, 5.3,
       and 5.4 above.

           (iv) Depreciation,  depletion,  or cost recovery allowance  recapture
       and recapture of intangible  drilling and development  costs, if any, due
       as a result of sales or  dispositions of assets shall be allocated in the
       same  proportion  that  the   depreciation,   depletion,   cost  recovery
       allowances,  or intangible  drilling and development costs being restored
       or recaptured were allocated.

       Section 5.6 Minimum Interest of General Partner Notwithstanding  anything
to the  contrary  that  may be  expressed  or  implied  in this  Agreement,  the
aggregate  interest of the General  Partner in each material item of Partnership
income, gain, loss, deduction,  or credit shall be equal to at least one percent
of each such item at all times during the existence of the Partnership.

       Section 5.7  Distributions  All  Investment  Income  will be  distributed
solely to the Unit Holders or will be used to reduce the Unit Holders'  share of
Partnership  borrowings,  if any,  regardless  of the  allocation  provisions of
Section 5.2A. The Partnership cash otherwise  available for distribution will be
distributed to the Unit Holders and the General Partner in the same  proportions
that  Partnership  Revenues  have been  allocated to them after giving effect to
previous  distributions  and to portions of such  Revenues  theretofore  used or
retained  to pay  costs  incurred  or  expected  to be  incurred  in  conducting
Partnership  operations  or to repay  borrowings  theretofore  or expected to be
thereafter obtained by the Partnership. Amounts which otherwise would constitute
cash available for  distribution  and which consist of proceeds from the sale of
any  interest  in  Producing  Properties  may be used or  committed  to  acquire
additional interests in Producing Properties at any time within 36 months of the
Activation  of the  Partnership.  Within 50 days after the end of each  calendar
quarter,  the General  Partner will  determine the amount of cash  available for
distribution  and will distribute  such amount,  if any, to the Unit Holders and
the General Partner as promptly thereafter as reasonably  possible.  The General
Partner's   determination  of  the  cash  available  for  distribution  will  be
conclusive and binding upon all Partners and Unit Holders.  The General  Partner
may, in its sole  discretion,  defer receipt of payment from the  Partnership of
the amount of General and  Administrative  Costs or other fees or amounts  which
may be payable by the Partnership to it in order to allow a greater distribution
to the Unit Holders for a particular quarter. Any such deferment will not (i) be
for a period  greater than a calendar  quarter unless the  Partnership  does not
have funds  sufficient to pay such deferred amounts and (ii) constitute a waiver
or release by the General  Partner of any amounts due to it by the  Partnership.
The

                                      -38-
<PAGE>

General  Partner may  determine  not to  distribute  the full amount of Revenues
which might otherwise be available for  distribution in an effort to equalize or
stabilize  the amounts of quarterly  distributions.  Any  available  amounts not
distributed  shall be invested and the interest or income  thereon  shall be for
the  accounts  of  the   Partners   and  Unit  Holders  to  which   amounts  are
distributable.  In no event,  however,  shall funds be advanced or borrowed  for
purposes of distributions if the amount of such  distributions  would exceed the
Partnership's  accrued and received  Revenues from the previous  four  quarters,
less accrued and paid operating costs with respect to such Revenues.

                                   ARTICLE SIX

                            WITHDRAWAL OR REMOVAL OF
                                 GENERAL PARTNER
             OR GENERAL PARTNER'S INTEREST IN PARTNERSHIP PROPERTIES

       Section 6.1 Withdrawal of General Partner or General Partner's Interest

       A. The General  Partner  (including by definition  any successor  General
Partner)  shall have the right to retire or  withdraw  at any time.  The General
Partner  covenants  (i)  that it  shall  not  withdraw  except  upon  120  days'
Notification to the Unit Holders;  (ii) that it shall pay all costs and expenses
incurred by the  Partnership  by virtue of such  retirement or  withdrawal;  and
(iii) that it shall not retire or withdraw  (A) prior to the  completion  of the
Partnership's primary acquisition activities or (B) before the fifth anniversary
of the  Activation  of the  Partnership  without the Consent of the Unit Holders
owning 50% or more of the outstanding Units.

       B.  The  General  Partner  may,  after  one year has  elapsed  since  the
Activation  of the  Partnership  and only if  necessary to satisfy the bona fide
requests of its creditors or upon the Consent  (subject to Section 12.3) by Unit
Holders owning more than 50% of the outstanding  Units, cause the Partnership to
distribute,  in partial  liquidation of its interest in the Partnership,  to the
General Partner fractional, undivided interests in the Net Profits Interests and
Royalties  of the  Partnership  from  time to time  and  upon at  least 90 days'
Notification to the Unit Holders and without  withdrawing  from or resigning its
position as General Partner. Such distribution may include fractional, undivided
interests in the Net Profits  Interests and Royalties of the  Partnership  (such
interest of the General Partner in a Net Profits Interest or Royalty distributed
is  hereinafter  referred to as the  "Distributed  Interest") up to an aggregate
interest  equal in value to 80% of the value of the Net  Profits  Interests  and
Royalties of the  Partnership  that the General Partner would have been entitled
to upon a hypothetical  liquidation of the Partnership  after application of the
provisions of Section 9.2 (the interest of the General  Partner in a Net Profits
Interest or Royalty  retained in the  Partnership is hereinafter  referred to as
the "Retained  Interest");  provided,  however,  that no such distribution shall
occur unless the General

                                      -39-
<PAGE>

Partner obtains an opinion of counsel to the Partnership to the effect that such
distribution will not result in any material adverse tax consequence to the Unit
Holders or the  Partnership.  Notwithstanding  anything to the  contrary in this
Agreement,  in the event that any such distribution is made, the General Partner
shall:

           (i)  make  appropriate  adjustments  in the  Capital  Account  of the
       General Partner and in the allocation of Partnership Revenues,  expenses,
       and  costs  to  assure  that  the  General  Partner  will  not  share  or
       participate  in any of the capital,  costs,  Revenues,  or  distributions
       attributable to the Net Profits  Interest or Royalties of the Partnership
       except to the extent of the Retained Interest of the General Partner; and
       Direct  Administrative  Costs  does  not  increase  as a  result  of such
       withdrawal; and

            (ii)  not  voluntarily  or  otherwise  dispose  of  its  Distributed
      Interest  unless the  undivided  interest of the  Partnership  in such Net
      Profits  Interests  or  Royalties  is  also  sold  or  disposed  of  for a
      proportionately equivalent consideration;

            (iii)   ensure  that  the  Unit   Holders'   share  of  General  and
      Administrative Costs and Direct  Administrative Costs does not increase as
      a result of such withdrawal; and

            (iv) fully  indemnify the  Partnership  and Unit Holders against any
      additional expenses resulting from such withdrawal.

       Section 6.2 Assignment of General  Partner  Interest  Subject to Sections
12.3 and 6.5B,  upon  obtaining the Consent of Unit Holders owning more than 50%
of the outstanding Units, the General Partner may assign or transfer its General
Partner  interest to a Person  which shall become a successor  General  Partner,
provided,  however, that no such Consent shall be required in connection with an
assignment or transfer pursuant to the merger, consolidation, or transfer of all
or substantially all of the assets of the General Partner.

       Section 6.3 Removal of General Partner

       A. Subject to Section 12.3,  the Unit Holders owning more than 50% of the
outstanding Units shall have the authority to remove the General Partner.

       B. (i) If the Unit  Holders  elect  to  remove  the  General  Partner  as
       permitted under this Section,  and further elect to continue the business
       of the  Partnership  with one or more  successor  General  Partners,  the
       removed  General  Partner shall not be removed until a successor  General
       Partner  has  been  selected  by the Unit  Holders  and  admitted  to the
       Partnership pursuant to Section 112.

       (ii)  Notwithstanding  Section 3.6B, any General  Partner who shall so be
       removed  shall be  released by any  successor  General  Partner  from all
       liability  for  Partnership   debts  and  obligations   incurred  by  the
       Partnership prior to the time of such removal.

                                      -40-
<PAGE>

       Section 6.4 Option to Purchase  Interest from Former  General  Partner In
the event the General  Partner  withdraws or is removed and a successor  General
Partner is selected,  the incoming  General  Partner and the  departing  General
Partner shall, by mutual agreement,  select an Independent Petroleum Engineer to
value  the  departing  General  Partner's  interest  in the  Partnership.  If no
agreement can be reached on the selection of an Independent  Petroleum Engineer,
the departing  General Partner and incoming General Partner shall each select an
Independent  Petroleum  Engineer,  who together shall select a third Independent
Petroleum Engineer, and the three Independent Petroleum Engineers shall together
determine  a value  of the  interests  of the  departing  General  Partner.  The
incoming General Partner, or the Partnership,  shall have the option to purchase
at least 20% of the interest of the departing  General  Partner  (including  any
Distributed  Interests  distributed to the General  Partner  pursuant to Section
6.1B) for the value  determined  by the  independent  appraisal.  The  departing
General  Partner's  interest  in the  Partnership  shall be  transferred  to the
successor General Partner, and the successor General Partner shall assign to the
departing General Partner a portion of Partnership Revenues, costs and rights to
receive  Partnership  distributions  as and when  such  items are  allocated  or
distributed,  as the case may be,  by the  Partnership  equal to the  percentage
interest of the departing General Partner in the Partnership prior to removal or
withdrawal,  less the portion  purchased by the successor General Partner or the
Partnership.

