Filed by: Dorchester Minerals, L.P.
Pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant to Rule 14a-12(b)
of the Securities Exchange Act of 1934
Commission File No. 333-88282
Subject Company: Dorchester Minerals, L.P.
The following is a proposed amendment letter delivered by the general
partners of Republic Royalty Company to the Republic ORRI owners on January 22,
2003 relating to proposed amendments to certain combination documents. The
proposed amendment letter is not final and is subject to further discussons with
the Republic ORRI Owners.
January ___, 2003
To the Republic ORRI Owners and the
Limited Partners of Dorchester Hugoton, Ltd.
and Spinnaker Royalty Company, L.P.
In connection with the proposed combination of the business and properties
of Dorchester Hugoton, Ltd. ("DHL"), Republic Royalty Company ("RRC"), and
Spinnaker Royalty Company, L.P. ("SRC") into Dorchester Minerals, L.P. (the
"Partnership") pursuant to that certain Combination Agreement, dated December
13, 2001, as amended (the "Combination Agreement"), among DHL, RRC, SRC, the
Partnership, Dorchester Minerals Management LP (the "General Partner"),
Dorchester Minerals Management GP LLC (the "Management GP") and Dorchester
Minerals Operating LP, and the Contribution Agreement, dated December 13, 2001
(the "Contribution Agreement"), the undersigned hereby agree to the following
matters. Capitalized terms used herein but not otherwise defined shall have the
meanings attributed to them in the applicable document in which context they are
used.
Amended and Restated Partnership Agreement
The Combination Agreement is amended to provide that the Amended and
Restated Agreement of Limited Partnership of the Partnership, the form of which
is attached as Exhibit 1.2 to the Combination Agreement (the "Partnership
Agreement"), is amended to provide for the following:
The General Partner shall be under a fiduciary duty and obligation to
conduct the affairs of the Partnership in a manner that it reasonably
believes to be in, or not inconsistent with, the best interests of the
Partnership and the Limited Partners. The foregoing statement is intended
to modify Section 7.9(b) of the Partnership Agreement as to the General
Partner and its Affiliates other than the members of the Advisory Committee
and non-manager officers of Affiliates of the General Partner.
Notwithstanding any provision to the contrary in the Partnership Agreement
(including Sections 7.5, 7.6 and 7.9), whenever a potential conflict of
interest exists or arises between the General Partner or any of its
Affiliates, on the one hand, and the Partnership or any of its Partners, on
the other, the General Partner in connection with its resolution of such
conflict is required to seek Special Approval of such resolution. Further,
the General Partner shall not be entitled to use its "sole discretion" (as
defined in the Partnership Agreement) in determining whether a potential
conflict of interest exists.
Notwithstanding any provision to the contrary in the Partnership Agreement
(including Section 7.1(a)(i)), to the extent necessary to avoid unrelated
business taxable income, the General Partner is prohibited from incurring
indebtedness, excluding trade payables, (i) in excess of $50,000 in the
aggregate at any given time or (ii) which would constitute
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"acquisition indebtedness" (as defined in Section 514 of the Internal
Revenue Code of 1986, as amended).
Notwithstanding any provision to the contrary in the Partnership Agreement
(including Section 7.1(a)(xiii)), to the extent necessary to avoid
unrelated business taxable income, the General Partner shall not cause the
Partnership to acquire working interests or cost bearing interests in any
oil and gas leases or similar assets. In the event that any of the assets
of the Partnership become working interests or cost bearing interests, the
General Partner shall cause such assets to be assigned to the Operating
Subsidiary in accordance with the Royalty/NPI Agreement.
The definition of "Available Cash" is amended to (i) delete the phrase "in
the reasonable discretion of the General Partner" and (ii) provide that
cash reserves for acquisitions may only be excluded from the calculation of
Available Cash to the extent such acquisitions are the subject of a binding
agreement or a non-binding letter of intent. Further, Section 7.9(b) is
amended to delete the next to last sentence.
