Execution Copy
WESTERN GAS PARTNERS, LP
18,750,000 Common Units
Representing Limited Partner Interests
Underwriting Agreement
May 8, 2008
Underwriting Agreement
May 8, 2008
UBS Securities LLC
Citigroup Global Markets Inc.
Credit Suisse Securities (USA) LLC
Morgan Stanley & Co. Incorporated
as Managing Underwriters
c/o UBS Securities LLC
299 Park Avenue
New York, New York 10171-0026
Ladies and Gentlemen:
Western Gas Partners, LP, a Delaware limited partnership (the
Partnership
), proposes
to issue and sell to the underwriters named in
Schedule A
annexed hereto (the
Underwriters
), for whom UBS Securities LLC, Citigroup Global Markets Inc., Credit Suisse
Securities (USA) LLC and Morgan Stanley & Co. Incorporated are acting as representatives (the
Representatives
), an aggregate of 18,750,000 common units (the
Firm Units
)
representing limited partner interests in the Partnership (the
Common Units
). In
addition, the Partnership proposes to grant to the Underwriters the option to purchase up to an
additional 2,812,500 Common Units (the
Additional Units
), solely for the purpose of
covering over-allotments. The Firm Units and the Additional Units are hereinafter collectively
referred to as the
Units
. The Units are described in the Prospectus, which is referred
to below.
This agreement (the
Agreement
) is to confirm the agreement among the Partnership,
Anadarko Petroleum Corporation, a Delaware corporation (
Anadarko
), Western Gas Resources,
Inc., a Delaware corporation (
Western Gas
), WGR Holdings, LLC, a Delaware limited
liability company (
Holdings
), and Western Gas Holdings, LLC, a Delaware limited liability
company (the
General Partner
, and together with the Partnership, Anadarko, Western Gas,
and Holdings, the
Western Gas Parties
), on the one hand, and the Underwriters on the
other hand, concerning the purchase of the Units from the Partnership by the Underwriters.
The Western Gas Parties, together with Western Gas Operating, LLC, a Delaware limited
liability company (
Operating GP
), WGR Operating, LP, a Delaware limited partnership (the
Operating Partnership
), Anadarko Gathering Company, LLC, a Delaware limited liability
company (
AGC
), Pinnacle Gas Treating LLC, a Texas limited liability company
(
PGT
), and MIGC LLC, a Delaware limited liability company (
MIGC
), are
collectively referred to herein as the
Western Gas Entities
. Each of Operating GP, the
Operating Partnership, AGC, PGT and MIGC is sometimes hereinafter referred to herein as an
Operating Subsidiary
, and they are collectively referred to herein as the
Operating
Subsidiaries
. The Western Gas Entities, other than Anadarko and Western Gas, are collectively
referred to herein as the
Partnership Entities
.
The Partnership hereby acknowledges that, in connection with the proposed offering of the
Units (the
Offering
), it has requested UBS Financial Services, Inc. (the
DUP
Manager
) to administer a directed unit program (the
Directed Unit Program
), under
which up to
2,812,500 Firm Units, or 15.0% of the Firm Units to be purchased by the Underwriters (the
Reserved Units
), shall be reserved for sale by the DUP Manager at the initial public
offering price to the officers, directors and employees of the General Partner and its affiliates,
including Anadarko, and certain other persons having a relationship with the Partnership, as
designated by the Partnership (the
Directed Unit Participants
), as part of the
distribution of the Units by the Underwriters, subject to the terms of this Agreement, the
applicable rules, regulations and interpretations of the Financial Industry Regulatory Authority
(
FINRA
) and all other applicable laws, rules and regulations. The number of Units
available for sale to the general public will be reduced to the extent that Directed Unit
Participants purchase Reserved Units. The Underwriters may offer any Reserved Units not purchased
by Directed Unit Participants to the general public on the same basis as the other Units being
issued and sold hereunder. The Partnership has supplied the DUP Manager with the names, addresses
and telephone numbers of the individuals or other entities that the Partnership has designated to
be participants in the Directed Unit Program. It is understood that any number of those so
designated to participate in the Directed Unit Program may decline to do so.
The Partnership has prepared and filed, in accordance with the provisions of the Securities
Act of 1933, as amended, and the rules and regulations thereunder (collectively, the
Act
), with the Securities and Exchange Commission (the
Commission
) a
registration statement on Form S-1 (File No. 333-146700) under the Act, including a prospectus,
relating to the Units. In addition, amendments to such registration statement have been prepared
and filed with the Commission in accordance with the Act.
Except where the context otherwise requires,
Registration Statement
, as used herein,
means the registration statement on Form S-1 (File No. 333-146700), as amended at the time of such
registration statements effectiveness for purposes of Section 11 of the Act, as such section
applies to the respective Underwriters (the
Effective Time
), including (i) all documents
filed as a part thereof, (ii) any information contained in a prospectus subsequently filed with the
Commission pursuant to Rule 424(b) under the Act and deemed, pursuant to Rule 430A or Rule 430C
under the Act, to be part of the registration statement at the Effective Time, and (iii) any
additional registration statement filed pursuant to Rule 462(b) under the Act.
The Partnership has furnished to the Representatives, for use by the Underwriters and by
dealers in connection with the Offering, copies of one or more preliminary prospectuses relating to
the Units. Except where the context otherwise requires,
Preliminary Prospectus
, as used
herein, means each such preliminary prospectus, in the form so furnished.
Except where the context otherwise requires,
Prospectus
, as used herein, means the
prospectus relating to the Units, filed by the Partnership with the Commission pursuant to Rule
424(b) under the Act on or before the second business day after the date hereof (or such earlier
time as may be required under the Act) or, if no such filing is required, the final prospectus
included in the Registration Statement at the time it became effective under the Act, in each case
in the form furnished by the Partnership to the Representatives for use by the Underwriters and by
dealers in connection with the Offering.
Permitted Free Writing Prospectuses
, as used herein, means each document listed on
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Schedule B-1
attached hereto, each road show (as defined in Rule 433 under the Act), if
any, related to the Offering contemplated hereby that is a written communication (as defined in
Rule 405 under the Act) (each such road show, a
Road Show
) and any other free writing
prospectus (as defined in Rule 405 under the Act) to which the Representatives provide their prior
consent.
Disclosure Package
, as used herein, means any Preliminary Prospectus together with
any combination of one or more of the Permitted Free Writing Prospectuses, if any, and the
information set forth on
Schedule B-2
attached hereto.
As used in this Agreement,
business day
shall mean a day on which the New York Stock
Exchange (the
NYSE
) is open for trading. The terms herein, hereof, hereto,
hereinafter and similar terms, as used in this Agreement, shall in each case refer to this
Agreement as a whole and not to any particular section, paragraph, sentence or other subdivision of
this Agreement. The term or, as used herein, is not exclusive.
The Partnership has prepared and filed, in accordance with Section 12 of the Securities
Exchange Act of 1934, as amended, and the rules and regulations thereunder (collectively, the
Exchange Act
), with the Commission a registration statement on Form 8-A (File No.
001-34046) (as amended, the
Exchange Act Registration Statement
) under the Exchange Act
to register, under Section 12(b) of the Exchange Act, the class of securities consisting of the
Common Units.
It is understood and agreed to by all parties that the Partnership was recently formed by
Holdings and the General Partner to gather, treat and transport natural gas. The Partnership will
initially indirectly own AGC, PGT and MIGC. Currently, Anadarko indirectly owns AGC, PGT and MIGC
through its indirect ownership of WGR Asset Holding Company LLC (
Asset Holdco
). Prior to
the date hereof, the following transactions (the
Formation Transactions
) occurred:
1. Western Gas formed Asset Holdco and contributed $1,000 in exchange for all of the
membership interests in Asset Holdco;
2. Asset Holdco formed Holdings and contributed $4,000 in exchange for all of the membership
interests in Holdings;
3. Asset Holdco formed the General Partner and contributed $1,000 in exchange for all of the
membership interests in the General Partner;
4. The General Partner and Asset Holdco formed the Partnership and contributed $60 and $2,940,
respectively, in exchange for a 2% general partner interest and a 98% limited partner interest in
the Partnership, respectively;
5. Asset Holdco contributed all of the membership interests in the General Partner and its 98%
limited partner interest in the Partnership to Holdings;
6. The Partnership formed Operating GP and contributed $1,000 in exchange for all
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of the membership interests in Operating GP;
7. Operating GP and the Partnership formed the Operating Partnership and contributed $0.10 and
$999.90, respectively, in exchange for a 0.01% general partner interest and a 99.99% limited
partner interest in the Operating Partnership, respectively; and
8. Asset Holdco distributed all of the membership interests in Holdings to Western Gas.
It is further understood and agreed by all parties that the following transactions (the
Offering Transactions
) will occur substantially contemporaneously with the time of
purchase (as defined in
Section 2
hereof):
1. Asset Holdco will distribute all of the membership interests in AGC, PGT and MIGC to
Western Gas;
2. Western Gas will contribute to the General Partner, on behalf of Holdings, a membership
interest in AGC with a value equal to 2% of the equity value of the Partnership at the time of
purchase (the
GP Contribution Interest
);
3. Western Gas will contribute to Holdings all of the remaining membership interest in AGC and
all of the membership interests in PGT and MIGC;
4. The General Partner will contribute the GP Contribution Interest to the Partnership in
exchange for (a) 1,083,115 general partner units representing a continuation of its 2.0% general
partner interest in the Partnership and (b) the Incentive Distribution Rights (as defined in the
Partnership Agreement, which is defined in
Section 3(i)
hereof);
5. Holdings will contribute all of the remaining interest in AGC and all of the interests in
PGT and MIGC to the Partnership in exchange for (a) 4,973,806 Common Units, (b) 26,536,306
subordinated units representing limited partner interests in the Partnership (the
Subordinated
Units
), (c) the right to receive, upon the earlier to occur of the expiration of the
Over-Allotment Option period or the exercise in full of the Over-Allotment Option, (1) a number of
additional Common Units that is equal to the excess, if any, of (x) 2,812,500 over (y) the
aggregate number of Common Units, if any, actually purchased by and issued to the Underwriters
pursuant to the exercise of the Over-Allotment Option and (2) a reimbursement of pre-formation
capital expenditures in an amount equal to the total amount of cash, if any, contributed by the
Underwriters to the Partnership at the additional time(s) of purchase with respect to the Common
Units purchased by and issued to the Underwriters pursuant to the exercise of the Over-Allotment
Option (if the Over-Allotment Option is not exercised, the Common Units issuable pursuant to the
right to receive additional Common Units described in this clause will, together with the Common
Units described in clause (a) and the Subordinated Units described in clause (b), represent a 63.4%
limited partner interest in the Partnership) and (d) the right to receive a distribution of $14.3
million as a reimbursement for certain pre-formation capital expenditures;
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6. The Partnership will contribute all of the membership interests in AGC, PGT and MIGC to the
Operating Partnership, of which 0.01% of such membership interests will be contributed on behalf of
Operating GP;
7. The public, through the Underwriters, will contribute $309.4 million in cash (the
Offering Proceeds
) to the Partnership in exchange for 18,7500,000 Common Units, which
will, if the Over-Allotment Option is not exercised, represent a 34.6% limited partner interest in
the Partnership;
8. The Partnership will use the Offering Proceeds to (a) pay the Underwriters discounts and a
structuring fee totaling approximately $20.1 million, (b) pay approximately $5.0 million of
Offering expenses, (c) make a loan of $260.0 million to Anadarko in exchange for a 30-year note
bearing interest at a fixed annual rate of 6.5% (the
Note
), (d) reimburse Anadarko for
$14.3 million of capital expenditures it incurred with respect to the assets contributed to the
Partnership and (e) provide $10.0 million for general partnership purposes;
9. The 98% limited partner interest in the Partnership held by Holdings and the 2% general
partner interest in the Partnership held by the General Partner will be redeemed and the initial
capital contributions of Asset Holdco and the General Partner will thereupon be refunded, and any
interest or other profit that may have resulted from the investment or other use of such capital
contributions will be distributed to Holdings and the General Partner in proportion to such capital
contributions.
10. The Partnership will enter into a $30.0 million working capital facility with Anadarko as
the lender (the
Credit Facility
); and
11. The agreements of limited partnership and the limited liability company agreements of the
Partnership Entities will be amended and restated to the extent necessary to reflect the foregoing
transactions and any other transactions contemplated by the Contribution Agreements (as described
below).
If the Underwriters exercise the Over-Allotment Option, the Partnership will use the net
proceeds of the sale of Additional Units to reimburse Anadarko for capital expenditures it incurred
with respect to the assets contributed to the Partnership during the two-year period prior to the
Offering. In connection with the Formation Transactions and the Offering Transactions
(collectively, the
Transactions
), the parties to the Transactions have entered or will
enter into various agreements, assignments, conveyances, contribution agreements and related
documents (collectively, the
Contribution Documents
). Additionally, the Partnership, the
General Partner and Anadarko will enter into an omnibus agreement to be dated as of the Closing
Date (the
Omnibus Agreement
), the General Partner and Anadarko will enter into a services
and secondment agreement to be dated as of the Closing Date (the
Services Agreement
) and
the General Partner and Andarko will enter into a tax sharing agreement to be dated as of the
Closing Date (the
Tax Sharing Agreement
, and together with the Contribution Documents,
the Omnibus Agreement and the Services Agreement, the
Transaction Documents
). The
Transaction Documents, the Operating Agreements (as defined below) and the Credit Facility are
collectively referred to herein as the
Operative Documents
).
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The Western Gas Parties and the Underwriters agree as follows:
1.
Sale and Purchase
. Upon the basis of the representations and warranties and
subject to the terms and conditions set forth herein, the Partnership agrees to issue and sell to
the respective Underwriters, the General Partner agrees to cause the Partnership to issue and sell
to the respective Underwriters and each of the Underwriters, severally and not jointly, agrees to
purchase from the Partnership, the number of Firm Units set forth opposite the name of such
Underwriter in
Schedule A
attached hereto, subject to adjustment in accordance with
Section 8
hereof, in each case at a purchase price of $15.51 per Unit. The Partnership is
advised by the Representatives that the Underwriters intend (i) to make a public offering of their
respective portions of the Firm Units as soon after the effective date of the Registration
Statement as in the Representatives judgment is advisable and (ii) initially to offer the Firm
Units upon the terms set forth in the Prospectus. The Representatives may from time to time
increase or decrease the public offering price after the initial public offering to such extent as
they may determine.
In addition, the Partnership hereby grants to the several Underwriters the option (the
Over-Allotment Option
) to purchase, and upon the basis of the representations and
warranties and subject to the terms and conditions set forth herein, in the event that the
Underwriters sell more Common Units in the Offering than the number of Firm Units, the Underwriters
shall have the right to purchase, severally and not jointly, from the Partnership, ratably in
accordance with the number of Firm Units to be purchased by each of them, all or a portion of the
Additional Units at the same purchase price per Unit to be paid by the Underwriters to the
Partnership for the Firm Units. The Over-Allotment Option may be exercised by the Representatives
on behalf of the several Underwriters at any time and from time to time on or before the thirtieth
day following the date of the Prospectus, by written notice to the Partnership. Such notice shall
set forth the aggregate number of Additional Units as to which the Over-Allotment Option is being
exercised and the date and time when the Additional Units are to be delivered (any such date and
time being referred to herein as an
additional time of purchase
);
provided
,
however
, that no additional time of purchase shall be earlier than the time of purchase (as
defined in
Section 2
hereof) nor earlier than the second business day after the date on
which the Over-Allotment Option shall have been exercised nor later than the tenth business day
after the date on which the Over-Allotment Option shall have been exercised. The number of
Additional Units to be sold to each Underwriter shall be the number that bears the same proportion
to the aggregate number of Additional Units being purchased as the number of Firm Units set forth
opposite the name of such Underwriter in
Schedule A
attached hereto bears to the aggregate
number of Firm Units, subject to such adjustments as the Representatives may determine are
necessary to eliminate fractional Units and subject to adjustment in accordance with
Section
8
hereof.
2.
Payment and Delivery
. Payment of the purchase price for the Firm Units shall be
made to the Partnership by Federal Funds wire transfer against electronic delivery of the Firm
Units in book entry form to the Representatives through the facilities of The Depository Trust
Company (
DTC
) for the respective accounts of the Underwriters. Such payment and delivery
shall be made at 9:00 A.M., Houston, Texas time, on May 14, 2008 (the
Closing Date
)
(unless another time shall be agreed to by the Representatives and the Partnership or unless
postponed in accordance with the provisions of
Section 8
hereof). The time at which such
payment and
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delivery are to be made is sometimes referred to herein as the
time of purchase
.
Electronic transfer of the Firm Units shall be made to the Representatives at the time of purchase
in such names and in such denominations as they shall specify.
Payment of the purchase price for the Additional Units shall be made at the additional time of
purchase in the same manner as the payment for the Firm Units. Electronic transfer of the
Additional Units shall be made to the Representatives at the additional time of purchase in such
names and in such denominations as they shall specify.
Delivery of the documents described in
Section 6
hereof with respect to the purchase
of the Firm Units and any purchase of Additional Units shall be made at the offices of Andrews
Kurth LLP, 600 Travis, Suite 4200, Houston, Texas 77002, at 9:00 A.M., Houston, Texas time, on the
Closing Date and the date of the closing of any purchase of Additional Units.
3.
Representations and Warranties of the Western Gas Parties
. Each of the Western Gas
Parties, jointly and severally, represents, warrants to and agrees with each of the Underwriters
that:
(a)
Effectiveness of Registration Statement
. The Registration Statement has heretofore
become effective under the Act or, with respect to any registration statement to be filed to
register the offer and sale of Units pursuant to Rule 462(b) under the Act, will be filed
with the Commission and become effective under the Act no later than 10:00 P.M., New York
City time, on the date of determination of the public offering price for the Units; no stop
order of the Commission preventing or suspending the use of any Preliminary Prospectus, the
Prospectus or any Permitted Free Writing Prospectus, or the effectiveness of the
Registration Statement, has been issued, and no proceedings for such purpose have been
instituted or, to the Partnerships knowledge after due inquiry, are contemplated by the
Commission; and the Exchange Act Registration Statement has become effective as provided in
Section 12 of the Exchange Act.
(b)
Compliance with Act; No Material Misstatements or Omissions
. The Registration
Statement complied when it became effective, complies as of the date hereof and, as amended
or supplemented, will comply at the time of purchase, each additional time of purchase, if
any, and at all times during which a prospectus is required by the Act to be delivered
(whether physically or through compliance with Rule 172 under the Act or any similar rule)
in connection with any sale of Units, in all material respects, with the requirements of the
Act; the Registration Statement did not, as of the Effective Time, contain an untrue
statement of a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading; each Preliminary Prospectus
complied at the time it was filed with the Commission, and complies as of the date hereof,
in all material respects, with the requirements of the Act; at no time during the period
that begins on the earlier of the date of such Preliminary Prospectus and the date such
Preliminary Prospectus was filed with the Commission and ends at the time of purchase did or
will any Preliminary Prospectus, as then amended or supplemented, include an untrue
statement of a material fact or omit to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made, not
misleading, and at no time during such period did or will any
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Preliminary Prospectus, as then amended or supplemented, together with any combination
of one or more of the then-issued Permitted Free Writing Prospectuses, if any, include an
untrue statement of a material fact or omit to state a material fact necessary in order to
make the statements therein, in light of the circumstances under which they were made, not
misleading; the Prospectus will comply, as of its date, the date that it is filed with the
Commission, the time of purchase, each additional time of purchase, if any, and at all times
during which a prospectus is required by the Act to be delivered (whether physically or
through compliance with Rule 172 under the Act or any similar rule) in connection with any
sale of Units, in all material respects, with the requirements of the Act (including,
without limitation, Section 10(a) of the Act); at no time during the period that begins on
the earlier of the date of the Prospectus and the date the Prospectus is filed with the
Commission and ends at the later of the time of purchase, the latest additional time of
purchase, if any, and the end of the period during which a prospectus is required by the Act
to be delivered (whether physically or through compliance with Rule 172 under the Act or any
similar rule) in connection with any sale of Units did or will the Prospectus, as then
amended or supplemented, include an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading; at no time during the period that
begins on the date of the earliest use of any Permitted Free Writing Prospectus and ends at
the time of purchase did or will any Permitted Free Writing Prospectus include an untrue
statement of a material fact or omit to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made, not
misleading, or conflict with the information contained in the Registration Statement, the
Preliminary Prospectuses or the Prospectus;
provided
,
however
, that the
Western Gas Parties make no representation or warranty in this
Section 3(b)
with
respect to any statement contained in the Registration Statement, any Preliminary
Prospectus, the Prospectus or any Permitted Free Writing Prospectus in reliance upon and in
conformity with information specified in
Section 10
hereof, furnished in writing by
or on behalf of any Underwriter through the Representatives to the Partnership expressly for
use in the Registration Statement, such Preliminary Prospectus, the Prospectus or such
Permitted Free Writing Prospectus. To the extent required by Rule 433(d) under the Act, all
Permitted Free Writing Prospectuses were preceded or accompanied by a statutory prospectus
meeting the requirements of Section 10 of the Act.
(c)
No Other Prospectus
. Prior to the execution of this Agreement, the Partnership has
not, directly or indirectly, offered or sold any Units by means of any prospectus (within
the meaning of the Act) or used any prospectus (within the meaning of the Act) in
connection with the offer or sale of the Units, in each case other than the Preliminary
Prospectuses and the Permitted Free Writing Prospectuses, if any; the Partnership has not,
directly or indirectly, prepared, used or referred to any Permitted Free Writing Prospectus
except in compliance with Rules 164 and 433 under the Act; assuming that any such Permitted
Free Writing Prospectus is accompanied or preceded by the most recent Preliminary Prospectus
that contains a price range or the Prospectus, as the case may be, and that any such
Permitted Free Writing Prospectus is so used or referred to after the Registration Statement
was filed with the Commission (and after any such Permitted Free Writing Prospectus was, if
required pursuant to Rule 433(d) under
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the Act, filed with the Commission), the use of or reference to any such Permitted Free
Writing Prospectus by any Underwriter will satisfy the provisions of Rule 164 and Rule 433
(without reliance on subsection (b), (c) or (d) of Rule 164); each of the Preliminary
Prospectuses is a prospectus that, other than by reason of Rule 433 or Rule 431 under the
Act, satisfies the requirements of Section 10 of the Act, including a price range where
required by rule; neither the Partnership nor the Underwriters are disqualified, by reason
of subsection (f) or (g) of Rule 164 under the Act, from using, in connection with the offer
and sale of the Units, a free writing prospectus (as defined in Rule 405 under the Act)
pursuant to Rules 164 and 433 under the Act; the Partnership is not an ineligible issuer
(as defined in Rule 405 under the Act) as of the eligibility determination date for purposes
of Rules 164 and 433 under the Act with respect to the Offering contemplated hereby; the
parties hereto agree and understand that the content of any and all road shows (as defined
in Rule 433(h)(4) under the Act) related to the Offering contemplated hereby is solely the
property of the Partnership; and the Partnership has caused there to be made available at
least one version of a
bona fide
electronic road show (as defined in Rule 433(h)(5) under
the Act) in a manner such that, pursuant to Rule 433(d)(8)(ii) under the Act, the
Partnership is not required, pursuant to Rule 433(d) under the Act, to file with the
Commission any Road Show.
(d)
Formation of the Western Gas Entities
. Each of the Western Gas Entities has been
duly formed and is validly existing as a limited partnership, limited liability company or
corporation, as the case may be, and is in good standing under the laws of the State of
Delaware or the State of Texas, as the case may be, with full partnership, limited liability
company or corporate power and authority to own, lease and operate its properties and
conduct its business as described in the Registration Statement, the Preliminary
Prospectuses, the Prospectus and each Permitted Free Writing Prospectus and (i) in the case
of the Western Gas Parties, to execute and deliver this Agreement and consummate the
transactions contemplated hereby, (ii) in the case of the Partnership, to issue, sell and
deliver the Units, (iii) in the case of the General Partner, to act as the general partner
of the Partnership, and (iv) in the case of each Western Gas Entity that is a party to an
Operative Document, to execute and deliver such Operative Document and consummate the
transactions contemplated thereby.
(e)
Foreign Qualification and Registration
. Each of the Western Gas Entities is duly
qualified to do business as a foreign limited partnership, limited liability company or
corporation, as the case may be, and is in good standing in each jurisdiction where the
ownership or lease of its properties or the conduct of its business requires such
qualification (as set forth in
Schedule C
hereto), except for any failures to be so
qualified and in good standing that would not, individually or in the aggregate, (i) have a
material adverse effect on the business, assets, condition (financial or otherwise), results
of operations or prospects of the Partnership Entities taken as a whole (a
Material
Adverse Effect
) or (ii) subject the limited partners of the Partnership to any material
liability or disability.
(f)
Ownership of Western Gas
. At the time of purchase and each additional time of
purchase, after giving effect to the Transactions, Anadarko will directly and indirectly own
all of the issued and outstanding shares of capital stock of Western Gas;
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such shares of capital stock will be duly authorized and validly issued; and Anadarko
will own such shares of capital stock free and clear of all claims, liens, encumbrances,
security interests, equities and charges (
Liens
).
(g)
Ownership of Holdings
. At the time of purchase and each additional time of
purchase, after giving effect to the Transactions, Western Gas will own all of the issued
and outstanding membership interests in Holdings; such membership interests will be duly
authorized and validly issued in accordance with the limited liability company agreement of
Holdings, as in effect at each such time (the
Holdings LLC Agreement
), fully paid
(to the extent required by the Holdings LLC Agreement) and nonassessable (except as such
nonassessability may be affected by Section 18-607 of the Delaware Limited Liability Company
Act (the
Delaware LLC Act
)); and Western Gas will own such membership interests
free and clear of all Liens.
(h)
Ownership of the General Partner
. At the time of purchase and each additional time
of purchase, after giving effect to the Transactions, Holdings will own all of the issued
and outstanding membership interests in the General Partner; such membership interests will
be duly authorized and validly issued in accordance with the limited liability company
agreement of the General Partner, as in effect at each such time (the
General Partner
LLC Agreement
), fully paid (to the extent required by the General Partner LLC
Agreement) and nonassessable (except as such nonassessability may be affected by Section
18-607 of the Delaware LLC Act); and Holdings will own such membership interests free and
clear of all Liens.
(i)
Ownership of General Partner Interest in the Partnership
. At the time of purchase
and each additional time of purchase, after giving effect to the Transactions, the General
Partner will be the sole general partner of the Partnership, with a 2.0% general partner
interest in the Partnership; such general partner interest will be duly authorized and
validly issued in accordance with the agreement of limited partnership of the Partnership,
as in effect at each such time (the
Partnership Agreement
); and the General
Partner will own such general partner interest free and clear of all Liens, except for
restrictions on transferability contained in the Partnership Agreement and as otherwise
described in the Registration Statement (excluding the exhibits thereto), each Preliminary
Prospectus and the Prospectus.
(j)
Ownership of Sponsor Units
. At the time of purchase, after giving effect to the
Transactions and assuming that the Over-Allotment Option has not been exercised at such time
of purchase, there will be 23,723,806 Common Units and 26,536,306 Subordinated Units
outstanding; at the time of purchase, after giving effect to the Transactions and assuming
that the Over-Allotment Option has not been exercised at such time of purchase, Holdings
will own 4,973,806 Common Units, 26,536,306 Subordinated Units and the right to receive
additional Common Units in an amount equal to 2,812,500 less the number of Additional Units,
if any, purchased by the Underwriters pursuant to the exercise of the Over-Allotment Option
(such Common Units and Subordinated Units and any Common Units issuable pursuant to the
right to receive additional Common Units described in this clause being collectively
referred to herein as the
Sponsor Units
); and at the time of purchase and after
giving effect to the
- 10 -
Transactions, the General Partner will own 1,083,115 general partner units and all of
the Incentive Distribution Rights (as defined in the Partnership Agreement). On the
31
st
day following the date of the Prospectus, there will be 26,536,306 Common
Units and 26,536,306 Subordinated Units outstanding; on such day, Holdings will own the
number of Common Units equal to 7,786,306 less the number of Additional Units, if any,
purchased by the Underwriters pursuant to the exercise of the Over-Allotment Option and
26,536,306 Subordinated Units; and on such day, the General Partner will own 1,083,115
general partner units and all of the Incentive Distribution Rights. All of the Sponsor
Units and the limited partner interests represented thereby and the Incentive Distribution
Rights will be duly authorized and validly issued in accordance with the Partnership
Agreement and will be fully paid (to the extent required by the Partnership Agreement) and
nonassessable (except as such nonassessability may be affected by (i) matters described in
the Registration Statement, the Preliminary Prospectus and the Prospectus under the caption
Risk FactorsRisks Inherent in an Investment in UsYour liability may not be limited if a
court finds that unitholder action constitutes control of our business, Risk FactorsRisks
Inherent in an Investment in UsUnitholders may have liability to repay distributions that
were wrongfully distributed to them and The Partnership AgreementLimited Liability (and
any similar information, if any, contained in any Permitted Free Writing Prospectus) and
(ii) Sections 17-303 and 17-607 of the Delaware LP Act); and all of the Sponsor Units owned
by Holdings and the Incentive Distribution Rights owned by the General Partner will be owned
free and clear of all Liens, except with respect to the restrictions on transferability
contained in the Partnership Agreement and as otherwise described in the Registration
Statement (excluding the exhibits thereto), each Preliminary Prospectus and the Prospectus.
(k)
Ownership of Operating GP
. At the time of purchase and each additional time of
purchase, after giving effect to the Transactions, the Partnership will own all of the
issued and outstanding membership interests in Operating GP; such membership interests will
be duly authorized and validly issued in accordance with the limited liability company
agreement of Operating GP, as in effect at each such time (the
Operating GP LLC
Agreement
), fully paid (to the extent required by the Operating GP LLC Agreement) and
nonassessable (except as such nonassessability may be affected by Section 18-607 of the
Delaware LLC Act); and the Partnership will own such membership interests free and clear of
all Liens.
(l)
Ownership of the Operating Partnership
. At the time of purchase and each
additional time of purchase, after giving effect to the Transactions, the Partnership will
be the sole limited partner of the Operating Partnership, with a 99.99% limited partner
interest in the Operating Partnership; such limited partner interest will be duly authorized
and validly issued in accordance with the agreement of limited partnership of the Operating
Partnership, as in effect at each such time (the
Operating Partnership LP
Agreement
), fully paid (to the extent required by the Operating Partnership LP
Agreement) and nonassessable (except as such nonassessability may be affected by Sections
17-303 and 17-607 of the Delaware LP Act); and the Partnership will own such limited partner
interest free and clear of all Liens. At the time of purchase and each additional time of
purchase, after giving effect to the Transactions, Operating GP will be the sole general
partner of the Operating Partnership, with 0.01% general partner interest
- 11 -
in the Operating Partnership; such general partner interest will be duly authorized and
validly issued in accordance with the Operating Partnership LP Agreement; and the
Partnership will own such general partner interest free and clear of all Liens.
(m)
Ownership of AGC
. At the time of purchase and each additional time of purchase,
after giving effect to the Transactions, the Operating Partnership will own all of the
issued and outstanding membership interests in AGC; such membership interests will be duly
authorized and validly issued in accordance with the limited liability company agreement of
AGC, as in effect at each such time (the
AGC LLC Agreement
), fully paid (to the
extent required by the AGC LLC Agreement) and nonassessable (except as such nonassessability
may be affected by Section 18-607 of the Delaware LLC Act); and the Operating Partnership
will own such membership interests free and clear of all Liens.
(n)
Ownership of PGT
. At the time of purchase and each additional time of purchase,
after giving effect to the Transactions, the Operating Partnership will own all of the
issued and outstanding membership interests in PGT; such membership interests will be duly
authorized and validly issued in accordance with the limited liability company agreement of
PGT, as in effect at each such time (the
PGT LLC Agreement
), fully paid (to the
extent required by the PGT LLC Agreement) and nonassessable (except as such nonassessability
may be affected by 101.206 of the Texas Business Organizations Code (
TBOC
)); and
the Operating Partnership will own such membership interests free and clear of all Liens.
(o)
Ownership of MIGC
. At the time of purchase and each additional time of purchase,
after giving effect to the Transactions, the Operating Partnership will own all of the
issued and outstanding membership interests in MIGC; such membership interests will be duly
authorized and validly issued in accordance with the limited liability company agreement of
MIGC, as in effect at each such time (the
MIGC LLC Agreement
), fully paid (to the
extent required by the MIGC LLC Agreement) and nonassessable (except as such
nonassessability may be affected by Section 18-607 of the Delaware LLC Act); and the
Operating Partnership will own such membership interests free and clear of all Liens.
(p)
No Other Subsidiaries
. The Partnership has no other direct or indirect
subsidiaries (as defined under the Act) other than the Operating Subsidiaries. Other than
its ownership interest in the Operating Subsidiaries, the Partnership does not own, and at
the time of purchase and each additional time of purchase will not own, directly or
indirectly, any shares of stock, any other equity interests or any long-term debt securities
of any corporation, partnership, limited liability company, joint venture, association or
other entity, other than the Note. All equity interests in the Operating Subsidiaries have
been issued in compliance with all applicable securities laws and were not issued in
violation of any preemptive right, resale right, right of first refusal or similar right.
No options, warrants or other rights to purchase, agreements or other obligations to issue
or rights to convert any obligation into equity interests in any of the Operating
Subsidiaries are outstanding.
(q)
Valid Issuance of the Units
. At the time of purchase and each additional
- 12 -
time of purchase, the Units to be sold by the Partnership, and the limited partner
interests represented thereby, will be duly authorized in accordance with the Partnership
Agreement and, when issued and delivered to the Underwriters against payment therefor as
provided herein, will be validly issued, fully paid (to the extent required under the
Partnership Agreement) and nonassessable (except as such nonassessability may be affected by
(i) matters described in the Registration Statement, the Preliminary Prospectus and the
Prospectus under the caption Risk FactorsRisks Inherent in an Investment in UsYour
liability may not be limited if a court finds that unitholder action constitutes control of
our business, Risk FactorsRisks Inherent in an Investment in UsUnitholders may have
liability to repay distributions that were wrongfully distributed to them and The
Partnership AgreementLimited Liability (and any similar information, if any, contained in
any Permitted Free Writing Prospectus) and (ii) Sections 17-303 and 17-607 of the Delaware
LP Act); other than the Sponsor Units and the Incentive Distribution Rights, the Units will
be the only limited partner interests of the Partnership issued and outstanding at the time
of purchase and each additional time of purchase; and the issuance and delivery of the Units
against payment therefore as provided herein will not violate any restriction upon the
transfer thereof or any preemptive right, resale right, right of first refusal or similar
right pursuant to the Partnerships certificate of limited partnership, the Partnership
Agreement or any agreement or other instrument to which the Partnership, any of the
Partnership Entities or any of their affiliates is a party or by which any of them or any of
their respective properties may be bound or affected.
(r)
Conformity of Securities to Description
. The Units, when issued and delivered in
accordance with the terms of the Partnership Agreement and against payment therefor as
provided herein will conform, and the Sponsor Units, the general partner interest and the
Incentive Distribution Rights conform, or when issued and delivered in accordance with the
terms of the Partnership Agreement will conform, in all material respects to the
descriptions thereof, if any, contained in the Registration Statement, the Preliminary
Prospectuses, the Prospectus and each Permitted Free Writing Prospectus.
(s)
Authority and Authorization
. The Partnership has all requisite power and authority
under the Partnership Agreement and the Delaware LP Act to issue, sell and deliver (i) the
Units, in accordance with and upon the terms and conditions set forth in this Agreement, the
Partnership Agreement, the Registration Statement, the Preliminary Prospectuses and the
Prospectus, and (ii) the Sponsor Units, in accordance with the terms and conditions set
forth in the Partnership Agreement and the Transaction Documents. At the time of purchase
and each additional time of purchase, all partnership, limited liability company and
corporate action, as the case may be, required to be taken by the Western Gas Entities or
any of their partners, members or stockholders for the authorization, issuance, sale and
delivery of the Units and the Sponsor Units, the consummation of the transactions (including
the Transactions) contemplated by this Agreement and the execution and delivery of the
Operative Documents shall have been validly taken.
(t)
Authorization, Execution and Delivery of this Agreement
. This Agreement has been
duly authorized, executed and delivered by each of the Western Gas Parties.
- 13 -
(u)
Authorization, Execution, Delivery and Enforceability of Other Agreements
. At or
before the time of purchase:
(i) The Holdings LLC Agreement will be duly authorized, executed and delivered
by Western Gas and will be a valid and legally binding agreement of Western Gas,
enforceable against Western Gas in accordance with its terms;
(ii) The General Partner LLC Agreement will be duly authorized, executed and
delivered by Holdings and will be a valid and legally binding agreement of Holdings,
enforceable against Holdings in accordance with its terms;
(iii) The Partnership Agreement will be duly authorized, executed and delivered
by the General Partner and Holdings and will be a valid and legally binding
agreement of the General Partner and Holdings, enforceable against both of them in
accordance with its terms;
(iv) The Operating GP LLC Agreement will be duly authorized, executed and
delivered by the Partnership and will be a valid and legally binding agreement of
the Partnership, enforceable against the Partnership in accordance with its terms;
(v) The Operating Partnership LP Agreement will be duly authorized, executed
and delivered by the Partnership and Operating GP and will be a valid and legally
binding agreement of the Partnership and Operating GP, enforceable against both of
them in accordance with its terms;
(vi) The AGC LLC Agreement will be duly authorized, executed and delivered by
the Operating Partnership and will be a valid and legally binding agreement of the
Operating Partnership, enforceable against the Operating Partnership in accordance
with its terms;
(vii) The MIGC LLC Agreement will be duly authorized, executed and delivered by
the Operating Partnership and will be a valid and legally binding agreement of the
Operating Partnership, enforceable against the Operating Partnership in accordance
with its terms;
(viii) The PGT LLC Agreement (together with the Holdings LLC Agreement, the
General Partner LLC Agreement, the Partnership Agreement, the Operating GP LLC
Agreement, the Operating Partnership LP Agreement, the AGC LLC Agreement and the
MIGC LLC Agreement, the
Operating Agreements
) will be duly authorized,
executed and delivered by the Operating Partnership and will be a valid and legally
binding agreement of the Operating Partnership, enforceable against the Operating
Partnership in accordance with its terms;
(ix) Each of the Contribution Documents will be duly authorized, executed and
delivered by the parties thereto and will be a valid and legally
- 14 -
binding agreement of each of the parties thereto, enforceable against each of
such parties in accordance with its terms;
(x) The Omnibus Agreement will be duly authorized, executed and delivered by
the Partnership, the General Partner and Anadarko and will be a valid and legally
binding agreement of each of them, enforceable against each of them in accordance
with its terms;
(xi) The Services Agreement will be duly authorized, executed and delivered by
the General Partner and Anadarko and will be a valid and legally binding agreement
of both of them, enforceable against both of them in accordance with its terms;
(xii) The Tax Sharing Agreement will be duly authorized, executed and delivered
by the General Partner and Anadarko and will be a valid and legally binding
agreement of both of them, enforceable against both of them in accordance with its
terms;
(xiii) The Credit Facility will be duly authorized, executed and delivered by
the Partnership and Anadarko and will be a valid and legally binding agreement of
both of them, enforceable against both of them in accordance with its terms;
provided
that, with respect to each agreement described in this
Section
3(u)
, the enforceability thereof may be limited by (A) bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws relating to or affecting
creditors rights generally and by general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law); and (B) public policy,
applicable laws relating to fiduciary duties and indemnification and an implied covenant of
good faith and fair dealing.
(v)
No Defaults
. No Western Gas Entity is in breach or violation of or in default
under (nor has any event occurred which, with notice, lapse of time or both, would result in
any breach or violation of, constitute a default under or give the holder of any
indebtedness (or a person acting on such holders behalf) the right to require the
repurchase, redemption or repayment of all or a part of such indebtedness under) (i) its
formation, governing or other organizational documents, (ii) any indenture, mortgage, deed
of trust, bank loan, credit agreement or other evidence of indebtedness, or any license,
lease, contract or other agreement or instrument to which it is a party or by which it or
any of its properties may be bound or affected, (iii) any federal, state, local or foreign
law, regulation or rule, (iv) any rule or regulation of any self-regulatory organization or
other non-governmental regulatory authority (including, without limitation, the rules and
regulations of the NYSE), or (v) any decree, judgment or order applicable to it or any of
its properties, except in the case of clauses (ii) through (v) for any such breaches,
violations or default that would not, individually or in the aggregate, have a Material
Adverse Effect, affect the validity of the Units or prevent or materially interfere with the
consummation of the transactions contemplated by this Agreement,
- 15 -
including the Offering, and the other transactions (including, but not limited to, the
Transactions) contemplated by the Registration Statement, the Preliminary Prospectuses, the
Prospectus, any Permitted Free Writing Prospectus and the Operative Documents.
(w)
No Conflicts
. The execution, delivery and performance of this Agreement and the
Operative Documents, the issuance and sale of the Units and the consummation of the
transactions contemplated hereby and thereby (including, without limitation, the
Transactions) will not conflict with, result in any breach or violation of, constitute a
default under (or constitute any event which, with notice, lapse of time or both, would
result in any breach or violation of, constitute a default under or give the holder of any
indebtedness (or a person acting on such holders behalf) the right to require the
repurchase, redemption or repayment of all or a part of such indebtedness under), or result
in the creation or imposition of a Lien on any property or assets of any Western Gas Entity
pursuant to (i) the formation, governing or other organizational documents of any of the
Western Gas Entities, (ii) any indenture, mortgage, deed of trust, bank loan, credit
agreement or other evidence of indebtedness, or any license, lease, contract or other
agreement or instrument to which any of the Western Gas Entities is a party or by which any
of the Western Gas Entities or any of their respective properties may be bound or affected,
(iii) any federal, state, local or foreign law, regulation or rule, (iv) any rule or
regulation of any self-regulatory organization or other non-governmental regulatory
authority (including, without limitation, the rules and regulations of the NYSE), or (v) any
decree, judgment or order applicable to any of the Western Gas Entities or any of their
respective properties, except in the cases of clauses (ii) through (v) for any such
conflicts, breaches, violations or defaults that would not, individually or in the
aggregate, have a Material Adverse Effect, affect the validity of the Units or prevent or
materially interfere with the consummation of the transactions contemplated by this
Agreement, including the Offering, and the other transactions (including, but not limited
to, the Transactions) contemplated by the Registration Statement, the Preliminary
Prospectuses, the Prospectus, any Permitted Free Writing Prospectus and the Operative
Documents.
(x)
No Consents
. No approval, authorization, consent or order of or filing with any
federal, state, local or foreign governmental or regulatory commission, board, body,
authority or agency, or of or with any self-regulatory organization or other
non-governmental regulatory authority (including, without limitation, the NYSE), or approval
of the security holders of the Western Gas Entities (each, a
Consent
), is required
in connection with the issuance and sale of the Units, the execution, delivery and
performance of the Operative Documents by the Western Gas Entities or the consummation by
the Western Gas Entities of the transactions contemplated hereby or thereby (including,
without limitation, the Transactions), other than (i) registration of the Units under the
Act, which has been effected (or, with respect to any registration statement to be filed
hereunder pursuant to Rule 462(b) under the Act, will be effected in accordance herewith),
(ii) any necessary qualification under the securities or blue sky laws of the various
jurisdictions in which the Units are being offered by the Underwriters, (iii) under the
rules and regulations of FINRA and (iv) Consents that have been, or prior to the Closing
Date will be, obtained.
(y)
No Preemptive Rights, Registration Rights, Options or Other Rights
.
- 16 -
Except as described in the Registration Statement (excluding the exhibits thereto),
each Preliminary Prospectus and the Prospectus, (i) no person has the right, contractual or
otherwise, to cause the Partnership to issue or sell to it any Units or other equity
interests of the Partnership, (ii) no person has any preemptive rights, resale rights,
rights of first refusal or other rights to purchase any Units or other equity interests in
the Partnership, (iii) no person has any resale rights in respect of any Units or other
equity interests in the Partnership that would be required to be disclosed in the
Registration Statement and are not so disclosed, (iv) no person has the right to act as an
underwriter or as a financial advisor to the Partnership in connection with the Offering and
(v) no person has the right, contractual or otherwise, to cause the Partnership to register
under the Act any Units or other equity interests in the Partnership, or to include any
Units or other equity interests in the Partnership in the Registration Statement or the
Offering contemplated thereby.
(z)
Permits
. Each of the Partnership Entities has all necessary licenses,
authorizations, consents and approvals (each, a
Permit
) and has made all necessary
filings required under any applicable law, regulation or rule, and has obtained all
necessary Permits from other persons, in order to conduct its business, except for such
Permits that, if not obtained, would not, individually or in the aggregate, result in a
Material Adverse Effect; and no Partnership Entity is in violation of or default under, or
has received notice of any proceedings relating to the revocation or modification of, any
such Permit or any federal, state, local or foreign law, regulation or rule or any decree,
order or judgment applicable to such Partnership Entity, except for any such violations,
defaults, revocations or modifications that would not, individually or in the aggregate,
have a Material Adverse Effect.
(aa)
Disclosure of Certain Items
. All legal or governmental proceedings, affiliate
transactions, off-balance sheet transactions, contracts, licenses, agreements, properties,
leases or documents of a character required to be described in the Registration Statement,
the Preliminary Prospectuses or the Prospectus or to be filed as an exhibit to the
Registration Statement have been so described or filed as required; and the statements
included in the Registration Statement, the Preliminary Prospectuses and the Prospectus
under the headings Our Cash Distribution Policy and Restrictions on Distributions,
Provisions of our Partnership Agreement Relating to Cash Distributions, Managements
Discussion and Analysis of Financial Condition and Results of OperationsLiquidity and
Capital Resources, BusinessSafety and Maintenance, BusinessRegulation of Operations,
BusinessEnvironmental Matters, BusinessTitle to Properties and Rights of Way,
Management, Certain Relationships and Related Party Transactions, Conflicts of Interest
and Fiduciary Duties, Description of the Common Units, The Partnership Agreement,
Material Tax Consequences and Underwriting (and any similar information contained in
each Permitted Free Writing Prospectus), insofar as they purport to summarize legal or
governmental matters or proceedings or the terms of statutes, rules, regulations, agreements
or documents, are fair and accurate summaries of such legal or governmental matters or
proceedings, statutes, rules, regulations, agreements or documents.
(bb)
Litigation
. Except as described in the Registration Statement (excluding the
exhibits thereto), each Preliminary Prospectus and the Prospectus, there are no
- 17 -
actions, suits, claims, investigations or proceedings pending or, to the Western Gas
Parties knowledge, threatened or contemplated to which the Western Gas Entities or any of
their respective directors or officers is or would be a party or to which any of their
respective properties is or would be subject at law or in equity, before or by any federal,
state, local or foreign governmental or regulatory commission, board, body, authority or
agency, or before or by any self-regulatory organization or other non-governmental
regulatory authority (including, without limitation, the NYSE), except for any such actions,
suits, claims, investigations or proceedings that would not, individually or in the
aggregate, if resolved adversely to any Western Gas Entity, have a Material Adverse Effect,
affect the validity of the Units or prevent or materially interfere with consummation of the
transactions contemplated by this Agreement, including the Offering, and the other
transactions (including, but not limited to, the Transactions) contemplated by the
Registration Statement, the Preliminary Prospectuses, the Prospectus, any Permitted Free
Writing Prospectus and the Operative Documents.
(cc)
Independent Registered Public Accounting Firm
. KPMG LLP, whose reports on the
financial statements of certain of the Partnership Entities and the combined financial
statements of Western Gas Partners Predecessor (as defined in such financial statements) are
included in the Registration Statement, the Preliminary Prospectuses, the Prospectus and
each Permitted Free Writing Prospectus containing an audit report, are independent
registered public accountants as required by the Act and by the rules of the Public Company
Accounting Oversight Board.
(dd)
Financial Statements
. The financial statements included in the Registration
Statement, the Preliminary Prospectuses, the Prospectus and, if any, each Permitted Free
Writing Prospectuses, together with the related notes and schedules, present fairly in all
material respects the financial position of the Partnership, the General Partner, MIGC and
Western Gas Partners Predecessor as of the dates indicated and the results of operations,
cash flows and changes in parents, partners or members equity, as the case may be, of the
Partnership, the General Partner, MIGC and Western Gas Partners Predecessor for the periods
specified; such financial statements have been prepared in compliance with the requirements
of the Act and Exchange Act and in conformity with U.S. generally accepted accounting
principles applied on a consistent basis during the periods involved; all pro forma
financial statements or data included in the Registration Statement, the Preliminary
Prospectuses, the Prospectus and each Permitted Free Writing Prospectus (excluding the pro
forma information and assumptions set forth under the caption Our Cash Distribution Policy
and Restrictions on DistributionsUnaudited Pro Forma Available Cash for the Year Ended
December 31, 2007 and in the related notes) comply with the requirements of the Act
(including, without limitation, Regulations S-X and G under the Act), the Exchange Act, Item
10 under Regulation S-K and Financial Interpretation No. 46, and the assumptions used in the
preparation of such pro forma financial statements and data are reasonable, the pro forma
adjustments used therein are appropriate to give effect to the transactions or circumstances
described therein and the pro forma adjustments have been properly applied to the historical
amounts in the compilation of those statements and data; all other financial and statistical
data contained in the Registration Statement, the Preliminary Prospectuses, the Prospectus
and each Permitted Free Writing Prospectus are accurately and fairly presented and prepared
on a
- 18 -
basis consistent with the financial statements and books and records of the Western Gas
Entities; the assumptions and forecasts underlying the pro forma information set forth
under the captions Our Cash Distribution Policy and Restrictions on
DistributionsPartnership Statement of Estimated Adjusted EBITDA and Our Cash Distribution
Policy and Restrictions on DistributionsUnaudited Pro Forma Available Cash for the Year
Ended December 31, 2007 and in the related notes in the Registration Statement, the
Preliminary Prospectuses and the Prospectus (and any similar information, if any, contained
in any Permitted Free Writing Prospectus) are, in the informed judgment of management of the
Partnership Entities, reasonable, and with respect to the pro forma information set forth
under the caption Our Cash Distribution Policy and Restrictions on DistributionsUnaudited
Pro Forma Available Cash for the Year Ended December 31, 2007 and in the related notes, the
pro forma adjustments used therein are appropriate to give effect to the transactions or
circumstances described therein and the pro forma adjustments have been properly applied to
the historical amounts in the compilation of those statements and data; there are no
financial statements (historical or pro forma) that are required to be included in the
Registration Statement, any Preliminary Prospectus or the Prospectus that are not so
included as required; the Partnership Entities do not have any material liabilities or
obligations, direct or contingent (including any off-balance sheet obligations), not
described in the Registration Statement (excluding the exhibits thereto), each Preliminary
Prospectus and the Prospectus; and all disclosures contained in the Registration Statement,
the Preliminary Prospectuses, the Prospectus and each Permitted Free Writing Prospectus
regarding non-GAAP financial measures (as such term is defined by the rules and
regulations of the Commission) comply with Regulation G and Item 10 of Regulation S-K under
the Act, to the extent applicable.
(ee)
No Material Adverse Change
. Subsequent to the respective dates as of which
information is given in the Registration Statement, the Preliminary Prospectuses, the
Prospectus and each Permitted Free Writing Prospectus, in each case excluding any amendments
or supplements to the foregoing made after the execution of this Agreement, except as
described in the Registration Statement (excluding the exhibits thereto), each Preliminary
Prospectus and the Prospectus, there has not been (i) any material adverse change, or any
developments that are reasonably likely to result in, individually or in the aggregate, a
material adverse change, in the business, assets, management, condition (financial or
otherwise), prospects or results of operations of the Partnership Entities (taken as a
whole), (ii) any transaction that is material to the Partnership Entities (taken as a
whole), (iii) any obligation or liability, direct or contingent (including any off-balance
sheet obligations), incurred by any Partnership Entity that is material to the Partnership
Entities (taken as a whole), (iv) any material change in the capitalization, ownership or
outstanding indebtedness of any Partnership Entity or (v) any dividend or distribution of
any kind declared, paid or made on the security interests of any Partnership Entity.
(ff)
Lock-Up Agreement
. The Partnership has obtained for the benefit of the
Underwriters the agreement (a
Lock-Up Agreement
), in the form set forth as
Exhibit A
hereto, of (i) each director and officer (within the meaning of Rule
16a-1(f) under the Exchange Act) of the General Partner, (ii) each Directed Unit Participant
who purchases in excess of $100,000 worth of Reserved Units pursuant to the Directed Unit
Program, (iii) each holder of Sponsor Units and (iv) each other holder of Common Units named
in
Exhibit A-1
hereto.
- 19 -
(gg)
Investment Company
. None of the Partnership Entities is, at no time during which
a prospectus is required by the Act to be delivered (whether physically or through
compliance with Rule 172 under the Act or any similar rule) in connection with any sale of
Units will any of them be, nor, after giving effect to the Offering and sale of the Units
and the application of the proceeds therefrom, will any of them be, an investment company
or an entity controlled by an investment company, as such terms are defined in the
Investment Company Act of 1940, as amended (the
Investment Company Act
).
(hh)
Title to Properties
. The Partnership Entities have good and marketable title to
all real property and good title to all personal property described in the Registration
Statement, the Preliminary Prospectuses, the Prospectus and each Permitted Free Writing
Prospectus as being owned by any of them, free and clear of all Liens, except for Liens that
would not materially interfere with the use of any such property for the conduct of their
businesses and Liens described in the Registration Statement (excluding the exhibits
thereto), each Preliminary Prospectus and the Prospectus. All property described in the
Registration Statement, the Preliminary Prospectuses, the Prospectus and each Permitted Free
Writing Prospectus as being held under lease by any Partnership Entity is held thereby under
valid, subsisting and enforceable leases.
(ii)
Rights-of-Way
. Each Partnership Entity has such consents, easements,
rights-of-way or licenses from any person (
rights-of-way
) as are necessary to
enable it to conduct its business in the manner described in the Registration Statement, the
Preliminary Prospectuses, the Prospectus and each Permitted Free Writing Prospectus, subject
to such qualifications as may be set forth in the Registration Statement, each such
Preliminary Prospectus, the Prospectus or each such Permitted Free Writing Prospectus,
except for (i) qualifications, reservations and encumbrances that would not, individually or
in the aggregate, have a Material Adverse Effect and (ii) such rights-of-way that, if not
obtained, would not result in, individually or in the aggregate, a Material Adverse Effect;
and, except as described in the Registration Statement (excluding the exhibits thereto),
each Preliminary Prospectus and the Prospectus or as would not interfere with the operations
of the Partnership Entities as conducted on the date hereof to such a material extent that
the Representatives could reasonably conclude that proceeding with the Offering would be
inadvisable, none of such rights-of-way contains any restriction that is materially
burdensome to the Partnership Entities, taken as a whole.
(jj)
Intellectual Property
. The Partnership Entities own, or have obtained valid and
enforceable licenses for or other rights to use, the inventions, patent applications,
patents, trademarks (both registered and unregistered), tradenames, service names,
copyrights, trade secrets and other proprietary information (collectively,
Intellectual
Property
) described in the Registration Statement, the Preliminary Prospectuses, the
Prospectus and, if any, each Permitted Free Writing Prospectus as being owned or licensed by
them or that are necessary for the conduct of their respective businesses as currently
conducted or as proposed to be conducted, except for any failures to own, license or have
rights to such Intellectual Property that would not, individually or
- 20 -
in the aggregate, have a Material Adverse Effect. The Western Gas Parties are unaware
of any claim to the contrary or any challenge by any other person to the rights of any of
the Partnership Entities with respect to any Intellectual Property. No Partnership Entity
has infringed or is infringing the intellectual property of a third party or has received
notice of a claim by a third party to the contrary.
(kk)
Labor and Employment Matters
. No Partnership Entity is engaged in any unfair
labor practice, and no labor disputes with the employees of or to be seconded to any
Partnership Entity exist or, to the knowledge of the Western Gas Parties after due inquiry,
are imminent or threatened that would, individually or in the aggregate, have a Material
Adverse Effect. To the knowledge of the Western Gas Parties: (i) there is (A) no unfair
labor practice complaint pending or threatened against any Partnership Entity before the
National Labor Relations Board, and no grievance or arbitration proceeding arising out of or
under collective bargaining agreements pending or threatened, (B) no strike, labor dispute,
slowdown or stoppage pending or threatened against any Partnership Entity and (C) no union
representation dispute currently existing concerning the employees of or to be seconded to
any Partnership Entity, (ii) no union organizing activities are currently taking place
concerning the employees of or to be seconded to any Partnership Entity and (iii) there has
been no violation of any federal, state, local or foreign law relating to discrimination in
the hiring, promotion or pay of employees, any applicable wage or hour laws or any provision
of the Employee Retirement Income Security Act of 1974, as amended (
ERISA
), or the
rules and regulations promulgated thereunder concerning the employees of or to be seconded
to any Partnership Entity.
(ll)
Environmental Compliance
. Except as described in the Registration Statement
(excluding the exhibits thereto), each Preliminary Prospectus and the Prospectus, (i) each
Partnership Entity and each of the properties, assets and operations of the Partnership
Entities is in compliance with any and all applicable federal, state, local or foreign laws,
statutes, ordinances, rules, regulations, orders, decrees, judgments, injunctions, permits,
licenses, authorizations or other binding requirements, or common laws, relating to health,
safety or the protection, cleanup or restoration of the environment or natural resources,
including those relating to the distribution, processing, generation, treatment, storage,
disposal, transportation, other handling or release or threatened release of Hazardous
Materials (as defined below) (
Environmental Laws
), (ii) each Partnership Entity
has received and is in compliance with all permits, licenses, authorizations or other
approvals required under applicable Environmental Laws to conduct its business as it is
currently being conducted, (iii) no Western Gas Entity has received written notice of any,
and to the knowledge of the Western Gas Parties, after reasonable inquiry, there are no
events, conditions or activities that could reasonably be expected to form the basis for
any, actual or potential liability for the investigation or remediation of any disposal or
release of hazardous or toxic substances or wastes, pollutants or contaminants, and (iv) no
Western Gas Entity is subject to any pending or, to the knowledge of the Western Gas
Parties, threatened actions, suits, demands, orders or proceedings against any Partnership
Entity relating to any Environmental Laws (collectively,
Proceedings
), except for
any (A) failures to comply with Environmental Laws or to receive or comply with required
permits, licenses, authorizations or other approvals, (B) actual or potential liabilities or
(C) Proceedings that would not, individually or in the aggregate, have a Material Adverse
- 21 -
Effect. Except as described in the Registration Statement (excluding the exhibits
thereto), each Preliminary Prospectus and the Prospectus, no Partnership Entity has entered
into any agreement relating to any alleged violation of any Environmental Law or any actual
or alleged release or threatened release or cleanup at any location of any Hazardous
Materials (as defined below). Except as described in the Registration Statement (excluding
the exhibits thereto), each Preliminary Prospectus and the Prospectus, no Partnership Entity
is currently named as a potentially responsible party under the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended
(
CERCLA
). As used herein,
Hazardous Materials
means any material
(including, without limitation, pollutants, contaminants, hazardous or toxic substances or
wastes) that is regulated by or may give rise to liability under any Environmental Law.
(mm)
Environmental Compliance Review
. In the ordinary course of its business, each
Partnership Entity conducts a periodic review of the effect of the Environmental Laws on its
business, operations and properties, in the course of which it identifies and evaluates
associated costs and liabilities (including, without limitation, any capital or operating
expenditures required for cleanup, closure of properties or compliance with Environmental
Laws or any permit, license or approval), any related constraints on operating activities
and any potential liabilities to third parties.
(nn)
ERISA Compliance
. None of the following events has occurred or exists with
respect to any of the Partnership Entities: (i) a failure to fulfill the obligations, if
any, under the minimum funding standards of Section 302 of the United States Employee
Retirement Income Security Act of 1974, as amended (
ERISA
), and the regulations
and published interpretations thereunder with respect to any Plan, determined without regard
to any waiver of such obligations or extension of any amortization period; (ii) an audit or
investigation by the Internal Revenue Service, the U.S. Department of Labor, the Pension
Benefit Guaranty Corporation or any other federal or state governmental agency or any
foreign regulatory agency with respect to the employment or compensation of employees of or
to be seconded to the Partnership Entities that would have a Material Adverse Effect; or
(iii) any breach of any contractual obligation, or any violation of law or applicable
qualification standards, with respect to the employment or compensation of employees of or
to be seconded to the Partnership Entities by any such Partnership Entity that would have a
Material Adverse Effect. None of the following events has occurred or is reasonably likely
to occur with respect to any of the Partnership Entities: (i) a material increase in the
aggregate amount of contributions required to be made to all Plans in the current fiscal
year compared to the amount of such contributions made by the Partnership Entities in the
most recently completed fiscal year; (ii) a material increase in the Partnership Entities
accumulated post-retirement benefit obligations (within the meaning of Statement of
Financial Accounting Standards 106) compared to the amount of such obligations in the most
recently completed fiscal year; (iii) any event or condition giving rise to a liability
under Title IV of ERISA that would have a Material Adverse Effect; or (iv) the filing of a
claim by one or more employees of, former employees of, or employees to be seconded to the
Partnership Entities related to its or their employment that would have a Material Adverse
Effect. For purposes of this paragraph, the term
Plan
means a plan (within the
meaning of Section 3(3) of ERISA) subject to Title IV of ERISA with respect to which any Partnership Entity may have any liability.
- 22 -
(oo)
Tax Returns
. All tax returns required to be filed by the Partnership Entities
have been timely filed, and all taxes and other assessments of a similar nature (whether
imposed directly or through withholding) including any interest, additions to tax or
penalties applicable thereto due or claimed to be due from such entities have been timely
paid, other than those (i) that are being contested in good faith and for which adequate
reserves have been provided or (ii) that, if not paid, would not, individually or in the
aggregate, have a Material Adverse Effect.
(pp)
Insurance
. The Western Gas Entities maintain insurance covering the properties,
operations, personnel and businesses of the Partnership Entities as such Western Gas
Entities reasonably deem adequate; such insurance insures against losses and risks to an
extent which is adequate, in accordance with customary industry practice, to protect the
Partnership Entities and their respective businesses; all such insurance is fully in force
on the date hereof and will be fully in force at the time of purchase and each additional
time of purchase; and the Western Gas Entities have no reason to believe that they will not
be able to renew such insurance as and when such insurance expires.
(qq)
No Business Interruptions
. No Partnership Entity has sustained, since the date of
the last audited financial statements included in the Registration Statement, the
Preliminary Prospectuses, the Prospectus or any Permitted Free Writing Prospectuses, any
material loss or interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor dispute or court or
governmental action, order or decree.
(rr)
Non-Renewal of Contracts and Agreements; Third Party Defaults
. Except as
described in the Registration Statement (excluding the exhibits thereto), each Preliminary
Prospectus and the Prospectus, no Western Gas Entity has sent or received any communication
regarding the termination of, or intent not to renew, any of the contracts or agreements
referred to or described in any Preliminary Prospectus, the Prospectus or any Permitted Free
Writing Prospectus, or referred to or described in, or filed as an exhibit to, the
Registration Statement, and no such termination or non-renewal has been threatened by any of
the Western Gas Entities or, to the knowledge of the Western Gas Parties, any other party to
any such contract or agreement. To the knowledge of the Western Gas Parties, after due
inquiry, no third party to any indenture, contract, lease, mortgage, deed of trust, note
agreement, loan agreement or other agreement, obligation, condition, covenant or instrument
to or by which any of the Western Gas Entities is a party or bound or to which their
respective properties are subject is in breach, default or violation under any such
agreement (and no event has occurred that, with notice or lapse of time or both, would
constitute such an event), which breach, default or violation would have a Material Adverse
Effect.
(ss)
Internal Controls
. The Partnership Entities maintain a system of internal
accounting controls sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with managements general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of financial statements in
- 23 -
conformity with generally accepted accounting principles and to maintain accountability
for assets; (iii) access to assets is permitted only in accordance with managements general
or specific authorization; and (iv) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with respect to any
differences.