       The method of payment for the interest purchased by the successor General
Partner or the  Partnership  must be fair to, and must  protect the solvency of,
the Partnership.  Where the General Partner voluntarily withdraws, the method of
payment shall provide for a non-interest  bearing unsecured promissory note with
the principal  payable from  distributions  which the departing  General Partner
would have received  pursuant to this  Agreement.  Where the General  Partner is
involuntarily  removed,  the method of payment  shall  provide  for an  interest
bearing  promissory  note  coming  due in no less than  five  years  with  equal
installments each year.

       Section 6.5  Power to Admit Successor General Partner

      A. If the General  Partner has  withdrawn  or been  removed,  Unit Holders
owning more than 50% of the outstanding Units shall have the right and authority
to appoint and admit a successor  General  Partner  meeting the  requirements of
Section 6.5B to take the place of the departing General Partner.

      B. If there is admitted to the  Partnership a successor  General  Partner,
such admission shall not become effective unless (i) the Partnership  shall have
received a certificate, duly executed by or on behalf of such proposed successor
General  Partner,  to the effect that:  (a) it is  experienced in performing (or
employs sufficient personnel who are experienced in performing) functions of the
type then being  performed by the departing  General  Partner,  (b) it has a net
worth

                                      -41-
<PAGE>

sufficient  to  satisfy  the  net  worth  requirements  of  the  Code,  Treasury
Regulations, the Internal Revenue Service, or the courts applicable to a general
partner in a limited  partnership in order to ensure that the  Partnership  will
not fail to be classified for federal income tax purposes as a partnership,  and
(c) such  Person,  if other than an  individual,  has the  authority to become a
successor  General  Partner  under  the  terms of this  Agreement;  and (ii) the
proposed successor General Partner shall have (a) become a party to, and adopted
all of the terms and  conditions  of, this Agreement and (b) paid all reasonable
legal fees of the  Partnership  and filing and  publication  costs in connection
with such Person's  becoming a successor  General  Partner.  The  Certificate of
Limited  Partnership  shall be amended to reflect the  withdrawal  of the former
General Partner and the admission of the successor General Partner.

       Section 6.6  Incapacity of the General Partner

       A. In the event of the Incapacity of the General Partner, the Partnership
shall be dissolved.  However,  within 90 days thereafter the Unit Holders owning
more than 50% of the outstanding Units may elect to reconstitute the Partnership
prior to application of the liquidation provisions of Section 9.2.

       B. Upon the  Incapacity  of the  General  Partner,  the Person who is its
legal  representative  shall  have all the rights of a General  Partner  for the
purpose of settling or managing  its estate and such power as the  Incapacitated
General Partner  possessed to assign all or any part of its interest and to join
with  such  assignee  in  satisfying  conditions  precedent  to such  assignee's
becoming a substituted General Partner.

                                  ARTICLE SEVEN

                          ASSIGNMENT OF LIMITED PARTNER
                            INTERESTS TO UNIT HOLDERS

       Section 7.1 Assignments of the Interests of Depositary

       A. Pursuant to Sections 7.lB and 13.1, the Depositary shall issue to each
Person purchasing one or more Units a Depositary  Receipt evidencing such Units.
The Partnership  shall  recognize as a Unit Holder,  for the number of Units for
which the Partnership has received proceeds,  each Person to whom the Depositary
issues a  Depositary  Receipt  as of the date not later  than 15 days  after the
release from escrow of Unit Holders' Subscriptions to the Partnership.

       B.  The  Depositary,  by the  execution  of this  Agreement,  irrevocably
assigns to the Unit  Holders  all of the  Depositary's  beneficial  (but not the
record)  rights and  interest  in and to the  Partnership,  except as  otherwise
provided herein, as of the date of Activation of the Partnership. The rights and
interest so  transferred  and assigned shall include,  without  limitation,  the
following:

                                      -42-
<PAGE>

           (i)  all  rights  to  receive  distributions  of  uninvested  Capital
       Contributions pursuant to Section 3.3 and the right to receive rebates of
       Acquisitions  Fee,  Commissions,  and  Organization  and  Offering  Costs
       pursuant to Section 3.3;

           (ii) all rights to receive  distributions  of Partnership  funds or
       assets under the terms of this Agreement or under the Act;

           (iii) all rights in respect of  allocations of each item of Revenues,
       gain, loss, deduction, and credit pursuant to Article Five;

           (iv) all  rights in  respect of  allocations  to  Capital  Accounts
       pursuant to Section 5.4;

           (v) all  rights to  receive  any  proceeds  of  liquidation  of the
       Partnership pursuant to Section 9.2;

           (vi) all  rights  to  inspect  books  and  records  and to  receive
       reports pursuant to Article Ten;

          (vii) the right to bring  derivative  actions  pursuant to the Act (in
       the event any such action  must be brought in the name of the  Depositary
       as a Limited Partner,  the Depositary  agrees to bring such action at the
       expense of the Unit Holder(s) requesting such action); and

          (viii) all rights which the Depositary has, or may have in the future,
       under this Agreement or the Act, except as otherwise provided herein.

       C. The General  Partner,  by the  execution  of this  Agreement,  and any
Substituted  Limited  Partner,  by its  adoption of this  Agreement  pursuant to
Section 7.3,  irrevocably  consents to and  acknowledges  that (i) the foregoing
assignment pursuant to Section 7.lB by the Depositary to the Unit Holders of the
Depositary's  beneficial rights and interest in the Partnership is effective and
(ii) the Unit Holders are intended to be third-party beneficiaries of all rights
and  privileges  of the  Depositary  hereunder.  The  General  Partner  and  any
Substituted  Limited  Partner  covenant and agree that, in  accordance  with the
foregoing  transfer and assignment,  all the Depositary's  beneficial rights and
privileges  hereunder may be exercised by the Unit Holders,  including,  without
limitation, those listed in Section 7.1B.

       D. The Depositary, by execution of this Agreement, irrevocably commits to
exercise  its rights to vote and  Consent as the Limited  Partner in  accordance
with directions it receives from the Unit Holders as provided herein.

       E. The Depositary shall not have the right to retire or withdraw from the
Partnership  and it may not be removed by the Unit Holders.  The  Depositary may
transfer its interest as the  Depositary to another Person only with the Consent
of the General Partner and Unit Holders other than Substituted  Limited Partners
owning more than 50% of the outstanding Units.

                                      -43-
<PAGE>

       F. All  Persons  becoming  Unit  Holders  will by their  payment  for and
acceptance  of  Depositary  Receipts  agree to  comply  with and be bound by the
terms,  conditions and obligations of and will be entitled to all rights of Unit
Holders under this Agreement.

       G. Other than pursuant to Sections 7.1B,  7.1E, and 7.2, the Depositary
shall not  transfer,  assign,  encumber,  pledge,  or  hypothecate  any of its
interest in the Partnership.

       Section 7.2 Rights of Unit Holders

       A. In accordance  with the transfer and  assignment  described in Section
7.lB, it is the intention of the parties  hereto that,  except to the extent set
forth in Section 3.6,  Unit Holders  shall have the same rights and  obligations
that Limited Partners have under this Agreement and under the Act. The fiduciary
duties and obligations of the General Partner to Limited  Partners under the Act
and this Agreement shall extend to the Unit Holders.

       B. Without  limiting the  generality of Section 7.2A,  persons who become
Limited  Partners  pursuant  to Section 7.3 below and other Unit  Holders  shall
share pari passu on the basis of one Limited  Partner  interest for one Unit and
shall be  considered  a single  class  with  respect  to all  rights to  receive
distributions and allocations pursuant to this Agreement.

       C. Subject to Section  12.3,  Unit  Holders  shall vote on all matters in
respect of which they are  entitled to vote (either in person,  by proxy,  or by
written  consent),  as a single  class,  with  each Unit  entitled  to one vote;
provided,  however,  that the  Depositary  shall  vote on  behalf of and only as
directed by the Unit Holders who are not Substituted Limited Partners.