Notwithstanding any provision to the contrary in the Partnership Agreement
(including Sections 5.7 and 7.3(c)), in the event that the Partnership
acquires properties for a combination of cash and Partnership Interests,
(i) the cash component of the acquisition consideration shall be equal to
or less than 5% of the aggregate cash distributions made by the Partnership
for the four most recent Quarters and (ii) the amount of Partnership
Interests to be issued in such acquisition, after giving effect to such
issuance, shall not exceed 10% of the outstanding Limited Partnership
Interests.
Notwithstanding any provision to the contrary in the Partnership Agreement
(including Section 5.6(a)), the Partnership is prohibited from issuing any
Partnership Securities having greater rights or powers than the common
units of the Partnership, and any options, rights, warrants, and
appreciation rights relating to such Partnership Securities, unless such
issuance is approved by a Unit Majority.
Notwithstanding anything to the contrary in Article XIII of the Partnership
Agreement, the Partnership shall, beginning in 2004, hold an annual meeting
of limited partners of the Partnership. In connection with the annual
meeting, (i) the members of the Advisory Committee will be elected by a
plurality of the votes of the Outstanding Limited Partnership Interests
present at the meeting in person or by proxy and entitled to vote in the
election and (ii) such other business will be transacted as is properly
brought before the meeting. Members of Management GP who in the original
form of Limited Liability Company Agreement of Management GP, attached as
Exhibit A to the Contribution Agreement (the "Management GP Agreement"),
had the right to appoint persons to serve as members of the Advisory
Committee (i) shall have the right to appoint persons to serve as members
of the Advisory Committee until the Partnership's 2004 annual meeting of
limited partners and (ii) beginning with the 2004 annual meeting of limited
partners, shall have the right to cause the General Partner to nominate
persons for election as members of the Advisory Committee in accordance
with the Management GP Agreement. In addition, limited partners may
nominate additional persons for election as a member of the Advisory
Committee in accordance with the procedures as set forth in
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Exhibit A attached hereto. The Partnership Agreement is amended to include
the provisions contained in Exhibit A.
The definition of "Outstanding" is amended to mean "with respect to
Partnership Securities, all Partnership Securities that are issued by the
Partnership and reflected as outstanding on the Partnership's books and
records as of the date of determination."
Notwithstanding anything to the contrary in newly renumbered Section 13.5,
special meetings of the Limited Partners may be called by the General
Partner or by Limited Partners owning 20% or more of the Outstanding
Limited Partner Interests of the class or classes for which a meeting is
proposed, provided that the Limited Partners shall only be entitled to call
one special meeting every 12 months. Section 13.5, as newly renumbered, is
amended to include the provisions contained in Exhibit A.
Section 7.12(b) is amended to provide that the General Partner or its
Affiliates have the right to "piggyback" on a registration requested by a
holder, other than the General Partner and its Affiliates, of demand
registration rights, provided that the party exercising the demand
registration may, at any time, abandon or delay any such registration
initiated by it. If the proposed offering upon which the General Partner or
its Affiliates exercise their piggyback rights shall be an underwritten
offering, then, in the event that the managing underwriter or managing
underwriters of such offering advise the Partnership and the General
Partner or its Affiliates electing to exercise piggyback rights in writing
that in their opinion the inclusion of all of the securities would
adversely and materially affect the success of the offering, the securities
that shall be included in such offering shall be allocated among the
parties exercising demand registration rights and the General Partner or
its Affiliates exercising piggyback registration rights in proportion to
the total number of securities that the parties exercising demand
registration rights propose to register in relation to the total number of
securities that the General Partner or its Affiliates exercising piggyback
registration rights propose to register.
Transfer Restriction Agreement
The Contribution Agreement is amended to provide that Article IV of the
Transfer Restriction Agreement, the form of which is attached as Exhibit C to
the Contribution Agreement, is amended to provide that permitted sales to third
parties, subject to a right of first refusal, may not be made prior to December
31, 2010.