(tt)
Disclosure Controls
. The Partnership has established and will maintain and
evaluate disclosure controls and procedures (as such term is defined in Rule 13a-15 and
15d-15 under the Exchange Act) and internal control over financial reporting (as such term
is defined in Rule 13a-15 and 15d-15 under the Exchange Act); such disclosure controls and
procedures are designed to ensure that material information relating to the Partnership is
made known to the General Partners Chief Executive Officer and its Chief Financial Officer,
and such disclosure controls and procedures are effective to perform the functions for which
they were established; the Partnerships independent auditors and the Audit Committee of the
Board of Directors of the General Partner have been advised of (i) all significant
deficiencies, if any, in the design or operation of internal control over financial
reporting which could adversely affect the Partnerships ability to record, process,
summarize and report financial data and (ii) all fraud, if any, whether or not material,
that involves management or other employees who have a role in the Partnerships internal
control over financial reporting; all material weaknesses, if any, in the Partnerships
internal control over financial reporting have been identified to the Partnerships
independent auditors; and since the date of the most recent evaluation of such disclosure
controls and procedures and internal control over financial reporting, there have been no
significant changes in the Partnerships internal control over financial reporting or in
other factors that could significantly affect internal controls, including any corrective
actions with regard to significant deficiencies and material weaknesses.
(uu)
Sarbanes-Oxley
. The Partnership Entities have taken all necessary action to
ensure that, upon and at all times after the filing of the Registration Statement, the
Partnership Entities and their respective officers and directors, in their capacities as
such, were and will be in compliance in all material respects with the applicable provisions
of the Sarbanes-Oxley Act of 2002 (the
Sarbanes-Oxley Act
) and the rules and
regulations of the Commission and NYSE promulgated thereunder.
(vv)
Forward-Looking Statements
. Each forward-looking statement (within the meaning
of Section 27A of the Act or Section 21E of the Exchange Act) contained in the Registration
Statement, the Preliminary Prospectuses, the Prospectus and each Permitted Free Writing
Prospectus has been made or reaffirmed with a reasonable basis and in good faith.
(ww)
Statistical and Market-Related Data
. All statistical or market-related data
included in the Registration Statement, the Preliminary Prospectuses, the Prospectus and
each Permitted Free Writing Prospectus are based on or derived from sources that the
Partnership reasonably believes to be reliable and accurate, and the Partnership has
obtained the written consent to the use of such data from such sources to the extent
required.
- 24 -
(xx)
Foreign Corrupt Practices Act
. No Partnership Entity nor, to the knowledge of the
Western Gas Parties, any employee or agent of the Partnership Entities has made any payment
of funds of the Partnership Entities or received or retained any funds in violation of any
law, rule or regulation (including, without limitation, the Foreign Corrupt Practices Act of
1977), which payment, receipt or retention is of a character required to be disclosed in the
Registration Statement, the Preliminary Prospectuses and the Prospectus.
(yy)
Money Laundering Laws
. The operations of the Partnership Entities are and have
been conducted at all times in compliance with applicable financial recordkeeping and
reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as
amended, the money laundering statutes of all jurisdictions, the rules and regulations
thereunder and any related or similar rules, regulations or guidelines issued, administered
or enforced by any governmental agency (collectively,
Money Laundering Laws
); and
no action, suit or proceeding by or before any court or governmental agency, authority or
body or any arbitrator or non-governmental authority involving the Partnership Entities with
respect to Money Laundering Laws is pending or, to the knowledge of the Western Gas Parties,
threatened.
(zz)
OFAC
. No Partnership Entity nor, to the knowledge of the Western Gas Parties, any
director, officer, agent, employee or affiliate of the Partnership Entities is currently
subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the
U.S. Treasury Department (
OFAC
); and the Western Gas Entities will not directly or
indirectly use the proceeds of the Offering, or lend, contribute or otherwise make available
such proceeds to any other person or entity, for the purpose of financing the activities of
any person currently subject to any U.S. sanctions administered by OFAC.
(aaa)
No Prohibition on Distributions
. No Partnership Entity is currently prohibited,
directly or indirectly, from making distributions with respect to its equity securities,
from repaying to any other Partnership Entity any loans or advances or from transferring any
property or assets to the Partnership or any other Partnership Entity, except as described
in the Registration Statement (excluding the exhibits thereto), each Preliminary Prospectus
and the Prospectus.
(bbb)
Related Party Transactions
. No Partnership Entity has, directly or indirectly
(i) extended credit, arranged to extend credit, or renewed any extension of credit, in the
form of a personal loan, to or for any director or executive officer of the General Partner
or its affiliates, or to or for any family member or affiliate of any director or executive
officer of the General Partner or its affiliates or (ii) made any material modification to
the term of any personal loan to any director or executive officer of the General Partner or
its affiliates, or any family member or affiliate of any director or executive officer of
the General Partner or its affiliates.
(ccc)
No Other Securities
. Immediately after the issuance and sale of the Units as
contemplated hereby, except as described in the Registration Statement (excluding the
exhibits thereto), each Preliminary Prospectus and the Prospectus, no other securities of
- 25 -
the Partnership shall be issued or outstanding; and the issuance and sale of the Units
as contemplated hereby will not cause any holder of Common Units, securities that are
convertible into or exchangeable or exercisable for Common Units or warrants, options or
other rights to purchase Common Units (or any other securities of the Partnership that are
substantially similar to Common Units) to have any right to acquire any securities of the
Partnership.
(ddd)
NYSE Listing
. The Common Units have been approved for listing on the NYSE,
subject only to official notice of issuance.
(eee)
No Brokers Fees
. Except pursuant to this Agreement and for the structuring fee
payable to UBS Securities LLC, no Western Gas Entity has incurred any liability for any
finders or brokers fee or agents commission in connection with the execution and delivery
of this Agreement or the consummation of the transactions (including, without limitation,
the Transactions) contemplated hereby or by the Registration Statement, the Preliminary
Prospectuses, the Prospectus or any Permitted Free Writing Prospectus.
(fff)
Stabilization or Manipulation
. None of the Western Gas Entities or any of their
affiliates (as such term is defined in Rule 405 promulgated under the Act) has taken,
directly or indirectly, any action which has constituted, or that was designed or might
reasonably be expected to cause or result in, the stabilization or manipulation of the price
of any security of the Partnership to facilitate the sale or resale of the Units.
(ggg)
FINRA Affiliations
. To the knowledge of the Western Gas Parties, after due
inquiry, there are no affiliations or associations between (i) any member of FINRA and (ii)
the Partnership, the General Partner or any of the General Partners officers or directors,
any 5% or greater securityholder of the Partnership or any beneficial owner of the
Partnerships unregistered equity securities that were acquired at any time on or after the
180th day immediately preceding the date the Registration Statement was initially filed with
the Commission, except as described in the Registration Statement (excluding the exhibits
thereto), each Preliminary Prospectus and the Prospectus.
(hhh)
Lending Relationship
. Except as described in the Registration Statement
(excluding the exhibits thereto), each Preliminary Prospectus and the Prospectus, no
Partnership Entity (i) has any material lending or other relationship with any bank or
lending affiliate of any Underwriter and (ii) intends to use any of the proceeds from the
Offering to repay any outstanding debt owed to any affiliate of any Underwriter.
(iii)
Directed Unit Program
. The Registration Statement, each Preliminary Prospectus,
the Prospectus and each Permitted Free Writing Prospectus comply, and any further amendments
or supplements thereto will comply, with any applicable laws or regulations of any foreign
jurisdiction in which any Preliminary Prospectus, the Prospectus or any Permitted Free
Writing Prospectus is distributed in connection with the Directed Unit Program; and no
approval, authorization, consent or order of or filing with any governmental or regulatory
commission, board, body, authority or agency, other than those heretofore obtained, is
required in connection with the offering of the Reserved Units in any jurisdiction where the Reserved Units are being offered.
- 26 -
(jjj)
Reserved Unit Sales
. The Partnership has not offered, or caused the Underwriters
to offer, Units to any person pursuant to the Directed Unit Program with the intent to
influence unlawfully (i) a customer or supplier of the Partnership Entities to alter the
customers or suppliers level or type of business with the Partnership Entities, or (ii) a
trade journalist or publication to write or publish favorable information about the
Partnership Entities or any of their businesses or services.
(kkk)
No Distribution of Other Offering Materials
. None of the Western Gas Entities
has distributed, nor will they distribute, prior to the later to occur of (i) the time of
purchase and each additional time of purchase and (ii) the completion of the distribution of
the Units, any prospectus (as defined under the Act) in connection with the offering and
sale of the Units other than the Registration Statement, the Preliminary Prospectuses, the
Prospectus, any Permitted Free Writing Prospectuses or other materials, if any, permitted by
the Act, including Rule 134 promulgated thereunder.
In addition, any certificate signed by an officer of any of the Western Gas Entities and
delivered to the Underwriters or counsel for the Underwriters in connection with the offering or
sale of the Units shall be deemed to be a representation and warranty by such Western Gas Entity,
as to matters covered thereby, to each Underwriter.
4.
Certain Covenants of the Western Gas Parties
. The Western Gas Parties, jointly and
severally, hereby agree:
(a)
Blue Sky Qualification
. To furnish such information as may be required and
otherwise to cooperate in qualifying the Units for offering and sale under the securities or
blue sky laws of such states or other jurisdictions as the Representatives may designate,
and to maintain such qualifications in effect so long as the Representatives may request for
the distribution of the Units (
provided
,
however
, that the Partnership shall
not be required to qualify as a foreign corporation or to consent to the service of process
under the laws of any such jurisdiction (except service of process with respect to the
offering and sale of the Units)); and to promptly advise the Representatives of the receipt
by the Partnership of any notification with respect to the suspension of the qualification
of the Units for offer or sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose;
(b)
Copies of Prospectus
. To make available to the Underwriters in New York City, as
soon as practicable after the Registration Statement becomes effective, and thereafter from
time to time to furnish to the Underwriters, as many copies of the Prospectus (as amended or
supplemented if the Partnership shall have made any amendments or supplements thereto after
the effective date of the Registration Statement) as the Underwriters may request for the
purposes contemplated by the Act; and in case any Underwriter is required to deliver
(whether physically or through compliance with Rule 172 under the Act or any similar rule)
in connection with any sale of Units a prospectus after the nine-month period referred to in
Section 10(a)(3) of the Act, the Partnership will prepare, at its expense, promptly upon
request such amendment or
- 27 -
amendments to the Registration Statement and the Prospectus as may be necessary to
permit compliance with the requirements of Section 10(a)(3) of the Act;
(c)
Post-Effective Amendments
. If, at the time this Agreement is executed and
delivered, it is necessary or appropriate for a post-effective amendment to the Registration
Statement, or a registration statement under Rule 462(b) under the Act, to be filed with the
Commission and become effective before the Units may be sold, to use their best efforts to
cause such post-effective amendment or such registration statement to be filed and become
effective, and to pay any applicable fees in accordance with the Act, as soon as possible;
and to advise the Underwriters promptly and, if requested by the Underwriters, to confirm
such advice in writing, (i) when such post-effective amendment or such registration
statement has become effective, and (ii) if Rule 430A under the Act is used, when the
Prospectus is filed with the Commission pursuant to Rule 424(b) under the Act (which the
Partnership agrees to file in a timely manner in accordance with such Rules);
(d)
Filing of Amendments or Supplements
. To advise the Underwriters promptly,
confirming such advice in writing, of any request by the Commission for amendments or
supplements to the Registration Statement or the Exchange Act Registration Statement, any
Preliminary Prospectus, the Prospectus or any Permitted Free Writing Prospectus or for
additional information with respect thereto, or of notice of the institution of proceedings
for the suspension of, or the entry of a stop order suspending, the effectiveness of the
Registration Statement and, if the Commission should enter a stop order suspending the
effectiveness of the Registration Statement, to use their best efforts to obtain the lifting
or removal of such order as soon as possible; and to advise the Underwriters promptly of any
proposal to amend or supplement the Registration Statement or the Exchange Act Registration
Statement, any Preliminary Prospectus, the Prospectus or any Permitted Free Writing
Prospectus, and to provide the Underwriters and Underwriters counsel copies of any such
documents for review and comment a reasonable amount of time prior to any proposed filing
and to file no such amendment or supplement to which the Underwriters shall object in
writing;
(e)
Exchange Act Reports
. Subject to
Section 4(d)
hereof, to file promptly all
reports and documents and any preliminary or definitive proxy or information statement
required to be filed by the Partnership with the Commission in order to comply with the
Exchange Act for so long as a prospectus is required by the Act to be delivered (whether
physically or through compliance with Rule 172 under the Act or any similar rule) in
connection with any sale of Units;
(f)
Rule
462(b)
Registration Statement
. If necessary or appropriate, to file a
registration statement pursuant to, and in accordance with, Rule 462(b) under the Act, and
pay the applicable fees in accordance with the Act,
(g)
Misstatements and Omissions
. To advise the Underwriters promptly of the happening
of any event within the period during which a prospectus is required by the Act to be
delivered (whether physically or through compliance with Rule 172 under the Act or any
similar rule) in connection with any sale of Units, which event could require
- 28 -
the making of any change in the Prospectus then being used so that the Prospectus would
not include an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the circumstances under
which they are made, not misleading, and to advise the Underwriters promptly if, during such
period, it shall become necessary to amend or supplement the Prospectus to cause the
Prospectus to comply with the requirements of the Act, and, in each case, during such time,
subject to
Section 4(d)
hereof, to promptly prepare and furnish, at the
Partnerships expense, to the Underwriters such amendments or supplements to such Prospectus
as may be necessary to reflect any such change or to effect such compliance;
(h)
Earnings Information
. To make generally available to the Partnerships security
holders, and to deliver to the Underwriters, an earnings statement of the Partnership (which
will satisfy the provisions of Section 11(a) of the Act) covering a period of twelve months
beginning after the effective date of the Registration Statement (as defined in Rule
158(c) under the Act) as soon as is reasonably practicable after the termination of such
twelve-month period but in any case not later than 18 months after the effective date of the
Registration Statement;
(i)
Annual Report
. Unless otherwise available through the Comissions electronic data
gathering, analysis and retrieval system (
EDGAR
), to furnish to the Partnerships
security holders as soon as practicable after the end of each fiscal year an annual report
(including a consolidated balance sheet and statements of income, unitholders equity and
cash flow of the General Partner, the Partnership and the Operating Subsidiaries, as the
case may be, for such fiscal year, accompanied by a copy of the certificate or report
thereon of a nationally recognized independent registered public accountants);
(j)
Copies of the Registration Statement
. Unless otherwise available through EDGAR, to
furnish to the Underwriters and Underwriters counsel as many copies of the Registration
Statement, as initially filed with the Commission, and of all amendments thereto (including
all exhibits thereto) as may reasonably be requested;
(k)
Copies of Other Documents
. Unless otherwise available through EDGAR, to furnish
each of the Underwriters for a period of five years from the date of this Agreement (i)
copies of any reports, proxy statements or other communications which the Partnership shall
send to its security holders (excluding any periodic income tax reporting materials) or
shall from time to time publish or publicly disseminate, (ii) copies of all annual,
quarterly, transition and current reports filed with the Commission on Forms 10-K, 10-Q or
8-K, or such other similar forms as may be designated by the Commission, (iii) copies of
documents or reports filed with any national securities exchange on which any class of
securities of the Partnership is listed and (iv) such other information as the Underwriters
may reasonably request regarding the Partnership Entities, in each case to the extent that
such materials are not publicly available;
(l)
Interim Financial Statements
. Unless otherwise available through EDGAR, to furnish
to the Underwriters as early as practicable prior to the time of purchase and each
additional time of purchase, but not later than two business days prior
- 29 -
thereto, a copy of the latest available unaudited interim and monthly consolidated
financial statements, if any, of the General Partner, the Partnership and the Operating
Subsidiaries which have been read by the Partnerships independent registered public
accountants, as stated in their letter to be furnished pursuant to
Section 6(c)
hereof;
(m)
Application of Proceeds
. To apply the net proceeds from the sale of the Units in
the manner set forth under the caption Use of Proceeds in the Registration Statement, each
Preliminary Prospectus and the Prospectus and to file such reports with the Commission with
respect to the sale of the Units and the application of the proceeds therefrom as may be
required by Rule 463 under the Act;
(n)
Covenant to Pay Costs
. Whether or not the transactions contemplated by this
Agreement are consummated or this Agreement is terminated, to pay all costs, expenses, fees
and taxes in connection with (i) the preparation and filing of the Registration Statement,
each Preliminary Prospectus, the Prospectus, each Permitted Free Writing Prospectus and any
amendments or supplements thereto, and the printing and furnishing of copies of each thereof
to the Underwriters, counsel for the Underwriters and dealers (including costs of mailing
and shipment), (ii) the registration, issuance, sale and delivery of the Units including any
stock or transfer taxes and stamp or similar duties payable upon the sale, issuance or
delivery of the Units to the Underwriters, (iii) the producing, word processing and/or
printing of this Agreement, any agreement among underwriters, any dealer agreements, any
powers of attorney and any closing documents (including compilations thereof) and the
reproduction and/or printing and furnishing of copies of each thereof to the Underwriters
and (except closing documents) to dealers (including costs of mailing and shipment), (iv)
the qualification of the Units for offering and sale under state or foreign laws and the
determination of their eligibility for investment under state or foreign law (including the
legal fees and filing fees and other disbursements of counsel for the Underwriters) and the
printing and furnishing of copies of any blue sky surveys or legal investment surveys to the
Underwriters and to dealers, (v) the listing of the Units on any securities exchange or
qualification of the Units for listing on the NYSE and any registration thereof under the
Exchange Act, (vi) any filing for review of the public offering of the Units by FINRA,
including the legal fees and filing fees and other disbursements of counsel to the
Underwriters relating to FINRA matters, (vii) the fees and disbursements of any transfer
agent or registrar for the Units, (viii) the costs and expenses of the Western Gas Entities
relating to presentations or meetings undertaken in connection with the marketing of the
offering and sale of the Units to prospective investors and the Underwriters sales forces,
including, without limitation, expenses associated with the production of road show slides
and graphics, fees and expenses of any consultants engaged in connection with the road show
presentations, travel, lodging and other expenses incurred by the officers of the Western
Gas Entities and any such consultants, and the cost of any aircraft chartered in connection
with the road show, (ix) the costs and expenses of qualifying the Units for inclusion in the
book-entry settlement system of the DTC, (x) the preparation and filing of the Exchange Act
Registration Statement, including any amendments thereto, (xi) the offer and sale of the
Reserved Units, including all costs and expenses of the DUP Manager and the Underwriters,
including the fees and disbursement of counsel for the Underwriters and (xii) the
performance of the Western Gas Parties other obligations hereunder;
- 30 -
(o)
Compliance with
Rules 433(d)
and (g)
. To comply with Rule 433(d) under the Act
(without reliance on Rule 164(b) under the Act) and with Rule 433(g) under the Act;
(p)
Partnership Lock-Up
. Beginning on the date hereof and ending on, and including,
the date that is 180 days after the date hereof (the
Lock-Up Period
), without the
prior written consent of the Representatives, not to (i) issue, sell, offer to sell,
contract or agree to sell, hypothecate, pledge, grant any option to purchase or otherwise
dispose of or agree to dispose of, directly or indirectly, or establish or increase a put
equivalent position or liquidate or decrease a call equivalent position within the meaning
of Section 16 of the Exchange Act and the rules and regulations of the Commission
promulgated thereunder with respect to, any Common Units, any other securities of the
Partnership that are substantially similar to Common Units, any securities that are
convertible into or exchangeable or exercisable for Common Units, or any warrants or other
rights to purchase Common Units, (ii) file or cause to become effective a registration
statement under the Act relating to the offer and sale of any Common Units, any other
securities of the Partnership that are substantially similar to Common Units, any securities
that are convertible into or exchangeable or exercisable for Common Units, or any warrants
or other rights to purchase Common Units, (iii) enter into any swap or other arrangement
that transfers to another, in whole or in part, any of the economic consequences of
ownership of any Common Units, any other securities of the Partnership that are
substantially similar to Common Units, any securities that are convertible into or
exchangeable or exercisable for Common Units, or any warrants or other rights to purchase
Common Units, whether any such transaction is to be settled by delivery of Common Units or
such other securities, in cash or otherwise or (iv) publicly announce an intention to effect
any transaction specified in clause (i), (ii) or (iii), except, in each case, for (A) the
registration of the offer and sale of the Units as contemplated by this Agreement, (B)
issuances of Common Units upon the exercise of options or warrants disclosed as outstanding
in the Registration Statement (excluding the exhibits thereto), each Preliminary Prospectus
and the Prospectus, and (C) the issuance of equity-based awards not exercisable during the
Lock-Up Period pursuant to option or other equity compensation plans described in the
Registration Statement (excluding the exhibits thereto), each Preliminary Prospectus and the
Prospectus;
provided
,
however
, that if (x) during the period that begins on
the date that is fifteen (15) calendar days plus three (3) business days before the last day
of the Lock-Up Period and ends on the last day of the Lock-Up Period, the Partnership issues
an earnings release or material news or a material event relating to the Partnership occurs;
or (y) prior to the expiration of the Lock-Up Period, the Partnership announces that it will
release earnings results during the sixteen (16) day period beginning on the last day of the
Lock-Up Period, then the restrictions imposed by this
Section (4)(q)
shall continue
to apply until the expiration of the date that is fifteen (15) calendar days plus three (3)
business days after the date on which the issuance of the earnings release or the material
news or material event occurs;
(q)
Lock-Up Agreements and Restrictions
. To cause (i) each director and officer
(within the meaning of Rule 16a-1(f) under the Exchange Act) of the General Partner, (ii)
each Directed Unit Participant who purchases in excess of $100,000 worth of Reserved Units
pursuant to the Directed Unit Program, (iii) each holder of Sponsor Units
- 31 -
and (iv) each other security holder named in
Exhibit A-1
hereto to execute and
deliver to the Underwriters a Lock-Up Agreement and otherwise to cause all of the Common
Units (including, without limitation, the Reserved Units) that are subject to such Lock-Up
Agreements to be restricted from sale, transfer, assignment, pledge or hypothecation to such
extent as may be required by FINRA and its rules, and to direct the transfer agent to place
stop transfer restrictions upon such Common Units (including, without limitation, the
Reserved Units) during the Lock-Up Period or any such longer period of time as may be
required by FINRA and its rules; and to comply with all applicable securities and other
laws, rules and regulations in each jurisdiction in which such Common Units (including,
without limitation, the Reserved Units) are offered in connection with this Agreement and
the Directed Unit Program;
(r)
Press Releases and Other Communications
. Prior to the time of purchase and each
additional time of purchase, to issue no press release or other communication directly or
indirectly (other than a press release issued in compliance with Rule 134 under the Act) and
to hold no press conferences with respect to any of the Partnership Entities, the financial
condition, results of operations, business, properties, assets, or liabilities of any of the
Partnership Entities, or the Offering, without the Underwriters prior consent, which shall
not be unreasonably withheld;
(s)
Distribution of Prospectuses
. At any time at or after the execution of this
Agreement, to make, directly or indirectly, no offer or sale of any Units by means of any
prospectus (within the meaning of the Act) and use no prospectus (within the meaning of
the Act) in connection with the Offering, in each case other than the Prospectus and any
Permitted Free Writing Prospectus;
(t)
No Stabilization
. To take, directly or indirectly, no action that will constitute,
or that is designed or might reasonably be expected to cause or result in, the stabilization
or manipulation of the price of any security of the Partnership to facilitate the sale or
resale of the Units;
(u)
NYSE Listing
. To use their best efforts to cause the Common Units, including the
Units, to be listed on the NYSE and to maintain such listing; and
(v)
Transfer Agent
. To maintain a transfer agent and, if necessary under the
jurisdiction of formation of the Partnership, a registrar for the Common Units.
5.
Reimbursement of Underwriters Expenses
. If the Units are not delivered at the
time of purchase or each additional time of purchase for any reason other than the termination of
this Agreement pursuant to the fifth paragraph of
Section 8
hereof or the default by one or
more of the Underwriters in its or their respective obligations hereunder, the Western Gas Parties,
jointly and severally, shall, in addition to paying the amounts described in
Section 4(n)
hereof, reimburse the Underwriters for all of their out-of-pocket expenses, including the fees and
disbursements of their counsel;
provided
,
however
, that if this agreement is
terminated because of the occurrence of any event specified in clause (b) of the second paragraph
of
Section 7
(other than as specified in clause (b)(ii) thereof), the Western Gas Parties
shall not be obligated to reimburse the Underwriters for any expenses specified in this
Section
5
.
- 32 -
6.
Conditions of Underwriters Obligations
. The several obligations of the
Underwriters hereunder are subject to the accuracy of the representations and warranties on the
part of the Western Gas Parties on the date hereof, at the time of purchase and at each additional
time of purchase, to the performance by the Western Gas Parties of their obligations hereunder and
to the following additional conditions precedent:
(a) The Partnership shall have furnished to the Representatives at the time of purchase
and at each additional time of purchase an opinion of Vinson & Elkins L.L.P., counsel for
the Partnership, addressed to the Underwriters, and dated the time of purchase or the
additional time of purchase, as the case may be, with executed copies for each of the other
Underwriters, in form and substance reasonably satisfactory to the Representatives, each
substantially in form set forth in
Exhibit B-1
hereto.
(b) The Partnership shall have furnished to the Representatives at the time of purchase
and at each additional time of purchase an opinion of Amanda M. McMillian, Vice President,
General Counsel and Corporate Secretary of the General Partner, addressed to the
Underwriters, and dated the time of purchase or the additional time of purchase, as the case
may be, with executed copies for each of the other Underwriters, in form and substance
reasonably satisfactory to the Representatives, each substantially in form set forth in
Exhibit B-2
hereto.
(c) The Representatives shall have received from KPMG LLP customary comfort letters
dated the date of this Agreement, the date of the Prospectus, the time of purchase and each
additional time of purchase and addressed to the Underwriters (with executed copies for each
of the Underwriters) in the forms satisfactory to the Representatives, which letters shall
cover, without limitation, the various financial disclosures contained in the Registration
Statement, the Preliminary Prospectuses, the Prospectus and each Permitted Free Writing
Prospectus.
(d) The Representatives shall have received at the time of purchase and at each
additional time of purchase the favorable opinion of Andrews Kurth LLP, counsel for the
Underwriters, addressed to the Underwriters, and dated the time of purchase or the
additional time of purchase, as the case may be, in form and substance reasonably
satisfactory to the Representatives.
(e) No Prospectus or amendment or supplement to the Registration Statement or the
Prospectus shall have been filed to which the Representatives shall have objected.
(f) The Registration Statement, the Exchange Act Registration Statement and any
registration statement required to be filed, prior to the sale of the Units, under the Act
pursuant to Rule 462(b) shall have been filed and shall have become effective under the Act
or the Exchange Act, as the case may be. The Prospectus shall have been filed with the
Commission pursuant to Rule 424(b) under the Act at or before 5:30 P.M., New York City time,
on the second full business day after the date of this Agreement (or such earlier time as
may be required under the Act).
- 33 -
(g) Prior to and at the time of purchase and each additional time of purchase, (i) no
stop order with respect to the effectiveness of the Registration Statement shall have been
issued under the Act and no proceedings shall have been initiated under Section 8(d) or 8(e)
of the Act; (ii) the Registration Statement and all amendments thereto shall not contain an
untrue statement of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading; (iii) none of the
Preliminary Prospectuses or the Prospectus, and no amendment or supplement thereto, shall
include an untrue statement of a material fact or omit to state a material fact necessary in
order to make the statements therein, in the light of the circumstances under which they are
made, not misleading; (iv) no Disclosure Package, and no amendment or supplement thereto,
shall include an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the circumstances under
which they are made, not misleading; and (v) no Permitted Free Writing Prospectus shall
include an untrue statement of a material fact or omit to state a material fact necessary in
order to make the statements therein, in the light of the circumstances under which they are
made, not misleading.
(h) Between the time of execution of this Agreement and the later of the time of
purchase and each additional time of purchase, (i) no material adverse change, or any
developments that are reasonably likely to result in, individually or in the aggregate, a
material adverse change, in the business, assets, management, condition (financial or
otherwise), prospects or results of operations of the Partnership Entities, taken as a
whole, shall have occurred or become known and (ii) no transaction which is material and
adverse to the Partnership Entities, taken as a whole, shall have been entered into by any
of the Partnership Entities or become probable, the effect of which is, in the judgment of
the Representatives, so material or adverse as to make it impracticable or inadvisable to
proceed with the Offering or the delivery of the Units as contemplated by the Prospectus.
(i) The Partnership shall have delivered to the Representatives at the time of purchase
and at each additional time of purchase a certificate of the Chief Executive Officer and
Chief Financial Officer of the General Partner, dated the time of purchase or the additional
time of purchase, as the case may be, in the form attached as
Exhibit C
hereto.
(j) The Representatives shall have received each of the signed Lock-Up Agreements
referred to in
Section 3(ff)
hereof, and each such Lock-Up Agreement shall be in
full force and effect at the time of purchase and at each additional time of purchase.
(k) The Partnership Entities shall have furnished to the Representatives such other
documents and certificates as to the accuracy and completeness of any statement in the
Registration Statement, any Preliminary Prospectus, the Prospectus or any Permitted Free
Writing Prospectus as of the time of purchase and each additional time of purchase as the
Representatives may reasonably request.
(l) The Units shall have been approved for listing on the NYSE, subject only to notice
of issuance at or prior to the time of purchase.
- 34 -
(m) FINRA shall not have raised any objection that has not been resolved with respect
to the fairness or reasonableness of the underwriting, or other arrangements of the
transactions, contemplated hereby.
7.
Effective Date of Agreement; Termination
. This Agreement shall become effective
when the parties hereto have executed and delivered this Agreement.
The obligations of the several Underwriters hereunder shall be subject to termination in the
absolute discretion of the Representatives, if (a) since the time of execution of this Agreement or
the earlier respective dates as of which information is given in the Registration Statement, the
Preliminary Prospectuses, the Prospectus and any Permitted Free Writing Prospectus, there has been
any change, or any developments that are reasonably likely to result in, individually or in the
aggregate, a material adverse change, in the business, assets, management, condition (financial or
otherwise), prospects or results of operations of any Western Gas Entity, the effect of which
change or development on the Partnership Entities, taken as a whole, is, in the sole judgment of
the Representatives, so material and adverse as to make it impractical or inadvisable to proceed
with the Offering or the delivery of the Units on the terms and in the manner contemplated in the
Registration Statement, the Preliminary Prospectuses, the Prospectus and each Permitted Free
Writing Prospectus, (b) since the time of execution of this Agreement, there shall have occurred
(i) a suspension or material limitation in trading in securities generally on the NYSE, the
American Stock Exchange or the NASDAQ; (ii) a suspension or material limitation in trading in the
Partnerships securities on the NYSE; (iii) a general moratorium on commercial banking activities
declared by either federal or New York State authorities or a material disruption in commercial
banking or securities settlement or clearance services in the United States; (iv) an outbreak or
escalation of hostilities or acts of terrorism involving the United States or a declaration by the
United States of a national emergency or war; or (v) any other calamity or crisis or any change in
financial, political or economic conditions in the United States or elsewhere, if the effect of any
such event specified in clause (iv) or (v), in the sole judgment of the Representatives, makes it
impractical or inadvisable to proceed with the Offering or the delivery of the Units on the terms
and in the manner contemplated in the Registration Statement, the Preliminary Prospectuses, the
Prospectus and each Permitted Free Writing Prospectus, or (c) since the time of execution of this
Agreement, there shall have occurred any downgrading in, or any notice or announcement shall have
been given or made of (i) any intended or potential downgrading or (ii) any watch, review or
possible change that does not indicate an affirmation or improvement in the rating accorded to, any
securities of or guaranteed by any Western Gas Entity by any nationally recognized statistical
rating organization, as that term is defined in Rule 436(g)(2) under the Act.
If the Representatives elect to terminate this Agreement as provided in this
Section
7
, the Partnership and each other Underwriter shall be notified promptly in writing.
If the sale to the Underwriters of the Units, as contemplated by this Agreement, is not
carried out by the Underwriters for any reason permitted under this Agreement, or if such sale is
not carried out because the Western Gas Entities shall be unable to comply with any of the terms of
this Agreement, the Western Gas Parties shall not be under any obligation or liability under this
Agreement (except to the extent provided in
Sections 4(n)
,
5
and
9
hereof),
and the Underwriters shall be under no obligation or liability to the Western Gas Parties under
this
- 35 -
Agreement (except to the extent provided in
Section 9
hereof) or to one another hereunder.
8.
Increase in Underwriters Commitments
. Subject to
Sections 6
and
7
hereof, if any Underwriter shall default in its obligation to take up and pay for the Firm Units to
be purchased by it hereunder (otherwise than for a failure of a condition set forth in
Section
6
hereof or a reason sufficient to justify the termination of this Agreement under the
provisions of
Section 7
hereof) and if the number of Firm Units that all Underwriters so
defaulting shall have agreed but failed to take up and pay for does not exceed 10% of the total
number of Firm Units, the non-defaulting Underwriters (including the Underwriters, if any,
substituted in the manner set forth below) shall take up and pay for (in addition to the aggregate
number of Firm Units they are obligated to purchase pursuant to
Section 1
hereof) the
number of Firm Units agreed to be purchased by all such defaulting Underwriters, as hereinafter
provided. Such Units shall be taken up and paid for by such non-defaulting Underwriters in such
amount or amounts as the Representatives may designate with the consent of each Underwriter so
designated or, in the event no such designation is made, such Units shall be taken up and paid for
by all non-defaulting Underwriters pro rata in proportion to the aggregate number of Firm Units set
forth opposite the names of such non-defaulting Underwriters in
Schedule A
.
Without relieving any defaulting Underwriter of its obligations hereunder, the Partnership
agrees with the non-defaulting Underwriters that it will not sell any Firm Units hereunder unless
all of the Firm Units are purchased by the Underwriters (or by substituted Underwriters selected by
the Representatives with the approval of the Partnership or selected by the Partnership with the
approval of the Representatives).
If a new Underwriter or Underwriters are substituted by the Underwriters or by the Partnership
for a defaulting Underwriter or Underwriters in accordance with the foregoing provision, the
Partnership or the Representatives shall have the right to postpone the time of purchase for a
period not exceeding five business days in order that any necessary changes in the Registration
Statement and the Prospectus and other documents may be effected.
The term Underwriter as used in this Agreement shall refer to and include any Underwriter
substituted under this
Section 8
with like effect as if such substituted Underwriter had
originally been named in
Schedule A
hereto.
If the aggregate number of Firm Units that the defaulting Underwriter or Underwriters agreed
to purchase exceeds 10% of the total number of Firm Units, and if neither the non-defaulting
Underwriters nor the Partnership shall make arrangements within the five business day period stated
above for the purchase of all the Firm Units that the defaulting Underwriter or Underwriters agreed
to purchase hereunder, this Agreement shall terminate without further act or deed and without any
liability on the part of the Partnership to any Underwriter and without any liability on the part
of any non-defaulting Underwriter to the Partnership. Nothing in this paragraph, and no action
taken hereunder, shall relieve any defaulting Underwriter from liability in respect of any default
of such Underwriter under this Agreement.
- 36 -
9.
Indemnity and Contribution
.
(a) Each of the Western Gas Parties, jointly and severally, agrees to indemnify, defend
and hold harmless each Underwriter, its partners, directors and officers, and any person who
controls any Underwriter within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act, and the successors and assigns of all of the foregoing persons, from and
against any loss, damage, expense, liability or claim (including the reasonable cost of
investigation) which, jointly or severally, any such Underwriter or any such person may
incur under the Act, the Exchange Act, the common law or otherwise, insofar as such loss,
damage, expense, liability or claim arises out of or is based upon (i) any untrue statement
or alleged untrue statement of a material fact contained in the Registration Statement (or
in the Registration Statement as amended by any post-effective amendment thereof by the
Partnership) or any omission or alleged omission to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, except insofar as
any such loss, damage, expense, liability or claim arises out of or is based upon any untrue
statement or alleged untrue statement of a material fact contained in, and in conformity
with the information specified in
Section 10
hereof furnished in writing by or on
behalf of such Underwriter through the Representatives to the Partnership expressly for use
in, the Registration Statement or arises out of or is based upon any omission or alleged
omission to state a material fact in the Registration Statement in connection with such
information, which material fact was not contained in such information and which material
fact was required to be stated in such Registration Statement or was necessary to make such
information not misleading, (ii) any untrue statement or alleged untrue statement of a
material fact included in any Prospectus (the term Prospectus for the purpose of this
Section 9
being deemed to include any Preliminary Prospectus, the Prospectus and any
amendments or supplements to the foregoing), in any Permitted Free Writing Prospectus, in
any issuer information (as defined in Rule 433 under the Act) of the Partnership or in any
Prospectus together with any combination of one or more Permitted Free Writing Prospectuses,
if any, or arises out of or is based upon any omission or alleged omission to state a
material fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except, with respect to such
Prospectus or Permitted Free Writing Prospectuses, insofar as any such loss, damage,
expense, liability or claim arises out of or is based upon any untrue statement or alleged
untrue statement of a material fact contained in, and in conformity with the information
specified in
Section 10
hereof furnished in writing by or on behalf of such
Underwriter through the Representatives to the Partnership expressly for use in, such
Prospectus or Permitted Free Writing Prospectus or arises out of or is based upon any
omission or alleged omission to state a material fact in such Prospectus or Permitted Free
Writing Prospectus in connection with such information, which material fact was not
contained in such information and which material fact was necessary in order to make the
statements in such information, in the light of the circumstances under which they were
made, not misleading, (iii) any untrue statement or alleged untrue statement of a material
fact included in any road show (as defined in Rule 433 under the Act) not constituting an
Issuer Free Writing Prospectus or (iv) the Directed Unit Program, except, with respect to
this clause (iv), insofar as such loss, damage, expense, liability or claim is finally
judicially determined to have resulted from the gross negligence or willful misconduct of
the Underwriters in conducting the Directed Unit Program.
- 37 -
(b) Without limitation of and in addition to its obligations under the other paragraphs
of this
Section 9
, each of the Western Gas Parties, jointly and severally, agrees to
indemnify, defend and hold harmless the DUP Manager, its partners, directors and officers,
and any person who controls the DUP Manager within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act, and the successors and assigns of all of the foregoing
persons, from and against any loss, damage, expense, liability or claim (including the
reasonable cost of investigation) which, jointly or severally, the DUP Manager or any such
person may incur under the Act, the Exchange Act, the common law or otherwise, insofar as
such loss, damage, expense, liability or claim (i) arises out of or is based upon (A) any of
the matters referred to in clauses (i) through (iii) of
Section 9(a)
, or (B) any
untrue statement or alleged untrue statement of a material fact contained in any material
prepared by, on behalf of or with the approval of the Partnership for distribution to
Directed Unit Participants in connection with the Directed Unit Program or is caused by any
omission or alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading; (ii) is or was caused by the
failure of any Directed Unit Participant to pay for and accept delivery of Reserved Units
that the Directed Unit Participant has agreed to purchase; or (iii) otherwise arises out of
or is based upon the Directed Unit Program,
provided
,
however
, that the
Western Gas Parties shall not be responsible under this clause (iii) for any loss, damage,
expense, liability or claim that is finally judicially determined to have resulted from the
gross negligence or willful misconduct of the DUP Manager in conducting the Directed Unit
Program.
Section 9(d)
shall apply equally to any Proceeding (as defined in
Section 9(d)
hereof) brought against the DUP Manager or any such person in respect
of which indemnity may be sought against the Western Gas Parties pursuant to the immediately
preceding sentence, except that the Western Gas Parties shall be liable for the expenses of
one separate counsel (in addition to any local counsel) for the DUP Manager and any such
person, separate and in addition to counsel for the persons who may seek indemnification
pursuant to
Section 9(a)
in any such Proceeding.
(c) Each Underwriter severally agrees to indemnify, defend and hold harmless the
Western Gas Parties, their directors and officers, and any person who controls the Western
Gas Parties within the meaning of Section 15 of the Act or Section 20 of the Exchange Act,
and the successors and assigns of all of the foregoing persons, from and against any loss,
damage, expense, liability or claim (including the reasonable cost of investigation) which,
jointly or severally, the Western Gas Parties or any such person may incur under the Act,
the Exchange Act, the common law or otherwise, insofar as such loss, damage, expense,
liability or claim arises out of or is based upon (i) any untrue statement or alleged untrue
statement of a material fact contained in, and in conformity with the information specified
in
Section 10
hereof furnished in writing by or on behalf of such Underwriter
through the Representatives to the Partnership expressly for use in, the Registration
Statement (or in the Registration Statement as amended by any post-effective amendment
thereof by the Partnership), or any omission or alleged omission to state a material fact in
such Registration Statement in connection with such information, which material fact was not
contained in such information and which material fact was required to be stated in such
Registration Statement or was necessary to make such information not misleading or (ii) any
untrue statement or alleged untrue statement of a material fact contained in, and in
conformity with the information specified in
Section 10
- 38 -
hereof furnished in writing by or on behalf of such Underwriter through the
Representatives to the Partnership expressly for use in, a Prospectus or a Permitted Free
Writing Prospectus, or any omission or alleged omission to state a material fact in such
Prospectus or Permitted Free Writing Prospectus in connection with such information, which
material fact was not contained in such information and which material fact was necessary in
order to make the statements in such information, in the light of the circumstances under
which they were made, not misleading.
(d) If any action, suit or proceeding (each, a
Proceeding
) is brought against
a person (an
indemnified party
) in respect of which indemnity may be sought
against any of the Western Gas Parties or an Underwriter (as applicable, the
indemnifying party
) pursuant to subsection
(a)
,
(b)
or
(c)
of this
Section 9
, such indemnified party shall promptly notify such indemnifying
party in writing of the institution of such Proceeding and such indemnifying party shall
assume the defense of such Proceeding, including the employment of counsel reasonably
satisfactory to such indemnified party and payment of all fees and expenses;
provided
,
however
, that the failure to so notify such indemnifying party
shall not relieve such indemnifying party from any liability which such indemnifying party
may have to any indemnified party or otherwise. The indemnified party or parties shall have
the right to employ its or their own counsel in any such case, but the fees and expenses of
such counsel shall be at the expense of such indemnified party or parties unless the
employment of such counsel shall have been authorized in writing by the indemnifying party
in connection with the defense of such Proceeding or the indemnifying party shall not have,
within a reasonable period of time in light of the circumstances, employed counsel to defend
such Proceeding or such indemnified party or parties shall have reasonably concluded that
there may be defenses available to it or them which are different from, additional to or in
conflict with those available to such indemnifying party (in which case such indemnifying
party shall not have the right to direct the defense of such Proceeding on behalf of the
indemnified party or parties), in any of which events such fees and expenses shall be borne
by such indemnifying party and paid as incurred (it being understood, however, that, except
as provided in
Section 9(b)
, such indemnifying party shall not be liable for the
expenses of more than one separate counsel (in addition to any local counsel) in any one
Proceeding or series of related Proceedings in the same jurisdiction representing the
indemnified parties who are parties to such Proceeding). The indemnifying party shall not
be liable for any settlement of any Proceeding effected without its written consent but, if
settled with its written consent, such indemnifying party agrees to indemnify and hold
harmless the indemnified party or parties from and against any loss or liability by reason
of such settlement. Notwithstanding the foregoing sentence, if at any time an indemnified
party shall have requested an indemnifying party to reimburse the indemnified party for fees
and expenses of counsel as contemplated by the second sentence of this
Section 9(d)
,
then the indemnifying party agrees that it shall be liable for any settlement of any
Proceeding effected without its written consent if (i) such settlement is entered into more
than 60 business days after receipt by such indemnifying party of the aforesaid request,
(ii) such indemnifying party shall not have fully reimbursed the indemnified party in
accordance with such request prior to the date of such settlement and (iii) such indemnified
party shall have given the indemnifying party at least 30 days prior notice of its
intention to settle. No indemnifying party shall, without the prior written consent of
- 39 -
the indemnified party, effect any settlement of any pending or threatened Proceeding in
respect of which any indemnified party is or could have been a party and indemnity could
have been sought hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on claims that are the
subject matter of such Proceeding and does not include an admission of fault or culpability
or a failure to act by or on behalf of such indemnified party.
(e) If the indemnification provided for in this
Section 9
is unavailable to an
indemnified party under subsection
(a)
,
(b)
or
(c)
of this
Section 9
or insufficient to hold an indemnified party harmless in respect of any
losses, damages, expenses, liabilities or claims referred to therein, then each applicable
indemnifying party shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, damages, expenses, liabilities or claims (i) in such proportion
as is appropriate to reflect the relative benefits received by the Western Gas Parties on
the one hand and the Underwriters on the other hand from the Offering or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred to in clause
(i) above but also the relative fault of the Western Gas Parties on the one hand and of the
Underwriters on the other in connection with the statements or omissions which resulted in
such losses, damages, expenses, liabilities or claims, as well as any other relevant
equitable considerations. The relative benefits received by the Western Gas Parties on the
one hand and the Underwriters on the other shall be deemed to be in the same respective
proportions as the total proceeds from the Offering (net of underwriting discounts and
commissions but before deducting expenses) received by the Western Gas Parties, and the
total underwriting discounts and commissions received by the Underwriters, bear to the
aggregate public offering price of the Units. The relative fault of the Western Gas Parties
on the one hand and of the Underwriters on the other shall be determined by reference to,
among other things, whether the untrue statement or alleged untrue statement of a material
fact or omission or alleged omission relates to information supplied by the Western Gas
Parties or by the Underwriters and the parties relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission. The amount
paid or payable by a party as a result of the losses, damages, expenses, liabilities and
claims referred to in this subsection shall be deemed to include any legal or other fees or
expenses reasonably incurred by such party in connection with investigating, preparing to
defend or defending any Proceeding.
(f) The Western Gas Parties and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this
Section 9
were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such purpose) or by any
other method of allocation that does not take account of the equitable considerations
referred to in subsection
(e)
above. Notwithstanding the provisions of this
Section 9
, no Underwriter shall be required to contribute any amount in excess of
the amount by which the total price at which the Units underwritten by such Underwriter and
distributed to the public were offered to the public exceeds the amount of any damage that
such Underwriter has otherwise been required to pay by reason of such untrue statement or
alleged untrue statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to
- 40 -
contribution from any person who was not guilty of such fraudulent misrepresentation.
The Underwriters obligations to contribute pursuant to this
Section 9
are several
in proportion to their respective underwriting commitments and not joint.
(g) The indemnity and contribution agreements contained in this
Section 9
and
the covenants, warranties and representations of the Western Gas Parties contained in this
Agreement shall remain in full force and effect regardless of any investigation made by or
on behalf of any Underwriter, its partners, directors or officers or any person (including
each partner, officer or director of such person) who controls any Underwriter within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act, or by or on behalf of
the Western Gas Parties, their directors or officers or any person who controls the Western
Gas Parties within the meaning of Section 15 of the Act or Section 20 of the Exchange Act,
and shall survive any termination of this Agreement or the issuance and delivery of the
Units. The Western Gas Parties and each Underwriter agree promptly to notify each other of
the commencement of any Proceeding against it and, in the case of the Western Gas Parties,
against any of their officers or directors in connection with the issuance and sale of the
Units, or in connection with the Registration Statement, any Preliminary Prospectus, the
Prospectus or any Permitted Free Writing Prospectus.
10.
Information Furnished by the Underwriters
. The concession and reallowance figures
appearing under the caption UnderwritingCommissions and Discounts and the statements relating to
stabilization by the Underwriters appearing under the caption UnderwritingPrice Stabilization,
Short Positions in the Prospectus, constitute the only information furnished by or on behalf of
the Underwriters, as such information is referred to in
Sections 3
and
9
hereof.
11.
Notices
. Except as otherwise herein provided, all statements, requests, notices
and agreements shall be in writing or by telegram or facsimile and, if to the Underwriters, shall
be sufficient in all respects if delivered or sent to UBS Securities LLC, 299 Park Avenue, New
York, NY 10171-0026, Attention: Syndicate Department, Citigroup Global Markets Inc., 388 Greenwich
Street, New York, NY 10013, Attention: General Counsel (Fax: (212) 816-7192), Credit Suisse
Securities (USA) LLC, Eleven Madison Avenue, New York, NY 10010-3629, Attention: Transactions
Advisory Group and Morgan Stanley & Co. Incorporated, 1585 Broadway, New York, NY 10036 and, if to
the Western Gas Parties, shall be sufficient in all respects if delivered or sent to the Western
Gas Parties at the offices of the Partnership at 1201 Lake Robbins Drive, The Woodlands, Texas
77380, Attention: Robert G. Gwin, President and Chief Executive Officer.
12.
Governing Law; Construction
. This Agreement and any claim, counterclaim or
dispute of any kind or nature whatsoever arising out of or in any way relating to this Agreement
(
Claim
), directly or indirectly, shall be governed by, and construed in accordance with,
the laws of the State of New York. The section headings in this Agreement have been inserted as a
matter of convenience of reference and are not a part of this Agreement.
13.
Submission to Jurisdiction
. Except as set forth below, no Claim may be commenced,
prosecuted or continued in any court other than the courts of the State of New York
- 41 -
located in the City and County of New York or in the United States District Court for the
Southern District of New York, which courts shall have jurisdiction over the adjudication of such
matters, and the Western Gas Parties consent to the jurisdiction of such courts and personal
service with respect thereto. The Western Gas Parties hereby consent to personal jurisdiction,
service and venue in any court in which any Claim arising out of or in any way relating to this
Agreement is brought by any third party against any Underwriter or any indemnified party. Each
Underwriter and the Western Gas Parties (each on its own behalf and, to the extent permitted by
applicable law, on behalf of its equity owners and affiliates) waive all right to trial by jury in
any action, proceeding or counterclaim (whether based upon contract, tort or otherwise) in any way
arising out of or relating to this Agreement. Each of the Western Gas Parties agrees that a final
judgment in any such action, proceeding or counterclaim brought in any such court shall be
conclusive and binding upon the Western Gas Parties and may be enforced in any other courts to the
jurisdiction of which the Western Gas Parties are or may be subject, by suit upon such judgment.
14.
Parties at Interest
. The Agreement set forth herein has been and is made solely
for the benefit of the Underwriters and the Western Gas Parties and to the extent provided in
Section 9
hereof the controlling persons, partners, directors and officers referred to in
such Section, and their respective successors, assigns, heirs, personal representatives and
executors and administrators. No other person, partnership, association or corporation (including
a purchaser, as such purchaser, from any of the Underwriters) shall acquire or have any right under
or by virtue of this Agreement.
15.
No Fiduciary Relationship
. The Western Gas Parties hereby acknowledge that the
Underwriters are acting solely as underwriters in connection with the purchase and sale of the
Partnerships securities. The Western Gas Parties further acknowledge that the Underwriters are
acting pursuant to a contractual relationship created solely by this Agreement entered into on an
arms length basis, and in no event do the parties intend that the Underwriters act or be
responsible as a fiduciary to the Western Gas Entities, their management, security holders or
creditors or any other person in connection with any activity that the Underwriters may undertake
or have undertaken in furtherance of the purchase and sale of the Units, either before or after the
date hereof. The Underwriters hereby expressly disclaim any fiduciary or similar obligations to
the Western Gas Entities, either in connection with the transactions contemplated by this Agreement
or any matters relating to such transactions, and each Western Gas Party hereby confirms its
understanding and agreement to that effect. The Western Gas Parties and the Underwriters agree
that they are each responsible for making their own independent judgments with respect to any such
transactions and that any opinions or views expressed by the Underwriters to the Western Gas
Entities regarding such transactions, including, but not limited to, any opinions or views with
respect to the price or market for the Partnerships securities, do not constitute advice or
recommendations to the Western Gas Entities. Each Western Gas Entity hereby waives and releases,
to the fullest extent permitted by law, any claims that the it may have against the Underwriters
with respect to any breach or alleged breach of any fiduciary or similar duty to the Western Gas
Entities in connection with the transactions contemplated by this Agreement or any matters relating
to such transactions.
16.
Counterparts
. This Agreement may be signed by the parties in one or more
- 42 -
counterparts which together shall constitute one and the same agreement among the parties.
17.
Successors and Assigns
. This Agreement shall be binding upon the Underwriters,
the Western Gas Parties, their respective successors and assigns and any successor or assign of any
substantial portion of any of the Western Gas Parties or any of the Underwriters respective
businesses and/or assets.
18.
Miscellaneous
. UBS Securities LLC (
UBS
), an indirect, wholly owned
subsidiary of UBS AG, is not a bank and is separate from any affiliated bank, including any U.S.
branch or agency of UBS AG. Because UBS is a separately incorporated entity, it is solely
responsible for its own contractual obligations and commitments, including obligations with respect
to sales and purchases of securities. Securities sold, offered or recommended by UBS are not
deposits, are not insured by the Federal Deposit Insurance Corporation, are not guaranteed by a
branch or agency, and are not otherwise an obligation or responsibility of a branch or agency.
[
The Remainder of This Page Intentionally Left Blank; Signature Page Follows
]
- 43 -
If the foregoing correctly sets forth the understanding among the Western Gas Parties and the
several Underwriters, please so indicate in the space provided below for that purpose, whereupon
this Agreement and your acceptance shall constitute a binding agreement between the Western Gas
Parties and the Underwriters, severally.
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Very truly yours,
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Anadarko Petroleum Corporation
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By:
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/s/ James T. Hackett
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Name:
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James T. Hackett
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Title:
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President and Chief Executive Officer
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Western Gas Resources, Inc.
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By:
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/s/ Robert G. Gwin
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Name:
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Robert G. Gwin
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Title:
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Vice President
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WGR Holdings, LLC
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By:
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/s/ Robert G. Gwin
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Name:
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Robert G. Gwin
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Title:
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President and Chief Executive Officer
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Western Gas Holdings, LLC
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By:
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/s/ Robert G. Gwin
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Name:
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Robert G. Gwin
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Title:
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President and Chief Executive Officer
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Western Gas Partners, LP
Signature Page to Underwriting Agreement
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Western Gas Partners, LP
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By:
Western Gas Holdings, LLC, its general partner
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By:
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/s/ Robert G. Gwin
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Name:
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Robert G. Gwin
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Title:
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President and Chief Executive Officer
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Western Gas Partners, LP
Signature Page to Underwriting Agreement
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Accepted and agreed to as of the date
first above written, on behalf of
itself and the other several
Underwriters named in
Schedule
A
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UBS Securities LLC
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By:
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/s/ Michael Jameson
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Name:
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Michael Jameson
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Title:
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Managing Director
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By:
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/s/ Amit Jhunjhunwala
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Name:
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Amit Jhunjhunwala
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Title:
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Director
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Citigroup Global Markets Inc.
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By:
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/s/ Michael J. Casey
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Name:
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Michael J. Casey
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Title:
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Vice President
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Credit Suisse Securities (USA) LLC
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By:
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/s/ Randy Bayless
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Name:
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Randy Bayless
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Title:
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Director
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Morgan Stanley & Co. Incorporated
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By:
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/s/ B. Moss
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Name:
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B. Moss
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Title:
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Executive Director
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Western Gas Partners, LP
Signature Page to Underwriting Agreement
EXHIBIT A
Lock-Up Agreement
, 2008
UBS Securities LLC
Citigroup Global Markets Inc.
Credit Suisse Securities (USA) LLC
Morgan Stanley & Co. Incorporated
Together with the other Underwriters
named in Schedule A to the Underwriting Agreement
referred to herein
c/o UBS Securities LLC
299 Park Avenue
New York, New York 10171-0026
Ladies and Gentlemen:
This Lock-Up Agreement is being delivered to you in connection with the proposed Underwriting
Agreement (the
Underwriting Agreement
) to be entered into by Anadarko Petroleum
Corporation, a Delaware corporation, Western Gas Resources, Inc., a Delaware corporation, WGR
Holdings, LLC, a Delaware limited liability company, Western Gas Holdings, LLC, a Delaware limited
liability company, Western Gas Partners, LP, a Delaware limited partnership (the
Partnership
), and UBS Securities LLC, Citigroup Global Markets Inc., Credit Suisse
Securities (USA) LLC and Morgan Stanley & Co. Incorporated (together, the
Representatives
) and the other underwriters named in
Schedule A
to the
Underwriting Agreement, with respect to the initial public offering (the
Offering
) of
18,750,000 common units of the Partnership representing limited partner interests in the
Partnership (the
Common Units
). Capitalized terms used but not defined herein shall have
the meanings given to them in the Underwriting Agreement.
In order to induce the Underwriters to enter into the Underwriting Agreement, the undersigned
agrees that, for a period (the
Lock-Up Period
) beginning on the date hereof and ending
on, and including, the date that is 180 days after the date of the Underwriting Agreement, the
undersigned will not, without the prior written consent of the Representatives, (i) sell, offer to
sell, contract or agree to sell, hypothecate, pledge, grant any option to purchase or otherwise
dispose of or agree to dispose of, directly or indirectly, or establish or increase a put
equivalent position or liquidate or decrease a call equivalent position within the meaning of
Section 16 of the Securities Exchange Act of 1934, as amended, and the rules and regulations of the
Securities and Exchange Commission (the
Commission
) promulgated thereunder (the
Exchange Act
) with respect to, any Common Units, any other securities of the Partnership
that are substantially similar to the Common Units, any securities convertible into or exchangeable
or exercisable for Common Units, or any warrants or other rights to purchase Common Units, (ii)
file (or
Exhibit A-1
participate in the filing of) a registration statement with the Commission in respect of any Common
Units, (iii) enter into any swap or other arrangement that transfers to another, in whole or in
part, any of the economic consequences of ownership of any Common Units, any other securities of
the Partnership that are substantially similar to the Common Units, any securities convertible into
or exchangeable or exercisable for Common Units, or any warrants or other rights to purchase Common
Units whether any such transaction is to be settled by delivery of Common Units or such other
securities, in cash or otherwise or (iv) publicly announce an intention to effect any transaction
specified in clause (i), (ii) or (iii). The foregoing sentence shall not apply to (a) the
registration of the issuance and sale of the Common Units as contemplated by the Underwriting
Agreement and the sale of the Common Units to the Underwriters (as defined in the Underwriting
Agreement) in the Offering, (b) bona fide gifts, provided the recipient thereof agrees in writing
with the Underwriters to be bound by the terms of this Lock-Up Agreement or (c) dispositions to any
trust for the direct or indirect benefit of the undersigned and/or the immediate family of the
undersigned, provided that such trust agrees in writing with the Underwriters to be bound by the
terms of this Lock-Up Agreement. For purposes of this paragraph, immediate family shall mean the
undersigned and the spouse, any lineal descendent, father, mother, brother or sister of the
undersigned.
In addition, the undersigned hereby waives any rights the undersigned may have to require
registration of Common Units in connection with the filing of a registration statement relating to
the Offering. The undersigned further agrees that, for the Lock-Up Period, the undersigned will
not, without the prior written consent of the Representatives, make any demand for, or exercise any
right with respect to, the registration of Common Units or any securities convertible into or
exercisable or exchangeable for Common Units, or warrants or other rights to purchase Common Units
or any such securities.
Notwithstanding the above, if (a) during the period that begins on the date that is fifteen
(15) calendar days plus three (3) business days before the last day of the Lock-Up Period and ends
on the last day of the Lock-Up Period, the Partnership issues an earnings release or material news
or a material event relating to the Partnership occurs; or (b) prior to the expiration of the
Lock-Up Period, the Partnership announces that it will release earnings results during the sixteen
(16) day period beginning on the last day of the Lock-Up Period, then the restrictions imposed by
this Lock-Up Agreement shall continue to apply until the expiration of the date that is fifteen
(15) calendar days plus three (3) business days after the date on which the issuance of the
earnings release or the material news or material event occurs.
In addition, the undersigned hereby waives any and all preemptive rights, participation
rights, resale rights, rights of first refusal and similar rights that the undersigned may have in
connection with the Offering or with any issuance or sale by the Partnership of any equity or other
securities before the Offering, except for any such rights as have been heretofore duly exercised.
The undersigned hereby confirms that the undersigned has not, directly or indirectly, taken,
and hereby covenants that the undersigned will not, directly or indirectly, take any action
designed, or which has constituted or will constitute or might reasonably be expected, to cause or
result in the stabilization or manipulation of the price of any security of the Partnership to
Exhibit A-2
facilitate the sale or resale of the Common Units.
* * *
Exhibit A-3
If (i) the Partnership notifies you in writing that it does not intend to proceed with the
Offering, (ii) the registration statement filed with the Commission with respect to the Offering is
withdrawn or (iii) for any reason the Underwriting Agreement shall be terminated prior to the time
of purchase (as defined in the Underwriting Agreement), this Lock-Up Agreement shall be terminated
and the undersigned shall be released from its obligations hereunder.
Exhibit A-4
EXHIBIT A-1
LIST OF PARTIES TO EXECUTE LOCK-UP AGREEMENTS
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Name
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Position
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1. Western Gas Holdings,
LLC
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2. Robert G. Gwin
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President, Chief Executive Officer and Director
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3. Michael C. Pearl
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Senior Vice President and Chief Financial
Officer
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4. Danny J. Rea
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Senior Vice President, Chief Operating Officer
and Director
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5. Amanda M. McMillian
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Vice President, General Counsel and Corporate
Secretary
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6. Jeremy M. Smith
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Vice President and Treasurer
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7. R. A. Walker
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Chairman of the Board
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8. Milton Carroll
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Director
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9. Anthony R. Chase
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Director
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10. James R. Crane
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Director
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11. Karl F. Kurz
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Director
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12. Robert K. Reeves
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Director
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13. David J. Tudor
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Director
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Exhibit A-1-1
EXHIBIT B-1
FORM OF OPINION OF VINSON & ELKINS, L.L.P.
1.
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Each of the Western Gas Entities has been duly formed and is validly existing as a limited
partnership, limited liability company or corporation, as the case may be, and is in good
standing under the laws of the State of Delaware or the State of Texas, as the case may be.
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2.
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Each Western Gas Entity has the full partnership, limited liability company or corporate
power and authority to own, lease and operate its properties and conduct its business as
described in the Disclosure Package and the Prospectus and (a) in the case of the Western Gas
Parties, to execute and deliver the Underwriting Agreement and perform its obligations under
the Underwriting Agreement, (b) in the case of the Partnership, to issue, sell and deliver the
Units, (c) in the case of the General Partner, to act as the general partner of the
Partnership, and (d) in the case of each Western Gas Entity that is a party to an Operative
Document, to execute and deliver such Operative Document and consummate the transactions
contemplated thereby.
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3.
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Each of the Western Gas Entities is duly qualified to do business as a foreign limited
partnership, limited liability company or corporation, as the case may be, and is in good
standing under the laws of each jurisdiction set forth opposite its name on
Annex A
hereto.
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4.
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The Underwriting Agreement has been duly authorized, executed and delivered by each of the
Western Gas Parties.
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5.
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Each of the Operative Documents has been duly authorized, executed and delivered by each of
the Western Gas Entities that is party thereto and, assuming the due authorization, execution
and delivery by each party thereto (other than the Western Gas Entities), constitutes a valid
and binding obligation of each such Western Gas Entity, enforceable against each such Western
Gas Entity in accordance with its terms.
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6.
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As of the date hereof, immediately prior to the issuance and sale of any Units to the
Underwriters in accordance with the Underwriting Agreement, the issued and outstanding limited
partner interests of the Partnership consist of 4,973,806 Common Units and 26,536,306
Subordinated Units (collectively, the Sponsor Units) and the Incentive Distribution Rights.
Such Sponsor Units and Incentive Distribution Rights and the limited partner interests
represented thereby have been duly authorized and validly issued in accordance with the
Partnership Agreement and are fully paid (to the extent required by the Partnership Agreement)
and nonassessable (except as such nonassessability may be affected by (a) matters described in
the Disclosure Package and the Prospectus under the caption Risk FactorsRisks Inherent in an
Investment in UsYour liability may not be limited if a court finds that unitholder action
constitutes control of our business, Risk FactorsRisks Inherent in an Investment in
UsUnitholders may have liability to
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Exhibit B-1-1
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repay distributions that were wrongfully distributed to them and The Partnership
AgreementLimited Liability (and any similar information, if any, contained in any
Permitted Free Writing Prospectus) and (b) Sections 17-303 and 17-607 of the Delaware LP
Act). Holdings owns the Sponsor Units and the General Partner owns the Incentive
Distribution Rights free and clear of all Liens, except with respect to the restrictions on
transferability contained in Partnership Agreement and as otherwise described in the
Disclosure Package and the Prospectus.