      Section 7.3 Conversion of Units into Limited Partner  Interests Subject to
the consent of the  General  Partner,  which  consent  will not be  unreasonably
withheld,  any Unit Holder who desires to convert his Units into an equal number
of Limited Partner  interests (which shall be included in the meaning of "Units"
as  such  term  is  used  in  this  Agreement)  may do so by  delivering  to the
Depositary an executed  transfer  application  (which is available  upon request
from the General Partner),  accompanied by written  instructions which set forth
an intention to become a Substituted  Limited  Partner and request  admission as
such to the  Partnership,  together with such other  instruments or documents as
the General Partner or the Depositary may deem necessary or desirable, including
the written  acceptance  and adoption by such Unit Holder of the  provisions  of
this  Agreement,  his  agreement  to be  bound  by the  terms  hereof,  and  the
execution,  acknowledgement,  and  delivery to the General  Partner of a special
power of attorney, the form and content of which are reasonably  satisfactory to
the General Partner.  Without limiting the generality of the foregoing,  refusal
by the General Partner to consent to the

                                      -44-
<PAGE>

foregoing shall not be deemed  unreasonable if such conversion would require the
Partnership to amend any filing  required to be made by it in any  jurisdiction.
Such executed  documents shall be accompanied by a payment to the Partnership by
such  Unit  Holder of a fee (not to  exceed  $100) for legal and  administrative
costs and recording fees. Unit Holders  becoming  Substituted  Limited  Partners
will be admitted to the Partnership quarterly,  or as promptly as possible after
the  commencement  of the next  calendar  quarter.  Each  Person  who  effects a
conversion  under this Section will thereafter be deemed to have an equal number
of units of interest as a Limited  Partner as the number of Units  converted and
the Substituted  Limited  Partner will not be able to re-exchange  such units of
Limited Partner interests for Units.  Upon such conversion,  the General Partner
may issue to the Substituted  Limited Partner a certificate in the form approved
by the General Partner that evidences ownership of Limited Partner interests. By
executing or adopting this Agreement,  the Depositary,  each Substituted Limited
Partner and, by the purchase of a Unit,  each Unit Holder hereby consents to the
admission of Substituted  Limited  Partners by the General Partner in accordance
with the foregoing.

                                  ARTICLE EIGHT

                            TRANSFERABILITY OF UNITS

       Section 8.1 Assignments of Units

       A. Subject to the  provisions of Section 8.4, no Unit Holder  (including,
without limiting the generality of the use of such term elsewhere, a Substituted
Limited Partner) may assign,  sell,  transfer,  or exchange  (collectively,  for
purposes of this Section 8.1, a  "transfer")  any Units  without the approval of
the General Partner.  In exercising its obligations under this Section 8.1A, the
General  Partner shall use its best efforts to ensure that the terms of transfer
are not in  contravention  of any of the  provisions of this Agreement and shall
not approve any transfer:

            (i) if such  transfer  is to a Person  who  makes a market  in the
       Units;

           (ii) if such transfer would be in violation of any applicable federal
       or state securities laws (including any applicable  suitability  standard
       and the  restrictions on transfer set forth in Rule 260.141.  11 of Title
       10 of the California Administrative Code); or

           (iii)  except  for  transfers  by gift or  inheritance,  intra-family
       transfers,  transfers  resulting from family dissolutions or transfers to
       Affiliates,  any transfer of Units that would result in the  transferor's
       holding one or more but less than 10 Units.

The General  Partner  shall give  Notification  to all Unit Holders in the event
that transfers have generally been suspended.

                                      -45-
<PAGE>

       B. Any  attempted  transfer in  contravention  of the  provisions of this
Section 8.1 shall,  unless  otherwise  determined by the General  Partner in its
sole  discretion,  be void  and  deemed  ineffectual  and  shall  not bind or be
recognized by the Partnership.

       C. The  Partnership  need not recognize for any purpose any assignment of
Units  unless there shall have been filed with the  Partnership  and recorded on
the  Partnership's  books  a  duly  executed  and  acknowledged   instrument  of
assignment, and such instrument evidences the written acceptance by the assignee
of all of the terms  and  provisions  of this  Agreement,  represents  that such
assignment was made in accordance  with all applicable  laws and regulations and
in all other  respects  is  satisfactory  in form and  substance  to the General
Partner.

       D. In  connection  with any  transfer,  the General  Partner  may, in its
discretion,  require an opinion of counsel satisfactory in form and substance to
the General Partner that such transfer would not violate any federal  securities
laws or any state securities or "blue sky" laws,  including investor suitability
standards  thereunder.  The  Partnership  need not recognize for any purpose any
purported  transfer  of all or part of the Units,  if, in the opinion of counsel
such transfer would violate any state  securities or "blue sky" laws  (including
any applicable suitability standards) applicable to the Partnership or the Units
to be  transferred,  except in the case of transfers  upon the death of the Unit
Holder (by bequest or inheritance) or by operation of law.

       E. Unless  otherwise  provided by the General  Partner,  any  transfer of
Units shall be recognized by the Partnership as of the first day of the calendar
quarter  following the approval of such transfer and the required  documentation
under Section 8.1C of this  Agreement.  The  Partnership and the General Partner
shall be entitled to treat the  transferor  of such Units as the absolute  owner
thereof in all  respects,  and shall incur no liability  for any  allocation  of
Revenues,  costs or expenses,  distribution or transmittal of reports or notices
required to be given to Unit  Holders  hereunder  which is made in good faith to
such transferor  until such time as the written  instrument of transfer has been
received by the Partnership and recorded on its books.

       F. The General Partner may reasonably interpret, and is hereby authorized
to take such action as it deems necessary or desirable to effect,  the foregoing
provisions  of this  Section 8.1.  The General  Partner  may, in its  reasonable
discretion and without the approval of the Unit Holders, amend the provisions of
this  Agreement  in such manner as may be necessary or desirable to preserve the
tax  status  of  the  Partnership  as a  partnership  or to  include  provisions
governing  the  transferability  of  interests in the  Partnership  which may be
approved in future legislation,  Treasury Regulations,  administrative  rulings,
and other pronouncements or judicial decisions; provided that any such amendment
does not, in the opinion of counsel to the  Partnership,  cause any asset of the
Partnership to be an asset of a

                                      -46-
<PAGE>

plan for purposes of Title I of the Employee  Retirement  Income Security Act of
1974, as amended ("ERISA"),  or the related prohibited transaction provisions of
Section 4975 of the Code,  of any plan which owns Units.  The Unit Holders shall
be given prompt Notification of any amendments permitted by this Section 8.1F.

       G. No purported  transfer by a transferor  of Units shall be recognized
unless:

            (a) A Unit  Holder who intends to transfer  Units  provides  written
       notice (the "Transfer Notice") to the Partnership of such intention;

             (b) The Transfer  Notice is received by the Partnership at least 15
       calendar  days  before  either  information  regarding  a  Unit  Holder's
       intention to transfer Units is made available to a potential purchaser or
       information regarding a potential purchaser's interest in acquiring Units
       is made available to the Unit Holder proposing to transfer;

             (c) The closing of any  transfer  of Units by a Unit Holder  occurs
       only within the period beginning 45 calendar days and ending 120 calendar
       days after the Partnership receives the Transfer Notice;

             (d) The Partnership receives written notice ("Close Notice") of the
       closing of such transfer of Units (which Close  Notice,  in the case of a
       transfer of Units,  shall contain a representation  from the transferring
       Unit Holder and purchaser as to (b)); and

             (e) The Partnership  does not receive a Transfer Notice from a Unit
       Holder until at least 60 calendar days have passed since the  Partnership
       has received a Close Notice or a written  notice of the withdrawal of the
       intention to sell with respect to all prior Transfer  Notices received by
       the Partnership from such Unit Holder.

       H. Unit Holders who are  residents of the State of  California  must meet
the  restrictions  on transfers set forth in Rule  260.141.11 of Title 10 of the
California Administrative Code, including any applicable suitability standards.

       I.  Except as  provided  in Section  8.4,  no  transfer  of Units will be
recorded or otherwise  recognized by the Depositary or the  Partnership  for any
purpose whatsoever unless and until the transferee, unless the transfer is among
members  of the  immediate  family of the  transferor  Unit  Holder,  has paid a
transfer fee to reimburse the Depositary or an Affiliate  acting as the transfer
agent for all actual,  reasonable, and necessary expenses (not to exceed $50 per
transaction) incurred in connection with the transfer.

       J. A  transferee  who has  accepted  an  assignment  of Units  shall be
deemed  to have  agreed  to  comply  with and be bound by all of the terms and
conditions of this Agreement.

                                      -47-
<PAGE>

       Section 8.2 Substituted Limited Partners

       A. The  Consent  of the  General  Partner  shall be  required  before the
assignee of any Units shall be admitted as a Substituted Limited Partner,  which
Consent  may be  withheld  in the sole and  absolute  discretion  of the General
Partner.

       B. No  person  shall  have the right to  become a  Substituted  Limited
Partner in place of his assignor  unless all of the following  conditions  are
first satisfied:

           (a) a duly executed and acknowledged written instrument of assignment
       complying with Section 8.1 shall have been filed with the Partnership and
       recorded on its books,  which  instrument  shall  specify the Units being
       assigned and set forth the  intention  of the assignor  that the assignee
       succeed to the assignor's  interest as a Substituted  Limited  Partner in
       his place;

           (b)  the   transferor  and  his  assignee  shall  have  executed  and
       acknowledged  such other instruments as the General Partner or Depositary
       may deem  necessary or desirable to effect such  substitution,  including
       the written  acceptance and adoption by the assignee of the provisions of
       this  Agreement,  his agreement to be bound by the terms hereof,  and his
       execution,  acknowledgment,  and  delivery  to the  General  Partner of a
       special power of attorney,  the form and content of which are  reasonably
       satisfactory to the General Partner; and

           (c) a  transfer  fee  sufficient  to cover  all  reasonable  expenses
       connected with such substitution (not to exceed $50) shall have been paid
       to the Partnership.

