UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): May 14, 2008 (May 8, 2008)
WESTERN GAS PARTNERS, LP
(Exact name of registrant as specified in its charter)
         
Delaware   001-34046   26-1075808
(State or other jurisdiction   (Commission   (IRS Employer
of incorporation or organization)   File Number)   Identification No.)
1201 Lake Robbins Drive
The Woodlands, Texas 77380-1046
(Address of principal executive office) (Zip Code)
(832) 636-6000
(Registrants’ telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 

 


 

Item 1.01 Entry into Material Definitive Agreement.
      Underwriting Agreement
     On May 8, 2008, Western Gas Partners, LP (the “Partnership”), Anadarko Petroleum Corporation (“Anadarko”), Western Gas Resources, Inc. (“WGR”), WGR Holdings, LLC (“Holdings”), and Western Gas Holdings, LLC (the “General Partner,” and together with the Partnership, Anadarko, WGR, and Holdings, the “Western Gas Parties”) entered into an Underwriting Agreement (the “Underwriting Agreement”) with UBS Securities LLC, Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC and Morgan Stanley & Co. Incorporated, as representatives of the several underwriters named therein (the “Underwriters”), providing for the offer and sale in a firm commitment underwritten offering of 18,750,000 common units representing limited partner interests in the Partnership (“Common Units”) at a price of $16.50 per Common Unit ($15.51 per Common Unit, net of underwriting discounts) (the “Offering”). Pursuant to the Underwriting Agreement, the Partnership granted the Underwriters a 30-day option (the “Over-Allotment Option”) to purchase up to an additional 2,812,500 Common Units to cover over-allotments, if any, on the same terms.
     In the Underwriting Agreement, the Partnership agreed to indemnify the Underwriters against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”), or to contribute to payments the Underwriters may be required to make because of any of those liabilities. A copy of the Underwriting Agreement is filed as Exhibit 1.1 to this Form 8-K and is incorporated herein by reference.
     The transactions contemplated by the Underwriting Agreement closed on May 14, 2008. The proceeds (net of underwriting discounts and structuring fees) received by the Partnership (before expenses) were approximately $289.3 million. As described in the Partnership’s final prospectus (the “Prospectus”) dated May 8, 2008 (File No. 333-146700) and filed on May 9, 2008 with the Securities and Exchange Commission (the “SEC”) pursuant to Rule 424(b)(1) under the Securities Act, the Partnership has used or will use the net proceeds of the Offering to (i) 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%, (ii) reimburse Anadarko for $14.3 million of capital expenditures it incurred with respect to assets contributed to the Partnership, (iii) provide $10.0 million for general partnership purposes and (iv) pay approximately $5.0 million of expenses associated with the Offering.
      Anadarko Petroleum Corporation Fixed Rate Note
     On May 14, 2008, in connection with the closing of the Offering, the Partnership made a loan of approximately $260.0 million to Anadarko (the “Note”). The Note is a 30-year note bearing interest at a fixed annual rate of 6.5%, payable quarterly, with principal and all accrued and unpaid interest due in full at maturity.
     The foregoing description is qualified in its entirety by reference to the full text of the Note, which is attached as Exhibit 10.1 to this Current Report on Form 8-K and incorporated in this Item 1.01 by reference.
      Contribution, Conveyance and Assumption Agreement
     The description of the Contribution, Conveyance and Assumption Agreement (the “Contribution Agreement”) provided below under Item 2.01 (and as defined therein) is incorporated in this Item 1.01 by reference. A copy of the Contribution Agreement is filed as Exhibit 10.2 to this Form 8-K and is incorporated in this Item 1.01 by reference.
      Omnibus Agreement
     On May 14, 2008, in connection with the closing of the Offering, the Partnership entered into an Omnibus Agreement (the “Omnibus Agreement”) with the General Partner and Anadarko. As more fully described in the Prospectus, the Omnibus Agreement addresses the following matters:
    Anadarko’s obligation to indemnify the Partnership for certain liabilities and the Partnership’s obligation to indemnify Anadarko for certain liabilities;
 
    the Partnership’s obligation to reimburse Anadarko for all cash expenses incurred or payments made on the Partnership’s behalf in conjunction with Anadarko’s provision of general and administrative services to the Partnership, including salary and benefits of Anadarko personnel, the Partnership’s public company expenses, general and administrative expenses and salaries, and benefits of the Partnership’s executive management who are employees of Anadarko;

 


 

    the Partnership’s obligation to reimburse Anadarko for all insurance coverage expenses it incurs or payments it makes with respect to our assets; and
 
    the Partnership’s obligation to reimburse Anadarko for the Partnership’s allocable portion of commitment fees (0.11% of the Partnership’s committed and available borrowing capacity) that Anadarko incurs under its $1.3 billion credit facility.
     The foregoing description is qualified in its entirety by reference to the full text of the Omnibus Agreement, which is attached as Exhibit 10.3 to this Current Report on Form 8-K and incorporated in this Item 1.01 by reference.
      Services and Secondment Agreement
     On May 14, 2008, in connection with the closing of the Offering, Anadarko and the General Partner entered into a Services and Secondment Agreement (the “Secondment Agreement”) pursuant to which specified employees of Anadarko are seconded to the General Partner to provide operating, routine maintenance and other services with respect to our business under the direction, supervision and control of the General Partner. Under the Secondment Agreement, the General Partner will reimburse Anadarko for the services provided by the seconded employees. The initial term of the Secondment Agreement will be 10 years, and will then extend automatically for additional 12-month periods subject to certain notice provisions. Either party may terminate the Secondment Agreement upon 180 days written notice.
     The foregoing description is qualified in its entirety by reference to the full text of the Secondment Agreement, which is attached as Exhibit 10.4 to this Current Report on Form 8-K and incorporated in this Item 1.01 by reference.
      Tax Sharing Agreement
     On May 14, 2008, in connection with the closing of the Offering, the Partnership entered into a Tax Sharing Agreement with Anadarko (the “Tax Sharing Agreement”) pursuant to which the Partnership agreed to reimburse Anadarko for the Partnership’s share of state and local income and other taxes borne by Anadarko as a result of the Partnership’s results being included in a combined or consolidated tax return filed by Anadarko with respect to periods after the closing of this Offering. Anadarko may use its tax attributes to cause its combined or consolidated group, of which the Partnership may be a member for this purpose, to owe no tax. However, the Partnership would nevertheless reimburse Anadarko for the tax it would have owed had the attributes not been available or used for the Partnership’s benefit, even though Anadarko had no cash expense for that period.
     The foregoing description is qualified in its entirety by reference to the full text of the Tax Sharing Agreement, which is attached as Exhibit 10.5 to this Current Report on Form 8-K and incorporated in this Item 1.01 by reference.
      Working Capital Loan Agreement
     The description of the Working Capital Loan Agreement (the “Working Capital Loan Agreement”) provided below under Item 2.03 (and as defined therein) is incorporated in this Item 1.01 by reference. A copy of the Working Capital Loan Agreement is filed as Exhibit 10.6 to this Form 8-K and is incorporated in this Item 1.01 by reference.
      Western Gas Partners 2008 Long-Term Incentive Plan
     In connection with the Offering, the Board of Directors of the General Partner adopted the Western Gas Partners, LP 2008 Long-Term Incentive Plan (the “Plan”) for employees and directors of the General Partner and its affiliates, including Anadarko, who perform services for the Partnership. The description of the material terms of the Plan contained in the section entitled “Management — Long-Term Incentive Plan” of the Prospectus is incorporated herein by reference. The description of the Plan in the Prospectus is not complete and is qualified in its entirety by reference to the Plan, which is filed as Exhibit 10.7 to this Form 8-K and is incorporated in this Item 1.01 by reference.
      Western Gas Holdings, LLC Equity Incentive Plan
     In connection with the Offering, the Board of Directors of the General Partner adopted the Western Gas Holdings, LLC Equity Incentive Plan (the “Equity Incentive Plan”) for the executive officers of the General Partner. The description of the material terms of the Equity Incentive Plan contained in the section entitled “Management — Western Gas Holdings, LLC Equity Incentive Plan” of the Prospectus is incorporated herein by reference. The description of the Equity Incentive Plan in the Prospectus is not complete and is qualified in its entirety by reference to the Equity Incentive Plan, which is filed as Exhibit 10.8 to this Form 8-K and is incorporated in this Item 1.01 by reference.

 


 

      Award Agreement
     On May 14, 2008, in connection with the closing of the Offering, the non-employee directors of the General Partner (Milton Carroll, Anthony R. Chase, James R. Crane, and David J. Tudor) received an initial grant of 7,576 phantom units (representing a value of approximately $125,000). The phantom units will vest 100% on the first anniversary of the date of grant (with vesting to be accelerated upon a change of control of the General Partner or Anadarko).
     The foregoing description is qualified in its entirety by reference to the full text of the form of Award Agreement, a copy of which is attached as Exhibit 10.9 to this Current Report on Form 8-K and incorporated in this Item 1.01 by reference.
      Indemnification Agreements
     In connection with the Offering, the General Partner entered into Indemnification Agreements (“Indemnification Agreements”) with each of its officers and directors (each, an “Indemnitee”). Each Indemnification Agreement provides that the General Partner will indemnify and hold harmless each Indemnitee against all expense, liability and loss (including attorney’s fees, judgments, fines or penalties and amounts to be paid in settlement) actually and reasonably incurred or suffered by the Indemnitee in connection with serving in their capacity as officers and directors of the General Partner (or of any subsidiary of the General Partner) or in any capacity at the request of the General Partner or its board of directors to the fullest extent permitted by applicable law, including Section 18-108 of the Delaware Limited Liability Company Act in effect on the date of the agreement or as such laws may be amended to provide more advantageous rights to the Indemnitee. The Indemnification Agreement also provides that the General Partner must advance payment of certain expenses to the Indemnitee, including fees of counsel, in advance of final disposition of any proceeding subject to receipt of an undertaking from the Indemnitee to return such advance if it is ultimately determined that the Indemnitee is not entitled to indemnification.
     The foregoing description is qualified in its entirety by reference to the full text of the form of Indemnification Agreement, a copy of which is attached as Exhibit 10.10 to this Current Report on Form 8-K and incorporated in this Item 1.01 by reference.
      Relationships
     As more fully described in the section “Certain Relationships and Related Party Transactions” of the Prospectus, which is incorporated herein by reference, each of the Partnership, the General Partner, Western Gas Operating, LLC (“Operating GP”), WGR Operating, LP (“OLP”), Holdings, WGR Asset Holding Company, LLC (“Asset HoldCo”) and WGR are direct or indirect subsidiaries of Anadarko. As a result, certain individuals, including officers of Anadarko and officers and directors of the General Partner, serve as officers and/or directors of more than one of such entities. The General Partner holds a 2.0% general partner interest in the Partnership and, assuming that the Underwriters do not exercise the Over-Allotment Option, Anadarko will indirectly own an approximate 64.4% limited partner interest in the Partnership. Certain of the Underwriters and their affiliates have performed investment banking, commercial banking and advisory services for Anadarko and its affiliates for which they have received customary fees and expenses. The description of the relationships among Anadarko and its affiliates and the Underwriters contained in the section entitled “Underwriting” of the Prospectus is incorporated herein by reference.
Item 2.01 Completion of Acquisition or Disposition of Assets.
      Contribution, Conveyance and Assumption Agreement
     On May 14, 2008, in connection with the closing of the Offering, the Partnership entered into a Contribution Agreement with the Western Gas Parties, Asset HoldCo, Operating GP and OLP (the “Contribution Agreement”). Immediately prior to the closing of the Offering, the following transactions, among others, occurred pursuant to the Contribution Agreement:
    the transfer of Anadarko Gathering Company, LLC, Pinnacle Gas Treating LLC and MIGC LLC to OLP;
 
    the Partnership’s issuance of 1,083,115 general partner units and incentive distribution rights to the General Partner; and
 
    the Partnership’s issuance of 4,973,806 Common Units, 26,536,306 Subordinated Units to Holdings and the right to receive any Common Units not purchased pursuant to the Over-Allotment Option.
     These transfers and distributions were made in a series of steps outlined in the Contribution Agreement. As noted in Item 1.01 above, the Partnership has certain relationships with the other relationships with certain parties to the Contribution Agreement.
     The foregoing description is qualified in its entirety by reference to the full text of the Contribution Agreement, which is attached as Exhibit 10.2 to this Current Report on Form 8-K and incorporated in this Item 2.01 by reference.

 


 

Item 2.03 Creation of Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
      Working Capital Loan Agreement
     On May 14, 2008, in connection with the closing of this Offering, the Partnership entered into a $30 million, two-year, Working Capital Loan Agreement with Anadarko as the lender (the “Working Capital Loan Agreement”). The Working Capital Loan Agreement will be available exclusively to fund the Partnership’s working capital borrowings. Borrowings under the Working Capital Loan Agreement will bear interest at the same rate as would apply to borrowings under the Anadarko revolving credit facility. The Partnership will pay a commitment fee of 0.11% annually to Anadarko on the unused portion of the borrowing capacity under the Working Capital Loan Agreement.
     The foregoing description is qualified in its entirety by reference to the full text of the Working Capital Loan Agreement, which is attached as Exhibit 10.6 to this Current Report on Form 8-K and incorporated in this Item 2.03 by reference.
Item 3.02 Unregistered Sales of Equity Securities.
     The description in Item 2.01 above of the issuances by the Partnership on May 14, 2008 in connection with the consummation of the transactions contemplated by the Contribution Agreement of 4,973,806 Common Units and 26,536,306 Subordinated Units to Holdings is incorporated herein by reference. The foregoing transactions were undertaken in reliance upon the exemption from the registration requirements of the Securities Act contained in Section 4(2) thereof. The Partnership believes that exemptions other than the foregoing exemption may exist for these transactions. Each of such Subordinated Units will convert into one Common Unit at the end of the subordination period. Unless earlier terminated pursuant to the terms of the First Amended and Restated Agreement of Limited Partnership of the Partnership (the “Partnership Agreement”), the subordination period will extend until the first day of any quarter beginning after June 30, 2011 that the Partnership meets the financial tests set forth in the Partnership Agreement, but may end sooner if the Partnership meets additional financial tests. The description of the subordination period contained in the section entitled “Provisions of Our Partnership Agreement Relating to Cash Distributions — Subordination Period” of the Prospectus is incorporated herein by reference.
Item 5.03 Amendments to Articles of Incorporation or Bylaws; Changes in Fiscal Year.
      First Amended and Restated Agreement of Limited Partnership of Western Gas Partners, LP
     As described in the Prospectus, on May 14, 2008, the Partnership amended and restated its Agreement of Limited Partnership in connection with the closing of the Offering. A description of the Partnership Agreement is contained in the section entitled “The Partnership Agreement” of the Prospectus and is incorporated herein by reference. A copy of the Partnership Agreement as adopted is filed as Exhibit 3.1 to this Form 8-K and is incorporated in this Item 5.03 by reference.
      First Amended and Restated Limited Liability Company Agreement of Western Gas Holdings, LLC
     On May 14, 2008, the General Partner amended and restated its Limited Liability Company Agreement (the “Amended and Restated LLC Agreement”) in connection with the closing of the Offering. The amendments to the Limited Liability Company Agreement of the General Partner included, among other things, outlining the rights of members, distributions by the General Partner, and the management by the board of directors. The foregoing description is qualified in its entirety by reference to the full text of the Amended and Restated LLC Agreement, which is attached as Exhibit 3.2 to this Current Report on Form 8-K and incorporated in this Item 5.03 by reference.
Item 9.01 Financial Statements and Exhibits.
     (d) Exhibits
     
1.1*
  Underwriting Agreement, dated May 8, 2008, by and among Western Gas Partners, LP, Anadarko Petroleum Corporation, Western Gas Resources, Inc., WGR Holdings, LLC, Western Gas Holdings, LLC and the Underwriters named therein.
 
   
3.1
  Amended and Restated Agreement of Limited Partnership of Western Gas Partners, LP, dated May 14, 2008.
 
   
3.2
  Amended and Restated Limited Liability Company Agreement of Western Gas Holdings, LLC, dated as of May 14, 2008.
 
   
10.1
  Anadarko Petroleum Corporation Fixed Rate Note due 2038.
 
   
10.2
  Contribution, Conveyance and Assumption Agreement by and among Western Gas Partners, LP, Western Gas Holdings, LLC, Anadarko Petroleum Corporation, WGR Holdings, LLC, Western Gas Resources, Inc., WGR Asset Holding Company LLC, Western Gas Operating, LLC and WGR Operating, LP, dated as of May 14, 2008.
 
   
10.3
  Omnibus Agreement by and among Western Gas Partners, LP, Western Gas Holdings, LLC and Anadarko Petroleum Corporation, dated as of May 14, 2008.
 
   
10.4
  Services and Secondment Agreement by and between Western Gas Holdings, LLC and Anadarko Petroleum Corporation, dated as of May 14, 2008.
 
   
10.5
  Tax Sharing Agreement by and among Anadarko Petroleum Corporation and Western Gas Partners, LP, dated as of May 14, 2008.

 


 

     
10.6
  Working Capital Loan Agreement between Anadarko Petroleum Corporation and Western Gas Partners, LP, dated as of May 14, 2008.
 
   
10.7
  Western Gas Partners 2008 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.11 to Amendment No. 2 to Western Gas Partners, LP’s Registration Statement on Form S-1, File No. 333-146700).
 
   
10.8
  Western Gas Holdings, LLC Equity Incentive Plan (incorporated by reference to Exhibit 10.15 to Amendment No. 4 to Western Gas Partners, LP’s Registration Statement on Form S-1, File No. 333-146700).
 
   
10.9
  Form of Award Agreement under the Western Gas Partners, LP 2008 Long-Term Incentive Plan.
 
   
10.10
  Form of Indemnification Agreement (incorporated by reference to Exhibit 10.10 to Amendment No. 2 to Western Gas Partners, LP’s Registration Statement on Form S-1, File No. 333-146700)
 
*   Pursuant to the rules of the Commission, the schedules and similar attachments to the agreement have not been filed herewith. The registrant agrees to furnish supplementally a copy of any omitted schedule to the Commission upon request.

 


 

SIGNATURES
     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
             
    WESTERN GAS PARTNERS, LP
 
           
    By:   Western Gas Holdings, LLC,
        its general partner
 
           
 
           
Dated: May 14, 2008   By:   /s/ Robert G. Gwin
 
           
        Robert G. Gwin
        President and Chief Executive Officer

 


 

EXHIBIT INDEX
     
Exhibit    
Number   Exhibit Title
 
   
1.1*
  Underwriting Agreement, dated May 8, 2008, by and among Western Gas Partners, LP, Anadarko Petroleum Corporation, Western Gas Resources, Inc., WGR Holdings, LLC, Western Gas Holdings, LLC and the Underwriters named therein.
 
   
3.1
  Amended and Restated Agreement of Limited Partnership of Western Gas Partners, LP, dated May 14, 2008.
 
   
3.2
  Amended and Restated Limited Liability Company Agreement of Western Gas Holdings, LLC, dated as of May 14, 2008.
 
   
10.1
  Anadarko Petroleum Corporation Fixed Rate Note due 2038.
 
   
10.2
  Contribution, Conveyance and Assumption Agreement by and among Western Gas Partners, LP, Western Gas Holdings, LLC, Anadarko Petroleum Corporation, WGR Holdings, LLC, Western Gas Resources, Inc., WGR Asset Holding Company LLC, Western Gas Operating, LLC and WGR Operating, LP, dated as of May 14, 2008.
 
   
10.3
  Omnibus Agreement by and among Western Gas Partners, LP, Western Gas Holdings, LLC and Anadarko Petroleum Corporation, dated as of May 14, 2008.
 
   
10.4
  Services and Secondment Agreement by and between Western Gas Holdings, LLC and Anadarko Petroleum Corporation, dated as of May 14, 2008.
 
   
10.5
  Tax Sharing Agreement by and among Anadarko Petroleum Corporation and Western Gas Partners, LP, dated as of May 14, 2008.
 
   
10.6
  Working Capital Loan Agreement between Anadarko Petroleum Corporation and Western Gas Partners, LP, dated as of May 14, 2008.
 
   
10.7
  Western Gas Partners 2008 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.11 to Amendment No. 2 to Western Gas Partners, LP’s Registration Statement on Form S-1, File No. 333-146700).
 
   
10.8
  Western Gas Holdings, LLC Equity Incentive Plan (incorporated by reference to Exhibit 10.15 to Amendment No. 4 to Western Gas Partners, LP’s Registration Statement on Form S-1, File No. 333-146700).
 
   
10.9
  Form of Award Agreement under the Western Gas Partners, LP 2008 Long-Term Incentive Plan.
 
   
10.10
  Form of Indemnification Agreement (incorporated by reference to Exhibit 10.10 to Amendment No. 2 to Western Gas Partners, LP’s Registration Statement on Form S-1, File No. 333-146700)
 
*   Pursuant to the rules of the Commission, the schedules and similar attachments to the agreement have not been filed herewith. The registrant agrees to furnish supplementally a copy of any omitted schedule to the Commission upon request.

 

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 statement’s 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 Partnership’s 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

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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 Factors—Risks Inherent in an Investment in Us—Your liability may not be limited if a court finds that unitholder action constitutes control of our business,” “Risk Factors—Risks Inherent in an Investment in Us—Unitholders may have liability to repay distributions that were wrongfully distributed to them” and “The Partnership Agreement—Limited 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

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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

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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 Factors—Risks Inherent in an Investment in Us—Your liability may not be limited if a court finds that unitholder action constitutes control of our business,” “Risk Factors—Risks Inherent in an Investment in Us—Unitholders may have liability to repay distributions that were wrongfully distributed to them” and “The Partnership Agreement—Limited 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 Partnership’s 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.

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     (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

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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 holder’s 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,

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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 holder’s 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 .

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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,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources,” “Business—Safety and Maintenance,” “Business—Regulation of Operations,” “Business—Environmental Matters,” “Business—Title 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

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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 Distributions—Unaudited 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

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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 Distributions—Partnership Statement of Estimated Adjusted EBITDA” and “Our Cash Distribution Policy and Restrictions on Distributions—Unaudited 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 Distributions—Unaudited 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.

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     (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

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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

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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.

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     (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 management’s general or specific authorization; (ii) transactions are recorded as necessary to permit preparation of financial statements in

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conformity with generally accepted accounting principles and to maintain accountability for assets; (iii) access to assets is permitted only in accordance with management’s 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 Partner’s 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 Partnership’s 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 Partnership’s 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 Partnership’s internal control over financial reporting; all material weaknesses, if any, in the Partnership’s internal control over financial reporting have been identified to the Partnership’s 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 Partnership’s 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.

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     (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

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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 Broker’s 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 finder’s or broker’s fee or agent’s 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 Partner’s officers or directors, any 5% or greater securityholder of the Partnership or any beneficial owner of the Partnership’s 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.

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     (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 customer’s or supplier’s 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

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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

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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 Partnership’s 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 Partnership’s 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 Comission’s electronic data gathering, analysis and retrieval system (“ EDGAR ”), to furnish to the Partnership’s 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

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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 Partnership’s 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;

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     (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

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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 .

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     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).

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     (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.

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     (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 Partnership’s 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

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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.

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     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.

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     (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

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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

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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

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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 “Underwriting—Commissions and Discounts” and the statements relating to stabilization by the Underwriters appearing under the caption “Underwriting—Price 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

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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 Partnership’s 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 arm’s 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 Partnership’s 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

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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 ]

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     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.
             
    Very truly yours,    
 
           
    Anadarko Petroleum Corporation    
 
           
 
  By:    /s/ James T. Hackett    
 
  Name:  
 
James T. Hackett
   
 
  Title:   President and Chief Executive Officer    
 
           
    Western Gas Resources, Inc.    
 
           
 
  By:    /s/ Robert G. Gwin    
 
  Name:  
 
Robert G. Gwin
   
 
  Title:   Vice President    
 
           
    WGR Holdings, LLC    
 
           
 
  By:    /s/ Robert G. Gwin    
 
  Name:  
 
Robert G. Gwin
   
 
  Title:   President and Chief Executive Officer    
 
           
    Western Gas Holdings, LLC    
 
           
 
  By:    /s/ Robert G. Gwin    
 
  Name:  
 
Robert G. Gwin
   
 
  Title:   President and Chief Executive Officer    
Western Gas Partners, LP
Signature Page to Underwriting Agreement

 


 

             
    Western Gas Partners, LP    
 
           
    By: Western Gas Holdings, LLC, its general partner    
 
           
 
  By:    /s/ Robert G. Gwin    
 
  Name:  
 
Robert G. Gwin
   
 
  Title:   President and Chief Executive Officer    
Western Gas Partners, LP
Signature Page to Underwriting Agreement

 


 

       
 
Accepted and agreed to as of the date first above written, on behalf of itself and the other several Underwriters named in Schedule A
   
         
  UBS Securities LLC
 
 
  By:    /s/ Michael Jameson  
    Name:    Michael Jameson  
    Title:    Managing Director  
 
     
  By:    /s/ Amit Jhunjhunwala  
    Name:    Amit Jhunjhunwala  
    Title:    Director  
 
  Citigroup Global Markets Inc.
 