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7.
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The issuance, sale and delivery by the Partnership of (a) the Sponsor Units to Holdings and
(b) the Incentive Distribution Rights to the General Partner pursuant to the Partnership
Agreement and the Contribution Agreement do not require registration under the Securities Act.
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8.
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The Units to be sold by the Partnership pursuant to the Underwriting Agreement, and the
limited partner interests represented thereby, have been duly authorized in accordance with
the Partnership Agreement and, when issued and delivered to the Underwriters against payment
therefor in accordance with the terms of the Underwriting Agreement, will be validly issued,
fully paid (to the extent required under the Partnership Agreement) and nonassessable (except
as such nonassessability may be affected by (a) matters described in the Disclosure Package
and the Prospectus under the caption Risk FactorsRisks Inherent in an Investment in UsYour
liability may not be limited if a court finds that unitholder action constitutes control of
our business, Risk FactorsRisks Inherent in an Investment in UsUnitholders may have
liability to repay distributions that were wrongfully distributed to them and The
Partnership AgreementLimited Liability (and any similar information, if any, contained in
any Permitted Free Writing Prospectus) and (b) Sections 17-303 and 17-607 of the Delaware LP
Act); and other than the Sponsor Units and the Incentive Distribution Rights, the Units will
be the only limited partner interests of the Partnership issued and outstanding.
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9.
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Anadarko directly and indirectly owns all of the issued and outstanding shares of capital
stock of Western Gas; such shares of capital stock have been duly authorized and validly
issued; and Anadarko owns such shares of capital stock free and clear of all Liens (a) in
respect of which a financing statement under the Uniform Commercial Code of the State of
Delaware naming Western Gas as debtor is on file in the office of the Secretary of State of
the State of Delaware or (b) otherwise known to us.
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10.
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Western Gas owns all of the issued and outstanding membership interests in Holdings; such
membership interests have been duly authorized and validly issued in accordance with the
Holdings LLC Agreement and are fully paid (to the extent required by the Holdings LLC
Agreement) and nonassessable (except as such nonassessability may be affected by Section
18-607 of the Delaware LLC Act); and Western Gas owns such membership interests free and clear
of all Liens (a) in respect of which a financing statement under the Uniform Commercial Code
of the State of Delaware naming Western Gas as debtor is on file in the office of the
Secretary of State of the State of Delaware or (b) otherwise known to us.
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Exhibit B-1-2
11.
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Holdings owns all of the issued and outstanding membership interests in the General Partner;
such membership interests have been duly authorized and validly issued in accordance with the
General Partner LLC Agreement and are fully paid (to the extent required by the General
Partner LLC Agreement) and nonassessable (except as such nonassessability may be affected by
Section 18-607 of the Delaware LLC Act); and Holdings owns such membership interests free and
clear of all Liens (a) in respect of which a financing statement under the Uniform Commercial
Code of the State of Delaware naming Holdings as debtor is on file in the office of the
Secretary of State of the State of Delaware or (b) otherwise known to us.
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12.
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The General Partner is the sole general partner of the Partnership, with a 2.0% general
partner interest in the Partnership; such general partner interest has been duly authorized
and validly issued in accordance with the Partnership Agreement; and the General Partner owns
such general partner interest free and clear of all Liens (except for restrictions on
transferability contained in the Partnership Agreement and as otherwise described in the
Disclosure Package and the Prospectus) (a) in respect of which a financing statement under the
Uniform Commercial Code of the State of Delaware naming the General Partner as debtor is on
file in the office of the Secretary of State of the State of Delaware or (b) otherwise known
to us.
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13.
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The Partnership owns all of the issued and outstanding membership interests in Operating GP;
such membership interests have been duly authorized and validly issued in accordance with the
Operating GP LLC Agreement and are fully paid (to the extent required by the Operating GP LLC
Agreement) and nonassessable (except as such nonassessability may be affected by Section
18-607 of the Delaware LLC Act); and the Partnership owns such membership interests free and
clear of all Liens (a) in respect of which a financing statement under the Uniform Commercial
Code of the State of Delaware naming the Partnership as debtor is on file in the office of the
Secretary of State of the State of Delaware or (b) otherwise known to us.
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14.
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The Partnership is the sole limited partner of the Operating Partnership, with a 99.99%
limited partner interest in the Operating Partnership; such limited partner interest has been
duly authorized and validly issued in accordance with the Operating Partnership LP Agreement
and is fully paid (to the extent required by the Operating Partnership LP Agreement) and
nonassessable (except as such nonassessability may be affected by Sections 17-303 and 17-607
of the Delaware LP Act); and the Partnership owns such limited partner interest free and clear
of all Liens (a) in respect of which a financing statement under the Uniform Commercial Code
of the State of Delaware naming the Partnership as debtor is on file in the office of the
Secretary of State of the State of Delaware or (b) otherwise known to us. Operating GP is the
sole general partner of the Operating Partnership, with a 0.01% general partner interest in
the Operating Partnership; such general partner interest has been duly authorized and validly
issued in accordance with the Operating Partnership LP Agreement; and Operating GP owns such
general partner interest free and clear of all Liens (a) in respect of which a financing
statement under the Uniform Commercial Code of the State of Delaware naming Operating GP as
debtor is on file in the office of the Secretary of State of the State of Delaware or (b)
otherwise known to us.
|
Exhibit B-1-3
15.
|
|
The Operating Partnership owns all of the issued and outstanding membership interests in AGC;
such membership interests have been duly authorized and validly issued in accordance with the
AGC LLC Agreement and are fully paid (to the extent required by the AGC LLC Agreement) and
nonassessable (except as such nonassessability may be affected by Section 18-607 of the
Delaware LLC Act); and the Operating Partnership owns such membership interests free and clear
of all Liens (a) in respect of which a financing statement under the Uniform Commercial Code
of the State of Delaware naming the Operating Partnership as debtor is on file in the office
of the Secretary of State of the State of Delaware or (b) otherwise known to us.
|
16.
|
|
The Operating Partnership owns all of the issued and outstanding membership interests in PGT;
such membership interests have been duly authorized and validly issued in accordance with the
PGT LLC Agreement and are fully paid (to the extent required by the PGT LLC Agreement) and
nonassessable (except as such nonassessability may be affected by Section 101.206 of the
TBOC); and the Operating Partnership owns such membership interests free and clear of all
Liens (a) in respect of which a financing statement under the Uniform Commercial Code of the
State of Texas naming the Operating Partnership as debtor is on file in the office of the
Secretary of State of the State of Texas or (b) otherwise known to us.
|
17.
|
|
The Operating Partnership owns all of the issued and outstanding membership interests in
MIGC; such membership interests have been duly authorized and validly issued in accordance
with the MIGC LLC Agreement and are fully paid (to the extent required by the MIGC LLC
Agreement) and nonassessable (except as such nonassessability may be affected by Section
18-607 of the Delaware LLC Act); and the Operating Partnership owns such membership interests
free and clear of all Liens (a) in respect of which a financing statement under the Uniform
Commercial Code of the State of Delaware naming the Operating Partnership as debtor is on file
in the office of the Secretary of State of the State of Delaware or (b) otherwise known to us.
|
18.
|
|
The Units are duly listed and admitted and authorized for trading, subject to official notice
of issuance, on the NYSE.
|
19.
|
|
Except as described in the Disclosure Package and the Prospectus, (a) there are no (i)
preemptive rights or other rights to subscribe for or purchase, nor any restriction upon the
voting or transfer of, any equity securities of any of the Partnership Entities, (ii)
outstanding options or warrants to purchase, or agreements or other obligations to issue, any
securities of the Partnership Entities or (iii) rights to convert any securities into or
exchange or exercise any securities for any equity interest in any of the Partnership Entities
and (b) neither the filing of the Registration Statement nor the offering, issuance or sale of
the Units as contemplated by the Underwriting Agreement gives rise to any rights for or
relating to the registration of any Units or other securities of any of the Partnership
Entities other than those that have been waived, in each case pursuant to or under the
formation, governing or other organizational documents of the Partnership
|
Exhibit B-1-4
|
|
Entities, any other agreement or instrument filed as an exhibit to the Registration
Statement, or the Delaware LP Act, the Delaware LLC Act, the General Corporation Law of the
State of Delaware (the
DGCL
), the laws of the State of Texas or federal law.
|
20.
|
|
The Units, the Sponsor Units, the general partner interest in the Partnership and the
Incentive Distribution Rights conform in all material respects to the descriptions thereof
contained in the Disclosure Package and the Prospectus.
|
21.
|
|
Each of the Registration Statement, as of the Effective Time, the Preliminary Prospectus, as
of its date, and the Prospectus, when filed with the Commission pursuant to Rule 424(b) and on
the Closing Date (except for the financial statements and related schedules, including the
notes and schedules thereto and the auditors reports thereon, and any other related financial
and accounting data included therein or excluded therefrom, as to which we express no
opinion), appeared on its face to be appropriately responsive, in all material respects, to
the requirements of the Act.
|
22.
|
|
The Registration Statement has become effective under the Act and, to our knowledge, no stop
order proceedings with respect thereto are pending or threatened under the Act, and any
required filing of the Prospectus and any supplement thereto pursuant to Rule 424 under the
Act has been made in the manner and within the time period required by such Rule 424 and in
the manner and within the time period required by Rule 430A under the Act; and the class of
securities consisting of the Common Units has become registered under Section 12 of the
Exchange Act.
|
23.
|
|
No permit, consent, approval, authorization, order, registration, filing or qualification
under the Delaware LP Act, the Delaware LLC Act, the DGCL, the laws of the State of Texas or
federal law is required in connection with the offering, issuance or sale by the Partnership
of the Units, the execution, delivery and performance of the Underwriting Agreement by the
Western Gas Parties, the execution, delivery and performance of the Operative Documents by the
Western Gas Entities that are parties thereto or the consummation of the Transactions by the
Western Gas Entities, except for such permits, consents, approvals, authorizations, orders,
registrations, filings or qualifications that have been obtained or made.
|
24.
|
|
None of (a) the offering, issuance or sale of the Units by the Partnership, (b) the
execution, delivery and performance of the Underwriting Agreement and the Operative Documents
by the Western Gas Entities that are parties thereto or (c) the consummation of the
Transactions by the Western Gas Entities (i) conflicts or will conflict with or constitutes or
will constitute a violation of the formation, governing or other organizational documents of
any of the Western Gas Entities, (ii) conflicts or will conflict with or constitutes or will
constitute a breach or violation of, or a default (or an event that, with notice or lapse of
time or both, would constitute such a default) under, any agreement or other instrument filed
as an exhibit to the Registration Statement, (iii) violates or will violate the Delaware LP
Act, the Delaware LLC Act, the DGCL, the laws of the State of Texas or federal law, (iv)
violates or will violate any order, judgment, decree or injunction of any court, governmental
agency or body of the States of Delaware
|
Exhibit B-1-5
|
|
or Texas or of the United States of America known to us having jurisdiction over any of the
Western Gas Entities or any of their properties or assets in a proceeding to which any of
them is a party or any of them or their properties is subject or (v) results or will result
in the creation or imposition of any Lien upon any property or assets of any of the
Partnership Entities;
provided, however
, that no opinion is expressed pursuant to this
paragraph [24] with respect to federal or state securities laws and other anti-fraud laws.
|
25.
|
|
No Partnership Entity is, and after giving effect to the Offering and the application of the
proceeds therefrom as described in the Registration Statement, each Preliminary Prospectus and
the Prospectus, no Partnership Entity will be, an investment company or an entity
controlled by an investment company, as such terms are defined in the Investment Company Act
of 1940, as amended.
|
26.
|
|
The statements included in the Disclosure Package and the Prospectus under the headings Our
Cash Distribution Policy and Restrictions on Distributions, Provisions of our Partnership
Agreement Relating to Cash Distributions, Managements Discussion and Analysis of Financial
Condition and Results of OperationsLiquidity and Capital Resources, Management, Certain
Relationships and Related Party Transactions, Conflicts of Interest and Fiduciary Duties,
Description of the Common Units, The Partnership Agreement, Material Tax Consequences,
Investment in Western Gas Partners, LP by Employee Benefit Plans and Underwriting (and any
similar information contained in each Permitted Free Writing Prospectus), insofar as they
purport to summarize legal or governmental matters or proceedings or the terms of statutes,
rules, regulations, agreements or documents, are fair and accurate summaries of such legal or
governmental matters or proceedings, statutes, rules, regulations, agreements or documents.
The description of the federal statutes, rules and regulations set forth in the Disclosure
Package and the Prospectus under BusinessSafety and Maintenance, BusinessRegulation of
Operations, BusinessEnvironmental Matters and BusinessTitle to Properties and Rights of
Way constitute accurate summaries of such statutes, rules and regulations in all material
respects.
|
27.
|
|
Except as described in the Disclosure Package and the Prospectus, no person has the right,
which has not been waived, under any Applicable Agreement or Operative Document to require the
registration under the Act or any sale of securities issued by the Partnership by reason of
the filing or effectiveness of the Registration Statement
[
or the Rule 462(b) Registration
Statement
]
.
|
28.
|
|
The opinion of Vinson & Elkins, L.L.P. that is filed as Exhibit 8.1 to the Registration
Statement (filed with the Commission on January 30, 2008) is confirmed and the Underwriters
may rely on such opinion as if it were addressed to them.
|
We have participated in conferences with officers and other representatives of the Western Gas
Entities, the independent public accountants of the Partnership and representatives of the
Underwriters, at which the contents of the Registration Statement, the Disclosure Package and the
Prospectus and related matters were discussed, and although we have not independently verified, are
not passing upon and are not assuming any responsibility for the accuracy, completeness or fairness
of the statements contained in the Registration Statement, the
Exhibit B-1-6
Disclosure Package and the Prospectus (except to the extent specified in paragraph [26]
above), based on the foregoing, no facts have come to our attention that lead us to believe that:
(A) the Registration Statement, as of the Effective Time, contained an untrue statement
of a material fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading,
(B)
the Disclosure Package, as of the Applicable Time,
1
contained any untrue statement
of a material fact or omitted to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were made, not
misleading; or
(C) the Prospectus, as of its date and the Closing Date, contained or contains an
untrue statement of a material fact or omitted or omits to state a material fact necessary
in order to make the statements therein, in the light of the circumstances under which they
were made, not misleading;
except that in each case, we do not express any opinion with respect to (i) the financial
statements included therein, including the notes and schedules thereto and the independent
registered public accountants reports thereon or (ii) the other financial and accounting data
contained in or omitted from the Registration Statement, the Disclosure Package or the Prospectus
and (iii) representations and warranties included in the exhibits to the Registration Statement.
Capitalized terms used herein without definition shall have the meanings ascribed to them in
the Underwriting Agreement.
|
|
|
1
|
|
[
:
] [a.m./p.m.] on [
], 2008.
|
Exhibit B-1-7
EXHIBIT B-2
FORM OF OPINION OF AMANDA M. MCMILLIAN
GENERAL COUNSEL OF WESTERN GAS HOLDINGS, LLC
1.
|
|
To my knowledge, there are no contracts, licenses, agreements, leases or documents of a
character that are required to be described in the Registration Statement, the Preliminary
Prospectuses or the Prospectus or to be filed as an exhibit to the Registration Statement have
not been so described or filed as required.
|
2.
|
|
Each Partnership Entity has all necessary licences, authorizations, consents and approvals
(each, a Permit) and has made all necessary filings required under any applicable law,
regulation or rule, and has obtained all necessary Permits from other persons, in order to
conduct its business, except for such Permits that, if not obtained, would not have a Material
Adverse Effect; and no Partnership Entity is in violation of or default under, or has received
notice of any proceedings relating to the revocation or modification of, any such Permit or
any federal, state, local or foreign law, regulation or rule or any decree, order or judgment
applicable to such Partnership Entity, except for any such violations, defaults, revocations
or modifications that would not, individually or in the aggregate, have a Material Adverse
Effect.
|
3.
|
|
Except as described in the Registration Statement, the Preliminary Prospectus, the Prospectus
and, if any, each Permitted Free Writing Prospectus, there are no actions, suits, claims
investigations or proceedings pending or, to my knowledge, threatened or contemplated to which
the Western Gas Entities or any of their respective directors or officers is or would be a
party or to which any of their respective properties is or would be subject at law or in
equity, before or by any federal, state, local or foreign governmental or regulatory
commission, board, body, authority or agency, or before or by any self-regulatory organization
or other non-governmental regulatory authority (including, without limitation, the NYSE),
except for any such actions, suits, claims, investigations or proceedings that would not,
individually or in the aggregate, if resolved adversely to any Western Gas Entity, have a
Material Adverse Effect.
|
Capitalized terms used herein without definition shall have the meanings ascribed to them in
the Underwriting Agreement.
Exhibit B-2-1
EXHIBIT C
OFFICERS CERTIFICATE
Each of the undersigned, Robert G. Gwin, President and Chief Executive Officer of Western Gas
Holdings, LLC, a Delaware limited liability company (the
General Partner
), which is the
general partner of Western Gas Partners, LP, a Delaware limited partnership (the
Partnership
), and Michael C. Pearl, Senior Vice President and Chief Financial Officer of
the General Partner, on behalf of the Partnership, does hereby certify pursuant to
Section
6(i)
of that certain Underwriting Agreement dated May 8, 2008 (the
Underwriting
Agreement
) among Anadarko Petroleum Corporation, Western Gas Resources, Inc., WGR Holdings,
LLC, the General Partner and the Partnership (collectively, the
Western Gas Parties
),
and, on behalf of the several Underwriters named therein, UBS Securities LLC, Citigroup Global
Markets Inc., Credit Suisse Securities (USA) LLC and Morgan Stanley & Co. Incorporated, that as of
May 14, 2008:
1.
|
|
He has reviewed the Registration Statement, each Preliminary Prospectus, the Prospectus and
each Permitted Free Writing Prospectus, if any.
|
2.
|
|
The representations and warranties of the Western Gas Parties as set forth in the
Underwriting Agreement are true and correct as of the date hereof and as if made on the date
hereof.
|
3.
|
|
The Western Gas Parties have performed all of their obligations under the Underwriting
Agreement as are to be performed at or before the date hereof.
|
4.
|
|
The conditions set forth in
Section 6(g)
of the Underwriting Agreement have been met.
|
5.
|
|
From the time of execution of the Underwriting Agreement to and including the date hereof, no
material adverse change, or any developments that are reasonably likely to result in,
individually or in the aggregate, a material adverse change, in the business, assets,
management, condition (financial or otherwise), prospects or results of operations of the
Partnership Entities, taken as a whole, has or have occurred.
|
Capitalized terms used herein without definition shall have the respective meanings ascribed
to them in the Underwriting Agreement.
[
Signature page follows
]
Exhibit C-1
In Witness Whereof,
the undersigned have hereunto set their hands on this May 14,
2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name:
|
|
Robert G. Gwin
|
|
|
|
|
Title:
|
|
President and Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name:
|
|
Michael C. Pearl
|
|
|
|
|
Title:
|
|
Senior Vice President and Chief Financial Officer
|
|
|
Exhibit C-2
Exhibit 3.1
Execution Version
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
WESTERN GAS PARTNERS, LP
TABLE OF CONTENTS
|
|
|
|
|
ARTICLE I
|
|
DEFINITIONS
|
|
|
|
|
|
Section 1.1 Definitions
|
|
|
1
|
|
Section 1.2 Construction
|
|
|
26
|
|
|
|
|
|
|
ARTICLE II
|
|
|
|
|
|
ORGANIZATION
|
|
|
|
|
|
Section 2.1 Formation
|
|
|
26
|
|
Section 2.2 Name
|
|
|
26
|
|
Section 2.3 Registered Office; Registered Agent; Principal Office; Other Offices
|
|
|
26
|
|
Section 2.4 Purpose and Business
|
|
|
27
|
|
Section 2.5 Powers
|
|
|
27
|
|
Section 2.6 Power of Attorney
|
|
|
27
|
|
Section 2.7 Term
|
|
|
29
|
|
Section 2.8 Title to Partnership Assets
|
|
|
29
|
|
|
|
|
|
|
ARTICLE III
|
|
|
|
|
|
RIGHTS OF LIMITED PARTNERS
|
|
|
|
|
|
Section 3.1 Limitation of Liability
|
|
|
29
|
|
Section 3.2 Management of Business
|
|
|
30
|
|
Section 3.3 Outside Activities of the Limited Partners
|
|
|
30
|
|
Section 3.4 Rights of Limited Partners
|
|
|
30
|
|
|
|
|
|
|
ARTICLE IV
|
|
|
|
|
|
CERTIFICATES; RECORD HOLDERS; TRANSFER OF PARTNERSHIP INTERESTS;
REDEMPTION OF PARTNERSHIP INTERESTS
|
|
|
|
|
|
Section 4.1 Certificates
|
|
|
31
|
|
Section 4.2 Mutilated, Destroyed, Lost or Stolen Certificates
|
|
|
32
|
|
Section 4.3 Record Holders
|
|
|
33
|
|
Section 4.4 Transfer Generally
|
|
|
33
|
|
Section 4.5 Registration and Transfer of Limited Partner Interests
|
|
|
33
|
|
Section 4.6 Transfer of the General Partners General Partner Interest
|
|
|
34
|
|
Section 4.7 Transfer of Incentive Distribution Rights
|
|
|
35
|
|
Section 4.8 Restrictions on Transfers
|
|
|
35
|
|
Section 4.9 Citizenship Certificates; Non-citizen Assignees
|
|
|
37
|
|
Section 4.10 Redemption of Partnership Interests of Non-citizen Assignees
|
|
|
38
|
|
Section 4.11 Taxation Certifications; Ineligible Assignees
|
|
|
39
|
|
Section 4.12 Redemption of Partnership Interests of Ineligible Assignees
|
|
|
40
|
|
|
|
|
|
|
ARTICLE V
|
|
|
|
|
|
CAPITAL CONTRIBUTIONS AND ISSUANCE OF PARTNERSHIP INTERESTS
|
|
|
|
|
|
Section 5.1 Organizational Contributions
|
|
|
41
|
|
Section 5.2 Contributions by the General Partner and its Affiliates
|
|
|
41
|
|
Section 5.3 Contributions by Initial Limited Partners
|
|
|
42
|
|
Section 5.4 Interest and Withdrawal
|
|
|
43
|
|
Section 5.5 Capital Accounts
|
|
|
43
|
|
Section 5.6 Issuances of Additional Partnership Securities
|
|
|
46
|
|
Section 5.7 Conversion of Subordinated Units
|
|
|
47
|
|
Section 5.8 Limited Preemptive Right
|
|
|
48
|
|
Section 5.9 Splits and Combinations
|
|
|
49
|
|
Section 5.10 Fully Paid and Non-Assessable Nature of Limited Partner Interests
|
|
|
49
|
|
Section 5.11 Issuance of Class B Units in Connection with Reset of Incentive Distribution Rights
|
|
|
50
|
|
|
|
|
|
|
ARTICLE VI
|
|
|
|
|
|
ALLOCATIONS AND DISTRIBUTIONS
|
|
|
|
|
|
Section 6.1 Allocations for Capital Account Purposes
|
|
|
52
|
|
Section 6.2 Allocations for Tax Purposes
|
|
|
61
|
|
Section 6.3 Requirement and Characterization of Distributions; Distributions to Record Holders
|
|
|
63
|
|
Section 6.4 Distributions of Available Cash from Operating Surplus
|
|
|
64
|
|
Section 6.5 Distributions of Available Cash from Capital Surplus
|
|
|
66
|
|
Section 6.6 Adjustment of Minimum Quarterly Distribution and Target Distribution Levels
|
|
|
66
|
|
Section 6.7 Special Provisions Relating to the Holders of Subordinated Units and Class B Units
|
|
|
67
|
|
Section 6.8 Special Provisions Relating to the Holders of Incentive Distribution Rights
|
|
|
68
|
|
Section 6.9 Entity-Level Taxation
|
|
|
68
|
|
|
|
|
|
|
ARTICLE VII
|
|
|
|
|
|
MANAGEMENT AND OPERATION OF BUSINESS
|
|
|
|
|
|
Section 7.1 Management
|
|
|
69
|
|
Section 7.2 Certificate of Limited Partnership
|
|
|
71
|
|
Section 7.3 Restrictions on the General Partners Authority
|
|
|
72
|
|
Section 7.4 Reimbursement of the General Partner
|
|
|
72
|
|
Section 7.5 Outside Activities
|
|
|
73
|
|
Section 7.6 Loans from the General Partner; Loans or Contributions from the Partnership or Group Members
|
|
|
74
|
|
Section 7.7 Indemnification
|
|
|
75
|
|
Section 7.8 Liability of Indemnitees
|
|
|
77
|
|
|
|
|
|
|
Section 7.9 Resolution of Conflicts of Interest; Standards of Conduct and
Modification of Duties
|
|
|
77
|
|
Section 7.10 Other Matters Concerning the General Partner
|
|
|
79
|
|
Section 7.11 Purchase or Sale of Partnership Securities
|
|
|
80
|
|
Section 7.12 Registration Rights of the General Partner and its Affiliates
|
|
|
80
|
|
Section 7.13 Reliance by Third Parties
|
|
|
83
|
|
|
|
|
|
|
ARTICLE VIII
|
|
|
|
|
|
BOOKS, RECORDS, ACCOUNTING AND REPORTS
|
|
|
|
|
|
Section 8.1 Records and Accounting
|
|
|
84
|
|
Section 8.2 Fiscal Year
|
|
|
84
|
|
Section 8.3 Reports
|
|
|
84
|
|
|
|
|
|
|
ARTICLE IX
|
|
|
|
|
|
TAX MATTERS
|
|
|
|
|
|
Section 9.1 Tax Returns and Information
|
|
|
85
|
|
Section 9.2 Tax Elections
|
|
|
85
|
|
Section 9.3 Tax Controversies
|
|
|
85
|
|
Section 9.4 Withholding
|
|
|
86
|
|
|
|
|
|
|
ARTICLE X
|
|
|
|
|
|
ADMISSION OF PARTNERS
|
|
|
|
|
|
Section 10.1 Admission of Limited Partners
|
|
|
86
|
|
Section 10.2 Admission of Successor General Partner
|
|
|
87
|
|
Section 10.3 Amendment of Agreement and Certificate of Limited Partnership
|
|
|
87
|
|
|
ARTICLE XI
|
|
|
|
|
|
WITHDRAWAL OR REMOVAL OF PARTNERS
|
Section 11.1 Withdrawal of the General Partner
|
|
|
88
|
|
Section 11.2 Removal of the General Partner
|
|
|
89
|
|
Section 11.3 Interest of Departing General Partner and Successor General Partner
|
|
|
90
|
|
Section 11.4 Termination of Subordination Period, Conversion of Subordinated Units and
Extinguishment of Cumulative Common Unit Arrearages
|
|
|
92
|
|
Section 11.5 Withdrawal of Limited Partners
|
|
|
92
|
|
|
|
|
|
|
ARTICLE XII
|
|
|
|
|
|
DISSOLUTION AND LIQUIDATION
|
|
|
|
|
|
Section 12.1 Dissolution
|
|
|
92
|
|
Section 12.2 Continuation of the Business of the Partnership After Dissolution
|
|
|
93
|
|
Section 12.3 Liquidator
|
|
|
93
|
|
Section 12.4 Liquidation
|
|
|
94
|
|
Section 12.5 Cancellation of Certificate of Limited Partnership
|
|
|
95
|
|
|
|
|
|
|
Section 12.6 Return of Contributions
|
|
|
95
|
|
Section 12.7 Waiver of Partition
|
|
|
95
|
|
Section 12.8 Capital Account Restoration
|
|
|
95
|
|
|
|
|
|
|
ARTICLE XIII
|
|
|
|
|
|
AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS; RECORD DATE
|
|
|
|
|
|
Section 13.1 Amendments to be Adopted Solely by the General Partner
|
|
|
95
|
|
Section 13.2 Amendment Procedures
|
|
|
97
|
|
Section 13.3 Amendment Requirements
|
|
|
98
|
|
Section 13.4 Special Meetings
|
|
|
98
|
|
Section 13.5 Notice of a Meeting
|
|
|
99
|
|
Section 13.6 Record Date
|
|
|
99
|
|
Section 13.7 Adjournment
|
|
|
99
|
|
Section 13.8 Waiver of Notice; Approval of Meeting; Approval of Minutes
|
|
|
100
|
|
Section 13.9 Quorum and Voting
|
|
|
100
|
|
Section 13.10 Conduct of a Meeting
|
|
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100
|
|
Section 13.11 Action Without a Meeting
|
|
|
101
|
|
Section 13.12 Right to Vote and Related Matters
|
|
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101
|
|
|
|
|
|
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ARTICLE XIV
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|
|
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MERGER, CONSOLIDATION OR CONVERSION
|
|
|
|
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Section 14.1 Authority
|
|
|
102
|
|
Section 14.2 Procedure for Merger, Consolidation or Conversion
|
|
|
102
|
|
Section 14.3 Approval by Limited Partners
|
|
|
104
|
|
Section 14.4 Certificate of Merger
|
|
|
105
|
|
Section 14.5 Effect of Merger, Consolidation or Conversion
|
|
|
105
|
|
|
|
|
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ARTICLE XV
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RIGHT TO ACQUIRE LIMITED PARTNER INTERESTS
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|
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Section 15.1 Right to Acquire Limited Partner Interests
|
|
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107
|
|
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|
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ARTICLE XVI
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GENERAL PROVISIONS
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Section 16.1 Addresses and Notices; Written Communications
|
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109
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Section 16.2 Further Action
|
|
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109
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Section 16.3 Binding Effect
|
|
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109
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Section 16.4 Integration
|
|
|
110
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Section 16.5 Creditors
|
|
|
110
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|
Section 16.6 Waiver
|
|
|
110
|
|
Section 16.7 Third-Party Beneficiaries
|
|
|
110
|
|
Section 16.8 Counterparts
|
|
|
110
|
|
Section 16.9 Applicable Law
|
|
|
110
|
|
Section 16.10 Invalidity of Provisions
|
|
|
110
|
|
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|
|
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Section 16.11 Consent of Partners
|
|
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110
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Section 16.12 Facsimile Signatures
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111
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FIRST AMENDED AND RESTATED AGREEMENT
OF LIMITED PARTNERSHIP OF WESTERN GAS PARTNERS, LP
THIS
FIRST AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF WESTERN GAS PARTNERS, LP dated as of May 14, 2008, is entered into by and between Western Gas Holdings, LLC, a Delaware limited liability company, as the General Partner, and WGR Holdings, LLC, a Delaware limited liability company, together with any other Persons who become Partners in the Partnership or parties hereto as provided herein. In consideration of the covenants, conditions and agreements contained herein, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1
Definitions
.
The following definitions shall be for all purposes, unless otherwise clearly indicated to the
contrary, applied to the terms used in this Agreement.
Acquisition
means any transaction in which any Group Member acquires (through an asset
acquisition, merger, stock acquisition or other form of investment) control over all or a portion
of the assets, properties or business of another Person for the purpose of increasing for a period
exceeding the short-term the operating capacity or operating income of the Partnership Group from
the operating capacity or operating income of the Partnership Group existing immediately prior to
such transaction. For purposes of this definition, the short-term generally refers to a period not
exceeding 12 months.
Additional Book Basis
means the portion of any remaining Carrying Value of an Adjusted
Property that is attributable to positive adjustments made to such Carrying Value as a result of
Book-Up Events. For purposes of determining the extent that Carrying Value constitutes Additional
Book Basis:
(a) Any negative adjustment made to the Carrying Value of an Adjusted Property as a result of
either a Book-Down Event or a Book-Up Event shall first be deemed to offset or decrease that
portion of the Carrying Value of such Adjusted Property that is attributable to any prior positive
adjustments made thereto pursuant to a Book-Up Event or Book-Down Event.
(b) If Carrying Value that constitutes Additional Book Basis is reduced as a result of a
Book-Down Event and the Carrying Value of other property is increased as a result of such Book-Down
Event, an allocable portion of any such increase in Carrying Value shall be treated as Additional
Book Basis;
provided
, that the amount treated as Additional Book Basis pursuant hereto as a result
of such Book-Down Event shall not exceed the amount by which the Aggregate Remaining Net Positive
Adjustments after such Book-Down Event exceeds the remaining Additional Book Basis attributable to
all of the Partnerships Adjusted Property after
Western Gas Partners, LP
First Amended and Restated Agreement of Limited Partnership
1
such Book-Down Event (determined without regard to the application of this clause (b) to such
Book-Down Event).
Additional Book Basis Derivative Items
means any Book Basis Derivative Items that are
computed with reference to Additional Book Basis. To the extent that the Additional Book Basis
attributable to all of the Partnerships Adjusted Property as of the beginning of any taxable
period exceeds the Aggregate Remaining Net Positive Adjustments as of the beginning of such period
(the
Excess Additional Book Basis
), the Additional Book Basis Derivative Items for such period
shall be reduced by the amount that bears the same ratio to the amount of Additional Book Basis
Derivative Items determined without regard to this sentence as the Excess Additional Book Basis
bears to the Additional Book Basis as of the beginning of such period.
Adjusted Capital Account
means the Capital Account maintained for each Partner as of the end
of each fiscal year of the Partnership, (a) increased by any amounts that such Partner is obligated
to restore under the standards set by Treasury Regulation Section 1.704-1(b)(2)(ii)(c) (or is
deemed obligated to restore under Treasury Regulation Sections 1.704-2(g) and 1.704-2(i)(5)) and
(b) decreased by (i) the amount of all losses and deductions that, as of the end of such fiscal
year, are reasonably expected to be allocated to such Partner in subsequent years under Sections
704(e)(2) and 706(d) of the Code and Treasury Regulation Section 1.751-1(b)(2)(ii), and (ii) the
amount of all distributions that, as of the end of such fiscal year, are reasonably expected to be
made to such Partner in subsequent years in accordance with the terms of this Agreement or
otherwise to the extent they exceed offsetting increases to such Partners Capital Account that are
reasonably expected to occur during (or prior to) the year in which such distributions are
reasonably expected to be made (other than increases as a result of a minimum gain chargeback
pursuant to Section 6.1(d)(i) or 6.1(d)(ii)). The foregoing definition of Adjusted Capital Account
is intended to comply with the provisions of Treasury Regulation Section 1.704-1(b)(2)(ii)(d) and
shall be interpreted consistently therewith. The Adjusted Capital Account of a Partner in respect
of a General Partner Unit, a Common Unit, a Subordinated Unit, a Class B Unit or an Incentive
Distribution Right or any other Partnership Interest shall be the amount that such Adjusted Capital
Account would be if such General Partner Unit, Common Unit, Subordinated Unit, Class B Unit,
Incentive Distribution Right or other Partnership Interest were the only interest in the
Partnership held by such Partner from and after the date on which such General Partner Unit, Common
Unit, Subordinated Unit, Class B Unit, Incentive Distribution Right or other Partnership Interest
was first issued.
Adjusted Operating Surplus
means, with respect to any period, (a) Operating Surplus
generated with respect to such period; (b) less (i) any net increase in Working Capital Borrowings
with respect to that period; and (ii) any net decrease in cash reserves for Operating Expenditures
with respect to such period not relating to an Operating Expenditure made with respect to such
period; and (c) plus (i) any net decrease in Working Capital Borrowings with respect to that
period; and (ii) any net increase in cash reserves for Operating Expenditures with respect to such
period required by any debt instrument for the repayment of principal, interest or premium.
Adjusted Operating Surplus does not include that portion of Operating Surplus included in clause
(a)(i) of the definition of Operating Surplus.
Western Gas Partners, LP
First Amended and Restated Agreement of Limited Partnership
2
Adjusted Property
means any property the Carrying Value of which has been adjusted pursuant
to Section 5.5(d)(i) or 5.5(d)(ii).
Affiliate
means, with respect to any Person, any other Person that directly or indirectly
through one or more intermediaries controls, is controlled by or is under common control with, the
Person in question. As used herein, the term control means the possession, direct or indirect,
of the power to direct or cause the direction of the management and policies of a Person, whether
through ownership of voting securities, by contract or otherwise.
Aggregate Quantity of Class B Units
is defined in Section 5.11.
Aggregate Remaining Net Positive Adjustments
means, as of the end of any taxable period, the
sum of the Remaining Net Positive Adjustments of all the Partners.
Agreed Allocation
means any allocation, other than a Required Allocation, of an item of
income, gain, loss or deduction pursuant to the provisions of Section 6.1, including a Curative
Allocation (if appropriate to the context in which the term Agreed Allocation is used).
Agreed Value
of any Contributed Property means the fair market value of such property or
other consideration at the time of contribution and in the case of an Adjusted Property, the fair
market value of such Adjusted Property on the date of the revaluation event as described in
5.5(d)(1), in both cases as determined by the General Partner. In making such determination, the
General Partner shall use such method as it determines to be appropriate to allocate the aggregate
Agreed Value of Adjusted Properties or Contributed Properties contributed to the Partnership in a
single or integrated transaction among each separate property on a basis proportional to the fair
market value of each such property.
Agreement
means this First Amended and Restated Agreement of Limited Partnership of Western
Gas Partners, LP, as it may be amended, supplemented or restated from time to time.
Anadarko
means Anadarko Petroleum Corporation, a Delaware corporation.
Asset HoldCo
means WGR Asset Holding Company LLC, a Delaware limited liability company, and
any successors thereto.
Associate
means, when used to indicate a relationship with any Person, (a) any corporation
or organization of which such Person is a director, officer or partner or is, directly or
indirectly, the owner of 20% or more of any class of voting stock or other voting interest; (b) any
trust or other estate in which such Person has at least a 20% beneficial interest or as to which
such Person serves as trustee or in a similar fiduciary capacity; and (c) any relative or spouse of
such Person, or any relative of such spouse, who has the same principal residence as such Person.
Available Cash
means, with respect to any Quarter ending prior to the Liquidation Date:
Western Gas Partners, LP
First Amended and Restated Agreement of Limited Partnership
3
(a) the sum of (i) all cash and cash equivalents of the Partnership Group (or the
Partnerships proportionate share of cash and cash equivalents in the case of Subsidiaries that are
not wholly owned) on hand at the end of such Quarter, and (ii) if the General Partner so
determines, all or any portion of any additional cash and cash equivalents of the Partnership Group
on hand on the date of determination of Available Cash with respect to such Quarter resulting from
Working Capital Borrowings made subsequent to the end of such Quarter, less
(b) the amount of any cash reserves established by the General Partner (or the Partnerships
proportionate share of cash reserves in the case of Subsidiaries that are not wholly owned) to (i)
provide for the proper conduct of the business of the Partnership Group (including reserves for
future capital expenditures and for anticipated future credit needs of the Partnership Group)
subsequent to such Quarter, (ii) comply with applicable law or any loan agreement, security
agreement, mortgage, debt instrument or other agreement or obligation to which any Group Member is
a party or by which it is bound or its assets are subject or (iii) provide funds for distributions
under Section 6.4 or 6.5 in respect of any one or more of the next four Quarters;
provided
,
however
, that the General Partner may not establish cash reserves pursuant to clause
(iii) above if the effect of such reserves would be that the Partnership is unable to distribute
the Minimum Quarterly Distribution on all Common Units, plus any Cumulative Common Unit Arrearage
on all Common Units, with respect to such Quarter; and, provided further, that disbursements made
by a Group Member or cash reserves established, increased or reduced after the end of such Quarter
but on or before the date of determination of Available Cash with respect to such Quarter shall be
deemed to have been made, established, increased or reduced, for purposes of determining Available
Cash, within such Quarter if the General Partner so determines.
Notwithstanding the foregoing,
Available Cash
with respect to the Quarter in which the
Liquidation Date occurs and any subsequent Quarter shall equal zero.
Board of Directors
means, with respect to the Board of Directors of the General Partner, its
board of directors or managers, as applicable, if a corporation or limited liability company, or if
a limited partnership, the board of directors or board of managers of the general partner of the
General Partner.
Book Basis Derivative Items
means any item of income, deduction, gain or loss that is
computed with reference to the Carrying Value of an Adjusted Property (e.g., depreciation,
depletion, or gain or loss with respect to an Adjusted Property).
Book-Down Event
means an event that triggers a negative adjustment to the Capital Accounts
of the Partners pursuant to Section 5.5(d).
Book-Tax Disparity
means with respect to any item of Contributed Property or Adjusted
Property, as of the date of any determination, the difference between the Carrying Value of such
Contributed Property or Adjusted Property and the adjusted basis thereof for federal income tax
purposes as of such date. A Partners share of the Partnerships Book-Tax Disparities in all of its
Contributed Property and Adjusted Property will be reflected by the
Western Gas Partners, LP
First Amended and Restated Agreement of Limited Partnership
4
difference between such Partners Capital Account balance as maintained pursuant to Section
5.5 and the hypothetical balance of such Partners Capital Account computed as if it had been
maintained strictly in accordance with federal income tax accounting principles.
Book-Up Event
means an event that triggers a positive adjustment to the Capital Accounts of
the Partners pursuant to Section 5.5(d).
Business Day
means Monday through Friday of each week, except that a legal holiday
recognized as such by the government of the United States of America or the State of Texas shall
not be regarded as a Business Day.
Capital Account
means the capital account maintained for a Partner pursuant to Section 5.5.
The Capital Account of a Partner in respect of a General Partner Unit, a Common Unit, a
Subordinated Unit, a Class B Unit, an Incentive Distribution Right or any Partnership Interest
shall be the amount that such Capital Account would be if such General Partner Unit, Common Unit,
Subordinated Unit, Class B Unit, Incentive Distribution Right or other Partnership Interest were
the only interest in the Partnership held by such Partner from and after the date on which such
General Partner Unit, Common Unit, Subordinated Unit, Class B Unit, Incentive Distribution Right or
other Partnership Interest was first issued.
Capital Contribution
means any cash, cash equivalents or the Net Agreed Value of Contributed
Property that a Partner contributes to the Partnership.
Capital Improvement
means any (a) addition or improvement to the capital assets owned by any
Group Member, (b) acquisition of existing, or the construction of new or the improvement or
replacement of existing, capital assets (including, without limitation, crude oil or natural gas
gathering systems, natural gas treatment or processing plants, natural gas liquids fractionation
facilities, storage facilities, pipeline systems or other midstream assets or facilities) or (c)
capital contributions by a Group Member to a Person that is not a Subsidiary in which a Group
Member has an equity interest to fund such Group Members pro rata share of the cost of the
acquisition of existing, or the construction of new or the improvement or replacement of existing,
capital assets (including, without limitation, crude oil or natural gas gathering systems, natural
gas treatment or processing plants, natural gas liquids fractionation facilities, storage
facilities, pipeline systems or other midstream assets or facilities) by such Person, in each case
if such addition, improvement, acquisition or construction is made to increase for a period longer
than the short-term the operating capacity or operating income of the Partnership Group, in the
case of clauses (a) and (b), or such Person, in the case of clause (c), from the operating capacity
or operating income of the Partnership Group or such Person, as the case may be, existing
immediately prior to such addition, improvement, replacement, acquisition or construction;
provided, however, that any such addition, improvement, replacement, acquisition or construction
that is made solely for investment purposes shall not constitute a Capital Improvement under this
Agreement. For purposes of this definition, the short-term generally refers to a period not
exceeding 12 months.
Capital Surplus
is defined in Section 6.3(a).
Western Gas Partners, LP
First Amended and Restated Agreement of Limited Partnership
5
Carrying Value
means (a) with respect to a Contributed Property or Adjusted Property, the
Agreed Value of such property reduced (but not below zero) by all depreciation, amortization and
cost recovery deductions charged to the Partners Capital Accounts in respect of such Contributed
Property, and (b) with respect to any other Partnership property, the adjusted basis of such
property for federal income tax purposes, all as of the time of determination; provided that the
Carrying Value of any property shall be adjusted from time to time in accordance with Sections
5.5(d)(i) and 5.5(d)(ii) and to reflect changes, additions or other adjustments to the Carrying
Value for dispositions and acquisitions of Partnership properties, as deemed appropriate by the
General Partner.
Cause
means a court of competent jurisdiction has entered a final, non-appealable judgment
finding the General Partner liable for actual fraud or willful misconduct in its capacity as a
general partner of the Partnership.
Certificate
means (a) a certificate (i) substantially in the form of Exhibit A to this
Agreement, (ii) issued in global form in accordance with the rules and regulations of the
Depositary or (iii) in such other form as may be adopted by the General Partner, issued by the
Partnership evidencing ownership of one or more Common Units or (b) a certificate, in such form as
may be adopted by the General Partner, issued by the Partnership evidencing ownership of one or
more other Partnership Securities.
Certificate of Limited Partnership
means the Certificate of Limited Partnership of the
Partnership filed with the Secretary of State of the State of Delaware as referenced in Section
7.2, as such Certificate of Limited Partnership may be amended, supplemented or restated from time
to time.
Citizenship Certification
means a properly completed certificate in such form as may be
specified by the General Partner by which a Limited Partner certifies that he (and if he is a
nominee holding for the account of another Person, that to the best of his knowledge such other
Person) is an Eligible Citizen.
claim
(as used in Section 7.12(d)) is defined in Section 7.12(d).
Class B Units
means a Partnership Security representing a fractional part of the Partnership
Interests of all Limited Partners, and having the rights and obligations specified with respect to
Class B Units in this Agreement.
Closing Date
means the first date on which Common Units are sold by the Partnership to the
Underwriters pursuant to the provisions of the Underwriting Agreement.
Closing Price
is defined in Section 15.1(a).
Code
means the Internal Revenue Code of 1986, as amended and in effect from time to time.
Any reference herein to a specific section or sections of the Code shall be deemed to include a
reference to any corresponding provision of any successor law.
Western Gas Partners, LP
First Amended and Restated Agreement of Limited Partnership
6
Combined Interest
is defined in Section 11.3(a).
Commences Commercial Service
shall mean the date a Capital Improvement is first put into
commercial service following completion of construction and testing.
Commission
means the United States Securities and Exchange Commission.
Commodity Hedge Contract
means any commodity exchange, swap, forward, cap, floor, collar or
other similar agreement or arrangement that is entered into for the purpose of hedging the
Partnership Groups exposure to fluctuations in the price of hydrocarbons in their operations and
not for speculative purposes.
Common Unit
means a Partnership Security representing a fractional part of the Partnership
Interests of all Limited Partners and Assignees, and having the rights and obligations specified
with respect to Common Units in this Agreement. The term Common Unit does not include a
Subordinated Unit or Class B Unit prior to its conversion into a Common Unit pursuant to the terms
hereof.
Common Unit Arrearage
means, with respect to any Common Unit, whenever issued, as to any
Quarter within the Subordination Period, the excess, if any, of (a) the Minimum Quarterly
Distribution with respect to a Common Unit in respect of such Quarter over (b) the sum of all
Available Cash distributed with respect to a Common Unit in respect of such Quarter pursuant to
Section 6.4(a)(i).
Contributed Property
means each property or other asset, in such form as may be permitted by
the Delaware Act, but excluding cash, contributed to the Partnership. Once the Carrying Value of a
Contributed Property is adjusted pursuant to Section 5.5(d), such property shall no longer
constitute a Contributed Property, but shall be deemed an Adjusted Property.
Contribution Agreement
means that certain Contribution, Conveyance and Assumption Agreement,
dated as of the Closing Date, among the General Partner, the Partnership, Anadarko, Holdings, the
Operating Partnership and certain other parties, together with the additional conveyance documents
and instruments contemplated or referenced thereunder, as such may be amended, supplemented or
restated from time to time.
Converted Class B Units
is defined in Section 5.11(g).
Credit Agreement
means that certain Revolving Credit Agreement, dated as of March 4, 2008,
by and among Anadarko Petroleum Corporation, Western Gas Partners, LP, JPMorgan Chase Bank, N.A.,
The Royal Bank of Scotland, PLC, BNP Paribas, Bank of America, N.A., BMO Capital Markets Financing,
Inc., The Bank of Tokyo-Mitsubishi UFJ, LTD., and each of the Lenders named therein.
Cumulative Common Unit Arrearage
means, with respect to any Common Unit, whenever issued,
and as of the end of any Quarter, the excess, if any, of (a) the sum resulting from adding together
the Common Unit Arrearage as to an Initial Common Unit for each of the
Western Gas Partners, LP
First Amended and Restated Agreement of Limited Partnership
7
Quarters within the Subordination Period ending on or before the last day of such Quarter over
(b) the sum of any distributions theretofore made pursuant to Section 6.4(a)(ii) and the second
sentence of Section 6.5 with respect to an Initial Common Unit (including any distributions to be
made in respect of the last of such Quarters).
Curative Allocation
means any allocation of an item of income, gain, deduction, loss or
credit pursuant to the provisions of Section 6.1(d)(xi).
Current Market Price
is defined in Section 15.1(a).
Deferred Issuance and Distribution
means both (a) the issuance by the Partnership of a
number of additional Common Units that is equal to the excess, if any, of (x) 2,812,500 over (y)
the aggregate number, if any, of Common Units actually purchased by and issued to the Underwriters
pursuant to the Over-Allotment Option on the Option Closing Date(s), and (b) a reimbursement of
preformation capital expenditures in an amount equal to the aggregate amount of cash, if any,
contributed by the Underwriters to the Partnership on the Option Closing Date(s) with respect to
Common Units issued by the Partnership upon each exercise of the Over-Allotment Option in
accordance with Section 5.3(b), if any.
Delaware Act
means the Delaware Revised Uniform Limited Partnership Act, 6 Del C. Section
17-101, et seq., as amended, supplemented or restated from time to time, and any successor to such
statute.
Departing General Partner
means a former General Partner from and after the effective date
of any withdrawal or removal of such former General Partner pursuant to Section 11.1 or Section
11.2.
Depositary
means, with respect to any Units issued in global form, The Depository Trust
Company and its successors and permitted assigns.
Disposed of Adjusted Property
has the meaning assigned to such term in Section
6.1(d)(xii)(B).
Economic Risk of Loss
has the meaning set forth in Treasury Regulation Section 1.752-2(a).
Eligible Citizen
means a Person qualified to own interests in real property in jurisdictions
in which any Group Member does business or proposes to do business from time to time, and whose
status as a Limited Partner the General Partner determines does not or would not subject such Group
Member to a significant risk of cancellation or forfeiture of any of its properties or any interest
therein.
Eligible Holder
means any (a) individual who is a U.S. citizen or U.S. resident alien, (b)
corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) that
was created or organized in or under the laws of the United States, any state thereof or the
District of Columbia, (c) estate whose income is subject to U.S. federal income taxation
Western Gas Partners, LP
First Amended and Restated Agreement of Limited Partnership
8
regardless of its source, (d) trust that (1) is subject to the primary supervision of a court
within the United States and that has one or more U.S. persons with authority to control all
substantial decisions of the trust or (2) has a valid election in effect under applicable Treasury
Regulations to be treated as a U.S. person, (e) any other entity that was created or organized in
or under the laws of the United States, any state thereof or the District of Columbia but is not
subject to U.S. federal income taxation on the income generated from the Partnership, provided all
of its beneficial owners are otherwise qualified as an Eligible Holder under alternative (a), (b),
(c), or (d) hereof.
Estimated Incremental Quarterly Tax Amount
is defined in Section 6.9.
Estimated Maintenance Capital Expenditures
means an estimate made in good faith by the Board
of Directors of the General Partner (with the concurrence of the Special Committee) of the average
quarterly Maintenance Capital Expenditures that the Partnership will need to incur over the long
term to maintain the operating capacity or operating income of the Partnership Group existing at
the time the estimate is made. The Board of Directors of the General Partner (with the concurrence
of the Special Committee) will be permitted to make such estimate in any manner it determines
reasonable. The estimate will be made at least annually and whenever an event occurs that is likely
to result in a material adjustment to the amount of future Estimated Maintenance Capital
Expenditures. The Partnership shall disclose to its Partners any change in the amount of Estimated
Maintenance Capital Expenditures in its reports made in accordance with Section 8.3 to the extent
not previously disclosed. Any adjustments to Estimated Maintenance Capital Expenditures shall be
prospective only.
Event of Withdrawal
is defined in Section 11.1(a).
Expansion Capital Expenditures
means cash expenditures for Acquisitions or Capital
Improvements, and shall not include Maintenance Capital Expenditures or Investment Capital
Expenditures. Expansion Capital Expenditures shall include interest (and related fees) on debt
incurred and distributions on equity issued (including incremental Incentive Distributions in
respect of newly issued equity), in each case, to finance the construction of a Capital Improvement
and paid during the period beginning on the date that the Partnership enters into a binding
obligation to commence construction of a Capital Improvement and ending on the earlier to occur of
the date that such Capital Improvement Commences Commercial Service and the date that such Capital
Improvement is abandoned or disposed of. Debt incurred or equity issued to fund such construction
period interest payments or such construction period distributions on equity paid during such
period (including incremental Incentive Distributions in respect of the newly issued equity), shall
also be deemed to be debt incurred or equity issued, as the case may be, to finance the
construction of a Capital Improvement. Where capital expenditures are made in part for Expansion
Capital Expenditures and in part for other purposes, the General Partner, with the concurrence of
the Special Committee, shall determine the allocation between the amounts paid for each.
FERC
means the Federal Energy Regulatory Commission.
Western Gas Partners, LP
First Amended and Restated Agreement of Limited Partnership
9
FERC Notice
means the giving of notice by the Partnership to the Limited Partners in the
manner specified in Section 16.1 that the Partnership is implementing procedures pursuant to this
Agreement to require a Limited Partner or a transferee of a Limited Partner Interest to certify
that such Person is a Eligible Holder.
Final Subordinated Units
is defined in Section 6.1(d)(x).
First Liquidation Target Amount
is defined in Section 6.1(c)(i)(E).
First Target Distribution
means $0.3450 per Unit per Quarter (or, with respect to the period
commencing on the Closing Date and ending on June 30, 2008, it means the product of $0.3450
multiplied by a fraction of which the numerator is the number of days in such period, and of which
the denominator is 91), subject to adjustment in accordance with Sections 5.11, 6.6 and 6.9.
Fully Diluted Basis
means, when calculating the number of Outstanding Units for any period,
a basis that includes, in addition to the Outstanding Units, all Partnership Securities and
options, rights, warrants and appreciation rights relating to an equity interest in the Partnership
(a) that are convertible into or exercisable or exchangeable for Units that are senior to or pari
passu with the Subordinated Units, (b) whose conversion, exercise or exchange price is less than
the Current Market Price on the date of such calculation, (c) that may be converted into or
exercised or exchanged for such Units prior to or during the Quarter immediately following the end
of the period for which the calculation is being made without the satisfaction of any contingency
beyond the control of the holder other than the payment of consideration and the compliance with
administrative mechanics applicable to such conversion, exercise or exchange and (d) that were not
converted into or exercised or exchanged for such Units during the period for which the calculation
is being made;
provided, however
, that for purposes of determining the number of Outstanding Units
on a Fully Diluted Basis when calculating whether the Subordination Period has ended or the
Subordinated Units are entitled to convert into Common Units pursuant to Section 5.7, such
Partnership Securities, options, rights, warrants and appreciation rights shall be deemed to have
been Outstanding Units only for the four Quarters that comprise the last four Quarters of the
measurement period;
provided, further
, that if consideration will be paid to any Group Member in
connection with such conversion, exercise or exchange, the number of Units to be included in such
calculation shall be that number equal to the difference between (i) the number of Units issuable
upon such conversion, exercise or exchange and (ii) the number of Units that such consideration
would purchase at the Current Market Price.
General Partner
means Western Gas Holdings, LLC, a Delaware limited liability company, and
its successors and permitted assigns that are admitted to the Partnership as general partner of the
Partnership, in its capacity as general partner of the Partnership (except as the context otherwise
requires).
General Partner Interest
means the ownership interest of the General Partner in the
Partnership (in its capacity as a general partner without reference to any Limited Partner Interest
held by it), which is evidenced by General Partner Units, and includes any and all benefits to
Western Gas Partners, LP
First Amended and Restated Agreement of Limited Partnership
10
which the General Partner is entitled as provided in this Agreement, together with all
obligations of the General Partner to comply with the terms and provisions of this Agreement.
General Partner Unit
means a fractional part of the General Partner Interest having the
rights and obligations specified with respect to the General Partner Interest. A General Partner
Unit is not a Unit.
GP Contribution Interest
shall have the meaning assigned to it in the Contribution
Agreement.
Gross Liability Value
means, with respect to any Liability of the Partnership described in
Treasury Regulation Section 1.752-7(b)(3)(i), the amount of cash that a willing assignor would pay
to a willing assignee to assume such Liability in an arms-length transaction. The Gross Liability
Value of each Liability of the Partnership described in Treasury Regulation Section
1.752-7(b)(3)(i) shall be adjusted at such times as provided in this Agreement for an adjustment to
Carrying Values.
Group
means a Person that with or through any of its Affiliates or Associates has any
contract, arrangement, understanding or relationship for the purpose of acquiring, holding, voting
(except voting pursuant to a revocable proxy or consent given to such Person in response to a proxy
or consent solicitation made to 10 or more Persons), exercising investment power or disposing of
any Partnership Interests with any other Person that beneficially owns, or whose Affiliates or
Associates beneficially own, directly or indirectly, Partnership Interests.
Group Member
means a member of the Partnership Group.
Group Member Agreement
means the partnership agreement of any Group Member, other than the
Partnership, that is a limited or general partnership, the limited liability company agreement of
any Group Member that is a limited liability company, the certificate of incorporation and bylaws
or similar organizational documents of any Group Member that is a corporation, the joint venture
agreement or similar governing document of any Group Member that is a joint venture and the
governing or organizational or similar documents of any other Group Member that is a Person other
than a limited or general partnership, limited liability company, corporation or joint venture, as
such may be amended, supplemented or restated from time to time.
Holder
as used in Section 7.12, is defined in Section 7.12(a).
Holdings
means WGR Holdings, LLC, a Delaware limited liability company.
IDR Reset Election
is defined in Section 5.11(a).
Incentive Distribution Right
means a non-voting Limited Partner Interest issued to the
General Partner in connection with the transfer of the GP Contribution Interest to the Partnership
pursuant to the Contribution Agreement, which Limited Partner Interest will confer upon the holder
thereof only the rights and obligations specifically provided in this Agreement with
Western Gas Partners, LP
First Amended and Restated Agreement of Limited Partnership
11
respect to Incentive Distribution Rights (and no other rights otherwise available to or other
obligations of a holder of a Partnership Interest). Notwithstanding anything in this Agreement to
the contrary, the holder of an Incentive Distribution Right shall not be entitled to vote such
Incentive Distribution Right on any Partnership matter except as may otherwise be required by law.
Incentive Distributions
means any amount of cash distributed to the holders of the Incentive
Distribution Rights pursuant to Sections 6.4(a)(v), (vi) and (vii) and 6.4(b)(iii), (iv) and (v).
Incremental Income Taxes
is defined in Section 6.9.
Indemnified Persons
is defined in Section 7.12(d).
Indemnitee
means (a) the General Partner, (b) any Departing General Partner, (c) any Person
who is or was an Affiliate of the General Partner or any Departing General Partner, (d) any Person
who is or was a member, manager, partner, director, officer, fiduciary or trustee of any Group
Member, the General Partner or any Departing General Partner or any Affiliate of any Group Member,
the General Partner or any Departing General Partner, (e) any Person who is or was serving at the
request of the General Partner or any Departing General Partner or any Affiliate of the General
Partner or any Departing General Partner as an officer, director, member, manager, partner,
fiduciary or trustee of another Person;
provided
that a Person shall not be an Indemnitee by reason
of providing, on a fee-for-services basis, trustee, fiduciary or custodial services, and (f) any
Person the General Partner designates as an Indemnitee for purposes of this Agreement.
Ineligible Assignee
means a Person whom the General Partner has determined is not an
Eligible Holder.
Initial Common Units
means the Common Units sold in the Initial Offering.
Initial Limited Partners
means Holdings (with respect to the Common Units, Subordinated
Units and Incentive Distribution Rights received by it pursuant to Section 5.2) and the
Underwriters, in each case upon being admitted to the Partnership in accordance with Section 10.1
of this Agreement.
Initial Loan
means the loan made by the Partnership with the net proceeds from the Initial
Offering of $260.0 million to Anadarko in exchange for a 30-year note bearing interest at a fixed
annual rate of 6.5%.
Initial Offering
means the initial offering and sale of Common Units to the public, as
described in the Registration Statement.
Initial Unit Price
means (a) with respect to the Common Units and the Subordinated Units,
the initial public offering price per Common Unit at which the Underwriters offered the Common
Units to the public for sale as set forth on the cover page of the prospectus included as
Western Gas Partners, LP
First Amended and Restated Agreement of Limited Partnership
12
part of the Registration Statement and first issued at or after the time the Registration
Statement first became effective or (b) with respect to any other class or series of Units, the
price per Unit at which such class or series of Units is initially sold by the Partnership, as
determined by the General Partner, in each case adjusted as the General Partner determines to be
appropriate to give effect to any distribution, subdivision or combination of Units.
Interim Capital Transactions
means the following transactions if they occur prior to the
Liquidation Date: (a) borrowings, refinancings or refundings of indebtedness (other than Working
Capital Borrowings and other than for items purchased on open account in the ordinary course of
business) by any Group Member and sales of debt securities of any Group Member; (b) sales of equity
interests of any Group Member (including the Common Units sold to the Underwriters pursuant to the
exercise of the Over-Allotment Option); (c) sales or other voluntary or involuntary dispositions of
any assets of any Group Member other than (i) sales or other dispositions of inventory, accounts
receivable and other assets in the ordinary course of business, and (ii) sales or other
dispositions of assets as part of normal retirements or replacements; (d) the termination of
Commodity Hedge Contracts and interest rate swap agreements prior to their respective specified
termination dates; (e) capital contributions received; and (f) corporate reorganizations or
restructurings.
Investment Capital Expenditures
means capital expenditures other than Maintenance Capital
Expenditures and Expansion Capital Expenditures.
Issue Price
means the price at which a Unit is purchased from the Partnership, net of any
sales commission or underwriting discount charged to the Partnership.
Limited Partner
means, unless the context otherwise requires, Asset HoldCo prior to its
contribution of its Limited Partner Interest to Holdings, Holdings prior to its withdrawal from the
Partnership, each Initial Limited Partner, each additional Person that becomes a Limited Partner
pursuant to the terms of this Agreement and any Departing General Partner upon the change of its
status from General Partner to Limited Partner pursuant to Section 11.3, in each case, in such
Persons capacity as limited partner of the Partnership; provided, however, that when the term
Limited Partner is used herein in the context of any vote or other approval, including Articles
XIII and XIV, such term shall not, solely for such purpose, include any holder of an Incentive
Distribution Right (solely with respect to its Incentive Distribution Rights and not with respect
to any other Limited Partner Interest held by such Person) except as may otherwise be required by
law.
Limited Partner Interest
means the ownership interest of a Limited Partner in the
Partnership, which may be evidenced by Common Units, Class B Units, Subordinated Units, Incentive
Distribution Rights or other Partnership Securities or a combination thereof or interest therein,
and includes any and all benefits to which such Limited Partner is entitled as provided in this
Agreement, together with all obligations of such Limited Partner to comply with the terms and
provisions of this Agreement;
provided, however
, that when the term Limited Partner Interest is
used herein in the context of any vote or other approval, including Articles XIII and XIV, such
term shall not, solely for such purpose, include any Incentive Distribution Right except as may
otherwise be required by law.
Western Gas Partners, LP
First Amended and Restated Agreement of Limited Partnership
13
Liquidation Date
means (a) in the case of an event giving rise to the dissolution of the
Partnership of the type described in clauses (a) and (b) of the first sentence of Section 12.2, the
date on which the applicable time period during which the holders of Outstanding Units have the
right to elect to continue the business of the Partnership has expired without such an election
being made, and (b) in the case of any other event giving rise to the dissolution of the
Partnership, the date on which such event occurs.