       C.  By  executing  or  adopting  this  Agreement,  the  Depositary,  each
Substituted  Limited  Partner,  and by the purchase of a Unit,  each Unit Holder
hereby consents to the admission of Substituted  Limited Partners by the General
Partner in accordance with the foregoing and Section 7.3.

       D. The General  Partner  shall amend the  Partnership's  records at least
once each quarter if necessary to effect the substitution of Substituted Limited
Partners.

       E. Each  Person  admitted as a  Substituted  Limited  Partner  under this
Section will be deemed to have an equal number of units of interest as a Limited
Partner as the number of Units  assigned  pursuant to this Section.  The General
Partner may issue to the  Substituted  Limited Partner a certificate in the form
approved by the General  Partner that  evidences  ownership  of Limited  Partner
interests.

                                      -48-
<PAGE>

       Section 8.3 Eligible Investors; Redemption If at any time, as a result of
any misrepresentations made by a Unit Holder to the Partnership relating to such
Unit Holder's  citizenship or other legal status,  the tax or other legal status
of the  Partnership  is  jeopardized or a substantial  risk of  cancellation  or
forfeiture of any property of the  Partnership is created,  the General  Partner
may notify the Unit  Holder and  purchase  the Units of such Unit Holder for the
Partnership's  account,  at such time and for such amount as the General Partner
may determine in its sole discretion.  Nothing in this Section 8.3 shall prevent
a Unit  Holder  from  transferring  his  Units  prior  to the  date set for such
purchase by the General Partner.

       Section 8.4 Death,  Incompetency,  or  Dissolution  of a Unit Holder If a
Unit  Holder  who is an  individual  dies or a court of  competent  jurisdiction
adjudges him to be incompetent  to manage his person or his property,  such Unit
Holder's  executor,   administrator,   guardian,  conservator,  or  other  legal
representative  may exercise all of such Unit Holder's rights for the purpose of
settling his estate or  administering  his  property,  including any power under
this  Agreement of an assignee to become a Substituted  Limited  Partner or Unit
Holder.  If a Unit  Holder  is a  corporation,  trust,  or other  entity  and is
dissolved or terminated,  the powers of such Unit Holder may be exercised by its
legal representative or successor.

                                  ARTICLE NINE

                          DISSOLUTION, LIQUIDATION, AND
                         TERMINATION OF THE PARTNERSHIP

       Section 9.1 Events Causing Dissolution

       A. The Partnership  shall be dissolved upon the happening of any of the
following events:

           (i) the expiration of its term,  without any  continuation  thereof
       as set forth in Section 2.3;

           (ii) the Incapacity of the General Partner; provided, however, within
       90  days  thereafter  the  Unit  Holders  owning  more  than  50%  of the
       outstanding  Units may elect to  reconstitute  the  Partnership  prior to
       application of the liquidation provisions of Section 9.2;

           (iii) the sale or other disposition  (including,  without limitation,
       the return of Unit  Holders'  Capital  Contributions  pursuant to Section
       3.3B)  at one  time  of all or  substantially  all of the  assets  of the
       Partnership existing at the time of such sale;

           (iv) the  election to  dissolve  the  Partnership  (a) by the General
       Partner (which  election shall be Consented to by the Unit Holders owning
       more than 50% of the  outstanding  Units),  or (b) by the Consent of Unit
       Holders owning more than 50% of the outstanding Units;

                                      -49-
<PAGE>

           (v) ninety  days after the  removal or  withdrawal  of the  General
       Partner (unless a successor is elected pursuant to Section 6.5); or

           (vi) the happening of any other event causing the  dissolution of the
       Partnership  under the laws of the State,  except that the  Incapacity of
       the Depositary or any Unit Holder shall not dissolve the  Partnership and
       the seizure of the  interest of the  Depositary  shall not  dissolve  the
       Partnership.

       B. Dissolution of the Partnership  shall be effective on the day on which
the event occurs giving rise to the dissolution,  but the Partnership  shall not
terminate  until the General Partner has recorded a notice of dissolution of the
Partnership  with the  office of the  Secretary  of State of the State and shall
have  complied  with the laws of the other states in which it does  business and
the assets of the Partnership have been distributed as provided in Section 9.2.

       C. Nothing contained in this Agreement shall impair,  restrict,  or limit
the  rights and  powers of the Unit  Holders  under the laws of the State or any
other  jurisdiction  in which the  Partnership  is doing  business to reform and
reconstitute  themselves as a limited partnership  following  dissolution of the
Partnership either under provisions identical to those set forth herein or under
any other provisions.

       D. If the  Partnership  is dissolved as a result of an event set forth in
Section 9.1 A(ii) or (v), Unit Holders  owning more than 50% of the  outstanding
Units may appoint an interim manager of the Partnership,  who shall have and may
exercise only the rights,  powers,  and duties of a general partner necessary to
preserve  Partnership  assets,  until (i) a successor General Partner is elected
pursuant  to Section  6.5,  if the  Partnership  is  reconstituted,  or (ii) the
Partnership is liquidated pursuant to Section 9.2. The interim manager shall not
be liable as a general  partner to the  Depositary  or Unit  Holders  and shall,
while acting in such capacity, be entitled to the same indemnification rights as
are set forth in Section 4.10.

       Section 9.2 Liquidation

       A. Subject to Section  9.1,  upon  dissolution  of the  Partnership,  its
liabilities  shall be paid in the order  provided  herein.  The General  Partner
shall sell or otherwise dispose of the  Partnership's  Property and other assets
and shall execute all amendments terminating the Partnership. In connection with
any such sale or  disposition,  the General  Partner shall attempt to obtain the
best prices for such  property.  Pending such sale or  disposition,  the General
Partner  shall have the right to continue to operate and  otherwise to deal with
Partnership  Property.  In the event the  Partnership is dissolved on account of
the Incapacity or removal of the General Partner,  the Partnership  shall elect,
in accordance with the provisions of Article Twelve, a Person (the  "Liquidating
Agent") to perform the function of the General Partner in liquidating the assets
of the Partnership and

                                      -50-
<PAGE>

winding up its affairs,  and shall pay to such Liquidating  Agent its reasonable
fees and expenses incurred in connection therewith. Gain or loss realized on the
sale or other  disposition of the  Partnership's  assets will be credited to (in
the case of gain) or charged against (in the case of loss) the General Partner's
and each Unit Holder's  Capital  Account to the extent  allocable to the General
Partner  and such  Unit  Holder  under  Article  Five.  Any  liquidation  of the
Partnership  shall take place out of court and  without  application  being made
therefor to the Secretary of State of the State.

       The  Liquidating  Agent shall agree not to resign at any time  without 15
days' prior  Notification and (if other than the General Partner) may be removed
at any time, with or without cause, by Notification of removal  approved by Unit
Holders  owning  more  than  50% of the  outstanding  Units.  Upon  dissolution,
removal,  or  resignation of the  Liquidating  Agent, a successor and substitute
Liquidating  Agent (who shall have and succeed to all rights,  powers and duties
of the original Liquidating Agent) shall, within 30 days thereafter, be selected
by Unit  Holders  owning more than 50% of the  outstanding  Units.  The right to
appoint a  successor  or  substitute  Liquidating  Agent in the manner  provided
herein  shall be  recurring  and  continuing  for so long as the  functions  and
services  of  the  Liquidating  Agent  are  authorized  to  continue  under  the
provisions  hereof, and every reference herein to the Liquidating Agent shall be
deemed to refer  also to any such  successor  or  substitute  Liquidating  Agent
appointed in the manner herein  provided.  The Liquidating  Agent shall have and
may exercise,  without  further  authorization  or Consent of any of the parties
hereto,  all of the powers conferred upon the General Partner under the terms of
this Agreement (but subject to all of the  applicable  limitations,  contractual
and  otherwise,  upon the exercise of such powers,  other than the limitation on
sales set forth in Section  4.3C) to the extent  necessary  or  desirable in the
good  faith  judgment  of the  Liquidating  Agent to carry  out the  duties  and
functions of the Liquidating  Agent hereunder for and during such period of time
as shall be reasonably  required in the good faith  judgment of the  Liquidating
Agent to complete the winding-up and  liquidation of the Limited  Partnership as
provided for herein.

       Notwithstanding   the  provision  of  Section  9.1  which   requires  the
liquidation  of the  assets  of the  Partnership,  but  subject  to the order of
priorities set forth herein,  if on dissolution of the  Partnership  the General
Partner or Liquidating Agent determines that an immediate sale of part or all of
the Partnership's assets would be impracticable or would cause undue loss to the
Unit  Holders,  the General  Partner or  Liquidating  Agent may, in its absolute
discretion,  defer for a reasonable  time the  liquidation  of any assets except
those necessary to satisfy  liabilities of the Partnership  (other than those to
the General  Partner and Unit  Holders) or place those  assets in a  liquidating
trust to hold  until such time as the  assets  are sold or  depleted;  provided,
however,  that such assets will be  transferred  to a liquidating  trust only if
before the transfer the General Partner or Liquidating Agent shall have received
the opinion of counsel to the Partnership that the operation of such liquidating
trust  pursuant  to its terms will not result in such  liquidating  trust  being
treated as

                                      -51-
<PAGE>

an  association  taxable as a  corporation  for  federal  income  tax  purposes.
Furthermore,  if the  dissolution of the  Partnership is effected by virtue of a
merger or combination  with another entity or by virtue of a transfer,  sale, or
exchange of all or substantially  all of the  Partnership's  assets for which at
least a portion of the  consideration  consists of securities of another entity,
such  securities may be  distributed to the General  Partner and Unit Holders in
kind and there  shall be no  obligation  to sell or  otherwise  dispose  of such
securities for cash or to place them in a liquidating trust; provided,  however,
that  no  such  securities  shall  be  distributed  to  the  Unit  Holders  upon
liquidation  unless (i) the securities are readily  marketable and (ii) pro rata
amounts of such  securities  (to the extent  such  securities  may be divided in
equal pro rata amounts) are distributed to each Unit Holder.