Lock-Up Agreement of William Casey McManemin
The Combination Agreement is amended to provide that as a condition to the
obligation of the parties to the Combination Agreement to consummate the
combination, the Partnership and William Casey McManemin will enter into a
lock-up agreement that prohibits the Disposition of any of the Securities, owned
at the time of execution of the lock-up agreement by Mr. McManemin directly or
with respect to which Mr. McManemin has an economic interest ("Covered
Securities") until the second anniversary of the closing of the combination. The
lock-up agreement shall expire as to 25% of the initial amount of the Covered
Securities upon each of the second, third and fourth anniversaries of the
closing of the combination, such that following
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the fourth anniversary of theclosing of the combination, Mr. McManemin is
permitted to sell up to 75% of the initial amount of the Covered Securities,
which restriction shall continue until such time as Mr. McManemin ceases to be a
manager of Management GP. In no event shall the lock-up agreement cover
securities which Mr. McManemin beneficially owns, or is deemed to beneficially
own, but in which he does not have an economic interest. Limited partnerships in
existence on the date of the lock-up agreement and in which Mr. McManemin has an
economic interest solely as a limited partner shall not be prohibited from
making a Disposition with respect to any or all of the Covered Securities owned
by the limited partnership. A partnership or entity of which Mr. McManemin is an
officer or general partner shall not be prohibited from making an in-kind
distribution of Covered Securities to its owners, provided that any Covered
Securities distributed to Mr. McManemin, or a partnership or entity of which Mr.
McManemin is a general partner or officer, will be subject to the provisions of
the lock-up agreement. The prohibition on a Disposition of Covered Securities
will be subject to exceptions for (i) bona fide gifts and charitable
contributions of up to a total of 50,000 common units during the first two years
of the lock-up agreement and (ii) transfers to members of Mr. McManemin's
immediate family, or a trust or trusts for the benefit of any of such family
members, provided that such family member or trust agrees in writing to be
subject to the provisions of the lock-up agreement.
Operating Subsidiary Limited Partnership Agreement
The Agreement of Limited Partnership of the Operating Subsidiary, dated
December 12, 2001, is amended to provide that the Operating Subsidiary may not
sell or transfer any working interests owned by it and which underlie the
overriding royalty interests in such properties held by the Partnership (the
"Operating ORRIs"), unless the related Operating ORRIs are sold or transferred
simultaneously at corresponding prices.
Amended and Restated LLC Agreement of Management GP
The Contribution Agreement is amended to provide that Section 8.2 of the
Management GP Agreement is amended to provide that the Appointment Rights shall
consist of (i) the right to appoint persons to serve as members of the Advisory
Committee until the Partnership's 2004 annual meeting of limited partners and
(ii) beginning with the 2004 annual meeting of limited partners, the right to
cause the General Partner to nominate persons for election as members of the
Advisory Committee in accordance with the Management GP Agreement and that such
nominees will be elected by the limited partners of the Partnership in
accordance with the Partnership Agreement of the Partnership.
Business Opportunities Agreement
Section 3 of the Business Opportunities Agreement, dated December 13, 2001,
is amended to provide that (i) "Oil and Gas Interests" shall mean oil and gas
interests, including but not limited to, (a) oil and gas net profits interests,
(b) royalty interests and other mineral interests and (c) to the extent such
interests are within the geographic boundaries of any lease, tract, unit or
parcel of land then owned by the Partnership or in which the Partnership at that
time has an interest, working interests or other cost bearing interests; (ii)
the threshold purchase price of a Qualifying Acquisition Opportunity shall be
greater than three percent (3%) of the Market Capitalization of the Partnership;
(iii) beginning on January 1, 2004, a Manager of Management
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GP that is also an Affiliate or employee of (a) the GP Parties or any Subsidiary
thereof or (b) any Officer or any Subsidiary thereof shall also be subject to
the obligations provided in Section 3 and such obligations on such Manager will
apply to all opportunities without regard to the amount of the purchase price
and (iv) that the Notifying Party must provide written notice to the Partnership
at least 21 days prior to the consummation of the transactions contemplated by
the Purchase Agreement.
Indemnity Agreement
The Combination Agreement is amended to delete Section 11.18, which would
have required that the Partnership and an affiliate of Republic Royalty Company,
LP enter into an indemnity agreement in connection with certain litigation.
Registration Rights Agreement
The proposed Registration Rights Agreement among the Partnership and the
Republic ORRI owners (the "Registration Rights Agreement") is amended to provide
for the following (the specific provisions of the Registration Rights Agreement
being amended are shown in parentheses below):
"Best Efforts" is defined as "a Person's reasonable best efforts without
the incurrence of unreasonable expense" (Section 1).