Liquidator
means one or more Persons selected by the General Partner to perform the
functions described in Section 12.4 as liquidating trustee of the Partnership within the meaning of
the Delaware Act.
Maintenance Capital Expenditures
means cash expenditures (including expenditures for the
addition or improvement to or replacement of the capital assets owned by any Group Member or for
the acquisition of existing, or the construction or development of new, capital assets, including,
without limitation, gas gathering systems, natural gas treatment or processing facilities, natural
gas liquids fractionation facilities, storage facilities, pipeline systems or other midstream
assets or facilities and other related or similar midstream assets or other assets that are
expected to generate qualifying income as defined by Section 7704 of the Code) if such
expenditures are made to maintain, including for a period longer than the short-term, the operating
capacity or operating income of the Partnership Group. Maintenance Capital Expenditures shall not
include (a) Expansion Capital Expenditures or (b) Investment Capital Expenditures. Maintenance
Capital Expenditures shall include interest (and related fees) on debt incurred and distributions
on equity issued (including incremental Incentive Distributions in respect of the newly issued
equity), in each case, to finance the construction or development of a replacement asset and paid
during the period beginning on the date that the Partnership enters into a binding obligation to
commence constructing or developing a replacement asset and ending on the earlier to occur of the
date that such replacement asset Commences Commercial Service and the date that such replacement
asset is abandoned or disposed of. Debt incurred to pay or equity issued to fund construction or
development period interest payments, or such construction or development period distributions on
equity (including incremental Incentive Distributions in respect of the newly issued equity), shall
also be deemed to be debt or equity, as the case may be, incurred to finance the construction or
development of a replacement asset. For purposes of this definition, the short-term generally
refers to a period not exceeding 12 months.
Merger Agreement
is defined in Section 14.1.
Minimum Quarterly Distribution
means $0.3000 per Unit per Quarter (or with respect to the
period commencing on the Closing Date and ending on June 30, 2008, it means the product of $0.3000
multiplied by a fraction of which the numerator is the number of days in such period and of which
the denominator is 91), subject to adjustment in accordance with Sections 5.11, 6.6 and 6.9.
National Securities Exchange
means an exchange registered with the Commission under Section
6(a) of the Securities Exchange Act, and any successor to such statute, or the Nasdaq Stock Market
or any successor thereto.
Western Gas Partners, LP
First Amended and Restated Agreement of Limited Partnership
14
Net Agreed Value
means, (a) in the case of any Contributed Property, the Agreed Value of
such property reduced by any Liabilities either assumed by the Partnership upon such contribution
or to which such property is subject when contributed, (b) in the case of any property distributed
to a Partner by the Partnership, the Partnerships Carrying Value of such property (as adjusted
pursuant to Section 5.5(d)(ii)) at the time such property is distributed, reduced by any Liability
either assumed by such Partner upon such distribution or to which such property is subject at the
time of distribution, and (c) in the case of a contribution of Common Units by the General Partner
to the Partnership as a Capital Contribution pursuant to Section 5.2(b), an amount per Common Unit
contributed equal to the Current Market Price per Common Unit as of the date of the contribution.
Net Income
means, for any taxable year, the excess, if any, of the Partnerships items of
income and gain (other than those items taken into account in the computation of Net Termination
Gain or Net Termination Loss) for such taxable year over the Partnerships items of loss and
deduction (other than those items taken into account in the computation of Net Termination Gain or
Net Termination Loss) for such taxable year. The items included in the calculation of Net Income
shall be determined in accordance with Section 5.5(b) and shall not include any items specially
allocated under Section 6.1(d);
provided
, that the determination of the items that have been
specially allocated under Section 6.1(d) shall be made without regard to any reversal of such items
under Section 6.1(d)(xii).
Net Loss
means, for any taxable year, the excess, if any, of the Partnerships items of loss
and deduction (other than those items taken into account in the computation of Net Termination Gain
or Net Termination Loss) for such taxable year over the Partnerships items of income and gain
(other than those items taken into account in the computation of Net Termination Gain or Net
Termination Loss) for such taxable year. The items included in the calculation of Net Loss shall be
determined in accordance with Section 5.5(b) and shall not include any items specially allocated
under Section 6.1(d);
provided
, that the determination of the items that have been specially
allocated under Section 6.1(d) shall be made without regard to any reversal of such items under
Section 6.1(d)(xii).
Net Positive Adjustments
means, with respect to any Partner, the excess, if any, of the
total positive adjustments over the total negative adjustments made to the Capital Account of such
Partner pursuant to Book-Up Events and Book-Down Events.
Net Termination Gain
means, for any taxable year, the sum, if positive, of all items of
income, gain, loss or deduction recognized by the Partnership (a) after the Liquidation Date or (b)
upon the sale, exchange or other disposition of all or substantially all of the assets of the
Partnership Group, taken as a whole, in a single transaction or a series of related transactions
(excluding any disposition to a member of the Partnership Group). The items included in the
determination of Net Termination Gain shall be determined in accordance with Section 5.5(b) and
shall not include any items of income, gain or loss specially allocated under Section 6.1(d).
Net Termination Loss
means, for any taxable year, the sum, if negative, of all items of
income, gain, loss or deduction recognized by the Partnership (a) after the Liquidation Date or (b)
upon the sale, exchange or other disposition of all or substantially all of the assets of the
Western Gas Partners, LP
First Amended and Restated Agreement of Limited Partnership
15
Partnership Group, taken as a whole, in a single transaction or a series of related
transactions (excluding any disposition to a member of the Partnership Group).. The items included
in the determination of Net Termination Loss shall be determined in accordance with Section 5.5(b)
and shall not include any items of income, gain or loss specially allocated under Section 6.1(d).
Non-citizen Assignee
means a Person whom the General Partner has determined does not
constitute an Eligible Citizen and as to whose Partnership Interest the General Partner has become
the substituted limited partner, pursuant to Section 4.9.
Nonrecourse Built-in Gain
means with respect to any Contributed Properties or Adjusted
Properties that are subject to a mortgage or pledge securing a Nonrecourse Liability, the amount of
any taxable gain that would be allocated to the Partners pursuant to Sections 6.2(b)(i)(A),
6.2(b)(ii)(A) and 6.2(b)(iii) if such properties were disposed of in a taxable transaction in full
satisfaction of such liabilities and for no other consideration.
Nonrecourse Deductions
means any and all items of loss, deduction or expenditure (including
any expenditure described in Section 705(a)(2)(B) of the Code) that, in accordance with the
principles of Treasury Regulation Section 1.704-2(b), are attributable to a Nonrecourse Liability.
Nonrecourse Liability
has the meaning set forth in Treasury Regulation Section
1.752-2(b)(3).
Notice of Election to Purchase
is defined in Section 15.1(b).
OLP GP
means Western Gas Operating, LLC, a Delaware limited liability company and the
general partner of the Operating Partnership, and any successors thereto.
Omnibus Agreement
means that certain Omnibus Agreement, dated as of the Closing Date, among
Anadarko, the General Partner and the Partnership, as such may be amended, supplemented or restated
from time to time.
Operating Expenditures
means all Partnership Group cash expenditures (or the Partnerships
proportionate share of expenditures in the case of Subsidiaries that are not wholly owned),
including, but not limited to, taxes, reimbursements of the General Partner in accordance with this
Agreement, the Omnibus Agreement or the Secondment Agreement, payments made in the ordinary course
of business under any interest rate swap agreements or Commodity Hedge Contracts (provided that
payments made in connection with the termination of any Commodity Hedge Contract prior to the
expiration of its stipulated settlement or termination date shall be excluded; and
provided further
that with respect to amounts paid in connection with the initial purchase of a Commodity Hedge
Contract, such amounts shall be amortized over the life of the applicable Commodity Hedge Contract
or expensed in full upon its termination, if earlier), director and officer compensation, repayment
of Working Capital Borrowings, debt service payments, Estimated Maintenance Capital Expenditures
and non-Pro Rata repurchases of Units (other than those made with the proceeds of an Interim
Capital Transaction), but subject to the following:
Western Gas Partners, LP
First Amended and Restated Agreement of Limited Partnership
16
(a) repayments of Working Capital Borrowings deducted from Operating Surplus pursuant to
clause (b)(iii) of the definition of Operating Surplus shall not constitute Operating
Expenditures when actually repaid;
(b) payments (including prepayments and prepayment penalties) of principal of and premium on
indebtedness other than Working Capital Borrowings shall not constitute Operating Expenditures; and
(c) Operating Expenditures shall not include (i) Expansion Capital Expenditures, (ii) actual
Maintenance Capital Expenditures, (iii) Investment Capital Expenditures, (iv) payment of
transaction expenses (including taxes and which, with respect to the termination of a Commodity
Hedge Contract prior to its stipulated settlement or termination date, such transaction expenses
shall constitute any payments due from any Group Member upon such settlement or termination)
relating to Interim Capital Transactions, (v) distributions to Partners, or (vi) non-Pro Rata
repurchases of Units of any class made with the proceeds of a substantially concurrent equity
issuance; and
(d) Where capital expenditures are made in part for Maintenance Capital Expenditures and in
part for other purposes, the General Partner, with the concurrence of the Special Committee, shall
determine the allocation between the amounts paid for each and, with respect to the part of such
capital expenditures consisting of Maintenance Capital Expenditures, the period over which the
capital expenditures made for such purposes will be deducted as an Operating Expenditure in
calculating Operating Surplus.
Operating Partnership
means WGR Operating, LP, a Delaware limited partnership, and any
successors thereto.
Operating Surplus
means, with respect to any period ending prior to the Liquidation Date, on
a cumulative basis and without duplication,
(a) the sum of (i) $31.8 million, (ii) all cash receipts of the Partnership Group (or the
Partnerships proportionate share of cash receipts in the case of Subsidiaries that are not wholly
owned) for the period beginning on the Closing Date and ending on the last day of such period, but
excluding cash receipts from Interim Capital Transactions (except to the extent specified in
Section 6.5), (iii) all cash receipts of the Partnership Group (or the Partnerships proportionate
share of cash receipts in the case of Subsidiaries that are not wholly owned) after the end of such
period but on or before the date of determination of Operating Surplus with respect to such period
resulting from Working Capital Borrowings, and (iv) cash distributions paid on equity issued to
finance all or a portion of the construction, acquisition or improvement of a Capital Improvement
or replacement of a capital asset (such as equipment or facilities) during the period beginning on
the date that the Group Member enters into a binding obligation to commence the construction,
acquisition or improvement of a Capital Improvement or replacement of a capital asset and ending on
the earlier to occur of the date the Capital Improvement or capital asset Commences Commercial
Service or the date that it is abandoned or disposed of (equity issued to fund construction period
interest payments on debt incurred, or construction period distributions on equity issued, to
finance the construction, acquisition or
Western Gas Partners, LP
First Amended and Restated Agreement of Limited Partnership
17
development of a Capital Improvement or replacement of a capital asset shall also be deemed to
be equity issued to finance the construction, acquisition or development of a Capital Improvement
or replacement of a capital asset for purposes of this clause (iv)),
less
(b) the sum of (i) Operating Expenditures for the period beginning on the Closing Date and
ending on the last day of such period; (ii) the amount of cash reserves established by the General
Partner (or the Partnerships proportionate share of cash reserves in the case of Subsidiaries that
are not wholly owned) to provide funds for future Operating Expenditures; and (iii) all Working
Capital Borrowings not repaid within twelve months after having been incurred;
provided, however
, that disbursements made (including contributions to a Group Member or
disbursements on behalf of a Group Member) or cash reserves established, increased or reduced after
the end of such period but on or before the date of determination of Available Cash with respect to
such period shall be deemed to have been made, established, increased or reduced, for purposes of
determining Operating Surplus, within such period if the General Partner so determines.
Notwithstanding the foregoing,
Operating Surplus
with respect to the Quarter in which the
Liquidation Date occurs and any subsequent Quarter shall equal zero.
Opinion of Counsel
means a written opinion of counsel (who may be regular counsel to the
Partnership or the General Partner or any of its Affiliates) acceptable to the General Partner.
Option Closing Date
means the date or dates on which any Common Units are sold by the
Partnership to the Underwriters upon exercise of the Over-Allotment Option.
Outstanding
means, with respect to Partnership Securities, all Partnership Securities that
are issued by the Partnership and reflected as outstanding on the Partnerships books and records
as of the date of determination;
provided, however
, that if at any time any Person or Group (other
than the General Partner or its Affiliates) beneficially owns 20% or more of any Outstanding
Partnership Securities of any class then Outstanding, none of the Partnership Securities owned by
such Person or Group shall be voted on any matter and shall not be considered to be Outstanding
when sending notices of a meeting of Limited Partners to vote on any matter (unless otherwise
required by law), calculating required votes, determining the presence of a quorum or for other
similar purposes under this Agreement, except that Common Units so owned shall be considered to be
Outstanding for purposes of Section 11.1(b)(iv) (such Common Units shall not, however, be treated
as a separate class of Partnership Securities for purposes of this Agreement or the Delaware Act);
provided, further
, that the foregoing limitation shall not apply to (i) any Person or Group who
acquired 20% or more of the Outstanding Partnership Securities of any class then Outstanding
directly from the General Partner or its Affiliates, (ii) any Person or Group who acquired 20% or
more of the Outstanding Partnership Securities of any class then Outstanding directly or indirectly
from a Person or Group described in clause (i)
provided
that the General Partner shall have
notified such Person or Group in writing that such limitation shall not apply, or (iii) any Person
or Group who acquired 20% or
Western Gas Partners, LP
First Amended and Restated Agreement of Limited Partnership
18
more of any Partnership Securities issued by the Partnership with the prior approval of the
Board of Directors of the General Partner.
Over-Allotment Option
means the over-allotment option granted to the Underwriters by the
Partnership pursuant to the Underwriting Agreement.
Partner Nonrecourse Debt
has the meaning set forth in Treasury Regulation Section
1.704-2(b)(4).
Partner Nonrecourse Debt Minimum Gain
has the meaning set forth in Treasury Regulation
Section 1.704-2(i)(2).
Partner Nonrecourse Deductions
means any and all items of loss, deduction or expenditure
(including any expenditure described in Section 705(a)(2)(B) of the Code) that, in accordance with
the principles of Treasury Regulation Section 1.704-2(i), are attributable to a Partner Nonrecourse
Debt.
Partners
means the General Partner and the Limited Partners.
Partnership
means Western Gas Partners, LP, a Delaware limited partnership.
Partnership Contribution Interests
shall have the meaning assigned to it in the Contribution
Agreement.
Partnership Group
means the Partnership and its Subsidiaries treated as a single
consolidated entity.
Partnership Interest
means an interest in the Partnership, which shall include the General
Partner Interest and Limited Partner Interests.
Partnership Minimum Gain
means that amount determined in accordance with the principles of
Treasury Regulation Sections 1.704-2(b)(2) and 1.704-2(d).
Partnership Security
means any class or series of equity interest in the Partnership (but
excluding any options, rights, warrants and appreciation rights relating to an equity interest in
the Partnership), including Common Units, Subordinated Units, Class B Units and Incentive
Distribution Rights.
Per Unit Capital Amount
means, as of any date of determination, the Capital Account, stated
on a per Unit basis, underlying any class of Units held by a Person other than the General Partner
or any Affiliate of the General Partner who holds Units.
Percentage Interest
means as of any date of determination (a) as to the General Partner with
respect to General Partner Units and as to any Unitholder with respect to Units, the product
obtained by multiplying (i) 100% less the percentage applicable to clause (b) below by (ii) the
quotient obtained by dividing (A) the number of General Partner Units held by the General Partner
or the number of Units held by such Unitholder, as the case may be, by (B) the total
Western Gas Partners, LP
First Amended and Restated Agreement of Limited Partnership
19
number of Outstanding Units and General Partner Units, and (b) as to the holders of other
Partnership Securities issued by the Partnership in accordance with Section 5.6, the percentage
established as a part of such issuance. The Percentage Interest with respect to an Incentive
Distribution Right shall at all times be zero.
Person
means an individual or a corporation, firm, limited liability company, partnership,
joint venture, trust, unincorporated organization, association, government agency or political
subdivision thereof or other entity.
Pro Rata
means (a) when used with respect to Units or any class thereof, apportioned equally
among all designated Units in accordance with their relative Percentage Interests, (b) when used
with respect to Partners or Record Holders, apportioned among all Partners or Record Holders in
accordance with their relative Percentage Interests and (c) when used with respect to holders of
Incentive Distribution Rights, apportioned equally among all holders of Incentive Distribution
Rights in accordance with the relative number or percentage of Incentive Distribution Rights held
by each such holder.
Purchase Date
means the date determined by the General Partner as the date for purchase of
all Outstanding Limited Partner Interests of a certain class (other than Limited Partner Interests
owned by the General Partner and its Affiliates) pursuant to Article XV.
Quarter
means, unless the context requires otherwise, a fiscal quarter of the Partnership,
or, with respect to the first fiscal quarter of the Partnership that includes the Closing Date, the
portion of such fiscal quarter after the Closing Date.
Recapture Income
means any gain recognized by the Partnership (computed without regard to
any adjustment required by Section 734 or Section 743 of the Code) upon the disposition of any
property or asset of the Partnership, which gain is characterized as ordinary income because it
represents the recapture of deductions previously taken with respect to such property or asset.
Record Date
means the date established by the General Partner or otherwise in accordance
with this Agreement for determining (a) the identity of the Record Holders entitled to notice of,
or to vote at, any meeting of Limited Partners or entitled to vote by ballot or give approval of
Partnership action in writing without a meeting or entitled to exercise rights in respect of any
lawful action of Limited Partners or (b) the identity of Record Holders entitled to receive any
report or distribution or to participate in any offer.
Record Holder
means the Person in whose name a Common Unit is registered on the books of the
Transfer Agent as of the opening of business on a particular Business Day, or with respect to other
Partnership Interests, the Person in whose name any such other Partnership Interest is registered
on the books that the General Partner has caused to be kept as of the opening of business on such
Business Day.
Redeemable Interests
means any Partnership Interests for which a redemption notice has been
given, and has not been withdrawn, pursuant to Section 4.10 and Section 4.12.
Western Gas Partners, LP
First Amended and Restated Agreement of Limited Partnership
20
Registration Statement
means the Registration Statement on Form S-1 (Registration No.
333-146700) as it has been or as it may be amended or supplemented from time to time, filed by the
Partnership with the Commission under the Securities Act to register the offering and sale of the
Common Units in the Initial Offering.
Remaining Net Positive Adjustments
means as of the end of any taxable period, (i) with
respect to the Unitholders holding Common Units, Subordinated Units or Class B Units, the excess of
(a) the Net Positive Adjustments of the Unitholders holding Common Units, Subordinated Units or
Class B Units as of the end of such period over (b) the sum of those Partners Share of Additional
Book Basis Derivative Items for each prior taxable period, (ii) with respect to the General Partner
(as holder of the General Partner Units), the excess of (a) the Net Positive Adjustments of the
General Partner as of the end of such period over (b) the sum of the General Partners Share of
Additional Book Basis Derivative Items with respect to the General Partner Units for each prior
taxable period, and (iii) with respect to the holders of Incentive Distribution Rights, the excess
of (a) the Net Positive Adjustments of the holders of Incentive Distribution Rights as of the end
of such period over (b) the sum of the Share of Additional Book Basis Derivative Items of the
holders of the Incentive Distribution Rights for each prior taxable period.
Required Allocations
means (a) any limitation imposed on any allocation of Net Losses or Net
Termination Losses under Section 6.1(b) or Section 6.1(c)(ii) and (b) any allocation of an item of
income, gain, loss or deduction pursuant to Section 6.1(d)(i), Section 6.1(d)(ii), Section
6.1(d)(iv), Section 6.1(d)(v), Section 6.1(d)(vi), Section 6.1(d)(vii) or Section 6.1(d)(ix).
Reset MQD
is defined in Section 5.11(e).
Reset Notice
is defined in Section 5.11(b).
Residual Gain
or
Residual Loss
means any item of gain or loss, as the case may be, of the
Partnership recognized for federal income tax purposes resulting from a sale, exchange or other
disposition of a Contributed Property or Adjusted Property, to the extent such item of gain or loss
is not allocated pursuant to Section 6.2(b)(i)(A) or Section 6.2(b)(ii)(A), respectively, to
eliminate Book-Tax Disparities.
Retained Converted Subordinated Unit
is defined in Section 5.5(c)(ii).
Second Liquidation Target Amount
is defined in Section 6.1(c)(i)(F).
Second Target Distribution
means $0.3750 per Unit per Quarter (or, with respect to the
period commencing on the Closing Date and ending on June 30, 2008, it means the product of $0.3750
multiplied by a fraction of which the numerator is equal to the number of days in such period and
of which the denominator is 91), subject to adjustment in accordance with Section 5.11, Section 6.6
and Section 6.9.
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First Amended and Restated Agreement of Limited Partnership
21
Secondment Agreement
means that certain Services and Secondment Agreement, dated as of the
Closing Date, between Anadarko and the General Partner, as such may be amended, supplemented and
restated from time to time.
Securities Act
means the Securities Act of 1933, as amended, supplemented or restated from
time to time and any successor to such statute.
Securities Exchange Act
means the Securities Exchange Act of 1934, as amended, supplemented
or restated from time to time and any successor to such statute.
Share of Additional Book Basis Derivative Items
means in connection with any allocation of
Additional Book Basis Derivative Items for any taxable period, (i) with respect to the Unitholders
holding Common Units, Subordinated Units or Class B Units, the amount that bears the same ratio to
such Additional Book Basis Derivative Items as the Unitholders Remaining Net Positive Adjustments
as of the end of such period bears to the Aggregate Remaining Net Positive Adjustments as of that
time, (ii) with respect to the General Partner (as holder of the General Partner Units), the amount
that bears the same ratio to such Additional Book Basis Derivative Items as the General Partners
Remaining Net Positive Adjustments as of the end of such period bears to the Aggregate Remaining
Net Positive Adjustment as of that time, and (iii) with respect to the Partners holding Incentive
Distribution Rights, the amount that bears the same ratio to such Additional Book Basis Derivative
Items as the Remaining Net Positive Adjustments of the Partners holding the Incentive Distribution
Rights as of the end of such period bears to the Aggregate Remaining Net Positive Adjustments as of
that time.
Special Approval
means approval by a majority of the members of the Special Committee acting
in good faith.
Special Committee
means a committee of the Board of Directors of the General Partner
composed entirely of two or more directors, each of whom (a) is not a security holder, officer or
employee of the General Partner, (b) is not an officer, director or employee of any Affiliate of
the General Partner, (c) is not a holder of any ownership interest in the Partnership Group other
than Common Units and (d) meets the independence standards required of directors who serve on an
audit committee of a board of directors established by the Securities Exchange Act and the rules
and regulations of the Commission thereunder and by the National Securities Exchange on which the
Common Units are listed or admitted to trading.
Subordinated Unit
means a Partnership Security representing a fractional part of the
Partnership Interests of all Limited Partners and Assignees and having the rights and obligations
specified with respect to Subordinated Units in this Agreement. The term Subordinated Unit does
not include a Common Unit or a Class B Unit. A Subordinated Unit that is convertible into a Common
Unit shall not constitute a Common Unit until such conversion occurs.
Subordination Period
means the period commencing on the Closing Date and ending on the first
to occur of the following dates:
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First Amended and Restated Agreement of Limited Partnership
22
(a) the first Business Day of any Quarter beginning after June 30, 2011 in respect of which
(i) (A) distributions of Available Cash from Operating Surplus on each of (I) the Outstanding
Common Units, Subordinated Units, any other Outstanding Units that are senior or equal in right of
distribution to the Subordinated Units, and (II) the General Partner Units, with respect to each of
the three consecutive, non-overlapping four-Quarter periods immediately preceding such date equaled
or exceeded the sum of the Minimum Quarterly Distribution on (I) all Outstanding Common Units and
Subordinated Units and any other Outstanding Units that are senior or equal in right of
distribution to the Subordinated Units and (II) the General Partner Units, during such periods and
(B) the Adjusted Operating Surplus for each of the three consecutive, non-overlapping four-Quarter
periods immediately preceding such date equaled or exceeded the sum of the Minimum Quarterly
Distribution on all of the (I) Common Units, Subordinated Units and any other Units that are senior
or equal in right of distribution to the Subordinated Units and (II) General Partner Units, that
were Outstanding during such periods on a Fully Diluted Basis, and (ii) there are no Cumulative
Common Unit Arrearages;
(b) the first Business Day of any Quarter ending on or after June 30, 2008 in respect of which
(i) (A) distributions of Available Cash from Operating Surplus in respect of (I) the Outstanding
Common Units, Subordinated Units, any other Outstanding Units that are senior or equal in right of
distribution to the Subordinated Units, and (II) the General Partner Units, with respect to each of
the four consecutive, non-overlapping Quarters immediately preceding such date equaled or exceeded
150% of the Minimum Quarterly Distribution on (I) all Outstanding Common Units and Subordinated
Units and any other Outstanding Units that are senior or equal in right of distribution to the
Subordinated Units and (II) the Outstanding General Partner Units, during such periods, and (B) the
Adjusted Operating Surplus for each of the four consecutive, non-overlapping Quarters immediately
preceding such date equaled or exceeded 150% of the sum of the Minimum Quarterly Distribution on
(I) the Common Units, Subordinated Units, other Units that are senior or equal in right of
distribution to the Subordinated Units and (II) the General Partner Units, that were Outstanding
during such periods on a Fully Diluted Basis and (ii) there are no Cumulative Common Unit
Arrearages;
(c) the first date on which there are no longer outstanding any Subordinated Units due to the
conversion of Subordinated Units into Common Units pursuant to Section 5.7 or otherwise; and
(d) the date on which the General Partner is removed as general partner of the Partnership
upon the requisite vote by holders of Outstanding Units under circumstances where Cause does not
exist and Units held by the General Partner and its Affiliates are not voted in favor of such
removal.
Subsidiary
means, with respect to any Person, (a) a corporation of which more than 50% of
the voting power of shares entitled (without regard to the occurrence of any contingency) to vote
in the election of directors or other governing body of such corporation is owned, directly or
indirectly, at the date of determination, by such Person, by one or more Subsidiaries of such
Person or a combination thereof, (b) a partnership (whether general or limited) in which such
Person or a Subsidiary of such Person is, at the date of determination, a general or limited
partner of such partnership, but only if more than 50% of the partnership interests of such
partnership
Western Gas Partners, LP
First Amended and Restated Agreement of Limited Partnership
23
(considering all of the partnership interests of the partnership as a single class) is owned,
directly or indirectly, at the date of determination, by such Person, by one or more Subsidiaries
of such Person, or a combination thereof, or (c) any other Person (other than a corporation or a
partnership) in which such Person, one or more Subsidiaries of such Person, or a combination
thereof, directly or indirectly, at the date of determination, has (i) at least a majority
ownership interest or (ii) the power to elect or direct the election of a majority of the directors
or other governing body of such Person.
Surviving Business Entity
is defined in Section 14.2(b).
Taxation Certification
means a properly completed certificate in such form as may be
specified by the General Partner by which a Limited Partner certifies that he (and if he is a
nominee holding for the account of another Person, that to the best of his knowledge such other
Person) is an Eligible Holder.
Tax Sharing Agreement
means that certain Tax Sharing Agreement, dated as of the Closing
Date, between Anadarko and the Partnership, as such may be amended, supplemented and restated from
time to time.
Target Distribution
means, collectively, the First Target Distribution, Second Target
Distribution and Third Target Distribution.
Third Target Distribution
means $0.4500 per Unit per Quarter (or, with respect to the period
commencing on the Closing Date and ending on June 30, 2008, it means the product of $0.4500
multiplied by a fraction of which the numerator is equal to the number of days in such period and
of which the denominator is 91), subject to adjustment in accordance with Sections 5.11, 6.6 and
6.9.
Trading Day
is defined in Section 15.1(a).
transfer
is defined in Section 4.4(a).
Transfer Agent
means such bank, trust company or other Person (including the General Partner
or one of its Affiliates) as shall be appointed from time to time by the General Partner to act as
registrar and transfer agent for the Common Units;
provided
, that if no Transfer Agent is
specifically designated for any other Partnership Securities, the General Partner shall act in such
capacity.
Underwriter
means each Person named as an underwriter in Schedule I to the Underwriting
Agreement who purchases Common Units pursuant thereto.
Underwriting Agreement
means that certain Underwriting Agreement, dated as of May 8, 2008,
among the Underwriters, the Partnership, the General Partner, Holdings and other parties thereto,
providing for the purchase of Common Units by the Underwriters.
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First Amended and Restated Agreement of Limited Partnership
24
Unit
means a Partnership Security that is designated as a Unit and shall include Common
Units, Subordinated Units and Class B Units but shall not include (i) General Partner Units (or the
General Partner Interest represented thereby) or (ii) Incentive Distribution Rights.
Unit Majority
means (i) during the Subordination Period, at least a majority of the
Outstanding Common Units (excluding Common Units owned by the General Partner and its Affiliates),
voting as a class, and at least a majority of the Outstanding Subordinated Units, voting as a
class, and (ii) after the end of the Subordination Period, at least a majority of the Outstanding
Common Units and Class B Units, if any, voting as a single class.
Unitholders
means the holders of Units.
Unpaid MQD
is defined in Section 6.1(c)(i)(B).
Unrealized Gain
attributable to any item of Partnership property means, as of any date of
determination, the excess, if any, of (a) the fair market value of such property as of such date
(as determined under Section 5.5(d)) over (b) the Carrying Value of such property as of such date
(prior to any adjustment to be made pursuant to Section 5.5(d) as of such date).
Unrealized Loss
attributable to any item of Partnership property means, as of any date of
determination, the excess, if any, of (a) the Carrying Value of such property as of such date
(prior to any adjustment to be made pursuant to Section 5.5(d) as of such date) over (b) the fair
market value of such property as of such date (as determined under Section 5.5(d)).
Unrecovered Initial Unit Price
means at any time, with respect to a Unit, the Initial Unit
Price less the sum of all distributions constituting Capital Surplus theretofore made in respect of
an Initial Common Unit and any distributions of cash (or the Net Agreed Value of any distributions
in kind) in connection with the dissolution and liquidation of the Partnership theretofore made in
respect of an Initial Common Unit, adjusted as the General Partner determines to be appropriate to
give effect to any distribution, subdivision or combination of such Units.
U.S. GAAP
means United States generally accepted accounting principles consistently applied.
Withdrawal Opinion of Counsel
is defined in Section 11.1(b).
Working Capital Agreement
means the Working Capital Loan Agreement, dated as of May 14,
2008, among the Partnership and Anadarko.
Working Capital Borrowings
means borrowings used solely for working capital purposes or to
pay distributions to Partners made pursuant to a credit facility (including the Credit Agreement or
the Working Capital Agreement), commercial paper facility or other similar financing arrangement,
provided that when it is incurred it is the intent of the borrower to repay such borrowings within
12 months from other than Working Capital Borrowings.
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First Amended and Restated Agreement of Limited Partnership
25
Section 1.2
Construction
.
Unless the context requires otherwise: (a) any pronoun used in this Agreement shall include
the corresponding masculine, feminine or neuter forms, and the singular form of nouns, pronouns and
verbs shall include the plural and vice versa; (b) references to Articles and Sections refer to
Articles and Sections of this Agreement; (c) the terms include, includes, including or words
of like import shall be deemed to be followed by the words without limitation; and (d) the terms
hereof, herein or hereunder refer to this Agreement as a whole and not to any particular
provision of this Agreement. The table of contents and headings contained in this Agreement are for
reference purposes only, and shall not affect in any way the meaning or interpretation of this
Agreement.
ARTICLE II
ORGANIZATION
Section 2.1
Formation
.
The General Partner and Asset HoldCo have previously formed the Partnership as a limited
partnership pursuant to the provisions of the Delaware Act and Asset HoldCo subsequently
contributed its Limited Partner Interest to Holdings. The General Partner and Holdings hereby
amend and restate the original Agreement of Limited Partnership of Western Gas Partners, LP in its
entirety. This amendment and restatement shall become effective on the date of this Agreement.
Except as expressly provided to the contrary in this Agreement, the rights, duties (including
fiduciary duties), liabilities and obligations of the Partners and the administration, dissolution
and termination of the Partnership shall be governed by the Delaware Act. All Partnership Interests
shall constitute personal property of the owner thereof for all purposes.
Section 2.2
Name
.
The name of the Partnership shall be Western Gas Partners, LP. The Partnerships business
may be conducted under any other name or names as determined by the General Partner, including the
name of the General Partner. The words Limited Partnership, LP, Ltd. or similar words or
letters shall be included in the Partnerships name where necessary for the purpose of complying
with the laws of any jurisdiction that so requires. The General Partner may change the name of the
Partnership at any time and from time to time and shall notify the Limited Partners of such change
in the next regular communication to the Limited Partners.
Section 2.3
Registered Office; Registered Agent; Principal Office; Other Offices
.
Unless and until changed by the General Partner, the registered office of the Partnership in
the State of Delaware shall be located at 1209 Orange Street, Wilmington, Delaware 19801, and the
registered agent for service of process on the Partnership in the State of Delaware at such
registered office shall be The Corporation Trust Company. The principal office of the Partnership
shall be located at 1201 Lake Robbins Drive, The Woodlands, Texas 77380-1046, or
Western Gas Partners, LP
First Amended and Restated Agreement of Limited Partnership
26
such other place as the General Partner may from time to time designate by notice to the
Limited Partners. The Partnership may maintain offices at such other place or places within or
outside the State of Delaware as the General Partner determines to be necessary or appropriate. The
address of the General Partner shall be 1201 Lake Robbins Drive, The Woodlands, Texas 77380-1046,
or such other place as the General Partner may from time to time designate by notice to the Limited
Partners.
Section 2.4
Purpose and Business
.
The purpose and nature of the business to be conducted by the Partnership shall be to (a)
engage directly in, or enter into or form, hold and dispose of any corporation, partnership, joint
venture, limited liability company or other arrangement to engage indirectly in, any business
activity that is approved by the General Partner and that lawfully may be conducted by a limited
partnership organized pursuant to the Delaware Act and, in connection therewith, to exercise all of
the rights and powers conferred upon the Partnership pursuant to the agreements relating to such
business activity, and (b) do anything necessary or appropriate to the foregoing, including the
making of capital contributions or loans to a Group Member;
provided, however
, that the General
Partner shall not cause the Partnership to engage, directly or indirectly, in any business activity
that the General Partner determines would cause the Partnership to be treated as an association
taxable as a corporation or otherwise taxable as an entity for federal income tax purposes. To the
fullest extent permitted by law, the General Partner shall have no duty or obligation to propose or
approve, and may decline to propose or approve, the conduct by the Partnership of any business free
of any fiduciary duty or obligation whatsoever to the Partnership or any Limited Partner and, in
declining to so propose or approve, shall not be required to act in good faith or pursuant to any
other standard imposed by this Agreement, any Group Member Agreement, any other agreement
contemplated hereby or under the Delaware Act or any other law, rule or regulation or at equity.
Section 2.5
Powers
.
The Partnership shall be empowered to do any and all acts and things necessary or appropriate
for the furtherance and accomplishment of the purposes and business described in Section 2.4 and
for the protection and benefit of the Partnership.
Section 2.6
Power of Attorney
.
(a) Each Limited Partner hereby constitutes and appoints the General Partner and, if a
Liquidator shall have been selected pursuant to Section 12.3, the Liquidator (and any successor to
the Liquidator by merger, transfer, assignment, election or otherwise) and each of their authorized
officers and attorneys-in-fact, as the case may be, with full power of substitution, as his true
and lawful agent and attorney-in-fact, with full power and authority in his name, place and stead,
to:
(i) execute, swear to, acknowledge, deliver, file and record in the appropriate public
offices (A) all certificates, documents and other instruments (including this Agreement and
the Certificate of Limited Partnership and all amendments or restatements
Western Gas Partners, LP
First Amended and Restated Agreement of Limited Partnership
27
hereof or thereof) that the General Partner or the Liquidator determines to be
necessary or appropriate to form, qualify or continue the existence or qualification of the
Partnership as a limited partnership (or a partnership in which the limited partners have
limited liability) in the State of Delaware and in all other jurisdictions in which the
Partnership may conduct business or own property; (B) all certificates, documents and other
instruments that the General Partner or the Liquidator determines to be necessary or
appropriate to reflect, in accordance with its terms, any amendment, change, modification or
restatement of this Agreement; (C) all certificates, documents and other instruments
(including conveyances and a certificate of cancellation) that the General Partner or the
Liquidator determines to be necessary or appropriate to reflect the dissolution and
liquidation of the Partnership pursuant to the terms of this Agreement; (D) all
certificates, documents and other instruments relating to the admission, withdrawal, removal
or substitution of any Partner pursuant to, or other events described in, Article IV,
Article X, Article XI or Article XII; (E) all certificates, documents and other instruments
relating to the determination of the rights, preferences and privileges of any class or
series of Partnership Securities issued pursuant to Section 5.6; and (F) all certificates,
documents and other instruments (including agreements and a certificate of merger) relating
to a merger, consolidation or conversion of the Partnership pursuant to Article XIV; and
(ii) execute, swear to, acknowledge, deliver, file and record all ballots, consents,
approvals, waivers, certificates, documents and other instruments that the General Partner
or the Liquidator determines to be necessary or appropriate to (A) make, evidence, give,
confirm or ratify any vote, consent, approval, agreement or other action that is made or
given by the Partners hereunder or is consistent with the terms of this Agreement or (B)
effectuate the terms or intent of this Agreement;
provided
, that when required by Section
13.3 or any other provision of this Agreement that establishes a percentage of the Limited
Partners or of the Limited Partners of any class or series required to take any action, the
General Partner and the Liquidator may exercise the power of attorney made in this Section
2.6(a)(ii) only after the necessary vote, consent or approval of the Limited Partners or of
the Limited Partners of such class or series, as applicable.
Nothing contained in this Section 2.6(a) shall be construed as authorizing the General Partner to
amend this Agreement except in accordance with Article XIII or as may be otherwise expressly
provided for in this Agreement.
(b) The foregoing power of attorney is hereby declared to be irrevocable and a power coupled
with an interest, and it shall survive and, to the maximum extent permitted by law, not be affected
by the subsequent death, incompetency, disability, incapacity, dissolution, bankruptcy or
termination of any Limited Partner and the transfer of all or any portion of such Limited Partners
Limited Partner Interest and shall extend to such Limited Partners heirs, successors, assigns and
personal representatives. Each such Limited Partner hereby agrees to be bound by any representation
made by the General Partner or the Liquidator acting in good faith pursuant to such power of
attorney; and each such Limited Partner, to the maximum extent permitted by law, hereby waives any
and all defenses that may be available to contest, negate or
Western Gas Partners, LP
First Amended and Restated Agreement of Limited Partnership
28
disaffirm the action of the General Partner or the Liquidator taken in good faith under such
power of attorney. Each Limited Partner shall execute and deliver to the General Partner or the
Liquidator, within 15 days after receipt of the request therefor, such further designation, powers
of attorney and other instruments as the General Partner or the Liquidator may request in order to
effectuate this Agreement and the purposes of the Partnership.
Section 2.7
Term
.
The term of the Partnership commenced upon the filing of the Certificate of Limited
Partnership in accordance with the Delaware Act and shall continue in existence until the
dissolution of the Partnership in accordance with the provisions of Article XII. The existence of
the Partnership as a separate legal entity shall continue until the cancellation of the Certificate
of Limited Partnership as provided in the Delaware Act.
Section 2.8
Title to Partnership Assets
.
Title to Partnership assets, whether real, personal or mixed and whether tangible or
intangible, shall be deemed to be owned by the Partnership as an entity, and no Partner,
individually or collectively, shall have any ownership interest in such Partnership assets or any
portion thereof. Title to any or all of the Partnership assets may be held in the name of the
Partnership, the General Partner, one or more of its Affiliates or one or more nominees, as the
General Partner may determine. The General Partner hereby declares and warrants that any
Partnership assets for which record title is held in the name of the General Partner or one or more
of its Affiliates or one or more nominees shall be held by the General Partner or such Affiliate or
nominee for the use and benefit of the Partnership in accordance with the provisions of this
Agreement;
provided, however
, that the General Partner shall use reasonable efforts to cause record
title to such assets (other than those assets in respect of which the General Partner determines
that the expense and difficulty of conveyancing makes transfer of record title to the Partnership
impracticable) to be vested in the Partnership as soon as reasonably practicable;
provided,
further
, that, prior to the withdrawal or removal of the General Partner or as soon thereafter as
practicable, the General Partner shall use reasonable efforts to effect the transfer of record
title to the Partnership and, prior to any such transfer, will provide for the use of such assets
in a manner satisfactory to the General Partner. All Partnership assets shall be recorded as the
property of the Partnership in its books and records, irrespective of the name in which record
title to such Partnership assets is held.
ARTICLE III
RIGHTS OF LIMITED PARTNERS
Section 3.1
Limitation of Liability
.
The Limited Partners shall have no liability under this Agreement except as expressly provided
in this Agreement or the Delaware Act.
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First Amended and Restated Agreement of Limited Partnership
29
Section 3.2
Management of Business
.
No Limited Partner, in its capacity as such, shall participate in the operation, management or
control (within the meaning of the Delaware Act) of the Partnerships business, transact any
business in the Partnerships name or have the power to sign documents for or otherwise bind the
Partnership. Any action taken by any Affiliate of the General Partner or any officer, director,
employee, manager, member, general partner, agent or trustee of the General Partner or any of its
Affiliates, or any officer, director, employee, manager, member, general partner, agent or trustee
of a Group Member, in its capacity as such, shall not be deemed to be participation in the control
of the business of the Partnership by a limited partner of the Partnership (within the meaning of
Section 17-303(a) of the Delaware Act) and shall not affect, impair or eliminate the limitations on
the liability of the Limited Partners under this Agreement.
Section 3.3
Outside Activities of the Limited Partners
.
Subject to the provisions of Section 7.5, which shall continue to be applicable to the Persons
referred to therein, regardless of whether such Persons shall also be Limited Partners, any Limited
Partner shall be entitled to and may have business interests and engage in business activities in
addition to those relating to the Partnership, including business interests and activities in
direct competition with the Partnership Group. Neither the Partnership nor any of the other
Partners shall have any rights by virtue of this Agreement in any business ventures of any Limited
Partner.
Section 3.4
Rights of Limited Partners
.
(a) In addition to other rights provided by this Agreement or by applicable law, and except as
limited by Section 3.4(b), each Limited Partner shall have the right, for a purpose reasonably
related to such Limited Partners interest as a Limited Partner in the Partnership, the
reasonableness of which having been determined in good faith by the General Partner, upon
reasonable written demand stating the purpose of such demand, and at such Limited Partners own
expense:
(i) to obtain true and full information regarding the status of the business and
financial condition of the Partnership;
(ii) promptly after its becoming available, to obtain a copy of the Partnerships
federal, state and local income tax returns for each year;
(iii) to obtain a current list of the name and last known business, residence or
mailing address of each Partner;
(iv) to obtain a copy of this Agreement and the Certificate of Limited Partnership and
all amendments thereto, together with copies of the executed copies of all powers of
attorney pursuant to which this Agreement, the Certificate of Limited Partnership and all
amendments thereto have been executed;
Western Gas Partners, LP
First Amended and Restated Agreement of Limited Partnership
30
(v) to obtain true and full information regarding the amount of cash and a description
and statement of the Net Agreed Value of any other Capital Contribution by each Partner and
that each Partner has agreed to contribute in the future, and the date on which each became
a Partner; and
(vi) to obtain such other information regarding the affairs of the Partnership as is
just and reasonable.
(b) The General Partner may keep confidential from the Limited Partners, for such period of
time as the General Partner deems reasonable, (i) any information that the General Partner
reasonably believes to be in the nature of trade secrets or (ii) other information the disclosure
of which the General Partner in good faith believes (A) is not in the best interests of the
Partnership Group, (B) could damage the Partnership Group or its business or (C) that any Group
Member is required by law or by agreement with any third party to keep confidential (other than
agreements with Affiliates of the Partnership the primary purpose of which is to circumvent the
obligations set forth in this Section 3.4).
ARTICLE IV
CERTIFICATES; RECORD HOLDERS; TRANSFER OF
PARTNERSHIP INTERESTS; REDEMPTION OF PARTNERSHIP INTERESTS
Section 4.1
Certificates
.
Upon the Partnerships issuance of Common Units, Subordinated Units or Class B Units to any
Person, the Partnership shall issue, upon the request of such Person, one or more Certificates in
the name of such Person evidencing the number of such Units being so issued. In addition, (a) upon
the General Partners request, the Partnership shall issue to it one or more Certificates in the
name of the General Partner evidencing its General Partner Units and (b) upon the request of any
Person owning Incentive Distribution Rights or any other Partnership Securities other than Common
Units, Subordinated Units or Class B Units, the Partnership shall issue to such Person one or more
certificates evidencing such Incentive Distribution Rights or other Partnership Securities other
than Common Units, Subordinated Units or Class B Units. Certificates shall be executed on behalf of
the Partnership by the Chairman of the Board, President or any Executive Vice President, Senior
Vice President or Vice President and the Secretary or any Assistant Secretary of the General
Partner. No Common Unit Certificate shall be valid for any purpose until it has been countersigned
by the Transfer Agent;
provided, however
, that the Units may be certificated or uncertificated as
provided in the Delaware Act; and
provided, further
, that if the General Partner elects to issue
Common Units in global form, the Common Unit Certificates shall be valid upon receipt of a
certificate from the Transfer Agent certifying that the Common Units have been duly registered in
accordance with the directions of the Partnership. Subject to the requirements of Section 6.7(c),
the Partners holding Certificates evidencing Subordinated Units may exchange such Certificates for
Certificates evidencing Common Units on or after the date on which such Subordinated Units are
converted into Common Units pursuant to the terms of Section 5.7. Subject to the requirements of
Section 6.7(e), the Partners holding Certificates evidencing Class B Units may exchange such
Western Gas Partners, LP
First Amended and Restated Agreement of Limited Partnership
31
Certificates for Certificates evidencing Common Units on or after the period set forth in
Section 5.11(f) pursuant to the terms of Section 5.11.
Section 4.2
Mutilated, Destroyed, Lost or Stolen Certificates
.
(a) If any mutilated Certificate is surrendered to the Transfer Agent (for Common Units) or
the General Partner (for Partnership Securities other than Common Units), the appropriate officers
of the General Partner on behalf of the Partnership shall execute, and the Transfer Agent (for
Common Units) or the General Partner (for Partnership Securities other than Common Units) shall
countersign and deliver in exchange therefor, a new Certificate, or shall deliver other evidence of
the issuance of uncertificated Units, evidencing the same number and type of Partnership Securities
as the Certificate so surrendered.
(b) The appropriate officers of the General Partner on behalf of the Partnership shall execute
and deliver, and the Transfer Agent (for Common Units) shall countersign, a new Certificate in
place of any Certificate previously issued if the Record Holder of the Certificate:
(i) makes proof by affidavit, in form and substance satisfactory to the General
Partner, that a previously issued Certificate has been lost, destroyed or stolen;
(ii) requests the issuance of a new Certificate, or other evidence of the issuance of
uncertificated Units, before the General Partner has notice that the Certificate has been
acquired by a purchaser for value in good faith and without notice of an adverse claim;
(iii) if requested by the General Partner, delivers to the General Partner a bond, in
form and substance satisfactory to the General Partner, with surety or sureties and with
fixed or open penalty as the General Partner may direct to indemnify the Partnership, the
Partners, the General Partner and the Transfer Agent against any claim that may be made on
account of the alleged loss, destruction or theft of the Certificate; and
(iv) satisfies any other reasonable requirements imposed by the General Partner.
If a Limited Partner fails to notify the General Partner within a reasonable period of time
after he has notice of the loss, destruction or theft of a Certificate, and a transfer of the
Limited Partner Interests represented by the Certificate is registered before the Partnership, the
General Partner or the Transfer Agent receives such notification, the Limited Partner shall be
precluded from making any claim against the Partnership, the General Partner or the Transfer Agent
for such transfer or for a new Certificate or other evidence of the issuance of uncertificated
Units.
(c) As a condition to the issuance of any new Certificate, or other evidence of the issuance
of uncertificated Units, under this Section 4.2, the General Partner may require the payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed in relation
thereto and any other expenses (including the fees and expenses of the Transfer Agent) reasonably
connected therewith.
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First Amended and Restated Agreement of Limited Partnership
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Section 4.3
Record Holders
.
The Partnership shall be entitled to recognize the Record Holder as the Partner with respect
to any Partnership Interest and, accordingly, shall not be bound to recognize any equitable or
other claim to, or interest in, such Partnership Interest on the part of any other Person,
regardless of whether the Partnership shall have actual or other notice thereof, except as
otherwise provided by law or any applicable rule, regulation, guideline or requirement of any
National Securities Exchange on which such Partnership Interests are listed or admitted to trading.
Without limiting the foregoing, when a Person (such as a broker, dealer, bank, trust company or
clearing corporation or an agent of any of the foregoing) is acting as nominee, agent or in some
other representative capacity for another Person in acquiring and/or holding Partnership Interests,
as between the Partnership on the one hand, and such other Persons on the other, such
representative Person shall be (a) the Record Holder of such Partnership Interest and (b) bound by
this Agreement and shall have the rights and obligations of a Partner hereunder and as, and to the
extent, provided for herein.
Section 4.4
Transfer Generally
.
(a) The term
transfer
, when used in this Agreement with respect to a Partnership Interest,
shall be deemed to refer to a transaction (i) by which the General Partner assigns its General
Partner Units to another Person or by which a holder of Incentive Distribution Rights assigns its
Incentive Distribution Rights to another Person, and includes a sale, assignment, gift, pledge,
encumbrance, hypothecation, mortgage, exchange or any other disposition by law or otherwise or (ii)
by which the holder of a Limited Partner Interest (other than an Incentive Distribution Right)
assigns such Limited Partner Interest to another Person who is or becomes a Limited Partner, and
includes a sale, assignment, gift, exchange or any other disposition by law or otherwise, including
any transfer upon foreclosure of any pledge, encumbrance, hypothecation or mortgage.
(b) No Partnership Interest shall be transferred, in whole or in part, except in accordance
with the terms and conditions set forth in this Article IV. Any transfer or purported transfer of a
Partnership Interest not made in accordance with this Article IV shall be, to the fullest extent
permitted by law, null and void.
(c) Nothing contained in this Agreement shall be construed to prevent a disposition by any
stockholder, member, partner or other owner of the General Partner of any or all of the shares of
stock, membership or limited liability company interests, partnership interests or other ownership
interests in the General Partner.
Section 4.5
Registration and Transfer of Limited Partner Interests
.
(a) The General Partner shall keep or cause to be kept on behalf of the Partnership a register
in which, subject to such reasonable regulations as it may prescribe and subject to the provisions
of Section 4.5(b), the Partnership will provide for the registration and transfer of Limited
Partner Interests. The Transfer Agent is hereby appointed registrar and transfer agent for the
purpose of registering Common Units and transfers of such Common Units as herein
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First Amended and Restated Agreement of Limited Partnership
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provided. The Partnership shall not recognize transfers of Certificates evidencing Limited
Partner Interests unless such transfers are effected in the manner described in this Section 4.5.
Upon surrender of a Certificate for registration of transfer of any Limited Partner Interests
evidenced by a Certificate, and subject to the provisions of Section 4.5(b), the appropriate
officers of the General Partner on behalf of the Partnership shall execute and deliver, and in the
case of Common Units, the Transfer Agent shall countersign and deliver, in the name of the holder
or the designated transferee or transferees, as required pursuant to the holders instructions, one
or more new Certificates, or shall deliver other evidence of the issuance of uncertificated Units,
evidencing the same aggregate number and type of Limited Partner Interests as was evidenced by the
Certificate so surrendered.
(b) Except as otherwise provided in Section 4.9 and Section 4.11, (i) the General Partner
shall not recognize any transfer of Limited Partner Interests until the Certificates evidencing
such Limited Partner Interests, or other evidence of the issuance of uncertificated Units, are
surrendered for registration of transfer and (ii) following a FERC Notice, such Certificates are
accompanied by a Taxation Certification, properly completed and duly executed by the transferee (or
the transferees attorney-in-fact duly authorized in writing). No charge shall be imposed by the
General Partner for such transfer;
provided
, that as a condition to the issuance of any new
Certificate, or other evidence of the issuance of uncertificated Units, under this Section 4.5, the
General Partner may require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed with respect thereto.
(c) Subject to (i) the foregoing provisions of this Section 4.5, (ii) Section 4.3, (iii)
Section 4.8, (iv) with respect to any class or series of Limited Partner Interests, the provisions
of any statement of designations or an amendment to this Agreement establishing such class or
series, (v) any contractual provisions binding on any Limited Partner and (vi) provisions of
applicable law including the Securities Act, Limited Partner Interests (other than the Incentive
Distribution Rights) shall be freely transferable.
(d) The General Partner and its Affiliates shall have the right at any time to transfer their
Subordinated Units, Class B Units and Common Units (whether issued upon conversion of the
Subordinated Units or otherwise) to one or more Persons.
Section 4.6
Transfer of the General Partners General Partner Interest
.
(a) Subject to Section 4.6(c) below, prior to June 30, 2018, the General Partner shall not
transfer all or any part of its General Partner Interest (represented by General Partner Units) to
a Person unless such transfer (i) has been approved by the prior written consent or vote of the
holders of at least a majority of the Outstanding Common Units (excluding Common Units held by the
General Partner and its Affiliates) or (ii) is of all, but not less than all, of its General
Partner Interest to (A) an Affiliate of the General Partner (other than an individual) or (B)
another Person (other than an individual) in connection with the merger or consolidation of the
General Partner with or into such other Person or the transfer by the General Partner of all or
substantially all of its assets to such other Person.
Western Gas Partners, LP
First Amended and Restated Agreement of Limited Partnership
34
(b) Subject to Section 4.6(c) below, on or after June 30, 2018, the General Partner may
transfer all or any of its General Partner Interest without Unitholder approval.
(c) Notwithstanding anything herein to the contrary, no transfer by the General Partner of all
or any part of its General Partner Interest to another Person shall be permitted unless (i) the
transferee agrees to assume the rights and duties of the General Partner under this Agreement and
to be bound by the provisions of this Agreement, (ii) the Partnership receives an Opinion of
Counsel that such transfer would not result in the loss of limited liability of any Limited Partner
under the Delaware Act or cause the Partnership to be treated as an association taxable as a
corporation or otherwise to be taxed as an entity for federal income tax purposes (to the extent
not already so treated or taxed) and (iii) such transferee also agrees to purchase all (or the
appropriate portion thereof, if applicable) of the partnership or membership or limited liability
company interest of the General Partner as the general partner or managing member, if any, of each
other Group Member. In the case of a transfer pursuant to and in compliance with this Section 4.6,
the transferee or successor (as the case may be) shall, subject to compliance with the terms of
Section 10.2, be admitted to the Partnership as the General Partner effective immediately prior to
the transfer of the General Partner Interest, and the business of the Partnership shall continue
without dissolution.
Section 4.7
Transfer of Incentive Distribution Rights
.
Prior to June 30, 2018, a holder of Incentive Distribution Rights may transfer any or all of
the Incentive Distribution Rights held by such holder without any consent of the Unitholders to (a)
an Affiliate of such holder (other than an individual) or (b) another Person (other than an
individual) in connection with (i) the merger or consolidation of such holder of Incentive
Distribution Rights with or into such other Person, (ii) the transfer by such holder of all or
substantially all of its assets to such other Person or (iii) the sale of all the ownership
interests in such holder. Any other transfer of the Incentive Distribution Rights prior to June 30,
2018 shall require the prior approval of holders of at least a majority of the Outstanding Common
Units (excluding Common Units held by the General Partner and its Affiliates). On or after June 30,
2018, the General Partner or any other holder of Incentive Distribution Rights may transfer any or
all of its Incentive Distribution Rights without Unitholder approval. Notwithstanding anything
herein to the contrary, (i) the transfer of Class B Units issued pursuant to Section 5.11, or the
transfer of Common Units issued upon conversion of the Class B Units, shall not be treated as a
transfer of all or any part of the Incentive Distribution Rights and (ii) no transfer of Incentive
Distribution Rights to another Person shall be permitted unless the transferee agrees to be bound
by the provisions of this Agreement.
Section 4.8
Restrictions on Transfers
.
(a) Notwithstanding the other provisions of this Article IV, no transfer of any Partnership
Interests shall be made if such transfer would (i) violate the then applicable federal or state
securities laws or rules and regulations of the Commission, any state securities commission or any
other governmental authority with jurisdiction over such transfer, (ii) terminate the existence or
qualification of the Partnership under the laws of the jurisdiction of its formation, or (iii)
cause the Partnership to be treated as an association taxable as a corporation or
Western Gas Partners, LP
First Amended and Restated Agreement of Limited Partnership
35
otherwise to be taxed as an entity for federal income tax purposes (to the extent not already
so treated or taxed).
(b) The General Partner may impose restrictions on the transfer of Partnership Interests if it
receives an Opinion of Counsel that such restrictions are necessary to avoid a significant risk of
the Partnership becoming taxable as a corporation or otherwise becoming taxable as an entity for
federal income tax purposes. The General Partner may impose such restrictions by amending this
Agreement;
provided, however
, that any amendment that would result in the delisting or suspension
of trading of any class of Limited Partner Interests on the principal National Securities Exchange
on which such class of Limited Partner Interests is then listed or admitted to trading must be
approved, prior to such amendment being effected, by the holders of at least a majority of the
Outstanding Limited Partner Interests of such class.
(c) The transfer of a Subordinated Unit that has converted into a Common Unit shall be subject
to the restrictions imposed by Section 6.7(c).
(d) The transfer of a Class B Unit that has converted into a Common Unit shall be subject to
the restrictions imposed by Section 6.7(e).
(e) Nothing contained in this Article IV, or elsewhere in this Agreement, shall preclude the
settlement of any transactions involving Partnership Interests entered into through the facilities
of any National Securities Exchange on which such Partnership Interests are listed or admitted to
trading.
(f) Each certificate evidencing Partnership Interests shall bear a conspicuous legend in
substantially the following form:
THE HOLDER OF THIS SECURITY ACKNOWLEDGES FOR THE BENEFIT OF WESTERN GAS PARTNERS, LP THAT
THIS SECURITY MAY NOT BE SOLD, OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED IF SUCH
TRANSFER WOULD (A) VIOLATE THE THEN APPLICABLE FEDERAL OR STATE SECURITIES LAWS OR RULES AND
REGULATIONS OF THE SECURITIES AND EXCHANGE COMMISSION, ANY STATE SECURITIES COMMISSION OR
ANY OTHER GOVERNMENTAL AUTHORITY WITH JURISDICTION OVER SUCH TRANSFER, (B) TERMINATE THE
EXISTENCE OR QUALIFICATION OF WESTERN GAS PARTNERS, LP UNDER THE LAWS OF THE STATE OF
DELAWARE, OR (C) CAUSE WESTERN GAS PARTNERS, LP TO BE TREATED AS AN ASSOCIATION TAXABLE AS A
CORPORATION OR OTHERWISE TO BE TAXED AS AN ENTITY FOR FEDERAL INCOME TAX PURPOSES (TO THE
EXTENT NOT ALREADY SO TREATED OR TAXED). WESTERN GAS HOLDINGS, LLC, THE GENERAL PARTNER OF
WESTERN GAS PARTNERS, LP, MAY IMPOSE ADDITIONAL RESTRICTIONS ON THE TRANSFER OF THIS
SECURITY IF IT RECEIVES AN OPINION OF COUNSEL THAT SUCH RESTRICTIONS ARE NECESSARY TO AVOID
A SIGNIFICANT RISK OF WESTERN GAS PARTNERS, LP BECOMING TAXABLE AS A CORPORATION OR
OTHERWISE BECOMING TAXABLE AS AN ENTITY FOR
Western Gas Partners, LP
First Amended and Restated Agreement of Limited Partnership
36
FEDERAL INCOME TAX PURPOSES. THE RESTRICTIONS SET FORTH ABOVE SHALL NOT PRECLUDE THE
SETTLEMENT OF ANY TRANSACTIONS INVOLVING THIS SECURITY ENTERED INTO THROUGH THE FACILITIES
OF ANY NATIONAL SECURITIES EXCHANGE ON WHICH THIS SECURITY IS LISTED OR ADMITTED TO TRADING.
Section 4.9
Citizenship Certificates; Non-citizen Assignees
.
(a) If any Group Member is or becomes subject to any federal, state or local law or regulation
that the General Partner determines would create a substantial risk of cancellation or forfeiture
of any property in which the Group Member has an interest based on the nationality, citizenship or
other related status of a Limited Partner, the General Partner may request any Limited Partner to
furnish to the General Partner, within 30 days after receipt of such request, an executed
Citizenship Certification or such other information concerning his nationality, citizenship or
other related status (or, if the Limited Partner is a nominee holding for the account of another
Person, the nationality, citizenship or other related status of such Person) as the General Partner
may request. If a Limited Partner fails to furnish to the General Partner within the aforementioned
30-day period such Citizenship Certification or other requested information or if upon receipt of
such Citizenship Certification or other requested information the General Partner determines that a
Limited Partner is not an Eligible Citizen, the Limited Partner Interests owned by such Limited
Partner shall be subject to redemption in accordance with the provisions of Section 4.10. In
addition, the General Partner may require that the status of any such Limited Partner be changed to
that of a Non-citizen Assignee and, thereupon, the General Partner shall be substituted for such
Non-citizen Assignee as the Limited Partner in respect of the Non-citizen Assignees Limited
Partner Interests.
(b) The General Partner shall, in exercising voting rights in respect of Limited Partner
Interests held by it on behalf of Non-citizen Assignees, distribute the votes in the same ratios as
the votes of Partners (including the General Partner) in respect of Limited Partner Interests other
than those of Non-citizen Assignees are cast, either for, against or abstaining as to the matter.
(c) Upon dissolution of the Partnership, a Non-citizen Assignee shall have no right to receive
a distribution in kind pursuant to Section 12.4 but shall be entitled to the cash equivalent
thereof, and the Partnership shall provide cash in exchange for an assignment of the Non-citizen
Assignees share of any distribution in kind. Such payment and assignment shall be treated for
Partnership purposes as a purchase by the Partnership from the Non-citizen Assignee of his Limited
Partner Interest (representing his right to receive his share of such distribution in kind).
(d) At any time after he can and does certify that he has become an Eligible Citizen, a
Non-citizen Assignee may, upon application to the General Partner, request that with respect to any
Limited Partner Interests of such Non-citizen Assignee not redeemed pursuant to Section 4.10, such
Non-citizen Assignee be admitted as a Limited Partner, and upon approval of the General Partner,
such Non-citizen Assignee shall be admitted as a Limited Partner and shall no longer constitute a
Non-citizen Assignee and the General Partner shall cease to be deemed to be the Limited Partner in
respect of the Non-citizen Assignees Limited Partner Interests.
Western Gas Partners, LP
First Amended and Restated Agreement of Limited Partnership
37
Section 4.10
Redemption of Partnership Interests of Non-citizen Assignees
.
(a) If at any time a Limited Partner fails to furnish a Citizenship Certification or other
information requested within the 30-day period specified in Section 4.9(a), or if upon receipt of
such Citizenship Certification or other information the General Partner determines, with the advice
of counsel, that a Limited Partner is not an Eligible Citizen, the Partnership may, unless the
Limited Partner establishes to the satisfaction of the General Partner that such Limited Partner is
an Eligible Citizen or has transferred his Partnership Interests to a Person who is an Eligible
Citizen and who furnishes a Citizenship Certification to the General Partner prior to the date
fixed for redemption as provided below, redeem the Limited Partner Interest of such Limited Partner
as follows:
(i) The General Partner shall, not later than the 30th day before the date fixed for
redemption, give notice of redemption to the Limited Partner, at his last address designated
on the records of the Partnership or the Transfer Agent, by registered or certified mail,
postage prepaid. The notice shall be deemed to have been given when so mailed. The notice
shall specify the Redeemable Interests, the date fixed for redemption, the place of payment,
that payment of the redemption price will be made upon surrender of the Certificate
evidencing the Redeemable Interests, or other evidence of the issuance of uncertificated
Units, and that on and after the date fixed for redemption no further allocations or
distributions to which the Limited Partner would otherwise be entitled in respect of the
Redeemable Interests will accrue or be made.