       B. Except as otherwise contemplated by Section 3.3B, in settling accounts
after  dissolution,  the  assets  of the  Partnership  shall  be paid out in the
following  order:  (i) to  third-party  creditors,  in the order or  priority as
provided by law; (ii) to the General Partner and any  Liquidating  Agent for any
expenses  of the  Partnership  paid by or payable to them to the extent they are
entitled to reimbursement  therefor pursuant to this Agreement;  (iii) to all of
the Unit  Holders  in the  amount  equivalent  to the  amount of their  positive
Capital Account  balances (as adjusted  pursuant to Section 9.2A) on the date of
distribution; (iv) to the General Partner in the amount equivalent to the amount
of its positive  Capital Account balance (as adjusted  pursuant to Section 9.2A)
on the date of distribution;  and (v) the balance,  if any, shall be paid to the
General  Partner and Unit Holders in the manner in which Revenues are then being
allocated.

       C.  Except as  otherwise  contemplated  by Section  3.3B,  if the General
Partner  has  a  deficit   balance  in  its  Capital   Account   following   the
distribution(s)  provided for in Section 9.2B above, as determined  alter taking
into account all  adjustments to its Capital Account for the taxable year of the
Partnership during which such distribution(s) occur, it shall restore the amount
of such deficit balance to the Partnership  within 90 days and such amount shall
be  distributed to the Unit Holders in accordance  with their  positive  Capital
Account balances.

       D. Except as otherwise contemplated by Section 3.3B, upon the liquidation
or partial liquidation of the General Partner's interest pursuant to Article Six
hereof,  any  distribution  to the  General  Partner  shall  be made pro rata in
accordance with and to the extent of its positive  Capital Account balance after
the General  Partner's and Unit Holders' Capital Accounts are adjusted as if all
of the Partnership's Property had been sold at its fair market value immediately
prior to such distribution and the gain or loss realized on such sale charged or
credited  to the  General  Partner's  and  Unit  Holders'  Capital  Accounts  in
accordance with the provisions of Article Five hereof;  provided,  however, that
if the General Partner has a deficit  balance in its Capital  Account  following
such  distribution  (or  adjustment  of the General  Partner's  Capital  Account
pursuant to this Section 9.2D),  the General Partner shall restore the amount of
such

                                      -52-
<PAGE>

deficit  balance to the  Partnership by the later of the end of the  Partnership
taxable year in which the liquidation of the General  Partner's  interest occurs
or 90 days after the date of such liquidation.

       E. Notwithstanding  anything to the contrary in this Agreement,  upon the
dissolution  and  termination  of the  Partnership,  the  General  Partner  will
contribute  to the  Partnership  the lesser of: (a) the  deficit  balance in its
Capital Account or (b) the excess of 1.01% of the total Capital Contributions of
the Unit Holders over the capital previously contributed by the General Partner.

                                   ARTICLE TEN

                        BOOKS AND RECORDS; ACCOUNTING;
                             TAX ELECTIONS; ETC.

       Section 10.1 Books and Records The books and records of the  Partnership,
including any  appraisals or valuations  given in connection  with  transactions
between the General Partner and its Affiliates and the Partnership,  information
relating  to the  sale by the  General  Partner  or any  Affiliates  of goods or
services to the  Partnership,  a record of the information  obtained as evidence
that a Unit Holder meets the suitability standards established for an investment
in the Partnership,  and a list of the names and addresses and Units of all Unit
Holders,  shall be maintained by the General Partner at the principal  office of
the Partnership for a period of six years following the close of the Fiscal Year
to which they relate and shall be available  for  examination  there by any Unit
Holder or its duly authorized  representatives  at any and all reasonable times.
Any Unit Holder, or its duly authorized  representatives,  upon paying the costs
of  collection,  duplication,  and  mailing,  shall be  entitled  for any proper
purpose  to a copy of the  list of names  and  addresses  and  Units of the Unit
Holders.  The  Partnership  may  maintain  such other  books and records and may
provide  such  financial  or other  statements  as the  General  Partner  in its
discretion deems advisable.

       Section 10.2 Accounting Basis for Tax and Reporting Purposes; Fiscal Year
The books and records of the Partnership for tax purposes,  for purposes of this
Agreement and for the purpose of reports to the  Partners,  shall be kept on the
accrual basis. The Fiscal Year of the Partnership  shall be the calendar year to
the extent  permissible  and the General  Partner  shall use its best efforts to
obtain any necessary approvals therefor.

       Section 10.3 Bank  Accounts  The General  Partner  shall  maintain a bank
account or  accounts  on behalf of the  Partnership  with any bank in the United
States having total assets in excess of $100,000,000.  The General Partner shall
not deposit Partnership funds in an account with any bank in an aggregate amount
in excess of 5% of such bank's total

                                      -53-
<PAGE>

assets.   Withdrawals   shall  be  made  only  in  the  regular  course  of  the
Partnership's  business on such  signature or signatures as the General  Partner
may  determine.  All deposits and other funds not needed in the operation of the
business may be deposited in interest-bearing accounts, certificates of deposit,
money market funds (including those managed or marketed by the Dealer Manager or
its Affiliates),  or invested in short-term United States Government obligations
maturing within one year,  commercial paper of corporations  organized under the
laws of any state of the United  States or the  District of Columbia  having the
highest credit rating granted by Moody's Investors  Service,  Inc. or Standard &
Poor's Corporation, or other similar highly liquid investments.

       Section 10.4 Reports

       A. The General  Partner  shall close the  Partnership's  books of account
promptly  at the  close of each  Fiscal  Year and an annual  examination  of the
Partnership's  financial  statements  shall be  performed  at the expense of the
Partnership by the  Accountants.  The General  Partner shall furnish to the Unit
Holders an annual  report within 120 days after the close of each Fiscal Year of
the  Partnership  commencing  with the Fiscal Year in which the  Partnership was
Activated. Such report will contain at least the following information:

           (i) Financial statements for the Partnership's accounts,  including a
       balance sheet, statement of operations, statement of changes in partners'
       capital,  and  statement  of cash flows  prepared on an accrual  basis in
       accordance with generally accepted accounting  principles and accompanied
       by a report  of the  Accountants  stating  that  their  audit was made in
       accordance with generally  accepted auditing  standards and that in their
       opinion such financial  statements present fairly the financial position,
       results of  operations,  partner's  capital and cash flows in  accordance
       with generally accepted accounting principles;

           (ii) A summary  itemization,  by type and/or  classification,  of the
       total fees and compensation,  including General and Administrative Costs,
       paid by the  Partnership  or  indirectly  on its  behalf,  to the General
       Partner  and  any  of its  Affiliates.  Compliance  with  the  method  of
       allocating General and  Administrative  Costs described in the Prospectus
       will be covered in the report issued by the Accountants,  The Accountants
       willalso  state in their  report  that the total  amount of  General  and
       Administrative  Costs  allocated to the  Partnership  did not  materially
       exceed  the  amounts  actually  incurred  by the  General  Partner or its
       Affiliates;

           (iii)  A  description  of  each  of the  Net  Profits  Interests  and
       Royalties,  including the cost therefor and the interests  owned therein,
       except  succeeding  reports need contain only material  changes,  if any,
       regarding interests in Producing Properties

                                      -54-
<PAGE>

      already  reported  upon.  With  respect to all  material  Farmouts,  the
      statement  shall  include a  justification  of the Farmout and a general
      description of the terms; and

           (iv) After the end of the Fiscal  Year  following  the Fiscal Year in
       which Activation of the Partnership  occurs, and annually  thereafter,  a
       computation as of the end of the immediately preceding Fiscal Year, based
       upon engineering  reports  prepared by one or more Independent  Petroleum
       Engineers  with respect to interests in Producing  Properties  containing
       Proved  Reserves  equal to at least  80% of the  Proved  Reserves  of the
       Partnership  (with the computation as to any balance of the Partnership's
       Proved Reserves being based upon petroleum  engineering  reports prepared
       by the General Partner or an Affiliate),  of the total  estimated  Proved
       Developed Producing Reserves,  Proved Developed  Non-Producing  Reserves,
       and Proved  Undeveloped  Reserves  attributable to the interests owned by
       the  Partnership,  the  estimated  dollar  value  thereof  stated in then
       existing prices and escalated  prices, if any (as provided by the General
       Partner),  and each Unit  Holder's  interest in such  reserve  value.  In
       addition,  the computation shall include an estimate of the time required
       for  the  extraction  of such  reserves  and the  present  worth  of such
       reserves and the estimate shall contain a statement that,  because of the
       time  period  required to extract  such  reserves,  the present  value of
       revenues  to be  obtained  in the  future  is less  than  if  immediately
       receivable.