The Partnership will bear all expenses arising from a registration of
securities pursuant to the Registration Rights Agreement, other than
underwriting discounts and commissions (Section 4).
The holders of Registrable Securities are entitled to four demand and
unlimited piggyback registrations, provided that not more than two demand
registrations may be Form S-3 shelf registrations (Section 2).
The holders of Registrable Securities are entitled to "piggyback" (i) on a
registration by the Partnership for an offering of equity securities of the
Partnership for cash (other than an offering relating solely to an employee
benefit plan) and (ii) on a registration requested by the General Partner
and its Affiliates pursuant to demand registration rights, provided that
the party exercising the demand registration may, at any time, abandon or
delay any such registration initiated by it. If the proposed offering upon
which the holders of Registrable Securities exercise their piggyback rights
shall be an underwritten offering, then, in the event that the managing
underwriter or managing underwriters of such offering advise the
Partnership and the Holders electing to exercise piggyback rights in
writing that in their opinion the inclusion of all of such Holder's
Partnership Securities would adversely and materially affect the success of
the offering, the securities that shall be included in such offering shall
be allocated among the Partnership or the parties exercising demand
registration rights, as applicable, and the Holders exercising piggyback
registration rights in proportion to the total number of securities that
the Partnership or the parties exercising demand registration rights, as
applicable, propose to
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register in relation to the total number of Registrable Securities that the
Holders exercising piggyback registration rights propose to register.
The Partnership will cause a demand registration to remain effective for
180 days, unless all securities covered by such registration have been sold
(Section 2.1(a)(ii).
The Partnership may postpone a demand registration 90 days if such
postponement is in the best interests of the Partnership and its partners
due a pending transaction, investigation or event (Section 2).
In the event a demand registration involves an underwritten offering, the
underwriter(s) shall be selected by the Holders and reasonably acceptable
to the Partnership (Section 2.1(d)).
Registration rights will not terminate until the later of (i) December 31,
2010, (ii) 2 years following the withdrawal of the General Partner as the
general partner of the Partnership or (iii) the termination of registration
rights granted to the General Partner and its affiliates (Section 2.3).
The Partnership represents and covenants that any registration statement
covering sales by a Holder pursuant to the Registration Rights Agreement
will not contain material misstatements or omissions.
The obligation of the Partnership to amend or supplement a prospectus to
keep a registration statement available for use may be suspended for up to
30 consecutive and 60 non-consecutive days if the amendment or supplement
would require the disclosure of information that the Partnership has a bona
fide business purpose for keeping confidential (Section 3(b)).
The Holders will agree to market-standoff for a period of 180 days from the
date of request to standoff (Section 5(a)).
Holders will not be required to indemnify, or provide contribution to, the
Partnership for losses arising from the registration of securities pursuant
to the Registration Rights Agreement (Section 6(b) and Section 6(d)).
Each Holder represents and covenants that any information provided by such
Holder with respect to a registration pursuant to the Registration Rights
Agreement will not contain material misstatements or omissions (Section
6(b)).
Each Holder may assign or subdivide its rights pursuant to the Registration
Rights Agreement directly to no more than four Persons without prior
written consent of the Partnership (Section 8).
The Partnership agrees to enter into customary underwriting agreements,
cooperate in any due diligence conducted by underwriters, and deliver or
cause to be delivered to the
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Holders and the underwriters, if any, any certificates, opinions or comfort
letters customarily required.
The Partnership agrees to facilitate the delivery of the Registrable
Securities upon any sale by a Holder pursuant to the Registration Rights
Agreement.
The undersigned parties agree that the foregoing will be effective for all
purposes under the Combination Agreement and the agreements contemplated by it.
The undersigned parties shall amend and restate the documents referred to above
that have previously been executed and will revise such documents that are to be
executed at closing, each in a manner consistent with the foregoing, and shall
execute such documents as amended and restated or revised, as applicable, at the
closing of the combination transaction.