(ii) The aggregate redemption price for Redeemable Interests shall be an amount equal
to the Current Market Price (the date of determination of which shall be the date fixed for
redemption) of Limited Partner Interests of the class to be so redeemed multiplied by the
number of Limited Partner Interests of each such class included among the Redeemable
Interests. The redemption price shall be paid, as determined by the General Partner, in cash
or by delivery of a promissory note of the Partnership in the principal amount of the
redemption price, bearing interest at the rate of 5% annually and payable in three equal
annual installments of principal together with accrued interest, commencing one year after
the redemption date.
(iii) Upon surrender by or on behalf of the Limited Partner, at the place specified in
the notice of redemption, of the Certificate evidencing the Redeemable Interests, duly
endorsed in blank or accompanied by an assignment duly executed in blank, or other evidence
of the issuance of uncertificated Units, the Limited Partner or his duly authorized
representative shall be entitled to receive the payment therefor.
(iv) After the redemption date, Redeemable Interests shall no longer constitute issued
and Outstanding Limited Partner Interests.
(b) The provisions of this Section 4.10 shall also be applicable to Limited Partner Interests
held by a Limited Partner as nominee of a Person determined to be other than an Eligible Citizen.
Western Gas Partners, LP
First Amended and Restated Agreement of Limited Partnership
38
(c) Nothing in this Section 4.10 shall prevent the recipient of a notice of redemption from
transferring his Limited Partner Interest before the redemption date if such transfer is otherwise
permitted under this Agreement. Upon receipt of notice of such a transfer, the General Partner
shall withdraw the notice of redemption,
provided
the transferee of such Limited Partner Interest
certifies to the satisfaction of the General Partner that he is an Eligible Citizen. If the
transferee fails to make such certification, such redemption shall be effected from the transferee
on the original redemption date.
Section 4.11
Taxation Certifications; Ineligible Assignees.
(a) Following a FERC Notice, if a transferee of a Limited Partner Interest fails to furnish a
properly completed Taxation Certification in the manner specified in Section 4.5(b) or if, upon
receipt of such Taxation Certification or otherwise, the General Partner determines that such
transferee is not an Eligible Holder, the Limited Partner Interests owned by such transferee shall
be subject to redemption in accordance with the provisions of Section 4.12.
(b) The General Partner may request any Limited Partner to furnish to the General Partner,
within 30 days after receipt of such request, an executed Taxation Certification or such other
information concerning his federal income tax status with respect to the income and loss generated
by the Partnership (or, if the Limited Partner is a nominee holding for the account of another
Person, the federal income tax status of such Person) as the General Partner may reasonably
request. If a Limited Partner or Assignee fails to furnish to the General Partner within the
aforementioned 30-day period such Taxation Certification or other requested information or if upon
receipt of such Taxation Certification or other requested information the General Partner
determines that a Limited Partner is an Ineligible Assignee, the Limited Partner Interests owned by
such Limited Partner shall be subject to redemption in accordance with the provisions of Section
4.12. The General Partner shall be substituted for such Ineligible Assignee as the Limited Partner
in respect of the Ineligible Assignees Limited Partner Interests. Upon determination by the
General Partner that such person is an Ineligible Assignee, the General Partner may elect to not
make distributions or allocations of income or loss to such Ineligible Assignee relating to such
Ineligible Assignees Limited Partner Interests.
(c) Following a FERC Notice or any other determination of an Ineligible Assignee, the General
Partner shall, in exercising voting rights in respect of Limited Partner Interests held by it on
behalf of Ineligible Assignees, distribute the votes in the same ratios as the votes of Partners
(including without limitation the General Partner) in respect of Limited Partner Interests other
than those of Ineligible Assignees are cast, either for, against or abstaining as to the matter.
(d) Upon dissolution of the Partnership, an Ineligible Assignee shall have no right to receive
a distribution in kind pursuant to Section 12.4 but shall be entitled to the cash equivalent
thereof, and the Partnership shall provide cash in exchange for an assignment of the Ineligible
Assignees share of any distribution in kind. Such payment and assignment shall be treated for
Partnership purposes as a purchase by the Partnership from the Ineligible Assignee of his Limited
Partner Interest (representing his right to receive his share of such distribution in kind).
Western Gas Partners, LP
First Amended and Restated Agreement of Limited Partnership
39
(e) At any time after an Ineligible Assignee can and does certify that it has become an
Eligible Holder, such Ineligible Assignee may, upon application to the General Partner, request
that with respect to any Limited Partner Interests of such Ineligible Assignee not redeemed
pursuant to Section 4.12, such Ineligible Assignee be admitted as a Limited Partner, and upon
approval of the General Partner, such Ineligible Assignee shall be admitted as a Limited Partner
and shall no longer constitute a Ineligible Assignee and the General Partner shall cease to be
deemed to be the Limited Partner in respect of such Ineligible Assignees Limited Partner
Interests.
Section 4.12
Redemption of Partnership Interests of Ineligible Assignees.
(a) If at any time following a FERC Notice or a request pursuant to Section 4.11(b), a
transferee of a Limited Partner Interest fails to furnish the General Partner a Taxation
Certification in the manner specified in Section 4.5(b) or any Limited Partner fails to furnish the
General Partner a Taxation Certification or other information requested within the 30-day period
specified in Section 4.11(b), or if upon receipt of such Taxation Certification or other
information the General Partner determines that a Limited Partner or transferee is not an Eligible
Holder, the Partnership may redeem the Limited Partner Interest of such Limited Partner or
transferee as follows:
(i) The General Partner shall, not later than the 30th day before the date fixed for
redemption, give notice of redemption to the Limited Partner or transferee, at his last
address designated on the records of the Partnership or the Transfer Agent, by registered or
certified mail, postage prepaid. The notice shall be deemed to have been given when so
mailed. The notice shall specify the Redeemable Interests, the date fixed for redemption,
the place of payment, that payment of the redemption price will be made upon surrender of
the Certificate evidencing the Redeemable Interests or, if uncertificated, upon receipt of
evidence satisfactory to the General Partner of the ownership of the Redeemable Interests,
and that on and after the date fixed for redemption no further allocations or distributions
to which the Limited Partner would otherwise be entitled in respect of the Redeemable
Interests will accrue or be made.
(ii) The aggregate redemption price for Redeemable Interests shall be an amount equal
to the lesser of (A) the Current Market Price (the date of determination of which shall be
the date fixed for redemption) of Limited Partner Interests of the class to be so redeemed
multiplied by the number of Limited Partner Interests of each such class included among the
Redeemable Interests and (B) the price paid for such Limited Partner Interests by the
Limited Partner or transferee. The redemption price shall be paid as determined by the
General Partner, in cash or by delivery of a promissory note of the Partnership in the
principal amount of the redemption price, bearing interest at the rate of 5% annually and
payable in three equal annual installments of principal together with accrued interest,
commencing one year after the redemption date.
(iii) Upon surrender by or on behalf of the Limited Partner, at the place specified in
the notice of redemption, of (x) if certificated, the Certificate evidencing the Redeemable
Interests, duly endorsed in blank or accompanied by an assignment duly
Western Gas Partners, LP
First Amended and Restated Agreement of Limited Partnership
40
executed in blank, or (y) if uncertificated, upon receipt of evidence satisfactory to
the General Partner of the ownership of the Redeemable Interests, the Limited Partner or
transferee or his duly authorized representative shall be entitled to receive the payment
therefor.
(iv) After the redemption date, Redeemable Interests shall no longer constitute issued
and Outstanding Limited Partner Interests.
(b) The provisions of this Section 4.12 shall also be applicable to Limited Partner Interests
held by a Limited Partner as nominee of a Person determined to be other than an Eligible Holder.
(c) Nothing in this Section 4.12 shall prevent the recipient of a notice of redemption from
transferring his Limited Partner Interest before the redemption date if such transfer is otherwise
permitted under this Agreement. Upon receipt of notice of such a transfer, the General Partner
shall withdraw the notice of redemption, provided the transferee of such Limited Partner Interest
certifies to the satisfaction of the General Partner in a Taxation Certification that he is an
Eligible Holder. If the transferee fails to make such certification, such redemption shall be
effected from the transferee on the original redemption date.
ARTICLE V
CAPITAL CONTRIBUTIONS AND ISSUANCE OF PARTNERSHIP INTERESTS
Section 5.1
Organizational Contributions
.
In connection with the formation of the Partnership under the Delaware Act, the General
Partner made an initial Capital Contribution to the Partnership in the amount of $60.00, for a
General Partner Interest equal to a 2% Percentage Interest and has been admitted as the General
Partner of the Partnership, and Asset HoldCo made an initial Capital Contribution to the
Partnership in the amount of $2,940.00 for a Limited Partner Interest equal to a 98% Percentage
Interest and has been admitted as a Limited Partner of the Partnership. Subsequent to the formation
of the Partnership, Asset HoldCo contributed its Limited Partner Interest to Holdings. As of the
Closing Date and effective with the admission of another Limited Partner to the Partnership, the
interests of Holdings and the General Partner shall be redeemed as provided in the Contribution
Agreement; and the initial Capital Contributions (i) of Asset HoldCo shall thereupon be refunded to
Holdings and (ii) of the General Partner shall be refunded to the General Partner. Ninety-eight
percent and two percent of any interest or other profit that may have resulted from the investment
or other use of such initial Capital Contributions shall be allocated and distributed to Holdings
and the General Partner, respectively.
Section 5.2
Contributions by the General Partner and its Affiliates
.
(a) On the Closing Date and pursuant to the Contribution Agreement: (i) the General Partner
shall contribute to the Partnership, as a Capital Contribution, the GP Contribution Interest, in
exchange for (A) 1,083,115 General Partner Units representing a continuation of its
Western Gas Partners, LP
First Amended and Restated Agreement of Limited Partnership
41
General Partner Interest equal to a 2% Percentage Interest, subject to all of the rights,
privileges and duties of the General Partner under this Agreement, and (B) the Incentive
Distribution Rights; and (ii) Holdings shall contribute to the Partnership, as a Capital
Contribution, the Partnership Contribution Interests in exchange for 4,973,806 Common Units,
26,536,306 Subordinated Units and the right to receive the Deferred Issuance and Distribution upon
the earlier to occur of (x) the expiration of the Over-Allotment Option or (y) the exercise in full
of the Over-Allotment Option.
(b) Upon the issuance of any additional Limited Partner Interests by the Partnership (other
than the Common Units issued in the Initial Offering, the Common Units and Subordinated Units
issued pursuant to Section 5.2(a), any Class B Units issued pursuant to Section 5.11 and any Common
Units issued upon conversion of Class B Units), the General Partner may, in exchange for a
proportionate number of General Partner Units, make additional Capital Contributions in an amount
equal to the product obtained by multiplying (i) the quotient determined by dividing (A) the
General Partners Percentage Interest by (B) 100 less the General Partners Percentage Interest
times (ii) the amount contributed to the Partnership by the Limited Partners in exchange for such
additional Limited Partner Interests. Except as set forth in Article XII, the General Partner shall
not be obligated to make any additional Capital Contributions to the Partnership.
(c) To the extent (i) expenses allocated to the Partnership Group in any period in accordance
with GAAP for general and administrative services provided pursuant to the Omnibus Agreement exceed
the G&A Expense Limit (as such term is defined in the Omnibus Agreement) or (ii) any Excess Bonus
Expenses (as such term is defined in the Services and Secondment Agreement) are allocated to the
Partnership Group in accordance with GAAP for any period, the excess noted in clause (i) or Excess
Bonus Expenses, if any, shall be treated as a Capital Contribution by Anadarko to the Partnership.
Section 5.3
Contributions by Initial Limited Partners
.
(a) On the Closing Date and pursuant to the Underwriting Agreement, each Underwriter shall
contribute to the Partnership cash in an amount equal to the Issue Price per Initial Common Unit,
multiplied by the number of Common Units specified in the Underwriting Agreement to be purchased by
such Underwriter at the Closing Date. In exchange for such Capital Contributions by the
Underwriters, the Partnership shall issue Common Units to each Underwriter on whose behalf such
Capital Contribution is made in an amount equal to the quotient obtained by dividing (i) the cash
contribution to the Partnership by or on behalf of such Underwriter by (ii) the Issue Price per
Initial Common Unit.
(b) Upon the exercise of the Over-Allotment Option, each Underwriter shall contribute to the
Partnership cash in an amount equal to the Issue Price per Initial Common Unit, multiplied by the
number of Common Units to be purchased by such Underwriter at such Option Closing Date. In exchange
for such Capital Contributions by the Underwriters, the Partnership shall issue Common Units to
each Underwriter on whose behalf such Capital Contribution is made in an amount equal to the
quotient obtained by dividing (i) the cash contributions to the Partnership by or on behalf of such
Underwriter by (ii) the Issue Price per Initial Common Unit.
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First Amended and Restated Agreement of Limited Partnership
42
(c) No Limited Partner Interests will be issued or issuable as of or at the Closing Date other
than (i) the Common Units issuable pursuant to subparagraph (a) hereof in aggregate number equal to
18,750,000; (ii) 2,812,500 Common Units, all or a portion of which are issuable upon the exercise
of the Over-Allotment Option pursuant to subparagraph (b) hereof, and the balance of which will be
issued as Deferred Issuance and Distribution upon the earlier to occur of the (x) the expiration of
the Over-Allotment Option or (y) the exercise in full of the Over-Allotment Option; (iii) the
26,536,306 Subordinated Units issuable to pursuant to Section 5.2 hereof; (iv) the 4,973,806 Common
Units issuable pursuant to Section 5.2 hereof; and (v) the Incentive Distribution Rights.
Section 5.4
Interest and Withdrawal
.
No interest shall be paid by the Partnership on Capital Contributions. No Partner shall be
entitled to the withdrawal or return of its Capital Contribution, except to the extent, if any,
that distributions made pursuant to this Agreement or upon liquidation of the Partnership may be
considered as such by law and then only to the extent provided for in this Agreement. Except to the
extent expressly provided in this Agreement, no Partner shall have priority over any other Partner
either as to the return of Capital Contributions or as to profits, losses or distributions. Any
such return shall be a compromise to which all Partners agree within the meaning of Section
17-502(b) of the Delaware Act.
Section 5.5
Capital Accounts
.
(a) The Partnership shall maintain for each Partner (or a beneficial owner of Partnership
Interests held by a nominee in any case in which the nominee has furnished the identity of such
owner to the Partnership in accordance with Section 6031(c) of the Code or any other method
acceptable to the General Partner) owning a Partnership Interest a separate Capital Account with
respect to such Partnership Interest in accordance with the rules of Treasury Regulation Section
1.704-1(b)(2)(iv). Such Capital Account shall be increased by (i) the amount of all Capital
Contributions made to the Partnership with respect to such Partnership Interest and (ii) all items
of Partnership income and gain (including income and gain exempt from tax) computed in accordance
with Section 5.5(b) and allocated with respect to such Partnership Interest pursuant to Section
6.1, and decreased by (x) the amount of cash or Net Agreed Value of all actual and deemed
distributions of cash or property made with respect to such Partnership Interest and (y) all items
of Partnership deduction and loss computed in accordance with Section 5.5(b) and allocated with
respect to such Partnership Interest pursuant to Section 6.1.
(b) For purposes of computing the amount of any item of income, gain, loss or deduction which
is to be allocated pursuant to Article VI and is to be reflected in the Partners Capital Accounts,
the determination, recognition and classification of any such item shall be the same as its
determination, recognition and classification for federal income tax purposes (including any method
of depreciation, cost recovery or amortization used for that purpose),
provided
, that:
(i) Solely for purposes of this Section 5.5, the Partnership shall be treated as owning
directly its proportionate share (as determined by the General Partner based upon
Western Gas Partners, LP
First Amended and Restated Agreement of Limited Partnership
43
the provisions of the applicable Group Member Agreement or governing, organizational or
similar documents) of all property owned by (x) any other Group Member that is classified as
a partnership for federal income tax purposes and (y) any other partnership, limited
liability company, unincorporated business or other entity classified as a partnership for
federal income tax purposes of which a Group Member is, directly or indirectly, a partner.
(ii) All fees and other expenses incurred by the Partnership to promote the sale of (or
to sell) a Partnership Interest that can neither be deducted nor amortized under Section 709
of the Code, if any, shall, for purposes of Capital Account maintenance, be treated as an
item of deduction at the time such fees and other expenses are incurred and shall be
allocated among the Partners pursuant to Section 6.1.
(iii) Except as otherwise provided in Treasury Regulation Section 1.704-1(b)(2)(iv)(m),
the computation of all items of income, gain, loss and deduction shall be made without
regard to any election under Section 754 of the Code which may be made by the Partnership
and, as to those items described in Section 705(a)(1)(B) or 705(a)(2)(B) of the Code,
without regard to the fact that such items are not includable in gross income or are neither
currently deductible nor capitalized for federal income tax purposes. To the extent an
adjustment to the adjusted tax basis of any Partnership asset pursuant to Section 734(b) or
743(b) of the Code is required, pursuant to Treasury Regulation Section
1.704-1(b)(2)(iv)(m), to be taken into account in determining Capital Accounts, the amount
of such adjustment in the Capital Accounts shall be treated as an item of gain or loss.
(iv) Any income, gain or loss attributable to the taxable disposition of any
Partnership property shall be determined as if the adjusted basis of such property as of
such date of disposition were equal in amount to the Partnerships Carrying Value with
respect to such property as of such date.
(v) In accordance with the requirements of Section 704(b) of the Code, any deductions
for depreciation, cost recovery or amortization attributable to any Contributed Property
shall be determined as if the adjusted basis of such property on the date it was acquired by
the Partnership were equal to the Agreed Value of such property. Upon an adjustment pursuant
to Section 5.5(d) to the Carrying Value of any Partnership property subject to depreciation,
cost recovery or amortization, any further deductions for such depreciation, cost recovery
or amortization attributable to such property shall be determined under the rules prescribed
by Treasury Regulation Section 1.704-3(d)(2) as if the adjusted basis of such property were
equal to the Carrying Value of such property immediately following such adjustment.
(vi) In the event the Gross Liability Value of any Liability of the Partnership
described in Treasury Regulation Section 1.752-7(b)(3)(i) is adjusted as required by this
Agreement, the amount of such adjustment shall be treated as an item of loss (if the
adjustment increases the Carrying Value of such Liability of the Partnership) or an item of
gain (if the adjustment decreases the Carrying Value of such Liability of the
Western Gas Partners, LP
First Amended and Restated Agreement of Limited Partnership
44
Partnership) and shall be taken into account for purposes of computing Net Income or
Net Loss.
(c) (i) A transferee of a Partnership Interest shall succeed to a pro rata portion of the
Capital Account of the transferor relating to the Partnership Interest so transferred.
(i) Subject to Section 6.7(c), immediately prior to the transfer of a Subordinated Unit
or of a Subordinated Unit that has converted into a Common Unit pursuant to Section 5.7 by a
holder thereof (other than a transfer to an Affiliate unless the General Partner elects to
have this subparagraph 5.5(c)(ii) apply), the Capital Account maintained for such Person
with respect to its Subordinated Units or converted Subordinated Units will (A) first, be
allocated to the Subordinated Units or converted Subordinated Units to be transferred in an
amount equal to the product of (x) the number of such Subordinated Units or converted
Subordinated Units to be transferred and (y) the Per Unit Capital Amount for a Common Unit,
and (B) second, any remaining balance in such Capital Account will be retained by the
transferor, regardless of whether it has retained any Subordinated Units or converted
Subordinated Units (
Retained Converted Subordinated Units
). Following any such allocation,
the transferors Capital Account, if any, maintained with respect to the retained
Subordinated Units or Retained Converted Subordinated Units, if any, will have a balance
equal to the amount allocated under clause (B) hereinabove, and the transferees Capital
Account established with respect to the transferred Subordinated Units or converted
Subordinated Units will have a balance equal to the amount allocated under clause (A)
hereinabove.
(d) (i) In accordance with Treasury Regulation Section 1.704-1(b)(2)(iv)(f), on an issuance of
additional Partnership Interests for cash or Contributed Property, the issuance of Partnership
Interests as consideration for the provision of services or the conversion of the General Partners
Combined Interest to Common Units pursuant to Section 11.3(b), the Capital Account of all Partners
and the Carrying Value of each Partnership property immediately prior to such issuance shall be
adjusted upward or downward to reflect any Unrealized Gain or Unrealized Loss attributable to such
Partnership property, as if such Unrealized Gain or Unrealized Loss had been recognized on an
actual sale of each such property for an amount equal to its fair market value immediately prior to
such issuance and had been allocated to the Partners at such time pursuant to Section 6.1(c) in the
same manner as any item of gain or loss actually recognized following an event giving rise to the
liquidation of the Partnership would have been allocated. In determining such Unrealized Gain or
Unrealized Loss, the aggregate cash amount and fair market value of all Partnership assets
(including cash or cash equivalents) immediately prior to the issuance of additional Partnership
Interests shall be determined by the General Partner using such method of valuation as it may
adopt;
provided, however
, that the General Partner, in arriving at such valuation, must take fully
into account the fair market value of the Partnership Interests of all Partners at such time. The
General Partner shall allocate such aggregate value among the assets of the Partnership (in such
manner as it determines) to arrive at a fair market value for individual properties.
(ii) In accordance with Treasury Regulation Section 1.704-1(b)(2)(iv)(f), immediately
prior to any actual or deemed distribution to a Partner of any Partnership
Western Gas Partners, LP
First Amended and Restated Agreement of Limited Partnership
45
property (other than a distribution of cash that is not in redemption or retirement of
a Partnership Interest), the Capital Accounts of all Partners and the Carrying Value of all
Partnership property shall be adjusted upward or downward to reflect any Unrealized Gain or
Unrealized Loss attributable to such Partnership property, as if such Unrealized Gain or
Unrealized Loss had been recognized on an actual sale of each such property immediately
prior to such distribution for an amount equal to its fair market value, and had been
allocated to the Partners, at such time, pursuant to Section 6.1(c) in the same manner as
any item of gain or loss actually recognized following an event giving rise to the
liquidation of the Partnership would have been allocated. In determining such Unrealized
Gain or Unrealized Loss the aggregate cash amount and fair market value of all Partnership
assets (including cash or cash equivalents) immediately prior to a distribution shall (A) in
the case of an actual distribution that is not made pursuant to Section 12.4 or in the case
of a deemed distribution, be determined and allocated in the same manner as that provided in
Section 5.5(d)(i) or (B) in the case of a liquidating distribution pursuant to Section 12.4,
be determined and allocated by the Liquidator using such method of valuation as it may
adopt.
Section 5.6
Issuances of Additional Partnership Securities
.
(a) The Partnership may issue additional Partnership Securities and options, rights, warrants
and appreciation rights relating to the Partnership Securities (including pursuant to Section
7.4(c)) for any Partnership purpose at any time and from time to time to such Persons for such
consideration and on such terms and conditions as the General Partner shall determine, all without
the approval of any Limited Partners.
(b) Each additional Partnership Security authorized to be issued by the Partnership pursuant
to Section 5.6(a) or security authorized to be issued pursuant to Section 7.4(c) may be issued in
one or more classes, or one or more series of any such classes, with such designations,
preferences, rights, powers and duties (which may be senior to existing classes and series of
Partnership Securities), as shall be fixed by the General Partner, including (i) the right to share
in Partnership profits and losses or items thereof; (ii) the right to share in Partnership
distributions; (iii) the rights upon dissolution and liquidation of the Partnership; (iv) whether,
and the terms and conditions upon which, the Partnership may redeem the Partnership Security or
other security; (v) whether such Partnership Security or other security is issued with the
privilege of conversion or exchange and, if so, the terms and conditions of such conversion or
exchange; (vi) the terms and conditions upon which each Partnership Security or other security will
be issued, evidenced by certificates and assigned or transferred; (vii) the method for determining
the Percentage Interest as to such Partnership Security; and (viii) the right, if any, of each such
Partnership Security to vote on Partnership matters, including matters relating to the relative
rights, preferences and privileges of such Partnership Security.
(c) The General Partner shall take all actions that it determines to be necessary or
appropriate in connection with (i) each issuance of Partnership Securities and options, rights,
warrants and appreciation rights relating to Partnership Securities pursuant to this Section 5.6,
or Section 7.4(c), (ii) the conversion of the General Partner Interest (represented by General
Partner Units) or any Incentive Distribution Rights into Units pursuant to the terms of this
Agreement,
Western Gas Partners, LP
First Amended and Restated Agreement of Limited Partnership
46
(iii) the issuance of Class B Units pursuant to Section 5.11 and the conversion of Class B
Units into Common Units pursuant to the terms of this Agreement, (iv) reflecting admission of such
additional Limited Partners in the books and records of the Partnership as the Record Holder of
such Limited Partner Interest and (v) all additional issuances of Partnership Securities. The
General Partner shall determine the relative rights, powers and duties of the holders of the Units
or other Partnership Securities being so issued. The General Partner shall do all things necessary
to comply with the Delaware Act and is authorized and directed to do all things that it determines
to be necessary or appropriate in connection with any future issuance of Partnership Securities or
in connection with the conversion of the General Partner Interest or any Incentive Distribution
Rights into Units pursuant to the terms of this Agreement, including compliance with any statute,
rule, regulation or guideline of any federal, state or other governmental agency or any National
Securities Exchange on which the Units or other Partnership Securities are listed or admitted to
trading.
(d) No fractional Units shall be issued by the Partnership.
Section 5.7
Conversion of Subordinated Units
.
(a) Notwithstanding Section 5.7(c) below, the Subordination Period shall terminate and all of
the Outstanding Subordinated Units will convert into Common Units on a one-for-one basis on the
first Business Day following the distribution of Available Cash to Partners pursuant to Section
6.3(a) in respect of any Quarter ending on or after June 30, 2011, in respect of which:
(i) distributions of Available Cash from Operating Surplus under Section 6.4(a) on each
of the Outstanding Common Units and Subordinated Units and any other Outstanding Units that
are senior or equal in right of distribution to the Subordinated Units and the General
Partner Units with respect to each of the three consecutive, non-overlapping four-Quarter
periods immediately preceding such date equaled or exceeded the sum of the Minimum Quarterly
Distribution on all of the Outstanding Common Units and Subordinated Units and any other
Outstanding Units that are senior or equal in right of distribution to the Subordinated
Units and the General Partner Units during such periods;
(ii) the Adjusted Operating Surplus for each of the three consecutive, non-overlapping
four-Quarter periods immediately preceding such date equaled or exceeded the sum of the
Minimum Quarterly Distribution on all of the Common Units, Subordinated Units and any other
Units that are senior or equal in right of distribution to the Subordinated Units and the
General Partner Units that were Outstanding during such periods on a Fully Diluted Basis;
and
(iii) there are no Cumulative Common Unit Arrearages.
(b) Notwithstanding Section 5.7(a) above or Section 5.7(c) below, the Subordination Period
shall terminate and all the Outstanding Subordinated Units will convert into Common Units on a
one-for-one basis on the first Business Day following the distribution of Available
Western Gas Partners, LP
First Amended and Restated Agreement of Limited Partnership
47
Cash to Partners pursuant to Section 6.3(a) in respect of any Quarter ending on or after June
30, 2008, in respect of which:
(i) distributions of Available Cash from Operating Surplus under Section 6.4(a) in
respect of all Outstanding Common Units, Subordinated Units, any other Outstanding Units
that are senior or equal in right of distribution to the Subordinated Units and the General
Partner Units with respect to each of the four consecutive, non-overlapping Quarters
immediately preceding such date equaled or exceeded 150% of the sum of the Minimum Quarterly
Distribution on all of the Outstanding Common Units, Subordinated Units, any other
Outstanding Units that are senior or equal in right of distribution to the Subordinated
Units and the General Partner Units during such period;
(ii) the Adjusted Operating Surplus for each of the four consecutive, non-overlapping
Quarters immediately preceding such date equaled or exceeded 150% of the sum of the Minimum
Quarterly Distribution on all of the Common Units, Subordinated Units and any other Units
that are senior or equal in right of distribution to the Subordinated Units and the General
Partner Units that were Outstanding during such periods on a Fully Diluted Basis; and
(iii) there are no Cumulative Common Unit Arrearages.
(c) Any Subordinated Units that are not converted into Common Units pursuant to Section 5.7(a)
or (b) shall convert into Common Units on a one-for-one basis on the second Business Day following
the distribution of Available Cash to Partners pursuant to Section 6.3(a) in respect of the final
Quarter of the Subordination Period.
(d) Notwithstanding any other provision of this Agreement, all the then Outstanding
Subordinated Units will automatically convert into Common Units on a one-for-one basis as set forth
in, and pursuant to the terms of, Section 11.4.
(e) A Subordinated Unit that has converted into a Common Unit shall be subject to the
provisions of Section 6.7(b) and Section 6.7(c).
Section 5.8
Limited Preemptive Right
.
Except as provided in this Section 5.8 and in Section 5.2, no Person shall have any
preemptive, preferential or other similar right with respect to the issuance of any Partnership
Security, whether unissued, held in the treasury or hereafter created. The General Partner shall
have the right, which it may from time to time assign in whole or in part to any of its Affiliates,
to purchase Partnership Securities from the Partnership whenever, and on the same terms that, the
Partnership issues Partnership Securities to Persons other than the General Partner and its
Affiliates, to the extent necessary to maintain the Percentage Interests of the General Partner and
its Affiliates equal to that which existed immediately prior to the issuance of such Partnership
Securities.
Western Gas Partners, LP
First Amended and Restated Agreement of Limited Partnership
48
Section 5.9
Splits and Combinations
.
(a) Subject to Section 5.9(d), Section 6.6 and Section 6.9 (dealing with adjustments of
distribution levels), the Partnership may make a Pro Rata distribution of Partnership Securities to
all Record Holders or may effect a subdivision or combination of Partnership Securities so long as,
after any such event, each Partner shall have the same Percentage Interest in the Partnership as
before such event, and any amounts calculated on a per Unit basis (including any Common Unit
Arrearage or Cumulative Common Unit Arrearage) or stated as a number of Units (including the number
of Subordinated Units that may convert prior to the end of the Subordination Period) are
proportionately adjusted.
(b) Whenever such a distribution, subdivision or combination of Partnership Securities is
declared, the General Partner shall select a Record Date as of which the distribution, subdivision
or combination shall be effective and shall send notice thereof at least 20 days prior to such
Record Date to each Record Holder as of a date not less than 10 days prior to the date of such
notice. The General Partner also may cause a firm of independent public accountants selected by it
to calculate the number of Partnership Securities to be held by each Record Holder after giving
effect to such distribution, subdivision or combination. The General Partner shall be entitled to
rely on any certificate provided by such firm as conclusive evidence of the accuracy of such
calculation.
(c) Promptly following any such distribution, subdivision or combination, the Partnership may
issue Certificates, or other evidence of the issuance of uncertificated Units, to the Record
Holders of Partnership Securities as of the applicable Record Date representing the new number of
Partnership Securities held by such Record Holders, or the General Partner may adopt such other
procedures that it determines to be necessary or appropriate to reflect such changes. If any such
combination results in a smaller total number of Partnership Securities Outstanding, the
Partnership shall require, as a condition to the delivery to a Record Holder of such new
Certificate, or other evidence of the issuance of uncertificated Units, the surrender of any
Certificate, or other evidence of the issuance of uncertificated Units, held by such Record Holder
immediately prior to such Record Date.
(d) The Partnership shall not issue fractional Units upon any distribution, subdivision or
combination of Units. If a distribution, subdivision or combination of Units would result in the
issuance of fractional Units but for the provisions of this Section 5.9(d), each fractional Unit
shall be rounded to the nearest whole Unit (and a 0.5 Unit shall be rounded to the next higher
Unit).
Section 5.10
Fully Paid and Non-Assessable Nature of Limited Partner Interests
.
All Limited Partner Interests issued pursuant to, and in accordance with the requirements of,
this Article V shall be fully paid and non-assessable Limited Partner Interests in the Partnership,
except as such non-assessability may be affected by Section 17-607 of the Delaware Act.
Western Gas Partners, LP
First Amended and Restated Agreement of Limited Partnership
49
Section 5.11
Issuance of Class B Units in Connection with Reset of Incentive Distribution
Rights
.
(a) Subject to the provisions of this Section 5.11, the holder of the Incentive Distribution
Rights (or, if there is more than one holder of the Incentive Distribution Rights, the holders of a
majority in interest of the Incentive Distribution Rights) shall have the right, at any time when
there are no Subordinated Units outstanding and the Partnership has made a distribution pursuant to
Section 6.4(b)(v) for each of the four most recently completed Quarters and the amount of each such
distribution did not exceed Adjusted Operating Surplus for such Quarter, to make an election (the
IDR Reset Election
) to cause the Minimum Quarterly Distribution and the Target Distributions to
be reset in accordance with the provisions of Section 5.11(e) and, in connection therewith, the
holder or holders of the Incentive Distribution Rights will become entitled to receive their
respective proportionate share of a number of Class B Units derived by dividing (i) the average
amount of cash distributions made by the Partnership for the two full Quarters immediately
preceding the giving of the Reset Notice (as defined in Section 5.11(b)) in respect of the
Incentive Distribution Rights by (ii) the average of the cash distributions made by the Partnership
in respect of each Common Unit for the two full Quarters immediately preceding the giving of the
Reset Notice (the number of Class B Units determined by such quotient is referred to herein as the
Aggregate Quantity of Class B Units
). Upon the issuance of such Class B Units, the Partnership
will issue to the General Partner that number of additional General Partner Units equal to the
product of (x) the quotient obtained by dividing (A) the Percentage Interest of the General Partner
immediately prior to such issuance by (B) a percentage equal to 100% less such Percentage Interest
by (y) the number of such Class B Units, and the General Partner shall not be obligated to make any
additional Capital Contribution to the Partnership in exchange for such issuance. The making of the
IDR Reset Election in the manner specified in Section 5.11(b) shall cause the Minimum Quarterly
Distribution and the Target Distributions to be reset in accordance with the provisions of Section
5.11(e) and, in connection therewith, the holder or holders of the Incentive Distribution Rights
will become entitled to receive Class B Units and General Partner Units on the basis specified
above, without any further approval required by the General Partner or the Unitholders, at the time
specified in Section 5.11(c) unless the IDR Reset Election is rescinded pursuant to Section
5.11(d).
(b) To exercise the right specified in Section 5.11(a), the holder of the Incentive
Distribution Rights (or, if there is more than one holder of the Incentive Distribution Rights, the
holders of a majority in interest of the Incentive Distribution Rights) shall deliver a written
notice (the
Reset Notice
) to the Partnership. Within 10 Business Days after the receipt by the
Partnership of such Reset Notice, as the case may be, the Partnership shall deliver a written
notice to the holder or holders of the Incentive Distribution Rights of the Partnerships
determination of the aggregate number of Class B Units which each holder of Incentive Distribution
Rights will be entitled to receive.
(c) The holder or holders of the Incentive Distribution Rights will be entitled to receive the
Aggregate Quantity of Class B Units and related additional General Partner Units on the fifteenth
Business Day after receipt by the Partnership of the Reset Notice, and the Partnership shall issue
Certificates for the Class B Units to the holder or holders of the Incentive
Western Gas Partners, LP
First Amended and Restated Agreement of Limited Partnership
50
Distribution Rights;
provided, however
, that the issuance of Class B Units to the holder or
holders of the Incentive Distribution Rights shall not occur prior to the approval of the listing
or admission for trading of the Common Units into which the Class B Units are convertible pursuant
to Section 5.11(f) by the principal National Securities Exchange upon which the Common Units are
then listed or admitted for trading if any such approval is required pursuant to the rules and
regulations of such National Securities Exchange.
(d) If the principal National Securities Exchange upon which the Common Units are then traded
has not approved the listing or admission for trading of the Common Units into which the Class B
Units are convertible pursuant to Section 5.11(f) on or before the 30th calendar day following the
Partnerships receipt of the Reset Notice and such approval is required by the rules and
regulations of such National Securities Exchange, then the holder of the Incentive Distribution
Rights (or, if there is more than one holder of the Incentive Distribution Rights, the holders of a
majority in interest of the Incentive Distribution Rights) shall have the right to either rescind
the IDR Reset Election or elect to receive other Partnership Securities having such terms as the
General Partner may approve, with the approval of the Special Committee, that will provide (i) the
same economic value, in the aggregate, as the Aggregate Quantity of Class B Units would have had at
the time of the Partnerships receipt of the Reset Notice, as determined by the General Partner,
and (ii) for the subsequent conversion of such Partnership Securities into Common Units within not
more than 12 months following the Partnerships receipt of the Reset Notice upon the satisfaction
of one or more conditions that are reasonably acceptable to the holder of the Incentive
Distribution Rights (or, if there is more than one holder of the Incentive Distribution Rights, the
holders of a majority in interest of the Incentive Distribution Rights).
(e) The Minimum Quarterly Distribution, First Target Distribution, Second Target Distribution
and Third Target Distribution shall be adjusted at the time of the issuance of Common Units or
other Partnership Securities pursuant to this Section 5.11 such that (i) the Minimum Quarterly
Distribution shall be reset to equal to the average cash distribution amount per Common Unit for
the two Quarters immediately prior to the Partnerships receipt of the Reset Notice (the
Reset
MQD
), (ii) the First Target Distribution shall be reset to equal 115% of the Reset MQD, (iii) the
Second Target Distribution shall be reset to equal to 125% of the Reset MQD and (iv) the Third
Target Distribution shall be reset to equal 150% of the Reset MQD.
(f) Any holder of Class B Units shall have the right to elect, by giving written notice to the
General Partner, to convert all or a portion of the Class B Units held by such holder, at any time
following the first anniversary of the issuance of such Class B Units, into Common Units on a
one-for-one basis, such conversion to be effective on the second Business Day following the General
Partners receipt of such written notice.
(g) A Class B Unit that has, pursuant to Section 5.11(f), converted into a Common Unit (a
Converted Class B Unit
) shall be subject to the provisions of Section 6.7(d) and Section 6.7(e).
Western Gas Partners, LP
First Amended and Restated Agreement of Limited Partnership
51
ARTICLE VI
ALLOCATIONS AND DISTRIBUTIONS
Section 6.1
Allocations for Capital Account Purposes
.
For purposes of maintaining the Capital Accounts and in determining the rights of the Partners
among themselves, the Partnerships items of income, gain, loss and deduction (computed in
accordance with Section 5.5(b)) shall be allocated among the Partners in each taxable year (or
portion thereof) as provided herein below.
(a)
Net Income
. After giving effect to the special allocations set forth in Section 6.1(d),
Net Income for each taxable year and all items of income, gain, loss and deduction taken into
account in computing Net Income for such taxable year shall be allocated as follows:
(i) First, 100% to the General Partner until the aggregate Net Income allocated to the
General Partner pursuant to this Section 6.1(a)(i) for the current taxable year and all
previous taxable years is equal to the aggregate Net Losses allocated to the General Partner
pursuant to Section 6.1(b)(iii) for all previous taxable years;
(ii) Second, 100% to the General Partner and the Unitholders, in accordance with their
respective Percentage Interests, until the aggregate Net Income allocated to such Partners
pursuant to this Section 6.1(a)(ii) for the current taxable year and all previous taxable
years is equal to the aggregate Net Losses allocated to such Partners pursuant to Section
6.1(b)(ii) for all previous taxable years; and
(iii) Third, the balance, if any, 100% to the General Partner and the Unitholders, in
accordance with their respective Percentage Interests;
(b)
Net Losses
. After giving effect to the special allocations set forth in Section 6.1(d),
Net Losses for each taxable period and all items of income, gain, loss and deduction taken into
account in computing Net Losses for such taxable period shall be allocated as follows:
(i) First, 100% to the General Partner and the Unitholders, in accordance with their
respective Percentage Interests, until the aggregate Net Losses allocated pursuant to this
Section 6.1(b)(i) for the current taxable year and all previous taxable years is equal to
the aggregate Net Income allocated to such Partners pursuant to Section 6.1(a)(iii) for all
previous taxable years,
provided
that the Net Losses shall not be allocated pursuant to this
Section 6.1(b)(i) to the extent that such allocation would cause any Unitholder to have a
deficit balance in its Adjusted Capital Account at the end of such taxable year (or increase
any existing deficit balance in its Adjusted Capital Account);
(ii) Second, 100% to the General Partner and the Unitholders, in accordance with their
respective Percentage Interests; provided, that Net Losses shall not be allocated pursuant
to this Section 6.1(b)(ii) to the extent that such allocation would cause any
Western Gas Partners, LP
First Amended and Restated Agreement of Limited Partnership
52
Unitholder to have a deficit balance in its Adjusted Capital Account at the end of such
taxable year (or increase any existing deficit balance in its Adjusted Capital Account); and
(iii) Third, the balance, if any, 100% to the General Partner;
(c)
Net Termination Gains and Losses
. After giving effect to the special allocations set
forth in Section 6.1(d), all items of income, gain, loss and deduction taken into account in
computing Net Termination Gain or Net Termination Loss for such taxable period shall be allocated
in the same manner as such Net Termination Gain or Net Termination Loss is allocated hereunder. All
allocations under this Section 6.1(c) shall be made after Capital Account balances have been
adjusted by all other allocations provided under this Section 6.1 and after all distributions of
Available Cash provided under Section 6.4 and Section 6.5 have been made;
provided, however
, that
solely for purposes of this Section 6.1(c), Capital Accounts shall not be adjusted for
distributions made pursuant to Section 12.4.
(i) If a Net Termination Gain is recognized (or deemed recognized pursuant to Section
5.5(d)), such Net Termination Gain shall be allocated among the Partners in the following
manner (and the Capital Accounts of the Partners shall be increased by the amount so
allocated in each of the following subclauses, in the order listed, before an allocation is
made pursuant to the next succeeding subclause):
(A) First, to each Partner having a deficit balance in its Capital Account, in
the proportion that such deficit balance bears to the total deficit balances in the
Capital Accounts of all Partners, until each such Partner has been allocated Net
Termination Gain equal to any such deficit balance in its Capital Account;
(B) Second, (x) to the General Partner in accordance with its Percentage
Interest and (y) to all Unitholders holding Common Units, Pro Rata, a percentage
equal to 100% less the percentage applicable to subclause (x) of this clause (B),
until the Capital Account in respect of each Common Unit then Outstanding is equal
to the sum of (1) its Unrecovered Initial Unit Price, (2) the Minimum Quarterly
Distribution for the Quarter during which the Liquidation Date occurs, reduced by
any distribution pursuant to Section 6.4(a)(i) or Section 6.4(b)(i) with respect to
such Common Unit for such Quarter (the amount determined pursuant to this clause (2)
is hereinafter defined as the
Unpaid MQD
) and (3) any then existing Cumulative
Common Unit Arrearage;
(C) Third, if the Adjusted Capital Account of a Common Unit or comparable
fraction thereof and a Class B Unit (or Converted Class B Unit) or comparable
fraction thereof are not identical, (x) to all Unitholders holding the class of
Units with the lower Adjusted Capital Account, Pro Rata, a percentage equal to 100%
less the percentage applicable to subclause (y) of this clause (C), and (y) to the
General Partner in accordance with its Percentage Interest, until the Adjusted
Capital Account of each Common Unit or comparable fraction thereof
Western Gas Partners, LP
First Amended and Restated Agreement of Limited Partnership
53
and each Class B Unit (or Converted Class B Unit) or comparable fraction
thereof are equal;
(D) Fourth, if such Net Termination Gain is recognized (or is deemed to be
recognized) prior to the conversion of the last Outstanding Subordinated Unit, (x)
to the General Partner in accordance with its Percentage Interest and (y) to all
Unitholders holding Subordinated Units, Pro Rata, a percentage equal to 100% less
the percentage applicable to subclause (x) of this clause (D), until the Capital
Account in respect of each Subordinated Unit then Outstanding equals the sum of (1)
its Unrecovered Initial Unit Price, determined for the taxable year (or portion
thereof) to which this allocation of gain relates, and (2) the Minimum Quarterly
Distribution for the Quarter during which the Liquidation Date occurs, reduced by
any distribution pursuant to Section 6.4(a)(iii) with respect to such Subordinated
Unit for such Quarter;
(E) Fifth, 100% to the General Partner and all Unitholders in accordance with
their respective Percentage Interests, until the Capital Account in respect of each
Common Unit then Outstanding is equal to the sum of (1) its Unrecovered Initial Unit
Price, (2) the Unpaid MQD, (3) any then existing Cumulative Common Unit Arrearage,
and (4) the excess of (aa) the First Target Distribution less the Minimum Quarterly
Distribution for each Quarter of the Partnerships existence over (bb) the
cumulative per Unit amount of any distributions of Available Cash that is deemed to
be Operating Surplus made pursuant to Section 6.4(a)(iv) and Section 6.4(b)(ii) (the
sum of (1), (2), (3) and (4) is hereinafter defined as the
First Liquidation Target
Amount
);
(F) Sixth, (x) to the General Partner in accordance with its Percentage
Interest, (y) 13% to the holders of the Incentive Distribution Rights, Pro Rata, and
(z) to all Unitholders, Pro Rata, a percentage equal to 100% less the sum of the
percentages applicable to subclauses (x) and (y) of this clause (F), until the
Capital Account in respect of each Common Unit then Outstanding is equal to the sum
of (1) the First Liquidation Target Amount, and (2) the excess of (aa) the Second
Target Distribution less the First Target Distribution for each Quarter of the
Partnerships existence over (bb) the cumulative per Unit amount of any
distributions of Available Cash that is deemed to be Operating Surplus made pursuant
to Section 6.4(a)(v) and Section 6.4(b)(iii) (the sum of (1) and (2) is hereinafter
defined as the
Second Liquidation Target Amount
);
(G) Seventh, (x) to the General Partner in accordance with its Percentage
Interest, (y) 23% to the holders of the Incentive Distribution Rights, Pro Rata, and
(z) to all Unitholders, Pro Rata, a percentage equal to 100% less the sum of the
percentages applicable to subclauses (x) and (y) of this clause (G), until the
Capital Account in respect of each Common Unit then Outstanding is equal to the sum
of (1) the Second Liquidation Target Amount, and (2) the excess of (aa) the Third
Target Distribution less the Second Target Distribution for each Quarter of the
Partnerships existence over (bb) the cumulative per Unit amount
Western Gas Partners, LP
First Amended and Restated Agreement of Limited Partnership
54
of any distributions of Available Cash that is deemed to be Operating Surplus
made pursuant to Section 6.4(a)(vi) and Section 6.4(b)(iv); and
(H) Finally, (x) to the General Partner in accordance with its Percentage
Interest, (y) 48% to the holders of the Incentive Distribution Rights, Pro Rata, and
(z) to all Unitholders, Pro Rata, a percentage equal to 100% less the sum of the
percentages applicable to subclauses (x) and (y) of this clause (H).
(ii) If a Net Termination Loss is recognized (or deemed recognized pursuant to Section
5.5(d)), such Net Termination Loss shall be allocated among the Partners in the following
manner:
(A) First, if such Net Termination Loss is recognized (or is deemed to be
recognized) prior to the conversion of the last Outstanding Subordinated Unit, (x)
to the General Partner in accordance with its Percentage Interest and (y) to all
Unitholders holding Subordinated Units, Pro Rata, a percentage equal to 100% less
the percentage applicable to subclause (x) of this clause (A), until the Capital
Account in respect of each Subordinated Unit then Outstanding has been reduced to
zero;
(B) Second, if the Adjusted Capital Account of a Common Unit or comparable
fraction there of and a Class B Unit (or Converted Class B Unit) or comparable
fraction thereof are not identical, to (i) the Unitholders holding the class of
Units with the higher Adjusted Capital Account and (ii) the General Partner, in
accordance with their Percentage Interests, until the Adjusted Capital Account of
each Common Unit or comparable fraction thereof and each Class B Unit (or Converted
Class B Unit) or comparable fraction thereof are equal;
(C) Third, (x) to the General Partner in accordance with its Percentage
Interest and (y) to all Unitholders, Pro Rata, a percentage equal to 100% less the
percentage applicable to subclause (x) of this clause (C) until the Capital Account
in respect of each Unit then Outstanding has been reduced to zero; and
(D) Fourth, the balance, if any, 100% to the General Partner.
(d)
Special Allocations
. Notwithstanding any other provision of this Section 6.1, the
following special allocations shall be made for such taxable period:
(i)
Partnership Minimum Gain Chargeback
. Notwithstanding any other provision of this
Section 6.1, if there is a net decrease in Partnership Minimum Gain during any Partnership
taxable period, each Partner shall be allocated items of Partnership income and gain for
such period (and, if necessary, subsequent periods) in the manner and amounts provided in
Treasury Regulation Sections 1.704-2(f)(6), 1.704-2(g)(2) and 1.704-2(j)(2)(i), or any
successor provision. For purposes of this Section 6.1(d), each Partners Adjusted Capital
Account balance shall be determined, and the allocation of income or gain required hereunder
shall be effected, prior to the application
Western Gas Partners, LP
First Amended and Restated Agreement of Limited Partnership
55
of any other allocations pursuant to this Section 6.1(d) with respect to such taxable
period (other than an allocation pursuant to Section 6.1(d)(vi) and Section 6.1(d)(vii)).
This Section 6.1(d)(i) is intended to comply with the Partnership Minimum Gain chargeback
requirement in Treasury Regulation Section 1.704-2(f) and shall be interpreted consistently
therewith.
(ii)
Chargeback of Partner Nonrecourse Debt Minimum Gain
. Notwithstanding the other
provisions of this Section 6.1 (other than Section 6.1(d)(i)), except as provided in
Treasury Regulation Section 1.704-2(i)(4), if there is a net decrease in Partner Nonrecourse
Debt Minimum Gain during any Partnership taxable period, any Partner with a share of Partner
Nonrecourse Debt Minimum Gain at the beginning of such taxable period shall be allocated
items of Partnership income and gain for such period (and, if necessary, subsequent periods)
in the manner and amounts provided in Treasury Regulation Sections 1.704-2(i)(4) and
1.704-2(j)(2)(ii), or any successor provisions. For purposes of this Section 6.1(d), each
Partners Adjusted Capital Account balance shall be determined, and the allocation of income
or gain required hereunder shall be effected, prior to the application of any other
allocations pursuant to this Section 6.1(d), other than Section 6.1(d)(i) and other than an
allocation pursuant to Section 6.1(d)(vi) and Section 6.1(d)(vii), with respect to such
taxable period. This Section 6.1(d)(ii) is intended to comply with the chargeback of items
of income and gain requirement in Treasury Regulation Section 1.704-2(i)(4) and shall be
interpreted consistently therewith.
(iii)
Priority Allocations
.
(A) If the amount of cash or the Net Agreed Value of any property distributed
(except cash or property distributed pursuant to Section 12.4) to any Unitholder
with respect to its Units for a taxable year is greater (on a per Unit basis) than
the amount of cash or the Net Agreed Value of property distributed to the other
Unitholders with respect to their Units (on a per Unit basis), then (1) there shall
be allocated gross income and gain to each Unitholder receiving such greater cash or
property distribution until the aggregate amount of such items allocated pursuant to
this Section 6.1(d)(iii)(A) for the current taxable year and all previous taxable
years is equal to the product of (aa) the amount by which the distribution (on a per
Unit basis) to such Unitholder exceeds the distribution (on a per Unit basis) to the
Unitholders receiving the smallest distribution and (bb) the number of Units owned
by the Unitholder receiving the greater distribution; and (2) the General Partner
shall be allocated gross income and gain in an aggregate amount equal to the product
obtained by multiplying (aa) the quotient determined by dividing (x) the General
Partners Percentage Interest at the time in which the greater cash or property
distribution occurs by (y) the sum of 100 less the General Partners Percentage
Interest at the time in which the greater cash or property distribution occurs times
(bb) the sum of the amounts allocated in clause (1) above.
Western Gas Partners, LP
First Amended and Restated Agreement of Limited Partnership
56
(B) After the application of Section 6.1(d)(iii)(A), all or any portion of the
remaining items of Partnership gross income or gain for the taxable period, if any,
shall be allocated (1) to the holders of Incentive Distribution Rights, Pro Rata,
until the aggregate amount of such items allocated to the holders of Incentive
Distribution Rights pursuant to this Section 6.1(d)(iii)(B) for the current taxable
year and all previous taxable years is equal to the cumulative amount of all
Incentive Distributions made to the holders of Incentive Distribution Rights from
the Closing Date to a date 45 days after the end of the current taxable year; and
(2) to the General Partner an amount equal to the product of (aa) an amount equal to
the quotient determined by dividing (x) the General Partners Percentage Interest by
(y) the sum of 100 less the General Partners Percentage Interest times (bb) the sum
of the amounts allocated in clause (1) above.
(iv)
Qualified Income Offset
. In the event any Partner unexpectedly receives any
adjustments, allocations or distributions described in Treasury Regulation Sections
1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), or 1.704-1(b)(2)(ii)(d)(6), items of
Partnership gross income and gain shall be specially allocated to such Partner in an amount
and manner sufficient to eliminate, to the extent required by the Treasury Regulations
promulgated under Section 704(b) of the Code, the deficit balance, if any, in its Adjusted
Capital Account created by such adjustments, allocations or distributions as quickly as
possible unless such deficit balance is otherwise eliminated pursuant to Section 6.1(d)(i)
or Section 6.1(d)(ii).
(v)
Gross Income Allocations
. In the event any Partner has a deficit balance in its
Capital Account at the end of any Partnership taxable period in excess of the sum of (A) the
amount such Partner is required to restore pursuant to the provisions of this Agreement and
(B) the amount such Partner is deemed obligated to restore pursuant to Treasury Regulation
Sections 1.704-2(g) and 1.704-2(i)(5), such Partner shall be specially allocated items of
Partnership gross income and gain in the amount of such excess as quickly as possible;
provided, that an allocation pursuant to this Section 6.1(d)(v) shall be made only if and to
the extent that such Partner would have a deficit balance in its Capital Account as adjusted
after all other allocations provided for in this Section 6.1 have been tentatively made as
if this Section 6.1(d)(v) were not in this Agreement.
(vi)
Nonrecourse Deductions
. Nonrecourse Deductions for any taxable period shall be
allocated to the Partners in accordance with their respective Percentage Interests. If the
General Partner determines that the Partnerships Nonrecourse Deductions should be allocated
in a different ratio to satisfy the safe harbor requirements of the Treasury Regulations
promulgated under Section 704(b) of the Code, the General Partner is authorized, upon notice
to the other Partners, to revise the prescribed ratio to the numerically closest ratio that
does satisfy such requirements.
(vii)
Partner Nonrecourse Deductions
. Partner Nonrecourse Deductions for any taxable
period shall be allocated 100% to the Partner that bears the Economic Risk of Loss with
respect to the Partner Nonrecourse Debt to which such Partner Nonrecourse
Western Gas Partners, LP
First Amended and Restated Agreement of Limited Partnership
57
Deductions are attributable in accordance with Treasury Regulation Section 1.704-2(i).
If more than one Partner bears the Economic Risk of Loss with respect to a Partner
Nonrecourse Debt, such Partner Nonrecourse Deductions attributable thereto shall be
allocated between or among such Partners in accordance with the ratios in which they share
such Economic Risk of Loss.
(viii)
Nonrecourse Liabilities
. For purposes of Treasury Regulation Section
1.752-3(a)(3), the Partners agree that Nonrecourse Liabilities of the Partnership in excess
of the sum of (A) the amount of Partnership Minimum Gain and (B) the total amount of
Nonrecourse Built-in Gain shall be allocated among the Partners in accordance with their
respective Percentage Interests.
(ix)
Code Section 754 Adjustments
. To the extent an adjustment to the adjusted tax
basis of any Partnership asset pursuant to Section 734(b) or 743(b) of the Code is required,
pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(m), to be taken into account in
determining Capital Accounts, the amount of such adjustment to the Capital Accounts shall be
treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if
the adjustment decreases such basis), and such item of gain or loss shall be specially
allocated to the Partners in a manner consistent with the manner in which their Capital
Accounts are required to be adjusted pursuant to such Section of the Treasury Regulations.
(x)
Economic Uniformity
.
(A) At the election of the General Partner with respect to any taxable period
ending upon, or after, the earlier to occur of (1) the first Book-Up Event or
Book-Down Event following the issuance of Class B Units pursuant to Section 5.11 or
(2) the termination of the Subordination Period, all or a portion of the remaining
items of Partnership gross income or gain for such taxable period, after taking into
account allocations pursuant to Section 6.1(d)(iii), shall be allocated 100% to each
Partner holding Subordinated Units that are Outstanding as of the termination of the
Subordination Period (
Final Subordinated Units
) in the proportion of the number of
Final Subordinated Units held by such Partner to the total number of Final
Subordinated Units then Outstanding, until each such Partner has been allocated an
amount of gross income or gain that increases the Capital Account maintained with
respect to such Final Subordinated Units to an amount equal to the product of (A)
the number of Final Subordinated Units held by such Partner and (B) the Per Unit
Capital Amount for a Common Unit. The purpose of this allocation is to establish
uniformity between the Capital Accounts underlying Final Subordinated Units and the
Capital Accounts underlying Common Units held by Persons other than the General
Partner and its Affiliates immediately prior to the conversion of such Final
Subordinated Units into Common Units. This allocation method for establishing such
economic uniformity will be available to the General Partner only if the method for
allocating the Capital Account maintained with respect to the Subordinated Units
between the transferred and retained Subordinated Units pursuant to Section
Western Gas Partners, LP
First Amended and Restated Agreement of Limited Partnership
58
5.5(c)(ii) does not otherwise provide such economic uniformity to the Final
Subordinated Units.
(B) At the election of the General Partner with respect to any taxable period
ending upon, or after, the conversion of the Class B Units pursuant to Section
5.11(f), all or a portion of the remaining items of Partnership gross income or gain
for such taxable period, after taking into account allocations pursuant to Section
6.1(d)(iii) and Section 6.1(d)(x)(A), shall be allocated 100% to the holder or
holders of the Converted Class B Units resulting from the conversion pursuant to
Section 5.11(f) in the proportion of the number of the Converted Class B Units held
by such holder or holders to the total number of Converted Class B Units then
Outstanding, until each such holder has been allocated an amount of gross income or
gain that increases the Capital Account maintained with respect to such Converted
Class B Units to an amount equal to the product of (A) the number of Converted Class
B Units held by such holder and (B) the Per Unit Capital Amount for a Common Unit.
The purpose of this allocation is to establish uniformity between the Capital
Accounts underlying Converted Class B Units and the Capital Accounts underlying
Common Units held by Persons other than the General Partner and its Affiliates
immediately prior to the receipt of Common Units pursuant to Section 5.11(f).
(xi)
Curative Allocation
.
(A) Notwithstanding any other provision of this Section 6.1, other than the
Required Allocations, the Required Allocations shall be taken into account in making
the Agreed Allocations so that, to the extent possible, the net amount of items of
gross income, gain, loss and deduction allocated to each Partner pursuant to the
Required Allocations and the Agreed Allocations, together, shall be equal to the net
amount of such items that would have been allocated to each such Partner under the
Agreed Allocations had the Required Allocations and the related Curative Allocation
not otherwise been provided in this Section 6.1. Notwithstanding the preceding
sentence, Required Allocations relating to (1) Nonrecourse Deductions shall not be
taken into account except to the extent that there has been a decrease in
Partnership Minimum Gain and (2) Partner Nonrecourse Deductions shall not be taken
into account except to the extent that there has been a decrease in Partner
Nonrecourse Debt Minimum Gain. Allocations pursuant to this Section 6.1(d)(xi)(A)
shall only be made with respect to Required Allocations to the extent the General
Partner determines that such allocations will otherwise be inconsistent with the
economic agreement among the Partners. Further, allocations pursuant to this Section
6.1(d)(xi)(A) shall be deferred with respect to allocations pursuant to clauses (1)
and (2) hereof to the extent the General Partner determines that such allocations
are likely to be offset by subsequent Required Allocations.
(B) The General Partner shall, with respect to each taxable period, (1) apply
the provisions of Section 6.1(d)(xi)(A) in whatever order is most likely to
Western Gas Partners, LP
First Amended and Restated Agreement of Limited Partnership
59
minimize the economic distortions that might otherwise result from the Required
Allocations, and (2) divide all allocations pursuant to Section 6.1(d)(xi)(A) among
the Partners in a manner that is likely to minimize such economic distortions.
(xii)
Corrective and Other Allocations
. In the event of any allocation of Additional
Book Basis Derivative Items or any Book-Down Event or any recognition of a Net Termination
Loss, the following rules shall apply:
(A) Except as provided in Section 6.1(d)(xii)(B), in the case of any allocation
of Additional Book Basis Derivative Items (other than an allocation of Unrealized
Gain or Unrealized Loss under Section 5.5(d) hereof) with respect to any Partnership
property, the General Partner shall allocate such Additional Book Basis Derivative
Items (1) to (aa) the holders of Incentive Distribution Rights and (bb) the General
Partner in the same manner that the Unrealized Gain or Unrealized Loss attributable
to such property is allocated pursuant to Section 5.5(d)(i) or Section 5.5(d)(ii)
and (2) to all Unitholders, Pro Rata, to the extent that the Unrealized Gain or
Unrealized Loss attributable to such property is allocated to any Unitholders
pursuant to Section 5.5(d)(i) or Section 5.2(ii).
(B) In the case of any allocation of Additional Book Basis Derivative Items
(other than an allocation of Unrealized Gain or Unrealized Loss under Section 5.5(d)
hereof or an allocation of Net Termination Gain or Net Termination Loss pursuant to
Section 6.1(c) hereof) as a result of a sale or other taxable disposition of any
Partnership asset that is an Adjusted Property (
Disposed of Adjusted Property
),
the General Partner shall allocate (1) additional items of gross income and gain
(aa) away from the holders of Incentive Distribution Rights and the General Partner
and (bb) to the Unitholders, or (2) additional items of deduction and loss (aa) away
from the Unitholders and (bb) to the holders of Incentive Distribution Rights and
the General Partner, to the extent that the Additional Book Basis Derivative Items
allocated to the Unitholders exceed their Share of Additional Book Basis Derivative
Items with respect to such Disposed of Adjusted Property. For this purpose, the
Unitholders shall be treated as being allocated Additional Book Basis Derivative
Items to the extent that such Additional Book Basis Derivative Items have reduced
the amount of income that would otherwise have been allocated to the Unitholders
under the Partnership Agreement (e.g., Additional Book Basis Derivative Items taken
into account in computing cost of goods sold would reduce the amount of book income
otherwise available for allocation among the Partners). Any allocation made pursuant
to this Section 6.1(d)(xii)(B) shall be made after all of the other Agreed
Allocations have been made as if this Section 6.1(d)(xii) were not in this Agreement
and, to the extent necessary, shall require the reallocation of items that have been
allocated pursuant to such other Agreed Allocations.
(C) In the case of any negative adjustments to the Capital Accounts of the
Partners resulting from a Book-Down Event or from the recognition of a Net
Termination Loss, such negative adjustment (1) shall first be allocated, to the
Western Gas Partners, LP
First Amended and Restated Agreement of Limited Partnership
60
extent of the Aggregate Remaining Net Positive Adjustments, in such a manner,
as determined by the General Partner, that to the extent possible the aggregate
Capital Accounts of the Partners will equal the amount that would have been the
Capital Account balance of the Partners if no prior Book-Up Events had occurred, and
(2) any negative adjustment in excess of the Aggregate Remaining Net Positive
Adjustments shall be allocated pursuant to Section 6.1(c) hereof.
(D) In making the allocations required under this Section 6.1(d)(xii), the
General Partner may apply whatever conventions or other methodology it determines
will satisfy the purpose of this Section 6.1(d)(xii).
Section 6.2
Allocations for Tax Purposes
.