 
  By:    /s/ Michael J. Casey  
    Name:    Michael J. Casey  
    Title:    Vice President  
 
  Credit Suisse Securities (USA) LLC
 
 
  By:    /s/ Randy Bayless  
    Name:    Randy Bayless  
    Title:    Director  
 
  Morgan Stanley & Co. Incorporated
 
 
  By:    /s/ B. Moss  
    Name:    B. Moss  
    Title:    Executive Director  
 
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.
         
 
  Yours very truly,    
 
       
 
 
 
Name:
   
Exhibit A-4

 


 

EXHIBIT A-1
LIST OF PARTIES TO EXECUTE LOCK-UP AGREEMENTS
     
Name   Position
 
   
1. Western Gas Holdings, LLC
   
 
   
2. Robert G. Gwin
  President, Chief Executive Officer and Director
 
   
3. Michael C. Pearl
  Senior Vice President and Chief Financial Officer
 
   
4. Danny J. Rea
  Senior Vice President, Chief Operating Officer and Director
 
   
5. Amanda M. McMillian
  Vice President, General Counsel and Corporate Secretary
 
   
6. Jeremy M. Smith
  Vice President and Treasurer
 
   
7. R. A. Walker
  Chairman of the Board
 
   
8. Milton Carroll
  Director
 
   
9. Anthony R. Chase
  Director
 
   
10. James R. Crane
  Director
 
   
11. Karl F. Kurz
  Director
 
   
12. Robert K. Reeves
  Director
 
   
13. David J. Tudor
  Director
Exhibit A-1-1

 


 

EXHIBIT B-1
FORM OF OPINION OF VINSON & ELKINS, L.L.P.
1.   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.
2.   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.
3.   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.
4.   The Underwriting Agreement has been duly authorized, executed and delivered by each of the Western Gas Parties.
5.   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.
6.   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 Factors—Risks Inherent in an Investment in Us—Your liability may not be limited if a court finds that unitholder action constitutes control of our business,” “Risk Factors—Risks Inherent in an Investment in Us—Unitholders may have liability to
Exhibit B-1-1

 


 

    repay distributions that were wrongfully distributed to them” and “The Partnership Agreement—Limited 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.
7.   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.
8.   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 Factors—Risks Inherent in an Investment in Us—Your liability may not be limited if a court finds that unitholder action constitutes control of our business,” “Risk Factors—Risks Inherent in an Investment in Us—Unitholders may have liability to repay distributions that were wrongfully distributed to them” and “The Partnership Agreement—Limited 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.
9.   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.
10.   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.
Exhibit B-1-2

 


 

11.   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.
12.   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.
13.   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.
14.   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 auditor’s 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,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity 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 “Business—Safety and Maintenance,” “Business—Regulation of Operations,” “Business—Environmental Matters” and “Business—Title 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 Partner’s 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 Partner’s 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
    100  
Section 13.11 Action Without a Meeting
    101  
Section 13.12 Right to Vote and Related Matters
    101  
 
       

ARTICLE XIV
 
       
MERGER, CONSOLIDATION OR CONVERSION
 
       
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  
 
       

ARTICLE XV
 
       
RIGHT TO ACQUIRE LIMITED PARTNER INTERESTS
 
       
Section 15.1 Right to Acquire Limited Partner Interests
    107  
 
       

ARTICLE XVI
 
       
GENERAL PROVISIONS
 
       
Section 16.1 Addresses and Notices; Written Communications
    109  
Section 16.2 Further Action
    109  
Section 16.3 Binding Effect
    109  
Section 16.4 Integration
    110  
Section 16.5 Creditors
    110  
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  

 


 

         
Section 16.11 Consent of Partners
    110  
Section 16.12 Facsimile Signatures
    111  

 


 

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 Partnership’s Adjusted Property after
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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 Partnership’s 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 Partner’s 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.
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     “ 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:
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          (a) the sum of (i) all cash and cash equivalents of the Partnership Group (or the Partnership’s 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 Partnership’s 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 Partner’s share of the Partnership’s Book-Tax Disparities in all of its Contributed Property and Adjusted Property will be reflected by the
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difference between such Partner’s Capital Account balance as maintained pursuant to Section 5.5 and the hypothetical balance of such Partner’s 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 Member’s 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).
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     “ 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.
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     “ 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 Group’s 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
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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
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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.
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     “ 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
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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 arm’s-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
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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
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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 Person’s 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.
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     “ 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.
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     “ 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 Partnership’s 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 Partnership’s 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 Partnership’s 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 Partnership’s 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 Partnership’s 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
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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 Partnership’s 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:
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          (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 Partnership’s 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 Partnership’s 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
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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 Partnership’s 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 Partnership’s 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
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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
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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.
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     “ 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 Partner’s 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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     “ 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 Partner’s 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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          (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
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First Amended and Restated Agreement of Limited Partnership

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(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

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     “ 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

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     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 Partnership’s 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 Partnership’s 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
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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
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First Amended and Restated Agreement of Limited Partnership

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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 Partner’s Limited Partner Interest and shall extend to such Limited Partner’s 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
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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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     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 Partnership’s business, transact any business in the Partnership’s 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 Partner’s 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 Partner’s 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 Partnership’s 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;
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     (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 Partnership’s 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 Partner’s 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
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First Amended and Restated Agreement of Limited Partnership

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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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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 holder’s 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 transferee’s 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 Partner’s 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.
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     (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
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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
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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 Assignee’s 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 Assignee’s 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 Assignee’s Limited Partner Interests.
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First Amended and Restated Agreement of Limited Partnership

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     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.
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First Amended and Restated Agreement of Limited Partnership

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     (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 Assignee’s 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 Assignee’s 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 Assignee’s 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).
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     (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 Assignee’s 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
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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
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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 Partner’s Percentage Interest by (B) 100 less the General Partner’s 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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     (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
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First Amended and Restated Agreement of Limited Partnership

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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 Partnership’s 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
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First Amended and Restated Agreement of Limited Partnership

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     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 transferor’s 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 transferee’s 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 Partner’s 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
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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,
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(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
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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.
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First Amended and Restated Agreement of Limited Partnership

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     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.
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First Amended and Restated Agreement of Limited Partnership

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     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 Partnership’s 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
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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 Partnership’s 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 Partnership’s 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 Partnership’s 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 Partnership’s 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 Partner’s 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).
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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 Partnership’s 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
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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
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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 Partnership’s 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 Partnership’s 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 Partnership’s existence over (bb) the cumulative per Unit amount
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First Amended and Restated Agreement of Limited Partnership

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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 Partner’s Adjusted Capital Account balance shall be determined, and the allocation of income or gain required hereunder shall be effected, prior to the application
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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 Partner’s 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 Partner’s Percentage Interest at the time in which the greater cash or property distribution occurs by (y) the sum of 100 less the General Partner’s 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.
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     (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 Partner’s Percentage Interest by (y) the sum of 100 less the General Partner’s 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 Partnership’s 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
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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
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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
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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
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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
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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 Partnership’s 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
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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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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 Partnership’s liability in respect of such payment, regardless of any claim of any Person who may have an interest in such payment by reason of an assignment or otherwise.
     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 Partner’s 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 Partner’s 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 Partner’s 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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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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     (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 Partner’s 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 Unitholder’s 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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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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Incremental Income Taxes, the General Partner shall estimate for such Quarter the Partnership Group’s 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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     (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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     (xiv) the undertaking of any action in connection with the Partnership’s 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 Partner’s 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 Partnership’s Subsidiaries) without the approval of holders of a Unit Majority; provided, however , that this provision shall not preclude or limit the General Partner’s 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 Group’s 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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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 Partner’s 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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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 arm’s-length basis (without reference to the lending party’s 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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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 Partner’s 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 Indemnitee’s 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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actions in the Indemnitee’s 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 Partnership’s activities or such Person’s 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 Indemnitee’s 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 Partnership’s 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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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 Partner’s 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 Partner’s 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 Person’s 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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     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 Holder’s 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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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 Holder’s 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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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 Holder’s 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 Partnership’s 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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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 Partner’s 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 Person’s 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 Partnership’s 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 Partnership’s 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 Partnership’s or the SEC’s 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 Partnership’s or the SEC’s 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 Partnership’s 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 Partner’s 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 Partnership’s expense) in connection with all examinations of the Partnership’s 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 Partner’s 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 Partner’s 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 Partner’s 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 Partner’s 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 Partnership’s 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 Partnership’s 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 Partner’s admission, the successor General Partner’s 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 Partner’s 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 Partnership’s assets for a reasonable time if it determines that an immediate sale or distribution of all or some of the Partnership’s assets would be impractical or would cause undue loss to the Partners. The Liquidator may distribute the Partnership’s 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 Partner’s 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 Person’s 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 Partnership’s 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
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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.
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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,
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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.
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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.
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     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
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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.
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      IN WITNESS WHEREOF , the parties hereto have executed this Agreement as of the date first written above.
         
  GENERAL PARTNER :

WESTERN GAS HOLDINGS, LLC
 
 
  By:   /s/ Robert G. Gwin    
    Name:   Robert G. Gwin   
    Title:   President and Chief Executive Officer   
 
  AMENDING LIMITED PARTNER :

WGR HOLDINGS, LLC
 
 
  By:   /s/ Robert G. Gwin    
    Name:   Robert G. Gwin   
    Title:   President and Chief Executive Officer   
 
  LIMITED PARTNERS :

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
 
 
  By:   /s/ Robert G. Gwin    
    Name:   Robert G. Gwin   
    Title:   President and Chief Executive Officer   
 
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
     
     No.                                             Common Units
     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.
                     
Dated:           Western Gas Partners, LP    
 
                   
 
                   
Countersigned and Registered by:       By:   Western Gas Holdings, LLC    
 
                   
Computershare Trust Company, N.A.,       By:        
 
                   
As Transfer Agent and Registrar       Name:        
 
                   
 
                   
 
          By:        
 
                   
 
              Secretary    
[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:
                     
TEN COM -   as tenants in common   UNIF GIFT/TRANSFERS MIN ACT
TEN ENT -
  as tenants by the entireties       Custodian        
 
                   
 
      (Cust)       (Minor)    
JT TEN -   as joint tenants with right of survivorship and not as tenants in common   Under Uniform Gifts/Transfers to CD Minors Act (State)
    Additional abbreviations, though not in the above list, may also be used.

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ASSIGNMENT OF COMMON UNITS OF
WESTERN GAS PARTNERS, LP
     FOR VALUE RECEIVED,                      hereby assigns, conveys, sells and transfers unto
             
 
 
   
 
(Please print or typewrite name and address of assignee)   (Please insert Social Security or other identifying number of assignee)
 
           
                     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.
 
           
Date:
 
 
  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.
 
           
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  
 
(Signature)



 
(Signature)
     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
 

AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
WESTERN GAS HOLDINGS, LLC
A Delaware Limited Liability Company
Dated as of
May 14, 2008

 

 


 

TABLE OF CONTENTS
         
ARTICLE I DEFINITIONS
       
 
Section 1.1 Definitions
    1  
Section 1.2 Construction
    6  
 
       
ARTICLE II ORGANIZATION
       
 
Section 2.1 Formation
    6  
Section 2.2 Name
    6  
Section 2.3 Registered Office; Registered Agent; Principal Office
    6  
Section 2.4 Purposes
    7  
Section 2.5 Term
    7  
Section 2.6 No State Law Partnership
    7  
Section 2.7 Certain Undertakings Relating to the Separateness
    7  
 
       
ARTICLE III MEMBERSHIP
       
 
Section 3.1 Membership Interests; Additional Members
    9  
Section 3.2 Access to Information
    9  
Section 3.3 Liability
    9  
Section 3.4 Withdrawal
    10  
Section 3.5 Meetings
    10  
Section 3.6 Action by Consent of Members
    10  
Section 3.7 Conference Telephone Meetings
    10  
Section 3.8 Quorum
    10  
 
       
ARTICLE IV ADMISSION OF MEMBERS; DISPOSITION OF MEMBERSHIP INTERESTS
       
 
Section 4.1 Admission of Assignee as a Member
    10  
Section 4.2 Requirements Applicable to All Dispositions and Admissions
    11  
 
       
ARTICLE V CAPITAL CONTRIBUTIONS
       
 
Section 5.1 Initial Capital Contributions
    11  
Section 5.2 Loans
    11  
Section 5.3 Return of Contributions
    11  
 
       
ARTICLE VI DISTRIBUTIONS AND ALLOCATIONS
       
 
Section 6.1 Distributions
    12  
Section 6.2 Distributions on Dissolution and Winding Up
    12  
Section 6.3 Limitations on Distributions
    12  
 
       
ARTICLE VII MANAGEMENT
       
 
Section 7.1 Management by Board of Directors
    12  
Section 7.2 Number; Qualification; Tenure
    13  
Section 7.3 Regular Meetings
    13  

 


 

         
Section 7.4 Special Meetings
    13  
Section 7.5 Notice
    14  
Section 7.6 Action by Consent of Board
    14  
Section 7.7 Conference Telephone Meetings
    14  
Section 7.8 Quorum
    14  
Section 7.9 Vacancies; Increases in the Number of Directors
    14  
Section 7.10 Committees
    15  
Section 7.11 Removal
    16  
Section 7.12 Compensation of Directors
    16  
 
       
ARTICLE VIII OFFICERS
       
 
Section 8.1 Officers
    16  
Section 8.2 Election and Term of Office
    16  
Section 8.3 Chairman of the Board
    17  
Section 8.4 Chief Executive Officer
    17  
Section 8.5 Chief Financial Officer
    17  
Section 8.6 President
    17  
Section 8.7 Vice Presidents
    18  
Section 8.8 Treasurer
    18  
Section 8.9 Secretary
    18  
Section 8.10 General Counsel
    19  
Section 8.11 Controller
    19  
Section 8.12 Removal
    19  
Section 8.13 Vacancies
    19  
 
       
ARTICLE IX INDEMNITY AND LIMITATION OF LIABILITY
       
 
Section 9.1 Indemnification of Directors and Officers
    19  
 
       
ARTICLE X TAXES
       
 
Section 10.1 Taxes
    20  
 
       
ARTICLE XI BOOKS, RECORDS, REPORTS, AND BANK ACCOUNTS
       
 
Section 11.1 Maintenance of Books
    20  
Section 11.2 Reports
    20  
Section 11.3 Bank Accounts
    21  
 
       
ARTICLE XII DISSOLUTION, WINDING-UP, TERMINATION AND CONVERSION
       
 
Section 12.1 Dissolution
    21  
Section 12.2 Winding-Up and Termination
    21  
Section 12.3 Deficit Capital Accounts
    22  
Section 12.4 Certificate of Cancellation
    22  
 
       
ARTICLE XIII GENERAL PROVISIONS
       
 
Section 13.1 Offset
    22  

 


 

         
Section 13.2 Notices
    23  
Section 13.3 Entire Agreement; Superseding Effect
    23  
Section 13.4 Effect of Waiver or Consent
    23  
Section 13.5 Amendment or Restatement
    24  
Section 13.6 Binding Effect
    24  
Section 13.7 Governing Law; Severability
    24  
Section 13.8 Further Assurances
    24  
Section 13.9 Waiver of Certain Rights
    25  
Section 13.10 Counterparts
    25  
 
Exhibit A Members
       
Exhibit B Directors
       
Exhibit C Officers
       

 


 

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

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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 Member’s 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 Member’s 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 Person’s 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 Person’s consent or acquiescence, a trustee, receiver, or
Western Gas Holdings, LLC
Limited Liability Company Agreement

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liquidator of such Person or of all or any substantial part of such Person’s properties has been appointed and 90 Days have expired without the appointment’s 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.
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Limited Liability Company Agreement

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     “ 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 Member’s status as a Member; (b) that Member’s 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 Member’s 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

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     “ 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 Member’s 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.
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Limited Liability Company Agreement

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     “ 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 Company’s registered agent for service of process is The Corporation Trust Company, and the address of the Company’s 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 Company’s registered agent or the location of the Company’s registered office or principal place of business as the Members may from time to time determine.
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Limited Liability Company Agreement

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     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.
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Limited Liability Company Agreement

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          (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 Partnership’s 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.
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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 Member’s 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 Member’s 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.
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     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 Member’s Membership Interests or (ii) the express right to be so admitted and (b) such Disposition is effected in strict compliance with this Article IV.
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     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 Member’s 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 Company’s 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 Company’s 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 Board’s 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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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 person’s
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successor shall have been duly elected and shall have qualified or until such person’s 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 Treasurer’s absence or inability, the Secretary’s 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 Secretary’s absence or inability, the
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Secretary’s 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 person’s successor, such person’s death, such person’s resignation or such person’s 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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officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise (hereinafter an “indemnitee”), against expenses (including reasonable attorney’s 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 indemnitee’s 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 Company’s 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:
Western Gas Holdings, LLC
Limited Liability Company Agreement

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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 Company’s 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 Company’s 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 Member’s 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.
Western Gas Holdings, LLC
Limited Liability Company Agreement

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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
Western Gas Holdings, LLC
Limited Liability Company Agreement

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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

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     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

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     IN WITNESS WHEREOF, the Member has executed this Agreement as of the date first set forth above.
         
  MEMBER :

WGR HOLDINGS, LLC
 
 
  By:   /s/ Robert G. Gwin    
    Robert G. Gwin   
    President and Chief Executive Officer   
 
Signature Page to
Western Gas Holdings, LLC
Limited Liability Company Agreement


 

EXHIBIT A
MEMBERS
                 
            Effective Capital
Member   Sharing Ratio   Contribution
WGR Holdings, LLC
    100 %   $ 1,000.00  
Western Gas Holdings, LLC
Limited Liability Company Agreement

A-1


 

EXHIBIT B
DIRECTORS
     
R. A. Walker
  Chairman of the Board
 
Milton Carroll
  Director
 
Anthony R. Chase
  Director
 
James R. Crane
  Director
 
Karl F. Kurz
  Director
 
Danny J. Rea
  Director
 
Robert K. Reeves
  Director
 
David J. Tudor
  Director
Western Gas Holdings, LLC
Limited Liability Company Agreement

B-1


 

EXHIBIT C
OFFICERS
     
Robert G. Gwin
  President and Chief Executive Officer
 
Danny J. Rea
  Senior Vice President and Chief Operating Officer
 
Michael C. Pearl
  Senior Vice President, Chief Financial Officer and Chief Accounting Officer
 
Jeremy M. Smith
  Vice President and Treasurer
 
Amanda M. McMillian
  Vice President, General Counsel and Corporate Secretary
 
Elizabeth C. Stumm
  Controller
 
David Siddall
  Assistant Secretary
 
Margaret C. Douglas
  Assistant Controller
 
David L. Williams
  Assistant Controller
 
Krista M. Mathews
  Assistant Secretary
 
Stephen J. Foster
  Assistant Treasurer
 
R. W. Tonnesen
  Assistant Treasurer and Assistant Secretary
Western Gas Holdings, LLC
Limited Liability Company Agreement

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Execution Version
ANADARKO PETROLEUM CORPORATION
Fixed Rate Note Due 2038
$260,000,000
     ANADARKO PETROLEUM CORPORATION, a Delaware corporation (herein called the “ Company ”, which term includes any successor person), for value received, hereby promises to pay to Western Gas Partners, LP (“ Western ”), or registered assigns, the principal sum of Two Hundred and Sixty Million Dollars ($260,000,000.00 ) on May 14, 2038 (the “ Maturity Date ”) , and to pay accrued but unpaid interest on the unpaid principal amount from May 14, 2008 through repayment, quarterly on each February 1, May 1, August 1 and November 1, at a rate per annum equal to six and one half percent (6.50%).
     Interest payable hereunder shall be computed on the basis of a year of 360 days comprised of 12 months of 30 days each.
     “ Material Adverse Change ” means any change occurring since December 31, 2007, in the consolidated financial position or results of operations of the Company and its subsidiaries taken as a whole that has had the effect of preventing the Company from carrying on its business or from meeting its current and anticipated obligations on a timely basis; provided , however , that any event, condition, change, occurrence or development of a state of circumstances which (a) adversely affects the oil and gas exploration and development, gas processing and transportation or hydrocarbon marketing industries generally, including changes in commodity prices or markets, general market prices and legal or regulatory changes (and in each case does not disproportionately affect the Company and its subsidiaries considered as a single enterprise as compared to similarly situated persons), (b) arises out of general economic or industry conditions (and in each case does not disproportionately affect the Company and its subsidiaries considered as a single enterprise as compared to similarly situated persons), or (c) arises out of any change in generally accepted accounting principles (which does not disproportionately affect the Company and its subsidiaries considered as a single enterprise as compared to similarly situated persons) shall not be considered in determining whether a Material Adverse Change has occurred.
     “ Note ” means this Fixed Rate Note Due 2038, dated May 14, 2008.
     “ Public Indenture ” means the Indenture, dated as of September 19, 2006, between the Borrower and The Bank of New York Trust Company, N.A., as Trustee.
     “ Specified Business Day ” means any day that is not a Saturday or Sunday, and that is not a day on which banking institutions are authorized or obligated by law or executive order to close in New York, New York.
     Payment of the principal of and any such interest on this Note will be made at the office or agency of the Company, in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts, against surrender of this Note at the Maturity Date of the principal thereof or any early repayment as provided herein.
     This Note is subject to redemption, in whole or in part, on any Specified Business Day at the election of the Company upon not less than 30 days’ nor more than 60 days’ notice, at a redemption price equal to the greater of (1) 100% of the principal amount to be redeemed (the “ Redemption Amount ”) or (2) the amount determined by the quotation agent (the “ Make Whole Price ”) described below under “Make Whole Calculation,” plus, in each case, accrued but unpaid interest to the redemption date.
     In the event of redemption of this Note in part only, a new Note or Notes of like tenor for the unredeemed portion hereof will be issued in the name of the holder hereof upon the cancellation hereof and all references to “Note” herein shall include the plural.
Make Whole Calculation
     The quotation agent will determine the Make Whole Price by determining the sum of the present values of the remaining scheduled payments of the principal of, and interest on, the Redemption Amount, not including any portion of these payments of interest accrued as of the date on which the Redemption

 


 

Amount is to be redeemed, discounted to the date on which the Redemption Amount is to be redeemed on a semi-annual basis, assuming a 360-day year consisting of twelve 30-day months, at the adjusted treasury rate described below plus 30 basis points.
     The quotation agent will utilize the following procedures to calculate the adjusted treasury rate. Western will appoint UBS Securities LLC (“ UBS ”) or its successor and two or more other primary U.S. Government securities dealers in New York City as reference dealers and the Company will appoint UBS or its successor to act as the Company’s quotation agent. If UBS or its successor is no longer a primary U.S. Government securities dealer, Western will substitute another primary U.S. Government securities dealer in its place as a reference dealer.
     The quotation agent will select a United States Treasury security which has a maturity comparable to the remaining maturity of the Note and which would be used in accordance with customary financial practice to price new issues of corporate debt securities with a maturity comparable to the remaining maturity of the Note. The reference dealers will provide the quotation agent with the bid and ask prices for that comparable United States Treasury security as of 5:00 p.m. on the third Specified Business Day before the redemption date. The calculation agent will calculate the average of the bid and ask prices provided by each reference dealer, eliminate the highest and the lowest average reference dealer quotations and then calculate the average of the remaining reference dealer quotations (“the “ Comparable Treasury Price ”). However, if the calculation agent obtains fewer than three reference dealer quotations, it will calculate the average of all the reference dealer quotations and not eliminate any quotations. The adjusted treasury rate will be the semi-annual equivalent yield to maturity of a security whose price, expressed as a percentage of its principal amount, is equal to the comparable treasury price.
     The Company represents and warrants to Western that:
     (A) The Company (i) has been duly incorporated and is validly existing and in good standing under the laws of the State of Delaware, and (ii) is qualified to do business as a foreign corporation and is in good standing in each jurisdiction of the United States in which the ownership of its properties or the conduct of its business requires such qualification and where the failure to so qualify would reasonably be expected to result in a Material Adverse Change.
     (B) The execution, delivery and performance by the Company of this Note have been duly authorized by all necessary corporate action of the Company and do not and will not: (i) contravene the terms of the articles or certificate of incorporation, or bylaws, of the Company; (ii) result in a breach of or constitute a default under any lease, instrument, contract or other agreement to which the Company is a party or by which it or its properties may be bound or affected that would reasonably be expected to result in a Material Adverse Change; or (iii) violate any provision of any law, rule, regulation, order, judgment, decree or the like binding on or affecting the Company.
     (C) This Note constitutes the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, subject to the effect of applicable bankruptcy, insolvency or similar laws affecting creditors’ rights generally and equitable principles of general applicability.
     (D) No authorization, consent, approval, license, exemption of, or filing or registration with, any governmental authority or agency, or approval or consent of any other person or entity (“ Person ”), is required for the due execution, delivery or performance by the Company of this Note.
     (E) To the knowledge of the Company, on the date hereof there are no actions, suits, or proceedings pending or threatened against the Company before any governmental authority as to which, in the opinion of the Company, there is a reasonable possibility of adverse determinations that would reasonably be expected, individually or in the aggregate, to result in a Material Adverse Change.
     (F) The consolidated balance sheets of the Company and its consolidated subsidiaries as of December 31, 2006 and 2007, and the related consolidated statements of income, stockholders’ equity and cash flows for each of the years in the three-year period ended December 31, 2007, audited by KPMG LLP, present fairly, in all material respects, the consolidated financial position of the Company and its consolidated subsidiaries as of December 31, 2006 and 2007, and their results of operations, changes in stockholders’ equity and cash flows for each of the years in the three-year period ended December 31, 2007, in conformity with GAAP applied on a consistent basis.