[SIGNATURES APPEAR ON THE FOLLOWING PAGE]
<page>
Each of the undersigned parties has caused this letter to be executed on
its behalf by its representative thereunto duly authorized, all as of the date
first above written.
DORCHESTER HUGOTON, LTD.
By: P.A. Peak, Inc., General Partner
By:____________________________
By: James E. Raley, Inc., General Partner
By:____________________________
REPUBLIC ROYALTY COMPANY
By: SAM Partners, Ltd., General Partner
By: SAM Partners, Inc., General Partner
By:_______________________
By: Vaughn Petroleum, Ltd., General Partner
By: VPL(GP), LLC, General Partner
By:________________________
SPINNAKER ROYALTY COMPANY, L.P.
By: Smith Allen Oil & Gas, Inc., General Partner
By:____________________________
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DORCHESTER MINERALS, L.P.
By: Dorchester Minerals Management LP,
General Partner
By: Dorchester Minerals Management GP LLC,
General Partner
By:________________________
DORCHESTER MINERALS MANAGEMENT LP
By: Dorchester Minerals Management GP LLC,
General Partner
By:____________________________
DORCHESTER MINERALS MANAGEMENT GP LLC
By:________________________________
DORCHESTER MINERALS OPERATING LP
By: Dorchester Minerals Operating GP LLC,
General Partner
By:___________________________
DORCHESTER MINERALS OPERATING GP LLC
By:________________________________
P.A. PEAK, INC.
By:________________________________
JAMES E. RALEY, INC.
By:________________________________
SAM PARTNERS, LTD.
By: SAM Partners, Inc., General Partner
By:____________________________
VAUGHN PETROLEUM, LTD.
By: VPL(GP), LLC, General Partner
By:____________________________
SMITH ALLEN OIL & GAS, INC.
By:________________________________
___________________________________
William Casey McManemin
___________________________________
H.C. Allen, Jr.
___________________________________
James E. Raley
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EXHIBIT A
The following shall be inserted as a new Section 13.4 of the Partnership
Agreement and the subsequent sections shall be renumbered.
SECTION 13.4. Annual Meetings.
(a) Beginning in 2004, an annual meeting of Limited Partners shall be held
for the election of the members of the Advisory Committee, on the first
Wednesday of May if not a legal holiday, and if a legal holiday then on the next
business day following, at 10:00 a.m., or at such date and time as may be
designated by resolution of the Board of Managers from time to time and stated
in the notice of the meeting, to elect the members of the Advisory Committee by
a plurality and to transact such other business as is properly brought before
the meeting in accordance with this Agreement. Annual meetings of Limited
Partners shall be held at such place, either within or without the State of
Delaware, as shall be designated from time to time by the Board of Managers and
stated in the notice of the meeting. Written notice of the annual meeting
stating the place, date and hour of the meeting shall be given to each Limited
Partner entitled to vote at such meeting and holding of record not less than ten
(10) nor more than sixty (60) days before the date of the meeting.
(b) To be properly brought before an annual meeting, business must be
either (i) specified in the notice of meeting (or any supplement thereto) given
by or at the direction of the Board of Managers, (ii) otherwise properly brought
before the meeting by or at the direction of the Board of Managers, or (iii)
otherwise (A) be properly requested to be brought before the meeting by a
Limited Partner of record entitled to vote in the election of the members of the
Advisory Committee generally and (B) constitute a proper subject to be brought
before the meeting. In order for business (other than the election of the
members of the Advisory Committee) to be properly brought before the annual
meeting of Limited Partners by a Limited Partner, the business must be legally
proper, and written notice of such Limited Partner's intent to bring such matter
before the annual meeting of Limited Partners must be delivered, either by
personal delivery or by United States mail, postage prepaid, to the General
Partner of the Partnership. Such notice must be received by the General Partner
not later than 60 days in advance of such meeting if such meeting is to be held
on a day which is within 30 days preceding the anniversary of the previous
year's annual meeting, or 90 days in advance of such meeting if such meeting is
to be held on or after the anniversary of the previous year's annual meeting. A
Limited Partner's notice to the General Partner shall set forth as to each
matter the Limited Partner proposes to bring before the annual meeting of
Limited Partners: (i) a brief description of the business desired to be brought
before the meeting and the reasons for conducting such business at the meeting,
(ii) the name and address, as they appear on the Partnership's books, of the
Limited Partner proposing such business, (iii) the class and number of Limited
Partnership Interests of the Partnership which are owned by such Limited Partner
and (iv) any material interest of the Limited Partner in such business. No
business brought by a Limited Partner shall be conducted at the annual meeting
of Limited Partners except in accordance with the procedures set forth in this
Section 13.4(b). The filing of a Limited Partner notice as required by this
Section 13.4(b) shall not, in and of itself, constitute the bringing of the
business described therein before the annual meeting. The chairman of the
meeting shall, if the facts warrant, determine that (1) the business proposed to
be brought before the meeting is not a
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proper subject therefor and/or (2) such business was not properly brought before
the meeting in accordance with the provisions hereof, and if he should so
determine, he shall declare to the meeting that (1) the business proposed to be
brought before the meeting is not a proper subject thereof and/or (2) such
business was not properly brought before the meeting and shall not be
transacted.