       B. Within 60 days alter the end of each fiscal quarter,  each Unit Holder
will receive an "investor statement" which summarizes such Unit Holder's current
quarter and cumulative cash distributions from the Partnership.

       C. In  addition  to the report  described  in Section  10.4A(iv)  of this
Agreement,  if an event occurs to the  knowledge  of the General  Partner or its
Affiliates leading to a reduction or an increase of such Proved Reserves of more
than  10%,  excluding  reduction  as a result  of  normal  production,  sales of
reserves or product  price  changes,  an  additional  computation  and  estimate
similar to that described in Section 10.4A(iv) shall be sent to each Unit Holder
as soon as possible,  and in no event more than 90 days after the  occurrence of
such event.

       D. By March 15 of each year, the General Partner will furnish a report to
each Unit Holder  containing such  information as is pertinent for completion of
such Unit Holder's respective federal, state, and other income tax returns.

       E. By January 31 of each year, the General  Partner will furnish a report
to each  Retirement  Plan owning Units as of December 31 of the  preceding  year
setting  forth an  evaluation  of the fair market  value of the Units as of such
December 31 of the preceding year.

                                      -55-
<PAGE>

       F. The General  Partner shall file on a timely basis with the  Securities
and  Exchange  Commission  all filings  required  to be made by the  Partnership
pursuant to the Securities Act of 1933, the Securities Exchange Act of 1934, and
the rules and regulations promulgated thereunder. The General Partner shall make
available  to any Unit  Holder  upon the Unit  Holder's  request,  copies of any
report filed by or on behalf of the Partnership with the Securities and Exchange
Commission.  The General  Partner  shall cause a copy of any reports sent to the
Unit Holders under  paragraphs  A, C, and D hereof to be sent to the  California
Commissioner of Corporations.

       G. The  General  Partner  agrees  to make all  relevant  financial  and
engineering  reports  available  for review by a Unit Holder on request at the
offices of the Partnership.

       Section 10.5 Elections The General Partner shall cause the Partnership to
make all elections required or permitted to be made by the Partnership under the
Code and not otherwise  expressly  providedfor in this Agreement,  in the manner
that the General Partner believes will be most advantageous to the Unit Holders,
except that the General  Partner shall not be required to make an election under
Section 754 of the Code or  corresponding  provisions of applicable state income
tax laws, and, if applicable,  the General Partner shall make the election under
Section  263(c) of the Code to expense all intangible  drilling and  development
costs in the initial  Partnership federal income tax return filed for the Fiscal
Year in which such costs are incurred.

                                 ARTICLE ELEVEN

                               AMENDMENTS; MERGER

       Section 11.1  Proposal and Adoption of Amendments Generally

       A.  Notwithstanding  anything to the contrary herein, the General Partner
may, without prior notice or Consent of any Unit Holder,  amend any provision of
this Agreement (including an amendment to admit an additional General Partner or
a successor  General  Partner in the event of the  withdrawal  or removal of the
General  Partner) if, in its opinion,  such  amendment  does not have a material
adverse  effect upon the Unit Holders or otherwise is permitted by Section 8.1F.
Amendments  to this  Agreement  to reflect  the  addition or  substitution  of a
Limited Partner or the admission of a successor General Partner shall be made at
the time and in the manner  referred to in Section 11.2. Any other  amendment to
this Agreement may be proposed by the General Partner or holders of at least 10%
of the outstanding  Units. The Person or Persons  proposing such amendment shall
submit  a  Notification  containing  (i) the text of such  amendment  and (ii) a
statement of the purpose of such amendment. The General Partner shall, within 15
days after receipt of any proposal under this Section 11.1A,  give  Notification
to the Depositary and all Unit Holders of such proposed

                                      -56-
<PAGE>

amendment, of such statement of purpose, and of any required opinion of counsel,
together,  in the case of an amendment proposed by Unit Holders, with the views,
if any, of the General Partner with respect to such proposed amendment.

       B.  Amendments to this Agreement  shall be adopted if: (i) in the case of
amendments referred to in Section 11.2, the conditions specified in Section 6.5B
shall have been  satisfactorily  completed and such amendment will not adversely
affect the classification of the Partnership as a partnership for federal income
tax  purposes  (which  shall  be  evidenced  by an  opinion  of  counsel  to the
Partnership  to that  effect);  (ii) in the case of  amendments  referred  to in
Section  8.1F,  the  conditions  specified  in  that  Section  shall  have  been
satisfactorily  completed;  or (iii) in the case of all other  amendments,  such
amendment  shall have been  Consented to by Unit Holders owning more than 50% of
the outstanding  Units (unless such Consent is not required  pursuant to Section
1l.1A of this  Agreement);  provided,  however,  that no such amendment may: (a)
increase  the duties or  liabilities  of the General  Partner or any Unit Holder
under this  Agreement  or  convert  the  interest  of any Unit  Holder  into the
interest of a General Partner or modify the limited liability of any Unit Holder
without  the  Consent of such  General  Partner or Unit  Holder;  (b) modify the
method provided in Article Five of determining  and allocating or  distributing,
as the case may be, each item of income, gain, loss, cost, deduction,  or credit
without the Consent of the General Partner or Unit Holder which may be adversely
affected by such  modification;  (c) amend Section 4.9, 4.10,  6.1, 6.2, 6.3, or
6.4  without  the  Consent of the General  Partner,  or (d) amend  Section  2.3,
4.2,4.4, 4.5, 4.6, 11.1, 11.2, or 12.3 unless the Consent of Unit Holders owning
at least two-thirds of the outstanding Units is obtained.

       C. Upon the adoption of any  amendment to this  Agreement,  the amendment
shall  be  executed  by the  General  Partner  (both  on its own  behalf  and as
attorney-in-fact  for any Substituted  Limited Partners) and the Depositary and,
if  necessary  or  appropriate,  shall be recorded in the proper  records of the
State and any other state in which the Partnership is then doing business.

       Section 11.2  Amendments  on  Admission or Removal of General  Partner If
this  Agreement or the  Certificate of Limited  Partnership  shall be amended to
reflect the withdrawal or removal of the General Partner and the continuation of
the business of the Partnership, such amendment shall be signed by the remaining
or successor General Partner and by the removed General Partner.

      Section 11.3 Merger The Partnership may merge or consolidate  with or into
one or more limited partnerships, general partnerships,  corporations,  business
trusts, or associations, or unincorporated businesses if (i) Consented to by the
General  Partner and by Unit  Holders  owning  more than 50% of the  outstanding
Units and (ii) such merger or  consolidation  is permitted  under the Act or any
other applicable law.

                                      -57-
<PAGE>

       Section  11.4  Exchange  Offers  Neither  the  General  Partner  nor  its
Affiliates  will make or cause to be made any offer to a Unit Holder to exchange
such Unit Holder's Units for a security unless:

            (a) such offer is made after the expiration of two years after
       the Partnership commenced operations;

            (b) such offer is made to all Unit Holders;

            (c) such  offer is on a basis no more  advantageous  to the  General
      Partner,   exchange  offeror,  or  underwriter  of  the  offer  and  their
      respective Affiliates,  than to Unit Holders; provided,  however, that the
      foregoing  clause shall not prohibit,  if permitted under applicable state
      and self-regulatory  organization guidelines:  (i) compensation (including
      the issuance of  securities) to such persons in exchange for such persons'
      other balance sheet assets  (non-Partnership  interests)  for inclusion of
      the General Partner in the exchange offer or tender of other balance sheet
      assets  of  the  General   Partner,   underwriter,   or  their  respective
      Affiliates,  based upon exchange valuation principles consistent with this
      Section  11.4;  (ii)  compensation  to  an  underwriter  for  services  in
      connection with the offer,  provided,  however, that no compensation shall
      be payable to an  underwriter  for the tender of interests by the exchange
      offeror, its Affiliates,  or the underwriter;  and (iii) compensation that
      may be permitted under subparagraph (g) below;

            (d) payments for services  rendered  Person in connection with the
       exchange are fully supportable, actual, and necessary;

            (e) in computing the exchange  ratio,  the value of reserves used is
      supported by an appraisal prepared by an Independent Petroleum Engineer as
      of the most current  feasible  date,  and the value of all other  material
      balance sheet assets,  including  undeveloped  acreage,  is at fair market
      value as determined by a qualified independent appraiser;

             (f) the offer is made  pursuant  to all  applicable  registration
       requirements under both federal and state laws;

             (g) if the exchange offeror is a corporation,  the offer is made in
       compliance  with  applicable  registration   requirements  for  corporate
       securities  and may not  allow  a  security  with  different  rights  and
       privileges to be issued to the General  Partner or its Affiliates  unless
       there is justification there-for;

             (h)  the offer  does not allow  for an  accelerated  subordinated
       interest to the General  Partner  without regard to the existing Payout
       provisions;

                                      -58-
<PAGE>

             (i)  additional  shares  or Units to be issued  pursuant  to future
       reevaluation of properties  include  reevaluation  of similar  properties
       held by Unit Holders;

            (j) there will be no  overrides  newly  established  to the  General
       Partner,  exchange offeror, or Affiliates thereof on Leases to be part of
       the exchange and any overrides to be  established  to  non-Affiliates  on
       such Leases and the basis therefor are disclosed in detail;

             (k)  all  properties  to be exchanged  are to be evaluated on the
       same basis or standard of evaluation; and

            (1)   material   properties   of  the   General   Partner  or  its
       Affiliates to be exchanged have complete cost disclosure;

provided, however, that the General Partner may avoid any of such conditions and
restrictions for which waivers or consents are obtained from  appropriate  state
securities  administrators or agencies.  Notwithstanding the foregoing,  neither
the General  Partner nor its  Affiliates  shall have any  obligation to make any
exchange offer to Unit Holders.