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     (G) The Company is not an “investment company” as defined in, or subject to regulation under, the Investment Company Act of 1940.
     (H) The Company has filed all United States Federal income tax returns and all other material tax returns and reports required to be filed (or obtained extensions with respect thereto) and has paid all taxes required to have been paid by it, except (i) taxes the validity of which are being contested in good faith by appropriate proceedings, and with respect to which the Company, to the extent required by GAAP, has set aside on its books adequate reserves or (ii) to the extent any failures to do so (individually or in the aggregate) would not reasonably be expected to result in a Material Adverse Change.
     (I) No Event of Default has occurred and is continuing.
     (J) The making of the loan hereunder does not require any authorization, consent or approval of, registration or filing with, or any other action by, any governmental authority or any other Person (including shareholders or any class of directors, whether interested or disinterested, of the Company or any other Person), nor is any such authorization, consent, approval, registration, filing or other action necessary for the validity or enforceability of this Note, except such as have been obtained or made and are in full force and effect.
     So long as any principal, interest or other amount due hereunder shall remain unpaid, the Company agrees that:
     (1) The Company shall furnish to Western, promptly after the Company has knowledge or becomes aware thereof, notice of (a) the occurrence of any Event of Default (as defined below); (b) the filing or commencement of any action, suit or proceeding by or before any arbitrator or governmental authority against or affecting the Company that if adversely determined would reasonably be expected to result in a Material Adverse Change; and (c) any other development that results in, or would reasonably be expected to result in, a Material Adverse Change.
     (2) The Company will comply with the provisions of Sections 1004 and 1005 of the Public Indenture (a true and complete copy of which the Company hereby represents has been furnished to Western), which provisions, together with related definitions, are hereby incorporated herein by reference for the benefit of Western and shall continue in effect for purposes of this paragraph, regardless of the termination, or any amendment or waiver of, or any consent to any deviation from or other modification of, the Public Indenture; provided , however , that, for purposes of this paragraph, (a) references in the Public Indenture to “ the Securities ” shall be deemed to refer to the respective obligations of the Company to pay the principal of and interest of this Note, and (b) references in the Public Indenture to “ this Indenture ” and to “ supplemental indentures ” shall be deemed to refer to this Note and amendments or supplements to this Note, respectively.
     (3) The Company shall comply with all laws, rules, regulations and orders of any governmental authority applicable to it or its property, except where any failures to do so, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Change.
     (4) The Company will at all times maintain, and will cause its subsidiaries to maintain, with financially sound and reputable insurers, insurance of the kinds and covering the risks and in the relative proportionate amounts (including as to self-insurance) consistent with that carried by companies engaged in the same or similar businesses and similarly situated; provided , that the Company shall not be required to maintain insurance against risks or in amounts no longer economically available, on a de novo or renewal basis, as applicable, to the Company and other companies engaged in the same or similar businesses and similarly situated.
     (5) In the event that the Company is not required to file information with the Securities and Exchange Commission (the “SEC”) pursuant to the Securities Exchange Act of 1934, as amended (“the Exchange Act”), the Company will provide to Western, in accordance with the rules and regulations prescribed from time to time by the SEC, any financial information which may be required pursuant to the Exchange Act in respect of the issuer of a security listed and registered on a national securities exchange as may be prescribed in such rules and regulations.
     Any of the following events which shall occur shall constitute an “ Event of Default ”:
     (i) The Company shall fail to pay when due any amount of principal hereof;

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     (ii) The Company shall fail to pay when due any interest hereon or any other amount payable hereunder, and such failure shall continue unremedied for five (5) Specified Business Days;
     (iii) Any representation or warranty by the Company under or in connection with this Note shall prove to have been incorrect in any material respect when made;
     (iv) The Company shall fail to perform or observe any other term, covenant or agreement contained in this Note on its part to be performed or observed, and such failure shall remain unremedied for a period of thirty (30) days from the date Western provides notice in writing of such occurrence;
     (v) (a) The Company shall be dissolved, liquidated, wound up or cease its corporate existence or cease to conduct its business in the ordinary course without the prior authorization of Western; or (b) the Company (1) shall make a general assignment for the benefit of creditors, or shall generally fail to pay, or admit in writing its inability to pay, its debts as they become due, subject to applicable grace periods, if any, whether at stated maturity or otherwise; (2) shall commence any voluntary Insolvency Proceeding; or (3) shall take any action to effectuate or authorize any of the foregoing;
     (vi) (a) Any involuntary Insolvency Proceeding (as defined below) is commenced or filed against the Company, or any writ, judgment, warrant of attachment, execution or similar process is issued or levied against a substantial part of the Company’s properties and such Insolvency Proceeding shall not be dismissed, or such writ, judgment, warrant of attachment, execution or similar process shall not be released, vacated or fully bonded within sixty (60) days after commencement, filing or levy; (b) the Company admits the material allegations of a petition against it in any Insolvency Proceeding, or an order for relief (or similar order under non-U.S. law) is ordered in any Insolvency Proceeding; or (c) the Company acquiesces in the appointment of a receiver, trustee, custodian, conservator, liquidator, mortgagee in possession (or agent therefor), or other similar Person for itself or a substantial portion of its property or business.
     (vii) The Company shall (a) default in the payment of principal of any indebtedness in an aggregate principal amount in excess of $100,000,000 (other than this Note) beyond the period of grace, if any, provided in the instrument or agreement under which such indebtedness was created as and when the same shall become due and payable, and such default shall have resulted in such indebtedness being declared due and payable prior to its stated maturity, or (b) default in the observance or performance of any other agreement or condition relating to any such indebtedness or contained in any instrument or agreement evidencing, securing or relating thereto, and such default shall have resulted in such indebtedness being declared due and payable prior to its stated maturity.
     (vii) the Company shall default in the performance of any term, condition, covenant or agreement contained in the Public Indenture and such default shall have resulted in any of the Securities (as defined in the Public Indenture) being declared due and payable prior to the date on which such Securities would otherwise have become due and payable.
     (viii) one or more judgments for the payment of money in an aggregate amount in excess of $100,000,000 shall be rendered against the Company and the same shall remain undischarged for a period of thirty (30) consecutive days during which execution shall not be effectively stayed, or any action shall be legally taken by a judgment creditor to attach or levy upon any assets of the Company to enforce any such judgment.
     As used herein, “Insolvency Proceeding” means (i) any case, action or proceeding before any court or other governmental agency or authority relating to bankruptcy, reorganization, insolvency, liquidation, receivership, dissolution, winding-up or relief of debtors, or (ii) any general assignment for the benefit of creditors, composition, marshalling of assets for creditors, or other, similar arrangement in respect of its creditors generally or any substantial portion of its creditors, in each case undertaken under U.S. federal, state or foreign law, including the Bankruptcy Code.
     As used herein, “Bankruptcy Code” means Title 11 of the United States Code entitled “Bankruptcy,” as now and hereafter in effect, or any successor statute.
     If any Event of Default shall occur and be continuing, Western may by notice to the Company declare the entire unpaid principal amount of this Note, all interest accrued and unpaid hereon and all other amounts due hereunder to be forthwith due and payable, whereupon the principal hereof, all such accrued interest and all such other amounts shall become and be forthwith due and payable, without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by the Company,

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provided that if an event described in paragraph (iv) or (v) above shall occur, the result which would otherwise occur only upon giving of notice by Western to the Company as specified above shall occur automatically, without the giving of any such notice.
     The Company agrees to pay on demand all the losses, costs, and expenses (including, without limitation, attorneys’ fees and disbursements) which Western incurs in connection with enforcement of this Note, or the protection or preservation of Western’s rights under this Note, whether by judicial proceedings or otherwise. Such costs and expenses include, without limitation, those incurred in connection with any workout or refinancing, or any bankruptcy, insolvency, liquidation or similar proceedings.
     No single or partial exercise of any power under this Note shall preclude any other or further exercise of such power or exercise of any other power. No delay or omission on the part of Western in exercising any right under this Note shall operate as a waiver of such right or any other right hereunder.
     This Note shall be binding on each of the Company and Western and their respective successors and assigns. Neither party may assign or transfer this Note or any of its obligations hereunder without the other party’s prior written consent.
     No provision of this Note shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and any premium and interest on this Note at the times, place and rate, and in the coin or currency, herein prescribed, subject to the Company’s right to redeem all or a portion of this Note as provided herein or as otherwise agreed to by the parties.
     The transfer of this Note is registrable with the Company, upon surrender of this Note for registration of transfer at the office or agency of the Company, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company duly executed by Western or any successor holder hereof or his attorney duly authorized in writing, and thereupon one or more new Notes of like tenor, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees.
     No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.
     Prior to due presentment of this Note for registration of transfer, the Company may treat the person in whose name this Note is registered as the owner hereof for all purposes, whether or not this Note be overdue, and the Company shall not be affected by notice to the contrary.
     This Note shall be governed by and construed in accordance with the law of the State of Texas.
The remainder of this page intentionally left blank.

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     IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed this 14 th day of May, 2008.
             
    ANADARKO PETROLEUM CORPORATION    
 
           
 
  By:
Name:
  Bruce W. Busmire
 
Bruce W. Busmire
   
 
  Title:   Vice President, Chief Accounting Officer and Treasurer    
Signature Page to Anadarko Petroleum Corporation
Fixed Rate Note Due 2038 — $260,000,000

Execution Version
CONTRIBUTION, CONVEYANCE AND ASSUMPTION
AGREEMENT
By and Among
WESTERN GAS PARTNERS, LP
WESTERN GAS HOLDINGS, LLC
ANADARKO PETROLEUM CORPORATION
WGR HOLDINGS, LLC
WESTERN GAS RESOURCES, INC.
WGR ASSET HOLDING COMPANY LLC
WESTERN GAS OPERATING, LLC
And
WGR OPERATING, LP
Dated as of May 14, 2008

 


 

CONTRIBUTION, CONVEYANCE AND ASSUMPTION
AGREEMENT
     This Contribution, Conveyance and Assumption Agreement, dated as of May 14, 2008 (this “ Agreement ”), is by and among Western Gas Partners, LP, a Delaware limited partnership (the “ Partnership ”), Western Gas Holdings, LLC, a Delaware limited liability company and the general partner of the Partnership (the “ General Partner ”), Anadarko Petroleum Corporation, a Delaware corporation (“ Anadarko ”), WGR Holdings, LLC, a Delaware limited liability company (“ WGR Holdings ”), Western Gas Resources, Inc., a Delaware corporation (“ WGR ”), WGR Asset Holding Company LLC, a Delaware limited liability company (“ Asset HoldCo ”), Western Gas Operating, LLC, a Delaware limited liability company (“ Operating GP ”), and WGR Operating, LP, a Delaware limited partnership (“ OLP ”). The above-named entities are sometimes referred to in this Agreement each as a “ Party” and collectively as the “ Parties .” Capitalized terms used herein shall have the meanings assigned to such terms in Article I.
RECITALS
      WHEREAS , the General Partner and Asset HoldCo have formed the Partnership, pursuant to the Delaware Revised Uniform Limited Partnership Act (the “ Delaware LP Act ”), for the purpose of engaging 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 LP Act.
      WHEREAS , in order to accomplish the objectives and purposes in the preceding recital, each of the following actions has been taken prior to the date hereof:
  1.   Asset HoldCo formed WGR Holdings under the terms of the Delaware Limited Liability Company Act (the “ Delaware LLC Act ”) and contributed $4,000 in exchange for all of the member interests in WGR Holdings.
 
  2.   Asset HoldCo formed the General Partner under the terms of the Delaware LLC Act and contributed $1,000 in exchange for all of the membership interests in the General Partner.
 
  3.   The General Partner and Asset HoldCo formed the Partnership under the terms of the Delaware LP Act and contributed $60 and $2,940, respectively, in exchange for a 2% general partner interest and a 98% limited partner interest, respectively, in the Partnership.
 
  4.   Asset HoldCo contributed all of the membership interests in the General Partner and the 98% limited partner interest in the Partnership to WGR Holdings.
 
  5.   The Partnership formed Operating GP under the terms of the Delaware LLC Act and contributed $1,000 in exchange for all of the membership interests in Operating GP.
 
  6.   Operating GP and the Partnership formed OLP under the terms of the Delaware LP Act and contributed $0.10 and $999.90, respectively, in exchange for a 0.01%

 


 

      general partner interest and a 99.99% limited partner interest, respectively, in OLP.
 
  7.   Asset HoldCo distributed all of the membership interests in WGR Holdings to WGR.
      WHEREAS , concurrently with the consummation of the transactions contemplated hereby, each of the following transactions shall occur:
  1.   Asset HoldCo will distribute all of its membership interests in 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 ”), to WGR.
 
  2.   WGR will contribute (on behalf of WGR Holdings) a portion of its membership interest in AGC with a value equal to 2% of the equity value of the Partnership based on upon the pricing of its initial public offering (the “ GP Contribution Interest ”) to the General Partner.
 
  3.   WGR will convey its remaining membership interest in AGC as well as all of the membership interest in Pinnacle and MIGC (collectively, the “ Partnership Contribution Interests ”) to WGR Holdings.
 
  4.   The General Partner will contribute the GP Contribution Interest to the Partnership in exchange for (i) 1,083,115 general partner units in the Partnership representing a continuation of its 2% general partner interest in the Partnership and (ii) the Incentive Distribution Rights.
 
  5.   WGR Holdings will contribute the Partnership Contribution Interests to the Partnership in exchange for (i) 4,973,806 Common Units representing a 9.1843% limited partner interest in the Partnership, (ii) 26,536,306 Subordinated Units representing a 49.0% limited partner interest in the Partnership, (iii) the right to receive a distribution of $14,265,625 as a reimbursement for certain capital expenditures and (iv) 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, (A) 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 on the Option Closing Date(s), and (B) a reimbursement of pre-formation 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 purchased by and issued to the Underwriters pursuant to each exercise of the Over-Allotment Option, if any.
 
  6.   The Partnership will contribute all of the membership interests in AGC, Pinnacle and MIGC to OLP, of which 0.01% of such membership interest contributed to OLP shall be contributed on behalf of Operating GP.

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  7.   The Partnership will (i) pay transaction expenses estimated to be approximately $5.0 million and (ii) loan $260.0 million to Anadarko pursuant to a 30-year note bearing interest at a fixed annual rate of 6.50%.
 
  8.   The 98% limited partner interest in the Partnership held by WGR Holdings and the 2% general partner interest in the Partnership held by the General Partner will be redeemed and the respective 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 WGR Holdings and the General Partner in proportion to such capital contributions.
 
  9.   The agreements of limited partnership and the limited liability company agreements of the aforementioned entities will be amended and restated to the extent necessary to reflect the applicable matters set forth above and contained in this Agreement.
      WHEREAS , at the Effective Time, the public, through the Underwriters, will purchase from the Partnership for $309,375,000 million in cash, less the amount of $20,109,375 payable to the Underwriters after taking into account the Underwriters’ discount of 6.0% and the structuring fee of $1,546,875 payable to UBS Securities LLC, 18,750,000 Common Units owned by the Partnership on such date (representing a 34.6224% limited partner interest in the Partnership).
      NOW , THEREFORE , in consideration of the mutual covenants, representations, warranties and agreements herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
     The terms set forth below in this Article I shall have the meanings ascribed to them below or in the part of this Agreement referred to below:
     “ Common Units ” means the common units representing limited partner interests in the Partnership.
     “ Commission ” means the U.S. Securities and Exchange Commission.
     “ Effective Time ” means immediately prior to the closing of the initial public offering pursuant to the Underwriting Agreement.
     “ Incentive Distribution Rights ” has the meaning assigned to such term in the Partnership Agreement.
     “ Option Closing Date ” has the meaning assigned to such term in the Partnership Agreement.

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     “ Over-Allotment Option ” has the meaning assigned to such term in the Partnership Agreement.
     “ Partnership Agreement ” means the First Amended and Restated Agreement of Limited Partnership of the Partnership dated as of May 14, 2008.
     “ Registration Statement ” means the Registration Statement on Form S-1 filed with the Commission (Registration No. 333-146700), as amended and effective at the Effective Time.
     “ Subordinated Units ” has the meaning assigned to such term in the Partnership Agreement.
     “ Securities Act ” means the Securities Act of 1933, as amended.
     “ Underwriters ” means those underwriters listed in the Underwriting Agreement.
     “ Underwriting Agreement ” means that certain Underwriting Agreement between UBS Securities LLC, Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC and Morgan Stanley & Co. Incorporated, as representatives of the Underwriters, the General Partner, the Partnership, Anadarko, WGR and WGR Holdings, dated as of May 8, 2008.
ARTICLE II
CONTRIBUTION, ACKNOWLEDGEMENTS AND DISTRIBUTIONS
      Section 2.1 Distribution of the AGC, Pinnacle and MIGC Interests by Asset HoldCo to WGR . Asset HoldCo hereby grants, distributes, bargains, conveys, assigns, transfers, sets over and delivers to WGR, its successors and assigns, for its and their own use forever, all right, title and interest in and to its entire membership interests in AGC, Pinnacle and MIGC, and WGR hereby accepts such membership interests.
      Section 2.2 Contribution of the GP Contribution Interest by WGR to the General Partner . On behalf of WGR Holdings, WGR hereby grants, contributes, bargains, conveys, assigns, transfers, sets over and delivers to the General Partner, its successors and its assigns, for its and their own use forever, all right, title and interest in and to the GP Contribution Interest, and the General Partner hereby accepts such GP Contribution Interest.
      Section 2.3 Contribution of the Partnership Contribution Interests by WGR to WGR Holdings . WGR hereby grants, contributes, bargains, conveys, assigns, transfers, sets over and delivers to WGR Holdings, its successors and its assigns, for its and their own use forever, all right, title and interest in and to the Partnership Contribution Interests, and WGR Holdings hereby accepts such Partnership Contribution Interests.
      Section 2.4 Contribution of the GP Contribution Interest by the General Partner to the Partnership . The General Partner hereby grants, contributes, bargains, conveys, assigns, transfers, sets over and delivers to the Partnership, its successors and its assigns, for its and their own use forever, all right, title and interest in and to the GP Contribution Interest, as a capital contribution, in exchange for (i) 1,083,115 general partner units representing a continuation of its 2% general partner interest in the Partnership and (ii) the issuance of the

4


 

Incentive Distribution Rights, and the Partnership hereby accepts the GP Contribution Interest as a contribution to the capital of the Partnership.
      Section 2.5 Contribution of the Partnership Contribution Interests by WGR Holdings to the Partnership . WGR Holdings hereby grants, contributes, bargains, conveys, assigns, transfers, sets over and delivers to the Partnership, its successors and its assigns, for its and their own use forever, all right, title and interest in and to the Partnership Contribution Interests, as a capital contribution, in exchange for (i) 4,973,806 Common Units representing a 9.1843% limited partner interest in the Partnership, (ii) 26,536,306 Subordinated Units representing a 49.0% limited partner interest in the Partnership, (iii) the right to receive a distribution of $14,265,625 as a reimbursement for certain capital expenditures and (iv) 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, 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 on the Option Closing Date(s), and (B) a reimbursement of pre-formation 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 purchased by and issued to the Underwriters pursuant to each exercise of the Over-Allotment Option, if any. The Partnership hereby accepts the Partnership Contribution Interests as a contribution to the capital of the Partnership.
      Section 2.6 Contribution of the AGC, Pinnacle and MIGC Interests by the Partnership to OLP . The Partnership hereby grants, contributes, bargains, conveys, assigns, transfers, sets over and delivers to OLP, its successors and its assigns, for its and their own use forever, all right, title and interest in and to the Partnership’s entire membership interests in AGC, Pinnacle and MIGC, of which 0.01% of such membership interest contributed to OLP shall be contributed on behalf of Operating GP, and OLP hereby accepts such membership interests.
      Section 2.7 Underwriters’ Cash Contribution . The Parties acknowledge that the Underwriters have, pursuant to the Underwriting Agreement, made a capital contribution to the Partnership of $309,375,000 in cash ($289,265,625 net to the Partnership after the underwriting discount (the “ Spread ”) of $18,562,500 and the structuring fee of $1,546,875 payable to UBS Securities LLC) in exchange for the issuance by the Partnership to the Underwriters of 18,750,000 Common Units, representing a 34.6224% limited partner interest in the Partnership.
      Section 2.8 Payment of Transaction Expenses and Distribution by the Partnership . The Parties acknowledge (a) the payment by the Partnership, in connection with the transactions contemplated hereby, of estimated transaction expenses in the amount of approximately $5.0 million (exclusive of the Spread and the structuring fee) and (b) the distribution by the Partnership of $14,265,625 of the net proceeds of the Offering to WGR Holdings as a reimbursement for certain pre-formation capital expenditures.
      Section 2.9 Redemption of the Initial Partner Interests in the Partnership and the Return of Initial Capital Contributions . The Partnership (a) hereby redeems (i) the 98% limited partner interest in the Partnership held by WGR Holdings and (ii) the 2% general partner

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interest in the Partnership held by the General Partner and (b) hereby refunds and distributes (i) to WGR Holdings the initial capital contribution made by Asset HoldCo to the Partnership along with 98% of any interest or other profit that resulted from the investment or other use of such initial capital contribution and (ii) to the General Partner the initial capital contribution made by it to the Partnership along with 2% of any interest or other profit that resulted from the investment or other use of such initial capital contribution.
      Section 2.10 30-Year Note . The Parties acknowledge the loan of $260.0 million by the Partnership to Anadarko pursuant to a 30-year note in the form attached as Exhibit 10.1 to the Registration Statement bearing interest at a fixed annual rate of 6.50%.
ARTICLE III
ADDITIONAL TRANSACTIONS
      Section 3.1 Purchase of Additional Common Units . If the Over-Allotment Option is exercised in whole or in part, the Underwriters will contribute additional cash to the Partnership in exchange for up to an additional 2,812,500 Common Units on the basis of the initial public offering price per Common Unit set forth in the Registration Statement.
      Section 3.2 Issuance of Additional Common Units . Upon the earlier to occur of the expiration of the Over-Allotment Option period or the exercise in full of the Over-Allotment Option, the Partnership will issue to WGR Holdings 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 on the Option Closing Date(s), and WGR Holdings will receive a cash distribution equal to the aggregate amount of cash, if any, contributed by the Underwriters to the Partnership on the Option Closing Date(s) pursuant to Section 3.1 hereof, less the amount of the underwriting discounts and the additional structuring fee.
      Section 3.3 Successive Up-Stream Distributions . The Parties acknowledge that, in connection with the completion of the transactions described in Article II and Sections 3.1 and 3.2 hereof, WGR Holdings will distribute to WGR one or more distributions of an aggregate amount equal to the sum of (x) the $14,265,625 that WGR Holdings received pursuant to Section 2.8(b) hereof and (y) the cash distribution WGR Holdings receives pursuant Section 3.2 hereof, if any, and thereafter WGR will distribute such amounts to Anadarko at such times and in such amounts, as the case may be.
ARTICLE IV
FURTHER ASSURANCES
     From time to time after the Effective Time, and without any further consideration, the Parties agree to execute, acknowledge and deliver all such additional deeds, assignments, bills of sale, conveyances, instruments, notices, releases, acquittances and other documents, and to do all such other acts and things, all in accordance with applicable law, as may be necessary or appropriate (a) more fully to assure that the applicable Parties own all of the properties, rights, titles, interests, estates, remedies, powers and privileges granted by this Agreement, or which are intended to be so granted, (b) more fully and effectively to vest in the applicable Parties and their