(c) Nominations for the election of the members of the Advisory Committee
shall be made by the General Partner and may be made by any Limited Partner
entitled to vote for the election of the members of the Advisory Committee and
holding of record. Any Limited Partner entitled to vote for the election of the
members of the Advisory Committee at a meeting (i.e., any Limited Partner of
record) may nominate persons for election as a member of the Advisory Committee
only if written notice of such Limited Partner's intent to make such nomination
is given, either by personal delivery or by United States mail, postage prepaid,
to the General Partner of the Partnership not later than 90 days in advance of
such meeting. Each such notice shall set forth: (1) the name and address of the
Limited Partner who intends to make the nomination of the person or persons to
be nominated; (2) the name of the person or persons to be nominated; (3) a
representation that the Limited Partner is a holder of record of Limited
Partnership Interests of the Partnership entitled to vote at such meeting and
intends to appear in person or by proxy at the meeting to nominate the person or
persons specified in the notice; (4) a description of all arrangements or
understandings between the Limited Partner and each nominee and any other person
or persons (naming such person or persons) pursuant to which the nomination or
nominations are to be made by the Limited Partner; (5) such other information
regarding each nominee proposed by such Limited Partner as would have been
required to be included in a proxy statement filed pursuant to the proxy rules
of the Securities and Exchange Commission had each nominee been nominated, or
intended to be nominated, by the General Partner; and (6) the written consent of
each nominee to serve as a member of the Advisory Committee if so elected. The
filing of a Limited Partner notice as required by this Section 13.4(c) shall
not, in and of itself, constitute the making of the nomination(s) described
therein. In order for the nomination of a person to be effective, the Limited
Partner who files the notice of intent to nominate such person shall also make
the nomination at the meeting. The chairman of the meeting may refuse to
acknowledge the nomination of any person not made in compliance with the
foregoing procedure.
(d) Newly created memberships on the Advisory Committee resulting from any
increase in the authorized number of members of the Advisory Committee may be
filled by the General Partner in accordance with the limited liability company
agreement of its general partner. In the event of a vacancy on the Advisory
Committee, the member of the general partner of the General Partner that held
the appointment or nomination right, as applicable, with respect to such
vacating member shall have the right, pursuant to the limited liability company
agreement of the general partner of the General Partner, to nominate, and cause
the General Partner to appoint, a replacement member of the Advisory Committee.
A member of the Advisory Committee appointed to fill a newly created membership
or a vacancy in accordance with the foregoing shall serve until the next annual
meeting of limited partners.
(e) In addition to any other applicable requirements, for a Limited Partner
proposal to be considered for inclusion in the Partnership's proxy statement for
the annual meeting, the Limited Partner must have satisfied all of the
conditions set forth in Rule 14a-8 promulgated by
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the Securities and Exchange Commission under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), or any successor rule thereto (the "Proxy
Rules"), including particularly the requirement that the Limited Partner give
timely written notice of the proposal to the Partnership.
The following shall be inserted into Section 13.10, as renumbered.