(a) Except as otherwise provided herein, for federal income tax purposes, each item of income,
gain, loss and deduction shall be allocated among the Partners in the same manner as its
correlative item of book income, gain, loss or deduction is allocated pursuant to Section 6.1.
(b) In an attempt to eliminate Book-Tax Disparities attributable to a Contributed Property or
Adjusted Property, items of income, gain, loss, depreciation, amortization and cost recovery
deductions shall be allocated for federal income tax purposes among the Partners as follows:
(i) (A) In the case of a Contributed Property, such items attributable thereto shall be
allocated among the Partners in the manner provided under Section 704(c) of the Code that
takes into account the variation between the Agreed Value of such property and its adjusted
basis at the time of contribution; and (B) any item of Residual Gain or Residual Loss
attributable to a Contributed Property shall be allocated among the Partners in the same
manner as its correlative item of book gain or loss is allocated pursuant to Section 6.1.
(ii) (A) In the case of an Adjusted Property, such items shall (1) first, be allocated
among the Partners in a manner consistent with the principles of Section 704(c) of the Code
to take into account the Unrealized Gain or Unrealized Loss attributable to such property
and the allocations thereof pursuant to Section 5.5(d)(i) or Section 5.5(d)(ii), and (2)
second, in the event such property was originally a Contributed Property, be allocated among
the Partners in a manner consistent with Section 6.2(b)(i)(A); and (B) any item of Residual
Gain or Residual Loss attributable to an Adjusted Property shall be allocated among the
Partners in the same manner as its correlative item of book gain or loss is allocated
pursuant to Section 6.1.
(iii) The General Partner shall apply the principles of Treasury Regulation Section
1.704-3(d) to eliminate Book-Tax Disparities.
(c) For the proper administration of the Partnership and for the preservation of uniformity of
the Limited Partner Interests (or any class or classes thereof), the General Partner shall (i)
adopt such conventions as it deems appropriate in determining the amount of
Western Gas Partners, LP
First Amended and Restated Agreement of Limited Partnership
61
depreciation, amortization and cost recovery deductions; (ii) make special allocations for
federal income tax purposes of income (including gross income) or deductions; and (iii) amend the
provisions of this Agreement as appropriate (x) to reflect the proposal or promulgation of Treasury
Regulations under Section 704(b) or Section 704(c) of the Code or (y) otherwise to preserve or
achieve uniformity of the Limited Partner Interests (or any class or classes thereof). The General
Partner may adopt such conventions, make such allocations and make such amendments to this
Agreement as provided in this Section 6.2(c) only if such conventions, allocations or amendments
would not have a material adverse effect on the Partners, the holders of any class or classes of
Limited Partner Interests issued and Outstanding or the Partnership, and if such allocations are
consistent with the principles of Section 704 of the Code.
(d) The General Partner may determine to depreciate or amortize the portion of an adjustment
under Section 743(b) of the Code attributable to unrealized appreciation in any Adjusted Property
(to the extent of the unamortized Book-Tax Disparity) using a predetermined rate derived from the
depreciation or amortization method and useful life applied to the unamortized Book-Tax Disparity
of such property, despite any inconsistency of such approach with Treasury Regulation Section
1.167(c)-l(a)(6) or any successor regulations thereto. If the General Partner determines that such
reporting position cannot reasonably be taken, the General Partner may adopt depreciation and
amortization conventions under which all purchasers acquiring Limited Partner Interests in the same
month would receive depreciation and amortization deductions, based upon the same applicable rate
as if they had purchased a direct interest in the Partnerships property. If the General Partner
chooses not to utilize such aggregate method, the General Partner may use any other depreciation
and amortization conventions to preserve the uniformity of the intrinsic tax characteristics of any
Limited Partner Interests, so long as such conventions would not have a material adverse effect on
the Limited Partners or the Record Holders of any class or classes of Limited Partner Interests.
(e) In accordance with Treasury Regulation Sections 1.1245-1(e) and 1.1250-1(f), any gain
allocated to the Partners upon the sale or other taxable disposition of any Partnership asset
shall, to the extent possible, after taking into account other required allocations of gain
pursuant to this Section 6.2, be characterized as Recapture Income in the same proportions and to
the same extent as such Partners (or their predecessors in interest) have been allocated any
deductions directly or indirectly giving rise to the treatment of such gains as Recapture Income.
(f) All items of income, gain, loss, deduction and credit recognized by the Partnership for
federal income tax purposes and allocated to the Partners in accordance with the provisions hereof
shall be determined without regard to any election under Section 754 of the Code that may be made
by the Partnership;
provided, however
, that such allocations, once made, shall be adjusted (in the
manner determined by the General Partner) to take into account those adjustments permitted or
required by Sections 734 and 743 of the Code.
(g) Each item of Partnership income, gain, loss and deduction, for federal income tax
purposes, shall be determined on an annual basis and prorated on a monthly basis and shall be
allocated to the Partners as of the opening of the National Securities Exchange on which the
Partnership Interests are listed or admitted to trading on the first Business Day of each month;
provided, however
, such items for the period beginning on the Closing Date and ending on the
Western Gas Partners, LP
First Amended and Restated Agreement of Limited Partnership
62
last day of the month in which the exercise in full of the Over-Allotment Option or the
expiration of the Over-Allotment Option occurs shall be allocated to the Partners as of the opening
of the National Securities Exchange on which the Partnership Interests are listed or admitted to
trading on the first Business Day of the next succeeding month; and
provided, further
, that gain or
loss on a sale or other disposition of any assets of the Partnership or any other extraordinary
item of income or loss realized and recognized other than in the ordinary course of business, as
determined by the General Partner, shall be allocated to the Partners as of the opening of the
National Securities Exchange on which the Partnership Interests are listed or admitted to trading
on the first Business Day of the month in which such gain or loss is recognized for federal income
tax purposes. The General Partner may revise, alter or otherwise modify such methods of allocation
to the extent permitted or required by Section 706 of the Code and the regulations or rulings
promulgated thereunder.
(h) Allocations that would otherwise be made to a Limited Partner under the provisions of this
Article VI shall instead be made to the beneficial owner of Limited Partner Interests held by a
nominee in any case in which the nominee has furnished the identity of such owner to the
Partnership in accordance with Section 6031(c) of the Code or any other method determined by the
General Partner.
Section 6.3
Requirement and Characterization of Distributions; Distributions to Record
Holders
.
(a) Within 45 days following the end of each Quarter commencing with the Quarter ending on
June 30, 2008, an amount equal to 100% of Available Cash with respect to such Quarter shall,
subject to Section 17-607 of the Delaware Act, be distributed in accordance with this Article VI by
the Partnership to the Partners as of the Record Date selected by the General Partner. All amounts
of Available Cash distributed by the Partnership on any date from any source shall be deemed to be
Operating Surplus until the sum of all amounts of Available Cash theretofore distributed by the
Partnership to the Partners pursuant to Section 6.4 equals the Operating Surplus from the Closing
Date through the close of the immediately preceding Quarter. Any remaining amounts of Available
Cash distributed by the Partnership on such date shall, except as otherwise provided in Section
6.5, be deemed to be
Capital Surplus
. All distributions required to be made under this Agreement
shall be made subject to Section 17-607 of the Delaware Act.
(b) Notwithstanding Section 6.3(a), in the event of the dissolution and liquidation of the
Partnership, all receipts received during or after the Quarter in which the Liquidation Date occurs
shall be applied and distributed solely in accordance with, and subject to the terms and conditions
of, Section 12.4.
(c) The General Partner may treat taxes paid by the Partnership on behalf of, or amounts
withheld with respect to, all or less than all of the Partners, as a distribution of Available Cash
to such Partners.
(d) Each distribution in respect of a Partnership Interest shall be paid by the Partnership,
directly or through the Transfer Agent or through any other Person or agent, only to
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63
the Record Holder of such Partnership Interest as of the Record Date set for such
distribution. Such payment shall constitute full payment and satisfaction of the Partnerships
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.
Section 6.4
Distributions of Available Cash from Operating Surplus
.
(a)
During Subordination Period
. Available Cash with respect to any Quarter within the
Subordination Period that is deemed to be Operating Surplus pursuant to the provisions of Section
6.3 or 6.5 shall, subject to Section 17-607 of the Delaware Act, be distributed as follows, except
as otherwise contemplated by Section 5.6 in respect of other Partnership Securities issued pursuant
thereto:
(i) First, (x) to the General Partner in accordance with its Percentage Interest and
(y) to the Unitholders holding Common Units, Pro Rata, a percentage equal to 100% less the
General Partners Percentage Interest, until there has been distributed in respect of each
Common Unit then Outstanding an amount equal to the Minimum Quarterly Distribution for such
Quarter;
(ii) Second, (x) to the General Partner in accordance with its Percentage Interest and
(y) to the Unitholders holding Common Units, Pro Rata, a percentage equal to 100% less the
General Partners Percentage Interest, until there has been distributed in respect of each
Common Unit then Outstanding an amount equal to the Cumulative Common Unit Arrearage
existing with respect to such Quarter;
(iii) Third, (x) to the General Partner in accordance with its Percentage Interest and
(y) to the Unitholders holding Subordinated Units, Pro Rata, a percentage equal to 100% less
the General Partners Percentage Interest, until there has been distributed in respect of
each Subordinated Unit then Outstanding an amount equal to the Minimum Quarterly
Distribution for such Quarter;
(iv) Fourth, to the General Partner and all Unitholders, in accordance with their
respective Percentage Interests, until there has been distributed in respect of each Unit
then Outstanding an amount equal to the excess of the First Target Distribution over the
Minimum Quarterly Distribution for such Quarter;
(v) Fifth, (A) to the General Partner in accordance with its Percentage Interest; (B)
13% to the holders of the Incentive Distribution Rights, Pro Rata; and (C) to all
Unitholders, Pro Rata, a percentage equal to 100% less the sum of the percentages applicable
to subclauses (A) and (B) of this clause (v) until there has been distributed in respect of
each Unit then Outstanding an amount equal to the excess of the Second Target Distribution
over the First Target Distribution for such Quarter;
(vi) Sixth, (A) to the General Partner in accordance with its Percentage Interest, (B)
23% to the holders of the Incentive Distribution Rights, Pro Rata; and (C) to all
Unitholders, Pro Rata, a percentage equal to 100% less the sum of the percentages
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64
applicable to subclauses (A) and (B) of this clause (vi), until there has been
distributed in respect of each Unit then Outstanding an amount equal to the excess of the
Third Target Distribution over the Second Target Distribution for such Quarter; and
(vii) Thereafter, (A) to the General Partner in accordance with its Percentage
Interest; (B) 48% to the holders of the Incentive Distribution Rights, Pro Rata; and (C) to
all Unitholders, Pro Rata, a percentage equal to 100% less the sum of the percentages
applicable to subclauses (A) and (B) of this clause (vii);
provided, however
, if the Minimum Quarterly Distribution, the First Target Distribution, the Second
Target Distribution and the Third Target Distribution have been reduced to zero pursuant to the
second sentence of Section 6.6(a), the distribution of Available Cash that is deemed to be
Operating Surplus with respect to any Quarter will be made solely in accordance with Section
6.4(a)(vii).
(b)
After Subordination Period
. Available Cash with respect to any Quarter after the
Subordination Period that is deemed to be Operating Surplus pursuant to the provisions of Section
6.3 or Section 6.5, subject to Section 17-607 of the Delaware Act, shall be distributed as follows,
except as otherwise required by Section 5.6(b) in respect of additional Partnership Securities
issued pursuant thereto:
(i) First, 100% to the General Partner and the Unitholders in accordance with their
respective Percentage Interests, until there has been distributed in respect of each Unit
then Outstanding an amount equal to the Minimum Quarterly Distribution for such Quarter;
(ii) Second, 100% to the General Partner and the Unitholders in accordance with their
respective Percentage Interests, until there has been distributed in respect of each Unit
then Outstanding an amount equal to the excess of the First Target Distribution over the
Minimum Quarterly Distribution for such Quarter;
(iii) Third, (A) to the General Partner in accordance with its Percentage Interest; (B)
13% to the holders of the Incentive Distribution Rights, Pro Rata; and (C) to all
Unitholders, Pro Rata, a percentage equal to 100% less the sum of the percentages applicable
to subclauses (A) and (B) of this clause (iii), until there has been distributed in respect
of each Unit then Outstanding an amount equal to the excess of the Second Target
Distribution over the First Target Distribution for such Quarter;
(iv) Fourth, (A) to the General Partner in accordance with its Percentage Interest; (B)
23% to the holders of the Incentive Distribution Rights, Pro Rata; and (C) to all
Unitholders, Pro Rata, a percentage equal to 100% less the sum of the percentages applicable
to subclause (A) and (B) of this clause (iv), until there has been distributed in respect of
each Unit then Outstanding an amount equal to the excess of the Third Target Distribution
over the Second Target Distribution for such Quarter; and
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65
(v) Thereafter, (A) to the General Partner in accordance with its Percentage Interest;
(B) 48% to the holders of the Incentive Distribution Rights, Pro Rata; and (C) to all
Unitholders, Pro Rata, a percentage equal to 100% less the sum of the percentages applicable
to subclauses (A) and (B) of this clause (v);
provided, however
, if the Minimum Quarterly Distribution, the First Target Distribution, the Second
Target Distribution and the Third Target Distribution have been reduced to zero pursuant to the
second sentence of Section 6.6(a), the distribution of Available Cash that is deemed to be
Operating Surplus with respect to any Quarter will be made solely in accordance with Section
6.4(b)(v).
Section 6.5
Distributions of Available Cash from Capital Surplus
.
Available Cash that is deemed to be Capital Surplus pursuant to the provisions of Section
6.3(a) shall, subject to Section 17-607 of the Delaware Act, be distributed, unless the provisions
of Section 6.3 require otherwise, 100% to the General Partner and the Unitholders in accordance
with their respective Percentage Interests, until a hypothetical holder of a Common Unit acquired
on the Closing Date has received with respect to such Common Unit, during the period since the
Closing Date through such date, distributions of Available Cash that are deemed to be Capital
Surplus in an aggregate amount equal to the Initial Unit Price. Available Cash that is deemed to be
Capital Surplus shall then be distributed (A) to the General Partner in accordance with its
Percentage Interest and (B) to all Unitholders holding Common Units, Pro Rata, a percentage equal
to 100% less the General Partners Percentage Interest, until there has been distributed in respect
of each Common Unit then Outstanding an amount equal to the Cumulative Common Unit Arrearage.
Thereafter, all Available Cash shall be distributed as if it were Operating Surplus and shall be
distributed in accordance with Section 6.4.
Section 6.6
Adjustment of Minimum Quarterly Distribution and Target Distribution Levels
.
(a) The Minimum Quarterly Distribution, First Target Distribution, Second Target Distribution,
Third Target Distribution, Common Unit Arrearages and Cumulative Common Unit Arrearages shall be
proportionately adjusted in the event of any distribution, combination or subdivision (whether
effected by a distribution payable in Units or otherwise) of Units or other Partnership Securities
in accordance with Section 5.9. In the event of a distribution of Available Cash that is deemed to
be from Capital Surplus, the then applicable Minimum Quarterly Distribution, First Target
Distribution, Second Target Distribution and Third Target Distribution, shall be adjusted
proportionately downward to equal the product obtained by multiplying the otherwise applicable
Minimum Quarterly Distribution, First Target Distribution, Second Target Distribution and Third
Target Distribution, as the case may be, by a fraction of which the numerator is the Unrecovered
Initial Unit Price of the Common Units immediately after giving effect to such distribution and of
which the denominator is the Unrecovered Initial Unit Price of the Common Units immediately prior
to giving effect to such distribution.
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(b) The Minimum Quarterly Distribution, First Target Distribution, Second Target Distribution
and Third Target Distribution, shall also be subject to adjustment pursuant to Section 5.11 and
Section 6.9.
Section 6.7
Special Provisions Relating to the Holders of Subordinated Units and Class B
Units
.
(a) Except with respect to the right to vote on or approve matters requiring the vote or
approval of a percentage of the holders of Outstanding Common Units and the right to participate in
allocations of income, gain, loss and deduction and distributions made with respect to Common
Units, the holder of a Subordinated Unit shall have all of the rights and obligations of a
Unitholder holding Common Units hereunder;
provided, however
, that immediately upon the conversion
of Subordinated Units into Common Units pursuant to Section 5.7, the Unitholder holding a
Subordinated Unit shall possess all of the rights and obligations of a Unitholder holding Common
Units hereunder, including the right to vote as a Common Unitholder and the right to participate in
allocations of income, gain, loss and deduction and distributions made with respect to Common
Units;
provided, however
, that such converted Subordinated Units shall remain subject to the
provisions of Sections 5.5(c)(ii), 6.1(d)(x)(A), 6.7(b) and 6.7(c).
(b) A Unitholder shall not be permitted to transfer a Subordinated Unit or a Subordinated Unit
that has converted into a Common Unit pursuant to Section 5.7 (other than a transfer to an
Affiliate) if the remaining balance in the transferring Unitholders Capital Account with respect
to the retained Subordinated Units or Retained Converted Subordinated Units would be negative after
giving effect to the allocation under Section 5.5(c)(ii)(B).
(c) The Unitholder holding a Common Unit that has resulted from the conversion of a
Subordinated Unit pursuant to Section 5.7 shall not be issued a Common Unit Certificate, or other
evidence of the issuance of uncertificated Units, pursuant to Section 4.1, and shall not be
permitted to transfer such Common Unit to a Person that is not an Affiliate of the holder until
such time as the General Partner determines, based on advice of counsel, that each such Common Unit
should have, as a substantive matter, like intrinsic economic and federal income tax
characteristics, in all material respects, to the intrinsic economic and federal income tax
characteristics of an Initial Common Unit. In connection with the condition imposed by this Section
6.7(c), the General Partner may take whatever steps are required to provide economic uniformity to
such Common Units in preparation for a transfer of such Common Units, including the application of
Sections 5.5(c)(ii), 6.1(d)(x) and 6.7(b);
provided, however
, that no such steps may be taken that
would have a material adverse effect on the Unitholders holding Common Units represented by Common
Unit Certificates, or other evidence of the issuance of uncertificated Units.
(d) Except with respect to the right to vote on or approve matters requiring the vote or
approval of a percentage of the holders of Outstanding Common Units and the right to participate in
allocations of income, gain, loss and deduction and distributions made with respect to Common
Units, the holders of Class B Units shall have all the rights and obligations of a Unitholder
holding Common Units;
provided, however
, that immediately upon the conversion of Class B Units into
Common Units pursuant to Section 5.11, the Unitholders holding a Converted
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67
Class B Unit shall possess all the rights and obligations of a Unitholder holding Common Units
hereunder, including the right to vote as a Common Unitholder and the right to participate in
allocations of income, gain, loss and deduction and distributions made with respect to Common
Units;
provided, however
, that such Converted Class B Units shall remain subject to the provisions
of Sections 6.1(a), 6.1(b), 6.1(d)(iii), 6.1(d)(x)(B) and 6.7(e).
(e) The holder or holders of Converted Class B Units resulting from the conversion pursuant to
Section 5.11(f) of any Class B Units pursuant to Section 5.11 shall not be issued a Common Unit
Certificate pursuant to Section 4.1, and shall not be permitted to transfer such Common Units until
such time as the General Partner determines, based on advice of counsel, that each such Common Unit
should have, as a substantive matter, like intrinsic economic and federal income tax
characteristics, in all material respects, to the intrinsic economic and federal income tax
characteristics of an Initial Common Unit. In connection with the condition imposed by this Section
6.7(e), the General Partner may take whatever steps are required to provide economic uniformity to
such Common Units, including the application of Section 6.1(d)(x)(B);
provided, however
, that no
such steps may be taken that would have a material adverse effect on the Unitholders holding Common
Units represented by Common Unit Certificates (for this purpose the allocations of items of income,
gain, loss or deduction with respect to Class B Units or with respect to Common Units will be
deemed not to have a material adverse effect on the Common Units).
Section 6.8
Special Provisions Relating to the Holders of Incentive Distribution Rights
.
Notwithstanding anything to the contrary set forth in this Agreement, the holders of the
Incentive Distribution Rights (a) shall (i) possess the rights and obligations provided in this
Agreement with respect to a Limited Partner pursuant to Article III and Article VII and (ii) have a
Capital Account as a Partner pursuant to Section 5.5 and all other provisions related thereto and
(b) shall not (i) be entitled to vote on any matters requiring the approval or vote of the holders
of Outstanding Units, except as provided by law, (ii) be entitled to any distributions other than
as provided in Sections 6.4(a)(v), (vi) and (vii), Section 6.4(b)(iii), (iv) and (v), and Section
12.4 or (iii) be allocated items of income, gain, loss or deduction other than as specified in this
Article VI.
Section 6.9
Entity-Level Taxation
.
If legislation is enacted or the interpretation of existing language is modified by a
governmental taxing authority so that a Group Member is treated as an association taxable as a
corporation or is otherwise subject to an entity-level tax for federal, state or local income tax
purposes, then the General Partner may reduce the Minimum Quarterly Distribution, the First Target
Distribution, the Second Target Distribution and the Third Target Distribution to take into account
the amount of income taxes that are payable by reason of any such new legislation or interpretation
(the
Incremental Income Taxes
), or any portion thereof selected by the General Partner, in the
manner provided in this Section 6.9. If the General Partner elects to reduce the Minimum Quarterly
Distribution, the First Target Distribution, the Second Target Distribution and the Third Target
Distribution for any Quarter with respect to all or a portion of any
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First Amended and Restated Agreement of Limited Partnership
68
Incremental Income Taxes, the General Partner shall estimate for such Quarter the Partnership
Groups aggregate liability (the
Estimated Incremental Quarterly Tax Amount
) for all such income
taxes that are payable by reason of any such new legislation or interpretation; provided that any
difference between such estimate and the actual tax liability for such Quarter that is owed by
reason of any such new legislation or interpretation shall be taken into account in determining the
Estimated Incremental Quarterly Tax Amount with respect to each Quarter in which any such
difference can be determined. For each such Quarter, the Minimum Quarterly Distribution, First
Target Distribution, Second Target Distribution and Third Target Distribution, shall be the product
obtained by multiplying (a) the amounts therefor that are set out herein prior to the application
of this Section 6.9 times (b) the quotient obtained by dividing (i) Available Cash with respect to
such Quarter by (ii) the sum of Available Cash with respect to such Quarter and the Estimated
Incremental Quarterly Tax Amount for such Quarter, as determined by the General Partner. For
purposes of the foregoing, Available Cash with respect to a Quarter will be deemed reduced by the
Estimated Incremental Quarterly Tax Amount for that Quarter.
ARTICLE VII
MANAGEMENT AND OPERATION OF BUSINESS
Section 7.1
Management
.
(a) The General Partner shall conduct, direct and manage all activities of the Partnership.
Except as otherwise expressly provided in this Agreement, all management powers over the business
and affairs of the Partnership shall be exclusively vested in the General Partner, and no Limited
Partner shall have any management power over the business and affairs of the Partnership. In
addition to the powers now or hereafter granted a general partner of a limited partnership under
applicable law or that are granted to the General Partner under any other provision of this
Agreement, the General Partner, subject to Section 7.3, shall have full power and authority to do
all things and on such terms as it determines to be necessary or appropriate to conduct the
business of the Partnership, to exercise all powers set forth in Section 2.5 and to effectuate the
purposes set forth in Section 2.4, including the following:
(i) the making of any expenditures, the lending or borrowing of money, the assumption
or guarantee of, or other contracting for, indebtedness and other liabilities, the issuance
of evidences of indebtedness, including indebtedness that is convertible into Partnership
Securities, and the incurring of any other obligations;
(ii) the making of tax, regulatory and other filings, or rendering of periodic or other
reports to governmental or other agencies having jurisdiction over the business or assets of
the Partnership;
(iii) the acquisition, disposition, mortgage, pledge, encumbrance, hypothecation or
exchange of any or all of the assets of the Partnership or the merger or other combination
of the Partnership with or into another Person (the matters described in this clause (iii)
being subject, however, to any prior approval that may be required by Section 7.3 and
Article XIV);
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69
(iv) the use of the assets of the Partnership (including cash on hand) for any purpose
consistent with the terms of this Agreement, including the financing of the conduct of the
operations of the Partnership Group; subject to Section 7.6(a), the lending of funds to
other Persons (including other Group Members); the repayment or guarantee of obligations of
any Group Member; and the making of capital contributions to any Group Member;
(v) the negotiation, execution and performance of any contracts, conveyances or other
instruments (including instruments that limit the liability of the Partnership under
contractual arrangements to all or particular assets of the Partnership, with the other
party to the contract to have no recourse against the General Partner or its assets other
than its interest in the Partnership, even if same results in the terms of the transaction
being less favorable to the Partnership than would otherwise be the case);
(vi) the distribution of Partnership cash;
(vii) the selection and dismissal of employees (including employees having titles such
as president, vice president, secretary and treasurer) and agents, outside
attorneys, accountants, consultants and contractors and the determination of their
compensation and other terms of employment or hiring;
(viii) the maintenance of insurance for the benefit of the Partnership Group, the
Partners and Indemnitees;
(ix) the formation of, or acquisition of an interest in, and the contribution of
property and the making of loans to, any further limited or general partnerships, joint
ventures, corporations, limited liability companies or other Persons (including the
acquisition of interests in, and the contributions of property to, any Group Member from
time to time) subject to the restrictions set forth in Section 2.4;
(x) the control of any matters affecting the rights and obligations of the Partnership,
including the bringing and defending of actions at law or in equity and otherwise engaging
in the conduct of litigation, arbitration or mediation and the incurring of legal expense
and the settlement of claims and litigation;
(xi) the indemnification of any Person against liabilities and contingencies to the
extent permitted by law;
(xii) the entering into of listing agreements with any National Securities Exchange and
the delisting of some or all of the Limited Partner Interests from, or requesting that
trading be suspended on, any such exchange (subject to any prior approval that may be
required under Section 4.8);
(xiii) the purchase, sale or other acquisition or disposition of Partnership
Securities, or the issuance of options, rights, warrants and appreciation rights relating to
Partnership Securities;
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70
(xiv) the undertaking of any action in connection with the Partnerships participation
in any Group Member; and
(xv) the entering into of agreements with any of its Affiliates to render services to a
Group Member or to itself in the discharge of its duties as General Partner of the
Partnership.
(b) Notwithstanding any other provision of this Agreement, any Group Member Agreement, the
Delaware Act or any applicable law, rule or regulation, each of the Partners and the Assignees and
each other Person who may acquire an interest in Partnership Securities hereby (i) approves,
ratifies and confirms the execution, delivery and performance by the parties thereto of this
Agreement and the Group Member Agreement of each other Group Member, the Underwriting Agreement,
the Omnibus Agreement, the Secondment Agreement, the Contribution Agreement, the Tax Sharing
Agreement, the Credit Agreement, the Working Capital Agreement, any Commodity Hedge Contract, any
Group Member Agreement and the other agreements described in or filed as exhibits to the
Registration Statement that are related to the transactions contemplated by the Registration
Statement; (ii) agrees that the General Partner (on its own or through any officer of the
Partnership) is authorized to execute, deliver and perform the agreements referred to in clause (i)
of this sentence and the other agreements, acts, transactions and matters described in or
contemplated by the Registration Statement on behalf of the Partnership without any further act,
approval or vote of the Partners or the Assignees or the other Persons who may acquire an interest
in Partnership Securities; and (iii) agrees that the execution, delivery or performance by the
General Partner, any Group Member or any Affiliate of any of them of this Agreement or any
agreement authorized or permitted under this Agreement (including the exercise by the General
Partner or any Affiliate of the General Partner of the rights accorded pursuant to Article XV)
shall not constitute a breach by the General Partner of any duty that the General Partner may owe
the Partnership or the Limited Partners or any other Persons under this Agreement (or any other
agreements) or of any duty otherwise existing at law, in equity or otherwise.
Section 7.2
Certificate of Limited Partnership
.
The General Partner has caused the Certificate of Limited Partnership to be filed with the
Secretary of State of the State of Delaware as required by the Delaware Act. The General Partner
shall use all reasonable efforts to cause to be filed such other certificates or documents that the
General Partner determines to be necessary or appropriate for the formation, continuation,
qualification and operation of a limited partnership (or a partnership in which the limited
partners have limited liability) in the State of Delaware or any other state in which the
Partnership may elect to do business or own property. To the extent the General Partner determines
such action to be necessary or appropriate, the General Partner shall file amendments to and
restatements of the Certificate of Limited Partnership and do all things to maintain the
Partnership as a limited partnership (or a partnership or other entity in which the limited
partners have limited liability) under the laws of the State of Delaware or of any other state in
which the Partnership may elect to do business or own property. Subject to the terms of Section
3.4(a), the General Partner shall not be required, before or after filing, to deliver or mail a
copy of the Certificate of Limited Partnership, any qualification document or any amendment thereto
to any Limited Partner.
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Section 7.3
Restrictions on the General Partners Authority
.
Except as provided in Article XII and Article XIV, the General Partner may not sell, exchange
or otherwise dispose of all or substantially all of the assets of the Partnership Group, taken as a
whole, in a single transaction or a series of related transactions (including by way of merger,
consolidation, other combination or sale of ownership interests of the Partnerships Subsidiaries)
without the approval of holders of a Unit Majority;
provided, however
, that this provision shall
not preclude or limit the General Partners ability to mortgage, pledge, hypothecate or grant a
security interest in all or substantially all of the assets of the Partnership Group and shall not
apply to any forced sale of any or all of the assets of the Partnership Group pursuant to the
foreclosure of, or other realization upon, any such encumbrance. Without the approval of holders of
a Unit Majority, the General Partner shall not, on behalf of the Partnership, except as permitted
under Section 4.6, Section 11.1, Section 11.2 or Section 12.1(a), elect or cause the Partnership to
elect a successor general partner of the Partnership.
Section 7.4
Reimbursement of the General Partner
.
(a) Except as provided in this Section 7.4 and elsewhere in this Agreement, the General
Partner shall not be compensated for its services as a general partner or managing member of any
Group Member.
(b) The General Partner shall be reimbursed on a monthly basis, or such other basis as the
General Partner may determine, for (i) all direct and indirect expenses it incurs or payments it
makes on behalf of the Partnership Group (including salary, bonus, incentive compensation and other
amounts paid to any Person, including Affiliates of the General Partner to perform services for the
Partnership Group or for the General Partner in the discharge of its duties to the Partnership
Group), and (ii) all other expenses allocable to the Partnership Group or otherwise incurred by the
General Partner in connection with operating the Partnership Groups business (including expenses
allocated to the General Partner by its Affiliates). The General Partner shall determine the
expenses that are allocable to the Partnership Group. Reimbursements pursuant to this Section 7.4
shall be in addition to any reimbursement to the General Partner as a result of indemnification
pursuant to Section 7.7.
(c) The General Partner, without the approval of the Limited Partners (who shall have no right
to vote in respect thereof), may propose and adopt on behalf of the Partnership employee benefit
plans, employee programs and employee practices (including plans, programs and practices involving
the issuance of Partnership Securities or options to purchase or rights, warrants or appreciation
rights or phantom or tracking interests relating to Partnership Securities), or cause the
Partnership to issue Partnership Securities in connection with, or pursuant to, any employee
benefit plan, employee program or employee practice maintained or sponsored by the General Partner,
Group Member or any Affiliates in each case for the benefit of employees and directors of the
General Partner or any of its Affiliates, in respect of services performed, directly or indirectly,
for the benefit of the Partnership Group. The Partnership agrees to issue and sell to the General
Partner or any of its Affiliates any Partnership Securities that the General Partner or such
Affiliates are obligated to provide to any employees and directors pursuant to any such employee
benefit plans, employee programs or employee practices.
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72
Expenses incurred by the General Partner in connection with any such plans, programs and
practices (including the net cost to the General Partner or such Affiliates of Partnership
Securities purchased by the General Partner or such Affiliates from the Partnership to fulfill
options or awards under such plans, programs and practices) shall be reimbursed in accordance with
Section 7.4(b). Any and all obligations of the General Partner under any employee benefit plans,
employee programs or employee practices adopted by the General Partner as permitted by this Section
7.4(c) shall constitute obligations of the General Partner hereunder and shall be assumed by any
successor General Partner approved pursuant to Section 11.1 or Section 11.2 or the transferee of or
successor to all of the General Partners General Partner Interest (represented by General Partner
Units) pursuant to Section 4.6.
Section 7.5
Outside Activities
.
(a) After the Closing Date, the General Partner, for so long as it is the General Partner of
the Partnership (i) agrees that its sole business will be to act as a general partner or managing
member, as the case may be, of the Partnership and any other partnership or limited liability
company of which the Partnership is, directly or indirectly, a partner or member and to undertake
activities that are ancillary or related thereto (including being a limited partner in the
Partnership) and (ii) shall not engage in any business or activity or incur any debts or
liabilities except in connection with or incidental to (A) its performance as general partner or
managing member, if any, of one or more Group Members or as described in or contemplated by the
Registration Statement, (B) the acquiring, owning or disposing of debt or equity securities in any
Group Member, or (C) the guarantee of, and mortgage, pledge, or encumbrance of any or all of its
assets in connection with, any indebtedness of Anadarko, any of its successors or permitted assigns
or any other Affiliate of the General Partner.
(b) Except as set forth in the Omnibus Agreement, each Indemnitee (other than the General
Partner) shall have the right to engage in businesses of every type and description and other
activities for profit and to engage in and possess an interest in other business ventures of any
and every type or description, whether in businesses engaged in or anticipated to be engaged in by
any Group Member, independently or with others, including business interests and activities in
direct competition with the business and activities of any Group Member, and none of the same shall
constitute a breach of this Agreement or any duty otherwise existing at law, in equity or
otherwise, to any Group Member or any Partner. None of any Group Member, any Limited Partner or any
other Person shall have any rights by virtue of this Agreement, any Group Member Agreement, or the
partnership relationship established hereby in any business ventures of any Indemnitee.
(c) Notwithstanding anything to the contrary in this Agreement, (i) the engaging in
competitive activities by any Indemnitees (other than the General Partner) in accordance with the
provisions of this Section 7.5 is hereby approved by the Partnership and all Partners, (ii) it
shall be deemed not to be a breach of any fiduciary duty or any other obligation of any type
whatsoever of any Indemnitee for the Indemnitees (other than the General Partner) to engage in such
business interests and activities in preference to or to the exclusion of the Partnership and (iii)
the Indemnitees shall have no obligation hereunder or as a result of any duty otherwise existing at
law, in equity or otherwise, to present business opportunities to the Partnership.
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73
Notwithstanding anything to the contrary in this Agreement, the doctrine of corporate
opportunity, or any analogous doctrine, shall not apply to any Indemnitee (including the General
Partner). No Indemnitee (including the General Partner) who acquires knowledge of a potential
transaction, agreement, arrangement or other matter that may be an opportunity for the Partnership,
shall have any duty to communicate or offer such opportunity to the Partnership, and such
Indemnitee (including the General Partner) shall not be liable to the Partnership, to any Limited
Partner or any other Person for breach of any fiduciary or other duty by reason of the fact that
such Indemnitee (including the General Partner) pursues or acquires for itself, directs such
opportunity to another Person or does not communicate such opportunity or information to the
Partnership; provided such Indemnitee does not engage in such business or activity as a result of
or using confidential or proprietary information provided by or on behalf of the Partnership to
such Indemnitee.
(d) The General Partner and each of its Affiliates may acquire Units or other Partnership
Securities in addition to those acquired on the Closing Date and, except as otherwise provided in
this Agreement, shall be entitled to exercise, at their option, all rights relating to all Units or
other Partnership Securities acquired by them. The term Affiliates when used in this Section
7.5(d) with respect to the General Partner shall not include any Group Member.
(e) Notwithstanding anything to the contrary in this Agreement, to the extent that any
provision of this Agreement purports or is interpreted to have the effect of restricting the
fiduciary duties that might otherwise, as a result of Delaware or other applicable law, be owed by
the General Partner to the Partnership and its Limited Partners, or to constitute a waiver or
consent by the Limited Partners to any such restriction, such provisions shall be deemed to have
been approved by the Partners.
Section 7.6
Loans from the General Partner; Loans or Contributions from the Partnership or
Group Members
.
(a) The General Partner or any of its Affiliates may lend to any Group Member, and any Group
Member may borrow from the General Partner or any of its Affiliates, funds needed or desired by the
Group Member for such periods of time and in such amounts as the General Partner may determine;
provided, however
, that in any such case the lending party may not charge the borrowing party
interest at a rate greater than the rate that would be charged the borrowing party or impose terms
less favorable to the borrowing party than would be charged or imposed on the borrowing party by
unrelated lenders on comparable loans made on an arms-length basis (without reference to the
lending partys financial abilities or guarantees), all as determined by the General Partner. The
borrowing party shall reimburse the lending party for any costs (other than any additional interest
costs) incurred by the lending party in connection with the borrowing of such funds. For purposes
of this Section 7.6(a) and Section 7.6(b), the term Group Member shall include any Affiliate of a
Group Member that is controlled by the Group Member.
(b) The Partnership may lend or contribute to any Group Member, and any Group Member may
borrow from the Partnership, funds on terms and conditions determined by the
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74
General Partner. Except for the Initial Loan, no Group Member may lend funds to the General
Partner or any of its Affiliates (other than another Group Member).
(c) No borrowing by any Group Member or the approval thereof by the General Partner shall be
deemed to constitute a breach of any duty hereunder or otherwise existing at law, in equity or
otherwise, of the General Partner or its Affiliates to the Partnership or the Limited Partners by
reason of the fact that the purpose or effect of such borrowing is directly or indirectly to (i)
enable distributions to the General Partner or its Affiliates (including in their capacities as
Limited Partners) to exceed the General Partners Percentage Interest of the total amount
distributed to all Partners or (ii) hasten the expiration of the Subordination Period or the
conversion of any Subordinated Units into Common Units.
Section 7.7
Indemnification
.
(a) To the fullest extent permitted by law but subject to the limitations expressly provided
in this Agreement, all Indemnitees shall be indemnified and held harmless by the Partnership from
and against any and all losses, claims, damages, liabilities, joint or several, expenses (including
legal fees and expenses), judgments, fines, penalties, interest, settlements or other amounts
arising from any and all claims, demands, actions, suits or proceedings, whether civil, criminal,
administrative or investigative, in which any Indemnitee may be involved, or is threatened to be
involved, as a party or otherwise, by reason of its status as an Indemnitee;
provided
, that the
Indemnitee shall not be indemnified and held harmless if there has been a final and non-appealable
judgment entered by a court of competent jurisdiction determining that, in respect of the matter
for which the Indemnitee is seeking indemnification pursuant to this Section 7.7, the Indemnitee
acted in bad faith or engaged in fraud, willful misconduct or, in the case of a criminal matter,
acted with knowledge that the Indemnitees conduct was unlawful;
provided, further
, no
indemnification pursuant to this Section 7.7 shall be available to the General Partner or its
Affiliates (other than a Group Member) with respect to its or their obligations incurred pursuant
to the Underwriting Agreement, the Omnibus Agreement, the Secondment Agreement, the Contribution
Agreement, the Tax Sharing Agreement or the Working Capital Agreement (other than obligations
incurred by the General Partner on behalf of the Partnership). Any indemnification pursuant to this
Section 7.7 shall be made only out of the assets of the Partnership, it being agreed that the
General Partner shall not be personally liable for such indemnification and shall have no
obligation to contribute or loan any monies or property to the Partnership to enable it to
effectuate such indemnification.
(b) To the fullest extent permitted by law, expenses (including legal fees and expenses)
incurred by an Indemnitee who is indemnified pursuant to Section 7.7(a) in defending any claim,
demand, action, suit or proceeding shall, from time to time, be advanced by the Partnership prior
to a final and non-appealable judgment entered by a court of competent jurisdiction determining
that, in respect of the matter for which the Indemnitee is seeking indemnification pursuant to this
Section 7.7, the Indemnitee is not entitled to be indemnified.
(c) The indemnification provided by this Section 7.7 shall be in addition to any other rights
to which an Indemnitee may be entitled under any agreement, pursuant to any vote of the holders of
Outstanding Limited Partner Interests, as a matter of law or otherwise, both as to
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75
actions in the Indemnitees capacity as an Indemnitee and as to actions in any other capacity
(including any capacity under the Underwriting Agreement), and shall continue as to an Indemnitee
who has ceased to serve in such capacity and shall inure to the benefit of the heirs, successors,
assigns and administrators of the Indemnitee.
(d) The Partnership may purchase and maintain (or reimburse the General Partner or its
Affiliates for the cost of) insurance, on behalf of the General Partner, its Affiliates and such
other Persons as the General Partner shall determine, against any liability that may be asserted
against, or expense that may be incurred by, such Person in connection with the Partnerships
activities or such Persons activities on behalf of the Partnership, regardless of whether the
Partnership would have the power to indemnify such Person against such liability under the
provisions of this Agreement.
(e) For purposes of this Section 7.7, the Partnership shall be deemed to have requested an
Indemnitee to serve as fiduciary of an employee benefit plan whenever the performance by it of its
duties to the Partnership also imposes duties on, or otherwise involves services by, it to the plan
or participants or beneficiaries of the plan; excise taxes assessed on an Indemnitee with respect
to an employee benefit plan pursuant to applicable law shall constitute fines within the meaning
of Section 7.7(a); and action taken or omitted by it with respect to any employee benefit plan in
the performance of its duties for a purpose reasonably believed by it to be in the best interest of
the participants and beneficiaries of the plan shall be deemed to be for a purpose that is in the
best interests of the Partnership.
(f) In no event may an Indemnitee subject the Limited Partners to personal liability by reason
of the indemnification provisions set forth in this Agreement.
(g) An Indemnitee shall not be denied indemnification in whole or in part under this Section
7.7 because the Indemnitee had an interest in the transaction with respect to which the
indemnification applies if the transaction was otherwise permitted by the terms of this Agreement.
(h) The provisions of this Section 7.7 are for the benefit of the Indemnitees, their heirs,
successors, assigns and administrators and shall not be deemed to create any rights for the benefit
of any other Persons.
(i) No amendment, modification or repeal of this Section 7.7 or any provision hereof shall in
any manner terminate, reduce or impair the right of any past, present or future Indemnitee to be
indemnified by the Partnership, nor the obligations of the Partnership to indemnify any such
Indemnitee under and in accordance with the provisions of this Section 7.7 as in effect immediately
prior to such amendment, modification or repeal with respect to claims arising from or relating to
matters occurring, in whole or in part, prior to such amendment, modification or repeal, regardless
of when such claims may arise or be asserted.
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Section 7.8
Liability of Indemnitees
.
(a) Notwithstanding anything to the contrary set forth in this Agreement, no Indemnitee shall
be liable for monetary damages to the Partnership, the Limited Partners, or any other Persons who
have acquired interests in the Partnership Securities, for losses sustained or liabilities incurred
as a result of any act or omission of an Indemnitee unless there has been a final and
non-appealable judgment entered by a court of competent jurisdiction determining that, in respect
of the matter in question, the Indemnitee acted in bad faith or engaged in fraud, willful
misconduct or, in the case of a criminal matter, acted with knowledge that the Indemnitees conduct
was criminal.
(b) Subject to its obligations and duties as General Partner set forth in Section 7.1(a), the
General Partner may exercise any of the powers granted to it by this Agreement and perform any of
the duties imposed upon it hereunder either directly or by or through its agents, and the General
Partner shall not be responsible for any misconduct or negligence on the part of any such agent
appointed by the General Partner in good faith.
(c) To the extent that, at law or in equity, an Indemnitee has duties (including fiduciary
duties) and liabilities relating thereto to the Partnership or to the Partners, the General Partner
and any other Indemnitee acting in connection with the Partnerships business or affairs shall not
be liable to the Partnership or to any Partner for its good faith reliance on the provisions of
this Agreement.
(d) Any amendment, modification or repeal of this Section 7.8 or any provision hereof shall be
prospective only and shall not in any way affect the limitations on the liability of the
Indemnitees under this Section 7.8 as in effect immediately prior to such amendment, modification
or repeal with respect to claims arising from or relating to matters occurring, in whole or in
part, prior to such amendment, modification or repeal, regardless of when such claims may arise or
be asserted.
Section 7.9
Resolution of Conflicts of Interest; Standards of Conduct and Modification of
Duties
.
(a) Unless otherwise expressly provided in this Agreement or any Group Member Agreement,
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, any Group Member or any Partner, on the
other, any resolution or course of action by the General Partner or its Affiliates in respect of
such conflict of interest shall be permitted and deemed approved by all Partners, and shall not
constitute a breach of this Agreement, of any Group Member Agreement, of any agreement contemplated
herein or therein, or of any duty stated or implied by law or equity, if the resolution or course
of action in respect of such conflict of interest is (i) approved by Special Approval, (ii)
approved by the vote of a majority of the Common Units (excluding Common Units owned by the General
Partner and its Affiliates), (iii) on terms no less favorable to the Partnership than those
generally being provided to or available from unrelated third parties or (iv) fair and reasonable
to the Partnership, taking into account the totality of the relationships between the parties
involved (including other transactions that may be particularly favorable or advantageous
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77
to the Partnership). The General Partner shall be authorized but not required in connection
with its resolution of such conflict of interest to seek Special Approval of such resolution, and
the General Partner may also adopt a resolution or course of action that has not received Special
Approval. If Special Approval is sought, then it shall be presumed that, in making its decision,
the Special Committee acted in good faith, and if Special Approval is not sought and the Board of
Directors determines that the resolution or course of action taken with respect to a conflict of
interest satisfies either of the standards set forth in clauses (iii) or (iv) above, then it shall
be presumed that, in making its decision, the Board of Directors acted in good faith, and in any
proceeding brought by any Limited Partner or by or on behalf of such Limited Partner or any other
Limited Partner or the Partnership challenging such approval, the Person bringing or prosecuting
such proceeding shall have the burden of overcoming such presumption. Notwithstanding anything to
the contrary in this Agreement or any duty otherwise existing at law or equity, the existence of
the conflicts of interest described in the Registration Statement are hereby approved by all
Partners and shall not constitute a breach of this Agreement or any duty otherwise existing at law,
in equity or otherwise.
(b) Whenever the General Partner makes a determination or takes or declines to take any other
action, or any of its Affiliates causes it to do so, in its capacity as the general partner of the
Partnership as opposed to in its individual capacity, whether under this Agreement, any Group
Member Agreement or any other agreement contemplated hereby or otherwise, then, unless another
express standard is provided for in this Agreement, the General Partner, or such Affiliates causing
it to do so, shall make such determination or take or decline to take such other action in good
faith and shall not be subject to any other or different standards (including fiduciary standards)
imposed by this Agreement, any Group Member Agreement, any other agreement contemplated hereby or
under the Delaware Act or any other law, rule or regulation or at equity. In order for a
determination or other action to be in good faith for purposes of this Agreement, the Person or
Persons making such determination or taking or declining to take such other action must reasonably
believe that the determination or other action is in the best interests of the Partnership.
(c) Whenever the General Partner makes a determination or takes or declines to take any other
action, or any of its Affiliates causes it to do so, in its individual capacity as opposed to in
its capacity as the general partner of the Partnership, whether under this Agreement, any Group
Member Agreement or any other agreement contemplated hereby or otherwise, then the General Partner,
or such Affiliates causing it to do so, are entitled, to the fullest extent permitted by law, to
make such determination or to take or decline to take such other action free of any duty (including
any fiduciary duty) or obligation whatsoever to the Partnership, any Limited Partner, and any other
Person bound by this Agreement, and the General Partner, or such Affiliates causing it to do so,
shall not, to the fullest extent permitted by law, be required to act in good faith or pursuant to
any other standard imposed by this Agreement, any Group Member Agreement, any other agreement
contemplated hereby or under the Delaware Act or any other law, rule or regulation or at equity. By
way of illustration and not of limitation, whenever the phrase, at the option of the General
Partner, or some variation of that phrase, is used in this Agreement, it indicates that the
General Partner is acting in its individual capacity. For the avoidance of doubt, whenever the
General Partner votes or transfers its Partnership Interests, or
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refrains from voting or transferring its Partnership Interests, it shall be acting in its
individual capacity. The General Partners organizational documents may provide that determinations
to take or decline to take any action in its individual, rather than representative, capacity may
or shall be determined by its members, if the General Partner is a limited liability company,
stockholders, if the General Partner is a corporation, or the members or stockholders of the
General Partners general partner, if the General Partner is a partnership.
(d) Notwithstanding anything to the contrary in this Agreement, the General Partner and its
Affiliates shall have no duty or obligation, express or implied, to (i) sell or otherwise dispose
of any asset of the Partnership Group other than in the ordinary course of business or (ii) permit
any Group Member to use any facilities or assets of the General Partner and its Affiliates, except
as may be provided in contracts entered into from time to time specifically dealing with such use.
Any determination by the General Partner or any of its Affiliates to enter into such contracts
shall be at its option.
(e) Except as expressly set forth in this Agreement, neither the General Partner nor any other
Indemnitee shall have any duties or liabilities, including fiduciary duties, to the Partnership or
any Limited Partner and the provisions of this Agreement, to the extent that they restrict,
eliminate or otherwise modify the duties and liabilities, including fiduciary duties, of the
General Partner or any other Indemnitee otherwise existing at law or in equity, are agreed by the
Partners to replace such other duties and liabilities of the General Partner or such other
Indemnitee.
(f) The Unitholders hereby authorize the General Partner, on behalf of the Partnership as a
partner or member of a Group Member, to approve of actions by the general partner or managing
member of such Group Member similar to those actions permitted to be taken by the General Partner
pursuant to this Section 7.9.
Section 7.10
Other Matters Concerning the General Partner
.
(a) The General Partner may rely upon, and shall be protected in acting or refraining from
acting upon, any resolution, certificate, statement, instrument, opinion, report, notice, request,
consent, order, bond, debenture or other paper or document believed by it to be genuine and to have
been signed or presented by the proper party or parties.
(b) The General Partner may consult with legal counsel, accountants, appraisers, management
consultants, investment bankers and other consultants and advisers selected by it, and any act
taken or omitted to be taken in reliance upon the opinion (including an Opinion of Counsel) of such
Persons as to matters that the General Partner reasonably believes to be within such Persons
professional or expert competence shall be conclusively presumed to have been done or omitted in
good faith and in accordance with such opinion.
(c) The General Partner shall have the right, in respect of any of its powers or obligations
hereunder, to act through any of its duly authorized officers, a duly appointed attorney or
attorneys-in-fact or the duly authorized officers of the Partnership or any Group Member.
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79
Section 7.11
Purchase or Sale of Partnership Securities
.
The General Partner may cause the Partnership to purchase or otherwise acquire Partnership
Securities;
provided
that, except as permitted pursuant to Section 4.10 or Section 4.12, the
General Partner may not cause any Group Member to purchase Subordinated Units during the
Subordination Period. Such Partnership Securities shall be held by the Partnership as treasury
securities unless they are expressly cancelled by action of an appropriate officer of the General
Partner. As long as Partnership Securities are held by any Group Member, such Partnership
Securities shall not be considered Outstanding for any purpose, except as otherwise provided
herein. The General Partner or any Affiliate of the General Partner may also purchase or otherwise
acquire and sell or otherwise dispose of Partnership Securities for its own account, subject to the
provisions of Articles IV and X.
Section 7.12
Registration Rights of the General Partner and its Affiliates
.
(a) If (i) the General Partner or any Affiliate of the General Partner (including for purposes
of this Section 7.12, any Person that is an Affiliate of the General Partner at the date hereof
notwithstanding that it may later cease to be an Affiliate of the General Partner) holds
Partnership Securities that it desires to sell and (ii) Rule 144 of the Securities Act (or any
successor rule or regulation to Rule 144) or another exemption from registration is not available
to enable such holder of Partnership Securities (the
Holder
) to dispose of the number of
Partnership Securities it desires to sell at the time it desires to do so without registration
under the Securities Act, then at the option and upon the request of the Holder, the Partnership
shall file with the Commission as promptly as practicable after receiving such request, and use all
commercially reasonable efforts to cause to become effective and remain effective for a period of
not less than six months following its effective date or such shorter period as shall terminate
when all Partnership Securities covered by such registration statement have been sold, a
registration statement under the Securities Act registering the offering and sale of the number of
Partnership Securities specified by the Holder;
provided, however
, that the Partnership shall not
be required to effect more than three registrations pursuant to this Section 7.12(a) and Section
7.12(b); and
provided further, however
, that if the Special Committee determines in good faith that
the requested registration would be materially detrimental to the Partnership and its Partners
because such registration would (x) materially interfere with a significant acquisition,
reorganization or other similar transaction involving the Partnership, (y) require premature
disclosure of material information that the Partnership has a bona fide business purpose for
preserving as confidential or (z) render the Partnership unable to comply with requirements under
applicable securities laws, then the Partnership shall have the right to postpone such requested
registration for a period of not more than six months after receipt of the Holders request, such
right pursuant to this Section 7.12(a) or Section 7.12(b) not to be utilized more than once in any
twelve-month period. In connection with any registration pursuant to the first sentence of this
Section 7.12(a), the Partnership shall (i) promptly prepare and file (A) such documents as may be
necessary to register or qualify the securities subject to such registration under the securities
laws of such states as the Holder shall reasonably request; provided, however, that no such
qualification shall be required in any jurisdiction where, as a result thereof, the Partnership
would become subject to general service of process or to taxation or
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First Amended and Restated Agreement of Limited Partnership
80
qualification to do business as a foreign corporation or partnership doing business in such
jurisdiction solely as a result of such registration, and (B) such documents as may be necessary to
apply for listing or to list the Partnership Securities subject to such registration on such
National Securities Exchange as the Holder shall reasonably request, and (ii) do any and all other
acts and things that may be necessary or appropriate to enable the Holder to consummate a public
sale of such Partnership Securities in such states. Except as set forth in Section 7.12(d), all
costs and expenses of any such registration and offering (other than the underwriting discounts and
commissions) shall be paid by the Partnership, without reimbursement by the Holder.
(b) If any Holder holds Partnership Securities that it desires to sell and Rule 144 of the
Securities Act (or any successor rule or regulation to Rule 144) or another exemption from
registration is not available to enable such Holder to dispose of the number of Partnership
Securities it desires to sell at the time it desires to do so without registration under the
Securities Act, then at the option and upon the request of the Holder, the Partnership shall file
with the Commission as promptly as practicable after receiving such request, and use its
commercially reasonable efforts to cause to become effective and remain effective for a period of
not less than six months following its effective date or such shorter period as shall terminate
when all Partnership Securities covered by such shelf registration statement have been sold, a
shelf registration statement covering the Partnership Securities specified by the Holder on an
appropriate form under Rule 415 under the Securities Act, or any similar rule that may be adopted
by the Commission;
provided, however
, that the Partnership shall not be required to effect more
than three registrations pursuant to Section 7.12(a) and this Section 7.12(b); and
provided
further, however
, that if the Special Committee determines in good faith that any offering under,
or the use of any prospectus forming a part of, the shelf registration statement would be
materially detrimental to the Partnership and its Partners because such offering or use would (x)
materially interfere with a significant acquisition, reorganization or other similar transaction
involving the Partnership, (y) require premature disclosure of material information that the
Partnership has a bona fide business purpose for preserving as confidential or (z) render the
Partnership unable to comply with requirements under applicable securities laws, then the
Partnership shall have the right to suspend such offering or use for a period of not more than six
months after receipt of the Holders request, such right pursuant to Section 7.12(a) or this
Section 7.12(b) not to be utilized more than once in any twelve-month period. In connection with
any shelf registration pursuant to this Section 7.12(b), the Partnership shall (i) promptly prepare
and file (A) such documents as may be necessary to register or qualify the securities subject to
such shelf registration under the securities laws of such states as the Holder shall reasonably
request;
provided, however
, that no such qualification shall be required in any jurisdiction where,
as a result thereof, the Partnership would become subject to general service of process or to
taxation or qualification to do business as a foreign corporation or partnership doing business in
such jurisdiction solely as a result of such shelf registration, and (B) such documents as may be
necessary to apply for listing or to list the Partnership Securities subject to such shelf
registration on such National Securities Exchange as the Holder shall reasonably request, and (ii)
do any and all other acts and things that may be necessary or appropriate to enable the Holder to
consummate a public sale of such Partnership Securities in such states. Except as set forth in
Section 7.12(d), all costs and expenses of any such shelf registration and offering (other than the
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81
underwriting discounts and commissions) shall be paid by the Partnership, without
reimbursement by the Holder.
(c) If the Partnership shall at any time propose to file a registration statement under the
Securities Act for an offering of equity securities of the Partnership for cash (other than an
offering relating solely to an employee benefit plan), the Partnership shall notify all Holders of
such proposals and use its commercially reasonable efforts to include such number or amount of
securities held by the Holder in such registration statement as the Holder shall request; provided,
that the Partnership is not required to make any effort or take any action to so include the
securities of the Holder once the registration statement is declared effective by the Commission or
otherwise becomes effective, including any registration statement providing for the offering from
time to time of securities pursuant to Rule 415 of the Securities Act. If the proposed offering
pursuant to this Section 7.12(c) shall be an underwritten offering, then, in the event that the
managing underwriter or managing underwriters of such offering advise the Partnership and the
Holder in writing that in their opinion the inclusion of all or some of the Holders Partnership
Securities would adversely and materially affect the success of the offering, the Partnership shall
include in such offering only that number or amount, if any, of securities held by the Holder that,
in the opinion of the managing underwriter or managing underwriters, will not so adversely and
materially affect the offering. Except as set forth in Section 7.12(d), all costs and expenses of
any such registration and offering (other than the underwriting discounts and commissions) shall be
paid by the Partnership, without reimbursement by the Holder.
(d) If underwriters are engaged in connection with any registration referred to in this
Section 7.12, the Partnership shall provide indemnification, representations, covenants, opinions
and other assurance to the underwriters in form and substance reasonably satisfactory to such
underwriters. Further, in addition to and not in limitation of the Partnerships obligation under
Section 7.7, the Partnership shall, to the fullest extent permitted by law, indemnify and hold
harmless the Holder, its officers, directors and each Person who controls the Holder (within the
meaning of the Securities Act) and any agent thereof (collectively,
Indemnified Persons
) from and
against any and all losses, claims, damages, liabilities, joint or several, expenses (including
legal fees and expenses), judgments, fines, penalties, interest, settlements or other amounts
arising from any and all claims, demands, actions, suits or proceedings, whether civil, criminal,
administrative or investigative, in which any Indemnified Person may be involved, or is threatened
to be involved, as a party or otherwise, under the Securities Act or otherwise (hereinafter
referred to in this Section 7.12(d) as a claim and in the plural as claims) based upon, arising
out of or resulting from any untrue statement or alleged untrue statement of any material fact
contained in any registration statement under which any Partnership Securities were registered
under the Securities Act or any state securities or Blue Sky laws, in any preliminary prospectus
(if used prior to the effective date of such registration statement), or in any summary or final
prospectus or free writing prospectus or in any amendment or supplement thereto (if used during the
period the Partnership is required to keep the registration statement current), or arising out of,
based upon or resulting from the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements made therein not misleading;
provided, however
, that the Partnership shall not be liable to any Indemnified Person to the extent
that any such claim arises out of, is based upon or results from an untrue statement
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82
or alleged untrue statement or omission or alleged omission made in such registration
statement, such preliminary, summary or final prospectus or free writing prospectus or such
amendment or supplement, in reliance upon and in conformity with written information furnished to
the Partnership by or on behalf of such Indemnified Person specifically for use in the preparation
thereof.
(e) The provisions of Section 7.12(a), Section 7.12(b) and Section 7.12(c) shall continue to
be applicable with respect to the General Partner (and any of the General Partners Affiliates)
after it ceases to be a general partner of the Partnership, during a period of two years subsequent
to the effective date of such cessation and for so long thereafter as is required for the Holder to
sell all of the Partnership Securities with respect to which it has requested during such two-year
period inclusion in a registration statement otherwise filed or that a registration statement be
filed;
provided, however
, that the Partnership shall not be required to file successive
registration statements covering the same Partnership Securities for which registration was
demanded during such two-year period. The provisions of Section 7.12(d) shall continue in effect
thereafter.
(f) The rights to cause the Partnership to register Partnership Securities pursuant to this
Section 7.12 may be assigned (but only with all related obligations) by a Holder to a transferee or
assignee of such Partnership Securities, provided (i) the Partnership is, within a reasonable time
after such transfer, furnished with written notice of the name and address of such transferee or
assignee and the Partnership Securities with respect to which such registration rights are being
assigned; and (ii) such transferee or assignee agrees in writing to be bound by and subject to the
terms set forth in this Section 7.12.
(g) Any request to register Partnership Securities pursuant to this Section 7.12 shall (i)
specify the Partnership Securities intended to be offered and sold by the Person making the
request, (ii) express such Persons present intent to offer such Partnership Securities for
distribution, (iii) describe the nature or method of the proposed offer and sale of Partnership
Securities, and (iv) contain the undertaking of such Person to provide all such information and
materials and take all action as may be required in order to permit the Partnership to comply with
all applicable requirements in connection with the registration of such Partnership Securities.
Section 7.13
Reliance by Third Parties
.
Notwithstanding anything to the contrary in this Agreement, any Person dealing with the
Partnership shall be entitled to assume that the General Partner and any officer of the General
Partner authorized by the General Partner to act on behalf of and in the name of the Partnership
has full power and authority to encumber, sell or otherwise use in any manner any and all assets of
the Partnership and to enter into any authorized contracts on behalf of the Partnership, and such
Person shall be entitled to deal with the General Partner or any such officer as if it were the
Partnerships sole party in interest, both legally and beneficially. Each Limited Partner hereby
waives, to the fullest extent permitted by law, any and all defenses or other remedies that may be
available against such Person to contest, negate or disaffirm any action of the General Partner or
any such officer in connection with any such dealing. In no event shall any Person dealing with the
General Partner or any such officer or its representatives be obligated to ascertain that the
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terms of this Agreement have been complied with or to inquire into the necessity or expedience
of any act or action of the General Partner or any such officer or its representatives. Each and
every certificate, document or other instrument executed on behalf of the Partnership by the
General Partner or its representatives shall be conclusive evidence in favor of any and every
Person relying thereon or claiming thereunder that (a) at the time of the execution and delivery of
such certificate, document or instrument, this Agreement was in full force and effect, (b) the
Person executing and delivering such certificate, document or instrument was duly authorized and
empowered to do so for and on behalf of the Partnership and (c) such certificate, document or
instrument was duly executed and delivered in accordance with the terms and provisions of this
Agreement and is binding upon the Partnership.
ARTICLE VIII
BOOKS, RECORDS, ACCOUNTING AND REPORTS
Section 8.1
Records and Accounting
.
The General Partner shall keep or cause to be kept at the principal office of the Partnership
appropriate books and records with respect to the Partnerships business, including all books and
records necessary to provide to the Limited Partners any information required to be provided
pursuant to Section 3.4(a). Any books and records maintained by or on behalf of the Partnership in
the regular course of its business, including the record of the Record Holders of Units or other
Partnership Securities, books of account and records of Partnership proceedings, may be kept on, or
be in the form of, computer disks, hard drives, punch cards, magnetic tape, photographs,
micrographics or any other information storage device; provided, that the books and records so
maintained are convertible into clearly legible written form within a reasonable period of time.
The books of the Partnership shall be maintained, for financial reporting purposes, on an accrual
basis in accordance with U.S. GAAP.
Section 8.2
Fiscal Year
.
The fiscal year of the Partnership shall be a fiscal year ending December 31.
Section 8.3
Reports
.
(a) As soon as practicable, but in no event later than 120 days after the close of each fiscal
year of the Partnership, the General Partner shall cause to be mailed or made available, by any
reasonable means (including posting on or accessible through the Partnerships or the SECs
website) to each Record Holder of a Unit as of a date selected by the General Partner, an annual
report containing financial statements of the Partnership for such fiscal year of the Partnership,
presented in accordance with U.S. GAAP, including a balance sheet and statements of operations,
Partnership equity and cash flows, such statements to be audited by a firm of independent public
accountants selected by the General Partner.