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respective successors and assigns beneficial and record title to the interests contributed and assigned by this Agreement or intended to be so and (c) more fully and effectively to carry out the purposes and intent of this Agreement.
ARTICLE V
EFFECTIVE TIME
     Notwithstanding anything contained in this Agreement to the contrary, none of the provisions of Article II of this Agreement shall be operative or have any effect until the Effective Time, at which time all the provisions of Article II of this Agreement shall be effective and operative in accordance with Article VI, without further action by any Party hereto.
ARTICLE VI
MISCELLANEOUS
      Section 6.1 Order of Completion of Transactions . The transactions provided for in Article II and Article III of this Agreement shall be completed immediately following the Effective Time in the following order: first, the transactions provided for in Article II shall be completed in the order set forth therein; and second, following the completion of the transactions provided for in Article II, the transactions provided for in Article III, if they occur, shall be completed.
      Section 6.2 Headings; References; Interpretation . All Article and Section headings in this Agreement are for convenience only and shall not be deemed to control or affect the meaning or construction of any of the provisions hereof. The words “hereof,” “herein” and “hereunder” and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole, including, without limitation, all Schedules and Exhibits attached hereto, and not to any particular provision of this Agreement. All references herein to Articles, Sections, Schedules and Exhibits shall, unless the context requires a different construction, be deemed to be references to the Articles and Sections of this Agreement and the Schedules and Exhibits attached hereto, and all such Schedules and Exhibits attached hereto are hereby incorporated herein and made a part hereof for all purposes. All personal pronouns used in this Agreement, whether used in the masculine, feminine or neuter gender, shall include all other genders, and the singular shall include the plural and vice versa. The use herein of the word “including” following any general statement, term or matter shall not be construed to limit such statement, term or matter to the specific items or matters set forth immediately following such word or to similar items or matters, whether or not non-limiting language (such as “without limitation”, “but not limited to”, or words of similar import) is used with reference thereto, but rather shall be deemed to refer to all other items or matters that could reasonably fall within the broadest possible scope of such general statement, term or matter.
      Section 6.3 Successors and Assigns . This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and assigns.
      Section 6.4 No Third Party Rights . The provisions of this Agreement are intended to bind the Parties as to each other and are not intended to and do not create rights in

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any other person or confer upon any other person any benefits, rights or remedies, and no person is or is intended to be a third party beneficiary of any of the provisions of this Agreement.
      Section 6.5 Counterparts . This Agreement may be executed in any number of counterparts with the same effect as if all signatory Parties had signed the same document. All counterparts shall be construed together and shall constitute one and the same instrument.
      Section 6.6 Choice of Law . This Agreement shall be subject to and governed by the laws of the State of Texas. Each Party hereby submits to the jurisdiction of the state and federal courts in the State of Texas and to venue in Houston, Texas.
      Section 6.7 Severability . If any of the provisions of this Agreement are held by any court of competent jurisdiction to contravene, or to be invalid under, the laws of any political body having jurisdiction over the subject matter hereof, such contravention or invalidity shall not invalidate the entire Agreement. Instead, this Agreement shall be construed as if it did not contain the particular provisions or provisions held to be invalid and an equitable adjustment shall be made and necessary provision added so as to give effect to the intention of the Parties as expressed in this Agreement at the time of execution of this Agreement.
      Section 6.8 Amendment or Modification . This Agreement may be amended or modified from time to time only by the written agreement of all the Parties. Each such instrument shall be reduced to writing and shall be designated on its face as an amendment to this Agreement.
      Section 6.9 Integration . This Agreement and the instruments referenced herein supersede all previous understandings or agreements among the Parties, whether oral or written, with respect to the subject matter of this Agreement and such instruments. This Agreement and such instruments contain the entire understanding of the Parties with respect to the subject matter hereof and thereof. No understanding, representation, promise or agreement, whether oral or written, is intended to be or shall be included in or form part of this Agreement unless it is contained in a written amendment hereto executed by the parties hereto after the date of this Agreement.
      Section 6.10 Deed; Bill of Sale; Assignment . To the extent required and permitted by applicable law, this Agreement shall also constitute a “deed,” “bill of sale” or “assignment” of the assets and interests referenced herein.
[ Signature Pages Follow ]

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     IN WITNESS WHEREOF, the parties to this Agreement have caused it to be duly executed as of the date first above written.
         
  WESTERN GAS PARTNERS, LP
 
 
  By:   WESTERN GAS HOLDINGS, LLC,    
    its general partner   
       
  By:   /s/ Robert G. Gwin    
    Name:   Robert G. Gwin   
    Title:   President and Chief Executive Officer   
 
         
  WESTERN GAS HOLDINGS, LLC
 
 
  By:   /s/ Robert G. Gwin    
    Name:   Robert G. Gwin   
    Title:   President and Chief Executive Officer   
 
         
  ANADARKO PETROLEUM CORPORATION
 
 
  By:   James T. Hackett    
    Name:   James T. Hackett   
    Title:   Chairman, President and Chief
Executive Officer 
 
 
         
  WGR HOLDINGS, LLC
 
 
  By:   /s/ Robert G. Gwin    
    Name:   Robert G. Gwin   
    Title:   President and Chief Executive Officer   
 
Signature Page to Contribution, Conveyance and Assumption Agreement

 


 

         
  WESTERN GAS RESOURCES, INC.
 
 
  By:   /s/ Robert G. Gwin    
    Name:   Robert G. Gwin   
    Title:   Vice President   
 
         
  WGR ASSET HOLDING COMPANY LLC
 
 
  By:   /s/ Robert G. Gwin    
    Name:   Robert G. Gwin   
    Title:   President and Chief Executive Officer   
 
         
  WESTERN GAS OPERATING, LLC
 
 
  By:   /s/ Robert G. Gwin    
    Name:   Robert G. Gwin   
    Title:   President and Chief Executive Officer   
 
         
  WGR OPERATING, LP
 
 
  By:   WESTERN GAS OPERATING, LLC,    
    its general partner   
       
  By:   /s/ Robert G. Gwin    
    Name:   Robert G. Gwin   
    Title:   President and Chief Executive Officer   
 
Signature Page to Contribution, Conveyance and Assumption Agreement

 

OMNIBUS AGREEMENT
BY AND AMONG
WESTERN GAS PARTNERS, LP
WESTERN GAS HOLDINGS, LLC
AND
ANADARKO PETROLEUM CORPORATION

 


 

Table of Contents
         
ARTICLE I
Definitions
1.1 Definitions
    1  
ARTICLE II
Indemnification
2.1 Indemnification by Anadarko
    5  
2.2 Indemnification by the Partnership Entities
    6  
2.3 Limitations Regarding Indemnification
    6  
2.4 Indemnification Procedures
    7  
ARTICLE III
Reimbursement Obligations
3.1 Reimbursement for Allocated General and Administrative Expenses; Limitations on Reimbursement
    8  
3.2 Reimbursement for Publicly Traded Partnership Expenses
    9  
3.3 Reimbursement for Insurance
    9  
3.4 Reimbursement for Allocated Commitment Fee
    9  
3.5 Reimbursement Procedures
    9  
ARTICLE IV
Miscellaneous
4.1 Accuracy of Recitals
    10  
4.2 Choice of Law; Submission to Jurisdiction
    10  
4.3 Notices
    10  
4.4 Further Assurances
    10  
4.5 Agreement
    11  
4.6 Termination
    11  
4.7 Effect of Waiver or Consent
    11  
4.8 Amendment or Modification
    11  
4.9 Assignment; Third-Party Beneficiaries
    11  
4.10 Counterparts
    11  
4.11 Severability
    11  
4.12 Interpretation
    12  
4.13 Titles and Headings
    12  
4.14 Relationship of the Parties
    12  
4.15 Binding Effect
    12  
4.16 Time of the Essence
    12  
4.17 Delay or Partial Exercise Not Waiver
    12  
4.18 Withholding or Granting of Consent
    12  
4.19 Laws and Regulations
    13  
4.20 Negation of Rights of Limited Partners, Assignees and Third Parties
    13  
4.21 No Recourse Against Officers or Directors
    13  
4.22 Signatories Duly Authorized
    13  
4.23 Incorporation of Exhibits by References
    13  
 i

 


 

OMNIBUS AGREEMENT
     This Omnibus Agreement (“ Agreement ”) is entered into on, and effective as of, the Closing Date (as defined herein), and is by and among Western Gas Partners, LP, a Delaware limited partnership (the “ Partnership ”), Western Gas Holdings, LLC, a Delaware limited liability company (“ General Partner ”), and Anadarko Petroleum Corporation, a Delaware corporation (“ Anadarko ”). The above-named entities are sometimes referred to in this Agreement each as a “ Party ” and collectively as the “ Parties .”
R E C I T A L S:
     The Parties desire by their execution of this Agreement to evidence their understanding, as more fully set forth in Article II and Article III of this Agreement, with respect to certain indemnification and reimbursement obligations of the Parties.
     In consideration of the premises and the covenants, conditions, and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:
ARTICLE I
Definitions
      1.1 Definitions . (a) Capitalized terms used herein but not defined shall have the meanings given them in the Partnership Agreement.
     (b) As used in this Agreement, the following terms shall have the respective meanings set forth below:
      “Affiliate” means, with respect to any Person, (a) any other Person directly or indirectly controlling, controlled by or under common control with such Person, (b) any Person owning or controlling fifty percent (50%) or more of the voting interests of such Person, (c) any officer or director of such Person, or (d) any Person who is the officer, director, trustee, or holder of fifty percent (50%) or more of the voting interest of any Person described in clauses (a) through (c). For purposes of this definition, the term “controls,” “is controlled by” or “is under common control with” shall mean the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.
     “ Agreement ” means this Omnibus Agreement, as it may be amended, modified or supplemented from time to time in accordance with the terms hereof.
     “ Anadarko ” is defined in the preamble to this Agreement.
     “ Anadarko Entities ” means Anadarko and any other Person controlled by Anadarko other than the Partnership Entities. For purposes of this definition, “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.

 


 

     “ Change of Control ” means, with respect to any Person (the “ Applicable Person ”), any of the following events: (i) any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all or substantially all of the Applicable Person’s assets to any other Person, unless immediately following such sale, lease, exchange or other transfer such assets are owned, directly or indirectly, by the Applicable Person; (ii) the dissolution or liquidation of the Applicable Person; (iii) the consolidation or merger of the Applicable Person with or into another Person pursuant to a transaction in which the outstanding Voting Securities of the Applicable Person are changed into or exchanged for cash, securities or other property, other than any such transaction where (A) the outstanding Voting Securities of the Applicable Person are changed into or exchanged for Voting Securities of the surviving Person or its parent and (B) the holders of the Voting Securities of the Applicable Person immediately prior to such transaction own, directly or indirectly, not less than a majority of the outstanding Voting Securities of the surviving Person or its parent immediately after such transaction; and (iv) a “person” or “group” (within the meaning of Sections 13(d) or 14(d)(2) of the Exchange Act) other than Anadarko or any Affiliate of Anadarko becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act) of more than 50% of all of the then outstanding Voting Securities of the Applicable Person, other than in a merger or consolidation which would not constitute a Change of Control under clause (iii) above.
     “ Closing Date ” means the date of the closing of the initial public offering of Common Units.
     “ Covered Environmental Losses ” means all Environmental Losses by reason of or arising out of any violation, event, circumstance, action, omission or condition associated with the operation of the Partnership Assets occurring on or before the Closing Date, but only to the extent such violation, event circumstance, action, omission or condition occurs on or before the Closing Date.
     “ Credit Agreement ” means that certain Revolving Credit Agreement, dated as of March 4, 2008, by and among Anadarko Petroleum Corporation, Western Gas Partners, LP, JP Morgan 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.
     “ CP Index ” is defined in Section 3.1(c).
     “ Environmental Activity ” shall mean any investigation, study, assessment, evaluation, sampling, testing, monitoring, containment, removal, disposal, closure, corrective action, remediation (regardless of whether active or passive), natural attenuation, restoration, bioremediation, response, repair, corrective measure, cleanup or abatement that is required or necessary under any applicable Environmental Law, including, without limitation, institutional or engineering controls or participation in a governmental voluntary cleanup program to conduct voluntary investigatory and remedial actions for the clean-up, removal or remediation of Hazardous Substances that exceed actionable levels established pursuant to Environmental Laws, or participation in a supplemental environmental project in partial or whole mitigation of a fine or penalty.

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     “ Environmental Laws ” means all federal, state, and local laws, statutes, rules, regulations, orders, judgments, ordinances, codes, injunctions, decrees, Environmental Permits and other legally enforceable requirements and rules of common law relating to (i) pollution or protection of the environment or natural resources, (ii) any Release or threatened Release of, or any exposure of any Person or property to, any Hazardous Substances or (iii) the generation, manufacture, processing, distribution, use, treatment, storage, transport or handling of any Hazardous Substances; including, without limitation, the federal Comprehensive Environmental Response, Compensation and Liability Act, the Superfund Amendments and Reauthorization Act, the Resource Conservation and Recovery Act, the Clean Air Act, the Clean Water Act, the Safe Drinking Water Act, the Toxic Substances Control Act, the Oil Pollution Act of 1990, the Federal Hazardous Materials Transportation Law, the Occupational Safety and Health Act, the Marine Mammal Protection Act, the Endangered Species Act, the National Environmental Policy Act and other environmental conservation and protection laws, each as amended through the Closing Date.
     “ Environmental Losses ” means all Losses (including, without limitation, the costs and expenses of any Environmental Activity or of any environmental or toxic tort pre-trial, trial or appellate legal or litigation work), by reason of or arising out of:
     (i) any violation of or cost to correct a of violation of any Environmental Laws;
     (ii) any Environmental Activity to address a Release of Hazardous Substances; or
     (iii) any event, omission or condition associated with ownership or operation of the Partnership Assets that results in a violation of any Environmental Law (including, without limitation, the exposure to or presence of Hazardous Substances on, under, about or migrating to or from the Partnership Assets or the exposure to or Release of Hazardous Substances arising out of operation of the Partnership Assets at non-Partnership Asset locations).
     “ Environmental Permit ” means any permit, approval, identification number, license, registration, certification, consent, exemption, variance or other authorization required under or issued pursuant to any applicable Environmental Law.
     “ Exchange Act ” means the Securities Exchange Act of 1934, as amended.
     “ G&A Expenses Limit ” is defined in Section 3.1(c).
     “ General Partner ” is defined in the preamble to this Agreement.
     “ Hazardous Substance ” means (i) any substance that is designated, defined or classified under any Environmental Law as a hazardous waste, solid waste, hazardous material, pollutant, contaminant or toxic or hazardous substance, or terms of similar meaning, or that is otherwise regulated under any Environmental Law, including, without limitation, any hazardous substance as defined under the Comprehensive Environmental Response, Compensation and Liability Act, as amended, (ii) oil as defined in the Oil Pollution Act of 1990, as amended, including, without limitation, oil, gasoline, natural gas, fuel oil, motor oil, waste oil, diesel fuel, jet fuel and other refined petroleum hydrocarbons and petroleum products and (iii) radioactive materials, asbestos containing materials or polychlorinated biphenyls.

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     “ Indemnified Party ” means each Person entitled to indemnification in accordance with Article II.
     “ Indemnifying Party ” means each Person from whom indemnification may be required in accordance with Article II.
     “ Losses ” means any losses, damages, liabilities, claims, demands, causes of action, judgments, settlements, fines, penalties, sanctions, costs and expenses (including, without limitation, court costs and reasonable attorney’s and experts’ fees) of any and every kind or character.
     “ Partnership ” is defined in the preamble to this Agreement.
     “ Partnership Agreement ” means the First Amended and Restated Agreement of Limited Partnership of the Partnership, dated as of the Closing Date, as such agreement is in effect on the Closing Date, to which reference is hereby made for all purposes of this Agreement. An amendment or modification to the Partnership Agreement subsequent to the Closing Date shall be given effect for the purposes of this Agreement only if it has received the approval of the Special Committee that would be required, if any, pursuant to Section 4.8 hereof if such amendment or modification were an amendment or modification of this Agreement.
     “ Partnership Assets ” means the gathering pipelines, compressors, treating facilities, transportation pipelines or related equipment or assets, or portions thereof, conveyed, contributed or otherwise transferred or intended to be conveyed, contributed or otherwise transferred to any member of the Partnership Group, or owned by, leased by or necessary for the operation of the business, properties or assets of any member of the Partnership Group, prior to or as of the Closing Date.
     “ Partnership Entities ” means the General Partner and each member of the Partnership Group.
     “ Partnership Group ” means the Partnership and its Subsidiaries treated as a single consolidated entity.
     “ Partnership Group Member ” means any member of the Partnership Group.
     “ Party ” and “ Parties ” are defined in the preamble to this Agreement.
     “ Person ” means an individual, corporation, partnership, joint venture, trust, limited liability company, unincorporated organization or any other entity.
     “ Release ” means any depositing, spilling, leaking, pumping, pouring, placing, emitting, discarding, abandoning, emptying, discharging, migrating, injecting, escaping, leaching, dumping or disposing into the environment.
     “ Services ” is defined in Section 3.1(a).

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     “ Subsidiary ” means, with respect to any Person, (i) 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, (ii) a partnership (whether general or limited) in which more than 50% of the partnership interests (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 (iii) 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 (A) at least a majority ownership interest or (B) the power to elect or direct the election of a majority of the directors or other governing body of such Person.
     “ Voting Securities ” means securities of any class of a Person entitling the holders thereof to vote in the election of, or to appoint, members of the board of directors or other similar governing body of the Person.
ARTICLE II
Indemnification
      2.1 Indemnification by Anadarko
          (a) Environmental Indemnification . Subject to the provisions of Section 2.3 and Section 2.4, Anadarko shall indemnify, defend and hold harmless the Partnership Entities from and against any Covered Environmental Losses suffered or incurred by the Partnership Entities and arising from or relating to the Partnership Assets for a period of three (3) years from the Closing Date.
          (b) Additional Indemnification . Subject to the provisions of Section 2.3 and Section 2.4, Anadarko shall indemnify, defend and hold harmless the Partnership Entities from and against any Losses suffered or incurred by the Partnership Entities by reason of or arising from:
  (i)   the failure of the Partnership Entities to be the owner of valid and indefeasible easement rights, leasehold and/or fee ownership interests in and to the lands on which are located any Partnership Assets, and such failure renders the Partnership Entities liable to a third party or unable to use or operate the Partnership Assets in substantially the same manner that the Partnership Assets were used and operated by the Anadarko Entities immediately prior to the Closing Date;
 
  (ii)   the failure of the Partnership Entities to have on the Closing Date any consent or governmental permit necessary to allow (A) the transfer of any of the Partnership Assets to the Partnership Group on the Closing Date or (B) the Partnership Entities to use or operate the Partnership Assets in substantially the same manner that the Partnership Assets were used and operated by the Anadarko Entities immediately prior to the Closing Date;

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  (iii)   all federal, state and local income tax liabilities (A) attributable to the ownership or operation of the Partnership Assets prior to the Closing Date, (B) of the Anadarko Entities that may result from the consummation of the formation transactions for the Partnership Entities, (C) of the Partnership Entities that may arise after the Closing Date and which have been specifically assumed by Anadarko or (D) arising under Treasury Regulation Section 1.1502-6 and any similar provision of state, local or foreign applicable law, by contract, as successor or transferee or otherwise and which income tax is attributable to having been a member of any consolidated, combined or unitary group prior to the Closing Date;
 
  (iv)   all liabilities, other than Covered Environmental Losses and other than liabilities incurred in the ordinary course of business conducted in compliance with applicable laws, that arise out of the Partnership Assets prior to the Closing Date; and
 
  (v)   all liabilities attributable to any assets or liabilities retained by the Anadarko Entities;
provided, however , that, in the case of clauses (i), (ii) and (iv) above, such indemnification obligations shall survive for three (3) years from the Closing Date; and in the case of clauses (iii) and (v) above, such indemnification obligations shall survive until 12:01 a.m. of the first day after the expiration of any applicable statute of limitations.
      2.2 Indemnification by the Partnership Entities . In addition to and not in limitation of the indemnification provided under the Partnership Agreement, the Partnership Entities shall indemnify, defend and hold harmless the Anadarko Entities from and against any Losses (excluding Environmental Losses) suffered or incurred by the Anadarko Entities by reason of or arising out of events and conditions associated with the operation of the Partnership Assets and occurring on or after the Closing Date, unless in any such case indemnification would not be permitted under the Partnership Agreement by reason of one of the provisos contained in Section 7.7 of the Partnership Agreement.
      2.3 Limitations Regarding Indemnification .
          (a) Notwithstanding anything herein to the contrary, in no event shall the Indemnifying Party have any indemnification obligations under this Agreement for claims made as a result of additions to or modifications of Environmental Laws promulgated after the Closing Date.
          (b) Notwithstanding anything herein to the contrary, the liability of the Indemnifying Party for any indemnification obligations under this Agreement will be subject to reduction for (i) any insurance proceeds realized by the Indemnified Party with respect to the indemnified party and (ii) any amounts recovered by the Indemnified Party under contractual indemnities from third parties. The Partnership hereby agrees to use commercially reasonable efforts to realize any applicable insurance proceeds and amounts recoverable under such contractual indemnities.