Members of the Advisory Committee shall be elected by a plurality of the
votes of the Outstanding Limited Interests present in person or by proxy at the
meeting and entitled to vote on the election of the members of the Advisory
Committee.
The following shall be inserted into Section 13.5, as renumbered.
A Limited Partner's request to the General Partner shall set forth as to
each matter the Limited Partner proposes to bring before the special meeting of
Limited Partners: (i) a brief description of the business desired to be brought
before the meeting and the reasons for conducting such business at the meeting,
(ii) the name and address, as they appear on the Partnership's books, of the
Limited Partner proposing such business, (iii) the class and number of Limited
Partnership Interests of the Partnership which are owned by such Limited Partner
and (iv) any material interest of the Limited Partner in such business. No
business brought by a Limited Partner shall be conducted at the annual meeting
of Limited Partners except in accordance with the procedures set forth in this
Section 13.5. Notwithstanding anything to the contrary, the Limited Partners
shall only be entitled to call one special meeting every twelve (12) months.
The following shall be inserted into Section 13.11, as renumbered.
Notwithstanding anything in this Agreement to the contrary, no business
shall be conducted at a meeting except in accordance with the procedures and
conditions set forth in this Article XIII, and the Proxy Rules; provided,
however, that nothing in this Article XIII or the Proxy Rules shall be deemed to
preclude discussion of any business properly brought before a meeting. The
chairman of the meeting shall, if the facts warrant, determine and declare to
the meeting that business was not properly brought before the meeting in
accordance with the provisions of this Article XIII, and if he should so
determine, he shall so declare to the meeting and any such business not properly
brought before the meeting shall not be transacted.
THE FOREGOING DOES NOT CONSTITUTE AN OFFER TO BUY, OR THE SOLICITATION OF
AN OFFER TO BUY, ANY SECURITIES. THE SECURITIES TO BE OFFERED IN CONNECTION WITH
THE PROPOSED TRANSACTION WILL BE OFFERED ONLY PURSUANT TO A PROSPECTUS/PROXY
STATEMENT INCLUDED IN A REGISTRATION STATEMENT FILED UNDER THE SECURITIES ACT OF
1933, AS AMENDED.
ALL PARTNERS OF DORCHESTER HUGOTON, REPUBLIC AND SPINNAKER ARE ADVISED TO
READ THE PROSPECTUS/PROXY STATEMENT, AND SUPPLEMENTS THERETO, FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION AND THE RELATED SOLICITATION/RECOMMENDATIONS
THAT WILL BE PROVIDED TO EACH PARTNER REQUESTING SUCH PARTNER'S VOTE, BECAUSE
THESE DOCUMENTS WILL CONTAIN IMPORTANT INFORMATION. A COPY OF THE
PROSPECTUS/PROXY STATEMENT AND RELATED SOLICITATION/RECOMMENDATIONS WERE MAILED
TO PARTNERS ON OCTOBER 31, 2002 AND SUPPLEMENT NO. 1 WAS MAILED DECEMBER 13,
2002 AND ARE AVAILABLE FROM DORCHESTER HUGOTON, REPUBLIC AND SPINNAKER ON
REQUEST. THE PROSPECTUS/PROXY STATEMENT, SUPPLEMENTS THERETO AND RELATED
SOLICITATION/RECOMMENDATIONS ARE AVAILABLE ON THE INTERNET AT THE SECURITIES AND
EXCHANGE COMMISSION'S WORLD WIDE WEB SITE AT HTTP://WWW.SEC.GOV.
Dorchester Hugoton, Republic and Spinnaker and their respective General
Partners, directors and/or officers, as applicable, may be deemed under the
Rules of the Securities and Exchange Commission to be "participants in the
solicitation" of proxies from the security holders of Dorchester Hugoton,
Republic and Spinnaker in favor of the transaction. SECURITY HOLDERS OF
DORCHESTER HUGOTON, REPUBLIC AND SPINNAKER MAY OBTAIN INFORMATION REGARDING THE
INTERESTS OF THE "PARTICIPANTS IN THE SOLICITATION" BY READING THE
PROSPECTUS/PROXY STATEMENT AND SUPPLEMENTS THERETO RELATING TO THE TRANSACTION.