(b) As soon as practicable, but in no event later than 90 days after the close of each Quarter
except the last Quarter of each fiscal year, the General Partner shall cause to be mailed
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or made available, by any reasonable means (including posting on or accessible through the
Partnerships or the SECs website) to each Record Holder of a Unit, as of a date selected by the
General Partner, a report containing unaudited financial statements of the Partnership and such
other information as may be required by applicable law, regulation or rule of any National
Securities Exchange on which the Units are listed or admitted to trading, or as the General Partner
determines to be necessary or appropriate.
ARTICLE IX
TAX MATTERS
Section 9.1
Tax Returns and Information
.
The Partnership shall timely file all returns of the Partnership that are required for
federal, state and local income tax purposes on the basis of the accrual method and the taxable
year or years that it is required by law to adopt, from time to time, as determined by the General
Partner. In the event the Partnership is required to use a taxable year other than a year ending on
December 31, the General Partner shall use reasonable efforts to change the taxable year of the
Partnership to a year ending on December 31. The tax information reasonably required by Record
Holders for federal and state income tax reporting purposes with respect to a taxable year shall be
furnished to them within 90 days of the close of the calendar year in which the Partnerships
taxable year ends. The classification, realization and recognition of income, gain, losses and
deductions and other items shall be on the accrual method of accounting for federal income tax
purposes.
Section 9.2
Tax Elections
.
(a) The Partnership shall make the election under Section 754 of the Code in accordance with
applicable regulations thereunder, subject to the reservation of the right to seek to revoke any
such election upon the General Partners determination that such revocation is in the best
interests of the Limited Partners. Notwithstanding any other provision herein contained, for the
purposes of computing the adjustments under Section 743(b) of the Code, the General Partner shall
be authorized (but not required) to adopt a convention whereby the price paid by a transferee of a
Limited Partner Interest will be deemed to be the lowest quoted closing price of the Limited
Partner Interests on any National Securities Exchange on which such Limited Partner Interests are
listed or admitted to trading during the calendar month in which such transfer is deemed to occur
pursuant to Section 6.2(g) without regard to the actual price paid by such transferee.
(b) Except as otherwise provided herein, the General Partner shall determine whether the
Partnership should make any other elections permitted by the Code.
Section 9.3
Tax Controversies
.
Subject to the provisions hereof, the General Partner is designated as the Tax Matters Partner
(as defined in the Code) and is authorized and required to represent the Partnership (at
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the Partnerships expense) in connection with all examinations of the Partnerships affairs by
tax authorities, including resulting administrative and judicial proceedings, and to expend
Partnership funds for professional services and costs associated therewith. Each Partner agrees to
cooperate with the General Partner and to do or refrain from doing any or all things reasonably
required by the General Partner to conduct such proceedings.
Section 9.4
Withholding
.
Notwithstanding any other provision of this Agreement, the General Partner is authorized to
take any action that may be required to cause the Partnership and other Group Members to comply
with any withholding requirements established under the Code or any other federal, state or local
law including pursuant to Sections 1441, 1442, 1445 and 1446 of the Code. To the extent that the
Partnership is required or elects to withhold and pay over to any taxing authority any amount
resulting from the allocation or distribution of income to any Partner or Assignee (including by
reason of Section 1446 of the Code), the General Partner may treat the amount withheld as a
distribution of cash pursuant to Section 6.3(c) in the amount of such withholding from such
Partner.
ARTICLE X
ADMISSION OF PARTNERS
Section 10.1
Admission of Limited Partners
.
(a) Upon the issuance by the Partnership of Common Units, Subordinated Units and Incentive
Distribution Rights to the General Partner, Holdings and the Underwriters as described in Article V
in connection with the Initial Offering, such parties shall automatically be admitted to the
Partnership as Initial Limited Partners in respect of the Common Units, Subordinated Units or
Incentive Distribution Rights issued to them.
(b) By acceptance of the transfer of any Limited Partner Interests in accordance with Article
IV or the acceptance of any Limited Partner Interests issued pursuant to Article V or pursuant to a
merger or consolidation pursuant to Article XIV, and except as provided in Section 4.9 or Section
4.11, each transferee of, or other such Person acquiring, a Limited Partner Interest (including any
nominee holder or an agent or representative acquiring such Limited Partner Interests for the
account of another Person) (i) shall be admitted to the Partnership as a Limited Partner with
respect to the Limited Partner Interests so transferred or issued to such Person when any such
transfer, issuance or admission is reflected in the books and records of the Partnership and such
Limited Partner becomes the Record Holder of the Limited Partner Interests so transferred, (ii)
shall become bound by the terms of this Agreement, (iii) represents that the transferee has the
capacity, power and authority to enter into this Agreement, (iv) grants the powers of attorney set
forth in this Agreement and (v) makes the consents and waivers contained in this Agreement, all
with or without execution of this Agreement by such Person. The transfer of any Limited Partner
Interests and the admission of any new Limited Partner shall not constitute an amendment to this
Agreement. A Person may become a Limited Partner or Record Holder of a Limited Partner Interest
without the consent or approval of any of the Partners. A
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Person may not become a Limited Partner without acquiring a Limited Partner Interest and until
such Person is reflected in the books and records of the Partnership as the Record Holder of such
Limited Partner Interest. The rights and obligations of a Person who is a Non-citizen Assignee
shall be determined in accordance with Section 4.9, and the rights and obligations of a Person who
is an Ineligible Assignee shall be determined in accordance with Section 4.11.
(c) The name and mailing address of each Limited Partner shall be listed on the books and
records of the Partnership maintained for such purpose by the Partnership or the Transfer Agent.
The General Partner shall update the books and records of the Partnership from time to time as
necessary to reflect accurately the information therein (or shall cause the Transfer Agent to do
so, as applicable). A Limited Partner Interest may be represented by a Certificate, as provided in
Section 4.1 hereof.
(d) Any transfer of a Limited Partner Interest shall not entitle the transferee to share in
the profits and losses, to receive distributions, to receive allocations of income, gain, loss,
deduction or credit or any similar item or to any other rights to which the transferor was entitled
until the transferee becomes a Limited Partner pursuant to Section 10.1(b).
Section 10.2
Admission of Successor General Partner
.
A successor General Partner approved pursuant to Section 11.1 or Section 11.2 or the
transferee of or successor to all of the General Partner Interest (represented by General Partner
Units) pursuant to Section 4.6 who is proposed to be admitted as a successor General Partner shall
be admitted to the Partnership as the General Partner, effective immediately prior to the
withdrawal or removal of the predecessor or transferring General Partner, pursuant to Section 11.1
or 11.2 or the transfer of the General Partner Interest (represented by General Partner Units)
pursuant to Section 4.6,
provided, however
, that no such successor shall be admitted to the
Partnership until compliance with the terms of Section 4.6 has occurred and such successor has
executed and delivered such other documents or instruments as may be required to effect such
admission. Any such successor shall, subject to the terms hereof, carry on the business of the
members of the Partnership Group without dissolution.
Section 10.3
Amendment of Agreement and Certificate of Limited Partnership
.
To effect the admission to the Partnership of any Partner, the General Partner shall take all
steps necessary or appropriate under the Delaware Act to amend the records of the Partnership to
reflect such admission and, if necessary, to prepare as soon as practicable an amendment to this
Agreement and, if required by law, the General Partner shall prepare and file an amendment to the
Certificate of Limited Partnership, and the General Partner may for this purpose, among others,
exercise the power of attorney granted pursuant to Section 2.6.
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ARTICLE XI
WITHDRAWAL OR REMOVAL OF PARTNERS
Section 11.1
Withdrawal of the General Partner
.
(a) The General Partner shall be deemed to have withdrawn from the Partnership upon the
occurrence of any one of the following events (each such event herein referred to as an
Event of
Withdrawal
);
(i) The General Partner voluntarily withdraws from the Partnership by giving written
notice to the other Partners;
(ii) The General Partner transfers all of its General Partner Interest pursuant to
Section 4.6;
(iii) The General Partner is removed pursuant to Section 11.2;
(iv) The General Partner (A) makes a general assignment for the benefit of creditors;
(B) files a voluntary bankruptcy petition for relief under Chapter 7 of the United States
Bankruptcy Code; (C) files a petition or answer seeking for itself a liquidation,
dissolution or similar relief (but not a reorganization) under any law; (D) files an answer
or other pleading admitting or failing to contest the material allegations of a petition
filed against the General Partner in a proceeding of the type described in clauses (A)-(C)
of this Section 11.1(a)(iv); or (E) seeks, consents to or acquiesces in the appointment of a
trustee (but not a debtor-in-possession), receiver or liquidator of the General Partner or
of all or any substantial part of its properties;
(v) A final and non-appealable order of relief under Chapter 7 of the United States
Bankruptcy Code is entered by a court with appropriate jurisdiction pursuant to a voluntary
or involuntary petition by or against the General Partner; or
(vi) (A) in the event the General Partner is a corporation, a certificate of
dissolution or its equivalent is filed for the General Partner, or 90 days expire after the
date of notice to the General Partner of revocation of its charter without a reinstatement
of its charter, under the laws of its state of incorporation; (B) in the event the General
Partner is a partnership or a limited liability company, the dissolution and commencement of
winding up of the General Partner; (C) in the event the General Partner is acting in such
capacity by virtue of being a trustee of a trust, the termination of the trust; (D) in the
event the General Partner is a natural person, his death or adjudication of incompetency;
and (E) otherwise in the event of the termination of the General Partner.
If an Event of Withdrawal specified in Section 11.1(a)(iv), (v) or (vi)(A), (B), (C) or (E) occurs,
the withdrawing General Partner shall give notice to the Limited Partners within 30 days after
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such occurrence. The Partners hereby agree that only the Events of Withdrawal described in this
Section 11.1 shall result in the withdrawal of the General Partner from the Partnership.
(b) Withdrawal of the General Partner from the Partnership upon the occurrence of an Event of
Withdrawal shall not constitute a breach of this Agreement under the following circumstances: (i)
at any time during the period beginning on the Closing Date and ending at 12:00 midnight, Central
Standard Time, on June 30, 2018, the General Partner voluntarily withdraws by giving at least 90
days advance notice of its intention to withdraw to the Limited Partners;
provided
, that prior to
the effective date of such withdrawal, the withdrawal is approved by Unitholders holding at least a
majority of the Outstanding Common Units (excluding Common Units held by the General Partner and
its Affiliates) and the General Partner delivers to the Partnership an Opinion of Counsel
(
Withdrawal Opinion of Counsel
) that such withdrawal (following the selection of the successor
General Partner) would not result in the loss of the limited liability of any Limited Partner or
any Group Member or cause any Group Member to be treated as an association taxable as a corporation
or otherwise to be taxed as an entity for federal income tax purposes (to the extent not already so
treated or taxed); (ii) at any time after 12:00 midnight, Central Standard Time, on June 30, 2018,
the General Partner voluntarily withdraws by giving at least 90 days advance notice to the
Unitholders, such withdrawal to take effect on the date specified in such notice; (iii) at any time
that the General Partner ceases to be the General Partner pursuant to Section 11.1(a)(ii) or is
removed pursuant to Section 11.2; or (iv) notwithstanding clause (i) of this sentence, at any time
that the General Partner voluntarily withdraws by giving at least 90 days advance notice of its
intention to withdraw to the Limited Partners, such withdrawal to take effect on the date specified
in the notice, if at the time such notice is given one Person and its Affiliates (other than the
General Partner and its Affiliates) own beneficially or of record or control at least 50% of the
Outstanding Units. The withdrawal of the General Partner from the Partnership upon the occurrence
of an Event of Withdrawal shall also constitute the withdrawal of the General Partner as general
partner or managing member, if any, to the extent applicable, of the other Group Members. If the
General Partner gives a notice of withdrawal pursuant to Section 11.1(a)(i), the holders of a Unit
Majority, may, prior to the effective date of such withdrawal, elect a successor General Partner.
The Person so elected as successor General Partner shall automatically become the successor general
partner or managing member, to the extent applicable, of the other Group Members of which the
General Partner is a general partner or a managing member, and is hereby authorized to, and shall,
continue the business of the Partnership, and, to the extent applicable, the other Group Members,
without dissolution. If, prior to the effective date of the General Partners withdrawal pursuant
to Section 11.1(a)(i), a successor is not selected by the Unitholders as provided herein or the
Partnership does not receive a Withdrawal Opinion of Counsel, the Partnership shall be dissolved in
accordance with and subject to Section 12.1. Any successor General Partner elected in accordance
with the terms of this Section 11.1 shall be subject to the provisions of Section 10.2.
Section 11.2
Removal of the General Partner
.
The General Partner may be removed if such removal is approved by the Unitholders holding at
least 66 2/3% of the Outstanding Units (including Units held by the General Partner and its
Affiliates) voting as a single class. Any such action by such holders for removal of the
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General Partner must also provide for the election of a successor General Partner by the
Unitholders holding a majority of the outstanding Common Units and Class B Units, if any, voting as
a single class and a majority of the outstanding Subordinated Units (if any Subordinated Units are
then Outstanding) voting as a class (including, in each case, Units held by the General Partner and
its Affiliates). Such removal shall be effective immediately following the admission of a successor
General Partner pursuant to Section 10.2. The removal of the General Partner shall also
automatically constitute the removal of the General Partner as general partner or managing member,
to the extent applicable, of the other Group Members of which the General Partner is a general
partner or a managing member. If a Person is elected as a successor General Partner in accordance
with the terms of this Section 11.2, such Person shall, upon admission pursuant to Section 10.2,
automatically become a successor general partner or managing member, to the extent applicable, of
the other Group Members of which the General Partner is a general partner or a managing member, and
is hereby authorized to, and shall, continue the business of the Partnership, and, to the extent
applicable, the other Group Members, without dissolution. The right of the holders of Outstanding
Units to remove the General Partner shall not exist or be exercised unless the Partnership has
received an opinion opining as to the matters covered by a Withdrawal Opinion of Counsel. Any
successor General Partner elected in accordance with the terms of this Section 11.2 shall be
subject to the provisions of Section 10.2.
Section 11.3
Interest of Departing General Partner and Successor General Partner
.
(a) In the event of (i) withdrawal of the General Partner under circumstances where such
withdrawal does not violate this Agreement or (ii) removal of the General Partner by the holders of
Outstanding Units under circumstances where Cause does not exist, if the successor General Partner
is elected in accordance with the terms of Section 11.1 or Section 11.2, the Departing General
Partner shall have the option, exercisable prior to the effective date of the withdrawal or removal
of such Departing General Partner, to require its successor to purchase its General Partner
Interest (represented by General Partner Units) and its general partner interest (or equivalent
interest), if any, in the other Group Members and all of its Incentive Distribution Rights
(collectively, the
Combined Interest
) in exchange for an amount in cash equal to the fair market
value of such Combined Interest, such amount to be determined and payable as of the effective date
of its withdrawal or removal. If the General Partner is removed by the Unitholders under
circumstances where Cause exists or if the General Partner withdraws under circumstances where such
withdrawal violates this Agreement, and if a successor General Partner is elected in accordance
with the terms of Section 11.1 or Section 11.2 (or if the business of the Partnership is continued
pursuant to Section 12.2 and the successor General Partner is not the former General Partner), such
successor shall have the option, exercisable prior to the effective date of the withdrawal or
removal of such Departing General Partner (or, in the event the business of the Partnership is
continued, prior to the date the business of the Partnership is continued), to purchase the
Combined Interest for such fair market value of such Combined Interest of the Departing General
Partner. In either event, the Departing General Partner shall be entitled to receive all
reimbursements due such Departing General Partner pursuant to Section 7.4, including any
employee-related liabilities (including severance liabilities), incurred in connection with the
termination of any employees employed by the Departing General Partner or its
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Affiliates (other than any Group Member) for the benefit of the Partnership or the other Group
Members.
For purposes of this Section 11.3(a), the fair market value of the Departing General Partners
Combined Interest shall be determined by agreement between the Departing General Partner and its
successor or, failing agreement within 30 days after the effective date of such Departing General
Partners withdrawal or removal, by an independent investment banking firm or other independent
expert selected by the Departing General Partner and its successor, which, in turn, may rely on
other experts, and the determination of which shall be conclusive as to such matter. If such
parties cannot agree upon one independent investment banking firm or other independent expert
within 45 days after the effective date of such departure, then the Departing General Partner shall
designate an independent investment banking firm or other independent expert, the Departing General
Partners successor shall designate an independent investment banking firm or other independent
expert, and such firms or experts shall mutually select a third independent investment banking firm
or independent expert, which third independent investment banking firm or other independent expert
shall determine the fair market value of the Combined Interest of the Departing General Partner. In
making its determination, such third independent investment banking firm or other independent
expert may consider the then current trading price of Units on any National Securities Exchange on
which Units are then listed or admitted to trading, the value of the Partnerships assets, the
rights and obligations of the Departing General Partner and other factors it may deem relevant.
(b) If the Combined Interest is not purchased in the manner set forth in Section 11.3(a), the
Departing General Partner (or its transferee) shall become a Limited Partner and its Combined
Interest shall be converted into Common Units pursuant to a valuation made by an investment banking
firm or other independent expert selected pursuant to Section 11.3(a), without reduction in such
Partnership Interest (but subject to proportionate dilution by reason of the admission of its
successor). Any successor General Partner shall indemnify the Departing General Partner (or its
transferee) as to all debts and liabilities of the Partnership arising on or after the date on
which the Departing General Partner (or its transferee) becomes a Limited Partner. For purposes of
this Agreement, conversion of the Combined Interest of the Departing General Partner to Common
Units will be characterized as if the Departing General Partner (or its transferee) contributed its
Combined Interest to the Partnership in exchange for the newly issued Common Units.
(c) If a successor General Partner is elected in accordance with the terms of Section 11.1 or
Section 11.2 (or if the business of the Partnership is continued pursuant to Section 12.2 and the
successor General Partner is not the former General Partner) and the option described in Section
11.3(a) is not exercised by the party entitled to do so, the successor General Partner shall, at
the effective date of its admission to the Partnership, contribute to the Partnership cash in the
amount equal to the product of (x) the quotient obtained by dividing (A) the Percentage Interest of
the General Partner Interest of the Departing General Partner by (B) a percentage equal to 100%
less the Percentage Interest of the General Partner Interest of the Departing General Partner and
(y) the Net Agreed Value of the Partnerships assets on such date. In such event, such successor
General Partner shall, subject to the following sentence, be entitled to its
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Percentage Interest of all Partnership allocations and distributions to which the Departing
General Partner was entitled. In addition, the successor General Partner shall cause this Agreement
to be amended to reflect that, from and after the date of such successor General Partners
admission, the successor General Partners interest in all Partnership distributions and
allocations shall be its Percentage Interest.
Section 11.4
Termination of Subordination Period, Conversion of Subordinated Units and
Extinguishment of Cumulative Common Unit Arrearages
.
Notwithstanding any provision of this Agreement, if the General Partner is removed as general
partner of the Partnership under circumstances where Cause does not exist and Units held by the
General Partner and its Affiliates are not voted in favor of such removal, (i) the Subordination
Period will end and all Outstanding Subordinated Units will immediately and automatically convert
into Common Units on a one-for-one basis (provided, however, that such converted Subordinated Units
shall remain subject to the provisions of Section 5.5(c)(ii), 6.1(d)(x) and 6.7(c)), (ii) all
Cumulative Common Unit Arrearages on the Common Units will be extinguished and (iii) the General
Partner will have the right to convert its General Partner Interest (represented by General Partner
Units) and its Incentive Distribution Rights into Common Units or to receive cash in exchange
therefor in accordance with Section 11.3.
Section 11.5
Withdrawal of Limited Partners
.
No Limited Partner shall have any right to withdraw from the Partnership;
provided, however
,
that when a transferee of a Limited Partners Limited Partner Interest becomes a Record Holder of
the Limited Partner Interest so transferred, such transferring Limited Partner shall cease to be a
Limited Partner with respect to the Limited Partner Interest so transferred.
ARTICLE XII
DISSOLUTION AND LIQUIDATION
Section 12.1
Dissolution
.
The Partnership shall not be dissolved by the admission of additional Limited Partners or by
the admission of a successor General Partner in accordance with the terms of this Agreement. Upon
the removal or withdrawal of the General Partner, if a successor General Partner is elected
pursuant to Section 10.2, 11.1, 11.2 or 12.2, the Partnership shall not be dissolved and such
successor General Partner is hereby authorized to, and shall, continue the business of the
Partnership. Subject to Section 12.2, the Partnership shall dissolve, and its affairs shall be
wound up, upon:
(a) an Event of Withdrawal of the General Partner as provided in Section 11.1(a) (other than
Section 11.1(a)(ii)), unless a successor is elected and such successor is admitted to the
Partnership pursuant to this Agreement;
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(b) an election to dissolve the Partnership by the General Partner that is approved by the
holders of a Unit Majority;
(c) the entry of a decree of judicial dissolution of the Partnership pursuant to the
provisions of the Delaware Act; or
(d) at any time there are no Limited Partners, unless the Partnership is continued without
dissolution in accordance with the Delaware Act.
Section 12.2
Continuation of the Business of the Partnership After Dissolution
.
Upon an Event of Withdrawal caused by (a) the withdrawal or removal of the General Partner as
provided in Section 11.1(a)(i) or (iii) and the failure of the Partners to select a successor to
such Departing General Partner pursuant to Section 11.1 or Section 11.2, then within 90 days
thereafter, or (b) an event constituting an Event of Withdrawal as defined in Section 11.1(a)(iv),
(v) or (vi), then, to the maximum extent permitted by law, within 180 days thereafter, the holders
of a Unit Majority may elect to continue the business of the Partnership on the same terms and
conditions set forth in this Agreement by appointing as a successor General Partner a Person
approved by the holders of a Unit Majority. Unless such an election is made within the applicable
time period as set forth above, the Partnership shall conduct only activities necessary to wind up
its affairs. If such an election is so made, then:
(i) the Partnership shall continue without dissolution unless earlier dissolved in
accordance with this Article XII;
(ii) if the successor General Partner is not the former General Partner, then the
interest of the former General Partner shall be treated in the manner provided in Section
11.3; and
(iii) the successor General Partner shall be admitted to the Partnership as General
Partner, effective as of the Event of Withdrawal, by agreeing in writing to be bound by this
Agreement;
(iv)
provided
, that the right of the holders of a Unit Majority to approve a successor
General Partner and to continue the business of the Partnership shall not exist and may not
be exercised unless the Partnership has received an Opinion of Counsel that (x) the exercise
of the right would not result in the loss of limited liability of any Limited Partner and
(y) neither the Partnership nor any Group Member would be treated as an association taxable
as a corporation or otherwise be taxable as an entity for federal income tax purposes upon
the exercise of such right to continue (to the extent not already so treated or taxed).
Section 12.3
Liquidator
.
Upon dissolution of the Partnership, unless the business of the Partnership is continued
pursuant to Section 12.2, the General Partner shall select one or more Persons to act as
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Liquidator. The Liquidator (if other than the General Partner) shall be entitled to receive
such compensation for its services as may be approved by holders of at least a majority of the
Outstanding Common Units, Subordinated Units and Class B Units, if any, voting as a single class.
The Liquidator (if other than the General Partner) shall agree not to resign at any time without 15
days prior notice and may be removed at any time, with or without cause, by notice of removal
approved by holders of at least a majority of the Outstanding Common Units, Subordinated Units and
Class B Units, if any, voting as a single class. Upon dissolution, removal or resignation of the
Liquidator, a successor and substitute Liquidator (who shall have and succeed to all rights, powers
and duties of the original Liquidator) shall within 30 days thereafter be approved by holders of at
least a majority of the Outstanding Common Units, Subordinated Units and Class B Units, if any,
voting as a single class. The right to approve a successor or substitute Liquidator in the manner
provided herein shall be deemed to refer also to any such successor or substitute Liquidator
approved in the manner herein provided. Except as expressly provided in this Article XII, the
Liquidator approved in the manner provided herein 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 sale set
forth in Section 7.3) necessary or appropriate to carry out the duties and functions of the
Liquidator hereunder for and during the period of time required to complete the winding up and
liquidation of the Partnership as provided for herein.
Section 12.4
Liquidation
.
The Liquidator shall proceed to dispose of the assets of the Partnership, discharge its
liabilities, and otherwise wind up its affairs in such manner and over such period as determined by
the Liquidator, subject to Section 17-804 of the Delaware Act and the following:
(a) The assets may be disposed of by public or private sale or by distribution in kind to one
or more Partners on such terms as the Liquidator and such Partner or Partners may agree. If any
property is distributed in kind, the Partner receiving the property shall be deemed for purposes of
Section 12.4(c) to have received cash equal to its fair market value; and contemporaneously
therewith, appropriate cash distributions must be made to the other Partners. The Liquidator may
defer liquidation or distribution of the Partnerships assets for a reasonable time if it
determines that an immediate sale or distribution of all or some of the Partnerships assets would
be impractical or would cause undue loss to the Partners. The Liquidator may distribute the
Partnerships assets, in whole or in part, in kind if it determines that a sale would be
impractical or would cause undue loss to the Partners.
(b) Liabilities of the Partnership include amounts owed to the Liquidator as compensation for
serving in such capacity (subject to the terms of Section 12.3) and amounts to Partners otherwise
than in respect of their distribution rights under Article VI. With respect to any liability that
is contingent, conditional or unmatured or is otherwise not yet due and payable, the Liquidator
shall either settle such claim for such amount as it thinks appropriate or establish a reserve of
cash or other assets to provide for its payment. When paid, any unused portion of the reserve shall
be distributed as additional liquidation proceeds.
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(c) All property and all cash in excess of that required to discharge liabilities as provided
in Section 12.4(b) shall be distributed to the Partners in accordance with, and to the extent of,
the positive balances in their respective Capital Accounts, as determined after taking into account
all Capital Account adjustments (other than those made by reason of distributions pursuant to this
Section 12.4(c)) for the taxable year of the Partnership during which the liquidation of the
Partnership occurs (with such date of occurrence being determined pursuant to Treasury Regulation
Section 1.704-1(b)(2)(ii)(g)), and such distribution shall be made by the end of such taxable year
(or, if later, within 90 days after said date of such occurrence).
Section 12.5
Cancellation of Certificate of Limited Partnership
.
Upon the completion of the distribution of Partnership cash and property as provided in
Section 12.4 in connection with the liquidation of the Partnership, the Certificate of Limited
Partnership and all qualifications of the Partnership as a foreign limited partnership in
jurisdictions other than the State of Delaware shall be canceled and such other actions as may be
necessary to terminate the Partnership shall be taken.
Section 12.6
Return of Contributions
.
The General Partner shall not be personally liable for, and shall have no obligation to
contribute or loan any monies or property to the Partnership to enable it to effectuate, the return
of the Capital Contributions of the Limited Partners or Unitholders, or any portion thereof, it
being expressly understood that any such return shall be made solely from Partnership assets.
Section 12.7
Waiver of Partition
.
To the maximum extent permitted by law, each Partner hereby waives any right to partition of
the Partnership property.
Section 12.8
Capital Account Restoration
.
No Limited Partner shall have any obligation to restore any negative balance in its Capital
Account upon liquidation of the Partnership. The General Partner shall be obligated to restore any
negative balance in its Capital Account upon liquidation of its interest in the Partnership by the
end of the taxable year of the Partnership during which such liquidation occurs, or, if later,
within 90 days after the date of such liquidation.
ARTICLE XIII
AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS; RECORD DATE
Section 13.1
Amendments to be Adopted Solely by the General Partner
.
Each Partner agrees that the General Partner, without the approval of any Partner, may amend
any provision of this Agreement and execute, swear to, acknowledge, deliver, file and record
whatever documents may be required in connection therewith, to reflect:
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(a) a change in the name of the Partnership, the location of the principal place of business
of the Partnership, the registered agent of the Partnership or the registered office of the
Partnership;
(b) admission, substitution, withdrawal or removal of Partners in accordance with this
Agreement;
(c) a change that the General Partner determines to be necessary or appropriate to qualify or
continue the qualification of the Partnership as a limited partnership or a partnership in which
the Limited Partners have limited liability under the laws of any state or to ensure that the Group
Members will not be treated as associations taxable as corporations or otherwise taxed as entities
for federal income tax purposes;
(d) a change that the General Partner determines (i) does not adversely affect the Limited
Partners (including any particular class of Partnership Interests as compared to other classes of
Partnership Interests) in any material respect, (ii) to be necessary or appropriate to (A) satisfy
any requirements, conditions or guidelines contained in any opinion, directive, order, ruling or
regulation of any federal or state agency or judicial authority or contained in any federal or
state statute (including the Delaware Act) or (B) facilitate the trading of the Units (including
the division of any class or classes of Outstanding Units into different classes to facilitate
uniformity of tax consequences within such classes of Units) or comply with any rule, regulation,
guideline or requirement of any National Securities Exchange on which the Units are or will be
listed or admitted to trading, (iii) to be necessary or appropriate in connection with action taken
by the General Partner pursuant to Section 5.9 or (iv) is required to effect the intent expressed
in the Registration Statement or the intent of the provisions of this Agreement or is otherwise
contemplated by this Agreement;
(e) a change in the fiscal year or taxable year of the Partnership and any other changes that
the General Partner determines to be necessary or appropriate as a result of a change in the fiscal
year or taxable year of the Partnership including, if the General Partner shall so determine, a
change in the definition of Quarter and the dates on which distributions are to be made by the
Partnership;
(f) an amendment that is necessary, in the Opinion of Counsel, to prevent the Partnership, or
the General Partner or its directors, officers, trustees or agents from in any manner being
subjected to the provisions of the Investment Company Act of 1940, as amended, the Investment
Advisers Act of 1940, as amended, or plan asset regulations adopted under the Employee Retirement
Income Security Act of 1974, as amended, regardless of whether such are substantially similar to
plan asset regulations currently applied or proposed by the United States Department of Labor;
(g) an amendment that the General Partner determines to be necessary or appropriate in
connection with the authorization of issuance of any class or series of Partnership Securities
pursuant to Section 5.6, including any amendment that the General Partner determines is necessary
or appropriate in connection with (i) the adjustments of the Minimum Quarterly Distribution, First
Target Distribution, Second Target Distribution and Third Target Distribution
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pursuant to the provisions of Section 5.11, (ii) the implementation of the provisions of
Section 5.11 or (iii) any modifications to the Incentive Distribution Rights made in connection
with the issuance of Partnership Securities pursuant to Section 5.6,
provided
that, with respect to
this clause (iii), the modifications to the Incentive Distribution Rights and the related issuance
of Partnership Securities have received Special Approval;
(h) any amendment expressly permitted in this Agreement to be made by the General Partner
acting alone;
(i) an amendment effected, necessitated or contemplated by a Merger Agreement approved in
accordance with Section 14.3;
(j) an amendment that the General Partner determines to be necessary or appropriate to reflect
and account for the formation by the Partnership of, or investment by the Partnership in, any
corporation, partnership, joint venture, limited liability company or other entity, in connection
with the conduct by the Partnership of activities permitted by the terms of Sections 2.4 or 7.1(a);
(k) a merger, conveyance or conversion pursuant to Section 14.3(d); or
(l) any other amendments substantially similar to the foregoing.
Section 13.2
Amendment Procedures
.
Except as provided in Section 13.1 and Section 13.3, all amendments to this Agreement shall be
made in accordance with the requirements contained in this Section 13.2. Amendments to this
Agreement may be proposed only by the General Partner;
provided, however
, that to the fullest
extent permitted by law, the General Partner shall have no duty or obligation to propose any
amendment to this Agreement and may decline to do so free of any duty (including any fiduciary
duty) or obligation whatsoever to the Partnership, any Limited Partner or any other Person bound by
this Agreement, and, in declining to propose an amendment, to the fullest extent permitted by law
shall not be required to act in good faith or pursuant to any other standard imposed by this
Agreement, any Group Member Agreement, any other agreement contemplated hereby or under the
Delaware Act or any other law, rule or regulation or at equity. A proposed amendment shall be
effective upon its approval by the General Partner and the holders of a Unit Majority, unless a
greater or different percentage is required under this Agreement or by Delaware law. Each proposed
amendment that requires the approval of the holders of a specified percentage of Outstanding Units
shall be set forth in a writing that contains the text of the proposed amendment. If such an
amendment is proposed, the General Partner shall seek the written approval of the requisite
percentage of Outstanding Units or call a meeting of the Unitholders to consider and vote on such
proposed amendment, in each case in accordance with the other provisions of this Article XIII. The
General Partner shall notify all Record Holders upon final adoption of any such proposed
amendments.
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Section 13.3
Amendment Requirements
.
(a) Notwithstanding the provisions of Section 13.1 and Section 13.2, no provision of this
Agreement that establishes a percentage of Outstanding Units (including Units deemed owned by the
General Partner) required to take any action shall be amended, altered, changed, repealed or
rescinded in any respect that would have the effect of reducing such voting percentage unless such
amendment is approved by the written consent or the affirmative vote of holders of Outstanding
Units whose aggregate Outstanding Units constitute not less than the voting requirement sought to
be reduced.
(b) Notwithstanding the provisions of Section 13.1 and Section 13.2, no amendment to this
Agreement may (i) enlarge the obligations of any Limited Partner without its consent, unless such
shall be deemed to have occurred as a result of an amendment approved pursuant to Section 13.3(c),
or (ii) enlarge the obligations of, restrict in any way any action by or rights of, or reduce in
any way the amounts distributable, reimbursable or otherwise payable to, the General Partner or any
of its Affiliates without its consent, which consent may be given or withheld at its option.
(c) Except as provided in Section 14.3, and without limitation of the General Partners
authority to adopt amendments to this Agreement without the approval of any Partners or Assignees
as contemplated in Section 13.1, any amendment that would have a material adverse effect on the
rights or preferences of any class of Partnership Interests in relation to other classes of
Partnership Interests must be approved by the holders of not less than a majority of the
Outstanding Partnership Interests of the class affected.
(d) Notwithstanding any other provision of this Agreement, except for amendments pursuant to
Section 13.1 and except as otherwise provided by Section 14.3(b), no amendments shall become
effective without the approval of the holders of at least 90% of the Outstanding Units voting as a
single class unless the Partnership obtains an Opinion of Counsel to the effect that such amendment
will not affect the limited liability of any Limited Partner under applicable partnership law of
the state under whose laws the Partnership is organized.
(e) Except as provided in Section 13.1, this Section 13.3 shall only be amended with the
approval of the holders of at least 90% of the Outstanding Units.
Section 13.4
Special Meetings
.
All acts of Limited Partners to be taken pursuant to this Agreement shall be taken in the
manner provided in this Article XIII. Special meetings of the Limited Partners may be called by the
General Partner or by Limited Partners owning 20% or more of the Outstanding Units of the class or
classes for which a meeting is proposed. Limited Partners shall call a special meeting by
delivering to the General Partner one or more requests in writing stating that the signing Limited
Partners wish to call a special meeting and indicating the general or specific purposes for which
the special meeting is to be called. Within 60 days after receipt of such a call from Limited
Partners or within such greater time as may be reasonably necessary for the Partnership to comply
with any statutes, rules, regulations, listing agreements or similar requirements
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governing the holding of a meeting or the solicitation of proxies for use at such a meeting,
the General Partner shall send a notice of the meeting to the Limited Partners either directly or
indirectly through the Transfer Agent. A meeting shall be held at a time and place determined by
the General Partner on a date not less than 10 days nor more than 60 days after the time notice of
the meeting is given as provided in Section 16.1. Limited Partners shall not vote on matters that
would cause the Limited Partners to be deemed to be taking part in the management and control of
the business and affairs of the Partnership so as to jeopardize the Limited Partners limited
liability under the Delaware Act or the law of any other state in which the Partnership is
qualified to do business.
Section 13.5
Notice of a Meeting
.
Notice of a meeting called pursuant to Section 13.4 shall be given to the Record Holders of
the class or classes of Units for which a meeting is proposed in writing by mail or other means of
written communication in accordance with Section 16.1. The notice shall be deemed to have been
given at the time when deposited in the mail or sent by other means of written communication.
Section 13.6
Record Date
.
For purposes of determining the Limited Partners entitled to notice of or to vote at a meeting
of the Limited Partners or to give approvals without a meeting as provided in Section 13.11 the
General Partner may set a Record Date, which shall not be less than 10 nor more than 60 days before
(a) the date of the meeting (unless such requirement conflicts with any rule, regulation, guideline
or requirement of any National Securities Exchange on which the Units are listed or admitted to
trading, in which case the rule, regulation, guideline or requirement of such National Securities
Exchange shall govern) or (b) in the event that approvals are sought without a meeting, the date by
which Limited Partners are requested in writing by the General Partner to give such approvals. If
the General Partner does not set a Record Date, then (a) the Record Date for determining the
Limited Partners entitled to notice of or to vote at a meeting of the Limited Partners shall be the
close of business on the day next preceding the day on which notice is given, and (b) the Record
Date for determining the Limited Partners entitled to give approvals without a meeting shall be the
date the first written approval is deposited with the Partnership in care of the General Partner in
accordance with Section 13.11.
Section 13.7
Adjournment
.
When a meeting is adjourned to another time or place, notice need not be given of the
adjourned meeting and a new Record Date need not be fixed, if the time and place thereof are
announced at the meeting at which the adjournment is taken, unless such adjournment shall be for
more than 45 days. At the adjourned meeting, the Partnership may transact any business which might
have been transacted at the original meeting. If the adjournment is for more than 45 days or if a
new Record Date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be
given in accordance with this Article XIII.
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Section 13.8
Waiver of Notice; Approval of Meeting; Approval of Minutes
.
The transactions of any meeting of Limited Partners, however called and noticed, and whenever
held, shall be as valid as if it had occurred at a meeting duly held after regular call and notice,
if a quorum is present either in person or by proxy. Attendance of a Limited Partner at a meeting
shall constitute a waiver of notice of the meeting, except when the Limited Partner attends the
meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction
of any business because the meeting is not lawfully called or convened; and except that attendance
at a meeting is not a waiver of any right to disapprove the consideration of matters required to be
included in the notice of the meeting, but not so included, if the disapproval is expressly made at
the meeting.
Section 13.9
Quorum and Voting
.
The holders of a majority of the Outstanding Units of the class or classes for which a meeting
has been called (including Outstanding Units deemed owned by the General Partner) represented in
person or by proxy shall constitute a quorum at a meeting of Limited Partners of such class or
classes unless any such action by the Limited Partners requires approval by holders of a greater
percentage of such Units, in which case the quorum shall be such greater percentage. At any meeting
of the Limited Partners duly called and held in accordance with this Agreement at which a quorum is
present, the act of Limited Partners holding Outstanding Units that in the aggregate represent a
majority of the Outstanding Units entitled to vote and be present in person or by proxy at such
meeting shall be deemed to constitute the act of all Limited Partners, unless a greater or
different percentage is required with respect to such action under the provisions of this
Agreement, in which case the act of the Limited Partners holding Outstanding Units that in the
aggregate represent at least such greater or different percentage shall be required. The Limited
Partners present at a duly called or held meeting at which a quorum is present may continue to
transact business until adjournment, notwithstanding the withdrawal of enough Limited Partners to
leave less than a quorum, if any action taken (other than adjournment) is approved by the required
percentage of Outstanding Units specified in this Agreement (including Outstanding Units deemed
owned by the General Partner). In the absence of a quorum any meeting of Limited Partners may be
adjourned from time to time by the affirmative vote of holders of at least a majority of the
Outstanding Units entitled to vote at such meeting (including Outstanding Units deemed owned by the
General Partner) represented either in person or by proxy, but no other business may be transacted,
except as provided in Section 13.7.
Section 13.10
Conduct of a Meeting
.
The General Partner shall have full power and authority concerning the manner of conducting
any meeting of the Limited Partners or solicitation of approvals in writing, including the
determination of Persons entitled to vote, the existence of a quorum, the satisfaction of the
requirements of Section 13.4, the conduct of voting, the validity and effect of any proxies and the
determination of any controversies, votes or challenges arising in connection with or during the
meeting or voting. The General Partner shall designate a Person to serve as chairman of any meeting
and shall further designate a Person to take the minutes of any meeting. All minutes shall be kept
with the records of the Partnership maintained by the General Partner. The General
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Partner may make such other regulations consistent with applicable law and this Agreement as
it may deem advisable concerning the conduct of any meeting of the Limited Partners or solicitation
of approvals in writing, including regulations in regard to the appointment of proxies, the
appointment and duties of inspectors of votes and approvals, the submission and examination of
proxies and other evidence of the right to vote, and the revocation of approvals in writing.
Section 13.11
Action Without a Meeting
.
If authorized by the General Partner, any action that may be taken at a meeting of the Limited
Partners may be taken without a meeting, without a vote and without prior notice, if an approval in
writing setting forth the action so taken is signed by Limited Partners owning not less than the
minimum percentage of the Outstanding Units (including Units deemed owned by the General Partner)
that would be necessary to authorize or take such action at a meeting at which all the Limited
Partners were present and voted (unless such provision conflicts with any rule, regulation,
guideline or requirement of any National Securities Exchange on which the Units are listed or
admitted to trading, in which case the rule, regulation, guideline or requirement of such National
Securities Exchange shall govern). Prompt notice of the taking of action without a meeting shall be
given to the Limited Partners who have not approved in writing. The General Partner may specify
that any written ballot, if any, submitted to Limited Partners for the purpose of taking any action
without a meeting shall be returned to the Partnership within the time period, which shall be not
less than 20 days, specified by the General Partner. If a ballot returned to the Partnership does
not vote all of the Units held by the Limited Partners, the Partnership shall be deemed to have
failed to receive a ballot for the Units that were not voted. If approval of the taking of any
action by the Limited Partners is solicited by any Person other than by or on behalf of the General
Partner, the written approvals shall have no force and effect unless and until (a) they are
deposited with the Partnership in care of the General Partner, (b) approvals sufficient to take the
action proposed are dated as of a date not more than 90 days prior to the date sufficient approvals
are deposited with the Partnership and (c) an Opinion of Counsel is delivered to the General
Partner to the effect that the exercise of such right and the action proposed to be taken with
respect to any particular matter (i) will not cause the Limited Partners to be deemed to be taking
part in the management and control of the business and affairs of the Partnership so as to
jeopardize the Limited Partners limited liability, and (ii) is otherwise permissible under the
state statutes then governing the rights, duties and liabilities of the Partnership and the
Partners. Nothing contained in this Section 13.11 shall be deemed to require the General Partner
to solicit all Limited Partners in connection with a matter approved by the holders of the
percentage of Units acting by written consent without a meeting.
Section 13.12
Right to Vote and Related Matters
.
(a) Only those Record Holders of the Outstanding Units on the Record Date set pursuant to
Section 13.6 (and also subject to the limitations contained in the definition of
Outstanding
)
shall be entitled to notice of, and to vote at, a meeting of Limited Partners or to act with
respect to matters as to which the holders of the Outstanding Units have the right to vote or to
act. All references in this Agreement to votes of, or other acts that may be taken by, the
Outstanding Units shall be deemed to be references to the votes or acts of the Record Holders of
such Outstanding Units.
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(b) With respect to Units that are held for a Persons account by another Person (such as a
broker, dealer, bank, trust company or clearing corporation, or an agent of any of the foregoing),
in whose name such Units are registered, such other Person shall, in exercising the voting rights
in respect of such Units on any matter, and unless the arrangement between such Persons provides
otherwise, vote such Units in favor of, and at the direction of, the Person who is the beneficial
owner, and the Partnership shall be entitled to assume it is so acting without further inquiry. The
provisions of this Section 13.12(b) (as well as all other provisions of this Agreement) are subject
to the provisions of Section 4.3.
ARTICLE XIV
MERGER, CONSOLIDATION OR CONVERSION
Section 14.1
Authority
.
The Partnership may merge or consolidate with or into one or more corporations, limited
liability companies, statutory trusts or associations, real estate investment trusts, common law
trusts or unincorporated businesses, including a partnership (whether general or limited (including
a limited liability partnership)) or convert into any such entity, whether such entity is formed
under the laws of the State of Delaware or any other state of the United States of America,
pursuant to a written plan of merger or consolidation (
Merger Agreement
) or a written plan of
conversion (
Plan of Conversion
), as the case may be, in accordance with this Article XIV.
Section 14.2
Procedure
for Merger, Consolidation or Conversion.
(a) Merger, consolidation or conversion of the Partnership pursuant to this Article XIV
requires the prior consent of the General Partner,
provided, however
, that, to the fullest extent
permitted by law, the General Partner shall have no duty or obligation to consent to any merger,
consolidation or conversion of the Partnership and may decline to do so free of any fiduciary duty
or obligation whatsoever to the Partnership, any Limited Partner and, in declining to consent to a
merger, consolidation or conversion, shall not be required to act pursuant to any other standard
imposed by this Agreement, any other agreement contemplated hereby or under the Delaware Act or any
other law, rule or regulation or at equity.
(b) If the General Partner shall determine to consent to the merger or consolidation, the
General Partner shall approve the Merger Agreement, which shall set forth:
(i) name and jurisdiction of formation or organization of each of the business entities
proposing to merge or consolidate;
(ii) the name and jurisdiction of formation or organization of the business entity that
is to survive the proposed merger or consolidation (the
Surviving Business Entity
);
(iii) the terms and conditions of the proposed merger or consolidation;
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(iv) the manner and basis of exchanging or converting the equity securities of each
constituent business entity for, or into, cash, property or interests, rights, securities or
obligations of the Surviving Business Entity; and (i) if any general or limited partner
interests, securities or rights of any constituent business entity are not to be exchanged
or converted solely for, or into, cash, property or general or limited partner interests,
rights, securities or obligations of the Surviving Business Entity, the cash, property or
interests, rights, securities or obligations of any general or limited partnership,
corporation, trust, limited liability company, unincorporated business or other entity
(other than the Surviving Business Entity) which the holders of such general or limited
partner interests, securities or rights are to receive in exchange for, or upon conversion
of their interests, securities or rights, and (ii) in the case of securities represented by
certificates, upon the surrender of such certificates, which cash, property or general or
limited partner interests, rights, securities or obligations of the Surviving Business
Entity or any general or limited partnership, corporation, trust, limited liability company,
unincorporated business or other entity (other than the Surviving Business Entity), or
evidences thereof, are to be delivered;
(v) a statement of any changes in the constituent documents or the adoption of new
constituent documents (the articles or certificate of incorporation, articles of trust,
declaration of trust, certificate or agreement of limited partnership, operating agreement
or other similar charter or governing document) of the Surviving Business Entity to be
effected by such merger or consolidation;
(vi) the effective time of the merger, which may be the date of the filing of the
certificate of merger pursuant to Section 14.4 or a later date specified in or determinable
in accordance with the Merger Agreement (
provided
, that if the effective time of the merger
is to be later than the date of the filing of such certificate of merger, the effective time
shall be fixed at a date or time certain at or prior to the time of the filing of such
certificate of merger and stated therein); and
(vii) such other provisions with respect to the proposed merger or consolidation that
the General Partner determines to be necessary or appropriate.
(c) If the General Partner shall determine to consent to the conversion, the General Partner
shall approve the Plan of Conversion, which shall set forth:
(i) the name of the converting entity and the converted entity;
(ii) a statement that the Partnership is continuing its existence in the organizational
form of the converted entity;
(iii) a statement as to the type of entity that the converted entity is to be and the
state or country under the laws of which the converted entity is to be incorporated, formed
or organized;
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(iv) the manner and basis of exchanging or converting the equity securities of each
constituent business entity for, or into, cash, property or interests, rights, securities or
obligations of the converted entity or another entity, or for the cancellation of such
equity securities;
(v) in an attachment or exhibit, the certificate of limited partnership of the
Partnership; and
(vi) in an attachment or exhibit, the certificate of limited partnership, articles of
incorporation, or other organizational documents of the converted entity;
(vii) the effective time of the conversion, which may be the date of the filing of the
articles of conversion or a later date specified in or determinable in accordance with the
Plan of Conversion (
provided
, that if the effective time of the conversion is to be later
than the date of the filing of such articles of conversion, the effective time shall be
fixed at a date or time certain at or prior to the time of the filing of such articles of
conversion and stated therein); and
(viii) such other provisions with respect to the proposed conversion that the General
Partner determines to be necessary or appropriate.
Section 14.3
Approval by Limited Partners
.
(a) Except as provided in Section 14.3(d), the General Partner, upon its approval of the
Merger Agreement or the Plan of Conversion, as the case may be, shall direct that the Merger
Agreement or the Plan of Conversion and the merger, consolidation or conversion contemplated
thereby, as applicable, be submitted to a vote of Limited Partners, whether at a special meeting or
by written consent, in either case in accordance with the requirements of Article XIII. A copy or a
summary of the Merger Agreement or the Plan of Conversion, as the case may be, shall be included in
or enclosed with the notice of a special meeting or the written consent.
(b) Except as provided in Section 14.3(d), the Merger Agreement or Plan of Conversion, as the
case may be, shall be approved upon receiving the affirmative vote or consent of the holders of a
Unit Majority.
(c) Except as provided in Section 14.3(d), after such approval by vote or consent of the
Limited Partners, and at any time prior to the filing of the certificate of merger or certificate
of conversion pursuant to Section 14.4, the merger, consolidation or conversion may be abandoned
pursuant to provisions therefor, if any, set forth in the Merger Agreement or Plan of Conversion,
as the case may be.
(d) Notwithstanding anything else contained in this Article XIV or in this Agreement, the
General Partner is permitted, without Limited Partner approval, to convert the Partnership or any
Group Member into a new limited liability entity, to merge the Partnership or any Group Member
into, or convey all of the Partnerships assets to, another limited liability entity that shall be
newly formed and shall have no assets, liabilities or operations at the time of such conversion,
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merger or conveyance other than those it receives from the Partnership or other Group Member
if (i) the General Partner has received an Opinion of Counsel that the conversion, merger or
conveyance, as the case may be, would not result in the loss of the limited liability of any
Limited Partner or cause the Partnership to be treated as an association taxable as a corporation
or otherwise to be taxed as an entity for federal income tax purposes (to the extent not previously
treated as such), (ii) the sole purpose of such conversion, merger, or conveyance is to effect a
mere change in the legal form of the Partnership into another limited liability entity and (iii)
the governing instruments of the new entity provide the Limited Partners and the General Partner
with the same rights and obligations as are herein contained.
(e) Additionally, notwithstanding anything else contained in this Article XIV or in this
Agreement, the General Partner is permitted, without Limited Partner approval, to merge or
consolidate the Partnership with or into another entity if (A) the General Partner has received an
Opinion of Counsel that the merger or consolidation, as the case may be, would not result in the
loss of the limited liability of any Limited Partner or cause the Partnership to be treated as an
association taxable as a corporation or otherwise to be taxed as an entity for federal income tax
purposes (to the extent not previously treated as such), (B) the merger or consolidation would not
result in an amendment to this Agreement, other than any amendments that could be adopted pursuant
to Section 13.1, (C) the Partnership is the Surviving Business Entity in such merger or
consolidation, (D) each Unit outstanding immediately prior to the effective date of the merger or
consolidation is to be an identical Unit of the Partnership after the effective date of the merger
or consolidation, and (E) the number of Partnership Securities to be issued by the Partnership in
such merger or consolidation does not exceed 20% of the Partnership Securities Outstanding
immediately prior to the effective date of such merger or consolidation.
(f) Pursuant to Section 17-211(g) of the Delaware Act, an agreement of merger or consolidation
approved in accordance with this Article XIV may (a) effect any amendment to this Agreement or (b)
effect the adoption of a new partnership agreement for the Partnership if it is the Surviving
Business Entity. Any such amendment or adoption made pursuant to this Section 14.3 shall be
effective at the effective time or date of the merger or consolidation.
Section 14.4
Certificate of Merger
.
Upon the required approval by the General Partner and the Unitholders of a Merger Agreement or
the Plan of Conversion, as the case may be, a certificate of merger or certificate of conversion,
as applicable, shall be executed and filed with the Secretary of State of the State of Delaware in
conformity with the requirements of the Delaware Act.
Section 14.5
Effect of Merger, Consolidation or Conversion
.
(a) At the effective time of the certificate of merger:
(i) all of the rights, privileges and powers of each of the business entities that has
merged or consolidated, and all property, real, personal and mixed, and all debts due to any
of those business entities and all other things and causes of action belonging to each of
those business entities, shall be vested in the Surviving Business Entity and after
Western Gas Partners, LP
First Amended and Restated Agreement of Limited Partnership
105
the merger or consolidation shall be the property of the Surviving Business Entity to
the extent they were of each constituent business entity;
(ii) the title to any real property vested by deed or otherwise in any of those
constituent business entities shall not revert and is not in any way impaired because of the
merger or consolidation;
(iii) all rights of creditors and all liens on or security interests in property of any
of those constituent business entities shall be preserved unimpaired; and
(iv) all debts, liabilities and duties of those constituent business entities shall
attach to the Surviving Business Entity and may be enforced against it to the same extent as
if the debts, liabilities and duties had been incurred or contracted by it.
(b) At the effective time of the certificate of conversion, for all purposes of the laws of
the State of Delaware:
(i) the Partnership shall continue to exist, without interruption, but in the
organizational form of the converted entity rather than in its prior organizational form;
(ii) all rights, title, and interests to all real estate and other property owned by
the Partnership shall remain vested in the converted entity in its new organizational form
without reversion or impairment, without further act or deed, and without any transfer or
assignment having occurred, but subject to any existing liens or other encumbrances thereon;
(iii) all liabilities and obligations of the Partnership shall continue to be
liabilities and obligations of the converted entity in its new organizational form without
impairment or diminution by reason of the conversion;
(iv) all rights of creditors or other parties with respect to or against the prior
interest holders or other owners of the Partnership in their capacities as such in existence
as of the effective time of the conversion will continue in existence as to those
liabilities and obligations and are enforceable against the converted entity by such
creditors and obligees to the same extent as if the liabilities and obligations had
originally been incurred or contracted by the converted entity;
(v) the Partnership Interests that are to be converted into partnership interests,
shares, evidences of ownership, or other rights or securities in the converted entity or
cash as provided in the plan of conversion shall be so converted, and Partners shall be
entitled only to the rights provided in the Plan of Conversion.
Western Gas Partners, LP
First Amended and Restated Agreement of Limited Partnership
106
ARTICLE XV
RIGHT TO ACQUIRE LIMITED PARTNER INTERESTS
Section 15.1
Right to Acquire Limited Partner Interests
.
(a) Notwithstanding any other provision of this Agreement, if at any time the General Partner
and its Affiliates hold more than 80% of the total Limited Partner Interests of any class then
Outstanding, the General Partner shall then have the right, which right it may assign and transfer
in whole or in part to the Partnership or any Affiliate of the General Partner, exercisable at its
option, to purchase all, but not less than all, of such Limited Partner Interests of such class
then Outstanding held by Persons other than the General Partner and its Affiliates, at the greater
of (x) the Current Market Price as of the date three days prior to the date that the notice
described in Section 15.1(b) is mailed and (y) the highest price paid by the General Partner or any
of its Affiliates for any such Limited Partner Interest of such class purchased during the 90-day
period preceding the date that the notice described in Section 15.1(b) is mailed. As used in this
Agreement, (i)
Current Market Price
as of any date of any class of Limited Partner Interests
means the average of the daily Closing Prices (as hereinafter defined) per Limited Partner Interest
of such class for the 20 consecutive Trading Days (as hereinafter defined) immediately prior to
such date; (ii)
Closing Price
for any day means the last sale price on such day, regular way, or
in case no such sale takes place on such day, the average of the closing bid and asked prices on
such day, regular way, as reported in the principal consolidated transaction reporting system with
respect to securities listed on the principal National Securities Exchange (other than the Nasdaq
Stock Market) on which such Limited Partner Interests are listed or admitted to trading or, if such
Limited Partner Interests of such class are not listed or admitted to trading on any National
Securities Exchange (other than the Nasdaq Stock Market), the last quoted price on such day or, if
not so quoted, the average of the high bid and low asked prices on such day in the over-the-counter
market, as reported by the Nasdaq Stock Market or such other system then in use, or, if on any such
day such Limited Partner Interests of such class are not quoted by any such organization, the
average of the closing bid and asked prices on such day as furnished by a professional market maker
making a market in such Limited Partner Interests of such class selected by the General Partner, or
if on any such day no market maker is making a market in such Limited Partner Interests of such
class, the fair value of such Limited Partner Interests on such day as determined by the General
Partner; and (iii)
Trading Day
means a day on which the principal National Securities Exchange on
which such Limited Partner Interests of any class are listed or admitted for trading is open for
the transaction of business or, if Limited Partner Interests of a class are not listed or admitted
for trading on any National Securities Exchange, a day on which banking institutions in New York
City generally are open.
(b) If the General Partner, any Affiliate of the General Partner or the Partnership elects to
exercise the right to purchase Limited Partner Interests granted pursuant to Section 15.1(a), the
General Partner shall deliver to the Transfer Agent notice of such election to purchase (the
Notice of Election to Purchase
) and shall cause the Transfer Agent to mail a copy of such Notice
of Election to Purchase to the Record Holders of Limited Partner Interests of such class (as of a
Record Date selected by the General Partner) at least 10, but not more than 60,
Western Gas Partners, LP
First Amended and Restated Agreement of Limited Partnership
107
days prior to the Purchase Date. Such Notice of Election to Purchase shall also be published
for a period of at least three consecutive days in at least two daily newspapers of general
circulation printed in the English language and published in the Borough of Manhattan, New York.
The Notice of Election to Purchase shall specify the Purchase Date and the price (determined in
accordance with Section 15.1(a)) at which Limited Partner Interests will be purchased and state
that the General Partner, its Affiliate or the Partnership, as the case may be, elects to purchase
such Limited Partner Interests, upon surrender of Certificates representing such Limited Partner
Interests, or other evidence of the issuance of uncertificated Units, in exchange for payment, at
such office or offices of the Transfer Agent as the Transfer Agent may specify, or as may be
required by any National Securities Exchange on which such Limited Partner Interests are listed.
Any such Notice of Election to Purchase mailed to a Record Holder of Limited Partner Interests at
his address as reflected in the records of the Transfer Agent shall be conclusively presumed to
have been given regardless of whether the owner receives such notice. On or prior to the Purchase
Date, the General Partner, its Affiliate or the Partnership, as the case may be, shall deposit with
the Transfer Agent cash in an amount sufficient to pay the aggregate purchase price of all of such
Limited Partner Interests to be purchased in accordance with this Section 15.1. If the Notice of
Election to Purchase shall have been duly given as aforesaid at least 10 days prior to the Purchase
Date, and if on or prior to the Purchase Date the deposit described in the preceding sentence has
been made for the benefit of the holders of Limited Partner Interests subject to purchase as
provided herein, then from and after the Purchase Date, notwithstanding that any Certificate, or
other evidence of the issuance of uncertificated Units, shall not have been surrendered for
purchase, all rights of the holders of such Limited Partner Interests (including any rights
pursuant to Article III, Article IV, Article V, Article VI, and Article XII) shall thereupon cease,
except the right to receive the purchase price (determined in accordance with Section 15.1(a)) for
Limited Partner Interests therefor, without interest, upon surrender to the Transfer Agent of the
Certificates representing such Limited Partner Interests, or other evidence of the issuance of
uncertificated Units, and such Limited Partner Interests shall thereupon be deemed to be
transferred to the General Partner, its Affiliate or the Partnership, as the case may be, on the
record books of the Transfer Agent and the Partnership, and the General Partner or any Affiliate of
the General Partner, or the Partnership, as the case may be, shall be deemed to be the owner of all
such Limited Partner Interests from and after the Purchase Date and shall have all rights as the
owner of such Limited Partner Interests (including all rights as owner of such Limited Partner
Interests pursuant to Article III, Article IV, Article V, Article VI and Article XII).
(c) At any time from and after the Purchase Date, a holder of an Outstanding Limited Partner
Interest subject to purchase as provided in this Section 15.1 may surrender his Certificate
evidencing such Limited Partner Interest, or other evidence of the issuance of uncertificated
Units, to the Transfer Agent in exchange for payment of the amount described in Section 15.1(a),
therefor, without interest thereon.
Western Gas Partners, LP
First Amended and Restated Agreement of Limited Partnership
108
ARTICLE XVI
GENERAL PROVISIONS
Section 16.1
Addresses and Notices; Written Communications
.
(a) Any notice, demand, request, report or proxy materials required or permitted to be given
or made to a Partner under this Agreement shall be in writing and shall be deemed given or made
when delivered in person or when sent by first class United States mail or by other means of
written communication to the Partner at the address described below. Any notice, payment or report
to be given or made to a Partner hereunder shall be deemed conclusively to have been given or made,
and the obligation to give such notice or report or to make such payment shall be deemed
conclusively to have been fully satisfied, upon sending of such notice, payment or report to the
Record Holder of such Partnership Securities at his address as shown on the records of the Transfer
Agent or as otherwise shown on the records of the Partnership, regardless of any claim of any
Person who may have an interest in such Partnership Securities by reason of any assignment or
otherwise. An affidavit or certificate of making of any notice, payment or report in accordance
with the provisions of this Section 16.1 executed by the General Partner, the Transfer Agent or the
mailing organization shall be prima facie evidence of the giving or making of such notice, payment
or report. If any notice, payment or report addressed to a Record Holder at the address of such
Record Holder appearing on the books and records of the Transfer Agent or the Partnership is
returned by the United States Postal Service marked to indicate that the United States Postal
Service is unable to deliver it, such notice, payment or report and any subsequent notices,
payments and reports shall be deemed to have been duly given or made without further mailing (until
such time as such Record Holder or another Person notifies the Transfer Agent or the Partnership of
a change in his address) if they are available for the Partner at the principal office of the
Partnership for a period of one year from the date of the giving or making of such notice, payment
or report to the other Partners. Any notice to the Partnership shall be deemed given if received by
the General Partner at the principal office of the Partnership designated pursuant to Section 2.3.
The General Partner may rely and shall be protected in relying on any notice or other document from
a Partner or other Person if believed by it to be genuine.
(b) The terms in writing, written communications, written notice and words of similar
import shall be deemed satisfied under this Agreement by use of e-mail and other forms of
electronic communication.
Section 16.2
Further Action
.
The parties shall execute and deliver all documents, provide all information and take or
refrain from taking action as may be necessary or appropriate to achieve the purposes of this
Agreement.
Section 16.3
Binding Effect
.
This Agreement shall be binding upon and inure to the benefit of the parties hereto and their
heirs, executors, administrators, successors, legal representatives and permitted assigns.
Western Gas Partners, LP
First Amended and Restated Agreement of Limited Partnership
109
Section 16.4
Integration
.
This Agreement constitutes the entire agreement among the parties hereto pertaining to the
subject matter hereof and supersedes all prior agreements and understandings pertaining thereto.
Section 16.5
Creditors
.
None of the provisions of this Agreement shall be for the benefit of, or shall be enforceable
by, any creditor of the Partnership.
Section 16.6
Waiver
.
No failure by any party to insist upon the strict performance of any covenant, duty, agreement
or condition of this Agreement or to exercise any right or remedy consequent upon a breach thereof
shall constitute waiver of any such breach of any other covenant, duty, agreement or condition.
Section 16.7
Third-Party Beneficiaries
.
Each Partner agrees that any Indemnitee shall be entitled to assert rights and remedies
hereunder as a third-party beneficiary hereto with respect to those provisions of this Agreement
affording a right, benefit or privilege to such Indemnitee.
Section 16.8
Counterparts
.
This Agreement may be executed in counterparts, all of which together shall constitute an
agreement binding on all the parties hereto, notwithstanding that all such parties are not
signatories to the original or the same counterpart. Each party shall become bound by this
Agreement immediately upon affixing its signature hereto or, in the case of a Person acquiring a
Limited Partner Interest, pursuant to Section 10.1(a) without execution hereto.
Section 16.9
Applicable Law
.
This Agreement shall be construed in accordance with and governed by the laws of the State of
Delaware.
Section 16.10
Invalidity of Provisions
.
If any provision of this Agreement is or becomes invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions contained herein
shall not be affected thereby.
Section 16.11
Consent of Partners
.