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          (c) The liability of the Indemnifying Party for any indemnification obligations under this Agreement will be reduced by any amounts reserved or accrued for such Losses on the consolidated balance sheet of the Partnership Entities as of December 31, 2007.
      2.4 Indemnification Procedures .
          (a) The Indemnified Party agrees that within thirty (30) days after it becomes aware of facts giving rise to a claim for indemnification pursuant to this Article II, it will provide notice thereof in writing to the Indemnifying Party specifying the nature of and specific basis for such claim; provided, however , that the Indemnified Party shall not submit claims more frequently than once a calendar quarter (or twice in the case of the last calendar quarter prior to the expiration of the applicable indemnity coverage under this Agreement). Notwithstanding the foregoing, the Indemnified Party’s failure to provide notice under this Section 2.4 will not relieve the Indemnifying Party from liability hereunder with respect to such matter except in the event and only to the extent that the Indemnifying Party is materially prejudiced by such failure or delay.
          (b) The Indemnifying Party shall have the right to control all aspects of the defense of (and any counterclaims with respect to) any claims brought against the Indemnified Party that are covered by the indemnification set forth in this Article II, including, without limitation, the selection of counsel ( provided that if such claim involves Covered Environmental Losses, such counsel shall be reasonably acceptable to the Indemnified Party), determination of whether to appeal any decision of any court and the settling of any such matter or any issues relating thereto; provided, however , that no such settlement shall be entered into without the consent (which consent shall not be unreasonably withheld, conditioned or delayed) of the Indemnified Party unless it includes a full release of the Indemnified Party from such matter or issues, as the case may be.
          (c) The Indemnified Party agrees to cooperate fully with the Indemnifying Party with respect to all aspects of the defense of any claims covered by the indemnification set forth in this Article II, including, without limitation, the prompt furnishing to the Indemnifying Party of any correspondence or other notice relating thereto that the Indemnified Party may receive, permitting the names of the Indemnified Party to be utilized in connection with such defense, the making available to the Indemnifying Party of any files, records or other information of the Indemnified Party that the Indemnifying Party considers relevant to such defense and the making available to the Indemnifying Party of any employees of the Indemnified Party; provided, however , that in connection therewith the Indemnifying Party agrees to use reasonable efforts to minimize the impact thereof on the operations of the Indemnified Party and further agrees to maintain the confidentiality of all files, records and other information furnished by the Indemnified Party pursuant to this Section 2.4, unless otherwise required by law or the listing standards of the New York Stock Exchange. In no event shall the obligation of the Indemnified Party to cooperate with the Indemnifying Party as set forth in the immediately preceding sentence be construed as imposing upon the Indemnified Party an obligation to hire and pay for counsel in connection with the defense of any claims covered by the indemnification set forth in this Article II; provided, however , that the Indemnified Party may, at its own option, cost and expense, hire and pay for counsel in connection with any such defense. The Indemnifying Party agrees to keep any such counsel hired by the Indemnified Party reasonably informed as to the

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status of any such defense, but the Indemnifying Party shall have the right to retain sole control over such defense.
          (d) The indemnification obligations under this Article II shall continue with respect to any claim for indemnification pursuant to this Article II that is pending as of the end of the applicable survival period notwithstanding the expiration of such survival period.
ARTICLE III
Reimbursement Obligations
      3.1 Reimbursement for Allocated General and Administrative Expenses; Limitations on Reimbursement.
          (a) Anadarko hereby agrees to cause the Anadarko Entities to continue to provide the Partnership Entities with certain general and administrative services, such as legal, accounting, treasury, cash management, insurance, administrative and claims processing, risk management, health, safety and environmental, information technology, human resources, credit, payroll, internal audit, tax, marketing and midstream. These general and administrative services shall be substantially identical in nature and quality to the services of such type previously provided by the Anadarko Entities in connection with their management and operation of the Partnership Assets prior to their acquisition by the Partnership Group. In the event that the Partnership Group makes any acquisitions of assets or businesses from any of the Anadarko Entities during the first three years following the date of this Agreement, Anadarko will cause the Anadarko Entities to similarly provide general and administrative services that are substantially identical in nature and quality to the services of such type previously provided by the Anadarko Entities in connection with their management and operation of such assets or businesses prior to their acquisition by the Partnership Group. In addition, in the event that the Partnership Group makes any acquisition of assets or businesses from any third party during the first three years following the date of this Agreement, Anadarko will cause the Anadarko Entities to provide general and administrative services that are substantially identical in nature and quality to the services of such type previously provided by the Anadarko Entities in connection with their management and operation of similar assets or businesses.
          (b) Subject to the provisions of Section 3.1(c) below, the Partnership Group hereby agrees to reimburse Anadarko for all cash expenses and expenditures that the Anadarko Entities incur or payments they make on behalf of the Partnership Entities for these general and administrative services provided for in Section 3.1(a).
          (c) Subject to the provisions of this Section 3.1(c), the amount for which Anadarko shall be entitled to reimbursement from the Partnership Entities pursuant to Section 3.1(b) for general and administrative expenses shall not exceed $6.0 million annually from the date of this Agreement through December 31, 2009 (the “ G&A Expenses Limit ”). On January 1, 2009, the G&A Expenses Limit shall be increased by the percentage increase in the Consumer Price Index – All Urban Consumers, U.S. City Average, Not Seasonally Adjusted (the “ CP Index ”). In making such adjustment, the G&A Expenses Limit shall be increased by the CP Index for the prior year period based on the most recent information available from the U.S. Department of Labor. If after the Closing the Partnership Group completes any acquisition of

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assets or businesses or the business of the Partnership Group otherwise expands from the date of this Agreement through December 31, 2009, then the G&A Expenses Limit shall be appropriately increased in order to account for adjustments in the nature and extent of the general and administrative services provided by the Anadarko Entities to the Partnership Entities, with any such increase in the G&A Expenses Limit (i) to remain in effect (subject to adjustment, if any, as provided in the immediately preceding sentence or for any subsequent acquisition(s)) for the period from the completion of any such acquisition through December 31, 2009 and (ii) to be subject to the prior approval of the Special Committee. After December 31, 2009, the G&A Expenses Limit will no longer apply and the General Partner will determine the amount of general and administrative expenses that will be properly allocated to the Partnership Group in accordance with the terms of the Partnership Agreement. The G&A Expenses Limit shall not apply to reimbursement for publicly traded partnership expenses of the Partnership Group as provided in Section 3.3 or the reimbursement of allocable commitment fees as provided in Section 3.4, including those publicly traded partnership expenses and allocable commitment fees incurred on or before the Closing Date by the Anadarko Entities on behalf of the Partnership Entities.
      3.2 Reimbursement for Publicly Traded Partnership Expenses.
          (a) The Partnership Entities hereby agree to reimburse Anadarko for all expenses and expenditures that the Anadarko Entities incur or payments that they make as a result of the Partnership becoming a publicly traded partnership, including (but not limited to) expenses associated with annual and quarterly reporting; tax return and Schedule K-1 preparation and distribution expenses; Sarbanes-Oxley compliance expenses; expenses associated with listing on the New York Stock Exchange; independent auditor fees; legal fees; investor relations expenses; and registrar and transfer agent fees. Furthermore, the Partnership Entities agree to reimburse Anadarko for these expenses incurred on or before the Closing Date by the Anadarko Entities on behalf of the Partnership Entities.
          (b) The obligation of the Partnership Entities to reimburse Anadarko pursuant to this Section 3.2 shall not be subject to any monetary limitation, including the G&A Expenses Limit contained in Section 3.1.
      3.3 Reimbursement for Insurance . The Partnership Entities hereby agree to reimburse Anadarko for all expenses that the Anadarko Entities incur or payments that they make on behalf of the Partnership Entities for insurance coverage with respect to the Partnership Assets.
      3.4 Reimbursement for Allocated Commitment Fee. The Partnership Entities hereby agree to reimburse Anadarko for their allocable portion of commitment fees that Anadarko incurs or pays under the Credit Agreement equal to an annual amount of 0.11% of the Partnership’s committed and available borrowing capacity thereunder.
      3.5 Reimbursement Procedures . On or before the fifth business day of each month, Anadarko shall send an invoice to the General Partner for that amount of money associated with all expenses or expenditures incurred or payments made by the Anadarko Entities during the preceding month that are to be reimbursed by the Partnership Entities pursuant to Sections 3.1,

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3.2, 3.3 and 3.4 hereof. Where it is not reasonably practicable to determine the cost of such an expense, expenditure or payment, Anadarko or the applicable Anadarko entity may make a good faith reasonable estimate of such expense, expenditure or payment (and provided that any such estimates, other than with respect to benefit load, are is “trued up” within 10 days of the end of each quarter based on the actual amount of the expenses, expenditures or payments in respect of which estimates were made in the immediately preceding quarter). Subject to the parenthetical clause in the immediately preceding sentence, the Partnership Entities shall accept any estimate or benefit load described in this paragraph, provided that such estimate is reasonable and made in good faith. The Partnership Entities shall pay such invoice, subject to any adjustment imposed by Section 3.1(c) hereof, within 30 days of receipt.
ARTICLE IV
Miscellaneous
      4.1 Accuracy of Recitals . The paragraphs contained in the recitals to this Agreement are incorporated in this Agreement by this reference, and the Parties to this Agreement acknowledge the accuracy thereof.
      4.2 Choice of Law; Submission to Jurisdiction . This Agreement shall be subject to and governed by the laws of the State of Texas. Each Party hereby submits to the jurisdiction of the state and federal courts in the State of Texas and to venue in Houston, Texas.
      4.3 Notices . Any notice, demand, or communication required or permitted under this Agreement shall be in writing and delivered personally, by reputable courier, or by telecopier, and shall be deemed to have been duly given as of the date and time reflected on the delivery receipt if delivered personally or sent by reputable courier service, or on the automatic telecopier receipt if sent by telecopier, addressed as follows:
Anadarko Petroleum Corporation
1201 Lake Robbins Drive
The Woodlands, Texas 77380
Attn: General Counsel
Fax: 832-636-3214
Western Gas Holdings, LLC
1201 Lake Robbins Drive
The Woodlands, Texas 77380
Attn: President
Fax: 832-636-6001
A Party may change its address for the purposes of notices hereunder by giving notice to the other Party specifying such changed address in the manner specified in this Section 6.2.
      4.4 Further Assurances . The Parties agree to execute such additional instruments, agreements and documents, and to take such other actions, as may be necessary to effect the purposes of this Agreement.

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      4.5 Agreement . This Agreement constitutes the entire agreement of the Parties relating to the matters contained herein, superseding all prior contracts or agreements, whether oral or written, relating to the matters contained herein.
      4.6 Termination . This Agreement, other than the provisions set forth in Article II hereof, shall terminate upon a Change of Control of the General Partner or the Partnership, other than any Change of Control of the General Partner or the Partnership that may be deemed to have occurred pursuant to clause (iv) of the definition of Change of Control solely as a result of a Change of Control of Anadarko. Notwithstanding any other provision of this Agreement, if the General Partner is removed as general partner of the Partnership under circumstances where Cause does not exist and Common Units held by the General Partner and its Affiliates are not voted in favor of such removal, this Agreement may immediately thereupon be terminated by Anadarko.
      4.7 Effect of Waiver or Consent . No waiver or consent, express or implied, by any Party to or of any breach or default by any Person in the performance by such Person of its obligations hereunder shall be deemed or construed to be a consent or waiver to or of any other breach or default in the performance by such Person of the same or any other obligations of such Person hereunder. Failure on the part of a Party to complain of any act of any Person or to declare any Person in default, irrespective of how long such failure continues, shall not constitute a waiver by such Party of its rights hereunder until the applicable statute of limitations period has run.
      4.8 Amendment or Modification . This Agreement may be amended or modified from time to time only by the written agreement of all the Parties; provided, however , that the Partnership may not, without the prior approval of the Special Committee, agree to any amendment or modification of this Agreement that, in the reasonable discretion of the General Partner, will have an adverse effect on the holders of Common Units. Each such instrument shall be reduced to writing and shall be designated on its face an “Amendment” or an “Addendum” to this Agreement.
      4.9 Assignment; Third-Party Beneficiaries . No Party shall have the right to assign its rights or obligations under this Agreement without the prior written consent of the other Parties. Each of the Parties hereto specifically intends that each entity comprising the Anadarko Entities and the Partnership Entities, as applicable, whether or not a Party to this Agreement, shall be entitled to assert rights and remedies hereunder as third-party beneficiaries hereto with respect to those provisions of this Agreement affording a right, benefit or privilege to any such entity.
      4.10 Counterparts . This Agreement may be executed in any number of counterparts with the same effect as if all signatory Parties had signed the same document. All counterparts shall be construed together and shall constitute one and the same instrument.
      4.11 Severability . If any provision of this Agreement or the application thereof to any Person or circumstance shall be held invalid or unenforceable to any extent, the remainder of this Agreement and the application of such provision to other Persons or circumstances shall not be affected thereby and shall be enforced to the greatest extent permitted by law.

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      4.12 Interpretation . In this Agreement, unless a clear contrary intention appears: (a) the singular includes the plural and vice versa; (b) reference to any Person includes such Person’s successors and assigns but, in the case of Party, only if such successors and assigns are permitted by this Agreement, and reference to a Person in a particular capacity excludes such Person in any other capacity; (c) reference to any gender includes each other gender; (d) reference to any agreement (including this Agreement), document or instrument means such agreement, document, or instrument as amended or modified and in effect from time to time in accordance with the terms thereof and, if applicable, the terms of this Agreement; (e) reference to any Section means such Section of this Agreement, and references in any Section or definition to any clause means such clause of such Section or definition; (f) “hereunder,” “hereof,” “hereto” and words of similar import will be deemed references to this Agreement as a whole and not to any particular Section or other provision hereof or thereof; (g) “including” (and with correlative meaning “include”) means including without limiting the generality of any description preceding such term; and (h) relative to the determination of any period of time, “from” means “from and including,” “to” means “to but excluding” and “through” means “through and including.”
      4.13 Titles and Headings . Section titles and headings in this Agreement are inserted for convenience of reference only and are not intended to be a part of, or to affect the meaning or interpretation of, this Agreement.
      4.14 Relationship of the Parties .
          (a) Nothing in this Agreement shall cause any of the Anadarko Entities or the Partnership Entities to become members of any other partnership, joint venture, association, syndicate or other entity. Nothing in this Agreement shall cause any Partnership Entity to be considered an Anadarko Entity, and vice versa.
          (b) For purposes of this Agreement, no Partnership Entity shall be deemed to be an Affiliate of the Anadarko Entities nor shall any Anadarko Entity be deemed to be an Affiliate of any the Partnership Entities.
      4.15 Binding Effect . This Agreement will be binding upon, and will inure to the benefit of, the Parties and their respective successors, permitted assigns and legal representatives.
      4.16 Time of the Essence . Time is of the essence in the performance of this Agreement.
      4.17 Delay or Partial Exercise Not Waiver . No failure or delay on the part of any Party to exercise any right or remedy under this Agreement will operate as a waiver thereof; nor shall any single or partial exercise of any right or remedy under this Agreement preclude any other or further exercise thereof or the exercise of any other right or remedy granted hereby or any related document. The waiver by either Party of a breach of any provisions of this Agreement will not constitute a waiver of a similar breach in the future or of any other breach or nullify the effectiveness of such provision.
      4.18 Withholding or Granting of Consent . Unless otherwise provided in this Agreement, each Party may, with respect to any consent or approval that it is entitled to grant pursuant to this Agreement, grant or withhold such consent or approval in its sole and

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uncontrolled discretion, with or without cause, and subject to such conditions as it shall deem appropriate.
      4.19 Laws and Regulations . Notwithstanding any provision of this Agreement to the contrary, no Party shall be required to take any act, or fail to take any act, under this Agreement if the effect thereof would be to cause such Party to be in violation of any applicable law, statute, rule or regulation.
      4.20 Negation of Rights of Limited Partners, Assignees and Third Parties . Except as set forth in Section 4.9, the provisions of this Agreement are enforceable solely by the Parties, and no limited partner, member, or assignee of Anadarko or the Partnership or other Person shall have the right, separate and apart from Anadarko or the Partnership, to enforce any provision of this Agreement or to compel any Party to comply with the terms of this Agreement.
      4.21 No Recourse Against Officers or Directors . For the avoidance of doubt, the provisions of this Agreement shall not give rise to any right of recourse against any officer or director of any Anadarko Entity or any Partnership Entity.
      4.22 Signatories Duly Authorized. Each of the signatories to this Agreement represents that he is duly authorized to execute this Agreement on behalf of the Party for which he is signing, and that such signature is sufficient to bind the Party purportedly represented.
      4.23 Incorporation of Exhibits by References. Any reference herein to any exhibit to this Agreement will incorporate it herein, as if it were set out in full in the text of this Agreement.
[ Signature page follows ]

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     IN WITNESS WHEREOF, the Parties have executed this Agreement on, and effective as of, the Closing Date.
         
  WESTERN GAS PARTNERS, LP
 
 
  By:   WESTERN GAS HOLDINGS, LLC,    
    its general partner   
     
  By:   /s/ Robert G. Gwin    
    Name:   Robert G. Gwin   
    Title:   President and Chief Executive Officer   
 
         
  WESTERN GAS HOLDINGS, LLC
 
 
  By:   /s/ Robert G. Gwin    
    Name:   Robert G. Gwin   
    Title:   President and Chief Executive Officer   
 
         
  ANADARKO PETROLEUM CORPORATION
 
 
  By:   /s/ James T. Hackett    
    Name:   James T. Hackett   
    Title:   Chairman, President and Chief
Executive Officer 
 
 
Signature Page to Omnibus Agreement

 

Execution Version
SERVICES AND SECONDMENT AGREEMENT
BY AND BETWEEN
WESTERN GAS HOLDINGS, LLC
AND
ANADARKO PETROLEUM CORPORATION

 


 

TABLE OF CONTENTS
             
 
  ARTICLE I        
 
  SECONDMENT        
 
           
1.1
  Seconded Employees     2  
1.2
  Period of Secondment     2  
1.3
  Withdrawal, Departure or Resignation     3  
1.4
  Termination of Secondment     3  
1.5
  Supervision     4  
1.6
  Seconded Employee Qualifications; Approval     4  
 
           
 
  ARTICLE II        
 
  SECONDMENT SERVICES        
 
           
2.1
  Secondment Services     5  
2.2
  Cancellation or Reduction of Secondment Services     5  
2.3
  Workers’ Compensation     5  
 
           
 
  ARTICLE III        
 
  SERVICES REIMBURSEMENT        
 
           
3.1
  Operational, Management, Reporting and Routine Maintenance Expenses     6  
3.2
  Seconded Employees     6  
 
           
 
  ARTICLE IV        
 
  ALLOCATION; RECORDS; AGENT        
 
           
4.1
  Allocation; Records     8  
4.2
  Agent     8  
 
           
 
  ARTICLE V        
 
  TERM        
 
           
 
  ARTICLE VI        
 
  GENERAL PROVISIONS        
 
           
6.1
  Accuracy of Recitals     10  
6.2
  Choice of Law; Submission to Jurisdiction     10  
6.3
  Notices     10  
6.4
  Further Assurances     11  
6.5
  Entire Agreement     11  
6.6
  Effect of Waiver or Consent     11  
6.7
  Amendment or Modification     11  
6.8
  Assignment; Third-Party Beneficiaries     11  
6.9
  Counterparts     11  
6.10
  Severability     11  
6.11
  Interpretation     12  
6.12
  Titles and Headings     12  
6.13
  Relationship of the Parties     12  

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6.14
  Binding Effect     12  
6.15
  Time of the Essence     13  
6.16
  Delay or Partial Exercise Not Waiver     13  
6.17
  Withholding or Granting of Consent     13  
6.18
  Laws and Regulations     13  
6.19
  No Recourse Against Officers or Directors     13  
6.20
  Signatories Duly Authorized     13  
6.21
  Incorporation of Exhibits by References     13  
6.22
  Dispute Resolution and Arbitration     13  
6.23
  Continuation of Work During Dispute     14  
6.24
  Legal Compliance     15  

-ii-


 

SERVICES AND SECONDMENT AGREEMENT
     This Services and Secondment Agreement (the “ Agreement ”), dated as of May 14, 2008 (the “ Effective Date ”), is entered into between Anadarko Petroleum Corporation, a Delaware corporation (“ Anadarko ”), and Western Gas Holdings, LLC, a Delaware limited liability company (“ General Partner ”) and the general partner of Western Gas Partners, LP, a Delaware limited partnership (the “ Partnership ”). Anadarko and the General Partner are hereinafter each referred to as a “ Party ” and are collectively referred to as the “ Parties .” Capitalized terms used herein but not defined shall have the meanings given them in that certain Omnibus Agreement by and among the Partnership, the General Partner and Anadarko, dated May 14, 2008 (the “ Omnibus Agreement ”).
RECITALS:
     WHEREAS, Anadarko will cause the Anadarko Entities to provide to the Partnership Group the services necessary to operate, manage, maintain and report the operating results of the Partnership’s assets, including gathering pipelines, compressors, treating facilities, transportation pipelines or related equipment or assets (the “ Partnership Assets ”);
     WHEREAS, in connection with the provision of the services under this Agreement, Anadarko desires to second to the General Partner certain personnel employed or contracted by the Anadarko Entities in connection with the Partnership Assets;
     NOW THEREFORE, in consideration of the premises and the mutual covenants and agreements contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Anadarko and the General Partner hereby agree as follows:

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      v
      SECONDMENT
I) Seconded Employees.
     Subject to the terms of this Agreement, Anadarko agrees to cause the Anadarko Entities to second to the General Partner, and the General Partner agrees to accept the secondment of, those certain specifically identified individuals (each, a “ Seconded Employee ” and collectively, the “ Seconded Employees ”) listed on Exhibit A (the “ Seconded Employee Schedule ”) for the purpose of performing job functions related to the Partnership Assets (the “ Secondment ”). The Seconded Employees will remain at all times employees of the Anadarko Entities but, in addition, they will also be temporary employees of the General Partner during the Period of Secondment (as defined below) and shall, at all times during the Period of Secondment, work under the direction, supervision and control of the General Partner. Anadarko will retain the right to cause the Anadarko Entities to hire or discharge the Seconded Employees but, subject to the provisions in Section 1.2, will not have the right to cause the Anadarko Entities to terminate the Secondment to the General Partner or otherwise exercise direction, supervision or control over the Seconded Employees. For each Seconded Employee, the “ Period of Secondment ” shall be that period of time as set forth in Section 1.2. Seconded Employees shall have no authority or apparent authority to act on behalf of the Anadarko Entities during the Period of Secondment. The Seconded Employee Schedule sets forth the names of the Seconded Employees seconded by the Anadarko Entities, the job functions of the Seconded Employees and the starting date for the Period of Secondment for each Seconded Employee. Individuals may be added or removed from the Seconded Employee Schedule from time to time by the execution by the Parties of a completed “Addition/Removal/Change of Responsibility of Seconded Employee” form, the form of which is attached to this Agreement as Exhibit B , which will be fully binding on the Parties for all purposes under this Agreement. Those rights and obligations of the Parties under this Agreement that relate to individuals that were on the Seconded Employee Schedule but then later removed from the Seconded Employee Schedule, which rights and obligations accrued before the removal of such individual, will survive the removal of such individual from the Seconded Employee Schedule to the extent necessary to enforce such rights and obligations.
II) Period of Secondment.
     Anadarko will cause the Anadarko Entities to second to the General Partner each Seconded Employee on the start date set forth on the Seconded Employee Schedule and continue

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to second, during the period (and only during the period) that the Seconded Employee is performing services for the General Partner, until the earliest of:
A) the end of the term of this Agreement;
B) the end date, if any, set forth for the Seconded Employee on the Seconded Employee Schedule (or another end date for such Seconded Employee as mutually agreed in writing by the Parties) (the “ End Date ”);
C) a withdrawal, departure, resignation or termination of such Seconded Employee under Section 1.3;
D) the date on which WGR Holdings, LLC ceases to own a majority of the issued and outstanding voting equity of the General Partner and the General Partner has entered into satisfactory arrangements which it determines, in good faith, will provide it with suitable qualified and experienced full-time or seconded employees necessary to operate, manage and maintain the Partnership Assets and
E) a termination of Secondment for such Seconded Employee under Section 1.4.
     At the end of the Period of Secondment for any Seconded Employee, such Seconded Employee will no longer be subject to the direction of the General Partner with regard to the Seconded Employee’s day-to-day activities.
III) Withdrawal, Departure or Resignation.
     Anadarko will use reasonable efforts to cause the Anadarko Entities to prevent any early withdrawal, departure or resignation of any Seconded Employee prior to the End Date for such Seconded Employee’s Period of Secondment. If any Seconded Employee tenders his resignation to an Anadarko Entity as an employee of such Anadarko Entity, Anadarko will promptly notify the General Partner. During the Period of Secondment for any Seconded Employee, Anadarko will cause the Anadarko Entities to not voluntarily withdraw or terminate any Seconded Employee except with the written consent of the General Partner (which may be through the execution of a completed Addition/Removal/Change of Responsibility of Seconded Employee form), such consent not to be unreasonably withheld. Anadarko will indemnify, defend and hold harmless the General Partner and its directors, officers and employees against any and all costs, expenses (including reasonable attorneys’ fees), claims, demands, losses, liabilities, obligations, actions, lawsuits and other proceedings, judgments and awards (each, a “ Loss ” and collectively, the “ Losses ”) arising out of or in any way connected with or related to the termination of employment of any Seconded Employee by any Anadarko Entity without the consent of THE GENERAL PARTNER, EVEN THOUGH SUCH LOSS MAY BE CAUSED IN PART BY THE NEGLIGENCE OF ONE OR MORE OF THE PARTNERSHIP ENTITIES, except to the extent that such Losses (i) arise solely out of or result solely from the negligence, gross negligence or willful misconduct of any of the Partnership Entities, or (ii) arise in connection with the termination of a Seconded Employee for cause. Upon the termination of employment, the Seconded Employee will cease performing services for the General Partner.
IV) Termination of Secondment.
     The General Partner will have the right to terminate the Secondment to it of any Seconded Employee for any reason at any time. Subject to Section 1.2, Anadarko will not have the right to cause any Anadarko Entity to terminate the Secondment to the General Partner of any Seconded Employee. Upon the termination of any Seconded Employee’s Period of Secondment, Anadarko will be solely liable for any costs or expenses associated with the termination of the

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Secondment, except as otherwise specifically set forth in this Agreement. Anadarko will indemnify, defend and hold harmless the General Partner and its directors, officers and employees against all Losses arising out of or in any way connected with or related to the termination of the Secondment of any Seconded Employee by THE GENERAL PARTNER, EVEN THOUGH SUCH LOSS MAY BE CAUSED IN PART BY THE NEGLIGENCE OF ONE OR MORE OF THE PARTNERSHIP ENTITIES, except to the extent that such Losses arise solely out of or result solely from the negligence, gross negligence or willful misconduct of any of the Partnership Entities. Upon the termination of a Secondment, the Seconded Employee will cease performing services for the General Partner. At no time will the General Partner have the right to terminate the employment with the Anadarko Entities of the Seconded Employees.
V) Supervision.
     During the Period of Secondment, the General Partner shall:
A) be ultimately and fully responsible for the daily work assignments of the Seconded Employee (and with respect to Seconded Employees that also provide services to the Anadarko Entities in connection with its operations (“ Shared Seconded Employees ”), during those times that the Shared Seconded Employees are performing services for the General Partner hereunder), including supervision of their day-to-day work activities and performance consistent with the purposes stated in Section 1.1 and the job functions set forth in the Seconded Employee Schedule;
B) set the hours of work and the holidays and vacation schedules (other than with respect to Shared Seconded Employees, as to which the General Partner and Anadarko shall jointly determine) for the Seconded Employee and
C) have the right to determine training which will be received by the Seconded Employee.
     In the course and scope of performing any Seconded Employee’s job functions, the Seconded Employee will be integrated into the organization of the General Partner, will report into the General Partner’s management structure, and will be under the direct management and supervision of the General Partner. The General Partner shall designate one of its officers to be responsible for the supervisory function set forth in this Section 1.5 on behalf of the General Partner.
VI) Seconded Employee Qualifications; Approval.
     Anadarko will cause the Anadarko Entities to provide such suitably qualified and experienced Seconded Employees as it is able to make available to the General Partner, and the General Partner will have the right to approve or reject each such Seconded Employee.