                                 ARTICLE TWELVE

                         CONSENTS, VOTING, AND MEETINGS

       Section  12.1  Methods of Giving  Consent  Any  Consent of a Unit  Holder
required by this  Agreement  may be given by a Unit Holder as follows:  (a) at a
meeting, in person, by a written proxy or signed writing directing the manner in
which it desires  that its vote be cast,  which  writing must be received by the
General  Partner  prior to such meeting,  or (b) without a meeting,  by a signed
writing  directing  the manner in which it desires that its vote be cast,  which
writing must be received by the General Partner prior to the date upon which the
votes of Unit Holders are to be counted.  Any Unit Holder may waive notice of or
attendance  at any meeting of the Unit Holders and may execute a signed  written
Consent. Only the votes of Unit Holders of record on the date set by the General
Partner  (which  date  shall be not less  than 10 days and not more than 60 days
prior to the date set for the  meeting  or  Consent),  whether  at a meeting  or
otherwise,  shall  be  counted.  Units  held  by the  General  Partner  and  its
Affiliates  which,  as a result  thereof,  cannot be  voted,  will not be deemed
outstanding  for purposes of  calculating  whether a sufficient  number of Units
have  consented.  The laws of the State  pertaining  to the  validity and use of
corporate proxies shall govern the validity and use of proxies given by the Unit
Holders.

                                      -59-
<PAGE>

       Section 12.2 Meetings of Unit Holders The General Partner may at any time
call a meeting of the Unit Holders or for a vote, without a meeting, of the Unit
Holders on matters  upon which the Unit  Holders are  entitled to provide  their
Consent,  and shall call for such a meeting or vote upon  receipt by the General
Partner of a request  therefor  made by Unit Holders  owning at least 10% of the
outstanding  Units as of the date of receipt of such request.  Within 15 days of
the receipt of the request,  the General  Partner shall provide  Notification to
all Unit Holders of record as of the date set by the General Partner (which date
shall be not less than 10 days and not more  than 60 days  prior to the date set
for the meeting or Consent) as to the time and place of the meeting,  if called,
and the general nature of the business to be transacted  thereat,  or if no such
meeting has been called,  of the matter or matters to be voted upon and the date
upon which the votes will be counted. The date of any meeting of Unit Holders or
the date upon which such votes,  without a meeting,  will be counted (regardless
of whether  the  General  Partner  has called for such  meeting or vote upon the
request of Unit Holders or has initiated  such event without such request) shall
be not less than 30 or more than 60 days following  mailing of the  Notification
thereof  by  the  General  Partner;   provided,   however,  that  the  date  for
Notification  of such  meeting or vote may be extended  for a period of up to 60
days, ~ in the opinion of the General  Partner such additional time is necessary
to permit  preparation  of proxy or  information  statements or other  documents
required  to be  delivered  in  connection  with  such  meeting  or  vote by the
Securities and Exchange Commission or other regulatory authorities. All expenses
of  the  meetings,   voting,  and  such  Notification  shall  be  borne  by  the
Partnership.  The presence,  in person or by proxy,  of Unit Holders owning more
than 50% of the  outstanding  Units of the  Partnership  shall be  necessary  to
constitute a quorum for the transaction of business at such meeting.  Units held
by the General Partner and its Affiliates may not be voted by them.

       Section 12.3  Limitations on  Requirements  for Consents  Notwithstanding
anything to the  contrary  contained in this  Agreement,  the powers of the Unit
Holders set forth in Sections 4.5D, 4.8, 6.1B, 6.2, 6.3A, 6.6A, 7.2C, 11.1A, and
12.5  shall not be deemed to be granted to the Unit  Holders or  exercisable  by
them if counsel for the Partnership or counsel designated by Unit Holders owning
at least 10% of the outstanding  Units renders an opinion to the effect that the
grant or the exercise of those powers,  or the result thereof,  is prohibited by
the Act,  will  impair  the  limited  liability  of the  Depositary  or the Unit
Holders,  or will affect the  classification of the Partnership as a partnership
for federal income tax purposes.

       Section 12.4  Submissions to Unit Holders The General  Partner shall give
all the Unit Holders  Notification  of any proposal or other matter  required by
any provisions of this Agreement or by law to be submitted for the consideration
and  approval  of  the  Unit  Holders.   Such  Notification  shall  include  any
information required by the relevant provision of the Agreement or by law.

                                      -60-
<PAGE>

       Section 12.5 Acting  Without  Concurrence  of General  Partner  Except as
limited by Sections  12.3 and ll.1B,  Unit  Holders  owning morn than 50% of the
outstanding  Units may,  without the  necessity for  concurrence  by the General
Partner, vote to:

             (a)   amend the Agreement;

             (b)  dissolve the Partnership;

             (c)  remove the General Partner and elect a new General Partner;

             (d)  elect a new General  Partner if the General  Partner  elects
       to withdraw;

             (e)  approve or  disapprove  the lease,  sale, or disposal of all
       or substantially all of the assets of the Partnership; or

             (f) cancel any contract for  services  with the General  Partner or
       any Affiliate thereof, which shall be without penalty,  provided 60 days'
       written notice is given.

                                ARTICLE THIRTEEN

                                 THE DEPOSITARY

       Section 13.1 Depositary Receipts

       A. Promptly after the Activation of the Partnership, the Depositary shall
execute and  forward to each Unit  Holder  Depositary  Receipts  evidencing  the
ownership  by the Unit Holder as of the date of  Activation  the Units for which
such Unit Holder subscribed.

       B.  Pursuant to the terms of Section  8.1,  upon  approval of the General
Partner of a transfer, the Depositary shall within ten business days execute and
forward Depositary Receipts to the respective transferees.

       C.  Depositary  Receipts may be endorsed with,  have  incorporated in the
text  thereof or be  accompanied  by such legends or  recitals,  attachments  or
changes,  not  inconsistent  with the  provisions of this  Agreement,  as may be
required to comply with any applicable law or regulation, or to conform with any
usage with respect thereto, or to indicate any special limitation or restriction
to which any particular  Unit may be subject,  or as may for any other reason be
required.  Each  Depositary  Receipt  shall be duly  executed  on  behalf of the
Depositary by the manual or facsimile  signature of a duly authorized officer of
the  Depositary.  No  Depositary  Receipt shall be entitled to any benefit under
this Agreement or be valid for any purpose unless it bears such signature.

                                      -61-
<PAGE>

       D. All Depositary  Receipts  executed by the Depositary shall be numbered
consecutively.  The Unit Holder of each  numbered  Depositary  Receipt  shall be
registered on the books of the Depositary maintained pursuant to Section 13.3A.

       E. Upon  surrender  by the Unit  Holder  in person or by duly  authorized
attorney  of one or  more  Depositary  Receipts  at the  Depositary's  principal
office, or at any other office it may designate for the purpose, for split-up or
combination,  the Depositary shall,  subject to the terms and conditions of this
Agreement  and the  Depositary  Receipt,  execute  and  deliver  one or more new
Depositary  Receipts in authorized  denominations  as requested,  evidencing the
same  aggregate  number  of  Units as  evidenced  by the  Depositary  Receipt(s)
surrendered.

       F. If any Depositary  Receipt is mutilated,  destroyed,  lost, or stolen,
the Depositary  shall execute and deliver a Depositary  Receipt in like form and
tenor in exchange and substitution for the mutilated, destroyed, lost, or stolen
Depositary Receipt; provided, that the Depositary may require the Unit Holder to
(i) surrender any mutilated  Depositary Receipt,  (ii) file with the Depositary,
in a form and manner  satisfactory  to it, proof of the  destruction,  loss,  or
theft, and of such Unit Holder's ownership, of the Depositary Receipt, and (iii)
furnish to the Depositary  reasonable  indemnification  (including posting of an
indemnity bond) satisfactory to the Depositary.