Each Partner hereby expressly consents and agrees that, whenever in this Agreement it is
specified that an action may be taken upon the affirmative vote or consent of less than all of the
Western Gas Partners, LP
First Amended and Restated Agreement of Limited Partnership
110
Partners, such action may be so taken upon the concurrence of less than all of the Partners
and each Partner shall be bound by the results of such action.
Section 16.12
Facsimile Signatures
.
The use of facsimile signatures affixed in the name and on behalf of the transfer agent and
registrar of the Partnership on certificates representing Common Units is expressly permitted by
this Agreement.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]
Western Gas Partners, LP
First Amended and Restated Agreement of Limited Partnership
111
IN WITNESS WHEREOF
, the parties hereto have executed this Agreement as of the date first
written above.
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GENERAL PARTNER
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WESTERN GAS HOLDINGS, LLC
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By:
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/s/ Robert G. Gwin
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Name:
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Robert G. Gwin
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Title:
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President and Chief Executive Officer
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AMENDING LIMITED PARTNER
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WGR HOLDINGS, LLC
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By:
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/s/ Robert G. Gwin
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Name:
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Robert G. Gwin
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Title:
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President and Chief Executive Officer
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LIMITED PARTNERS
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All Limited Partners now and hereafter admitted as Limited Partners of the Partnership, pursuant to powers of attorney now and hereafter executed in favor of, and granted and delivered to the General Partner or without execution hereof pursuant to Section 10.1(a) hereof.
WGR HOLDINGS, LLC
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By:
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/s/ Robert G. Gwin
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Name:
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Robert G. Gwin
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Title:
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President and Chief Executive Officer
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Signature Page First Amended and Restated Agreement
of Limited Partnership of Western Gas Partners, LP
EXHIBIT A
to the First Amended and Restated
Agreement of Limited Partnership of
Western Gas Partners, LP
Certificate Evidencing Common Units
Representing Limited Partner Interests in
Western Gas Partners, LP
In accordance with Section 4.1 of the First Amended and Restated Agreement of Limited
Partnership of Western Gas Partners, LP, as amended, supplemented or restated from time to time
(the
Partnership Agreement
), Western Gas Partners, LP, a Delaware limited partnership (the
Partnership
), hereby certifies that
(the
Holder
) is the registered
owner of
Common Units representing limited partner interests in the Partnership (the
Common Units
) transferable on the books of the Partnership, in person or by duly authorized
attorney, upon surrender of this Certificate properly endorsed. The rights, preferences and
limitations of the Common Units are set forth in, and this Certificate and the Common Units
represented hereby are issued and shall in all respects be subject to the terms and provisions of,
the Partnership Agreement. Copies of the Partnership Agreement are on file at, and will be
furnished without charge on delivery of written request to the Partnership at, the principal office
of the Partnership located at 1201 Lake Robbins Drive, The Woodlands, Texas 77380-1046. Capitalized
terms used herein but not defined shall have the meanings given them in the Partnership Agreement.
THE HOLDER OF THIS SECURITY ACKNOWLEDGES FOR THE BENEFIT OF WESTERN GAS PARTNERS, LP THAT THIS
SECURITY MAY NOT BE SOLD, OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED IF SUCH TRANSFER WOULD
(A) VIOLATE THE THEN APPLICABLE FEDERAL OR STATE SECURITIES LAWS OR RULES AND REGULATIONS OF THE
SECURITIES AND EXCHANGE COMMISSION, ANY STATE SECURITIES COMMISSION OR ANY OTHER GOVERNMENTAL
AUTHORITY WITH JURISDICTION OVER SUCH TRANSFER, (B) TERMINATE THE EXISTENCE OR QUALIFICATION OF
WESTERN GAS PARTNERS, LP UNDER THE LAWS OF THE STATE OF DELAWARE, OR (C) CAUSE WESTERN GAS
PARTNERS, LP TO BE TREATED AS AN ASSOCIATION TAXABLE AS A CORPORATION OR OTHERWISE TO BE TAXED AS
AN ENTITY FOR FEDERAL INCOME TAX PURPOSES (TO THE EXTENT NOT ALREADY SO TREATED OR TAXED). WESTERN
GAS HOLDINGS, LLC, THE GENERAL PARTNER OF WESTERN GAS PARTNERS, LP, MAY IMPOSE ADDITIONAL
RESTRICTIONS ON THE TRANSFER OF THIS SECURITY IF IT RECEIVES AN OPINION OF COUNSEL THAT SUCH
RESTRICTIONS ARE NECESSARY TO AVOID A SIGNIFICANT RISK OF WESTERN GAS PARTNERS, LP BECOMING TAXABLE
AS A CORPORATION OR OTHERWISE BECOMING TAXABLE AS AN ENTITY FOR FEDERAL INCOME TAX PURPOSES. THE
RESTRICTIONS SET FORTH ABOVE SHALL NOT PRECLUDE THE SETTLEMENT OF ANY TRANSACTIONS INVOLVING THIS
SECURITY ENTERED INTO THROUGH THE
A-1
FACILITIES OF ANY NATIONAL SECURITIES EXCHANGE ON WHICH THIS SECURITY IS LISTED OR ADMITTED TO
TRADING.
The Holder, by accepting this Certificate, is deemed to have (i) requested admission as, and
agreed to become, a Limited Partner and to have agreed to comply with and be bound by and to have
executed the Partnership Agreement, (ii) represented and warranted that the Holder has all right,
power and authority and, if an individual, the capacity necessary to enter into the Partnership
Agreement, (iii) granted the powers of attorney provided for in the Partnership Agreement and (iv)
made the waivers and given the consents and approvals contained in the Partnership Agreement.
This Certificate shall not be valid for any purpose unless it has been countersigned and
registered by the Transfer Agent and Registrar. This Certificate shall be governed by and
construed in accordance with the laws of the State of Delaware.
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Dated:
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Western Gas Partners, LP
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Countersigned and Registered by:
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By:
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Western Gas Holdings, LLC
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Computershare Trust Company, N.A.,
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By:
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As Transfer Agent and Registrar
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Name:
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By:
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Secretary
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[Reverse of Certificate]
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of this Certificate,
shall be construed as follows according to applicable laws or regulations:
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TEN COM -
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as tenants in common
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UNIF GIFT/TRANSFERS MIN ACT
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TEN ENT -
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as tenants by the entireties
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Custodian
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(Cust)
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(Minor)
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JT TEN -
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as joint tenants with right of
survivorship and not as tenants in common
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Under Uniform Gifts/Transfers to CD Minors Act (State)
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Additional abbreviations, though not in the above list, may also be used.
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A-2
ASSIGNMENT OF COMMON UNITS OF
WESTERN GAS PARTNERS, LP
FOR VALUE RECEIVED,
hereby assigns, conveys, sells and transfers unto
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(Please print or typewrite name and
address of assignee)
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(Please insert Social Security
or other identifying number of
assignee)
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Common Units representing limited partner interests evidenced by
this Certificate, subject to the Partnership Agreement, and does hereby
irrevocably constitute and appoint
as its attorney-in-fact with
full power of substitution to transfer the same on the books of Western Gas
Partners, LP.
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Date:
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NOTE: The signature to any
endorsement hereon must
correspond with the name as
written upon the face of this
Certificate in every
particular. without
alteration, enlargement or
change.
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T
HE SIGNATURE(S) MUST BE GUARANTEED BY AN
ELIGIBLE GUARANTOR INSTITUTION (BANKS,
STOCKBROKERS, SAVINGS AND LOAN
ASSOCIATIONS AND CREDIT UNIONS WITH
MEMBERSHIP IN AN APPROVED SIGNATURE
GUARANTEE MEDALLION PROGRAM), PURSUANT TO
S.E.C. RULE 17Ad-15
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(Signature)
(Signature)
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No transfer of the Common Units evidenced hereby will be
registered on the books of the Partnership, unless the Certificate
evidencing the Common Units to be transferred is surrendered for
registration or transfer.
A-3
Exhibit
3.2
Execution Version
LIMITED LIABILITY COMPANY AGREEMENT
OF
WESTERN GAS HOLDINGS, LLC
A Delaware Limited Liability Company
Dated as of
TABLE OF CONTENTS
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ARTICLE I DEFINITIONS
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Section 1.1 Definitions
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1
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Section 1.2 Construction
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6
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ARTICLE II ORGANIZATION
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Section 2.1 Formation
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6
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Section 2.2 Name
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6
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Section 2.3 Registered Office; Registered Agent; Principal Office
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6
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Section 2.4 Purposes
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7
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Section 2.5 Term
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7
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Section 2.6 No State Law Partnership
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7
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Section 2.7 Certain Undertakings Relating to the Separateness
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7
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ARTICLE III MEMBERSHIP
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Section 3.1 Membership Interests; Additional Members
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9
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Section 3.2 Access to Information
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9
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Section 3.3 Liability
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9
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Section 3.4 Withdrawal
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10
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Section 3.5 Meetings
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10
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Section 3.6 Action by Consent of Members
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10
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Section 3.7 Conference Telephone Meetings
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10
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Section 3.8 Quorum
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10
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ARTICLE IV ADMISSION OF MEMBERS; DISPOSITION OF MEMBERSHIP INTERESTS
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Section 4.1 Admission of Assignee as a Member
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10
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Section 4.2 Requirements Applicable to All Dispositions and Admissions
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11
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ARTICLE V CAPITAL CONTRIBUTIONS
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Section 5.1 Initial Capital Contributions
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11
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Section 5.2 Loans
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11
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Section 5.3 Return of Contributions
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11
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ARTICLE VI DISTRIBUTIONS AND ALLOCATIONS
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Section 6.1 Distributions
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12
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Section 6.2 Distributions on Dissolution and Winding Up
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12
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Section 6.3 Limitations on Distributions
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12
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ARTICLE VII MANAGEMENT
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Section 7.1 Management by Board of Directors
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12
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Section 7.2 Number; Qualification; Tenure
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13
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Section 7.3 Regular Meetings
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13
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Section 7.4 Special Meetings
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13
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Section 7.5 Notice
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14
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Section 7.6 Action by Consent of Board
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14
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Section 7.7 Conference Telephone Meetings
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14
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Section 7.8 Quorum
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14
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Section 7.9 Vacancies; Increases in the Number of Directors
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14
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Section 7.10 Committees
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15
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Section 7.11 Removal
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16
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Section 7.12 Compensation of Directors
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16
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ARTICLE VIII OFFICERS
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Section 8.1 Officers
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16
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Section 8.2 Election and Term of Office
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16
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Section 8.3 Chairman of the Board
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17
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Section 8.4 Chief Executive Officer
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17
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Section 8.5 Chief Financial Officer
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17
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Section 8.6 President
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17
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Section 8.7 Vice Presidents
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18
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Section 8.8 Treasurer
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18
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Section 8.9 Secretary
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18
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Section 8.10 General Counsel
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19
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Section 8.11 Controller
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19
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Section 8.12 Removal
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19
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Section 8.13 Vacancies
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19
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ARTICLE IX INDEMNITY AND LIMITATION OF LIABILITY
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Section 9.1 Indemnification of Directors and Officers
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19
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ARTICLE X TAXES
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Section 10.1 Taxes
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20
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ARTICLE XI BOOKS, RECORDS, REPORTS, AND BANK ACCOUNTS
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Section 11.1 Maintenance of Books
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20
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Section 11.2 Reports
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20
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Section 11.3 Bank Accounts
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21
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ARTICLE XII DISSOLUTION, WINDING-UP, TERMINATION AND CONVERSION
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Section 12.1 Dissolution
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21
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Section 12.2 Winding-Up and Termination
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21
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Section 12.3 Deficit Capital Accounts
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22
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Section 12.4 Certificate of Cancellation
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22
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ARTICLE XIII GENERAL PROVISIONS
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Section 13.1 Offset
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22
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Section 13.2 Notices
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23
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Section 13.3 Entire Agreement; Superseding Effect
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23
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Section 13.4 Effect of Waiver or Consent
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23
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Section 13.5 Amendment or Restatement
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24
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Section 13.6 Binding Effect
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24
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Section 13.7 Governing Law; Severability
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24
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Section 13.8 Further Assurances
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24
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Section 13.9 Waiver of Certain Rights
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25
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Section 13.10 Counterparts
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25
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Exhibit A Members
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Exhibit B Directors
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Exhibit C Officers
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AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
WESTERN GAS HOLDINGS, LLC
This AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT (this
Agreement
) of Western
Gas Holdings, LLC (the
Company
), dated as of May 14, 2008, is adopted, executed and agreed to by
WGR Holdings, LLC, a Delaware limited liability company (
Holdings
), as the sole Member of the
Company.
R E C I T A L S:
WHEREAS, the Company was formed as a Delaware limited liability company on August 21, 2007.
WHEREAS, the Limited Liability Company Agreement of Western Gas Holdings, LLC was executed
effective August 21, 2007 (the
Original Limited Liability Company Agreement
) by WGR Asset Holding
Company LLC, a Delaware limited liability company (
Asset HoldCo
).
WHEREAS, Asset HoldCo contributed all of its Membership Interests to Holdings on September 11,
2007.
WHEREAS, on September 11, 2007, the First Amendment to the Original Limited Liability Company
Agreement was adopted to name Holdings as the sole Member.
WHEREAS, the sole Member of the Company deems it advisable to amend and restate the Original
Limited Liability Company Agreement, as amended, in its entirety as set forth herein.
NOW THEREFORE, for and in consideration of the premises, the covenants and agreements set
forth herein and other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, Holdings, as the sole Member of the Company, hereby amends and restates the
Original Limited Liability Company Agreement in its entirety as follows:
ARTICLE I
DEFINITIONS
Section 1.1
Definitions.
(a) As used in this Agreement, the following terms have the respective meanings set forth
below or set forth in the Sections referred to below:
Act
means the Delaware Limited Liability Company Act (Delaware General Corporations Code
Sections 18-101, et seq.), as it may be amended from time to time, and any corresponding provisions
of succeeding law. All references in this Agreement to provisions of
Western Gas Holdings, LLC
Limited Liability Company Agreement
1
the Act shall be deemed to refer, if applicable, to their successor statutory provisions to
the extent appropriate in light of the context herein in which such references are used.
Affiliate
means, with respect to any Person, any other Person that directly or indirectly
through one or more intermediaries controls, is controlled by or is under common control with, the
Person in question. As used herein, the term control means the possession, direct or indirect, of
the power to direct or cause the direction of the management and policies of a Person, whether
through ownership of voting securities, by contract or otherwise; and the terms controlling and
controlled have meanings correlative to the foregoing.
Agreement
is defined in the introductory paragraph, as the same may be amended, modified,
supplemented or restated from time to time.
Anadarko Entities
means Anadarko Petroleum Corporation, a Delaware corporation, and its
Subsidiaries, including Holdings, and its Affiliates (other than the Company and the Partnership
Group).
Applicable Law
means (a) any United States federal, state or local law, statute or ordinance
or any rule, regulation, order, writ, injunction, judgment, decree or permit of any Governmental
Authority and (b) any rule or listing requirement of any applicable national stock exchange or
listing requirement of any national stock exchange or Commission recognized trading market on which
securities issued by the Partnership are listed or quoted.
Assignee
means any Person that acquires a Members share of the income, gain, loss,
deduction and credits of, and the right to receive distributions from, the Company or any portion
thereof through a Disposition; provided, however, that an Assignee shall have no right to be
admitted to the Company as a Member except in accordance with Article IV. The Assignee of a
dissolved Member is the shareholder, partner, member or other equity owner or owners of the
dissolved Member to whom such Members Membership Interest is assigned by the Person conducting the
liquidation or winding up of such Member.
Audit Committee
is defined in Section 7.10(b).
Bankruptcy
or
Bankrupt
means, with respect to any Person, that (a) such Person (i) makes a
general assignment for the benefit of creditors; (ii) files a voluntary bankruptcy petition; (iii)
becomes the subject of an order for relief or is declared insolvent in any federal or state
bankruptcy or insolvency proceedings; (iv) files a petition or answer seeking for such Person a
reorganization, arrangement, composition, readjustment, liquidation, dissolution, or similar relief
under any Applicable Law; (v) files an answer or other pleading admitting or failing to contest the
material allegations of a petition filed against such Person in a proceeding of the type described
in subclauses (i) through (iv) of this clause (a); or (vi) seeks, consents to, or acquiesces in the
appointment of a trustee, receiver, or liquidator of such Person or of all or any substantial part
of such Persons properties; or (b) a proceeding seeking reorganization, arrangement, composition,
readjustment, liquidation, dissolution, or similar relief under any Applicable Law has been
commenced against such Person and 120 Days have expired without dismissal thereof or with respect
to which, without such Persons consent or acquiescence, a trustee, receiver, or
Western Gas Holdings, LLC
Limited Liability Company Agreement
2
liquidator of such Person or of all or any substantial part of such Persons properties has
been appointed and 90 Days have expired without the appointments having been vacated or stayed, or
90 Days have expired after the date of expiration of a stay, if the appointment has not previously
been vacated. The foregoing definition of Bankruptcy is intended to replace and shall supercede
and replace the definition of Bankruptcy set forth in the Act.
Board
is defined in Section 7.1(c).
Business Day
means (i) any day on which the national securities exchange upon which
securities of the Partnership are listed is open for trading, or (ii) in the event that no
Partnership securities are listed on a national securities exchange, any day on which the New York
Stock Exchange is open for trading.
Capital Contribution
means, with respect to any Member, the amount of money and the net
agreed value of any property (other than money) contributed to the Company by such Member. Any
reference in this Agreement to the Capital Contribution of a Member shall include any Capital
Contribution of its predecessors in interest.
Certified Public Accountants
means a firm of independent public accountants selected from
time to time by the Board.
Claim
means any and all judgments, claims, causes of action, demands, lawsuits, suits,
proceedings, Governmental investigations or audits, losses, assessments, fines, penalties,
administrative orders, obligations, costs, expenses, liabilities and damages (whether actual,
consequential or punitive), including interest, penalties, reasonable attorneys fees,
disbursements and costs of investigations, deficiencies, levies, duties and imposts.
Code
means the Internal Revenue Code of 1986, as amended from time to time.
Commission
means the United States Securities and Exchange Commission.
Company
is defined in the introductory paragraph.
Compensation Committee
is defined in Section 7.10(d).
Day
means a calendar day; provided, however, that, if any period of Days referred to in this
Agreement shall end on a Day that is not a Business Day, then the expiration of such period shall
be automatically extended until the end of the next succeeding Business Day.
Delaware Certificate
is defined in Section 2.1.
Director
or
Directors
means a member or members of the Board.
Dispose
,
Disposing
or
Disposition
means with respect to any asset (including a
Membership Interest or any portion thereof), a sale, assignment, transfer, conveyance, gift,
exchange or other disposition of such asset, whether such disposition be voluntary, involuntary or
by operation of Applicable Law.
Western Gas Holdings, LLC
Limited Liability Company Agreement
3
Disposing Member
is defined in Section 4.1.
Dissolution Event
is defined in Section 12.1(a).
Encumber
,
Encumbering
, or
Encumbrance
means the creation of a security interest, lien,
pledge, mortgage or other encumbrance, whether such encumbrance be voluntary, involuntary or by
operation of Applicable Law.
GAAP
means generally accepted accounting principles as applied in the United States.
Governmental Authority
or
Governmental
means any federal, state or local court or
governmental or regulatory agency or authority or any arbitration board, tribunal or mediator
having jurisdiction over the Company or its assets or Members.
Group Member
is defined in the Partnership Agreement.
Holdings
is defined in the introductory paragraph.
Incentive Plan
means any plan or arrangement pursuant to which the Company may compensate
its employees, consultants, directors and/or service providers.
Independent Director
is defined in Section 7.10(b).
Limited Partner
and
Limited Partners
are defined in the Partnership Agreement.
Majority Interest
means Membership Interests in the Company entitled to more than 50% of the
Sharing Ratios.
Member
means any Person executing this Agreement as of the date of this Agreement as a
member of the Company or hereafter admitted to the Company as a member as provided in this
Agreement, but such term does not include any Person who has ceased to be a member in the Company.
Membership Interest
means, with respect to any Member, (a) that Members status as a Member;
(b) that Members share of the income, gain, loss, deduction and credits of, and the right to
receive distributions from, the Company; (c) all other rights, benefits and privileges enjoyed by
that Member (under the Act, this Agreement, or otherwise) in its capacity as a Member, including
that Members rights to vote, consent and approve and otherwise to participate in the management of
the Company; and (d) all obligations, duties and liabilities imposed on that Member (under the Act,
this Agreement or otherwise) in its capacity as a Member, including any obligations to make Capital
Contributions.
Notices
is defined in Section 13.2.
Omnibus Agreement
is defined in the Partnership Agreement.
Original LIMITED LIABILITY COMPANY AGREEMENT
is defined in the Recitals.
Western Gas Holdings, LLC
Limited Liability Company Agreement
4
Partnership
means Western Gas Partners, LP, a Delaware limited partnership.
Partnership Agreement
means the First Amended and Restated Agreement of Limited Partnership
of the Partnership, dated as of May 14, 2008, as it may be further amended and restated, or any
successor agreement.
Partnership Group
means the Partnership and its Subsidiaries treated as a single
consolidated entity.
Person
means an individual or a corporation, firm, limited liability company, partnership,
joint venture, trust, unincorporated organization, association, government agency or political
subdivision thereof or other entity.
Sharing Ratio
means, subject in each case to adjustments in accordance with this Agreement
or in connection with Dispositions of Membership Interests, (a) in the case of a Member executing
this Agreement as of the date of this Agreement or a Person acquiring such Members Membership
Interest, the percentage specified for that Member as its Sharing Ratio on Exhibit A, and (b) in
the case of Membership Interests issued pursuant to Section 3.1, the Sharing Ratio established
pursuant thereto; provided, however, that the total of all Sharing Ratios shall always equal 100%.
Special Approval
means approval by a majority of the members of the Special Committee.
Special Committee
is defined in Section 7.10(c).
Subsidiary
means, with respect to any Person, (a) a corporation of which more than 50% of
the voting power of shares entitled (without regard to the occurrence of any contingency) to vote
in the election of directors or other governing body of such corporation is owned, directly or
indirectly, at the date of determination, by such Person, by one or more Subsidiaries of such
Person or a combination thereof, (b) a partnership (whether general or limited) in which such
Person or a Subsidiary of such Person is, at the date of determination, a general or limited
partner of such partnership, but only if more than 50% of the partnership interests of such
partnership (considering all of the partnership interests of the partnership as a single class) is
owned, directly or indirectly, at the date of determination, by such Person, by one or more
Subsidiaries of such Person or a combination thereof, or (c) any other Person (other than a
corporation or a partnership) in which such Person, one or more Subsidiaries of such Person or a
combination thereof, directly or indirectly, at the date of determination, has (i) at least a
majority ownership interest or (ii) the power to elect or direct the election of a majority of the
directors or other governing body of such Person.
Treasury Regulations
means the regulations (including temporary regulations) promulgated by
the United States Department of the Treasury pursuant to and in respect of provisions of the Code.
All references herein to sections of the Treasury Regulations shall include any corresponding
provision or provisions of succeeding, similar or substitute, temporary or final Treasury
Regulations.
Western Gas Holdings, LLC
Limited Liability Company Agreement
5
Withdraw
,
Withdrawing
or
Withdrawal
means the withdrawal, resignation or retirement of a
Member from the Company as a Member. Such terms shall not include any Dispositions of Membership
Interest (which are governed by Article IV), even though the Member making a Disposition may cease
to be a Member as a result of such Disposition.
(b) Other terms defined herein have the meanings so given them.
Section 1.2
Construction.
Unless the context requires otherwise: (a) any pronoun used in this Agreement shall include
the corresponding masculine, feminine or neuter forms, and the singular form of nouns, pronouns and
verbs shall include the plural and vice versa; (b) references to Articles and Sections refer to
Articles and Sections of this Agreement; (c) the terms include, includes, including or words
of like import shall be deemed to be followed by the words without limitation; and (d) the terms
hereof, herein or hereunder refer to this Agreement as a whole and not to any particular
provision of this Agreement. The table of contents and headings contained in this Agreement are for
reference purposes only, and shall not affect in any way the meaning or interpretation of this
Agreement.
ARTICLE II
ORGANIZATION
Section 2.1
Formation.
The Company was formed as a Delaware limited liability company by the filing of a Certificate
of Formation (the
Delaware Certificate
) on August 21, 2007 with the Secretary of State of the
State of Delaware under and pursuant to the Act.
Section 2.2
Name.
The name of the Company is WESTERN GAS HOLDINGS, LLC and all Company business must be
conducted in that name and such other names that comply with Applicable Law as the Board or the
Member may select.
Section 2.3
Registered Office; Registered Agent; Principal Office.
The name of the Companys registered agent for service of process is The Corporation Trust
Company, and the address of the Companys registered office in the State of Delaware is The
Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801. The principal place of
business of the Company shall be located at 1201 Lake Robbins Drive, The Woodlands, Texas
77380-1046. The Members may change the Companys registered agent or the location of the Companys
registered office or principal place of business as the Members may from time to time determine.
Western Gas Holdings, LLC
Limited Liability Company Agreement
6
Section 2.4
Purposes.
The purpose of the Company is to act as the general partner of the Partnership as described in
the Partnership Agreement and to engage in any lawful business or activity ancillary or related
thereto. The Company shall possess and may exercise all the powers and privileges granted by the
Act, by any other law or by this Agreement, together with any powers incidental thereto, including
such powers and privileges as are necessary or appropriate to the conduct, promotion or attainment
of the business, purposes or activities of the Company.
Section 2.5
Term.
The period of existence of the Company commenced on August 21, 2007 and shall end at such time
as a certificate of cancellation is filed with the Secretary of State of Delaware in accordance
with Section 12.4.
Section 2.6
No State Law Partnership.
The Members intend that the Company shall not be a partnership (whether general, limited or
other) or joint venture, and that no Member shall be a partner or joint venturer with any other
Member, for any purposes other than (if the Company has more than one Member) federal and state
income tax purposes, and this Agreement may not be construed or interpreted to the contrary.
Section 2.7
Certain Undertakings Relating to the Separateness.
(a) Separateness Generally. The Company shall, and shall cause the members of the Partnership
Group to, conduct their respective businesses and operations separate and apart from those of any
other Person (including the Anadarko Entities), except the Company and/or one or more members of
the Partnership Group, in accordance with this Section 2.7.
(b) Separate Records. The Company shall, and shall cause the Partnership to, (i) maintain
their respective books and records and their respective accounts separate from those of any other
Person, (ii) maintain their respective financial records, which will be used by them in their
ordinary course of business, showing their respective assets and liabilities separate and apart
from those of any other Person, except their consolidated Subsidiaries, and (iii) file their
respective own tax returns separate from those of any other Person, except (A) to the extent that
the Partnership or the Company (x) is treated as a disregarded entity for tax purposes or (y) is
not otherwise required to file tax returns under applicable law or (B) as may otherwise be required
by applicable law.
(c) Separate Assets. The Company shall not, and shall cause the Partnership to not, commingle
or pool its funds or other assets with those of any other Person, except its consolidated
Subsidiaries, and shall maintain its assets in a manner in which it is not costly or difficult to
segregate, ascertain or otherwise identify its assets as separate from those of any other Person.
Western Gas Holdings, LLC
Limited Liability Company Agreement
7
(d) Separate Name. The Company shall, and shall cause the members of the Partnership Group
to, (i) conduct their respective businesses in their respective own names or in the names of their
respective Subsidiaries or the Partnership, (ii) use their or the Partnerships separate
stationery, invoices, and checks, (iii) correct any known misunderstanding regarding their
respective separate identities as members of the Partnership Group from that of any other Person
(including the Anadarko Entities), and (iv) generally hold themselves and the Partnership Group out
as entities separate from any other Person (including the Anadarko Entities).
(e) Separate Credit. The Company shall not (i) pay its own liabilities from a source other
than its own funds, (ii) guarantee or become obligated for the debts of any other Person, except
its Subsidiaries, (iii) hold out its credit as being available to satisfy the obligations of any
other Person, except its Subsidiaries, (iv) acquire obligations or debt securities of its
Affiliates (other than the Company or its Subsidiaries), or (v) pledge its assets for the benefit
of any Person or make loans or advances to any Person, except its Subsidiaries;
provided
that the
Company may engage in any transaction described in clauses (ii)(v) of this Section 2.7(e) if prior
Special Approval has been obtained for such transaction and either (A) the Special Committee has
determined, or has obtained reasonable written assurance from a nationally recognized firm of
independent public accountants or a nationally recognized investment banking or valuation firm,
that the borrower or recipient of the credit extension is not then insolvent and will not be
rendered insolvent as a result of such transaction or (B) in the case of transactions described in
clause (iv), such transaction is completed through a public auction or a National Securities
Exchange.
(f) Separate Formalities. The Company shall, and shall cause the Partnership to, (i) observe
all limited liability company or limited partnership formalities, as the case may be, and other
formalities required by its organizational documents, the laws of the jurisdiction of its formation
and other Applicable Laws, (ii) engage in transactions with any member of the Anadarko Entities in
conformity with the requirements of Section 7.9(c) of the Partnership Agreement and (iii) subject
to the terms of the Omnibus Agreement, promptly pay, from its own funds, and on a current basis,
its allocable share of general and administrative expenses, capital expenditures, and costs for
shared services performed by any member of the Anadarko Entities. Each material contract between
the Company or the Partnership, on the one hand, and any member of the Anadarko Entities, on the
other hand, shall be in writing.
(g) No Effect. Failure by the company to comply with any of the obligations set forth above
shall not affect the status of the Company as a separate legal entity, with its separate assets and
separate liabilities or restrict or limit the Company from engaging or contracting with the
Anadarko Entities for the provision of services or the purchase or sale of products, whether under
the Omnibus Agreement or otherwise.
Western Gas Holdings, LLC
Limited Liability Company Agreement
8
ARTICLE III
MEMBERSHIP
Section 3.1
Membership Interests; Additional Members.
Holdings is the sole initial Member of the Company as reflected in Exhibit A attached hereto.
Persons may be admitted to the Company as Members, on such terms and conditions as the Members
determine at the time of admission. The terms of admission or issuance must specify the Sharing
Ratios applicable thereto and may provide for the creation of different classes or groups of
Members having different rights, powers and duties. The Members may reflect the creation of any new
class or group in an amendment to this Agreement, indicating the different rights, powers and
duties, and such an amendment shall be approved and executed by the Members. Any such admission
shall be effective only after such new Member has executed and delivered to the Members and the
Company an instrument containing the notice address of the new Member, the new Members
ratification of this Agreement and agreement to be bound by it.
Section 3.2
Access to Information.
Each Member shall be entitled to receive any information that it may request concerning the
Company; provided, however, that this Section 3.2 shall not obligate the Company to create any
information that does not already exist at the time of such request (other than to convert existing
information from one medium to another, such as providing a printout of information that is stored
in a computer database). Each Member shall also have the right, upon reasonable notice, and at all
reasonable times during usual business hours to inspect the properties of the Company and to audit,
examine and make copies of the books of account and other records of the Company. Such right may be
exercised through any agent or employee of such Member designated in writing by it or by an
independent public accountant, engineer, attorney or other consultant so designated. All costs and
expenses incurred in any inspection, examination or audit made on such Members behalf shall be
borne by such Member.
Section 3.3
Liability.
(a) No Member shall be liable for the debts, obligations or liabilities of the Company solely
by reason of being a member of the Company.
(b) The Company and the Members agree that the rights, duties and obligations of the Members
in their capacities as members of the Company are only as set forth in this Agreement and as
otherwise arise under the Act. Furthermore, the Members agree that the existence of any rights of a
Member, or the exercise or forbearance from exercise of any such rights, shall not create any
duties or obligations of the Member in its capacity as a member of the Company, nor shall such
rights be construed to enlarge or otherwise to alter in any manner the duties and obligations of
such Member.
Western Gas Holdings, LLC
Limited Liability Company Agreement
9
Section 3.4
Withdrawal.
A Member does not have the right or power to Withdraw.
Section 3.5
Meetings.
A meeting of the Members may be called at any time at the request of any Member.
Section 3.6
Action by Consent of Members.
Except as otherwise required by Applicable Law, all decisions of the Members shall require the
affirmative vote of the Members owning a majority of Sharing Ratios present at a meeting at which a
quorum is present in accordance with Section 3.8. To the extent permitted by Applicable Law, the
Members may act without a meeting and without notice so long as the number of Members who would be
required to take such action at a duly held meeting shall have executed a written consent with
respect to any such action taken in lieu of a meeting.
Section 3.7
Conference Telephone Meetings.
Any Member may participate in a meeting of the Members or by means of conference telephone or
similar communications equipment by means of which all persons participating in the meeting can
hear each other, and such participation in a meeting shall constitute presence in person at such
meeting.
Section 3.8
Quorum.
The Members owning a majority of Sharing Ratios, present in person or participating in
accordance with Section 3.7, shall constitute a quorum for the transaction of business, but, if at
any meeting of the Members there shall be less than a quorum present, a majority of the Members
present may adjourn the meeting from time to time without further notice. Any act of the Members
owning a majority of Sharing Ratios present at a meeting at which a quorum is present shall be the
act of the Members. The Members present at a duly organized meeting may continue to transact
business until adjournment, notwithstanding the withdrawal of enough Members to leave less than a
quorum.
ARTICLE IV
ADMISSION OF MEMBERS; DISPOSITION OF MEMBERSHIP INTERESTS
Section 4.1
Admission of Assignee as a Member.
An Assignee has the right to be admitted to the Company as a Member, with the Membership
Interests (and attendant Sharing Ratio) so transferred to such Assignee, only if (a) the Member
making the Disposition (a
Disposing Member
) has granted the Assignee either (i) all, but not less
than all, of such Disposing Members Membership Interests or (ii) the express right to be so
admitted and (b) such Disposition is effected in strict compliance with this Article IV.
Western Gas Holdings, LLC
Limited Liability Company Agreement
10
Section 4.2
Requirements Applicable to All Dispositions and Admissions.
Any Disposition of Membership Interests and any admission of an Assignee as a Member shall
also be subject to the following requirements, and such Disposition (and admission, if applicable)
shall not be effective unless such requirements are complied with:
(a) Payment of Expenses. The Disposing Member and its Assignee shall pay, or reimburse the
Company for, all reasonable costs and expenses incurred by the Company in connection with the
Disposition and admission of the Assignee as a Member.
(b) No Release. No Disposition of Membership Interests shall effect a release of the
Disposing Member from any liabilities to the Company or the other Members arising from events
occurring prior to the Disposition, except as otherwise may be provided in any instrument or
agreement pursuant to which a Disposition of Membership Interests is effected.
ARTICLE V
CAPITAL CONTRIBUTIONS
Section 5.1
Initial Capital Contributions.
At the time of the formation of the Company and prior to its contribution of all of its
Membership Interests to Holdings, Asset HoldCo, as the initial or organizational Member of the
Company, made the Capital Contribution as set forth next to its name on Exhibit A.
Section 5.2
Loans.
If the Company does not have sufficient cash to pay its obligations, any Member(s) that may
agree to do so may advance all or part of the needed funds to or on behalf of the Company. An
advance described in this Section 5.2 constitutes a loan from the Member to the Company, bears
interest at a rate determined by the Members from the date of the advance until the date of payment
and is not a Capital Contribution.
Section 5.3
Return of Contributions.
Except as expressly provided herein, no Member is entitled to the return of any part of its
Capital Contributions or to be paid interest in respect of either its Capital Account or its
Capital Contributions. A Capital Contribution remaining unpaid by the Company is not a liability of
the Company or of any Member. A Member is not required to contribute or to lend any cash or
property to the Company to enable the Company to return any Members Capital Contributions.
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ARTICLE VI
DISTRIBUTIONS AND ALLOCATIONS
Section 6.1
Distributions.
Distributions to the Members shall be made only to all Members simultaneously in proportion to
their respective Sharing Ratios (at the time the amounts of such distributions are determined) and
in such aggregate amounts and at such times as shall be determined by the Members representing a
Majority Interest (at the time the amounts of such distributions are determined); provided,
however, that any loans from Members pursuant to Section 5.2 shall be repaid prior to any
distributions to Members pursuant to this Section 6.1.
Section 6.2
Allocations of Profits and Losses.
The Companys profits and losses shall be allocated to the Members in proportion to their
respective Sharing Ratios.
Section 6.3
Limitations on Distributions.
Notwithstanding any provision to the contrary contained in this Agreement, the Company shall
not make a distribution to any Member on account of its interest in the Company if such
distribution would violate Section 18-607 of the Act or other Applicable Law.
ARTICLE VII
MANAGEMENT
Section 7.1
Management by Board of Directors.
(a) The management of the Company is fully reserved to the Members, and the Company shall not
have managers as that term is used in the Act. The powers of the Company shall be exercised by or
under the authority of, and the business and affairs of the Company shall be managed under the
direction of, the Members, who shall make all decisions and take all actions for the Company.
(b) The Members shall have the power and authority to delegate to one or more other persons
the Members rights and power to manage and control the business and affairs, or any portion
thereof, of the Company, including to delegate to agents, officers and employees of a Member or the
Company, and to delegate by a management agreement with or otherwise to other Persons.
(c) The Members have heretofore delegated to and hereby expressly continue to delegate to the
Board of Directors of the Company (the
Board
), to the fullest extent permitted under this
Agreement and Delaware law, all of the Companys power and authority to manage and control the
business and affairs of the Partnership. The number of directors
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constituting the Board shall be fixed from time to time pursuant to a resolution adopted by
Members representing a Majority Interest. The initial Directors of the Company in office at the
date of approval of this Agreement are set forth on Exhibit B hereto. The Board may designate one
or more other persons to be officers of the Company to assist in carrying out the Boards decisions
and the day-to-day activities of the Company in its role as the general partner of the Partnership.
Officers are not managers as that term is used in the Act. Any officers who are so designated
shall have such titles and authority and perform such duties as the Board may delegate to them. The
salaries or other compensation, if any, of the officers of the Company shall be fixed by the Board.
Any officer may be removed as such, either with or without cause, by the Board and any vacancy
occurring in any office of the Company may be filled by the Board. Designation of an officer shall
not of itself create contract rights.
(d) Notwithstanding anything herein to the contrary, without obtaining approval of Holdings as
the sole Member, the Company shall not, and shall not take any action to cause the Partnership to,
(i) sell all or substantially all of the assets of the Company or the Partnership, (ii) merge or
consolidate, (iii) dissolve or liquidate, (iv) make or consent to a general assignment for the
benefit of its respective creditors; (v) file or consent to the filing of any bankruptcy,
insolvency or reorganization petition for relief under the United States Bankruptcy Code naming the
Company or the Partnership, as applicable, or otherwise seek, with respect to the Company or the
Partnership, such relief from debtors or protection from creditors generally; or (vi) take various
actions similar to those described in any of clauses (i) (v) of this Section 7.1(d).
Section 7.2
Number; Qualification; Tenure.
(a) The number of Directors constituting the Board shall be at least two and no more than
nine, and may fixed from time to time pursuant to a resolution adopted by a majority of the
Directors. A Director need not be a Member. Each Director shall be elected or approved by the
Members at an annual meeting of the Members and shall serve as a Director of the Company for a term
of one year (or their earlier death or removal from office) or until their successors are elected
and qualified.
(b) The initial Directors of the Company in office at the date of approval of this Agreement
are set forth on Exhibit B hereto.
Section 7.3
Regular Meetings.
Regular quarterly and annual meetings of the Board shall be held at such time and place as
shall be designated from time to time by resolution of the Board. Notice of such regular quarterly
and annual meetings shall not be required.
Section 7.4
Special Meetings.
A special meeting of the Board may be called at any time at the request of (a) the Chairman of
the Board or (b) a majority of the Directors then in office.
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Section 7.5
Notice.
Written notice of all special meetings of the Board must be given to all Directors at least
two Business Days prior to any special meeting of the Board. All notices and other communications
to be given to Directors shall be sufficiently given for all purposes hereunder if in writing and
delivered by hand, courier or overnight delivery service or three Days after being mailed by
certified or registered mail, return receipt requested, with appropriate postage prepaid, or when
received in the form of an e-mail, telegram or facsimile, and shall be directed to the address,
e-mail address or facsimile number as such Director shall designate by notice to the Company.
Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the
Board need be specified in the notice of such meeting, except for amendments to this Agreement, as
provided herein. A meeting may be held at any time without notice if all the Directors are present
or if those not present waive notice of the meeting either before or after such meeting.
Section 7.6
Action by Consent of Board.
To the extent permitted by Applicable Law, the Board, or any committee of the Board, may act
without a meeting so long as all members of the Board or committee shall have executed a written
consent with respect to any action taken in lieu of a meeting.
Section 7.7
Conference Telephone Meetings.
Directors or members of any committee of the Board may participate in a meeting of the Board
or such committee by means of conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other, and such participation in a
meeting shall constitute presence in person at such meeting.
Section 7.8
Quorum.
A majority of all Directors, present in person or participating in accordance with Section
7.7, shall constitute a quorum for the transaction of business, but if at any meeting of the Board
there shall be less than a quorum present, a majority of the Directors present may adjourn the
meeting from time to time without further notice. Except as otherwise required by Applicable Law,
all decisions of the Board, or any committee of the Board, shall require the affirmative vote of a
majority of all Directors of the Board, or any committee of the Board, respectively. The Directors
present at a duly organized meeting may continue to transact business until adjournment,
notwithstanding the withdrawal of enough Directors to leave less than a quorum.
Section 7.9
Vacancies; Increases in the Number of Directors.
Vacancies and newly created directorships resulting from any increase in the number of
Directors shall be filled by the Members in their sole discretion. Any Director so chosen shall
hold office until the next annual election and until his successor shall be duly elected and shall
qualify, unless sooner displaced.
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Section 7.10
Committees.
(a) The Board may establish committees of the Board and may delegate any of its
responsibilities, except as otherwise prohibited by Applicable Law, to such committees.
(b) The Board shall have an audit committee (the
Audit Committee
) comprised of directors who
meet the independence standards required of directors who serve on an audit committee of a board of
directors established by the Securities Exchange Act of 1934, as amended, and the rules and
regulations of the Commission thereunder and by the New York Stock Exchange or any National
Securities Exchange on which the Common Units are listed. The Audit Committee shall establish a
written audit committee charter in accordance with the rules and regulations of the New York Stock
Exchange or any National Securities Exchange on which the Common Units are listed from time to
time, and the Commission, as amended from time to time. Each member of the Audit Committee shall
satisfy the rules and regulations of the New York Stock Exchange or any National Securities
Exchange on which the Common Units are listed from time to time and the Commission, as amended from
time to time, pertaining to qualification for service on an audit committee. An
Independent
Director
shall mean a Director so satisfying such rules and regulations.
(c) The Board shall have a special committee comprised of no fewer than two Directors (the
Special Committee
); all members of which shall be Independent Directors, but none of whom may be
(i) security holders, officers or employees of the Company, (ii) officers, directors or employees
of any Affiliate of the Company or (iii) holders of any ownership interest in the Partnership Group
other than Common Units or securities exercisable, convertible into, or exchangeable for Common
Units. The Special Committee may review, and approve or disapprove, transactions in which a
potential conflict of interest exists or arises between the Company, or any of its Affiliates
(other than a Group Member), on the one hand, and any Group Member or any Partner (as defined in
the Partnership Agreement), all in accordance with the applicable provisions of the Partnership
Agreement. Any matter approved by the Special Committee in good faith in accordance with the
provisions, and subject to the limitations, of the Partnership Agreement, shall not be deemed to be
a breach of any fiduciary or other duties owed by the Board or any Director to the Company or the
Members.
(d) The Board may have a compensation committee (the
Compensation Committee
). The
Compensation Committee shall be charged with such matters pertaining to the compensation of
Directors, officers and other personnel of the Company, the review, approval and administration of
any Incentive Plans put in place by the Company or the Partnership and such other related matters
as may be directed by the Board from time to time.
(e) A majority of any committee, present in person or participating in accordance with Section
7.7, shall constitute a quorum for the transaction of business of such committee.
(f) A majority of any committee may determine its action and fix the time and place of its
meetings unless the Board shall otherwise provide. Notice of such meetings shall be given to each
member of the committee in the manner provided for in Section 7.5. The Board
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15
shall have power at any time to fill vacancies in, to change the membership of, or to dissolve
any such committee.
Section 7.11
Removal.
Any Director or the entire Board may be removed at any time, with or without cause, by the
Members.
Section 7.12
Compensation of Directors.
Except as expressly provided in any written agreement between the Company and a Director or by
resolution of the Board, no Director shall receive any compensation from the Company for services
provided to the Company in its capacity as a Director, except that each Director shall be
compensated for attendance at Board meetings at rates of compensation as from time to time
established by the Board or a committee thereof; provided, however, that Directors who are also
employees of the Company or any Affiliate thereof shall receive no compensation for their services
as Directors or committee members. In addition, the Directors who are not employees of the Company
or any Affiliate thereof shall be entitled to be reimbursed for out-of-pocket costs and expenses
incurred in connection with attending meetings of the Board or committees thereof.
ARTICLE VIII
OFFICERS
Section 8.1
Officers.
The officers of the Company shall serve at the pleasure of the Board. Such officers shall have
the authority and duties delegated to each of them, respectively, by the Board from time to time.
The officers of the Company shall be a Chairman of the Board, a Chief Executive Officer, a Chief
Financial Officer, a President, a Secretary, a Treasurer, a General Counsel, a Controller and such
other officers as the Board from time to time may deem proper. The Chairman of the Board shall be
chosen from among the Directors. All officers elected by the Board shall each have such powers and
duties as generally pertain to their respective offices, subject to the specific provisions of this
Article VIII. The Board or any committee thereof may from time to time elect such other officers
(including one or more Vice Presidents, Assistant Controllers, Assistant Secretaries and Assistant
Treasurers) as may be necessary or desirable for the conduct of the business of the Company. Such
other officers and agents shall have such duties and shall hold their offices for such terms as
shall be provided in this Agreement or as may be prescribed by the Board or such committee, as the
case may be from time to time.
Section 8.2
Election and Term of Office.
The names and titles of the officers of the Company in office as of the date of approval of
this Agreement are set forth on Exhibit C hereto. Thereafter, the officers of the Company shall be
elected from time to time by the Board. Each officer shall hold office until such persons
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16
successor shall have been duly elected and shall have qualified or until such persons death
or until he or she shall resign or be removed pursuant to Section 8.12.
Section 8.3
Chairman of the Board.
The Chairman of the Board, if any, shall preside, if present, at all meetings of the Board and
of the unitholders of the Partnership and shall perform such additional functions and duties as the
Board may prescribe from time to time. The Directors also may elect a Vice Chairman of the Board to
act in the place of the Chairman of the Board upon his or her absence or inability to act.
Section 8.4
Chief Executive Officer.
The Chief Executive Officer, who may be the Chairman or Vice Chairman of the Board and/or the
President, shall have general and active management authority over the business of the Company and
shall see that all orders and resolutions of the Board are carried into effect. The Chief Executive
Officer may sign deeds, mortgages, bonds, contracts or other instruments, except in cases where the
signing and execution thereof shall be expressly delegated by the Board or by this Agreement to
some other officer or agent of the Company, or shall be required by law to be otherwise signed and
executed. The Chief Executive Officer shall also perform all duties and have all powers incident to
the office of Chief Executive Officer and perform such other duties and may exercise such other
powers as may be assigned by this Agreement or prescribed by the Board from time to time.
Section 8.5
Chief Financial Officer.
The Chief Financial Officer shall exercise all the powers and perform the duties of the office
of the chief financial officer and in general have overall supervision of the financial operations
of the Company. The Chief Financial Officer shall, when requested, counsel with and advise the
other officers of the Company and shall perform such other duties as such officer may agree with
the Chief Executive Officer or as the Board of Directors may from time to time determine.
Section 8.6
President.
The President shall, subject to the control of the Board and the Chief Executive Officer, in
general, supervise and control all of the business and affairs of the Company. The President shall
preside at all meetings of the Members. The President may sign any deeds, mortgages, bonds,
contracts or other instruments, except in cases where the signing and execution thereof shall be
expressly delegated by the Board or by this Agreement to some other officer or agent of the
Company, or shall be required by law to be otherwise signed and executed. The President shall also
perform all duties and have all powers incident to the office of President and perform such other
duties as may be prescribed by the Board from time to time.
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Section 8.7
Vice Presidents.
Any Executive Vice President, Senior Vice President and Vice President, in the order of
seniority, unless otherwise determined by the Board, shall, in the absence or disability of the
President, perform the duties and exercise the powers of the President. They shall also perform the
usual and customary duties and have the powers that pertain to such office and generally assist the
President by executing contracts and agreements and exercising such other powers and performing
such other duties as are delegated to them by the President and as the Board may further prescribe.
Section 8.8
Treasurer.
(a) The Treasurer shall exercise general supervision over the receipt, custody and
disbursement of corporate funds. The Treasurer shall cause the funds of the Company to be deposited
in such banks as may be authorized by the Board, or in such banks as may be designated as
depositories in the manner provided by resolution of the Board. The Treasurer shall, in general,
perform all duties incident to the office of the Treasurer and shall have such further powers and
duties and shall be subject to such directions as may be granted or imposed from time to time by
the Board.
(b) Assistant Treasurers shall have such authority and perform such duties of the Treasurer as
may be provided in this Agreement or assigned to them by the Board or the Treasurer. Assistant
Treasurers shall assist the Treasurer in the performance of the duties assigned to the Treasurer,
and in assisting the Treasurer, each Assistant Treasurer shall for such purpose have the powers of
the Treasurer. During the Treasurers absence or inability, the Secretarys authority and duties
shall be possessed by such Assistant Treasurer or Assistant Treasurers as the Board may designate.
Section 8.9
Secretary.
(a) The Secretary shall keep or cause to be kept, in one or more books provided for that
purpose, the minutes of all meetings of the Board, the committees of the Board and the Members and
of the Limited Partners pursuant to Article VII. The Secretary shall see that all notices are duly
given in accordance with the provisions of this Agreement and as required by law; shall be
custodian of the records and the seal of the Company and affix and attest the seal to all documents
to be executed on behalf of the Company under its seal; and shall see that the books, reports,
statements, certificates and other documents and records required by law to be kept and filed are
properly kept and filed; and in general, shall perform all the duties incident to the office of
Secretary and such other duties as from time to time may be assigned to the Secretary by the Board.
(b) Assistant Secretaries shall have such authority and perform such duties of the Secretary
as may be provided in this Agreement or assigned to them by the Board or the Secretary. Assistant
Secretaries shall assist the Secretary in the performance of the duties assigned to the Secretary,
and in assisting the Secretary, each Assistant Secretary shall for such purpose have the powers of
the Secretary. During the Secretarys absence or inability, the
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18
Secretarys authority and duties shall be possessed by such Assistant Secretary or Assistant
Secretaries as the Board may designate.
Section 8.10
General Counsel
The General Counsel shall be the principal legal officer of the Company. The General Counsel
shall have general direction of and supervision over the legal affairs of the Company and shall
advise the Board of Directors and officers of the Company on all legal matters. The General Counsel
shall have such other powers and perform such other duties as may be prescribed from time to time
by the Board of Directors or the Chief Executive Officer.
Section 8.11
Controller
If so determined by the Board of Directors, the Controller shall be the principal accounting
officer of the Company. The Controller shall maintain adequate records of all assets, liabilities
and transactions of the Company and shall be responsible for the design, installation and
maintenance of accounting and cost systems and procedures throughout the Company. He shall have
such other powers and perform such other duties as may be prescribed from time to time by the Board
of Directors or the Chief Executive Officer.
Section 8.12
Removal.
Any officer elected, or agent appointed, by the Board may be removed by the affirmative vote
of a majority of the Board whenever, in their judgment, the best interests of the Company would be
served thereby. No officer shall have any contractual rights against the Company for compensation
by virtue of such election beyond the date of the election of such persons successor, such
persons death, such persons resignation or such persons removal, whichever event shall first
occur, except as otherwise provided in an employment contract or under an employee deferred
compensation plan.
Section 8.13
Vacancies.
A newly created elected office and a vacancy in any elected office because of death,
resignation or removal may be filled by the Board for the unexpired portion of the term at any
meeting of the Board.
ARTICLE IX
INDEMNITY AND LIMITATION OF LIABILITY
Section 9.1
Indemnification of Directors and Officers.
The Company shall indemnify any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that he or she is or was a director or
officer of the Company, or is or was serving at the request of the Company as a director,
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Limited Liability Company Agreement
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officer, employee or agent of another corporation, partnership, joint venture, trust or other
enterprise (hereinafter an indemnitee), against expenses (including reasonable attorneys fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred by indemnitee in
connection with such action, suit or proceeding to the full extent permitted by the Delaware
Limited Liability Company Act, upon such determination having been made as to indemnitees good
faith and conduct as is required by said Limited Liability Act. Expenses incurred in defending a
civil or criminal action, suit or proceeding shall be paid by the Company in advance of the final
disposition of such action, suit or proceeding to the extent, if any, authorized by the Sole Member
in accordance with the provisions of said Limited Liability Act, upon receipt of an undertaking by
or on behalf of the indemnitee to repay such amount unless it shall ultimately be determined that
indemnitee is entitled to be indemnified by the Company.
ARTICLE X
TAXES
Section 10.1
Taxes.
The Member shall prepare and timely file (on behalf of the Company) all state and local tax
returns, if any, required to be filed by the Company. The Company and the Member acknowledge that
for federal income tax purposes, the Company will be disregarded as an entity separate from the
Member pursuant to Treasury Regulation § 301.7701-3 as long as all of the member interests in the
Company are owned by the Member.
ARTICLE XI
BOOKS, RECORDS, REPORTS, AND BANK ACCOUNTS
Section 11.1
Maintenance of Books.
(a) The Board shall keep or cause to be kept at the principal office of the Company or at such
other location approved by the Board complete and accurate books and records of the Company,
supporting documentation of the transactions with respect to the conduct of the Companys business
and minutes of the proceedings of the Board and any other books and records that are required to be
maintained by Applicable Law.
(b) The books of account of the Company shall be maintained on the basis of a fiscal year that
is the calendar year and on an accrual basis in accordance with GAAP, consistently applied.
Section 11.2
Reports.
The Board shall cause to be prepared and delivered to each Member such reports, forecasts,
studies, budgets and other information as the Members may reasonably request from time to time.
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Section 11.3
Bank Accounts.
Funds of the Company shall be deposited in such banks or other depositories as shall be
designated from time to time by the Board. All withdrawals from any such depository shall be made
only as authorized by the Board and shall be made only by check, wire transfer, debit memorandum or
other written instruction.
ARTICLE XII
DISSOLUTION, WINDING-UP, TERMINATION AND CONVERSION
Section 12.1
Dissolution.
(a) The Company shall dissolve and its affairs shall be wound up on the first to occur of the
following events (each a
Dissolution Event
):
(i) the unanimous consent of the Members; or
(ii) entry of a decree of judicial dissolution of the Company under Section 18-802 of
the Act; or
(iii) at any time there are no Members of the Company, unless the Company is continued
in accordance with the Act or this Agreement.
(b) No other event shall cause a dissolution of the Company.
(c) Upon the occurrence of any event that causes there to be no Members of the Company, to the
fullest extent permitted by law, the personal representative of the last remaining Member is hereby
authorized to, and shall, within 90 days after the occurrence of the event that terminated the
continued membership of such Member in the Company, agree in writing (i) to continue the Company
and (ii) to the admission of the personal representative or its nominee or designee, as the case
may be, as a substitute Member of the Company, effective as of the occurrence of the event that
terminated the continued membership of such Member in the Company.
(d) Notwithstanding any other provision of this Agreement, the Bankruptcy of a Member shall
not cause such Member to cease to be a member of the Company and, upon the occurrence of such an
event, the Company shall continue without dissolution.
Section 12.2
Winding-Up and Termination.
(a) On the occurrence of a Dissolution Event, the Members shall act as liquidator. The
liquidator shall proceed diligently to wind up the affairs of the Company and make final
distributions as provided herein and in the Act. The costs of winding up shall be borne as a
Company expense. The steps to be accomplished by the liquidator are as follows:
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(i) as promptly as possible after dissolution and again after final winding up, the
liquidator shall cause a proper accounting to be made by a recognized firm of certified
public accountants of the Companys assets, liabilities, and operations through the last Day
of the month in which the dissolution occurs or the final winding up is completed, as
applicable;
(ii) the liquidator shall discharge from Company funds all of the debts, liabilities
and obligations of the Company (including all expenses incurred in winding up or otherwise
make adequate provision for payment and discharge thereof (including the establishment of a
cash escrow fund for contingent, conditional and unmatured liabilities in such amount and
for such term as the liquidator may reasonably determine); and
(iii) all remaining assets of the Company shall be distributed to the Members in
accordance with Section 6.1.
(b) The distribution of cash or property to a Member in accordance with the provisions of this
Section 12.2 constitutes a complete return to the Member of its Capital Contributions and a
complete distribution to the Member of its Membership Interest and all the Companys property and
constitutes a compromise to which all Members have consented pursuant to Section 18-502(b) of the
Act. To the extent that a Member returns funds to the Company, it has no claim against any other
Member for those funds.
Section 12.3
Deficit Capital Accounts.
No Member will be required to pay to the Company, to any other Member or to any third party
any deficit balance that may exist from time to time in the Members Capital Account.
Section 12.4
Certificate of Cancellation.
On completion of the distribution of Company assets as provided herein, the Members (or such
other Person or Persons as the Act may require or permit) shall file a certificate of cancellation
with the Secretary of State of Delaware and take such other actions as may be necessary to
terminate the existence of the Company. Upon the filing of such certificate of cancellation, the
existence of the Company shall terminate, except as may be otherwise provided by the Act or by
Applicable Law.
ARTICLE XIII
GENERAL PROVISIONS
Section 13.1
Offset.
Whenever the Company is to pay any sum to any Member, any amounts that Member owes the Company
may be deducted from that sum before payment.
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Section 13.2
Notices.
All notices, demands, requests, consents, approvals or other communications (collectively,
Notices
) required or permitted to be given hereunder or which are given with respect to this
Agreement shall be in writing and shall be personally served, delivered by reputable air courier
service with charges prepaid, or transmitted by hand delivery, telegram, telex or facsimile,
addressed as set forth below, or to such other address as such party shall have specified most
recently by written notice. Notice shall be deemed given on the date of service or transmission if
personally served or transmitted by telegram, telex or facsimile. Notice otherwise sent as provided
herein shall be deemed given upon delivery of such notice:
To the Company:
WESTERN GAS HOLDINGS, LLC
1201 Lake Robbins Drive
The Woodlands, Texas 77380-1046
Attn: President
Telephone: (832) 636-6000
Fax: (832) 636-6001
To Holdings:
WGR Holdings, LLC
1201 Lake Robbins Drive
The Woodlands, Texas 77380-1046
Attn: President
Telephone: (832) 636-6000
Fax: (832) 636-6001
Section 13.3
Entire Agreement; Superseding Effect.
This Agreement constitutes the entire agreement of the Members relating to the Company and the
transactions contemplated hereby, and supersedes all provisions and concepts contained in all prior
contracts or agreements between the Members with respect to the Company, whether oral or written.
Section 13.4
Effect of Waiver or Consent.
Except as otherwise provided in this Agreement, a waiver or consent, express or implied, to or
of any breach or default by any Member in the performance by that Member of its obligations with
respect to the Company is not a consent or waiver to or of any other breach or default in the
performance by that Member of the same or any other obligations of that Member with respect to the
Company. Except as otherwise provided in this Agreement, failure on the part of a Member to
complain of any act of any Member or to declare any Member in default with respect to the Company,
irrespective of how long that failure continues, does not constitute a
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waiver by that Member of its rights with respect to that default until the applicable
statute-of-limitations period has run.
Section 13.5
Amendment or Restatement.
This Agreement may be amended or restated only by a written instrument executed by all
Members; provided, however, that notwithstanding anything to the contrary contained in this
Agreement, each Member agrees that the Board, without the approval of any Member, may amend any
provision of the Delaware Certificate and this Agreement, and may authorize any Officer to execute,
swear to, acknowledge, deliver, file and record any such amendment and whatever documents may be
required in connection therewith, to reflect any change that does not require consent or approval
(or for which such consent or approval has been obtained) under this Agreement or does not
materially adversely affect the rights of the Members.
Section 13.6
Binding Effect.
Subject to the restrictions on Dispositions set forth in this Agreement, this Agreement is
binding on and shall inure to the benefit of the Members and their respective successors and
permitted assigns.
Section 13.7
Governing Law; Severability.
THIS AGREEMENT IS GOVERNED BY AND SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE
OF DELAWARE, EXCLUDING ANY CONFLICT-OF-LAWS RULE OR PRINCIPLE THAT MIGHT REFER THE GOVERNANCE OR
THE CONSTRUCTION OF THIS AGREEMENT TO THE LAW OF ANOTHER JURISDICTION. In the event of a direct
conflict between the provisions of this Agreement and any mandatory, non-waivable provision of the
Act, such provision of the Act shall control. If any provision of the Act may be varied or
superseded in a LIMITED LIABILITY COMPANY AGREEMENT (or otherwise by agreement of the members or
managers of a limited liability company), such provision shall be deemed superseded and waived in
its entirety if this Agreement contains a provision addressing the same issue or subject matter. If
any provision of this Agreement or the application thereof to any Member or circumstance is held
invalid or unenforceable to any extent, (a) the remainder of this Agreement and the application of
that provision to other Members or circumstances is not affected thereby, and (b) the Members shall
negotiate in good faith to replace that provision with a new provision that is valid and
enforceable and that puts the Members in substantially the same economic, business and legal
position as they would have been in if the original provision had been valid and enforceable.
Section 13.8
Further Assurances.
In connection with this Agreement and the transactions contemplated hereby, each Member shall
execute and deliver any additional documents and instruments and perform any additional acts that
may be necessary or appropriate to effectuate and perform the provisions of this Agreement and
those transactions.
western Gas Holdings, LLC
Limited Liability Company Agreement
24
Section 13.9
Waiver of Certain Rights.
Each Member irrevocably waives any right it may have to maintain any action for dissolution of
the Company or for partition of the property of the Company.
Section 13.10
Counterparts.
This Agreement may be executed in any number of counterparts with the same effect as if all
signing parties had signed the same document. All counterparts shall be construed together and
constitute the same instrument.
[
Signature Page to Follow
]
Western Gas Holdings, LLC
Limited Liability Company Agreement
25
IN WITNESS WHEREOF, the Member has executed this Agreement as of the date first set forth
above.
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MEMBER
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WGR HOLDINGS, LLC
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By:
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/s/ Robert G. Gwin
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Robert G. Gwin
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President and Chief Executive Officer
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Signature Page to
Western Gas Holdings, LLC
Limited Liability Company Agreement
EXHIBIT A
MEMBERS
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Effective Capital
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Member
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Sharing Ratio
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Contribution
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WGR Holdings, LLC
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100
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%
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$
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1,000.00
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Western Gas Holdings, LLC
Limited Liability Company Agreement
A-1
EXHIBIT B
DIRECTORS
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R. A. Walker
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Chairman of the Board
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Milton Carroll
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Director
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Anthony R. Chase
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Director
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James R. Crane
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Director
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Karl F. Kurz
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Director
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Danny J. Rea
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Director
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Robert K. Reeves
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Director
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David J. Tudor
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Director
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Western Gas Holdings, LLC
Limited Liability Company Agreement
B-1
EXHIBIT C
OFFICERS
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Robert G. Gwin
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President and Chief Executive Officer
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Danny J. Rea
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Senior Vice President and Chief Operating Officer
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Michael C. Pearl
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Senior Vice President, Chief Financial Officer and Chief Accounting Officer
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Jeremy M. Smith
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Vice President and Treasurer
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Amanda M. McMillian
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Vice President, General Counsel and Corporate Secretary
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Elizabeth C. Stumm
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Controller
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David Siddall
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Assistant Secretary
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Margaret C. Douglas
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Assistant Controller
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David L. Williams
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Assistant Controller
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Krista M. Mathews
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Assistant Secretary
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Stephen J. Foster
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Assistant Treasurer
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R. W. Tonnesen
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Assistant Treasurer and Assistant Secretary
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Western Gas Holdings, LLC
Limited Liability Company Agreement
C-1