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      v
      SECONDMENT SERVICES
I) Secondment Services.
     Anadarko shall cause the Anadarko Entities to second Seconded Employees to the General Partner to provide the General Partner with those services necessary to operate, manage, maintain and report the operating results of the Partnership Assets (the “ Secondment Services ”).
II) Cancellation or Reduction of Secondment Services.
     The General Partner may terminate or reduce the level of any of the Secondment Services on 30 days’ prior written notice to Anadarko. In the event the General Partner terminates the Secondment Services, the General Partner shall pay Anadarko the monthly installment for the last month (or portion thereof) in which it received such services. Upon payment thereof, the General Partner shall have no further payment obligations. In the event that the General Partner reduces the level of any of the Secondment Services, the Parties will negotiate in good faith to determine an appropriate Services Reimbursement (as defined in Section 3.1 below) for the reduced Secondment Services.
III) Workers’ Compensation.
     At all times, Anadarko will cause the Anadarko Entities to maintain workers’ compensation insurance (either through an insurance company or self-insured arrangement) applicable to the Seconded Employees. Anadarko will cause the Anadarko Entities to name the General Partner as an also insured employer under such insurance policy. Prior to being assigned any duties by the General Partner, each Seconded Employee must sign an acknowledgement that the Seconded Employee is an employee during the Secondment Period of both the Anadarko Entities and the General Partner and that for any work place injury, the Seconded Employee’s sole remedy will be under such Anadarko Entity’s workers’ compensation insurance policy. Notwithstanding the foregoing, nothing herein shall preclude a Seconded Employee from participating in benefit programs generally available to employees of Anadarko Entities.

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      v
      SERVICES REIMBURSEMENT
I) Operational, Management, Reporting and Routine Maintenance Expenses.
     On or before the fifth business day of each month, Anadarko shall send an invoice to the General Partner for that amount of money associated with all expenses incurred by the Anadarko Entities in connection with the performance of the Secondment Services during the preceding month (the “ Services Reimbursement ”). The General Partner shall pay such invoice within 30 days of receipt.
II) Seconded Employees.
     Among other items, the Services Reimbursement shall include all reasonable cash expenses incurred by the Anadarko Entities for the Seconded Employees, including, but not limited to:
A) compensation, salary and wages (including payroll and withholding taxes associated therewith);
B) 401(k) costs and any matching 401(k) contributions;
C) vacation and sick leave benefits;
D) medical and health insurance benefits;
E) disability insurance;
F) workers’ compensation insurance;
G) life insurance;
H) severance payments, if any and
I) any other employee benefit for which the Anadarko Entities incur costs.
     The costs and expenses described in (a) through (i) above are referred to as “ Seconded Employee Expenses .” For the avoidance of any doubt, the Seconded Employee Expenses shall not include any payments made to Seconded Employees under Anadarko’s Value Creation Plan (or any successor plan thereto) and the excess of actual bonus amounts awarded under Anadarko’s Annual Incentive Plan (“ AIP ”) to any Seconded Employee over 120% of such Seconded Employee’s AIP bonus target (collectively, “ Excess Bonus Expenses ”). Where it is not reasonably practicable to determine the cost of such a cost or expense, Anadarko or the applicable Anadarko Entity may make a good faith reasonable estimate of such cost or expense (and provided that any such estimates, other than with respect to benefit load, are “trued up” within 10 days of the end of each quarter based on the actual amount of the expenses, expenditures or payments in respect of which estimates were made in the immediately preceding

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quarter). Anadarko or the applicable Anadarko Entity may include the costs and expenses described in (b) through (i) above in a percentage benefit load based upon the amount of costs and expenses incurred in (a) above. Subject to the parenthetical clause included in this paragraph, the General Partner shall accept any estimate or benefit load described in this paragraph, provided that such estimate is reasonable and made in good faith.

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      v
      ALLOCATION; RECORDS; AGENT
I) Allocation; Records.
     Anadarko will use commercially reasonable efforts to maintain an allocation schedule reflecting the direct and indirect costs of the Seconded Employee Expenses based on the Secondment Services. The General Partner will use commercially reasonable efforts to keep and maintain books/records reflecting hours worked and costs and expenses incurred in connection with each of the Seconded Employees, and Anadarko will have the right from time to time upon its reasonable request to audit such books/records maintained by the General Partner. The General Partner and its representatives will have the right to audit the allocation schedule and such other records as the General Partner may reasonably require in connection with its verification of the Seconded Employee Expenses during regular business hours and on reasonable prior notice. Based on these records, the General Partner may request adjustments under Section 3.2 above.
II) Agent.
     Seconded Employee Expenses remain the primary legal responsibility of the General Partner as the employer of the Seconded Employees during the Secondment Period. Anadarko agrees to act as agent for the General Partner in paying the Seconded Employee Expenses of the employees temporarily assigned under this Secondment Agreement. Anadarko agrees to indemnify and hold the General Partner harmless from any and all Losses incurred by the General Partner or any of the other Partnership Entities related to Anadarko’s failure to carry out its duties as agent for the payment of the Seconded Employee Expenses as set forth above, except to the extent that such Losses arise solely out of or result solely from the negligence, gross negligence or willful misconduct of any of the Partnership Entities.

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      v
      TERM
     The term of this Agreement will commence on the Effective Date and will continue for an initial period of 10 years. Upon the expiration of the initial 10 year period, the term of this Agreement shall automatically extend for an additional 12 month period, unless either Party provides at least 180 days’ prior written notice to the other Party, prior to the expiration of such initial period, that the Party wishes for this Agreement to expire at the end of the initial 10 year period. After the initial 12 month renewal period, the term of this Agreement shall automatically extend for additional 12 month periods, unless either Party provides prior written notice, at least 180 days prior to the expiration of the applicable 12 month period, that the Party wishes for this Agreement to expire at the end of such 12 month period. Upon proper notice by a Party to the other Party, in accordance with this Article 5, that the Party wishes for this Agreement to expire on the expiration of the applicable 10 year or 12 month period, this Agreement shall not automatically extend, but shall instead expire upon the expiration of the applicable 10 year or 12 month period and only those provisions that, by their terms, expressly survive this Agreement shall so survive. Notwithstanding the foregoing, the General Partner may terminate this Agreement at any time, upon 180 days prior written notice to Anadarko, and only those provisions that, by their terms, expressly survive this Agreement shall so survive.

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      v
      GENERAL PROVISIONS
I) Accuracy of Recitals.
     The paragraphs contained in the recitals to this Agreement are incorporated in this Agreement by this reference, and the Parties to this Agreement acknowledge the accuracy thereof.
II) Choice of Law; Submission to Jurisdiction.
     This Agreement shall be subject to and governed by the laws of the State of Texas. Each Party hereby submits to the jurisdiction of the state and federal courts in the State of Texas and to venue in Houston, Texas.
III) Notices.
     Any notice, demand or communication required or permitted under this Agreement shall be in writing and delivered personally, by reputable courier or by telecopier, and shall be deemed to have been duly given as of the date and time reflected on the delivery receipt, if delivered personally or sent by reputable courier service, or on the automatic telecopier receipt, if sent by telecopier, addressed as follows:
Anadarko Petroleum Corporation
1201 Lake Robbins Drive
The Woodlands, Texas 77380
Attn: General Counsel
Fax: 832-636-3214
Western Gas Holdings, LLC
1201 Lake Robbins Drive
The Woodlands, Texas 77380
Attn: President
Fax: 832-636-6001
     A Party may change its address for the purposes of notices hereunder by giving notice to the other Party specifying such changed address in the manner specified in this Section 6.2.

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IV) Further Assurances.
     The Parties agree to execute such additional instruments, agreements and documents, and to take such other actions, as may be necessary to effect the purposes of this Agreement.
V) Entire Agreement.
     This Agreement constitutes the entire agreement of the Parties relating to the matters contained herein, superseding all prior contracts or agreements, whether oral or written, relating to the matters contained herein.
VI) Effect of Waiver or Consent .
     No waiver or consent, express or implied, by any Party to or of any breach or default by any Person (as defined in Section 6.11 below) in the performance by such Person of its obligations hereunder shall be deemed or construed to be a consent or waiver to or of any other breach or default in the performance by such Person of the same or any other obligations of such Person hereunder. Failure on the part of a Party to complain of any act of any Person or to declare any Person in default, irrespective of how long such failure continues, shall not constitute a waiver by such Party of its rights hereunder until the applicable statute of limitations period has run.
VII) Amendment or Modification .
     This Agreement may be amended or modified from time to time only by the written agreement of all the Parties; provided, however, that the Partnership may not, without the prior approval of the Special Committee, agree to any amendment or modification of this Agreement that, in the reasonable discretion of the General Partner, will have an adverse effect on the holders of Common Units. Each such instrument shall be reduced to writing and shall be designated on its face an “Amendment” or an “Addendum” to this Agreement.
VIII) Assignment; Third-Party Beneficiaries.
     No Party shall have the right to assign its rights or obligations under this Agreement without the prior written consent of the other Parties. Each of the Parties hereto specifically intends that each entity comprising the Anadarko Entities and the Partnership Entities, as applicable, whether or not a Party to this Agreement, shall be entitled to assert rights and remedies hereunder as third-party beneficiaries hereto with respect to those provisions of this Agreement affording a right, benefit or privilege to any such entity.
IX) Counterparts .
     This Agreement may be executed in any number of counterparts with the same effect as if all signatory Parties had signed the same document. All counterparts shall be construed together and shall constitute one and the same instrument.
X) Severability .
     If any provision of this Agreement or the application thereof to any Person or circumstance shall be held invalid or unenforceable to any extent, the remainder of this Agreement and the application of such provision to other Persons or circumstances shall not be affected thereby and shall be enforced to the greatest extent permitted by law.

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XI) Interpretation.
     In this Agreement, unless a clear contrary intention appears: (a) the singular includes the plural and vice versa; (b) reference to any individual, or any partnership, corporation, limited liability company, trust or other legal entity (“ Person ”) includes such Person’s successors and assigns but, in the case of Party, only if such successors and assigns are permitted by this Agreement, and reference to a Person in a particular capacity excludes such Person in any other capacity; (c) reference to any gender includes each other gender; (d) reference to any agreement (including this Agreement), document or instrument means such agreement, document, or instrument as amended or modified and in effect from time to time in accordance with the terms thereof and, if applicable, the terms of this Agreement; (e) reference to any Section means such Section of this Agreement, and references in any Section or definition to any clause means such clause of such Section or definition; (f) “hereunder,” “hereof,” “hereto” and words of similar import will be deemed references to this Agreement as a whole and not to any particular Section or other provision hereof or thereof; (g) “including” (and with correlative meaning “include”) means including without limiting the generality of any description preceding such term; and (h) relative to the determination of any period of time, “from” means “from and including,” “to” means “to but excluding” and “through” means “through and including.”
XII) Titles and Headings.
     Section titles and headings in this Agreement are inserted for convenience of reference only and are not intended to be a part of, or to affect the meaning or interpretation of, this Agreement.
XIII) Relationship of the Parties.
A) Nothing in this Agreement shall cause any of the Anadarko Entities or the Partnership Entities to become members of any other partnership, joint venture, association, syndicate or other entity. Nothing in this Agreement shall cause any Partnership Entity to be considered an Anadarko Entity, and vice versa.
B) As used in this Agreement, “ Affiliate ” means, with respect to any Person, (a) any other Person directly or indirectly controlling, controlled by or under common control with such Person, (b) any Person owning or controlling fifty percent (50%) or more of the voting interests of such Person, (c) any officer or director of such Person or (d) any Person who is the officer, director, trustee or holder of fifty percent (50%) or more of the voting interest of any Person described in clauses (a) through (c). For purposes of this definition, the term “controls,” “is controlled by” or “is under common control with” shall mean the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise. For purposes of this Agreement, no Partnership Entity shall be deemed to be an Affiliate of the Anadarko Entities nor shall any Anadarko Entity be deemed to be an Affiliate of the Partnership Entities.
XIV) Binding Effect.
     This Agreement will be binding upon, and will inure to the benefit of, the Parties and their respective successors, permitted assigns and legal representatives.

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XV) Time of the Essence.
     Time is of the essence in the performance of this Agreement.
XVI) Delay or Partial Exercise Not Waiver.
     No failure or delay on the part of any Party to exercise any right or remedy under this Agreement will operate as a waiver thereof; nor shall any single or partial exercise of any right or remedy under this Agreement preclude any other or further exercise thereof or the exercise of any other right or remedy granted hereby or any related document. The waiver by either Party of a breach of any provisions of this Agreement will not constitute a waiver of a similar breach in the future or of any other breach or nullify the effectiveness of such provision.
XVII) Withholding or Granting of Consent .
     Unless otherwise provided in this Agreement, each Party may, with respect to any consent or approval that it is entitled to grant pursuant to this Agreement, grant or withhold such consent or approval in its sole and uncontrolled discretion, with or without cause, and subject to such conditions as it shall deem appropriate.
XVIII) Laws and Regulations .
     Notwithstanding any provision of this Agreement to the contrary, no Party shall be required to take any act, or fail to take any act, under this Agreement if the effect thereof would be to cause such Party to be in violation of any applicable law, statute, rule or regulation.
XIX) No Recourse Against Officers or Directors .
     For the avoidance of doubt, the provisions of this Agreement shall not give rise to any right of recourse against any officer or director of any Anadarko Entity or any Partnership Entity.
XX) Signatories Duly Authorized.
     Each of the signatories to this Agreement represents that he is duly authorized to execute this Agreement on behalf of the Party for which he is signing, and that such signature is sufficient to bind the Party purportedly represented.
XXI) Incorporation of Exhibits by References.
     Any reference herein to any exhibit to this Agreement will incorporate it herein, as if it were set out in full in the text of this Agreement.
XXII) Dispute Resolution and Arbitration.
A) Should a dispute arise between the Parties, the Parties shall promptly seek to amicably resolve any such dispute by negotiations between the Parties prior to the initiation of binding arbitration in accordance with Section 6.22(b). The Parties shall meet at a mutually acceptable time and place within fifteen (15) days after written notice by any Party to any other Party seeking resolution of a dispute under this Section 6.22(a) and thereafter as often as they reasonably determine to be necessary or appropriate to exchange relevant information and to attempt to resolve the dispute. All negotiations and communications pursuant to this Section 6.22(a) shall be treated and maintained by the Parties as confidential information and shall be treated as compromise and settlement negotiations for purposes of the Federal Rules of Evidence. Any proposed resolution of a dispute under this Agreement must be approved on behalf of the

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Partnership by the Special Committee of the Board of Directors of the General Partner before it is finalized. If the matter is not resolved within 30 days after the initial meeting of the Parties, or such longer period as may be mutually agreed upon, either Party may initiate arbitration in accordance with Section 6.22(b).
B) Any disputes hereunder, including the inability of the Parties to agree to an adjustment to the Services Reimbursements pursuant to the provisions of Section 3.1, must be resolved through the use of binding arbitration using three arbitrators, in accordance with the Commercial Arbitration Rules of the American Arbitration Association, as supplemented to the extent necessary to determine any procedural appeal questions by the Federal Arbitration Act (Title 9 of the United States Code). If there is any inconsistency between this Section and the Commercial Arbitration Rules or the Federal Arbitration Act, the terms of this Section 6.22 will control the rights and obligations of the Parties. Arbitration must be initiated within the applicable time limits set forth in this Agreement and not thereafter or if no time limit is given, within the time period allowed by the applicable statute of limitations. Arbitration may be initiated by a party (“ Claimant ”) serving written notice on another party (“ Respondent ”) that the Claimant elects to refer a particular dispute to binding arbitration. Claimant’s notice initiating binding arbitration must identify the arbitrator Claimant has appointed. The Respondent shall respond to Claimant within 30 days after receipt of Claimant’s notice, identifying the arbitrator Respondent has appointed. If the Respondent fails for any reason to name an arbitrator within the 30-day period, Claimant shall petition to the American Arbitration Association for appointment of an arbitrator for Respondent’s account. The two arbitrators so chosen shall select a third arbitrator within 30 days after the second arbitrator has been appointed. The Claimant will pay the compensation and expenses of the arbitrator named by or for it, and the Respondent will pay the compensation and expenses of the arbitrator named by or for it. The costs of petitioning for the appointment of an arbitrator, if any, shall be paid by Respondent. The Claimant and Respondent will each pay one-half of the compensation and expenses of the third arbitrator. All arbitrators must (a) be neutral parties with no prior relationships to any participants, parties, attorneys or law firms involved in the proceedings, (b) have never been officers, directors or employees of any of the Partnership Entities or Anadarko Entities and (c) have not less than seven years experience in the energy industry. The hearing will be conducted in Fort Worth, Texas and commence within 30 days after the selection of the third arbitrator. The Parties and the arbitrators should proceed diligently and in good faith in order that the award may be made as promptly as possible. Except as provided in the Federal Arbitration Act, the decision of the arbitrators will be binding on and non-appealable by the Parties hereto. The arbitrators shall have no right to grant or award indirect, consequential, punitive or exemplary damages of any kind.
XXIII) Continuation of Work During Dispute.
     Subject to Section 2.2 hereof, notwithstanding any dispute, it shall be the responsibility of each Party to continue to perform its obligations under this Agreement pending resolution of the dispute.

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XXIV) Legal Compliance.
     The Parties acknowledge and agree that this Agreement, and all services provided under this Agreement, are intended to comply with any and all laws and legal obligations and that this Agreement should be construed and interpreted with this purpose in mind. In this regard, the Parties specifically agree as follows:
A) The Parties will comply with all equal employment opportunity requirements and other applicable employment laws. Where a joint or combined action is required by the law in order to comply with an employment obligation, the parties will cooperate fully and in good faith to comply with the applicable obligation.
B) The General Partner acknowledges and agrees that Seconded Employees may utilize the complaint reporting and resolution process of Anadarko and agrees to cooperate in the investigation and resolution of any complaint that may be made.
C) The Parties agree that they will adhere to the Fair Labor Standards Act of 1938, as amended, any comparable state law and any law regulating the payment of wages or compensation. The General Partner is solely responsible for ensuring that non-exempt Seconded Employees accurately record their hours and time worked.
[Signature page follows]

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     AS WITNESS HEREOF, the Parties have caused this Agreement to be executed by their duly authorized representatives on the date herein above mentioned.
             
    ANADARKO PETROLEUM CORPORATION    
 
           
 
  By:    /s/ James T. Hackett    
 
  Name:  
 
James T. Hackett
   
 
  Title:   Chairman, President and Chief    
 
      Executive Officer    
 
           
    WESTERN GAS HOLDINGS, LLC    
 
           
 
  By:   /s/ Robert G. Gwin    
 
           
 
  Name:   Robert G. Gwin    
 
  Title:   President and Chief Executive Officer    
Signature Page to Services and Secondment Agreement

 


 

EXHIBIT A TO THE
SERVICES AND SECONDMENT AGREEMENT
     This Exhibit A is attached the Services and Secondment Agreement (the “ Agreement ”) dated May 14, 2008 by and between Anadarko Petroleum Corporation and Western Gas Holdings, LLC. All defined terms used herein shall have the same meaning as set forth in the Agreement.
     All information must be filled in for this form to be valid.
SECONDED EMPLOYEE SCHEDULE
         
Name of Seconded Employee   Title and Job Function   Start Date
Mickey Bosarge
  Non-Employee   May 14, 2008
Jason Cochran
  Operator II   May 14, 2008
Tadd Dunnahoe
  Measurement Technician V   May 14, 2008
Marion Freeman
  Measurement Technician V   May 14, 2008
Timothy Hedrick
  Operator II   May 14, 2008
Michael Henry
  Construction Foreman   May 14, 2008
Kelly Hutchinson
  Sr. Foreman   May 14, 2008
Regie Judd
  Staff Autom & Mass Analyst   May 14, 2008
Raymond Martin
  Sr. Measurement Technician   May 14, 2008
Michael McGee
  Operator III   May 14, 2008
Perry Neill
  Field Foreman   May 14, 2008
Howard Pate
  Non-Employee   May 14, 2008
Wesley Robinson
  Mechanic IV   May 14, 2008
Russell Schick
  Operator II   May 14, 2008
Jerry Shoemaker
  Field Foreman   May 14, 2008
Stacy Stansbury
  Welder V   May 14, 2008
Ronnie Tanner
  Operator III   May 14, 2008
Mark Warren
  Operator II   May 14, 2008
Brock Whitney
  Sr. Measurement Technician   May 14, 2008
Daniel Winkler
  Mechanic III   May 14, 2008
Jyl Baumann
  Field Analyst II   May 14, 2008
John Curtis
  Field Supv   May 14, 2008
Mark Diede
  Sr. Measurement Technician   May 14, 2008
Brad Engler
  Corrosion Technician I   May 14, 2008

 


 

         
Name of Seconded Employee   Title and Job Function   Start Date
Curtis Hyde
  Measurement Technician I   May 14, 2008
Ellory Mills
  Corrosion Technician IV   May 14, 2008
Robert Schmitz
  Area Supt   May 14, 2008
Ryan Smith
  Measurement Technician II   May 14, 2008
Russell Steiner
  Measurement Technician IV   May 14, 2008
Kerrie Strickland
  General Laborer II   May 14, 2008
Tracy Zimbelman
  Operations Specialist II   May 14, 2008
Gary Allen
  Sr. Field Analyst   May 14, 2008
Dennis Atkins
  Fieldman IV   May 14, 2008
Martin Banning
  Sr. Maintenance Foreman   May 14, 2008
Gary Biehm
  Plant Operator V   May 14, 2008
Thomas Bohannon
  Fieldman IV   May 14, 2008
Ronald Boone
  Pipeline Foreman   May 14, 2008
David Boothby
  Sr. Fieldman   May 14, 2008
Stacy Burrows
  Mechanic V   May 14, 2008
Donald Burrows
  Measurement Technician V   May 14, 2008
Heath Cain
  Fieldman III   May 14, 2008
David Conner
  Fieldman V   May 14, 2008
Troy Cooper
  Fieldman V   May 14, 2008
Lloyd Dixon
  Measurement Technician III   May 14, 2008
Alfred Eddy
  Sr. Plant Operator   May 14, 2008
Timothy Evans
  Field Foreman   May 14, 2008
Eugene Graves
  Sr. Field Analyst   May 14, 2008
Tracy Gutierrez
  Measurement Technician IV   May 14, 2008
James Hammerschmidt
  Construction Foreman   May 14, 2008
Jack Hasik
  Sr. Mechanic   May 14, 2008
Alan Hanna
  Sr. Field Analyst   May 14, 2008
Albert Hodges
  Area Supt   May 14, 2008
Howard Hunter
  Field V   May 14, 2008
Russell Jays
  General Laborer II   May 14, 2008
Robert Jones
  Sr. Measurement Technician   May 14, 2008
John Keeter
  Fieldman IV   May 14, 2008
Jimmy Kelley
  Fieldman V   May 14, 2008
Paula Koski
  Measurement Technician IV   May 14, 2008
John Lear
  Fieldman IV   May 14, 2008

 


 

         
Name of Seconded Employee   Title and Job Function   Start Date
Stuart Lujan
  Fieldman V   May 14, 2008
Larry Martin
  Sr. Field Analyst   May 14, 2008
Trent McCabe
  Fieldman III   May 14, 2008
Jerry Merwin
  Fieldman IV   May 14, 2008
Harry Mills
  Field Foreman   May 14, 2008
Jeff Mills
  Plant Operator V   May 14, 2008
Trenton Milton
  Mechanic V   May 14, 2008
Phillip Mitchell
  Pipeline Foreman   May 14, 2008
Dawn Nease
  Sr. Measurement Foreman   May 14, 2008
Michael Pond
  Sr. Field Analyst   May 14, 2008
Enrique Reza
  Fieldman III   May 14, 2008
Robert Rich
  Mechanic IV   May 14, 2008
Ronald Rich
  Mechanic III   May 14, 2008
Pat Rich
  Non-Employee   May 14, 2008
Jason Robertson
  Fieldman I   May 14, 2008
Richard Robinson
  Measurement Technician IV   May 14, 2008
Edward Rutledge
  Fieldman IV   May 14, 2008
Steven Savely
  Fieldman I   May 14, 2008
Tommy Silva
  Fieldman IV   May 14, 2008
Ronald Simmons
  Plant Operator V   May 14, 2008
Kathy Slaughter
  Fieldman IV   May 14, 2008
Greg Steizler
  Measurement Technician IV   May 14, 2008
Rodney Stout
  Sr. Measurement Technician   May 14, 2008
Jerry Stricker
  Fieldman V   May 14, 2008
Trevor Thompson
  Fieldman III   May 14, 2008
Jerry Trout
  Operator V   May 14, 2008
William Trujillo
  Measurement Technician IV   May 14, 2008
Danny Walls
  Mechanic IV   May 14, 2008
Jay Williams
  Fieldman IV   May 14, 2008
Donald Williams
  Sr. Mechanic   May 14, 2008
Jerry Arnold
  Operations Technician IV   May 14, 2008
Conard Baker
  Automation Foreman   May 14, 2008
Christopher Bettencourt
  Plant Operator III   May 14, 2008
Joshua Brittain
  Plant Operator III   May 14, 2008
Josh Deen
  Non-Employee   May 14, 2008