       G. As a condition  precedent to the  execution  and  delivery,  transfer,
split-up,  combination,  surrender,  conversion,  or exchange of any  Depositary
Receipt,  the Depositary may require (i) payment of any fee required  hereby and
payment of a sum sufficient for  reimbursement of any tax or other  governmental
charge with respect  thereto;  (ii) proof  satisfactory to it as to the identity
and  genuineness of any signature or endorsement or as to the due  authorization
of the action, including, without limitation, the guarantee of such signature by
an appropriate  entity;  (iii) proof satisfactory to it that the Person in whose
name any Depositary Receipt will be issued (and any Persons for whom such Person
will hold such Depositary  Receipt) is or is not a Retirement  Plan; (iv) filing
of such information and execution of such documents by the transferor and/or the
transferee  as may be required by this  Agreement or the  Depositary  Receipt or
otherwise  as  deemed  necessary  or  appropriate  by the  Depositary;  and  (v)
compliance  with such other  conditions as may be imposed under  applicable laws
and  regulations.  The Depositary  shall be entitled to rely upon, and shall not
have any liability to the Partnership,  the General Partner, any Unit Holder, or
any other  Person  with  respect  to the  content of any proof  submitted  to it
pursuant to this Section  13.1G.  and shall have no  obligation to inquire as to
the truth and accuracy thereof (except for acts or omissions  resulting from the
Depositary's gross negligence).

       H.  All  Depositary  Receipts  surrendered  to the  Depositary  shall  be
canceled. The Depositary shall retain all canceled Depositary Receipts and other
instruments,  documents,  and  records  in  accordance  with  the  policies  and
regulations of the Depositary and federal securities laws.

                                      -62-
<PAGE>

       Section 13.2  Depositary or Affiliate as Transfer Agent and Registrar The
Depositary  or an Affiliate  shall also be the transfer  agent and registrar for
the Depositary Receipts unless prohibited by law, regulation,  or any applicable
rule of a securities exchange or market. In its capacity as such, subject to the
terms and conditions of this  Agreement,  the Depositary or such Affiliate shall
transfer  record  ownership of the Units by  bookkeeping  entry on the books and
records maintained pursuant to Section 13.3A.

       Section 13.3 Duties of Depositary

       A. In performing its duties  hereunder the  Depositary  shall (or cause
such Affiliate acting as transfer agent to):

            (i) maintain at its principal office a current list of the full name
       and last known home or business address of each Unit Holder, set forth in
       alphabetical  order,  which  list  shall  be  available  during  ordinary
       business hours for examination and copying at the reasonable request, and
       at the expense, of any Unit Holder or his duly authorized representative,
       or copies of such list may be requested in writing for any proper purpose
       by any Unit Holder or his duly authorized  representative;  provided that
       the  reasonable  costs of  fulfilling  such  request,  including  copying
       expenses,  shall be paid by the  Unit  Holder  making  such  request.  In
       addition,  the Depositary  shall, as required,  furnish to the Securities
       and   Exchange   Commission,   any  report,   financial   statement,   or
       communication  received from the  Partnership or the General Partner that
       is made generally available to Unit Holders;

           (ii) keep all records required to be kept, for the periods specified,
       and shall file with the Securities and Exchange  Commission all materials
       required to be so filed,  under the  Securities  Exchange Act of 1934, by
       virtue of its status as  Depositary.  A copy of any material filed by the
       Depositary  with the  Securities  and Exchange  Commission  shall also be
       provided to the Partnership within two business days after its filing. To
       the extent that any such filing requires information from the Partnership
       or the  General  Partner,  such  information  shall be  furnished  to the
       Depositary by the General Partner in sufficient quantity and a sufficient
       time in advance of the date the filing is  required  to be made to enable
       the Depositary to comply with such requirements; and

           (iii)  keep  books  at its  corporate  office  for  the  transfer  of
       Depositary Receipts. The books shall be open during normal business hours
       for inspection by the Unit Holders.  The Depositary may,  however,  close
       the  transfer  books,  at any  time or from  time to  time,  when  deemed
       expedient  by it  in  connection  with  the  performance  of  its  duties
       hereunder.

                                      -63-
<PAGE>

       B. Upon the request of the Partnership,  the Depositary shall as promptly
as  practicable  furnish to the  Partnership a list, as of the date specified in
such  request,  of  the  names,  addresses,  and  social  security  or  taxpayer
identification numbers of all Unit Holders.

       Section 13.4 Depositary Not a Trustee, Issuer, etc. The Depositary is not
a trustee and it is intended that the Depositary, in its capacity as depositary,
shall not be deemed to be an "issuer" or  "underwriter"  of securities under the
federal  securities laws or applicable state securities laws; it being expressly
understood and agreed that the Depositary,  in its capacity as a limited partner
of the Partnership, is acting only in a ministerial capacity.

       Section 13.5  Indemnification  of the Depositary The Depositary  shall be
indemnified  by the  Partnership  to the same  extent  and  subject  to the same
conditions and  restrictions  as provided in Section 4.10 of this Agreement with
respect to the indemnification of the General Partner and its Affiliates.

       Section 13.6  Limitation  of Expense  Reimbursements  The expenses of the
Depositary  otherwise  reimbursable  to it under the terms of this Agreement and
the fees  payable to it  hereunder  shall not exceed the lesser of (i) an amount
equal to 90% of the  competitive  price which would be charged by  nonaffiliated
persons rendering similar services in the same or comparable geographic location
or (ii) the costs and  expenses of the  Depositary  incurred in  rendering  such
services.

                                ARTICLE FOURTEEN

                            MISCELLANEOUS PROVISIONS

       Section 14.1  Notification  to the Partnership or the General Partner Any
Notification  to the  Partnership  or the General  Partner  shall be sent to the
principal office of the Partnership,  as set forth in this Agreement.  Except as
provided  herein,  any  Notification  to a Unit Holder shall be sent to its last
known address.

       Section 14.2 Binding  Provisions The covenants and  agreements  contained
herein shall be binding upon and inure to the benefits of the heirs,  executors,
administrators, successors, and assigns of the respective parties hereto.

       Section  14.3  Applicable  Law  This  Agreement  shall be  construed  and
enforced in accordance with the laws of the State.

       Section 14.4  Separability  of Provisions If for any reason any provision
or  provisions  hereof which are not material to the purposes or business of the
Partnership  are determined to be invalid and contrary to any existing or future
law, such invalidity  shall not impair the operation of or affect those portions
of this Agreement that are valid.

                                      -64-
<PAGE>

       Section 14.5 Appointment of the General Partner as  Attorney-in-Fact  The
Depositary,  by the execution of this  Agreement,  irrevocably  constitutes  and
appoints the General  Partner as its true and lawful agent and  attorney-in-fact
with  full  power  and  authority  in its name,  place,  and  stead to  execute,
acknowledge,  deliver,  swear to,  file,  and record at the  appropriate  public
offices such documents,  instruments,  and conveyances  that may be necessary or
appropriate to carry out the provisions or purposes of this Agreement, including
without  limitation:  (a) the  Certificate  of  Limited  Partnership  and  other
certificates and instruments (including counterparts of this Agreement), and any
amendment  thereof that the General Partner deems  appropriate to form,  reform,
qualify,  or continue the Partnership (or a new partnership  with  substantially
the  same  provisions  as  the  Partnership)  as a  limited  partnership  (or  a
partnership in which the Partners will have limited liability comparable to that
provided by the Act) in the  jurisdiction  in which the  Partnership may conduct
business; (b) all amendments to the foregoing and to this Agreement necessary to
admit into the Partnership  additional or substituted  General Partners pursuant
to Section 11.2; (c) all instruments that the General Partner deems  appropriate
to reflect a change or  modification  of the  Partnership in accordance with the
terms of this Agreement (including those necessary to reflect additional Capital
Contributions);  and (d) all conveyances and other  instruments that the General
Partner deems  appropriate  to reflect the  dissolution  and  termination of the
Partnership.

       Section  14.6 Entire  Agreement  This  Agreement  constitutes  the entire
agreement  among the parties.  This Agreement  supersedes any prior agreement or
understanding among the parties and may not be modified or amended in any manner
other than as set forth herein.

       Section  14.7  Paragraph   TitlesArticle   and  section  titles  are  for
descriptive  purposes  only and shall not  control or alter the  meaning of this
Agreement as set forth in the text.

       Section  14.8  Counterparts  This  Agreement  may be  executed in several
counterparts,  all of which together shall  constitute one agreement  binding on
all parties  hereto,  notwithstanding  that all the parties  have not signed the
same  counterpart  except that no counterpart  shall be binding unless signed by
the General Partner.

                                      -65-
<PAGE>

                                          GEODYNE PROPERTIES, INC.,
                                          as General Partner

                                          By:   /s/ Steven A. Curlee
                                                ----------------------------
                                                Steven A. Curlee
                                                Vice President - Legal

                                          GEODYNE INSTITUTIONAL DEPOSITARY
                                          COMPANY, as the Limited Partner

                                          By:   /s/ Steven A. Curlee
                                                ----------------------------
                                                Steven A. Curlee
                                                Vice President - Legal

                                      -66-
<PAGE>

                                   SCHEDULE A

                                 General Partner

                                                      Capital
Name and Address                                      Contribution

Geodyne Properties, Inc............................   $100
320 South Boston Avenue
The Mezzanine
Tulsa, Oklahoma 74103-3708

                                 Limited Partner

                                                      Capital
Name and Address                                      Contribution

Geodyne Institutional Depositary Company...........   $18,870,200
320 South Boston Avenue
The Mezzanine
Tulsa, Oklahoma 74103-3708

                                      -67-

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