 


 

         
Name of Seconded Employee   Title and Job Function   Start Date
Simmie Douglas
  Operations Technician V   May 14, 2008
Donald Gill
  Plant Operator V   May 14, 2008
Cory Hearrell
  Plant Operator IV   May 14, 2008
Judy Hill
  Non-Employee   May 14, 2008
David Hinson
  Sr. Foreman   May 14, 2008
Jeffrey Karh
  Operations Technician V   May 14, 2008
Brian Lookabaugh
  Plant Operator I   May 14, 2008
Larry Martin
  E&I Technician IV   May 14, 2008
Mitchell McSwain
  Plant Foreman   May 14, 2008
Rodd Pagel
  Plant Operator V   May 14, 2008
Charles Pickens
  Operations Technician IV   May 14, 2008
Joshua Richardson
  Automation Tech III   May 14, 2008
Alan Rummel
  Measurement Technician IV   May 14, 2008
Tommy Sawyer
  Mechanic V   May 14, 2008
Steven Shaw
  Sr. Operations Technician   May 14, 2008
Michael South
  Plant Operator V   May 14, 2008
Ronald Warren
  Field Analyst II   May 14, 2008
Jared Weakley
  Plant Operator III   May 14, 2008
William Woodruff
  Field Foreman   May 14, 2008
Jonathan Bishop
  Mechanic III   May 14, 2008
Jonathan Bishop
  Mechanic III   May 14, 2008
Jim Hartley
  Production Supt   May 14, 2008
Jim Hartley
  Production Supt   May 14, 2008
Cale Jensen
  E&I Technician I   May 14, 2008
Cale Jensen
  E&I Technician I   May 14, 2008
Michael Johansen
  Mechanic IV   May 14, 2008
Michael Johansen
  Mechanic IV   May 14, 2008
Kirt Rasmussen
  Field Foreman   May 14, 2008
Kirt Rasmussen
  Field Foreman   May 14, 2008
Kevin Whitmer
  E&I Technician IV   May 14, 2008
Kevin Whitmer
  E&I Technician IV   May 14, 2008
Bobby Hess
  Sr. Foreman   May 14, 2008
Leroy Hutson
  Operator V   May 14, 2008
Jackie Pender
  Field Services Analyst II   May 14, 2008
[Signature page follows]

 


 

                     
ANADARKO PETROLEUM CORPORATION       WESTERN GAS HOLDINGS, LLC    
 
                   
By:
  /s/ James T. Hackett       By:   /s/ Robert G. Gwin    
Name:
 
 
James T. Hackett
      Name:  
 
Robert G. Gwin
   
Title:
  Chairman, President and Chief       Title:   President and Chief Executive Officer    
 
  Executive Officer                

 


 

EXHIBIT B TO THE
SERVICES AND SECONDMENT AGREEMENT
     This Exhibit B is attached the Services and Secondment Agreement (the “ Agreement ”) dated [                      ], [                      ] by and between Anadarko Petroleum Corporation and Western Gas Holdings, LLC. All defined terms used herein shall have the same meaning as set forth in the Agreement.
ADDITION/REMOVAL/CHANGE OF RESPONSIBILITY
OF SECONDED EMPLOYEE
     In accordance with Section 1.1 of the Secondment Agreement, the Parties hereto wish to add, remove, or change the responsibilities of the following Seconded Employees.
     All information must be filled in for this form to be valid.
                         
Name of Seconded                  
Employee   Title and Job Function     Start Date     End Date  
 
                       
                     
ANADARKO PETROLEUM CORPORATION       WESTERN GAS HOLDINGS, LLC    
 
                   
By:
          By:        
Name:
 
 
      Name:  
 
   
Title:
          Title:   [President]    

 

Execution Version
TAX SHARING AGREEMENT
BY AND AMONG
ANADARKO PETROLEUM CORPORATION
AND
WESTERN GAS PARTNERS, LP
May 14, 2008

 


 

TABLE OF CONTENTS
ARTICLE I
Definitions
             
1.1
  Definitions     1  
 
           
ARTICLE II
Preparation and Filing of Tax Returns
 
           
2.1
  Manner of Filing     3  
2.2
  Franchise Tax Taxable Period     4  
 
           
ARTICLE III
Allocation of Taxes
 
           
3.1
  Liability of the Partnership Group for Combined Taxes     4  
3.2
  Partnership Group Combined Tax Liability     4  
3.3
  Preparation and Delivery of Pro Forma Tax Returns     5  
3.4
  Payment of Tax     5  
3.5
  Subsequent Changes in Treatment of Tax Items     5  
 
           
ARTICLE IV
Control of Tax Proceedings; Cooperation and Exchange of Information
 
           
4.1
  Control of Proceedings     5  
4.2
  Cooperation and Exchange of Information     6  
 
           
ARTICLE V
Warranties and Representations; Payment Obligations
 
           
5.1
  Warranties and Representations Relating to Actions of        
 
  Anadarko and the Partnership     6  
5.2
  Calculation of Payment Obligations     7  
5.3
  Prompt Performance     7  
5.4
  Interest     7  
5.5
  Tax Records     8  
5.6
  Continuing Covenants     8  
 
           
ARTICLE VI
Miscellaneous Provisions
 
           
6.1
  Notice     8  
6.2
  Required Payments     8  
6.3
  Injunctions     9  
6.4
  Further Assurances     9  
6.5
  Parties in Interest     9  
6.6
  Setoff     9  
6.7
  Change of Law     9  
6.8
  Termination and Survival     9  
6.9
  Amendments; No Waivers     9  
6.10
  Governing Law and Interpretation     10  

 


 

             
6.11
  Resolution of Certain Disputes     10  
6.12
  Confidentiality     10  
6.13
  Costs, Expenses and Attorneys’ Fees     10  
6.14
  Counterparts     11  
6.15
  Severability     11  
6.16
  Entire Agreement.     11  
6.17
  Assignment     11  
6.18
  Fair Meaning     12  
6.19
  Titles and Headings     12  
6.20
  Construction     12  

 


 

TAX SHARING AGREEMENT
BY AND AMONG
ANADARKO PETROLEUM CORPORATION AND
WESTERN GAS PARTNERS, LP
     Tax Sharing Agreement (the “ Agreement ”), dated this 14 th day of May, 2008, by and among ANADARKO PETROLEUM CORPORATION (“ Anadarko ”), a Delaware corporation, and WESTERN GAS PARTNERS, LP (the “ Partnership ”), a Delaware limited partnership.
RECITALS
     WHEREAS, Anadarko is the common parent of an affiliated group of corporations within the meaning of Section 1504(a) of the Code (as defined below), which currently files a consolidated federal income tax return;
     WHEREAS, the Partnership Group (as defined below) includes various entities that may be required to join with Anadarko in the filing of a consolidated, combined or unitary state tax return;
     WHEREAS, the Parties (as defined below) wish to set forth the general principles under which they will allocate and share various Taxes (as defined below) and related liabilities;
     WHEREAS, Anadarko, on behalf of itself and its present and future subsidiaries other than the Partnership Group (“ Anadarko Group ”), and the Partnership, on behalf of itself and its present and future subsidiaries (the “ Partnership Group ”), are entering into this Agreement to provide for the allocation among the Anadarko Group and the Partnership Group of all responsibilities, liabilities and benefits relating to any Tax for which a Combined Return (as defined below) is filed for a taxable period including or beginning on or after the Effective Date (as defined below) and to provide for certain other matters;
     NOW, THEREFORE, in consideration of the mutual agreements, provisions and covenants contained in this Agreement, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:
ARTICLE I
Definitions
      1.1 Definitions . The following terms shall have the following meanings (such meanings to be equally applicable to both the singular and the plural forms of the terms defined):
     “ Accounting Referee ” is defined in Section 6.11 herein.
     “ Anadarko Group ” is defined in the Recitals to this Agreement.
     “ Code ” means the Internal Revenue Code of 1986, as amended, or any successor thereto, as in effect for the taxable period in question.

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     “ Combined Group ” means a group of corporations or other entities that files a Combined Return.
     “ Combined Return ” means any Tax Return (other than a Tax Return for U.S. federal income taxes) filed on a consolidated, combined (including nexus combination, worldwide combination, domestic combination, line of business combination or any other form of combination) or unitary basis that includes activities of any member of the Anadarko Group and any member of the Partnership Group.
     “ Effective Date ” means 7:00 a.m., Central time, on May 14, 2008.
     “ Final Determination ” means the final resolution of any Tax (or other matter) for a taxable period, including related interest or penalties, that, under applicable law, is not subject to further appeal, review or modification through proceedings or otherwise, including (i) by the expiration of a statute of limitations or a period for the filing of claims for refunds, amending Tax Returns, appealing from adverse determinations or recovering any refund (including by offset), (ii) by a decision, judgment, decree or other order by a court of competent jurisdiction, which has become final and unappealable, (iii) by a closing agreement, an accepted offer in compromise or a comparable agreement under laws of the particular Tax Authority, (iv) by execution of a form under the laws of a Tax Authority that is comparable to an Internal Revenue Service Form 870 or 870-AD (excluding, however, with respect to a particular Tax Item for a particular taxable period any such form that reserves (whether by its terms or by operation of law) the right of the taxpayer to file a claim for refund and/or the right of the Tax Authority to assert a further deficiency with respect to such Tax Item for such period) or (v) by any allowance of a refund or credit, but only after the expiration of all periods during which such refund may be adjusted.
     “ Notice ” is defined in Section 6.1 herein.
     “ Partnership Group ” is defined in the recitals to this Agreement.
     “ Partnership Group Combined Tax Liability ” means, with respect to any Tax, the Partnership Group’s liability for such Tax owed with respect to a Combined Return for a taxable period, as determined under Section 3.2 of this Agreement.
     “ Partnership Group Deposit ” is defined in Section 3.4 herein.
     “ Partnership Group Members ” means those entities included in the Partnership Group.
     “ Partnership Group Pro Forma Combined Return ” means a pro forma Combined Return or other schedule prepared pursuant to Section 3.2 of this Agreement.
     “ Party ” means each of Anadarko and the Partnership, and solely for purposes of this definition, “Anadarko” includes the Anadarko Group and the “Partnership” includes the Partnership Group. Each of Anadarko and the Partnership shall cause the Anadarko Group and the Partnership Group, respectively, to comply with this Agreement.

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     “ Tax Attribute ” means a Tax Item of a member of the Partnership Group reflected on a Combined Return that is comparable to one or more of the following attributes with respect to a U.S. federal income tax consolidated tax return: a net operating loss, a net capital loss, an unused investment credit, an unused foreign tax credit, an excess charitable contribution, a U.S. federal minimum tax credit or a U.S. federal general business credit (but not tax basis or earnings and profits).
     “ Tax Authority ” means a domestic governmental authority (other than the United States) or any subdivision, agency, commission or authority thereof or any quasi-governmental or private body having jurisdiction over the assessment, determination, collection or imposition of any Tax (excluding the U.S. Internal Revenue Service).
     “ Tax Controversy ” means any audit, examination, dispute, suit, action, litigation or other judicial or administrative proceeding initiated by Anadarko or the Partnership or any Tax Authority.
     “ Tax Item ” means any item of income, gain, loss, deduction or credit, or other item reflected on a Tax Return or any Tax Attribute.
     “ Tax Return ” means any return, report, certificate, form or similar statement or document (including any related or supporting information or schedule attached thereto and any information return, amended Tax Return, claim for refund or declaration of estimated tax) required to be supplied to, or filed with, a Tax Authority in connection with the determination, assessment or collection of any Tax or the administration of any laws, regulations or administrative requirements relating to any Tax.
     “ Taxes ” means all forms of taxation, whenever created or imposed, and whether imposed by a domestic, local, municipal, governmental, state, federation or other body, but excluding taxes imposed by the United States, and without limiting the generality of the foregoing, shall include net income, alternative or add-on minimum, gross income, sales, use, ad valorem, gross receipts, value added, franchise, profits, license, transfer, recording, withholding, payroll, employment, excise, severance, stamp, occupation, premium, property, windfall profit, custom duty or other tax, governmental fee or like assessment or charge of any kind whatsoever, together with any related interest, penalties or other additions to tax, or additional amounts imposed by any such Tax Authority.
     Any term used but not capitalized herein that is defined in the Code or in the Treasury Regulations thereunder shall, to the extent required by the context of the provision at issue, have the meaning assigned to it in the Code or such regulation.
ARTICLE II
Preparation and Filing of Tax Returns
      2.1 Manner of Filing .
          (a) For periods that include the Effective Date and periods after the Effective Date, Anadarko shall have the sole and exclusive responsibility for the preparation and filing of, and shall prepare and file, all Combined Returns or cause to be prepared and filed all Combined

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Returns. Anadarko shall be authorized to take any and all action necessary or incidental to the preparation and filing of a Combined Return, including, without limitation, (i) making elections and adopting accounting methods, (ii) filing all extensions of time, including extensions of time for payment of tax, (iii) filing claims for refund or credit or (iv) giving waivers or bonds.
          (b) For periods that include the Effective Date and periods after the Effective Date, the Partnership Group shall have the sole and exclusive responsibility for the preparation and filing of, and shall prepare and file or cause to be prepared and filed, all Tax Returns of the Partnership Group Members that are not Combined Returns.
          (c) Anadarko shall have sole discretion to include, or cause to be included, in a Combined Return for any Tax any member of the Partnership Group for which inclusion in such Combined Return is elective; provided, however, that the Partnership Group Combined Tax Liability for any period shall not exceed the aggregate of (x) each such elective Partnership Group Member’s liability for such Tax for such period, computed as if such Partnership Group Member were not included in such Combined Return and (y) the Partnership Group Combined Tax Liability calculated for the Partnership Group Members for which inclusion is not elective. Anadarko shall provide pro forma Tax Returns pursuant to Section 3.5 of this Agreement to support the calculation of the amount of any decrease in the Partnership Group Combined Tax Liability pursuant to this Section 2.1(c).
      2.2 Franchise Tax Taxable Period . References to “taxable period” for any franchise or other doing business Tax shall mean the taxable period during which the income, operations, assets or capital comprising the base of such Tax is measured, regardless of whether the right to do business for another taxable period is obtained by the payment of such franchise Tax.
ARTICLE III
Allocation of Taxes
      3.1 Liability of the Partnership Group for Combined Taxes . For each Tax for each taxable period that includes or begins on or after the Effective Date and for which a Combined Return is filed, the Partnership Group Members included in such Combined Return shall be liable to Anadarko for an amount equal to the Partnership Group Combined Tax Liability in respect of such Tax.
      3.2 Partnership Group Combined Tax Liability . With respect to each Tax for each taxable period that includes or begins on or after the Effective Date and for which a member of the Partnership Group is included in a Combined Return, the Partnership Group Combined Tax Liability for such Tax for such taxable period shall be the Tax for such taxable period as determined on a Partnership Group Pro Forma Combined Return prepared:
          (a) by including only the Tax Items of the members of the Partnership Group that are included in the Combined Return and computing the liability of the Partnership Group Members for such Tax as if such Partnership Group Members were included in a separate consolidated or unitary group;
          (b) except as provided in Section 3.2(e) hereof, using all elections, accounting methods and conventions used on the Combined Return for such period;

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          (c) applying the Tax rate in effect for the Combined Return of the Combined Group for such taxable period;
          (d) assuming that the Partnership Group elects not to carry back any net operating losses and
          (e) assuming that the Partnership Group’s utilization of any Tax Attribute carryforward or carryback is limited to the Tax Attributes of the Partnership Group that would be available if the Partnership Group Combined Tax Liability for each taxable period ending after January 1, 2008 were determined in accordance with this Section 3.2.
      3.3 Preparation and Delivery of Pro Forma Tax Returns . Not later than 90 days following the date on which a Combined Return is filed with the appropriate Tax Authority, Anadarko shall prepare and deliver to the Partnership the related Partnership Group Pro Forma Combined Return calculating the Partnership Group Combined Tax Liability attributable to the period covered by such filed Combined Return.
      3.4 Payment of Tax . Anadarko shall timely pay (or shall cause to be timely paid) any Tax reflected on a Combined Return and hold the Partnership harmless for all liability for such Tax. In the event Anadarko is required to make an estimated payment or deposit of any Tax of any Combined Group which includes any member of the Partnership Group, Anadarko shall calculate the portion, if any, of such estimated payment or deposit attributable to the Partnership Group using a methodology similar to that described in Section 3.2 (the “ Partnership Group Deposit ”) and shall present such calculation to the Partnership. Within 5 days thereafter, the Partnership shall pay the Partnership Group Deposit to Anadarko. Within 30 days after delivery by Anadarko of a Partnership Group Pro Forma Combined Return to the Partnership calculating the Partnership Group Combined Tax Liability with respect to a Combined Return, the Partnership shall pay to Anadarko such Partnership Group Combined Tax Liability less the amount of any Partnership Group Deposit relating to the same Combined Return.
      3.5 Subsequent Changes in Treatment of Tax Items . With respect to any Combined Return for any taxable period beginning on or after the Effective Date, in the event of a change in the treatment of any Tax Item of any member of a Combined Group as a result of a Final Determination, within 30 days following such Final Determination (i) Anadarko shall calculate the change, if any, to the Partnership Group Combined Tax Liability resulting from such change, (ii) Anadarko shall pay any decrease in the Partnership Group Combined Tax Liability to the Partnership and (iii) the Partnership shall pay any increase in the Partnership Group Combined Tax Liability to Anadarko.
ARTICLE IV
Control of Tax Proceedings; Cooperation and Exchange of Information
      4.1 Control of Proceedings . Except as provided in this Article IV, Anadarko shall have full responsibility and discretion in handling, settling or contesting any Tax Controversy involving a Tax Return for which it has filing responsibility under this Agreement as well as all Tax Returns for all taxable periods ending before the Effective Date. The Partnership shall have full responsibility and discretion in handling, settling or contesting any Tax Controversy

-5-


 

involving a Tax Return for which it has filing responsibility under this Agreement. Except as otherwise provided in this Article IV, any costs incurred in handling, settling or contesting any Tax Controversy shall be borne by the Party having full responsibility and discretion thereof.
      4.2 Cooperation and Exchange of Information .
          (a) Each Party shall cooperate fully at such time and to the extent reasonably requested by any other Party in connection with the preparation and filing of any Tax Return or claim for refund, or the conduct of any audit, dispute, proceeding, suit or action concerning any issues or other matters considered in this Agreement. Such cooperation shall include, without limitation, the following: (i) the retention and provision on demand of Tax Returns, books, records (including those concerning ownership and Tax basis of property which a Party may possess), documentation or other information relating to the Tax Returns, including accompanying schedules, related workpapers and documents relating to rulings or other determinations by Taxing Authorities, until the expiration of the applicable statute of limitations (giving effect to any extension, waiver or mitigation thereof); (ii) the provision of additional information, including an explanation of material provided under clause (i) of this Section 4.2(a), to the extent such information is necessary or reasonably helpful in connection with the foregoing; (iii) the execution of any document that may be necessary or reasonably helpful in connection with the filing of a Tax Return by Anadarko, the Partnership or of their respective subsidiaries, or in connection with any audit, dispute, proceeding, suit or action and (iv) such Party’s commercially reasonable efforts to obtain any documentation from a governmental authority or a third party that may be necessary or reasonably helpful in connection with any of the foregoing.
          (b) Each Party shall make its employees and facilities available on a reasonable and mutually convenient basis in connection with any of the foregoing matters.
          (c) If any Party fails to provide any information requested pursuant to Section 4.2 hereof within a reasonable period, as determined in good faith by the Party requesting the information, then the requesting Party shall have the right to engage a public accounting firm to gather such information, provided that 30 days’ prior written notice is given to the unresponsive Party. If the unresponsive Party fails to provide the requested information within 30 days of receipt of such notice, then such unresponsive Party shall permit the requesting Party’s public accounting firm full access to all appropriate records or other information as reasonably necessary to comply with this Section 4.2 and shall reimburse the requesting Party or pay directly all costs connected with the requesting Party’s engagement of the public accounting firm.
ARTICLE V
Warranties and Representations; Payment Obligations
      5.1 Warranties and Representations Relating to Actions of Anadarko and the Partnership . Each of Anadarko and the Partnership warrants and represents to the other that:

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          (a) in the case of Anadarko, it is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has all requisite power to carry out the transactions contemplated by this Agreement;
          (b) in the case of the Partnership, it is a limited partnership duly organized, validly existing and in good standing under the laws of the State of Delaware and has all requisite power to carry out the transactions contemplated by this Agreement;
          (c) it has duly and validly taken all action necessary to authorize the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby;
          (d) this Agreement has been duly executed and delivered by it and constitutes its legal, valid and binding obligation enforceable in accordance with its terms subject, as to the enforcement of remedies, to (i) applicable bankruptcy, reorganization, insolvency, moratorium or other similar laws affecting the enforcement of creditors’ rights generally from time to time in effect and (ii) general principles of equity, whether enforcement is sought in a proceeding at law or in equity and
          (e) the execution and delivery of this Agreement, the consummation of the transactions contemplated hereby or the compliance with any of the provisions of this Agreement will not (i) conflict with or result in a breach of any provision of its certificate of incorporation, by-laws, certificate of limited partnership, limited partnership agreement or general partnership agreement, as the case may be, (ii) breach, violate or result in a default under any of the terms of any agreement or other instrument or obligation to which it is a party or by which it or any of its properties or assets may be bound or (iii) violate any order, writ, injunction, decree, statute, rule or regulation applicable to it or affecting any of its properties or assets.
      5.2 Calculation of Payment Obligations . Except as otherwise provided under this Agreement, to the extent that the payor Party has a payment obligation to the payee Party pursuant to this Agreement, the payee Party shall provide the payor Party with its calculation of the amount of such obligation. The documentation of such calculation shall provide sufficient detail to permit the payor Party to reasonably understand the calculation. All payment obligations shall be made to the payee Party or to the appropriate Tax Authority as specified by the payee Party within 30 days after delivery by the payee Party to the payor Party of written notice of a payment obligation. Any disputes with respect to payment obligations shall be resolved in accordance with Section 6.11 below.
      5.3 Prompt Performance . All actions required to be taken by any Party under this Agreement shall be performed within the time prescribed for performance in this Agreement or if no period is prescribed, such actions shall be performed promptly.
      5.4 Interest . Payments pursuant to this Agreement that are not made within the period prescribed therefor in this Agreement shall bear interest (compounded daily) from and including the date immediately following the last date of such period through and including the date of payment at a rate equal to the U.S. federal short-term rate or rates established pursuant to Section 6621 of the Code for the period during which such payment is due but unpaid.

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      5.5 Tax Records . The Parties to this Agreement hereby agree to retain and provide on proper demand by any Tax Authority (subject to any applicable privileges) the books, records, documentation and other information relating to any Tax Return until the later of (i) the expiration of the applicable statute of limitations (giving effect to any extension, waiver or mitigation thereof), (ii) the date specified in an applicable records retention agreement entered into with a Tax Authority, (iii) a Final Determination made with respect to such Tax Return and (iv) the final resolution of any claim made under this Agreement for which such information is relevant.
      5.6 Continuing Covenants . Each Party agrees (i) not to take any action reasonably expected to result in a new or changed Tax Item that is detrimental to any other Party and (ii) to take any action reasonably requested by any other Party that would reasonably be expected to result in a new or changed Tax Item that produces a benefit or avoids a detriment to such other Party; provided that such action does not result in any additional cost not fully compensated for by the requesting Party. The Parties hereby acknowledge that the preceding sentence is not intended to limit, and therefore shall not apply to, the rights of the Parties with respect to matters otherwise covered by this Agreement.
ARTICLE VI
Miscellaneous Provisions
      6.1 Notice . Any notice, demand, claim or other communication required or permitted to be given under this Agreement (a “ Notice ”) shall be in writing and may be personally served provided a receipt is obtained therefor, or may be sent by certified mail return receipt requested postage prepaid, to the Parties at the following addresses (or at such other address as one Party may specify by notice to any other Party):
     
Anadarko at:
  Anadarko Petroleum Corporation
 
  1201 Lake Robbins Drive
 
  The Woodlands, Texas 77380
 
  Attention: General Counsel
 
  Fax: 832-636-3214
 
   
Partnership at:
  Western Gas Partners, LP
 
  c/o Western Gas Holdings, LLC
 
  1201 Lake Robbins Drive
 
  The Woodlands, Texas 77380
 
  Attention: President
 
  Fax: 832-636-6001
     A Notice which is delivered personally shall be deemed given as of the date specified on the written receipt therefor. A Notice mailed as provided herein shall be deemed given on the third business day following the date so mailed. Notification of a change of address may be given by any Party to another in the manner provided in this Section 6.1 for providing a Notice.
      6.2 Required Payments . Unless otherwise provided in this Agreement, any payment of Tax required shall be due within 30 days of a Final Determination of the amount of such Tax.

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      6.3 Injunctions . The Parties acknowledge that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with its specific terms or were otherwise breached. The Parties hereto shall be entitled to an injunction or injunctions to prevent breaches of the provisions of this Agreement and to enforce specifically the terms and provisions of this Agreement in any court having jurisdiction, such remedy being in addition to any other remedy to which they may be entitled at law or in equity.
      6.4 Further Assurances . Subject to the provisions hereof, the Parties hereto shall make, execute, acknowledge and deliver such other instruments and documents, and take all such other actions, as may be reasonably required in order to effectuate the purposes of this Agreement and to consummate the transactions contemplated hereby. Subject to the provisions hereof, each of the Parties shall, in connection with entering into this Agreement, perform its obligations hereunder and take any and all actions relating hereto, comply with all applicable laws, regulations, orders and decrees, obtain all required consents and approvals and make all required filings with any governmental agency, other regulatory or administrative agency, commission or similar authority and promptly provide the other Parties with all such information as such Parties may reasonably request in order to be able to comply with the provisions of this sentence.
      6.5 Parties in Interest . Except as herein otherwise specifically provided, nothing in this Agreement expressed or implied is intended to confer any right or benefit upon any person, firm or corporation other than the Parties and their respective successors and permitted assigns.
      6.6 Setoff . Except as provided by Section 2.1(c) of this Agreement, all payments to be made under this Agreement shall be made without setoff, counterclaim or withholding, all of which are expressly waived.
      6.7 Change of Law . If, due to any change in applicable law or regulations or the interpretation thereof by any court of law or other governing body having jurisdiction subsequent to the date of this Agreement, performance of any provision of this Agreement or any transaction contemplated hereby shall become impracticable or impossible, the Parties hereto shall use their best efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such provision.
      6.8 Termination and Survival . Notwithstanding anything in this Agreement to the contrary, this Agreement shall remain in effect and its provisions shall survive for the full period of all applicable statutes of limitation (giving effect to any extension, waiver or mitigation thereof) or until otherwise agreed to in writing by Anadarko and the Partnership, or their successors.
      6.9 Amendments; No Waivers .
          (a) Any provision of this Agreement may be amended or waived if, and only if, such amendment or waiver is in writing and signed, in the case of an amendment, by Anadarko and the Partnership, or in the case of a waiver, by the Party against whom the waiver is to be effective.

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          (b) No failure or delay by any Party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege.
      6.10 Governing Law and Interpretation . This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware applicable to agreements made and to be performed in the State of Delaware.
      6.11 Resolution of Certain Disputes . Any disagreement between the Parties with respect to any matter that is the subject of this Agreement, including, without limitation, any disagreement with respect to any calculation or other determinations by Anadarko hereunder, which is not resolved by mutual agreement of the Parties, shall be resolved by a nationally recognized independent accounting firm chosen by and mutually acceptable to the Parties hereto (an “ Accounting Referee ”). Such Accounting Referee shall be chosen by the Parties within fifteen (15) business days from the date on which one Party serves written notice on another Party requesting the appointment of an Accounting Referee, provided that such notice specifically describes the calculations to be considered and resolved by the Accounting Referee. In the event the Parties cannot agree on the selection of an Accounting Referee, then the Accounting Referee shall be any office or branch of the public accounting firm of KPMG LLP. The Accounting Referee shall resolve any such disagreements as specified in the notice within 30 days of appointment; provided, however, that no Party shall be required to deliver any document or take any other action pursuant to this Section 6.11 if it determines that such action would result in the waiver of any legal privilege or any detriment to its business. Any resolution of an issue submitted to the Accounting Referee shall be final and binding on the Parties hereto without further recourse. The Parties shall share the costs and fees of the Accounting Referee equally.
      6.12 Confidentiality . Except to the extent required to protect a Party’s interests in a Tax Controversy, each Party shall hold and shall cause its consultants and advisors to hold in strict confidence, unless compelled to disclose by judicial or administrative process or, in the opinion of its counsel, by other requirements of law, all information (other than any such information relating solely to the business or affairs of such Party) concerning another Party or its representatives pursuant to this Agreement (except to the extent that such information can be shown to have been (i) previously known by the Party to which it was furnished, (ii) in the public domain through no fault of such Party or (iii) later lawfully acquired from other sources by the Party to which it was furnished), and each Party shall not release or disclose such information to any other person, except its auditors, attorneys, financial advisors, bankers and other consultants and advisors who shall be advised of the provisions of this Agreement. Each Party shall be deemed to have satisfied its obligation to hold confidential information concerning or supplied by another Party if it exercises the same care as it takes to preserve confidentiality for its own similar information.
      6.13 Costs, Expenses and Attorneys’ Fees . Except as expressly set forth in this Agreement, each Party shall bear its own costs and expenses incurred pursuant to this Agreement. In the event a Party to this Agreement brings an action or proceeding for the breach or enforcement of this Agreement, the prevailing party in such action, proceeding or appeal,

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whether or not such action, proceeding or appeal proceeds to final judgment, shall be entitled to recover as an element of its costs, and not as damages, such reasonable attorneys’ fees as may be awarded in the action, proceeding or appeal in addition to whatever other relief the prevailing party may be entitled. For purposes of this Section 6.13, the “prevailing party” shall be the Party who is entitled to recover its costs; a Party not entitled to recover its costs shall not recover attorneys’ fees. No sum for attorneys’ fees shall be counted in calculating the amount of the judgment for purposes of determining whether a Party is entitled to recover its costs or attorneys’ fees.
      6.14 Counterparts . This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument.
      6.15 Severability . The Parties hereby agree that, if any provision of this Agreement should be adjudicated to be invalid or unenforceable, such provision shall be deemed deleted herefrom with respect, and only with respect, to the operation of such provision in the particular jurisdiction in which such adjudication was made, and only to the extent of the invalidity, and any such invalidity or unenforceability in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. All other remaining provisions of this Agreement shall remain in full force and effect for the particular jurisdiction and all other jurisdictions.
      6.16 Entire Agreement .
          (a) This Agreement contains the entire agreement between the Parties with respect to the subject matter hereof and supersedes all other agreements, whether or not written, in respect of any Tax between the Anadarko Group and the Partnership Group.
          (b) In the event of any conflict or inconsistency between the provisions of this Agreement and the provisions of any other agreement between the Anadarko Group and the Partnership Group, the provisions of this Agreement shall take precedence and to such extent shall be deemed to supersede such conflicting provisions under the other agreement.
      6.17 Assignment . This Agreement is being entered into by Anadarko and the Partnership on behalf of themselves and each member of the Anadarko Group and the Partnership Group. This Agreement shall constitute a direct obligation of each such member and shall be deemed to have been readopted and affirmed on behalf of any entity that becomes a member of the Anadarko Group or the Partnership Group in the future. Each of Anadarko and the Partnership hereby guarantee the performance of all actions, agreements and obligations provided for under this Agreement of each member of the Anadarko Group and the Partnership Group, respectively. Each of Anadarko and the Partnership shall, upon the written request of the other, cause any of their respective group members to formally execute this Agreement. This Agreement shall be binding upon, and shall inure to the benefit of, the successors, assigns and persons controlling any of the entities bound hereby for so long as such successors, assigns or controlling persons are members of the Anadarko Group or the Partnership Group or their successors and assigns.

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      6.18 Fair Meaning . This Agreement shall be construed in accordance with its fair meaning and shall not be construed strictly against the drafter.
      6.19 Titles and Headings . Titles and headings to sections herein are inserted for the convenience of reference only and are not intended to be a part of or to affect the meaning or interpretation of this Agreement.
      6.20 Construction . In this Agreement, unless the context otherwise requires, the terms “herein,” “hereof” and “hereunder” refer to this Agreement.

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     IN WITNESS WHEREOF, the Parties hereto have executed and delivered this Agreement as of the day and year first above written.
             
    ANADARKO PETROLEUM CORPORATION    
 
           
 
  By:   /s/ James T. Hackett
 
   
 
  Name:   James T. Hackett    
 
  Title:   Chairman, President and Chief Executive Officer    
 
           
    WESTERN GAS PARTNERS, LP    
 
           
 
  By:   Western Gas Holdings, LLC,
its general partner
   
 
           
 
  By:   /s/ Robert G. Gwin    
 
           
 
      Robert G. Gwin    
 
      President and Chief Executive Officer    
Signature Page to Tax Sharing Agreement

Execution Version
WORKING CAPITAL LOAN AGREEMENT
     This WORKING CAPITAL LOAN AGREEMENT (this “ Agreement ”) is made as of May 14, 2008 (the " Effective Date ”), between Anadarko Petroleum Corporation, a Delaware corporation, with principal offices at 1201 Lake Robbins Drive, The Woodlands, Texas 77380 (“ Lender ”), and Western Gas Partners, LP, a Delaware limited partnership with principal offices at 1201 Lake Robbins Drive, The Woodlands, Texas 77380 (“ Borrower ”).
     For good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Lender and Borrower agree as follows:
1. Loans . Subject to the terms and conditions of this Agreement, from time to time during the period from the Effective Date to May 14, 2010 (the “ Maturity Date ”), Lender agrees to make loans ( “Loans" ) to Borrower in an aggregate principal amount outstanding not to exceed $30,000,000.00 (the “Commitment Amount" ) at any time. Within the foregoing limits, Borrower may borrow, repay and reborrow Loans in accordance with the terms and conditions hereof.
2. Repayment of the Loans . Borrower promises to pay the outstanding principal balance of the Loans, together with interest accrued and outstanding thereon and any other sums due hereunder, on the Maturity Date or such earlier date upon which the maturity of the Loans may have been accelerated pursuant to Section 8 . Notwithstanding the foregoing, Borrower shall repay the Loans such that no principal is outstanding for a period of at least fifteen consecutive days during the twelve month period commencing on the Effective Date and during the twelve month period commencing on each anniversary thereof.
3. Procedure for Borrowing . Borrower may borrow Loans on any Business Day (together with other capitalized terms not defined in the body of this Agreement, as defined in Exhibit A ) by notice to Lender in accordance with the procedures set forth in, and subject to the terms of, the Revolving Credit Agreement, except that: (a) Borrower shall give such notice no later than 12:00 p.m., Houston time, on the date of funding; (b) Borrower shall give such notice to and in a form acceptable to Lender rather than the applicable agent under the Revolving Credit Agreement; (c) any term of the Revolving Credit Agreement to the contrary notwithstanding, a Loan may only be made in US Dollars; and (d) unless a rate and interest period (i) other than one-month LIBOR and (ii) available under the Revolving Credit Agreement are specified in such notice, each Loan shall bear interest at the one-month LIBOR rate and be for an Interest Period of one month.
4. Interest . Borrower shall pay interest on the unpaid principal amount of each Loan which bears interest at the Base Rate or a default rate based on the Base Rate in accordance with the procedures and terms of the Revolving Credit Agreement. The unpaid principal amount of each Loan which bears interest at a rate other than the Base Rate or a rate based on the Base Rate shall bear interest for each day during each Interest Period with respect thereto at a rate per annum determined in accordance with the procedures and terms of the Revolving Credit Agreement. Without limiting the generality of the preceding sentence, if Borrower pays the principal of any Loan on any day other than the last day of the Interest Period relevant thereto and Lender so requests, then Borrower shall pay “breakage” in accordance with the procedures and terms of the Revolving Credit Agreement. Notwithstanding the foregoing provisions of this Section 4 or any other provision of this Agreement, interest on the Loans and other amounts due hereunder at any time shall be limited to the highest lawful rate that may be charged under the laws of the State of Texas at such time.
5. Increased Costs; Taxes; Prepayments of Loans . Borrower shall pay increased costs on the Loans and taxes in connection with the Loans, in each case in accordance with the procedures and terms of the Revolving Credit Agreement as if the loans were loans thereunder and Lender were a lender thereunder. Notwithstanding the provisions of Section 4 , Borrower may not borrow at any rate other than the Base Rate at any time when Borrower would not be permitted to borrow at such rate if Borrower were the borrower under the Revolving Credit Agreement. Subject to Section 1 , each Loan and any prepayment of any Loan shall be made in accordance with Sections 2.07 and 2.08 of the Revolving Credit Agreement. Prepayments shall be allocated first, to any Loans bearing interest at a rate based on the Base Rate, and second, to Loans in the order in which their Interest Periods terminate.
6. Borrower’s Representations and Warranties . Borrower represents and warrant to Lender that:
  (a)   Borrower (i) has been duly formed and is validly existing in good standing under the laws of the State of Delaware and (ii) is qualified to do business as a foreign entity in good standing in each jurisdiction of the United States in which the ownership of

 


 

      its properties or the conduct of its business requires such qualification and where the failure to so qualify would be reasonably expected to have a material adverse effect on the Borrower and its subsidiaries, taken as a whole; and
  (b)   this Agreement has been duly authorized, executed and delivered by Borrower and constitutes the valid and binding agreement of Borrower, enforceable in accordance with its terms.
7. Conditions of Lending . The obligation of Lender to make any Loan is subject to the conditions precedent that:
  (a)   Each of the representations and warranties set forth in Section 6 is true and accurate on and as of the date of the making of such Loan; and
 
  (b)   no event has occurred and is continuing or would result from the proposed Loan that constitutes a Default or Event of Default.
8. Events of Default . If one or more of the following events of default (each an “ Event of Default ”) shall occur and be continuing:
  (a)   Borrower shall default in any payment of principal when and as the payment shall become due and payable, or Borrower shall default in any payment of interest as required herein, or in the payment of any fees or other amounts, when the same shall become due and payable, and such default shall continue for a period of three (3) Business Days;
 
  (b)   Borrower shall (i) apply for or consent to the appointment of, or the taking of possession by, a receiver, custodian, trustee or liquidator of itself or of its property, (ii) admit in writing of its inability to pay its debts as such debts become due, (iii) make a general assignment for the benefit of its creditors, (iv) commence a voluntary case under any Bankruptcy Law, (v) file a petition seeking to take advantage of any other law providing for similar relief of debtors, or (vi) consent or acquiesce in writing to any petition duly filed against it in any involuntary case under any Bankruptcy Law; or
 
  (c)   a proceeding or case shall be commenced, without the application or consent of Borrower in any court of competent jurisdiction seeking (i) its liquidation, reorganization, dissolution or winding up, or the composition or readjustment of its debts, (ii) the appointment of a trustee, receiver, custodian, liquidator or the like of it or of its assets, or (iii) similar relief in respect of it, under any law providing for the relief of debtors, and such proceeding or case shall continue undismissed, or unstayed and in effect, for a period of sixty (60) days (or such longer period, so long as Borrower shall be taking such action in good faith as shall be reasonably necessary to obtain the timely dismissal or stay of such proceeding or case); or an order for relief shall be entered in an involuntary case under any applicable Bankruptcy Law, against Borrower; or
 
  (d)   a Change of Control shall occur,
then and in each and every case Lender, by notice in writing to Borrower, may terminate the commitment of Lender hereunder and/or declare the unpaid balance of the Loans and any other amounts payable hereunder to be forthwith due and payable, and thereupon such balance shall become so due and payable without presentation, protest or further demand or notice of any kind, all of which are hereby expressly waived; provided that in the case of Section 8(b) and Section 8(c) above, the commitments of Lender hereunder shall automatically terminate and the Loans and any other amounts payable hereunder shall forthwith be due and payable.
9. Notices . Notices under and in connection with this Agreement shall be given and deemed effective as provided in Section 9.01 of the Revolving Credit Agreement.
10. Waivers; Amendments . No failure or delay by Lender to exercise any right or power shall operate as a waiver thereof, nor shall any partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such right or power, preclude any other or further exercise of such right or power. No waiver of any right or power of Lender in this Agreement shall be effective unless given in writing signed by Lender. This Agreement may not be amended or modified except by a writing signed by the parties.
11. Expenses of Enforcement . Borrower shall reimburse Lender on demand for any fees or other expenses of Lender in connection with the enforcement of this Agreement and the collection of the Loans and any other amounts due Lender hereunder. Borrower agrees, to the fullest extent permitted by law, to indemnify and hold harmless Lender and each of its directors, officers, employees and agents (each an “ Indemnified Party ”) from and against any and all claims, damages, liabilities and expenses (including without limitation fees and disbursements of counsel) arising out of or in connection with any investigation, litigation or proceeding (whether

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or not any Indemnified Party is a party) arising out of, related to or in connection with this Agreement, the Loans or any transaction in which any proceeds of all or any part of the Loans made hereunder are applied, provided that such indemnity shall not, as to any Indemnified Party, be available to the extent that such losses, claims, damages, liabilities or related expenses resulted from the gross negligence, unlawful conduct or willful misconduct of such Indemnified Party.
12. Successors and Assigns . This Agreement shall be binding on and inure to the benefit of the parties and their respective successors and permitted assigns. Borrower may not assign this Agreement or delegate any of its duties hereunder without the express written consent of Lender.
13. Commitment Fee . Borrower shall pay Lender a commitment fee quarterly in arrears on the last day of each March, June, September and December, commencing on June 30, 2008, and at the Maturity Date (or earlier date as to which the maturity of the Loans has been accelerated pursuant to Section 8 ), such commitment fee to be in an amount equal to 0.11% per annum on the average daily unused Commitment Amount for the relevant period.
14. Governing Law . This Agreement shall be construed in accordance with and governed by the laws of the State of Texas.
15. Headings; Section References . Headings in this Agreement are for convenience only and shall not be used to interpret or construe its provisions. References to Sections in this Agreement are to Sections of this Agreement.
16. Counterparts . This Agreement may be executed in two or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.
17. Entire Agreement . This instrument and any other loan documents executed in connection herewith constitute the entire Agreement between Lender and Borrower and may not be contradicted by evidence of prior, contemporaneous or subsequent oral agreements of the parties. There are no unwritten oral agreements between the parties.
18. Notices . All notices under this Agreement shall be in writing and delivered to the respective parties at their principal offices stated at the beginning hereof.
19. No Third Party Beneficiaries . The agreement of Lender to make Loan to Borrower on the terms and conditions set forth in this Agreement is solely for the benefit of Borrower and no other person has any rights hereunder against Lender or with respect to the extension of credit contemplated hereby.
20. Special Exculpation . No claim may be made by Borrower or any other person against Lender, directors, officers, employees, attorneys or agents of any of them for any special, indirect, consequential or punitive damages in respect of any claim for breach of contract or any other theory of liability arising out of or relating to this Agreement or any other financing document or the transactions contemplated hereby or thereby, or any act, omission or event occurring in connection therewith, and Borrower hereby waives, releases and agrees not to sue upon any claim for any such damages, whether or not accrued and whether or not known or suspected to exist in its favor.
21. Waiver of Jury Trial . Each of Borrower and Lender hereby irrevocably waives, to the fullest extent permitted by law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby.
22. Severability . If any term or provision of this Agreement shall be determined to be illegal or unenforceable, all other terms and provisions of this Agreement shall nevertheless remain effective and shall be enforced to the fullest extent permitted by applicable law.
23. Further Assurances . The parties agree (a) to furnish upon request to each other such further information, (b) to execute and deliver to each other such other documents, and (c) to do such other acts and things, all as the other party may reasonably request for the purpose of carrying out the intent of this Agreement.
In witness whereof the parties have caused this Agreement to be executed by their proper officers on the day and year first above written.

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  Anadarko Petroleum Corporation
 
 
  By:   /s/ Bruce W. Busmire    
    Bruce W. Busmire   
    Vice President, Chief Accounting Officer and Treasurer   
 
  Western Gas Partners, LP
 
 
  By:   Western Gas Holdings, LLC,    
    its general partner   
     
  By:   /s/ Robert G. Gwin    
    Robert G. Gwin   
    President and Chief Executive Officer   
 
Signature Page to Working Capital Loan Agreement

 


 

Exhibit A
As used in the Agreement to which this Exhibit A is attached, the following terms have the meanings indicated:
     “ Base Rate ” means the rate used for determining interest on amounts of principal outstanding from time to time under the Revolving Credit Agreement with respect to which the parties thereto have not agreed on (i) a specific interest period over which a particular rate shall apply and (ii) a fixed rate, which may be determined by a formula, for such period.
     “ Change of Control ” means any of the following events: (i) any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all or substantially all of the General Partner’s assets to any other Person, unless immediately following such sale, lease, exchange or other transfer such assets are owned, directly or indirectly, by the General Partner; (ii) the dissolution or liquidation of the General Partner; (iii) the consolidation or merger of the General Partner with or into another Person pursuant to a transaction in which the outstanding membership interests of the General Partner are changed into or exchanged for cash, securities or other property, other than any such transaction where (a) the outstanding membership interests of the General Partner are changed into or exchanged for Voting Securities of the surviving corporation or its parent and (b) the Lender continues to own, directly or indirectly, not less than a majority of the outstanding Voting Securities of the surviving corporation or its parent immediately after such transaction; and (iv) other than Lender and its affiliates, a “person” or “group” (within the meaning of Sections 13(d) or 14(d)(2) of the Exchange Act) being or becoming the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act) of more than 50% of all of the then outstanding membership interests of the General Partner, except in a merger or consolidation which would not constitute a Change of Control under clause (iii) above.
     “ Exchange Act ” means the United States Securities Exchange Act of 1934, as amended.
     “ General Partner ” means Western Gas Holdings, LLC, a Delaware limited liability company (including any permitted successors and assigns under the Agreement of Limited Partnership of the Borrower).
     “ Person ” means a corporation, partnership, joint venture, trust, limited liability company, unincorporated organization or any other entity.
     “ Revolving Credit Agreement ” at any time means the revolving credit agreement with the largest aggregate commitment amount to which Lender is then a party as the borrower, as amended, or if there is no such revolving credit agreement then in effect, the last revolving credit agreement to which Lender was a party as the borrower. As of the Effective Date, the Revolving Credit Agreement is the revolving credit agreement dated as of March 4, 2008 among, inter alia , Anadarko Petroleum Corporation, JPMorgan Chase Bank, as US Administrative Agent, and the lenders party thereto, as amended.
     “ Voting Securities ” means securities of any class of Person entitling the holders thereof to vote in the election of members of the board of directors or other similar governing body of the Person, or in the case of a limited partnership, a majority of the general partner interests in such limited partnership.

 

Exhibit 10.9
(WESTERN GAS LOGO)
                     ,      
<Name>
<Address>
Dear <Name>:
It is my pleasure to confirm to you that on                      ,            , in recognition of your election to the Board of Directors of Western Gas Holdings, LLC (the “General Partner”), you were granted                      phantom units of Western Gas Partners, LP (the “Partnership”) pursuant to the provisions of the Partnership’s 2008 Long-Term Incentive Plan (the “Plan”). Capitalized terms not defined in this letter are defined in the Plan.
A phantom unit is a notional unit that entitles you to receive a common unit representing a limited partner interest in the Partnership (a “Common Unit”) upon the vesting of the phantom unit or, at the discretion of the Board of Directors of the General Partner, cash equal to the Fair Market Value of a Common Unit. Each phantom unit has the economic equivalent of one Common Unit. Your phantom units will vest 100% on                      ,            , the first anniversary of the date of this grant, and will have tandem distribution equivalent rights (which means that you will receive a credit for each phantom unit equal to the distribution, if any, that the Partnership makes on each Common Unit with such credit being payable to you in cash on a current basis as such distributions are paid to holders of Common Units). If your membership on the Board of Directors of the General Partner terminates for any reason prior to the vesting of your phantom units, your phantom units will be automatically forfeited unless and to the extent that the Board of Directors of the General Partner provides otherwise. In addition, your phantom units will vest automatically upon a Change of Control of the General Partner or of Anadarko Petroleum Corporation.
In addition to the terms set forth above, your phantom units are also subject to the terms of the Plan, a copy of which is attached for your convenience. Please note that this letter serves as your notice of award and is for your personal files. You are not required to sign and return any documents .
If you have any questions or concerns, please contact Amanda M. McMillian, Vice President, General Counsel and Corporate Secretary, at 832-636-7584 or amanda.mcmillian@westerngas.com.
         
  Sincerely,
 
 
     
  Robert G. Gwin   
  President and Chief Executive Officer
Western Gas Holdings, LLC
(as general partner of Western Gas Partners, LP)